Form 8-K

8-K — FS Bancorp, Inc.

Accession: 0001437749-26-023959

Filed: 2026-07-21

Period: 2026-07-21

CIK: 0001530249

SIC: 6036 (SAVINGS INSTITUTIONS, NOT FEDERALLY CHARTERED)

Item: Results of Operations and Financial Condition

Item: Other Events

Item: Financial Statements and Exhibits

Documents

8-K — fsbw20260514_8k.htm (Primary)

EX-99.1 — EXHIBIT 99.1 (ex_963242.htm)

GRAPHIC (logo.jpg)

XML — IDEA: XBRL DOCUMENT (R1.htm)

8-K — FORM 8-K

8-K (Primary)

Filename: fsbw20260514_8k.htm · Sequence: 1

fsbw20260514_8k.htm

false

0001530249

2026-07-21

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): July 21, 2026

FS BANCORP, INC.

(Exact name of registrant as specified in its charter)

Washington

001-35589

45-4585178

(State or other jurisdiction

of incorporation)

(Commission

File Number)

(I.R.S. Employer

Identification No.)

6920 220th Street SW

Mountlake Terrace, Washington

98043

(Address of principal executive offices)

(Zip Code)

Registrant's telephone number, including area code: (425) 771-5299

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions.

☐

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, par value $.01 per share

FSBW

The NASDAQ Stock Market LLC

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Item 2.02 Results of Operations and Financial Condition

On July 21, 2026, FS Bancorp, Inc. (the Company), the parent corporation of 1st Security Bank of Washington, issued its earnings release for the quarter ended June 30, 2026. A copy of the press release is furnished with this Form 8-K as Exhibit 99.1 and is incorporated herein by reference.

Item 8.01 Other Events

On July 21, 2026, the Company announced its Board of Directors declared a regular quarterly cash dividend on Company common stock of $0.29 per share, payable on August 21, 2026, to stockholders of record as of the close of business on August 7, 2026.

Item 9.01 Exhibits

(d)

Exhibits

99.1

Press release of FS Bancorp, Inc. dated July 21, 2026

104

Cover Page Interactive Data File (embedded within the Inline XBRL document)

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date: July 21, 2026

FS BANCORP, INC.

/s/Phillip D. Whittington

Phillip D. Whittington

Chief Financial Officer

EX-99.1 — EXHIBIT 99.1

EX-99.1

Filename: ex_963242.htm · Sequence: 2

ex_963242.htm

Exhibit 99.1

FS Bancorp, Inc. Reports Second Quarter Net Income of $7.9 Million or $1.04 Per Diluted Share and Declares 54th Consecutive Quarterly Cash Dividend

MOUNTLAKE TERRACE, WA – July 21, 2026 – FS Bancorp, Inc. (NASDAQ: FSBW) (the “Company”), the holding company for 1st Security Bank of Washington (the “Bank”) today reported 2026 second quarter net income of $7.9 million, or $1.04 per diluted share, compared to $7.8 million, or $1.02 per diluted share, for the prior quarter, and $7.7 million, or $0.99 per diluted share, for the comparable quarter one year ago. For the six months ended June 30, 2026, net income was $15.8 million, or $2.07 per diluted share, compared to net income of $15.7 million, or $1.99 per diluted share, for the comparable six-month period in 2025.

“From the announcement of our proposed merger with Pacific West Bank in the first quarter of 2026, our teams have been diligently working toward a successful integration, while concurrently contributing to our financial success this quarter,” stated Matthew Mullet, President and CEO of FS Bancorp, Inc. “We are also pleased to announce that our Board of Directors has approved our 54th 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 August 21, 2026, to shareholders of record as of August 7, 2026,” concluded Mullet.

2026 Second Quarter Highlights

●

Net income totaled $7.9 million for the second quarter of 2026, compared to $7.8 million for the previous quarter, and $7.7 million for the comparable quarter one year ago;

●

Total deposits decreased $188.7 million, or 7.2%, to $2.45 billion at June 30, 2026, compared to $2.63 billion at March 31, 2026. This decrease was primarily due to a $201.1 million decrease in brokered deposits, with an offsetting increase of $12.1 million in retail deposits. Compared to June 30, 2025, total deposits decreased $104.5 million, or 4.1%. The cost of deposits decreased to 2.18% for the quarter ended June 30, 2026, from 2.24% for the quarter ended March 31, 2026, primarily due to the Company's funding strategy of shifting from higher cost brokered deposits to borrowings, while maintaining sufficient liquidity;

●

Loans receivable, net increased $4.9 million, to $2.63 billion at June 30, 2026, compared to $2.62 billion at March 31, 2026, and increased $46.7 million, from $2.58 billion at June 30, 2025. The year-over-year loan growth was primarily due to an increase of $88.9 million in the commercial real estate portfolio, partially offset by heightened payoff activity in the consumer loan portfolio which decreased $33.1 million during the same period;

●

Consumer loans were $573.2 million at June 30, 2026, a decrease of $10.3 million, or 1.8%, from $583.5 million in the previous quarter, and a decrease of $33.1 million, or 5.5%, from $606.3 million in the comparable quarter one year ago. During the three months ended June 30, 2026, consumer loan originations included 87.3% of indirect home improvement loans originated with a Fair Isaac Corporation (“FICO”) score above 720;

●

The Commercial and Consumer Banking segment reported net income of $6.8 million for the second quarter of 2026, compared to $6.7 million for the prior quarter and $7.4 million for the second quarter of 2025. The Home Lending segment reported net income of $1.1 million for both the first and second quarters of 2026, compared to $352,000 for the second quarter of 2025;

●

Repurchased 87,000 shares of the Company's common stock for $3.6 million in the second quarter of 2026, at an average price of $41.81 per share;

FS Bancorp Q2 Earnings

July 21, 2026

Page 2

●

Book value per share increased $1.15, or 2.7%, to $43.57 at June 30, 2026, compared to $42.42 at March 31, 2026, and increased $4.02, or 10.2%, from $39.55 at June 30, 2025. Tangible book value per share (non-GAAP financial measure) increased $1.23 to $41.84 at June 30, 2026, compared to $40.61 at March 31, 2026, and increased $4.38 from $37.46 at June 30, 2025. See, “Non-GAAP Financial Measures;” and

●

Regulatory capital ratios at the Bank were 14.0% for total risk-based capital and 11.4% for Tier 1 leverage capital at June 30, 2026, compared to 13.8% for total risk-based capital and 11.2% for Tier 1 leverage capital at March 31, 2026. The Bank remained well capitalized under applicable regulatory capital standards.

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 and six months ended June 30, 2026 and 2025 (dollars in thousands):

At or For the Three Months Ended June 30, 2026

Condensed income statement:

Commercial and Consumer Banking

Home Lending

Total

Net interest income

(1)

$ 29,662

$ 2,986

$ 32,648

Provision for credit losses

(2,297)

(344)

(2,641)

Noninterest income

(2)

2,740

3,410

6,150

Noninterest expense

(3)

(21,413)

(4,691)

(26,104)

Income before provision for income taxes

8,692

1,361

10,053

Provision for income taxes

(1,899)

(218)

(2,117)

Net income

$ 6,793

$ 1,143

$ 7,936

Total average assets for period ended

$ 2,511,682

$ 668,842

$ 3,180,524

Full-time employees ("FTEs")

476

117

593

At or For the Three Months Ended June 30, 2025

Condensed income statement:

Commercial and Consumer Banking

Home Lending

Total

Net interest income (1)

$ 29,179

$ 2,933

$ 32,112

Provision for credit losses

(1,849 )

(172 )

(2,021 )

Noninterest income (2)

2,298

2,872

5,170

Noninterest expense (3)

(20,314 )

(5,188 )

(25,502 )

Income before provision for income taxes

9,314

445

9,759

Provision for income taxes

(1,938 )

(93 )

(2,031 )

Net income

$ 7,376

$ 352

$ 7,728

Total average assets for period ended

$ 2,466,917

$ 649,443

$ 3,116,360

FTEs

452

115

567

FS Bancorp Q2 Earnings

July 21, 2026

Page 3

At or For the Six Months Ended June 30, 2026

Condensed income statement:

Commercial and Consumer Banking

Home Lending

Total

Net interest income

(1)

$ 59,214

$ 5,979

$ 65,193

Provision for credit losses

(4,842)

(328)

(5,170)

Noninterest income

(2)

5,204

6,347

11,551

Noninterest expense

(3)

(42,275)

(9,349)

(51,624)

Income before provision for income taxes

17,301

2,649

19,950

Provision for income taxes

(3,762)

(422)

(4,184)

Net income

$ 13,539

$ 2,227

$ 15,766

Total average assets for period ended

$ 2,527,284

$ 663,600

$ 3,190,884

FTEs

476

117

593

At or For the Six Months Ended June 30, 2025

Condensed income statement:

Commercial and Consumer Banking

Home Lending

Total

Net interest income

(1)

$ 57,585

$ 5,508

$ 63,093

Provision for credit losses

(3,170 )

(443 )

(3,613 )

Noninterest income

(2)

4,543

5,753

10,296

Noninterest expense

(3)

(40,489 )

(10,067 )

(50,556 )

Income before provision for income taxes

18,469

751

19,220

Provision for income taxes

(3,314 )

(157 )

(3,471 )

Net income

$ 15,155

$ 594

$ 15,749

Total average assets for period ended

$ 2,440,654

$ 634,013

$ 3,074,667

FTEs

452

115

567

________________________

(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, 2026, the Company recorded a net increase of $45,000 and a net decrease of $56,000 in fair value, respectively, compared to a net increase of $3,000 and a net increase of $266,000 in fair value for the three and six months ended June 30, 2025, respectively. As of both June 30, 2026 and 2025, there were $13.2 million in residential mortgage loans recorded at fair value, which had previously been 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, 2026 and 2025, the Home Lending segment included allocated overhead expenses of $1.7 million and $3.6 million, compared to $1.8 million and $3.7 million, respectively.

FS Bancorp Q2 Earnings

July 21, 2026

Page 4

Asset Summary

The following table summarizes the composition of total assets and changes from the linked quarter and prior-year period.

ASSETS

Linked Quarter

Prior Year

(Dollars in thousands)

June 30,

March 31,

June 30,

Change

Quarter Change

2026

2025

Cash and due from banks

12,835

12,424

15,168

411

(2,333

)

(15

Interest-bearing deposits at other financial institutions

16,875

26,278

18,027

(9,403

)

(36

)

(1,152

)

Total cash and cash equivalents

29,710

38,702

33,195

(8,992

)

(23

)

(3,485

)

(10

)

Certificates of deposit at other financial institutions

—

248

—

Securities available-for-sale, at fair value

269,460

271,007

302,692

(1,547

)

(33,232

)

(11

)

Securities held-to-maturity, net

34,845

33,267

31,562

1,578

3,283

Loans held for sale, at fair value

30,548

56,275

53,630

(25,727

)

(46

)

(23,082

)

(43

)

Loans receivable, net

2,628,992

2,624,091

2,582,272

4,901

—

46,720

Accrued interest receivable

14,263

15,333

14,270

(1,070

)

—

Premises and equipment, net

43,455

43,612

30,098

(157

)

—

13,357

Long-lived assets held for sale

3,258

—

Operating lease right-of-use

6,655

5,472

7,969

1,183

(1,314

)

(16

)

Federal Home Loan Bank stock, at cost

14,420

8,701

11,579

5,719

2,841

Deferred tax asset, net

6,441

7,175

7,782

(734

)

(10

)

(1,341

)

(17

)

Bank owned life insurance (“BOLI”), net

36,771

36,508

38,262

263

(1,491

)

MSRs, held at the lower of cost or fair value

8,912

8,676

8,652

236

260

Goodwill

3,592

—

Core deposit intangible, net

9,052

9,774

12,071

(722

)

(3,019

)

(25

)

Other assets

38,706

38,072

38,139

634

567

TOTAL ASSETS

3,179,080

3,203,515

3,176,013

(24,435

)

3,067

—

FS Bancorp Q2 Earnings

July 21, 2026

Page 5

Prior

LOAN PORTFOLIO

Linked

Year

(Dollars in thousands)

Quarter

COMMERCIAL REAL ESTATE

June 30, 2026

March 31, 2026

June 30, 2025

("CRE") LOANS

Amount

Percent

Amount

Percent

Amount

Percent

Change

CRE owner occupied

$ 184,136

6.9 %

$ 182,260

6.9 %

$ 180,250

6.8 %

$ 1,876

$ 3,886

CRE non-owner occupied

188,258

7.1

182,568

6.9

171,979

6.6

5,690

16,279

Commercial and speculative construction and development

370,459

13.9

358,657

13.5

300,723

11.5

11,802

69,736

Multi-family

262,137

9.9

263,353

9.9

263,185

10.1

(1,216 )

(1,048 )

Total CRE loans

1,004,990

37.8

986,838

37.2

916,137

35.0

18,152

88,853

RESIDENTIAL REAL ESTATE LOANS

One-to-four-family (excludes HFS)

660,518

24.8

630,996

23.8

639,881

24.4

29,522

20,637

Home equity

88,214

3.3

88,468

3.3

85,613

3.3

(254 )

2,601

Residential custom construction

44,765

1.7

44,134

1.7

54,024

2.1

631

(9,259 )

Total residential real estate loans

793,497

29.8

763,598

28.8

779,518

29.8

29,899

13,979

CONSUMER LOANS

Indirect home improvement

502,151

18.9

513,437

19.3

530,375

20.3

(11,286 )

(28,224 )

Marine

66,941

2.5

67,126

2.5

72,765

2.8

(185 )

(5,824 )

Other consumer

4,111

0.1

2,921

0.1

3,151

0.1

1,190

960

Total consumer loans

573,203

21.5

583,484

21.9

606,291

23.2

(10,281 )

(33,088 )

COMMERCIAL BUSINESS LOANS

Commercial and industrial (“C&I”)

281,181

10.6

304,470

11.5

294,563

11.3

(23,289 )

(13,382 )

Warehouse lending

7,286

0.3

18,144

0.6

17,952

0.7

(10,858 )

(10,666 )

Total commercial business loans

288,467

10.9

322,614

12.1

312,515

12.0

(34,147 )

(24,048 )

Total loans receivable, gross

2,660,157

100.0 %

2,656,534

100.0 %

2,614,461

100.0 %

3,623

45,696

Allowance for credit losses ("ACL") on loans

(31,165)

(32,443 )

(32,189 )

1,278

1,024

Total loans receivable, net

$ 2,628,992

$ 2,624,091

$ 2,582,272

$ 4,901

$ 46,720

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:

Current

(Dollars in

Weighted

thousands)

For the Quarter Ended

Average

CRE by type:

Sep 30, 2026

Dec 31, 2026

Mar 31, 2027

Jun 30, 2027

Sep 30, 2027

Dec 31, 2027

Mar 31, 2028

Jun 30, 2028

Total

Rate

Apartment

6,957

16,937

7,345

2,242

4,101

11,817

15,901

37,411

102,711

5.85

Industrial

198

—

13,497

3,645

5,641

5,204

2,790

6,334

37,309

5.88

Mixed use

—

1,135

1,287

—

3,210

445

—

6,077

6.73

Office

538

12,580

2,767

—

7,318

3,622

—

3,090

29,915

5.75

Other

3,241

2,408

—

1,739

323

866

8,608

5.24

Retail

—

3,298

2,902

2,322

7,370

—

417

16,309

4.88

Senior housing and assisted living

2,092

—

1,336

—

3,022

—

6,450

6.88

Total

13,026

36,358

27,798

11,284

24,753

23,877

22,165

48,118

207,379

FS Bancorp Q2 Earnings

July 21, 2026

Page 6

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

(Dollars in thousands)

CRE by Type:

June 30, 2026

March 31, 2026

June 30, 2025

CRE non-owner occupied:

Office

$43,705

$43,532

$39,141

Retail

42,042

42,186

38,652

Hospitality/restaurant

24,499

24,673

26,489

Industrial

20,824

14,064

14,444

Self-storage

18,767

18,844

19,075

Mixed use

18,489

18,674

18,387

Other

9,189

9,249

3,670

Senior housing/assisted living

6,882

7,263

7,448

Education/worship

2,359

2,387

2,467

Land

1,502

1,696

2,206

Total CRE non-owner occupied

188,258

182,568

171,979

CRE owner occupied:

Industrial

79,137

74,904

77,419

Office

31,862

35,100

40,156

Retail

27,433

27,443

19,470

Other

10,539

10,674

9,483

Mixed use

9,239

7,685

5,548

Hospitality/restaurant

7,622

8,125

7,230

Automobile related

6,745

6,792

7,215

Car wash

4,376

4,394

4,447

Agriculture

3,816

3,759

4,652

Education/worship

3,367

3,384

4,630

Total CRE owner occupied

184,136

182,260

180,250

Total

$ 372,394

$ 364,828

$ 352,229

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

(Dollars in thousands)

June 30, 2026

March 31, 2026

June 30, 2025

Construction Types:

Amount

Percent

Amount

Percent

Amount

Percent

Commercial construction – retail

$ 8,447

2.0 %

$ 8,450

2.1 %

$ 8,447

2.4 %

Commercial construction – office

7,164

1.7

9,442

2.3

9,083

2.6

Commercial construction – self storage

25,234

6.1

24,217

6.0

16,553

4.7

Commercial construction – hotel

13,463

3.3

11,968

3.0

3,673

1.0

Multi-family

46,186

11.1

44,343

11.0

23,119

6.5

Custom construction – single family residential and single family manufactured residential

33,944

8.2

33,425

8.3

45,570

12.8

Custom construction – land, lot and acquisition and development

10,821

2.6

10,708

2.7

8,454

2.4

Speculative residential construction – vertical

225,992

54.4

216,204

53.7

200,375

56.5

Speculative residential construction – land, lot and acquisition and development

43,973

10.6

44,034

10.9

39,473

11.1

Total

$ 415,224

100.0 %

$ 402,791

100.0 %

$ 354,747

100.0 %

FS Bancorp Q2 Earnings

July 21, 2026

Page 7

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

(Dollars in

Prior Year

thousands)

For the Three Months Ended

Linked Quarter

Quarter

June 30, 2026

March 31, 2026

June 30, 2025

Amount

Percent

Amount

Percent

Amount

Percent

Change

Purchase

$ 163,100

79.2 %

$ 139,626

67.3 %

$ 170,854

85.7 %

$ 23,474

16.8

$ (7,754 )

(4.5 )%

Refinance

42,741

20.8

67,864

32.7

28,470

14.3

(25,123 )

(37.0 )

14,271

50.1 %

Total

$ 205,841

100.0 %

$ 207,490

100.0 %

$ 199,324

100.0 %

$ (1,649 )

(0.8 )

$ 6,517

3.3 %

(Dollars in thousands)

For the Six Months Ended June 30,

2026

2025

Amount

Percent

Amount

Percent

$ Change

% Change

Purchase

$ 302,726

73.2 %

$ 290,737

84.3 %

$ 11,989

4.1 %

Refinance

110,605

26.8

53,983

15.7

56,622

104.9 %

Total

$ 413,331

100.0 %

$ 344,720

100.0 %

$ 68,611

19.9 %

During the quarter ended June 30, 2026, the Company sold $156.1 million of one-to-four-family loans compared to $154.7 million during the previous quarter and $127.1 million during the same quarter one year ago. Gross margins on home loan sales decreased to 2.98% for the quarter ended June 30, 2026, compared to 3.03% in the previous quarter and decreased from 3.06% 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.

(Dollars in thousands)

Linked

Prior Year

DEPOSITS

June 30, 2026

March 31, 2026

June 30, 2025

Quarter

Transactional deposits:

Amount

Percent

Amount

Percent

Amount

Percent

$ Change

Noninterest-bearing checking

$ 629,799

25.7 %

$ 634,787

24.1 %

$ 643,573

25.2 %

$ (4,988 )

$ (13,774 )

Interest-bearing checking

209,721

8.6

185,793

7.0

181,240

7.1

23,928

28,481

Escrow accounts related to mortgages serviced

(1)

12,057

0.5

18,904

0.7

10,496

0.4

(6,847 )

1,561

Subtotal

851,577

34.8

839,484

31.8

835,309

32.7

12,093

16,268

Savings and money market:

Savings

173,091

7.1

169,192

6.4

159,601

6.3

3,899

13,490

Money market

375,833

15.3

377,685

14.3

350,548

13.7

(1,852 )

25,285

Subtotal

548,924

22.4

546,877

20.7

510,149

20.0

2,047

38,775

Certificates of deposit:

CDs

922,022

37.6

923,801

35.0

896,892

35.1

(1,779 )

25,130

Brokered Deposits

Non-maturity brokered deposits

4,027

0.2

250

—

251

—

3,777

3,776

Maturity brokered deposits

122,332

5.0

327,164

12.5

310,774

12.2

(204,832 )

(188,442)

Subtotal

126,359

5.2

327,414

12.5

311,025

12.2

(201,055 )

(184,666)

Total deposits

$ 2,448,882

100.0 %

$ 2,637,576

100.0 %

$ 2,553,375

100.0 %

$ (188,694 )

$ (104,493 )

Borrowings (2)

$ 324,500

$ 167,305

$ 234,305

$ 157,195

$ 90,195

Stockholders' equity

$ 318,960

$ 313,852

$ 297,203

$ 5,108

$ 21,757

Book value per common share

$ 43.57

$ 42.42

$ 39.55

$ 1.15

$ 4.02

(1)

Primarily noninterest-bearing accounts based on applicable state law.

(2)

Comprised of FHLB advances and Federal Reserve Bank borrowings.

FS Bancorp Q2 Earnings

July 21, 2026

Page 8

Brokered deposits declined from the prior quarter, partially offset by increased borrowings, which offered a slightly lower cost of funds.

In the table above, the linked quarter increase in stockholders’ equity at June 30, 2026, compared to March 31, 2026, was primarily due to net income of $7.9 million. Changes in the fair value of available‑for‑sale securities and interest rate swap cash flow hedges increased accumulated other comprehensive income (“AOCI”) by $2.1 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 share repurchases of $3.6 million 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 June 30, 2026, capital ratios presented for the Bank and the Company were as follows:

At June 30, 2026

Bank

Company

Total risk-based capital (to risk-weighted assets)

14.01%

13.87%

Tier 1 leverage capital (to average assets)

11.43%

10.05%

CET 1 capital (to risk-weighted assets)

12.84%

11.29%

Credit Quality

The following tables summarize changes in the ACL on loans for the periods indicated and the balances of nonperforming and classified loans at the dates indicated.

For the three months ended

Linked

Prior Year

ACL ON LOANS

June 30,

March 31,

June 30,

Quarter

(Dollars in thousands)

2026

2025

$ Change

Beginning ACL balance

$ 32,443

$ 31,937

$ 31,653

$ 506

$ 790

Provision

2,559

2,650

1,715

(91)

844

Charge-offs

Indirect

(2,067)

(2,450 )

(1,556 )

383

(511)

Marine

(7)

(75 )

(43 )

Other

(49)

(95 )

(42 )

(7)

Commercial and speculative construction and development

(2,277)

—

(2,277)

Commercial business

(39)

(230 )

—

191

(39)

Subtotal

(4,439)

(2,850 )

(1,641 )

(1,589)

(2,798)

Recoveries

Indirect

584

585

331

(1)

253

Marine

(33)

(51 )

Other

Commercial business

—

(78)

(70)

Subtotal

602

706

462

(104)

140

Ending ACL balance

$ 31,165

$ 32,443

$ 32,189

$ (1,278 )

$ (1,024 )

FS Bancorp Q2 Earnings

July 21, 2026

Page 9

NONPERFORMING LOANS

Linked

Prior Year

(Dollars in thousands)

June 30,

March 31,

June 30,

Quarter

CRE LOANS

2026

2025

$ Change

CRE

$ 614

$ 1,081

$ 2,046

$ (467)

$ (1,432)

Commercial and speculative construction and development

7,164

9,442

9,083

(2,278)

(1,919)

Total CRE loans

7,778

10,523

11,129

(2,745)

(3,351)

RESIDENTIAL REAL ESTATE LOANS

One-to-four-family (excludes HFS)

1,973

1,983

1,809

(10)

164

Home equity

472

475

251

(3)

221

Total residential real estate loans

2,445

2,458

2,060

(13)

385

CONSUMER LOANS

Indirect home improvement

4,799

4,622

3,365

177

1,434

Marine

606

466

567

140

Other consumer

(15)

Total consumer loans

5,424

5,122

3,945

302

1,479

COMMERCIAL BUSINESS LOANS

C&I

—

165

1,862

(165)

(1,862)

Total nonperforming loans

$ 15,647

$ 18,268

$ 18,996

$ (2,621)

$ (3,349)

The decrease in nonperforming loans at June 30, 2026, compared to June 30, 2025, was primarily attributable to a $2.3 million charge-off on a commercial construction loan and a single payoff within the commercial real estate portfolio. The 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.

CLASSIFIED LOANS

Linked

Prior Year

(Dollars in thousands)

June 30,

March 31,

June 30,

Quarter

CRE LOANS

2026

2025

$ Change

CRE

$ 4,236

$ 4,122

$ 2,046

$ 114

$ 2,190

Commercial and speculative construction and development

7,164

9,442

9,083

(2,278)

(1,919)

Total CRE loans

11,400

13,564

11,129

(2,164)

271

RESIDENTIAL REAL ESTATE LOANS

One-to-four-family (excludes HFS)

3,794

3,814

4,383

(20)

(589)

Home equity

472

475

251

(3)

221

Total residential real estate loans

4,266

4,289

4,634

(23)

(368)

CONSUMER LOANS

Indirect home improvement

4,799

4,622

3,365

177

1,434

Marine

606

466

567

140

Other consumer

(15)

Total consumer loans

5,424

5,122

3,945

302

1,479

COMMERCIAL BUSINESS LOANS

C&I

3,889

3,168

5,220

721

(1,331)

Total classified loans

$ 24,979

$ 26,143

$ 24,928

$ (1,164)

$ 51

FS Bancorp Q2 Earnings

July 21, 2026

Page 10

Operating Results

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 $536,000 increase in net 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.

For the six months ended June 30, 2026, net interest income increased $2.1 million to $65.2 million, from $63.1 million for the six months ended June 30, 2025, with a $3.5 million increase in total interest income, partially offset by a $1.4 million increase in interest expense. The $3.5 million increase in total interest income was primarily due to an increase of $3.9 million in interest income on loans receivable, including fees, resulting from net loan growth. The $1.4 million increase in total interest expense was primarily due to a $1.0 million increase in interest expense on deposits, reflecting higher average deposit balances and funding costs during the period, and a $629,000 increase in interest expense on the subordinated note following its repricing to a higher interest rate in 2026, partially offset by a $267,000 decrease in interest expense on borrowings.

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 and decreased one basis point from 4.31% to 4.30% for the six months ended June 30, 2026, compared to the same period in 2025. Net interest margin remained relatively stable during both periods as modest increases in earning asset yields were largely offset by corresponding increases in funding costs.

The average total cost of funds, including noninterest-bearing checking, increased two basis points to 2.41% for the three months ended June 30, 2026, from 2.39% for the three months ended June 30, 2025. This increase primarily reflected the repricing of the subordinated note together with changes in the Company's funding mix during the period, partially offset by lower rates on certificates of deposit as those deposits repriced. The average cost of funds increased two basis points to 2.40% for the six months ended June 30, 2026, from 2.38% for the six months ended June 30, 2025, primarily for the same reason noted above.

For the three and six months ended June 30, 2026, the provision for credit losses on loans was $2.6 million and $5.2 million, compared to $2.0 million and $3.6 million for the three and six months ended June 30, 2025. The year-to-date provision for credit losses on loans reflects a $3.1 million increase in net charge-off activity, primarily due to a $2.3 million partial charge-off on a single commercial construction loan as well as increased charge-offs in the consumer loan portfolio. The commercial construction loan had been partially reserved for in prior periods.

During the three months ended June 30, 2026, total net charge-offs increased $2.7 million to $3.8 million, compared to $1.2 million for the three months ended June 30, 2025. The increase was primarily attributable to an additional charge-off on a 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. Following the additional charge-off, management believes the remaining carrying value appropriately reflects current collateral values. 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.

FS Bancorp Q2 Earnings

July 21, 2026

Page 11

During the six months ended June 30, 2026, net charge-offs increased $3.1 million to $6.0 million, compared to $2.9 million for the six months ended June 30, 2025. The increase was primarily due to higher net charge-offs within the indirect home improvement portfolio and the additional charge-off on the commercial construction loan relationship discussed above.

Total 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 reflected higher gain on sale of loans of $609,000 and a $404,000 increase in other noninterest income, partially offset by a $42,000 decrease in service charges and fee income.

Total noninterest income increased $1.3 million to $11.6 million for the six months ended June 30, 2026, from $10.3 million for the six months ended June 30, 2025. This increase was the result of a $1.3 million increase in gain on sale of loans and a $158,000 increase in other noninterest income, partially offset by a $213,000 decrease in service charges and fee income.

Total 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 focal review process, as well as higher benefit costs. In addition, the Company recorded $417,000 of acquisition-related costs associated with the previously announced merger with Pacific West Bancorp (“Pacific West”), which remains subject to customary closing conditions, including shareholder and regulatory approvals. These increases were partially offset by a $1.1 million reduction in operations expense, primarily due to an approximately $800,000 decrease in the mortgage repurchase reserve. The reduction reflects the continued seasoning of loans originated during the high-volume production years of 2020 and 2021, which reduced expected future repurchase losses.

Total noninterest expense increased $1.1 million to $51.6 million for the six months ended June 30, 2026, from $50.6 million for the six months ended June 30, 2025. This increase included a $1.8 million increase in salaries and benefits, a $712,000 increase in acquisition costs, and a $515,000 increase in loan costs, partially offset by a $1.2 million decrease in operations, primarily due to the same reason mentioned above.

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.

FS Bancorp Q2 Earnings

July 21, 2026

Page 12

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 in which 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 the Company's website at www.fsbwa.com and on the SEC's website at www.sec.gov.

Further, statements about the potential effects of the Company's proposed merger with 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 factor and future developments which are uncertain, unpredictable, and in many cases, beyond the Company's control, including the following: the expected cost savings, synergies and other financial benefits from the merger might not be realized within the expected time frames or at all; governmental approval of the merger may not be obtained, or adverse regulatory conditions may be imposed in connection with governmental approvals of the merger; conditions to the closing of the merger may not be satisfied; the shareholders of Pacific West may fail to approve the consummation of the merger; the integration of the combined company, including the retention of key personnel, might not proceed as planned; and the combined company might not perform as well as expected.

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.

FS Bancorp Q2 Earnings

July 21, 2026

Page 13

FS BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands) (Unaudited)

Linked

Prior Year

June 30,

March 31,

June 30,

Quarter

ASSETS

2026

2025

% Change

Cash and due from banks

$ 12,835

$ 12,424

$ 15,168

(15 )

Interest-bearing deposits at other financial institutions

16,875

26,278

18,027

(36 )

(6 )

Total cash and cash equivalents

29,710

38,702

33,195

(23 )

(10 )

Certificates of deposit at other financial institutions

—

248

—

Securities available-for-sale, at fair value

269,460

271,007

302,692

(1 )

(11 )

Securities held-to-maturity, net

34,845

33,267

31,562

Loans held for sale, at fair value

30,548

56,275

53,630

(46 )

(43 )

Loans receivable, net

2,628,992

2,624,091

2,582,272

—

Accrued interest receivable

14,263

15,333

14,270

(7 )

—

Premises and equipment, net

43,455

43,612

30,098

—

Long-lived assets held for sale

3,258

—

Operating lease right-of-use

6,655

5,472

7,969

(16 )

Federal Home Loan Bank stock, at cost

14,420

8,701

11,579

Deferred tax asset, net

6,441

7,175

7,782

(10 )

(17 )

Bank owned life insurance (“BOLI”), net

36,771

36,508

38,262

(4 )

MSRs, held at the lower of cost or fair value

8,912

8,676

8,652

Goodwill

3,592

—

Core deposit intangible, net

9,052

9,774

12,071

(7 )

(25 )

Other assets

38,706

38,072

38,139

TOTAL ASSETS

$ 3,179,080

$ 3,203,515

$ 3,176,013

(1 )

—

LIABILITIES

Deposits:

Noninterest-bearing accounts

$ 641,856

$ 653,691

$ 654,069

(2 )

Interest-bearing accounts

1,807,026

1,983,885

1,899,306

(9 )

(5 )

Total deposits

2,448,882

2,637,576

2,553,375

(7 )

(4 )

Borrowings

324,500

167,305

234,305

Subordinated notes:

Principal amount

50,000

—

Unamortized debt issuance costs

(306)

(322 )

(373 )

(5 )

(18 )

Total subordinated notes less unamortized debt issuance costs

49,694

49,678

49,627

—

Operating lease liability

6,753

5,570

8,138

(17 )

Other liabilities

30,291

29,534

33,365

(9 )

Total liabilities

2,860,120

2,889,663

2,878,810

(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; 7,423,772 shares issued and outstanding at June 30, 2026, 7,501,542 at March 31, 2026, and 7,618,543 at June 30, 2025

(1 )

(3 )

Additional paid-in capital

40,886

43,668

48,418

(6 )

(16 )

Retained earnings

291,635

285,854

268,509

Accumulated other comprehensive loss, net of tax

(13,635)

(15,745 )

(19,800 )

(13 )

(31 )

Total stockholders’ equity

318,960

313,852

297,203

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

$ 3,179,080

$ 3,203,515

$ 3,176,013

(1 )

—

FS Bancorp Q2 Earnings

July 21, 2026

Page 14

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

INTEREST INCOME

2026

2025

% Change

Loans receivable, including fees

$ 46,202

$ 46,012

$ 45,038

—

Interest and dividends on investment securities, cash and cash equivalents, and interest-bearing deposits at other financial institutions

3,460

3,321

3,665

(6 )

Total interest and dividend income

49,662

49,333

48,703

INTEREST EXPENSE

Deposits

13,908

14,713

14,520

(5 )

(4 )

Borrowings

2,197

1,384

1,585

Subordinated notes

909

691

486

Total interest expense

17,014

16,788

16,591

NET INTEREST INCOME

32,648

32,545

32,112

—

PROVISION FOR CREDIT LOSSES

2,641

2,529

2,021

NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES

30,007

30,016

30,091

—

NONINTEREST INCOME

Service charges and fee income

2,281

2,073

2,323

(2 )

Gain on sale of loans

2,581

2,384

1,972

Earnings on cash surrender value of BOLI

263

259

254

Other noninterest income

1,025

685

621

Total noninterest income

6,150

5,401

5,170

NONINTEREST EXPENSE

Salaries and benefits

15,570

14,854

14,088

Operations

2,699

3,380

3,824

(20 )

(29 )

Occupancy

1,938

1,876

1,780

Data processing

1,826

1,594

2,137

(15 )

Loan costs

900

882

719

Professional and board fees

1,060

1,014

1,155

(8 )

FDIC insurance

531

627

554

(15)

(4 )

Marketing and advertising

445

309

398

Acquisition costs

417

295

—

100

Amortization of core deposit intangible

722

744

809

(3 )

(11 )

(Recovery) impairment of servicing rights

(4)

(55 )

(93 )

(111 )

Total noninterest expense

26,104

25,520

25,502

INCOME BEFORE PROVISION FOR INCOME TAXES

10,053

9,897

9,759

PROVISION FOR INCOME TAXES

2,117

2,067

2,031

NET INCOME

$ 7,936

$ 7,830

$ 7,728

Basic earnings per share

$ 1.06

$ 1.04

$ 1.00

Diluted earnings per share

$ 1.04

$ 1.02

$ 0.99

FS Bancorp Q2 Earnings

July 21, 2026

Page 15

FS BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF INCOME

(Dollars in thousands, except per share amounts) (Unaudited)

Year

Six Months Ended June 30,

Over Year

INTEREST INCOME

2026

2025

% Change

Loans receivable, including fees

$ 92,214

$ 88,340

Interest and dividends on investment securities, cash and cash equivalents, and interest-bearing deposits at other financial institutions

6,781

7,150

(5 )

Total interest and dividend income

98,995

95,490

INTEREST EXPENSE

Deposits

28,621

27,578

Borrowings

3,581

3,848

(7 )

Subordinated note

1,600

971

Total interest expense

33,802

32,397

NET INTEREST INCOME

65,193

63,093

PROVISION FOR CREDIT LOSSES

5,170

3,613

NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES

60,023

59,480

NONINTEREST INCOME

Service charges and fee income

4,354

4,567

(5 )

Gain on sale of loans

4,965

3,672

Earnings on cash surrender value of BOLI

522

505

Other noninterest income

1,710

1,552

Total noninterest income

11,551

10,296

NONINTEREST EXPENSE

Salaries and benefits

30,424

28,621

Operations

6,079

7,269

(16 )

Occupancy

3,814

3,496

Data processing

3,420

4,182

(18 )

Loan costs

1,782

1,267

Professional and board fees

2,074

2,342

(11 )

FDIC insurance

1,158

1,092

Marketing and advertising

754

619

Acquisition costs

712

—

Amortization of core deposit intangible

1,466

1,639

(11 )

(Recovery) impairment of MSRs

(59)

(303 )

Total noninterest expense

51,624

50,556

INCOME BEFORE PROVISION FOR INCOME TAXES

19,950

19,220

PROVISION FOR INCOME TAXES

4,184

3,471

NET INCOME

$ 15,766

$ 15,749

—

Basic earnings per share

$ 2.11

$ 2.02

Diluted earnings per share

$ 2.07

$ 1.99

FS Bancorp Q2 Earnings

July 21, 2026

Page 16

KEY FINANCIAL RATIOS AND DATA (Unaudited)

For the Three Months Ended

June 30,

March 31,

June 30,

PERFORMANCE RATIOS:

2026

2025

Return on assets (ratio of net income to average total assets)

(1)

1.00

0.99

Return on equity (ratio of net income to average total stockholders' equity) (1)

9.94

10.03

10.29

Yield on average interest-earning assets

(1)

6.54

6.53

6.52

Average total cost of funds

(1)

2.41

2.39

Interest rate spread information – average during period

4.13

4.14

4.13

Net interest margin

(1)

4.30

4.31

4.30

Operating expense to average total assets

(1)

3.29

3.23

3.28

Average interest-earning assets to average interest-bearing liabilities

(1)

139.32

139.86

140.98

Efficiency ratio

(2)

67.28

67.25

68.40

Common equity ratio (ratio of stockholders' equity to total assets)

10.03

9.80

9.36

Tangible common equity ratio

(3)

9.67

9.42

8.91

For the Six Months Ended

June 30,

PERFORMANCE RATIOS:

2026

2025

Return on assets (ratio of net income to average total assets)

1.00 %

1.03 %

Return on equity (ratio of net income to average total stockholders' equity)

9.98

10.55

Yield on average interest-earning assets

6.54

6.52

Average total cost of funds

2.40

2.38

Interest rate spread information – average during period

4.14

Net interest margin

4.30

4.31

Operating expense to average total assets

3.26

3.32

Average interest-earning assets to average interest-bearing liabilities

139.59

141.93

Efficiency ratio

(2)

67.27

68.89

June 30,

March 31,

June 30,

ASSET QUALITY RATIOS AND DATA:

2026

2025

Nonperforming assets to total assets at end of period

(4)

0.49

0.57

0.60

Nonperforming loans to total gross loans (excluding loans HFS)

(5)

0.59

0.69

0.73

ACL – loans to nonperforming loans (5)

199.15

177.67

168.89

ACL – loans to total gross loans (excluding loans HFS)

1.17

1.22

1.23

FS Bancorp Q2 Earnings

July 21, 2026

Page 17

At or For the Three Months Ended

June 30,

March 31,

June 30,

PER COMMON SHARE DATA:

2026

2025

Basic earnings per share

$ 1.06

$ 1.04

$ 1.00

Diluted earnings per share

$ 1.04

$ 1.02

$ 0.99

Weighted average basic shares outstanding

7,340,326

7,402,375

7,580,576

Weighted average diluted shares outstanding

7,483,199

7,531,291

7,698,173

Common shares outstanding at end of period

7,320,801

(6)

7,398,571

(7)

7,515,480

(8)

Book value per share using common shares outstanding

$ 43.57

$ 42.42

$ 39.55

Tangible book value per share using common shares outstanding (9)

$ 41.84

$ 40.61

$ 37.46

(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 7,423,772 at June 30, 2026, less 102,971 unvested restricted stock shares.

(7)

Common shares were calculated using shares outstanding of 7,501,542 at March 31, 2026, less 102,971 unvested restricted stock shares.

(8)

Common shares were calculated using shares outstanding of 7,618,543 at June 30, 2025, less 103,063 unvested restricted stock shares.

(9)

Tangible book value per share using outstanding common shares excludes intangible assets. This ratio represents a non-GAAP financial measure. See “Non-GAAP Financial Measures” below.

(Dollars in thousands)

For the Three Months Ended June 30,

For the Six Months Ended June 30,

QTR Over QTR

YTD Over YTD

Average Balances

2026

2025

2026

2025

$ Change

Assets

Loans receivable, net

(1)

$ 2,695,907

$ 2,613,121

$ 2,698,436

$ 2,586,761

$ 82,786

$ 111,675

Investment securities - taxable

245,713

275,951

249,955

258,786

(30,238 )

(8,831 )

Investment securities - nontaxable

77,460

78,155

77,800

77,900

(695 )

(100 )

Interest-bearing deposits and certificates of deposit at other financial institutions

13,806

19,502

18,418

17,840

(5,696 )

578

FHLB stock, at cost

11,323

8,775

9,699

10,353

2,548

(654 )

Total interest-earning assets

3,044,209

2,995,504

3,054,308

2,951,640

48,705

102,668

Noninterest-earning assets

136,315

120,856

136,576

123,027

15,459

13,549

Total assets

$ 3,180,524

$ 3,116,360

$ 3,190,884

$ 3,074,667

$ 64,164

$ 116,217

Liabilities

Interest-bearing deposit accounts

$ 1,911,053

$ 1,924,586

$ 1,959,834

$ 1,845,534

$ (13,533 )

$ 114,300

Borrowings

224,176

150,492

178,467

184,377

73,684

(5,910 )

Subordinated notes

49,683

49,617

49,675

49,608

Total interest-bearing liabilities

2,184,912

2,124,695

2,187,976

2,079,519

60,217

108,457

Noninterest-bearing deposit accounts

644,215

657,820

651,440

660,805

(13,605 )

(9,365 )

Other noninterest-bearing liabilities

31,061

32,700

32,923

33,218

(1,639 )

(295 )

Total liabilities

$ 2,860,188

$ 2,815,215

$ 2,872,339

$ 2,773,542

$ 44,973

$ 98,797

(1) Includes loans HFS.

FS Bancorp Q2 Earnings

July 21, 2026

Page 18

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.

(Dollars in thousands, except share and per share amounts)

June 30,

March 31,

June 30,

Tangible Book Value Per Share:

2026

2025

Stockholders' equity (GAAP)

318,960

313,852

297,203

Less: goodwill and core deposit intangible, net

(12,644)

(13,366)

(15,663)

Tangible common stockholders' equity (non-GAAP)

306,316

300,486

281,540

Common shares outstanding at end of period

7,320,801

(1)

7,398,571

(2)

7,515,480

(3)

Book value per share (GAAP)

43.57

42.42

39.55

Tangible book value per share (non-GAAP)

41.84

40.61

37.46

Tangible Common Equity Ratio:

Total assets (GAAP)

3,179,080

3,203,515

3,176,013

Less: goodwill and core deposit intangible assets

(12,644)

(13,366)

(15,663)

Tangible assets (non-GAAP)

3,166,436

3,190,149

3,160,350

Common equity ratio (GAAP)

10.03

9.80

9.36

Tangible common equity ratio (non-GAAP)

9.67

9.42

8.91

_________________________

(1)

Common shares were calculated using shares outstanding of 7,423,772 at June 30, 2026, less 102,971 unvested restricted stock shares.

(2)

Common shares were calculated using shares outstanding of 7,501,542 at March 31, 2026, less 102,971 unvested restricted stock shares.

(3)

Common shares were calculated using shares outstanding of 7,618,543 at June 30, 2025, less 103,063 unvested restricted stock shares.

FS Bancorp Q2 Earnings

July 21, 2026

Page 19

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. No offering of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended.

In connection with the proposed merger, a registration statement on Form S-4 has been filed with the SEC which includes a proxy statement of Pacific West and a prospectus of the Company, which will be distributed to the shareholders of Pacific West in connection with the vote of Pacific West's shareholders on the merger of Pacific West 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, INCLUDING THE PROXY STATEMENT/PROSPECTUS CONTAINED THEREIN, AS WELL AS ANY AMENDMENTS THERETO, AND THE DEFINITIVE PROXY STATEMENT/PROSPECTUS, BECAUSE THESE DOCUMENTS CONTAIN IMPORTANT INFORMATION REGARDING THE PROPOSED MERGER AND RELATED MATTERS.

Investors and security holders may obtain free copies of the registration statement on Form S-4, including the proxy statement/prospectus, contained therein, as well as any amendments thereto, and the definitive proxy statement/prospectus, and other documents filed with the SEC by the Company through the website maintained by the SEC at www.sec.gov. These documents may also 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, copies of these documents may 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 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 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’s participants and additional information regarding the interests of these participants is 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

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