Form 8-K

8-K — FS Bancorp, Inc.

Accession: 0001437749-26-033128

Filed: 2026-10-21

Period: 2026-10-21

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 — fsbw20260812_8k.htm (Primary)

EX-99.1 — EXHIBIT 99.1 (ex_1003896.htm)

GRAPHIC (logo.jpg)

XML — IDEA: XBRL DOCUMENT (R1.htm)

8-K — FORM 8-K

8-K (Primary)

Filename: fsbw20260812_8k.htm · Sequence: 1

fsbw20260812_8k.htm

false

0001530249

2026-10-21

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): October 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 October 21, 2026, FS Bancorp, Inc. (the Company), the parent corporation of 1st Security Bank of Washington, issued its earnings release for the quarter ended September 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 October 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 November 20, 2026, to stockholders of record as of the close of business on November 6, 2026.

Item 9.01 Exhibits

(d)

Exhibits

99.1

Press release of FS Bancorp, Inc. dated October 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: October 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_1003896.htm · Sequence: 2

ex_1003896.htm

Exhibit 99.1

FS Bancorp, Inc. Reports Third Quarter Net Income of $4.9 Million or $0.63 Per Diluted Share and Declares 55th Consecutive Quarterly Cash Dividend

MOUNTLAKE TERRACE, WA – October 21, 2026 – FS Bancorp, Inc. (NASDAQ: FSBW) (the “Company”), the holding company for 1st Security Bank of Washington (the “Bank”) today reported 2026 third quarter net income of $4.9 million, or $0.63 per diluted share, compared to $7.9 million, or $1.04 per diluted share, for the prior quarter, and $9.2 million, or $1.18 per diluted share, for the comparable quarter one year ago. For the nine months ended September 30, 2026, net income was $20.7 million, or $2.62 per diluted share, compared to net income of $24.9 million, or $3.18 per diluted share, for the comparable nine-month period in 2025.

“We are excited to work with the Pacific West Bank team members to further expand the deposit and loan opportunities in the greater Portland, Oregon and Vancouver, Washington markets, and we appreciate all of the hard work that went into the successful systems integration, effective October 5, 2026, through the collaboration of our newly combined teams,” stated Matthew Mullet, President and CEO of FS Bancorp, Inc. “We are also pleased to announce that our Board of Directors has approved our 55th 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 November 20, 2026, to shareholders of record as of November 6, 2026,” concluded Mullet.

Recent Events

At the close of business on August 19, 2026, the Company completed its acquisition of Pacific West Bancorp (“Pacific West”) and its wholly-owned subsidiary, Pacific West Bank. Pacific West shareholders received 430,149 shares of FS Bancorp common stock and $16.9 million in cash, for a total consideration of approximately $35.3 million based on the closing price of FS Bancorp common stock on the acquisition date.

The acquisition was accounted for using the acquisition method of accounting. Accordingly, the purchase price was allocated to the assets acquired, including identifiable intangible assets, and the liabilities assumed, based on their estimated fair values as of the acquisition date. These fair values represent management's best estimates based on information available and facts and circumstances in existence on the acquisition date and are subject to adjustment during a measurement period not to exceed one year from the acquisition date.

The Company acquired assets with a fair value of $476.5 million, including loans of $256.5 million and a core deposit intangible of $5.3 million, and assumed liabilities of $439.5 million, including deposits of $435.6 million. In accordance with Accounting Standards Update (“ASU”) 2025-08, which the Company early adopted effective January 1, 2026, the allowance for credit losses on acquired loans of $3.9 million was established at the acquisition date through a gross-up of the loans' amortized cost rather than through the provision for credit losses. Because the fair value of net assets acquired exceeded the consideration paid, the Company recognized a preliminary bargain purchase gain of $1.7 million in noninterest income, which is not taxable. The Company incurred $2.5 million in merger-related expenses during the quarter.

2026 Third Quarter Highlights

●

Net income totaled $4.9 million for the third quarter of 2026, compared to $7.9 million for the previous quarter, and $9.2 million for the comparable quarter one year ago;

●

Total deposits increased $418.3 million, or 17.1%, to $2.87 billion at September 30, 2026, compared to $2.45 billion at June 30, 2026, primarily reflecting the Pacific West Bancorp Acquisition (“Pacific West Acquisition”) which had $442.8 million in deposits at September 30, 2026. Transactional deposits increased $377.6 million during the quarter, of which $351.6 million was attributable to the Pacific West Acquisition. Compared to September 30, 2025, total deposits increased $180.7 million, or 6.7%;

FS Bancorp Q3 Earnings

October 21, 2026

Page 2

●

Loans receivable, net increased $379.1 million to $3.01 billion at September 30, 2026, from $2.63 billion at June 30, 2026, and increased $408.5 million from $2.60 billion at September 30, 2025. The increases from both prior periods reflected the Pacific West Acquisition, which included $252.7 million in loans that remained outstanding at September 30, 2026, and $131.7 million of loan growth during the third quarter;

●

The Commercial and Consumer Banking segment reported net income of $5.7 million for the third quarter of 2026, compared to $6.8 million for the prior quarter and $8.4 million for the third quarter of 2025. The Home Lending segment reported a net loss of $806,000 for the third quarter of 2026 due to rising interest rates, compared to net income of $1.1 million for the prior quarter, and $775,000 for the third quarter of 2025;

●

Repurchased 44,664 shares of the Company's common stock in the open market for $1.9 million in the third quarter of 2026, at an average price of $43.41 per share;

●

Book value per share decreased $0.52, or 1.2%, to $43.05 at September 30, 2026, compared to $43.57 at June 30, 2026, and increased $2.62, or 6.5%, from $40.43 at September 30, 2025. Tangible book value per share (non-GAAP financial measure) decreased $1.00 to $40.84 at September 30, 2026, compared to $41.84 at June 30, 2026, and increased $2.41 from $38.43 at September 30, 2025. See, “Non-GAAP Financial Measures;”

●

Regulatory capital ratios at the Bank were 12.6% for total risk-based capital and 11.2% for Tier 1 leverage capital at September 30, 2026, compared to 14.0% for total risk-based capital and 11.4% for Tier 1 leverage capital at June 30, 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 nine months ended September 30, 2026 and 2025 (dollars in thousands):

At or For the Three Months Ended September 30, 2026

Condensed income statement:

Commercial and Consumer Banking

Home Lending

Total

Net interest income

(1)

$ 31,888

$ 3,798

$ 35,686

Provision for credit losses

(2,855)

(607)

(3,462)

Noninterest income

(2)

4,776

1,400

6,176

Noninterest expense

(3)

(26,703)

(5,611)

(32,314)

Income before provision for income taxes

7,106

(1,020)

6,086

(Provision) benefit for income taxes

(1,374)

214

(1,160)

Net income (loss)

$ 5,732

$ (806)

$ 4,926

Total average assets for period ended

$ 2,685,235

$ 718,565

$ 3,403,800

Full-time employees ("FTEs")

513

113

626

FS Bancorp Q3 Earnings

October 21, 2026

Page 3

At or For the Three Months Ended September 30, 2025

Condensed income statement:

Commercial and Consumer Banking

Home Lending

Total

Net interest income (1)

$ 30,810

$ 2,880

$ 33,690

Provision for credit losses

(2,150 )

(159 )

(2,309 )

Noninterest income (2)

2,079

3,515

5,594

Noninterest expense (3)

(20,134 )

(5,254 )

(25,388 )

Income before provision for income taxes

10,605

982

11,587

Provision for income taxes

(2,203 )

(207 )

(2,410 )

Net income

$ 8,402

$ 775

$ 9,177

Total average assets for period ended

$ 2,523,410

$ 662,047

$ 3,185,457

FTEs

460

115

575

At or For the Nine Months Ended September 30, 2026

Condensed income statement:

Commercial and Consumer Banking

Home Lending

Total

Net interest income

(1)

$ 91,102

$ 9,777

$ 100,879

Provision for credit losses

(7,697)

(935)

(8,632)

Noninterest income

(2)

9,980

7,747

17,727

Noninterest expense

(3)

(68,978)

(14,960)

(83,938)

Income before provision for income taxes

24,407

1,629

26,036

Provision for income taxes

(5,136)

(208)

(5,344)

Net income

$ 19,271

$ 1,421

$ 20,692

Total average assets for period ended

$ 2,580,513

$ 682,123

$ 3,262,636

FTEs

513

113

626

At or For the Nine Months Ended September 30, 2025

Condensed income statement:

Commercial and Consumer Banking

Home Lending

Total

Net interest income

(1)

$ 88,397

$ 8,387

$ 96,784

Provision for credit losses

(5,320 )

(602 )

(5,922 )

Noninterest income

(2)

6,621

9,269

15,890

Noninterest expense

(3)

(60,624 )

(15,321 )

(75,945 )

Income before provision for income taxes

29,074

1,733

30,807

Provision for income taxes

(5,517 )

(364 )

(5,881 )

Net income

$ 23,557

$ 1,369

$ 24,926

Total average assets for period ended

$ 2,468,543

$ 643,460

$ 3,112,003

FTEs

460

115

575

________________________

(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 nine months ended September 30, 2026, the Company recorded a net decrease of $742,000 and $799,000 in fair value, compared to a net increase of $203,000 and $469,000 in fair value for the three and nine months ended September 30, 2025, respectively. As of September 30, 2026 and 2025, there were $13.9 million and $12.8 million, respectively, 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 nine months ended September 30, 2026 and 2025, the Home Lending segment included allocated overhead expenses of $1.9 million and $5.5 million, compared to $1.8 million and $5.5 million, respectively.

FS Bancorp Q3 Earnings

October 21, 2026

Page 4

Asset Summary

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

ASSETS

Linked Quarter

Prior Year

(Dollars in thousands)

September 30,

June 30,

September 30,

Change

Quarter Change

2026

2025

Cash and due from banks

29,022

12,835

12,391

16,187

126

16,631

134

Interest-bearing deposits at other financial institutions

14,925

16,875

48,889

(1,950

)

(12

)

(33,964

)

(69

)

Total cash and cash equivalents

43,947

29,710

61,280

14,237

(17,333

)

(28

)

Securities available-for-sale, at fair value

342,185

269,460

311,695

72,725

30,490

Securities held-to-maturity, net

37,734

34,845

31,386

2,889

6,348

Loans held for sale, at fair value

22,820

30,548

38,579

(7,728

)

(25

)

(15,759

)

(41

)

Loans receivable, net

3,008,129

2,628,992

2,599,601

379,137

408,528

Accrued interest receivable

16,901

14,263

15,122

2,638

1,779

Premises and equipment, net

49,148

43,455

32,444

5,693

16,704

Long-lived assets held for sale

3,258

—

3,258

Operating lease right-of-use

7,799

6,655

6,832

1,144

967

Federal Home Loan Bank stock, at cost

13,073

14,420

7,975

(1,347

)

5,098

Deferred tax asset, net

9,469

6,441

6,767

3,028

2,702

Bank owned life insurance (“BOLI”), net

41,857

36,771

38,531

5,086

3,326

MSRs, held at the lower of cost or fair value

8,887

8,912

8,506

(25

)

—

381

Goodwill

3,592

—

Core deposit intangible, net

13,525

9,052

11,284

4,473

2,241

Other assets

54,327

38,706

35,231

15,621

19,096

TOTAL ASSETS

3,676,651

3,179,080

3,208,825

497,571

467,826

FS Bancorp Q3 Earnings

October 21, 2026

Page 5

The following table summarizes the composition of the Company's loan portfolio by loan category as of September 30, 2026, compared to June 30, 2026 and September 30, 2025, including the dollar changes from the linked quarter and prior year period.

Prior

LOAN PORTFOLIO

Linked

Year

(Dollars in thousands)

Quarter

COMMERCIAL REAL ESTATE

September 30, 2026

June 30, 2026

September 30, 2025

("CRE") LOANS

Amount

Percent

Amount

Percent

Amount

Percent

Change

CRE owner occupied

$ 224,764

7.3 %

$ 184,136

6.9 %

$ 170,714

6.5 %

$ 40,628

$ 54,050

CRE non-owner occupied

298,385

9.8

188,258

7.1

172,713

6.6

110,127

125,672

Commercial and speculative construction and development

393,005

12.9

370,459

13.9

326,684

12.4

22,546

66,321

Multi-family

297,955

9.8

262,137

9.9

262,578

10.0

35,818

35,377

Total CRE loans

1,214,109

39.8

1,004,990

37.8

932,689

35.5

209,119

281,420

RESIDENTIAL REAL ESTATE LOANS

One-to-four-family (excludes HFS)

758,537

24.9

660,518

24.8

629,712

23.9

98,019

128,825

Home equity

93,020

3.1

88,214

3.3

86,895

3.3

4,806

6,125

Residential custom construction

56,677

1.9

44,765

1.7

53,296

2.0

11,912

3,381

Total residential real estate loans

908,234

29.9

793,497

29.8

769,903

29.2

114,737

138,331

CONSUMER LOANS

Indirect home improvement

493,505

16.2

502,151

18.9

527,597

20.1

(8,646 )

(34,092 )

Marine

68,838

2.3

66,941

2.5

70,220

2.7

1,897

(1,382 )

Other consumer

21,714

0.7

4,111

0.1

2,962

0.1

17,603

18,752

Total consumer loans

584,057

19.2

573,203

21.5

600,779

22.9

10,854

(16,722 )

COMMERCIAL BUSINESS LOANS

Commercial and industrial (“C&I”)

322,572

10.6

281,181

10.6

311,173

11.8

41,391

11,399

Warehouse lending

15,620

0.5

7,286

0.3

15,113

0.6

8,334

507

Total commercial business loans

338,192

11.1

288,467

10.9

326,286

12.4

49,725

11,906

Total loans receivable, gross

3,044,592

100.0 %

2,660,157

100.0 %

2,629,657

100.0 %

384,435

414,935

Allowance for credit losses ("ACL") on loans

(36,463)

(31,165 )

(30,056 )

(5,298)

(6,407)

Total loans receivable, net

$ 3,008,129

$ 2,628,992

$ 2,599,601

$ 379,137

$ 408,528

Loan growth during the three months ended September 30, 2026, reflected the Pacific West Acquisition, which included $252.7 million in loans that remained outstanding at September 30, 2026, as well as $131.5 million of loan growth excluding the acquired loans. Excluding the impact of the acquisition, loan growth was primarily concentrated in non-owner occupied commercial real estate and one-to-four family residential loans, which increased $29.8 million and $76.6 million, respectively, from June 30, 2026. Growth in one-to-four family residential loans included the purchase of $36.7 million of adjustable-rate residential mortgage loans.

FS Bancorp Q3 Earnings

October 21, 2026

Page 6

The following table presents information on CRE loans scheduled to mature or reprice within the next two years, excluding loans that reprice automatically in connection with changes in the prime rate.

Current

(Dollars in

Weighted

thousands)

For the Quarter Ended

Average

CRE by type:

Dec 31, 2026

Mar 31, 2027

Jun 30, 2027

Sep 30, 2027

Dec 31, 2027

Mar 31, 2028

Jun 30, 2028

Sep 30, 2028

Total

Rate

Apartment

54,457

10,183

5,598

7,892

14,007

16,719

382

3,874

113,112

5.74

Education/Worship

—

2,345

—

5,822

8,167

5.82

Industrial

10,122

6,038

3,608

6,277

5,290

3,155

7,261

7,588

49,339

5.33

Mixed use

768

2,369

—

413

3,192

442

—

406

7,590

5.77

Office

21,251

3,499

4,282

8,088

3,585

300

3,924

1,102

46,031

5.41

Other

2,681

269

1,713

666

—

853

8,468

14,674

6.11

Retail

3,272

3,737

5,753

7,326

—

432

—

20,534

4.73

Senior housing and assisted living

—

1,327

—

3,002

—

4,329

6.83

Total

92,551

26,095

22,281

33,007

26,098

23,632

12,852

27,260

263,776

5.57

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

(Dollars in thousands)

CRE by Type:

September 30, 2026

June 30, 2026

September 30, 2025

CRE non-owner occupied:

Office

$63,682

$43,705

$42,537

Retail

56,375

42,042

36,827

Hospitality/restaurant

51,126

24,499

25,798

Industrial

44,576

20,824

14,352

Mixed use

38,154

18,489

18,663

Self-storage

21,089

18,767

19,001

Senior housing/assisted living

10,818

6,882

7,390

Other

10,220

9,189

3,632

Education/worship

2,345

2,359

2,441

Land

—

1,502

2,072

Total CRE non-owner occupied

298,385

188,258

172,713

CRE owner occupied:

Industrial

93,186

79,137

77,059

Office

44,588

31,862

31,981

Retail

30,272

27,433

17,399

Hospitality/restaurant

10,851

7,622

7,675

Education/worship

10,727

3,367

5,516

Other

10,654

10,539

10,521

Mixed use

9,720

9,239

4,622

Automobile related

6,697

6,745

7,164

Car wash

4,359

4,376

4,430

Agriculture

3,710

3,816

4,347

Total CRE owner occupied

224,764

184,136

170,714

Total

$ 523,149

$ 372,394

$ 343,427

FS Bancorp Q3 Earnings

October 21, 2026

Page 7

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

(Dollars in thousands)

September 30, 2026

June 30, 2026

September 30, 2025

Construction Types:

Amount

Percent

Amount

Percent

Amount

Percent

Commercial construction – self storage

$ 25,748

5.7 %

$ 25,234

6.1 %

$ 18,701

4.9 %

Commercial construction – hotel

15,299

3.4

13,463

3.3

6,147

1.6

Commercial construction – retail

13,486

3.0

8,447

2.0

8,445

2.2

Commercial construction – office

7,164

1.6

7,164

1.7

9,250

2.4

Commercial construction – lots

2,945

0.7

—

Commercial construction – industrial

1,845

0.4

—

Commercial construction – auto service facility

1,465

0.3

—

Multi-family

52,127

11.6

46,186

11.1

29,751

7.8

Custom construction – single family residential and single family manufactured residential

43,921

9.8

33,944

8.2

44,299

11.7

Custom construction – land, lot and acquisition and development

12,766

2.8

10,821

2.6

8,998

2.4

Speculative residential construction – vertical

230,036

51.2

225,992

54.4

217,821

57.3

Speculative residential construction – land, lot and acquisition and development

42,890

9.5

43,973

10.6

36,668

9.7

Total

$ 449,692

100.0 %

$ 415,224

100.0 %

$ 380,080

100.0 %

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

September 30, 2026

June 30, 2026

September 30, 2025

Amount

Percent

Amount

Percent

Amount

Percent

Change

Purchase

$ 179,810

84.3 %

$ 163,100

79.2 %

$ 155,920

88.8 %

$ 16,710

10.2

$ 23,890

15.3 %

Refinance

33,367

15.7

42,741

20.8

19,714

11.2

(9,374 )

(21.9 )

13,653

69.3 %

Total

$ 213,177

100.0 %

$ 205,841

100.0 %

$ 175,634

100.0 %

$ 7,336

3.6

$ 37,543

21.4 %

(Dollars in thousands)

For the Nine Months Ended September 30,

2026

2025

Amount

Percent

Amount

Percent

$ Change

% Change

Purchase

$ 482,012

76.8 %

$ 446,631

85.8 %

$ 35,381

7.9 %

Refinance

145,438

23.2

73,697

14.2

71,741

97.3 %

Total

$ 627,450

100.0 %

$ 520,328

100.0 %

$ 107,122

20.6 %

During the quarter ended September 30, 2026, the Company sold $122.9 million of one-to-four-family loans, compared to $156.1 million during the previous quarter and $156.4 million during the same quarter one year ago. Gross margins on home loan sales increased to 3.55% for the quarter ended September 30, 2026, compared to 2.98% in the previous quarter and increased from 3.14% 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.

FS Bancorp Q3 Earnings

October 21, 2026

Page 8

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, including the dollar changes from the linked quarter and prior year period.

(Dollars in thousands)

Linked

Prior Year

DEPOSITS

September 30, 2026

June 30, 2026

September 30, 2025

Quarter

Transactional deposits:

Amount

Percent

Amount

Percent

Amount

Percent

$ Change

Noninterest-bearing checking

738,715

25.9

629,799

25.7

648,661

24.2

108,916

90,054

Interest-bearing checking

293,069

10.2

209,721

8.6

199,527

7.4

83,348

93,542

Fintech partner deposits

(1)

177,463

6.2

—

177,463

Escrow accounts related to mortgages serviced

(2)

19,976

0.7

12,057

0.5

17,192

0.6

7,919

2,784

Subtotal

1,229,223

43.0

851,577

34.8

865,380

32.2

377,646

363,843

Savings and money market:

Savings

181,400

6.3

173,092

7.1

167,006

6.2

8,308

14,394

Money market

433,851

15.1

375,833

15.3

354,082

13.2

58,018

79,769

Subtotal

615,251

21.4

548,925

22.4

521,088

19.4

66,326

94,163

Certificates of deposit:

CDs

946,667

33.0

922,022

37.6

930,371

34.6

24,645

16,296

Brokered Deposits

Non-maturity brokered deposits

1,003

—

4,027

0.2

251

—

(3,024

)

752

Maturity brokered deposits

75,060

2.6

122,331

5.0

369,402

13.8

(47,271

)

(294,342

)

Subtotal

76,063

2.6

126,358

5.2

369,653

13.8

(50,295

)

(293,590

)

Total deposits

2,867,204

100.0

2,448,882

100.0

2,686,492

100.0

418,322

180,712

Borrowings (3)

373,500

324,500

129,305

49,000

244,195

Stockholders' equity

333,206

318,960

300,511

14,246

32,695

Book value per common share

43.05

43.57

40.43

(0.52

)

2.62

(1)

Fintech partner deposits are deposits associated with the Bank’s Banking-as-a-Service relationships with financial technology companies.

(2)

Primarily noninterest-bearing accounts based on applicable state law.

(3)

Comprised of FHLB advances and Federal Reserve Bank borrowings.

The Company acquired its fintech partner deposits through the acquisition of Pacific West Acquisition. Through these relationships, the Company provides deposit and related banking services to fintech partners and their end users.

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 increase in stockholders’ equity from June 30, 2026, to September 30, 2026, was primarily due to $18.4 million in common stock issued in the Pacific West Acquisition, and net income of $4.9 million. Changes in the fair value of available‑for‑sale securities and interest rate swap cash flow hedges decreased accumulated other comprehensive income (“AOCI”) by $5.3 million, net of tax, reflecting changes in market interest rates during the quarter. The increase in stockholders’ equity was partially offset by $1.9 million in open market share repurchases and $2.2 million in cash dividends paid.

FS Bancorp Q3 Earnings

October 21, 2026

Page 9

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 September 30, 2026, capital ratios presented for the Bank and the Company were as follows:

At September 30, 2026

Bank

Company

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

12.61%

12.35%

Tier 1 leverage capital (to average assets)

11.24%

9.89%

CET 1 capital (to risk-weighted assets)

11.44%

10.07%

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

September 30,

June 30,

September 30,

Quarter

(Dollars in thousands)

2026

2025

$ Change

Beginning ACL balance

$ 31,165

$ 32,443

$ 32,189

$ (1,278)

$ (1,024)

Provision

2,953

2,559

1,851

394

1,102

Merger day 1 ACL (1)

3,898

—

3,898

Charge-offs

Indirect

(1,926)

(2,067 )

(1,941 )

141

Marine

(186)

(7 )

(55 )

(179)

(131)

Other

(22)

(49 )

Commercial and speculative construction and development

—

(2,277)

(2,299)

2,277

2,299

Commercial business

(1)

(39 )

—

(1)

Subtotal

(2,135)

(4,439 )

(4,344 )

2,304

2,209

Recoveries

Indirect

511

584

323

(73)

188

Marine

Other

(11)

(8)

Commercial business

—

Subtotal

582

602

360

(20)

222

Ending ACL balance

$ 36,463

$ 31,165

$ 30,056

$ 5,298

$ 6,407

(1)

The Company early adopted ASU 2025-08. The guidance was applied prospectively to qualifying purchased seasoned loans acquired in connection with the Pacific West Acquisition.

FS Bancorp Q3 Earnings

October 21, 2026

Page 10

NONPERFORMING LOANS

Linked

Prior Year

(Dollars in thousands)

September 30,

June 30,

September 30,

Quarter

CRE LOANS

2026

2025

$ Change

CRE owner occupied

$ 3,542

$ 614

$ 2,047

$ 2,928

$ 1,495

CRE non-owner occupied

5,623

—

5,623

Commercial and speculative construction and development

7,824

7,164

9,150

660

(1,326)

Multi-family

130

—

130

Total CRE loans

17,119

7,778

11,197

9,341

5,922

RESIDENTIAL REAL ESTATE LOANS

One-to-four-family (excludes HFS)

2,327

1,973

1,799

354

528

Home equity

520

472

317

203

Total residential real estate loans

2,847

2,445

2,116

402

731

CONSUMER LOANS

Indirect home improvement

4,421

4,799

3,802

(378)

619

Marine

540

606

620

(66)

(80)

Other consumer

(4)

(25)

Total consumer loans

4,976

5,424

4,462

(448)

514

COMMERCIAL BUSINESS LOANS

C&I

199

—

600

199

(401)

Total nonperforming loans

$ 25,141

$ 15,647

$ 18,375

$ 9,494

$ 6,766

The increase in nonperforming loans at September 30, 2026, compared to June 30, 2026, was primarily driven by $8.6 million of nonaccrual loans acquired as part of the Pacific West Acquisition. The acquired loans were on nonaccrual status as of the acquisition date and booked at fair market value under acquisition accounting.

CLASSIFIED LOANS

Linked

Prior Year

(Dollars in thousands)

September 30,

June 30,

September 30,

Quarter

CRE LOANS

2026

2025

$ Change

CRE owner occupied

$ 4,224

$ 1,212

$ 3,080

$ 3,012

$ 1,144

CRE non-owner occupied

9,952

3,024

2,435

6,928

7,517

Commercial and speculative construction and development

7,824

7,164

9,150

660

(1,326)

Multi-family

3,307

—

3,307

Total CRE loans

25,307

11,400

14,665

13,907

10,642

RESIDENTIAL REAL ESTATE LOANS

One-to-four-family (excludes HFS)

4,140

3,794

3,646

346

494

Home equity

520

472

317

203

Total residential real estate loans

4,660

4,266

3,963

394

697

CONSUMER LOANS

Indirect home improvement

4,421

4,799

3,802

(378)

619

Marine

540

606

620

(66)

(80)

Other consumer

(4)

(25)

Total consumer loans

4,976

5,424

4,462

(448)

514

COMMERCIAL BUSINESS LOANS

C&I

3,469

3,889

3,963

(420)

(494)

Total classified loans

$ 38,412

$ 24,979

$ 27,053

$ 13,433

$ 11,359

The increase in classified loans at September 30, 2026, compared to June 30, 2026, was primarily driven by $12.5 million of classified loans acquired as part of the Pacific West Acquisition.

FS Bancorp Q3 Earnings

October 21, 2026

Page 11

Operating Results

Net interest income increased $2.0 million to $35.7 million for the three months ended September 30, 2026, from $33.7 million for the three months ended September 30, 2025. The increase was primarily a result of a $2.7 million increase in interest income on loans receivable, including interest income from loans acquired in the Pacific West Acquisition and the impact of net loan growth, partially offset by a $452,000 increase in total interest expense. The increase in total interest expense primarily reflected increases of $843,000 in interest expense on borrowings and $438,000 in interest expense on subordinated notes following their repricing at higher interest rates in 2026, partially offset by an $829,000 decrease in interest expense on deposits. The decrease in deposit interest expense reflected fluctuations in market interest rates and changes in the composition of deposits and borrowings, including the impact of balances acquired in the Pacific West Acquisition.

For the nine months ended September 30, 2026, net interest income increased $4.1 million to $100.9 million, from $96.8 million for the nine months ended September 30, 2025, with a $6.0 million increase in total interest income, partially offset by a $1.9 million increase in total interest expense. The $6.0 million increase in total interest income was primarily due to an increase of $6.6 million in interest income on loans receivable, including fees, primarily attributable to loan growth and the Pacific West Acquisition. The $1.9 million increase in total interest expense was primarily due to a $1.1 million increase in interest expense on subordinated notes, as noted above, as well as a $576,000 increase in interest expense on borrowings, and a $214,000 increase in interest expense on deposits.

Net interest margin (“NIM”) (annualized) was 4.36% for the three months ended September 30, 2026, compared to 4.37% for the same period in the prior year and 4.30% for the three months ended June 30, 2026. The six basis point increase from the prior quarter was primarily attributable to lower funding costs, including lower rates on certificates of deposit as those deposits repriced and the addition of the slightly lower-cost funding base acquired in the Pacific West Acquisition, as well as improved yields on the Company’s investment securities portfolio. Incremental interest accretion on loans acquired in the Pacific West Acquisition had an immaterial impact on NIM during the period.

The average total cost of funds, including noninterest-bearing checking accounts, decreased nine basis points to 2.32% for the three months ended September 30, 2026, from 2.41% for the three months ended September 30, 2025. The decrease primarily reflected lower rates on certificates of deposit as those deposits repriced, as well as the addition of slightly lower-cost funding from the Pacific West Acquisition. The average cost of funds decreased two basis points to 2.37% for the nine months ended September 30, 2026, from 2.39% for the nine months ended September 30, 2025.

For the three and nine months ended September 30, 2026, the provision for credit losses on loans was $3.0 million and $8.2 million, compared to $2.3 million and $5.9 million for the three and nine months ended September 30, 2025, respectively. The year-to-date increase in the provision primarily reflected an increase in net charge-offs of $649,000 and additional reserve activity related to a single nonperforming construction and development loan.

During the three months ended September 30, 2026, net charge-offs decreased $2.4 million to $1.6 million, compared to $4.0 million for the three months ended September 30, 2025. The decrease was primarily attributable to a $2.3 million charge-off on a commercial construction loan relationship recognized during the three months ended September 30, 2025.

During the nine months ended September 30, 2026, net charge-offs increased $649,000 to $7.5 million, compared to $6.9 million for the nine months ended September 30, 2025. The increase was primarily due to higher net charge-offs in the indirect home improvement portfolio.

Total noninterest income increased $582,000 to $6.2 million for the three months ended September 30, 2026, from $5.6 million for the three months ended September 30, 2025. The increase was primarily due to the bargain purchase gain of $1.7 million from the Pacific West Acquisition, primarily offset by a decrease of $971,000 in gain on sale of loans, reflecting market interest rates putting pressure on home loan sales, and a decrease of $231,000 in other noninterest income.

FS Bancorp Q3 Earnings

October 21, 2026

Page 12

Total noninterest income remained relatively unchanged at $6.2 million for the three months ended September 30, 2026, compared to $6.2 million for the three months ended June 30, 2026, as the $1.7 million bargain purchase gain from the Pacific West Acquisition was largely offset by a $1.1 million decrease in gain on sale of loans, reflecting lower loan sale volume as higher mortgage rates reduced saleable production, and a $742,000 fair value decrease on first lien residential mortgage loans accounted for under the fair value option, primarily due to higher mortgage rates during the period.

Total noninterest income increased $1.8 million to $17.7 million for the nine months ended September 30, 2026, from $15.9 million for the nine months ended September 30, 2025. This increase was mainly the result of a $1.7 million bargain purchase gain from the Pacific West Acquisition, and a $322,000 increase in gain on sale of loans.

Total noninterest expense increased $6.9 million to $32.3 million for the three months ended September 30, 2026, compared to $25.4 million for the three months ended September 30, 2025. The $6.9 million increase was largely comprised of a $2.8 million increase in salaries and benefits, primarily reflecting an increase in full-time-equivalent employees resulting from the Pacific West Acquisition, as well as higher overall benefit costs, and $2.5 million in acquisition-related costs associated with the transaction, compared to no acquisition costs in the prior year.

Total noninterest expense increased $6.2 million to $32.3 million for the three months ended September 30, 2026, from $26.1 million for the three months ended June 30, 2026. The increase primarily reflected a $2.0 million increase in acquisition-related costs, a $1.6 million increase in salaries and benefits expense relating to the increase in full-time-equivalent employees from the Pacific West Acquisition and higher overall benefit costs, a $1.9 million increase in operations expense, and a $426,000 increase in data processing expense. The increases in operations and data processing expenses reflected additional operating costs associated with the Pacific West Acquisition, while the increase in operations expense also reflected certain expense adjustments recognized in the prior quarter.

Total noninterest expense increased $8.0 million to $83.9 million for the nine months ended September 30, 2026, from $75.9 million for the nine months ended September 30, 2025. This increase included a $4.6 million increase in salaries and benefits, a $3.2 million increase in acquisition costs, a $647,000 increase in occupancy, and a $573,000 increase in loan costs, partially offset by a $548,000 decrease in operations, primarily due to the same reasons mentioned above.

Merger-related activity during the third quarter was primarily focused on transaction completion and integration planning associated with the Pacific West Acquisition, including legal and professional fees, change-in-control costs, investment banking fees, and initial system integration activities related to the planned fourth quarter 2026 core processing conversion. Acquisition-related expenses, as noted above, include these integration costs as well as costs incurred to complete and consolidate the operations of the two companies. Management anticipates that the majority of the remaining acquisition-related expenses, consisting primarily of system integration and core conversion costs, will be recognized during the fourth quarter of 2026.

FS Bancorp Q3 Earnings

October 21, 2026

Page 13

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 32 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, as well as various communities in Oregon.

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 “may,” “believe,” “will,” “will likely result,” “are expected to,” “will continue,” “anticipate,” “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 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; credit risks of lending activities, including changes in the level and direction of loan delinquencies and charge-offs and changes in estimates of the adequacy of the allowance for credit losses; 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.

FS Bancorp Q3 Earnings

October 21, 2026

Page 14

Further, statements about the effects of the Company's acquisition of Pacific West, completed on August 19, 2026, on the Company's business, financial results, and condition may constitute forward-looking statements and are subject to the risk that the actual effects may differ, possibly materially, from what is reflected in the forward-looking statements due to factors and future developments which are uncertain, unpredictable, and in many cases, beyond the Company's control, including the following: the expected cost savings, synergies and other financial benefits from the merger might not be realized within the expected time frames or at all; the integration of the combined company, including the conversion of operating systems and the retention of key personnel and customers, might not proceed as planned or may be more difficult, time-consuming or costly than expected; merger-related and integration expenses may be greater than expected; preliminary estimates of the fair value of acquired assets and assumed liabilities may change during the measuring period, and acquired loans may experience higher credit losses than anticipated; 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 Q3 Earnings

October 21, 2026

Page 15

FS BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands) (Unaudited)

Linked

Prior Year

September 30,

June 30,

September 30,

Quarter

ASSETS

2026

2025

% Change

Cash and due from banks

29,022

12,835

12,391

126

134

Interest-bearing deposits at other financial institutions

14,925

16,875

48,889

(12

)

(69

)

Total cash and cash equivalents

43,947

29,710

61,280

(28

)

Securities available-for-sale, at fair value

342,185

269,460

311,695

Securities held-to-maturity, net

37,734

34,845

31,386

Loans held for sale, at fair value

22,820

30,548

38,579

(25

)

(41

)

Loans receivable, net

3,008,129

2,628,992

2,599,601

Accrued interest receivable

16,901

14,263

15,122

Premises and equipment, net

49,148

43,455

32,444

Long-lived assets held for sale

3,258

—

100

Operating lease right-of-use

7,799

6,655

6,832

Federal Home Loan Bank stock, at cost

13,073

14,420

7,975

(9)

Deferred tax asset, net

9,469

6,441

6,767

Bank owned life insurance (“BOLI”), net

41,857

36,771

38,531

MSRs, held at the lower of cost or fair value

8,887

8,912

8,506

—

Goodwill

3,592

—

Core deposit intangible, net

13,525

9,052

11,284

Other assets

54,327

38,706

35,231

TOTAL ASSETS

3,676,651

3,179,080

3,208,825

LIABILITIES

Deposits:

Noninterest-bearing accounts

758,691

641,856

665,852

Interest-bearing accounts

2,108,513

1,807,026

2,020,640

Total deposits

2,867,204

2,448,882

2,686,492

Borrowings

373,500

324,500

129,305

189

Subordinated notes:

Principal amount

46,000

50,000

(8)

Unamortized debt issuance costs

(265)

(306

)

(356

)

(13

)

(26

)

Total subordinated notes less unamortized debt issuance costs

45,735

49,694

49,644

(8)

Operating lease liability

7,899

6,753

6,993

Other liabilities

49,107

30,291

35,880

Total liabilities

3,343,445

2,860,120

2,908,314

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; 7,867,367 shares issued and outstanding at September 30, 2026, 7,423,772 at June 30, 2026, and 7,535,330 at September 30, 2025

Additional paid-in capital

57,702

40,886

43,907

Retained earnings

294,408

291,635

273,882

Accumulated other comprehensive loss, net of tax

(18,983)

(13,635

)

(17,353

)

Total stockholders’ equity

333,206

318,960

300,511

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

3,676,651

3,179,080

3,208,825

FS Bancorp Q3 Earnings

October 21, 2026

Page 16

FS BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF INCOME

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

Three Months Ended

Linked

Prior Year

September 30,

June 30,

September 30,

Quarter

INTEREST INCOME

2026

2025

% Change

Loans receivable, including fees

$ 49,346

$ 46,202

$ 46,664

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

4,075

3,460

4,309

(5 )

Total interest and dividend income

53,421

49,662

50,973

INTEREST EXPENSE

Deposits

14,033

13,908

14,862

(6 )

Borrowings

2,778

2,197

1,935

Subordinated notes

924

909

486

Total interest expense

17,735

17,014

17,283

NET INTEREST INCOME

35,686

32,648

33,690

PROVISION FOR CREDIT LOSSES

3,462

2,641

2,309

NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES

32,224

30,007

31,381

NONINTEREST INCOME

Service charges and fee income

2,424

2,281

2,326

Bargain purchase gain

1,658

—

Gain on sale of loans

1,468

2,581

2,439

(43)

(40)

Gain on sale of investment securities, net

—

Earnings on cash surrender value of BOLI

286

263

269

Other noninterest income

329

1,025

560

(68)

(41)

Total noninterest income

6,176

6,150

5,594

—

NONINTEREST EXPENSE

Salaries and benefits

17,178

15,570

14,415

Operations

4,616

2,699

3,974

Occupancy

2,073

1,938

1,744

Data processing

2,252

1,826

1,784

Loan costs

803

900

746

(11)

Professional and board fees

1,067

1,060

1,093

(2 )

FDIC insurance

630

531

592

Marketing and advertising

449

445

259

Acquisition costs

2,463

417

—

491

Amortization of core deposit intangible

788

722

787

—

Recovery of servicing rights

(5)

(4 )

(6)

(17 )

Total noninterest expense

32,314

26,104

25,388

INCOME BEFORE PROVISION FOR INCOME TAXES

6,086

10,053

11,587

(39)

(47)

PROVISION FOR INCOME TAXES

1,160

2,117

2,410

(45)

(52)

NET INCOME

$ 4,926

$ 7,936

$ 9,177

(38)

(46)

Basic earnings per share

$ 0.65

$ 1.06

$ 1.20

(39)

(46)

Diluted earnings per share

$ 0.63

$ 1.04

$ 1.18

(39)

(47)

FS Bancorp Q3 Earnings

October 21, 2026

Page 17

FS BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF INCOME

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

Year

Nine Months Ended September 30,

Over Year

INTEREST INCOME

2026

2025

% Change

Loans receivable, including fees

$ 141,560

$ 135,004

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

10,856

11,459

(5 )

Total interest and dividend income

152,416

146,463

INTEREST EXPENSE

Deposits

42,654

42,440

Borrowings

6,359

5,783

Subordinated notes

2,524

1,456

Total interest expense

51,537

49,679

NET INTEREST INCOME

100,879

96,784

PROVISION FOR CREDIT LOSSES

8,632

5,922

NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES

92,247

90,862

NONINTEREST INCOME

Service charges and fee income

6,778

6,894

(2 )

Bargain purchase gain

1,658

—

Gain on sale of loans

6,433

6,111

Gain on sale of investment securities, net

—

Earnings on cash surrender value of BOLI

808

773

Other noninterest income

2,039

2,112

(3)

Total noninterest income

17,727

15,890

NONINTEREST EXPENSE

Salaries and benefits

47,602

43,037

Operations

10,695

11,243

(5 )

Occupancy

5,887

5,240

Data processing

5,672

5,966

(5 )

Loan costs

2,585

2,012

Professional and board fees

3,141

3,435

(9 )

FDIC insurance

1,788

1,684

Marketing and advertising

1,203

879

Acquisition costs

3,175

—

Amortization of core deposit intangible

2,254

2,426

(7 )

(Recovery) impairment of MSRs

(64)

(378 )

Total noninterest expense

83,938

75,945

INCOME BEFORE PROVISION FOR INCOME TAXES

26,036

30,807

(15)

PROVISION FOR INCOME TAXES

5,344

5,881

(9)

NET INCOME

$ 20,692

$ 24,926

(17)

Basic earnings per share

$ 2.67

$ 3.23

(17)

Diluted earnings per share

$ 2.62

$ 3.18

(18)

FS Bancorp Q3 Earnings

October 21, 2026

Page 18

KEY FINANCIAL RATIOS AND DATA (Unaudited)

For the Three Months Ended

September 30,

June 30,

September 30,

PERFORMANCE RATIOS:

2026

2025

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

(1)

0.57

1.00

1.14

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

5.85

9.94

11.97

Yield on average interest-earning assets

(1)

6.52

6.54

6.61

Average total cost of funds

(1)

2.32

2.41

Interest rate spread information – average during period

4.20

4.13

4.20

Net interest margin

(1)

4.36

4.30

4.37

Operating expense to average total assets

(1)

3.77

3.29

3.16

Average interest-earning assets to average interest-bearing liabilities

139.79

139.32

140.80

Efficiency ratio

(2)

77.19

67.28

64.63

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

9.06

10.03

9.37

Tangible common equity ratio

(3)

8.64

9.67

8.94

For the Nine Months Ended

September 30,

PERFORMANCE RATIOS:

2026

2025

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

(1)

0.85 %

1.07 %

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

(1)

8.55

11.03

Yield on average interest-earning assets

(1)

6.53

6.55

Average total cost of funds

(1)

2.37

2.39

Interest rate spread information – average during period

4.16

Net interest margin

(1)

4.32

4.33

Operating expense to average total assets

(1)

3.44

3.26

Average interest-earning assets to average interest-bearing liabilities

139.66

141.54

Efficiency ratio

(2)

70.77

67.40

September 30,

June 30,

September 30,

ASSET QUALITY RATIOS AND DATA:

2026

2025

Nonperforming assets to total assets at end of period

(4)

0.68

0.49

0.57

Nonperforming loans to total gross loans (excluding loans HFS)

(5)

0.83

0.59

0.70

ACL – loans to nonperforming loans (5)

145.03

199.15

163.77

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

1.20

1.17

1.14

FS Bancorp Q3 Earnings

October 21, 2026

Page 19

At or For the Three Months Ended

September 30,

June 30,

September 30,

PER COMMON SHARE DATA:

2026

2025

Basic earnings per share

$ 0.65

$ 1.06

$ 1.20

Diluted earnings per share

$ 0.63

$ 1.04

$ 1.18

Weighted average basic shares outstanding

7,524,107

7,340,326

7,488,139

Weighted average diluted shares outstanding

7,677,572

7,483,199

7,623,243

Common shares outstanding at end of period

7,739,797

(6)

7,320,801

(7)

7,432,359

(8)

Book value per share using common shares outstanding

$ 43.05

$ 43.57

$ 40.43

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

$ 40.84

$ 41.84

$ 38.43

(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 7,867,367 at September 30, 2026, less 127,570 unvested restricted stock shares.

(7)

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

(8)

Common shares were calculated using shares outstanding of 7,535,330 at September 30, 2025, less 102,971 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 September 30,

For the Nine Months Ended September 30,

QTR Over QTR

YTD Over YTD

Average Balances

2026

2025

2026

2025

$ Change

Assets

Loans receivable, net

(1)

$ 2,864,219

$ 2,651,111

$ 2,754,304

$ 2,608,338

$ 213,108

$ 145,966

Investment securities - taxable

277,518

285,111

259,243

267,657

(7,593 )

(8,414 )

Investment securities - nontaxable

76,796

79,341

77,462

78,386

(2,545 )

(924 )

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

14,954

34,857

17,251

23,575

(19,903 )

(6,324)

FHLB stock, at cost

14,321

10,082

11,257

10,262

4,239

995

Total interest-earning assets

3,247,808

3,060,502

3,119,517

2,988,218

187,306

131,299

Noninterest-earning assets

155,992

124,955

143,119

123,785

31,037

19,334

Total assets

$ 3,403,800

$ 3,185,457

$ 3,262,636

$ 3,112,003

$ 218,343

$ 150,633

Liabilities

Interest-bearing deposit accounts

$ 1,992,076

$ 1,947,830

$ 1,970,700

$ 1,880,007

$ 44,246

$ 90,693

Borrowings

283,054

176,234

213,712

181,633

106,820

32,079

Subordinated notes

48,230

49,633

49,188

49,617

(1,403)

(429)

Total interest-bearing liabilities

2,323,360

2,173,697

2,233,600

2,111,257

149,663

122,343

Noninterest-bearing deposit accounts

707,196

668,908

670,230

663,536

38,288

6,694

Other noninterest-bearing liabilities

39,239

38,746

35,051

35,081

493

(30 )

Total liabilities

$ 3,069,795

$ 2,881,351

$ 2,938,881

$ 2,809,874

$ 188,444

$ 129,007

(1) Includes loans HFS.

FS Bancorp Q3 Earnings

October 21, 2026

Page 20

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 provides useful supplemental information regarding the Company’s capital position and facilitates comparisons of the quality and composition of the Company's capital over time and with that of its peers. Where applicable, the Company has also presented comparable GAAP information.

These non-GAAP financial measures have inherent limitations, may not be calculated in the same manner by other companies, and should not be considered in isolation or as a substitute for the Company’s financial position, results of operations or other financial measures 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 to 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)

September 30,

June 30,

September 30,

Tangible Book Value Per Share:

2026

2025

Stockholders' equity (GAAP)

333,206

318,960

300,511

Less: goodwill and core deposit intangible, net

(17,117)

(12,644)

(14,876)

Tangible common stockholders' equity (non-GAAP)

316,089

306,316

285,635

Common shares outstanding at end of period

7,739,797

(1)

7,320,801

(2)

7,432,359

(3)

Book value per share (GAAP)

43.05

43.57

40.43

Tangible book value per share (non-GAAP)

40.84

41.84

38.43

Tangible Common Equity Ratio:

Total assets (GAAP)

3,676,651

3,179,080

3,208,825

Less: goodwill and core deposit intangible assets

(17,117)

(12,644)

(14,876)

Tangible assets (non-GAAP)

3,659,534

3,166,436

3,193,949

Common equity ratio (GAAP)

9.06

10.03

9.37

Tangible common equity ratio (non-GAAP)

8.64

9.67

8.94

_________________________

(1)

Common shares were calculated using shares outstanding of 7,867,367 at September 30, 2026, less 127,570 unvested restricted stock shares.

(2)

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

(3)

Common shares were calculated using shares outstanding of 7,535,330 at September 30, 2025, less 102,971 unvested restricted stock shares.

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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