FS Bancorp, Inc. (NASDAQ: FSBW) (the “Company”), the holding
company for 1st Security Bank of Washington (the “Bank”) today
reported 2024 third quarter net income of $10.3 million,
or $1.29 per diluted share, compared to $9.0 million, or
$1.13 per diluted share, for the comparable quarter one year
ago. For the nine months ended September 30, 2024,
net income was $27.6 million, or $3.45 per diluted share,
compared to net income of $26.3 million, or $3.33 per diluted
share, for the comparable nine-month period in 2023.
“Deposit growth experienced in the third quarter of
2024 was a direct result of the Bank-wide focus and strategic
planning objective to fund loan growth with core deposits,” stated
Joe Adams, CEO. “We are also pleased that our Board of
Directors approved our forty-seventh consecutive
quarterly cash dividend of $0.27 per common share, demonstrating
our continued commitment to returning value
to shareholders. The cash dividend will be paid on
November 21, 2024, to shareholders of record as of
November 7, 2024,” concluded Adams.
2024 Third Quarter Highlights
- Net income was $10.3 million for the third quarter of
2024, compared to $9.0 million for both the previous
quarter and the comparable quarter one year ago;
- Net interest margin (“NIM”) increased to 4.35% for the third
quarter of 2024, compared to 4.29% in the previous quarter, and
4.34% for the comparable quarter one year ago;
- Total deposits increased $44.5 million, or 1.9%, to $2.43
billion at September 30, 2024, primarily due to an increase in
noninterest-bearing checking of $34.4 million and certificates
of deposit ("CDs") of $15.0 million, compared to
$2.38 billion at June 30, 2024 and decreased $27.1
million, or 1.1%, from $2.45 billion at September 30,
2023. Noninterest-bearing deposits
were $657.8 million at September 30, 2024,
$623.3 million at June 30, 2024, and $670.2 million at
September 30, 2023;
- Borrowings decreased $18.1 million, or 9.9% to $163.8
million at September 30, 2024, compared to $181.9 million at June
30, 2024, as a result of the Company's strategic planning objective
to fund loan growth with core deposits;
- Loans receivable, net was unchanged at $2.46 billion
at September 30, 2024, and June 30, 2024, and increased
$88.1 million, or 3.7%, from $2.38 billion at September
30, 2023;
- Consumer loans, of which 87.3% are home improvement loans,
decreased $9.3 million, or 1.4%, to $632.4 million at
September 30, 2024, compared to $641.7 million in the previous
quarter, and decreased $7.7 million, or 1.2%, from
$640.1 million in the comparable quarter one year ago. Yields
on consumer loans increased 18 basis points to 7.59% from
7.41% at the end of the second quarter 2024. During the three
months ended September 30, 2024, consumer loan originations
included 80.4% of home improvement loans originated with a Fair
Isaac Corporation (“FICO”) score above 720 and 83.9% of home
improvement loans with a UCC-2 security filing;
- For the third quarter of 2024, there was a tax
benefit of $420,000, compared to tax provisions of
$2.4 million in the prior quarter, and $2.5 million for the same
quarter last year. The tax benefit for the third quarter of
2024 was due to $28.4 million of energy tax credits purchased
during the current quarter related to the Inflation Reduction Act
of 2022;
- Repurchased 97,000 shares of the Company's common stock in
the third quarter of 2024 at an average price of $43.58 per share
with $1.4 million remaining for future purchases under the
share repurchase plan that was approved in July
2024;
- Book value per share increased $0.30 to $37.45 at
September 30, 2024, compared to $37.15 at June 30, 2024, and
increased $4.87 from $32.58 at September 30, 2023.
Tangible book value per share (non-GAAP financial measure)
increased $0.44 to $35.10 at September 30, 2024,
compared to $34.66 at June 30, 2024, and increased $5.37 from
$29.73 at September 30, 2023. See, “Non-GAAP Financial
Measures.”
- Segment reporting in the third quarter of 2024 reflected net
income of $9.3 million for the Commercial and Consumer Banking
segment and $1.0 million for the Home Lending segment,
compared to net income of $8.0 million and $1.0
million in the prior quarter, and net income of
$8.8 million and $166,000 in the third quarter of 2023,
respectively;
- The percentage of available unencumbered cash and secured
borrowing capacity at the Federal Home Loan Bank (“FHLB”) and the
Federal Reserve Bank to uninsured deposits was 182% at September
30, 2024, compared to 191% in the prior quarter. The average
deposit size per FDIC-insured account at the Bank was $33,000 and
$32,000 for September 30, 2024 and June 30, 2024, respectively;
and
- Regulatory capital ratios at the Bank were 14.2% for total
risk-based capital and 11.2% for Tier 1 leverage capital at
September 30, 2024, compared to 13.9% for total risk-based capital
and 10.9% for Tier 1 leverage capital at June 30, 2024.
Segment Reporting
The Company reports two segments: Commercial and Consumer
Banking and Home Lending. The Commercial and Consumer Banking
segment provides diversified financial products and services to our
commercial and consumer customers. These products and services
include deposit products; residential, consumer, business and
commercial real estate lending portfolios and cash management
services. This segment is also responsible for the management of
the investment portfolio and other assets of the Bank. The Home
Lending segment originates one-to-four-family residential mortgage
loans primarily for sale in the secondary markets as well as loans
held for investment.
The Company reflected the sale of servicing rights in the
first quarter of 2024 as a gain to the Commercial and Consumer
Banking segment to offset the realized loss on sale of investment
securities and will allocate the gain on a straight-line basis
over four years as intercompany income from the Commercial and
Consumer Banking segment to the Home Lending segment.
The tables below provide a summary of segment reporting at or
for the three and nine months ended September 30, 2024 and
2023 (dollars in thousands):
| |
|
At or For the Three Months Ended September 30, 2024 |
|
| Condensed income
statement: |
|
Commercial and Consumer Banking |
|
|
Home Lending |
|
|
Total |
|
|
Net interest income (1) |
|
$ |
28,612 |
|
|
$ |
2,632 |
|
|
$ |
31,244 |
|
| Provision for credit
losses |
|
|
(1,331 |
) |
|
|
(182 |
) |
|
|
(1,513 |
) |
| Noninterest income (2) |
|
|
2,257 |
|
|
|
3,710 |
|
|
|
5,967 |
|
| Noninterest expense (3) |
|
|
(20,199 |
) |
|
|
(5,633 |
) |
|
|
(25,832 |
) |
| Income before (provision)
benefit for income taxes |
|
|
9,339 |
|
|
|
527 |
|
|
|
9,866 |
|
| (Provision) benefit for income
taxes |
|
|
(71 |
) |
|
|
491 |
|
|
|
420 |
|
| Net income |
|
$ |
9,268 |
|
|
$ |
1,018 |
|
|
$ |
10,286 |
|
| Total average assets for
period ended |
|
$ |
2,347,855 |
|
|
$ |
612,935 |
|
|
$ |
2,960,790 |
|
| Full-time employees
("FTEs") |
|
|
442 |
|
|
|
117 |
|
|
|
559 |
|
| |
|
At or For the Three Months Ended September 30, 2023 |
|
| Condensed income
statement: |
|
Commercial and Consumer Banking |
|
|
Home Lending |
|
|
Total |
|
|
Net interest income (1) |
|
$ |
27,563 |
|
|
$ |
3,071 |
|
|
$ |
30,634 |
|
| Provision for credit
losses |
|
|
(437 |
) |
|
|
(111 |
) |
|
|
(548 |
) |
| Noninterest income (2) |
|
|
2,680 |
|
|
|
2,302 |
|
|
|
4,982 |
|
| Noninterest expense (3) |
|
|
(18,539 |
) |
|
|
(5,047 |
) |
|
|
(23,586 |
) |
| Income before provision for
income taxes |
|
|
11,267 |
|
|
|
215 |
|
|
|
11,482 |
|
| Provision for income
taxes |
|
|
(2,480 |
) |
|
|
(49 |
) |
|
|
(2,529 |
) |
| Net income |
|
$ |
8,787 |
|
|
$ |
166 |
|
|
$ |
8,953 |
|
| Total average assets for
period ended |
|
$ |
2,361,014 |
|
|
$ |
540,372 |
|
|
$ |
2,901,386 |
|
| FTEs |
|
|
434 |
|
|
|
128 |
|
|
|
562 |
|
| |
|
At or For the Nine Months Ended September 30, 2024 |
|
| Condensed income
statement: |
|
Commercial and Consumer Banking |
|
|
Home Lending |
|
|
Total |
|
|
Net interest income (1) |
|
$ |
84,749 |
|
|
$ |
7,242 |
|
|
$ |
91,991 |
|
| Provision for credit
losses |
|
|
(3,796 |
) |
|
|
(193 |
) |
|
|
(3,989 |
) |
| Noninterest income (2) |
|
|
6,919 |
|
|
|
10,027 |
|
|
|
16,946 |
|
| Noninterest expense (3) |
|
|
(58,250 |
) |
|
|
(14,968 |
) |
|
|
(73,218 |
) |
| Income before (provision)
benefit for income taxes |
|
|
29,622 |
|
|
|
2,108 |
|
|
|
31,730 |
|
| (Provision) benefit for income
taxes |
|
|
(4,253 |
) |
|
|
165 |
|
|
|
(4,088 |
) |
| Net income |
|
$ |
25,369 |
|
|
$ |
2,273 |
|
|
$ |
27,642 |
|
| Total average assets for
period ended |
|
$ |
2,369,740 |
|
|
$ |
586,001 |
|
|
$ |
2,955,741 |
|
| FTEs |
|
|
442 |
|
|
|
117 |
|
|
|
559 |
|
| |
|
At or For the Nine Months Ended September 30, 2023 |
|
| Condensed income
statement: |
|
Commercial and Consumer Banking |
|
|
Home Lending |
|
|
Total |
|
|
Net interest income (1) |
|
$ |
83,332 |
|
|
$ |
9,516 |
|
|
$ |
92,848 |
|
| Provision for credit
losses |
|
|
(2,555 |
) |
|
|
(817 |
) |
|
|
(3,372 |
) |
| Noninterest income (2) |
|
|
7,766 |
|
|
|
7,268 |
|
|
|
15,034 |
|
| Noninterest expense (3) |
|
|
(56,099 |
) |
|
|
(15,215 |
) |
|
|
(71,314 |
) |
| Income before provision for
income taxes |
|
|
32,444 |
|
|
|
752 |
|
|
|
33,196 |
|
| Provision for income
taxes |
|
|
(6,758 |
) |
|
|
(157 |
) |
|
|
(6,915 |
) |
| Net income |
|
$ |
25,686 |
|
|
$ |
595 |
|
|
$ |
26,281 |
|
| Total average assets for
period ended |
|
$ |
2,288,996 |
|
|
$ |
520,513 |
|
|
$ |
2,809,509 |
|
| FTEs |
|
|
434 |
|
|
|
128 |
|
|
|
562 |
|
__________________________
|
(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, 2024, the Company recorded net
increases in fair value of $262,000 and $448,000, respectively, as
compared to net decreases in fair value of $343,000 and
$285,000 for the three and nine months ended September 30,
2023. As of September 30, 2024 and 2023, there
were $13.9 million and $15.2 million, respectively,
in residential mortgage loans recorded at fair value as they were
previously transferred from loans held for sale to loans held for
investment. |
|
(3) |
|
Noninterest expense includes
allocated overhead expense from general corporate activities.
Allocation is determined based on a combination of segment assets
and FTEs. For the three and nine months ended September
30, 2024 and 2023, the Home Lending segment included allocated
overhead expenses of $1.8 million and $4.8 million, compared
to $1.5 million and $4.7 million, respectively. |
|
|
|
|
Asset Summary
Total assets increased $28.8 million, or 1.0%, to $2.97
billion at September 30, 2024, compared to $2.94 billion
at June 30, 2024, and increased $50.1 million, or 1.7%, from
$2.92 billion at September 30, 2023. The
increase in total assets at September 30,
2024, compared to June 30, 2024, included increases
of $15.7 million in other assets, consisting primarily of a
federal income tax receivable of $25.7 million, $7.3 million in
total cash and cash equivalents, $7.0 million in securities
available-for-sale, and $6.5 million in loans receivable, net,
partially offset by decreases in loans held for sale (“HFS”)
of $4.4 million, and core deposit intangible ("CDI"),
net of $897,000. The increase compared to September 30, 2023, was
primarily due to increases in loans receivable, net of
$88.1 million, loans HFS of $30.7 million, other assets
of $13.1 million, and FHLB stock of $5.8 million. These
increases were partially offset by decreases in total cash and
cash equivalents of $40.3 million, securities
available-for-sale of $23.7 million, mortgage servicing rights
("MSR") of $8.9 million, certificates of deposit at other
financial institutions of $5.6 million, CDI, net of
$3.7 million, deferred tax asset, net of
$3.2 million, operating lease right-of-use assets of $1.7
million, and premises and equipment, net of $900,000.
|
LOAN PORTFOLIO |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (Dollars in thousands) |
|
September 30, 2024 |
|
|
June 30, 2024 |
|
|
September 30, 2023 |
|
| |
|
Amount |
|
|
Percent |
|
|
Amount |
|
|
Percent |
|
|
Amount |
|
|
Percent |
|
| REAL ESTATE
LOANS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Commercial |
|
$ |
352,933 |
|
|
|
14.1 |
% |
|
$ |
359,404 |
|
|
|
14.4 |
% |
|
$ |
364,673 |
|
|
|
15.2 |
% |
| Construction and
development |
|
|
292,366 |
|
|
|
11.7 |
|
|
|
274,209 |
|
|
|
11.0 |
|
|
|
289,873 |
|
|
|
12.0 |
|
| Home equity |
|
|
75,063 |
|
|
|
3.0 |
|
|
|
73,749 |
|
|
|
3.0 |
|
|
|
67,103 |
|
|
|
2.8 |
|
| One-to-four-family (excludes
HFS) |
|
|
591,666 |
|
|
|
23.7 |
|
|
|
588,966 |
|
|
|
23.7 |
|
|
|
540,670 |
|
|
|
22.5 |
|
| Multi-family |
|
|
238,462 |
|
|
|
9.6 |
|
|
|
239,675 |
|
|
|
9.6 |
|
|
|
243,661 |
|
|
|
10.1 |
|
| Total real estate loans |
|
|
1,550,490 |
|
|
|
62.1 |
|
|
|
1,536,003 |
|
|
|
61.7 |
|
|
|
1,505,980 |
|
|
|
62.6 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| CONSUMER
LOANS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Indirect home improvement |
|
|
552,226 |
|
|
|
22.2 |
|
|
|
563,621 |
|
|
|
22.7 |
|
|
|
562,650 |
|
|
|
23.4 |
|
| Marine |
|
|
76,845 |
|
|
|
3.1 |
|
|
|
74,627 |
|
|
|
3.0 |
|
|
|
73,887 |
|
|
|
3.1 |
|
| Other consumer |
|
|
3,346 |
|
|
|
0.1 |
|
|
|
3,440 |
|
|
|
0.1 |
|
|
|
3,547 |
|
|
|
0.1 |
|
| Total consumer loans |
|
|
632,417 |
|
|
|
25.4 |
|
|
|
641,688 |
|
|
|
25.8 |
|
|
|
640,084 |
|
|
|
26.6 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| COMMERCIAL BUSINESS
LOANS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Commercial and industrial
("C&I") |
|
|
296,773 |
|
|
|
11.9 |
|
|
|
285,183 |
|
|
|
11.5 |
|
|
|
236,520 |
|
|
|
9.8 |
|
| Warehouse lending |
|
|
15,249 |
|
|
|
0.6 |
|
|
|
25,548 |
|
|
|
1.0 |
|
|
|
23,489 |
|
|
|
1.0 |
|
| Total commercial business
loans |
|
|
312,022 |
|
|
|
12.5 |
|
|
|
310,731 |
|
|
|
12.5 |
|
|
|
260,009 |
|
|
|
10.8 |
|
| Total loans receivable,
gross |
|
|
2,494,929 |
|
|
|
100.0 |
% |
|
|
2,488,422 |
|
|
|
100.0 |
% |
|
|
2,406,073 |
|
|
|
100.0 |
% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Allowance for credit losses on
loans |
|
|
(31,232 |
) |
|
|
|
|
|
|
(31,238 |
) |
|
|
|
|
|
|
(30,501 |
) |
|
|
|
|
| Total loans receivable,
net |
|
$ |
2,463,697 |
|
|
|
|
|
|
$ |
2,457,184 |
|
|
|
|
|
|
$ |
2,375,572 |
|
|
|
|
|
| |
Loans receivable, net was unchanged at $2.46 billion
at September 30, 2024 and June 30, 2024, and increased
$88.1 million from $2.38 billion at September 30, 2023.
Total real estate loans remained virtually unchanged at $1.55
billion at September 30, 2024, compared to June 30, 2024,
however, there were notable shifts within the portfolio.
Specifically, construction and development loans
increased $18.2 million, one-to-four-family loans
(excluding HFS) increased $2.7 million mainly due to new
loan originations, and home equity loans increased $1.3
million. These gains were partially offset by
declines of $6.5 million in commercial real estate
loans and $1.2 million in multi-family loans. In
addition, commercial business loans increased $1.3 million to
$312.0 million at September 30, 2024, up
from $310.7 million on June 30, 2024, resulting from
an increase of $11.6 million in C&I loans and a
decrease of $10.3 million in warehouse lending. Consumer
loans decreased $9.3 million to $632.4 million
at September 30, 2024, compared to June 30, 2024,
resulting from an $11.4 million decrease in indirect home
improvement loans, partially offset by an increase of $2.2
million in marine loans.
The composition of CRE loans at the dates
indicated were as follows:
|
(Dollars in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
September 30, 2024 |
|
|
June 30, 2024 |
|
|
September 30, 2023 |
|
| CRE by
Type: |
|
Amount |
|
|
Amount |
|
|
Amount |
|
| Agriculture |
|
$ |
3,610 |
|
|
$ |
3,639 |
|
|
$ |
3,926 |
|
| CRE Non-owner occupied: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Office |
|
|
40,672 |
|
|
|
41,381 |
|
|
|
41,878 |
|
|
Retail |
|
|
36,070 |
|
|
|
37,507 |
|
|
|
37,865 |
|
|
Hospitality/restaurant |
|
|
27,743 |
|
|
|
28,314 |
|
|
|
25,252 |
|
|
Self storage |
|
|
19,130 |
|
|
|
19,141 |
|
|
|
21,381 |
|
|
Mixed use |
|
|
17,881 |
|
|
|
18,062 |
|
|
|
16,768 |
|
|
Industrial |
|
|
15,402 |
|
|
|
17,163 |
|
|
|
17,431 |
|
|
Senior housing/assisted living |
|
|
7,621 |
|
|
|
7,675 |
|
|
|
8,556 |
|
|
Other (1) |
|
|
6,684 |
|
|
|
6,847 |
|
|
|
7,814 |
|
|
Land |
|
|
2,523 |
|
|
|
3,021 |
|
|
|
6,381 |
|
|
Education/worship |
|
|
2,545 |
|
|
|
2,571 |
|
|
|
2,645 |
|
|
Total CRE non-owner occupied |
|
|
176,271 |
|
|
|
181,682 |
|
|
|
185,971 |
|
| CRE owner occupied: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Industrial |
|
|
63,577 |
|
|
|
63,969 |
|
|
|
63,307 |
|
|
Office |
|
|
42,156 |
|
|
|
41,978 |
|
|
|
41,663 |
|
|
Retail |
|
|
19,968 |
|
|
|
20,885 |
|
|
|
23,228 |
|
|
Hospitality/restaurant |
|
|
10,528 |
|
|
|
10,800 |
|
|
|
14,153 |
|
|
Other (2) |
|
|
8,116 |
|
|
|
8,354 |
|
|
|
8,850 |
|
|
Car wash |
|
|
9,575 |
|
|
|
9,607 |
|
|
|
7,818 |
|
|
Automobile related |
|
|
8,874 |
|
|
|
8,200 |
|
|
|
8,193 |
|
|
Education/worship |
|
|
4,609 |
|
|
|
4,610 |
|
|
|
4,617 |
|
|
Mixed use |
|
|
5,649 |
|
|
|
5,680 |
|
|
|
2,947 |
|
|
Total CRE owner occupied |
|
|
173,052 |
|
|
|
174,083 |
|
|
|
174,776 |
|
| Total |
|
$ |
352,933 |
|
|
$ |
359,404 |
|
|
$ |
364,673 |
|
__________________________________
|
(1) |
|
Primarily includes loans secured by mobile home parks
totaling $774,000, $782,000, and $2.4 million, RV parks
totaling $689,000, $692,000, and $702,000, automobile-related
collateral totaling $594,000, $599,000, and $0, and other
collateral totaling $4.6 million, $4.7 million,
and $4.8 million at September 30, 2024, June
30, 2024, and September 30, 2023, respectively. |
|
(2) |
|
Primarily includes loans secured
by gas stations totaling $1.5 million,
$1.6 million and $1.7 million, non-profit
organization totaling $901,000,
$908,000 and $928,000, and other collateral
totaling $5.7 million, $5.1 million
and $6.2 million at September 30,
2024, June 30, 2024, and September 30,
2023, respectively. |
|
|
|
|
The following tables includes CRE loans repricing or maturing
within the next two years, excluding loans that reprice
simultaneously with changes to the prime rate:
| (Dollars in thousands) |
|
|
For the Quarter Ended |
|
|
|
|
Current Weighted |
| |
|
Dec 31, |
|
Mar 31, |
|
Jun 30, |
|
Sep 30, |
|
Dec 31, |
|
Mar 31, |
|
Jun 30, |
|
Sep 30, |
|
|
|
|
Average |
| CRE by type: |
|
2024 |
|
2025 |
|
2025 |
|
2025 |
|
2025 |
|
2026 |
|
2026 |
|
2026 |
|
Total |
|
Rate |
|
Agriculture |
|
$ |
926 |
|
$ |
— |
|
$ |
424 |
|
$ |
— |
|
$ |
311 |
|
$ |
181 |
|
$ |
259 |
|
$ |
306 |
|
$ |
2,407 |
|
6.40% |
| Apartment |
|
|
9,990 |
|
|
9,817 |
|
|
5,271 |
|
|
1,829 |
|
|
18,671 |
|
|
1,908 |
|
|
14,485 |
|
|
9,797 |
|
|
71,768 |
|
4.87% |
| Auto related |
|
|
— |
|
|
— |
|
|
2,091 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
2,091 |
|
4.18% |
| Hotel / hospitality |
|
|
— |
|
|
579 |
|
|
1,212 |
|
|
1,336 |
|
|
— |
|
|
118 |
|
|
1,307 |
|
|
— |
|
|
4,552 |
|
4.39% |
| Industrial |
|
|
8,337 |
|
|
897 |
|
|
588 |
|
|
— |
|
|
10,361 |
|
|
584 |
|
|
173 |
|
|
1,636 |
|
|
22,576 |
|
5.29% |
| Mixed use |
|
|
795 |
|
|
1,750 |
|
|
3,490 |
|
|
250 |
|
|
318 |
|
|
— |
|
|
— |
|
|
— |
|
|
6,603 |
|
5.00% |
| Office |
|
|
4,702 |
|
|
11,171 |
|
|
— |
|
|
4,214 |
|
|
988 |
|
|
528 |
|
|
1,666 |
|
|
566 |
|
|
23,835 |
|
4.88% |
| Other |
|
|
1,227 |
|
|
— |
|
|
116 |
|
|
1,168 |
|
|
246 |
|
|
901 |
|
|
— |
|
|
2,545 |
|
|
6,203 |
|
4.96% |
| Retail |
|
|
1,266 |
|
|
2,006 |
|
|
— |
|
|
83 |
|
|
— |
|
|
465 |
|
|
3,285 |
|
|
— |
|
|
7,105 |
|
4.15% |
| Senior housing and assisted
living |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
2,186 |
|
|
— |
|
|
— |
|
|
2,186 |
|
4.75% |
| Total |
|
$ |
27,243 |
|
$ |
26,220 |
|
$ |
13,192 |
|
$ |
8,880 |
|
$ |
30,895 |
|
$ |
6,871 |
|
$ |
21,175 |
|
$ |
14,850 |
|
$ |
149,326 |
|
4.91% |
| |
A breakdown of construction loans at the dates indicated were as
follows:
|
(Dollars in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
September 30, 2024 |
|
|
June 30, 2024 |
|
| Construction
Types: |
|
Amount |
|
|
Percent |
|
|
Amount |
|
|
Percent |
|
| Commercial construction ─
retail |
|
$ |
8,710 |
|
|
|
3.0 |
% |
|
$ |
8,698 |
|
|
|
3.2 |
% |
| Commercial construction ─
office |
|
|
4,737 |
|
|
|
1.6 |
|
|
|
4,737 |
|
|
|
1.7 |
|
| Commercial construction ─ self
storage |
|
|
10,408 |
|
|
|
3.5 |
|
|
|
10,000 |
|
|
|
3.6 |
|
| Commercial construction ─ car
wash |
|
|
7,807 |
|
|
|
2.7 |
|
|
|
7,807 |
|
|
|
2.8 |
|
| Multi-family |
|
|
30,931 |
|
|
|
10.6 |
|
|
|
30,960 |
|
|
|
11.3 |
|
| Custom construction ─ single
family residential and single family manufactured residential |
|
|
43,528 |
|
|
|
14.9 |
|
|
|
46,107 |
|
|
|
16.8 |
|
| Custom construction ─ land,
lot and acquisition and development |
|
|
8,220 |
|
|
|
2.8 |
|
|
|
7,310 |
|
|
|
2.7 |
|
| Speculative residential
construction ─ vertical |
|
|
145,549 |
|
|
|
49.8 |
|
|
|
131,293 |
|
|
|
47.9 |
|
| Speculative residential
construction ─ land, lot and acquisition and development |
|
|
32,476 |
|
|
|
11.1 |
|
|
|
27,297 |
|
|
|
10.0 |
|
| Total |
|
$ |
292,366 |
|
|
|
100.0 |
% |
|
$ |
274,209 |
|
|
|
100.0 |
% |
|
(Dollars in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
September 30, 2024 |
|
|
September 30, 2023 |
|
| Construction
Types: |
|
Amount |
|
|
Percent |
|
|
Amount |
|
|
Percent |
|
| Commercial construction ─
retail |
|
$ |
8,710 |
|
|
|
3.0 |
% |
|
$ |
7,347 |
|
|
|
2.5 |
% |
| Commercial construction ─
office |
|
|
4,737 |
|
|
|
1.6 |
|
|
|
4,591 |
|
|
|
1.6 |
|
| Commercial construction ─ self
storage |
|
|
10,408 |
|
|
|
3.5 |
|
|
|
10,734 |
|
|
|
3.7 |
|
| Commercial construction ─ car
wash |
|
|
7,807 |
|
|
|
2.7 |
|
|
|
7,287 |
|
|
|
2.5 |
|
| Multi-family |
|
|
30,931 |
|
|
|
10.6 |
|
|
|
52,913 |
|
|
|
18.3 |
|
| Custom construction ─ single
family residential and single family manufactured residential |
|
|
43,528 |
|
|
|
14.9 |
|
|
|
44,542 |
|
|
|
15.4 |
|
| Custom construction ─ land,
lot and acquisition and development |
|
|
8,220 |
|
|
|
2.8 |
|
|
|
7,012 |
|
|
|
2.4 |
|
| Speculative residential
construction ─ vertical |
|
|
145,549 |
|
|
|
49.8 |
|
|
|
124,244 |
|
|
|
42.8 |
|
| Speculative residential
construction ─ land, lot and acquisition and development |
|
|
32,476 |
|
|
|
11.1 |
|
|
|
31,203 |
|
|
|
10.8 |
|
| Total |
|
$ |
292,366 |
|
|
|
100.0 |
% |
|
$ |
289,873 |
|
|
|
100.0 |
% |
| |
Originations of one-to-four-family loans to purchase and
refinance a home for the periods indicated were as follows:
| (Dollars in thousands) |
|
For the Three Months Ended |
|
|
For the Three Months Ended |
|
|
|
|
|
|
|
|
|
| |
|
September 30, 2024 |
|
|
June 30, 2024 |
|
|
|
|
|
|
|
|
|
| |
|
Amount |
|
|
Percent |
|
|
Amount |
|
|
Percent |
|
|
$ Change |
|
|
% Change |
|
|
Purchase |
|
$ |
168,088 |
|
|
|
85.7 |
% |
|
$ |
193,715 |
|
|
|
92.3 |
% |
|
$ |
(25,627 |
) |
|
|
(13.2 |
)% |
| Refinance |
|
|
28,001 |
|
|
|
14.3 |
|
|
|
16,173 |
|
|
|
7.7 |
|
|
|
11,828 |
|
|
|
73.1 |
% |
|
Total |
|
$ |
196,089 |
|
|
|
100.0 |
% |
|
$ |
209,888 |
|
|
|
100.0 |
% |
|
$ |
(13,799 |
) |
|
|
(6.5 |
)% |
| (Dollars in thousands) |
|
For the Three Months Ended September 30, |
|
|
|
|
|
|
|
|
|
| |
|
2024 |
|
|
2023 |
|
|
|
|
|
|
|
|
|
| |
|
Amount |
|
|
Percent |
|
|
Amount |
|
|
Percent |
|
|
$ Change |
|
|
% Change |
|
|
Purchase |
|
$ |
168,088 |
|
|
|
85.7 |
% |
|
$ |
139,345 |
|
|
|
92.1 |
% |
|
$ |
28,743 |
|
|
|
20.6 |
% |
| Refinance |
|
|
28,001 |
|
|
|
14.3 |
|
|
|
12,001 |
|
|
|
7.9 |
|
|
|
16,000 |
|
|
|
133.3 |
% |
|
Total |
|
$ |
196,089 |
|
|
|
100.0 |
% |
|
$ |
151,346 |
|
|
|
100.0 |
% |
|
$ |
44,743 |
|
|
|
29.6 |
% |
| (Dollars in thousands) |
|
For the Nine Months Ended September 30, |
|
|
|
|
|
|
|
|
|
| |
|
2024 |
|
|
2023 |
|
|
|
|
|
|
|
|
|
| |
|
Amount |
|
|
Percent |
|
|
Amount |
|
|
Percent |
|
|
$ Change |
|
|
% Change |
|
|
Purchase |
|
$ |
497,705 |
|
|
|
88.8 |
% |
|
$ |
387,211 |
|
|
|
91.8 |
% |
|
$ |
110,494 |
|
|
|
28.5 |
% |
| Refinance |
|
|
62,546 |
|
|
|
11.2 |
|
|
|
34,635 |
|
|
|
8.2 |
|
|
|
27,911 |
|
|
|
80.6 |
% |
|
Total |
|
$ |
560,251 |
|
|
|
100.0 |
% |
|
$ |
421,846 |
|
|
|
100.0 |
% |
|
$ |
138,405 |
|
|
|
32.8 |
% |
|
|
During the quarter ended September 30, 2024, the Company sold
$167.6 million of one-to-four-family loans compared to
$164.5 million during the previous quarter and
$117.6 million during the same quarter one year ago. Gross
margins on home loan sales were unchanged at 2.96% for
both quarters ended September 30, 2024, and June 30,
2024, and declined from 3.08% in the same quarter one year ago.
Gross margins are defined as the margin on loans sold (cash sales)
without the impact of deferred costs.
Liabilities and Equity Summary
Changes in deposits at the dates indicated were as follows:
|
(Dollars in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
September 30, 2024 |
|
|
June 30, 2024 |
|
|
|
|
|
|
|
|
|
| Transactional deposits: |
|
Amount |
|
|
Percent |
|
|
Amount |
|
|
Percent |
|
|
$ Change |
|
|
% Change |
|
|
Noninterest-bearing checking |
|
$ |
641,270 |
|
|
|
26.4 |
% |
|
$ |
613,137 |
|
|
|
25.7 |
% |
|
$ |
28,133 |
|
|
|
4.6 |
% |
|
Interest-bearing checking (1) |
|
|
165,944 |
|
|
|
6.8 |
|
|
|
166,839 |
|
|
|
7.0 |
|
|
|
(895 |
) |
|
|
(0.5 |
) |
|
Escrow accounts related to mortgages serviced (2) |
|
|
16,483 |
|
|
|
0.7 |
|
|
|
10,212 |
|
|
|
0.4 |
|
|
|
6,271 |
|
|
|
61.4 |
|
|
Subtotal |
|
|
823,697 |
|
|
|
33.9 |
|
|
|
790,188 |
|
|
|
33.1 |
|
|
|
33,509 |
|
|
|
4.2 |
|
| Savings |
|
|
151,364 |
|
|
|
6.2 |
|
|
|
151,398 |
|
|
|
6.4 |
|
|
|
(34 |
) |
|
|
(0.0 |
) |
| Money market (3) |
|
|
340,049 |
|
|
|
14.0 |
|
|
|
343,995 |
|
|
|
14.4 |
|
|
|
(3,946 |
) |
|
|
(1.1 |
) |
|
Subtotal |
|
|
491,413 |
|
|
|
20.2 |
|
|
|
495,393 |
|
|
|
20.8 |
|
|
|
(3,980 |
) |
|
|
(0.8 |
) |
| Certificates of deposit less
than $100,000 (4) |
|
|
533,441 |
|
|
|
22.0 |
|
|
|
530,537 |
|
|
|
22.3 |
|
|
|
2,904 |
|
|
|
0.5 |
|
| Certificates of deposit of
$100,000 through $250,000 |
|
|
452,705 |
|
|
|
18.7 |
|
|
|
427,893 |
|
|
|
18.0 |
|
|
|
24,812 |
|
|
|
5.8 |
|
| Certificates of deposit
greater than $250,000 |
|
|
126,075 |
|
|
|
5.2 |
|
|
|
138,792 |
|
|
|
5.8 |
|
|
|
(12,717 |
) |
|
|
(9.2 |
) |
|
Subtotal |
|
|
1,112,221 |
|
|
|
45.9 |
|
|
|
1,097,222 |
|
|
|
46.1 |
|
|
|
14,999 |
|
|
|
1.4 |
|
|
Total |
|
$ |
2,427,331 |
|
|
|
100.0 |
% |
|
$ |
2,382,803 |
|
|
|
100.0 |
% |
|
$ |
44,528 |
|
|
|
1.9 |
% |
| (Dollars in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
September 30, 2024 |
|
|
September 30, 2023 |
|
|
|
|
|
|
|
|
|
| Transactional deposits: |
|
Amount |
|
|
Percent |
|
|
Amount |
|
|
Percent |
|
|
$ Change |
|
|
% Change |
|
|
Noninterest-bearing checking |
|
$ |
641,270 |
|
|
|
26.4 |
% |
|
$ |
643,670 |
|
|
|
26.2 |
% |
|
$ |
(2,400 |
) |
|
|
(0.4 |
)% |
|
Interest-bearing checking (1) |
|
|
165,944 |
|
|
|
6.8 |
|
|
|
219,468 |
|
|
|
8.9 |
|
|
|
(53,524 |
) |
|
|
(24.4 |
) |
|
Escrow accounts related to mortgages serviced (2) |
|
|
16,483 |
|
|
|
0.7 |
|
|
|
26,489 |
|
|
|
1.1 |
|
|
|
(10,006 |
) |
|
|
(37.8 |
) |
|
Subtotal |
|
|
823,697 |
|
|
|
33.9 |
|
|
|
889,627 |
|
|
|
36.2 |
|
|
|
(65,930 |
) |
|
|
(7.4 |
) |
| Savings |
|
|
151,364 |
|
|
|
6.2 |
|
|
|
157,901 |
|
|
|
6.4 |
|
|
|
(6,537 |
) |
|
|
(4.1 |
) |
| Money market (3) |
|
|
340,049 |
|
|
|
14.0 |
|
|
|
389,962 |
|
|
|
15.9 |
|
|
|
(49,913 |
) |
|
|
(12.8 |
) |
|
Subtotal |
|
|
491,413 |
|
|
|
20.2 |
|
|
|
547,863 |
|
|
|
22.3 |
|
|
|
(56,450 |
) |
|
|
(10.3 |
) |
| Certificates of deposit less
than $100,000 (4) |
|
|
533,441 |
|
|
|
22.0 |
|
|
|
527,032 |
|
|
|
21.5 |
|
|
|
6,409 |
|
|
|
1.2 |
|
| Certificates of deposit of
$100,000 through $250,000 |
|
|
452,705 |
|
|
|
18.7 |
|
|
|
406,545 |
|
|
|
16.6 |
|
|
|
46,160 |
|
|
|
11.4 |
|
| Certificates of deposit
greater than $250,000 |
|
|
126,075 |
|
|
|
5.2 |
|
|
|
83,377 |
|
|
|
3.4 |
|
|
|
42,698 |
|
|
|
51.2 |
|
|
Subtotal |
|
|
1,112,221 |
|
|
|
45.9 |
|
|
|
1,016,954 |
|
|
|
41.5 |
|
|
|
95,267 |
|
|
|
9.4 |
|
|
Total |
|
$ |
2,427,331 |
|
|
|
100.0 |
% |
|
$ |
2,454,444 |
|
|
|
100.0 |
% |
|
$ |
(27,113 |
) |
|
|
(1.1 |
)% |
__________________________________
|
(1) |
|
There were no brokered deposits at September 30,
2024 and June 30, 2024, compared to $50.1 million
at September 30, 2023.
|
|
(2) |
|
Noninterest-bearing
accounts. |
|
(3) |
|
Includes $1.0 million, $4.0
million and $51,000 of brokered deposits at September 30,
2024, June 30, 2024 and September 30, 2023, respectively. |
|
(4) |
|
Includes $250.2 million,
$261.0 million, and $323.3 million of brokered deposits
at September 30, 2024, June 30, 2024 and September 30, 2023,
respectively. |
|
|
|
|
At September 30, 2024, CDs, which include retail and non-retail
CDs, totaled $1.11 billion, compared to $1.10 billion at June
30, 2024 and $1.02 billion at September 30, 2023, with
non-retail CDs representing 22.5%, 24.9% and 33.2% of total CDs at
such dates, respectively. At September 30, 2024, non-retail CDs,
which include brokered CDs, online CDs and public funds CDs,
decreased $10.4 million to $262.9 million, compared to
$273.4 million at June 30, 2024, primarily due to
a decrease of $10.8 million in brokered CDs. Non-retail
CDs totaled $262.9 million at September 30, 2024, compared to
$337.2 million at September 30, 2023.
At September 30, 2024, the Bank had uninsured deposits of
approximately $644.9 million, compared to
approximately $586.6 million at June 30, 2024, and
$591.6 million at September 30, 2023. The uninsured
amounts are estimates based on the methodologies and assumptions
used for the Bank's regulatory reporting requirements.
At September 30, 2024, borrowings decreased $18.1 million
to $163.8 million at September 30, 2024, from
$181.9 million at June 30, 2024, and increased
$41.9 million from $121.9 million at September 30, 2023.
These borrowings were comprised of FHLB advances of
$153.8 million, and overnight borrowings of
$10.0 million.
Total stockholders’ equity increased $4.9 million to
$288.9 million at September 30, 2024, from $284.0 million at
June 30, 2024, and increased $38.2 million, from
$250.7 million at September 30, 2023. The increase in
stockholders’ equity at September 30, 2024, compared
to June 30, 2024, reflects net income of $10.3 million,
partially offset by cash dividends paid of $2.1 million.
Stockholders’ equity was also impacted by decreases in unrealized
net losses on securities available for sale of $4.2
million, net of tax, and decreases in unrealized net
gains on fair value and cash flow hedges of $7.0 million,
net of tax, reflecting changes in market interest rates during
the quarter, resulting in a $2.7 million increase in
accumulated other comprehensive loss, net of tax. Book value per
common share was $37.45 at September 30, 2024, compared to
$37.15 at June 30, 2024, and $32.58 at September 30,
2023.
The Bank is considered well capitalized under the capital
requirements established by the Federal Deposit Insurance
Corporation (“FDIC”) with a total risk-based capital ratio of
14.2%, a Tier 1 leverage capital ratio of 11.2%, and a common
equity Tier 1 (“CET1”) capital ratio of 12.9% at September 30,
2024.
The Company exceeded all regulatory capital requirements with a
total risk-based capital ratio of 14.4%, a Tier 1 leverage capital
ratio of 9.7%, and a CET1 ratio of 11.2% at September 30, 2024.
Credit Quality
The allowance for credit losses on loans (“ACLL”) was
$31.2 million, or 1.25% of gross loans receivable (excluding
loans HFS) at September 30, 2024, compared to $31.2 million,
or 1.26% of gross loans receivable (excluding loans HFS), at
June 30, 2024, and $30.5 million, or 1.27% of gross loans
receivable (excluding loans HFS), at September 30, 2023. The
virtually static balance in the ACLL at September 30,
2024, compared to the prior quarter was primarily due to
insignificant changes in the loan portfolio period over period and
provision for credit losses on loans that offset consumer loan
net charge-offs. The increase of $731,000 in the
ACLL from the same quarter the prior year was primarily due to
organic loan growth and increases in nonperforming loans and
net charge-offs. The allowance for credit losses on unfunded loan
commitments decreased $79,000 to $1.5 million at
September 30, 2024, compared to $1.6 million at June 30,
2024, and decreased $291,000 from $1.8 million at
September 30, 2023.
Nonperforming loans decreased $634,000 to
$10.8 million at September 30, 2024, compared to
$11.4 million at June 30, 2024, and increased
$5.2 million from $5.6 million at September 30, 2023. The
decrease in nonperforming loans compared to the prior
quarter was primarily due to decreases in nonperforming
indirect home improvement loans of $549,000 and marine
loans of $94,000. The increase in nonperforming loans compared to
the same quarter the prior year was primarily due to increases
in nonperforming construction and development loans of
$4.7 million and commercial business loans of
$461,000.
Loans classified as substandard decreased $1.1 million to
$23.2 million at September 30, 2024, compared
to $24.3 million at June 30, 2024, and increased
$4.0 million from $19.2 million at September 30,
2023. The decrease in substandard loans compared to the
prior quarter was primarily due to a decrease of
$549,000 in indirect home improvement loans, $323,000 in
commercial real estate loans, $94,000 in marine loans, $74,000 in
C&I loans, and $59,000 in one-to-four family loans. The
increase in substandard loans compared to the prior year was
primarily due to increases of $4.7 million
in construction and development loans, $108,000 in home equity
loans, $102,000 in indirect home improvement loans, partially
offset by decreases of $462,000 in C&I loans, $293,000 in
one-to-four-family loans, and $173,000 in marine loans. There
was no other real estate owned (“OREO”) property at
September 30, 2024 and June 30, 2024, compared to one OREO property
(a closed branch in Centralia, Washington) of $570,000 at
September 30, 2023.
Operating Results
Net interest income increased $610,000 to
$31.2 million for the three months ended September 30, 2024,
from $30.6 million for the three months ended September 30,
2023, primarily due to an increase in interest and
dividend income of $3.8 million, partially offset by an
increase in interest expense of $3.2 million. The $3.8 million
increase in total interest income was primarily due to an
increase of $3.9 million in interest income on loans
receivable, including fees, primarily as a result of new loans
being originated at higher rates and variable rate loans
repricing higher. The $3.2 million increase in total interest
expense was primarily the result of higher market
interest rates, higher utilization of borrowings and a shift in
deposit mix from transactional accounts to higher cost CDs.
For the nine months ended September 30, 2024, net
interest income decreased $857,000 to $92.0 million, from
$92.8 million for the nine months ended September
30, 2023, resulting from an increase in interest
expense of $16.0 million and an increase in interest
income of $15.1 million.
NIM (annualized) increased one basis point to 4.35%
for the three months ended September 30, 2024, from 4.34% for the
same period in the prior year, and decreased 26 basis points
to 4.30% for the nine months ended September 30, 2024,
from 4.56% for the nine months ended September 30,
2023. The change in NIM for the three and nine months
ended September 30, 2024 compared to the same periods in 2023,
reflects the increased costs of deposits and borrowings, which
outpaced the increased yields earned on interest-earning
assets.
The average total cost of funds, including noninterest-bearing
checking, increased 47 basis points to 2.39% for the three
months ended September 30, 2024, from 1.92% for the three months
ended September 30, 2023. This increase was predominantly due to
higher market rates for deposits and increased utilization of
higher cost borrowings. The average cost of funds increased
75 basis points to 2.33% for the nine months
ended September 30, 2024, from 1.58% for the nine months
ended September 30, 2023, also reflecting increases in market
interest rates over last year and increased utilization of
borrowings. Management remains focused on matching
deposit/liability duration with the duration of loans/assets where
feasible.
For the three and nine months ended September 30, 2024, the
provision for credit losses on loans was $1.5 million and
$4.0 million, compared to $683,000 and
$4.1 million for the three and nine months ended
September 30, 2023. The provision for credit losses on loans
reflects an increase in charge-off activity for the quarter and
increases in the loan portfolio for the year-to-date periods.
During the three months ended September 30, 2024, net
charge-offs increased $1.1 million to $1.6 million,
compared to $531,000 for the same period last year. This
increase was the result of increased net charge-offs of
$996,000 in indirect home improvement loans and $82,000 in
marine loans, partially offset by a net recovery
of $8,000 in other consumer loans. Net
charge-offs increased $2.7 million to $4.3 million during
the nine months ended September 30, 2024, compared to
$1.6 million during the nine months ended September
30, 2023. This increase included net charge-off
increases of $1.5 million in indirect home improvement
loans, $1.0 million C&I loans, $146,000 in marine loans
and $117,000 in other consumer loans. Management attributes
the increase in net charge-offs over the year primarily to
volatile economic conditions.
Noninterest income increased $985,000 to
$6.0 million for the three months ended September 30,
2024, from $5.0 million for the three months ended September
30, 2023. The increase reflects a $648,000 increase
in gain on sale of loans, primarily as a result of the increased
volume of loans sold and an increase of $566,000 in other
noninterest income, primarily due to fair value changes on
loans. Noninterest income during the three months
ended September 30, 2024, also reflects a $141,000 gain on the
sale of MSRs, with no similar transaction occurring in the
comparable quarter last year. These increases
were partially offset by a $400,000 decrease in
service charges and fee income, primarily due to the sale of MSRs
in the first quarter of 2024. Noninterest income increased
$1.9 million to $16.9 million for the
nine months ended September 30, 2024, from
$15.0 million for the nine months ended September
30, 2023. This increase was primarily the result of an
$8.4 million gain on sale of MSRs recorded during the first
nine months of 2024 with no similar transaction occurring in
the comparable nine month period in 2023, and a $1.5
million increase in gain on sale of loans, partially offset by a
$7.8 million loss on sale of investment securities resulting
from management's strategic decision to increase the yields earned
on and reduce the duration of the securities portfolio, and an
$839,000 decrease in service charges and fee income due to a
reduction in loan servicing fees due to the sale of MSRs in the
first quarter of 2024.
Noninterest expense increased $2.2 million to
$25.8 million for the three months ended September 30,
2024, from $23.6 million for the three months ended September
30, 2023. The increase in noninterest expense
was primarily due to increases of $506,000 in
impairment of MSRs, $482,000 in salaries and benefits,
$557,000 in professional and board fees, which included
$571,000 in nonrecurring consulting charges and legal
fees related to application/system upgrades and tax
credit work, $418,000 in operations, $315,000 in data
processing, and a decrease of $105,000 in
amortization of CDI. Noninterest expense increased $1.9
million to $73.2 million for the nine months
ended September 30, 2024, from $71.3 million for the
nine months ended September 30, 2023. This increase
was primarily due to increases of $1.1 million in data
processing, $1.0 million in professional and board fees which
included $824,000 in nonrecurring consulting charges and legal
fees for the reasons stated above, $610,000 in operations
expense, and $545,000 in impairment of MSRs, partially offset by a
decrease of $1.6 million in acquisition costs as a result
of no acquisition costs during the current period.
For the three months ended September 30, 2024, the Company
recorded a benefit for income taxes of $420,000 as compared to
a provision for income taxes of $2.5 million for the
three months ended September 30, 2023. The tax benefit was
primarily due to the purchase during the quarter
ended September 30, 2024, of alternative energy tax credits
available under the Inflation Reduction Act of 2022, resulting in a
gain of $2.3 million, which was partially offset by the $1.8
million provision for income taxes recorded on net income for
the three months ended September 30, 2024. The Inflation
Reduction Act of 2022 introduced several energy tax credits
designed to promote clean energy investments, reduce carbon
emissions, and accelerate the transition to renewable
energy. The effective corporate income tax rates for the three
months ended September 30, 2024 and 2023 were (4.3)% which was
reduced by 2,300 basis points due to the energy tax credits
discussed above, and 22.0%, respectively. The decrease in the
effective corporate income tax rate, excluding the effects of the
energy tax credits, was attributable to tax benefits derived from
the exercises of employee stock options during the current
quarter.
About FS Bancorp
FS Bancorp, Inc., a Washington corporation, is the holding
company for 1st Security Bank of Washington. The Bank offers a
range of loan and deposit services primarily to small- and
middle-market businesses and individuals in Washington and
Oregon. It operates through 27 bank branches, one
headquarters office that provides loans and deposit services, and
loan production offices in various suburban communities in the
greater Puget Sound area, the Kennewick-Pasco-Richland metropolitan
area of Washington, also known as the Tri-Cities, and in Vancouver,
Washington. Additionally, the Bank services home mortgage customers
across the Northwest, focusing on markets in Washington
State including the Puget Sound, Tri-Cities, and Vancouver.
Forward-Looking Statements
When used in this press release and in other documents filed
with or furnished to the Securities and Exchange Commission (the
“SEC”), in press releases or other public stockholder
communications, or in oral statements made with the approval of an
authorized executive officer, the words or phrases “believe,”
“will,” “will likely result,” “are expected to,” “will continue,”
“is anticipated,” “estimate,” “project,” “plans,” or similar
expressions are intended to identify “forward-looking statements”
within the meaning of the Private Securities Litigation Reform Act
of 1995. Forward-looking statements are not historical facts but
instead represent management's current expectations and forecasts
regarding future events, many of which are inherently uncertain and
outside of our control. Actual results may differ, possibly
materially from those currently expected or projected in these
forward-looking statements. Factors that could cause the Company’s
actual results to differ materially from those described in the
forward-looking statements, include but are not limited to, the
following: adverse impacts to economic conditions in the Company’s
local market areas, other markets where the Company has lending
relationships, or other aspects of the Company’s business
operations or financial markets, including, without limitation, as
a result of employment levels; labor shortages, the effects of
inflation, a recession or slowed economic growth; changes in
the interest rate environment, including the increases and
decrease in the Federal Reserve benchmark rate and duration at
which such interest rate levels are maintained, which could
adversely affect our revenues and expenses, the values of our
assets and obligations, and the availability and cost of capital
and liquidity; the impact of inflation and the current and future
monetary policies of the Federal Reserve in response thereto; the
effects of any federal government shutdown; increased
competitive pressures, changes in the interest rate environment,
adverse changes in the securities markets, the Company’s ability
to execute its plans to grow its residential construction
lending, mortgage banking, and warehouse lending operations, and
the geographic expansion of its indirect home improvement lending;
challenges arising from expanding into new geographic markets,
products, or services; secondary market conditions for loans and
the Company’s ability to originate loans for sale and sell loans in
the secondary market; volatility in the mortgage industry;
fluctuations in deposits; liquidity issues, including our ability
to borrow funds or raise additional capital, if necessary; the
impact of bank failures or adverse developments at other banks and
related negative press about the banking industry in general on
investor and depositor sentiment; legislative and regulatory
changes, including changes in banking, securities and tax law, in
regulatory policies and principles, or the interpretation of
regulatory capital or other rules; disruptions, security
breaches, or other adverse events, failures or interruptions in, or
attacks on, our information technology systems or on the
third-party vendors who perform critical processing functions for
us; environmental, social and governance goals; the effects of
climate change, severe weather events, natural disasters,
pandemics, epidemics and other public health crises, acts of war or
terrorism, civil unrest and other external events on our
business; and other factors described in the Company’s latest
Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, and
other reports filed with or furnished to the SEC which are
available on its website at www.fsbwa.com and on the SEC's website
at www.sec.gov.
Any of the forward-looking statements that the Company makes in
this press release and in the other public statements are based
upon management's beliefs and assumptions at the time they are made
and may turn out to be incorrect because of the inaccurate
assumptions the Company might make, because of the factors
illustrated above or because of other factors that cannot be
foreseen by the Company. Therefore, these factors should be
considered in evaluating the forward-looking statements, and undue
reliance should not be placed on such statements. The Company does
not undertake and specifically disclaims any obligation to revise
any forward-looking statements to reflect the occurrence of
anticipated or unanticipated events or circumstances after the date
of such statements.
|
FS BANCORP, INC. AND
SUBSIDIARYCONSOLIDATED BALANCE
SHEETS(Dollars in thousands, except share amounts)
(Unaudited) |
| |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Linked |
|
|
Prior Year |
|
| |
|
September 30, |
|
|
June 30, |
|
|
September 30, |
|
|
Quarter |
|
|
Quarter |
|
| |
|
2024 |
|
|
2024 |
|
|
2023 |
|
|
% Change |
|
|
% Change |
|
|
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and due from banks |
|
$ |
17,950 |
|
|
$ |
20,005 |
|
|
$ |
18,137 |
|
|
|
(10 |
) |
|
|
(1 |
) |
|
Interest-bearing deposits at other financial institutions |
|
|
22,390 |
|
|
|
13,006 |
|
|
|
62,536 |
|
|
|
72 |
|
|
|
(64 |
) |
|
Total cash and cash equivalents |
|
|
40,340 |
|
|
|
33,011 |
|
|
|
80,673 |
|
|
|
22 |
|
|
|
(50 |
) |
|
Certificates of deposit at other financial institutions |
|
|
12,001 |
|
|
|
12,707 |
|
|
|
17,636 |
|
|
|
(6 |
) |
|
|
(32 |
) |
|
Securities available-for-sale, at fair value |
|
|
228,199 |
|
|
|
221,182 |
|
|
|
251,917 |
|
|
|
3 |
|
|
|
(9 |
) |
|
Securities held-to-maturity, net |
|
|
8,455 |
|
|
|
8,455 |
|
|
|
8,455 |
|
|
|
— |
|
|
|
— |
|
|
Loans held for sale, at fair value |
|
|
49,373 |
|
|
|
53,811 |
|
|
|
18,636 |
|
|
|
(8 |
) |
|
|
165 |
|
|
Loans receivable, net |
|
|
2,463,697 |
|
|
|
2,457,184 |
|
|
|
2,375,572 |
|
|
|
— |
|
|
|
4 |
|
|
Accrued interest receivable |
|
|
14,014 |
|
|
|
13,792 |
|
|
|
13,925 |
|
|
|
2 |
|
|
|
1 |
|
|
Premises and equipment, net |
|
|
30,026 |
|
|
|
29,999 |
|
|
|
30,926 |
|
|
|
— |
|
|
|
(3 |
) |
|
Operating lease right-of-use |
|
|
5,365 |
|
|
|
5,784 |
|
|
|
7,042 |
|
|
|
(7 |
) |
|
|
(24 |
) |
|
Federal Home Loan Bank stock, at cost |
|
|
9,504 |
|
|
|
10,322 |
|
|
|
3,696 |
|
|
|
(8 |
) |
|
|
157 |
|
|
Other real estate owned |
|
|
— |
|
|
|
— |
|
|
|
570 |
|
|
|
— |
|
|
|
(100 |
) |
|
Deferred tax asset, net |
|
|
4,222 |
|
|
|
4,590 |
|
|
|
7,424 |
|
|
|
(8 |
) |
|
|
(43 |
) |
|
Bank owned life insurance (“BOLI”), net |
|
|
38,453 |
|
|
|
38,201 |
|
|
|
37,480 |
|
|
|
1 |
|
|
|
3 |
|
|
MSRs, held at the lower of cost or fair value |
|
|
8,739 |
|
|
|
9,352 |
|
|
|
17,657 |
|
|
|
(7 |
) |
|
|
(51 |
) |
|
Goodwill |
|
|
3,592 |
|
|
|
3,592 |
|
|
|
3,592 |
|
|
|
— |
|
|
|
— |
|
|
Core deposit intangible, net |
|
|
14,586 |
|
|
|
15,483 |
|
|
|
18,323 |
|
|
|
(6 |
) |
|
|
(20 |
) |
|
Other assets |
|
|
39,642 |
|
|
|
23,912 |
|
|
|
26,548 |
|
|
|
66 |
|
|
|
49 |
|
| TOTAL
ASSETS |
|
$ |
2,970,208 |
|
|
$ |
2,941,377 |
|
|
$ |
2,920,072 |
|
|
|
1 |
|
|
|
2 |
|
|
LIABILITIES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noninterest-bearing accounts |
|
$ |
657,753 |
|
|
$ |
623,349 |
|
|
$ |
670,158 |
|
|
|
6 |
|
|
|
(2 |
) |
|
Interest-bearing accounts |
|
|
1,769,578 |
|
|
|
1,759,454 |
|
|
|
1,784,286 |
|
|
|
1 |
|
|
|
(1 |
) |
|
Total deposits |
|
|
2,427,331 |
|
|
|
2,382,803 |
|
|
|
2,454,444 |
|
|
|
2 |
|
|
|
(1 |
) |
|
Borrowings |
|
|
163,806 |
|
|
|
181,895 |
|
|
|
121,895 |
|
|
|
(10 |
) |
|
|
34 |
|
|
Subordinated notes: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Principal amount |
|
|
50,000 |
|
|
|
50,000 |
|
|
|
50,000 |
|
|
|
— |
|
|
|
— |
|
|
Unamortized debt issuance costs |
|
|
(423 |
) |
|
|
(439 |
) |
|
|
(489 |
) |
|
|
(4 |
) |
|
|
(13 |
) |
|
Total subordinated notes less unamortized debt issuance costs |
|
|
49,577 |
|
|
|
49,561 |
|
|
|
49,511 |
|
|
|
— |
|
|
|
— |
|
|
Operating lease liability |
|
|
5,548 |
|
|
|
5,979 |
|
|
|
7,269 |
|
|
|
(7 |
) |
|
|
(24 |
) |
|
Other liabilities |
|
|
35,044 |
|
|
|
37,113 |
|
|
|
36,288 |
|
|
|
(6 |
) |
|
|
(3 |
) |
|
Total liabilities |
|
|
2,681,306 |
|
|
|
2,657,351 |
|
|
|
2,669,407 |
|
|
|
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;
7,817,172 shares issued and outstanding at September 30, 2024,
7,742,607 at June 30, 2024, and 7,796,095 at September 30,
2023 |
|
|
78 |
|
|
|
77 |
|
|
|
78 |
|
|
|
1 |
|
|
|
— |
|
|
Additional paid-in capital |
|
|
55,264 |
|
|
|
55,834 |
|
|
|
57,464 |
|
|
|
(1 |
) |
|
|
(4 |
) |
|
Retained earnings |
|
|
251,843 |
|
|
|
243,651 |
|
|
|
222,532 |
|
|
|
3 |
|
|
|
13 |
|
|
Accumulated other comprehensive loss, net of tax |
|
|
(18,283 |
) |
|
|
(15,536 |
) |
|
|
(29,409 |
) |
|
|
18 |
|
|
|
(38 |
) |
|
Total stockholders’ equity |
|
|
288,902 |
|
|
|
284,026 |
|
|
|
250,665 |
|
|
|
2 |
|
|
|
15 |
|
| TOTAL LIABILITIES AND
STOCKHOLDERS’ EQUITY |
|
$ |
2,970,208 |
|
|
$ |
2,941,377 |
|
|
$ |
2,920,072 |
|
|
|
1 |
|
|
|
2 |
|
| |
|
FS BANCORP, INC. AND
SUBSIDIARYCONSOLIDATED STATEMENTS OF
INCOME(Dollars in thousands, except per share amounts)
(Unaudited) |
| |
| |
|
Three Months Ended |
|
|
Linked |
|
|
Prior Year |
|
| |
|
September 30, |
|
|
June 30, |
|
|
September 30, |
|
|
Quarter |
|
|
Quarter |
|
| |
|
2024 |
|
|
2024 |
|
|
2023 |
|
|
% Change |
|
|
% Change |
|
|
INTEREST INCOME |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Loans receivable, including
fees |
|
$ |
43,800 |
|
|
$ |
42,406 |
|
|
$ |
39,874 |
|
|
|
3 |
|
|
|
10 |
|
| Interest and dividends on
investment securities, cash and cash equivalents, and certificates
of deposit at other financial institutions |
|
|
3,243 |
|
|
|
3,534 |
|
|
|
3,396 |
|
|
|
(8 |
) |
|
|
(5 |
) |
|
Total interest and dividend income |
|
|
47,043 |
|
|
|
45,940 |
|
|
|
43,270 |
|
|
|
2 |
|
|
|
9 |
|
| INTEREST
EXPENSE |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Deposits |
|
|
13,486 |
|
|
|
13,252 |
|
|
|
10,462 |
|
|
|
2 |
|
|
|
29 |
|
| Borrowings |
|
|
1,828 |
|
|
|
1,801 |
|
|
|
1,689 |
|
|
|
1 |
|
|
|
8 |
|
| Subordinated notes |
|
|
485 |
|
|
|
486 |
|
|
|
485 |
|
|
|
— |
|
|
|
— |
|
|
Total interest expense |
|
|
15,799 |
|
|
|
15,539 |
|
|
|
12,636 |
|
|
|
2 |
|
|
|
25 |
|
| NET INTEREST
INCOME |
|
|
31,244 |
|
|
|
30,401 |
|
|
|
30,634 |
|
|
|
3 |
|
|
|
2 |
|
| PROVISION FOR CREDIT
LOSSES |
|
|
1,513 |
|
|
|
1,077 |
|
|
|
548 |
|
|
|
40 |
|
|
|
176 |
|
| NET INTEREST INCOME
AFTER PROVISION FOR CREDIT LOSSES |
|
|
29,731 |
|
|
|
29,324 |
|
|
|
30,086 |
|
|
|
1 |
|
|
|
(1 |
) |
| NONINTEREST
INCOME |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Service charges and fee
income |
|
|
2,482 |
|
|
|
2,479 |
|
|
|
2,882 |
|
|
|
— |
|
|
|
(14 |
) |
| Gain on sale of loans |
|
|
2,523 |
|
|
|
2,463 |
|
|
|
1,875 |
|
|
|
2 |
|
|
|
35 |
|
| Gain on sale of MSRs |
|
|
141 |
|
|
|
— |
|
|
|
— |
|
|
|
NM |
|
|
|
NM |
|
| Gain on sale of investment
securities, net |
|
|
11 |
|
|
|
151 |
|
|
|
— |
|
|
|
(93 |
) |
|
|
NM |
|
| Earnings on cash surrender
value of BOLI |
|
|
252 |
|
|
|
242 |
|
|
|
233 |
|
|
|
4 |
|
|
|
8 |
|
| Other noninterest income |
|
|
558 |
|
|
|
533 |
|
|
|
(8 |
) |
|
|
5 |
|
|
|
(7,075 |
) |
|
Total noninterest income |
|
|
5,967 |
|
|
|
5,868 |
|
|
|
4,982 |
|
|
|
2 |
|
|
|
20 |
|
| NONINTEREST
EXPENSE |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Salaries and benefits |
|
|
13,985 |
|
|
|
13,378 |
|
|
|
13,503 |
|
|
|
5 |
|
|
|
4 |
|
| Operations |
|
|
3,827 |
|
|
|
3,519 |
|
|
|
3,409 |
|
|
|
9 |
|
|
|
12 |
|
| Occupancy |
|
|
1,662 |
|
|
|
1,669 |
|
|
|
1,588 |
|
|
|
— |
|
|
|
5 |
|
| Data processing |
|
|
2,156 |
|
|
|
2,058 |
|
|
|
1,841 |
|
|
|
5 |
|
|
|
17 |
|
| Loan costs |
|
|
666 |
|
|
|
653 |
|
|
|
564 |
|
|
|
2 |
|
|
|
18 |
|
| Professional and board
fees |
|
|
1,223 |
|
|
|
888 |
|
|
|
666 |
|
|
|
38 |
|
|
|
84 |
|
| FDIC insurance |
|
|
533 |
|
|
|
450 |
|
|
|
561 |
|
|
|
18 |
|
|
|
(5 |
) |
| Marketing and advertising |
|
|
377 |
|
|
|
377 |
|
|
|
452 |
|
|
|
— |
|
|
|
(17 |
) |
| Amortization of core deposit
intangible |
|
|
897 |
|
|
|
919 |
|
|
|
1,002 |
|
|
|
(2 |
) |
|
|
(10 |
) |
| Impairment (recovery) of
servicing rights |
|
|
506 |
|
|
|
(54 |
) |
|
|
— |
|
|
|
(1,037 |
) |
|
|
NM |
|
|
Total noninterest expense |
|
|
25,832 |
|
|
|
23,857 |
|
|
|
23,586 |
|
|
|
8 |
|
|
|
10 |
|
| INCOME BEFORE
(BENEFIT) PROVISION FOR INCOME TAXES |
|
|
9,866 |
|
|
|
11,335 |
|
|
|
11,482 |
|
|
|
(13 |
) |
|
|
(14 |
) |
| (BENEFIT) PROVISION FOR INCOME
TAXES |
|
|
(420 |
) |
|
|
2,376 |
|
|
|
2,529 |
|
|
|
(118 |
) |
|
|
(117 |
) |
| NET
INCOME |
|
$ |
10,286 |
|
|
$ |
8,959 |
|
|
$ |
8,953 |
|
|
|
15 |
|
|
|
15 |
|
| Basic earnings per share |
|
$ |
1.32 |
|
|
$ |
1.15 |
|
|
$ |
1.15 |
|
|
|
15 |
|
|
|
15 |
|
| Diluted earnings per
share |
|
$ |
1.29 |
|
|
$ |
1.13 |
|
|
$ |
1.13 |
|
|
|
14 |
|
|
|
14 |
|
| |
| |
|
Nine Months Ended |
|
|
Year |
|
| |
|
September 30, |
|
|
September 30, |
|
|
Over Year |
|
| |
|
2024 |
|
|
2023 |
|
|
% Change |
|
|
INTEREST INCOME |
|
|
|
|
|
|
|
|
|
|
|
|
| Loans receivable, including
fees |
|
$ |
127,203 |
|
|
$ |
114,082 |
|
|
|
12 |
|
| Interest and dividends on
investment securities, cash and cash equivalents, and certificates
of deposit at other financial institutions |
|
|
10,660 |
|
|
|
8,667 |
|
|
|
23 |
|
|
Total interest and dividend income |
|
|
137,863 |
|
|
|
122,749 |
|
|
|
12 |
|
| INTEREST
EXPENSE |
|
|
|
|
|
|
|
|
|
|
|
|
| Deposits |
|
|
39,620 |
|
|
|
24,696 |
|
|
|
60 |
|
| Borrowings |
|
|
4,796 |
|
|
|
3,749 |
|
|
|
28 |
|
| Subordinated note |
|
|
1,456 |
|
|
|
1,456 |
|
|
|
— |
|
|
Total interest expense |
|
|
45,872 |
|
|
|
29,901 |
|
|
|
53 |
|
| NET INTEREST
INCOME |
|
|
91,991 |
|
|
|
92,848 |
|
|
|
(1 |
) |
| PROVISION FOR CREDIT
LOSSES |
|
|
3,989 |
|
|
|
3,372 |
|
|
|
18 |
|
| NET INTEREST INCOME
AFTER PROVISION FOR CREDIT LOSSES |
|
|
88,002 |
|
|
|
89,476 |
|
|
|
(2 |
) |
| NONINTEREST
INCOME |
|
|
|
|
|
|
|
|
|
|
|
|
| Service charges and fee
income |
|
|
7,513 |
|
|
|
8,352 |
|
|
|
(10 |
) |
| Gain on sale of loans |
|
|
6,824 |
|
|
|
5,298 |
|
|
|
29 |
|
| Gain on sale of MSRs |
|
|
8,356 |
|
|
|
— |
|
|
|
NM |
|
| Loss on sale of investment
securities, net |
|
|
(7,836 |
) |
|
|
— |
|
|
|
NM |
|
| Earnings on cash surrender
value of BOLI |
|
|
734 |
|
|
|
681 |
|
|
|
8 |
|
| Other noninterest income |
|
|
1,355 |
|
|
|
703 |
|
|
|
93 |
|
|
Total noninterest income |
|
|
16,946 |
|
|
|
15,034 |
|
|
|
13 |
|
| NONINTEREST
EXPENSE |
|
|
|
|
|
|
|
|
|
|
|
|
| Salaries and benefits |
|
|
40,920 |
|
|
|
40,880 |
|
|
|
— |
|
| Operations |
|
|
10,354 |
|
|
|
9,744 |
|
|
|
6 |
|
| Occupancy |
|
|
5,036 |
|
|
|
4,670 |
|
|
|
8 |
|
| Data processing |
|
|
6,172 |
|
|
|
5,092 |
|
|
|
21 |
|
| Loan costs |
|
|
1,904 |
|
|
|
2,077 |
|
|
|
(8 |
) |
| Professional and board
fees |
|
|
3,034 |
|
|
|
2,001 |
|
|
|
52 |
|
| FDIC insurance |
|
|
1,515 |
|
|
|
1,732 |
|
|
|
(13 |
) |
| Marketing and advertising |
|
|
981 |
|
|
|
1,072 |
|
|
|
(8 |
) |
| Acquisition costs |
|
|
— |
|
|
|
1,562 |
|
|
|
100 |
|
| Amortization of core deposit
intangible |
|
|
2,757 |
|
|
|
2,484 |
|
|
|
11 |
|
| Impairment of servicing
rights |
|
|
545 |
|
|
|
— |
|
|
|
NM |
|
|
Total noninterest expense |
|
|
73,218 |
|
|
|
71,314 |
|
|
|
3 |
|
| INCOME BEFORE
PROVISION FOR INCOME TAXES |
|
|
31,730 |
|
|
|
33,196 |
|
|
|
(4 |
) |
| PROVISION FOR INCOME
TAXES |
|
|
4,088 |
|
|
|
6,915 |
|
|
|
(41 |
) |
| NET
INCOME |
|
$ |
27,642 |
|
|
$ |
26,281 |
|
|
|
5 |
|
| Basic earnings per share |
|
$ |
3.54 |
|
|
$ |
3.38 |
|
|
|
5 |
|
| Diluted earnings per
share |
|
$ |
3.45 |
|
|
$ |
3.33 |
|
|
|
4 |
|
| |
KEY FINANCIAL RATIOS AND DATA (Unaudited)
| |
|
At or For the Three Months Ended |
|
| |
|
September 30, |
|
|
June 30, |
|
|
September 30, |
|
| |
|
2024 |
|
|
2024 |
|
|
2023 |
|
|
PERFORMANCE RATIOS: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Return on assets (ratio of net income to average total assets)
(1) |
|
|
1.38 |
% |
|
|
1.22 |
% |
|
|
1.22 |
% |
|
Return on equity (ratio of net income to average equity) (1) |
|
|
14.08 |
|
|
|
12.72 |
|
|
|
13.81 |
|
|
Yield on average interest-earning assets (1) |
|
|
6.56 |
|
|
|
6.48 |
|
|
|
6.13 |
|
|
Average total cost of funds (1) |
|
|
2.39 |
|
|
|
2.38 |
|
|
|
1.92 |
|
|
Interest rate spread information – average during period |
|
|
4.17 |
|
|
|
3.33 |
|
|
|
4.21 |
|
|
Net interest margin (1) |
|
|
4.35 |
|
|
|
4.29 |
|
|
|
4.34 |
|
|
Operating expense to average total assets (1) |
|
|
3.47 |
|
|
|
3.26 |
|
|
|
3.23 |
|
|
Average interest-earning assets to average interest-bearing
liabilities (1) |
|
|
144.28 |
|
|
|
166.25 |
|
|
|
145.14 |
|
|
Efficiency ratio (2) |
|
|
69.42 |
|
|
|
65.78 |
|
|
|
66.22 |
|
|
Common equity ratio (ratio of stockholders' equity to total
assets) |
|
|
9.73 |
|
|
|
9.66 |
|
|
|
8.58 |
|
|
Tangible common equity ratio (3) |
|
|
9.17 |
|
|
|
9.07 |
|
|
|
7.89 |
|
| |
|
For the Nine Months Ended |
|
| |
|
September 30, |
|
|
September 30, |
|
| |
|
2024 |
|
|
2023 |
|
|
PERFORMANCE RATIOS: |
|
|
|
|
|
|
|
|
|
Return on assets (ratio of net income to average total assets)
(1) |
|
|
1.25 |
% |
|
|
1.25 |
% |
|
Return on equity (ratio of net income to average equity) (1) |
|
|
13.05 |
|
|
|
14.13 |
|
|
Yield on average interest-earning assets (1) |
|
|
6.44 |
|
|
|
6.03 |
|
|
Average total cost of funds (1) |
|
|
2.33 |
|
|
|
1.58 |
|
|
Interest rate spread information – average during period |
|
|
4.11 |
|
|
|
4.45 |
|
|
Net interest margin (1) |
|
|
4.30 |
|
|
|
4.56 |
|
|
Operating expense to average total assets (1) |
|
|
3.31 |
|
|
|
3.39 |
|
|
Average interest-earning assets to average interest-bearing
liabilities |
|
|
144.14 |
|
|
|
146.23 |
|
|
Efficiency ratio (2) |
|
|
67.21 |
|
|
|
66.10 |
|
| |
|
September 30, |
|
|
June 30, |
|
|
September 30, |
|
| |
|
2024 |
|
|
2024 |
|
|
2023 |
|
|
ASSET QUALITY RATIOS AND DATA: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonperforming assets to total assets at end of period (4) |
|
|
0.36 |
% |
|
|
0.39 |
% |
|
|
0.21 |
% |
|
Nonperforming loans to total gross loans (excluding loans HFS)
(5) |
|
|
0.43 |
|
|
|
0.46 |
|
|
|
0.23 |
|
|
Allowance for credit losses – loans to nonperforming loans (5) |
|
|
290.07 |
|
|
|
273.95 |
|
|
|
493.46 |
|
|
Allowance for credit losses – loans to total gross loans (excluding
loans HFS) |
|
|
1.25 |
|
|
|
1.26 |
|
|
|
1.27 |
|
| |
|
At or For the Three Months Ended |
|
| |
|
September 30, |
|
|
June 30, |
|
|
September 30, |
|
| |
|
2024 |
|
|
2024 |
|
|
2023 |
|
|
PER COMMON SHARE DATA: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per share |
|
$ |
1.32 |
|
|
$ |
1.15 |
|
|
$ |
1.15 |
|
|
Diluted earnings per share |
|
$ |
1.29 |
|
|
$ |
1.13 |
|
|
$ |
1.13 |
|
|
Weighted average basic shares outstanding |
|
|
7,676,102 |
|
|
|
7,688,246 |
|
|
|
7,667,981 |
|
|
Weighted average diluted shares outstanding |
|
|
7,854,389 |
|
|
|
7,796,253 |
|
|
|
7,780,430 |
|
|
Common shares outstanding at end of period |
|
|
7,713,359 |
(6) |
|
|
7,644,463 |
(7) |
|
|
7,693,951 |
(8) |
|
Book value per share using common shares outstanding |
|
$ |
37.45 |
|
|
$ |
37.15 |
|
|
$ |
32.58 |
|
|
Tangible book value per share using common shares outstanding
(3) |
|
$ |
35.10 |
|
|
$ |
34.66 |
|
|
$ |
29.73 |
|
__________________________________
|
(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 7,817,172 at September 30, 2024,
less 103,813 unvested restricted stock shares. |
|
(7) |
|
Common shares were calculated
using shares outstanding of 7,742,607 at June 30, 2024, less
98,144 unvested restricted stock shares. |
|
(8) |
|
Common shares were calculated
using shares outstanding of 7,796,095 at September 30, 2023,
less 102,144 unvested restricted stock shares. |
| (Dollars in thousands) |
|
For the Three Months Ended September 30, |
|
|
For the Nine Months Ended September 30, |
|
|
Linked Qtr. |
|
|
Prior Year Qtr. |
|
| Average
Balances |
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
|
$ Change |
|
|
$ Change |
|
|
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Loans receivable, net (1) |
|
$ |
2,536,106 |
|
|
$ |
2,423,691 |
|
|
$ |
2,504,129 |
|
|
$ |
2,362,885 |
|
|
$ |
112,415 |
|
|
$ |
141,244 |
|
| Securities available-for-sale,
at amortized cost |
|
|
250,957 |
|
|
|
294,148 |
|
|
|
288,460 |
|
|
|
276,835 |
|
|
|
(43,191 |
) |
|
|
11,625 |
|
| Securities
held-to-maturity |
|
|
8,500 |
|
|
|
8,500 |
|
|
|
8,500 |
|
|
|
8,500 |
|
|
|
- |
|
|
|
- |
|
| Interest-bearing deposits and
certificates of deposit at other financial institutions |
|
|
48,546 |
|
|
|
68,369 |
|
|
|
49,887 |
|
|
|
67,163 |
|
|
|
(19,823 |
) |
|
|
(17,276 |
) |
| FHLB stock, at cost |
|
|
10,739 |
|
|
|
4,626 |
|
|
|
6,666 |
|
|
|
5,190 |
|
|
|
6,113 |
|
|
|
1,476 |
|
|
Total interest-earning assets |
|
|
2,854,848 |
|
|
|
2,799,334 |
|
|
|
2,857,642 |
|
|
|
2,720,573 |
|
|
|
55,514 |
|
|
|
137,069 |
|
| Noninterest-earning
assets |
|
|
105,941 |
|
|
|
102,052 |
|
|
|
98,099 |
|
|
|
88,936 |
|
|
|
3,889 |
|
|
|
9,163 |
|
| Total
assets |
|
$ |
2,960,789 |
|
|
$ |
2,901,386 |
|
|
$ |
2,955,741 |
|
|
$ |
2,809,509 |
|
|
$ |
59,403 |
|
|
$ |
146,232 |
|
|
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Interest-bearing deposit
accounts |
|
$ |
1,737,793 |
|
|
$ |
1,741,257 |
|
|
$ |
1,788,324 |
|
|
$ |
1,703,688 |
|
|
$ |
(3,464 |
) |
|
$ |
84,636 |
|
| Borrowings |
|
|
191,279 |
|
|
|
138,013 |
|
|
|
144,635 |
|
|
|
107,254 |
|
|
|
53,266 |
|
|
|
37,381 |
|
| Subordinated notes |
|
|
49,567 |
|
|
|
49,500 |
|
|
|
49,550 |
|
|
|
49,484 |
|
|
|
67 |
|
|
|
66 |
|
|
Total interest-bearing liabilities |
|
|
1,978,639 |
|
|
|
1,928,770 |
|
|
|
1,982,509 |
|
|
|
1,860,426 |
|
|
|
49,869 |
|
|
|
122,083 |
|
| Noninterest-bearing deposit
accounts |
|
|
650,852 |
|
|
|
676,000 |
|
|
|
648,345 |
|
|
|
664,319 |
|
|
|
(25,148 |
) |
|
|
(15,974 |
) |
| Other noninterest-bearing
liabilities |
|
|
40,606 |
|
|
|
39,365 |
|
|
|
41,965 |
|
|
|
36,095 |
|
|
|
1,241 |
|
|
|
5,870 |
|
| Total
liabilities |
|
$ |
2,670,097 |
|
|
$ |
2,644,135 |
|
|
$ |
2,672,819 |
|
|
$ |
2,560,840 |
|
|
$ |
25,962 |
|
|
$ |
111,979 |
|
__________________________________
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) |
|
September 30, |
|
June 30, |
|
September 30, |
|
| Tangible Book Value
Per Share: |
|
2024 |
|
2024 |
|
2023 |
|
|
Stockholders' equity (GAAP) |
|
$ |
288,902 |
|
|
$ |
284,026 |
|
|
$ |
250,665 |
|
|
|
Less: goodwill and core deposit intangible, net |
|
|
(18,178 |
) |
|
|
(19,075 |
) |
|
|
(21,915 |
) |
|
|
Tangible common stockholders' equity (non-GAAP) |
|
$ |
270,724 |
|
|
$ |
264,951 |
|
|
$ |
228,750 |
|
|
| |
|
|
|
|
|
|
|
|
|
|
| Common shares outstanding at
end of period |
|
|
7,713,359 |
(1) |
|
|
7,644,463 |
(2) |
|
|
7,693,951 |
(3) |
|
| |
|
|
|
|
|
|
|
|
|
|
| Book value per share
(GAAP) |
|
$ |
37.45 |
|
|
$ |
37.15 |
|
|
$ |
32.58 |
|
|
| Tangible book value per share
(non-GAAP) |
|
$ |
35.10 |
|
|
$ |
34.66 |
|
|
$ |
29.73 |
|
|
| |
|
|
|
|
|
|
|
|
|
|
| Tangible Common Equity
Ratio: |
|
|
|
|
|
|
|
|
|
|
|
Total assets (GAAP) |
|
$ |
2,970,208 |
|
|
$ |
2,941,377 |
|
|
$ |
2,920,072 |
|
|
|
Less: goodwill and core deposit intangible assets |
|
|
(18,178 |
) |
|
|
(19,075 |
) |
|
|
(21,915 |
) |
|
|
Tangible assets (non-GAAP) |
|
$ |
2,952,030 |
|
|
$ |
2,922,302 |
|
|
$ |
2,898,157 |
|
|
| |
|
|
|
|
|
|
|
|
|
|
| Common equity ratio
(GAAP) |
|
|
9.73 |
% |
|
|
9.66 |
% |
|
|
8.58 |
% |
|
| Tangible common equity ratio
(non-GAAP) |
|
|
9.17 |
|
|
|
9.07 |
|
|
|
7.89 |
|
|
_________________________
|
(1) |
|
Common shares were calculated
using shares outstanding of 7,817,172 at September 30, 2024,
less 103,813 unvested restricted stock shares. |
|
(2) |
|
Common shares were calculated
using shares outstanding of 7,742,607 at June 30, 2024, less
98,144 unvested restricted stock shares. |
|
(3) |
|
Common shares were calculated
using shares outstanding of 7,796,095 at September 30, 2023,
less 102,144 unvested restricted stock shares. |
|
|
|
|
Contacts: Joseph C. Adams,Chief Executive
OfficerMatthew D. Mullet,President/Chief Financial Officer(425)
771-5299www.FSBWA.com
FS Bancorp (NASDAQ:FSBW)
Historical Stock Chart
Von Nov 2024 bis Dez 2024
FS Bancorp (NASDAQ:FSBW)
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Von Dez 2023 bis Dez 2024
