FS Bancorp, Inc. reported second quarter 2026 net income of $7.9 million, or $1.04 per diluted share, missing the analyst consensus estimate of $1.08 by 3.7%. This represents a 5.05% increase over earnings of $0.99 per share from the same period last year. The company reported quarterly sales of $38.798 million, beating the analyst consensus estimate of $38.005 million by 2.09%, a 4.07% increase over sales of $37.282 million in the same period last year. FS Bancorp also announced its 54th consecutive quarterly cash dividend of $0.29 per common share, payable on August 21, 2026, to shareholders of record as of August 7, 2026.

"From the announcement of our proposed merger with Pacific West Bank in the first quarter of 2026, our teams have been diligently working toward a successful integration, while concurrently contributing to our financial success this quarter," stated Matthew Mullet, President and CEO of FS Bancorp, Inc.

Second Quarter 2026 Financial Highlights

The following table summarizes key earnings metrics for the second quarter of 2026 compared to the prior quarter and the comparable prior-year quarter:

Additional second quarter highlights include:

• Total deposits decreased $188.7 million, or 7.2%, to $2.45 billion at June 30, 2026, from $2.63 billion at March 31, 2026, primarily due to a $201.1 million decrease in brokered deposits, partially offset by a $12.1 million increase in retail deposits. Compared to June 30, 2025, total deposits decreased $104.5 million, or 4.1%. The cost of deposits decreased to 2.18% for the quarter ended June 30, 2026, from 2.24% for the quarter ended March 31, 2026.
• Loans receivable, net increased $4.9 million to $2.63 billion at June 30, 2026, from $2.62 billion at March 31, 2026, and increased $46.7 million from $2.58 billion at June 30, 2025. Year-over-year loan growth was primarily driven by an $88.9 million increase in the commercial real estate portfolio, partially offset by a $33.1 million decrease in the consumer loan portfolio.
• Consumer loans were $573.2 million at June 30, 2026, a decrease of $10.3 million, or 1.8%, from $583.5 million in the previous quarter, and a decrease of $33.1 million, or 5.5%, from $606.3 million in the comparable quarter one year ago. During the three months ended June 30, 2026, consumer loan originations included 87.3% of indirect home improvement loans originated with a Fair Isaac Corporation ("FICO") score above 720.
• The company repurchased 87,000 shares of common stock for $3.6 million in the second quarter of 2026, at an average price of $41.81 per share.
• Book value per share increased $1.15, or 2.7%, to $43.57 at June 30, 2026, compared to $42.42 at March 31, 2026, and increased $4.02, or 10.2%, from $39.55 at June 30, 2025. Tangible book value per share (non-GAAP) increased $1.23 to $41.84 at June 30, 2026, compared to $40.61 at March 31, 2026, and increased $4.38 from $37.46 at June 30, 2025.

Segment Performance

FS Bancorp operates through two reportable segments: Commercial and Consumer Banking, and Home Lending. The following table summarizes segment net income for the three months ended June 30, 2026, and the comparable periods (dollars in thousands):

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

Capital Position and Regulatory Ratios

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

At June 30, 2026, capital ratios for the Bank and the Company were as follows:

Stockholders' equity increased to $318,960 thousand at June 30, 2026, from $313,852 thousand at March 31, 2026, primarily due to net income of $7.9 million and a $2.1 million net-of-tax increase in accumulated other comprehensive income from changes in the fair value of available-for-sale securities and interest rate swap cash flow hedges. The increase was partially offset by share repurchases of $3.6 million and cash dividends paid of $2.2 million.

Net Interest Income and Margin

Net interest income increased $536,000 to $32.6 million for the three months ended June 30, 2026, from $32.1 million for the three months ended June 30, 2025, primarily due to an increase in total interest income of $959,000, partially offset by an increase in total interest expense of $423,000. For the six months ended June 30, 2026, net interest income increased $2.1 million to $65.2 million, from $63.1 million for the six months ended June 30, 2025.

Net interest margin (annualized) was unchanged at 4.30% for the three months ended June 30, 2026, compared to the same period in the prior year, and decreased one basis point from 4.31% to 4.30% for the six months ended June 30, 2026, compared to the same period in 2025. The average total cost of funds, including noninterest-bearing checking, increased two basis points to 2.41% for the three months ended June 30, 2026, from 2.39% for the three months ended June 30, 2025.

Credit Quality

For the three and six months ended June 30, 2026, the provision for credit losses on loans was $2.6 million and $5.2 million, compared to $2.0 million and $3.6 million for the three and six months ended June 30, 2025. During the three months ended June 30, 2026, total net charge-offs increased $2.7 million to $3.8 million, compared to $1.2 million for the three months ended June 30, 2025. The increase was primarily attributable to an additional charge-off on a commercial construction loan relationship, as well as higher net charge-offs within the indirect home improvement portfolio.

Total nonperforming loans decreased to $15,647 thousand at June 30, 2026, from $18,268 thousand at March 31, 2026, and from $18,996 thousand at June 30, 2025. The allowance for credit losses on loans to total gross loans (excluding loans held for sale) was 1.17% at June 30, 2026, compared to 1.22% at March 31, 2026, and 1.23% at June 30, 2025.

Noninterest Income and Expense

Total noninterest income increased $980,000 to $6.2 million for the three months ended June 30, 2026, from $5.2 million for the three months ended June 30, 2025, primarily reflecting higher gain on sale of loans of $609,000 and a $404,000 increase in other noninterest income. Total noninterest expense increased $602,000 to $26.1 million for the three months ended June 30, 2026, compared to $25.5 million for the three months ended June 30, 2025. The increase was primarily attributable to a $1.5 million increase in salaries and benefits expense and $417,000 of acquisition-related costs associated with the previously announced merger with Pacific West Bancorp, partially offset by a $1.1 million reduction in operations expense.