"We continue to manage our strong net interest margins (NIM) with expanding yields on earning assets while maintaining a stable, well positioned mix of funding liabilities," stated Matthew Mullet, CEO and President of 1st Security Bank.
"Shareholder returns were balanced in the third quarter with share repurchases, a paid special dividend, and the payment of our 50th quarterly dividend," stated Joe Adams, CEO of FS Bancorp, Inc. "We are also pleased to announce that our Board of Directors has approved our 51st consecutive quarterly cash dividend of $0.28 per common share, demonstrating our commitment to long-term shareholders. The cash dividend will be paid on November 20, 2025, to shareholders of record as of November 6, 2025," concluded Adams.
2025 Third Quarter Highlights
Net income was $9.2 million for the third quarter of 2025, compared to $7.7 million for the previous quarter, and $10.3 million for the comparable quarter one year ago;
Total deposits increased $133.1 million, or 5.2%, to $2.69 billion at September 30, 2025, compared to $2.55 billion at June 30, 2025, and increased $259.2 million, or 10.7%, from $2.43 billion at September 30, 2024, primarily due to an increase in brokered certificates of deposit ("CDs") and, to a lesser extent, other deposits. Noninterest-bearing deposits were $665.9 million at September 30, 2025, $654.1 million at June 30, 2025, and $657.8 million at September 30, 2024;
Borrowings decreased $105.0 million, or 44.8%, to $129.3 million at September 30, 2025, compared to $234.3 million at June 30, 2025, and decreased $34.5 million, or 21.1%, from $163.8 million at September 30, 2024;
Loans receivable, net increased $17.3 million, or 0.7%, to $2.60 billion at September 30, 2025, compared to $2.58 billion at June 30, 2025, and increased $135.9 million, or 5.5%, from $2.46 billion at September 30, 2024;
Consumer loans were $600.8 million at September 30, 2025, a decrease of $5.5 million, or 0.91%, from $606.3 million in the previous quarter, and a decrease of $31.6 million, or 5.0%, from $632.4 million in the comparable quarter one year ago. During the three months ended September 30, 2025, consumer loan originations included 83.3% of home improvement loans originated with a Fair Isaac Corporation ("FICO") score above 720;
Repurchased 134,413 shares of the Company's common stock in the third quarter of 2025 at an average price of $41.15 per share, with $826,000 remaining for future purchases under the existing share repurchase plan as of September 30, 2025;
Book value per share increased $0.88 to $40.43 at September 30, 2025, compared to $39.55 at June 30, 2025, and increased $2.98 from $37.45 at September 30, 2024. Tangible book value per share (non-GAAP financial measure) increased $0.97 to $38.43 at September 30, 2025, compared to $37.46 at June 30, 2025, and increased $3.33 from $35.10 at September 30, 2024. See, "Non-GAAP Financial Measures;"
Segment reporting in the third quarter of 2025 reflected net income of $8.4 million for the Commercial and Consumer Banking segment and $775,000 for the Home Lending segment, compared to net income of $7.4 million and $351,000 in the prior quarter, and net income of $9.3 million and $1.0 million in the third quarter of 2024, respectively; and
Regulatory capital ratios at the Bank were 13.8% for total risk-based capital and 11.0% for Tier 1 leverage capital at September 30, 2025, compared to 14.1% for total risk-based capital and 11.2% for Tier 1 leverage capital at June 30, 2025.
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, 2025 and 2024 (dollars in thousands):
At or For the Three Months Ended September 30, 2025
Condensed income statement:
Commercial andConsumerBanking
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
Full-time employees ("FTEs")
460
115
575
At or For the Three Months Ended September 30, 2024
Condensed income statement:
Commercial andConsumer 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 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
$
2,347,854
$
612,935
$
2,960,789
FTEs
442
117
559
At or For the Nine Months Ended September 30, 2025
Condensed income statement:
Commercial andConsumer 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
At or For the Nine Months Ended September 30, 2024
Condensed income statement:
Commercial andConsumerBanking
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 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
__________________________
(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, 2025, the Company recorded a net increase in fair value of $203,000 and $469,000, respectively, compared to a net increase in fair value of $262,000 and $448,000, respectively for the three and nine months ended September 30, 2024. As of September 30, 2025 and 2024, there were $12.8 million and $13.9 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, 2025 and 2024, the Home Lending segment included allocated overhead expenses of $1.8 million and $5.5 million, compared to $1.8 million and $4.8 million for the same periods in 2024, respectively.
Asset Summary
The following table presents the components and changes in total assets as of the dates indicated.
ASSETS
Linked Quarter
Prior Year
(Dollars in thousands)
Sep 30,
Jun 30,
Sep 30,
Change
Quarter Change
2025
2025
2024
$
%
$
%
Cash and due from banks
$
12,391
$
15,168
$
17,950
$
(2,777
)
(18
)%
$
(5,559
)
(31
)%
Interest-bearing deposits at other financial institutions
48,889
18,027
22,390
30,862
171
26,499
118
Total cash and cash equivalents
61,280
33,195
40,340
28,085
85
20,940
52
Certificates of deposit at other financial institutions
—
248
12,001
(248
)
NM
(12,001
)
NM
Securities available-for-sale, at fair value
311,695
302,692
228,199
9,003
3
83,496
37
Securities held-to-maturity, net
31,386
31,562
8,455
(176
)
(1
)
22,931
271
Loans held for sale, at fair value
38,579
53,630
49,373
(15,051
)
(28
)
(10,794
)
(22
)
Loans receivable, net
2,599,601
2,582,272
2,463,697
17,329
1
135,904
6
Accrued interest receivable
15,122
14,270
14,014
852
6
1,108
8
Premises and equipment, net
32,444
30,098
30,026
2,346
8
2,418
8
Operating lease right-of-use
6,832
7,969
5,365
(1,137
)
(14
)
1,467
27
Federal Home Loan Bank stock, at cost
7,975
11,579
9,504
(3,604
)
(31
)
(1,529
)
(16
)
Deferred tax asset, net
6,767
7,782
4,222
(1,015
)
(13
)
2,545
60
Bank owned life insurance ("BOLI"), net
38,531
38,262
38,453
269
1
78
—
MSRs, held at the lower of cost or fair value
8,506
8,652
8,739
(146
)
(2
)
(233
)
(3
)
Goodwill
3,592
3,592
3,592
—
—
—
—
Core deposit intangible, net
11,284
12,071
14,586
(787
)
(7
)
(3,302
)
(23
)
Other assets
35,231
38,139
39,642
(2,908
)
(8
)
(4,411
)
(11
)
TOTAL ASSETS
$
3,208,825
$
3,176,013
$
2,970,208
$
32,812
1
%
$
238,617
8
%
The increase in total assets reflects the Company's continued focus on balance sheet growth through loan origination and selective investment activity, funded by a combination of on-balance sheet liquidity and borrowings.
Prior
LOAN PORTFOLIO
Linked
Year
(Dollars in thousands)
Quarter
Quarter
COMMERCIAL REAL ESTATE
September 30, 2025
June 30, 2025
September 30, 2024
$
$
("CRE") LOANS
Amount
Percent
Amount
Percent
Amount
Percent
Change
Change
CRE owner occupied
$
170,714
6.5
%
$
180,250
6.8
%
$
176,661
7.1
%
$
(9,536
)
$
(5,947
)
CRE non-owner occupied
172,713
6.6
171,979
6.6
176,272
7.1
734
(3,559
)
Commercial and speculative construction and development
326,684
12.4
300,723
11.5
240,618
9.6
25,961
86,066
Multi-family
262,578
10.0
263,185
10.1
238,462
9.6
(607
)
24,116
Total CRE loans
932,689
35.5
916,137
35.0
832,013
33.4
16,552
100,676
RESIDENTIAL REAL ESTATE LOANS
One-to-four-family (excludes HFS)
629,712
23.9
639,881
24.4
591,666
23.7
(10,169
)
38,046
Home equity
86,895
3.3
85,613
3.3
75,063
3.0
1,282
11,832
Residential custom construction
53,296
2.0
54,024
2.1
51,748
2.1
(728
)
1,548
Total residential real estate loans
769,903
29.2
779,518
29.8
718,477
28.8
(9,615
)
51,426
CONSUMER LOANS
Indirect home improvement
527,597
20.1
530,375
20.3
552,226
22.1
(2,778
)
(24,629
)
Marine
70,220
2.7
72,765
2.8
76,845
3.1
(2,545
)
(6,625
)
Other consumer
2,962
0.1
3,151
0.1
3,346
0.1
(189
)
(384
)
Total consumer loans
600,779
22.9
606,291
23.2
632,417
25.3
(5,512
)
(31,638
)
COMMERCIAL BUSINESS LOANS
Commercial and industrial ("C&I")
311,173
11.8
294,563
11.3
296,773
11.9
16,610
14,400
Warehouse lending
15,113
0.6
17,952
0.7
15,249
0.6
(2,839
)
(136
)
Total commercial business loans
326,286
12.4
312,515
12.0
312,022
12.5
13,771
14,264
Total loans receivable, gross
2,629,657
100.0
%
2,614,461
100.0
%
2,494,929
100.0
%
15,196
134,728
Allowance for credit losses ("ACL") on loans
(30,056
)
(32,189
)
(31,232
)
2,133
1,176
Total loans receivable, net
$
2,599,601
$
2,582,272
$
2,463,697
$
17,329
$
135,904
Total loans increased to $2.63 billion during the third quarter of 2025, primarily as a result of growth in commercial and speculative construction and development loans and C&I loans. Commercial and speculative construction and development loans increased $26.0 million, let by speculative residential vertical projects, while C&I loans increased $16.6 million.
The composition of CRE loans at the dates indicated were as follows:
(Dollars in thousands)
CRE by Type:
Sep 30, 2025
Jun 30, 2025
Sep 30, 2024
CRE non-owner occupied:
Office
$
42,537
$
39,141
$
40,672
Retail
36,827
38,652
36,070
Hospitality/restaurant
25,798
26,489
27,743
Self-storage
19,001
19,075
19,130
Mixed use
18,663
18,387
17,882
Industrial
14,352
14,444
15,402
Senior housing/assisted living
7,390
7,448
7,621
Other
3,632
3,670
6,684
Land
2,072
2,206
2,523
Education/worship
2,441
2,467
2,545
Total CRE non-owner occupied
172,713
171,979
176,272
CRE owner occupied:
Industrial
77,059
77,419
63,577
Office
31,981
40,156
42,156
Retail
17,399
19,470
19,968
Hospitality/restaurant
7,675
7,230
10,528
Other
10,521
9,483
8,116
Car wash
4,430
4,447
9,575
Automobile related
7,164
7,215
8,874
Mixed use
4,622
5,548
5,648
Agriculture
4,347
4,652
3,610
Education/worship
5,516
4,630
4,609
Total CRE owner occupied
170,714
180,250
176,661
Total
$
343,427
$
352,229
$
352,933
The following table includes CRE loans repricing or maturing within the next two years, excluding loans that reprice simultaneously with changes to the prime rate:
Current
(Dollars in
