MOUNTLAKE TERRACE, Wash., July 22, 2025 (GLOBE NEWSWIRE) -- FS Bancorp, Inc. (NASDAQ:FSBW) (the "Company"), the holding company for 1st Security Bank of Washington (the "Bank") today reported 2025 second quarter net income of $7.7 million, or $0.99 per diluted share, compared to $9.0 million, or $1.13 per diluted share, for the comparable quarter one year ago. For the six months ended June 30, 2025, net income was $15.7 million, or $1.99 per diluted share, compared to net income of $17.4 million, or $2.20 per diluted share, for the comparable six-month period in 2024.

"We are proud of the balance sheet growth this quarter driven by solid loan demand. Additionally, our share repurchase activity reflects our continued confidence and commitment to delivering long-term value to our shareholders," stated Phillip Whittington, CFO.

"We are pleased to announce that our Board of Directors has approved our 50th consecutive quarterly cash dividend of $0.28 per common share, demonstrating our continued commitment to delivering value to our shareholders. In recognition of this milestone, the Board also approved a special dividend of $0.22 per common share. Both dividends will be paid on August 21, 2025, to shareholders of record as of August 7, 2025," noted Matthew Mullet, President.

2025 Second Quarter Highlights

Net income was $7.7 million for the second quarter of 2025, compared to $8.0 million for the previous quarter, and $9.0 million for the comparable quarter one year ago;
Total deposits decreased $61.8 million, or 2.4%, to $2.55 billion at June 30, 2025, primarily due to a decrease of $59.1 million in brokered deposits, compared to $2.62 billion at March 31, 2025, and increased $170.6 million, or 7.2%, from $2.38 billion at June 30, 2024. Noninterest-bearing deposits were $654.1 million at June 30, 2025, $676.7 million at March 31, 2025, and $623.3 million at June 30, 2024;
Borrowings increased $165.5 million, or 240.5% to $234.3 million at June 30, 2025, compared to $68.8 million at March 31, 2025, and increased $52.4 million, or 28.8%, from $181.9 million at June 30, 2024;
Loans receivable, net increased $81.2 million, or 3.2%, to $2.58 billion at June 30, 2025, compared to $2.50 billion at March 31, 2025, and increased $125.1 million, or 5.1%, from $2.46 billion at June 30, 2024;
Consumer loans were $606.3 million at June 30, 2025, a decrease of $2.6 million, or 0.4%, from $608.9 million in the previous quarter, and a decrease of $35.4 million, or 5.5%, from $641.7 million in the comparable quarter one year ago. During the three months ended June 30, 2025, consumer loan originations included 82.5% of home improvement loans originated with a Fair Isaac Corporation ("FICO") score above 720;
Repurchased 132,282 shares of the Company's common stock in the second quarter of 2025 at an average price of $38.92 per share with $725,000 remaining for future purchases under the existing share repurchase plan at June 30, 2025. In addition, as previously announced on July 9, 2025, the Board approved a new share repurchase plan authorizing the repurchase of up to $5.0 million in shares of the Company's outstanding common stock;
Book value per share increased $0.43 to $39.55 at June 30, 2025, compared to $39.12 at March 31, 2025, and increased $2.40 from $37.15 at June 30, 2024. Tangible book value per share (non-GAAP financial measure) increased $0.50 to $37.46 at June 30, 2025, compared to $36.96 at March 31, 2025, and increased $2.80 from $34.66 at June 30, 2024. See, "Non-GAAP Financial Measures;"
Segment reporting in the second quarter of 2025 reflected net income of $7.4 million for the Commercial and Consumer Banking segment and $351,000 for the Home Lending segment, compared to net income of $7.8 million and $242,000 in the prior quarter, and net income of $8.0 million and $1.0 million in the second quarter of 2024, respectively; and
Regulatory capital ratios at the Bank were 14.1% for total risk-based capital and 11.2% for Tier 1 leverage capital at June 30, 2025, compared to 14.4% for total risk-based capital and 11.3% for Tier 1 leverage capital at March 31, 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 six months ended June 30, 2025 and 2024 (dollars in thousands):

	At or For the Three Months Ended June 30, 2025
Condensed income statement:	Commercial and Consumer Banking			Home Lending			Total
Net interest income⁽¹⁾	$	29,179		$	2,933		$	32,112
Provision for credit losses		(1,849	)		(172	)		(2,021	)
Noninterest income⁽²⁾		2,297			2,873			5,170
Noninterest expense⁽³⁾		(20,313	)		(5,189	)		(25,502	)
Income before provision for income taxes		9,314			445			9,759
Provision for income taxes		(1,937	)		(94	)		(2,031	)
Net income	$	7,377		$	351		$	7,728
Total average assets for period ended	$	2,466,917		$	649,443		$	3,116,360
Full-time employees ("FTEs")		452			115			567

	At or Three Months Ended June 30, 2024
Condensed income statement:	Commercial and Consumer Banking			Home Lending			Total
Net interest income⁽¹⁾	$	28,051		$	2,350		$	30,401
(Provision) recovery for credit losses		(1,214	)		137			(1,077	)
Noninterest income⁽²⁾		2,269			3,599			5,868
Noninterest expense⁽³⁾		(19,043	)		(4,814	)		(23,857	)
Income before provision for income taxes		10,063			1,272			11,335
Provision for income taxes		(2,113	)		(263	)		(2,376	)
Net income	$	7,950		$	1,009		$	8,959
Total average assets for period ended	$	2,359,741		$	588,090		$	2,947,831
FTEs		450			121			571

	At or For the Six Months Ended June 30, 2025
Condensed income statement:	Commercial and Consumer Banking			Home Lending			Total
Net interest income⁽¹⁾	$	57,586		$	5,507		$	63,093
Provision for credit losses		(3,170	)		(443	)		(3,613	)
Noninterest income⁽²⁾		4,542			5,754			10,296
Noninterest expense⁽³⁾		(40,489	)		(10,067	)		(50,556	)
Income before provision for income taxes		18,469			751			19,220
Provision for income taxes		(3,314	)		(157	)		(3,471	)
Net income	$	15,155		$	594		$	15,749
Total average assets for period ended	$	2,440,654		$	634,013		$	3,074,667
FTEs		452			115			567

	At or For the Six Months Ended June 30, 2024
Condensed income statement:	Commercial and Consumer Banking			Home Lending			Total
Net interest income⁽¹⁾	$	56,137		$	4,610		$	60,747
Provision for credit losses		(2,465	)		(11	)		(2,476	)
Noninterest income⁽²⁾		4,662			6,317			10,979
Noninterest expense⁽³⁾		(38,051	)		(9,335	)		(47,386	)
Income before provision for income taxes		20,283			1,581			21,864
Provision for income taxes		(4,182	)		(326	)		(4,508	)
Net income	$	16,101		$	1,255		$	17,356
Total average assets for period ended	$	2,380,803		$	572,386		$	2,953,189
FTEs		450			121			571

__________________________

(1)		Net interest income is the difference between interest earned on assets and the cost of liabilities to fund those assets. Interest earned includes actual interest earned on segment assets and, if the segment has excess liabilities, interest credits for providing funding to the other segment. The cost of liabilities includes interest expense on segment liabilities and, if the segment does not have enough liabilities to fund its assets, a funding charge based on the cost of assigned liabilities to fund segment assets.
(2)		Noninterest income includes activity from certain residential mortgage loans that were initially originated for sale and measured at fair value and subsequently transferred to loans held for investment. Gains and losses from changes in fair value for these loans are reported in earnings as a component of noninterest income. For the three and six months ended June 30, 2025, the Company recorded a net increase in fair value of $3,000 and $266,000, respectively, compared to a net increase in fair value of $184,000 and $186,000, respectively for the three and six months ended June 30, 2024. As of June 30, 2025 and 2024, there were $13.2 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 six months ended June 30, 2025 and 2024, the Home Lending segment included allocated overhead expenses of $1.8 million and $3.7 million, compared to $1.5 million and $3.0 million, 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)	June 30,		March 31,		June 30,		Change						Quarter Change
	2025		2025		2024		$			%			$			%
Cash and due from banks	$	15,168	$	18,657	$	20,005	$	(3,489	)		(19	)%	$	(4,837	)		(24	)%
Interest-bearing deposits at other financial institutions		18,027		44,084		13,006		(26,057	)		(59	)		5,021			39
Total cash and cash equivalents		33,195		62,741		33,011		(29,546	)		(47	)		184			1
Certificates of deposit at other financial institutions		248		1,234		12,707		(986	)		(80	)		(12,459	)		(98	)
Securities available-for-sale, at fair value		302,692		291,133		221,182		11,559			4			81,510			37
Securities held-to-maturity, net		31,562		10,434		8,455		21,128			202			23,107			273
Loans held for sale, at fair value		53,630		31,038		53,811		22,592			73			(181	)		—
Loans receivable, net		2,582,272		2,501,117		2,457,184		81,155			3			125,088			5
Accrued interest receivable		14,270		14,406		13,792		(136	)		(1	)		478			3
Premises and equipment, net		30,098		29,451		29,999		647			2			99			—
Operating lease right-of-use		7,969		4,979		5,784		2,990			60			2,185			38
Federal Home Loan Bank stock, at cost		11,579		5,256		10,322		6,323			120			1,257			12
Deferred tax asset, net		7,782		7,009		4,590		773			11			3,192			70
Bank owned life insurance ("BOLI"), net		38,262		38,778		38,201		(516	)		(1	)		61			—
MSRs, held at the lower of cost or fair value		8,652		8,926		9,352		(274	)		(3	)		(700	)		(7	)
Goodwill		3,592		3,592		3,592		—			—			—			—
Core deposit intangible, net		12,071		12,879		15,483		(808	)		(6	)		(3,412	)		(22	)
Other assets		38,139		43,105		23,912		(4,966	)		(12	)		14,227			59
TOTAL ASSETS	$	3,176,013	$	3,066,078	$	2,941,377	$	109,935			4	%	$	234,636			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	June 30, 2025						March 31, 2025						June 30, 2024						$			$
("CRE") LOANS	Amount			Percent			Amount			Percent			Amount			Percent			Change			Change
CRE owner occupied	$	180,250			6.8	%	$	164,911			6.5	%	$	177,723			7.1	%	$	15,339		$	2,527
CRE non-owner occupied		171,979			6.6			174,188			6.9			181,681			7.3			(2,209	)		(9,702	)
Commercial and speculative construction and development		300,723			11.5			288,978			11.4			220,793			8.9			11,745			79,930
Multi-family		263,185			10.1			244,940			9.7			239,675			9.6			18,245			23,510
Total CRE loans		916,137			35.0			873,017			34.5			819,872			32.9			43,120			96,265

RESIDENTIAL REAL ESTATE LOANS
One-to-four-family (excludes HFS)		639,881			24.4			637,299			25.2			588,966			23.7			2,582			50,915
Home equity		85,613			3.3			73,846			2.9			73,749			3.0			11,767			11,864
Residential custom construction		54,024			2.1			48,810			1.9			53,416			2.1			5,214			608
Total residential real estate loans		779,518			29.8			759,955			30.0			716,131			28.8			19,563			63,387

CONSUMER LOANS
Indirect home improvement		530,375			20.3			532,038			21.0			563,621			22.6			(1,663	)		(33,246	)
Marine		72,765			2.8			73,737			2.9			74,627			3.0			(972	)		(1,862	)
Other consumer		3,151			0.1			3,118			0.1			3,440			0.1			33			(289	)
Total consumer loans		606,291			23.2			608,893			24.0			641,688			25.7			(2,602	)		(35,397	)

COMMERCIAL BUSINESS LOANS
Commercial and industrial ("C&I")		294,563			11.3			274,956			10.9			285,183			11.6			19,607			9,380
Warehouse lending		17,952			0.7			15,949			0.6			25,548			1.0			2,003			(7,596	)
Total commercial business loans		312,515			12.0			290,905			11.5			310,731			12.6			21,610			1,784
Total loans receivable, gross		2,614,461			100.0	%		2,532,770			100.0	%		2,488,422			100.0	%		81,691			126,039

Allowance for credit losses on loans		(32,189	)					(31,653	)					(31,238	)					(536	)		(951	)
Total loans receivable, net	$	2,582,272					$	2,501,117					$	2,457,184					$	81,155		$	125,088

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

(Dollars in thousands)	June 30, 2025		March 31, 2025		June 30, 2024
CRE by Type:	Amount		Amount		Amount
CRE non-owner occupied:
Office	$	39,141	$	39,406	$	41,380
Retail		38,652		35,520		37,507
Hospitality/restaurant		26,489		27,377		28,314
Self-storage		19,075		19,092		19,141
Mixed use		18,387		18,868		18,062
Industrial		14,444		15,033		17,163
Senior housing/assisted living		7,448		7,506		7,675
Other		3,670		6,579		6,847
Land		2,206		2,314		3,021
Education/worship		2,467		2,493		2,571
Total CRE non-owner occupied		171,979		174,188		181,681
CRE owner occupied:
Industrial		77,419		66,618		63,970
Office		40,156		40,447		41,978
Retail		19,470		20,535		20,885
Other		9,483		8,529		8,354
Hospitality/restaurant		7,230		7,306		10,800
Automobile related		7,215		7,266		8,200
Mixed use		5,548		5,579		5,680
Agriculture		4,652		3,990		3,639
Education/worship		4,630		4,641		4,610
Car wash		4,447		—		9,607
Total CRE owner occupied		180,250		164,911		177,723
Total	$	352,229	$	339,099	$	359,404

The following table includes CRE loans repricing or maturing within the next two years, excluding loans that reprice simultaneously with changes to the prime rate:

																			Current
(Dollars in																			Weighted
thousands)	For the Quarter Ended																		Average
CRE by type:	Sep 30, 2025		Dec 31, 2025		Mar 31, 2026		Jun 30, 2026		Sep 30, 2026		Dec 31, 2026		Mar 31, 2027		Jun 30, 2027		Total		Rate
Agriculture	$	716	$	314	$	178	$	265	$	287	$	—	$	—	$	—	$	1,760	6.28	%
Apartment		—		13,679		1,128		13,788		9,747		7,062		4,117		—		49,521	4.96	%
Hotel / hospitality		2,393		—		113		1,243		—		—		103		—		3,852	5.26	%
Industrial		—		10,002		976		586		1,578		—		13,412		263		26,817	5.12	%
Mixed use		241		—		7,101		—		—		379		—		—		7,721	8.14	%
Office		15,015		6,055		515		1,629		554		7,695		2,857		1,213		35,533	5.50	%
Other		1,921		240		884		—		—		1,485		—		3,515		8,045	4.80	%
Retail		1,020		—		421		3,448		—		3,399		3,027		2,801		14,116	4.26	%
Education/worship		1,314		—		—		—		2,467		—		—		—		3,781	5.18	%
Senior housing and assisted living		—		—		2,142		—		—		—		—		1,372		3,514	4.76	%
Total	$	22,620	$	30,290	$	13,458	$	20,959	$	14,633	$	20,020	$	23,516	$	9,164	$	154,660	5.22	%

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

(Dollars in thousands)	June 30, 2025					March 31, 2025					June 30, 2024
Construction Types:	Amount		Percent			Amount		Percent			Amount		Percent
Commercial construction – retail	$	8,447		2.4	%	$	8,157		2.4	%	$	8,698		3.2	%
Commercial construction – office		9,083		2.6			6,487		1.9			4,737		1.7
Commercial construction – self storage		16,553		4.7			16,012		4.7			10,000		3.6
Commercial construction – hotel		3,673		1.0			402		0.1			7,807		2.8
Multi-family		23,119		6.5			31,275		9.3			30,960		11.3
Custom construction – single family residential and single family manufactured residential		45,570		12.8			41,143		12.2			46,106		16.8
Custom construction – land, lot and acquisition and development		8,454		2.4			7,667		2.3			7,310		2.7
Speculative residential construction – vertical		200,375		56.5			186,042		55.1			131,294		47.9
Speculative residential construction – land, lot and acquisition and development		39,473		11.1			40,603		12.0			27,297		10.0
Total	$	354,747		100.0	%	$	337,788		100.0	%	$	274,209		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
	June 30, 2025				March 31, 2025				June 30, 2024				$		%	$			%
	Amount		Percent		Amount		Percent		Amount		Percent		Change		Change	Change			Change
Purchase	$	170,854	85.7	%	$	120,719	83.0	%	$	193,715	92.3	%	$	50,135	41.5	$	(22,861	)	(11.8	)%
Refinance		28,470	14.3			24,677	17.0			16,173	7.7			3,793	15.4		12,297		76.0	%
Total	$	199,324	100.0	%	$	145,396	100.0	%	$	209,888	100.0	%	$	53,928	37.1	$	(10,564	)	(5.0	)%

(Dollars in thousands)	For the Six Months Ended June 30,
	2025				2024
	Amount		Percent		Amount		Percent		$ Change			% Change
Purchase	$	290,737	84.3	%	$	329,292	90.5	%	$	(38,555	)	(11.7	)	%
Refinance		53,983	15.7			34,545	9.5			19,438		56.3		%
Total	$	344,720	100.0	%	$	363,837	100.0	%	$	(19,117	)	(5.3	)	%

During the quarter ended June 30, 2025, the Company sold $127.1 million of one-to-four-family loans compared to $91.9 million during the previous quarter and $164.5 million during the same quarter one year ago. The increase in the volume of loans sold during the current quarter compared to the prior quarter was primarily due to seasonal factors, including the spring homebuying season. This increased demand for homes generally results in a higher volume of loan originations and, consequently, more loans available for sale. Gross margins on home loan sales decreased to 3.06% for the quarter ended June 30, 2025, compared to 3.26% in the previous quarter and increased from 2.96% in the same quarter one year ago. Gross margins are defined as the margin on loans sold (cash sales) without the impact of deferred costs.

Liabilities and Equity Summary

The following table summarizes the components and changes in deposits, borrowings, equity, and book value per common share at the dates indicated.

(Dollars in thousands)																Linked			Prior Year
Deposits	June 30, 2025					March 31, 2025					June 30, 2024					Quarter			Quarter
Transactional deposits:	Amount		Percent			Amount		Percent			Amount		Percent			$ Change			$ Change
Noninterest-bearing checking	$	643,573		25.2	%	$	659,417		25.2	%	$	613,137		25.7	%	$	(15,844	)	$	30,436
Interest-bearing checking:
Retail deposits		181,240		7.1			171,396		6.6			166,839		7.0			9,844			14,401
Brokered deposits		30,020		1.2			30,073		1.1			—		—			(53	)		30,020
Total interest-bearing checking		211,260		8.3			201,469		7.7			166,839		7.0			9,791			44,421
Escrow accounts related to mortgages serviced⁽¹⁾		10,496		0.4			17,289		0.7			10,212		0.4			(6,793	)		284
Subtotal		865,329		33.9			878,175		33.6			790,188		33.1			(12,846	)		75,141
Savings and money market:
Savings		159,601		6.3			160,332		6.1			151,398		6.4			(731	)		8,203
Money market:
Retail deposits		350,548		13.6			343,098		13.1			339,946		14.2			7,450			10,602
Brokered deposits		251		0.1			251		—			4,049		0.2			—			(3,798	)
Total money market		350,799		13.7			343,349		13.1			343,995		14.4			7,450			6,804
Subtotal		510,400		20.0			503,681		19.2			495,393		20.8			6,719			15,007
Certificates of deposit:
Retail CDs		891,355		34.9			881,630		33.7			823,866		34.6			9,725			67,489
Nonretail CDs:
Online CDs		3,423		0.1			9,354		0.4			9,354		0.4			(5,931	)		(5,931	)
Public CDs		2,114		0.1			2,440		0.1			2,983		0.1			(326	)		(869	)
Brokered CDs		280,754		11.0			339,871		13.0			261,019		11.0			(59,117	)		19,735
Total nonretail CDs		286,291		11.2			351,665		13.5			273,356		11.5			(65,374	)		12,935
Subtotal		1,177,646		46.1			1,233,295		47.2			1,097,222		46.1			(55,649	)		80,424
Total deposits	$	2,553,375		100.0	%	$	2,615,151		100.0	%	$	2,382,803		100.0	%	$	(61,776	)	$	170,572
Borrowings⁽²⁾	$	234,305				$	68,805				$	181,895				$	165,500		$	52,410
Equity	$	297,203				$	298,840				$	284,026				$	(1,637	)	$	13,177
Book value per common share	$	39.55				$	39.12				$	37.15				$	0.43		$	2.40

__________________________

(1)		Primarily noninterest-bearing accounts based on applicable state law.
(2)		Comprised of FHLB advances and Federal Reserve Bank borrowings.

At June 30, 2025, the Bank had uninsured deposits of approximately $677.2 million, compared to approximately $679.4 million at March 31, 2025, and $586.6 million at June 30, 2024. The uninsured amounts are estimates based on the methodologies and assumptions used for the Bank's regulatory reporting requirements.

In reference to the table above, the linked quarter decrease in stockholders' equity at June 30, 2025, compared to March 31, 2025, was primarily due to share repurchases of $5.1 million, cash dividends paid of $2.1 million, and $525,000 in equity award compensation, partially offset by net income of $7.7 million. Stockholders' equity was also impacted by a decline in unrealized fair value on securities available for sale of $1.2 million, net of tax, and fair value and cash flow hedges of $1.6 million, net of tax, reflecting changes in market interest rates during the quarter, resulting in a $2.8 million decrease in accumulated other comprehensive loss, net of tax.

The Bank is considered "well capitalized" under the capital requirement established by the Federal Deposit Insurance Corporation ("FDIC") and the Company exceeded all regulatory capital requirements. At June 30, 2025, capital ratios presented for the Bank and the Company were as follows:

	At June 30, 2025
	Bank		Company
Total risk-based capital (to risk-weighted assets)	14.07	%	14.16	%
Tier 1 leverage capital (to average assets)	11.18	%	9.65	%
CET 1 capital (to risk-weighted assets)	12.82	%	11.07	%

Credit Quality

The following table summarizes the changes in the ACL on loans, nonperforming loans, and substandard loans at the dates indicated.

ACL ON LOANS	June 30,			March 31,			June 30,			Linked			Prior Year
(Dollars in thousands)	2025			2025			2024			Quarter			Quarter
	Amount			Amount			Amount			$ Change			$ Change
Beginning ACL balance	$	(31,653	)	$	(31,870	)	$	(31,479	)	$	217		$	(174	)
Provision		(1,715	)		(1,505	)		(1,001	)		(210	)		(714	)
Charge-offs
Indirect		1,555			1,579			825			(24	)		730
Marine		43			20			157			23			(114	)
Other		42			37			33			5			9
Commercial business		—			433			733			(433	)		(733	)
Subtotal		1,640			2,069			1,748			(429	)		(108	)
Recoveries
Indirect		(330	)		(340	)		(307	)		10			(23	)
Marine		(54	)		(3	)		(110	)		(51	)		56
Other		(7	)		(4	)		(4	)		(3	)		(3	)
Commercial business		(70	)		—			(85	)		(70	)		15
Subtotal		(461	)		(347	)		(506	)		(114	)		45
Ending ACL balance	$	(32,189	)	$	(31,653	)	$	(31,238	)	$	(536	)	$	(951	)

NONPERFORMING LOANS	June 30,		March 31,		June 30,		Linked			Prior Year
(Dollars in thousands)	2025		2025		2024		Quarter			Quarter
CRE LOANS	Amount		Amount		Amount		$ Change			$ Change
CRE	$	2,046	$	1,196	$	1,116	$	850		$	930
Commercial and speculative construction and development		9,083		6,487		4,737		2,596			4,346
Total CRE loans		11,129		7,683		5,853		3,446			5,276

RESIDENTIAL REAL ESTATE LOANS
One-to-four-family (excludes HFS)		1,809		1,134		170		675			1,639
Home equity		251		252		156		(1	)		95
Total residential real estate loans		2,060		1,386		326		674			1,734

CONSUMER LOANS
Indirect home improvement		3,365		2,821		2,319		544			1,046
Marine		567		648		327		(81	)		240
Other consumer		13		1		6		12			7
Total consumer loans		3,945		3,470		2,652		475			1,293

COMMERCIAL BUSINESS LOANS
C&I		1,862		1,932		2,575		(70	)		(713	)
Total nonperforming loans	$	18,996	$	14,471	$	11,406	$	4,525		$	7,590

The increase in nonaccrual loans during the period was partly driven by a single commercial construction loan, which remains in active development. Ongoing construction disbursements on this loan contributed to a $2.6 million increase from the prior quarter and a $4.3 million increase compared to the same period last year. Increases in consumer loan delinquencies also contributed to the overall rise in nonaccrual loans between the periods.

CRITICIZED LOANS	June 30,		March 31,		June 30,		Linked			Prior Year
(Dollars in thousands)	2025		2025		2024		Quarter			Quarter
CRE LOANS	Amount		Amount		Amount		$ Change			$ Change
CRE	$	2,046	$	2,040	$	3,926	$	6		$	(1,880	)
Commercial and speculative construction and development		9,083		6,487		4,737		2,596			4,346
Total CRE loans		11,129		8,527		8,663		2,602			2,466

RESIDENTIAL REAL ESTATE LOANS
One-to-four-family (excludes HFS)		4,383		3,728		2,854		655			1,529
Home equity		251		252		156		(1	)		95
Total residential real estate loans		4,634		3,980		3,010		654			1,624

CONSUMER LOANS
Indirect home improvement		3,365		2,821		2,319		544			1,046
Marine		567		649		327		(82	)		240
Other consumer		13		1		6		12			7
Total consumer loans		3,945		3,471		2,652		474			1,293

COMMERCIAL BUSINESS LOANS
C&I		5,220		7,524		9,954		(2,304	)		(4,734	)
Total criticized loans	$	24,928	$	23,502	$	24,279	$	1,426		$	649

Operating Results

Net interest income increased $1.7 million to $32.1 million for the three months ended June 30, 2025, from $30.4 million for the three months ended June 30, 2024, primarily due to an increase in total interest income of $2.8 million, partially offset by an increase in interest expense of $1.1 million. The $2.8 million increase in total interest income was primarily due to an increase of $2.6 million in interest income on loans receivable, including fees, primarily as a result of net loan growth. The $1.1 million increase in total interest expense was primarily the result of higher average balances of deposits and borrowings to fund asset growth.

For the six months ended June 30, 2025, net interest income increased $2.3 million to $63.1 million, from $60.7 million for the six months ended June 30, 2024, with a $4.7 million increase in total interest income, partially offset by a $2.3 million increase in interest expense for the same reasons mentioned above.

NIM (annualized) increased one basis point to 4.30% for the three months ended June 30, 2025, from 4.29% for the same period in the prior year and increased four basis points from 4.27% to 4.31% for the six months ended June 30, 2025. The change in NIM for the three and six months ended June 30, 2025, compared to the same period in 2024, reflects the increased yields on interest-earning assets, as a result of loan growth and repricing activity. The improvement also reflects a favorable shift in the asset mix and disciplined management of deposit and funding costs.

The average total cost of funds, including noninterest-bearing checking, increased one basis point to 2.39% for the three months ended June 30, 2025, from 2.38% for the three months ended June 30, 2024. This increase was predominantly due to higher average balances in borrowings. The average cost of funds increased eight basis points to 2.38% for the six months ended June 30, 2025, from 2.30% for the six months ended June 30, 2024, primarily for the same reason noted above as well as growth in the deposit mix from the prior year.

For the three and six months ended June 30, 2025, the provision for credit losses on loans was $2.0 million and $3.6 million, compared to $1.1 million and $2.5 million for the three and six months ended June 30, 2024, respectively. The provision for credit losses on loans reflects net loan growth and an increase in net charge-off activity.

During the three months ended June 30, 2025, net charge-offs decreased $63,000 to $1.2 million, compared to the same period the prior year. During the six months ended June 30, 2025, net charge-offs increased $184,000, to $2.9 million, compared to $2.7 million during the six months ended June 30, 2024. The increase was primarily due to a $1.2 million increase in net charge-offs on indirect home improvement loans, partially offset by a $693,000 decrease in net charge-offs on commercial business loans and a $271,000 decrease in net charge-offs on marine loans. Management attributes the increase in net charge-offs for the current six month period to continued volatile economic conditions.

Total noninterest income decreased $698,000 to $5.2 million for the three months ended June 30, 2025, from $5.9 million for the three months ended June 30, 2024. The decrease primarily reflects a $491,000 decrease in gain on sale of loans, primarily due to a decrease of loans available for sale, a $156,000 decrease in service charges and fee income and a $151,000 decrease in gain on sale of investment securities due to no sales activity in the current quarter compared to the same period last year. Total noninterest income decreased $683,000, to $10.3 million, for the six months ended June 30, 2025, from $11.0 million for the six months ended June 30, 2024. This decrease was primarily the result of a $629,000 decrease in gain on sale of loans, a $464,000 decrease in service charges and fee income, and a net decrease of $368,000 from no activity in gain on sales of MSRs and loss on sale of investment securities compared to an $8.2 million net gain on sale of MSRs, offset by the $7.8 million loss on sale of investment securities that occurred in the first half of 2024. These decreases in total noninterest income were partially offset by a $755,000 increase in other noninterest income as result of sales of nonmarketable equity securities at a $312,000 gain, bank owned life insurance proceeds of $195,000, and a $101,000 increase in brokered loans fees.

Total noninterest expense was $25.5 million for the three months ended June 30, 2025, compared to $23.9 million for the three months ended June 30, 2024. The $1.6 million increase was primarily due to a $710,000 increase in salaries and benefits, primarily due to competitive wage adjustments, a $305,000 increase in operations expense, and a $267,000 increase in professional and board fees. Total noninterest expense increased $3.2 million to $50.6 million for the six months ended June 30, 2025, compared to $47.4 million for the six months ended June 30, 2024. Increases during the six month period ended June 30, 2025, compared to the same period last year included $1.7 million in salaries and benefits, $742,000 in operations expense, and $531,000 in professional and board fees.

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, recessionary pressures or slowing economic growth; changes in interest rates and the duration of such changes, including actions by the Federal Reserve, 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 monetary and fiscal policy responses thereto 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, and Asia, or the imposition of new or increased tariffs and trade restrictions, which may disrupt financial markets, global supply chains, energy 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 our 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 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; the ability to adapt to rapid technological changes, including advancements in artificial intelligence, digital banking, 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 goals; 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 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 SUBSIDIARY CONSOLIDATED BALANCE SHEETS (Dollars in thousands) (Unaudited)

										Linked			Prior Year
	June 30,			March 31,			June 30,			Quarter			Quarter
ASSETS	2025			2025			2024			% Change			% Change
Cash and due from banks	$	15,168		$	18,657		$	20,005			(19	)		(24	)
Interest-bearing deposits at other financial institutions		18,027			44,084			13,006			(59	)		39
Total cash and cash equivalents		33,195			62,741			33,011			(47	)		1
Certificates of deposit at other financial institutions		248			1,234			12,707			(80	)		(98	)
Securities available-for-sale, at fair value		302,692			291,133			221,182			4			37
Securities held-to-maturity, net		31,562			10,434			8,455			202			273
Loans held for sale, at fair value		53,630			31,038			53,811			73			—
Loans receivable, net		2,582,272			2,501,117			2,457,184			3			5
Accrued interest receivable		14,270			14,406			13,792			(1	)		3
Premises and equipment, net		30,098			29,451			29,999			2			—
Operating lease right-of-use		7,969			4,979			5,784			60			38
Federal Home Loan Bank stock, at cost		11,579			5,256			10,322			120			12
Deferred tax asset, net		7,782			7,009			4,590			11			70
Bank owned life insurance ("BOLI"), net		38,262			38,778			38,201			(1	)		—
MSRs, held at the lower of cost or fair value		8,652			8,926			9,352			(3	)		(7	)
Goodwill		3,592			3,592			3,592			—			—
Core deposit intangible, net		12,071			12,879			15,483			(6	)		(22	)
Other assets		38,139			43,105			23,912			(12	)		59
TOTAL ASSETS	$	3,176,013		$	3,066,078		$	2,941,377			4			8
LIABILITIES
Deposits:
Noninterest-bearing accounts	$	654,069		$	676,706		$	623,349			(3	)		5
Interest-bearing accounts		1,899,306			1,938,445			1,759,454			(2	)		8
Total deposits		2,553,375			2,615,151			2,382,803			(2	)		7
Borrowings		234,305			68,805			181,895			241			29
Subordinated notes:
Principal amount		50,000			50,000			50,000			—			—
Unamortized debt issuance costs		(373	)		(389	)		(439	)		(4	)		(15	)
Total subordinated notes less unamortized debt issuance costs		49,627			49,611			49,561			—			—
Operating lease liability		8,138			5,149			5,979			58			36
Other liabilities		33,365			28,522			37,113			17			(10	)
Total liabilities		2,878,810			2,767,238			2,657,351			4			8
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; 7,618,543 shares issued and outstanding at June 30, 2025, 7,742,907 at March 31, 2025, and 7,742,607 at June 30, 2024		76			77			77			(1	)		(1	)
Additional paid-in capital		48,418			52,806			55,834			(8	)		(13	)
Retained earnings		268,509			262,945			243,651			2			10
Accumulated other comprehensive loss, net of tax		(19,800	)		(16,988	)		(15,536	)		17			27
Total stockholders' equity		297,203			298,840			284,026			(1	)		5
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	3,176,013		$	3,066,078		$	2,941,377			4			8


FS BANCORP, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF INCOME (Dollars in thousands, except per share amounts) (Unaudited)

	Three Months Ended								Linked			Prior Year
	June 30,		March 31,			June 30,			Quarter			Quarter
INTEREST INCOME	2025		2025			2024			% Change			% Change
Loans receivable, including fees	$	45,038	$	43,303		$	42,406			4			6
Interest and dividends on investment securities, cash and cash equivalents, and certificates of deposit at other financial institutions		3,665		3,485			3,534			5			4
Total interest and dividend income		48,703		46,788			45,940			4			6
INTEREST EXPENSE
Deposits		14,520		13,058			13,252			11			10
Borrowings		1,585		2,263			1,801			(30	)		(12	)
Subordinated notes		486		485			486			—			—
Total interest expense		16,591		15,806			15,539			5			7
NET INTEREST INCOME		32,112		30,982			30,401			4			6
PROVISION FOR CREDIT LOSSES		2,021		1,592			1,077			27			88
NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES		30,091		29,390			29,324			2			3
NONINTEREST INCOME
Service charges and fee income		2,323		2,244			2,479			4			(6	)
Gain on sale of loans		1,972		1,700			2,463			16			(20	)
Gain on sale of investment securities, net		—		—			151			NM			NM
Earnings on cash surrender value of BOLI		254		250			242			2			5
Other noninterest income		621		932			533			(33	)		17
Total noninterest income		5,170		5,126			5,868			1			(12	)
NONINTEREST EXPENSE
Salaries and benefits		14,088		14,533			13,378			(3	)		5
Operations		3,824		3,445			3,519			11			9
Occupancy		1,780		1,717			1,669			4			7
Data processing		2,137		2,045			2,058			4			4
Loan costs		719		548			653			31			10
Professional and board fees		1,155		1,186			888			(3	)		30
FDIC insurance		554		538			450			3			23
Marketing and advertising		398		221			377			80			6
Amortization of core deposit intangible		809		831			919			(3	)		(12	)
Impairment (recovery) of servicing rights		38		(9	)		(54	)		(522	)		(170	)
Total noninterest expense		25,502		25,055			23,857			2			7
INCOME BEFORE PROVISION FOR INCOME TAXES		9,759		9,461			11,335			3			(14	)
PROVISION FOR INCOME TAXES		2,031		1,440			2,376			41			(15	)
NET INCOME	$	7,728	$	8,021		$	8,959			(4	)		(14	)
Basic earnings per share	$	1.00	$	1.02		$	1.15			(2	)		(13	)
Diluted earnings per share	$	0.99	$	1.01		$	1.13			(2	)		(12	)


FS BANCORP, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF INCOME (Dollars in thousands, except per share amounts) (Unaudited)

	Six Months Ended					Year
	June 30,		June 30,			Over Year
INTEREST INCOME	2025		2024			% Change
Loans receivable, including fees	$	88,340	$	83,403			6
Interest and dividends on investment securities, cash and cash equivalents, and certificates of deposit at other financial institutions		7,150		7,417			(4	)
Total interest and dividend income		95,490		90,820			5
INTEREST EXPENSE
Deposits		27,578		26,134			6
Borrowings		3,848		2,968			30
Subordinated note		971		971			—
Total interest expense		32,397		30,073			8
NET INTEREST INCOME		63,093		60,747			4
PROVISION FOR CREDIT LOSSES		3,613		2,476			46
NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES		59,480		58,271			2
NONINTEREST INCOME
Service charges and fee income		4,567		5,031			(9	)
Gain on sale of loans		3,672		4,301			(15	)
Gain on sale of MSRs		—		8,215			NM
Loss on sale of investment securities, net		—		(7,847	)		NM
Earnings on cash surrender value of BOLI		505		482			5
Other noninterest income		1,552		797			95
Total noninterest income		10,296		10,979			(6	)
NONINTEREST EXPENSE
Salaries and benefits		28,621		26,935			6
Operations		7,269		6,527			11
Occupancy		3,496		3,374			4
Data processing		4,182		4,016			4
Loan costs		1,267		1,238			2
Professional and board fees		2,342		1,811			29
FDIC insurance		1,092		982			11
Marketing and advertising		619		604			2
Amortization of core deposit intangible		1,639		1,860			(12	)
Impairment of servicing rights		29		39			(26	)
Total noninterest expense		50,556		47,386			7
INCOME BEFORE PROVISION FOR INCOME TAXES		19,220		21,864			(12	)
PROVISION FOR INCOME TAXES		3,471		4,508			(23	)
NET INCOME	$	15,749	$	17,356			(9	)
Basic earnings per share	$	2.02	$	2.23			(9	)
Diluted earnings per share	$	1.99	$	2.20			(10	)

KEY FINANCIAL RATIOS AND DATA (Unaudited)

	At or For the Three Months Ended
	June 30,			March 31,			June 30,
PERFORMANCE RATIOS:	2025			2025			2024
Return on assets (ratio of net income to average total assets)⁽¹⁾		0.99	%		1.07	%		1.22	%
Return on equity (ratio of net income to average total stockholders' equity)⁽¹⁾		10.29			10.80			12.72
Yield on average interest-earning assets⁽¹⁾		6.52			6.53			6.48
Average total cost of funds⁽¹⁾		2.39			2.38			2.38
Interest rate spread information – average during period		4.13			4.15			4.10
Net interest margin⁽¹⁾		4.30			4.32			4.29
Operating expense to average total assets⁽¹⁾		3.28			3.35			3.26
Average interest-earning assets to average interest-bearing liabilities⁽¹⁾		140.98			142.94			143.64
Efficiency ratio⁽²⁾		68.40			69.39			65.78
Common equity ratio (ratio of stockholders' equity to total assets)		9.36			9.75			9.66
Tangible common equity ratio⁽³⁾		8.91			9.26			9.07

	For the Six Months Ended
	June 30,			June 30,
PERFORMANCE RATIOS:	2025			2024
Return on assets (ratio of net income to average total assets)		1.03	%		1.18	%
Return on equity (ratio of net income to average total stockholders' equity)		10.55			12.51
Yield on average interest-earning assets		6.52			6.39
Average total cost of funds		2.38			2.30
Interest rate spread information – average during period		4.14			4.09
Net interest margin		4.31			4.27
Operating expense to average total assets		3.32			3.23
Average interest-earning assets to average interest-bearing liabilities		141.93			144.07
Efficiency ratio⁽²⁾		68.89			66.07

	June 30,			March 31,			June 30,
ASSET QUALITY RATIOS AND DATA:	2025			2025			2024
Nonperforming assets to total assets at end of period⁽⁴⁾		0.60	%		0.47	%		0.39	%
Nonperforming loans to total gross loans (excluding loans HFS)⁽⁵⁾		0.73			0.57			0.46
Allowance for credit losses – loans to nonperforming loans⁽⁵⁾		168.89			219.08			273.95
Allowance for credit losses – loans to total gross loans (excluding loans HFS)		1.23			1.25			1.26

	At or For the Three Months Ended
	June 30,			March 31,			June 30,
PER COMMON SHARE DATA:	2025			2025			2024
Basic earnings per share	$	1.00		$	1.02		$	1.15
Diluted earnings per share	$	0.99		$	1.01		$	1.13
Weighted average basic shares outstanding		7,580,576			7,695,320			7,688,246
Weighted average diluted shares outstanding		7,698,173			7,805,728			7,796,253
Common shares outstanding at end of period		7,515,480	⁽⁶⁾		7,639,844	⁽⁷⁾		7,644,463	⁽⁸⁾
Book value per share using common shares outstanding	$	39.55		$	39.12		$	37.15
Tangible book value per share using common shares outstanding⁽⁹⁾	$	37.46		$	36.96		$	34.66

__________________________

(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 7,618,543 at June 30, 2025, less 103,063 unvested restricted stock shares.
(7)		Common shares were calculated using shares outstanding of 7,742,907 at March 31, 2025, less 103,063 unvested restricted stock shares.
(8)		Common shares were calculated using shares outstanding of 7,742,607 at June 30, 2024, less 98,144 unvested restricted stock shares.
(9)		Tangible book value per share using outstanding common shares excludes intangible assets. This ratio represents a non-GAAP financial measure. See "Non-GAAP Financial Measures" below.

(Dollars in thousands)	For the Three Months Ended June 30,				For the Six Months Ended June 30,				QTR Over QTR			YTD Over YTD
Average Balances	2025		2024		2025		2024		$ Change			$ Change
Assets
Loans receivable, net⁽¹⁾	$	2,612,959	$	2,511,326	$	2,586,598	$	2,487,964	$	101,633		$	98,634
Securities available-for-sale, at amortized cost		332,705		283,422		321,622		307,417		49,283			14,205
Securities held-to-maturity		21,401		8,500		15,063		8,500		12,901			6,563
Interest-bearing deposits and certificates of deposit at other financial institutions		8,775		41,613		10,353		50,563		(32,838	)		(40,210	)
FHLB stock, at cost		19,502		7,040		17,840		4,607		12,462			13,233
Total interest-earning assets		2,995,342		2,851,901		2,951,476		2,859,051		143,441			92,425
Noninterest-earning assets		121,018		95,930		123,191		94,138		25,088			29,053
Total assets	$	3,116,360	$	2,947,831	$	3,074,667	$	2,953,189	$	168,529		$	121,478
Liabilities
Interest-bearing deposit accounts	$	1,924,586	$	1,794,966	$	1,845,534	$	1,813,865	$	129,620		$	31,669
Borrowings		150,492		140,964		184,377		121,057		9,528			63,320
Subordinated notes		49,617		49,550		49,608		49,542		67			66
Total interest-bearing liabilities		2,124,695		1,985,480		2,079,519		1,984,464		139,215			95,055
Noninterest-bearing deposit accounts		657,820		637,345		660,805		647,214		20,475			13,591
Other noninterest-bearing liabilities		32,700		41,785		33,218		42,516		(9,085	)		(9,298	)
Total liabilities	$	2,815,215	$	2,664,610	$	2,773,542	$	2,674,194	$	150,605		$	99,348

__________________________

(1)		Includes loans HFS.

Non-GAAP Financial Measures:

In addition to financial results presented in accordance with generally accepted accounting principles utilized in the United States ("GAAP"), this earnings release presents non-GAAP financial measures that include tangible book value per share, and tangible common equity ratio. Management believes that providing the Company's tangible book value per share and tangible common equity ratio is consistent with the capital treatment utilized by the investment community, which excludes intangible assets from the calculation of risk-based capital ratios and facilitates comparison of the quality and composition of the Company's capital over time and to its competitors. Where applicable, the Company has also presented comparable GAAP information.

These non-GAAP financial measures have inherent limitations, are not required to be uniformly applied, and are not audited. They should not be considered in isolation or as a substitute for total stockholders' equity or operating results determined in accordance with GAAP. These non-GAAP measures may not be comparable to similarly titled measures reported by other companies.

Reconciliation of the GAAP book value per share and common equity ratio and the non-GAAP tangible book value per share and tangible common equity ratio is presented below.

(Dollars in thousands, except share and per share amounts)	June 30,				March 31,				June 30,
Tangible Book Value Per Share:	2025				2025				2024
Stockholders' equity (GAAP)	$	297,203			$	298,840			$	284,026
Less: goodwill and core deposit intangible, net		(15,663	)			(16,471	)			(19,075	)
Tangible common stockholders' equity (non-GAAP)	$	281,540			$	282,369			$	264,951

Common shares outstanding at end of period		7,515,480		⁽¹⁾		7,639,844		⁽²⁾		7,644,463		⁽³⁾

Book value per share (GAAP)	$	39.55			$	39.12			$	37.15
Tangible book value per share (non-GAAP)	$	37.46			$	36.96			$	34.66

Tangible Common Equity Ratio:
Total assets (GAAP)	$	3,176,013			$	3,066,078			$	2,941,377
Less: goodwill and core deposit intangible assets		(15,663	)			(16,471	)			(19,075	)
Tangible assets (non-GAAP)	$	3,160,350			$	3,049,607			$	2,922,302

Common equity ratio (GAAP)		9.36		%		9.75		%		9.66		%
Tangible common equity ratio (non-GAAP)		8.91				9.26				9.07

_________________________

(1)		Common shares were calculated using shares outstanding of 7,618,543 at June 30, 2025, less 103,063 unvested restricted stock shares.
(2)		Common shares were calculated using shares outstanding of 7,742,907 at March 31, 2025, less 103,063 unvested restricted stock shares.
(3)		Common shares were calculated using shares outstanding of 7,742,607 at June 30, 2024, less 98,144 unvested restricted stock shares.

Contacts:

Joseph C. Adams,

Chief Executive Officer

Matthew D. Mullet,

President

Phillip D. Whittington,

Chief Financial Officer

(425) 771-5299

www.FSBWA.com