MOUNTLAKE TERRACE, Wash., Jan. 21, 2025 (GLOBE NEWSWIRE) -- FS Bancorp, Inc. (NASDAQ: FSBW) (the "Company”), the holding company for 1st Security Bank of Washington (the "Bank”), today reported fourth quarter net income of $7.4 million, or $0.92 per diluted share, compared to $9.8 million, or $1.23 per diluted share, for the comparable quarter one year ago. The decrease in net income during the fourth quarter of 2024, compared to the preceding quarter, was primarily due to a $420,000 tax benefit recorded during the preceding quarter, compared to a $2.5 million tax provision recorded for the fourth quarter of 2024. The tax benefit for the third quarter of 2024 was due to $28.4 million of energy tax credits purchased during the third quarter related to the Inflation Reduction Act of 2022. Net income for the year ended December 31, 2024 was $35.0 million, or $4.36 per diluted share, compared to $36.1 million, or $4.56 per diluted share for 2023.
"Despite economic volatility that has impacted interest rates for loans and deposits these past few years, we are proud to have, primarily through organic loan growth, surpassed $3 billion in total assets,” stated Joe Adams, CEO. "We are also thankful to our Board of Directors for increasing our forty-eighth consecutive quarterly cash dividend by $0.01 to $0.28 per common share. The quarterly dividend will be paid on February 20, 2025, to shareholders of record as of February 6, 2025,” concluded Adams.
"Tangible book value (non-GAAP) per share was $36.02 at December 31, 2024, compared to $31.64 at December 31, 2023, a 13.8% increase year over year. The focus on risk adjusted returns and growing tangible book value remains a mainstay for the Company's shareholders,” noted Matthew Mullet, President and CFO.
2024 Fourth Quarter and Year End Highlights
- Net income was $7.4 million for the fourth quarter of 2024, compared to $10.3 million in the previous quarter, and $9.8 million for the comparable quarter one year ago;
- Net interest margin ("NIM”) was 4.31% for the fourth quarter of 2024, compared to 4.35% in the previous quarter, and 4.24% for the comparable quarter one year ago;
- Total deposits decreased $87.9 million, or 3.6%, to $2.34 billion at December 31, 2024, primarily due to a $107.9 million decrease in brokered deposits, compared to $2.43 billion at September 30, 2024, and decreased $182.9 million, or 7.3%, from $2.52 billion at December 31, 2023. Noninterest-bearing deposits were $638.2 million at December 31, 2024, $657.8 million at September 30, 2024, and $670.8 million at December 31, 2023;
- Loans receivable, net increased $38.3 million, or 1.6%, to $2.50 billion at December 31, 2024, compared to $2.46 billion at September 30, 2024, and increased $100.5 million, or 4.2%, from $2.40 billion at December 31, 2023;
- Consumer loans, of which 87.4% are home improvement loans, decreased $12.2 million, or 1.9%, to $620.2 million at December 31, 2024, compared to $632.4 million in the previous quarter and decreased $26.6 million, or 4.1% from $646.8 million in the comparable quarter one year ago. During the three months ended December 31, 2024, 81.2% of consumer portfolio originations for home improvement loans had a Fair Isaac Corporation ("FICO”) score above 720 and 80.7% were secured with a UCC-2 filing;
- Borrowings increased $144.0 million, or 87.9%, to $307.8 million at December 31, 2024, compared to $163.8 million at September 30, 2024, and increased $214.1 million, or 228.3%, from $93.7 million at December 31, 2023;
- A $2.5 million provision for income taxes was recorded during the fourth quarter of 2024, compared to a $420,000 tax benefit during the third quarter of 2024, as a result of $28.4 million of energy tax credits purchased during the third quarter of 2024;
- Repurchased 35,000 shares of the Company's common stock in the fourth quarter of 2024 at an average price of $48.47 per share with $4.7 million remaining for future purchases under the existing share repurchase plan;
- Book value per share increased $0.81 to $38.26 at December 31, 2024, compared to $37.45 at September 30, 2024, and increased $3.91 from $34.36 at December 31, 2023. Tangible book value per share (non-GAAP financial measure) increased $0.92 to $36.02 at December 31, 2024, compared to $35.10 at September 30, 2024, and increased $6.62 from $31.64 at December 31, 2023. See, "Non-GAAP Financial Measures.”
- Segment reporting in the fourth quarter of 2024 reflected net income of $7.4 million for the Commercial and Consumer Banking segment and a net loss of $39,000 for the Home Lending segment, compared to net income of $9.3 million and $1.0 million in the prior quarter, and net income of $10.0 million and net loss of $254,000 in the fourth quarter of 2023, 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 December 31, 2024, compared to 13.4% for total risk-based capital and 10.4% for Tier 1 leverage capital at December 31, 2023.
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 tables below provide a summary of segment reporting at or for the three months and years ended December 31, 2024 and 2023 (dollars in thousands):
| At or For the Three Months Ended December 31, 2024 | ||||||||||||
| Condensed income statement: | Commercial and Consumer Banking | Home Lending | Total | |||||||||
| Net interest income(1) | $ | 28,555 | $ | 2,559 | $ | 31,114 | ||||||
| (Provision) recovery for credit losses | (1,597 | ) | 75 | (1,522 | ) | |||||||
| Noninterest income(2) | 2,308 | 2,302 | 4,610 | |||||||||
| Noninterest expense(3) | (19,365 | ) | (4,986 | ) | (24,351 | ) | ||||||
| Income (loss) before (provision) benefit for income taxes | 9,901 | (50 | ) | 9,851 | ||||||||
| (Provision) benefit for income taxes | (2,480 | ) | 11 | (2,469 | ) | |||||||
| Net income (loss) | $ | 7,421 | $ | (39 | ) | $ | 7,382 | |||||
| Total average assets for period ended | $ | 2,383,885 | $ | 606,826 | $ | 2,990,711 | ||||||
| Full-time employees ("FTEs") | 447 | 115 | 562 | |||||||||
| At or For the Three Months Ended December 31, 2023 | ||||||||||||
| Condensed income statement: | Commercial and Consumer Banking | Home Lending | Total | |||||||||
| Net interest income(1) | $ | 28,405 | $ | 2,050 | $ | 30,455 | ||||||
| Provision for credit losses | (939 | ) | (463 | ) | (1,402 | ) | ||||||
| Noninterest income(2) | 2,602 | 2,854 | 5,456 | |||||||||
| Noninterest expense(3) | (17,668 | ) | (4,765 | ) | (22,433 | ) | ||||||
| Income (loss) before (provision) benefit for income taxes | 12,400 | (324 | ) | 12,076 | ||||||||
| (Provision) benefit for income taxes | (2,374 | ) | 70 | (2,304 | ) | |||||||
| Net income (loss) | $ | 10,026 | $ | (254 | ) | $ | 9,772 | |||||
| Total average assets for period ended | $ | 2,395,363 | $ | 548,002 | $ | 2,943,365 | ||||||
| FTEs | 447 | 123 | 570 | |||||||||
| At or For the Year Ended December 31, 2024 | ||||||||||||
| Condensed income statement: | Commercial and Consumer Banking | Home Lending | Total | |||||||||
| Net interest income(1) | $ | 113,304 | $ | 9,801 | $ | 123,105 | ||||||
| Provision for credit losses | (5,393 | ) | (118 | ) | (5,511 | ) | ||||||
| Noninterest income(2) | 9,227 | 12,329 | 21,556 | |||||||||
| Noninterest expense(3) | (77,615 | ) | (19,954 | ) | (97,569 | ) | ||||||
| Income before (provision) benefit for income taxes | 39,523 | 2,058 | 41,581 | |||||||||
| (Provision) benefit for income taxes | (6,733 | ) | 176 | (6,557 | ) | |||||||
| Net income | $ | 32,790 | $ | 2,234 | $ | 35,024 | ||||||
| Total average assets for period ended | $ | 2,373,295 | $ | 591,236 | $ | 2,964,531 | ||||||
| FTEs | 447 | 115 | 562 | |||||||||
| At or For the Year Ended December 31, 2023 | ||||||||||||
| Condensed income statement: | Commercial and Consumer Banking | Home Lending | Total | |||||||||
| Net interest income(1) | $ | 111,737 | $ | 11,566 | $ | 123,303 | ||||||
| Provision for credit losses | (3,494 | ) | (1,280 | ) | (4,774 | ) | ||||||
| Noninterest income(2) | 10,368 | 10,122 | 20,490 | |||||||||
| Noninterest expense(3) | (73,767 | ) | (19,980 | ) | (93,747 | ) | ||||||
| Income before provision for income taxes | 44,844 | 428 | 45,272 | |||||||||
| Provision for income taxes | (9,132 | ) | (87 | ) | (9,219 | ) | ||||||
| Net income | $ | 35,712 | $ | 341 | $ | 36,053 | ||||||
| Total average assets for period ended | $ | 2,315,806 | $ | 527,442 | $ | 2,843,248 | ||||||
| FTEs | 447 | 123 | 570 | |||||||||
| (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 months and year ended December 31, 2024, the Company recorded a net decrease in fair value of $396,000 and a net increase in fair value of $52,000, respectively, as compared to net increases in fair value of $733,000 and $447,000 for the three months and year ended December 31, 2023, respectively. As of December 31, 2024 and 2023, there were $12.7 million and $15.1 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 months and years ended December 31, 2024 and 2023, the Home Lending segment included allocated overhead expenses of $1.8 million and $6.6 million, compared to $1.4 million and $6.1 million, respectively. | |
Total assets increased $59.0 million, or 2.0%, to $3.03 billion at December 31, 2024, compared to $2.97 billion at both September 30, 2024 and December 31, 2023. The increase in total assets at December 31, 2024, compared to September 30, 2024, was primarily due to increases of $53.0 million in securities available-for-sale ("AFS”), $38.3 million in loans receivable, net, and $6.1 million in FHLB stock, partially offset by decreases of $21.5 million in loans held for sale ("HFS”), $10.3 million in certificates of deposit ("CDs”) at other financial institutions, and $10.0 million in interest-bearing deposits at other financial institutions. The increase in securities AFS was attributable to purchases of variable and shorter duration securities. The increase in loans receivable, net was due to organic loan growth. The increase compared to December 31, 2023, was primarily due to increases in loans receivable, net of $100.5 million, other assets of $21.3 million, and FHLB stock of $13.5 million, partially offset by decreases in interest-bearing deposits at other financial institutions of $36.3 million, CDs at other financial institutions of $22.4 million, securities available-for-sale of $11.8 million, and mortgage servicing rights ("MSRs”) held for sale of $8.1 million.
| LOAN PORTFOLIO | ||||||||||||||||||||||||
| (Dollars in thousands) | December 31, 2024 | September 30, 2024 | December 31, 2023 | |||||||||||||||||||||
| Amount | Percent | Amount | Percent | Amount | Percent | |||||||||||||||||||
| REAL ESTATE LOANS | ||||||||||||||||||||||||
| Commercial | $ | 345,317 | 13.6 | % | $ | 352,933 | 14.1 | % | $ | 366,328 | 15.1 | % | ||||||||||||
| Construction and development | 330,700 | 13.1 | 292,366 | 11.7 | 303,054 | 12.5 | ||||||||||||||||||
| Home equity | 75,147 | 3.0 | 75,063 | 3.0 | 69,488 | 2.9 | ||||||||||||||||||
| One-to-four-family (excludes HFS) | 617,322 | 24.4 | 591,666 | 23.7 | 567,742 | 23.3 | ||||||||||||||||||
| Multi-family | 245,222 | 9.7 | 238,462 | 9.6 | 223,769 | 9.2 | ||||||||||||||||||
| Total real estate loans | 1,613,708 | 63.8 | 1,550,490 | 62.1 | 1,530,381 | 63.0 | ||||||||||||||||||
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