"We are excited about the announced merger with Pacific West Bancorp that occurred in February and our projected growth into the Portland, Oregon market area later in 2026," stated Matthew Mullet, CEO and President of 1st Security Bank.
"Book value per share reached a split adjusted record of $42.42 in the first quarter of 2026, reflecting sustained earnings growth and disciplined capital management," stated Joe Adams, CEO of FS Bancorp, Inc. "We are also pleased to announce that our Board of Directors has approved our 53rd consecutive quarterly cash dividend of $0.29 per common share, demonstrating our commitment to returning capital to long-term shareholders. The cash dividend will be paid on May 21, 2026, to shareholders of record as of May 7, 2026," concluded Adams. 2026 First Quarter Highlights
Net income totaled $7.8 million for the first quarter of 2026, compared to $8.4 million for the previous quarter, and $8.0 million for the comparable quarter one year ago. The linked quarter-over-quarter decrease is primarily due to a $1.0 million bank owned life insurance mortality benefit received in the prior quarter with no such benefit for the first quarter of 2026. Pre-tax income grew to $9.9 million in the first quarter of 2026, up $440,000, or 4.6%, from $9.5 million in the comparable quarter one year ago, driven by growth in net interest income and Home Lending segment results;
Total deposits, excluding brokered deposits, were unchanged at $2.31 billion at March 31, 2026 and December 31, 2025, and increased $65.2 million, or 2.9%, from $2.24 billion at March 31, 2025. The cost of deposits decreased to 2.24% for the quarter ended March 31, 2026, from 2.26% for the quarter ended December 31, 2025 primarily due to repricing on maturing certificates of deposits and other deposit repricing activities;
Loans receivable, net was $2.62 billion at both March 31, 2026 and December 31, 2025, and increased $123.0 million, or 4.9%, from $2.50 billion at March 31, 2025. Net growth of $17.4 million in the commercial real estate portfolio was partially offset by heightened payoff activity in the consumer loan portfolio for the quarter ended March 31, 2026;
Consumer loans were $583.5 million at March 31, 2026, a decrease of $13.5 million, or 2.3%, from $597.0 million in the previous quarter, and a decrease of $25.4 million, or 4.2%, from $608.9 million in the comparable quarter one year ago. During the three months ended March 31, 2026, consumer loan originations included 83.3% of home improvement loans originated with a Fair Isaac Corporation ("FICO") score above 720;
Home Lending production increased significantly compared to the comparable quarter one year ago, totaling $207.5 million for the three months ended March 31, 2026, compared to $145.4 million for the three months ended March 31, 2025, a 42.7% increase, driven by improved rate activity;
Segment reporting in the first quarter of 2026 reflected net income of $6.7 million for the Commercial and Consumer Banking segment and $1.1 million for the Home Lending segment, compared to net income of $7.8 million and $643,000 in the prior quarter, and net income of $7.8 million and $241,000 in the first quarter of 2025, respectively;
Repurchased $620,000, or 15,025 shares of the Company's common stock in the first quarter of 2026 at an average price of $41.24 per share, with $3.6 million remaining for future purchases under the existing share repurchase plan as of March 31, 2026;
Book value per share increased $0.87 to $42.42 at March 31, 2026, compared to $41.55 at December 31, 2025, and increased $3.30 from $39.12 at March 31, 2025. Tangible book value per share (non-GAAP financial measure) increased $0.96 to $40.61 at March 31, 2026, compared to $39.65 at December 31, 2025, and increased $3.65 from $36.96 at March 31, 2025. See, "Non-GAAP Financial Measures"; and
Regulatory capital ratios at the Bank were 13.8% for total risk-based capital and 11.2% for Tier 1 leverage capital at March 31, 2026, compared to 14.0% for total risk-based capital and 11.0% for Tier 1 leverage capital at December 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 months ended March 31, 2026 and 2025 (dollars in thousands):
At or For the Three Months Ended March 31, 2026
Condensed income statement:
Commercial andConsumer Banking
Home Lending
Total
Net interest income (1)
$
29,552
$
2,993
$
32,545
(Provision) recovery for credit losses
(2,545
)
16
(2,529
)
Noninterest income (2)
2,464
2,937
5,401
Noninterest expense (3)
(20,862
)
(4,658
)
(25,520
)
Income before provision for income taxes
8,609
1,288
9,897
Provision for income taxes
(1,863
)
(204
)
(2,067
)
Net income
$
6,746
$
1,084
$
7,830
Total average assets for period ended
$
2,543,059
$
658,300
$
3,201,359
Full-time employees ("FTEs")
469
116
585
At or For the Three Months Ended March 31, 2025
Condensed income statement:
Commercial andConsumer Banking
Home Lending
Total
Net interest income (1)
$
28,407
$
2,575
$
30,982
Provision for credit losses
(1,321
)
(271
)
(1,592
)
Noninterest income (2)
2,246
2,880
5,126
Noninterest expense (3)
(20,176
)
(4,879
)
(25,055
)
Income before provision for income taxes
9,156
305
9,461
Provision for income taxes
(1,376
)
(64
)
(1,440
)
Net income
$
7,780
$
241
$
8,021
Total average assets for period ended
$
2,414,100
$
618,412
$
3,032,512
FTEs
454
113
567
________________________
(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 ended March 31, 2026, the Company recorded a net decrease in fair value of $101,000, compared to a net increase in fair value of $263,000, for the three months ended March 31, 2025. As of March 31, 2026 and 2025, there were $13.0 million and $14.5 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 ended March 31, 2026 and 2025, the Home Lending segment included allocated overhead expenses of $1.9 million and $1.8 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)
Mar 31,
Dec 31,
Mar 31,
Change
Quarter Change
2026
2025
2025
$
%
$
%
Cash and due from banks
$
12,424
$
13,504
$
18,657
$
(1,080
)
(8
)%
$
(6,233
)
(33
)%
Interest-bearing deposits at other financial institutions
26,278
14,715
44,084
11,563
79
(17,806
)
(40
)
Total cash and cash equivalents
38,702
28,219
62,741
10,483
37
(24,039
)
(38
)
Certificates of deposit at other financial institutions
—
—
1,234
—
NM
(1,234
)
(100
)
Securities available-for-sale, at fair value
271,007
288,667
291,133
(17,660
)
(6
)
(20,126
)
(7
)
Securities held-to-maturity, net
33,267
33,224
10,434
43
—
22,833
219
Loans held for sale, at fair value
56,275
43,705
31,038
12,570
29
25,237
81
Loans receivable, net
2,624,091
2,623,172
2,501,117
919
—
122,974
5
Accrued interest receivable
15,333
14,614
14,406
719
5
927
6
Premises and equipment, net
43,612
44,065
29,451
(453
)
(1
)
14,161
48
Long-lived assets held for sale
3,258
3,258
—
—
—
3,258
—
Operating lease right-of-use
5,472
5,789
4,979
(317
)
(5
)
493
10
Federal Home Loan Bank stock, at cost
8,701
7,971
5,256
730
9
3,445
66
Deferred tax asset, net
7,175
6,993
7,009
182
3
166
2
Bank owned life insurance ("BOLI"), net
36,508
36,249
38,778
259
1
(2,270
)
(6
)
MSRs, held at the lower of cost or fair value
8,676
8,608
8,926
68
1
(250
)
(3
)
Goodwill
3,592
3,592
3,592
—
—
—
—
Core deposit intangible, net
9,774
10,518
12,879
(744
)
(7
)
(3,105
)
(24
)
Other assets
38,072
38,203
43,105
(131
)
—
(5,033
)
(12
)
TOTAL ASSETS
$
3,203,515
$
3,196,847
$
3,066,078
$
6,668
—
%
$
137,437
4
%
Prior
LOAN PORTFOLIO
Linked
Year
(Dollars in thousands)
Quarter
Quarter
COMMERCIAL REAL ESTATE
March 31, 2026
December 31, 2025
March 31, 2025
$
$
("CRE") LOANS
Amount
Percent
Amount
Percent
Amount
Percent
Change
Change
CRE owner occupied
$
182,260
6.9
%
$
176,078
6.6
%
$
164,911
6.5
%
$
6,182
$
17,349
CRE non-owner occupied
182,568
6.9
177,113
6.7
174,188
6.9
5,455
8,380
Commercial and speculative construction and development
358,657
13.5
354,130
13.3
288,978
11.4
4,527
69,679
Multi-family
263,353
9.9
262,150
9.9
244,940
9.7
1,203
18,413
Total CRE loans
986,838
37.2
969,471
36.5
873,017
34.5
17,367
113,821
RESIDENTIAL REAL ESTATE LOANS
One-to-four-family (excludes HFS)
630,996
23.8
628,761
23.7
637,299
25.2
2,235
(6,303
)
Home equity
88,468
3.3
88,271
3.3
73,846
2.9
197
14,622
Residential custom construction
44,134
1.7
42,329
1.6
48,810
1.9
1,805
(4,676
)
Total residential real estate loans
763,598
28.8
759,361
28.6
759,955
30.0
4,237
3,643
CONSUMER LOANS
Indirect home improvement
513,437
19.3
525,842
19.8
532,038
21.0
(12,405
)
(18,601
)
Marine
67,126
2.5
68,115
2.6
73,737
2.9
(989
)
(6,611
)
Other consumer
2,921
0.1
3,029
0.1
3,118
0.1
(108
)
(197
)
Total consumer loans
583,484
21.9
596,986
22.5
608,893
24.0
(13,502
)
(25,409
)
COMMERCIAL BUSINESS LOANS
Commercial and industrial ("C&I")
304,470
11.5
301,111
11.3
274,956
10.9
3,359
29,514
Warehouse lending
18,144
0.6
28,180
1.1
15,949
0.6
(10,036
)
2,195
Total commercial business loans
322,614
12.1
329,291
12.4
290,905
11.5
(6,677
)
31,709
Total loans receivable, gross
2,656,534
100.0
%
2,655,109
100.0
%
2,532,770
100.0
%
1,425
123,764
Allowance for credit losses ("ACL") on loans
(32,443
)
(31,937
)
(31,653
)
(506
)
(790
)
Total loans receivable, net
$
2,624,091
$
2,623,172
$
2,501,117
$
919
$
122,974
The composition of CRE loans at the dates indicated were as follows:
(Dollars in thousands)
CRE by Type:
Mar 31, 2026
Dec 31, 2025
Mar 31, 2025
CRE non-owner occupied:
Office
$
43,532
$
44,429
$
39,406
Retail
42,186
36,387
35,520
Hospitality/restaurant
24,673
24,848
27,377
Self-storage
18,844
18,924
19,092
Mixed use
18,674
18,903
18,868
Industrial
14,064
14,263
15,033
Other
9,249
7,729
6,579
Senior housing/assisted living
7,263
7,329
7,506
Education/worship
2,387
2,414
2,493
Land
1,696
1,887
2,314
Total CRE non-owner occupied
182,568
177,113
174,188
CRE owner occupied:
Industrial
74,904
75,347
66,618
Office
35,100
30,311
40,447
Retail
27,443
24,248
20,535
Other
10,674
10,492
8,529
Hospitality/restaurant
8,125
7,583
7,306
Mixed use
7,685
7,831
5,579
Automobile related
6,792
7,111
7,266
Car wash
4,394
4,412
—
Agriculture
3,759
4,136
3,990
Education/worship
3,384
4,607
4,641
Total CRE owner occupied
182,260
176,078
164,911
Total
$
364,828
$
353,191
$
339,099
