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FS Bancorp, Inc. (FSBW)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 GAAP results were steady: net income $8.0M and diluted EPS $1.01, up vs Q4 2024 ($7.4M; $0.92) but modestly below Q1 2024 ($8.4M; $1.06) . Margin metrics held firm as NIM ticked up to 4.32% (vs 4.31% in Q4 and 4.26% YoY) while efficiency ratio rose to 69.4% (vs 68.2% in Q4; 66.4% YoY) .
  • Funding mix pivoted: deposits surged $276M QoQ (+11.8%) to $2.62B largely via brokered CDs, enabling a $239M reduction in FHLB borrowings; uninsured deposits edged up but remained manageable (~$679M) .
  • Credit quality stayed resilient with ACLL/loans at 1.25% (vs 1.26% in Q4) amid slightly higher NPLs ($14.5M vs $13.6M in Q4); higher net charge-offs were concentrated in home improvement loans, which management tied to volatile macro conditions .
  • Capital and shareholder returns: tangible common equity ratio improved to 9.26% and TBV/share to $36.96; FSBW repurchased ~98K shares in Q1 at $39.06 and authorized a new $5.0M buyback on April 4; the Board declared its 49th consecutive $0.28 dividend payable May 22 .
  • Versus S&P Global consensus: “Primary EPS” was essentially in line (0.93 actual vs 0.93 est.) and S&P “Revenue” came in below (actual $34.5M vs $36.1M est.). Company-reported diluted EPS was $1.01, reflecting differences in EPS definitions (Primary vs GAAP diluted) . Values retrieved from S&P Global.*

What Went Well and What Went Wrong

What Went Well

  • Deposit growth exceeded expectations, positioning the bank to fund the loan pipeline; management highlighted strong core deposit trends alongside brokered inflows to optimize funding costs .
  • Funding mix optimization: brokered CDs increased (non-retail CDs to $351.7M; +$196.8M brokered) and FHLB advances were paid down by $239M QoQ, lowering period-end borrowings to $68.8M .
  • Capital and TBV accretion continued: TBV/share rose to $36.96 (from $36.02 in Q4) with TCE ratio at 9.26%, supported by earnings and modest AOCI improvement .

What Went Wrong

  • Efficiency ratio deteriorated to 69.39% (from 68.16% in Q4 and 66.36% YoY) as noninterest expenses increased $1.5M YoY, mainly salaries/benefits and operations .
  • Credit costs reflected macro pressure: provision rose to $1.59M (vs $1.52M in Q4; $1.40M YoY) with net charge-offs up $247K YoY to $1.7M, driven by indirect home improvement .
  • Consumer/home improvement balances continued to contract ($609M vs $620M in Q4 and $646M YoY), weighing on mixed loan growth dynamics despite resilient CRE and 1-4 family categories .

Financial Results

Core P&L and Margin Metrics

MetricQ1 2024Q4 2024Q1 2025
Net Interest Income ($M)30.35 31.11 30.98
Noninterest Income ($M)5.11 4.61 5.13
Provision for Credit Losses ($M)1.40 1.52 1.59
Noninterest Expense ($M)23.53 24.35 25.06
Net Income ($M)8.40 7.38 8.02
Diluted EPS ($)1.06 0.92 1.01
NIM (%)4.26 4.31 4.32
Efficiency Ratio (%)66.36 68.16 69.39

S&P Global Consensus vs Actual (Q1 2025)

MetricEstimateActual
Primary EPS0.93*0.93*
Revenue ($M)36.05*34.52*

Values retrieved from S&P Global.*

Segment Results (Net Income)

SegmentQ1 2024Q4 2024Q1 2025
Commercial & Consumer Banking ($M)8.15 7.42 7.78
Home Lending ($M)0.25 -0.04 0.24
Total ($M)8.40 7.38 8.02

KPIs and Balance Sheet

KPIQ1 2024Q4 2024Q1 2025
Total Assets ($B)2.970 3.029 3.066
Loans Receivable, Net ($B)2.415 2.502 2.501
Total Deposits ($B)2.465 2.339 2.615
Noninterest-Bearing Deposits ($M)646.9 638.2 676.7
Borrowings ($M)129.9 307.8 68.8
ACLL / Loans (%)1.29 1.26 1.25
Nonperforming Loans ($M)12.1 13.6 14.5
TCE Ratio (%)8.74 9.25 9.26
Book Value/Share ($)36.06 38.26 39.12
Home Loan Sales Gross Margin (%)3.43 3.14 3.26
Avg Cost of Funds (%)2.21 2.38 2.38

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Quarterly Cash DividendQ2 2025$0.28/share (Q4 declared) $0.28/share payable May 22, 2025 Maintained
Share Repurchase AuthorizationThrough Mar 31, 2026~$0.9M remaining from prior plan (as of Nov 15, 2024) New $5.0M authorization (Apr 4, 2025) Raised
Quantitative Financial Guidance2025None providedNone providedN/A

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024 and Q4 2024)Current Period (Q1 2025)Trend
Deposit Funding/Core vs BrokeredQ3: core deposit growth; non-retail CDs down; no brokered in IB checking . Q4: brokered CDs down; FHLB borrowings up on better rates .Deposits +$276M QoQ; brokered CDs up ~$197M; paid down borrowings $239M .Mix shift back to brokered CDs to reduce borrowings.
NIM/Cost of FundsQ3 NIM 4.35%; avg COF 2.39% . Q4 NIM 4.31%; COF 2.38% .NIM 4.32%; COF 2.38% .Stable NIM; COF plateaued.
Credit Quality/Charge-offsQ3 NCOs higher, mainly home improvement; ACLL 1.25% . Q4 similar pattern; ACLL 1.26% .NCOs up YoY; ACLL 1.25%; NPLs $14.5M (up QoQ) .Elevated but contained; reserves stable.
Construction/CRE ExposureQ3: construction up; CRE owner/non-owner mix detailed . Q4: construction up QoQ; CRE composition detailed .Construction $338M; CRE detail and repricing ladder disclosed .Active, watched; ladder manageable.
Home Lending MarginsQ3 cash sale margin 2.96% . Q4 3.14% .3.26% .Improving sequentially.
Capital/Shareholder ReturnsQ3/TBV up; dividend $0.27 . Q4/TBV up; dividend raised to $0.28 .TBV $36.96; TCE 9.26%; new $5M buyback; dividend maintained .Continued discipline and returns.

Management Commentary

  • “Deposit growth exceeded expectations in the first quarter of 2025, enabling the Bank to be well positioned for our loan pipeline going into the second quarter.” — Matthew Mullet, President/CFO .
  • “Our Board of Directors approved our forty-ninth consecutive quarterly cash dividend of $0.28 per common share, demonstrating our continued commitment to returning value to shareholders.” — Joe Adams, CEO .
  • “We are delighted to announce Phil’s promotion to Chief Financial Officer… the ideal person for this position.” — Joe Adams on CFO succession (effective May 1, 2025) .
  • “Tangible book value (non-GAAP) per share was $36.02 at December 31, 2024… focus on risk adjusted returns and growing tangible book value remains a mainstay.” — Matthew Mullet (Q4 context) .

Q&A Highlights

  • No public Q1 2025 earnings call transcript was available in our sources; investor materials include the press release and 10-Q (no transcript on the IR site’s Quarterly Results page) .

Estimates Context

  • S&P Global consensus for Q1 2025 “Primary EPS” was 0.93 with 3 estimates; S&P “actual” Primary EPS was 0.93*, essentially in line. Company-reported diluted EPS was $1.01 (GAAP), reflecting definitional differences (Primary vs GAAP diluted) . Values retrieved from S&P Global.*
  • S&P Global “Revenue” estimate was $36.05M (2 estimates) vs S&P “actual” $34.52M*, indicating a revenue shortfall on S&P’s definition. Values retrieved from S&P Global.*
  • Given thin coverage (3 EPS, 2 revenue), modest estimate volatility is possible near prints. Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Stable spread income and disciplined funding: NIM held at 4.32% as FSBW tactically swapped higher-cost borrowings for brokered CDs, driving a sharp QoQ drop in borrowings and supporting near-term NII stability .
  • Watch credit in consumer/home improvement: net charge-offs rose YoY and NPLs ticked up, though reserves/loans stayed steady at 1.25% and substandard balances were contained; monitoring indirect consumer remains prudent in a volatile macro .
  • Capital return durable: TBV/share and TCE continue to improve; the new $5M buyback plus the maintained $0.28 dividend support total return, particularly if shares trade near TBV .
  • Home lending showing margin recovery: cash sale margins improved to 3.26%, aiding fee income diversification even as one-to-four originations remain seasonally/macro constrained .
  • Deposit trajectory is a near-term catalyst: management cited better-than-expected deposit growth; sustained core inflows could lower reliance on brokered CDs and further optimize the liability stack .
  • Valuation sensitivity: Thin sell-side coverage and definitional differences (Primary vs diluted EPS, S&P revenue constructs) can create optical beats/misses; anchoring on GAAP trends and spread metrics may better capture intrinsic momentum .
  • Medium-term thesis: Steady NIM in a range-bound rate environment, cautious credit costs, and capital return underpin earnings durability; upside levered to core deposit growth and continued fee-margin recovery .

Appendix: Additional Operating Detail

  • Loans flat QoQ at $2.50B, up $86M YoY; CRE $873M (+$47M YoY), 1-4 family $637M (+$57M YoY), consumer $609M (-$37M YoY), C&I $275M (+$19M YoY) .
  • CRE repricing ladder totals ~$178M through Mar 2027 with weighted rates in the mid-4% to mid-5% by category .
  • Segment profitability: Commercial & Consumer Banking delivered $7.78M NI; Home Lending $0.24M, reflecting improved sale margins and expense allocation .

Notes: Values retrieved from S&P Global.*