FS Bancorp, Inc. (FSBW)·Q3 2025 Earnings Summary

Executive Summary

• Q3 2025 delivered solid sequential improvement: diluted EPS rose to $1.18 from $0.99 in Q2, though down year-over-year from $1.29 as credit costs and nonaccrual balances remained elevated . Net interest margin expanded to 4.37% (vs. 4.30% in Q2; 4.35% YoY), supported by higher earning asset yields and disciplined funding costs .
• Versus Wall Street: on S&P Global’s Primary EPS basis, FSBW modestly missed consensus ($1.08 est. vs. $1.03 actual*); revenue was slightly below ($37.9M est. vs. $37.0M actual*) as Street coverage remains limited (3 EPS estimates; 2 revenue estimates)*. Values retrieved from S&P Global.
• Balance sheet actions were supportive: deposits grew $133.1M (+5.2%) QoQ to $2.69B, while borrowings fell $105.0M (-44.8%) to $129.3M, strengthening liquidity and reducing funding costs .
• Capital return stepped up post-quarter: the Board authorized an additional $5.0M share repurchase program (12-month window) on Oct 27, following Q3 buybacks of 134,413 shares at $41.15 average .
• Catalyst framing: NIM resilience, deposit inflows, and new buyback authorization are positive; watch credit normalization (construction charge-offs; consumer nonaccruals) as the key swing factor for near-term stock reaction .

What Went Well and What Went Wrong

• What Went Well

  • “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,” said Matt Mullet (President & CEO, 1st Security Bank) .
  • Deposits up $133.1M QoQ to $2.69B; borrowings down $105.0M QoQ to $129.3M, improving funding profile and flexibility .
  • Efficiency ratio improved to 64.63% from 68.40% in Q2, highlighting operating discipline despite wage and operations headwinds .

• What Went Wrong

  • Nonperforming loans remained elevated at $18.4M (vs. $19.0M in Q2; $10.8M YoY), driven by two commercial construction loans still in development and higher consumer/mortgage delinquencies .
  • Credit costs increased: provision for credit losses rose to $2.3M (vs. $2.0M in Q2; $1.5M YoY), including a $2.3M partial charge-off on a commercial construction office project (fully reserved previously) .
  • Noninterest income declined YoY (-$373K) to $5.6M on lower service charges and no MSR sales, offsetting gains on loan sales and other income .

Financial Results

Segment Net Income ($USD Thousands)

Key Performance Indicators

Actual vs. Wall Street Consensus (S&P Global)

Values retrieved from S&P Global.

Guidance Changes

Note: Company did not provide numeric revenue/EPS/expense guidance in the Q3 materials; forward-looking statements discuss macro and risk factors but no quantified outlook .

Earnings Call Themes & Trends

No Q3 2025 earnings call transcript was located on the company’s IR site or major transcript aggregators; analysis below reflects management commentary in the press releases for Q1–Q3 2025 .

Management Commentary

• “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.” — Matthew Mullet, President & CEO 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.” — Joe Adams, CEO of FS Bancorp, Inc. .
• Q2 context: “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.” — Phillip Whittington, CFO .

Q&A Highlights

• No Q3 2025 earnings call transcript or webcast replay could be identified on the company’s IR site; analysis reflects press release disclosures .
• As such, there were no management Q&A clarifications to formal guidance, and narrative points center on NIM dynamics, funding mix, credit monitoring, and capital return actions .

Estimates Context

• S&P Global consensus for Q3 2025 Primary EPS: $1.08; actual: $1.03* — a modest miss on SPGI’s EPS basis*. Company-reported diluted EPS was $1.18, reflecting a different EPS definition used in the press release .
• S&P Global revenue consensus: $37.9M; actual: $37.0M* — slightly below consensus*. Coverage is thin (3 EPS estimates; 2 revenue estimates)*. Values retrieved from S&P Global.

Key Takeaways for Investors

• NIM resiliency and operating efficiency improvements (64.63% in Q3) point to supportive earnings power even as rate dynamics evolve .
• Funding profile improved: deposit inflows (+$133.1M QoQ) and materially lower borrowings (-$105.0M QoQ) reduce funding costs and interest rate sensitivity .
• Credit normalization remains the key watch item: elevated NPLs ($18.4M) and a $2.3M construction office charge-off; however, QoQ NPLs declined and ACL coverage remains robust (ACL-to-NPL 163.77%) .
• Home lending trends improved seasonally (loans sold $156.4M; gross margins 3.14%), partly offsetting lower fee lines (service charges; no MSR sales) .
• Capital return is a tangible catalyst: continued dividend ($0.28) and fresh $5.0M buyback authorization post-quarter support per-share value accretion .
• Near-term trading lens: constructive on NIM/funding mix and buybacks; monitor consumer/CRE construction credit metrics and any further charge-offs impacting provision trajectory .
• Medium-term thesis: balance-sheet growth (loans +$135.9M YoY), disciplined costs, and conservative capital keep FSBW positioned to compound TBV (tangible BV per share up $0.97 QoQ to $38.43) while absorbing credit normalization .