MOUNTLAKE TERRACE, Wash., July 21, 2026 (GLOBE NEWSWIRE) -- FS Bancorp, Inc. (NASDAQ: FSBW) (the “Company”), the holding company for 1st Security Bank of Washington (the “Bank”) today reported 2026 second quarter net income of $7.9 million, or $1.04 per diluted share, compared to $7.8 million, or $1.02 per diluted share, for the prior quarter, and $7.7 million, or $0.99 per diluted share, for the comparable quarter one year ago. For the six months ended June 30, 2026, net income was $15.8 million, or $2.07 per diluted share, compared to net income of $15.7 million, or $1.99 per diluted share, for the comparable six-month period in 2025.

“From the announcement of our proposed merger with Pacific West Bank in the first quarter of 2026, our teams have been diligently working toward a successful integration, while concurrently contributing to our financial success this quarter,” stated Matthew Mullet, President and CEO of FS Bancorp, Inc. “We are also pleased to announce that our Board of Directors has approved our 54th 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 August 21, 2026, to shareholders of record as of August 7, 2026,” concluded Mullet.

2026 Second Quarter Highlights

Net income totaled $7.9 million for the second quarter of 2026, compared to $7.8 million for the previous quarter, and $7.7 million for the comparable quarter one year ago;
Total deposits decreased $188.7 million, or 7.2%, to $2.45 billion at June 30, 2026, compared to $2.63 billion at March 31, 2026. This decrease was primarily due to a $201.1 million decrease in brokered deposits, with an offsetting increase of $12.1 million in retail deposits. Compared to June 30, 2025, total deposits decreased $104.5 million, or 4.1%. The cost of deposits decreased to 2.18% for the quarter ended June 30, 2026, from 2.24% for the quarter ended March 31, 2026, primarily due to the Company's funding strategy of shifting from higher cost brokered deposits to borrowings, while maintaining sufficient liquidity;
Loans receivable, net increased $4.9 million, to $2.63 billion at June 30, 2026, compared to $2.62 billion at March 31, 2026, and increased $46.7 million, from $2.58 billion at June 30, 2025. The year-over-year loan growth was primarily due to an increase of $88.9 million in the commercial real estate portfolio, partially offset by heightened payoff activity in the consumer loan portfolio which decreased $33.1 million during the same period;
Consumer loans were $573.2 million at June 30, 2026, a decrease of $10.3 million, or 1.8%, from $583.5 million in the previous quarter, and a decrease of $33.1 million, or 5.5%, from $606.3 million in the comparable quarter one year ago. During the three months ended June 30, 2026, consumer loan originations included 87.3% of indirect home improvement loans originated with a Fair Isaac Corporation (“FICO”) score above 720;
The Commercial and Consumer Banking segment reported net income of $6.8 million for the second quarter of 2026, compared to $6.7 million for the prior quarter and $7.4 million for the second quarter of 2025. The Home Lending segment reported net income of $1.1 million for both the first and second quarters of 2026, compared to $352,000 for the second quarter of 2025;
Repurchased 87,000 shares of the Company's common stock for $3.6 million in the second quarter of 2026, at an average price of $41.81 per share;
Book value per share increased $1.15, or 2.7%, to $43.57 at June 30, 2026, compared to $42.42 at March 31, 2026, and increased $4.02, or 10.2%, from $39.55 at June 30, 2025. Tangible book value per share (non-GAAP financial measure) increased $1.23 to $41.84 at June 30, 2026, compared to $40.61 at March 31, 2026, and increased $4.38 from $37.46 at June 30, 2025. See, “Non-GAAP Financial Measures;” and
Regulatory capital ratios at the Bank were 14.0% for total risk-based capital and 11.4% for Tier 1 leverage capital at June 30, 2026, compared to 13.8% for total risk-based capital and 11.2% for Tier 1 leverage capital at March 31, 2026. The Bank remained well capitalized under applicable regulatory capital standards.

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, 2026 and 2025 (dollars in thousands):

	At or For the Three Months Ended June 30, 2026
Condensed income statement:	Commercial and Consumer Banking			Home Lending			Total
Net interest income ⁽¹⁾	$	29,662		$	2,986		$	32,648
Provision for credit losses		(2,297	)		(344	)		(2,641	)
Noninterest income ⁽²⁾		2,740			3,410			6,150
Noninterest expense ⁽³⁾		(21,413	)		(4,691	)		(26,104	)
Income before provision for income taxes		8,692			1,361			10,053
Provision for income taxes		(1,899	)		(218	)		(2,117	)
Net income	$	6,793		$	1,143		$	7,936
Total average assets for period ended	$	2,511,682		$	668,842		$	3,180,524
Full-time employees ("FTEs")		476			117			593

	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⁾		2,298			2,872			5,170
Noninterest expense ⁽³⁾		(20,314	)		(5,188	)		(25,502	)
Income before provision for income taxes		9,314			445			9,759
Provision for income taxes		(1,938	)		(93	)		(2,031	)
Net income	$	7,376		$	352		$	7,728
Total average assets for period ended	$	2,466,917		$	649,443		$	3,116,360
FTEs		452			115			567

	At or For the Six Months Ended June 30, 2026
Condensed income statement:	Commercial and Consumer Banking			Home Lending			Total
Net interest income ⁽¹⁾	$	59,214		$	5,979		$	65,193
Provision for credit losses		(4,842	)		(328	)		(5,170	)
Noninterest income ⁽²⁾		5,204			6,347			11,551
Noninterest expense ⁽³⁾		(42,275	)		(9,349	)		(51,624	)
Income before provision for income taxes		17,301			2,649			19,950
Provision for income taxes		(3,762	)		(422	)		(4,184	)
Net income	$	13,539		$	2,227		$	15,766
Total average assets for period ended	$	2,527,284		$	663,600		$	3,190,884
FTEs		476			117			593

	At or For the Six Months Ended June 30, 2025
Condensed income statement:	Commercial and Consumer Banking			Home Lending			Total
Net interest income ⁽¹⁾	$	57,585		$	5,508		$	63,093
Provision for credit losses		(3,170	)		(443	)		(3,613	)
Noninterest income ⁽²⁾		4,543			5,753			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

________________________

(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, 2026, the Company recorded a net increase of $45,000 and a net decrease of $56,000 in fair value, respectively, compared to a net increase of $3,000 and a net increase of $266,000 in fair value for the three and six months ended June 30, 2025, respectively. As of both June 30, 2026 and 2025, there were $13.2 million in residential mortgage loans recorded at fair value, which had previously been 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, 2026 and 2025, the Home Lending segment included allocated overhead expenses of $1.7 million and $3.6 million, compared to $1.8 million and $3.7 million, respectively.

Asset Summary

The following table summarizes the composition of total assets and changes from the linked quarter and prior-year period.

ASSETS							Linked Quarter						Prior Year
(Dollars in thousands)	June 30,		March 31,		June 30,		Change						Quarter Change
	2026		2026		2025		$			%			$			%
Cash and due from banks	$	12,835	$	12,424	$	15,168	$	411			3	%	$	(2,333	)		(15	)%
Interest-bearing deposits at other financial institutions		16,875		26,278		18,027		(9,403	)		(36	)		(1,152	)		(6	)
Total cash and cash equivalents		29,710		38,702		33,195		(8,992	)		(23	)		(3,485	)		(10	)
Certificates of deposit at other financial institutions		—		—		248		—			—		NM			NM
Securities available-for-sale, at fair value		269,460		271,007		302,692		(1,547	)		(1	)		(33,232	)		(11	)
Securities held-to-maturity, net		34,845		33,267		31,562		1,578			5			3,283			10
Loans held for sale, at fair value		30,548		56,275		53,630		(25,727	)		(46	)		(23,082	)		(43	)
Loans receivable, net		2,628,992		2,624,091		2,582,272		4,901			—			46,720			2
Accrued interest receivable		14,263		15,333		14,270		(1,070	)		(7	)		(7	)		—
Premises and equipment, net		43,455		43,612		30,098		(157	)		—			13,357			44
Long-lived assets held for sale		3,258		3,258		—		—			—			—		NM
Operating lease right-of-use		6,655		5,472		7,969		1,183			22			(1,314	)		(16	)
Federal Home Loan Bank stock, at cost		14,420		8,701		11,579		5,719			66			2,841			25
Deferred tax asset, net		6,441		7,175		7,782		(734	)		(10	)		(1,341	)		(17	)
Bank owned life insurance (“BOLI”), net		36,771		36,508		38,262		263			1			(1,491	)		(4	)
MSRs, held at the lower of cost or fair value		8,912		8,676		8,652		236			3			260			3
Goodwill		3,592		3,592		3,592		—			—			—			—
Core deposit intangible, net		9,052		9,774		12,071		(722	)		(7	)		(3,019	)		(25	)
Other assets		38,706		38,072		38,139		634			2			567			1
TOTAL ASSETS	$	3,179,080	$	3,203,515	$	3,176,013	$	(24,435	)		(1	)%	$	3,067			—	%


LOAN PORTFOLIO
(Dollars in thousands)
COMMERCIAL REAL ESTATE	June 30, 2026						March 31, 2026						June 30, 2025						Linked Quarter $			Prior Year Quarter $
("CRE") LOANS	Amount			Percent			Amount			Percent			Amount			Percent			Change			Change
CRE owner occupied	$	184,136			6.9	%	$	182,260			6.9	%	$	180,250			6.8	%	$	1,876		$	3,886
CRE non-owner occupied		188,258			7.1			182,568			6.9			171,979			6.6			5,690			16,279
Commercial and speculative construction and development		370,459			13.9			358,657			13.5			300,723			11.5			11,802			69,736
Multi-family		262,137			9.9			263,353			9.9			263,185			10.1			(1,216	)		(1,048	)
Total CRE loans		1,004,990			37.8			986,838			37.2			916,137			35.0			18,152			88,853

RESIDENTIAL REAL ESTATE LOANS
One-to-four-family (excludes HFS)		660,518			24.8			630,996			23.8			639,881			24.4			29,522			20,637
Home equity		88,214			3.3			88,468			3.3			85,613			3.3			(254	)		2,601
Residential custom construction		44,765			1.7			44,134			1.7			54,024			2.1			631			(9,259	)
Total residential real estate loans		793,497			29.8			763,598			28.8			779,518			29.8			29,899			13,979

CONSUMER LOANS
Indirect home improvement		502,151			18.9			513,437			19.3			530,375			20.3			(11,286	)		(28,224	)
Marine		66,941			2.5			67,126			2.5			72,765			2.8			(185	)		(5,824	)
Other consumer		4,111			0.1			2,921			0.1			3,151			0.1			1,190			960
Total consumer loans		573,203			21.5			583,484			21.9			606,291			23.2			(10,281	)		(33,088	)

COMMERCIAL BUSINESS LOANS
Commercial and industrial (“C&I”)		281,181			10.6			304,470			11.5			294,563			11.3			(23,289	)		(13,382	)
Warehouse lending		7,286			0.3			18,144			0.6			17,952			0.7			(10,858	)		(10,666	)
Total commercial business loans		288,467			10.9			322,614			12.1			312,515			12.0			(34,147	)		(24,048	)
Total loans receivable, gross		2,660,157			100.0	%		2,656,534			100.0	%		2,614,461			100.0	%		3,623			45,696

Allowance for credit losses ("ACL") on loans		(31,165	)					(32,443	)					(32,189	)					1,278			1,024
Total loans receivable, net	$	2,628,992					$	2,624,091					$	2,582,272					$	4,901		$	46,720

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, 2026		Dec 31, 2026		Mar 31, 2027		Jun 30, 2027		Sep 30, 2027		Dec 31, 2027		Mar 31, 2028		Jun 30, 2028		Total		Rate
Apartment	$	6,957	$	16,937	$	7,345	$	2,242	$	4,101	$	11,817	$	15,901	$	37,411	$	102,711		5.85	%
Industrial		198		—		13,497		3,645		5,641		5,204		2,790		6,334		37,309		5.88	%
Mixed use		—		1,135		1,287		—		—		3,210		445		—		6,077		6.73	%
Office		538		12,580		2,767		—		7,318		3,622		—		3,090		29,915		5.75	%
Other		3,241		2,408		—		1,739		323		24		7		866		8,608		5.24	%
Retail		—		3,298		2,902		2,322		7,370		—		—		417		16,309		4.88	%
Senior housing and assisted living		2,092		—		—		1,336		—		—		3,022		—		6,450		6.88	%
Total	$	13,026	$	36,358	$	27,798	$	11,284	$	24,753	$	23,877	$	22,165	$	48,118	$	207,379

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

(Dollars in thousands)
CRE by Type:	June 30, 2026			March 31, 2026			June 30, 2025
CRE non-owner occupied:
Office		$	43,705		$	43,532		$	39,141
Retail			42,042			42,186			38,652
Hospitality/restaurant			24,499			24,673			26,489
Industrial			20,824			14,064			14,444
Self-storage			18,767			18,844			19,075
Mixed use			18,489			18,674			18,387
Other			9,189			9,249			3,670
Senior housing/assisted living			6,882			7,263			7,448
Education/worship			2,359			2,387			2,467
Land			1,502			1,696			2,206
Total CRE non-owner occupied			188,258			182,568			171,979
CRE owner occupied:
Industrial			79,137			74,904			77,419
Office			31,862			35,100			40,156
Retail			27,433			27,443			19,470
Other			10,539			10,674			9,483
Mixed use			9,239			7,685			5,548
Hospitality/restaurant			7,622			8,125			7,230
Automobile related			6,745			6,792			7,215
Car wash			4,376			4,394			4,447
Agriculture			3,816			3,759			4,652
Education/worship			3,367			3,384			4,630
Total CRE owner occupied			184,136			182,260			180,250
Total	$		372,394	$		364,828	$		352,229

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

(Dollars in thousands)	June 30, 2026					March 31, 2026					June 30, 2025
Construction Types:	Amount		Percent			Amount		Percent			Amount		Percent
Commercial construction – retail	$	8,447		2.0	%	$	8,450		2.1	%	$	8,447		2.4	%
Commercial construction – office		7,164		1.7			9,442		2.3			9,083		2.6
Commercial construction – self storage		25,234		6.1			24,217		6.0			16,553		4.7
Commercial construction – hotel		13,463		3.3			11,968		3.0			3,673		1.0
Multi-family		46,186		11.1			44,343		11.0			23,119		6.5
Custom construction – single family residential and single family manufactured residential		33,944		8.2			33,425		8.3			45,570		12.8
Custom construction – land, lot and acquisition and development		10,821		2.6			10,708		2.7			8,454		2.4
Speculative residential construction – vertical		225,992		54.4			216,204		53.7			200,375		56.5
Speculative residential construction – land, lot and acquisition and development		43,973		10.6			44,034		10.9			39,473		11.1
Total	$	415,224		100.0	%	$	402,791		100.0	%	$	354,747		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, 2026					March 31, 2026					June 30, 2025					$			%			$			%
	Amount		Percent			Amount		Percent			Amount		Percent			Change			Change			Change			Change
Purchase	$	163,100		79.2	%	$	139,626		67.3	%	$	170,854		85.7	%	$	23,474			16.8		$	(7,754	)		(4.5	)%
Refinance		42,741		20.8			67,864		32.7			28,470		14.3			(25,123	)		(37.0	)		14,271			50.1	%
Total	$	205,841		100.0	%	$	207,490		100.0	%	$	199,324		100.0	%	$	(1,649	)		(0.8	)	$	6,517			3.3	%

(Dollars in thousands)	For the Six Months Ended June 30,
	2026					2025
	Amount		Percent			Amount		Percent			$ Change		% Change
Purchase	$	302,726		73.2	%	$	290,737		84.3	%	$	11,989		4.1	%
Refinance		110,605		26.8			53,983		15.7			56,622		104.9	%
Total	$	413,331		100.0	%	$	344,720		100.0	%	$	68,611		19.9	%

During the quarter ended June 30, 2026, the Company sold $156.1 million of one-to-four-family loans compared to $154.7 million during the previous quarter and $127.1 million during the same quarter one year ago. Gross margins on home loan sales decreased to 2.98% for the quarter ended June 30, 2026, compared to 3.03% in the previous quarter and decreased from 3.06% 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, 2026					March 31, 2026					June 30, 2025					Quarter			Quarter
Transactional deposits:	Amount		Percent			Amount		Percent			Amount		Percent			$ Change			$ Change
Noninterest-bearing checking	$	629,799		25.7	%	$	634,787		24.1	%	$	643,573		25.2	%	$	(4,988	)	$	(13,774	)
Interest-bearing checking		209,721		8.6			185,793		7.0			181,240		7.1			23,928			28,481
Escrow accounts related to mortgages serviced ⁽¹⁾		12,057		0.5			18,904		0.7			10,496		0.4			(6,847	)		1,561
Subtotal		851,577		34.8			839,484		31.8			835,309		32.7			12,093			16,268
Savings and money market:
Savings		173,091		7.1			169,192		6.4			159,601		6.3			3,899			13,490
Money market		375,833		15.3			377,685		14.3			350,548		13.7			(1,852	)		25,285
Subtotal		548,924		22.4			546,877		20.7			510,149		20.0			2,047			38,775
Certificates of deposit:
CDs		922,022		37.6			923,801		35.0			896,892		35.1			(1,779	)		25,130
Brokered Deposits
Non-maturity brokered deposits		4,027		0.2			250		—			251		—			3,777			3,776
Maturity brokered deposits		122,332		5.0			327,164		12.5			310,774		12.2			(204,832	)		(188,442	)
Subtotal		126,359		5.2			327,414		12.5			311,025		12.2			(201,055	)		(184,666	)
Total deposits	$	2,448,882		100.0	%	$	2,637,576		100.0	%	$	2,553,375		100.0	%	$	(188,694	)	$	(104,493	)
Borrowings ⁽²⁾	$	324,500				$	167,305				$	234,305				$	157,195		$	90,195
Stockholders' equity	$	318,960				$	313,852				$	297,203				$	5,108		$	21,757
Book value per common share	$	43.57				$	42.42				$	39.55				$	1.15		$	4.02

_____________

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

Brokered deposits declined from the prior quarter, partially offset by increased borrowings, which offered a slightly lower cost of funds.

In the table above, the linked quarter increase in stockholders’ equity at June 30, 2026, compared to March 31, 2026, was primarily due to net income of $7.9 million. Changes in the fair value of available‑for‑sale securities and interest rate swap cash flow hedges increased accumulated other comprehensive income (“AOCI”) by $2.1 million, net of tax. Gains and losses in fair value reflect changes in market interest rates during the periods. The increase in stockholders’ equity was partially offset by share repurchases of $3.6 million and cash dividends paid of $2.2 million.

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, 2026, capital ratios presented for the Bank and the Company were as follows:

	At June 30, 2026
	Bank		Company
Total risk-based capital (to risk-weighted assets)	14.01	%	13.87	%
Tier 1 leverage capital (to average assets)	11.43	%	10.05	%
CET 1 capital (to risk-weighted assets)	12.84	%	11.29	%

Credit Quality

The following tables summarize changes in the ACL on loans for the periods indicated and the balances of nonperforming and classified loans at the dates indicated.

	For the three months ended									Linked			Prior Year
ACL ON LOANS	June 30,			March 31,			June 30,			Quarter			Quarter
(Dollars in thousands)	2026			2026			2025			$ Change			$ Change
Beginning ACL balance	$	32,443		$	31,937		$	31,653		$	506		$	790
Provision		2,559			2,650			1,715			(91	)		844
Charge-offs
Indirect		(2,067	)		(2,450	)		(1,556	)		383			(511	)
Marine		(7	)		(75	)		(43	)		68			36
Other		(49	)		(95	)		(42	)		46			(7	)
Commercial and speculative construction and development		(2,277	)		—			—			(2,277	)		(2,277	)
Commercial business		(39	)		(230	)		—			191			(39	)
Subtotal		(4,439	)		(2,850	)		(1,641	)		(1,589	)		(2,798	)
Recoveries
Indirect		584			585			331			(1	)		253
Marine		3			36			54			(33	)		(51	)
Other		15			7			7			8			8
Commercial business		—			78			70			(78	)		(70	)
Subtotal		602			706			462			(104	)		140
Ending ACL balance	$	31,165		$	32,443		$	32,189		$	(1,278	)	$	(1,024	)

NONPERFORMING LOANS							Linked			Prior Year
(Dollars in thousands)	June 30,		March 31,		June 30,		Quarter			Quarter
CRE LOANS	2026		2026		2025		$ Change			$ Change
CRE	$	614	$	1,081	$	2,046	$	(467	)	$	(1,432	)
Commercial and speculative construction and development		7,164		9,442		9,083		(2,278	)		(1,919	)
Total CRE loans		7,778		10,523		11,129		(2,745	)		(3,351	)

RESIDENTIAL REAL ESTATE LOANS
One-to-four-family (excludes HFS)		1,973		1,983		1,809		(10	)		164
Home equity		472		475		251		(3	)		221
Total residential real estate loans		2,445		2,458		2,060		(13	)		385

CONSUMER LOANS
Indirect home improvement		4,799		4,622		3,365		177			1,434
Marine		606		466		567		140			39
Other consumer		19		34		13		(15	)		6
Total consumer loans		5,424		5,122		3,945		302			1,479

COMMERCIAL BUSINESS LOANS
C&I		—		165		1,862		(165	)		(1,862	)
Total nonperforming loans	$	15,647	$	18,268	$	18,996	$	(2,621	)	$	(3,349	)

The decrease in nonperforming loans at June 30, 2026, compared to June 30, 2025, was primarily attributable to a $2.3 million charge-off on a commercial construction loan and a single payoff within the commercial real estate portfolio. The charge-off reflects leasing uncertainty and updated appraised values for the underlying property, as well as continued pressure on commercial real estate values in the surrounding market.

CLASSIFIED LOANS							Linked			Prior Year
(Dollars in thousands)	June 30,		March 31,		June 30,		Quarter			Quarter
CRE LOANS	2026		2026		2025		$ Change			$ Change
CRE	$	4,236	$	4,122	$	2,046	$	114		$	2,190
Commercial and speculative construction and development		7,164		9,442		9,083		(2,278	)		(1,919	)
Total CRE loans		11,400		13,564		11,129		(2,164	)		271

RESIDENTIAL REAL ESTATE LOANS
One-to-four-family (excludes HFS)		3,794		3,814		4,383		(20	)		(589	)
Home equity		472		475		251		(3	)		221
Total residential real estate loans		4,266		4,289		4,634		(23	)		(368	)

CONSUMER LOANS
Indirect home improvement		4,799		4,622		3,365		177			1,434
Marine		606		466		567		140			39
Other consumer		19		34		13		(15	)		6
Total consumer loans		5,424		5,122		3,945		302			1,479

COMMERCIAL BUSINESS LOANS
C&I		3,889		3,168		5,220		721			(1,331	)
Total classified loans	$	24,979	$	26,143	$	24,928	$	(1,164	)	$	51

Operating Results

Net interest income increased $536,000 to $32.6 million for the three months ended June 30, 2026, from $32.1 million for the three months ended June 30, 2025, primarily due to an increase in total interest income of $959,000, partially offset by an increase in total interest expense of $423,000. The $536,000 increase in net interest income was primarily due to an increase of $1.2 million in interest income on loans receivable, including fees, resulting from net loan growth. The $423,000 increase in total interest expense reflected a $612,000 increase in interest expense on borrowings resulting from higher average borrowing balances and a $423,000 increase in interest expense on the subordinated note following its repricing to a higher interest rate in 2026, partially offset by a $612,000 decrease in interest expense on deposits.

For the six months ended June 30, 2026, net interest income increased $2.1 million to $65.2 million, from $63.1 million for the six months ended June 30, 2025, with a $3.5 million increase in total interest income, partially offset by a $1.4 million increase in interest expense. The $3.5 million increase in total interest income was primarily due to an increase of $3.9 million in interest income on loans receivable, including fees, resulting from net loan growth. The $1.4 million increase in total interest expense was primarily due to a $1.0 million increase in interest expense on deposits, reflecting higher average deposit balances and funding costs during the period, and a $629,000 increase in interest expense on the subordinated note following its repricing to a higher interest rate in 2026, partially offset by a $267,000 decrease in interest expense on borrowings.

Net interest margin (“NIM”) (annualized) was unchanged at 4.30% for the three months ended June 30, 2026, compared to the same period in the prior year and decreased one basis point from 4.31% to 4.30% for the six months ended June 30, 2026, compared to the same period in 2025. Net interest margin remained relatively stable during both periods as modest increases in earning asset yields were largely offset by corresponding increases in funding costs.

The average total cost of funds, including noninterest-bearing checking, increased two basis points to 2.41% for the three months ended June 30, 2026, from 2.39% for the three months ended June 30, 2025. This increase primarily reflected the repricing of the subordinated note together with changes in the Company's funding mix during the period, partially offset by lower rates on certificates of deposit as those deposits repriced. The average cost of funds increased two basis points to 2.40% for the six months ended June 30, 2026, from 2.38% for the six months ended June 30, 2025, primarily for the same reason noted above.

For the three and six months ended June 30, 2026, the provision for credit losses on loans was $2.6 million and $5.2 million, compared to $2.0 million and $3.6 million for the three and six months ended June 30, 2025. The year-to-date provision for credit losses on loans reflects a $3.1 million increase in net charge-off activity, primarily due to a $2.3 million partial charge-off on a single commercial construction loan as well as increased charge-offs in the consumer loan portfolio. The commercial construction loan had been partially reserved for in prior periods.

During the three months ended June 30, 2026, total net charge-offs increased $2.7 million to $3.8 million, compared to $1.2 million for the three months ended June 30, 2025. The increase was primarily attributable to an additional charge-off on a commercial construction loan relationship that was previously partially charged off in 2024, as well as higher net charge-offs within the indirect home improvement portfolio. The additional charge-off reflects leasing uncertainty and updated appraised values for the underlying property, as well as continued pressure on commercial real estate values in the surrounding market. Following the additional charge-off, management believes the remaining carrying value appropriately reflects current collateral values. Management expects final resolution of the relationship during the second half of 2026. The increase in indirect home improvement loan net charge-offs primarily reflects elevated delinquency levels within portions of the portfolio.

During the six months ended June 30, 2026, net charge-offs increased $3.1 million to $6.0 million, compared to $2.9 million for the six months ended June 30, 2025. The increase was primarily due to higher net charge-offs within the indirect home improvement portfolio and the additional charge-off on the commercial construction loan relationship discussed above.

Total noninterest income increased $980,000 to $6.2 million for the three months ended June 30, 2026, from $5.2 million for the three months ended June 30, 2025. The increase primarily reflected higher gain on sale of loans of $609,000 and a $404,000 increase in other noninterest income, partially offset by a $42,000 decrease in service charges and fee income.

Total noninterest income increased $1.3 million to $11.6 million for the six months ended June 30, 2026, from $10.3 million for the six months ended June 30, 2025. This increase was the result of a $1.3 million increase in gain on sale of loans and a $158,000 increase in other noninterest income, partially offset by a $213,000 decrease in service charges and fee income.

Total noninterest expense increased $602,000 to $26.1 million for the three months ended June 30, 2026, compared to $25.5 million for the three months ended June 30, 2025. The $602,000 increase was primarily attributable to a $1.5 million increase in salaries and benefits expense resulting from annual compensation adjustments implemented during the second quarter as part of the Company's annual focal review process, as well as higher benefit costs. In addition, the Company recorded $417,000 of acquisition-related costs associated with the previously announced merger with Pacific West Bancorp (“Pacific West”), which remains subject to customary closing conditions, including shareholder and regulatory approvals. These increases were partially offset by a $1.1 million reduction in operations expense, primarily due to an approximately $800,000 decrease in the mortgage repurchase reserve. The reduction reflects the continued seasoning of loans originated during the high-volume production years of 2020 and 2021, which reduced expected future repurchase losses.

Total noninterest expense increased $1.1 million to $51.6 million for the six months ended June 30, 2026, from $50.6 million for the six months ended June 30, 2025. This increase included a $1.8 million increase in salaries and benefits, a $712,000 increase in acquisition costs, and a $515,000 increase in loan costs, partially offset by a $1.2 million decrease in operations, primarily due to the same reason mentioned above.

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”), 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 economic conditions in the Company’s local market areas, other markets in which 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 rate levels and volatility, and the timing and pace of such changes, including actions by the Federal Reserve, which could adversely affect the Company's revenues and expenses, the values of our assets and obligations, and the availability and cost of capital and liquidity; inflationary pressures and related monetary and fiscal policy responses, 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, South America, and Asia, or the imposition of new or increased tariffs and trade restrictions, which may disrupt financial markets, global supply chains, commodity 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 the Company's 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 the Company's ability to borrow funds or raise additional capital, if necessary; the impact of bank failures or adverse developments at other banks and related negative publicity 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 platforms, 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 matters; 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 the Company's website at www.fsbwa.com and on the SEC's website at www.sec.gov.

Further, statements about the potential effects of the Company's proposed merger with Pacific West on the Company's business, financial results, and condition may constitute forward-looking statements and are subject to the risk that the actual effects may differ, possibly materially, from what is reflected in the forward-looking statements due to factor and future developments which are uncertain, unpredictable, and in many cases, beyond the Company's control, including the following: the expected cost savings, synergies and other financial benefits from the merger might not be realized within the expected time frames or at all; governmental approval of the merger may not be obtained, or adverse regulatory conditions may be imposed in connection with governmental approvals of the merger; conditions to the closing of the merger may not be satisfied; the shareholders of Pacific West may fail to approve the consummation of the merger; the integration of the combined company, including the retention of key personnel, might not proceed as planned; and the combined company might not perform as well as expected.

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 expressly disclaims any obligation, to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by law.

FS BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands) (Unaudited)

										Linked			Prior Year
	June 30,			March 31,			June 30,			Quarter			Quarter
ASSETS	2026			2026			2025			% Change			% Change
Cash and due from banks	$	12,835		$	12,424		$	15,168			3			(15	)
Interest-bearing deposits at other financial institutions		16,875			26,278			18,027			(36	)		(6	)
Total cash and cash equivalents		29,710			38,702			33,195			(23	)		(10	)
Certificates of deposit at other financial institutions		—			—			248			—			NM
Securities available-for-sale, at fair value		269,460			271,007			302,692			(1	)		(11	)
Securities held-to-maturity, net		34,845			33,267			31,562			5			10
Loans held for sale, at fair value		30,548			56,275			53,630			(46	)		(43	)
Loans receivable, net		2,628,992			2,624,091			2,582,272			—			2
Accrued interest receivable		14,263			15,333			14,270			(7	)		—
Premises and equipment, net		43,455			43,612			30,098			—			44
Long-lived assets held for sale		3,258			3,258			—			—			NM
Operating lease right-of-use		6,655			5,472			7,969			22			(16	)
Federal Home Loan Bank stock, at cost		14,420			8,701			11,579			66			25
Deferred tax asset, net		6,441			7,175			7,782			(10	)		(17	)
Bank owned life insurance (“BOLI”), net		36,771			36,508			38,262			1			(4	)
MSRs, held at the lower of cost or fair value		8,912			8,676			8,652			3			3
Goodwill		3,592			3,592			3,592			—			—
Core deposit intangible, net		9,052			9,774			12,071			(7	)		(25	)
Other assets		38,706			38,072			38,139			2			1
TOTAL ASSETS	$	3,179,080		$	3,203,515		$	3,176,013			(1	)		—
LIABILITIES
Deposits:
Noninterest-bearing accounts	$	641,856		$	653,691		$	654,069			(2	)		(2	)
Interest-bearing accounts		1,807,026			1,983,885			1,899,306			(9	)		(5	)
Total deposits		2,448,882			2,637,576			2,553,375			(7	)		(4	)
Borrowings		324,500			167,305			234,305			94			38
Subordinated notes:
Principal amount		50,000			50,000			50,000			—			—
Unamortized debt issuance costs		(306	)		(322	)		(373	)		(5	)		(18	)
Total subordinated notes less unamortized debt issuance costs		49,694			49,678			49,627			—			—
Operating lease liability		6,753			5,570			8,138			21			(17	)
Other liabilities		30,291			29,534			33,365			3			(9	)
Total liabilities		2,860,120			2,889,663			2,878,810			(1	)		(1	)
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; 7,423,772 shares issued and outstanding at June 30, 2026, 7,501,542 at March 31, 2026, and 7,618,543 at June 30, 2025		74			75			76			(1	)		(3	)
Additional paid-in capital		40,886			43,668			48,418			(6	)		(16	)
Retained earnings		291,635			285,854			268,509			2			9
Accumulated other comprehensive loss, net of tax		(13,635	)		(15,745	)		(19,800	)		(13	)		(31	)
Total stockholders’ equity		318,960			313,852			297,203			2			7
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	3,179,080		$	3,203,515		$	3,176,013			(1	)		—

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	2026			2026			2025		% Change			% Change
Loans receivable, including fees	$	46,202		$	46,012		$	45,038		—			3
Interest and dividends on investment securities, cash and cash equivalents, and interest-bearing deposits at other financial institutions		3,460			3,321			3,665		4			(6	)
Total interest and dividend income		49,662			49,333			48,703		1			2
INTEREST EXPENSE
Deposits		13,908			14,713			14,520		(5	)		(4	)
Borrowings		2,197			1,384			1,585		59			39
Subordinated notes		909			691			486		32			87
Total interest expense		17,014			16,788			16,591		1			3
NET INTEREST INCOME		32,648			32,545			32,112		—			2
PROVISION FOR CREDIT LOSSES		2,641			2,529			2,021		4			31
NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES		30,007			30,016			30,091		—			—
NONINTEREST INCOME
Service charges and fee income		2,281			2,073			2,323		10			(2	)
Gain on sale of loans		2,581			2,384			1,972		8			31
Earnings on cash surrender value of BOLI		263			259			254		2			4
Other noninterest income		1,025			685			621		50			65
Total noninterest income		6,150			5,401			5,170		14			19
NONINTEREST EXPENSE
Salaries and benefits		15,570			14,854			14,088		5			11
Operations		2,699			3,380			3,824		(20	)		(29	)
Occupancy		1,938			1,876			1,780		3			9
Data processing		1,826			1,594			2,137		15			(15	)
Loan costs		900			882			719		2			25
Professional and board fees		1,060			1,014			1,155		5			(8	)
FDIC insurance		531			627			554		(15	)		(4	)
Marketing and advertising		445			309			398		44			12
Acquisition costs		417			295			—		41			100
Amortization of core deposit intangible		722			744			809		(3	)		(11	)
(Recovery) impairment of servicing rights		(4	)		(55	)		38		(93	)		(111	)
Total noninterest expense		26,104			25,520			25,502		2			2
INCOME BEFORE PROVISION FOR INCOME TAXES		10,053			9,897			9,759		2			3
PROVISION FOR INCOME TAXES		2,117			2,067			2,031		2			4
NET INCOME	$	7,936		$	7,830		$	7,728		1			3
Basic earnings per share	$	1.06		$	1.04		$	1.00		2			6
Diluted earnings per share	$	1.04		$	1.02		$	0.99		2			5

FS BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except per share amounts) (Unaudited)
						Year
	Six Months Ended June 30,					Over Year
INTEREST INCOME	2026			2025		% Change
Loans receivable, including fees	$	92,214		$	88,340		4
Interest and dividends on investment securities, cash and cash equivalents, and interest-bearing deposits at other financial institutions		6,781			7,150		(5	)
Total interest and dividend income		98,995			95,490		4
INTEREST EXPENSE
Deposits		28,621			27,578		4
Borrowings		3,581			3,848		(7	)
Subordinated note		1,600			971		65
Total interest expense		33,802			32,397		4
NET INTEREST INCOME		65,193			63,093		3
PROVISION FOR CREDIT LOSSES		5,170			3,613		43
NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES		60,023			59,480		1
NONINTEREST INCOME
Service charges and fee income		4,354			4,567		(5	)
Gain on sale of loans		4,965			3,672		35
Earnings on cash surrender value of BOLI		522			505		3
Other noninterest income		1,710			1,552		10
Total noninterest income		11,551			10,296		12
NONINTEREST EXPENSE
Salaries and benefits		30,424			28,621		6
Operations		6,079			7,269		(16	)
Occupancy		3,814			3,496		9
Data processing		3,420			4,182		(18	)
Loan costs		1,782			1,267		41
Professional and board fees		2,074			2,342		(11	)
FDIC insurance		1,158			1,092		6
Marketing and advertising		754			619		22
Acquisition costs		712			—	NM
Amortization of core deposit intangible		1,466			1,639		(11	)
(Recovery) impairment of MSRs		(59	)		29		(303	)
Total noninterest expense		51,624			50,556		2
INCOME BEFORE PROVISION FOR INCOME TAXES		19,950			19,220		4
PROVISION FOR INCOME TAXES		4,184			3,471		21
NET INCOME	$	15,766		$	15,749		—
Basic earnings per share	$	2.11		$	2.02		4
Diluted earnings per share	$	2.07		$	1.99		4

KEY FINANCIAL RATIOS AND DATA (Unaudited)

	For the Three Months Ended
	June 30,			March 31,			June 30,
PERFORMANCE RATIOS:	2026			2026			2025
Return on assets (ratio of net income to average total assets) ⁽¹⁾		1.00	%		0.99	%		0.99	%
Return on equity (ratio of net income to average total stockholders' equity) ⁽¹⁾		9.94			10.03			10.29
Yield on average interest-earning assets ⁽¹⁾		6.54			6.53			6.52
Average total cost of funds ⁽¹⁾		2.41			2.39			2.39
Interest rate spread information – average during period		4.13			4.14			4.13
Net interest margin ⁽¹⁾		4.30			4.31			4.30
Operating expense to average total assets ⁽¹⁾		3.29			3.23			3.28
Average interest-earning assets to average interest-bearing liabilities ⁽¹⁾		139.32			139.86			140.98
Efficiency ratio ⁽²⁾		67.28			67.25			68.40
Common equity ratio (ratio of stockholders' equity to total assets)		10.03			9.80			9.36
Tangible common equity ratio ⁽³⁾		9.67			9.42			8.91

	For the Six Months Ended
	June 30,			June 30,
PERFORMANCE RATIOS:	2026			2025
Return on assets (ratio of net income to average total assets)		1.00	%		1.03	%
Return on equity (ratio of net income to average total stockholders' equity)		9.98			10.55
Yield on average interest-earning assets		6.54			6.52
Average total cost of funds		2.40			2.38
Interest rate spread information – average during period		4.14			4.14
Net interest margin		4.30			4.31
Operating expense to average total assets		3.26			3.32
Average interest-earning assets to average interest-bearing liabilities		139.59			141.93
Efficiency ratio ⁽²⁾		67.27			68.89

	June 30,			March 31,			June 30,
ASSET QUALITY RATIOS AND DATA:	2026			2026			2025
Nonperforming assets to total assets at end of period ⁽⁴⁾		0.49	%		0.57	%		0.60	%
Nonperforming loans to total gross loans (excluding loans HFS) ⁽⁵⁾		0.59			0.69			0.73
ACL – loans to nonperforming loans ⁽⁵⁾		199.15			177.67			168.89
ACL – loans to total gross loans (excluding loans HFS)		1.17			1.22			1.23

	At or For the Three Months Ended
	June 30,			March 31,			June 30,
PER COMMON SHARE DATA:	2026			2026			2025
Basic earnings per share	$	1.06		$	1.04		$	1.00
Diluted earnings per share	$	1.04		$	1.02		$	0.99
Weighted average basic shares outstanding		7,340,326			7,402,375			7,580,576
Weighted average diluted shares outstanding		7,483,199			7,531,291			7,698,173
Common shares outstanding at end of period		7,320,801	⁽⁶⁾		7,398,571	⁽⁷⁾		7,515,480	⁽⁸⁾
Book value per share using common shares outstanding	$	43.57		$	42.42		$	39.55
Tangible book value per share using common shares outstanding ⁽⁹⁾	$	41.84		$	40.61		$	37.46

__________

(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 7,423,772 at June 30, 2026, less 102,971 unvested restricted stock shares.
(7)		Common shares were calculated using shares outstanding of 7,501,542 at March 31, 2026, less 102,971 unvested restricted stock shares.
(8)		Common shares were calculated using shares outstanding of 7,618,543 at June 30, 2025, less 103,063 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	2026		2025		2026		2025		$ Change			$ Change
Assets
Loans receivable, net ⁽¹⁾	$	2,695,907	$	2,613,121	$	2,698,436	$	2,586,761	$	82,786		$	111,675
Investment securities - taxable		245,713		275,951		249,955		258,786		(30,238	)		(8,831	)
Investment securities - nontaxable		77,460		78,155		77,800		77,900		(695	)		(100	)
Interest-bearing deposits and certificates of deposit at other financial institutions		13,806		19,502		18,418		17,840		(5,696	)		578
FHLB stock, at cost		11,323		8,775		9,699		10,353		2,548			(654	)
Total interest-earning assets		3,044,209		2,995,504		3,054,308		2,951,640		48,705			102,668
Noninterest-earning assets		136,315		120,856		136,576		123,027		15,459			13,549
Total assets	$	3,180,524	$	3,116,360	$	3,190,884	$	3,074,667	$	64,164		$	116,217
Liabilities
Interest-bearing deposit accounts	$	1,911,053	$	1,924,586	$	1,959,834	$	1,845,534	$	(13,533	)	$	114,300
Borrowings		224,176		150,492		178,467		184,377		73,684			(5,910	)
Subordinated notes		49,683		49,617		49,675		49,608		66			67
Total interest-bearing liabilities		2,184,912		2,124,695		2,187,976		2,079,519		60,217			108,457
Noninterest-bearing deposit accounts		644,215		657,820		651,440		660,805		(13,605	)		(9,365	)
Other noninterest-bearing liabilities		31,061		32,700		32,923		33,218		(1,639	)		(295	)
Total liabilities	$	2,860,188	$	2,815,215	$	2,872,339	$	2,773,542	$	44,973		$	98,797

____________

(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:	2026				2026				2025
Stockholders' equity (GAAP)	$	318,960			$	313,852			$	297,203
Less: goodwill and core deposit intangible, net		(12,644	)			(13,366	)			(15,663	)
Tangible common stockholders' equity (non-GAAP)	$	306,316			$	300,486			$	281,540

Common shares outstanding at end of period		7,320,801		⁽¹⁾		7,398,571		⁽²⁾		7,515,480		⁽³⁾

Book value per share (GAAP)	$	43.57			$	42.42			$	39.55
Tangible book value per share (non-GAAP)	$	41.84			$	40.61			$	37.46

Tangible Common Equity Ratio:
Total assets (GAAP)	$	3,179,080			$	3,203,515			$	3,176,013
Less: goodwill and core deposit intangible assets		(12,644	)			(13,366	)			(15,663	)
Tangible assets (non-GAAP)	$	3,166,436			$	3,190,149			$	3,160,350

Common equity ratio (GAAP)		10.03	%			9.80	%			9.36	%
Tangible common equity ratio (non-GAAP)		9.67				9.42				8.91

_____________________________

(1)		Common shares were calculated using shares outstanding of 7,423,772 at June 30, 2026, less 102,971 unvested restricted stock shares.
(2)		Common shares were calculated using shares outstanding of 7,501,542 at March 31, 2026, less 102,971 unvested restricted stock shares.
(3)		Common shares were calculated using shares outstanding of 7,618,543 at June 30, 2025, less 103,063 unvested restricted stock shares.

Additional Information About the Merger and Where to Find It

This press release does not constitute an offer to sell or the solicitation of an offer to buy or exchange any securities or a solicitation of any vote or approval with respect to the proposed transaction with Pacific West. No offering of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended.

In connection with the proposed merger, a registration statement on Form S-4 has been filed with the SEC which includes a proxy statement of Pacific West and a prospectus of the Company, which will be distributed to the shareholders of Pacific West in connection with the vote of Pacific West's shareholders on the merger of Pacific West with and into the Company and the issuance of Company common stock in the proposed transaction. INVESTORS AND SECURITY HOLDERS ARE ENCOURAGED TO READ THE REGISTRATION STATEMENT, INCLUDING THE PROXY STATEMENT/PROSPECTUS CONTAINED THEREIN, AS WELL AS ANY AMENDMENTS THERETO, AND THE DEFINITIVE PROXY STATEMENT/PROSPECTUS, BECAUSE THESE DOCUMENTS CONTAIN IMPORTANT INFORMATION REGARDING THE PROPOSED MERGER AND RELATED MATTERS.

Investors and security holders may obtain free copies of the registration statement on Form S-4, including the proxy statement/prospectus, contained therein, as well as any amendments thereto, and the definitive proxy statement/prospectus, and other documents filed with the SEC by the Company through the website maintained by the SEC at www.sec.gov. These documents may also be obtained free of charge by accessing the Company’s website at www.fsbwa.com under the tab “Investor Relations” and then under “SEC Filings.” Alternatively, copies of these documents may be obtained free of charge by (1) writing to FS Bancorp, Inc at 6920 220th Street SW, Mountlake Terrace, Washington 98043, Attn: Investor Relations or (2) by calling (425) 771-5299.

Participants in the Solicitation

The Company, Pacific West and certain of their respective directors and executive officers may be deemed to be participants in the solicitation of proxies from the shareholders of Pacific West in connection with the proposed transaction. Information about the Company's directors and executive officers is included in the proxy statement for its 2026 annual meeting of the Company’s shareholders, which was filed with the SEC on April 6, 2026. Information about Pacific West’s participants and additional information regarding the interests of these participants is included in the proxy statement/prospectus regarding the proposed transaction when it becomes available. Free copies of this document may be obtained as described above.

Contacts:
Matthew D. Mullet,
President and Chief Executive Officer
Phillip D. Whittington,
Chief Financial Officer

(425) 771-5299
www.FSBWA.com

FS Bancorp, Inc. Reports Second Quarter Net Income of $7.9 Million or $1.04 Per Diluted Share and Declares 54th Consecutive Quarterly Cash Dividend