Overview

• US regional bank reported Q2 net income and EPS up slightly from prior year

• Net interest income rose modestly year-over-year, driven by loan growth

• Company repurchased 87,000 shares for $3.6 mln and maintained quarterly dividend

• Total deposits decreased 7.2% from prior quarter due to a decrease in brokered deposits

Outlook

• Company expects final resolution of a commercial construction loan relationship in H2 2026

• FS Bancorp sees continued pressure on commercial real estate values in its market

Result Drivers

• LOAN GROWTH - Net interest income increased due to higher interest income on loans receivable, mainly from growth in the commercial real estate portfolio

• CREDIT CHARGE-OFFS - Provision for credit losses rose due to higher net charge-offs, including a partial charge-off on a commercial construction loan and increased delinquencies in the indirect home improvement portfolio

• FUNDING MIX SHIFT - Total deposits declined, mainly from a reduction in brokered deposits, offset by increased borrowings at a slightly lower cost

Company press release: ID:nGNX5l9NRV

Key Details

Metric	Beat/Miss	Actual	Consensus Estimate
Q2 EPS		$1.04
Q2 Net Income		$7.90 mln
Q2 Net Interest Income		$32.60 mln
Q2 Dividend		$0.29
Q2 Net Interest Margin		4.30%

Analyst Coverage

• The current average analyst rating on the shares is "hold" and the breakdown of recommendations is 1 "strong buy" or "buy", 2 "hold" and no "sell" or "strong sell"

• The average consensus recommendation for the banks peer group is "buy."

• Wall Street's median 12-month price target for FS Bancorp Inc is $45.50, about 5.8% above its July 20 closing price of $43.02

• The stock recently traded at 9 times the next 12-month earnings vs. a P/E of 9 three months ago

Reuters Recommended Reads

• July 21 - Bridgewater Bancshares Q2 adjusted EPS meets estimates as net interest income rises on loan growth

• July 21 - Metropolitan Bank Q2 EPS falls on credit loss provision and one-time expenses

• July 21 - KeyCorp quarterly profit rises on interest income strength

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