8-K: FS Bancorp Reports $7.4 Million Net Income for Q4 2024, Increases Quarterly Dividend

FS Bancorp announced a net income of $7.4 million for the fourth quarter of 2024 and a 3.7% increase in its quarterly dividend.

Summary

• FS Bancorp reported a net income of $7.4 million, or $0.92 per diluted share, for the fourth quarter of 2024, compared to $9.8 million, or $1.23 per diluted share, in the same quarter of the previous year.
• The decrease in net income was primarily due to a $2.5 million tax provision in Q4 2024, compared to a $420,000 tax benefit in the previous quarter.
• For the full year 2024, net income was $35.0 million, or $4.36 per diluted share, compared to $36.1 million, or $4.56 per diluted share in 2023.
• The company's total assets surpassed $3 billion, driven by organic loan growth.
• The board of directors increased the quarterly cash dividend by $0.01 to $0.28 per common share, marking the forty-eighth consecutive quarterly increase.
• Tangible book value per share increased by 13.8% year-over-year to $36.02 at December 31, 2024.
• Total deposits decreased by $87.9 million to $2.34 billion at the end of 2024, primarily due to a reduction in brokered deposits.
• Loans receivable, net increased by $38.3 million to $2.50 billion at the end of 2024.
• Borrowings increased by $144.0 million to $307.8 million at the end of 2024.
• The company repurchased 35,000 shares of its common stock in the fourth quarter at an average price of $48.47 per share.
• The Commercial and Consumer Banking segment reported net income of $7.4 million, while the Home Lending segment reported a net loss of $39,000 for the fourth quarter of 2024.
• Regulatory capital ratios at the Bank were 14.2% for total risk-based capital and 11.2% for Tier 1 leverage capital at December 31, 2024.

Sentiment

Score: 6

Explanation: The sentiment is moderately positive due to the increase in assets and dividend, but tempered by the decrease in net income and deposits. The company is navigating a challenging economic environment.

Positives

• The company achieved a significant milestone by surpassing $3 billion in total assets.
• The quarterly dividend was increased for the forty-eighth consecutive time.
• Tangible book value per share saw a substantial year-over-year increase of 13.8%.
• Loans receivable, net increased by $38.3 million in the quarter.
• The company repurchased 35,000 shares of its common stock.
• The company's total risk-based capital ratio was 14.2% at December 31, 2024, indicating a strong capital position.

Negatives

• Net income for the fourth quarter of 2024 decreased compared to both the previous quarter and the same quarter of the previous year.
• Total deposits decreased by $87.9 million in the quarter.
• Consumer loans decreased by $12.2 million in the quarter.
• Nonperforming loans increased by $2.8 million in the quarter.
• Net charge-offs increased by $348,000 in the quarter.
• Noninterest income decreased by $846,000 in the quarter.

Risks

• The company faces risks related to economic volatility impacting interest rates for loans and deposits.
• Decreases in deposits, particularly brokered deposits, could affect funding.
• Increases in nonperforming loans and net charge-offs could impact profitability.
• The company is exposed to fluctuations in the mortgage industry and secondary market conditions.
• Changes in interest rates and the cost of funds could affect the net interest margin.
• The company is subject to legislative and regulatory changes.

Future Outlook

The document includes forward-looking statements regarding future events and financial performance, which are subject to various risks and uncertainties. The company does not undertake any obligation to revise these statements.

Management Comments

• Joe Adams, CEO, stated that the company surpassed $3 billion in total assets primarily through organic loan growth.
• Joe Adams, CEO, expressed gratitude to the Board of Directors for increasing the quarterly cash dividend.
• Matthew Mullet, President and CFO, noted that the focus on risk-adjusted returns and growing tangible book value remains a priority for the company's shareholders.

Industry Context

The results reflect the challenges faced by the banking industry due to economic volatility and interest rate fluctuations. The company's focus on organic loan growth and risk management aligns with industry best practices. The increase in borrowings and decrease in brokered deposits is a common strategy to manage funding costs in the current environment.

Comparison to Industry Standards

• FS Bancorp's net interest margin of 4.31% is within the range of regional banks, but it is important to compare this to peers with similar asset sizes and geographic locations.
• The company's tangible book value growth of 13.8% year-over-year is a strong result compared to many regional banks, indicating effective capital management.
• The decrease in deposits is a common trend in the current environment, with many banks experiencing a shift in deposit mix. It is important to compare the magnitude of the decrease to peers.
• The increase in borrowings is a common strategy to manage funding costs, but it is important to monitor the company's leverage ratios compared to industry benchmarks.
• The company's capital ratios are above regulatory requirements, which is a positive sign of financial health. It is important to compare these ratios to peers to assess relative strength.

Stakeholder Impact

• Shareholders will benefit from the increased dividend and the growth in tangible book value.
• Employees may benefit from the company's growth and increased loan origination.
• Customers will continue to have access to a range of loan and deposit services.
• Suppliers and creditors will be impacted by the company's financial performance and growth.

Next Steps

• The company will pay the increased quarterly dividend on February 20, 2025.
• Management will continue to focus on organic loan growth and risk-adjusted returns.
• The company will continue to monitor economic conditions and their impact on the business.

Key Dates

Keywords

FS Bancorp, Net Income, Dividend, Loans, Deposits, Assets, Tangible Book Value, Net Interest Margin, Capital Ratios, Share Repurchase, Nonperforming Loans, Credit Losses, Banking, Financial Results