FS Bancorp, Inc. reported third-quarter net income of $4.9 million, or $0.63 per diluted share, for the period ended September 30, 2026. This figure represents a decline from $7.9 million in the previous quarter and $9.2 million in the comparable quarter one year prior. The decrease coincides with the completion of the company's acquisition of Pacific West Bancorp, which closed on August 19, 2026.
The acquisition added significant assets to the balance sheet of FS Bancorp's subsidiary, 1st Security Bank of Washington. The company acquired assets with a fair value of $476.5 million, including $256.5 million in loans, and assumed liabilities of $439.5 million, including $435.6 million in deposits. Because the fair value of the net assets acquired exceeded the total consideration of approximately $35.3 million, FS Bancorp recognized a preliminary bargain purchase gain of $1.7 million in noninterest income. The company also incurred $2.5 million in merger-related expenses during the quarter.
Matthew Mullet, President and CEO of FS Bancorp, stated that the company is working with Pacific West Bank team members to expand deposit and loan opportunities in the greater Portland, Oregon and Vancouver, Washington markets. He noted that systems integration was completed on October 5, 2026. The Board of Directors approved a 55th consecutive quarterly cash dividend of $0.29 per common share, which will be paid on November 20, 2026, to shareholders of record as of November 6, 2026.
Total deposits increased by $418.3 million, or 17.1%, to $2.87 billion at September 30, 2026, primarily reflecting the Pacific West acquisition. Loans receivable, net, increased by $379.1 million to $3.01 billion during the same period. The Commercial and Consumer Banking segment reported net income of $5.7 million for the third quarter of 2026. In contrast, the Home Lending segment reported a net loss of $806,000 due to rising interest rates, compared to net income of $1.1 million in the prior quarter.
Regulatory capital ratios for 1st Security Bank were 12.6% for total risk-based capital and 11.2% for Tier 1 leverage capital at September 30, 2026. These figures were down from 14.0% and 11.4%, respectively, at June 30, 2026, but the bank remained well capitalized under applicable regulatory standards.