Key Highlights

  • FS Bancorp (NASDAQ:FSBW) reported third-quarter 2026 GAAP diluted EPS of USD 0.63 on Wednesday, October 21, 2026, against a consensus estimate of USD 1.11 and USD 1.04 in the second quarter.
  • Non-interest expense rose to USD 32.3 million from USD 26.1 million, including USD 2.5 million of pre-tax merger expenses tied to the Pacific West Bank acquisition closed on August 19, 2026.
  • The deal added USD 256.5 million of loans and USD 435.6 million of deposits, lifting total deposits 17.1% in the quarter to USD 2.87 billion and producing a USD 1.7 million bargain purchase gain.
  • The net interest margin rose to 4.36% from 4.30%, and the board declared a 55th consecutive quarterly dividend of USD 0.29 per share, payable on Friday, November 20, 2026.

A Deal Quarter Below Estimates

FS Bancorp (NASDAQ:FSBW), the Washington state holding company for 1st Security Bank of Washington, reported third-quarter 2026 results at 4:30 p.m. ET on Wednesday, October 21, 2026. Net income was USD 4.9 million, or USD 0.63 per diluted share, against USD 7.9 million, or USD 1.04, in the second quarter and USD 1.18 a year earlier. The consensus estimate was USD 1.11; a figure of USD 0.65 also appears in consensus comparisons, while the release reports GAAP results only. Net interest income rose to USD 35.7 million from USD 33.7 million a year earlier. Net loans grew USD 379.1 million in the quarter to USD 3.01 billion, largely through the acquisition of Pacific West Bank.

How Acquisition Costs Hit the Quarter

FS Bancorp (NASDAQ:FSBW) does not reconcile its result to consensus, but the release shows where earnings went. Non-interest expense jumped USD 6.2 million from the second quarter to USD 32.3 million, including USD 2.5 million of pre-tax merger expenses. Non-interest income was flat at USD 6.2 million because a USD 1.7 million non-taxable bargain purchase gain, booked when acquired net assets exceed the price paid, offset lower gains on loan sales and a USD 742,000 fair value decrease. The provision for credit losses on loans was USD 3.0 million. Under a new accounting standard, the USD 3.9 million day-one allowance on acquired loans went onto the balance sheet rather than through the provision. The margin still improved to 4.36%.

Risks and What to Watch

The first risk for FS Bancorp (NASDAQ:FSBW) is integration: systems conversion took effect on Monday, October 5, 2026, and the cost base now spans 32 branches. The second is acquired credit, as non-performing loans rose to USD 25.1 million from USD 15.6 million, mainly from USD 8.6 million of acquired non-accrual loans, and classified loans reached USD 38.4 million. The third is capital, as tangible book value per share eased to USD 40.84 from USD 41.84 and the company common equity tier 1 ratio was 10.07%. The company still repurchased 44,664 shares for USD 1.9 million. Investors should watch the dividend record date of Friday, November 6, 2026 and the payment on Friday, November 20, 2026.

Where Things Stand

The answer is that FS Bancorp (NASDAQ:FSBW) fell short because acquisition-related expenses and weaker loan sale gains absorbed revenue growth in the quarter the Pacific West Bank deal closed. GAAP diluted EPS of USD 0.63 compares with a USD 1.11 consensus estimate, although the margin widened and deposits rose 17.1%. Chief Executive Officer Matthew Mullet pointed to new "deposit and loan opportunities". The next catalysts are the November 6 dividend record date, the November 20 payment and the first full quarter after integration. Merger benefits are not assured, and this is not investment advice.