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1. Company Snapshot

1.a. Company Description

FS Bancorp, Inc.operates as a bank holding company for 1st Security Bank of Washington that provides banking and financial services to local families, local and regional businesses, and industry niches.The company operates in two segments, Commercial and Consumer Banking; and Home Lending.


It offers various deposit instruments, including checking accounts, money market deposit accounts, savings accounts, and certificates of deposit.The company provides one-to-four-family residential first mortgages, second mortgage/home equity loan products, non-mortgage commercial business loans, commercial real estate loans, and construction and development loans, as well as consumer loans, which primarily include personal lines of credit, credit cards, automobile, direct home improvement, loans on deposit, and recreational loans.As of December 31, 2021, it operated 21 full bank service branches and 10 home loan production offices in suburban communities in the greater Puget Sound area, including Snohomish, King, Pierce, Jefferson, Kitsap, Clallam, Grays Harbor, Thurston, and Lewis counties; and one loan production office in the market area of the Tri-Cities.


The company was founded in 1936 and is headquartered in Mountlake Terrace, Washington.

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1.b. Last Insights on FSBW

FS Bancorp's recent performance was negatively impacted by declining net income, which fell 14.4% year-over-year to $7.7 million, or $0.99 per diluted share. Earnings per share decreased from $1.13 a year ago, missing prior year levels. Despite beating earnings estimates, the company's revenue and profitability have been under pressure. Additionally, CEO Joe Adams' upcoming retirement and transition to a new leadership structure may have contributed to investor uncertainty. A special dividend and 50th consecutive quarterly cash dividend were declared.

1.c. Company Highlights

2. Transcript Summary

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3. NewsRoom

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Reviewing FS Bancorp (NASDAQ:FSBW) and Westamerica Bancorporation (NASDAQ:WABC)

Dec -03

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D.A. Davidson & CO. Sells 2,600 Shares of FS Bancorp, Inc. $FSBW

Oct -31

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FS Bancorp, Inc. Authorizes Additional Share Repurchases

Oct -27

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FS Bancorp (FSBW) Q3 Earnings and Revenues Surpass Estimates

Oct -21

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FS Bancorp, Inc. Reports Third Quarter Net Income of $9.2 Million or $1.18 Per Diluted Share and Declares 51st Consecutive Quarterly Cash Dividend

Oct -21

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FS Bancorp, Inc. Announces CEO Succession Plan

Aug -15

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FS Bancorp (FSBW) Q2 Earnings and Revenues Top Estimates

Jul -22

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FS Bancorp, Inc. Reports Second Quarter Net Income of $7.7 Million or $0.99 Per Diluted Share and Declares 50th Consecutive Quarterly Cash Dividend in Addition to a Special Dividend

Jul -22

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (3.65%)

6. Segments

Commercial and Consumer Banking

Expected Growth: 3.5%

FS Bancorp's 3.5% growth in Commercial and Consumer Banking is driven by a strong loan pipeline, increased commercial lending, and expansion of treasury management services. Additionally, strategic investments in digital banking platforms and targeted marketing efforts have contributed to growth in deposit accounts and customer acquisition.

Home Lending

Expected Growth: 4.5%

FS Bancorp, Inc.'s 4.5% growth in Home Lending is driven by strong demand for mortgages, low interest rates, and a robust housing market. Additionally, the company's strategic expansion into new markets, improved operational efficiency, and enhanced digital lending capabilities have contributed to the growth.

7. Detailed Products

Commercial Banking

FS Bancorp, Inc. offers a range of commercial banking services, including cash management, treasury management, and commercial lending to businesses of all sizes.

Consumer Banking

FS Bancorp, Inc. provides consumer banking services, including checking and savings accounts, credit cards, personal loans, and mortgages to individuals.

Home Lending

FS Bancorp, Inc. offers a range of home lending services, including mortgage loans, home equity loans, and construction loans to individuals and families.

Wealth Management

FS Bancorp, Inc. provides wealth management services, including investment management, financial planning, and trust services to individuals and families.

Insurance Services

FS Bancorp, Inc. offers insurance services, including life insurance, disability insurance, and long-term care insurance to individuals and businesses.

8. FS Bancorp, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

FS Bancorp, Inc. operates in a highly competitive industry, with many substitutes available to customers. However, the company's strong brand recognition and customer loyalty help to mitigate the threat of substitutes.

Bargaining Power Of Customers

FS Bancorp, Inc.'s customers have some bargaining power due to the availability of alternative banking services. However, the company's strong relationships with its customers and its ability to offer personalized services help to reduce the bargaining power of customers.

Bargaining Power Of Suppliers

FS Bancorp, Inc. has a diverse supplier base, which reduces the bargaining power of individual suppliers. Additionally, the company's strong financial position and long-term relationships with its suppliers help to mitigate the bargaining power of suppliers.

Threat Of New Entrants

The banking industry has high barriers to entry, including regulatory hurdles and significant capital requirements. This makes it difficult for new entrants to enter the market, reducing the threat of new entrants to FS Bancorp, Inc.

Intensity Of Rivalry

The banking industry is highly competitive, with many established players competing for market share. FS Bancorp, Inc. faces intense competition from larger banks and fintech companies, which can make it difficult to attract and retain customers.

9. SWOT Analysis

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 35.44%
Debt Cost 5.97%
Equity Weight 64.56%
Equity Cost 8.67%
WACC 7.72%
Leverage 54.90%

11. Quality Control: FS Bancorp, Inc. passed 3 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
First Merchants

A-Score: 6.6/10

Value: 7.3

Growth: 6.1

Quality: 6.4

Yield: 7.0

Momentum: 5.0

Volatility: 7.7

1-Year Total Return ->

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Third Coast Bancshares

A-Score: 6.6/10

Value: 7.2

Growth: 9.3

Quality: 7.1

Yield: 0.0

Momentum: 9.0

Volatility: 6.7

1-Year Total Return ->

Stock-Card
CF Bankshares

A-Score: 6.5/10

Value: 8.4

Growth: 6.9

Quality: 6.3

Yield: 2.0

Momentum: 6.5

Volatility: 9.0

1-Year Total Return ->

Stock-Card
Veritex Holdings

A-Score: 6.3/10

Value: 5.4

Growth: 6.4

Quality: 6.4

Yield: 6.0

Momentum: 8.0

Volatility: 5.3

1-Year Total Return ->

Stock-Card
FS Bancorp

A-Score: 6.2/10

Value: 7.3

Growth: 7.6

Quality: 5.8

Yield: 6.0

Momentum: 3.5

Volatility: 7.3

1-Year Total Return ->

Stock-Card
Park National

A-Score: 5.8/10

Value: 4.9

Growth: 5.6

Quality: 6.2

Yield: 6.0

Momentum: 4.0

Volatility: 8.0

1-Year Total Return ->

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

40.52$

Current Price

40.52$

Potential

-0.00%

Expected Cash-Flows