Nasdaq:FSBW
FS Bancorp, Inc.
A Florida-based regional bank offering comprehensive commercial and consumer financial solutions with a strong liquidity position and growing net income.
Key Metrics
Investment Thesis
Bull Case
Investors may favor FSBW due to its expanding revenue base which grew from $3.2M in 2022 to $4.6M in 2023 alongside rising net income; The bank maintains a robust asset base of $2.97B with substantial cash reserves providing safety against liquidity shocks; Consistent profitability trends suggest effective cost management and growing market share in its regional footprint.
Bear Case
Concerns arise from the massive retained earnings deficit of $230.4M which could limit future dividend growth or recapitalization capabilities; High interest expense relative to revenue compresses net interest margins and reduces overall return on equity for shareholders; Limited common share repurchases of only 223,000 shares indicate conservative capital return policies compared to peers.
About FS Bancorp, Inc.
FS Bancorp Inc. (FSBW) is a regional bank headquartered in Florida serving the Southeastern United States with commercial and retail banking services. The company manages approximately $2.97 billion in assets, focusing on deposit gathering and loan origination while maintaining significant liquid reserves.
Analysis
Management Discussion
The company reported a net profit increase to $36.1M in 2023 compared to $29.6M the prior year, driven by improved operating profits reaching $45.3M despite substantial interest expenses. Cash flow from operations matched investing activities at $77.7M while financing outflows of $131.1M reflect ongoing share buybacks totaling 223,000 shares and dividend payments of $7.8M.
Industry Overview
The regional banking sector is characterized by intense competition among community banks and large national institutions for deposit spreads and loan origination fees. Industry performance is highly sensitive to Federal Reserve interest rate policies which directly impact net interest margins and commercial real estate valuations in local markets.
Financial Statements
Income Statement
Balance Sheet
Cash Flow
| Metric | 2022 | 2023 |
|---|---|---|
| Revenue | $3.2M | $4.6M |
| Cost of Revenue | $0 | $0 |
| Gross Profit | $3.2M | $4.6M |
| Operating Expenses | $-33.8M | $-40.7M |
| Operating Income | $37.0M | $45.3M |
| G&A | $10.7M | $13.1M |
| Stock-Based Comp | — | $2.0M |
| D&A | $2.5M | $2.6M |
| Amortization | $691.0K | $3.5M |
| Other OpEx | $-44.5M | $-53.7M |
| Non-Operating Income | $0 | $0 |
| Interest Expense | $14.4M | $43.9M |
| Pre-Tax Income | $37.0M | $45.3M |
| Income Tax | $7.3M | $9.2M |
| Continuing Ops | $29.6M | $36.1M |
| Discontinued Ops | $0 | $0 |
| Net Income | $29.6M | $36.1M |
| Minority Interest | $0 | $0 |
| Net to Common | $29.6M | $36.1M |
| Metric | 2022 | 2023 |
|---|---|---|
| Cash & Equivalents | $41.4M | $65.7M |
| PP&E (Net) | $25.1M | $30.6M |
| Goodwill | $2.3M | $3.6M |
| Operating Leases | $6.2M | $6.6M |
| Total Assets | $2.63B | $2.97B |
| Total Liabilities | $2.40B | $2.71B |
| Shareholders' Equity | $231.7M | $264.5M |
| Paid-In Capital | — | $57.4M |
| Retained Earnings | $202.1M | $230.4M |
| AOCI | $-25.6M | $-23.3M |
| Total L&E | $2.63B | $2.97B |
| Metric | 2022 | 2023 |
|---|---|---|
| Net Income (CFO) | $29.6M | $36.1M |
| Non-Cash Adjustments | $-60.7M | $62.4M |
| Working Capital Changes | $216.0M | $-20.8M |
| Cash from Operations | $184.9M | $77.7M |
| Capital Expenditures | $1.6M | $1.7M |
| Cash from Investing | $-504.0M | $77.7M |
| Share Buybacks | $15.6M | $223.0K |
| Dividends Paid | $7.1M | $7.8M |
| Cash from Financing | $334.1M | $-131.1M |
| FX Effect | $0 | $0 |
| Net Change in Cash | $14.9M | $24.3M |
| Beginning Cash | $26.5M | $41.4M |
| Ending Cash | $41.4M | $65.7M |
Frequently Asked Questions
How does FS Bancorp, Inc. make money?
Commercial Lending providing business loans to small and medium enterprises; Retail Banking including checking, savings, and mortgage products for individual consumers; Asset Management delivering wealth management and investment advisory services; Deposit Taking facilitating interest-bearing savings accounts and certificates of deposit.
What are the main risks for FSBW?
Elevated interest expense of $43.9M indicating potential sensitivity to rising interest rate environments affecting net interest margins; Significant retained earnings deficit of $230.4M suggesting historical capital erosion or aggressive dividend policies impacting equity buffers; Concentration risk in regional Southeastern markets exposed to local economic downturns and real estate cycles.
What is FSBW's competitive advantage?
Strong liquidity coverage with $65.7M in cash and equivalents relative to operational needs; Consistent net income growth from $29.6M in 2022 to $36.1M in 2023 demonstrating profitability resilience; Conservative capital management evidenced by a healthy shareholders' equity of $264.5M against total liabilities.
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Not financial advice. All content is for informational purposes only. Data may contain errors. Consult a qualified financial advisor before making investment decisions.