FS Bancorp, Inc. (FSBW): Boston Consulting Group Matrix [10-2024 Updated]

As we dive into the financial landscape of FS Bancorp, Inc. (FSBW) in 2024, we will explore the company's performance through the lens of the Boston Consulting Group Matrix. This framework categorizes FSBW's business segments into Stars, Cash Cows, Dogs, and Question Marks, providing a clear picture of where the company shines and where it faces challenges. From a strong net interest margin and growth in net income to concerns over declining consumer loans, there's much to uncover about FSBW's strategic positioning. Read on to discover how these dynamics are shaping the future of this financial institution.

Background of FS Bancorp, Inc. (FSBW)

FS Bancorp, Inc. is the holding company for 1st Security Bank of Washington, established in 1936. Headquartered in Mountlake Terrace, Washington, it operates as a community bank that provides a wide range of financial services including commercial and consumer banking as well as home lending solutions.

As of September 30, 2024, FS Bancorp reported total assets of approximately $2.97 billion, showing a modest increase from $2.94 billion in the previous quarter and $2.92 billion a year prior. The company’s net income for the third quarter of 2024 was $10.3 million, up from $9.0 million in the same quarter of the previous year.

The bank primarily operates through two segments: Commercial and Consumer Banking, and Home Lending. The Commercial and Consumer Banking segment offers a variety of deposit products and loans, while the Home Lending segment focuses on originating residential mortgage loans. As of September 30, 2024, the bank's loan portfolio stood at approximately $2.46 billion, with a significant portion attributed to home improvement loans.

FS Bancorp has shown resilience in its operations, achieving a return on assets of 1.38% for the third quarter of 2024, compared to 1.22% in the previous quarter. The company’s net interest margin improved slightly to 4.35% from 4.29% in the prior quarter, reflecting the bank's effective management of interest-earning assets and liabilities.

The bank is well-capitalized under regulatory standards, with a total risk-based capital ratio of 14.2% and a Tier 1 leverage capital ratio of 11.2% as of September 30, 2024. Additionally, FS Bancorp has consistently returned value to its shareholders, recently announcing its forty-seventh consecutive quarterly cash dividend of $0.27 per common share.

FS Bancorp, Inc. (FSBW) - BCG Matrix: Stars

Strong Net Interest Margin

Net interest margin (NIM) for FS Bancorp, Inc. was reported at 4.35% for Q3 2024, reflecting an increase from 4.29% in the previous quarter and 4.34% for the same quarter last year.

Net Income Growth

In Q3 2024, net income rose to $10.3 million, compared to $9.0 million in the previous quarter and $9.0 million year-over-year. For the nine months ended September 30, 2024, net income was $27.6 million, up from $26.3 million for the comparable period in 2023.

Commercial and Consumer Banking Segment Growth

The Commercial and Consumer Banking segment continues to show consistent growth in net interest income, contributing significantly to the overall performance of FS Bancorp.

Robust Loan Origination in Residential Mortgages

FS Bancorp experienced strong loan origination in residential mortgages, particularly in the purchase segment, which accounted for 85.7% of total loan originations during Q3 2024.

Positive Growth in Noninterest Income

Noninterest income increased by $985,000 to $6.0 million for Q3 2024, driven by a substantial gain on the sale of mortgage servicing rights, which amounted to $8.4 million for the first nine months of 2024.

Improved Return on Equity

Return on equity improved to 14.08% in Q3 2024, indicating effective use of shareholder funds and a strong position within the market.

FS Bancorp, Inc. (FSBW) - BCG Matrix: Cash Cows

Significant Total Deposits

Total deposits at FS Bancorp amounted to $2.43 billion as of September 30, 2024, reflecting a 1.9% increase or $44.5 million from the previous quarter. This growth is primarily attributed to an increase in noninterest-bearing checking accounts by $34.4 million.

Growth in Noninterest-Bearing Accounts

Noninterest-bearing checking accounts reached $641.3 million, representing 26.4% of total deposits. This signifies a slight growth from $613.1 million in the previous quarter.

Certificates of Deposit Increase

Certificates of deposit (CDs) above $100,000 saw a remarkable year-over-year increase of 51.2%. Total CDs as of September 30, 2024, amounted to $1.11 billion, up from $1.02 billion in the same period last year.

Consistent Operating Expenses

Operating expenses remained consistent relative to total assets, with an operating expense to average total assets ratio of 3.47% for Q3 2024, compared to 3.23% for the same quarter last year, indicating efficiency in managing costs.

Market Position in Home Lending

FS Bancorp holds a strong market position in home lending, focusing on one-to-four-family loans. During Q3 2024, the company sold $196.1 million in one-to-four-family loans, compared to $151.3 million in Q3 2023, showcasing a 29.6% increase.

FS Bancorp, Inc. (FSBW) - BCG Matrix: Dogs

Decline in Interest-Bearing Checking Accounts

The interest-bearing checking accounts at FS Bancorp have seen a decline of 24.4% compared to the previous year. This significant drop reflects a challenging environment for deposit growth in a competitive market.

Decrease in Consumer Loans

In the third quarter of 2024, consumer loans decreased by $9.3 million, or 1.4%, bringing the total to $632.4 million compared to $641.7 million in the previous quarter. This trend indicates potential weakness in demand for consumer lending products.

Increase in Nonperforming Loans

The rate of nonperforming loans increased slightly to 0.43%, reflecting some ongoing asset quality concerns. This figure highlights the challenges FS Bancorp faces in maintaining the quality of its loan portfolio amidst economic fluctuations.

High Efficiency Ratio

FS Bancorp's efficiency ratio remains high at 69.42%, suggesting that there is significant room for improvement in cost management. A high efficiency ratio indicates that the company is spending a substantial amount of its revenue on operating expenses, which may hinder profitability.

Decreased Commercial Real Estate Loans

Commercial real estate loans have decreased, signaling potential market challenges. This decline could be attributed to various factors, including rising interest rates and changing market conditions that affect commercial property demand.

FS Bancorp, Inc. (FSBW) - BCG Matrix: Question Marks

Fluctuating yields on average interest-earning assets, which could impact profitability.

As of September 30, 2024, the yield on average interest-earning assets for FS Bancorp was 6.56%, an increase from 6.48% in the previous quarter and 6.13% a year prior. This fluctuation in yields can significantly influence the bank's profitability, especially as market conditions evolve.

Increased competition in the mortgage market, affecting origination volumes.

In the third quarter of 2024, FS Bancorp reported total loan origination volumes of $196.1 million, a decrease of 6.5% from $209.9 million in the previous quarter. The competitive landscape in the mortgage sector has intensified, impacting the bank's ability to maintain origination volumes.

Heavy reliance on home improvement loans, which may be sensitive to economic downturns.

Home improvement loans constitute 87.3% of FS Bancorp's consumer loan portfolio, which stood at $632.4 million as of September 30, 2024. This heavy reliance makes the bank vulnerable to economic downturns, as discretionary spending on home improvements could decline in adverse economic conditions.

Potential for growth in new geographic markets, but execution risks remain.

FS Bancorp has identified opportunities for expansion into new geographic markets. However, execution risks are substantial, given the need for effective market penetration strategies and local market knowledge. The bank's strategic planning will be crucial in mitigating these risks while pursuing growth.

Uncertain regulatory changes that may affect operational flexibility and cost structures.

The regulatory environment for financial institutions is continuously evolving. As of late 2024, FS Bancorp faces uncertainties regarding potential regulatory changes that could impact its operational flexibility and cost structures, particularly concerning compliance costs and capital requirements.

In summary, FS Bancorp, Inc. (FSBW) presents a mixed portfolio according to the BCG Matrix, with Stars like its strong net interest margin and growing net income driving growth, while Cash Cows such as significant total deposits ensure stability. However, the company faces challenges with Dogs reflecting declines in certain loan segments and high efficiency ratios, alongside Question Marks stemming from fluctuating yields and increased competition. Navigating these dynamics will be crucial for FSBW as it seeks to capitalize on growth opportunities while addressing operational weaknesses.

Article updated on 8 Nov 2024

Resources:

1. FS Bancorp, Inc. (FSBW) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of FS Bancorp, Inc. (FSBW)' financial performance, including balance sheets, income statements, and cash flow statements.
2. SEC Filings – View FS Bancorp, Inc. (FSBW)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.