Fs Bancorp, Inc. · NASDAQ:FSBW
Fs Bancorp — Debt Investor Presentation (February 2021)
47 slides from Fs Bancorp's debt investor presentation, Feb 11, 2021
Slide 1: Subordinated Debt Issuance
1ST SECURITY BANK FS BANCORP INC. SUBORDINATED DEBT ISSUANCE onan “Builda truly we great placeto ri) eae work and bank.” -FSBW Vision Statement
Slide 2: Disclosure Statement
1ST SECURITY BANK FS BANCORP INC. Disclosure Statement The Information included in this presentation is confidential and may not be reproduced or redistributed, passed on oF divulged, directiy or indirectly, t0 any other person. FS Bancorp, Inc (the “Cornpany") eserves the right to request the retur
Slide 3: Notice to Recipients
1ST SECURITY BANK FS BANCORP, INC. Notice to Recipients This presentation does not constitute an offer to sell or @ solicitation of an offer to purchase or subscribe for, any securities of the Company. Ths presentation Is for Informational purposes only and is being Furnished on a confidential basis
Slide 4: Terms of the Planned Capital Raise
1ST SECURITY BANK FS BANCORB INC. TERMS OF THE PLANNED CAPITAL RAISE pe eaneopimenenee) Security Typ Fixed-to-Floating Rate Subordinated Notes due 2031 Principal Amount: $40.0 million Issuer Redemption: Callable at par beginning five years prior to maturity Offering Type: Regulation D Private Placem
Slide 5: Franchise Overview
1ST SECURITY BANK FRANCHISE OVERVIEW FS BANCORB INC. Total Assets: $2.11 billion (2t december 31, 2020) Headquartered: Mountlake Terrace, WA = Branches: 23* Loan Production Offices: 11 ATM Locations: 25 Year Established: 1936 Quarterly Dividend: $0.26** * Including headquarters and drive through ban
Slide 6: Culture & History
1ST SECURITY BANK FS BANCORP INC. CULTURE & HISTORY Build a truly great place to work and bank Live our Core Values and ‘WOW’ each other and our customers every day , Jim Collins’ Guiding Supls) SUED Emphasis on Best idea wins Principl driven, and eal etectin Good-to-Great ne nice people Lessons Con
Slide 7: The Five Pillars of 1SB
1ST SECURITY BANK FS BANCORP. INC. | The Five Pillars of 1SB |
Slide 8: Long Term Strategic Plan
1ST SECURITY BANK FS BANCORP INC. LONG TERM STRATEGIC PLAN Continued expansion of our commercial business lending programs = Increase in-house originations of residential mortgage loans which are primarily sold into the secondary market through the mortgage banking platform = Remain focused on maint
Slide 9: Executive Management
1ST SECURITY BANK FS BANCORP, INC. EXECUTIVE MANAGEMENT Name Position Ast Security Bank _ Industry 2 Joseph Adams Chief Executive officer 18 20+ A rin Burr EVP, Chief Risk Officer u 20+ 5 Matthew Mullet EVP, Chief Financial Officer 9 20+ & Kelli Nielsen EVP, Retail Banking & Marketing 4 25+ l a | Ro
Slide 10: Board of Directors
1ST SECURITY BANK BOARD OF DIRECTORS Name Position, Committees About Chairman, Audit and ‘Retred Univar Senor Vee President. Career Ted Leech Compensation Committees _sponsibites included oversight of Accounting, A/F Infermaven Technology Treasury Legal HR and Aut Director, Chief Executive Joseph C.
Slide 11: Largest Snohomish County Bank
1ST SECURITY BANK FS BANCORP INC. LARGEST SNOHOMISH COUNTY BANK a Pas, oa as i << $4.1B $1.6B $1.3B As of December 31, 2020, largest bank headquartered in Snohomish County (FUBIATE® | |ovcade Financia ) eestor) (E J , ra Wa \f >) \ $520M* $350M* $255M i Golf Savings Bank - ISTSECURITY BANK ee or Rom
Slide 12: County Deposits & Demographics
1ST SECURITY BANK County Deposits & Demographics (6/30/20) Deposits Deposit Market Number of In Market Market ot county Rank Branches (S000) share %__ Frandhise Snohomish 7 692,156 47% ABR Grays Harbor 6 208885 187% 12.6% Clallam 3 2 183921 ane 11.4% king 22 2 1agss1_ 01% = 9.2% Jefferson 2 2 131895
Slide 13: Response to the COVID-19 Pandemic
1ST SECURITY BANK FS BANCORP, INC. RESPONSE TO THE COVID-19 PANDEMIC = Participating in the Paycheck Protection Program (“PPP”) with 474 funded loans as of December 31, 2020, totaling $76 million for borrowers in the communities we serve. During the fourth quarter of 2020, 66 PPP loans totaling $12
Slide 14: Pandemic Impact
1ST SECURITY BANK FS BANCORP, INC. PANDEMIC IMPACT Commerdal COVID-19 Risk Industries: December 31, 2020 PPP Lending Activity by Sector oan Tyee Loan Dollars ¥of Loans Avg. Loan Size % of Category BMACHsk industry fotloans Loan Dollars Avg. oan Size ‘of Loans Out, ews waspialy 2 Sazakoass saeo13 2m
Slide 15: Response to the COVID-19 Pandemic
1ST SECURITY BANK FS BANCORB INC. RESPONSE TO THE COVID-19 PANDEMIC Relief Loansby Category s101338 $56,585 Note: Bctudestoans which have poidoff aso December 31,2020 sassee Serviced Loans for others in Forbearance (in $000's) - i906 Segment Total AlDeterls Deferral ended AdionlDeteral_ Stil in itl
Slide 16: Year End 2020 Highlights
1ST SECURITY BANK FS BANCORB INC. YEAR END 2020 HIGHLIGHTS Total assets of $2.1 billion Gross portfolio loans of $1.6 billion Net income of $39.3 million Financial Highlights Year End 2020 Diluted earnings per share of $2.60 Tangible book value per share of $53.63") Announced thirty-second consecuti
Slide 17: Franchise Growth
1ST SECURITY BANK FS BANCORB INC. FRANCHISE GROWTH 32.118 $8 $192 $1,628 si72 sus 5 a 2016 2017 2018 2019 2020 2016 2017 2018 2019 2020 Total Deposits ($B) Total Net Loans ($B) sum si.678 sizes $1408 aes $1.278 $815 $830 oi - a 2016 2017 2018 2019 2020 2016 2017 2018 2019 Source: S&P Giatal Market I
Slide 18: Income Statement Trends
1ST SECURITY BANK FS BANCORB INC. INCOME STATEMENT TRENDS sues s100 $923 S e709 = gra (888 e456 saa $10 r [ 201s «2016. «2017S 201820192020 Total Noninterest Expense($M) 201s «2016S 2017S 2018 = 2019-2020 201s 2016. «2017S 2018 = 2019-2020 *Incluies $7.4 milion in Bargain Purchase Gain(®PG)
Slide 19: Selected Performance Ratio Trends
1ST SECURITY BANK FS BANCORB INC. SELECTED PERFORMANCE RATIO TRENDS ROAA ROAE 18.14% 18.74% 2.07% bas tam 2% 125% ia 152% 1.49% LJ : all nil Ul 205-2016 = 2017S 0820192020 201s 2016S 2017S 2018S 2019-2020 EfficiencyRatio® Net Interest Margin s.01% ie baat 4.72% 4.61% 4.53% ea.95% 66.95% 6 argg 66.70
Slide 20: Noninterest Income
1ST SECURITY BANK FS BANCORB INC. NONINTEREST INCOME $55.4 Gainonsale BOLI of Securities 1.6% 05% her service Charges 4.3% $234 $22.6 $23.0 $193 ; ; L J 2015 2016.«S 2017S 2018S 2019-2020 Source: S&P Glatal Market Intelligence Note: 2020 Norinterest Incormeyear-oversyear growth dus in partta incease
Slide 21: Noninterest Expense
1ST SECURITY BANK FS BANCORB INC. NONINTEREST EXPENSE $66.6 ete Occupancy pata processing 71%. 6.6% Gain on sale of OREO 0.0% OREO expenses Loancosts 0% $48.8 | Professional Fees 4.2% $38.9 FoIC Insurance 1.2% Other 4.9% $28.8 ; 2015 -2016«S2017,—S 2018S 2019S 2020 Source: S&PGiatal Market Intellige
Slide 22: Building Stockholder Value
1ST SECURITY BANK FS BANCORB INC. BUILDING STOCKHOLDER VALUE se97 955.33 945.35 $6.29 $a1.19 sada $34.47 $4.28 $29.32 3.51 Bs $25.18 } i L 2015 2016. «= 2017S 018 = 2019 = 2020 2015 «2016.«=S 2017S 2018.-= 2019-2020 Source: S&P Glatal Market Intelligence
Slide 23: Segment Reporting Analysis
1ST SECURITY BANK FS BANCORB INC. SEGMENT REPORTING ANALYSIS Bai wees Commercial & Consumer ene ag. $48.2 vag sar sas sur ws ao so a ee oo Soe oe ee | I | | | — — = = = sus as as ao sat wr so saz sus ua a 7 = a a i = I 2016 2017 2018 2019 2020 = al —_ 7 Laced Note: Dallaramaunts in milions 23
Slide 24: Enterprise Risk Management
1ST SECURITY BANK FS BANCORP, INC. ENTERPRISE RISK MANAGEMENT k Management Governance = Board and Committee oversight and reporting = Tenured Enterprise Risk Manager & Chief Risk Officer repart to the Chief Executive Officer = Ownership of individual risk categories by subject matter experts * Indep
Slide 25: Disciplined Credit Culture
1ST SECURITY BANK FS BANCORP, INC. DISCIPLINED CREDIT CULTURE The company employs board and committee oversight and reporting, with the CRO and senior executive compliance officers reporting directly to the audit committee = FSBW hasa disciplined underwriting approach with generally standard LTV and
Slide 26: Loan Portfolio Summary
1ST SECURITY BANK FS BANCORB INC. LOAN PORTFOLIO SUMMARY Total Gross Loans (excl. loans HFS): $1.68 $1,738 Warehouse 91.428 lending, = Home equity Commercial and 3% industrial 1% 2015, 2016 2017 2018 2019 2020 {i)Loare, net of deterred fess, costs, and includes HFS (2)Other consumer inclu marine lar
Slide 27: Home Lending
1ST SECURITY BANK FS BANCORP, INC. HOME LENDING = One-to-four-family loans originated decreased $70.7 million, or 12%, to $519.2 million, = Servicing unpaid principal balance: compared to $589.9 million for the preceding $2.1 billion and 7,131 loans quarter = Q4 2020 notional servicing: $301.3 milli
Slide 28: Home Lending Gain on Sale Revenue as a Percentage of Total Revenue
1ST SECURITY BANK FS BANCORB INC. Home Lens Gain on Sale Revenue as a Percentage of Total Revenue L 2015 2016 2017 201 2019 2020 Total Revenues($M) $70.3 srt smo ss00 = -_ 500 ca soo = goog 2288. waa a180 smo sua sus. sua 12 a soo ss a S 5 ‘: 2015 2016 2017 2018 2019 2020 come = Gainon Sale 28
Slide 29: Consumer Lending
1ST SECURITY BANK FS BANCORP INC. CONSUMER LENDING Minnes0t2 Nevada Primarily home improvement and marine, UCC-2 secured Calor 07% 7% arizona Offered on an indirect basis and largely automated (with fers underwriter verification) $375 million outstanding as of Q4 2020 $47 million in dealer originati
Slide 30: Commercial Business Lending
1ST SECURITY BANK FS BANCORP INC. COMMERCIAL BUSINESS LENDING Outstanding C&I Balance: $273.6 million = C&l commitments were $432.1 million = Outstanding balances were $273.6 million at December 31, 2020 relative to $263.8 million at September 30, 2020 ieee 2% = The $9.8 million of quarter over sequ
Slide 31: Construction & Development Lending
1ST SECURITY BANK FS BANCORP INC. CONSTRUCTION & DEVELOPMENT LENDING Overall construction: $374 million committed / $217 million outstanding Growth in custom owner-occupied & manufactured homes under construction Custom/MF are $26.4 million committed / $12.8 million outstanding 5.51% average coupon
Slide 32: Top Borrowers - By Commitment
1ST SECURITY BANK FS BANCORP INC. TOP 20 BORROWERS - By Commitment Total Total k % of Total Loan Type Commitment Outstanding __Rating Portfolio 1 Construction warehouse $28,000,000 $18,370,130 4 178% 2 ME Construction; MF Perm, and NOORental 24,958,216 10,924,680 5 159% 3. ME Construction; MF Perm 2
Slide 33: Asset Quality
1ST SECURITY BANK FS BANCORB INC. ASSET QUALITY 1.69% 1.39% 0.93% 0.98% ~ | | 2015-2016. «= -2017,-—S «201820192020, Charge-offs & Recoveries ($000's) Nol 1.66% ase $1,099 pee $1,030 las se28 $0,067 (030) (040) | | dail a 50.329) $3,758) 0.5% $(2.620) 2015 2016 2017 2018 2019 2020 2015 2016 2017 201
Slide 34: Deposit Composition and Growth
1ST SECURITY BANK FS BANCORB INC. DEPOSIT COMPOSITION AND GROWTH Total Deposits: $1.7 billion $1.678 Certificates of deposits over $250,000 Certificates of deposits under $250,000 $435,058 Interest-bearing checking $226,282 MMDA and Savings $582,390 201s 2016 = 2017,— 2018 2019 2020 accounts related
Slide 35: Composition Comparison Year Over Year
1ST SECURITY BANK FS BANCORP INC. COMPOSITION COMPARISON YEAR OVER YEAR Total Deposits: $1.7 billion Total Deposits: $1.4 billion Certificates of deposits 40%
Slide 36: Top Depositors
1ST SECURITY BANK FS BANCORB INC. TOP 20 DEPOSITORS Balance of Total Deposits 1) Commercial Customer $13,651,471 0.82% 2) Commercial Customer 12,580,958 0.75 3) Commercial Customer 12,535,713 0.75 4) Commercial Customer 7,481,910 0.45 5) Commercial Customer 6,458,003 0.39 6) Commercial Customer 6,14
Slide 37: Securities by Sector & ASC
1ST SECURITY BANK FS BANCORB INC. SECURITIES BY SECTOR & ASC 320 Agency Calisble MBs Variable Taxable Muni “a. ; > Sector ‘Current Book Vali WAL (Yes) Viele [ascsz0 Designation current Book Valin] MBs Fixed $60,561,363 56 227 Held-toMaturity $7,500,000 TE Muni - Non 8 58,425,738 73 2a2 Aogilable-for
Slide 38: Additional Sources of Liquidity
1ST SECURITY BANK FS BANCORP, INC. ADDITIONAL SOURCES OF LIQUIDITY ‘On-Balance Sheet Liquidity 12/31/2020 2020 Average 2019 Average! Interest Bearing Cash & Equivalents 80,022 84,291 56,783 Interest Bearing Time Deposits 12,278 16,491 22,966 cash (less reserves) 8,292 Estey wiv Unplegded Investments
Slide 39: Interest Rate Sensitivity
1ST SECURITY BANK FS BANCORB INC. INTEREST RATE SENSITIVITY Net Interest Margin (%) Current 6Month —12Month 24 Month 36 Month As of November 30, 2020* the ~400 3.08 3.48 309 2.82 institutionis i light . -20 382 3B 3.38 313 institution is in a slightly asse “0 393 65 a0 9 sensitive position as measur
Slide 40: Capital Structure - Holding Company
1ST SECURITY BANK FS BANCORP, INC. “_ STRUCTURE* - Holding Company ALLL: 1.2% Tier 2 Capital: Sub Debt**: 0.6% $31.2 million Total Capital: $251.6 million Tier 1 Capital: CET1: 12.8% ME $220.4 million Total RBC 40
Slide 41: Capital Strategy
1ST SECURITY BANK FS BANCORP, INC. CAPITAL STRATEGY Franchise Growth Continued organic asset growth across our diverse group of lending channels Expand commercial business lending including construction lendinginline with regulatory guidance for oversight on construction concentrations above 100% of
Slide 42: Capital Ratios
1ST SECURITY BANK FS BANCORB INC. CAPITAL RATIOS The Bank has adopted a Capital Strategy based upon a simple risk based Leverage Capital framework. Within that framework, the Board has established a capital floor of eight percent (8%) + If the Bank were to fall below 8% the Community Bank Leverage R
Slide 43: Interest Coverage & Double Leverage
1ST SECURITY BANK FS BANCORB INC. INTEREST COVERAGE & DOUBLE LEVERAGE * Assumes a $40.0 million gross offering, with net proceeds of $39.4 million * Company redeemed $10.0 million of existing subordinated debt on January 4, 2020 Interest Coverage Twelve Mos. Ending, Offering Sub Debt Pro Forma 2020
Slide 44: Presentation Summary
1ST SECURITY BANK FS BANCORP, INC. PRESENTATION SUMMARY Seasoned management team with deep local market knowledge Robust, diversified growth in consumer, commercial, and real estate lending Stable core deposit growth Diverse revenue metrics Attractive core banking markets Focused credit team with ex
Slide 45: Appendix - Non-GAAP Reconciliation
APPENDIX —- NON-GAAP RECONCILIATION 45
Slide 46: Reconciliation of GAAP to Non-GAAP Financial Measures - Equity
1ST SECURITY BANK FS BANCORB INC. RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES - EQUITY This presentation contains the tangible book value per share, a non-GAAP financial measure. Tangible common stockholders’ equity is calculated by excluding intangible assets from stockholders’ equity. Fo
Slide 47: Contact Information
CONTACT INFORMATION Joe Adams Matthew Mullet Dennis O’Leary joea@fsbwa.com mattm@fsbwa.com denniso@fsbwa.com Chief Executive Officer Chief Financial Officer © Chief Lending Officer (425) 697-8048 (425) 697-8026 (425) 771-1643 Administrative Center 6920 220‘Street Southwest Mountlake Terrace, Washing
FS Bancorp — Debt Investor Presentation (February 2021) on 6ix