FS Bancorp : Fourth Quarter ending December 31, 2021

JOSEPH URBANSKI

President

Chief Executive Officer

CONTACT	FOR IMMEDIATE RELEASE	January 11, 2022
Stacy Merrifield
Investor Relations
260.463.7111
[e-mail]

FS Bancorp Reports December 31, 2021 Financial Results

LAGRANGE, IN. - FS Bancorp (the "Company") (OTCPK: FXLG) parent company of Farmers State Bank (the "Bank") announced earnings for the year ended December 31, 2021.

FS Bancorp is pleased to report record earnings for the year ending December 31, 2021. Net income for the year ended December 31, 2021 was $15.5 million compared to $14.3 million for 2020. During the fourth quarter of 2021, net income for the Company was $3,856,000 compared to $3,718,000 for the fourth quarter of 2020. FS Bancorp experienced the following highlights during 2021:

• Total loans excluding warehouse participations and Paycheck Protection Program (PPP) loans totaled $664 million at December 31, 2021 compared to $605 million at December 31, 2020. At December 31, 2021 our one remaining PPP loan had an outstanding balance of $6,000 and warehouse participations totaled $8 million.
• During the fourth quarter our securities available for sale increased $78.3 million. This was primarily related to the purchase of $79 million of U.S. Treasury bonds. These U.S. Treasury bonds have an average maturity of approximately three years.
• We prepaid $43.5 million of Federal Home Loan Bank advances with penalties totaling $453,000 during 2021 compared to penalties of $439,000 during 2020.
• Total deposits grew to a record $979 million at December 31, 2021.
• Total shareholders' equity was more than $102 million at December 31, 2021 representing an increase of more than $7 million since December 31, 2020.
• PPP fee income was $111,000 and $535,000 for the three months ended December 31, 2021 and 2020 and $1,328,000 and $950,000 for the twelve months ended December 31, 2021 and 2020.

220 S. Detroit Street • LaGrange, Indiana 46761 • phone [phone] • fax [phone]

www.GoFSB.com

• Gains on sale of securities was $533,000 during 2021 compared to $18,000 during 2020. During the second quarter of 2021, the Company experienced a gain of $387,000 on the sale of a restricted stock of a financial services company.
• During the second quarter of 2021, the Bank committed nearly $450,000 to area schools to support student athletes across our footprint. This expense is included in advertising and marketing expense.
• Asset quality remains very good through the fourth quarter of 2021. Net charge-offs during 2021 totaled $49,000, and total delinquencies were 0.16% of loans at December 31, 2021.

We are pleased to have achieved 10% loan growth (excluding warehouse participations and PPP loans) over the past twelve months. Of the $58.7 million of portfolio loan growth in 2021, $35.1 million occurred in the fourth quarter. Income from PPP loans has been a source of income for Farmers State Bank and other financial institutions over the past two years. We do not expect this to be a meaningful source of income going forward.

The Company's Board of Directors approved dividends totaling a record $1.78 per share during 2021 as well as a new stock repurchase program that allows the Company to repurchase up to $6 million of its stock during 2022 and 2023. Thank you for your continued investment in FS Bancorp and your support of our Farmers State Bank team.

Forward Looking Statements

This press release may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include expressions such as "expects," "intends," "believes," and "should," which are necessarily statements of belief as to the expected outcomes of future events. Actual results could materially differ from those presented. The Company's ability to predict future results involves a number of risks and uncertainties. The Company undertakes no obligation to release revisions to these forward-looking statements or reflect events or circumstances after the date of this release.

Founded in 1915 in Stroh, Indiana, Farmers State Bank is one of northeast Indiana's leading financial institutions and the home of Blue Button Banking. With corporate headquarters in LaGrange, Indiana, Farmers State Bank has been providing banking and financial services to both consumers and businesses for the past 100 years. To learn more, visit GoFSB.com.

FS BANCORP

CONSOLIDATED BALANCE SHEETS

December 31, 2021 and 2020 (Unaudited)

	December 31,	December 31,
(Dollars in thousands)		2021		2020
Assets
Cash and due from banks	$	72,304	$	100,536
Investment securities		318,617		173,542
Federal Home Loan Bank stock		2,343		2,246
Total loans		672,850		690,546
Less allowance for loan losses		(6,598)		(6,631)
Loans, net		666,252		683,915
Premises and equipment, net		10,340		10,736
CSV- Insurance		14,638		14,361
Goodwill and other intangible assets		2,604		2,604
Other assets		7,288		5,566
Total Assets	$	1,094,386	$	993,506
Liabilities
Deposits
Noninterest-bearing demand	$	274,268	$	261,891
Interest-bearing demand		423,879		359,969
Savings		188,500		124,153
Time under $250,000		72,635		87,540
Time $250,000 and over		19,577		21,230
Total deposits		978,859		854,783
Repurchase agreements		7,607		8,012
Federal Home Loan Bank advances		-		31,427
Other liabilities		5,356		4,640
Total Liabilities		991,822		898,862
Shareholders' Equity
Common stock: No par value, 5,000,000 shares
authorized; 2,381,952 shares issued and
2,166,158 and 2,173,534 shares outstanding 2021
and 2020		149		149
Paid-in capital		3,152		3,549
Retained earnings		104,909		93,302
Net unrealized gains (losses) on securities		1,861		4,399
Less treasury stock, at cost; 215,794 and 208,418
shares 2021 and 2020		(7,507)		(6,755)
Total Shareholders' Equity		102,564		94,644
Total Liabilities and Shareholders' Equity	$	1,094,386	$	993,506

FS BANCORP

CONSOLIDATED STATEMENTS OF INCOME

For the Three and Twelve Months Ended December 31, 2021 and 2020 (Unaudited)

		Three Months Ended	Twelve Months Ended
(Dollars in thousands except earnings per share)		December 31,		December 31,
		2021		2020		2021		2020
Interest Income
Interest and fees on loans	$	7,118	$	8,215	$	29,585	$	31,497
Interest on investment securities		1,319		858		4,317		3,088
Other interest and dividend income		83		66		316		476
Total Interest Income		8,520		9,139		34,218		35,061
Interest Expense
Interest on deposits		269		438		1,122		2,554
Interest on FHLB advances and other borrowings		19		169		306		682
Total Interest Expense		288		607		1,428		3,236
Net Interest Income		8,232		8,532		32,790		31,825
Provision for loan losses		-		-		-		380
Net Interest Income after Provision for Loan
Losses		8,232		8,532		32,790		31,445
Noninterest Income
Service charges on deposit accounts		480		428		1,706		1,617
Credit and debit card income		900		694		3,372		2,582
Mortgage banking		100		236		809		591
Gains and losses on securities		-		18		533		18
Other income		308		292		1,222		1,182
Total Noninterest Income		1,788		1,668		7,642		5,990
Noninterest Expenses
Salaries and employee benefits		3,071		3,253		12,496		11,795
Occupancy expense on premises, furniture and
equipment, net		499		533		1,958		1,903
Data processing expense		461		453		1,886		1,803
Advertising and marketing expense		140		140		951		507
Other expenses		1,379		1,358		4,735		4,247
Total Noninterest Expenses		5,550		5,737		22,026		20,255
Income Before Income Taxes		4,470		4,463		18,406		17,180
Income tax expense (benefit)		614		745		2,943		2,866
Net Income	$	3,856	$	3,718	$	15,463	$	14,314
Basic Earnings Per Share	$	1.78	$	1.70	$	7.14	$	6.56
Diluted Earnings Per Common Share	$	1.77	$	1.69	$	7.09	$	6.51