Exhibit 99.1

FS Bancorp, Inc. Reports 2019 Results Including  $22.7 Million of Net Income or $5.01 Per Diluted Share,  and  a 5% Increase in Its Dividend to $0.21 Per Quarter

MOUNTLAKE TERRACE, WA – January  28, 2020 – FS Bancorp, Inc. (NASDAQ:FSBW)  (the “Company”), the holding company for 1st Security Bank of Washington (the “Bank”) today reported 2019 fourth quarter net income of  $5.9 million, or $1.30 per diluted share, compared to $11.7 million, or $2.83 per diluted share for the same period last year, which included a bargain purchase gain of $7.4 million from the Anchor Bancorp Acquisition (“Anchor Acquisition”) in November 2018.  Net income for the year ended December 31, 2019 was $22.7 million, or $5.01 per diluted share, compared to net income of $24.3 million, or $6.29 per diluted share for last year.

 “2019 was a transitional year due to the integration of Anchor Bank and the establishment of 1st Security Bank in new communities as a result of the merger,” stated CEO Joe Adams.  “We are pleased to announce that our Board of Directors increased and approved our twenty-eighth consecutive quarterly cash dividend. The quarterly dividend will be paid on February 19, 2020, to shareholders of record as of February 5, 2020.”

CFO Matthew Mullet noted, “Our Board of Directors approved another 225,000 annual share repurchase plan as we continue to manage our capital prudently and in a manner which we believe will enhance liquidity and return value for our shareholders.”

2019 Fourth  Quarter and Year End Highlights

Balance Sheet and Credit Quality

Total assets increased $18.1 million, or 1.1%, to $1.71 billion at December  31, 2019, compared to $1.69 billion at September 30, 2019, and increased $91.4 million, or 5.6%, from $1.62 billion at December  31, 2018.  The quarter over linked quarter increase in total assets was primarily due to increases in loans receivable, net of $25.1 million, 

securities available-for-sale, at fair value of $20.0 million, and other assets of $3.8 million, partially offset by a decrease in total cash and cash equivalents of $17.1 million, loans held for sale (“HFS”) of $10.9 million, and certificates of deposit at other financial institutions of $3.4 million. The year over year increase in total assets included increases in securities available-for-sale, at fair value of $28.9 million, loans receivable, net of $23.8 million, loans HFS of $18.5 million, total cash and cash equivalents of $13.0 million, operating lease right-of-use assets of $5.0 million, other assets of $4.7 million, and servicing rights of $1.1 million, partially offset by decreases in Federal Home Loan Bank (“FHLB”) stock of $1.8 million and certificates of deposit at other financial institutions of $1.2 million.    The year over year increases were primarily due to organic loan and deposit growth. 

Loans receivable, net increased $25.1 million to $1.34 billion at December  31, 2019, from $1.31 billion at September  30, 2019, and increased $23.8 million from $1.31 billion at December  31, 2018.  The quarter over linked quarter increase in total real estate loans was  $5.1 million, including increases in multi-family of $11.6 million, one-to-four-family portfolio of $7.8 million, commercial real estate of $5.2 million, and home equity of $1.6 million, partially offset by a planned decrease in construction and development of $21.1 million.  Consumer loans increased $8.3 million, primarily due to an increase of  $9.7 million in indirect home improvement loans. Commercial business loans increased $12.4 million, due to increases in commercial and industrial loans of $6.4 million and warehouse lending of $5.9 million.  

One-to-four-family loans originated through the home lending segment, which includes loans HFS, loans held for investment, fixed rate seconds, and loans brokered to other institutions, were  $252.6 million during the quarter ended December  31, 2019, a decrease of  $36.3 million, or 12.6%, compared to $288.9 million for the preceding quarter, and an increase of $100.9 million, or 66.6% from $151.7 million, for the comparable quarter one year ago.

During the year ended December  31, 2019, originations through the home lending segment  were  $891.4 million, an increase of  $186.6 million, or 26.5%, compared to $704.8 million for the year ended December  31, 2018.  During the quarter ended December  31, 2019, the Company sold $233.8 million of one-to-four-family loans, compared to sales of $247.3 million during the previous quarter, and sales of $147.1 million during the same quarter one year ago. During the year ended December  31, 2019, the Company sold $785.4 million of one-to-four-family loans compared to sales of $637.7 million during the same period last year.

Originations of one-to-four-family loans to purchase and to refinance a home for the three months ended and years ended December  31, 2019 and 2018 were as follows: 

The allowance for loan losses (“ALLL”) at December 31, 2019 increased to $13.2 million, or 0.98% of gross loans receivable, excluding loans HFS, compared to $12.8 million, or 0.96% of gross loans receivable, excluding loans HFS at September  30, 2019, and $12.3 million, or 0.93% of gross loans receivable, excluding loans HFS, at December  31, 2018.  Non-performing loans increased to $3.0 million at December  31, 2019,  from $2.2 million at September  30, 2019,  and decreased $861,000 from $3.9 million at December  31, 2018.  Substandard loans decreased $696,000 to $6.7 million at  December  31, 2019, compared to $7.4 million at September  30, 2019, and decreased $1.3 million from $8.0 million at December 31, 2018.  The year over year decreases in non-performing and substandard loans were primarily due to the charge-off of a commercial line of credit of $1.2 million in the first quarter and one commercial business relationship totaling $431,000 in the second quarter of 2019.  There were two other real estate owned (“OREO”) properties totaling $168,000 at December  31, 2019, compared to two OREO properties totaling $178,000 and $689,000 at September 30, 2019 and December  31, 2018, respectively.

Included in the carrying value of gross loans are net discounts on loans purchased in the Anchor Acquisition. The remaining net discount on loans acquired in the Anchor Acquisition was $2.7 million, $3.1 million, and $5.3 million, on $198.5 million, $223.7 million, and $361.6 million of gross loans at December  31, 2019, September 30, 2019, and December 31, 2018, respectively.

Total deposits were unchanged at $1.39 billion at both December 31, 2019 and September  30, 2019, and increased $118.2 million from $1.27 billion at December  31, 2018.  Relationship-based transactional deposits (noninterest-bearing checking, interest-bearing checking, and escrow accounts) decreased $26.3 million from September  30, 2019, primarily due to an  $18.9 million decrease in interest-bearing checking accounts, and a $4.7 million decrease in noninterest-bearing checking accounts, and increased $65.9 million from December  31, 2018.  Money market and savings accounts increased $15.6 million from September  30, 2019, and decreased $15.6 million from

December  31, 2018.  Time deposits increased $16.5 million from September  30, 2019, and increased $67.9 million from December  31, 2018. 

At December  31, 2019, non-retail certificates of deposit (“CDs”) which include brokered CDs, online CDs, and public funds increased  $5.1 million to $146.2 million, compared to $141.1 million at September  30, 2019,  mainly due to a $5.2 million increase in brokered CDs. The year over year increase in non-retail CDs of $18.7 million from $127.5 million at December  31, 2018, was driven by  a $24.7 million increase in brokered CDs and a $3.2 million increase in online CDs, primarily offset by a $9.0 million decrease in public funds.  Management remains focused on increasing our lower cost relationship-based deposits to fund long-term asset growth.

At December  31, 2019, borrowings increased  $8.0 million, or 10.4%, to $84.9 million, from $76.9 million at September 30, 2019, and decreased $52.3 million, or 38.1% from $137.2 million at December  31, 2018.    The quarter to date increase and year to date decrease in borrowings were primarily related to the use and repayments of FHLB advances in relation to the fluctuating activity in deposits and our liquidity objectives. 

Total stockholders’ equity increased $6.0 million, to $200.2 million at December  31, 2019, from $194.3 million at September 30, 2019, and increased $20.2 million, from $180.0 million at December  31, 2018.  The increase in stockholders’ equity from the third quarter was primarily due to net income of $5.9 million.  Book value per common share was $45.85 at December  31, 2019, compared to $44.61 at September  30, 2019, and $41.19 at December  31, 2018.

The Bank is well capitalized under the minimum capital requirements established by the Federal Deposit Insurance Corporation (“FDIC”) with a total risk-based capital ratio of 14.6%, a Tier 1 leverage capital ratio of 11.6%, and a common equity Tier 1 (“CET1”) capital ratio of 13.7% at December  31, 2019. 

The Company exceeded all regulatory capital requirements with a total risk-based capital ratio of 14.3%, a Tier 1 leverage capital ratio of 11.3%, and a CET1 ratio of 13.4% at December  31, 2019.

Operating Results

Net interest income increased $1.5 million, to $17.4 million for the three months ended December  31, 2019, from $15.8 million for the three months ended December  31, 2018.  This increase was a result of a $2.4 million increase in loans receivable interest income primarily as a result of the Anchor Acquisition, and a $404,000 decrease in borrowing interest expense, partially offset by a $1.4 million increase in deposit interest expense due to deposits assumed in the Anchor Acquisition and continued organic deposit growth combined with higher market interest

rates in 2019.  Net interest income increased $18.2 million, to $70.3 million for the year ended December  31, 2019, from $52.1 million for the year ended December  31, 2018, mostly attributable to a $26.1 million increase in interest income on loans receivable, partially offset by an  $8.8 million increase in interest expense on deposits. 

The net interest margin (“NIM”) decreased 30 basis points to 4.29% for the three months ended December  31, 2019, from 4.59% for the same period in the prior year, and decreased eight basis points to 4.53% for the year ended December  31, 2019, from 4.61% for the year ended December  31, 2018,  largely as a result of three 25 basis point decreases in the targeted Fed Funds Rate in the third and fourth quarter of 2019.  The quarter over quarter decrease in NIM was impacted by lower note rates on recent fixed rate real estate loan originations and adjustable rate commercial loans and less recognized fee income due to slower construction loan growth, partially offset by incremental interest accretion on loans acquired in the Anchor Acquisition of 10 basis points.    

The year over year decrease in NIM was primarily due to lower note rates for recently originated real estate loans, including significantly lower construction and development loans that typically carry higher note rates than one-to-four-family loans, partially offset by incremental interest accretion on loans acquired in the Anchor Acquisition of 15 basis points.  The average cost of funds, including noninterest-bearing checking, increased eight basis points to 1.31% for the three months ended December  31, 2019, from 1.23% for the three months ended December  31, 2018.  This increase was predominantly due to growth in higher market rate deposits with overall deposit growth. The year over year average cost of funds, including noninterest-bearing checking, increased 34 basis points to 1.34% for the year ended December  31, 2019, from 1.00% for the year ended December  31, 2018, reflecting the increase in market interest rates over the last year as reductions in deposit costs lag the recent reductions in loan yields, due in part to competitive pressures.    Management remains focused on matching deposit/liability duration with the duration of loans/assets where appropriate.

For the three months ended December  31, 2019, the provision for loan losses was $647,000, compared to $290,000 for the three months ended December  31, 2018, due primarily to the increase in the loan portfolio due to organic loan growth and loans acquired in the Anchor Acquisition, and net charge-offs.  During the three months ended December  31, 2019, net charge-offs totaled $183,000, compared to net recoveries of  $14,000 for the same period last year.  The provision for loan losses was $2.9 million for the year ended December 31, 2019, compared to $1.5 million for the year ended December 31, 2018, due primarily to loan growth and $2.0 million in net charge-offs during the year, compared to net recoveries of $53,000 during the year ended December  31, 2018. The increase in net charge-offs during the year ended December 31, 2019, was primarily due to the charge-off of a commercial line of credit of $1.2 million in the first quarter and one commercial business relationship totaling $431,000 in the second quarter.

Noninterest income decreased $5.8 million, to $5.7 million, for the three months ended December  31, 2019, from $11.4 million for the three months ended December  31, 2018, which included a $7.4 million bargain purchase gain from the Anchor Acquisition.  Excluding the bargain purchase gain, the quarter over quarter increases included  $1.3 million in gain on sale of loans, primarily due to higher sales volume, and $235,000 in service charges and fee income, mainly driven by deposit growth.    Noninterest income decreased  $3.8 million, to  $23.0 million for the year ended December  31, 2019, from $26.9 million for the year ended December  31, 2018.  Excluding the bargain purchase gain, the year over year increases included $3.3 million in service charges and fee income, driven by the loans acquired in the Anchor Acquisition and organic loan growth, $526,000 in other noninterest income, and  $459,000 in earnings on the cash surrender value of BOLI, partially offset by a decrease of $613,000 in gain on sale of loans.

Noninterest expense increased $1.9 million, to $15.7 million for the three months ended December  31, 2019, from $13.8 million for the three months ended December  31, 2018.  The increase in noninterest expense was primarily as a result of growth in our operations with increases of $2.3 million in salaries and benefits, including an increase of $1.6 million in incentives and commissions for the loan production staff associated with strong loan production growth this quarter, $338,000 in loan costs, $276,000 in data processing, $249,000 in occupancy, partially offset by a  decrease in acquisition costs of $1.0 million and a $186,000 recovery on servicing rights reflecting changes in market interest rates.   

Noninterest expense increased $13.5 million to $62.3 million for the year ended December  31, 2019, from $48.8 million for the year ended December  31, 2018.  The increase during the period was primarily as a result of the Anchor Acquisition and growth in our operations with increases of $5.3 million in salaries and benefits, including an increase of  $1.9 million in incentives and commissions, $3.0 million in operations, $2.1 million in data processing, and $1.6 million in occupancy expense. Acquisition costs were $1.8 million for the year ended December  31, 2019, compared to $1.4 million for last year, primarily due to the integration of the Anchor Bank core processing platform.  

About FS Bancorp

FS Bancorp, Inc., a Washington corporation, is the holding company for 1st Security Bank of Washington.  The Bank provides loan and deposit services to customers who are predominantly small- and middle-market businesses and individuals in Western Washington through its 21 bank branches, including nine branches from the Anchor Acquisition,  one administrative office that accepts deposits, and seven loan production offices in various suburban communities in the greater Puget Sound area, and one loan production office in the market area of the Tri-Cities, Washington.  The Bank services home mortgage customers throughout Washington State with an emphasis in the Puget Sound and Tri-Cities home lending markets.

Forward-Looking Statements

When used in this press release and in other documents filed with or furnished to the Securities and Exchange Commission (the “SEC”), in press releases or other public stockholder communications, or in oral statements made with the approval of an authorized executive officer, the words or phrases “believe,” “will,” “will likely result,” “are expected to,” “will continue,” “is anticipated,” “estimate,” “project,” “plans,” or similar expressions are intended to identify “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward‑looking statements are not historical facts but instead represent management's current expectations and forecasts regarding future events, many of which are inherently uncertain and outside of our control.  Actual results may differ, possibly materially from those currently expected or projected in these forward-looking statements. Factors that could cause our actual results to differ materially from those described in the forward-looking statements, include but are not limited to, the following: the expected cost savings, synergies and other financial benefits from our recent acquisition of Anchor might not be realized within the expected time frames or at all; the integration of the combined company, including personnel changes/retention, might not proceed as planned; and the combined company might not perform as well as expected; increased competitive pressures; changes in the interest rate environment; changes in general economic conditions and conditions within the securities markets; our ability to execute our plans to grow our residential construction lending, mortgage banking, and warehouse lending operations, and the geographic expansion of our indirect home improvement lending; secondary market conditions for loans and our ability to originate loans for sale and sell loans in the secondary

market; legislative and regulatory changes; and other factors described in the Company’s latest Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, and other filings with the SEC which are available on our website at www.fsbwa.com and on the SEC's website at www.sec.gov.  Any of the forward-looking statements that we make in this press release and in the other public statements are based upon management's beliefs and assumptions at the time they are made and may turn out to be wrong because of the inaccurate assumptions we might make, because of the factors illustrated above or because of other factors that we cannot foresee. Therefore, these factors should be considered in evaluating the forward‑looking statements, and undue reliance should not be placed on such statements. We do not undertake and specifically disclaim any obligation to revise any forward-looking statements to reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such statements. These risks could cause our actual results for 2020 and beyond to differ materially from those expressed in any forward-looking statements made by, or on behalf of us and could negatively affect our operating and stock performance.

FS BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS

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FS BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF INCOME

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FS BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF INCOME

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