Terrace-based bank raises $32M in IPO

MOUNTLAKE TERRACE — The 1st Security Bank of Washington has made the transition from a mutual bank to a stock-based institution with a $32 million capital infusion from an initial public offering.

FS Bancorp Inc. is now the holding company for 1st Security Bank, following the sale of 3,240,125 shares of common stock at $10 per share. FS Bancorp’s common stock started trading Tuesday on the Nasdaq Capital Market under the symbol FSBW. It closed the day at $10.01 per share on volume of 1,052,280 shares.

With headquarters in Mountlake Terrace, 1st Security Bank has branches in Bothell, Lynnwood, Edmonds, Redmond, Poulsbo and Puyallup.

Unlike other local banks that raised capital through private investors, 1st Security Bank offered depositors with accounts as of June 30, 2007, “tier 1 rights” to buy 10 or more shares of stock at the initial public offering, 1st Security Bank chief financial officer Matt Mullet said. In a May 25 prospectus, the bank’s officers expected the IPO to bring in $20 million to $28 million. Instead, he said, the offering was oversubscribed and went “supermax,” raising $32.4 million.

After deducting fees and expenses, FS Bancorp netted $30,154,500 from the stock sale.

“That was encouraging to see,” said 1st Security CEO Joseph Adams. “The underwriters say it shows a pent-up demand for quality local bank stock offerings.”

FS Bancorp will mail full or partial refunds due to depositors as a result of the oversubscription. It started mailing stock certificates to investors on Tuesday. Customers can get confirmation of stock allocation at allocations.kbw.com or by calling 855-824-9310 between 8 a.m. and 4 p.m. through Friday.

Mullet said FS Bancorp will use the capital infusion to expand the 1st Security “franchise” and help the bank grow. It plans to open a new full-service branch on Seattle’s Capitol Hill during the first quarter of 2013.

1st Security Bank traces its roots to 1936, when it served select employment groups in the Puget Sound area as Washington’s Credit Union. On April 1, 2004, it converted to a Washington state-chartered mutual savings bank. Upon completion of the conversion and public stock offering, 1st Security Bank of Washington will be a Washington state-chartered stock savings bank and the wholly owned subsidiary of FS Bancorp.

Kurt Batdorf: 425-339-3102; kbatdorf@heraldnet.com. More from The Herald Business Journal: www.theheraldbusinessjournal.com

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