UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark one)

☒         ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2020         OR

☐         TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number: 001-35589

FS BANCORP, INC.

(Exact name of registrant as specified in its charter)

Washington	45-4585178
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)
6920 220th Street SW, Mountlake Terrace, Washington	98043
(Address of principal executive offices)	(Zip Code)
Registrant’s telephone number, including area code:	(425) 771-5299

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 par value per share	FSBW	The NASDAQ Stock Market LLC

Securities Registered Pursuant to Section 12(g) of the Act: None

Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐    No ☒

Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐    No ☒

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒    No ☐

Indicate by check mark whether the registrant has submitted electronically, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒    No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐	Accelerated filer ☒
Non-accelerated filer ☐	Smaller reporting company ☒
Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13 (a) of the Exchange Act. ☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of

its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒

Indicate by check mark whether the Registrant is a shell company (as defined in Exchange Act Rule 12b-2). Yes ☐    No ☒

As of March 5, 2021, there were 4,233,040 shares of the Registrant’s common stock outstanding. The aggregate market value of the common stock held by non-affiliates of the Registrant was $147,557,403, based on the closing sales price of $38.57 per share of the Registrant’s common stock as quoted on the NASDAQ Stock Market LLC on June 30, 2020. For purposes of this calculation, common stock held by executive officers and directors of the Registrant is considered to be held by affiliates.

DOCUMENTS INCORPORATED BY REFERENCE

1. Portions of the definitive Proxy Statement for the 2021 Annual Meeting of Shareholders (“Proxy Statement”) are incorporated by reference into Part III.

FS Bancorp, Inc.

Table of Contents

			Page
PART I
Item 1.	Business:		5
		General	5
		Market Area	6
		Lending Activities	8
		Loan Originations, Servicing, Purchases and Sales	18
		Asset Quality	21
		Allowance for Loan Losses	24
		Investment Activities	28
		Deposit Activities and Other Sources of Funds	30
		Subsidiary and Other Activities	34
		Competition	34
		Employees	35
		How We Are Regulated	39
		Taxation	47
Item 1A.	Risk Factors		48
Item 1B.	Unresolved Staff Comments		63
Item 2.	Properties		63
Item 3.	Legal Proceedings		63
Item 4.	Mine Safety Disclosures		63
PART II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities		64
Item 6.	Selected Financial Data		66
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		68
		Overview	68
		Critical Accounting Policies and Estimates	71
		Our Business and Operating Strategy and Goals	73
		Comparison of Financial Condition at December 31, 2020 and December 31, 2019	74
		Average Balances, Interest and Average Yields/Costs	78
		Rate/Volume Analysis	79
		Comparison of Results of Operations for the Years Ended December 31, 2020 and December 31, 2019	79
		Asset and Liability Management and Market Risk	83
		Liquidity	85
		Commitments and Off-Balance Sheet Arrangements	86
		Capital Resources	86
		Recent Accounting Pronouncements	87
Item 7A.	Quantitative and Qualitative Disclosures about Market Risk		87
Item 8.	Financial Statements and Supplementary Data		87
Item 9.	Changes in and Disagreements With Accountants on Accounting and Financial Disclosure		142
Item 9A.	Controls and Procedures		142
Item 9B.	Other Information		143

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		Page
PART III
Item 10.	Directors, Executive Officers and Corporate Governance	143
Item 11.	Executive Compensation	144
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	144
Item 13.	Certain Relationships and Related Transactions, and Director Independence	145
Item 14.	Principal Accounting Fees and Services	145
PART IV
Item 15.	Exhibits and Financial Statement Schedules	146
Item 16.	Form 10-K Summary	147
SIGNATURES		148

As used in this report, the terms “we,” “our,” “us,” “Company”, and “FS Bancorp” refer to FS Bancorp, Inc. and its consolidated subsidiary, 1st Security Bank of Washington, unless the context indicates otherwise. When we refer to “Bank” in this report, we are referring to 1st Security Bank of Washington, the wholly owned subsidiary of FS Bancorp.

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Forward-Looking Statements

This Form 10-K contains forward-looking statements, which can be identified by the use of words such as “believes,” “expects,” “anticipates,” “estimates” or similar expressions. Forward-looking statements include, but are not limited to:

● statements of our goals, intentions and expectations;

● statements regarding our business plans, prospects, growth, and operating strategies;

● statements regarding the quality of our loan and investment portfolios; and

● estimates of our risks and future costs and benefits.

These forward-looking statements are subject to significant risks and uncertainties. Actual results may differ materially from those contemplated by the forward-looking statements due to, among others, the following factors:

● the effect of the COVID-19 pandemic, including on the Company’s credit quality and business operations, as well as its impact on general economic and financial market conditions and other uncertainties resulting from the COVID-19 pandemic, such as the extent and duration of the impact on public health, the U.S. and global economies, and consumer and corporate customers, including economic activity, employment levels and market liquidity;

● general economic conditions, either nationally or in our market area, that are worse than expected;

● the credit risks of lending activities, including changes in the level and trend of loan delinquencies, write offs, changes in our allowance for loan losses, and provision for loan losses that may be impacted by deterioration in the housing and commercial real estate markets;

● secondary market conditions and our ability to originate loans for sale and sell loans in the secondary market;

● fluctuations in the demand for loans, the number of unsold homes, land and other properties, and fluctuations in real estate values in our market area;

● staffing fluctuations in response to product demand or the implementation of corporate strategies that affect our workforce and potential associated charges;

● the use of estimates in determining fair value of certain of our assets, which estimates may prove to be incorrect and result in significant declines in valuation;

● changes in the interest rate environment that reduce our interest margins or reduce the fair value of financial instruments;

● uncertainty regarding the future of the London Interbank Offered Rate (“LIBOR”), and the potential transition away from LIBOR toward new interest rate benchmarks;

● increased competitive pressures among financial services companies;

● our ability to execute our plans to grow our residential construction lending, our home lending operations, our warehouse lending, and the geographic expansion of our indirect home improvement lending;

● our ability to attract and retain deposits;

● our ability to successfully integrate any assets, liabilities, customers, systems, and management personnel we may in the future acquire into our operations and our ability to realize related revenue synergies and cost savings within expected time frames and any goodwill charges related thereto;

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● our ability to control operating costs and expenses;

● our ability to retain key members of our senior management team;

● changes in consumer spending, borrowing, and savings habits;

● our ability to successfully manage our growth;

● legislative or regulatory changes that adversely affect our business, including the effect of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd Frank Act”), changes in regulation policies and principles, an increase in regulatory capital requirements or change in the interpretation of regulatory capital or other rules, including as a result of Basel III;

● adverse changes in the securities markets;

● changes in accounting policies and practices, as may be adopted by the bank regulatory agencies, the Public Company Accounting Oversight Board, or the Financial Accounting Standards Board (“FASB”), including as a result of the Coronavirus Aid, Relief, and Economic Security Act of 2020 (“CARES Act”) and the Consolidated Appropriations Act, 2021 (“CAA 2021”);

● costs and effects of litigation, including settlements and judgments;

● disruptions, security breaches, or other adverse events, failures, or interruptions in, or attacks on, our information technology systems or on the third-party vendors who perform several of our critical processing functions;

● inability of key third-party vendors to perform their obligations to us; and

● other economic, competitive, governmental, regulatory, and technical factors affecting our operations, pricing, products, and services, including as a result of the CARES Act and the CAA 2021 and recent COVID-19 vaccination efforts, and other risks described elsewhere in this Form 10-K and our other reports filed with the U.S. Securities and Exchange Commission (“SEC”).

Any of the forward-looking statements made in this Form 10-K and in other public statements may turn out to be wrong because of inaccurate assumptions we might make, because of the factors illustrated above or because of other factors that we cannot foresee. Forward-looking statements are based upon management’s beliefs and assumptions at the time they are made. The Company undertakes no obligation to update or revise any forward-looking statement included in this report or to update the reasons why actual results could differ from those contained in such statements, whether as a result of new information, future events or otherwise. In light of these risks, uncertainties and assumptions, the forward-looking statements discussed in this report might not occur and you should not put undue reliance on any forward-looking statements.

Available Information

The Company provides a link on its investor information page at www.fsbwa.com to filings with the SEC for purposes of providing copies of its annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to these reports, as soon as reasonably practicable after we have electronically filed such material with, or furnished such material to the SEC. Other than an investor’s own internet access charges, these filings are free of charge and available through the SEC’s website at www.sec.gov. The information contained on the Company’s website is not included as part of, or incorporated by reference into, this Annual Report on Form 10-K.

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PART 1

Item 1. Business

General

FS Bancorp, Inc. (“FS Bancorp” or the “Company”), a Washington corporation, was organized in September 2011 for the purpose of becoming the holding company of 1st Security Bank of Washington (“1st Security Bank of Washington” or  the “Bank”) upon the Bank’s conversion from a mutual to a stock savings bank (“Conversion”). The Conversion was completed on July 9, 2012. At December 31, 2020, the Company had consolidated total assets of $2.11 billion, total deposits of $1.67 billion, and stockholders’ equity of $230.0 million. The Company has not engaged in significant activity other than holding the stock of the Bank. Accordingly, the information set forth in this Annual Report on Form 10-K (“Form 10-K”), including the consolidated financial statements and related data, relates primarily to the Bank.

1st Security Bank of Washington is a relationship-driven community bank. The Bank delivers banking and financial services to local families, local and regional businesses and industry niches within distinct Puget Sound area communities. The Bank emphasizes long-term relationships with families and businesses within the communities served, working with them to meet their financial needs. The Bank is also actively involved in community activities and events within these market areas, which further strengthens relationships within these markets. The Bank has been serving the Puget Sound area since 1907. Originally chartered as a credit union, and known as Washington’s Credit Union, the Bank served various select employment groups. On April 1, 2004, the Bank converted from a credit union to a Washington state-chartered mutual savings bank. Upon completion of the Conversion in July 2012, 1st Security Bank of Washington became a Washington state-chartered stock savings bank and the wholly owned subsidiary of the Company.

At December 31, 2020, the Bank maintained the headquarters office that produces loans and accepts deposits located in Mountlake Terrace, Washington, and an administrative office in Aberdeen, Washington, as well as 21 full-service bank branches and nine home loan production offices in suburban communities in the greater Puget Sound area. The Bank also has one home loan production office in the Tri-Cities, Washington.  

The Company is a diversified lender with a focus on the origination of one-to-four-family, commercial real estate, consumer, including indirect home improvement (“fixture secured loans”),  solar and marine lending, commercial business and second mortgage or home equity loans. Historically, consumer loans, in particular fixture secured loans represented the largest portion of the Company’s loan portfolio and the mainstay of the Company’s lending strategy.  In recent years, the Company has placed more of an emphasis on real estate lending products, such as one-to-four-family, commercial real estate, including speculative residential construction, as well as commercial business loans, while growing the current size of the consumer loan portfolio. The Company reintroduced in-house originations of residential mortgage loans in 2012, primarily for sale into the secondary market, through a mortgage banking program. The Company’s lending strategies are intended to take advantage of: (1) the Company’s historical strength in indirect consumer lending, (2) recent market consolidation that has created new lending opportunities, and (3) relationship lending. Retail deposits will continue to serve as an important funding source. For more information regarding the business and operations of 1st Security Bank of Washington, see “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this Form 10-K.

In March 2020, the outbreak of COVID-19 was recognized as a pandemic by the World Health Organization. The spread of COVID-19 has created a global public health crisis that has resulted in unprecedented uncertainty, volatility and disruption in financial markets and in governmental, commercial and consumer activity in the United States and globally, including the markets that we serve. Governmental responses to the pandemic have included orders to close businesses not deemed essential and directing individuals to restrict their movements, observe social distancing and shelter in place. These actions, together with responses to the pandemic by businesses and individuals, have resulted in rapid decreases in commercial and consumer activity, both temporary and permanent and closures of many businesses, a rapid increase in unemployment, material decreases in business valuations, disrupted global supply chains, market downturns and volatility, changes in consumer behavior related to pandemic fears, related emergency response legislation and an expectation that the Board of Governors of the Federal Reserve System (“Federal Reserve”) will maintain a low interest rate environment for the foreseeable future. Although financial markets have rebounded from significant declines that

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occurred earlier in the pandemic and global economic conditions showed signs of improvement beginning during the second quarter of 2020, many of the effects that arose or became more pronounced after the onset of the COVID-19 pandemic have persisted through the end of the year. These changes have had and are likely to continue to have a significant adverse effect on the markets in which we conduct our business and the demand for our products and services. See "Risk Factors - Risks Related to Macroeconomic Conditions-The COVID-19 pandemic has impacted the way we conduct business which may adversely impact our financial results and those of our customers. The ultimate impact will depend on future developments, which are highly uncertain and cannot be predicted, including the scope and duration of the pandemic and actions taken by governmental authorities in response to the pandemic.”

During the year ended December 31, 2020, the Bank participated in the U.S. Small Business Administration (“SBA”) Paycheck Protection Program (“PPP”), a guaranteed unsecured loan program enacted under the CARES Act, enacted March 27, 2020, to provide near-term relief to help small businesses impacted by COVID-19 sustain operations The deadline for PPP loan applications to the SBA was initially August 8, 2020.  Under this program we funded applications totaling $75.8 million of loans in our market areas and began processing applications for loan forgiveness in the fourth quarter of 2020.  As of December 31, 2020, we had received SBA forgiveness on 66 PPP loans totaling $12.0 million resulting in a remaining 423 PPP loans with an aggregate balance of $62.1 million. The CAA 2021 enacted in December 2020 renewed and extended the PPP until March 31, 2021 by authorizing an additional $284.5 billion for the program for eligible small businesses and nonprofits.  As a result, the Bank began originating PPP loans again in January 2021.

In addition, the Bank is continuing to offer payment and financial relief programs for borrowers impacted by COVID-19. These programs include short-term (e.g. less than six months) modifications such as payment deferrals, interest only payment periods, fee waivers, extensions of repayment terms, or other delays in payment. As of December 31, 2020, the amount of portfolio loans remaining under payment/relief agreements includes commercial real estate loans of $31.2 million, commercial business loans of $12.8 million, a portfolio one-to-four-family loan of $308,000, and consumer loans of $392,000. Since these loans were performing loans that were current on their payments prior to the COVID-19 pandemic, these modifications are not considered to be troubled debt restructurings through December 31, 2020 pursuant to applicable accounting and regulatory guidance.  On December 27, 2020, the CAA 2021was signed into law. Among other purposes, this Act provides additional coronavirus emergency response and relief, including extending relief offered under the CARES Act related to troubled debt restructurings as a result of COVID-19 through January 1, 2022 or 60 days after the end of the national emergency declared by the President, whichever is earlier.  For additional discussion of impacts to our business from the COVID-19 pandemic, see Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations - Highlights in Response to the COVID-19 Pandemic” and “Note 3 - Loans Receivable and Allowance for Loan Losses” of the Notes to Consolidated Financial Statements included in “Item 8. Financial Statements and Supplementary Data” of this Form 10 K.

1st Security Bank of Washington is examined and regulated by the Washington State Department of Financial Institutions (“DFI”), its primary regulator, and by the Federal Deposit Insurance Corporation (“FDIC”). 1st Security Bank of Washington is required to have certain reserves set by the Federal Reserve and is a member of the Federal Home Loan Bank of Des Moines (“FHLB” or “FHLB of Des Moines”), which is one of the 11 regional banks in the Federal Home Loan Bank System.

The principal executive offices of the Company are located at 6920 220th Street SW, Mountlake Terrace, Washington 98043 and the main telephone number is (425) 771-5299.

Market Area

The Company conducts operations, including loan and/or deposit services, out of its headquarters, nine home loan production offices (four of which stand-alone), and 21 full-service bank branches in the Puget Sound region of Washington, and one stand-alone loan production office in Eastern Washington. The headquarters is located in Mountlake Terrace, in Snohomish County, Washington. The four stand-alone home lending offices in the Puget Sound region are located in Puyallup, in Pierce County, Bellevue, in King County, Port Orchard, in Kitsap County, Everett, in Snohomish County, and the one in Eastern Washington located in the Tri-Cities (Kennewick), in Benton County, Washington. The 21 full-service bank branches are located in the following counties: three in Snohomish, two in King, two in Clallam, two in Jefferson, two in Pierce, five in Grays Harbor, two in Thurston, one in Lewis, and two in Kitsap County.

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The primary market area for business operations is the Seattle-Tacoma-Bellevue, Washington Metropolitan Statistical Area (the “Seattle MSA”).  Kitsap, Clallam, Jefferson, Thurston, Lewis, and Grays Harbor counties, though not in the Seattle MSA, are also part of the Company’s market area. This overall region is typically known as the Puget Sound region. The population of the Puget Sound region as estimated by Puget Sound Regional Council was 4.3 million in 2020, over half of the state’s population, representing a large population base for potential business. The region has a well-developed urban area in the western portion along Puget Sound, with the north, central and eastern portions containing a mixture of developed residential and commercial neighborhoods and undeveloped, rural neighborhoods.

The Puget Sound region is the largest business center in both the State of Washington and the Pacific Northwest. Currently, key elements of the economy are aerospace, military bases, clean technology, biotechnology, education, information technology, logistics, international trade and tourism. The region is well known for the long presence of The Boeing Corporation and Microsoft, two major industry leaders, and for its leadership in technology. Amazon.com has expanded significantly in the Seattle downtown area. The workforce in general is well-educated and strong in technology. Washington State’s location with regard to the Pacific Rim, along with a deep-water port has made international trade a significant part of the regional economy. Tourism has also developed into a major industry for the area, due to the scenic beauty, temperate climate and easy accessibility.

King County, which includes the city of Seattle, has the largest employment base and overall level of economic activity. Six of the largest employers in the state are headquartered in King County including Microsoft Corporation, University of Washington, Amazon.com, King County Government, Starbucks, and Swedish Health Services. Pierce County is the second most populous county in the state and its economy is also well diversified with the presence of military related government employment (Joint Base Lewis-McChord), along with health care (the Multicare Health System and the Franciscan Health System). In addition, there is a large employment base in the economic sectors of shipping (the Port of Tacoma) and aerospace employment (Boeing). Snohomish County to the north has an economy based on aerospace employment (Boeing), health care (Providence Regional Medical Center), and military (the Everett Naval Station) along with additional employment concentrations in biotechnology, electronics/computers, and wood products.

In 2020, the median household income for King County was $95,000, compared to $74,000 for the State of Washington, and $62,000 for the United States.

The United States Navy is a key element for Kitsap County’s economy. The United States Navy is the largest employer in the county, with installations at Puget Sound Naval Shipyard, Naval Undersea Warfare Center Keyport and Naval Base Kitsap (which comprises former Naval Submarine Base Bangor, and Naval Station Bremerton). The largest private employers in the county are the Harrison Medical Center and Port Madison Enterprises.  Clallam County depends on agriculture, forestry, fishing, outdoor recreation and tourism.  Jefferson County’s largest private employer is Port Townsend Paper Mill and the largest employer overall (private and public) is Jefferson Healthcare.

Thurston County includes Olympia, home of Washington State’s capital and its economic base is largely driven by state government related employment.  In 2020, the median household income for Thurston County was $73,000.

Lewis County is supported by manufacturing, retail trade, local government and industrial services.  Grays Harbor County has been historically dependent on the timber and fishing industries, but also relies on tourism, manufacturing, agriculture, shipping, transportation, and technology.

Unemployment in Washington was an estimated 7.2% at December 31, 2020, closely paralleling national trends as disclosed in the U.S. Bureau of Labor Statistics reflecting the impact of COVID-19 over the prior year. King County’s estimated unemployment rate was 6.8%, an increase from 3.5% in the prior year. The estimated unemployment rate in Snohomish County at year end 2020 was 7.8%, an increase from 2.4% at year end 2019.  Kitsap County’s unemployment rate was 7.8% at December 31, 2020, compared to 4.1% at December 31, 2019.  At December 31, 2020, the estimated unemployment rate in Pierce County was 7.6%, up from 4.8% at December 31, 2019. Grays Harbor County’s, Thurston County’s, and Lewis County’s unemployment rates rose to 10.1%, 6.5%, and 7.4%, respectively at December 31, 2020, compared to 7.0%, 4.4%, and 6.0% at year end 2019, respectively. Outside of the Puget Sound area, the Tri-Cities market includes two counties, Benton and Franklin, and we have two full-service branches in Clallam County and two in Jefferson County. The estimated unemployment rate in Benton County at year end 2020 was 6.4%, up from 5.4% at year end 2019. At December 31, 2020, the estimated unemployment rate in Franklin County was slightly up to 7.4%, from 7.3% at

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December 31, 2019. For Clallam and Jefferson counties, the estimated unemployment rates at December 31, 2020 increased to 8.4% and 8.2%, respectively, compared to 6.3% and 5.3%, respectively at December 31, 2019.

According to the Washington Center for Real Estate Research, home values in the State of Washington continued to improve in 2020. For the quarter ended December 31, 2020, the average home value was $747,000 in King County, $574,000 in Snohomish County, $454,000 in Jefferson County, $439,000 in Pierce County, $438,000 in Kitsap County, $395,000 in Thurston County, $360,000 in Clallam County, $345,000 in both Benton and Franklin counties, $316,000 in Lewis County, and $265,000 in Grays Harbor County. Compared to the statewide average increase in home values of 16.0% in the fourth quarter of 2020, Lewis, Grays Harbor, and Pierce counties outperformed the state average with 24.1%, 22.6%, and 17.0%, respectively, with our remaining counties: Snohomish, Thurston, Kitsap, Benton, Franklin, Clallam, Jefferson, and King counties below the state average increase, with 15.9%, 14.0%, 12.5%, 12.1%, 12.1%, 12.1%, 11.9% and 11.3% increases in average home values, respectively.

For a discussion regarding the competition in the Company’s primary market area, see “Competition.”

Lending Activities

General. Historically, the Company’s primary emphasis was the origination of consumer loans (primarily indirect home improvement loans), one-to-four-family residential first mortgages, and second mortgage/home equity loan products. As a result of the Company’s initial public offering in 2012, while maintaining the active indirect consumer lending program, the Company shifted its lending focus to include non-mortgage commercial business loans, as well as commercial real estate which includes construction and development loans. The Company reintroduced in-house originations of residential mortgage loans in 2012, primarily for sale in the secondary market. While maintaining the Company’s historical strength in consumer lending, the Company has added management and personnel in the commercial and home lending areas to take advantage of the relatively favorable long-term business and economic environments prevailing in the markets.

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Loan Portfolio Analysis. The following table sets forth the composition of the loan portfolio, excluding loans held for sale (“HFS”) by type of loan at the dates indicated.

(Dollars in thousands)	December 31, 2020				December 31, 2019				December 31, 2018				December 31, 2017				December 31, 2016
	Amount		Percent		Amount		Percent		Amount		Percent		Amount		Percent		Amount		Percent
REAL ESTATE LOANS
Commercial	$	222,719	14.15	%	$	210,749	15.59	%	$	204,699	15.43	%	$	63,611	8.22	%	$	55,871	9.23	%
Construction and development		216,975	13.78			179,654	13.29			247,306	18.65			143,068	18.50			94,462	15.60
Home equity		43,093	2.74			38,167	2.82			40,258	3.04			25,289	3.27			20,081	3.32
One-to-four-family (excludes HFS)		311,093	19.76			261,539	19.34			249,397	18.80			163,655	21.16			124,009	20.48
Multi-family		131,601	8.36			133,931	9.91			104,663	7.89			44,451	5.75			37,527	6.20
Total real estate loans		925,481	58.79			824,040	60.95			846,323	63.81			440,074	56.90			331,950	54.83
CONSUMER LOANS
Indirect home improvement		286,020	18.17			254,691	18.84			212,226	16.00			171,225	22.14			144,262	23.83
Marine		85,740	5.44			67,179	4.97			57,822	4.36			35,397	4.58			28,549	4.71
Other consumer		3,418	0.22			4,340	0.32			5,425	0.41			2,046	0.26			1,915	0.32
Total consumer loans		375,178	23.83			326,210	24.13			275,473	20.77			208,668	26.98			174,726	28.86
COMMERCIAL BUSINESS LOANS
Commercial and industrial		224,476	14.26			140,531	10.40			138,686	10.46			83,306	10.77			65,841	10.88
Warehouse lending		49,092	3.12			61,112	4.52			65,756	4.96			41,397	5.35			32,898	5.43
Total commercial business loans		273,568	17.38			201,643	14.92			204,442	15.42			124,703	16.12			98,739	16.31
Total loans receivable, gross		1,574,227	100.00	%		1,351,893	100.00	%		1,326,238	100.00	%		773,445	100.00	%		605,415	100.00	%
Allowance for loan losses		(26,172)				(13,229)				(12,349)				(10,756)				(10,211)
Deferred costs and fees, net		(4,017)				(3,273)				(2,907)				(2,708)				(1,887)
Premiums on purchased loans, net		943				955				1,537				1,577				—
Total loans receivable, net	$	1,544,981			$	1,336,346			$	1,312,519			$	761,558			$	593,317

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The following table shows the composition of the loan portfolio by fixed- and adjustable-rate loans, excluding HFS at the dates indicated.

	December 31,
	2020				2019				2018				2017				2016
(Dollars in thousands)	Amount		Percent		Amount		Percent		Amount		Percent		Amount		Percent		Amount		Percent
Fixed-rate loans:
Real estate loans
Commercial	$	94,324	5.99	%	$	65,913	4.88	%	$	58,037	4.37	%	$	32,430	4.19	%	$	30,445	5.03	%
Construction and development		8,082	0.51			3,749	0.28			25,613	1.93			286	0.04			—	—
Home equity		17,403	1.11			11,292	0.83			14,134	1.07			2,649	0.34			1,644	0.27
One-to-four-family (excludes HFS)		113,465	7.21			51,583	3.80			45,126	3.40			11,804	1.53			10,267	1.69
Multi-family		46,627	2.96			36,985	2.74			41,832	3.15			14,453	1.87			4,538	0.75
Total real estate loans		279,901	17.78			169,522	12.53			184,742	13.92			61,622	7.97			46,894	7.74
Consumer loans		373,221	23.71			323,633	23.94			272,279	20.53			207,671	26.85			174,041	28.75
Commercial business loans
Commercial and industrial		114,025	7.24			53,329	3.95			59,195	4.46			32,835	4.24			26,901	4.45
Warehouse lending		—	—			—	—			—	—			673	0.09			—	—
Total commercial business loans		114,025	7.24			53,329	3.95			59,195	4.46			33,508	4.33			26,901	4.45
Total fixed-rate loans		767,147	48.73			546,484	40.42			516,216	38.91			302,801	39.15			247,836	40.94
Adjustable-rate loans:
Real estate loans
Commercial		128,395	8.16			144,836	10.71			146,662	11.06			31,181	4.03			25,426	4.20
Construction and development		208,893	13.27			175,905	13.01			221,693	16.72			142,782	18.46			94,462	15.60
Home equity		25,690	1.63			26,875	1.99			26,124	1.97			22,640	2.93			18,437	3.05
One-to-four-family (excludes HFS)		197,628	12.55			209,956	15.54			204,271	15.40			151,851	19.63			113,742	18.79
Multi-family		84,974	5.40			96,946	7.17			62,831	4.74			29,998	3.88			32,989	5.45
Total real estate loans		645,580	41.01			654,518	48.42			661,581	49.89			378,452	48.93			285,056	47.09
Consumer loans		1,957	0.12			2,577	0.19			3,194	0.24			997	0.13