Dive Brief:
- Mountlake Terrace, Washington-based FS Bancorp has agreed to merge with West Linn, Oregon-based Pacific West in a roughly $34.6 million deal that’s set to close in the third quarter, the banks said Wednesday.
- The combination will create a bank with 31 locations, $3.6 billion in assets, $3 billion in deposits and $3 billion in loans, the lenders said.
- The deal also amplifies the presence of FS’s subsidiary, 1st Security Bank of Washington, in the Portland metropolitan area, where Pacific West’s four branches are located.
Dive Insight:
The banking space has seen an acceleration of mergers and acquisitions in the year since President Donald Trump has retaken office.
While much of the focus in 2025 fell on regional banks picking up midsize lenders in an attempt to spread nationwide, 2026 is expected to yield deals in which sub-$1 billion-asset banks, like $386 million-asset Pacific West, find their buyer pool shrinking.
As part of the deal, Pacific West shareholders will receive a mix of 430,176 FS Bancorp shares and $16,832,742 in cash.
The transaction’s $34.6 million value derives from the $41.26 closing price of FS Bancorp’s stock from Wednesday.
The transaction is expected to be immediately accretive to FS Bancorp’s earnings per share, increasing to 7.4% accretion in 2027. Tangible book value is set to be earned back in 2.4 years.
“This partnership with Pacific West represents a compelling step forward in our continued expansion across the Pacific Northwest,” 1st Security CEO Matthew Mullet said in a statement Wednesday. “Pacific West has built a customer-focused commercial banking franchise with deep roots in the Portland-Vancouver metro area. Combining our organizations brings together complementary strengths that enhance our ability to serve our customers and communities.”
Mullet is a relatively new CEO at 1st Security, taking the role last September.
Once the deal closes, Pacific West investors are expected to hold 5.4% of the combined company.
Jason Wessling, CEO of Pacific West, said his bank is “excited” to join FS Bancorp, “a company that shares our commitment to relationship banking and community engagement.”
“This merger provides Pacific West with access to broader capital resources, enhanced technology, and a wider suite of products and services that will benefit our customers, employees, and the communities we serve,” Wessling said.
