In a 2-for-1 stock split, on the "distribution date", each shareholder receives one additional share of stock for each share that he or she holds as of a certain date, known as the "record date". As a result, the number of issued shares is doubled, and the price per share at which the stock trades is expected to be reduced by approximately one-half.

The Board of Directors of FS Bancorp, Inc. (the “Company”) declared a 2-for-1 stock split in the form of a 100% stock dividend on the Company’s common stock ("FSBW stock" or "Common Stock") payable on July 14, 2021 to shareholders of record as of the close of business on July 6, 2021. The additional shares of FSBW stock received as a result of the stock split are referred to in this FAQ as "split shares".

A stock split makes the price of the Company's stock more affordable and potentially more attractive to new investors and the split adds liquidity to the shares.

The split shares will be credited on the distribution date to shareholders of record at the close of business on the record date. The record date is July 6, 2021.

The distribution date for the split shares is July 14, 2021. If shares are registered in your name as of the market close on the record date, you will receive the split shares on the distribution date.

Nasdaq has advised that it has set July 15, 2021 as the ex-dividend date. The 'ex-dividend date' is the first day that FSBW stock will trade on a post-split basis at a post-split adjusted price. For example, if the closing stock price on July 14, 2021 is $71.00 per share, the opening stock price on July 15, 2021 is expected to be approximately $35.50 per share.

On July 14, 2021, you will receive split shares on all shares you own as of the close of business on the record date, July 6, 2021. If you sell any of your shares at any time before the record date, you will not be entitled to receive the split shares on the shares you sell. If you buy shares at any time on or before the record date, you will be entitled to receive the split shares on shares you hold as of the close of business on the record date.

The answer to this question differs depending on whether shares are sold on the Nasdaq Global Market or directly between a buyer and seller other than on the Nasdaq Global Market.

Shares sold on Nasdaq Global Market:

Any trade of FSBW stock on the Nasdaq Global Market executed prior to the ex-dividend date includes the right to the additional shares. A record holder that sells his or her stock will not be entitled to the receipt of the additional shares. In order for a record holder to receive the additional shares, the record holder must hold the shares through the distribution date, July 14, 2021. Buyers of FSBW are rightful claimants to the additional shares if purchased prior to the ex-dividend date; they need not be a holder of record. Trades of FSBW stock on the Nasdaq Global Market that settle between the record date and the distribution date will be considered "trades with distribution", those that ultimately entitle the buyer to the split shares even though the buyer did not own the shares on the record date. These trades will have a "due bill" attached to them. A "due bill" is an IOU from the seller indicating that the buyer, not the seller who was holding the stock on the record date, is entitled to the split shares upon their issuance. If you buy shares of FSBW stock on the Nasdaq Global Market between the record date and July 14, 2021, you will be entitled to split shares based on your purchases, but you will not receive them on the distribution date. You will receive the split shares when the due bills settle.

If you sell shares of FSBW stock on the Nasdaq Global Market between the record date and July 14, 2021, the trade will have a due bill attached to it and you will receive no split shares even though you may have been the record holder on the record date. The split shares on sold FSBW stock will be held and used to settle the due bills.

Shares NOT sold on the Nasdaq Global Market:

The Company will issue FSBW stock to the holder of record as of the close of business on the record date. For purchase and sale transactions not effected over the Nasdaq Global Market, those transactions will not have the benefit of the rules and conventions adopted by Nasdaq which provide that buyers between the record date and distribution date will ultimately receive the split shares. Consequently, buyers of FSBW stock in transactions not effected through Nasdaq during the period between the record date and distribution date will need to make arrangements with the seller for delivery of the split shares by the seller after the distribution date. The obligation of the seller to transfer the split shares to a buyer will be a matter between the seller and buyer. FS Bancorp, Inc. will issue the split shares to the holder of record as of the close of business on the record date and will not be responsible for ensuring buyers of FSBW stock between the record date and distribution date receive the split shares.

Shares of FSBW stock not traded on the Nasdaq Global Market but effected using a broker may be subject to conventions or rules similar to or different from Nasdaq. Shareholders who trade between the record date and distribution date should check with their broker as to the treatment and delivery of the split shares in connection with such trade.

No stock certificates will be issued. Instead, if you hold certificates, the additional shares you will receive as a result of the stock split in the form of a stock dividend will be distributed through the Direct Registration System (DRS). This means that you have full ownership of your additional shares without the responsibility of holding the actual certificates. A DRS Transaction Statement is enclosed along with this Q&A The DRS Transaction Statement is your confirmation; it indicates the number of additional split shares you received based on your share balance as of the record date. Keep it with your existing FSBW stock certificates and other important documents as a record of your ownership.

If you hold shares in a brokerage account, the additional shares will be automatically deposited to your brokerage account. Please contact your broker with any questions you may have.

Existing FSBW stock certificate(s) are still valid. Do not destroy them. We encourage you to deposit your existing certificate(s) to a DRS account or in a brokerage account, however you may continue to physically hold them and be responsible for their safekeeping. You can convert your shares held in certificate form into book-entry shares by mailing your certificate(s) and a letter of instruction via registered or certified mail with return receipt requested, or some other form of traceable, insured mail to: Equiniti Trust Company, P.O. Box 64874, South St. Paul, Minnesota 55164-0874 For security purposes, please do not sign your certificates. Once the certificate shares are converted to book-entry form, you will be sent a statement confirming your account balance. It is recommended you insure any certificates you mail for 4% of the current market value of the total number of shares.

The Company has been advised that, under current law, for United States federal income tax purposes, the receipt of split shares of Common Stock, as a result of this stock split, will not result in any taxable income, gain or losses to shareholders. Further, immediately after the stock split, the per share tax basis of all shares of Common Stock held by a shareholder will be the basis in the original shares allocated equally to the original shares and the split shares. For example, if you own 100 shares of FSBW stock before the split with a tax basis of $76.00 per share, after the split you will own 200 shares of FSBW stock with a tax basis of $38.00 per share. Finally, the split shares will be deemed to have been acquired at the same time as the original shares with respect to which the new shares were issued.

The foregoing tax information is furnished for your assistance, but you should consult your personal tax advisor regarding the impact this might have on your personal situation.

The laws of jurisdictions other than that of the United States may impose income taxes on the receipt of split shares. For FSBW shareholders outside the U.S., please consult with your local tax advisor on tax impacts as they could vary by jurisdiction.

July 15, 2021.

The Company’s most recent quarterly dividend was $0.27 per share payable on May 20, 2021. The Board of Directors approved an increase of the dividend on June 24, 2021 increasing the level of total dividends post-split, on an adjusted basis to $0.14 per share for the dividend to be paid in the third quarter of 2021. Thus, all the shares, including the split shares, would receive this dividend, which, in this example, would be a total post-split dividend distribution equal to the previous total dividend distribution on a pre-split shares basis.

For more information about the stock split, please contact Matt Mullet, Chief Financial Officer of the Company at (425) 697-8026. For more information about DRS or your FSBW shareholder account, please call the EQ Shareowner Services Customer Care Center at by calling 1-800-468- 9716. Representatives are available Monday to Friday from 7:00 a.m. to 7:00 p.m. Central Time. Alternatively you can e-mail EQ Shareowner Services at shareowneronline.com under “Contact Us.”

For information about your brokerage account, please contact your broker.