WASHINGTON, DC – August 9, 2026 (STL.News) The Federal Reserve Board has approved the application by FS Bancorp Inc. to merge with Pacific West Bancorp, clearing one of the final regulatory hurdles for a transaction that will expand the Washington-based banking company into Oregon. The approval authorizes FS Bancorp to indirectly acquire Pacific West Bank, headquartered in West Linn, Oregon, subject to the remaining closing conditions of the merger agreement.
The transaction, first announced in February 2026, combines a publicly traded Pacific Northwest banking company with an Oregon-based community bank holding company. Once completed, Pacific West Bancorp will merge into FS Bancorp, followed immediately by the merger of Pacific West Bank into 1st Security Bank of Washington, FS Bancorp’s banking subsidiary.
Federal Reserve Approves the Transaction
The Federal Reserve’s approval confirms that regulators determined the proposed merger satisfies the requirements of the Bank Holding Company Act and other applicable federal banking laws.
In reviewing bank mergers, the Federal Reserve evaluates several factors, including the financial condition of the organizations involved, management quality, capital adequacy, competitive effects, the convenience and needs of the communities served, compliance with banking regulations, and the potential impact on the stability of the U.S. financial system.
While the Federal Reserve’s action represents one of the most significant regulatory milestones, the merger remains subject to the remaining customary closing conditions before it can be completed.
FS Bancorp Expands Its Pacific Northwest Footprint
Headquartered in Mountlake Terrace, Washington, FS Bancorp Inc. is a publicly traded bank holding company listed on the Nasdaq Stock Market under the ticker symbol FSBW.
Its principal subsidiary, 1st Security Bank of Washington, traces its origins to 1936, giving the institution nearly 90 years of community banking history. Today, the bank provides personal banking, commercial lending, residential mortgage lending, treasury management, and other financial services to consumers, businesses, and nonprofit organizations throughout western Washington.
Before announcing the acquisition, FS Bancorp reported approximately $3.2 billion in total assets, $2.6 billion in loans, and $2.6 billion in deposits. Through 1st Security Bank, the company operates 27 full-service banking offices across Washington state.
Although investors purchase shares of FS Bancorp on the Nasdaq, 1st Security Bank itself is not publicly traded. Like many banking organizations, the bank operates as a wholly owned subsidiary of its publicly traded holding company
The acquisition represents another step in FS Bancorp’s long-term strategy of expanding its community banking franchise throughout the Pacific Northwest.
Pacific West Bancorp Brings an Established Oregon Franchise
Pacific West Bancorp, headquartered in West Linn, Oregon, is the parent company of Pacific West Bank, which was established in 2004.
Unlike FS Bancorp, Pacific West Bancorp is not listed on a national securities exchange such as the Nasdaq or the New York Stock Exchange. Instead, its shares are quoted on the OTCQX Best Market under the ticker symbol PWBK. Pacific West Bank, like 1st Security Bank, is not publicly traded and operates as the company’s wholly owned banking subsidiary.
Pacific West Bank serves businesses and consumers throughout the Portland metropolitan area and operates four banking offices located in West Linn, Portland, Lake Oswego, Oregon, and Vancouver, Washington.
As of December 31, 2025, the bank reported approximately $386 million in total assets, making it a substantially smaller institution than FS Bancorp while providing the acquiring company with an established presence in one of the Pacific Northwest’s largest metropolitan markets.
Combined Company Expected to Reach $3.6 Billion in Assets
Upon completion of the merger, the combined organization is expected to have approximately:
- $3.6 billion in total assets
- $3.0 billion in loans
- $3.0 billion in deposits
- 31 banking offices serving customers in Washington and Oregon
The transaction is valued at approximately $34.6 million.
Under the merger agreement, Pacific West shareholders may elect to receive either cash or shares of FS Bancorp common stock, subject to allocation provisions contained in the agreement. Based on those terms, Pacific West shareholders are expected to own approximately 5.4% of the combined company after the merger closes.
Community Banking Continues to Consolidate
The acquisition reflects a broader trend across the U.S. banking industry, where community and regional banks continue to pursue strategic mergers to increase scale and expand into adjacent markets.
Rising investments in cybersecurity, fraud prevention, digital banking technology, regulatory compliance, and data security have encouraged many institutions to seek greater operating efficiencies through consolidation. For growing regional banks, acquisitions can also provide immediate access to new markets, experienced employees, and established customer relationships.
For FS Bancorp, the transaction expands its presence beyond Washington into the greater Portland metropolitan area without the time and expense of building a new branch network from the ground up.
The companies have not announced any immediate changes to customer accounts, products, online banking services, or branch operations. Those details are typically communicated closer to the completion of a merger and any subsequent systems integration.
Looking Ahead
With Federal Reserve approval now secured, FS Bancorp and Pacific West Bancorp are positioned to complete one of the Pacific Northwest’s notable community banking transactions of 2026, provided the remaining closing conditions are satisfied.
If completed as planned, the combined organization will operate 31 banking offices and manage approximately $3.6 billion in assets, strengthening its presence across Washington and Oregon while expanding its commercial and community banking operations throughout the region.
The merger also highlights the continued consolidation of community banking institutions as regional banks seek to broaden their geographic reach, strengthen their balance sheets, and compete more effectively in an increasingly technology-driven financial services industry.
