Economy & Business · The Record
Federal Reserve approves FS Bancorp merger, denies hearing on objection citing 14 loans to Black borrowers in 2025
The Board's order records the objection's figures and rates the acquirer's Lending Test Low Satisfactory as of April 3, 2023. A public HMDA query returns all eight counts - but the snapshot fixes them to no year and no named bank.
The Board of Governors of the Federal Reserve System announced its approval of the application by FS Bancorp, Inc., of Mountlake Terrace, Washington, to merge with Pacific West Bancorp and indirectly acquire Pacific West Bank of West Linn, Oregon, according to the Board's press release on the transaction.
The approval order records that the Board received two adverse comments from a single commenter, who objected on the ground that 1st Security Bank of Washington made fewer loans to African American individuals than to white individuals in Washington in 2024 and 2025. The commenter is not named in the order and is not named here.
The record half: what the order puts on paper
The order sets out the figures the commenter submitted. For 2024: 929 loans made to white individuals and 59 applications denied, against 19 loans made to African American individuals and one application denied. For 2025: 1,059 mortgage loans made to white individuals and 63 applications denied, against 14 mortgage loans made to African American individuals and five applications denied.
Arithmetic on the figures as the order records them, with the denominators visible. In 2024, the denial rate implied for African American applicants was one of 20 recorded actions, or 5.0 percent, against 59 of 988, or 6.0 percent, for white applicants - a gap running the other way. In 2025 it was five of 19 recorded actions, or 26.3 percent, against 63 of 1,122, or 5.6 percent. The 2025 rate rests on a base of 19 actions. A move from one denial to five in a group that small is not a statistically robust finding, and no reader should treat it as one.
The order also states the framework the Board applies. It says the Board is concerned when HMDA data reflect disparities in the rates of applications, originations and denials among racial, ethnic or gender groups in local areas, and that such disparities may point to weaknesses in an institution's policies for extending credit fairly. It then states that public HMDA data omit information material to credit decisions - credit scores among them - and that the Board weighs the disparities against "additional information not available to the public". The Board consulted the FDIC as primary federal supervisor of both banks and considered the most recent consumer compliance examinations, which covered fair lending. On that basis the order determines that "the convenience and needs factor is consistent with approval".
Two further items sit in the same document. 1st Security Bank of Washington carried an overall CRA rating of Satisfactory at its most recent FDIC performance evaluation, dated April 3, 2023, with Outstanding on the Investment Test and Low Satisfactory on each of the Lending Test and the Service Test - the lowest passing component grade, from an evaluation now more than three years old. Pacific West Bank carried an overall Satisfactory rating as of February 14, 2022. The order also records that the commenter asked for public hearings, that the Board found the request identified no disputed issue of fact material to its decision that a hearing would clarify, and that the request was denied. On capital, the order states that FS Bancorp, Pacific West and their subsidiary depository institutions are well capitalized and that the combined organization would remain so upon consummation, and that the two banks do not compete directly in any banking market.
The claim half: how the deal was announced
The merger announcement posted by Pacific West Bank said the deal "represents a compelling step forward in our continued expansion across the Pacific Northwest." Monitor Daily's report carries the same passage in fuller form, including the statement that "Combining our organizations brings together complementary strengths that enhance our ability to serve our customers and communities." Neither statement addresses lending disparities; neither was made in response to the objection, which the order records as arriving later in the process.
What the public database returns, and what it does not
Daily Pol queried the Consumer Financial Protection Bureau and FFIEC HMDA Data Browser API for Washington state, filtered to action codes 1 and 3 and to white and Black or African American applicants, under legal entity identifier 5493003T5D4N1CM46J77. The response snapshot contains two aggregation blocks. The first, marked as served from the database, reports counts of 929 and 59 for white applicants and 19 and one for Black or African American applicants. The second, marked as served from cache, reports 1,059 and 63 for white applicants and 14 and five for Black or African American applicants. All eight counts the order attributes to the commenter appear in that response.
Two limits on that check, stated rather than buried. The echoed parameters in both blocks are byte-identical and contain no year field, so the snapshot does not fix either block to 2024 or to 2025; every year label in this article comes from the order alone. And the response returns no institution name, so this record does not tie that identifier to a named bank. What holds is a correspondence between counts - not between counts and a year, and not between counts and an institution.
Analysis
The following is Daily Pol's reading of the cited record, not a finding by any regulator.
Nothing in the order's passages reviewed here states a finding that any fair-lending law was violated, and this piece asserts none; a gap in outcomes is not evidence of unlawful conduct. What the record does show is an audit boundary. The commenter's public numbers are checkable, and the same counts come back from a public government interface. The Board's reassurance about them is not checkable: it rests expressly on information the public cannot see, from examinations the public cannot read, alongside a component CRA grade of Low Satisfactory set in April 2023. The hearing was denied for want of a material factual dispute - and on the numbers there is indeed no dispute, because the order does not contest them. The disagreement is about what they mean, which is exactly the part the public file cannot test.
Forecast, checkable by June 30, 2027: the same query - same identifier, same state, same filters - run against 2026 data will return a count below 20 for Black or African American applicants under action code 1.
Comment and limits
No public statement from FS Bancorp, Inc. or 1st Security Bank of Washington addressing these figures was located in the sources reviewed. Daily Pol has not obtained comment from either; a request for comment is logged for a human editor before publication, and the absence of a reply should not be read as a refusal. Further limits: the order text used here is an extract, not the full document; the query covers two race categories only, and HMDA derived race is recorded separately from ethnicity, so the white category includes Hispanic and Latino applicants; and the CRA component ratings are taken from the Board's order rather than from the FDIC evaluations themselves, which could not be retrieved.