Core Insights - Laurie Stewart, President and CEO of Sound Community Bank, has been recognized as one of The Most Powerful Women to Watch in 2025 by American Banker [1][2] - The Most Powerful Women in Banking program celebrates exceptional leadership, business performance, and commitment to diversity, equity, and inclusion in the financial services sector [2] Company Overview - Sound Community Bank, established in 1953, is a full-service bank offering personal and business banking services in the greater Puget Sound region [6] - The bank operates in King, Pierce, Snohomish, Jefferson, and Clallam counties, and has an online presence [6] Leadership Achievements - Laurie Stewart has been instrumental in transforming Sound Community Bank from a $38 million credit union to a $1 billion publicly traded commercial bank [5] - She has served in various leadership roles, including Chairperson of the American Bankers Association Board of Directors, becoming only the third woman to hold this position in nearly 150 years [5] - Stewart is also active in trade associations and has served on the FDIC Community Bank Advisory Board [5] Recognition Event - The honorees of The Most Powerful Women in Banking will be celebrated at a gala on October 23, 2025, in New York City [4]

Core Viewpoint - The Board of Directors of Sound Financial Bancorp, Inc. has appointed Wesley Ochs as President, effective October 1, 2025, while Laurie Stewart continues as Chief Executive Officer, reflecting a strategic succession plan to ensure continuity in leadership and the advancement of the Bank's mission [1][2]. Leadership Transition - Wesley Ochs has over 23 years of banking experience, including roles in retail banking, mortgage banking, and commercial lending, and has been the Chief Financial Officer since 2021 [2][3]. - Ochs has focused on enhancing operational efficiencies, financial reporting, and client experience, with recent efforts in asset/liability management and credit loss modeling [3]. - Laurie Stewart, celebrating her 35th anniversary with the organization, has overseen its transformation from a credit union to a state-chartered, FDIC-insured commercial bank and will ensure a smooth transition of the President's duties [4]. Company Overview - Sound Financial Bancorp, Inc. is the parent company of Sound Community Bank, headquartered in Seattle, Washington, with full-service branches in multiple locations [5]. - The Bank is a Fannie Mae Approved Lender and Seller/Servicer, with a loan production office in Seattle [5].

[Filing Information](index=1&type=section&id=Filing%20Information) This section provides general information about the Form 10-Q filing, including the registrant's name, the quarterly period covered, and the number of common shares outstanding as of the latest practicable date - Registrant: **Sound Financial Bancorp, Inc.**[2](index=2&type=chunk) - Quarterly period ended: **June 30, 2025**[2](index=2&type=chunk) Common Stock Outstanding | As of Date | Shares Outstanding | | :--- | :--- | | August 8, 2025 | 2,566,069 | [PART I FINANCIAL INFORMATION](index=3&type=section&id=PART%20I%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents the Company's unaudited condensed consolidated financial statements, including the balance sheets, income statements, comprehensive income statements, stockholders' equity statements, and cash flow statements for the periods ended June 30, 2025, and December 31, 2024, or for the three and six months ended June 30, 2025 and 2024 [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets%20as%20of%20June%2030%2C%202025%20and%20December%2031%2C%202024%20(unaudited)) Condensed Consolidated Balance Sheets (in thousands) | Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **ASSETS** | | | | Cash and cash equivalents | $102,542 | $43,641 | | Available-for-sale securities | $7,521 | $7,790 | | Held-to-maturity securities | $2,113 | $2,130 | | Loans held-for-portfolio, net | $895,750 | $891,672 | | Total assets | $1,058,242 | $993,633 | | **LIABILITIES** | | | | Total deposits | $899,459 | $837,799 | | Borrowings | $25,000 | $25,000 | | Total liabilities | $952,238 | $889,967 | | **STOCKHOLDERS' EQUITY** | | | | Total stockholders' equity | $106,004 | $103,666 | [Condensed Consolidated Statements of Income](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income%20for%20the%20Three%20and%20Six%20Months%20Ended%20June%2030%2C%202025%20and%202024%20(unaudited)) Condensed Consolidated Statements of Income (in thousands, except per share) | Item | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Total interest income | $14,915 | $14,039 | $28,622 | $27,799 | | Total interest expense | $5,660 | $6,591 | $11,295 | $12,891 | | Net interest income | $9,255 | $7,448 | $17,327 | $14,908 | | Provision for (release of) credit losses | $170 | $(109) | $(33) | $(142) | | Total noninterest income | $1,120 | $1,162 | $2,216 | $2,258 | | Total noninterest expense | $7,665 | $7,737 | $15,578 | $15,394 | | Net income | $2,052 | $795 | $3,219 | $1,564 | | Basic EPS | $0.80 | $0.31 | $1.25 | $0.61 | | Diluted EPS | $0.79 | $0.31 | $1.24 | $0.61 | [Condensed Consolidated Statements of Comprehensive Income](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income%20for%20the%20Three%20and%20Six%20Months%20Ended%20June%2030%2C%202025%20and%202024%20(unaudited)) Condensed Consolidated Statements of Comprehensive Income (in thousands) | Item | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net income | $2,052 | $795 | $3,219 | $1,564 | | Other comprehensive (loss) gain, net of tax | $(67) | $1 | $(84) | $(61) | | Comprehensive income | $1,985 | $796 | $3,135 | $1,503 | [Condensed Consolidated Statements of Stockholders' Equity](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity%20for%20the%20Three%20and%20Six%20Months%20Ended%20June%2030%2C%202025%20and%202024%20(unaudited)) Stockholders' Equity Changes (in thousands) | Item | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :--- | :--- | :--- | | Balance, at December 31, prior year | $103,666 | $100,654 | | Net income | $3,219 | $1,564 | | Other comprehensive loss, net of tax | $(84) | $(61) | | Share-based compensation | $156 | $193 | | Cash dividends paid on common stock | $(974) | $(972) | | Common stock options exercised | $21 | $33 | | Common stock repurchased | $0 | $(64) | | Balance, at June 30, current year | $106,004 | $101,347 | [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows%20for%20the%20Six%20Months%20Ended%20June%2030%2C%202025%20and%202024%20(unaudited)) Condensed Consolidated Statements of Cash Flows (in thousands) | Cash Flow Activity | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $1,358 | $(496) | | Net cash (used in) provided by investing activities | $(3,160) | $6,700 | | Net cash provided by financing activities | $60,703 | $79,217 | | Net change in cash and cash equivalents | $58,901 | $85,421 | | Cash and cash equivalents, end of period | $102,542 | $135,111 | [Notes to Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements%20(unaudited)) This section provides detailed disclosures and explanations for the condensed consolidated financial statements, covering accounting policies, recent pronouncements, investments, loans, fair value measurements, mortgage servicing rights, commitments, borrowings, earnings per share, leases, and subsequent events [Note 1 – Basis of Presentation](index=10&type=section&id=Note%201%20%E2%80%93%20Basis%20of%20Presentation) - Financial statements are unaudited and prepared in accordance with U.S. GAAP for interim information and SEC regulations[23](index=23&type=chunk) - No changes in significant accounting policies from the **2024 Form 10-K**[24](index=24&type=chunk) [Note 2 – Accounting Pronouncements Recently Issued or Adopted](index=10&type=section&id=Note%202%20%E2%80%93%20Accounting%20Pronouncements%20Recently%20Issued%20or%20Adopted) - Adopted **ASU 2023-09** (Improvements to Income Tax Disclosures) on **January 1, 2025**, with no material impact expected[25](index=25&type=chunk) - **ASU 2024-03** (Expense Disaggregation Disclosures) effective for annual periods beginning after **December 15, 2026**[26](index=26&type=chunk) [Note 3 – Investments](index=11&type=section&id=Note%203%20%E2%80%93%20Investments) Investment Securities (in thousands) | Security Type | June 30, 2025 Fair Value | December 31, 2024 Fair Value | | :--- | :--- | :--- | | Available-for-sale securities | $7,521 | $7,790 | | Held-to-maturity securities | $1,687 | $1,712 | Unrealized Losses on Investment Securities (in thousands) | Security Type | June 30, 2025 Gross Unrealized Losses | December 31, 2024 Gross Unrealized Losses | | :--- | :--- | :--- | | Available-for-sale securities | $(1,449) | $(1,340) | | Held-to-maturity securities | $(426) | $(418) | - Unrealized losses are due to changes in market interest rates, not credit quality; no allowance for credit losses on securities[32](index=32&type=chunk) [Note 4 – Loans](index=13&type=section&id=Note%204%20%E2%80%93%20Loans) Loans Held-for-Portfolio (in thousands) | Loan Type | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | One-to-four family | $262,672 | $269,684 | | Commercial and multifamily | $398,429 | $371,516 | | Construction and land | $49,926 | $73,077 | | Total loans held-for-portfolio, gross | $904,286 | $900,171 | | Allowance for credit losses — loans | $(8,536) | $(8,499) | | Total loans held-for-portfolio, net | $895,750 | $891,672 | Allowance for Credit Losses (ACL) Activity (in thousands) | Item | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | ACL - Loans, beginning balance | $8,393 | $8,598 | $8,499 | $8,760 | | Provision for (release of) credit losses | $164 | $(88) | $79 | $(194) | | Net charge-offs | $(21) | $(17) | $(42) | $(73) | | ACL - Loans, ending balance | $8,536 | $8,493 | $8,536 | $8,493 | Nonaccrual Loans (in thousands) | Loan Type | June 30, 2025 Total Nonaccrual Loans | December 31, 2024 Total Nonaccrual Loans | | :--- | :--- | :--- | | One-to-four family | $1,423 | $537 | | Commercial and multifamily | $1,065 | $3,734 | | Floating homes | $0 | $2,363 | | Total nonaccrual loans | $3,366 | $7,491 | [Note 5 – Fair Value Measurements](index=21&type=section&id=Note%205%20%E2%80%93%20Fair%20Value%20Measurements) - Fair value measurements are based on **ASC 820**, maximizing observable inputs (Level 1, 2) and minimizing unobservable inputs (Level 3)[59](index=59&type=chunk) Financial Assets Measured at Fair Value (in thousands) | Asset Type | June 30, 2025 Fair Value | December 31, 2024 Fair Value | | :--- | :--- | :--- | | Available-for-sale securities | $7,521 | $7,790 | | Loans held-for-sale | $2,025 | $487 | | Mortgage servicing rights | $4,638 | $4,769 | | OREO and repossessed assets (nonrecurring) | $300 | $0 | | Collateral dependent loans (nonrecurring) | $3,501 | $7,627 | - Mortgage Servicing Rights (MSRs) are classified as **Level 3**, using unobservable inputs like prepayment speed (**125%-438%**) and discount rate (**9.0%-13.5%**)[70](index=70&type=chunk) [Note 6 – Mortgage Servicing Rights](index=25&type=section&id=Note%206%20%E2%80%93%20Mortgage%20Servicing%20Rights) Mortgage Servicing Rights (MSRs) Activity (in thousands) | Item | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Beginning balance, at fair value | $4,688 | $4,612 | $4,769 | $4,632 | | Changes in fair value | $(80) | $(116) | $(179) | $(181) | | Ending balance, at fair value | $4,638 | $4,540 | $4,638 | $4,540 | Key MSR Economic Assumptions | Assumption | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Prepayment speed (PSA model) | 125% | 125% | | Weighted-average life | 10.4 years | 10.6 years | | Weighted average discount rate | 10.0% | 10.0% | [Note 7 – Commitments and Contingencies](index=26&type=section&id=Note%207%20%E2%80%93%20Commitments%20and%20Contingencies) - Company engages in off-balance sheet financial transactions, primarily loan commitments and lines of credit, involving credit and interest rate risks[76](index=76&type=chunk)[167](index=167&type=chunk) - Total loan commitments were **$52.5 million** at June 30, 2025, down from **$55.8 million** at December 31, 2024[170](index=170&type=chunk) [Note 8 – Borrowings, FHLB Stock and Subordinated Notes](index=26&type=section&id=Note%208%20%E2%80%93%20Borrowings%2C%20FHLB%20Stock%20and%20Subordinated%20Notes) FHLB Advances (in thousands) | Type | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Short-term advances | $15,000 | $0 | | Long-term advances | $10,000 | $25,000 | | Total FHLB advances | $25,000 | $25,000 | FHLB Borrowing Capacity (in thousands) | Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Amount available to borrow | $374,270 | $385,366 | | Remaining FHLB borrowing capacity | $161,155 | $172,327 | - Subordinated notes totaled **$11.8 million** at June 30, 2025, with a fixed interest rate of **5.25%** until October 1, 2025, then resetting to SOFR plus **513 basis points**[82](index=82&type=chunk) [Note 9 – Earnings Per Common Share](index=27&type=section&id=Note%209%20%E2%80%93%20Earnings%20Per%20Common%20Share) Earnings Per Common Share | Item | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net income available to common stockholders - basic | $2,044 | $790 | $3,206 | $1,554 | | Basic EPS | $0.80 | $0.31 | $1.25 | $0.61 | | Diluted EPS | $0.79 | $0.31 | $1.24 | $0.61 | | Weighted average shares outstanding, basic | 2,556,562 | 2,540,538 | 2,555,413 | 2,539,872 | | Weighted average shares outstanding, diluted | 2,577,990 | 2,559,015 | 2,578,287 | 2,557,993 | [Note 10 – Leases](index=28&type=section&id=Note%2010%20%E2%80%93%20Leases) Lease Right-of-Use Assets and Liabilities (in thousands) | Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Operating lease right-of-use assets | $3,816 | $3,725 | | Finance lease right-of-use assets | $117 | $0 | | Operating lease liabilities | $4,095 | $4,013 | | Finance lease liabilities | $118 | $0 | Net Lease Expense (in thousands) | Item | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net lease expense | $291 | $269 | $564 | $536 | Weighted-Average Lease Terms and Discount Rates | Lease Type | June 30, 2025 Term | June 30, 2025 Discount Rate | | :--- | :--- | :--- | | Operating leases | 3.9 years | 3.09% | | Finance leases | 4.5 years | 4.41% | [Note 11 – Subsequent Events](index=29&type=section&id=Note%2011%20%E2%80%93%20Subsequent%20Events) - On **July 29, 2025**, the Board of Directors declared a quarterly cash dividend of **$0.19 per common share**, payable on **August 25, 2025**[87](index=87&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=30&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the Company's financial condition and results of operations, including forward-looking statements, critical accounting estimates, and detailed comparisons of financial performance and key metrics for the periods presented [Special Note Regarding Forward-Looking Statements](index=30&type=section&id=Special%20Note%20Regarding%20Forward-Looking%20Statements) - Forward-looking statements involve risks and uncertainties, including adverse economic conditions, changes in interest rates, inflation, and regulatory policies[89](index=89&type=chunk) - Company does not undertake to publicly release revisions to forward-looking statements[91](index=91&type=chunk) [General Business Overview](index=31&type=section&id=General) - Sound Financial Bancorp is a bank holding company for Sound Community Bank, a Washington state-chartered commercial bank[92](index=92&type=chunk) - Primary business: attracting retail/commercial deposits and investing in various loan types (residential, commercial, construction, consumer, business)[94](index=94&type=chunk) Consolidated Financial Position (in millions) | Item | June 30, 2025 | | :--- | :--- | | Total assets | $1,060 | | Net loans held-for-portfolio | $895.8 | | Deposits | $899.5 | | Stockholders' equity | $106.0 | [Critical Accounting Estimates](index=31&type=section&id=Critical%20Accounting%20Estimates) - Critical accounting estimates include the allowance for credit losses (ACL) and accounting for mortgage servicing rights (MSRs)[97](index=97&type=chunk) - Estimates are susceptible to material changes due to interest rates, economic conditions, and borrower performance[97](index=97&type=chunk) [Financial Condition Analysis](index=32&type=section&id=Comparison%20of%20Financial%20Condition%20at%20June%2030%2C%202025%20and%20December%2031%2C%202024) [Total Assets](index=32&type=section&id=Total%20Assets) - Total assets increased by **$64.6 million**, or **6.5%**, to **$1.06 billion** at June 30, 2025, from **$993.6 million** at December 31, 2024[98](index=98&type=chunk) [Cash and Cash Equivalents, and Investment Securities](index=32&type=section&id=Cash%20and%20Cash%20Equivalents%2C%20and%20Investment%20Securities) - Cash and cash equivalents increased **$58.9 million (135.0%)** to **$102.5 million**, primarily due to the return of reciprocal deposits[99](index=99&type=chunk) - Investment securities decreased **$286 thousand (2.9%)** to **$9.6 million**, mainly due to scheduled payments and higher net unrealized losses on AFS securities[100](index=100&type=chunk) [Loans](index=32&type=section&id=Loans) - Loans held-for-portfolio, net, increased **$4.1 million (0.5%)** to **$895.8 million**[101](index=101&type=chunk) Changes in Loans Held-for-Portfolio (in thousands) | Loan Type | Amount Change | Percent Change | | :--- | :--- | :--- | | Commercial and multifamily | $26,913 | 7.2% | | Home equity | $1,896 | 7.1% | | Construction and land | $(23,151) | (31.7)% | | One-to-four family | $(7,012) | (2.6)% | - Loans held-for-sale increased to **$2.03 million** at June 30, 2025, from **$487 thousand** at December 31, 2024, due to timing of mortgage originations and sales[103](index=103&type=chunk) [Allowance for Credit Losses (ACL)](index=33&type=section&id=Allowance%20for%20Credit%20Losses) - ACL on loans increased **$37 thousand (0.4%)** to **$8.5 million**, driven by loan portfolio growth and qualitative adjustments for market uncertainty[104](index=104&type=chunk) Credit Ratios | Ratio | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | ACL - loans as % of total loans outstanding | 0.94% | 0.94% | | Nonaccrual loans as % of total loans outstanding | 0.37% | 0.83% | | ACL - loans as % of nonaccrual loans | 253.59% | 113.46% | [Nonperforming Assets (NPAs)](index=35&type=section&id=Nonperforming%20Assets) - NPAs decreased **$3.8 million (51.1%)** to **$3.7 million**, or **0.35% of total assets**, at June 30, 2025[108](index=108&type=chunk) - Decrease primarily due to **$6.9 million** in payoffs of nonaccrual loans, including commercial real estate and floating home loans[109](index=109&type=chunk) - Percentage of nonperforming loans to total loans decreased to **0.37%** from **0.83%**[110](index=110&type=chunk) [Mortgage Servicing Rights (MSRs)](index=37&type=section&id=Mortgage%20Servicing%20Rights) - Fair value of MSRs decreased **$131 thousand (2.7%)** to **$4.6 million**[110](index=110&type=chunk) - Fluctuations in MSR fair value can materially impact financial results[110](index=110&type=chunk) [Deposits and Borrowings](index=37&type=section&id=Deposits%20and%20Borrowings) - Total deposits increased **$61.7 million (7.4%)** to **$899.5 million**, mainly due to the return of reciprocal deposits[111](index=111&type=chunk) - Noninterest-bearing deposits decreased **$8.3 million (6.3%)** to **$124.2 million**, representing **13.8%** of total deposits[111](index=111&type=chunk) Deposit Balances and Weighted-Average Rates (in thousands) | Deposit Type | June 30, 2025 Amount | June 30, 2025 Wtd. Avg. Rate | December 31, 2024 Amount | December 31, 2024 Wtd. Avg. Rate | | :--- | :--- | :--- | :--- | :--- | | Noninterest-bearing demand | $120,979 | —% | $130,095 | —% | | Money market | $282,346 | 3.14% | $206,067 | 3.60% | | Time deposits | $293,881 | 4.05% | $295,822 | 4.57% | | Total deposits | $899,459 | 2.34% | $837,799 | 2.63% | - Uninsured deposits totaled **$171.2 million (19.0% of total deposits)** at June 30, 2025, up from **$167.3 million (20.0%)** at December 31, 2024[113](index=113&type=chunk) [Stockholders' Equity](index=38&type=section&id=Stockholders'%20Equity) - Total stockholders' equity increased **$2.3 million (2.3%)** to **$106.0 million**[116](index=116&type=chunk) - Increase reflects **$3.2 million** net income, **$156 thousand** share-based compensation, and **$21 thousand** from stock options, partially offset by **$974 thousand** in cash dividends and **$84 thousand** other comprehensive loss[116](index=116&type=chunk) [Net Interest Income and Yield Analysis](index=38&type=section&id=Average%20Balances%2C%20Net%20Interest%20Income%2C%20Yields%20Earned%20and%20Rates%20Paid) [Average Balances, Net Interest Income, Yields Earned and Rates Paid](index=38&type=section&id=Average%20Balances%2C%20Net%20Interest%20Income%2C%20Yields%20Earned%20and%20Rates%20Paid) Key Interest Rate Metrics (Annualized) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Average loan yield | 6.14% | 5.56% | 5.92% | 5.53% | | Average cost of total interest-bearing liabilities | 2.80% | 3.22% | 2.82% | 3.17% | | Net interest rate spread | 3.12% | 2.28% | 2.91% | 2.31% | | Net interest margin | 3.67% | 2.92% | 3.47% | 2.94% | [Rate/Volume Analysis](index=39&type=section&id=Rate%2FVolume%20Analysis) Change in Net Interest Income (in thousands) | Item | 3 Months Ended June 30, 2025 vs. 2024 | 6 Months Ended June 30, 2025 vs. 2024 | | :--- | :--- | :--- | | Total Increase (Decrease) in Net Interest Income | $1,807 | $2,419 | - For the three months, interest income increased by **$876 thousand** (rate-driven), and interest expense decreased by **$931 thousand** (rate-driven)[122](index=122&type=chunk) - For the six months, interest income increased by **$823 thousand** (rate-driven), and interest expense decreased by **$1,596 thousand** (rate-driven)[122](index=122&type=chunk) [Results of Operations Analysis](index=40&type=section&id=Comparison%20of%20Results%20of%20Operation%20for%20the%20Three%20and%20Six%20Months%20Ended%20June%2030%2C%202025%20and%202024) [General Results](index=40&type=section&id=General_Results) - Q2 2025 net income increased **$1.3 million (158.1%)** to **$2.1 million**, or **$0.79 diluted EPS**, driven by higher net interest income[123](index=123&type=chunk) - YTD 2025 net income increased **$1.7 million (105.8%)** to **$3.2 million**, or **$1.24 diluted EPS**, also primarily due to increased net interest income[124](index=124&type=chunk) [Interest Income](index=40&type=section&id=Interest%20Income) - Q2 2025 total interest income increased **$876 thousand (6.2%)** to **$14.9 million**, mainly from a **58 basis point** increase in average loan yield[125](index=125&type=chunk) - YTD 2025 total interest income increased **$823 thousand (3.0%)** to **$28.6 million**, driven by a **39 basis point** increase in average loan yield[130](index=130&type=chunk)[131](index=131&type=chunk) - Interest income on cash and cash equivalents decreased by **$489 thousand (30.8%)** in Q2 and **$895 thousand (29.8%)** YTD due to lower average balances and yields[129](index=129&type=chunk)[131](index=131&type=chunk) [Interest Expense](index=41&type=section&id=Interest%20Expense) - Q2 2025 total interest expense decreased **$931 thousand (14.1%)** to **$5.7 million**, primarily due to lower interest rates across most interest-bearing liabilities[133](index=133&type=chunk) - YTD 2025 total interest expense decreased **$1.6 million (12.4%)** to **$11.3 million**, mainly from lower average rates paid on deposits and borrowings[136](index=136&type=chunk) - Interest expense on certificate accounts declined **$871 thousand** in Q2, with average rate decreasing to **3.98%** from **4.73%**[134](index=134&type=chunk) [Net Interest Income](index=42&type=section&id=Net%20Interest%20Income) - Q2 2025 net interest income increased **$1.8 million (24.3%)** to **$9.3 million**, with net interest margin rising to **3.67%** from **2.92%**[138](index=138&type=chunk)[139](index=139&type=chunk) - YTD 2025 net interest income increased **$2.4 million (16.2%)** to **$17.3 million**, with net interest margin rising to **3.47%** from **2.94%**[140](index=140&type=chunk) - FOMC lowered federal funds rate target range by **100 basis points** to **4.25%-4.50%** by June 30, 2025, with all cuts in H2 2024[141](index=141&type=chunk) [Provision for Credit Losses](index=43&type=section&id=Provision%20for%20Credit%20Losses) - Q2 2025 provision for credit losses was **$170 thousand**, compared to a **$109 thousand** release in Q2 2024, due to loan growth and market uncertainty[142](index=142&type=chunk) - YTD 2025 saw a **$33 thousand** release of credit losses, compared to a **$142 thousand** release in YTD 2024, due to improved credit quality and lower unfunded commitments[143](index=143&type=chunk) - Net charge-offs were **$21 thousand** for Q2 2025 and **$42 thousand** for YTD 2025[142](index=142&type=chunk)[143](index=143&type=chunk) [Noninterest Income](index=44&type=section&id=Noninterest%20Income) - Q2 2025 noninterest income decreased **$42 thousand (3.6%)** to **$1.1 million**, primarily due to lower service charges and net gain on loan sales[145](index=145&type=chunk)[147](index=147&type=chunk) - YTD 2025 noninterest income decreased **$42 thousand (1.9%)** to **$2.2 million**, also due to lower service charges and net gain on loan sales[146](index=146&type=chunk)[150](index=150&type=chunk) - Earnings on BOLI increased by **$95 thousand** in Q2 and **$112 thousand** YTD due to strategic policy exchanges into higher yielding policies[147](index=147&type=chunk)[148](index=148&type=chunk) [Noninterest Expense](index=45&type=section&id=Noninterest%20Expense) - Q2 2025 noninterest expense decreased **$72 thousand (0.9%)** to **$7.7 million**, driven by lower salaries and benefits (**$337 thousand** decrease) and operations expense (**$126 thousand** decrease)[149](index=149&type=chunk)[151](index=151&type=chunk) - YTD 2025 noninterest expense increased **$184 thousand (1.2%)** to **$15.6 million**, primarily due to a **$619 thousand** increase in data processing expenses[153](index=153&type=chunk)[156](index=156&type=chunk) - Efficiency ratio improved to **73.88%** for Q2 2025 from **89.86%** in Q2 2024[152](index=152&type=chunk) [Income Tax Expense](index=46&type=section&id=Income%20Tax%20Expense) - Q2 2025 income tax expense was **$488 thousand (19.21% effective rate)**, up from **$187 thousand (19.04%)** in Q2 2024[153](index=153&type=chunk) - YTD 2025 income tax expense was **$779 thousand (19.48% effective rate)**, up from **$350 thousand (18.29%)** in YTD 2024[153](index=153&type=chunk) - Increase in effective tax rate due to taxable earnings on BOLI from policy exchanges[153](index=153&type=chunk) [Capital and Liquidity Management](index=46&type=section&id=Capital%20and%20Liquidity) [Capital](index=47&type=section&id=Capital) - Stockholders' equity increased **$2.3 million** to **$106.0 million** at June 30, 2025[157](index=157&type=chunk) - Dividend payout ratio was **30.26%** for the six months ended June 30, 2025, compared to **62.15%** for the same period in 2024[158](index=158&type=chunk) [Stock Repurchase Programs](index=47&type=section&id=Stock%20Repurchase%20Programs) - A **$1.5 million** stock repurchase program authorized in January 2024 expired on **January 26, 2025**, and was not renewed[160](index=160&type=chunk) - No shares were repurchased during the three months ended June 30, 2025[183](index=183&type=chunk) [Liquidity](index=47&type=section&id=Liquidity) - As of June 30, 2025, liquid assets included **$110.1 million** in cash and cash equivalents and available-for-sale investment securities, and **$2.0 million** in loans held-for-sale[164](index=164&type=chunk) - Available borrowing capacity: **$161.2 million** from FHLB and **$19.4 million** from Federal Reserve's discount window[164](index=164&type=chunk) - Sound Financial Bancorp (unconsolidated) had **$6.8 million** in cash, noninterest-bearing deposits, and liquid investments[171](index=171&type=chunk) [Regulatory Capital](index=48&type=section&id=Regulatory%20Capital) Community Bank Leverage Ratios (CBLR) | Entity | June 30, 2025 CBLR | | :--- | :--- | | Bank | 10.60% | | Company | 10.09% | | Minimum Requirement | 9% | - Company elected to phase in the full effect of CECL on regulatory capital over a **three-year transition period**, commencing **January 1, 2023**[174](index=174&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=49&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section states that there have been no material changes in the Company's market risk profile since the filing of its 2024 Form 10-K - No material changes in market risk since the **2024 Form 10-K**[176](index=176&type=chunk) [Item 4. Controls and Procedures](index=49&type=section&id=Item%204.%20Controls%20and%20Procedures) This section details the evaluation of the Company's disclosure controls and procedures and reports on any changes in internal control over financial reporting [Evaluation of Disclosure Controls and Procedures](index=49&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) - Disclosure controls and procedures were effective as of **June 30, 2025**, as concluded by principal executive and financial officers[177](index=177&type=chunk) - Acknowledges inherent limitations in control procedures, meaning they can provide only reasonable, not absolute, assurance[179](index=179&type=chunk) [Changes in Internal Control over Financial Reporting](index=49&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) - No material changes in internal control over financial reporting during the three months ended **June 30, 2025**[180](index=180&type=chunk) [PART II OTHER INFORMATION](index=50&type=section&id=PART%20II%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=50&type=section&id=Item%201.%20Legal%20Proceedings) The Company is involved in various legal proceedings in the normal course of business, but no currently pending proceedings are expected to have a material adverse effect on its financial condition - Any liability from currently pending legal proceedings is not expected to have a material adverse effect on the Company's business or financial condition[181](index=181&type=chunk) [Item 1A. Risk Factors](index=50&type=section&id=Item%201A.%20Risk%20Factors) This section confirms that there have been no material changes to the risk factors previously disclosed in the Company's 2024 Form 10-K - No material changes in the Risk Factors previously disclosed in **Item 1A of the 2024 Form 10-K**[182](index=182&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=50&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section reports on the Company's equity security sales and use of proceeds, specifically noting no common share repurchases during the three months ended June 30, 2025 - No common shares were repurchased during the three months ended **June 30, 2025**[183](index=183&type=chunk) [Item 3. Defaults Upon Senior Securities](index=50&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This section states that there were no defaults upon senior securities during the reporting period - None[184](index=184&type=chunk) [Item 4. Mine Safety Disclosures](index=50&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section indicates that mine safety disclosures are not applicable to the Company's operations - Not applicable[185](index=185&type=chunk) [Item 5. Other Information](index=50&type=section&id=Item%205.%20Other%20Information) This section provides other information, including details on trading plans by directors and officers - No Rule 10b5-1 or non-Rule 10b5-1 trading arrangements were adopted or terminated by directors or officers during the three months ended **June 30, 2025**[186](index=186&type=chunk) [Item 6. Exhibits](index=51&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed as part of the Form 10-Q, including corporate governance documents, employment agreements, equity incentive plans, and certifications - Includes Articles of Incorporation, Bylaws, Employment Agreements, Equity Incentive Plans, and Certifications[191](index=191&type=chunk) [SIGNATURES](index=54&type=section&id=SIGNATURES) This section contains the official signatures of the Company's principal executive officer and principal financial officer, certifying the report - Report signed by **Laura Lee Stewart** (President/CEO) and **Wes Ochs** (EVP/CSO/CFO) on **August 11, 2025**[196](index=196&type=chunk)

[Introduction & Executive Summary](index=1&type=section&id=Introduction%20%26%20Executive%20Summary) [Q2 2025 Financial Highlights](index=1&type=section&id=Q2%202025%20Financial%20Highlights) Sound Financial Bancorp, Inc. reported a significant increase in net income and diluted EPS for Q2 2025 compared to the previous quarter and prior year. The Board declared a cash dividend of $0.19 per share | Metric | Q2 2025 | Q1 2025 | Q2 2024 | | :-------------------- | :------ | :------ | :------ | | Net Income | $2.1 million | $1.2 million | $795 thousand | | Diluted EPS | $0.79 | $0.45 | $0.31 | - The Board of Directors declared a cash dividend of **$0.19 per share**, payable on August 25, 2025[1](index=1&type=chunk) [Management Commentary](index=1&type=section&id=Management%20Commentary) Management highlighted a 2% increase in the loan portfolio, improved credit quality, and a 5 basis point reduction in the cost of funds. Strategic focus remains on maintaining strong credit quality, improving net interest margin, controlling expenses, and realizing benefits from prior technology investments - The Company increased its loans held for portfolio by **2%** in the quarter, improved credit quality, and reduced its cost of funds by **5 basis points**, emphasizing money market products[2](index=2&type=chunk) - Teams remain focused on maintaining strong credit quality, improving net interest margin, and controlling expenses, resolving three of the four largest nonaccrual loans during the quarter[3](index=3&type=chunk) - Net interest income continues to improve by replacing lower yielding loans and growing the portfolio, with expected continued decline in funding costs and further efficiencies from technology investments[4](index=4&type=chunk) [Q2 2025 Financial Performance Summary](index=1&type=section&id=Q2%202025%20Financial%20Performance%20Summary) Key financial metrics for Q2 2025 show significant improvements in net interest income and net interest margin, alongside a decrease in total assets and deposits, and a substantial reduction in nonperforming loans Q2 2025 Key Financial Performance | Metric | Q2 2025 | Q1 2025 | Q2 2024 | | :------------------------------------ | :------ | :------ | :------ | | Net interest income | $9.3 million | $8.1 million | $7.4 million | | Total assets | $1.06 billion | $1.07 billion | $1.07 billion | | Loans held-for-portfolio | $904.3 million | $886.2 million | $889.3 million | | Total deposits | $899.5 million | $910.3 million | $906.8 million | | Noninterest-bearing deposits | $124.2 million | $126.7 million | $124.9 million | | Loans-to-deposits ratio | 101% | 98% | 98% | | Total nonperforming loans | $3.4 million | $9.7 million | $8.9 million | | Nonperforming loans to total loans | 0.37% | - | - | | Allowance for credit losses to NPLs | 253.59% | - | - | | Net interest margin (NIM), annualized | 3.67% | 3.25% | 2.92% | | Provision for credit losses | $170 thousand | ($203 thousand) | ($109 thousand) | | Total noninterest income | $1.1 million | $1.1 million | $1.2 million | | Total noninterest expense | $7.7 million | $7.9 million | $7.7 million | [Operating Results](index=3&type=section&id=Operating%20Results) [Net Interest Income after Provision for Credit Losses (Table)](index=3&type=section&id=Net%20Interest%20Income%20after%20Provision%20for%20Credit%20Losses%20%28Table%29) The table provides a comparative overview of interest income, interest expense, net interest income, and provision for credit losses across Q2 2025, Q1 2025, and Q2 2024, highlighting significant quarter-over-quarter and year-over-year changes Operating Results (Dollars in thousands, unaudited) | Metric | June 30, 2025 | March 31, 2025 | June 30, 2024 | Q2 2025 vs. Q1 2025 Amount ($) | Q2 2025 vs. Q1 2025 Percentage (%) | Q2 2025 vs. Q2 2024 Amount ($) | Q2 2025 vs. Q2 2024 Percentage (%) | | :-------------------------------------------------- | :------------ | :------------- | :------------ | :----------------------------- | :--------------------------------- | :----------------------------- | :--------------------------------- | | Interest income | $14,915 | $13,706 | $14,039 | $1,209 | 8.8% | $876 | 6.2% | | Interest expense | $5,660 | $5,635 | $6,591 | $25 | 0.4% | ($931) | (14.1)% | | Net interest income | $9,255 | $8,071 | $7,448 | $1,184 | 14.7% | $1,807 | 24.3% | | Provision for (release of) credit losses | $170 | ($203) | ($109) | $373 | (183.7)% | $279 | (256.0)% | | Net interest income after provision for credit losses | $9,085 | $8,274 | $7,557 | $811 | 9.8% | $1,528 | 20.2% | [Q2 2025 vs Q1 2025 Analysis](index=3&type=section&id=Q2%202025%20vs%20Q1%202025%20Analysis) Interest income increased by 8.8% QoQ, primarily driven by higher average balances of interest-earning cash, increased average yields on loans and investments, and loan payoffs. Interest expense saw a slight increase, while a provision for credit losses was recorded due to loan portfolio growth and qualitative adjustments - Interest income increased **$1.2 million**, or **8.8%**, to **$14.9 million**, primarily due to a higher average balance of interest-earning cash, a **45 basis point** increase in the average yield on loans, and a **45 basis point** increase in the average yield on investments[8](index=8&type=chunk) - Interest income on loans increased **$1.1 million**, or **8.8%**, to **$13.7 million**, with the average yield on total loans rising to **6.14%** from **5.69%**, driven by nonaccrual loan payoffs and new originations at higher rates[9](index=9&type=chunk) - A provision for credit losses of **$170 thousand** was recorded, compared to a release of **$203 thousand** in the prior quarter, mainly due to a larger loan portfolio, increased unfunded commitments, and additional qualitative adjustments for certain loan segments[12](index=12&type=chunk) [Q2 2025 vs Q2 2024 Analysis](index=4&type=section&id=Q2%202025%20vs%20Q2%202024%20Analysis) Interest income on loans increased by 11.2% YoY, with the average loan yield rising to 6.14%. Interest expense decreased significantly due to lower average balances and rates on interest-bearing deposits and FHLB advances. A provision for credit losses was recorded in Q2 2025 compared to a release in Q2 2024 - Interest income on loans increased **$1.4 million**, or **11.2%**, to **$13.7 million**, with the average yield on total loans rising to **6.14%** from **5.56%**, primarily due to nonaccrual loan payoffs, new originations at higher rates, and upward repricing on variable-rate loans[13](index=13&type=chunk) - Interest expense decreased primarily due to lower average balances of interest-bearing demand, NOW, certificate accounts, and FHLB advances, as well as lower average rates paid on all categories of interest-bearing deposits[15](index=15&type=chunk) - A provision for credit losses of **$170 thousand** was recorded, compared to a release of **$109 thousand** in the prior year's quarter, reflecting factors such as loan portfolio growth and qualitative adjustments[16](index=16&type=chunk) [Noninterest Income](index=4&type=section&id=Noninterest%20Income) [Noninterest Income Table](index=4&type=section&id=Noninterest%20Income%20Table) The table details the components of noninterest income for Q2 2025, Q1 2025, and Q2 2024, showing changes in service charges, BOLI earnings, mortgage servicing income, and other categories Noninterest Income (Dollars in thousands, unaudited) | Metric | June 30, 2025 | March 31, 2025 | June 30, 2024 | Q2 2025 vs. Q1 2025 Amount ($) | Q2 2025 vs. Q1 2025 Percentage (%) | Q2 2025 vs. Q2 2024 Amount ($) | Q2 2025 vs. Q2 2024 Percentage (%) | | :------------------------------------ | :------------ | :------------- | :------------ | :----------------------------- | :--------------------------------- | :----------------------------- | :--------------------------------- | | Service charges and fee income | $664 | $684 | $761 | ($20) | (2.9)% | ($97) | (12.7)% | | Earnings on bank-owned life insurance | $229 | $195 | $134 | $34 | 17.4% | $95 | 70.9% | | Mortgage servicing income | $263 | $269 | $279 | ($6) | (2.2)% | ($16) | (5.7)% | | Fair value adjustment on MSR | ($80) | ($99) | ($116) | $19 | (19.2)% | $36 | (31.0)% | | Net gain on sale of loans | $44 | $49 | $74 | ($5) | (10.2)% | ($30) | (40.5)% | | Other income | — | — | $30 | — | —% | ($30) | (100.0)% | | Total noninterest income | $1,120 | $1,098 | $1,162 | $22 | 2.0% | ($42) | (3.6)% | [Q2 2025 vs Q1 2025 Analysis](index=4&type=section&id=Q2%202025%20vs%20Q1%202025%20Analysis) Total noninterest income increased slightly QoQ, driven by higher earnings from BOLI and a lower fair value adjustment on mortgage servicing rights. This was partially offset by a decrease in service charges and fee income and a decline in net gain on loan sales - The increase in noninterest income was primarily related to a **$34 thousand** increase in earnings from BOLI due to market fluctuations and a **$19 thousand** lower adjustment for the fair value of mortgage servicing rights[18](index=18&type=chunk) - These increases were partially offset by a **$20 thousand** decrease in service charges and fee income due to the absence of a Mastercard volume incentive received in the prior quarter[18](index=18&type=chunk) - Net gain on sale of loans declined by **$5 thousand**, reflecting lower pricing margins on loans sold, despite an increase in loan sale volume[19](index=19&type=chunk) [Q2 2025 vs Q2 2024 Analysis](index=5&type=section&id=Q2%202025%20vs%20Q2%202024%20Analysis) Total noninterest income decreased YoY, mainly due to lower service charges, mortgage servicing income, net gain on loan sales, and other income. These decreases were partially offset by a significant increase in BOLI earnings and an improvement in the fair value adjustment of mortgage servicing rights - The decrease in noninterest income was primarily due to a **$97 thousand** decrease in service charges and fee income, a **$16 thousand** decrease in mortgage servicing income, a **$30 thousand** decrease in net gain on sale of loans, and a **$30 thousand** decrease in other income[24](index=24&type=chunk) - These decreases were partially offset by a **$95 thousand** increase in earnings from BOLI, primarily due to a strategic decision to exchange existing policies into higher yielding ones, and a **$36 thousand** improvement in the adjustment for the fair value of mortgage servicing rights[24](index=24&type=chunk) [Noninterest Expense](index=5&type=section&id=Noninterest%20Expense) [Noninterest Expense Table](index=5&type=section&id=Noninterest%20Expense%20Table) The table presents a comparative breakdown of noninterest expenses for Q2 2025, Q1 2025, and Q2 2024, showing changes across categories like salaries, operations, and data processing Noninterest Expense (Dollars in thousands, unaudited) | Metric | June 30, 2025 | March 31, 2025 | June 30, 2024 | Q2 2025 vs. Q1 2025 Amount ($) | Q2 2025 vs. Q1 2025 Percentage (%) | Q2 2025 vs. Q2 2024 Amount ($) | Q2 2025 vs. Q2 2024 Percentage (%) | | :------------------------------------ | :------------ | :------------- | :------------ | :----------------------------- | :--------------------------------- | :----------------------------- | :--------------------------------- | | Salaries and benefits | $4,321 | $4,595 | $4,658 | ($274) | (6.0)% | ($337) | (7.2)% | | Operations | $1,443 | $1,365 | $1,569 | $78 | 5.7% | ($126) | (8.0)% | | Regulatory assessments | $222 | $221 | $220 | $1 | 0.5% | $2 | 0.9% | | Occupancy | $416 | $437 | $397 | ($21) | (4.8)% | $19 | 4.8% | | Data processing | $1,254 | $1,293 | $910 | ($39) | (3.0)% | $344 | 37.8% | | Net loss (gain) on OREO and repossessed assets | $9 | $3 | ($17) | $6 | 200.0% | $26 | (152.9)% | | Total noninterest expense | $7,665 | $7,914 | $7,737 | ($249) | (3.1)% | ($72) | (0.9)% | [Q2 2025 vs Q1 2025 Analysis](index=5&type=section&id=Q2%202025%20vs%20Q1%202025%20Analysis) Total noninterest expense decreased QoQ, primarily driven by lower salaries and benefits due to annual deferred compensation timing and higher deferred salaries, as well as decreases in occupancy and data processing costs. These reductions were partially offset by increased operations expense and OREO-related expenses - The decrease in noninterest expense was primarily a result of a **$274 thousand** decrease in salaries and benefits, a **$21 thousand** decrease in occupancy, and a **$39 thousand** decrease in data processing costs[25](index=25&type=chunk) - These decreases were partially offset by a **$78 thousand** increase in operations expense due to higher deposit product costs and loan fees, and a **$6 thousand** increase in expenses related to OREO and repossessed assets due to a new property[23](index=23&type=chunk)[26](index=26&type=chunk) [Q2 2025 vs Q2 2024 Analysis](index=6&type=section&id=Q2%202025%20vs%20Q2%202024%20Analysis) Total noninterest expense decreased YoY, mainly due to lower salaries and benefits and operations expense, reflecting cost-saving initiatives. This was partially offset by significant increases in data processing expenses due to project implementations and new software, as well as higher occupancy and OREO-related expenses - The decrease in noninterest expense was primarily a result of a **$337 thousand** decrease in salaries and benefits and a **$126 thousand** decrease in operations expense due to cost saving initiatives and process improvements[32](index=32&type=chunk) - These decreases were partially offset by a **$344 thousand** increase in data processing expenses due to project implementations and new software technology, a **$19 thousand** increase in occupancy expense, and a **$26 thousand** increase in OREO-related expenses[32](index=32&type=chunk) [Balance Sheet Review, Capital Management and Credit Quality](index=6&type=section&id=Balance%20Sheet%20Review%2C%20Capital%20Management%20and%20Credit%20Quality) [Assets Overview](index=6&type=section&id=Assets%20Overview) Total assets decreased slightly QoQ and YoY, primarily due to lower cash and cash equivalents. Loans held-for-portfolio, however, increased due to new originations across most loan segments - Total assets decreased **$10.9 million** or **1.0%** to **$1.06 billion** at June 30, 2025, from **$1.07 billion** at March 31, 2025, primarily due to lower cash and cash equivalents[27](index=27&type=chunk) - Cash and cash equivalents decreased **$29.0 million**, or **22.0%**, to **$102.5 million** at June 30, 2025, primarily due to lower deposit balances and an increase in loans held-for-portfolio[28](index=28&type=chunk) - Loans held-for-portfolio increased **$18.1 million** or **2.0%** to **$904.3 million** at June 30, 2025, primarily due to new loan originations across most segments, excluding other consumer loans[30](index=30&type=chunk) [Nonperforming Assets (NPAs)](index=6&type=section&id=Nonperforming%20Assets%20%28NPAs%29) Nonperforming assets (NPAs) significantly decreased by 62.2% QoQ and 59.4% YoY, primarily due to substantial loan payoffs, including large commercial real estate and floating home loans. The ratio of NPAs to total assets improved to 0.35% - Nonperforming assets (NPAs) decreased **$6.0 million**, or **62.2%**, to **$3.7 million** at June 30, 2025, from **$9.7 million** at March 31, 2025, primarily due to payoffs totaling **$6.9 million**[31](index=31&type=chunk) - NPAs to total assets improved to **0.35%** at June 30, 2025, compared to **0.91%** at March 31, 2025 and **0.84%** at June 30, 2024[32](index=32&type=chunk) Nonperforming Assets Summary (Dollars in thousands) | Category | June 30, 2025 | March 31, 2025 | June 30, 2024 | | :-------------------------- | :------------ | :------------- | :------------ | | Total nonperforming loans | $3,366 | $9,653 | $8,909 | | OREO and Other Repossessed Assets | $300 | $41 | $115 | | Total NPAs | $3,666 | $9,694 | $9,024 | [Allowance for Credit Losses](index=7&type=section&id=Allowance%20for%20Credit%20Losses) The allowance for credit losses on loans to total loans outstanding remained stable at 0.94%. The allowance for credit losses on loans to total nonperforming loans significantly increased to 253.59%, indicating robust coverage for potential losses - The allowance for credit losses on loans to total loans outstanding was **0.94%** at June 30, 2025, compared to **0.95%** at March 31, 2025 and **0.96%** at June 30, 2024[32](index=32&type=chunk) - Net loan charge-offs were **$21 thousand** for both Q2 and Q1 2025, compared to **$17 thousand** for Q2 2024[33](index=33&type=chunk) Allowance for Credit Losses Summary (Dollars in thousands, unaudited) | Metric | June 30, 2025 | March 31, 2025 | June 30, 2024 | | :-------------------------------------------------- | :------------ | :------------- | :------------ | | Allowance for Credit Losses on Loans (End of Period) | $8,536 | $8,393 | $8,493 | | Provision for (release of) credit losses on loans | $164 | ($85) | ($88) | | Net charge-offs during the period | ($21) | ($21) | ($17) | | Allowance for Credit Losses on Unfunded Loan Commitments (End of Period) | $122 | $116 | $245 | | Allowance for credit losses on loans to total loans | 0.94% | 0.95% | 0.96% | | Allowance for credit losses on loans to total nonperforming loans | 253.59% | 86.95% | 95.33% | [Deposits](index=8&type=section&id=Deposits) Total deposits decreased by 1.2% QoQ and 0.8% YoY, primarily due to normal daily fluctuations in customer account balances. Noninterest-bearing deposits also saw a slight decrease - Total deposits decreased **$10.9 million**, or **1.2%**, to **$899.5 million** at June 30, 2025, from **$910.3 million** at March 31, 2025, primarily due to normal daily fluctuations[35](index=35&type=chunk) - Noninterest-bearing deposits decreased **$2.5 million**, or **2.0%**, to **$124.2 million** at June 30, 2025, representing **13.7%** of total deposits[35](index=35&type=chunk) [Borrowings & Subordinated Notes](index=8&type=section&id=Borrowings%20%26%20Subordinated%20Notes) FHLB advances remained stable QoQ at $25.0 million but decreased YoY from $40.0 million, primarily used to support loan growth and maintain liquidity. Subordinated notes remained consistent at $11.8 million - FHLB advances totaled **$25.0 million** at June 30, 2025 and March 31, 2025, down from **$40.0 million** at June 30, 2024, primarily used to support organic loan growth and maintain liquidity[36](index=36&type=chunk) - Subordinated notes, net, totaled **$11.8 million** at both June 30, 2025 and March 31, 2025, and **$11.7 million** at June 30, 2024[36](index=36&type=chunk) [Stockholders' Equity](index=8&type=section&id=Stockholders%27%20Equity) Stockholders' equity increased by 1.5% QoQ and 4.6% YoY, driven primarily by net income earned during the quarter and share-based compensation, partially offset by an increase in accumulated other comprehensive loss and cash dividends - Stockholders' equity totaled **$106.0 million** at June 30, 2025, an increase of **$1.6 million**, or **1.5%**, from March 31, 2025, and an increase of **$4.7 million**, or **4.6%**, from June 30, 2024[37](index=37&type=chunk) - The increase in stockholders' equity was primarily the result of **$2.1 million** of net income and **$75 thousand** in share-based compensation, partially offset by a **$67 thousand** increase in accumulated other comprehensive loss and **$487 thousand** in cash dividends[37](index=37&type=chunk) [Company Information](index=8&type=section&id=Company%20Information) [Company Overview](index=8&type=section&id=Company%20Overview) Sound Financial Bancorp, Inc. is the holding company for Sound Community Bank, headquartered in Seattle, Washington, with full-service branches in several locations and a loan production office. The bank is a Fannie Mae Approved Lender and Seller/Servicer - Sound Financial Bancorp, Inc. is the parent company of Sound Community Bank, headquartered in Seattle, Washington, with full-service branches in Seattle, Tacoma, Mountlake Terrace, Sequim, Port Angeles, Port Ludlow and University Place[38](index=38&type=chunk) - Sound Community Bank is a Fannie Mae Approved Lender and Seller/Servicer with one loan production office located in the Madison Park neighborhood of Seattle[38](index=38&type=chunk) [Forward-Looking Statements Disclaimer](index=9&type=section&id=Forward-Looking%20Statements%20Disclaimer) [Disclaimer Details](index=9&type=section&id=Disclaimer%20Details) This section provides a disclaimer regarding forward-looking statements, outlining that such statements are based on assumptions and expectations, subject to risks and uncertainties, and may differ materially from actual results. It lists various factors that could cause actual results to differ, including economic conditions, interest rate changes, regulatory shifts, and technological advancements. The Company disclaims any obligation to revise these statements - Forward-looking statements are based on underlying assumptions and expectations, subject to risks, uncertainties, and unknown factors, and may include projections of future financial performance[39](index=39&type=chunk) - Factors that could cause actual results to differ materially include adverse impacts to economic conditions, changes in interest rate levels, the impact of inflation, bank failures, changes in consumer habits, risks of lending activities, and regulatory changes[40](index=40&type=chunk) - The Company does not undertake—and specifically disclaims any obligation—to revise any forward-looking statement to reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such statement[41](index=41&type=chunk) [Consolidated Financial Statements](index=10&type=section&id=Consolidated%20Financial%20Statements) [Consolidated Income Statements (Six Months Ended)](index=10&type=section&id=Consolidated%20Income%20Statements%20%28Six%20Months%20Ended%29) The consolidated income statements for the six months ended June 30, 2025, show an increase in net interest income and net income compared to the same period in 2024, despite a slight decrease in total noninterest income Consolidated Income Statements (Dollars in thousands, unaudited) | Metric | For the Six Months Ended June 30, 2025 | For the Six Months Ended June 30, 2024 | | :-------------------------------------------------- | :------------------------------------- | :------------------------------------- | | Interest income | $28,622 | $27,799 | | Interest expense | $11,295 | $12,891 | | Net interest income | $17,327 | $14,908 | | Release of provision for credit losses | ($33) | ($142) | | Net interest income after release of provision for credit losses | $17,360 | $15,050 | | Total noninterest income | $2,216 | $2,258 | | Total noninterest expense | $15,578 | $15,394 | | Income before provision for income taxes | $3,998 | $1,914 | | Provision for income taxes | $779 | $350 | | Net income | $3,219 | $1,564 | [Consolidated Income Statements (Quarter Ended)](index=11&type=section&id=Consolidated%20Income%20Statements%20%28Quarter%20Ended%29) The consolidated income statements for the quarter ended June 30, 2025, demonstrate strong growth in net interest income and net income compared to previous quarters, despite a provision for credit losses Consolidated Income Statements (Dollars in thousands, unaudited) | Metric | June 30, 2025 | March 31, 2025 | December 31, 2024 | September 30, 2024 | June 30, 2024 | | :-------------------------------------------------- | :------------ | :------------- | :---------------- | :----------------- | :------------ | | Interest income | $14,915 | $13,706 | $14,736 | $14,838 | $14,039 | | Interest expense | $5,660 | $5,635 | $6,516 | $6,965 | $6,591 | | Net interest income | $9,255 | $8,071 | $8,220 | $7,873 | $7,448 | | Provision for (release of) provision for credit losses | $170 | ($203) | $14 | $8 | ($109) | | Net interest income after provision for credit losses | $9,085 | $8,274 | $8,206 | $7,865 | $7,557 | | Total noninterest income | $1,120 | $1,098 | $1,160 | $1,235 | $1,162 | | Total noninterest expense | $7,665 | $7,914 | $7,058 | $7,679 | $7,737 | | Income before provision for income taxes | $2,540 | $1,458 | $2,308 | $1,421 | $982 | | Provision for income taxes | $488 | $291 | $389 | $267 | $187 | | Net income | $2,052 | $1,167 | $1,919 | $1,154 | $795 | [Consolidated Balance Sheets](index=12&type=section&id=Consolidated%20Balance%20Sheets) The consolidated balance sheets at June 30, 2025, show a slight decrease in total assets and liabilities compared to the prior quarter, while stockholders' equity increased. Loans held-for-portfolio increased, offset by a decrease in cash and deposits Consolidated Balance Sheets (Dollars in thousands, unaudited) | Metric | June 30, 2025 | March 31, 2025 | December 31, 2024 | September 30, 2024 | June 30, 2024 | | :-------------------------------------------------- | :------------ | :------------- | :---------------- | :----------------- | :------------ | | **ASSETS:** | | | | | | | Cash and cash equivalents | $102,542 | $131,494 | $43,641 | $148,930 | $135,111 | | Available-for-sale securities, at fair value | $7,521 | $7,689 | $7,790 | $8,032 | $7,996 | | Held-to-maturity securities, at amortized cost | $2,113 | $2,121 | $2,130 | $2,139 | $2,147 | | Loans held-for-sale | $2,025 | $2,267 | $487 | $65 | $257 | | Loans held-for-portfolio, net | $895,750 | $877,833 | $891,672 | $893,148 | $880,781 | | Total assets | $1,058,242 | $1,069,186 | $993,633 | $1,100,930 | $1,074,859 | | **LIABILITIES:** | | | | | | | Total deposits | $899,459 | $910,347 | $837,799 | $930,197 | $906,769 | | Borrowings | $25,000 | $25,000 | $25,000 | $40,000 | $40,000 | | Subordinated notes, net | $11,780 | $11,770 | $11,759 | $11,749 | $11,738 | | Total liabilities | $952,238 | $964,755 | $889,967 | $998,691 | $973,512 | | **STOCKHOLDERS' EQUITY:** | | | | | | | Total stockholders' equity | $106,004 | $104,431 | $103,666 | $102,239 | $101,347 | | Total liabilities and stockholders' equity | $1,058,242 | $1,069,186 | $993,633 | $1,100,930 | $1,074,859 | [Key Financial Ratios](index=13&type=section&id=Key%20Financial%20Ratios) Key financial ratios for Q2 2025 demonstrate improved profitability and efficiency, with significant increases in return on average assets, return on average equity, and net interest margin, alongside a notable decrease in the efficiency ratio Key Financial Ratios (unaudited) | Metric | June 30, 2025 | March 31, 2025 | December 31, 2024 | September 30, 2024 | June 30, 2024 | | :-------------------------- | :------------ | :------------- | :---------------- | :----------------- | :------------ | | Annualized return on average assets | 0.78% | 0.45% | 0.70% | 0.42% | 0.30% | | Annualized return on average equity | 7.78% | 4.53% | 7.40% | 4.50% | 3.17% | | Annualized net interest margin | 3.67% | 3.25% | 3.13% | 2.98% | 2.92% | | Annualized efficiency ratio | 73.88% | 86.31% | 75.25% | 84.31% | 89.86% | [Per Common Share Data](index=13&type=section&id=Per%20Common%20Share%20Data) Per common share data for Q2 2025 shows an increase in both basic and diluted earnings per share, as well as book value per share, reflecting improved profitability and equity growth Per Common Share Data (unaudited) | Metric | June 30, 2025 | March 31, 2025 | December 31, 2024 | September 30, 2024 | June 30, 2024 | | :-------------------------------- | :------------ | :------------- | :---------------- | :----------------- | :------------ | | Basic earnings per share | $0.80 | $0.45 | $0.75 | $0.45 | $0.31 | | Diluted earnings per share | $0.79 | $0.45 | $0.74 | $0.45 | $0.31 | | Weighted-average basic shares outstanding | 2,556,562 | 2,554,265 | 2,547,210 | 2,544,233 | 2,540,538 | | Weighted-average diluted shares outstanding | 2,577,990 | 2,578,609 | 2,578,771 | 2,569,368 | 2,559,015 | | Common shares outstanding at period-end | 2,566,069 | 2,566,069 | 2,564,907 | 2,564,095 | 2,557,284 | | Book value per share | $41.31 | $40.70 | $40.42 | $39.87 | $39.63 | [Average Balance, Average Yield Earned, and Average Rate Paid](index=14&type=section&id=Average%20Balance%2C%20Average%20Yield%20Earned%2C%20and%20Average%20Rate%20Paid) [Three Months Ended](index=14&type=section&id=Three%20Months%20Ended) This section details the average balances, interest earned/paid, and yields/rates for interest-earning assets and interest-bearing liabilities for the three months ended June 30, 2025, March 31, 2025, and June 30, 2024, illustrating the components of net interest income and margin Average Balance, Average Yield Earned, and Average Rate Paid (Dollars in thousands, unaudited) | Metric | June 30, 2025 Average Outstanding Balance | June 30, 2025 Interest Earned/Paid | June 30, 2025 Yield/Rate | March 31, 2025 Average Outstanding Balance | March 31, 2025 Interest Earned/Paid | March 31, 2025 Yield/Rate | June 30, 2024 Average Outstanding Balance | June 30, 2024 Interest Earned/Paid | June 30, 2024 Yield/Rate | | :------------------------------------ | :-------------------------------------- | :--------------------------------- | :----------------------- | :--------------------------------------- | :---------------------------------- | :------------------------ | :--------------------------------------- | :---------------------------------- | :----------------------- | | **Interest-Earning Assets:** | | | | | | | | | | | Loans receivable | $895,039 | $13,695 | 6.14% | $896,822 | $12,588 | 5.69% | $891,863 | $12,320 | 5.56% | | Interest-earning cash | $102,572 | $1,097 | 4.29% | $95,999 | $1,010 | 4.27% | $120,804 | $1,586 | 5.28% | | Investments | $12,842 | $123 | 3.84% | $12,924 | $108 | 3.39% | $13,935 | $133 | 3.84% | | Total interest earning assets | $1,010,453 | $14,915 | 5.92% | $1,005,745 | $13,706 | 5.53% | $1,026,602 | $14,039 | 5.50% | | **Interest-Bearing Liabilities:** | | | | | | | | | | | Savings and money market accounts | $346,655 | $2,258 | 2.61% | $335,419 | $2,058 | 2.49% | $301,454 | $2,115 | 2.82% | | Demand and NOW accounts | $138,150 | $107 | 0.31% | $140,905 | $108 | 0.31% | $153,739 | $148 | 0.39% | | Certificate accounts | $288,286 | $2,860 | 3.98% | $289,960 | $3,039 | 4.25% | $317,496 | $3,731 | 4.73% | | Subordinated notes | $11,777 | $168 | 5.72% | $11,766 | $168 | 5.79% | $11,735 | $168 | 5.76% | | Borrowings | $25,007 | $267 | 4.28% | $25,000 | $262 | 4.25% | $40,000 | $429 | 4.31% | | Total interest bearing liabilities | $809,875 | $5,660 | 2.80% | $803,050 | $5,635 | 2.85% | $824,424 | $6,591 | 3.22% | | Net interest income/spread | | $9,255 | 3.12% | | $8,071 | 2.68% | | $7,448 | 2.28% | | Net interest margin | | | 3.67% | | | 3.25% | | | 2.92% | | Total deposits | $894,997 | $5,225 | 2.34% | $892,499 | $5,205 | 2.37% | $901,567 | $5,994 | 2.67% | [Six Months Ended](index=15&type=section&id=Six%20Months%20Ended) This section provides the average balances, interest earned/paid, and yields/rates for interest-earning assets and interest-bearing liabilities for the six months ended June 30, 2025, and June 30, 2024, offering a broader view of interest rate dynamics Average Balance, Average Yield Earned, and Average Rate Paid (Dollars in thousands, unaudited) | Metric | June 30, 2025 Average Outstanding Balance | June 30, 2025 Interest Earned/Paid | June 30, 2025 Yield/Rate | June 30, 2024 Average Outstanding Balance | June 30, 2024 Interest Earned/Paid | June 30, 2024 Yield/Rate | | :------------------------------------ | :-------------------------------------- | :--------------------------------- | :----------------------- | :--------------------------------------- | :---------------------------------- | :----------------------- | | **Interest-Earning Assets:** | | | | | | | | Loans receivable | $895,926 | $26,283 | 5.92% | $893,646 | $24,553 | 5.53% | | Interest-earning cash | $99,304 | $2,107 | 4.28% | $114,082 | $3,002 | 5.29% | | Investments | $11,551 | $232 | 4.05% | $12,633 | $244 | 3.88% | | Total interest-earning assets | $1,006,781 | $28,622 | 5.73% | $1,020,361 | $27,799 | 5.48% | | **Interest-Bearing Liabilities:** | | | | | | | | Savings and money market accounts | $341,068 | $4,317 | 2.55% | $292,954 | $3,981 | 2.73% | | Demand and NOW accounts | $139,520 | $214 | 0.31% | $156,751 | $289 | 0.37% | | Certificate accounts | $289,119 | $5,899 | 4.11% | $316,495 | $7,426 | 4.72% | | Subordinated notes | $11,772 | $336 | 5.76% | $11,730 | $336 | 5.76% | | Borrowings | $25,003 | $529 | 4.27% | $40,000 | $859 | 4.32% | | Total interest-bearing liabilities | $806,482 | $11,295 | 2.82% | $817,930 | $12,891 | 3.17% | | Net interest income/spread | | $17,327 | 2.91% | | $14,908 | 2.31% | | Net interest margin | | | 3.47% | | | 2.94% | | Total deposits | $893,755 | $10,430 | 2.35% | $896,858 | $11,696 | 2.62% | [Loans](index=16&type=section&id=Loans) The loan portfolio shows growth in commercial and multifamily, home equity, manufactured homes, and floating homes, while one-to-four family and construction and land loans experienced declines. Total loans held-for-portfolio, net, increased to $895.75 million at June 30, 2025 Loans (Dollars in thousands, unaudited) | Loan Category | June 30, 2025 | March 31, 2025 | December 31, 2024 | September 30, 2024 | June 30, 2024 | | :-------------------------- | :------------ | :------------- | :---------------- | :----------------- | :------------ | | One-to-four family | $262,672 | $262,457 | $269,684 | $271,702 | $268,488 | | Home equity | $28,582 | $28,112 | $26,686 | $25,199 | $26,185 | | Commercial and multifamily | $398,429 | $392,798 | $371,516 | $358,587 | $342,632 | | Construction and land | $49,926 | $42,492 | $73,077 | $85,724 | $96,962 | | Manufactured homes | $43,112 | $42,448 | $41,128 | $40,371 | $38,953 | | Floating homes | $91,448 | $86,626 | $86,411 | $86,155 | $81,622 | | Other consumer | $17,259 | $18,224 | $17,720 | $18,266 | $18,422 | | Commercial business loans | $14,779 | $14,690 | $15,605 | $17,481 | $17,860 | | Total loans | $906,207 | $887,847 | $901,827 | $903,485 | $891,124 | | Total loans held-for-portfolio, net | $895,750 | $877,833 | $891,672 | $893,148 | $880,781 | [Deposits](index=16&type=section&id=Deposits) Total deposits decreased to $899.46 million at June 30, 2025, with decreases in noninterest-bearing demand, interest-bearing demand, and savings accounts, partially offset by an increase in certificates Deposits (Dollars in thousands, unaudited) | Deposit Type | June 30, 2025 | March 31, 2025 | December 31, 2024 | September 30, 2024 | June 30, 2024 | | :-------------------------- | :------------ | :------------- | :---------------- | :----------------- | :------------ | | Noninterest-bearing demand | $124,197 | $126,687 | $132,532 | $129,717 | $124,915 | | Interest-bearing demand | $137,222 | $143,595 | $142,126 | $148,740 | $152,829 | | Savings | $61,813 | $63,533 | $61,252 | $61,455 | $63,368 | | Money market | $282,346 | $287,058 | $206,067 | $285,655 | $253,873 | | Certificates | $293,881 | $289,474 | $295,822 | $304,630 | $311,784 | | Total deposits | $899,459 | $910,347 | $837,799 | $930,197 | $906,769 | [Credit Quality Data](index=17&type=section&id=Credit%20Quality%20Data) Credit quality significantly improved, with total nonperforming assets decreasing by 62.2% QoQ. The allowance for credit losses on loans to total nonperforming loans ratio dramatically increased to 253.59%, indicating strong coverage Credit Quality Data (Dollars in thousands, unaudited) | Metric | June 30, 2025 | March 31, 2025 | December 31, 2024 | September 30, 2024 | June 30, 2024 | | :-------------------------------------------------- | :------------ | :------------- | :---------------- | :----------------- | :------------ | | Total nonperforming loans | $3,366 | $9,653 | $7,491 | $8,489 | $8,909 | | OREO and other repossessed assets | $300 | $41 | — | $115 | $115 | | Total nonperforming assets | $3,666 | $9,694 | $7,491 | $8,604 | $9,024 | | Net charge-offs during the quarter | ($21) | ($21) | ($13) | ($14) | ($17) | | Provision for (release of) credit losses during the quarter | $170 | ($203) | $14 | $8 | ($109) | | Allowance for credit losses - loans | $8,536 | $8,393 | $8,499 | $8,585 | $8,493 | | Allowance for credit losses - loans to total loans | 0.94% | 0.95% | 0.94% | 0.95% | 0.96% | | Allowance for credit losses - loans to total nonperforming loans | 253.59% | 86.95% | 113.46% | 101.13% | 95.33% | | Nonperforming loans to total loans | 0.37% | 1.09% | 0.83% | 0.94% | 1.00% | | Nonperforming assets to total assets | 0.35% | 0.91% | 0.75% | 0.78% | 0.84% | [Other Statistics](index=17&type=section&id=Other%20Statistics) Key operational statistics for Q2 2025 include a loans-to-deposits ratio of 100.75% and noninterest-bearing deposits representing 13.81% of total deposits. Average total assets and equity for the quarter also increased Other Statistics (Dollars in thousands, unaudited) | Metric | June 30, 2025 | March 31, 2025 | December 31, 2024 | September 30, 2024 | June 30, 2024 | | :------------------------------------ | :------------ | :------------- | :---------------- | :----------------- | :------------ | | Total loans to total deposits | 100.75% | 97.53% | 107.64% | 97.13% | 98.27% | | Noninterest-bearing deposits to total deposits | 13.81% | 13.92% | 15.82% | 13.95% | 13.78% | | Average total assets for the quarter | $1,055,881 | $1,051,135 | $1,089,067 | $1,095,404 | $1,070,579 | | Average total equity for the quarter | $105,803 | $104,543 | $103,181 | $102,059 | $100,961 | [Contact Information](index=17&type=section&id=Contact%20Information) [Contact Details](index=17&type=section&id=Contact%20Details) Contact details for financial inquiries (Wes Ochs, EVP/CFO) and media inquiries (Laurie Stewart, President/CEO) are provided - For financial inquiries, contact Wes Ochs, Executive Vice President/CFO at **(206) 436-8587**[59](index=59&type=chunk) - For media inquiries, contact Laurie Stewart, President/CEO at **(206) 436-1495**[59](index=59&type=chunk)

Core Viewpoint - Sound Financial Bancorp, Inc. reported a net income of $2.1 million for Q2 2025, reflecting a significant increase compared to previous quarters, alongside a cash dividend declaration of $0.19 per share [1][6]. Financial Performance - Net income for Q2 2025 was $2.1 million, or $0.79 diluted earnings per share, compared to $1.2 million, or $0.45 per share in Q1 2025, and $795 thousand, or $0.31 per share in Q2 2024 [1]. - Total assets decreased by $10.9 million, or 1.0%, to $1.06 billion at June 30, 2025, from $1.07 billion at March 31, 2025 [7]. - Loans held-for-portfolio increased by $18.1 million, or 2.0%, to $904.3 million at June 30, 2025, compared to $886.2 million at March 31, 2025 [7]. - Total deposits decreased by $10.9 million, or 1.2%, to $899.5 million at June 30, 2025, from $910.3 million at March 31, 2025 [7][32]. - Net interest income increased by $1.2 million, or 14.7%, to $9.3 million for Q2 2025, compared to $8.1 million for Q1 2025 [7][10]. Credit Quality and Provision for Losses - Total nonperforming loans decreased by $6.3 million, or 65.1%, to $3.4 million at June 30, 2025, from $9.7 million at March 31, 2025 [7][29]. - A provision for credit losses of $170 thousand was recorded for Q2 2025, compared to a release of provision for credit losses of $203 thousand in Q1 2025 [14][18]. - The allowance for credit losses on loans to total loans outstanding was 0.94% at June 30, 2025, compared to 0.95% at March 31, 2025 [31][32]. Noninterest Income and Expenses - Total noninterest income increased by $22 thousand, or 2.0%, to $1.1 million for Q2 2025, compared to Q1 2025 [19][20]. - Total noninterest expense decreased by $249 thousand, or 3.1%, to $7.7 million for Q2 2025, compared to Q1 2025 [7][25]. Capital Management - Stockholders' equity totaled $106.0 million at June 30, 2025, an increase of $1.6 million, or 1.5%, from $104.4 million at March 31, 2025 [34]. - The company maintained capital levels in excess of regulatory requirements and was categorized as "well-capitalized" at June 30, 2025 [7][34].

PART I - FINANCIAL INFORMATION This section presents the company's unaudited financial statements, management's analysis of financial condition and operations, market risk disclosures, and internal controls [Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) The unaudited condensed consolidated financial statements for Sound Financial Bancorp, Inc. as of March 31, 2025, show an increase in total assets to $1.07 billion from $993.6 million at year-end 2024, primarily driven by a significant rise in cash and cash equivalents. Net income for the first quarter of 2025 was $1.2 million, a 51.6% increase from $770 thousand in the same period of 2024, largely due to higher net interest income. The statements reflect the company's financial position, operational results, and cash flows for the period [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section details the company's financial position, highlighting changes in assets, liabilities, and equity Condensed Consolidated Balance Sheet Highlights (unaudited) | Account | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | Change (%) | | :--- | :--- | :--- | :--- | | Cash and cash equivalents | $131,494 | $43,641 | +201.3% | | Total loans held-for-portfolio, net | $877,833 | $891,672 | -1.6% | | Total assets | $1,069,186 | $993,633 | +7.6% | | Total deposits | $910,347 | $837,799 | +8.7% | | Total liabilities | $964,755 | $889,967 | +8.4% | | Total stockholders' equity | $104,431 | $103,666 | +0.7% | - The significant increase in **cash and cash equivalents** was a primary driver for the growth in total assets[10](index=10&type=chunk) [Condensed Consolidated Statements of Income](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) This section presents the company's operational performance, focusing on revenue, expenses, and net income Condensed Consolidated Statements of Income Highlights (unaudited) | Metric | Three Months Ended Mar 31, 2025 (in thousands) | Three Months Ended Mar 31, 2024 (in thousands) | Change (%) | | :--- | :--- | :--- | :--- | | Net interest income | $8,071 | $7,460 | +8.2% | | Release of credit losses | $(203) | $(33) | +515.2% | | Noninterest income | $1,098 | $1,096 | +0.2% | | Noninterest expense | $7,914 | $7,656 | +3.4% | | Net income | $1,167 | $770 | +51.6% | | Diluted EPS | $0.45 | $0.30 | +50.0% | - **Net income grew significantly year-over-year**, driven by an increase in net interest income and a larger release of credit losses[12](index=12&type=chunk) [Condensed Consolidated Statements of Comprehensive Income](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) This section outlines the company's comprehensive income, including net income and other comprehensive loss components Comprehensive Income (unaudited) | Metric | Three Months Ended Mar 31, 2025 (in thousands) | Three Months Ended Mar 31, 2024 (in thousands) | | :--- | :--- | :--- | | Net income | $1,167 | $770 | | Other comprehensive loss, net of tax | $(17) | $(62) | | Comprehensive income | $1,150 | $708 | [Condensed Consolidated Statements of Stockholders' Equity](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity) This section details changes in stockholders' equity, including net income and dividend distributions - Stockholders' equity increased from **$103.7 million** at Dec 31, 2024, to **$104.4 million** at March 31, 2025. The increase was primarily due to net income of **$1.2 million**, partially offset by cash dividends of **$487 thousand**[16](index=16&type=chunk) - The company paid a cash dividend of **$0.19 per share** during the first quarter of 2025[16](index=16&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section summarizes the company's cash inflows and outflows from operating, investing, and financing activities Cash Flow Summary (unaudited) | Cash Flow Activity | Three Months Ended Mar 31, 2025 (in thousands) | Three Months Ended Mar 31, 2024 (in thousands) | | :--- | :--- | :--- | | Net cash provided by operating activities | $1,852 | $3,519 | | Net cash provided by (used in) investing activities | $13,923 | $(5,101) | | Net cash provided by financing activities | $72,078 | $89,869 | | **Net change in cash and cash equivalents** | **$87,853** | **$88,287** | - The net increase in cash was primarily driven by a net increase in deposits of **$72.5 million** and a net decrease in loans of **$13.9 million**[18](index=18&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations and additional information supporting the condensed consolidated financial statements - The company operates under one segment and has not made any significant changes to its accounting policies from the 2024 Form 10-K[23](index=23&type=chunk)[24](index=24&type=chunk) - Total loans held-for-portfolio decreased to **$886.2 million** at March 31, 2025, from **$900.2 million** at December 31, 2024. The Allowance for Credit Losses (ACL) on loans was **$8.4 million**[32](index=32&type=chunk) - Nonaccrual loans increased to **$9.7 million** as of March 31, 2025, from **$7.5 million** at December 31, 2024[46](index=46&type=chunk) - The company has **$25.0 million** in FHLB advances and **$11.8 million** in subordinated notes outstanding as of March 31, 2025[75](index=75&type=chunk)[81](index=81&type=chunk) - On April 29, 2025, the Board of Directors declared a quarterly cash dividend of **$0.19 per common share**[87](index=87&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=28&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes the 51.6% year-over-year increase in Q1 2025 net income to a $611 thousand rise in net interest income and a $170 thousand increase in the release of credit loss provisions. The net interest margin improved to 3.25% from 2.95% due to decreased funding costs. Total assets grew by 7.6% to $1.07 billion, driven by higher cash balances from the return of reciprocal deposits. The loan portfolio saw a slight decrease, mainly from a reduction in construction and land loans. Nonperforming assets increased to 0.91% of total assets. The company remains well-capitalized, with a Community Bank Leverage Ratio (CBLR) of 9.98%, exceeding the 9% minimum [Comparison of Financial Condition](index=30&type=section&id=Comparison%20of%20Financial%20Condition) This section analyzes changes in the company's balance sheet, including assets, liabilities, and equity - Total assets increased by **$75.6 million (7.6%)** to **$1.07 billion** at March 31, 2025, primarily due to an **$87.9 million** increase in cash and cash equivalents, which was driven by the return of reciprocal deposits that were strategically moved off-balance sheet at year-end 2024[98](index=98&type=chunk)[99](index=99&type=chunk) - Net loans held-for-portfolio decreased by **$13.8 million (1.6%)** to **$877.8 million**. This was mainly caused by a **$30.6 million (41.9%)** decline in construction and land loans due to project completions and a significant loan payoff[101](index=101&type=chunk)[103](index=103&type=chunk) - Total deposits increased by **$72.5 million (8.7%)** to **$910.3 million**, largely due to the return of reciprocal deposits. However, noninterest-bearing deposits decreased by **$5.8 million (4.4%)**[115](index=115&type=chunk) - Nonperforming assets (NPAs) increased by **$2.2 million** to **$9.7 million**, representing **0.91% of total assets**, up from **0.75%** at year-end 2024. The increase was primarily due to the addition of six loans totaling **$2.4 million** to nonaccrual status[111](index=111&type=chunk)[112](index=112&type=chunk) [Comparison of Results of Operations](index=37&type=section&id=Comparison%20of%20Results%20of%20Operations) This section discusses the company's financial performance, focusing on revenue, expenses, and profitability drivers - Net income for Q1 2025 was **$1.2 million**, a **51.6% increase** from **$770 thousand** in Q1 2024. This was primarily driven by a **$611 thousand** increase in net interest income[124](index=124&type=chunk) Net Interest Margin Analysis | Metric | Three Months Ended Mar 31, 2025 | Three Months Ended Mar 31, 2024 | | :--- | :--- | :--- | | Net interest income | $8,071 thousand | $7,460 thousand | | Net interest rate spread | 2.68% | 2.32% | | Net interest margin | 3.25% | 2.95% | - The net interest margin improved by **30 basis points** year-over-year, mainly due to decreased funding costs from lower average rates on deposits and a lower average balance of borrowings[132](index=132&type=chunk) - A release of credit losses of **$203 thousand** was recorded in Q1 2025, compared to a release of **$33 thousand** in Q1 2024. The release was primarily due to a decline in the loan portfolio balance[134](index=134&type=chunk) - Noninterest expense increased by **3.4%** to **$7.9 million**, largely due to a **$276 thousand** increase in data processing expenses related to project implementations[138](index=138&type=chunk)[140](index=140&type=chunk) [Capital and Liquidity](index=41&type=section&id=Capital%20and%20Liquidity) This section assesses the company's capital adequacy, liquidity position, and dividend policies - Stockholders' equity increased by **$765 thousand** to **$104.4 million** in Q1 2025, reflecting net income of **$1.2 million**, partially offset by **$487 thousand** in common stock dividends[119](index=119&type=chunk)[144](index=144&type=chunk) - The company paid a cash dividend of **$0.19 per share** in Q1 2025, consistent with Q1 2024[145](index=145&type=chunk) - As of March 31, 2025, the company had significant available liquidity, including **$139.2 million** in cash and AFS securities, **$167.5 million** in FHLB borrowing capacity, and **$20.3 million** through the Federal Reserve's discount window[152](index=152&type=chunk) - The stock repurchase program approved in January 2024 expired on January 26, 2025, and was not renewed. No shares were repurchased in Q1 2025[147](index=147&type=chunk)[170](index=170&type=chunk) [Regulatory Capital](index=43&type=section&id=Regulatory%20Capital) This section details the company's compliance with regulatory capital requirements and ratios - The company and the Bank are considered **well-capitalized**. As of March 31, 2025, the Bank's Community Bank Leverage Ratio (CBLR) was **10.76%** and the Company's was **9.98%**, both exceeding the **9% minimum requirement**[160](index=160&type=chunk) - The company has elected to phase in the regulatory capital effects of the CECL accounting standard over a three-year transition period, which began on January 1, 2023[161](index=161&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=43&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company reports no material changes in its market risk since the disclosures provided in its 2024 Form 10-K - There have been no material changes in the Company's market risk since its 2024 Form 10-K[163](index=163&type=chunk) [Controls and Procedures](index=43&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, evaluated the company's disclosure controls and procedures as of March 31, 2025, and concluded they were effective. There were no changes in internal control over financial reporting during the quarter that have materially affected, or are reasonably likely to materially affect, these controls - The Principal Executive Officer and Principal Financial Officer concluded that as of March 31, 2025, the Company's disclosure controls and procedures were effective[164](index=164&type=chunk) - No changes in internal control over financial reporting occurred during the quarter ended March 31, 2025, that have materially affected, or are reasonably likely to materially affect, internal controls[167](index=167&type=chunk) PART II - OTHER INFORMATION This section covers legal proceedings, risk factors, equity sales, and other relevant disclosures [Legal Proceedings](index=45&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various legal proceedings in the normal course of business, but any potential liability from these is not expected to have a material adverse effect on its financial condition - The Company is occasionally involved in legal proceedings, but any liability from currently pending cases is not expected to have a material adverse effect on the business or financial condition[168](index=168&type=chunk) [Risk Factors](index=45&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes to the risk factors previously disclosed in the company's 2024 Form 10-K - There have been no material changes in the Risk Factors previously disclosed in Item 1A of the 2024 Form 10-K[169](index=169&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=45&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company's stock repurchase program, which authorized up to $1.5 million in purchases, expired on January 26, 2025. No shares were repurchased during the first quarter of 2025 - The stock repurchase program announced on January 26, 2024, expired on January 26, 2025[170](index=170&type=chunk) Share Repurchases for Q1 2025 | Period | Total Number of Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | January 2025 | — | $— | | February 2025 | — | $— | | March 2025 | — | $— | | **Total** | **—** | **$—** | [Other Information](index=45&type=section&id=Item%205.%20Other%20Information) During the first quarter of 2025, no director or officer adopted or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement - During the three months ended March 31, 2025, no director or officer adopted or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement[173](index=173&type=chunk) [Exhibits](index=46&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including articles of incorporation, bylaws, forms of stock certificates, various management and compensation agreements, and required certifications by the CEO and CFO - The report includes standard corporate governance documents, management compensation plans, and required SEC certifications as exhibits[179](index=179&type=chunk)

[Executive Summary & Dividend Announcement](index=1&type=section&id=Executive%20Summary%20%26%20Dividend%20Announcement) Q1 2025 financial highlights include net income and diluted EPS trends, a declared cash dividend, and management commentary on financial performance and credit quality [Q1 2025 Financial Highlights](index=1&type=section&id=Q1%202025%20Financial%20Highlights) Sound Financial Bancorp, Inc. reported **net income of $1.2 million** for Q1 2025, or **$0.45 diluted EPS**, a decrease from Q4 2024 but an increase from Q1 2024, and declared a cash dividend of **$0.19 per share** Net Income and Diluted EPS Trends (Dollars in thousands) | Metric | Q1 2025 | Q4 2024 | Q1 2024 | | :------------ | :------ | :------ | :------ | | Net Income | $1,200 | $1,900 | $770 | | Diluted EPS | $0.45 | $0.74 | $0.30 | - A cash dividend of **$0.19** per share was declared, payable on May 23, 2025, to stockholders of record as of May 9, 2025[1](index=1&type=chunk) [Management Commentary](index=1&type=section&id=Management%20Commentary) Management highlighted efforts to improve net interest margin by lowering deposit costs and originating higher-rate loans, alongside a focus on expense management, achieving year-over-year reductions through technology investments despite quarter-over-quarter increases, and noted an increase in nonperforming loans primarily due to two specific credits - The President and CEO, Laurie Stewart, noted a **12-basis point** improvement in net interest margin (NIM) compared to the prior quarter, driven by efforts to lower deposit costs and originate new loans at higher rates[2](index=2&type=chunk) - CFO Wes Ochs explained that quarter-over-quarter expense increases were due to typical year-end accrual adjustments and annual first-quarter expenses, however, year-over-year, combined salaries and benefits, and operational expenses decreased due to technology investments[3](index=3&type=chunk) - Nonperforming loans (NPLs) increased by **$2.2 million (28.9%)** to **$9.7 million** at March 31, 2025, mainly due to two specific credits, one of which has since been repaid, with **83%** of NPLs tied to four well-secured loans, and the company actively working towards resolutions[4](index=4&type=chunk) [Financial Performance Overview](index=1&type=section&id=Financial%20Performance%20Overview) This section details key financial metrics, operating results, and income statement components, including net interest income, noninterest income, and noninterest expense [Key Financial Metrics](index=1&type=section&id=Key%20Financial%20Metrics) The company's **total assets increased by 7.6%** quarter-over-quarter to **$1.07 billion**, while **loans held-for-portfolio decreased by 1.5%**, and **total deposits grew by 8.7%** QoQ, improving the **loans-to-deposits ratio to 98%**, with **net interest margin improving to 3.25%** and a significant release of provision for credit losses recorded Q1 2025 Key Financial Performance | Metric | Q1 2025 Value (Millions) | Change QoQ (%) | Change YoY (%) | | :------------------------------------------ | :----------------------- | :------------- | :------------- | | Total assets | $1070.0 | +7.6% | -1.6% | | Loans held-for-portfolio | $886.2 | -1.5% | -1.3% | | Total deposits | $910.3 | +8.7% | -0.7% | | Loans-to-deposits ratio | 98% | -10% | 0% | | Net interest income | $8.1 | -1.8% | +8.2% | | Net interest margin (NIM), annualized | 3.25% | +0.12% | +0.30% | | Provision for credit losses | $-0.203 | -1550% | +515.2% | | Total noninterest income | $1.1 | -5.3% | +0.2% | | Total noninterest expense | $7.9 | +12.1% | +3.4% | | Total nonperforming loans | $9.7 | +28.9% | +6.6% | | Nonperforming loans to total loans | 1.09% | +0.26% | +0.08% | | Allowance for credit losses on loans to total loans | 0.95% | +0.01% | -0.01% | [Operating Results](index=3&type=section&id=Operating%20Results) Operating results for Q1 2025 showed a decrease in net interest income quarter-over-quarter but an increase year-over-year, primarily driven by changes in interest income and expense dynamics, with noninterest income experiencing a slight decrease QoQ due to mortgage servicing rights adjustments and loan sales, while noninterest expense increased QoQ due to annual accruals and data processing costs, but saw some YoY reductions in operations Operating Results (Dollars in thousands, unaudited) | Metric | March 31, 2025 | December 31, 2024 | March 31, 2024 | | :------------------------------------------------ | :------------- | :---------------- | :------------- | | Interest income | $13,706 | $14,736 | $13,760 | | Interest expense | $6,300 | $5,635 | $6,516 | | Net interest income | $7,460 | $8,071 | $8,220 | | (Release of) provision for credit losses | $(203) | $14 | $(33) | | Net interest income after (release of) provision for credit losses | $7,493 | $8,274 | $8,206 | [Net Interest Income after (Release of) Provision for Credit Losses](index=3&type=section&id=Net%20Interest%20Income%20after%20%28Release%20of%29%20Provision%20for%20Credit%20Losses) Net interest income after provision for credit losses decreased quarter-over-quarter but increased year-over-year, with the QoQ decrease due to lower interest income from reduced loan/investment balances and yields, partially offset by lower interest expense from reduced deposit costs, and the YoY increase driven by higher loan yields and lower interest expense from reduced deposit balances and rates, despite lower interest-bearing cash income - The decrease in interest income from Q4 2024 was primarily due to a lower average balance of loans, investments, and interest-earning cash, along with declines in average yields on loans (**8 bps**), interest-bearing cash (**41 bps**), and investments (**57 bps**)[8](index=8&type=chunk) - Interest expense decreased QoQ due to lower average balances and rates paid on all categories of interest-bearing deposits, with the average cost of deposits falling from **2.58%** to **2.37%**[10](index=10&type=chunk) - A release of provision for credit losses of **$203 thousand** was recorded in Q1 2025, compared to a **$14 thousand** provision in Q4 2024 and a **$33 thousand** release in Q1 2024, mainly due to a smaller loan portfolio and reduced unfunded commitments[11](index=11&type=chunk)[14](index=14&type=chunk) [Noninterest Income](index=4&type=section&id=Noninterest%20Income) Total noninterest income decreased slightly quarter-over-quarter but remained stable year-over-year, with the QoQ decline mainly due to a downward adjustment in mortgage servicing rights and fewer loan sales, partially offset by increased earnings from bank-owned life insurance (BOLI) and service charges, and the YoY stability driven by increases in service charges and BOLI earnings, offset by decreases in mortgage servicing income and net gain on loan sales Noninterest Income (Dollars in thousands, unaudited) | Metric | March 31, 2025 | December 31, 2024 | March 31, 2024 | | :-------------------------------------- | :------------- | :---------------- | :------------- | | Service charges and fee income | $684 | $619 | $612 | | Earnings on bank-owned life insurance | $195 | $127 | $177 | | Mortgage servicing income | $269 | $277 | $282 | | Fair value adjustment on mortgage servicing rights | $(99) | $77 | $(65) | | Net gain on sale of loans | $49 | $53 | $90 | | Other income | $0 | $7 | $0 | | Total noninterest income | $1,098 | $1,160 | $1,096 | - QoQ decrease in noninterest income was primarily due to a **$176 thousand** downward adjustment in fair value of mortgage servicing rights and lower loan sales (**$2.0 million** in Q1 2025 vs **$3.5 million** in Q4 2024)[16](index=16&type=chunk)[17](index=17&type=chunk) - QoQ decrease was partially offset by a **$68 thousand** increase in BOLI earnings (due to strategic policy exchange) and a **$65 thousand** increase in service charges and fee income (due to Mastercard volume incentive and higher interchange income)[17](index=17&type=chunk) [Noninterest Expense](index=5&type=section&id=Noninterest%20Expense) Total noninterest expense increased both quarter-over-quarter and year-over-year, with the QoQ increase mainly driven by higher salaries and benefits (due to accrual reversals, annual deferred compensation, 401(k) contributions, and payroll taxes), regulatory assessments, occupancy, data processing, and OREO additions, and the YoY increase primarily due to higher data processing expenses from project amortizations and increased regulatory assessments, partially offset by a decrease in operations expense due to Mastercard reimbursements and cost-saving initiatives Noninterest Expense (Dollars in thousands, unaudited) | Metric | March 31, 2025 | December 31, 2024 | March 31, 2024 | | :-------------------------- | :------------- | :---------------- | :------------- | | Salaries and benefits | $4,595 | $3,920 | $4,543 | | Operations | $1,365 | $1,329 | $1,457 | | Regulatory assessments | $221 | $189 | $189 | | Occupancy | $437 | $409 | $444 | | Data processing | $1,293 | $1,232 | $1,017 | | Net loss (gain) on OREO and repossessed assets | $3 | $(21) | $6 | | Total noninterest expense | $7,914 | $7,058 | $7,656 | - QoQ increase in noninterest expense was primarily due to a **$675 thousand** increase in salaries and benefits (accrual reversals, annual deferred compensation, 401(k), payroll taxes), and increases in regulatory assessments, occupancy, data processing, and OREO[20](index=20&type=chunk) - YoY increase in noninterest expense was mainly due to a **$276 thousand** increase in data processing expenses (project amortizations) and a **$32 thousand** increase in regulatory assessments, partially offset by a **$92 thousand** decrease in operations expense (Mastercard reimbursements, cost savings)[20](index=20&type=chunk)[21](index=21&type=chunk) [Balance Sheet, Capital Management & Credit Quality](index=6&type=section&id=Balance%20Sheet%2C%20Capital%20Management%20%26%20Credit%20Quality) This section provides an overview of assets, liabilities, stockholders' equity, nonperforming assets, and credit quality, including the allowance for credit losses [Assets](index=6&type=section&id=Assets) Total assets increased by **$75.6 million (7.6%)** quarter-over-quarter to **$1.07 billion**, primarily due to a significant increase in cash and cash equivalents, partially offset by a decrease in loans held-for-portfolio, with the QoQ increase in cash being a strategic reversal of reciprocal deposit sales from year-end 2024, and loans held-for-portfolio decreasing due to the payoff of a **$17.0 million** special mention loan - Total assets increased **$75.6 million (7.6%)** to **$1.07 billion** at March 31, 2025, from $993.6 million at December 31, 2024[22](index=22&type=chunk) - Cash and cash equivalents increased **$87.9 million (201.3%)** to **$131.5 million** at March 31, 2025, primarily due to the return of reciprocal deposits to the balance sheet that were strategically sold at the end of 2024[23](index=23&type=chunk) - Loans held-for-portfolio decreased **$13.9 million** to **$886.2 million** at March 31, 2025, mainly due to the payoff of a **$17.0 million** special mention loan[25](index=25&type=chunk) [Nonperforming Assets (NPAs) and Credit Quality](index=6&type=section&id=Nonperforming%20Assets%20%28NPAs%29%20and%20Credit%20Quality) Nonperforming assets (NPAs) increased by **29.4%** quarter-over-quarter to **$9.7 million**, primarily due to the addition of six loans to nonaccrual status, including two commercial real estate loans, while the allowance for credit losses on loans to total loans remained stable at **0.95%** - Nonperforming assets (NPAs) increased **$2.2 million (29.4%)** to **$9.7 million** at March 31, 2025, from $7.5 million at December 31, 2024, primarily due to the addition of six loans totaling **$2.4 million** to nonaccrual status, including two commercial real estate loans[26](index=26&type=chunk) - NPAs to total assets were **0.91%** at March 31, 2025, compared to 0.75% at December 31, 2024, and 0.90% at March 31, 2024[27](index=27&type=chunk) Nonperforming Assets (Dollars in thousands) | Category | March 31, 2025 | December 31, 2024 | March 31, 2024 | | :------------------------ | :------------- | :---------------- | :------------- | | Total nonperforming loans | $9,653 | $7,491 | $9,053 | | OREO and Other Repossessed Assets | $41 | $0 | $690 | | Total NPAs | $9,694 | $7,491 | $9,743 | [Allowance for Credit Losses](index=8&type=section&id=Allowance%20for%20Credit%20Losses) The allowance for credit losses on loans decreased slightly to $8.39 million at March 31, 2025, reflecting a release of provision during the quarter, with the ratio of allowance for credit losses on loans to total loans remaining stable at 0.95% Allowance for Credit Losses (Dollars in thousands, unaudited) | Metric | March 31, 2025 | December 31, 2024 | March 31, 2024 | | :------------------------------------------------ | :------------- | :---------------- | :------------- | | Allowance for Credit Losses on Loans (end of period) | $8,393 | $8,499 | $8,598 | | (Release of) provision for credit losses during the period | $(85) | $(73) | $(106) | | Net charge-offs during the period | $(21) | $(13) | $(56) | | Allowance for credit losses on loans to total loans | 0.95% | 0.94% | 0.96% | | Allowance for credit losses on loans to total nonperforming loans | 86.95% | 113.46% | 94.97% | [Liabilities](index=8&type=section&id=Liabilities) Total deposits increased by **8.7%** quarter-over-quarter to **$910.3 million**, primarily due to the return of reciprocal deposits and a strategic reduction in high-cost money market deposits, with noninterest-bearing deposits representing **13.9%** of total deposits - Total deposits increased **$72.5 million (8.7%)** to **$910.3 million** at March 31, 2025, from $837.8 million at December 31, 2024, primarily due to the return of reciprocal deposits and a decrease in one high-cost money market deposit relationship[30](index=30&type=chunk) - Noninterest-bearing deposits decreased **$5.8 million (4.4%)** to **$126.7 million** at March 31, 2025, representing **13.9%** of total deposits[30](index=30&type=chunk) - FHLB advances totaled **$25.0 million** at March 31, 2025, consistent with prior periods, and subordinated notes, net, totaled **$11.8 million**[31](index=31&type=chunk) [Stockholders' Equity](index=8&type=section&id=Stockholders%27%20Equity) Stockholders' equity increased by **$765 thousand (0.7%)** quarter-over-quarter to **$104.4 million**, driven by net income, share-based compensation, and common stock options exercised, partially offset by cash dividends and an increase in accumulated other comprehensive loss - Stockholders' equity totaled **$104.4 million** at March 31, 2025, an increase of **$765 thousand (0.7%)** from December 31, 2024[32](index=32&type=chunk) - The increase in equity was primarily due to **$1.2 million** of net income, **$81 thousand** in share-based compensation, and **$21 thousand** from common stock options exercised, partially offset by **$487 thousand** in cash dividends and a **$17 thousand** increase in accumulated other comprehensive loss[32](index=32&type=chunk) [Company Information & Forward-Looking Statements](index=9&type=section&id=Company%20Information%20%26%20Forward-Looking%20Statements) This section outlines the company's profile and includes a disclaimer regarding forward-looking statements and associated risks [Company Profile](index=9&type=section&id=Company%20Profile) Sound Financial Bancorp, Inc. is the holding company for Sound Community Bank, headquartered in Seattle, Washington, with several full-service branches and a loan production office, and is a Fannie Mae Approved Lender and Seller/Servicer - Sound Financial Bancorp, Inc. is the parent company of Sound Community Bank, headquartered in Seattle, Washington[33](index=33&type=chunk) - Sound Community Bank operates full-service branches in Seattle, Tacoma, Mountlake Terrace, Sequim, Port Angeles, Port Ludlow, and University Place, and is a Fannie Mae Approved Lender and Seller/Servicer[33](index=33&type=chunk) [Forward-Looking Statements Disclaimer](index=9&type=section&id=Forward-Looking%20Statements%20Disclaimer) The report contains forward-looking statements, identified by terms like 'will likely result' or 'are expected to,' which are based on assumptions and subject to various risks and uncertainties, cautioning readers not to place undue reliance on these statements as actual results may differ materially due to factors such as economic conditions, interest rate changes, inflation, bank failures, regulatory changes, and cybersecurity risks, with the Company disclaiming any obligation to revise these statements - The press release contains 'forward-looking statements' as defined by the Private Securities Litigation Reform Act of 1995, based on assumptions and expectations, and subject to risks and uncertainties[34](index=34&type=chunk) - Factors that could cause actual results to differ materially include adverse economic conditions, changes in interest rates, inflation, bank failures, changes in consumer habits, lending risks, real estate fluctuations, regulatory changes, IT disruptions, and geopolitical tensions[35](index=35&type=chunk) - The Company specifically disclaims any obligation to revise any forward-looking statement to reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such statement[36](index=36&type=chunk) [Financial Statements & Ratios](index=10&type=section&id=Financial%20Statements%20%26%20Ratios) This section presents consolidated income statements, balance sheets, key financial ratios, per common share data, average balance and yield information, and detailed loan, deposit, and credit quality data [Consolidated Income Statements](index=10&type=section&id=Consolidated%20Income%20Statements) The consolidated income statement provides a detailed breakdown of revenues and expenses over the past five quarters, showing trends in interest income, interest expense, net interest income, provision for credit losses, noninterest income, noninterest expense, and ultimately net income Consolidated Income Statements (Dollars in thousands, unaudited) | Metric | March 31, 2025 | December 31, 2024 | September 30, 2024 | June 30, 2024 | March 31, 2024 | | :------------------------------------------------ | :------------- | :---------------- | :----------------- | :------------ | :------------- | | Interest income | $13,706 | $14,736 | $14,838 | $14,039 | $13,760 | | Interest expense | $5,635 | $6,516 | $6,965 | $6,591 | $6,300 | | Net interest income | $8,071 | $8,220 | $7,873 | $7,448 | $7,460 | | (Release of) provision for credit losses | $(203) | $14 | $8 | $(109) | $(33) | | Net interest income after (release of) provision for credit losses | $8,274 | $8,206 | $7,865 | $7,557 | $7,493 | | Total noninterest income | $1,098 | $1,160 | $1,235 | $1,162 | $1,096 | | Total noninterest expense | $7,914 | $7,058 | $7,679 | $7,737 | $7,656 | | Income before provision for income taxes | $1,458 | $2,308 | $1,421 | $982 | $933 | | Provision for income taxes | $291 | $389 | $267 | $187 | $163 | | Net income | $1,167 | $1,919 | $1,154 | $795 | $770 | [Consolidated Balance Sheets](index=11&type=section&id=Consolidated%20Balance%20Sheets) The consolidated balance sheet presents the company's financial position at the end of the past five quarters, detailing assets, liabilities, and stockholders' equity, with key changes including an increase in cash and cash equivalents and total deposits, alongside a decrease in loans held-for-portfolio Consolidated Balance Sheets (Dollars in thousands, unaudited) | Metric | March 31, 2025 | December 31, 2024 | September 30, 2024 | June 30, 2024 | March 31, 2024 | | :------------------------------------------------ | :------------- | :---------------- | :----------------- | :------------ | :------------- | | Cash and cash equivalents | $131,494 | $43,641 | $148,930 | $135,111 | $137,977 | | Loans held-for-portfolio, net | $877,833 | $891,672 | $893,148 | $880,781 | $889,279 | | Total Assets | $1,069,186 | $993,633 | $1,100,930 | $1,074,859 | $1,086,685 | | Total deposits | $910,347 | $837,799 | $930,197 | $906,769 | $916,883 | | Total Liabilities | $964,755 | $889,967 | $998,691 | $973,512 | $985,693 | | Total Stockholders' Equity | $104,431 | $103,666 | $102,239 | $101,347 | $100,992 | [Key Financial Ratios](index=12&type=section&id=Key%20Financial%20Ratios) Key financial ratios for Q1 2025 show an annualized return on average assets of 0.45% and return on average equity of 4.53%, with the annualized net interest margin improving to 3.25%, while the efficiency ratio increased to 86.31% Key Financial Ratios (unaudited) | Metric | March 31, 2025 | December 31, 2024 | September 30, 2024 | June 30, 2024 | March 31, 2024 | | :-------------------------------- | :------------- | :---------------- | :----------------- | :------------ | :------------- | | Annualized return on average assets | 0.45% | 0.70% | 0.42% | 0.30% | 0.29% | | Annualized return on average equity | 4.53% | 7.40% | 4.50% | 3.17% | 3.06% | | Annualized net interest margin | 3.25% | 3.13% | 2.98% | 2.92% | 2.95% | | Annualized efficiency ratio | 86.31% | 75.25% | 84.31% | 89.86% | 89.48% | [Per Common Share Data](index=12&type=section&id=Per%20Common%20Share%20Data) Per common share data for Q1 2025 shows basic and diluted earnings per share at **$0.45**, with book value per share increasing to **$40.70** Per Common Share Data (unaudited) | Metric | March 31, 2025 | December 31, 2024 | September 30, 2024 | June 30, 2024 | March 31, 2024 | | :------------------------------------ | :------------- | :---------------- | :----------------- | :------------ | :------------- | | Basic earnings per share | $0.45 | $0.75 | $0.45 | $0.31 | $0.30 | | Diluted earnings per share | $0.45 | $0.74 | $0.45 | $0.31 | $0.30 | | Weighted-average basic shares outstanding | 2,554,265 | 2,547,210 | 2,544,233 | 2,540,538 | 2,539,213 | | Weighted-average diluted shares outstanding | 2,578,609 | 2,578,771 | 2,569,368 | 2,559,015 | 2,556,958 | | Common shares outstanding at period-end | 2,566,069 | 2,564,907 | 2,564,095 | 2,557,284 | 2,558,546 | | Book value per share | $40.70 | $40.42 | $39.87 | $39.63 | $39.47 | [Average Balance, Average Yield Earned, and Average Rate Paid](index=13&type=section&id=Average%20Balance%2C%20Average%20Yield%20Earned%2C%20and%20Average%20Rate%20Paid) This section provides a detailed breakdown of average balances, interest earned/paid, and yields/rates for interest-earning assets and interest-bearing liabilities over the past three quarters, highlighting the average yield on loans at 5.69% and the average cost of total funding at 2.46% for Q1 2025 Average Balance, Average Yield Earned, and Average Rate Paid (Dollars in thousands, unaudited) | Metric | March 31, 2025 | December 31, 2024 | March 31, 2024 | | :------------------------------------ | :------------- | :---------------- | :------------- | | Average Outstanding Balance - Loans receivable | $896,822 | $900,832 | $895,430 | | Interest Earned - Loans receivable | $12,588 | $13,070 | $12,233 | | Yield - Loans receivable | 5.69% | 5.77% | 5.49% | | Total interest earning assets | $1,005,745 | $1,044,507 | $1,016,829 | | Total interest bearing liabilities | $803,050 | $838,560 | $811,436 | | Net interest income/spread | $8,071 | $8,220 | $7,460 | | Net interest margin | 3.25% | 3.13% | 2.95% | | Average cost of total funding | 2.46% | 2.68% | 2.68% | [Loans](index=14&type=section&id=Loans) The loan portfolio decreased slightly to $887.8 million at March 31, 2025, with notable decreases in one-to-four family and construction and land loans, partially offset by increases in commercial and multifamily and home equity loans Loans by Type (Dollars in thousands, unaudited) | Loan Type | March 31, 2025 | December 31, 2024 | March 31, 2024 | | :------------------------ | :------------- | :---------------- | :------------- | | One-to-four family | $262,457 | $269,684 | $279,213 | | Home equity | $28,112 | $26,686 | $24,380 | | Commercial and multifamily| $392,798 | $371,516 | $324,483 | | Construction and land | $42,492 | $73,077 | $111,726 | | Manufactured homes | $42,448 | $41,128 | $37,583 | | Floating homes | $86,626 | $86,411 | $84,237 | | Other consumer | $18,224 | $17,720 | $18,847 | | Commercial business loans | $14,690 | $15,605 | $19,075 | | Total loans | $887,847 | $901,827 | $899,544 | [Deposits](index=14&type=section&id=Deposits) Total deposits increased to $910.3 million at March 31, 2025, with a notable increase in money market deposits, while noninterest-bearing demand deposits decreased slightly Deposits by Type (Dollars in thousands, unaudited) | Deposit Type | March 31, 2025 | December 31, 2024 | March 31, 2024 | | :------------------------ | :------------- | :---------------- | :------------- | | Noninterest-bearing demand| $126,687 | $132,532 | $128,666 | | Interest-bearing demand | $143,595 | $142,126 | $159,178 | | Savings | $63,533 | $61,252 | $65,723 | | Money market | $287,058 | $206,067 | $241,976 | | Certificates | $289,474 | $295,822 | $321,340 | | Total deposits | $910,347 | $837,799 | $916,883 | [Credit Quality Data](index=15&type=section&id=Credit%20Quality%20Data) Credit quality data shows an increase in total nonperforming loans and assets quarter-over-quarter, with the allowance for credit losses on loans to total nonperforming loans decreasing to 86.95%, indicating a lower coverage ratio compared to the previous quarter Credit Quality Data (Dollars in thousands, unaudited) | Metric | March 31, 2025 | December 31, 2024 | March 31, 2024 | | :------------------------------------------------ | :------------- | :---------------- | :------------- | | Total nonperforming loans | $9,653 | $7,491 | $9,053 | | OREO and other repossessed assets | $41 | $0 | $690 | | Total nonperforming assets | $9,694 | $7,491 | $9,743 | | Net charge-offs during the quarter | $(21) | $(13) | $(56) | | Provision for (release of) credit losses during the quarter | $(203) | $14 | $(33) | | Allowance for credit losses - loans | $8,393 | $8,499 | $8,598 | | Allowance for credit losses - loans to total loans | 0.95% | 0.94% | 0.96% | | Allowance for credit losses - loans to total nonperforming loans | 86.95% | 113.46% | 94.97% | | Nonperforming loans to total loans | 1.09% | 0.83% | 1.01% | | Nonperforming assets to total assets | 0.91% | 0.75% | 0.90% | [Other Statistics](index=15&type=section&id=Other%20Statistics) Other key statistics for Q1 2025 include a **loans-to-deposits ratio of 97.53%** and noninterest-bearing deposits representing **13.92%** of total deposits, with average total assets for the quarter at **$1.05 billion** and average total equity at **$104.5 million** Other Statistics (Dollars in thousands, unaudited) | Metric | March 31, 2025 | December 31, 2024 | September 30, 2024 | June 30, 2024 | March 31, 2024 | | :---------------------------------------- | :------------- | :---------------- | :----------------- | :------------ | :------------- | | Total loans to total deposits | 97.53% | 107.64% | 97.13% | 98.27% | 98.11% | | Noninterest-bearing deposits to total deposits | 13.92% | 15.82% | 13.95% | 13.78% | 14.03% | | Average total assets for the quarter | $1,051,135 | $1,089,067 | $1,095,404 | $1,070,579 | $1,062,036 | | Average total equity for the quarter | $104,543 | $103,181 | $102,059 | $100,961 | $101,292 | [Contact Information](index=15&type=section&id=Contact%20Information) Contact information for financial inquiries and media inquiries is provided [Contact Details](index=15&type=section&id=Contact%20Details) Contact information for financial inquiries is provided for Wes Ochs, Executive Vice President/CFO, and for media inquiries for Laurie Stewart, President/CEO - For financial inquiries, contact Wes Ochs, Executive Vice President/CFO at (206) 436-8587[49](index=49&type=chunk) - For media inquiries, contact Laurie Stewart, President/CEO at (206) 436-1495[49](index=49&type=chunk)

Core Viewpoint - Sound Financial Bancorp, Inc. reported a net income of $1.2 million for Q1 2025, a decrease from $1.9 million in Q4 2024, but an increase from $770 thousand in Q1 2024, alongside a cash dividend declaration of $0.19 per share [1][2][40] Financial Performance - Total assets increased by $75.6 million or 7.6% to $1.07 billion at March 31, 2025, compared to $993.6 million at December 31, 2024, but decreased by $17.5 million or 1.6% from $1.09 billion at March 31, 2024 [6] - Loans held-for-portfolio decreased by $13.9 million or 1.5% to $886.2 million at March 31, 2025, compared to $900.2 million at December 31, 2024, and decreased by $11.7 million or 1.3% from $897.9 million at March 31, 2024 [6][33] - Total deposits increased by $72.5 million or 8.7% to $910.3 million at March 31, 2025, from $837.8 million at December 31, 2024, but decreased by $6.5 million or 0.7% from $916.9 million at March 31, 2024 [7] Income and Expenses - Net interest income decreased by $149 thousand or 1.8% to $8.1 million for Q1 2025, compared to $8.2 million for Q4 2024, but increased by $611 thousand or 8.2% from $7.5 million for Q1 2024 [9] - Total noninterest income decreased by $62 thousand or 5.3% to $1.1 million for Q1 2025, compared to Q4 2024, and was virtually unchanged compared to Q1 2024 [11][24] - Total noninterest expense increased by $856 thousand or 12.1% to $7.9 million for Q1 2025, compared to Q4 2024, and increased by $258 thousand or 3.4% compared to Q1 2024 [11][25] Credit Quality - Total nonperforming loans increased by $2.2 million or 28.9% to $9.7 million at March 31, 2025, from $7.5 million at December 31, 2024, and increased by $600 thousand or 6.6% from $9.1 million at March 31, 2024 [8] - The allowance for credit losses on loans to total loans outstanding was 0.95% at March 31, 2025, compared to 0.94% at December 31, 2024, and 0.96% at March 31, 2024 [10][35] Capital Management - Stockholders' equity totaled $104.4 million at March 31, 2025, an increase of $765 thousand or 0.7% from $103.7 million at December 31, 2024, and an increase of $3.4 million or 3.4% from $101.0 million at March 31, 2024 [40]

Loan and Credit Quality - Modified loans to troubled borrowers totaled $1.3 million at December 31, 2024, down from $1.7 million at December 31, 2023[94]. - Classified assets amounted to $27.4 million at December 31, 2024, representing 26.4% of equity capital and 2.8% of total assets[98]. - The allowance for credit losses (ACL) on loans was $8.5 million, or 0.94% of the total loan portfolio, compared to $8.8 million, or 0.98% at December 31, 2023[102]. - Nonaccrual loans increased to $7.5 million, or 0.83% of total loans outstanding, from $3.6 million, or 0.40% in the previous year[105]. - The ACL as a percentage of nonperforming loans decreased to 113.46% at December 31, 2024, from 246.34% at December 31, 2023[108]. - Net charge-offs were $100 thousand for the year ended December 31, 2024, compared to $163 thousand for the year ended December 31, 2023[108]. - Special mention assets totaled $18.7 million at December 31, 2024[97]. - The company maintains an allowance for credit losses on loans using the Current Expected Credit Loss (CECL) methodology, which reflects management's best estimate of lifetime expected credit losses[209]. Deposits and Funding - Total deposits increased by $11.3 million to $837.8 million at December 31, 2024, primarily due to a $52.0 million, or 33.8%, increase in money market accounts[122]. - Core deposits represented approximately 87.3% of total deposits at December 31, 2024, compared to 86.6% at December 31, 2023[119]. - Interest-bearing demand and savings accounts decreased by $26.2 million, or 15.6%, and $8.2 million, or 11.8%, respectively, from December 31, 2023, to December 31, 2024[122]. - Noninterest-bearing demand accounts increased by $6.0 million, or 4.8%, in 2024 compared to 2023[122]. - The company had $25.0 million of outstanding FHLB fixed-rate advances at December 31, 2024, with maturities ranging from January 2026 to January 2028[129]. - Approximately $167.3 million of the deposit portfolio was uninsured as of December 31, 2024[125]. - The company had no brokered deposits at December 31, 2024, compared to $5.0 million of brokered money market accounts at December 31, 2023[119]. - The total amount available under the FHLB agreement at December 31, 2024, was $172.3 million[129]. Regulatory and Compliance - The company is subject to extensive regulatory oversight from the FDIC and WDFI, which includes the ability to require higher loan loss reserves[140]. - The implementation of the Current Expected Credit Loss (CECL) standard may reduce the company's retained earnings and affect regulatory capital[156]. - The company must maintain specified levels of regulatory capital under FDIC and FRB regulations, with the CBLR framework providing a simplified measure of capital adequacy[152]. - The FDIC has increased initial base deposit insurance assessment rates by two basis points starting in 2023, which may impact the company's operating expenses[147]. - Sound Financial Bancorp is subject to comprehensive regulation by the Federal Reserve under the Bank Holding Company Act, ensuring safe and sound operations[177]. - The Federal Reserve limits the payment of cash dividends by bank holding companies if net income is insufficient to cover both the cash dividend and a rate of earnings retention[185]. - Sound Community Bank is required to disclose its privacy policy and inform consumers of their rights to opt out of certain practices[165]. - Non-compliance with federal or state privacy and cybersecurity laws could lead to substantial regulatory fines and reputational harm[167]. Economic and Market Conditions - Economic conditions in the Puget Sound area significantly impact the bank's loan repayment capabilities and overall financial performance[200]. - The bank's loan portfolio includes higher-risk loans, such as commercial and multifamily real estate loans, which are sensitive to economic fluctuations[204]. - The COVID-19 pandemic has led to increased uncertainty in the commercial real estate market, affecting demand for office space[204]. - The bank's financial performance is influenced by external economic factors, including inflation and monetary policy changes[202]. Risk Management - The effectiveness of the company's risk management framework is critical, as ineffective management could lead to unexpected losses and materially affect financial results[254]. - The company faces ongoing challenges from an increasing prevalence of fraud and financial crimes, which have resulted in financial losses despite preventive measures[236]. - The company has not incurred substantial losses from cyber-attacks to date, but ongoing advancements in internet and mobile banking heighten exposure to cybersecurity risks[223]. - The reliance on external vendors for essential operations exposes the company to operational and information security risks, which could disrupt operations and impair customer service[229]. - The adoption of Artificial Intelligence (AI) introduces model risk and regulatory compliance concerns, particularly regarding transparency and explainability in decision-making processes[231]. Employee and Workforce - As of December 31, 2024, Sound Community Bank employed 108 full-time and 15 part-time employees, with a workforce composition of approximately 62% female[194][195]. - The average employee tenure at Sound Community Bank is 6.14 years, indicating strong employee engagement[195]. Financial Performance and Strategy - The company had $1.3 million in unrestricted cash as of December 31, 2024, to support dividend and debt payments[260]. - The company's investment strategy emphasizes safer investments, prioritizing risk management over yield[112]. - The company relies on competitive pricing policies, marketing, and client service to attract and retain deposits[119]. - The company did not recognize any credit losses on investment securities during the year ended December 31, 2024[116]. - The company faces risks related to mortgage banking income volatility, particularly in a rising interest rate environment, which may decrease loan originations and revenues[219]. - Increased prepayment rates can negatively impact the fair value of mortgage servicing rights and loan administration fee income[220].

Company Information - Sound Financial Bancorp, Inc. is a bank holding company and the parent company of Sound Community Bank [2] - The company is headquartered in Seattle, Washington, and operates full-service branches in several locations including Seattle, Tacoma, Mountlake Terrace, Sequim, Port Angeles, Port Ludlow, and University Place [2] - Sound Community Bank is a Fannie Mae Approved Lender and Seller/Servicer, with one Loan Production Office located in the Madison Park neighborhood of Seattle [2] Upcoming Events - The annual meeting of shareholders is scheduled for May 27, 2025 [1] - The record date for shareholders entitled to vote at the annual meeting is March 31, 2025 [1] Contact Information - For additional information, Laurie Stewart serves as the President and CEO, and can be contacted at 206.436.1495 [3]