Core Insights - Sound Financial Bancorp, Inc. (NASDAQ:SFBC) operates in a competitive banking landscape and is evaluated based on its Return on Invested Capital (ROIC) compared to its Weighted Average Cost of Capital (WACC) [1] Financial Performance - SFBC has a ROIC of 4.54% and a WACC of 17.25%, resulting in a ROIC to WACC ratio of 0.26, indicating it is not generating returns above its cost of capital [2][5] - SB Financial Group, Inc. (SBFG) leads with a ROIC of 5.93% and a WACC of 4.25%, achieving a ROIC to WACC ratio of 1.39, showcasing high capital efficiency [2][5] - FS Bancorp, Inc. (FSBW) has a ROIC of 8.09% and a WACC of 16.64%, resulting in a ROIC to WACC ratio of 0.48, indicating better capital utilization compared to SFBC [3][5] - Home Federal Bancorp, Inc. of Louisiana (HFBL) has a ROIC to WACC ratio of 0.04, reflecting significant challenges in generating returns above its cost of capital [3] - Southern Missouri Bancorp, Inc. (SMBC) and IF Bancorp, Inc. (IROQ) have ROIC to WACC ratios of 0.07 and 0.19, respectively, indicating struggles similar to SFBC in achieving returns that surpass their cost of capital [4]

Sound Financial Bancorp, Inc. Q4 2025 Results Seattle, WA, January 27, 2026 — Sound Financial Bancorp, Inc. (the "Company") (Nasdaq: SFBC), the holding company for Sound Community Bank (the "Bank"), today reported net income of $2.2 million for the quarter ended December 31, 2025, or $0.87 diluted earnings per share, compared to net income of $1.7 million, or $0.66 diluted earnings per share, for the quarter ended September 30, 2025, and $1.9 million, or $0.74 diluted earnings per share, for the quarter end ...

Core Viewpoint - Sound Financial Bancorp, Inc. reported a net income of $2.2 million for Q4 2025, reflecting a year-over-year increase in earnings and a cash dividend declaration of $0.21 per share [1][2]. Financial Performance - Total assets increased by $32.0 million, or 3.0%, to $1.09 billion at December 31, 2025, compared to $1.06 billion at September 30, 2025, and increased by $98.5 million, or 9.9%, from $993.6 million at December 31, 2024 [6]. - Loans held-for-portfolio decreased by $4.2 million, or 0.5%, to $905.5 million at December 31, 2025, compared to $909.7 million at September 30, 2025, but increased by $5.4 million, or 0.6%, from $900.2 million at December 31, 2024 [6]. - Total deposits increased by $49.9 million, or 5.6%, to $948.9 million at December 31, 2025, from $898.9 million at September 30, 2025, and increased by $111.1 million, or 13.3%, from $837.8 million at December 31, 2024 [7]. - Net interest income decreased by $278 thousand, or 3.1%, to $8.7 million for Q4 2025, compared to $8.9 million for Q3 2025, but increased by $442 thousand, or 5.4%, from $8.2 million for Q4 2024 [8]. - Net interest margin (NIM) was 3.36% for Q4 2025, down from 3.48% for Q3 2025, but up from 3.13% for Q4 2024 [18][24]. Credit Quality - Credit quality trends remained stable, with nonperforming loans increasing by $3.1 million, or 112.8%, to $5.8 million at December 31, 2025, from $2.7 million at September 30, 2025 [11][42]. - The allowance for credit losses on loans to total loans outstanding was 0.95% at December 31, 2025, compared to 0.94% at both September 30, 2025, and December 31, 2024 [43]. Noninterest Income and Expense - Total noninterest income decreased by $14 thousand, or 1.6%, to $867 thousand for Q4 2025, compared to $881 thousand for Q3 2025, and decreased by $293 thousand, or 25.3%, compared to $1.16 million for Q4 2024 [10][30]. - Total noninterest expense decreased by $836 thousand, or 10.9%, to $6.8 million for Q4 2025, compared to $7.5 million for Q4 2024 [11][35]. Balance Sheet and Capital Management - Cash and cash equivalents increased by $37.3 million, or 36.9%, to $138.5 million at December 31, 2025, compared to $101.2 million at September 30, 2025 [37]. - The company maintained capital levels in excess of regulatory requirements and was categorized as "well-capitalized" at December 31, 2025 [15].

Core Viewpoint - Sound Financial Bancorp, Inc. reported a net income of $2.2 million for Q4 2025, reflecting a year-over-year increase in earnings and a cash dividend declaration of $0.21 per share [1][2]. Financial Performance - Net income for Q4 2025 was $2.2 million, or $0.87 diluted earnings per share, compared to $1.7 million, or $0.66 per share in Q3 2025, and $1.9 million, or $0.74 per share in Q4 2024 [1]. - Total assets increased by $32.0 million, or 3.0%, to $1.09 billion at December 31, 2025, from $1.06 billion at September 30, 2025, and increased by $98.5 million, or 9.9%, from $993.6 million at December 31, 2024 [5][30]. - Total deposits rose by $49.9 million, or 5.6%, to $948.9 million at December 31, 2025, compared to $898.9 million at September 30, 2025, and increased by $111.1 million, or 13.3%, from $837.8 million at December 31, 2024 [6][30]. Loan and Deposit Trends - Loans held-for-portfolio decreased by $4.2 million, or 0.5%, to $905.5 million at December 31, 2025, compared to $909.7 million at September 30, 2025, but increased by $5.4 million, or 0.6%, from $900.2 million at December 31, 2024 [5][35]. - The loans-to-deposits ratio was 96% at December 31, 2025, down from 101.45% at September 30, 2025, and 108% at December 31, 2024 [7]. Credit Quality - Nonperforming loans increased by $3.1 million, or 112.8%, to $5.8 million at December 31, 2025, from $2.7 million at September 30, 2025, but decreased by $1.7 million, or 22.8%, from $7.5 million at December 31, 2024 [7][36]. - The allowance for credit losses on loans to total loans outstanding was 0.95% at December 31, 2025, compared to 0.94% at both September 30, 2025, and December 31, 2024 [38]. Income and Expenses - Net interest income decreased by $278 thousand, or 3.1%, to $8.7 million for Q4 2025, compared to $8.9 million for Q3 2025, but increased by $442 thousand, or 5.4%, from $8.2 million for Q4 2024 [8][11]. - Total noninterest income decreased by $14 thousand, or 1.6%, to $867 thousand for Q4 2025, compared to Q3 2025, and decreased by $293 thousand, or 25.3%, compared to Q4 2024 [10][26]. - Total noninterest expense decreased by $836 thousand, or 10.9%, to $6.8 million for Q4 2025, compared to Q3 2025, and decreased by $218 thousand, or 3.1%, compared to Q4 2024 [10][30]. Operational Insights - The company emphasized consistent expense control and operational improvements, positioning itself for future recovery despite challenges in the mortgage market [2][3]. - The CEO noted that every employee contributed to the results, demonstrating an ability to do more with less [2].

Core Viewpoint - Columbia Banking System is positioned as a superior investment compared to Sound Financial Bancorp based on various financial metrics and analyst recommendations [1]. Dividends - Columbia Banking System offers an annual dividend of $1.48 per share with a yield of 5.1%, while Sound Financial Bancorp pays $0.76 per share with a yield of 1.8% [2]. - Columbia Banking System has a payout ratio of 66.7% of its earnings, compared to 28.8% for Sound Financial Bancorp, indicating a stronger dividend growth potential [2]. - Columbia Banking System has increased its dividend for 4 consecutive years, whereas Sound Financial Bancorp has done so for 2 years [2]. Analyst Recommendations - Columbia Banking System has a consensus rating score of 2.33, with 11 hold ratings, 3 buy ratings, and 1 strong buy rating [4]. - Sound Financial Bancorp has a lower consensus rating score of 2.00, with only 1 hold rating and no buy or strong buy ratings [4]. - Analysts suggest a target price of $29.58 for Columbia Banking System, indicating a potential upside of 2.54% [5]. Earnings & Valuation - Columbia Banking System reported gross revenue of $2.97 billion and net income of $533.67 million, with an earnings per share (EPS) of $2.22 and a price-to-earnings (P/E) ratio of 13.00 [7]. - In contrast, Sound Financial Bancorp has gross revenue of $62.03 million, net income of $4.64 million, an EPS of $2.64, and a P/E ratio of 16.37 [7]. - Columbia Banking System is trading at a lower P/E ratio, suggesting it is more affordable compared to Sound Financial Bancorp [7]. Profitability - Columbia Banking System has a net margin of 15.98%, return on equity of 11.13%, and return on assets of 1.18% [9]. - Sound Financial Bancorp shows lower profitability metrics with a net margin of 10.97%, return on equity of 6.48%, and return on assets of 0.65% [9]. Institutional and Insider Ownership - Institutional investors hold 92.5% of Columbia Banking System shares, while 68.9% of Sound Financial Bancorp shares are held by institutional investors [10]. - Insider ownership is 0.7% for Columbia Banking System and 12.4% for Sound Financial Bancorp, indicating stronger institutional confidence in Columbia Banking System [10]. Summary - Columbia Banking System outperforms Sound Financial Bancorp in 14 out of 18 comparative factors, highlighting its overall stronger financial position and investment potential [11].

Financial Position - Total assets increased by $66.5 million, or 6.7%, to $1.06 billion at September 30, 2025, from $993.6 million at December 31, 2024[102] - Stockholders' equity stood at $107.5 million as of September 30, 2025[98] - Total stockholders' equity increased by $3.8 million, or 3.7%, to $107.5 million at September 30, 2025, from $103.7 million at December 31, 2024[121] - Total deposits rose by $61.1 million, or 7.3%, to $898.9 million at September 30, 2025, compared to $837.8 million at December 31, 2024[117] - Uninsured deposits totaled $168.6 million at September 30, 2025, representing 18.8% of total deposits, compared to $167.3 million, or 20.0% of total deposits as of December 31, 2024[119] Loan Portfolio - Loans held-for-portfolio increased by $9.5 million, or 1.1%, to $901.2 million at September 30, 2025, with commercial and multifamily loans up by $37.3 million, or 10.0%[105] - Home equity loans increased by $3.2 million, or 12.1%, reflecting high demand for liquidity among homeowners[105] - Construction and land loans declined by $20.3 million, or 27.8%, due to project completions and a slowdown in new financing activities[106] - At September 30, 2025, commercial and multifamily real estate loans accounted for 44.8% of total loans, while one-to-four family loans accounted for 31.5%[107] - Loans held-for-sale decreased to $271 thousand at September 30, 2025, from $487 thousand at December 31, 2024, due to timing of mortgage originations and sales[108] Income and Expenses - Net income for Q3 2025 increased by $541 thousand, or 46.9%, to $1.7 million, compared to $1.2 million in Q3 2024, driven by strong growth in net interest income[128] - For the nine months ended September 30, 2025, net income rose by $2.2 million, or 80.7%, to $4.9 million, primarily due to higher net interest income[129] - Total interest income for Q3 2025 decreased by $186 thousand, or 1.3%, to $14.7 million, primarily due to a decline in cash and cash equivalents[130] - Total interest income increased by $635 thousand, or 1.5%, to $43.3 million for the nine months ended September 30, 2025, driven by a higher average loan balance and a 33 basis points increase in average yield on loans[134] - Total noninterest income decreased by $354 thousand, or 28.7%, to $881 thousand for the three months ended September 30, 2025, compared to $1.2 million for the same period in 2024[150] Interest and Yield - Interest income from loans increased by $636 thousand, or 4.9%, to $13.5 million in Q3 2025, with an average yield on loans rising to 5.89%[131] - The average yield on investments increased to 3.92% in Q3 2025, despite a decrease in the average balance of investments[132] - The net interest rate spread improved to 2.91% in Q3 2025, compared to 2.34% in Q3 2024[127] - Interest income on loans increased by $2.4 million, or 6.3%, to $39.8 million for the nine months ended September 30, 2025, primarily due to a 33 basis point increase in average yield on loans[135] Credit Quality - Nonperforming assets decreased by $4.4 million, or 59.1%, to $3.1 million, representing 0.29% of total assets at September 30, 2025, down from $7.5 million, or 0.75% of total assets at December 31, 2024[113] - The allowance for credit losses on loans increased slightly by $65 thousand, or 0.8%, to $8.564 million[105] - The ratio of net charge-offs during the period to average loans outstanding was (0.02)% for the three months ended September 30, 2025[112] - Total nonaccrual loans decreased by $4.8 million, or 63.7%, to $2.7 million at September 30, 2025, from $7.5 million at December 31, 2024[114] Operational Efficiency - The efficiency ratio improved to 78.16% for the quarter ended September 30, 2025, compared to 84.31% for the same quarter in 2024, primarily due to higher net interest income[156] - Noninterest expenses remained relatively flat, contributing positively to the overall increase in net income[128] - Total noninterest expense remained relatively unchanged at $7.676 million for the three months ended September 30, 2025, compared to $7.679 million for the same period in 2024[153] Dividends and Shareholder Returns - Cash dividends of $0.57 per common share were paid during the nine months ended September 30, 2025, resulting in a dividend payout ratio of 29.75%[162] - The company expects to continue paying quarterly cash dividends, subject to the Board of Directors' discretion[162] Liquidity and Capital Resources - As of September 30, 2025, the company had $108.8 million in cash and cash equivalents, with an additional $271 thousand in loans held-for-sale[169] - The company had the ability to borrow $158.9 million in FHLB advances and $19.5 million through the Federal Reserve's discount window, with $25.0 million in outstanding advances from the FHLB[169] - The company is not aware of any events likely to materially affect its liquidity, capital resources, or operations as of September 30, 2025[169] - The company has commitments to extend credit totaling $54.381 million, which may not represent future cash requirements as many are expected to expire without being drawn upon[173] Regulatory Compliance - The company implemented the CECL model starting January 1, 2023, and is phasing in the full effect of CECL on regulatory capital over a three-year transition period[178] - The company's Community Bank Leverage Ratios (CBLR) were 10.71% for the Bank and 10.14% for the Company, exceeding the minimum requirement of 9%[177] - There have been no material changes in the company's market risk since the 2024 Form 10-K[180]

Financial Performance - Net income for Q3 2025 was $1.7 million, or $0.66 diluted earnings per share, down from $2.1 million, or $0.79 per share in Q2 2025, and up from $1.2 million, or $0.45 per share in Q3 2024[1] - For the nine months ended September 30, 2025, net income increased to $4,914,000, up 80.5% from $2,719,000 in the same period of 2024[39] - Basic earnings per share for Q3 2025 were $0.66, compared to $0.45 in Q3 2024[44] - The annualized return on average assets for Q3 2025 was 0.63%, compared to 0.42% in Q3 2024[42] - The efficiency ratio for Q3 2025 was 78.16%, compared to 84.31% in Q3 2024, indicating improved cost management[42] Income and Expenses - Net interest income decreased by $315 thousand, or 3.4%, to $8.9 million in Q3 2025 compared to $9.3 million in Q2 2025, but increased by $1.1 million, or 13.6%, from $7.9 million in Q3 2024[4] - Noninterest income decreased by $239 thousand, or 21.3%, to $881 thousand for Q3 2025 compared to Q2 2025, and decreased by $354 thousand, or 28.7%, compared to Q3 2024[4] - Salaries and benefits decreased by $210 thousand, or 4.7%, compared to Q3 2024, due to higher deferred salaries from increased loan originations[23] - Data processing expenses increased by $207 thousand, reflecting new software technology deployment in 2025[30] Assets and Liabilities - Total assets increased by $1.9 million, or 0.2%, to $1.06 billion at September 30, 2025, compared to $1.06 billion at June 30, 2025, and decreased by $40.8 million, or 3.7%, from $1.10 billion at September 30, 2024[4] - Total deposits decreased by $516 thousand, or 0.1%, to $898.9 million at September 30, 2025, from $899.5 million at June 30, 2025, and decreased by $31.3 million, or 3.4%, from $930.2 million at September 30, 2024[4] - Cash and cash equivalents decreased by $1.4 million, or 1.4%, from Q2 2025, and by $47.8 million, or 32.1%, from Q3 2024, totaling $101.2 million[25] - Stockholders' equity increased by $1.4 million, or 1.4%, to $107.5 million at September 30, 2025, driven by $1.7 million of net income earned during the quarter[34] Loans and Credit Quality - Loans held-for-portfolio increased by $5.4 million, or 0.6%, to $909.7 million at September 30, 2025, compared to $904.3 million at June 30, 2025, and increased by $8.0 million, or 0.9%, from $901.7 million at September 30, 2024[4] - Nonperforming loans decreased by $649 thousand, or 19.3%, to $2.7 million at September 30, 2025, from $3.4 million at June 30, 2025, and decreased by $5.8 million, or 68.0%, from $8.5 million at September 30, 2024[4] - The provision for credit losses was $55 thousand for Q3 2025, down from $170 thousand in Q2 2025, and up from $8 thousand in Q3 2024[11] - The allowance for credit losses on loans was $8,564 thousand at September 30, 2025, reflecting a provision of $65 thousand during the quarter[32] Market Conditions and Future Outlook - The company anticipates potential impacts from economic conditions, interest rate changes, and regulatory developments on future performance[37] - The average yield on total loans was 5.89% for Q3 2025, down from 6.14% in Q2 2025, and up from 5.70% in Q3 2024[8] - The average cost of deposits was 2.32% for Q3 2025, down from 2.34% in Q2 2025, and down from 2.74% in Q3 2024[10]

Core Insights - Sound Financial Bancorp reported a net income of $1.7 million for Q3 2025, a decrease from $2.1 million in Q2 2025 and an increase from $1.2 million in Q3 2024, with diluted earnings per share of $0.66 [1] - The Board of Directors declared a cash dividend of $0.19 per share, payable on November 21, 2025 [1] Financial Performance - Total assets increased by $1.9 million or 0.2% to $1.06 billion at September 30, 2025, but decreased by $40.8 million or 3.7% from $1.10 billion at September 30, 2024 [5] - Loans held-for-portfolio increased by $5.4 million or 0.6% to $909.7 million at September 30, 2025, compared to $901.7 million at September 30, 2024 [5][35] - Total deposits decreased by $516 thousand or 0.1% to $898.9 million at September 30, 2025, and decreased by $31.3 million or 3.4% from $930.2 million at September 30, 2024 [6][40] Interest Income and Expenses - Net interest income decreased by $315 thousand or 3.4% to $8.9 million for Q3 2025, but increased by $1.1 million or 13.6% from $7.9 million in Q3 2024 [7][12] - The net interest margin was 3.48% for Q3 2025, down from 3.67% in Q2 2025 and up from 2.98% in Q3 2024 [8] - Interest expense increased by $52 thousand or 0.9% to $5.7 million for Q3 2025, compared to Q2 2025 [16] Credit Quality - Total nonperforming loans decreased by $649 thousand or 19.3% to $2.7 million at September 30, 2025, compared to the previous quarter [7] - A provision for credit losses of $55 thousand was recorded for Q3 2025, down from $170 thousand in Q2 2025 [9][17] - The allowance for credit losses on loans to total loans outstanding was 0.94% at September 30, 2025, compared to 0.95% at September 30, 2024 [9][37] Noninterest Income and Expenses - Total noninterest income decreased by $239 thousand or 21.3% to $881 thousand for Q3 2025, compared to Q2 2025 [10][24] - Noninterest expense remained stable at $7.7 million for Q3 2025, with slight fluctuations in specific categories [28][30] Capital Management - Stockholders' equity totaled $107.5 million at September 30, 2025, an increase of $1.4 million or 1.4% from the previous quarter [42] - The company maintained capital levels in excess of regulatory requirements and was categorized as "well-capitalized" at September 30, 2025 [11]

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].