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Sound Financial Bancorp, Inc.
2400 3rd Avenue
Suite 150
Seattle, WA 98121
(206) 448-0884

Transfer Agent
Broadridge Corporate Issuer Solutions, Inc.
1717 Arch Street, Suite 1300
Philadelphia, PA 19103

Shareholder Inquiries:
1-877-830-4936
Fax: (215) 553-5402
E-mail: shareholder@broadridge.com

Sound Financial Bancorp, Inc. Reports Net Income of $2.0 Million for Second Quarter 2018

Board Declares quarterly cash dividend of $0.14 per share

Company Release - 7/26/2018 6:35 PM ET

SEATTLE, July 26, 2018 (GLOBE NEWSWIRE) -- Sound Financial Bancorp, Inc. (Nasdaq:SFBC), the holding company (the "Company") for Sound Community Bank (the "Bank"), today reported net income of $2.0 million for the quarter ended June 30, 2018, or diluted earnings per share of $0.77, as compared to net income of $1.6 million, or diluted earnings per share of $0.63 for the quarter ended March 31, 2018 and $1.3 million, or diluted earnings per share of $0.50, for the quarter ended June 30, 2017.

The Company also announced today that the Board of Directors has declared a cash dividend on Company common stock of $0.14 per share, payable on August 24, 2018 to stockholders of record as of the close of business on August 10, 2018.

“Our loan portfolio continues to achieve significant  growth in  both residential and commercial loans, and we continue to focus on deposit growth as our main funding source,” said Laurie Stewart, President and CEO of the Company and the Bank.  “We also continue to maintain our strong net interest margin despite  a rising interest rate environment,” concluded Ms. Stewart.

Highlights for the quarter ended June 30, 2018 include:

 Loans increased 5.5% to $590.8 million at June 30, 2018, from $560.0 million at March 31, 2018, and increased 19.6% from $493.9 million at June 30, 2017;
 Total deposits increased 1.9% to $539.4 million at June 30, 2018, from $529.2 million at March 31, 2018, and increased 9.3% from $493.7 million at June 30, 2017;
 Total assets increased 4.0% to $686.2 million at June 30, 2018, from $659.5 million at March 31, 2018 and increased 16.7% from $588.3 million at June 30, 2018;
 Net interest income increased 7.3% to $6.9 million for the quarter ended June 30, 2018, from $6.5 million for the quarter ended March 31, 2018, and increased 20.6% from $5.8 million for the quarter ended June 30, 2017;
 Net interest margin ("NIM") increased to 4.31% for the quarter ended June 30, 2018, compared to 4.26% for the quarter ended March 31, 2018 and 4.27% for the quarter ended June 30, 2017;
 Nonperforming assets increased $81,000, or 3.2%, to $2.6 million at June 30, 2018, from $2.6 million at March 31, 2018 and decreased $1.6 million, or 37.3%, from $4.2 million at June 30, 2017; and
 Provision for loan losses was $150,000 for the quarter ended June 30, 2018, compared to $100,000 for the quarter ended March 31, 2018.  There was no provision for the quarter ended June 30, 2017.

Both the Company and Bank continue to maintain capital levels in excess of the regulatory requirements and the Bank continued to be categorized as “well-capitalized” at June 30, 2018.

Operating Results

Net interest income increased $472,000, or 7.3%, to $6.9 million for the quarter ended June 30, 2018, compared to $6.5 million for the quarter ended March 31, 2018 and increased $1.1 million, or 20.6%, from $5.8 million for the quarter ended June 30, 2017.  The change from the prior quarter and the same quarter one year ago was primarily a result of higher interest income partially offset by an increase in interest expense.

Interest income increased $671,000, or 9.0%, to $8.2 million for the second quarter of 2018 compared to $7.5 million for the first quarter of 2018 and increased $1.7 million, or 25.3%, from $6.5 million for the second quarter of 2017.  The increase in interest income from loans in both periods was due to higher average loan balances, as loan originations exceeded loan repayments during the period, and higher loan yields.  Average loan balances were $576.7 million for the quarter ended June 30, 2018 compared to $549.7 million for the quarter ended March 31, 2018 and $488.2 million for the quarter ended June 30, 2017.  The average yield on loans was 5.48% for the quarter ended June 30, 2018 compared to 5.27% for the quarter ended March 31, 2018 and 5.21% for the quarter ended June 30, 2017.  Interest income on the investment portfolio and cash and cash equivalents increased due to the rise in market interest rates during the second quarter of 2018 compared to one year ago. 

Interest expense increased $199,000, or 19.5%, to $1.2 million for the quarter ended June 30, 2018, compared to $1.0 million for the quarter ended March 31, 2018 and increased $459,000, or 60.2%, compared to $763,000 for the quarter ended June 30, 2017.  The increase from the sequential quarter and the same quarter one year ago was primarily due to the increase in the average balances and cost of FHLB borrowings.  The average balance of borrowings increased $18.7 million, or 38.0%, to $67.9 million at June 30, 2018 from $49.2 million at March 31, 2018.  The average balance of borrowings increased $42.6 million, or 168.0%, compared to June 30, 2017.  The cost of borrowings increased to 2.01% for the quarter ended June 30, 2018 compared to 1.73% for the first quarter of 2018 and was 1.18% for the second quarter of 2017.  We utilize borrowings to supplement our deposits to support loan growth.  The rise in the cost of borrowings was the result of the increase in the target federal funds rate over the past quarter and past year.  Interest expense on deposits increased $71,000, or 8.8%, to $881,000 for the quarter ended June 30, 2018, compared to $810,000 for the quarter ended March 31, 2018 and increased $193,000, or 28.1%, from $688,000 during the quarter ended June 30, 2017.  The increase in deposit expense was driven by both the rise in the average balance of deposits as well as the cost of deposits.  The average cost of deposits was 0.67% for the three months ended June 30, 2018 compared to 0.63% for the first quarter of 2018 and 0.58% for the second quarter of 2017. 

The net interest margin increased to 4.31% for the quarter ended June 30, 2018, compared to 4.26% for the quarter ended March 31, 2018 and 4.27% for the quarter ended June 30, 2017.  The increase was due to higher average loan yields partially offset by higher funding costs as a result of the increase in the average cost and balance of both deposits and FHLB borrowings.

We recorded a provision for loan losses of $150,000 for the quarter ended June 30, 2018, compared to $100,000 for the quarter ended March 31, 2018.  There was no provision recorded for the quarter ended June 30, 2017.  The increase in the provision from the previous periods was primarily due to the increase in the balance of the total loan portfolio which increased 5.5% and 19.6% from the previous quarter and second quarter of 2017,  respectively.

Noninterest income during the second quarter of 2018 remained relatively unchanged at $1.1 million compared to the first quarter of 2018.  Noninterest income increased $107,000, or 10.9%, to $1.1 million for the quarter ended June 30, 2018, compared to the same quarter in 2017.  This increase was primarily the result of an $82,000, or 31.4%, increase in net gain on sale of loans as well as a positive $58,000 fair value adjustment on mortgage servicing rights, partially offset by a $31,000 decrease in service charges and fee income. 

Noninterest expense remained stable, decreasing slightly by $32,000, or 0.6%, to $5.4 million for the quarter ended June 30, 2018, compared to the sequential quarter.  The decrease was primarily a result of a one-time adjustment to salaries and benefits due to the departure of an executive officer, as previously disclosed, as well as a decrease in expenses related to our operations.  In particular, reductions to accruals for marketing and professional fees were partially offset by an increase in audit fees.  Occupancy expense increased due to a one-time adjustment to recognize straight-line rent expense over the life of a lease.

Noninterest expense increased $605,000, or 12.6% to $5.4 million during the quarter ended June 30, 2018 compared to $4.8 million for the quarter ended June 30, 2017, primarily from higher salaries and benefits and operating expenses.  Salaries and benefits expense increased $393,000 compared to the second quarter of 2017 primarily due to an increase in the number of full-time equivalent employees as a result of the addition of our University Place branch and loan production office in Sequim in June 2017.  The percent of incentive bonuses paid out quarterly increased starting in January 2018, which also contributed to the period-over-period increase.  Operations expense increased $169,000 primarily due to an increase in audit fees, losses related to serviced loans, and increases in credit administration fees.

The efficiency ratio for the quarter ended June 30, 2018 improved to 67.28%, compared to 71.89% for the quarter ended March 31, 2018 and 71.22% for the second quarter of 2017.  The improvement in the efficiency ratio compared to the prior quarter and the year ago quarter was due primarily to the increase in net interest income.

The provision for income taxes increased slightly for the second quarter of 2018, compared to the sequential quarter as a result of the increase in income before taxes.  The provision for income taxes decreased $124,000, or 19.5%, compared to the second quarter of 2017 as a result of the Tax Cuts and Jobs Act which was signed into law on December 22, 2017, and reduced our federal corporate income tax rate from 35% to 21% beginning in January 2018.

Balance Sheet Review, Capital Management and Credit Quality

Total assets at June 30, 2018 were $686.2 million, compared to $659.5 million at March 31, 2018 and $588.3 million at June 30, 2017.  The increase from both the sequential quarter and same quarter last year was primarily a result of the increase in loans. In addition, FHLB stock increased $1.9 million to $3.6 million at June 30, 2018 as compared to $1.7 million at June 30, 2017, as a result of our utilizing additional FHLB advances to fund loan growth over the last year. 

Loans totaled $590.8 million at June 30, 2018, compared to $560.0 million at March 31, 2018 and $493.9 million at June 30, 2017.  All loan categories experienced an increase as compared to the comparative prior periods other than home equity loans. The largest increases in the loan portfolio compared to the prior quarter were in the commercial and multifamily, commercial business, floating homes, and one-to four- family loan portfolios.  The commercial and multifamily loan portfolio increased $15.7 million, or 7.1%, to $236.9 million and the commercial business loan portfolio increased $5.3 million, or 13.9%, to $43.1 million.  The floating homes and one- to four- family loan portfolios increased $4.5 million, or 15.6%, and $4.1 million, or 2.5%, respectively.  The largest increases in the loan portfolio compared to the year ago quarter were in the commercial and multifamily loan portfolio, which increased $41.4 million, or 21.2%, the one- to four- family loan portfolio, which increased $18.5 million, or 12.5%, and the commercial business loan portfolio, which increased $17.8 million, or 70.3%.  At June 30, 2018, commercial and multifamily real estate loans were approximately 40.0% of total loans. One- to four- family loans, including home equity loans, were  approximately 32.5% of the loan portfolio.  Consumer loans, consisting of manufactured homes, floating homes and other consumer loans were approximately 9.7% of total loans at that date.  Construction and land loans were approximately 10.5% of the loan portfolio and commercial business loans were  approximately 7.3% of total loans  at June 30, 2018.

Cash and cash equivalents decreased $5.3 million, or 8.1%, to $59.4 million at June 30, 2018, compared to $64.7 million at March 31, 2018 and remained relatively unchanged compared to June 30, 2017.  The decrease from the prior quarter was due to a reduction of our excess liquidity to fund our loan growth. 

Deposits increased $10.2 million, or 1.9%, to $539.4 million at June 30, 2018, compared to $529.2 million at March 31, 2018 and increased $45.7 million, or 9.3%, compared to $493.7 million at June 30, 2017.  The increase in deposits during  the second quarter of 2018 compared to the sequential quarter reflects our continued focus on generating low cost deposits to fund our loan growth.  The increase in deposits in the second quarter of 2018 compared to the same quarter last year was the result of organic growth and $14.5 million in deposits assumed as a result of the purchase of our University Place branch in June 2017.  FHLB borrowings increased to $71.0 million at June 30, 2018, compared to $56.0 million at March 31, 2018 and increased from $25.0 million one year ago. 

Nonperforming assets ("NPAs"), which are comprised of non-accrual loans, nonperforming troubled debt restructurings (“TDRs”), other real estate owned (“OREO”) and other repossessed assets, remained stable at $2.6 million, or 0.39% of total assets, at both June 30, 2018 and  March 31, 2018, and decreased $1.6 million, or 37.3% from $4.2 million, or 0.72% of total assets, at June 30, 2017. 

The following table summarizes our NPAs:

Nonperforming Loans:  

June 30, 2018
  

March 31, 2018
  

June 30, 2017
(Dollars in thousands,
unaudited)
  

Balance
 % of
Total
  

Balance
 % of
Total
  

Balance
 % of
Total
One- to four- family $  986 37.3% $  782 30.5% $  2,039 48.3%
Home equity loans  391 14.8   452 17.6   691 16.4 
Commercial and multifamily  192 7.3   197 7.7   211 5.0 
Construction and land  79 3.0   82 3.2   - - 
Manufactured homes  182 6.9   200 7.8   98 2.3 
Commercial business  204 7.7   212 8.3   229 5.4 
Total nonperforming loans  2,034 76.9   1,925 75.1   3,268 77.4 
OREO and Other Repossessed
Assets:
            
One- to four- family  - -   28 1.1   342 8.1 
Commercial and multifamily  600 22.7   600 23.4   600 14.2 
Manufactured homes  10 0.4   10 0.4   10 0.3 
Total OREO and repossessed assets  610 23.1   638 24.9   952 22.6 
Total nonperforming assets $2,644 100.0% $2,563 100.0% $4,220 100.0%

The following table summarizes the allowance for loan losses:

  For the Quarter Ended:
Allowance for Loan Losses June 30,

2018
 March 31,

2018
 June 30,

2017
(Dollars in thousands, unaudited)   
Balance at beginning of period $  5,328  $  5,241  $  4,838 
Provision for loan losses during the period  150   100   - 
Net recoveries/(charge-offs) during the period  25   (13)  (3)
Balance at end of period $  5,503  $  5,328  $4,835 
       
Allowance for loan losses to total loans  0.93%  0.95%  0.98%
Allowance for loan losses to total nonperforming loans  270.55%  276.78%  147.95%

The increase in the allowance for loan losses at June 30, 2018, compared to the prior quarter and the same period a year ago was due to the increase in the balance of the loan portfolio.  Total loans increased $30.8 million, or 5.5%, and $96.9 million, or 19.6%, compared to March 31, 2018, and June 30, 2017, respectively.  Net loan recoveries during the second quarter of 2018 totaled $25,000 compared to net loan charge-offs of $13,000 for the preceding quarter and net loan charge-offs of $3,000 for the second quarter of 2017.

The allowance for loan losses to total loans decreased slightly to 0.93% for the quarter ended June 30, 2018 compared to 0.95% for the quarter ended March 31, 2018 and 0.98% for the quarter ended June 30, 2017. The decline in the ratio reflects the growth in the loan portfolio and  improvement in the credit quality of our portfolio over the last year.  The allowance for loan losses as a percent of nonperforming loans decreased to 270.6% at June 30, 2018 compared to 276.8% at March 31, 2018 and increased from 148.0% at June 30, 2017. 

Sound Financial Bancorp, Inc., a bank holding company, is the parent company of Sound Community Bank, and is headquartered in Seattle, Washington with full-service branches in Seattle, Tacoma, Mountlake Terrace, Sequim, Port Angeles, Port Ludlow, and University Place. Sound Community Bank is a Fannie Mae Approved Lender and Seller/Servicer with two Loan Production Offices, one located in the Madison Park neighborhood of Seattle and one located in Sequim, Washington. For more information, please visit www.soundcb.com.

Forward Looking Statement Disclaimer

When used in filings by Sound Financial Bancorp, Inc. (the "Company”) with the Securities and Exchange Commission (the “SEC”), in the Company's press releases or other public or stockholder communications, and in oral statements made with the approval of an authorized executive officer, the words or phrases “will likely result,” “are expected to,” “will continue,” “is anticipated,” “estimate,” “project,” “intends” or similar expressions are intended to identify “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements, which are based on various underlying assumptions and expectations and are subject to risks, uncertainties and other unknown factors, may include projections of our future financial performance based on our growth strategies and anticipated trends in our business.  These statements are only predictions based on our current expectations and projections about future events, and may turn out to be wrong because of inaccurate assumptions we might make, because of the factors illustrated below or because of other important factors that we cannot foresee that could cause our actual results to be materially different from the historical results or from any future results expressed or implied by such forward-looking statements.

Factors which could cause actual results to differ materially, include, but are not limited to: changes in general and local economic conditions; legislative changes; changes in policies by regulatory agencies; fluctuations in interest rates; the risks of lending and investing activities, including changes in the level and direction of loan delinquencies and write-offs and changes in estimates of the adequacy of the allowance for loan losses; the Company's ability to access cost-effective funding; fluctuations in real estate values and both residential and commercial real estate market conditions; demand for loans and deposits in the Company's market area; secondary market conditions for loans; results of examinations of the Company or its wholly owned bank subsidiary by their regulators; competition; changes in management’s business strategies; changes in the regulatory and tax environments in which the Company operates; and other factors described in the Company’s latest annual Report on Form 10-K and Quarterly Reports on Form 10-Q and other filings with the Securities and Exchange Commission – which are available at www.soundcb.com and on the SEC’s website at www.sec.gov.

The Company does not undertake - and specifically declines any obligation - to publicly release the result of any revisions which may be made to any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.

CONSOLIDATED INCOME STATEMENTS For the Quarter Ended: Sequential
Quarter

% Change
 Year over Year
% Change
(Dollars in thousands, unaudited) June 30,
2018
 March 31,
2018
 June 30,
2017
  
Interest income $8,163 $7,492 $  6,517 9.0% 25.3%
Interest expense  1,222  1,023  763 19.5  60.2 
Net interest income  6,941  6,469  5,754 7.3  20.6 
Provision for loan losses  150  100  - 50.0  nm
Net interest income after provision for loan losses   

6,791
   

6,369
   

5,754
  

6.6
   

18.0
 
Noninterest income:          
Service charges and fee income  461  460  492 0.2  (6.3)
Earnings on cash surrender value of bank-owned life insurance   

80
   

79
   

82
  

1.3
   

(2.4


)
Mortgage servicing income  206  220  148 (6.4) 39.2 
Net gain on sale of loans  343  332  261 3.3  31.4 
Total noninterest income  1,090  1,091  983 (0.1) 10.9 
Noninterest expense:          
Salaries and benefits  3,055  3,141  2,662 (2.7) 14.8 
Operations  1,198  1,239  1,029 (3.3) 16.4 
Regulatory assessments  91  101  136 (9.9) (33.1)
Occupancy  573  474  522 20.9  9.8 
Data processing  461  453  438 1.8  5.3 
Net loss and expenses on OREO and repossessed assets   

25
   

27
   

11
  

(7.4


)
  

127.3
 
Total noninterest expense  5,403  5,435  4,798 (0.6) 12.6 
Income before provision for income taxes  2,478  2,025  1,939 22.4  27.8 
Provision for income taxes  512  423  636 21.0  (19.5)
Net income $1,966 $1,602 $1,303 22.7% 50.9%

___

nm = not meaningful

  For the Quarter Ended: Sequential
Quarter

% Change
  

Year over Year
% Change
  June 30,
2018
 March 31,
2018
 June 30,
2017
  
KEY FINANCIAL RATIOS (unaudited)          
Annualized return on average assets 1.16% 1.00% 0.92% 16.0% 26.1%
Annualized return on average equity 11.57% 9.67% 8.24% 19.6% 40.4%
Annualized net interest margin 4.31% 4.26% 4.27% 1.2% 0.9%
Annualized efficiency ratio 67.28% 71.89% 71.22% (6.4)% (5.5)%


PER COMMON SHARE DATA At or For the Quarter Ended: Sequential
Quarter

% Change
 Year over
Year

% Change
(Shares in thousands, unaudited) June 30,
2018
 March 31,
2018
 June 30,
2017
  
Basic earnings per share $0.79 $0.65  $0.52    21.5% 51.9%
Diluted earnings per share $0.77 $0.63 $0.50 22.2  54.0 
Weighted-average basic shares outstanding  2,489  2,477  2,501 0.5  (0.5)
Weighted-average diluted shares outstanding  2,561  2,558  2,597 0.1  (1.4)
Common shares outstanding at period-end  2,540  2,524  2,502 0.6  1.5 
Book value per share $26.96 $26.36 $25.13    2.3% 7.3%



CONSOLIDATED INCOME STATEMENT
 Six Months Ended Year over
(Dollars in thousands, unaudited) June 30,
2018
 June 30,
2017
 Year
% Change
Interest income $  15,655 $  13,108 19.4%
Interest expense  2,245  1,557 44.2 
Net interest income  13,410  11,551 16.1 
Provision for loan losses  250  - nm
Net interest income after provision for loan
losses
  
13,160
   

11,551
  
13.9
 
Noninterest income:      
Service charges and fee income  921  1,003 (8.2)
Increase in cash surrender value of life
insurance
   

159
   

163
  

(2.5


)
Mortgage servicing income  426  381 11.8 
Gain on sale of loans  675  433 55.9 
Total noninterest income  2,181  1,980 10.2 
Noninterest expense:      
Salaries and benefits  6,196  5,353 15.7 
Operations  2,437  2,050 18.9 
Regulatory assessments  192  260 (26.2)
Occupancy  1,047  895 17.0 
Data processing  914  845 8.2 
Net loss and expenses on OREO and
repossessed assets
   

52
   

14
  

271.4
 
Total noninterest expense  10,838  9,417 15.1 
Income before provision for income taxes  4,503  4,114 9.5 
Provision for income taxes  935  1,397 (33.1)
Net income $  3,568 $  2,717 31.3%

                  ___

          nm = not meaningful

CONSOLIDATED BALANCE SHEET   Sequential
Quarter

% Change
 Year over
Year
% Change
(Dollars in thousands, unaudited) June 30,
2018
 March 31,
2018
 June 30,
2017
  
ASSETS          
Cash and cash equivalents $59,434  $64,689  $59,956  (8.1)% (0.9)%
Available-for-sale securities, at fair value  5,118   5,268   6,200  (2.8) (17.5)
Loans held-for-sale  721   950   720  (24.1) 0.1 
Loans  590,756   559,979   493,896  5.5  19.6 
Allowance for loan losses  (5,503)  (5,328)  (4,835) 3.3  13.8 
Total loans, net  585,253   554,651   489,061  5.5  19.7 
Accrued interest receivable  2,224   1,962   1,677  13.4  32.6 
Bank-owned life insurance, net  13,155   13,075   12,429  0.6  5.8 
Other real estate owned (“OREO”) and other
repossessed assets, net
   

610
    

638
    

952
   

(4.4


)
  

(35.9


)
Mortgage servicing rights, at fair value  3,582   3,532   3,450  1.4  3.8 
Federal Home Loan Bank (“FHLB”) stock, at cost   

3,614
    

3,014
    

1,705
   

19.9
   

112.0
 
Premises and equipment, net  7,474   7,545   7,467  (0.9) 0.1 
Other assets  5,038   4,207   4,634  19.8  8.7 
TOTAL ASSETS $686,223  $659,531  $588,251  4.0% 16.7%
LIABILITIES          
Deposits:          
Interest-bearing $454,703  $444,918  $418,724  2.2% 8.6%
Noninterest-bearing  84,713   84,275   75,020  0.5  12.9 
Total deposits  539,416   529,193   493,744  1.9  9.3 
Borrowings  71,000   56,000   25,000  26.8  184.0 
Accrued interest payable  82   81   78  1.2  5.1 
Other liabilities  6,766   6,605   6,011  2.4  12.6 
Advance payments from borrowers for taxes
and insurance
   

476
    

1,106
    

548
   

(57.0


)
  

(13.1


)
TOTAL LIABILITIES  617,740   592,985   525,381  4.2  17.6 
STOCKHOLDERS' EQUITY:          
Common stock  25   25   25  -  - 
Additional paid-in capital  25,371   25,104   24,300  1.1  4.4 
Unearned shares – Employee Stock Ownership Plan (“ESOP”)   

(397


)
   

(453


)
   

(683


)
  

(12.4


)
  

(41.9


)
Retained earnings  43,405   41,792   39,089  3.9  11.0 
Accumulated other comprehensive income,
net of tax
   

79
    

78
    

139
   

1.3
   

(43.2


)
TOTAL STOCKHOLDERS’ EQUITY  68,483   66,546   62,870  2.9  8.9 
TOTAL LIABILITIES AND STOCKHOLDERS’
EQUITY
 

$
 

686,223
  

$
 

659,531
  

$
 

588,251
   

4.0


%
  

16.7


%


LOANS   Sequential
Quarter

% Change
 Year over
Year
% Change
(Dollars in thousands, unaudited) June 30,
2018
 March 31,
2018
 June 30,
2017
  
Real estate loans:          
  One- to four- family $166,390  $162,294  $147,848  2.5% 12.5%
  Home equity  25,954   27,638   27,996  (6.1) (7.3)
  Commercial and multifamily  236,915   221,255   195,486  7.1  21.2 
  Construction and land  62,704   60,789   52,775  3.2  18.8 
  Total real estate loans  491,963   471,976   424,105  4.2  16.0 
Consumer Loans:          
  Manufactured homes  18,295   17,480   16,300  4.7  12.2 
  Floating homes  33,643   29,110   25,225  15.6  33.4 
  Other consumer  5,642   5,462   4,639  3.3  21.6 
  Total consumer loans  57,580   52,052   46,164  10.6  24.7 
Commercial business loans  43,119   37,854   25,314  13.9  70.3 
  Total loans  592,662   561,882   495,583  5.5  19.6 
Less:          
  Deferred fees  (1,906)  (1,903)  (1,687) 0.2  13.0 
  Allowance for loan losses  (5,503)  (5,328)  (4,835) 3.3  13.8 
Total loans, net $585,253  $554,651  $489,061  5.5% 19.7%


DEPOSITS   Sequential
Quarter

% Change
 Year over
Year
% Change
(Dollars in thousands, unaudited) June 30,
2018
 March 31,
2018
 June 30,
2017
  
Noninterest-bearing $84,713 $84,275 $75,020 0.5% 12.9%
Interest-bearing  186,691  178,629  159,291 4.5  17.2 
Savings  51,031  50,336  47,375 1.4  7.7 
Money market  49,378  49,457  55,222 (0.2) (10.6)
Certificates  167,603  166,496  156,836 0.7  6.9 
Total deposits $539,416 $529,193 $493,744 1.9% 9.3%


  At or For the Quarter Ended: Sequential
Quarter

% Change
 Year over
year

% Change
CREDIT QUALITY DATA
(Dollars in thousands, unaudited)
 

 
June 30,
2018
 March 31,
2018
 June 30,
2017
  
Nonaccrual loans $1,882  $  1,793  $  1,819  5.0% 3.5%
Nonperforming TDRs  152   132   1,449  15.2  (89.5)
Total nonperforming loans  2,034   1,925   3,268  5.7  (37.8)
OREO and other repossessed assets  610   638   952  (4.4) (35.9)
Total nonperforming assets $  2,644  $  2,563  $  4,220  3.2  (37.3)
Performing TDRs on accrual $  3,325  $  3,246  $ 2,254   2.4  47.5 
Net (charge-offs)/recoveries during the quarter  25   (13)  (3) (292.3) (933.3)
Provision for loan losses during the quarter  150   100   -  50.0  nm
Allowance for loan losses  5,503   5,328   4,835  3.3  13.8 
Allowance for loan losses to total loans  0.93%  0.95%  0.98% (2.1) (5.1)
Allowance for loan losses to total nonperforming
loans
  270.55%  276.78%  147.95%  

(2.3


)
 82.9 
Nonperforming loans to total loans  0.34%  0.34%  0.66% -  (48.5)
Nonperforming assets to total assets  0.39%  0.39%  0.72% -% (45.8)%

___

nm = not meaningful

OTHER PERIOD-END STATISTICS June 30,
2018
 March 31,
2018
 June 30,
2017
 Sequential
Quarter

% Change
 Year over
Year

% Change
(Dollars in thousands, unaudited)          
Sound Community Bank:          
Net loan to deposit ratio  108.50%  104.81%  99.05% 3.5% 9.5%
Noninterest-bearing deposits / total deposits  15.70%  15.93%  15.19% (1.4)% 3.4%
           
Sound Financial Bancorp, Inc.:          
Average total assets for the quarter $  677,630  $  639,741  $  568,691  5.9% 19.2%
Average total equity for the quarter $  67,945  $  66,245   $  63,251  2.6% 7.4%


Media: Financial:
Laurie Stewart Daphne Kelley
President/CEO SVP/CFO
(206) 448-0884 x306 (206) 448-0884 x305

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Source: Sound Financial Bancorp, Inc.