SOUND FINANCIAL BANCORP, INC.
|
(Exact name of registrant as specified in its charter)
|
Maryland
|
|
001-35633
|
|
45-5188530
|
(State or other jurisdiction
of incorporation)
|
|
(Commission File No.)
|
|
(IRS Employer
Identification No.)
|
2005 5th Avenue, Second Floor, Seattle, Washington
|
|
98121
|
(Address of principal executive offices)
|
|
(Zip Code)
|
Registrant's telephone number, including area code: (206) 448-0884
|
|
Not Applicable
|
(Former name or former address, if changed since last report)
|
□
|
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
|
□
|
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
|
□
|
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
|
□
|
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
|
|
SOUND FINANCIAL BANCORP, INC.
|
||
|
|
|
|
|
|
|
|
Date:
|
November 4, 2014
|
By:
|
/s/ Laura Lee Stewart
|
|
|
|
Laura Lee Stewart, President and CEO
|
●
|
|
Annualized return on average assets was 1.07% for the current quarter, compared to 1.09% for the second quarter of 2014 and an increase of 13.5% from 0.96% for the third quarter of 2013;
|
●
|
|
Annualized Return on average equity was 10.09% for the current quarter, compared to 10.22% for the second quarter of 2014 and an increase of 16.8% from 8.64% for the third quarter of 2013;
|
●
|
|
Net interest income increased to $4.8 million for the current quarter, an increase of 3.0% compared to the second quarter of 2014 and 8.5% from the same period last year;
|
●
|
|
Provision for loan losses remained unchanged at $200,000 for both the current quarter and the second quarter of 2014, and decreased 55.6% from $450,000 for the third quarter of 2013;
|
●
|
|
Loans increased 6.8% to $417.4 million at September 30, 2014, compared to December 31, 2013 and increased 9.9% from September 30, 2013;
|
●
|
|
Deposits increased 15.7% to $403.2 million at September 30, 2014, compared to December 31, 2013 and increased 18.1% from September 30, 2013;
|
●
|
|
Annualized net charge-offs remained at 0.18% for both the current quarter and second quarter of 2014 and decreased 34 basis points from the same period last year; and
|
●
|
|
Tier 1 leverage ratio of 10.37% and a Total risk-based capital asset ratio of 14.16% at September 30, 2014.
|
Nonperforming Loans:
|
At Sep 30, 2014
|
At Dec 31, 2013
|
At Sep 30, 2013
|
|||||||||||||||||||||
(in $000s, unaudited)
|
Balance
|
% of Total
|
Balance
|
% of Total
|
Balance
|
% of Total
|
||||||||||||||||||
One- to four- family
|
$
|
828
|
21.7
|
%
|
$
|
772
|
24.9
|
%
|
$
|
1,005
|
34.6
|
%
|
||||||||||||
Home equity loans
|
280
|
7.3
|
222
|
7.2
|
622
|
21.4
|
||||||||||||||||||
Commercial and multifamily
|
2,228
|
58.4
|
820
|
26.5
|
230
|
7.9
|
||||||||||||||||||
Manufactured
|
214
|
5.6
|
106
|
3.4
|
65
|
2.3
|
||||||||||||||||||
Other consumer
|
3
|
0.1
|
1
|
nm
|
-
|
nm
|
||||||||||||||||||
Total nonperforming loans
|
3,553
|
93.2
|
1,921
|
62.0
|
%
|
1,922
|
66.2
|
%
|
||||||||||||||||
OREO and Other Repossessed Assets:
|
||||||||||||||||||||||||
One- to four- family
|
189
|
5.0
|
1,086
|
35.0
|
898
|
30.9
|
||||||||||||||||||
Manufactured
|
70
|
1.8
|
92
|
3.0
|
83
|
2.9
|
||||||||||||||||||
Total OREO and repossessed assets
|
259
|
6.8
|
1,178
|
38.0
|
981
|
33.8
|
||||||||||||||||||
Total nonperforming assets
|
$
|
3,812
|
100.0
|
%
|
$
|
3,099
|
100.0
|
%
|
$
|
2,903
|
100.0
|
%
|
|
For the Quarter Ended:
|
|||||||||||
Allowance for Loan Losses
|
Sep 30,
|
Jun 30,
|
Sep 30,
|
|||||||||
(in $000s, unaudited)
|
2014
|
2014
|
2013
|
|||||||||
Balance at beginning of period
|
$
|
4,191
|
$
|
4,176
|
$
|
4,129
|
||||||
Provision for loan losses during the period
|
200
|
200
|
450
|
|||||||||
Net charge-offs during the period
|
(161
|
)
|
(185
|
)
|
(464
|
)
|
||||||
Balance at end of period
|
$
|
4,230
|
$
|
4,191
|
$
|
4,115
|
||||||
|
||||||||||||
Allowance for loan losses to total loans
|
1.01
|
%
|
1.04
|
%
|
1.08
|
%
|
||||||
Allowance for loan losses to total nonperforming loans
|
119.05
|
%
|
195.66
|
%
|
214.10
|
%
|
CONSOLIDATED INCOME STATEMENTS
|
Quarter Ended
|
Sequential Quarter
|
Year over Year
|
|||||||||||||||||
(in $000s, unaudited)
|
Sep 30, 2014
|
Jun 30, 2014
|
Sep 30, 2013
|
% Change
|
% Change
|
|||||||||||||||
Interest income
|
$
|
5,395
|
$
|
5,240
|
$
|
4,985
|
3.0
|
%
|
8.2
|
%
|
||||||||||
Interest expense
|
612
|
596
|
578
|
2.7
|
5.9
|
|||||||||||||||
Net interest income
|
4,783
|
4,644
|
4,407
|
3.0
|
8.5
|
|||||||||||||||
Provision for loan losses
|
200
|
200
|
450
|
0.0
|
(55.6
|
)
|
||||||||||||||
Net interest income after provision for loan losses
|
4,583
|
4,444
|
3,957
|
3.1
|
15.8
|
|||||||||||||||
Noninterest income:
|
||||||||||||||||||||
Service charges and fee income
|
805
|
700
|
564
|
15.0
|
42.7
|
|||||||||||||||
Increase in cash surrender value of life insurance
|
87
|
86
|
78
|
1.2
|
11.5
|
|||||||||||||||
Mortgage servicing income
|
202
|
80
|
76
|
152.5
|
165.8
|
|||||||||||||||
Gain on sale of loans
|
184
|
110
|
37
|
67.3
|
397.3
|
|||||||||||||||
Other noninterest income
|
153
|
144
|
271
|
6.3
|
(43.5
|
)
|
||||||||||||||
Total noninterest income
|
1,431
|
1,120
|
1,026
|
27.8
|
39.5
|
|||||||||||||||
Noninterest expense:
|
||||||||||||||||||||
Salaries and benefits
|
1,998
|
1,958
|
1,858
|
2.0
|
7.5
|
|||||||||||||||
Operations expense
|
1,155
|
1,009
|
825
|
14.5
|
40.0
|
|||||||||||||||
Data processing
|
606
|
328
|
348
|
84.8
|
74.1
|
|||||||||||||||
Losses and expenses related to OREO
|
(12
|
)
|
78
|
125
|
(115.4
|
)
|
(109.6
|
)
|
||||||||||||
Other noninterest expense
|
447
|
402
|
410
|
11.2
|
9.0
|
|||||||||||||||
Total noninterest expense
|
4,194
|
3,775
|
3,566
|
11.1
|
17.6
|
|||||||||||||||
Income before income taxes
|
1,820
|
1,789
|
1,417
|
1.7
|
28.4
|
|||||||||||||||
Income tax expense
|
585
|
573
|
423
|
2.1
|
38.3
|
|||||||||||||||
Net income
|
$
|
1,235
|
$
|
1,216
|
$
|
994
|
1.6
|
24.2
|
||||||||||||
|
||||||||||||||||||||
KEY FINANCIAL RATIOS (in $000s, unaudited)
|
||||||||||||||||||||
Return on average assets
|
1.07
|
%
|
1.09
|
%
|
0.96
|
%
|
(1.8
|
)%
|
11.5
|
%
|
||||||||||
Return on average equity
|
10.09
|
10.22
|
8.64
|
(1.3
|
)
|
16.8
|
||||||||||||||
Net interest margin
|
4.43
|
4.40
|
4.55
|
(0.7
|
)
|
(2.6
|
)
|
|||||||||||||
Efficiency ratio
|
67.09
|
63.60
|
63.34
|
5.5
|
5.9
|
|||||||||||||||
|
||||||||||||||||||||
PER COMMON SHARE DATA
|
Quarter Ended
|
Sequential Quarter
|
Year over Year
|
|||||||||||||||||
(in $000s, except per share data, unaudited)
|
Sep 30, 2014
|
Jun 30, 2014
|
Sep 30, 2013
|
% Change
|
% Change
|
|||||||||||||||
Basic earnings per share
|
$
|
0.49
|
$
|
0.48
|
$
|
0.39
|
2.1
|
%
|
25.6
|
%
|
||||||||||
Diluted earnings per share
|
$
|
0.47
|
$
|
0.47
|
$
|
0.38
|
0.0
|
23.7
|
||||||||||||
Weighted average basic shares outstanding
|
2,516
|
2,510
|
2,577
|
0.2
|
(2.4
|
)
|
||||||||||||||
Weighted average diluted shares outstanding
|
2,609
|
2,601
|
2,634
|
0.3
|
(0.9
|
)
|
||||||||||||||
Common shares outstanding at period-end
|
2,516
|
2,516
|
2,551
|
0.0
|
(1.4
|
)
|
||||||||||||||
Book value per share
|
$
|
19.64
|
$
|
19.15
|
$
|
17.75
|
2.6
|
10.6
|
CONSOLIDATED BALANCE SHEET
|
Sequential Quarter
|
Year over Year
|
||||||||||||||||||
(in $000's, unaudited)
|
Sep 30, 2014
|
Dec 31, 2013
|
Sep 30, 2013
|
% Change
|
% Change
|
|||||||||||||||
ASSETS
|
||||||||||||||||||||
Cash and cash equivalents
|
$
|
22,139
|
$
|
15,334
|
$
|
13,961
|
44.4
|
%
|
58.6
|
%
|
||||||||||
Securities available-for-sale, at fair value
|
12,944
|
15,421
|
16,639
|
(16.1
|
)
|
(22.2
|
)
|
|||||||||||||
Loans held-for-sale
|
2,490
|
130
|
1,664
|
1815.4
|
49.6
|
|||||||||||||||
Loans:
|
||||||||||||||||||||
One- to four- family residential
|
129,168
|
117,452
|
114,720
|
10.0
|
12.6
|
|||||||||||||||
Home equity
|
34,782
|
35,155
|
35,317
|
(1.1
|
)
|
(1.5
|
)
|
|||||||||||||
Commercial and multifamily
|
158,635
|
156,600
|
147,768
|
1.3
|
7.4
|
|||||||||||||||
Construction and land
|
45,186
|
44,300
|
43,780
|
2.0
|
3.2
|
|||||||||||||||
Manufactured homes
|
12,584
|
13,496
|
13,966
|
(6.8
|
)
|
(9.9
|
)
|
|||||||||||||
Other consumer
|
13,000
|
10,255
|
9,393
|
26.8
|
38.4
|
|||||||||||||||
Commercial business
|
23,996
|
13,668
|
14,842
|
75.6
|
61.7
|
|||||||||||||||
Total loans, gross
|
417,351
|
390,926
|
379,786
|
6.8
|
9.9
|
|||||||||||||||
Allowance for loan losses
|
(4,230
|
)
|
(4,177
|
)
|
(4,115
|
)
|
1.3
|
2.8
|
||||||||||||
Loans, net
|
413,121
|
386,749
|
375,671
|
6.8
|
10.0
|
|||||||||||||||
Accrued interest receivable
|
1,446
|
1,366
|
1,313
|
5.9
|
10.1
|
|||||||||||||||
Bank-owned life insurance
|
11,321
|
11,068
|
10,950
|
2.3
|
3.4
|
|||||||||||||||
OREO and other repossessed assets, net
|
259
|
1,178
|
981
|
(78.0
|
)
|
(73.6
|
)
|
|||||||||||||
Mortgage servicing rights, at fair value
|
3,115
|
2,984
|
2,843
|
4.4
|
9.6
|
|||||||||||||||
FHLB stock, at cost
|
2,247
|
2,314
|
2,336
|
(2.9
|
)
|
(3.8
|
)
|
|||||||||||||
Premises and equipment, net
|
5,621
|
2,138
|
2,174
|
162.9
|
158.6
|
|||||||||||||||
Other assets
|
4,576
|
3,929
|
3,196
|
16.5
|
43.2
|
|||||||||||||||
Total assets
|
$
|
479,279
|
$
|
442,611
|
$
|
431,728
|
8.3
|
11.0
|
||||||||||||
LIABILITIES AND SHAREHOLDERS' EQUITY
|
||||||||||||||||||||
Liabilities:
|
||||||||||||||||||||
Demand deposit, noninterest-bearing
|
44,219
|
34,594
|
34,575
|
27.8
|
27.9
|
|||||||||||||||
Demand deposit, interest-bearing
|
98,739
|
70,639
|
56,320
|
39.8
|
75.3
|
|||||||||||||||
Savings and money market
|
87,584
|
85,578
|
94,105
|
2.3
|
(6.9
|
)
|
||||||||||||||
Time deposits
|
172,632
|
157,528
|
156,342
|
9.6
|
10.4
|
|||||||||||||||
Total deposits
|
403,174
|
348,339
|
341,342
|
15.7
|
18.1
|
|||||||||||||||
Accrued interest payable and other liabilities
|
5,958
|
4,547
|
4,082
|
31.0
|
46.0
|
|||||||||||||||
Borrowings
|
20,738
|
43,221
|
40,381
|
(52.0
|
)
|
(48.6
|
)
|
|||||||||||||
Total liabilities
|
429,870
|
396,107
|
385,805
|
8.5
|
11.4
|
|||||||||||||||
Shareholders' Equity:
|
||||||||||||||||||||
Common stock
|
25
|
25
|
26
|
0.0
|
(3.8
|
)
|
||||||||||||||
Paid-in capital
|
23,218
|
23,829
|
24,370
|
(2.6
|
)
|
(4.7
|
)
|
|||||||||||||
Unearned shared – ESOP
|
(1,369
|
)
|
(1,369
|
)
|
(1,598
|
)
|
0.0
|
(14.3
|
)
|
|||||||||||
Retained earnings
|
27,348
|
24,288
|
23,410
|
12.6
|
16.8
|
|||||||||||||||
Accumulated other comprehensive loss
|
187
|
(269
|
)
|
(285
|
)
|
(169.5
|
)
|
(165.6
|
)
|
|||||||||||
Total shareholders' equity
|
49,409
|
46,504
|
45,923
|
6.2
|
7.6
|
|||||||||||||||
Total liabilities and shareholders' equity
|
$
|
479,279
|
$
|
442,611
|
$
|
431,728
|
8.3
|
11.0
|
CREDIT QUALITY DATA
(in $000's, unaudited)
|
Sep 30, 2014
|
Dec 31, 2013
|
Sep 30, 2013
|
Sequential Quarter
% Change
|
Year over year
% Change
|
|||||||||||||||
Nonaccrual loans
|
$
|
904
|
$
|
558
|
$
|
1,161
|
62.0
|
%
|
(22.1
|
)%
|
||||||||||
Nonperforming TDRs and loans over 90 days past due and on accrual
|
2,649
|
1,363
|
761
|
94.4
|
248.1
|
|||||||||||||||
Total nonperforming loans
|
3,553
|
1,921
|
1,922
|
85.0
|
84.9
|
|||||||||||||||
OREO and other repossessed assets
|
259
|
1,178
|
981
|
(78.0
|
)
|
(73.6
|
)
|
|||||||||||||
Total nonperforming assets
|
3,812
|
3,099
|
2,903
|
23.0
|
31.3
|
|||||||||||||||
Performing TDRs on accrual
|
4,660
|
5,404
|
5,918
|
(13.8
|
)
|
(21.3
|
)
|
|||||||||||||
Net charge-offs during the quarter
|
161
|
138
|
464
|
16.7
|
(65.3
|
)
|
||||||||||||||
Provision for loan losses during the quarter
|
200
|
200
|
450
|
0.0
|
(55.6
|
)
|
||||||||||||||
Allowance for loan losses
|
4,230
|
4,177
|
4,115
|
1.3
|
2.8
|
|||||||||||||||
Classified assets
|
7,874
|
7,192
|
9,212
|
9.5
|
(14.5
|
)
|
||||||||||||||
Allowance for loan losses to total loans
|
1.01
|
%
|
1.07
|
%
|
1.08
|
%
|
(5.6
|
)
|
(6.5
|
)
|
||||||||||
Allowance for loan losses to total nonperforming loans
|
119.05
|
%
|
217.44
|
%
|
214.10
|
%
|
(45.2
|
)
|
(46.1
|
)
|
||||||||||
Nonperforming loans to total loans
|
0.85
|
%
|
0.49
|
%
|
0.50
|
%
|
73.5
|
70.0
|
||||||||||||
Nonperforming assets to total assets
|
0.80
|
%
|
0.70
|
%
|
0.67
|
%
|
14.3
|
19.4
|
||||||||||||
|
||||||||||||||||||||
OTHER PERIOD-END STATISTICS
|
||||||||||||||||||||
(unaudited)
|
||||||||||||||||||||
Sound Community Bank:
|
||||||||||||||||||||
Loan to deposit ratio
|
102.47
|
%
|
111.74
|
%
|
110.10
|
%
|
(8.3
|
)%
|
(6.9
|
)%
|
||||||||||
Noninterest-bearing deposits / total deposits
|
10.97
|
9.93
|
10.10
|
10.5
|
8.6
|
|||||||||||||||
Leverage ratio
|
10.37
|
10.00
|
10.32
|
3.7
|
0.5
|
|||||||||||||||
Tier 1 risk-based capital ratio
|
13.00
|
13.02
|
13.03
|
(0.2
|
)
|
(0.2
|
)
|
|||||||||||||
Total risk-based capital ratio
|
14.16
|
14.26
|
14.28
|
(0.7
|
)
|
(0.8
|
)
|
Media:
|
|
Financial:
|
Laurie Stewart
|
|
Matt Deines
|
President/CEO
|
|
EVP/CFO
|
(206) 448-0884 x306
|
|
(206) 448-0884 x305
|