Sound Financial Bancorp, Inc. (the "Company") (Nasdaq: SFBC), the
holding company for Sound Community Bank (the "Bank"), today
reported net income of $2.9 million for the quarter ended
June 30, 2023, or $1.11 diluted earnings per share, as
compared to net income of $2.2 million, or $0.83 diluted earnings
per share, for the quarter ended March 31, 2023, and $1.6 million,
or $0.61 diluted earnings per share, for the quarter ended
June 30, 2022. The Company also announced today that its Board
of Directors declared a cash dividend on Company common stock of
$0.19 per share, payable on August 23, 2023 to stockholders of
record as of the close of business on August 9, 2023.
Comments from the President and Chief
Executive Officer
“Strong earnings for the quarter were fueled by both a recovery
from credit losses and a non-recurring death benefit payment
received from bank-owned life insurance. While both loans and
deposits declined this quarter, the loan contraction was primarily
the result of decreases in commercial construction loans based on
successful completion of projects,” remarked Laurie Stewart,
President and Chief Executive Officer. "Deposit balances increased
during the first quarter, but seasonal outflows for tax and
business planning needs, primarily by our business clients in the
second quarter, offset the earlier gains. As a result our
loan-to-deposit ratio remained at 104%," concluded Ms.
Stewart.
Q2 2023 Financial Performance |
Total assets increased $6.4 million or 0.6% to $1.01 billion at
June 30, 2023, from $1.00 billion at March 31, 2023, and
increased $73.8 million or 7.9% from $937.0 million at
June 30, 2022. |
|
|
Net interest income decreased $627 thousand or 6.7% to $8.7 million
for the quarter ended June 30, 2023, from $9.4 million for the
quarter ended March 31, 2023, and increased $352 thousand or 4.2%
from $8.4 million for the quarter ended June 30, 2022. |
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|
Net interest margin ("NIM"), annualized, was 3.71% for the quarter
ended June 30, 2023, compared to 4.01% for the quarter ended
March 31, 2023 and 3.82% for the quarter ended June 30,
2022. |
Loans held-for-portfolio decreased $15.1 million or 1.7% to $855.4
million at June 30, 2023, compared to $870.5 million at March
31, 2023, and increased $49.4 million or 6.1% from $806.1 million
at June 30, 2022. |
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|
A $331 thousand reversal of credit losses was recorded for the
quarter ended June 30, 2023, compared to a $10 thousand
provision for credit losses for the quarter ended March 31, 2023
and a $592 thousand provision for credit losses for the quarter
ended June 30, 2022. At June 30, 2023, the allowance for
credit losses on loans to total nonperforming loans was
543.94%. |
Total deposits decreased $19.4 million or 2.3% to $822.3 million at
June 30, 2023, from $841.6 million at March 31, 2023, and
increased $36.3 million or 4.6% from $786.0 million at
June 30, 2022. Noninterest-bearing deposits decreased $14.6
million or 8.4% to $158.5 million at June 30, 2023 compared to
$173.1 million at March 31, 2023, and decreased $28.1 million or
15.1% compared to $186.6 million at June 30, 2022. |
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Loan-to-deposit ratio was 104% at June 30, 2023, compared to
104% at March 31, 2023 and 103% at June 30, 2022. |
|
|
Earnings on bank-owned life insurance (“BOLI”) were $718 thousand
for the quarter ended June 30, 2023, compared to $151 thousand
for the quarter ended March 31, 2023 and a loss of $35 thousand for
the quarter ended June 30, 2022. The current quarter earnings
included a non-recurring death benefit related to our BOLI
policies. |
|
|
Net gain on sale of loans was $110 thousand for the quarter ended
June 30, 2023, compared to $78 thousand for the quarter ended
March 31, 2023 and $84 thousand for the quarter ended June 30,
2022. |
Total nonperforming loans increased $218 thousand or 16.8% to $1.5
million at June 30, 2023, from $1.3 million at March 31, 2023,
and decreased $3.0 million or 66.5% from $4.5 million at
June 30, 2022. Nonperforming loans to total loans were 0.18%
and the allowance for credit losses on loans to total loans
outstanding was 0.96% at June 30, 2023. |
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The Bank continued to maintain capital levels in excess of
regulatory requirements and was categorized as "well-capitalized"
at June 30, 2023. |
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Operating Results
Net interest income decreased $627 thousand, or
6.7%, to $8.7 million for the quarter ended June 30, 2023,
compared to $9.4 million for the quarter ended March 31, 2023, and
increased $352 thousand, or 4.2%, from $8.4 million for the quarter
ended June 30, 2022. The decrease in the current quarter
compared to the prior quarter, was primarily the result of rates
paid on and balances of certificate accounts increasing faster than
we were able to redeploy the funds into higher earning assets. The
increase compared to the second quarter of 2022 was primarily the
result of a higher average balance of and yield earned on average
interest-earning assets, partially offset by a higher average
balance of and rate paid on average interest-bearing
liabilities.
Interest income increased $238 thousand, or 2.0%,
to $12.4 million for the quarter ended June 30, 2023, compared
to $12.2 million for the quarter ended March 31, 2023, and
increased $3.4 million, or 38.1%, from $9.0 million for the quarter
ended June 30, 2022. The increase from the prior quarter was
primarily due to a three basis point increase in the average yield
on loans and a 36 basis point increase in the average yield on
investments and interest-bearing cash following continued increases
in the targeted federal funds rate, partially offset by lower
average balances of loans and investments and interest-bearing
cash. The increase in interest income from the same quarter last
year was due primarily to higher average loan balances, a 64 basis
point increase in the average loan yield and a 354 basis point
increase in the average yield on investments and interest-bearing
cash, partially offset by a lower average balance of investments
and interest-bearing cash.
Interest income on loans increased $170 thousand,
or 1.5%, to $11.6 million for the quarter ended June 30, 2023,
compared to $11.4 million for the quarter ended March 31, 2023, and
increased $2.9 million, or 32.8%, from $8.7 million for the quarter
ended June 30, 2022. The average balance of total loans was
$866.4 million for the quarter ended June 30, 2023, compared
to $867.7 million for the quarter ended March 31, 2023 and $741.6
million for the quarter ended June 30, 2022. The average yield
on total loans was 5.35% for the quarter ended June 30, 2023,
compared to 5.32% for the quarter ended March 31, 2023 and 4.70%
for the quarter ended June 30, 2022. The increase in the
average loan yield during the current quarter compared to the prior
quarter and second quarter of 2022 was primarily due to variable
rate loans adjusting to higher market interest rates and new loan
originations at higher interest rates. Interest income on
investments and interest-bearing cash increased $68 thousand to
$861 thousand for the quarter ended June 30, 2023, compared to
$793 thousand for the quarter ended March 31, 2023, and increased
$572 thousand from $289 thousand for the quarter ended
June 30, 2022, due to a higher average yield on investments
and interest-bearing cash, partially offset by a lower average
balance as excess cash liquidity was deployed into loans during the
past year.
Interest expense increased $865 thousand, or 30.9%,
to $3.7 million for the quarter ended June 30, 2023, from $2.8
million for the quarter ended March 31, 2023, and increased $3.1
million, or 517.5%, from $594 thousand for the quarter ended
June 30, 2022. The increase in interest expense during the
current quarter from the prior quarter was primarily the result of
a $33.2 million increase in the average balance of certificate
accounts, as well as higher average rates paid on all
interest-bearing deposits, (other than demand and NOW accounts),
partially offset by a $27.1 million decrease in the average balance
of interest-bearing deposits other than certificate accounts and a
$3.2 million decrease in the average balance of borrowings, which
were comprised of Federal Home Loan Bank ("FHLB") advances. The
increase in interest expense during the current quarter from the
comparable period a year ago was primarily the result of a $45.7
million increase in the average balance of borrowings and a $183.8
million increase in the average balance of certificate accounts, as
well as higher average rates paid on all interest-bearing
liabilities (excluding subordinate notes), partially offset by a
$129.0 million decrease in the average balance of interest-bearing
deposits other than certificate accounts. The average cost of FHLB
advances increased to 4.56% for the quarter ended June 30,
2023, from 4.51% for the quarter ended March 31, 2023, from 1.99%
for the quarter ended June 30, 2022. The average balance of
our total borrowings, which included FHLB advances and subordinated
notes, increased $3.2 million to $59.8 million from $56.6 million
for the quarter ended March 31, 2023, as we used FHLB advances to
supplement the decrease in deposits during the quarter, and the
average balance of our total borrowings increased $45.8 million
from $14.1 million for the quarter ended June 30, 2022 as we
used FHLB advances to fund loan growth.
NIM (annualized) was 3.71% for the quarter ended
June 30, 2023, compared to 4.01% for the quarter ended March
31, 2023 and 3.82% for the quarter ended June 30, 2022. The
decrease in NIM from the prior quarter was primarily due to the
cost of funding increasing at a faster pace than the yield earned
on interest-earning assets, driven by the higher average balance of
certificate accounts at higher interest rates. The increase from
the same quarter a year ago was the result of an increase in
interest income on interest-earning assets, driven by the higher
average balance of and yield earned on loans, partially offset by
an increase in the cost of funding.
A release of credit losses of $331 thousand was
recorded for the quarter ended June 30, 2023, consisting of a
release of credit losses on loans of $242 thousand and a release of
reserve for unfunded loan commitments of $89 thousand. This
compared to a provision for credit losses of $10 thousand for the
quarter ended March 31, 2023, consisting of a provision for loan
losses of $245 thousand and a release of the reserve for unfunded
loan commitments of $235 thousand, and a provision for credit
losses of $592 thousand for the quarter ended June 30, 2022,
consisting of a provision for loan losses of $600 thousand and a
release of the reserve for unfunded loan commitments of $8
thousand. The Company adopted the CECL standard as of January 1,
2023. All amounts prior to January 1, 2023 reflect our use of the
incurred loss methodology to compute our allowance for credit
losses, which is not directly comparable to the new, current
expected credit loss methodology. The decrease in the provision for
credit losses for the quarter ended June 30, 2023 compared to
the quarter ended March 31, 2023 resulted primarily from the
decrease in our loans held-for-portfolio, with most of the decline
occurring within our commercial construction portfolio as projects
were completed. In addition, expected loss estimates consider
various factors including customer specific information, changes in
risk ratings, projected delinquencies, and the impact of economic
conditions on borrowers' ability to repay.
Noninterest income increased $876 thousand, or
86.3%, to $1.9 million for the quarter ended June 30, 2023,
compared to $1.0 million for both the quarter ended March 31, 2023,
and the quarter ended June 30, 2022. The increase from both
prior periods was primarily related to $568 thousand in earnings on
death benefits paid under our BOLI policies and an insurance
settlement received during the current quarter on a prior OREO
property included in service charges and fee income. Additionally,
the increase in noninterest income from the prior quarter was due
to a $236 thousand increase in the fair value adjustment on
mortgage servicing rights. The increase in noninterest income from
the comparable period in 2022 was also the result of a $26 thousand
increase in net gain on sale of loans as a result of an increase in
the amount of loans originated for sale and a $39 thousand increase
in the fair value adjustment on mortgage servicing rights,
partially offset by a decrease in our mortgage servicing income due
to the size of the servicing portfolio shrinking at a faster rate
than we can replace the loans due to the current interest rate
environment. Loans sold during the quarter ended June 30,
2023, totaled $6.2 million, compared to $3.9 million and $2.9
million of loans sold during the quarters ended March 31, 2023 and
June 30, 2022, respectively.
Noninterest expense decreased $118 thousand, or
1.5%, to $7.5 million for the quarter ended June 30, 2023,
compared to $7.6 million for the quarter ended March 31, 2023, and
increased $705 thousand, or 10.4%, from $6.8 million for the
quarter ended June 30, 2022. The decrease from the quarter
ended March 31, 2023 was primarily a result of lower stock
compensation expense due to annual grants occurring during the
first quarter of the year, partially offset by higher medical
expense as a result of an increase in claims. Data processing
expense decreased as a result of the full recovery of the write off
of one large project during the first quarter of 2023. The increase
in noninterest expense compared to the quarter ended June 30,
2022 was primarily due to an increase in salaries and benefits of
$731 thousand reflecting higher wages, lower deferred compensation
and higher medical expense, partially offset by a decrease in
incentive compensation as a result of a lower percentage earned on
loans originated, changes to incentive compensation programs, such
as the addition of non-production performance requirements, and
lower commission expense related to a decline in mortgage
originations. Data processing expense decreased as a result of the
recovery of expenses written off in the first quarter of 2023,
partially offset by higher expenses as a result of increased data
processing costs related to inflationary increases.
Balance Sheet Review, Capital Management
and Credit Quality
Assets at June 30, 2023 totaled $1.01 billion,
compared to $1.00 billion at March 31, 2023 and $937.0 million at
June 30, 2022. The increase in total assets from March 31,
2023 was primarily due to an increase in cash and cash equivalents,
partially offset by a decrease in loans held-for-portfolio. The
increase from one year ago was primarily a result of increases in
loans held-for-portfolio, partially offset by lower balances in
cash and cash equivalents and investment securities.
Cash and cash equivalents increased $18.6 million,
or 22.8%, to $100.2 million at June 30, 2023, compared to
$81.6 million at March 31, 2023, and increased $20.1 million, or
25.1%, from $80.1 million at June 30, 2022, consistent with
management's strategy to increase liquidity in light of the recent
volatility in the banking sector. The increase from the prior
quarter-end was primarily due to an increase in FHLB advances and a
decrease in loans held-for-portfolio, partially offset by a
decrease in deposits. The increase from one year ago was primarily
due to increases in deposits and FHLB advances, partially offset by
an increase in loans held-for-portfolio.
Investment securities decreased $211 thousand, or
2.0%, to $10.6 million at June 30, 2023, compared to $10.8
million at March 31, 2023, and decreased $1.0 million, or 8.8%,
from $11.6 million at June 30, 2022. Held-to-maturity
securities totaled $2.2 million at June 30, 2023, March 31,
2023, and June 30, 2022. Available-for-sale securities totaled
$8.4 million at June 30, 2023, compared to $8.6 million at
March 31, 2023 and $9.4 million at June 30, 2022. The decrease
in available-for-sale securities from the prior quarter-end was
primarily due to regularly scheduled payments, partially offset by
a lower net unrealized losses resulting from an increase in market
values during the quarter. The decrease from one year ago was
primarily due to the call of one municipal bond in the fourth
quarter of 2022, regularly scheduled payments and maturities, and
net unrealized losses resulting from the increases in market
interest rates during the past 12 months.
Loans held-for-portfolio decreased to $855.4
million at June 30, 2023, from $870.5 million at March 31,
2023 and $806.1 million at June 30, 2022. The decrease in
loans held-for-portfolio at June 30, 2023, compared to March
31, 2023, primarily resulted from decreases in all real estate
loans (excluding home equity), commercial business loans and
floating home loans, with the largest decreases occurring in
commercial and multifamily loans and construction and land loans.
The decreases in commercial and multifamily loans and construction
and land loans from March 31, 2023 primarily resulted from the
completion of commercial construction projects and the repayment of
a large multifamily loan. These decreases were partially offset by
increases in manufactured homes and other consumer loans. The
increase in loans held-for-portfolio at June 30, 2023,
compared to one year ago, primarily resulted from increases across
all loan categories, excluding commercial and multifamily real
estate loans, and other consumer loans. The increase from
June 30, 2022 in loans held-for-portfolio primarily resulted
from greater economic and lending activity in our market area
during the second-half of 2022.
Nonperforming assets (“NPAs”), which are comprised
of nonaccrual loans, including nonperforming loan modifications,
other real estate owned (“OREO”) and other repossessed assets,
increased $218 thousand, or 11.7%, to $2.1 million at June 30,
2023, from $1.9 million at March 31, 2023 and decreased $3.1
million, or 59.6%, from $5.2 million at June 30, 2022. The
increase in NPAs from the prior quarter-end was primarily due to
the addition of a nonaccrual commercial real estate loan, partially
offset by payoffs and normal payment amortization. The decrease
from one year ago was primarily due to the payoff of a $2.3 million
nonperforming multifamily loan during 2022, the payoff of $1.5
million in nonperforming one-to-four family loans related to a
single borrower, the payoff of a $243 thousand other consumer loan,
and the write-off of one residential property for $84 thousand,
partially offset by additions during the same period.
NPAs to total assets were 0.21%, 0.19% and 0.55% at
June 30, 2023, March 31, 2023 and June 30, 2022,
respectively. The allowance for credit losses on loans to total
loans outstanding was 0.96%, 0.98% and 0.88% at June 30, 2023,
March 31, 2023 and June 30, 2022, respectively. Net loan
charge-offs for the second quarter of 2023 totaled $73 thousand,
compared to $72 thousand for the first quarter of 2023, and $110
thousand for the second quarter of 2022.
The following table summarizes our NPAs at the
dates indicated (dollars in thousands):
|
June 30,2023 |
|
March 31,2023 |
|
December 31,2022 |
|
September 30,2022 |
|
June 30,2022 |
Nonperforming Loans: |
|
|
|
|
|
|
|
|
|
One-to-four family |
$ |
914 |
|
|
$ |
697 |
|
|
$ |
2,136 |
|
|
$ |
1,960 |
|
|
$ |
1,669 |
|
Home equity loans |
|
88 |
|
|
|
138 |
|
|
|
142 |
|
|
|
133 |
|
|
|
152 |
|
Commercial and multifamily |
|
323 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
2,307 |
|
Construction and land |
|
25 |
|
|
|
322 |
|
|
|
324 |
|
|
|
29 |
|
|
|
30 |
|
Manufactured homes |
|
156 |
|
|
|
134 |
|
|
|
96 |
|
|
|
99 |
|
|
|
117 |
|
Other consumer |
|
5 |
|
|
|
1 |
|
|
|
262 |
|
|
|
265 |
|
|
|
233 |
|
Total nonperforming loans |
|
1,511 |
|
|
|
1,293 |
|
|
|
2,959 |
|
|
|
2,486 |
|
|
|
4,509 |
|
OREO and Other Repossessed Assets: |
|
|
|
|
|
|
|
|
|
One-to-four family |
|
— |
|
|
|
— |
|
|
|
84 |
|
|
|
84 |
|
|
|
84 |
|
Commercial and multifamily |
|
575 |
|
|
|
575 |
|
|
|
575 |
|
|
|
575 |
|
|
|
575 |
|
Total OREO and repossessed assets |
|
575 |
|
|
|
575 |
|
|
|
659 |
|
|
|
659 |
|
|
|
659 |
|
Total NPAs |
$ |
2,086 |
|
|
$ |
1,868 |
|
|
$ |
3,618 |
|
|
$ |
3,145 |
|
|
$ |
5,168 |
|
|
|
|
|
|
|
|
|
|
|
Percentage of Nonperforming Loans: |
|
|
|
|
|
|
|
|
|
One-to-four family |
|
43.8 |
% |
|
|
37.3 |
% |
|
|
59.0 |
% |
|
|
62.3 |
% |
|
|
32.3 |
% |
Home equity loans |
|
4.2 |
|
|
|
7.4 |
|
|
|
3.9 |
|
|
|
4.2 |
|
|
|
2.9 |
|
Commercial and multifamily |
|
15.5 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
44.7 |
|
Construction and land |
|
1.2 |
|
|
|
17.3 |
|
|
|
9.0 |
|
|
|
0.9 |
|
|
|
0.6 |
|
Manufactured homes |
|
7.5 |
|
|
|
7.2 |
|
|
|
2.7 |
|
|
|
3.2 |
|
|
|
2.3 |
|
Other consumer |
|
0.2 |
|
|
|
— |
|
|
|
7.2 |
|
|
|
8.4 |
|
|
|
4.5 |
|
Total nonperforming loans |
|
72.4 |
|
|
|
69.2 |
|
|
|
81.8 |
|
|
|
79.0 |
|
|
|
87.3 |
|
Percentage of OREO and Other Repossessed
Assets: |
|
|
|
|
|
|
|
|
|
One-to-four family |
|
— |
|
|
|
— |
|
|
|
2.3 |
|
|
|
2.7 |
|
|
|
1.6 |
|
Commercial and multifamily |
|
27.6 |
|
|
|
30.8 |
|
|
|
15.9 |
|
|
|
18.3 |
|
|
|
11.1 |
|
Total OREO and repossessed assets |
|
27.6 |
|
|
|
30.8 |
|
|
|
18.2 |
|
|
|
21.0 |
|
|
|
12.7 |
|
Total NPAs |
|
100.0 |
% |
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
100.0 |
% |
The following table summarizes the allowance for
credit losses at the dates and for the periods indicated (dollars
in thousands, unaudited):
|
At or For the Quarter Ended: |
|
June 30,2023 |
|
March 31,2023 |
|
December 31,2022 |
|
September 30,2022 |
|
June 30,2022 |
Allowance for Credit Losses on Loans |
|
|
|
|
|
|
|
|
|
Balance at beginning of period |
$ |
8,532 |
|
|
$ |
7,599 |
|
|
$ |
7,489 |
|
|
$ |
7,117 |
|
|
$ |
6,407 |
|
Adoption of ASU 2016-13(1) |
|
— |
|
|
|
760 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
(Reversal of) provision for credit losses during the period |
|
(242 |
) |
|
|
245 |
|
|
|
125 |
|
|
|
375 |
|
|
|
600 |
|
Net (charge-offs)/recoveries during the period |
|
(73 |
) |
|
|
(72 |
) |
|
|
(15 |
) |
|
|
(3 |
) |
|
|
110 |
|
Balance at end of period |
$ |
8,217 |
|
|
$ |
8,532 |
|
|
$ |
7,599 |
|
|
$ |
7,489 |
|
|
$ |
7,117 |
|
Reserve for unfunded loan commitments |
|
|
|
|
|
|
|
|
|
Balance at beginning of period |
$ |
795 |
|
|
$ |
335 |
|
|
$ |
382 |
|
|
$ |
411 |
|
|
$ |
419 |
|
Adoption of ASU 2016-13(1) |
|
— |
|
|
|
695 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Provision for (reversal of) credit losses |
|
(89 |
) |
|
|
(235 |
) |
|
|
(47 |
) |
|
|
(29 |
) |
|
|
(8 |
) |
Balance at end of period |
|
706 |
|
|
|
795 |
|
|
|
335 |
|
|
|
382 |
|
|
|
411 |
|
Allowance for credit losses |
$ |
8,923 |
|
|
$ |
9,327 |
|
|
$ |
7,934 |
|
|
$ |
7,871 |
|
|
$ |
7,528 |
|
Allowance for credit losses on loans to total loans |
|
0.96 |
% |
|
|
0.98 |
% |
|
|
0.88 |
% |
|
|
0.88 |
% |
|
|
0.88 |
% |
Allowance for credit losses to total loans |
|
1.04 |
% |
|
|
1.07 |
% |
|
|
0.92 |
% |
|
|
0.92 |
% |
|
|
0.93 |
% |
Allowance for credit losses on loans to total nonperforming
loans |
|
543.81 |
% |
|
|
659.86 |
% |
|
|
256.81 |
% |
|
|
301.25 |
% |
|
|
157.84 |
% |
Allowance for credit losses to total nonperforming loans |
|
590.54 |
% |
|
|
721.46 |
% |
|
|
268.14 |
% |
|
|
316.60 |
% |
|
|
166.97 |
% |
(1) Represents the impact of adopting ASU
2016-13, Financial Instruments — Credit Losses on January 1, 2023.
Since that date, as a result of adopting ASU 2016-13, our
methodology to compute our allowance for credit losses has been
based on a current expected credit loss methodology, rather than
the previously applied incurred loss methodology.
Deposits decreased $19.4 million, or 2.3%, to
$822.3 million at June 30, 2023, from $841.6 million at March
31, 2023 and increased $36.3 million, or 4.6%, from $786.0 million
at June 30, 2022. The decrease in deposits compared to the
prior quarter-end was primarily a result of decreases in
noninterest-bearing, interest-bearing and savings accounts,
partially offset by higher balances in certificate and money market
accounts. The overall decrease was largely driven by seasonal
payments made for federal, state and employment taxes in April and
a decrease in escrow custodial accounts. The increase in our
deposits compared to one year ago was mainly a result of an
increase in certificate accounts, which was primarily used to fund
organic loan growth. Our noninterest-bearing deposits decreased
$14.6 million, or 8.4%, to $158.5 million at June 30, 2023,
compared to $173.1 million at March 31, 2023 and decreased $28.1
million, or 15.1%, from $186.6 million at June 30, 2022.
Noninterest-bearing deposits represented 19.3%, 20.6% and 23.7% of
total deposits at June 30, 2023, March 31, 2023 and
June 30, 2022, respectively.
There were $60.0 million of outstanding FHLB
advances at June 30, 2023, as compared to $35.0 million at
March 31, 2023 and $30.0 million at June 30, 2022. FHLB
advances are primarily used to support organic loan growth and to
maintain liquidity ratios in line with our asset/liability
objectives. Of the $60.0 million of FHLB advances outstanding at
June 30, 2023, $20.0 million were overnight advances and $40.0
million were long-term with maturities ranging from late 2024
through early 2028. Subordinated notes, net totaled $11.7 million
at each of June 30, 2023, March 31, 2023 and June 30,
2022.
Stockholders’ equity totaled $99.9 million at
June 30, 2023, an increase of $1.3 million, or 1.3%, from
$98.6 million at March 31, 2023, and an increase of $6.9 million,
or 7.4%, from $93.1 million at June 30, 2022. The increase in
stockholders’ equity from March 31, 2023 was primarily the result
of $2.9 million of net income earned during the current quarter, a
$60 thousand decrease in accumulated other comprehensive loss, net
of tax, and $56 thousand in proceeds from exercises of stock
options, partially offset by $1.2 million in stock repurchases and
the payment of $494 thousand in cash dividends to Company
stockholders. In addition, stockholders' equity at both June 30,
2023 and March 31, 2023 was negatively impacted by the adoption of
CECL in the first quarter of 2023, which resulted in an after-tax
decrease to opening retained earnings of $1.1 million.
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 one loan
production office located in the Madison Park neighborhood of
Seattle, Washington. For more information, please visit
www.soundcb.com.
Forward Looking Statement
Disclaimer
When used in this press release and in documents
filed or furnished by Sound Financial Bancorp, Inc. (the "Company")
with the Securities and Exchange Commission (the "SEC"), in the
Company's other 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 listed below or
because of other factors that we cannot foresee that could cause
our actual results to be materially different from historical
results or from any future results expressed or implied by such
forward-looking statements. You are cautioned not to place undue
reliance on any forward-looking statements, which speak only as of
the date made.
Factors which could cause actual results to
differ materially, include, but are not limited to: potential
adverse impacts to economic conditions in the Company’s local
market areas, other markets where the Company has lending
relationships, or other aspects of the Company's business
operations or financial markets, including, without limitation, as
a result of employment levels, labor shortages and the effects of
inflation or deflation, a potential recession or slowed economic
growth caused by increasing political instability from acts of war
including Russia's invasion of Ukraine, as well as supply chain
disruptions; higher inflation and impact of current and future
monetary policies of the Federal Reserve in response thereto; the
impact of bank failures or adverse developments at other banks and
related negative press about the banking industry in general on
investor and depositor sentiment; changes in consumer spending,
borrowing and savings habits; 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 the Bank by
their regulators; increased competition; changes in management's
business strategies; legislative changes; 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 subsequent Quarterly Reports on Form 10-Q and other
documents filed with or furnished to the Securities and Exchange
Commission, which are available at www.soundcb.com and on the SEC's
website at www.sec.gov. The risks inherent in these factors could
cause the Company's actual results to differ materially from those
expressed in any forward-looking statements made by, or on behalf
of, the Company and could negatively affect the Company's operating
and stock performance.
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.
CONSOLIDATED INCOME
STATEMENTS(Dollars in thousands, unaudited)
|
|
For the Quarter Ended |
|
|
June 30,2023 |
|
March 31,2023 |
|
December 31,2022 |
|
September 30,2022 |
|
June 30,2022 |
Interest income |
|
$ |
12,412 |
|
|
$ |
12,174 |
|
|
$ |
11,819 |
|
|
$ |
10,776 |
|
$ |
8,986 |
|
Interest expense |
|
|
3,668 |
|
|
|
2,803 |
|
|
|
2,131 |
|
|
|
1,179 |
|
|
594 |
|
Net interest income |
|
|
8,744 |
|
|
|
9,371 |
|
|
|
9,688 |
|
|
|
9,597 |
|
|
8,392 |
|
(Release of) provision for credit losses(1) |
|
|
(331 |
) |
|
|
10 |
|
|
|
78 |
|
|
|
346 |
|
|
592 |
|
Net interest income after (release of) provision for credit
losses |
|
|
9,075 |
|
|
|
9,361 |
|
|
|
9,610 |
|
|
|
9,251 |
|
|
7,800 |
|
Noninterest income: |
|
|
|
|
|
|
|
|
|
|
Service charges and fee income |
|
|
670 |
|
|
|
581 |
|
|
|
618 |
|
|
|
604 |
|
|
596 |
|
Earnings (loss) on bank-owned life insurance |
|
|
718 |
|
|
|
151 |
|
|
|
175 |
|
|
|
59 |
|
|
(35 |
) |
Mortgage servicing income |
|
|
297 |
|
|
|
299 |
|
|
|
303 |
|
|
|
306 |
|
|
313 |
|
Fair value adjustment on mortgage servicing rights |
|
|
96 |
|
|
|
(140 |
) |
|
|
(127 |
) |
|
|
9 |
|
|
57 |
|
Net gain on sale of loans |
|
|
110 |
|
|
|
78 |
|
|
|
49 |
|
|
|
48 |
|
|
84 |
|
Total noninterest income |
|
|
1,891 |
|
|
|
969 |
|
|
|
1,018 |
|
|
|
1,026 |
|
|
1,015 |
|
Noninterest expense: |
|
|
|
|
|
|
|
|
|
|
Salaries and benefits |
|
|
4,700 |
|
|
|
4,485 |
|
|
|
4,234 |
|
|
|
4,044 |
|
|
3,969 |
|
Operations |
|
|
1,491 |
|
|
|
1,441 |
|
|
|
1,536 |
|
|
|
1,610 |
|
|
1,436 |
|
Regulatory assessments |
|
|
154 |
|
|
|
153 |
|
|
|
136 |
|
|
|
116 |
|
|
99 |
|
Occupancy |
|
|
435 |
|
|
|
459 |
|
|
|
418 |
|
|
|
447 |
|
|
439 |
|
Data processing |
|
|
788 |
|
|
|
993 |
|
|
|
841 |
|
|
|
848 |
|
|
849 |
|
Total noninterest expense |
|
|
7,497 |
|
|
|
7,615 |
|
|
|
7,165 |
|
|
|
7,065 |
|
|
6,792 |
|
Income before provision for income taxes |
|
|
3,469 |
|
|
|
2,715 |
|
|
|
3,463 |
|
|
|
3,212 |
|
|
2,023 |
|
Provision for income taxes |
|
|
577 |
|
|
|
547 |
|
|
|
539 |
|
|
|
666 |
|
|
409 |
|
Net income |
|
$ |
2,892 |
|
|
$ |
2,168 |
|
|
$ |
2,924 |
|
|
$ |
2,546 |
|
$ |
1,614 |
|
(1) Amounts for periods prior to January 1, 2023
include the reclassification of the provision for (release of)
unfunded loan commitment expense from operations expense for
comparability purposes. However, these prior period amounts were
calculated using the previously applied incurred loss methodology,
rather than the current expected credit loss methodology adopted on
January 1, 2023, and the balances are not directly comparable.
CONSOLIDATED INCOME
STATEMENTS(Dollars in thousands, unaudited)
|
|
For theSix Months
EndedJune 30, |
|
|
|
2023 |
|
|
|
2022 |
|
Interest income |
|
$ |
24,586 |
|
|
$ |
17,199 |
|
Interest expense |
|
|
6,470 |
|
|
|
1,189 |
|
Net interest income |
|
|
18,116 |
|
|
|
16,010 |
|
(Release of) provision for credit losses(1) |
|
|
(321 |
) |
|
|
725 |
|
Net interest income after (release of) provision for credit
losses |
|
|
18,437 |
|
|
|
15,285 |
|
Noninterest income: |
|
|
|
|
Service charges and fee income |
|
|
1,251 |
|
|
|
1,146 |
|
Earnings on bank-owned life insurance |
|
|
868 |
|
|
|
(14 |
) |
Mortgage servicing income |
|
|
596 |
|
|
|
633 |
|
Fair value adjustment on mortgage servicing rights |
|
|
(44 |
) |
|
|
325 |
|
Net gain on sale of loans |
|
|
187 |
|
|
|
450 |
|
Total noninterest income |
|
|
2,858 |
|
|
|
2,540 |
|
Noninterest expense: |
|
|
|
|
Salaries and benefits |
|
|
9,185 |
|
|
|
8,137 |
|
Operations |
|
|
2,933 |
|
|
|
2,743 |
|
Regulatory assessments |
|
|
307 |
|
|
|
200 |
|
Occupancy |
|
|
894 |
|
|
|
872 |
|
Data processing |
|
|
1,780 |
|
|
|
1,670 |
|
Net gain on OREO and repossessed assets |
|
|
13 |
|
|
|
— |
|
Total noninterest expense |
|
|
15,112 |
|
|
|
13,622 |
|
Income before provision for income taxes |
|
|
6,183 |
|
|
|
4,203 |
|
Provision for income taxes |
|
|
1,124 |
|
|
|
867 |
|
Net income |
|
$ |
5,059 |
|
|
$ |
3,336 |
|
(1) Amounts for the six months ended June 30, 2022
include the reclassification of the provision for (release of)
unfunded loan commitment expense from operations expense for
comparability purposes. However, the prior period amount was
calculated using the previously applied incurred loss methodology,
rather than the current expected credit loss methodology adopted on
January 1, 2023, and the balance is not directly comparable.
CONSOLIDATED BALANCE SHEET(Dollars in thousands,
unaudited)
|
|
June 30,2023 |
|
March 31,2023 |
|
December 31,2022 |
|
September 30,2022 |
|
June 30,2022 |
ASSETS |
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
100,169 |
|
|
$ |
81,580 |
|
|
$ |
57,836 |
|
|
$ |
76,064 |
|
|
$ |
80,051 |
|
Available-for-sale securities, at fair value |
|
|
8,398 |
|
|
|
8,601 |
|
|
|
10,207 |
|
|
|
10,396 |
|
|
|
9,382 |
|
Held-to-maturity securities, at amortized cost |
|
|
2,182 |
|
|
|
2,190 |
|
|
|
2,199 |
|
|
|
2,207 |
|
|
|
2,215 |
|
Loans held-for-sale |
|
|
1,716 |
|
|
|
1,414 |
|
|
|
— |
|
|
|
1,908 |
|
|
|
100 |
|
Loans held-for-portfolio |
|
|
855,429 |
|
|
|
870,545 |
|
|
|
865,981 |
|
|
|
851,447 |
|
|
|
806,078 |
|
Allowance for credit losses - loans |
|
|
(8,217 |
) |
|
|
(8,532 |
) |
|
|
(7,599 |
) |
|
|
(7,489 |
) |
|
|
(7,117 |
) |
Total loans held-for-portfolio, net |
|
|
847,212 |
|
|
|
862,013 |
|
|
|
858,382 |
|
|
|
843,958 |
|
|
|
798,961 |
|
Accrued interest receivable |
|
|
3,100 |
|
|
|
3,152 |
|
|
|
3,083 |
|
|
|
2,809 |
|
|
|
2,350 |
|
Bank-owned life insurance, net |
|
|
21,550 |
|
|
|
21,465 |
|
|
|
21,314 |
|
|
|
21,140 |
|
|
|
21,081 |
|
Other real estate owned ("OREO") and other repossessed assets,
net |
|
|
575 |
|
|
|
575 |
|
|
|
659 |
|
|
|
659 |
|
|
|
659 |
|
Mortgage servicing rights, at fair value |
|
|
4,726 |
|
|
|
4,587 |
|
|
|
4,687 |
|
|
|
4,787 |
|
|
|
4,754 |
|
Federal Home Loan Bank ("FHLB") stock, at cost |
|
|
3,583 |
|
|
|
2,583 |
|
|
|
2,832 |
|
|
|
2,897 |
|
|
|
2,317 |
|
Premises and equipment, net |
|
|
5,321 |
|
|
|
5,370 |
|
|
|
5,513 |
|
|
|
5,505 |
|
|
|
5,632 |
|
Right-of-use assets |
|
|
4,966 |
|
|
|
5,200 |
|
|
|
5,102 |
|
|
|
5,319 |
|
|
|
5,548 |
|
Other assets |
|
|
7,276 |
|
|
|
5,633 |
|
|
|
4,537 |
|
|
|
4,597 |
|
|
|
3,954 |
|
TOTAL ASSETS |
|
$ |
1,010,774 |
|
|
$ |
1,004,363 |
|
|
$ |
976,351 |
|
|
$ |
982,246 |
|
|
$ |
937,004 |
|
LIABILITIES |
|
|
|
|
|
|
|
|
|
|
Interest-bearing deposits |
|
$ |
663,765 |
|
|
$ |
668,568 |
|
|
$ |
635,567 |
|
|
$ |
623,122 |
|
|
$ |
599,377 |
|
Noninterest-bearing deposits |
|
|
158,488 |
|
|
|
173,079 |
|
|
|
173,196 |
|
|
|
192,275 |
|
|
|
186,609 |
|
Total deposits |
|
|
822,253 |
|
|
|
841,647 |
|
|
|
808,763 |
|
|
|
815,397 |
|
|
|
785,986 |
|
Borrowings |
|
|
60,000 |
|
|
|
35,000 |
|
|
|
43,000 |
|
|
|
44,500 |
|
|
|
30,000 |
|
Accrued interest payable |
|
|
619 |
|
|
|
385 |
|
|
|
395 |
|
|
|
109 |
|
|
|
194 |
|
Lease liabilities |
|
|
5,306 |
|
|
|
5,543 |
|
|
|
5,448 |
|
|
|
5,749 |
|
|
|
5,980 |
|
Other liabilities |
|
|
10,243 |
|
|
|
9,398 |
|
|
|
8,318 |
|
|
|
8,071 |
|
|
|
9,210 |
|
Advance payments from borrowers for taxes and insurance |
|
|
732 |
|
|
|
2,099 |
|
|
|
1,046 |
|
|
|
1,799 |
|
|
|
922 |
|
Subordinated notes, net |
|
|
11,697 |
|
|
|
11,686 |
|
|
|
11,676 |
|
|
|
11,665 |
|
|
|
11,655 |
|
TOTAL LIABILITIES |
|
|
910,850 |
|
|
|
905,758 |
|
|
|
878,646 |
|
|
|
887,290 |
|
|
|
843,947 |
|
STOCKHOLDERS' EQUITY: |
|
|
|
|
|
|
|
|
|
|
Common stock |
|
|
25 |
|
|
|
26 |
|
|
|
26 |
|
|
|
26 |
|
|
|
26 |
|
Additional paid-in capital |
|
|
28,070 |
|
|
|
28,251 |
|
|
|
28,004 |
|
|
|
27,886 |
|
|
|
27,777 |
|
Retained earnings |
|
|
72,923 |
|
|
|
71,362 |
|
|
|
70,792 |
|
|
|
68,309 |
|
|
|
66,203 |
|
Accumulated other comprehensive loss, net of tax |
|
|
(1,094 |
) |
|
|
(1,034 |
) |
|
|
(1,117 |
) |
|
|
(1,265 |
) |
|
|
(949 |
) |
TOTAL STOCKHOLDERS' EQUITY |
|
|
99,924 |
|
|
|
98,605 |
|
|
|
97,705 |
|
|
|
94,956 |
|
|
|
93,057 |
|
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY |
|
$ |
1,010,774 |
|
|
$ |
1,004,363 |
|
|
$ |
976,351 |
|
|
$ |
982,246 |
|
|
$ |
937,004 |
|
KEY FINANCIAL
RATIOS(unaudited)
|
|
For the Quarter Ended |
|
|
June 30,2023 |
|
|
March 31,2023 |
|
|
December 31,2022 |
|
|
September 30,2022 |
|
|
June 30,2022 |
Annualized return on average assets |
|
1.17 |
% |
|
|
0.88 |
% |
|
|
1.16 |
% |
|
|
1.04 |
% |
|
|
0.70 |
% |
Annualized return on average equity |
|
11.66 |
|
|
|
8.88 |
|
|
|
11.94 |
|
|
|
10.61 |
|
|
|
6.86 |
|
Annualized net interest margin(1) |
|
3.71 |
|
|
|
4.01 |
|
|
|
4.05 |
|
|
|
4.13 |
|
|
|
3.83 |
|
Annualized efficiency ratio(2) |
|
70.49 |
% |
|
|
73.65 |
% |
|
|
66.93 |
% |
|
|
66.51 |
% |
|
|
72.20 |
% |
(1) Net interest income divided by average interest
earning assets.(2) Noninterest expense divided by total revenue
(net interest income and noninterest income).
PER COMMON SHARE
DATA(unaudited)
|
|
At or For the Quarter Ended |
|
|
June 30, 2023 |
|
|
March 31, 2023 |
|
December 31, 2022 |
|
September 30, 2022 |
|
June 30, 2022 |
Basic earnings per share |
|
$ |
1.12 |
|
|
$ |
0.84 |
|
|
$ |
1.13 |
|
|
$ |
0.99 |
|
|
$ |
0.62 |
|
Diluted earnings per share |
|
$ |
1.11 |
|
|
$ |
0.83 |
|
|
$ |
1.12 |
|
|
$ |
0.97 |
|
|
$ |
0.61 |
|
Weighted-average basic shares outstanding |
|
|
2,574,677 |
|
|
|
2,578,413 |
|
|
|
2,565,407 |
|
|
|
2,562,551 |
|
|
|
2,584,179 |
|
Weighted-average diluted shares outstanding |
|
|
2,591,233 |
|
|
|
2,604,043 |
|
|
|
2,600,905 |
|
|
|
2,597,690 |
|
|
|
2,615,299 |
|
Common shares outstanding at period-end |
|
|
2,573,223 |
|
|
|
2,601,443 |
|
|
|
2,583,619 |
|
|
|
2,581,949 |
|
|
|
2,578,595 |
|
Book value per share |
|
$ |
38.83 |
|
|
$ |
37.90 |
|
|
$ |
37.82 |
|
|
$ |
36.78 |
|
|
$ |
36.09 |
|
AVERAGE BALANCE, AVERAGE YIELD EARNED, AND
AVERAGE RATE PAID(Dollars in thousands, unaudited)
The following tables present, for the periods
indicated, the total dollar amount of interest income from average
interest-earning assets and the resultant yields, as well as the
interest expense on average interest-bearing liabilities, expressed
both in dollars and rates. Income and yields on tax-exempt
obligations have not been computed on a tax equivalent basis. All
average balances are daily average balances. Nonaccrual loans have
been included in the table as loans carrying a zero yield for the
period they have been on nonaccrual (dollars in thousands).
|
Three Months Ended |
|
June 30, 2023 |
|
March 31, 2023 |
|
June 30, 2022 |
|
Average Outstanding Balance |
|
Interest Earned/Paid |
|
Yield/Rate |
|
Average Outstanding Balance |
|
Interest Earned/Paid |
|
Yield/Rate |
|
Average Outstanding Balance |
|
Interest Earned/Paid |
|
Yield/Rate |
Interest-Earning Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans receivable |
$ |
866,438 |
|
|
$ |
11,551 |
|
5.35 |
% |
|
$ |
867,724 |
|
|
$ |
11,381 |
|
5.32 |
% |
|
$ |
741,626 |
|
|
$ |
8,697 |
|
4.70 |
% |
Investments and interest-bearing cash |
|
79,001 |
|
|
|
861 |
|
4.37 |
% |
|
|
80,244 |
|
|
|
793 |
|
4.01 |
% |
|
|
138,943 |
|
|
|
289 |
|
0.83 |
% |
Total interest-earning assets |
$ |
945,439 |
|
|
$ |
12,412 |
|
5.27 |
% |
|
$ |
947,968 |
|
|
$ |
12,174 |
|
5.21 |
% |
|
$ |
880,569 |
|
|
$ |
8,986 |
|
4.09 |
% |
Interest-Bearing Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Savings and money market accounts |
$ |
163,165 |
|
|
$ |
350 |
|
0.86 |
% |
|
$ |
164,270 |
|
|
$ |
93 |
|
0.23 |
% |
|
$ |
195,339 |
|
|
$ |
29 |
|
0.06 |
% |
Demand and NOW accounts |
|
215,120 |
|
|
|
182 |
|
0.34 |
% |
|
|
241,088 |
|
|
|
267 |
|
0.45 |
% |
|
|
311,941 |
|
|
|
125 |
|
0.16 |
% |
Certificate accounts |
|
279,774 |
|
|
|
2,421 |
|
3.47 |
% |
|
|
246,578 |
|
|
|
1,776 |
|
2.92 |
% |
|
|
95,974 |
|
|
|
260 |
|
1.09 |
% |
Subordinated notes |
|
11,693 |
|
|
|
168 |
|
5.76 |
% |
|
|
11,683 |
|
|
|
168 |
|
5.83 |
% |
|
|
11,648 |
|
|
|
168 |
|
5.79 |
% |
Borrowings |
|
48,138 |
|
|
|
547 |
|
4.56 |
% |
|
|
44,911 |
|
|
|
499 |
|
4.51 |
% |
|
|
2,418 |
|
|
|
12 |
|
1.99 |
% |
Total interest-bearing liabilities |
$ |
717,890 |
|
|
|
3,668 |
|
2.05 |
% |
|
$ |
708,530 |
|
|
|
2,803 |
|
1.60 |
% |
|
$ |
617,320 |
|
|
|
594 |
|
0.39 |
% |
Net interest income/spread |
|
|
$ |
8,744 |
|
3.22 |
% |
|
|
|
$ |
9,371 |
|
3.60 |
% |
|
|
|
$ |
8,392 |
|
3.71 |
% |
Net interest margin |
|
|
|
|
3.71 |
% |
|
|
|
|
|
4.01 |
% |
|
|
|
|
|
3.82 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ratio of interest-earning assets to interest-bearing
liabilities |
|
132 |
% |
|
|
|
|
|
|
134 |
% |
|
|
|
|
|
|
143 |
% |
|
|
|
|
Noninterest-bearing deposits |
$ |
159,284 |
|
|
|
|
|
|
$ |
172,805 |
|
|
|
|
|
|
$ |
192,843 |
|
|
|
|
|
Total deposits |
|
817,343 |
|
|
$ |
2,953 |
|
1.45 |
% |
|
|
824,741 |
|
|
$ |
2,136 |
|
1.05 |
% |
|
|
796,097 |
|
|
$ |
414 |
|
0.21 |
% |
Total funding(1) |
|
877,174 |
|
|
|
3,668 |
|
1.68 |
% |
|
|
881,335 |
|
|
|
2,803 |
|
1.29 |
% |
|
|
810,163 |
|
|
|
594 |
|
0.29 |
% |
(1) Total funding is the sum of average
interest-bearing liabilities and average noninterest-bearing
deposits. The cost of total funding is calculated as annualized
total interest expense divided by average total funding.
|
Six Months Ended |
|
June 30, 2023 |
|
June 30, 2022 |
|
Average Outstanding Balance |
|
Interest Earned/Paid |
|
Yield/Rate |
|
Average Outstanding Balance |
|
Interest Earned/Paid |
|
Yield/Rate |
Interest-Earning Assets: |
|
|
|
|
|
|
|
|
|
|
|
Loans receivable |
$ |
867,078 |
|
|
$ |
22,932 |
|
5.33 |
% |
|
$ |
718,402 |
|
|
$ |
16,772 |
|
4.71 |
% |
Investments and interest-bearing cash |
|
78,499 |
|
|
|
1,654 |
|
4.25 |
% |
|
|
162,304 |
|
|
|
427 |
|
0.53 |
% |
Total interest-earning assets |
$ |
945,577 |
|
|
$ |
24,586 |
|
5.24 |
% |
|
$ |
880,706 |
|
|
$ |
17,199 |
|
3.94 |
% |
Interest-Bearing Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
Savings and money market accounts |
$ |
163,714 |
|
|
$ |
477 |
|
0.59 |
% |
|
$ |
195,731 |
|
|
$ |
59 |
|
0.06 |
% |
Demand and NOW accounts |
|
228,032 |
|
|
|
414 |
|
0.37 |
% |
|
|
313,552 |
|
|
|
247 |
|
0.16 |
% |
Certificate accounts |
|
263,268 |
|
|
|
4,197 |
|
3.21 |
% |
|
|
99,127 |
|
|
|
535 |
|
1.09 |
% |
Subordinated notes |
|
11,688 |
|
|
|
336 |
|
5.80 |
% |
|
|
11,643 |
|
|
|
336 |
|
5.82 |
% |
Borrowings |
|
46,533 |
|
|
|
1,046 |
|
4.53 |
% |
|
|
1,215 |
|
|
|
12 |
|
1.99 |
% |
Total interest-bearing liabilities |
$ |
713,235 |
|
|
|
6,470 |
|
1.83 |
% |
|
$ |
621,268 |
|
|
|
1,189 |
|
0.39 |
% |
Net interest income/spread |
|
|
$ |
18,116 |
|
3.41 |
% |
|
|
|
$ |
16,010 |
|
3.55 |
% |
Net interest margin |
|
|
|
|
3.86 |
% |
|
|
|
|
|
3.67 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Ratio of interest-earning assets to interest-bearing
liabilities |
|
133 |
% |
|
|
|
|
|
|
142 |
% |
|
|
|
|
Noninterest-bearing deposits |
$ |
166,007 |
|
|
|
|
|
|
$ |
193,695 |
|
|
|
|
|
Total deposits |
|
821,021 |
|
|
$ |
5,088 |
|
1.25 |
% |
|
|
802,105 |
|
|
$ |
841 |
|
0.21 |
% |
Total funding (1) |
|
879,242 |
|
|
|
6,470 |
|
1.48 |
% |
|
|
814,963 |
|
|
|
1,189 |
|
0.29 |
% |
(1) Total funding is the sum of average
interest-bearing liabilities and average noninterest-bearing
deposits. The cost of total funding is calculated as annualized
total interest expense divided by average total funding.
LOANS(Dollars in thousands, unaudited)
|
|
June 30,2023 |
|
March 31,2023 |
|
December 31,2022 |
|
September 30,2022 |
|
June 30,2022 |
Real estate loans: |
|
|
|
|
|
|
|
|
|
|
One-to-four family |
|
$ |
273,720 |
|
|
$ |
274,687 |
|
|
$ |
274,638 |
|
|
$ |
270,009 |
|
|
$ |
250,295 |
|
Home equity |
|
|
19,760 |
|
|
|
19,631 |
|
|
|
19,548 |
|
|
|
17,642 |
|
|
|
16,374 |
|
Commercial and multifamily |
|
|
301,828 |
|
|
|
307,558 |
|
|
|
313,358 |
|
|
|
315,677 |
|
|
|
307,462 |
|
Construction and land |
|
|
117,382 |
|
|
|
125,983 |
|
|
|
116,878 |
|
|
|
112,980 |
|
|
|
101,394 |
|
Total real estate loans |
|
|
712,690 |
|
|
|
727,859 |
|
|
|
724,422 |
|
|
|
716,308 |
|
|
|
675,525 |
|
Consumer Loans: |
|
|
|
|
|
|
|
|
|
|
Manufactured homes |
|
|
31,619 |
|
|
|
27,904 |
|
|
|
26,953 |
|
|
|
25,375 |
|
|
|
23,264 |
|
Floating homes |
|
|
70,596 |
|
|
|
73,579 |
|
|
|
74,443 |
|
|
|
69,968 |
|
|
|
66,573 |
|
Other consumer |
|
|
17,915 |
|
|
|
17,378 |
|
|
|
17,923 |
|
|
|
17,565 |
|
|
|
18,076 |
|
Total consumer loans |
|
|
120,130 |
|
|
|
118,861 |
|
|
|
119,319 |
|
|
|
112,908 |
|
|
|
107,913 |
|
Commercial business loans |
|
|
23,939 |
|
|
|
25,192 |
|
|
|
23,815 |
|
|
|
23,986 |
|
|
|
24,302 |
|
Total loans |
|
|
856,759 |
|
|
|
871,912 |
|
|
|
867,556 |
|
|
|
853,202 |
|
|
|
807,740 |
|
Less: |
|
|
|
|
|
|
|
|
|
|
Premiums |
|
|
884 |
|
|
|
946 |
|
|
|
973 |
|
|
|
984 |
|
|
|
1,010 |
|
Deferred fees, net |
|
|
(2,214 |
) |
|
|
(2,313 |
) |
|
|
(2,548 |
) |
|
|
(2,739 |
) |
|
|
(2,672 |
) |
Allowance for credit losses - loans |
|
|
(8,217 |
) |
|
|
(8,532 |
) |
|
|
(7,599 |
) |
|
|
(7,489 |
) |
|
|
(7,117 |
) |
Total loans held-for-portfolio, net |
|
$ |
847,212 |
|
|
$ |
862,013 |
|
|
$ |
858,382 |
|
|
$ |
843,958 |
|
|
$ |
798,961 |
|
DEPOSITS(Dollars in thousands,
unaudited)
|
|
June 30,2023 |
|
|
March 31,2023 |
|
|
December 31,2022 |
|
|
September 30,2022 |
|
|
June 30,2022 |
Noninterest-bearing |
|
$ |
158,488 |
|
|
$ |
173,079 |
|
|
$ |
173,196 |
|
|
$ |
192,275 |
|
|
$ |
186,609 |
|
Interest-bearing |
|
|
208,571 |
|
|
|
235,836 |
|
|
|
254,982 |
|
|
|
284,267 |
|
|
|
312,439 |
|
Savings |
|
|
79,349 |
|
|
|
83,991 |
|
|
|
95,641 |
|
|
|
99,602 |
|
|
|
103,311 |
|
Money market |
|
|
87,360 |
|
|
|
77,624 |
|
|
|
74,639 |
|
|
|
84,692 |
|
|
|
87,672 |
|
Certificates |
|
|
288,485 |
|
|
|
271,117 |
|
|
|
210,305 |
|
|
|
154,561 |
|
|
|
95,955 |
|
Total deposits |
|
$ |
822,253 |
|
|
$ |
841,647 |
|
|
$ |
808,763 |
|
|
$ |
815,397 |
|
|
$ |
785,986 |
|
CREDIT QUALITY DATA(Dollars in
thousands, unaudited)
|
|
At or For the Quarter Ended |
|
|
June 30,2023 |
|
March 31,2023 |
|
December 31,2022 |
|
September 30,2022 |
|
June 30,2022 |
Total nonperforming loans |
|
$ |
1,511 |
|
|
$ |
1,293 |
|
|
$ |
2,958 |
|
|
$ |
2,486 |
|
|
$ |
4,509 |
|
OREO and other repossessed assets |
|
|
575 |
|
|
|
575 |
|
|
|
659 |
|
|
|
659 |
|
|
|
659 |
|
Total nonperforming assets |
|
$ |
2,086 |
|
|
$ |
1,868 |
|
|
$ |
3,617 |
|
|
$ |
3,145 |
|
|
$ |
5,168 |
|
Net (charge-offs) recoveries during the quarter |
|
$ |
(73 |
) |
|
$ |
(72 |
) |
|
$ |
(15 |
) |
|
$ |
(3 |
) |
|
$ |
110 |
|
(Release of) provision for credit losses during the quarter |
|
|
(331 |
) |
|
|
10 |
|
|
|
78 |
|
|
|
346 |
|
|
|
592 |
|
Allowance for credit losses - loans |
|
|
8,217 |
|
|
|
8,532 |
|
|
|
7,599 |
|
|
|
7,489 |
|
|
|
7,117 |
|
Allowance for credit losses - loans to total loans |
|
|
0.96 |
% |
|
|
0.98 |
% |
|
|
0.88 |
% |
|
|
0.88 |
% |
|
|
0.88 |
% |
Allowance for credit losses - loans to total nonperforming
loans |
|
|
543.94 |
% |
|
|
659.83 |
% |
|
|
256.89 |
% |
|
|
301.25 |
% |
|
|
157.84 |
% |
Nonperforming loans to total loans |
|
|
0.18 |
% |
|
|
0.15 |
% |
|
|
0.34 |
% |
|
|
0.29 |
% |
|
|
0.56 |
% |
Nonperforming assets to total assets |
|
|
0.21 |
% |
|
|
0.19 |
% |
|
|
0.37 |
% |
|
|
0.32 |
% |
|
|
0.55 |
% |
OTHER STATISTICS(Dollars in
thousands, unaudited)
|
|
At or For the Quarter Ended |
|
|
June 30,2023 |
|
March 31,2023 |
|
December 31,2022 |
|
September 30,2022 |
|
June 30,2022 |
|
|
|
|
|
|
|
|
|
|
|
Total loans to total deposits |
|
|
104.20 |
% |
|
|
103.60 |
% |
|
|
107.27 |
% |
|
|
104.64 |
% |
|
|
102.77 |
% |
Noninterest-bearing deposits to total deposits |
|
|
19.27 |
% |
|
|
20.56 |
% |
|
|
21.41 |
% |
|
|
23.58 |
% |
|
|
23.74 |
% |
|
|
|
|
|
|
|
|
|
|
|
Average total assets for the quarter |
|
$ |
992,822 |
|
|
$ |
996,516 |
|
|
$ |
996,042 |
|
|
$ |
969,254 |
|
|
$ |
920,984 |
|
Average total equity for the quarter |
|
$ |
99,503 |
|
|
$ |
99,028 |
|
|
$ |
97,119 |
|
|
$ |
95,244 |
|
|
$ |
94,397 |
|
Contact
Financial: |
|
|
Wes Ochs |
|
|
|
Executive Vice President/CFO |
|
|
(206) 436-8587 |
|
|
|
|
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Media: |
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Laurie Stewart |
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President/CEO |
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(206) 436-1495 |
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Sound Financial Bancorp (NASDAQ:SFBC)
Historical Stock Chart
From Apr 2024 to May 2024
Sound Financial Bancorp (NASDAQ:SFBC)
Historical Stock Chart
From May 2023 to May 2024