[X]
|
ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
For
the fiscal year ended December 31, 2008
|
|
OR
|
|
[ ]
|
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
For
the transition period
from
to
|
United
States
|
26-0776123
|
(State
or other jurisdiction of incorporation or organization)
|
(I.R.S.
Employer Identification No.)
|
2005
5
th
Avenue, Suite 200, Seattle Washington
(Address
of principal executive offices)
|
98121
(Zip
Code)
|
2008
|
2007
|
2006
|
2005
|
2004
|
||||||||||||||||||||||||||||||||||||
Amount
|
Percent
|
Amount
|
Percent
|
Amount
|
Amount
|
Percent
|
Amount
|
Percent
|
Amount
|
|||||||||||||||||||||||||||||||
Real
estate loans:
|
||||||||||||||||||||||||||||||||||||||||
One-
to four-family
|
$ | 90,863 | 34.33 | % | $ | 84,788 | 38.37 | % | $ | 86,102 | 41.60 | % | $ | 75,554 | 39.34 | % | $ | 67,599 | 42.55 | % | ||||||||||||||||||||
Home
equity
|
54,557 | 20.61 | 45,374 | 20.53 | 39,302 | 18.99 | 28,534 | 14.86 | 23,841 | 15.01 | ||||||||||||||||||||||||||||||
Commercial
|
48,730 | 18.41 | 25,013 | 11.32 | 17,501 | 8.46 | 15,548 | 8.10 | 15,042 | 9.47 | ||||||||||||||||||||||||||||||
Construction
or development
|
12,220 | 4.62 | 8,622 | 3.90 | 9,459 | 4.57 | 7,777 | 4.05 | 5,163 | 3.25 | ||||||||||||||||||||||||||||||
Total real estate
loans
|
206,370 | 77.97 | 163,797 | 74.12 | 152,364 | 73.62 | 127,413 | 66.35 | 111,645 | 70.27 | ||||||||||||||||||||||||||||||
Consumer
loans:
|
||||||||||||||||||||||||||||||||||||||||
Manufactured
homes
|
22,723 | 8.58 | 22,495 | 10.18 | 19,785 | 9.56 | 16,648 | 8.67 | 9,702 | 6.11 | ||||||||||||||||||||||||||||||
Automobile
|
10,080 | 3.81 | 15,078 | 6.82 | 17,272 | 8.35 | 18,138 | 9.44 | 15,964 | 10.05 | ||||||||||||||||||||||||||||||
Credit
Card
|
--- | --- | --- | --- | --- | --- | 12,196 | 6.35 | 11,747 | 7.39 | ||||||||||||||||||||||||||||||
Other
|
7,871 | 2.97 | 8,818 | 3.99 | 9,932 | 4.79 | 6,478 | 3.37 | 5,223 | 3.29 | ||||||||||||||||||||||||||||||
Total consumer
loans
|
40,674 | 15.37 | 46,391 | 20.99 | 46,989 | 22.71 | 53,460 | 27.84 | 42,636 | 26.84 | ||||||||||||||||||||||||||||||
Commercial
business loans
|
17,668 | 6.67 | 10,803 | 4.89 | 7,600 | 3.67 | 11,168 | 5.82 | 4,588 | 2.89 | ||||||||||||||||||||||||||||||
Total
loans
|
264,712 | 100.00 | % | 220,991 | 100.00 | % | 206,953 | 100.00 | % | 192,041 | 100.00 | % | 158,869 | 100.00 | % | |||||||||||||||||||||||||
Less:
|
||||||||||||||||||||||||||||||||||||||||
Deferred
fees and discounts
|
43 | (65 | ) | 12 | 185 | 131 | ||||||||||||||||||||||||||||||||||
Loans
held for sale
|
956 | 822 | 1,307 | 1,069 | --- | |||||||||||||||||||||||||||||||||||
Allowance
for losses
|
1,306 | 828 | 822 | 1,321 | 1,033 | |||||||||||||||||||||||||||||||||||
Total loans,
net
|
$ | 262,407 | $ | 219,406 | $ | 204,812 | $ | 189,466 | $ | 157,705 |
2008
|
2007
|
2006
|
2005
|
2004
|
||||||||||||||||||||||||||||||||||||
Amount
|
Percent
|
Amount
|
Percent
|
Amount
|
Amount
|
Percent
|
Amount
|
Percent
|
Amount
|
|||||||||||||||||||||||||||||||
Fixed-
rate loans
:
|
||||||||||||||||||||||||||||||||||||||||
Real
estate loans:
|
||||||||||||||||||||||||||||||||||||||||
One- to
four-family
(1)
|
$ | 72,439 | 27.37 | % | $ | 66,335 | 30.02 | % | $ | 74,159 | 35.83 | % | $ | 69,100 | 35.98 | % | $ | 63,725 | 40.11 | % | ||||||||||||||||||||
Home
equity
|
15,613 | 5.90 | 17,814 | 8.05 | 18,159 | 8.77 | 7,655 | 3.99 | 6,304 | 3.97 | ||||||||||||||||||||||||||||||
Commercial
|
26,035 | 9.84 | 17,250 | 7.81 | 12,000 | 5.80 | 11,088 | 5.77 | 7,813 | 4.92 | ||||||||||||||||||||||||||||||
Construction
or development
|
10,323 | 3.90 | 5,583 | 2.53 | 7,056 | 3.41 | 3,461 | 1.80 | 1,788 | 1.13 | ||||||||||||||||||||||||||||||
Total real estate
loans
|
124,410 | 47.01 | 106,982 | 48.41 | 111,374 | 53.82 | 91,304 | 47.54 | 79,630 | 50.12 | ||||||||||||||||||||||||||||||
Manufactured
homes
|
22,723 | 8.58 | 22,495 | 10.18 | 19,785 | 9.56 | 16,648 | 8.67 | 9,702 | 6.11 | ||||||||||||||||||||||||||||||
Automobile
|
10,080 | 3.81 | 15,078 | 6.82 | 17,272 | 8.35 | 18,138 | 9.44 | 15,964 | 10.05 | ||||||||||||||||||||||||||||||
Credit
card
|
--- | --- | --- | --- | --- | --- | 3,138 | 1.63 | 5,595 | 3.52 | ||||||||||||||||||||||||||||||
Other
consumer
|
6,168 | 2.33 | 7,119 | 3.22 | 9,148 | 4.42 | 5,755 | 3.00 | 4,421 | 2.78 | ||||||||||||||||||||||||||||||
Commercial
business loans
|
7,551 | 2.85 | 5,539 | 2.51 | 4,121 | 1.99 | 3,750 | 1.95 | 1,674 | 1.05 | ||||||||||||||||||||||||||||||
Total fixed-rate
loans
|
46,522 | 17.57 | 157,213 | 71.14 | 161,700 | 78.13 | 138,733 | 72.24 | 116,986 | 73.64 | ||||||||||||||||||||||||||||||
Adjustable-
rate loans
:
|
||||||||||||||||||||||||||||||||||||||||
Real
estate loans:
|
||||||||||||||||||||||||||||||||||||||||
One-
to four-family
|
18,424 | 6.96 | 18,453 | 8.35 | 11,942 | 5.77 | 6,453 | 3.36 | 3,875 | 2.44 | ||||||||||||||||||||||||||||||
Home
equity
|
38,944 | 14.71 | 27,560 | 12.47 | 21,143 | 10.22 | 20,879 | 10.87 | 17,537 | 11.04 | ||||||||||||||||||||||||||||||
Commercial
|
22,695 | 8.57 | 7,764 | 3.51 | 5,502 | 2.66 | 4,460 | 2.32 | 7,228 | 4.55 | ||||||||||||||||||||||||||||||
Construction
or development
|
1,897 | 0.72 | 3,039 | 1.38 | 2,403 | 1.16 | 4,316 | 2.25 | 3,375 | 2.12 | ||||||||||||||||||||||||||||||
Total real estate
loans
|
81,960 | 30.96 | 56,816 | 25.71 | 40,990 | 19.81 | 36,108 | 18.80 | 32,015 | 20.15 | ||||||||||||||||||||||||||||||
Credit
card
|
--- | --- | --- | --- | --- | --- | 9,058 | 4.72 | 6,152 | 3.87 | ||||||||||||||||||||||||||||||
Other
consumer
|
1,703 | 0.64 | 1,698 | 0.77 | 784 | 0.38 | 724 | 0.38 | 802 | 0.50 | ||||||||||||||||||||||||||||||
Commercial
business loans
|
10,117 | 3.82 | 5,264 | 28.86 | 3,479 | 1.68 | 7,418 | 3.86 | 2,914 | 1.83 | ||||||||||||||||||||||||||||||
Total
adjustable-rate loans
|
11,820 | 4.46 | 63,778 | 28.86 | 45,253 | 21.87 | 53,308 | 27.76 | 41,883 | 26.36 | ||||||||||||||||||||||||||||||
Total
loans
|
264,712 | 100.00 | % | 220,991 | 100.00 | % | 206,953 | 100.00 | % | 192,041 | 100.00 | % | 158,869 | 100.00 | % | |||||||||||||||||||||||||
Less:
|
||||||||||||||||||||||||||||||||||||||||
Deferred
fees and discounts
|
43 | (65 | ) | 12 | 185 | 131 | ||||||||||||||||||||||||||||||||||
Loans
held for sale
|
956 | 822 | 1,307 | 1,069 | --- | |||||||||||||||||||||||||||||||||||
Allowance
for losses
|
1,306 | 828 | 822 | 1,321 | 1,033 | |||||||||||||||||||||||||||||||||||
Total loans,
net
|
$ | 262,407 | $ | 219,406 | $ | 204,812 | $ | 189,466 | $ | 157,705 |
Real
Estate Mortgages
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||
One-
to Four-
Family
|
Home Equity
Loans
|
Commercial
|
Construction
or
Development
|
Consumer
|
Commercial
Business
|
Total
|
||||||||||||||||||||||||||||||||||||||||||||||||||
Amount
|
Weighted
Average
Rate
|
Amount
|
Weighted
Average
Rate
|
Amount
|
Weighted
Average
Rate
|
Amount
|
Weighted
Average
Rate
|
Amount
|
Weighted
Average
Rate
|
Amount
|
Weighted
Average
Rate
|
Amount
|
Weighted
Average
Rate
|
|||||||||||||||||||||||||||||||||||||||||||
(Dollars
in thousands)
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2009
(1)
|
$ | 2,047 | 5.65 | % | $ | 406 | 6.91 | % | $ | 5,496 | 7.54 | % | $ | 6,639 | 7.21 | % | $ | 1,533 | 12.20 | % | $ | 9,609 | 5.83 | % | $ | 25,730 | 6.93 | % | ||||||||||||||||||||||||||||
2010
|
6,145 | 4.77 | 239 | 5.00 | 505 | 7.37 | 207 | 6.60 | 1,544 | 7.67 | 1,085 | 7.73 | 9,725 | 5.74 | ||||||||||||||||||||||||||||||||||||||||||
2011
|
3,621 | 5.71 | 833 | 5.06 | 542 | 7.03 | 50 | 6.75 | 2,928 | 7.59 | 777 | 8.11 | 8,751 | 6.58 | ||||||||||||||||||||||||||||||||||||||||||
2012
|
6,782 | 6.05 | 478 | 5.40 | 3,000 | 6.89 | 112 | 9.27 | 3,688 | 8.43 | 1,278 | 7.78 | 15,338 | 6.93 | ||||||||||||||||||||||||||||||||||||||||||
2013
to 2015
|
15,042 | 7.01 | 3,196 | 5.51 | 4,759 | 7.09 | 196 | 6.63 | 6,181 | 7.78 | 2,947 | 6.99 | 32,321 | 7.02 | ||||||||||||||||||||||||||||||||||||||||||
2016
to 2019
|
9,845 | 5.46 | 24,800 | 5.14 | 24,119 | 6.73 | 774 | 6.82 | 4,347 | 8.31 | 1,481 | 7.17 | 65,366 | 6.05 | ||||||||||||||||||||||||||||||||||||||||||
2020
to 2023
|
2,760 | 5.60 | 21,092 | 6.22 | 2,311 | 6.84 | 3,952 | 7.22 | 10,637 | 9.07 | 23 | 7.38 | 40,775 | 7.05 | ||||||||||||||||||||||||||||||||||||||||||
2024
and following
|
44,621 | 5.69 | 3,513 | 7.86 | 7,998 | 6.89 | 290 | 6.76 | 9,816 | 8.04 | 468 | 7.28 | 66,706 | 6.31 | ||||||||||||||||||||||||||||||||||||||||||
Total
|
$ | 90,863 | 5.85 | % | $ | 54,557 | 5.77 | % | $ | 48,730 | 6.90 | % | $ | 12,220 | 7.17 | % | $ | 40,674 | 8.44 | % | $ | 17,668 | 6.53 | % | $ | 264,712 | 6.53 | % |
For
the year
ended
December 31,
|
||||||||||||
2008
|
2007
|
2006
|
||||||||||
(In
thousands)
|
||||||||||||
Originations by
type
:
|
||||||||||||
Fixed-rate:
|
||||||||||||
One-
to four-family real estate
|
$ | 54,024 | $ | 30,601 | $ | 38,712 | ||||||
Home
equity
|
4,035 | 5,768 | 13,593 | |||||||||
Commercial
real estate
|
13,072 | 10,391 | 1,035 | |||||||||
Construction
and development
|
2,574 | 2,531 | 6,747 | |||||||||
Consumer
|
7,579 | 12,012 | 19,191 | |||||||||
Commercial
business
|
5,212 | 3,404 | 1,669 | |||||||||
Total
fixed-rate
|
86,496 | 64,707 | 80,947 | |||||||||
Adjustable
rate
:
|
||||||||||||
One-
to four-family real estate
(1)
|
3,658 | 9,221 | 6,982 | |||||||||
Home
equity
|
13,547 | 11,300 | 7,879 | |||||||||
Commercial
real estate
|
18,140 | 5,081 | 325 | |||||||||
Construction
and development
|
1,128 | 1,919 | 1,748 | |||||||||
Consumer
|
151 | 389 | 191 | |||||||||
Commercial
business
|
1,515 | 2,793 | 769 | |||||||||
Total
adjustable-rate
|
38,139 | 30,704 | 17,894 | |||||||||
Total
loans originated
|
124,635 | 95,411 | 98,841 | |||||||||
Purchases by
type
:
|
||||||||||||
Commercial
real estate
|
9,731 | --- | --- | |||||||||
Sales and
Repayments
:
|
||||||||||||
One-
to four-family real estate
|
31,552 | 25,644 | 26,221 | |||||||||
Consumer
|
--- | --- | 11,602 | |||||||||
Total
loans sold
|
31,552 | 25,644 | 37,823 | |||||||||
Total
principal repayments
|
59,093 | 55,728 | 46,106 | |||||||||
Total
reductions
|
90,645 | 81,373 | 83,929 | |||||||||
Net
increase (decrease)
|
$ | 43,721 | $ | 14,038 | $ | 14,912 |
(1)
|
These
loans include $1.9 million, $3.4 million and $2.8 million, respectively,
of adjustable rate mortgage loan originations to employees at December 31,
2008, 2007 and 2006.
|
Loans
Delinquent For:
|
||||||||||||||||||||||||||||||||||||
60-89
Days
|
90
Days and Over
|
Total
Delinquent Loans
|
||||||||||||||||||||||||||||||||||
Number
|
Amount
|
Percent
of
Loan
Category
|
Number
|
Amount
|
Percent
of
Loan
Category
|
Number
|
Amount
|
Percent
of
Loan
Category
|
||||||||||||||||||||||||||||
(Dollars
in Thousands)
|
||||||||||||||||||||||||||||||||||||
One-
to four-family real
estate
|
10 | $ | 534 | 0.59 | % | 2 | $ | 258 | 0.28 | % | 12 | $ | 792 | 0.87 | % | |||||||||||||||||||||
Home
Equity
|
2 | 108 | 0.20 | 6 | 340 | 0.62 | 8 | 448 | 0.82 | |||||||||||||||||||||||||||
Commercial
Real Estate
|
1 | 187 | 0.38 | 2 | 471 | 0.97 | 3 | 658 | 1.47 | |||||||||||||||||||||||||||
Construction
and Development
|
1 | 142 | 1.16 | 2 | 59 | 0.48 | 3 | 201 | 1.16 | |||||||||||||||||||||||||||
Consumer
|
13 | 35 | 0.09 | 2 | 64 | 0.16 | 15 | 99 | 0.24 | |||||||||||||||||||||||||||
Commercial
Business
|
2 | 149 | 0.84 | 1 | 60 | 0.34 | 3 | 209 | 1.18 | |||||||||||||||||||||||||||
Total
|
29 | $ | 1,155 | 0.44 | % | 15 | $ | 1,252 | 0.47 | % | 44 | $ | 2,407 | 0.91 | % |
December
31,
|
||||||||||||||||||||
2008
|
2007
|
2006
|
2005
|
2004
|
||||||||||||||||
(Dollars
in thousands)
|
||||||||||||||||||||
Non-accruing
loans:
|
||||||||||||||||||||
One-
to four-family
|
$ | 258 | $ | 256 | $ | 132 | $ | --- | $ | -- | ||||||||||
Home
equity
|
340 | --- | --- | 20 | --- | |||||||||||||||
Commercial
Real Estate
|
471 | --- | --- | --- | --- | |||||||||||||||
Construction
or Development
|
59 | --- | --- | --- | --- | |||||||||||||||
Consumer
|
64 | 162 | 160 | 109 | 42 | |||||||||||||||
Commercial
Business
|
60 | --- | --- | --- | --- | |||||||||||||||
Total
|
1,252 | 418 | 292 | 129 | 42 | |||||||||||||||
Accruing
loans delinquent more
than 90
days
:
|
||||||||||||||||||||
One-
to four-family
|
--- | --- | --- | 129 | --- | |||||||||||||||
Home
equity
|
--- | --- | --- | --- | --- | |||||||||||||||
Consumer
|
--- | --- | --- | 191 | 10 | |||||||||||||||
Commercial
business
|
--- | --- | --- | --- | --- | |||||||||||||||
Total
|
--- | --- | --- | 320 | 10 | |||||||||||||||
Foreclosed
assets
:
|
||||||||||||||||||||
One-
to four-family
|
1,250 | 817 | --- | --- | --- | |||||||||||||||
Commercial
business
|
190 | --- | --- | --- | --- | |||||||||||||||
Consumer
|
284 | 35 | 106 | --- | --- | |||||||||||||||
Total
|
1,724 | 852 | 106 | --- | --- | |||||||||||||||
Total
non-performing assets
|
$ | 2,976 | $ | 1,270 | $ | 398 | $ | 449 | $ | 52 | ||||||||||
Total
as a percentage of total assets
|
1.01 | % | 0.54 | % | 0.18 | % | 0.22 | % | 0.03 | % |
December
31,
|
||||||||||||||||||||
2008
|
2007
|
2006
|
2005
|
2004
|
||||||||||||||||
(Dollars
in thousands)
|
||||||||||||||||||||
Balance
at beginning of period
|
$ | 828 | $ | 822 | $ | 1,321 | $ | 1,033 | $ | 826 | ||||||||||
Charge-offs:
|
||||||||||||||||||||
One-to
four-family
|
114 | - | - | - | - | |||||||||||||||
Home
equity
|
62 | - | - | - | - | |||||||||||||||
Commercial
real estate
|
37 | - | - | - | - | |||||||||||||||
Commercial
business
|
71 | - | - | - | - | |||||||||||||||
Consumer
|
507 | 483 | 1,013 | 752 | 741 | |||||||||||||||
Recoveries
:
|
||||||||||||||||||||
One-to
four-family
|
2 | - | - | - | - | |||||||||||||||
Commercial
business
|
15 | - | - | - | - | |||||||||||||||
Consumer
|
142 | 239 | 233 | 94 | 91 | |||||||||||||||
Net
charge-offs
|
632 | 244 | 780 | 658 | 650 | |||||||||||||||
Additions
charged to operations
|
1,110 | 250 | 281 | 946 | 857 | |||||||||||||||
Balance
at end of period
|
$ | 1,306 | $ | 828 | $ | 822 | $ | 1,321 | $ | 1,033 | ||||||||||
Net
charge-offs during the
period
as a percentage of average loans
outstanding during the period
|
0.26 | % | 0.11 | % | 0.40 | % | 0.37 | % | 0.45 | % | ||||||||||
Net
charge-offs during the
period
as a percentage of average non-
performing assets
|
144.46 | % | 33.46 | % | 184.42 | % | 262.67 | % | 427.63 | % | ||||||||||
Allowance
as a percentage of
Non-performing
loans
|
104.31 | % | 198.22 | % | 281.51 | % | 294.21 | % | 1,986.54 | % | ||||||||||
Allowance
as a percentage of total loans
(end
of
period)
|
0.50 | % | 0.37 | % | 0.40 | % | 0.69 | % | 0.65 | % |
2008
|
2007
|
2006
|
2005
|
2004
|
||||||||||||||||||||||||||||||||||||
Amount
|
Percent
of
loans
in
each category
to
total
loans
|
Amount
|
Percent
of
loans
in
each category
to
total
loans
|
Amount
|
Percent
of
loans
in
each category
to
total
loans
|
Amount
|
Percent
of
loans
in
each category
to
total
loans
|
Amount
|
Percent
of
loans
in
each category
to
total
loans
|
|||||||||||||||||||||||||||||||
Allocated
at end of period to:
|
||||||||||||||||||||||||||||||||||||||||
One-
to four-family
|
$ | 321 | 34.33 | % | $ | 145 | 38.37 | % | $ | 100 | 41.60 | % | $ | 90 | 39.84 | % | $ | 85 | 42.55 | % | ||||||||||||||||||||
Home
equity
|
240 | 20.61 | 100 | 20.53 | 40 | 18.99 | 35 | 14.86 | 30 | 15.01 | ||||||||||||||||||||||||||||||
Commercial
real estate
|
153 | 18.41 | 170 | 11.32 | 170 | 8.46 | 165 | 8.10 | 100 | 9.47 | ||||||||||||||||||||||||||||||
Construction
or development
|
55 | 4.62 | 25 | 3.90 | 30 | 4.57 | 20 | 4.05 | 20 | 3.25 | ||||||||||||||||||||||||||||||
Consumer
(1)
|
379 | 15.36 | 298 | 20.99 | 407 | 22.71 | 931 | 27.84 | 748 | 26.84 | ||||||||||||||||||||||||||||||
Commercial
business
|
158 | 6.67 | 90 | 4.89 | 75 | 3.67 | 80 | 5.82 | 50 | 2.89 | ||||||||||||||||||||||||||||||
Total
|
$ | 1,306 | 100.00 | % | $ | 828 | 100.00 | % | $ | 822 | 100.00 | % | $ | 1,321 | 100.00 | % | $ | 1,033 | 100.00 | % |
(1)
|
Because
of the sale of our credit card portfolio in June 2007, no portion of our
allowance at December 31, 2008, 2007 or 2006 was allocated to credit card
lending. The allowance for loan losses attributable to our
credit card portfolio at December 31, 2005 and 2004 was $600,000 and
$518,000 respectively.
|
December
31,
|
||||||||||||||||||||||||||||||||
2008
|
2007
|
2006
|
2005
|
|||||||||||||||||||||||||||||
Amortized
Cost
|
Fair
Value
|
Amortized
Cost
|
Fair
Value
|
Amortized
Cost
|
Fair
Value
|
Amortized
Cost
|
Fair
Value
|
|||||||||||||||||||||||||
(In
thousands)
|
||||||||||||||||||||||||||||||||
Securities
available for sale, at fair value
:
|
||||||||||||||||||||||||||||||||
Federal
agency mortgage-backed
|
$ | 2,007 | $ | 2,029 | $ | 68 | $ | 71 | $ | 165 | $ | 170 | $ | 242 | $ | 222 | ||||||||||||||||
Non-agency
mortgage-backed
(1)
|
8,124 | 6,901 | --- | --- | --- | --- | --- | --- | ||||||||||||||||||||||||
Total
available for sale
|
10,131 | 8,930 | 68 | 71 | 165 | 170 | 242 | 222 | ||||||||||||||||||||||||
Federal
Home Loan Bank stock
|
2,444 | 2,444 | 1,320 | 1,320 | 1,320 | 1,320 | 1,320 | 1,320 | ||||||||||||||||||||||||
Total
securities
|
$ | 12,575 | $ | 11,374 | $ | 1,388 | $ | 1,391 | $ | 1,485 | $ | 1,490 | $ | 1,562 | $ | 1,542 |
1
year or less
|
Over
1 year
|
Total
Securities
|
||||||||||||||||||||||||||
Amortized
Cost
|
Weighted
Average
Yield
|
Amortized
Cost
|
Weighted
Average
Yield
|
Amortized
Cost
|
Weighted
Average
Yield
|
Fair
Value
|
||||||||||||||||||||||
December
31, 2008
|
||||||||||||||||||||||||||||
Securities
available for sale, at fair value
:
|
||||||||||||||||||||||||||||
Federal
agency mortgage-backedmor
|
--- | --- | $ | 2,007 | 4.11 | % | $ | 2,007 | 4.11 | % | $ | 2,028 | ||||||||||||||||
Non-Agency
mortgage-backed
|
--- | --- | $ | 8,124 | 7.14 | % | $ | 8,124 | 7.14 | % | $ | 6,901 | ||||||||||||||||
Total
|
--- | --- | $ | 10,131 | 6.59 | % | $ | 10,131 | 6.59 | % | $ | 8,929 | ||||||||||||||||
December
31, 2007
|
||||||||||||||||||||||||||||
Securities
available for sale, at fair value
:
|
||||||||||||||||||||||||||||
Federal
agency mortgage-backed
|
--- | --- | $ | 68 | 8.00 | % | $ | 68 | 8.00 | % | $ | 71 |
For
the year ended December 31,
|
||||||||||||
2008
|
2007
|
2006
|
||||||||||
(Dollars
in thousand)
|
||||||||||||
Opening
balance
|
$ | 202,791 | $ | 180,968 | $ | 168,173 | ||||||
Net
deposits (withdrawals)
|
11,329 | 15,245 | 7,354 | |||||||||
Interest
credited
|
6,440 | 6,578 | 5,441 | |||||||||
Ending
balance
|
$ | 222,560 | $ | 202,791 | $ | 180,968 | ||||||
Net
increase
|
$ | 19,769 | $ | 21,823 | $ | 12,795 | ||||||
Percent
increase
|
9.75 | % | 12.06 | % | 7.61 | % |
December
31,
|
||||||||||||||||||||||||
2008
|
2007
|
2006
|
||||||||||||||||||||||
Amount
|
Percent
of
total
|
Amount
|
Percent
of
total
|
Amount
|
Percent
of
total
|
|||||||||||||||||||
(Dollars
in thousand)
|
||||||||||||||||||||||||
Transactions
and Savings Deposits:
|
||||||||||||||||||||||||
Interest-bearing
demand
|
$ | 20,637 | 9.30 | % | $ | 31,999 | 15.78 | % | $ | 12,711 | 7.02 | % | ||||||||||||
Non
interest-bearing checking
|
12,589 | 5.67 | 13,290 | 6.55 | 17,251 | 9.53 | ||||||||||||||||||
Statement
savings
|
13,109 | 5.64 | 11,696 | 5.77 | 12,510 | 6.91 | ||||||||||||||||||
Money
market
|
51,744 | 23.31 | 39,754 | 19.60 | 53,270 | 29.44 | ||||||||||||||||||
Total
non-certificates
|
98,079 | 43.92 | 96,739 | 47.70 | 95,742 | 52.91 | ||||||||||||||||||
Certificates:
|
||||||||||||||||||||||||
1.00
- 3.99%
|
40,969 | 18.46 | 6,339 | 3.13 | 16,519 | 9.13 | ||||||||||||||||||
4.00
- 5.99%
|
83,507 | 37.62 | 99,708 | 49.17 | 68,549 | 37.87 | ||||||||||||||||||
6.00
- 7.99%
|
5 | 0.00 | 5 | 0.00 | 155 | 0.09 | ||||||||||||||||||
8.00%
and over
|
--- | --- | --- | --- | 3 | 0.00 | ||||||||||||||||||
Total
certificates
|
124,481 | 56.08 | 106,052 | 52.30 | 85,226 | 47.08 | ||||||||||||||||||
Total
deposits
|
$ | 222,560 | 100.00 | % | $ | 202,791 | 100.00 | % | $ | 180,968 | 100.00 | % |
1.00-
3.99%
|
4.00-
5.99%
|
Total
|
Percent
of Total
|
|||||||||||||
(Dollars
in thousands)
|
||||||||||||||||
Certificate
accounts
maturing in quarter
ending
:
|
||||||||||||||||
March
31,
2009
|
$ | 7,947 | $ | 8,073 | $ | 16,020 | 12.87 | % | ||||||||
June
30,
2009
|
8,438 | 5,387 | 13,825 | 11.11 | ||||||||||||
September
30, 2009
|
2,322 | 17,008 | 19,330 | 15.53 | ||||||||||||
December
31, 2009
|
17,846 | 23,124 | 40,970 | 32.91 | ||||||||||||
March
31,
2010
|
1,209 | 5,008 | 6,217 | 4.99 | ||||||||||||
June
30,
2010
|
1,107 | 1,294 | 2,401 | 1.93 | ||||||||||||
September
30, 2010
|
96 | 1,103 | 1,199 | 0.96 | ||||||||||||
December
31, 2010
|
1,304 | 12,370 | 13,674 | 10.98 | ||||||||||||
March
31,
2011
|
120 | 4,368 | 4,488 | 3.61 | ||||||||||||
June
30,
2011
|
272 | 88 | 360 | 0.29 | ||||||||||||
September
30, 2011
|
143 | 19 | 162 | 0.13 | ||||||||||||
December
31, 2011
|
1 | 184 | 185 | 0.15 | ||||||||||||
Thereafter
|
164 | 5,486 | 5,650 | 4.54 | ||||||||||||
Total
|
$ | 40,969 | $ | 83,512 | $ | 124,481 | 100.00 | % | ||||||||
Percent
of
total
|
32 . 9 | % | 67.1 | % | 100.00 | % |
Maturity
|
||||||||||||||||||||
3
months
or less
|
Over
3 to
6 months
|
Over
6 to
12 months
|
Over
12
months
|
Total
|
||||||||||||||||
(In
thousands)
|
||||||||||||||||||||
Certificates
of deposit less than $100,000
|
$ | 5,659 | $ | 6,644 | $ | 28,322 | $ | 17,646 | $ | 58,271 | ||||||||||
Certificates
of deposit of $100,000 or more
|
10,361 | 7,181 | 31,978 | 16,690 | 66,210 | |||||||||||||||
Total
certificates of
deposit
|
$ | 16,020 | $ | 13,825 | $ | 60,300 | $ | 34,336 | $ | 124,481 |
For
the year ended December 31,
|
||||||||||||
2008
|
2007
|
2006
|
||||||||||
(Dollars
in thousands)
|
||||||||||||
Maximum
balance:
|
||||||||||||
Federal
Home Loan Bank advances
|
$ | 56,119 | $ | 34,519 | $ | 24,485 | ||||||
Average
balances:
|
||||||||||||
Federal
Home Loan Bank advances
|
$ | 38,474 | $ | 26,511 | $ | 19,824 | ||||||
Weighted
average interest rate:
|
||||||||||||
Federal
Home Loan Bank advances
|
3.31 | % | 5.08 | % | 4.77 | % |
December
31,
|
||||||||||||
2008
|
2007
|
2006
|
||||||||||
(Dollars
in thousands)
|
||||||||||||
Federal
Home Loan Bank advances
|
$ | 42,219 | $ | 15,869 | $ | 22,029 | ||||||
Weighted average interest rate
of
:
|
||||||||||||
Federal
Home Loan Bank advances
|
2.73 | % | 4.63 | % | 4.84 | % |
Location
|
Year opened
|
Owned
or
leased
|
Lease
expiration date
|
Main
office:
|
|||
2005
5
th
Avenue
Seattle,
WA 98121
|
1993
|
Leased
|
2017
1
|
Branch
offices:
|
|||
Cedar
Plaza Branch
22807
44
th
Avenue West
Mountlake
Terrace, WA 98043
|
2004
|
Leased
|
2015
2
|
East Marginal Branch
(Tukwila)
10200
East Marginal Way South
Seattle,
WA 98168
|
1953
|
Leased
|
2010
3
|
Lakewood
Branch
Lakewood
Town Center
61111
Lakewood Town Center
Blvd.,
SW, Suite B
Lakewood,
WA 98499
|
2004
|
Leased
|
2009
4
|
Sequim
Branch
541
North 5
th
Avenue
Sequim,
WA 98382
|
1997
|
Leased
|
2013
5
|
For
|
Against
|
Abstain
|
|
Votes
by all Shareholders
|
2,404,248
|
201,710
|
21,281
|
Votes
by non-MHC Shareholders
|
782,813
|
201,710
|
21,281
|
Stock
Price
|
Dividends
per share
|
|||
2008
Quarter
|
High
|
Low
|
||
First
Quarter (1/8/2008 to 3/31/2008)
|
$
9.47
|
$
9.00
|
---
|
|
Second
Quarter (4/1/2008 to 6/30/2008)
|
$
9.24
|
$
9.10
|
$ 0.04
|
|
Third
Quarter (7/31/2008 to 9/30/2008)
|
$
9.10
|
$
7.30
|
$ 0.04
|
|
Fourth
Quarter (10/1/2008 to 12/31/2008)
|
$
7.50
|
$
6.05
|
$ 0.04
|
At
December 31,
|
||||||||||||
2008
|
2007
|
2006
|
||||||||||
(In
thousands)
|
||||||||||||
Selected Financial
Condition Data
:
|
||||||||||||
Total
assets
|
$ | 293,497 | $ | 236,965 | $ | 220,663 | ||||||
Loans
receivable, net
|
262,407 | 219,406 | 204,812 | |||||||||
Loans
held for sale
|
956 | 822 | 1,307 | |||||||||
Mortgage-backed
securities available for sale (at fair value)
|
8,930 | 71 | 170 | |||||||||
Federal
Home Loan Bank stock
|
2,444 | 1,320 | 1,320 | |||||||||
Deposits
|
222,560 | 202,791 | 180,968 | |||||||||
Federal
Home Loan Bank advances
|
42,419 | 15,869 | 22,029 | |||||||||
Equity
|
26,103 | 15,888 | 15,569 |
For
the year ended
December
31,
|
|||||||||||||
2008
|
2007
|
2006
|
|||||||||||
(In
thousands)
|
|||||||||||||
Selected Operations
Data
:
|
|||||||||||||
Total
interest income
|
$ | 16,959 | $ | 14,959 | $ | 13,641 | |||||||
Total
interest expense
|
7,713 | 7,925 | 6,386 | ||||||||||
Net interest
income
|
9,246 | 7,034 | 7,255 | ||||||||||
Provision
for loan losses
|
1,110 | 250 | 282 | ||||||||||
Net interest income after
provision for loan losses
|
8,136 | 6,784 | 6,973 | ||||||||||
Fees
and service charges
|
1,813 | 1,633 | 1,911 | ||||||||||
Gain
(loss) on sales of loans
(1)
|
(15 | ) | 11 | 2,277 | |||||||||
Gain
(loss) on sales of securities
|
154 | --- | --- | ||||||||||
Other
non-interest income
|
223 | 472 | 424 | ||||||||||
Total non-interest
income
|
2,175 | 2,116 | 4,612 | ||||||||||
Total
non-interest expense
|
10,004 | 8,519 | 8,234 | ||||||||||
Income
before provision for income taxes
|
307 | 381 | 3,351 | ||||||||||
Provision
for income taxes
|
45 | 62 | 1,108 | ||||||||||
Net income
|
$ | 262 | $ | 319 | $ | 2,243 |
|
(1)
|
The
gain on sale of loans for the year ended December 31, 2006 includes the
$2.3 million gain on the sale of our $11.6 million credit card
portfolio.
|
For
the year ended
December 31,
|
||||||||||||
2008
|
2007
|
2006
|
||||||||||
Selected Financial
Ratios and Other Data
:
|
||||||||||||
Performance
ratios
:
(1)
|
||||||||||||
Return on assets (ratio of net
income to average total assets)
|
0.10 | % | 0.14 | % | 1.06 | % | ||||||
Return on equity (ratio of net
income to average equity)
|
0.98 | % | 2.00 | % | 15.10 | % | ||||||
Interest rate spread
information:
|
||||||||||||
Average during
period
|
3.50 | % | 3.11 | % | 3.53 | % | ||||||
End of period
|
3.54 | % | 3.19 | % | 3.02 | % | ||||||
Net interest margin
(2)
|
3.64 | % | 3.22 | % | 3.64 | % | ||||||
Non-interest income to operating
revenue
|
19.04 | % | 23.12 | % | 39.81 | % | ||||||
Operating expense to average
total assets
|
3.69 | % | 3.70 | % | 3.90 | % | ||||||
Average interest-earning assets
to average interest-bearing liabilities
|
106.33 | % | 99.79 | % | 103.34 | % | ||||||
Efficiency ratio
(3)
|
87.59 | % | 93.10 | % | 69.39 | % | ||||||
Asset quality
ratios
:
|
||||||||||||
Non-performing assets to total
assets at end of period
|
1.01 | % | 0.54 | % | 0.18 | % | ||||||
Non-performing loans to gross
loans
|
0.47 | % | 0.19 | % | 0.14 | % | ||||||
Allowance for loan losses to
non-performing loans
|
104.31 | % | 198.22 | % | 281.51 | % | ||||||
Allowance for loan losses to
gross loans
|
0.49 | % | 0.37 | % | 0.40 | % | ||||||
Net charge-offs to average loans
outstanding
|
0.26 | % | 0.11 | % | 0.40 | % | ||||||
Capital
ratios
:
|
||||||||||||
Equity to total assets at end of
period
|
8.89 | % | 6.70 | % | 7.06 | % | ||||||
Average equity to average
assets
|
9.86 | % | 6.94 | % | 7.03 | % | ||||||
Other
data
:
|
||||||||||||
Number of full service
offices
|
5 | 5 | 5 |
(1)
|
Performance
ratios during the 2006 periods include a $2.3 million gain resulting from
the sale of our credit card portfolio in June 2006.
|
(2) | Net interest income divided by average interest earning assets. |
(3)
|
Total
other operating expense, excluding real estate owned and repossessed
property expense, as a percentage of net interest income and total other
operating income, excluding net securities
transactions.
|
Year
ended December 31,
|
||||||||||||||||||||||||||||||||||||
2008
|
2007
|
2006
|
||||||||||||||||||||||||||||||||||
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
:
|
(Dollars
in thousands)
|
|||||||||||||||||||||||||||||||||||
Loans
receivable(1)
|
$ | 247,058 | $ | 16,436 | 6.65 | % | $ | 216,076 | $ | 14,911 | 6.90 | % | $ | 197,535 | $ | 13,534 | 6.85 | % | ||||||||||||||||||
Mortgage-backed
securities(2)
|
6,664 | 510 | 7.85 | 118 | 11 | 9.32 | 197 | (24 | ) | (12.16 | ) | |||||||||||||||||||||||||
Other
|
1,796 | 13 | 0.74 | 1,432 | 37 | 2.58 | 1,579 | 131 | 8.29 | |||||||||||||||||||||||||||
Total
interest-earning assets(1)
|
255,518 | 16,959 | 6.64 | 217,626 | 14,959 | 6.87 | 199,311 | 13,641 | 6.84 | |||||||||||||||||||||||||||
Interest-Bearing
Liabilities
:
|
||||||||||||||||||||||||||||||||||||
Savings
and Money Markets
|
54,042 | 1,100 | 2.04 | 56,512 | 1,642 | 2.91 | 68,267 | 2,077 | 3.04 | |||||||||||||||||||||||||||
Demand
and NOW accounts
|
36,688 | 294 | 0.80 | 32,727 | 288 | 0.88 | 24,928 | 29 | 0.12 | |||||||||||||||||||||||||||
Certificate
accounts
|
111,741 | 5,046 | 4.52 | 96,648 | 4,649 | 4.81 | 79,747 | 3,335 | 4.18 | |||||||||||||||||||||||||||
Borrowings
|
38,474 | 1,273 | 3.31 | 26,511 | 1,346 | 5.08 | 19,824 | 945 | 4.77 | |||||||||||||||||||||||||||
Total
interest-bearing liabilities
|
240,945 | 7,713 | 3.20 | 212,398 | 7,925 | 3.73 | 192,766 | 6,386 | 3.31 | |||||||||||||||||||||||||||
Net
interest income
|
$ | 9,246 | $ | 7,034 | $ | 7,255 | ||||||||||||||||||||||||||||||
Net
interest rate spread
|
3.34 | % | 3.14 | % | 3.53 | % | ||||||||||||||||||||||||||||||
Net
earning assets
|
$ | 14,573 | $ | 5,228 | $ | 6,545 | ||||||||||||||||||||||||||||||
Net
interest margin
|
3.62 | % | 3.23 | % | 3.64 | % | ||||||||||||||||||||||||||||||
Average
interest-earning assets to
average
interest-bearing liabilities
|
106.05 | % | 102.46 | % | 103.40 | % |
(1)
|
Calculated net of deferred loan fees, loan discounts, loans in process and loss reserves. |
(2)
|
The
negative yields during 2006 are the result of the acceleration of the
amortization of premiums caused by significant prepayments during the
periods.
|
Year
ended December 31,
2008 vs. 2007
|
Year
ended December 31,
2007 vs. 2006
|
|||||||||||||||||||||||
Increase
(decrease)
due to
|
Total
increase
|
Increase
(decrease)
due to
|
Total
increase
|
|||||||||||||||||||||
Volume
|
Rate
|
(decrease)
|
Volume
|
Rate
|
(decrease)
|
|||||||||||||||||||
(In
thousands)
|
||||||||||||||||||||||||
Interest-earning
assets
:
|
||||||||||||||||||||||||
Loans
receivable
|
$ | 1,593 | $ | (68 | ) | $ | 1,525 | $ | 1,274 | $ | 103 | $ | 1,377 | |||||||||||
Mortgage-backed
securities
|
520 | (21 | ) | 499 | (5 | ) | 40 | 35 | ||||||||||||||||
Other
|
2 | (26 | ) | (24 | ) | (4 | ) | (90 | ) | (94 | ) | |||||||||||||
Total interest-earning
assets
|
$ | 2,115 | $ | (115 | ) | $ | 2,000 | $ | 1,265 | $ | 53 | $ | 1,318 | |||||||||||
Interest-bearing
liabilities
:
|
||||||||||||||||||||||||
Savings
and Money Market
|
$ | (50 | ) | $ | (492 | ) | $ | (542 | ) | $ | (354 | ) | $ | (81 | ) | $ | (435 | ) | ||||||
Demand
and NOW accounts
|
7 | (1 | ) | 6 | 40 | 219 | 259 | |||||||||||||||||
Certificate
accounts
|
422 | (25 | ) | 397 | 758 | 556 | 1,314 | |||||||||||||||||
Borrowings
|
150 | (223 | ) | (73 | ) | 329 | 72 | 401 | ||||||||||||||||
Total interest-bearing
liabilities
|
$ | 529 | $ | (741 | ) | (212 | ) | $ | 774 | $ | 765 | 1,539 | ||||||||||||
Net
interest income (loss)
|
$ | 2,212 | $ | (221 | ) |
Actual
|
Minimum Capital
Requirements
|
Minimum Required to
Be Well-Capitalized
Under Prompt
Corrective
Action
Provisions
|
||||||||||||||||||||||
Amount
|
Ratio
|
Amount
|
Ratio
|
Amount
|
Rate
|
|||||||||||||||||||
(Dollars
in thousands)
|
||||||||||||||||||||||||
Core capital (to total
adjusted assets)
|
$ | 24,393 | 8.31 | % | $ | 11,740 | 4.00 | % | $ | 14,675 | 5.00 | % | ||||||||||||
Core
capital (to risk-weighted assets)
|
$ | 24,393 | 11.77 | % | $ | 8,285 | 4.00 | % (1) | $ | 12,427 | 6.00 | % | ||||||||||||
Risked-based capital (to risk-weighted assets)
|
$ | 25,549 | 12.40 | % | $ | 16,569 | 8.00 | % | $ | 20,712 | 10.00 | % |
(1)
|
The
Tier 1 risk-based capital requirement for a well-capitalized institution
is 6% of risk-weighted assets. See “How We Are Regulated -
Regulatory Capital
Requirements.”
|
DECEMBER
31,
|
DECEMBER
31,
|
|||||||
2008
|
2007
|
|||||||
ASSETS
|
||||||||
Cash
and cash equivalents
|
$ | 5,607,800 | $ | 6,104,963 | ||||
Securities
available-for-sale (AFS), at fair value
|
8,929,798 | 71,245 | ||||||
Federal
Home Loan Bank (FHLB) stock, at cost
|
2,444,000 | 1,319,500 | ||||||
Loans
held for sale
|
955,595 | 822,129 | ||||||
Loans
|
263,712,797 | 220,233,447 | ||||||
Less
allowance for loan losses
|
(1,305,950 | ) | (827,688 | ) | ||||
Total
loans
|
262,406,847 | 219,405,759 | ||||||
Accrued
interest receivable
|
1,219,645 | 1,051,476 | ||||||
Premises
and equipment, net
|
1,545,705 | 1,404,853 | ||||||
Bank-owned
life insurance
|
6,195,055 | 4,035,412 | ||||||
Mortgage
servicing rights
|
863,146 | 864,946 | ||||||
Other
real estate owned
|
1,250,531 | 817,108 | ||||||
Other
assets
|
2,079,177 | 1,068,008 | ||||||
Total
assets
|
$ | 293,497,299 | $ | 236,965,399 | ||||
Deposits
|
||||||||
Interest-bearing
|
$ | 209,583,218 | $ | 189,501,253 | ||||
Noninterest-bearing
demand
|
13,176,999 | 13,289,946 | ||||||
Total
deposits
|
222,760,217 | 202,791,199 | ||||||
FHLB
advances
|
42,219,355 | 15,869,355 | ||||||
Accrued
interest payable
|
259,757 | 210,518 | ||||||
Other
liabilities
|
1,825,143 | 1,951,786 | ||||||
Advance
payments from borrowers for taxes and insurance
|
330,319 | 254,213 | ||||||
Total
liabilities
|
267,394,791 | 221,077,071 | ||||||
COMMITMENTS AND
CONTINGENCIES (NOTE
15
)
|
||||||||
STOCKHOLDERS'
EQUITY
|
||||||||
Preferred
stock, $0.01 par value, 1,000,000 shares authorized, none
issued
|
- | - | ||||||
Common
stock, $0.01 par value, 24,000,000 shares authorized, 2,948,063
shares issued and 2,844,059 outstanding as of December 31, 2008, no
shares issued and outstanding as of December 31, 2007
|
29,480 | - | ||||||
Additional
paid-in capital
|
11,936,035 | |||||||
Unearned
shares - Employee Stock Ownership Plan (“ESOP”)
|
(1,057,997 | ) | - | |||||
Retained
earnings
|
15,987,547 | 15,885,167 | ||||||
Accumulated
other comprehensive (loss) income, net of tax
|
(792,557 | ) | 3,161 | |||||
Total
stockholders’ equity
|
26,102,508 | 15,888,328 | ||||||
Total
liabilities and stockholders’ equity
|
$ | 293,497,299 | $ | 236,965,399 |
YEARS
ENDED DECEMBER 31,
|
||||||||
2008
|
2007
|
|||||||
INTEREST
INCOME
|
||||||||
Loans,
including fees
|
$ | 16,435,721 | $ | 14,910,648 | ||||
Interest
and dividends on investments and cash equivalents
|
522,933 | 47,987 | ||||||
Total
interest income
|
16,958,654 | 14,958,635 | ||||||
INTEREST
EXPENSE
|
||||||||
Deposits
|
6,440,185 | 6,578,434 | ||||||
FHLB
advances
|
1,273,281 | 1,346,127 | ||||||
Total
interest expense
|
7,713,466 | 7,924,561 | ||||||
NET
INTEREST INCOME
|
9,245,188 | 7,034,074 | ||||||
PROVISION
FOR LOAN LOSSES
|
1,110,000 | 250,000 | ||||||
NET
INTEREST INCOME AFTER PROVISION
|
||||||||
FOR
LOAN LOSSES
|
8,135,188 | 6,784,074 | ||||||
NONINTEREST
INCOME
|
||||||||
Service
charges and fee income
|
1,813,343 | 1,632,957 | ||||||
Earnings
on cash surrender value of bank owned
|
||||||||
life
insurance
|
159,643 | 156,831 | ||||||
Mortgage
servicing income
|
333,834 | 314,765 | ||||||
Gain
on sale of securities
|
153,633 | - | ||||||
Gain
(loss) on sale of assets
|
(285,135 | ) | 10,949 | |||||
Total
noninterest income
|
2,175,318 | 2,115,502 | ||||||
NONINTEREST
EXPENSE
|
||||||||
Salaries
and benefits
|
4,991,553 | 4,088,474 | ||||||
Operations
|
3,239,755 | 2,389,294 | ||||||
Occupancy
|
1,004,751 | 932,324 | ||||||
Data
processing
|
767,777 | 1,108,362 | ||||||
Total
noninterest expense
|
10,003,836 | 8,518,453 | ||||||
INCOME
BEFORE PROVISION FOR INCOME TAXES
|
306,670 | 381,122 | ||||||
PROVISION
FOR INCOME TAXES
|
45,095 | 61,986 | ||||||
NET
INCOME
|
$ | 261,575 | $ | 319,136 | ||||
Earnings
per common share
|
||||||||
Basic
|
$ | 0.09 | N/A | |||||
Diluted
|
$ | 0.09 | N/A |
Common
Stock
|
||||||||||||||||||||||||||||||||
Shares
|
Amount
|
Additional
Paid-in
Capital
|
Unearned
Shares
Issued
to
ESOP
|
Retained
Earnings
|
Accumulated
Other
Comprehensive
Income
(Loss)
|
Total
Stockholders'
Equity
|
Comprehensive
Income
(loss)
|
|||||||||||||||||||||||||
BALANCE,
December 31, 2006
|
$ | - | - | - | $ | 15,566,031 | $ | 3,044 | $ | 15,569,075 | ||||||||||||||||||||||
Net
income
|
319,136 | 319,136 | 319,136 | |||||||||||||||||||||||||||||
Unrealized
gain on available-for-sale
|
||||||||||||||||||||||||||||||||
securities,
net of tax
|
- | 117 | 117 | 117 | ||||||||||||||||||||||||||||
BALANCE,
December 31, 2007
|
$ | - | $ | - | $ | - | $ | 15,885,167 | $ | 3,161 | $ | 15,888,328 | $ | 319,253 | ||||||||||||||||||
Net
income
|
261,575 | 261,575 | 261,575 | |||||||||||||||||||||||||||||
Common
Stock Issued
|
2,832,503 | 29,480 | 11,918,078 | (1,155,600 | ) | 10,791,958 | ||||||||||||||||||||||||||
ESOP
Shares committed to be released
|
11,556 | 17,957 | 97,603 | 115,560 | ||||||||||||||||||||||||||||
Dividends
|
(159,195 | ) | (159,195 | ) | ||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||
Unrealized
(loss) on available-
for-sale
securities,
net
of tax
|
(795,718 | ) | (795,718 | ) | (795,718 | ) | ||||||||||||||||||||||||||
BALANCE,
December 31, 2008
|
2,844,059 | $ | 29,480 | $ | 11,936,035 | $ | (1,057,997 | ) | $ | 15,987,547 | $ | (792,557 | ) | $ | 26,102,508 | $ | (534,143 | ) |
YEAR
ENDED
|
||||||||
DECEMBER
31,
|
||||||||
2008
|
2007
|
|||||||
CASH
FLOWS FROM OPERATING ACTIVITIES
|
||||||||
Net
income
|
$ | 261,575 | $ | 319,136 | ||||
Adjustments
to reconcile net income to net cash from operating
activities
|
||||||||
Amortization
of net (premium) discount on investments
|
(90,047 | ) | 3,544 | |||||
Provision
for loan losses
|
1,110,000 | 250,000 | ||||||
Depreciation
and amortization
|
404,382 | 331,551 | ||||||
Additions
to mortgage servicing rights
|
(339,808 | ) | (247,481 | ) | ||||
Amortization
of mortgage servicing rights
|
341,608 | 250,097 | ||||||
Increase
in cash surrender value of bank owned life insurance
|
(159,643 | ) | (156,831 | ) | ||||
Deferred
income tax
|
(286,000 | ) | (93,000 | ) | ||||
Proceeds
from sale of loans
|
31,552,290 | 25,643,933 | ||||||
Originations
of loans held for sale
|
(31,701,551 | ) | (22,728,821 | ) | ||||
Loss
on sale of other real estate owned
|
100,659 | - | ||||||
Loss
on sale of repossessed assets
|
168,681 | - | ||||||
(Gain)
loss on sale of loans
|
15,795 | (10,949 | ) | |||||
(Decrease)
increase in operating assets and liabilities
|
||||||||
Change
in accrued interest receivable
|
(168,169 | ) | (156,094 | ) | ||||
Change
in other assets
|
94,961 | 58,355 | ||||||
Change
in accrued interest payable
|
49,239 | 88,957 | ||||||
Change
in other liabilities
|
(541,644 | ) | 234,235 | |||||
Net
cash from operating activities
|
812,328 | 3,786,632 | ||||||
CASH
FLOWS FROM INVESTING ACTIVITIES
|
||||||||
Proceeds
from maturities of AFS investments
|
678,817 | 94,897 | ||||||
Purchase
of AFS investments
|
(10,648,170 | ) | - | |||||
Purchase
of bank owned life insurance
|
(2,000,000 | ) | (600,000 | ) | ||||
Purchase
of FHLB Stock
|
(1,124,500 | ) | - | |||||
Net
increase in loans
|
(47,912,610 | ) | (18,079,776 | ) | ||||
Improvements
to OREO
|
(159,966 | ) | - | |||||
Proceeds
from sale of OREO
|
3,258,725 | - | ||||||
Purchases
of premises and equipment
|
(545,234 | ) | (406,205 | ) | ||||
Net
cash from investing activities
|
(58,452,938 | ) | (18,991,084 | ) | ||||
CASH
FLOWS FROM FINANCING ACTIVITIES
|
||||||||
Net
increase in deposits
|
19,969,018 | 21,823,205 | ||||||
Proceeds
from FHLB advances
|
26,950,000 | |||||||
Repayment
of FHLB advances
|
(600,000 | ) | (6,160,000 | ) | ||||
Net
proceeds from stock issuance
|
10,809,915 | - | ||||||
Cash
dividends paid
|
(159,195 | ) | - | |||||
ESOP
Shares released
|
97,603 | - | ||||||
Net
change in advances from borrowers for taxes and insurance
|
76,106 | (3,096 | ) | |||||
Net
cash from financing activities
|
57,143,447 | 15,660,109 | ||||||
INCREASE
(DECREASE) IN CASH
|
||||||||
AND
CASH EQUIVALENTS
|
(497,163 | ) | 455,657 | |||||
CASH
AND CASH EQUIVALENTS, beginning of period
|
6,104,963 | 5,649,306 | ||||||
CASH
AND CASH EQUIVALENTS, end of period
|
$ | 5,607,800 | $ | 6,104,963 | ||||
SUPPLEMENTAL
CASH FLOW INFORMATION
|
||||||||
Cash
paid for income taxes
|
$ | 315,000 | $ | 120,000 | ||||
Interest
paid on deposits and FHLB advances
|
$ | 7,664,227 | $ | 5,770,819 | ||||
Transfer
to other real estate owned
|
$ | 3,632,841 | $ | 817,108 |
2008
|
2007
|
|||||||
Unrealized
holding gain (loss) on available-for-
|
||||||||
sale
securities
|
$ | (1,204,005 | ) | $ | 117 | |||
Net
unrealized losses
|
(1,204,005 | ) | 117 | |||||
Tax
effect
|
408,287 | - | ||||||
Net-of-tax
amount
|
$ | (795,718 | ) | $ | 117 |
2008
|
2007
|
|||||||
Net
unrealized gain (loss) on
|
||||||||
available-for-sale
securities
|
$ | (1,200,844 | ) | $ | 3,161 | |||
Tax
effect
|
408,287 | - | ||||||
Net-of-tax
amount
|
$ | (792,557 | ) | $ | 3,161 |
Gross
Unrealized
|
Estimated
|
|||||||||||||||||||
Amortized
|
Losses
Less
|
Losses
Greater
|
Fair
|
|||||||||||||||||
AFS
Securities
|
Cost
|
Gains
|
Than
1 Year
|
Than
1 Year
|
Value
|
|||||||||||||||
December
31, 2008
|
||||||||||||||||||||
Agency
mortgage-backed
securities
|
$ | 2,007,166 | $ | 21,596 | $ | - | $ | - | $ | 2,028,762 | ||||||||||
Non-agency
mortgage-backed securities
|
8,123,476 | - | (1,222,440 | ) | - | 6,901,036 | ||||||||||||||
Total
AFS Investments
|
$ | 10,130,642 | $ | 21,596 | $ | (1,222,440 | ) | $ | - | $ | 8,929,798 | |||||||||
December
31, 2007
|
||||||||||||||||||||
Agency
mortgage-backed
securities
|
$ | 68,084 | $ | 3,161 | $ | - | $ | - | $ | 71,245 |
AFS
Securities
|
Par
|
Amortized
Cost
|
Market
Value
|
Unrealized
Loss
|
|||||||||||||
Agency
mortgage backed-securities
|
$ | 1,975,211 | $ | 2,007,166 | $ | 2,028,762 | - | ||||||||||
Non-agency
mortgage backed securities
|
$ | 8,729,154 | $ | 8,123,476 | 6,901,036 | (1,222,440 | ) | ||||||||||
$ | 10,704,365 | $ | 10,130,642 | $ | 8,929,798 | (1,222,440 | ) |
2008
|
2007
|
|||||||
Real
estate loans
|
||||||||
One-
to four-family
|
$ | 89,907,581 | $ | 83,965,522 | ||||
Home
equity
|
54,556,779 | 45,373,749 | ||||||
Commercial
|
48,729,582 | 25,013,481 | ||||||
Construction
or development
|
12,220,170 | 8,621,743 | ||||||
205,414,112 | 162,974,495 | |||||||
Consumer
loans
|
||||||||
Manufactured
homes
|
22,722,664 | 22,495,034 | ||||||
Automobile
|
10,079,522 | 15,077,564 | ||||||
Other
|
7,871,022 | 8,818,012 | ||||||
40,673,208 | 46,390,610 | |||||||
Commercial
business loans
|
17,667,965 | 10,802,911 | ||||||
263,755,285 | 220,168,016 | |||||||
Deferred
loan origination (fees) costs
|
(42,488 | ) | 65,431 | |||||
Allowance
for loan losses
|
(1,305,950 | ) | (827,688 | ) | ||||
Total
loans, net
|
$ | 262,406,847 | $ | 219,405,759 |
2008
|
2007
|
|||||||
Balance,
beginning of year
|
$ | 827,688 | $ | 822,393 | ||||
Provision
for loan losses
|
1,110,000 | 250,000 | ||||||
Loans
charged off
|
(791,089 | ) | (483,760 | ) | ||||
Recoveries
|
159,351 | 239,055 | ||||||
Balance,
end of year
|
$ | 1,305,950 | $ | 827,688 |
2008
|
2007
|
|||||||
Balance,
beginning of year
|
$ | 864,946 | $ | 867,562 | ||||
Servicing
assets recognized during the year
|
396,934 | 247,481 | ||||||
Amortization
of servicing assets
|
(341,608 | ) | (250,097 | ) | ||||
Valuation
Allowance
|
(57,126 | ) | - | |||||
Balance,
end of year
|
$ | 863,146 | $ | 864,946 |
2008
|
2007
|
|||||||
Prepayment
speed (PSA)
|
381 | % | 217 | % | ||||
Weighted-average
life (years)
|
3.2 | 5.1 | ||||||
Yield
to maturity discount rate
|
9.0 | % | 10.0 | % |
2008
|
2007
|
|||||||
Leasehold
improvements
|
$ | 1,831,776 | $ | 1,552,684 | ||||
Furniture
and equipment
|
1,927,094 | 1,670,571 | ||||||
3,758,870 | 3,223,255 | |||||||
Accumulated
depreciation and amortization
|
(2,222,128 | ) | (1,818,402 | ) | ||||
1,536,742 | 1,404,853 | |||||||
Fixed
assets in process
|
8,963 | - | ||||||
$ | 1,545,705 | $ | 1,404,853 |
YEAR
ENDING
|
||||
DECEMBER
31,
|
AMOUNT
|
|||
2009
|
$ | 619,755 | ||
2010
|
526,626 | |||
2011
|
511,325 | |||
2012
|
525,356 | |||
2013
|
519,026 | |||
Thereafter
|
2,572,025 | |||
$ | 5,274,113 |
2008
|
2007
|
|||||||
Savings
accounts
|
$ | 13,109,252 | $ | 11,696,050 | ||||
Checking
accounts
|
33,226,202 | 45,289,355 | ||||||
Money
market accounts
|
51,744,024 | 39,754,145 | ||||||
Time
certificates of deposit accounts
|
124,480,739 | 106,051,649 | ||||||
$ | 222,560,217 | $ | 202,791,199 |
YEAR
ENDING
|
||||
DECEMBER
31,
|
AMOUNT
|
|||
2009
|
$ | 90,145,651 | ||
2010
|
23,491,055 | |||
2011
|
7,646,519 | |||
2012
|
3,139,269 | |||
2013
and thereafter
|
58,245 | |||
$ | 124,480,739 |
2008
|
2007
|
|||||||
Savings
accounts
|
$ | 121,450 | $ | 130,603 | ||||
Checking
accounts
|
278,300 | 320,855 | ||||||
Money
market accounts
|
984,636 | 1,478,458 | ||||||
Time
certificates of deposit accounts
|
5,055,799 | 4,648,518 | ||||||
$ | 6,440,185 | $ | 6,578,434 |
YEAR
ENDING
|
||||
DECEMBER
31,
|
AMOUNT
|
|||
2009
|
$ | 22,219,355 | ||
2010
|
10,000,000 | |||
2011
|
10,000,000 | |||
$ | 42,219,355 |
2008
|
2007
|
2006
|
||||||||||
(Dollars
in thousands)
|
||||||||||||
Maximum
balance:
|
||||||||||||
FHLB
advances
|
$ | 56,119 | $ | 34,519 | $ | 24,485 | ||||||
Average
balances:
|
||||||||||||
FHLB
advances
|
$ | 38,474 | $ | 26,511 | $ | 19,824 | ||||||
Weighted
average interest rate:
|
||||||||||||
FHLB
advances
|
2.73 | % | 4.63 | % | 4.84 | % |
Numerator:
|
2008
|
|||
Net
income
|
$ | 261,575 | ||
Denominator:
|
||||
Denominator
for basic net income per share:
|
||||
Weighted
average shares
|
2,838,410 | |||
Effect
of dilutive common stock equivalents
|
- | |||
Denominator
for diluted net income per share
|
2,838,410 | |||
Basic
net income per share
|
$ | 0.09 | ||
Diluted
net income per share
|
$ | 0.09 |
2008
|
2007
|
|||||||
Current
|
$ | 331,095 | $ | 154,986 | ||||
Deferred
|
(286,000 | ) | (93,000 | ) | ||||
Provision
for income taxes
|
$ | 45,095 | $ | 61,986 |
Provision
at statutory rate
|
$ | 104,268 | $ | 129,580 | ||||
Tax-exempt
income
|
(71,156 | ) | (67,754 | ) | ||||
Other
|
11,983 | 160 | ||||||
$ | 45,095 | $ | 61,986 | |||||
Federal
Tax Rate
|
34.0 | % | 34.0 | % | ||||
Tax
exempt rate
|
(23.2 | ) | (17.8 | ) | ||||
Other
|
3.9 | 0.1 | ||||||
Effective
tax rate
|
14.7 | % | 16.3 | % |
Deferred
tax assets
|
||||||||
Deferred
compensation
|
$ | 144,000 | $ | 100,000 | ||||
Unrealized
loss on securities
|
408,000 | - | ||||||
Nonaccrual
interest
|
19,000 | 4,000 | ||||||
Charitable
contributions
|
58,000 | - | ||||||
Allowance
for loan losses
|
115,000 | (73,000 | ) | |||||
Other,
net
|
19,000 | - | ||||||
Total
deferred tax assets
|
763,000 | 31,000 | ||||||
Deferred
tax liabilities
|
||||||||
FHLB
stock
|
142,000 | 142,000 | ||||||
Prepaid
expenses
|
36,000 | 57,000 | ||||||
Depreciation
|
70,000 | (12,000 | ) | |||||
Unrealized
gain on securities
|
- | 1,000 | ||||||
Deferred
loan fees and costs
|
253,000 | 276,000 | ||||||
Total
deferred tax liabilities
|
501,000 | 464,000 | ||||||
Net
deferred tax asset (liability)
|
$ | 262,000 | $ | (433,000 | ) |
To
Be Well Capitalized
|
||||||||||||
For
Capital
|
Under
Prompt Corrective
|
|||||||||||
Actual
|
Adequacy
Purposes
|
Action
Provisions
|
||||||||||
Amount
|
Ratio
|
Amount
|
Ratio
|
Amount
|
Ratio
|
|||||||
As
of December 31, 2008
|
||||||||||||
Total
Capital
|
||||||||||||
(to
Risk-Weighted Assets)
|
$25,686
|
12.40%
|
$16,569
|
>
|
8.0%
|
$20,712
|
>
|
10.0%
|
||||
Tier
I Capital
|
||||||||||||
(to
Risk-Weighted Assets)
|
$24,393
|
11.77%
|
$
8,285
|
>
|
4.0%
|
$12,427
|
>
|
6.0%
|
||||
Tier
I Capital
|
||||||||||||
(to
Average Assets)
|
$24,393
|
8.31%
|
$11,740
|
>
|
4.0%
|
$14,675
|
>
|
5.0%
|
||||
As
of December 31, 2007
|
||||||||||||
Total
Capital
|
||||||||||||
(to
Risk-Weighted Assets)
|
$16,716
|
10.52%
|
$12,708
|
>
|
8.0%
|
$15,885
|
>
|
10.0%
|
||||
Tier
I Capital
|
||||||||||||
(to
Risk-Weighted Assets)
|
$15,885
|
10.00%
|
$6,354
|
>
|
4.0%
|
$ 9,531
|
>
|
6.0%
|
||||
Tier
I Capital
|
||||||||||||
(to
Average Assets)
|
$15,885
|
6.70%
|
$9,479
|
>
|
4.0%
|
$11,848
|
>
|
5.0%
|
2008
|
2007
|
|||||||
Equity
|
$ | 23,587 | $ | 15,888 | ||||
Accumulated
other comprehensive
|
||||||||
(income)
loss
|
793 | (3 | ) | |||||
Total
Tier 1 capital
|
$ | 24,380 | $ | 15,885 | ||||
Allowance
for loan and lease losses
|
$ | 1,306 | $ | 828 | ||||
Unrealized
gain on AFS securities
|
- | 3 | ||||||
Total
capital
|
$ | 25,686 | $ | 16,716 |
2008
|
2007
|
|||||||||||||||
Carrying
|
Fair
|
Carrying
|
Fair
|
|||||||||||||
Amount
|
Value
|
Amount
|
Value
|
|||||||||||||
Financial
assets
|
||||||||||||||||
Cash
and cash equivalents
|
$ | 5,607,800 | $ | 5,607,800 | $ | 6,104,963 | $ | 6,104,963 | ||||||||
Securities available-
|
||||||||||||||||
for-sale
|
$ | 8,929,798 | $ | 8,929,798 | $ | 71,245 | $ | 71,245 | ||||||||
Mortgage servicing rights | $ | 920,271 | $ | 863,146 | $ | 864,946 | $ | 1,248,711 | ||||||||
FHLB
stock
|
$ | 2,444,000 | $ | 2,444,000 | $ | 1,319,500 | $ | 1,319,500 | ||||||||
Loans,
net
|
$ | 263,362,442 | $ | 263,167,112 | $ | 219,405,759 | $ | 218,709,207 | ||||||||
Accrued
interest receivable
|
$ | 1,219,645 | $ | 1,219,645 | $ | 1,051,476 | $ | 1,051,476 | ||||||||
Financial
liabilities
|
||||||||||||||||
Demand
deposits
|
$ | 98,079,478 | $ | 98,079,478 | $ | 96,739,550 | $ | 96,739,550 | ||||||||
Time
deposits
|
$ | 124,480,739 | $ | 123,280,368 | $ | 106,051,649 | $ | 106,504,696 | ||||||||
FHLB
advances
|
$ | 42,419,355 | $ | 41,909,153 | $ | 15,869,355 | $ | 15,884,249 | ||||||||
Accrued
interest payable
|
$ | 259,757 | $ | 259,757 | $ | 210,518 | $ | 210,518 | ||||||||
Advance
payments from
|
||||||||||||||||
borrowers
for taxes
|
||||||||||||||||
and
insurance
|
$ | 330,318 | $ | 330,318 | $ | 254,213 | $ | 254,213 |
Fair
Value at December 31, 2008
|
||||
Description
|
Total
|
Level
1
|
Level
2
|
Level
3
|
Available
for Sale Securities
|
$8,929,798
|
$ -
|
$5,676,787
|
$ 3,253,011
|
Fair
Value at December 31, 2008
|
December
31, 2008
|
||||
Description
|
Total
|
Level
1
|
Level
2
|
Level
3
|
Total
Losses
|
Mortgage
Servicing Rights
|
$ 863,146
|
$ -
|
$ 863,146
|
$
-
|
$ 57,126
|
OREO
and Foreclosed Assets
|
$1,724,567
|
$ -
|
$ -
|
$1,724,567
|
$ 33,500
|
Impaired
Loans
|
$4,577,080
|
$ -
|
$ -
|
$4,577,080
|
$ 581,177
|
2008
|
2007
|
|||||||
Unused
home equity lines of credit
|
$ | 22,959,662 | $ | 19,989,961 | ||||
Unused
personal line of credit
|
2,856,705 | 3,192,912 | ||||||
Unused
business line of credit
|
6,312,060 | 9,171,216 | ||||||
Undisbursed
portion of loans closed
|
1,811,247 | 2,324,413 | ||||||
Irrevocable
letters of credit
|
2,283,450 | 1,575,000 | ||||||
Residential
mortgage commitments
|
5,608,700 | 1,406,242 | ||||||
$ | 41,831,824 | $ | 37,659,744 |
Item
9.
|
Changes
In and Disagreements With Accountants on Accounting and Financial
Disclosure.
|
Item
12.
|
Security
Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
|
Plan
Category
|
Number
of securities
to
be issued
upon
exercise
of
outstanding options, warrants and rights
|
Weighted
average
exercise
price of
outstanding
options,
warrants
and rights
|
Number
of securities
remaining
available
for
future issuance
under
equity
compensation
plan
|
|||
Equity
Incentive Plan approved
by
Security Holders
|
---
(1)
|
$ ---
|
202,237
(2)
|
|||
Equity
Incentive Plan Not
Approved
by Security Holders
|
---
|
---
|
---
|
(1)
|
On
October 10, 2008, the Company’s shareholders approve an equity incentive
plan providing for the issuance of stock options, restricted stock and
stock appreciation rights. No awards were made under this plan
in 2008. However a number of awards were made on January 27,
2009.
|
(2)
|
Consists
of stock options and stock appreciation rights covering up to 144,455
shares of common stock and restricted stock and restricted stock units
covering up to 57,782 shares of common
stock.
|
Report
of Independent Registered Public Accounting Firm
|
Consolidated
Balance Sheets at December 31, 2008 and 2007
|
Consolidated
Statements of Income for the Years Ended December 31, 2008 and
2007
|
Consolidated
Statements of Stockholders' Equity for the Years Ended December 31,
2008,
and
2007
|
Consolidated
Statements of Cash Flows for the Years Ended December 31, 2008 and
2007
|
Notes
to Consolidated Financial
Statements
|
Exhibit
Number
|
Document
|
Reference
to
Prior
Filing or
Exhibit
Number
Attached
Hereto
|
||
3.1
|
Charter
|
*
|
||
3.2
|
Bylaws
|
**
|
||
4
|
Instruments
defining the rights of security holders, including
indentures:
Form
of Sound Financial, Inc. Common Stock Certificate
|
**
|
||
9
|
Voting
Trust Agreement
|
None
|
||
10.1
|
Employment
Agreement with Laura Lee Stewart
|
*
|
||
10.2
|
Executive
Long Term Compensation Agreement with Laura Lee Stewart
|
*
|
||
10.3
|
Executive
Long Term Compensation Agreement with Patricia Floyd
|
*
|
||
10.4
|
Sound
Incentive Compensation Achievement Plan
|
*
|
||
10.5
|
Summary
of Annual Bonus Plan
|
*
|
||
10.6
|
Summary
of Quarterly Bonus Plan
|
*
|
||
10.7
|
Director
Fee Arrangements for 2009
|
10.7
|
||
10.8
|
Sound
Financial, Inc. 2008 Equity Incentive Plan
|
10.8
|
||
10.9
|
Form
of Incentive Stock Option Agreement under the 2008 Equity Incentive
Plan
|
+
|
||
10.10
|
Form
of Non-Qualified Stock Option Agreement under the 2008 Equity Incentive
Plan
|
+
|
||
10.11
|
Form
of Restricted Stock Agreement under the 2008 Equity Incentive
Plan
|
+
|
||
11
|
Statement
re computation of per share earnings
|
None
|
||
14
|
Code
of Business Conduct and Ethics
|
***
|
||
16
|
Letter
re change in certifying accountant
|
None
|
||
18
|
Letter
re change in accounting principles
|
None
|
||
21
|
Subsidiaries
of the registrant
|
*
|
||
22
|
Published
report regarding matters submitted to vote of security
holders
|
None
|
||
23
|
Consents
of Independent Registered Public Accounting Firm - Moss Adams
LLP
|
23
|
||
24
|
Power
of Attorney
|
None
|
||
31.1
|
Rule
13(a)-14(a) Certification (Chief Executive Officer)
|
31.1
|
||
31.2
|
Rule
13(a)-14(a) Certification (Chief Financial Officer)
|
31.2
|
||
32
|
Section
1350 Certification
|
32
|
*
|
Filed
as an exhibit to the Company’s Form SB-2 registration statement filed on
September 20, 2007 (File No. 333-146196) pursuant to Section 5 of the
Securities Act of 1933. Such previously filed document is
incorporated herein by reference in accordance with Item 601 of Regulation
S-K.
|
**
|
Filed
as an exhibit to Pre-Effective Amendment No. 1 to the Company’s Form SB-2
registration statement filed on November 2, 2007 (File
No. 333-146196) pursuant to Section 5 of the Securities Act of
1933. Such previously filed document is incorporated herein by
reference in accordance with Item 601 of Regulation
S-K.
|
***
|
Filed
as an exhibit to the Company’s Form 10-K filed on March 31,
2008. Such previously filed document is incorporated herein by
reference in accordance with Item 601 of Regulation
S-K.
|
+
|
Filed
as an Exhibit to the Company’s Form 8K filed on January 29,
2009. Such previously filed document in incorporated herein by
reference in accordance with Item 601 of Regulation
S-K.
|
Sound
Financial, Inc.
|
||
Date: March
30, 2009
|
By:
|
/s/ Laura Lee
Stewart
|
Laura
Lee Stewart, President and Chief Executive Officer
|
||
Duly
Authorized Representative)
|
||
/s/ Laura Lee
Stewart
|
/s/
Tyler K.
Myers
|
||
Laura
Lee Stewart, President and Director
|
Tyler K. Myers
, Chairman of
the Board
|
||
(Principal Executive
Officer)
|
|||
Date: March
30, 2009
|
Date: March
30, 2009
|
||
/s/
David S. Haddad,
Jr.
|
/s/
Robert F.
Carney
|
||
David S. Haddad, Jr.
,
Director
|
Robert F. Carney
,
Director
|
||
Date: March
30, 2009
|
Date: March
30, 2009
|
||
/s/
Debra Jones
|
/s/
Milton L.
McMullen
|
||
Debra Jones
,
Director
|
Milton L. McMullen
,
Director
|
||
Date: March
30, 2009
|
Date: March
30, 2009
|
||
/s/
Rogelio
Riojas
|
/s/
James E.
Sweeney
|
||
Rogelio Riojas
,
Director
|
James E. Sweeney
,
Director
|
||
Date: March
30, 2009
|
Date: March
30, 2009
|
||
/s/ Matthew P. Deines
|
|||
Matthew
P. Deines, Executive Vice President
|
|||
and
Chief Financial Officer
|
|||
(Principal Financial and
Accounting Officer)
|
|||
Date: March
30, 2009
|
Number
|
Description
|
10.7
|
Director
Fee Arrangements for 2009
|
10.8
|
Sound
Financial Inc. 2008 Equity Incentive Plan
|
23 | Consent of Independent Registered Public Accounting Firm - Moss Adams LLP |
31.1
|
Rule
13(a)-14(a) Certification (Chief Executive Officer)
|
31.2
|
Rule
13(a)-14(a) Certification (Chief Financial Officer)
|
32
|
Section
1350 Certification
|
ARTICLE
I PURPOSE
|
3
|
|
Section
1.1
|
General
Purpose of the Plan.
|
3
|
ARTICLE
II DEFINITIONS
|
3
|
|
ARTICLE
III AVAILABLE SHARES
|
6
|
|
Section
3.1
|
Shares
Available Under the Plan.
|
6
|
Section
3.2
|
Shares
Available for Options and Stock Appreciation Rights.
|
6
|
Section
3.3
|
Shares
Available for Restricted Stock Awards.
|
6
|
Section
3.4
|
Additional
OTS Restrictions.
|
6
|
Section
3.5
|
Computation
of Shares Issued.
|
7
|
ARTICLE
IV ADMINISTRATION
|
7
|
|
Section
4.1
|
Committee.
|
7
|
Section
4.2
|
Committee
Powers.
|
7
|
ARTICLE
V STOCK OPTIONS
|
8
|
|
Section
5.1
|
Grant
of Options.
|
8
|
Section
5.2
|
Size
of Option.
|
8
|
Section
5.3
|
Exercise
Price.
|
8
|
Section
5.4
|
Exercise
Period.
|
9
|
Section
5.5
|
Vesting
Date.
|
9
|
Section
5.6
|
Additional
Restrictions on Incentive Stock Options.
|
9
|
Section
5.7
|
Method
of Exercise.
|
10
|
Section
5.8
|
Limitations
on Options.
|
11
|
Section
5.9
|
Prohibition
Against Option Repricing.
|
11
|
ARTICLE
VI STOCK APPRECIATION RIGHTS
|
12
|
|
Section
6.1
|
Grant
of Stock Appreciation Rights.
|
12
|
Section
6.2
|
Size
of Stock Appreciation Right.
|
12
|
Section
6.3
|
Exercise
Price.
|
12
|
Section
6.4
|
Exercise
Period.
|
12
|
Section
6.5
|
Vesting
Date.
|
13
|
Section
6.6
|
Method
of Exercise.
|
13
|
Section
6.7
|
Limitations
on Stock Appreciation Rights.
|
14
|
Section
6.8
|
Prohibition
Against Stock Appreciation Right Repricing.
|
14
|
ARTICLE
VII RESTRICTED STOCK AWARDS
|
15
|
|
Section
7.1
|
In
General.
|
15
|
Section
7.2
|
Vesting
Date.
|
16
|
Section
7.3
|
Dividend
Rights.
|
16
|
Section
7.4
|
Voting
Rights.
|
16
|
Section
7.5
|
Designation
of Beneficiary.
|
16
|
Section
7.6
|
Manner
of Distribution of Awards.
|
16
|
ARTICLE
VIII SPECIAL TAX PROVISION
|
17
|
|
Section
8.1
|
Tax
Withholding Rights.
|
17
|
ARTICLE
IX AMENDMENT AND TERMINATION
|
17
|
|
Section
9.1
|
Termination
|
17
|
Section
9.2
|
Amendment.
|
17
|
Section
9.3
|
Adjustments
in the Event of Business Reorganization.
|
17
|
ARTICLE
X MISCELLANEOUS
|
18
|
|
Section
10.1
|
Status
as an Employee Benefit Plan.
|
18
|
Section
10.2
|
No
Right to Continued Employment.
|
18
|
Section
10.3
|
Construction
of Language.
|
18
|
Section
10.4
|
Governing
Law.
|
18
|
Section
10.5
|
Headings.
|
18
|
Section
10.6
|
Non-Alienation
of Benefits.
|
19
|
Section
10.7
|
Notices.
|
19
|
Section
10.8
|
Approval
of Shareholders.
|
19
|
|
(a)
|
any
third person, including a "group" as defined in Section 13(d)(3) of the
Securities Exchange Act of 1934, becomes the beneficial owner of shares of
the Company with respect to which 25% or more of the total number of votes
for the election of the Board may be
cast;
|
|
(i)
|
The
name and last known mailing address of the Option Holder and of each
person given rights under such Domestic Relations
Order;
|
|
(ii)
|
the
amount or percentage of the Option Holder's benefits under this Plan to be
paid to each person covered by such Domestic Relations
Order;
|
|
(iii)
|
the
number of payments or the period to which such Domestic Relations Order
applies; and
|
|
(iv)
|
the
name of this Plan; and
|
|
(v)
|
inconsistent
with a previous Qualified Domestic Relations
Order.
|
|
(a)
|
with
the consent of the Participant, to the extent deemed necessary by the
Committee, amend or modify the terms of any outstanding Award or
accelerate or defer the Vesting Date
thereof;
|
|
(i)
|
specify
the number of Shares covered by the
Option;
|
|
(ii)
|
specify
the Exercise Price;
|
|
(iii)
|
specify
the Exercise Period;
|
|
(iv)
|
specify
the Vesting Date; and
|
|
(v)
|
contain
such other terms and conditions not inconsistent with the Plan as the
Committee may, in its discretion,
prescribe.
|
|
(i)
|
giving
written notice to the Committee, in such form and manner as the Committee
may prescribe, of his or her intent to exercise the
Option;
|
|
(ii)
|
delivering
to the Committee full payment for the Shares as to which the Option is to
be exercised; and
|
|
(iii)
|
satisfying
such other conditions as may be prescribed in the Award
Agreement.
|
|
(i)
|
in
cash (by certified or bank check or such other instrument as the Company
may accept); or
|
|
(ii)
|
if
and to the extent permitted by the Committee, in the form of Shares
already owned by the Option Holder having an aggregate Fair Market Value
on the date the Option is exercised equal to the aggregate Exercise Price
to be paid; or
|
|
(iii)
|
by
a combination thereof.
|
|
(ii)
|
the
completion of such registration or other qualification under any state or
federal law, rule or regulation as the Committee shall determine to be
necessary or advisable.
|
|
(b)
|
the
last day of the three-month period commencing on the date of the
Participant's termination of Service, other than on account of death,
Disability or a Termination for
Cause;
|
|
(ii)
|
satisfying
such other conditions as may be prescribed in the Award
Agreement.
|
|
(ii)
|
the
completion of such registration or other qualification under any state or
federal law, rule or regulation as the Committee shall determine to be
necessary or advisable.
|
|
(ii)
|
if
the Participant of a Restricted Stock Award terminates Service prior to
the Vesting Date on account of death or Disability, the Vesting Date shall
be accelerated to the date of termination of the Participant's Service
with the Company; and
|
|
(ii)
|
the
number and kind of securities that may be delivered or deliverable in
respect of outstanding Awards; and
|
1.
|
I
have reviewed this annual report on Form 10-K of Sound Financial,
Inc.;
|
2.
|
Based
on my knowledge, this report does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
report;
|
3.
|
Based
on my knowledge, the financial statements, and other financial information
included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this
report;
|
4.
|
The
registrant’s other certifying officer(s) and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal
control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f) for the registrant and
have:
|
|
a)
|
designed
such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure
that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being
prepared;
|
|
b)
|
designed
such internal control over financial reporting, or caused such internal
control over financial reporting to be designed under our supervision, to
provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial reporting and the preparation
of financial statements for external purposes in accordance with generally
accepted accounting principles;
|
|
c)
|
evaluated
the effectiveness of the registrant’s disclosure controls and procedures
and presented in this report our conclusions about the effectiveness of
the disclosure controls and procedures, as of the end of the period
covered by this report based on such evaluation;
and
|
|
d)
|
disclosed
in this report any change in the registrant’s internal control over
financial reporting that occurred during the registrant’s most recent
fiscal quarter that has materially affected, or is reasonably likely to
materially affect, the registrant’s internal control over financial
reporting; and
|
5.
|
The
registrant’s other certifying officer(s) and I have disclosed, based on
our most recent evaluation of internal control over financial reporting to
the registrant’s auditors and the audit committee of registrant’s board of
directors (or persons performing the equivalent
functions):
|
|
a)
|
all
significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting, which are
reasonably likely to adversely affect the registrant’s ability to record,
process, summarize and report financial information;
and
|
|
b)
|
any
fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant’s internal control
over financial reporting.
|
Date: March
30, 2009
|
By:
|
/s/ Laura Lee
Stewart
|
|
Laura
Lee Stewart
|
|||
President
and Chief Executive Officer
|
1.
|
I
have reviewed this annual report on Form 10-K of Sound Financial,
Inc.;
|
2.
|
Based
on my knowledge, this report does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
report;
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3.
|
Based
on my knowledge, the financial statements, and other financial information
included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this
report;
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4.
|
The
registrant’s other certifying officer(s) and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal
control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f) for the registrant and
have:
|
|
a)
|
designed
such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure
that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being
prepared;
|
|
b)
|
designed
such internal control over financial reporting, or caused such internal
control over financial reporting to be designed under our supervision, to
provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial reporting and the preparation
of financial statements for external purposes in accordance with generally
accepted accounting principles;
|
|
c)
|
evaluated
the effectiveness of the registrant’s disclosure controls and procedures
and presented in this report our conclusions about the effectiveness of
the disclosure controls and procedures, as of the end of the period
covered by this report based on such evaluation;
and
|
|
d)
|
disclosed
in this report any change in the registrant’s internal control over
financial reporting that occurred during the registrant’s most recent
fiscal quarter that has materially affected, or is reasonably likely to
materially affect, the registrant’s internal control over financial
reporting; and
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5.
|
The
registrant’s other certifying officer(s) and I have disclosed, based on
our most recent evaluation of internal control over financial reporting to
the registrant’s auditors and the audit committee of registrant’s board of
directors (or persons performing the equivalent
functions):
|
|
a)
|
all
significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting, which are
reasonably likely to adversely affect the registrant’s ability to record,
process, summarize and report financial information;
and
|
|
b)
|
any
fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant’s internal control
over financial reporting.
|
Date: March
30, 2009
|
By:
|
/s/ Matthew P.
Deines
|
Matthew
P. Deines
|
||
Executive
Vice President and Chief Financial Officer
|
||
(Principal
Financial and Accounting Officer)
|
Date: March
30, 2009
|
By:
|
/s/ Laura Lee
Stewart
|
Laura
Lee Stewart
|
||
President
and Chief Executive Officer
|
||
Date: March
30, 2009
|
By:
|
/s/ Matthew P.
Deines
|
Matthew
P. Deines
|
||
Executive
Vice President and Chief Financial
Officer
|