☒ |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
☐ |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Maryland
|
45-5188530
|
|
(State or other jurisdiction of incorporation or organization)
|
(I.R.S. Employer Identification No.)
|
2400 3
rd
Avenue, Suite 150, Seattle, Washington
|
98121
|
|
(Address of principal executive offices)
|
(Zip Code)
|
Large accelerated filer ☐
|
Accelerated filer ☐
|
Non-accelerated filer ☐
|
Smaller reporting company ☐
|
(Do not check if a smaller reporting company)
|
|
Emerging growth company ☒
|
Page
Number
|
||
PART I
|
FINANCIAL INFORMATION | |
Item 1.
|
Financial Statements | |
3
|
||
4
|
||
5
|
||
6
|
||
7
|
||
8
|
||
Item 2.
|
Management's Discussion and Analysis of Financial Condition and Results of Operations |
30
|
Item 3.
|
Quantitative and Qualitative Disclosures About Market Risk |
41
|
Item 4.
|
Controls and Procedures |
41
|
PART II
|
OTHER INFORMATION
|
|
Item 1.
|
42
|
|
Item 1A
|
42
|
|
Item 2.
|
42
|
|
Item 3.
|
42
|
|
Item 4.
|
42
|
|
Item 5.
|
42
|
|
Item 6.
|
42
|
|
44 | ||
45 |
March 31,
2017
|
December 31,
2016
|
|||||||
ASSETS
|
||||||||
Cash and cash equivalents
|
$
|
52,807
|
$
|
54,582
|
||||
Available-for-sale securities, at fair value
|
6,359
|
6,604
|
||||||
Loans held for sale
|
1,970
|
871
|
||||||
Loans
|
489,290
|
500,001
|
||||||
Allowance for loan losses
|
(4,838
|
)
|
(4,822
|
)
|
||||
Total loans, net
|
484,452
|
495,179
|
||||||
Accrued interest receivable
|
1,754
|
1,816
|
||||||
Bank-owned life insurance (“BOLI”), net
|
12,163
|
12,082
|
||||||
Other real estate owned (“OREO”) and repossessed assets, net
|
952
|
1,172
|
||||||
Mortgage servicing rights, at fair value
|
3,558
|
3,561
|
||||||
Federal Home Loan Bank (“FHLB”) stock, at cost
|
1,731
|
2,840
|
||||||
Premises and equipment, net
|
6,009
|
5,549
|
||||||
Other assets
|
3,621
|
4,127
|
||||||
Total assets
|
$
|
575,376
|
$
|
588,383
|
||||
LIABILITIES
|
||||||||
Deposits
|
||||||||
Interest-bearing
|
409,191
|
403,990
|
||||||
Noninterest-bearing demand
|
71,631
|
63,741
|
||||||
Total deposits
|
480,822
|
467,731
|
||||||
Borrowings
|
25,631
|
54,792
|
||||||
Accrued interest payable
|
87
|
73
|
||||||
Other liabilities
|
6,042
|
4,874
|
||||||
Advance payments from borrowers for taxes and insurance
|
1,166
|
638
|
||||||
Total liabilities
|
513,748
|
528,108
|
||||||
COMMITMENTS AND CONTINGENCIES (NOTE 7)
|
||||||||
STOCKHOLDERS' EQUITY
|
||||||||
Preferred stock, $0.01 par value, 10,000,000 shares authorized, none issued or Outstanding
|
-
|
-
|
||||||
Common stock, $0.01 par value, 40,000,000 shares authorized, 2,499,880 and 2,498,804 shares issued and outstanding as of March 31, 2017 and December 31, 2016, respectively
|
25
|
25
|
||||||
Additional paid-in capital
|
24,134
|
23,979
|
||||||
Unearned shares - Employee Stock Ownership Plan (“ESOP”)
|
(683
|
)
|
(683
|
)
|
||||
Retained earnings
|
38,037
|
36,873
|
||||||
Accumulated other comprehensive income, net of tax
|
115
|
81
|
||||||
Total stockholders’ equity
|
61,628
|
60,275
|
||||||
Total liabilities and stockholders’ equity
|
$
|
575,376
|
$
|
588,383
|
Three Months Ended
March 31,
|
||||||||
2017
|
2016
|
|||||||
INTEREST INCOME
|
||||||||
Loans, including fees
|
$
|
6,442
|
$
|
5,952
|
||||
Interest and dividends on investments, cash and cash equivalents
|
150
|
116
|
||||||
Total interest income
|
6,592
|
6,068
|
||||||
INTEREST EXPENSE
|
||||||||
Deposits
|
703
|
688
|
||||||
Borrowings
|
92
|
29
|
||||||
Total interest expense
|
795
|
717
|
||||||
Net interest income
|
5,797
|
5,351
|
||||||
PROVISION FOR LOAN LOSSES
|
-
|
150
|
||||||
Net interest income after provision for loan losses
|
5,797
|
5,201
|
||||||
NONINTEREST INCOME
|
||||||||
Service charges and fee income
|
511
|
566
|
||||||
Earnings on cash surrender value of bank-owned life insurance
|
81
|
84
|
||||||
Mortgage servicing income
|
253
|
204
|
||||||
Fair value adjustment on mortgage servicing rights
|
(20
|
)
|
(114
|
)
|
||||
Net gain on sale of loans
|
171
|
210
|
||||||
Total noninterest income
|
996
|
950
|
||||||
NONINTEREST EXPENSE
|
||||||||
Salaries and benefits
|
2,691
|
2,563
|
||||||
Operations
|
1,021
|
972
|
||||||
Regulatory assessments
|
124
|
155
|
||||||
Occupancy
|
373
|
385
|
||||||
Data processing
|
407
|
386
|
||||||
Net loss on OREO and repossessed assets
|
3
|
-
|
||||||
Total noninterest expense
|
4,619
|
4,461
|
||||||
Income before provision for income taxes
|
2,174
|
1,690
|
||||||
Provision for income taxes
|
760
|
584
|
||||||
Net income
|
$
|
1,414
|
$
|
1,106
|
||||
Earnings per common share:
|
||||||||
Basic
|
$
|
0.57
|
$
|
0.45
|
||||
Diluted
|
$
|
0.54
|
$
|
0.43
|
||||
Weighted average number of common shares outstanding:
|
||||||||
Basic
|
2,499,502
|
2,477,751
|
||||||
Diluted
|
2,596,519
|
2,571,604
|
Three Months Ended
March 31,
|
||||||||
2017
|
2016
|
|||||||
Net income
|
$
|
1,414
|
$
|
1,106
|
||||
Available for sale securities:
|
||||||||
Unrealized gains on sale of securities arising during the period, net of taxes of $17 and $4, respectively
|
34
|
6
|
||||||
Other comprehensive income, net of tax
|
34
|
6
|
||||||
Comprehensive income
|
$
|
1,448
|
$
|
1,112
|
Shares
|
Common
Stock
|
Additional
Paid-in
Capital
|
Unearned
ESOP Shares
|
Retained
Earnings
|
Accumulated
Other
Comprehensive
Income,
net of tax
|
Total
Stockholders’
Equity
|
||||||||||||||||||||||
Balances at December 31, 2015
|
2,469,206
|
$
|
25
|
$
|
23,002
|
$
|
(911
|
)
|
$
|
32,240
|
$
|
164
|
$
|
54,520
|
||||||||||||||
Net income
|
1,106
|
1,106
|
||||||||||||||||||||||||||
Other comprehensive income, net of tax
|
6
|
6
|
||||||||||||||||||||||||||
Share-based compensation
|
102
|
102
|
||||||||||||||||||||||||||
Cash dividends on common stock ($0.075 per share)
|
(186
|
)
|
(186
|
)
|
||||||||||||||||||||||||
Restricted stock awards issued
|
11,606
|
-
|
||||||||||||||||||||||||||
Exercise of stock options
|
577
|
6
|
6
|
|||||||||||||||||||||||||
Balances at March 31, 2016
|
2,481,389
|
$
|
25
|
$
|
23,110
|
$
|
(911
|
)
|
$
|
33,160
|
$
|
170
|
$
|
55,554
|
Shares
|
Common
Stock
|
Additional
Paid-in
Capital
|
Unearned
ESOP Shares
|
Retained
Earnings
|
Accumulated
Other
Comprehensive
Income,
net of tax
|
Total
Stockholders’
Equity
|
||||||||||||||||||||||
Balances at December 31, 2016
|
2,498,804
|
$
|
25
|
$
|
23,979
|
$
|
(683
|
)
|
$
|
36,873
|
$
|
81
|
$
|
60,275
|
||||||||||||||
Net income
|
1,414
|
1,414
|
||||||||||||||||||||||||||
Other comprehensive income, net of tax
|
34
|
34
|
||||||||||||||||||||||||||
Share-based compensation
|
144
|
144
|
||||||||||||||||||||||||||
Cash dividends on common stock ($0.10 per share)
|
(250
|
)
|
(250
|
)
|
||||||||||||||||||||||||
Restricted stock awards issued
|
576
|
|||||||||||||||||||||||||||
Exercise of stock options
|
500
|
11
|
11
|
|||||||||||||||||||||||||
Balances at March 31, 2017
|
2,499,880
|
$
|
25
|
$
|
24,134
|
$
|
(683
|
)
|
$
|
38,037
|
$
|
115
|
$
|
61,628
|
Three Months Ended March 31,
|
||||||||
2017
|
2016
|
|||||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
||||||||
Net income
|
$
|
1,414
|
$
|
1,106
|
||||
Adjustments to reconcile net income to net cash from operating activities:
|
||||||||
Accretion of net premium on investments
|
12
|
10
|
||||||
Provision for loan losses
|
-
|
150
|
||||||
Depreciation and amortization
|
203
|
195
|
||||||
Compensation expense related to stock options and restricted stock
|
144
|
102
|
||||||
Fair value adjustment on mortgage servicing rights
|
20
|
114
|
||||||
Additions to mortgage servicing rights, net of amortization
|
(17
|
)
|
40
|
|
||||
Increase in cash surrender value of BOLI
|
(81
|
)
|
(84
|
)
|
||||
Net gain on sale of loans
|
(171
|
)
|
(210
|
)
|
||||
Proceeds from sale of loans
|
14,044
|
13,827
|
||||||
Originations of loans held for sale
|
(14,972
|
)
|
(12,712
|
)
|
||||
Loss on sale and write-downs of OREO and repossessed assets
|
(3
|
)
|
-
|
|||||
Change in operating assets and liabilities:
|
||||||||
Accrued interest receivable
|
62
|
13
|
||||||
Other assets
|
489
|
(203
|
)
|
|||||
Accrued interest payable
|
14
|
10
|
||||||
Other liabilities
|
1,168
|
2,176
|
||||||
Net cash from operating activities
|
2,326
|
4,534
|
||||||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
||||||||
Proceeds from principal payments, maturities and sales of available for sale securities
|
284
|
409
|
||||||
FHLB stock redeemed
|
1,109
|
309
|
||||||
Net decrease (increase) in loans
|
10,727
|
(2,515
|
)
|
|||||
Proceeds from sale of OREO and other repossessed assets
|
223
|
124
|
||||||
Purchases of premises and equipment, net
|
(663
|
)
|
(824
|
)
|
||||
Net cash from (used by) investing activities
|
11,680
|
(2,497
|
)
|
|||||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
||||||||
Net increase in deposits
|
13,091
|
8,097
|
||||||
Proceeds from borrowings
|
16,000
|
27,500
|
||||||
Repayment of borrowings
|
(45,161
|
)
|
(36,561
|
)
|
||||
Dividends paid on common stock
|
(250
|
)
|
(186
|
)
|
||||
Net change in advances from borrowers for taxes and insurance
|
528
|
522
|
||||||
Proceeds from stock option exercises
|
11
|
6
|
||||||
Net cash used by financing activities
|
(15,781
|
)
|
(622
|
)
|
||||
Net (decrease) increase in cash and cash equivalents
|
(1,775
|
)
|
1,415
|
|||||
Cash and cash equivalents, beginning of period
|
54,582
|
48,264
|
||||||
Cash and cash equivalents, end of period
|
52,807
|
$
|
49,679
|
|||||
SUPPLEMENTAL CASH FLOW INFORMATION:
|
||||||||
Cash paid for income taxes
|
$
|
650
|
$
|
300
|
||||
Interest paid on deposits and borrowings
|
$
|
781
|
$
|
707
|
||||
Noncash net transfer from loans to OREO and repossessed assets
|
$
|
-
|
$
|
187
|
Amortized
Cost
|
Gross
Unrealized
Gains
|
Gross
Unrealized
Losses
|
Estimated
Fair Value
|
|||||||||||||
March 31, 2017
|
||||||||||||||||
Municipal bonds
|
$
|
3,255
|
$
|
139
|
$
|
(20
|
)
|
$
|
3,374
|
|||||||
Agency mortgage-backed securities
|
2,612
|
52
|
(1
|
)
|
2,663
|
|||||||||||
Non-agency mortgage-backed securities
|
338
|
-
|
(16
|
)
|
322
|
|||||||||||
Total
|
$
|
6,205
|
$
|
191
|
$
|
(37
|
)
|
$
|
6,359
|
|||||||
December 31, 2016
|
||||||||||||||||
Municipal bonds
|
$
|
3,262
|
$
|
127
|
$
|
(36
|
)
|
$
|
3,353
|
|||||||
Agency mortgage-backed securities
|
2,858
|
49
|
(3
|
)
|
2,904
|
|||||||||||
Non-agency mortgage-backed securities
|
362
|
-
|
(15
|
)
|
347
|
|||||||||||
Total
|
$
|
6,482
|
$
|
176
|
$
|
(54
|
)
|
$
|
6,604
|
March 31, 2017
|
||||||||
Amortized
Cost
|
Fair
Value
|
|||||||
Due in less than one year
|
$
|
-
|
$
|
-
|
||||
Due in one to five years
|
1,344
|
1,323
|
||||||
Due after five to ten years
|
414
|
437
|
||||||
Due after ten years
|
1,497
|
1,614
|
||||||
Mortgage-backed securities
|
2,950
|
2,985
|
||||||
Total
|
$
|
6,205
|
$
|
6,359
|
March 31, 2017
|
||||||||||||||||||||||||
Less Than 12 Months
|
12 Months or Longer
|
Total
|
||||||||||||||||||||||
Fair
Value
|
Unrealized
Loss
|
Fair
Value
|
Unrealized
Loss
|
Fair
Value
|
Unrealized
Loss
|
|||||||||||||||||||
Municipal bonds
|
$
|
1,323
|
$
|
(20
|
)
|
$
|
-
|
$
|
-
|
$
|
1,323
|
$
|
(20
|
)
|
||||||||||
Agency mortgage-backed securities
|
1,056
|
(1
|
)
|
-
|
-
|
1,056
|
(1
|
)
|
||||||||||||||||
Non-agency mortgage-backed securities
|
-
|
-
|
322
|
(16
|
)
|
322
|
(16
|
)
|
||||||||||||||||
Total
|
$
|
2,379
|
$
|
(21
|
)
|
$
|
322
|
$
|
(16
|
)
|
$
|
2,701
|
$
|
(37
|
)
|
December 31, 2016
|
||||||||||||||||||||||||
Less Than 12 Months
|
12 Months or Longer
|
Total
|
||||||||||||||||||||||
Fair
Value
|
Unrealized
Loss
|
Fair
Value
|
Unrealized
Loss
|
Fair
Value
|
Unrealized
Loss
|
|||||||||||||||||||
Municipal bonds
|
$
|
1,313
|
$
|
(36
|
)
|
$
|
-
|
$
|
-
|
$
|
1,313
|
$
|
(36
|
)
|
||||||||||
Agency mortgage-backed securities
|
-
|
-
|
1,125
|
(3
|
)
|
1,125
|
(3
|
)
|
||||||||||||||||
Non-agency mortgage-backed securities
|
-
|
-
|
347
|
(15
|
)
|
347
|
(15
|
)
|
||||||||||||||||
Total
|
$
|
1,313
|
$
|
(36
|
)
|
$
|
1,472
|
$
|
(18
|
)
|
$
|
2,785
|
$
|
(54
|
)
|
March 31,
2017
|
December 31,
2016
|
|||||||
Real estate loans:
|
||||||||
One- to four- family
|
$
|
144,948
|
$
|
152,386
|
||||
Home equity
|
27,533
|
27,771
|
||||||
Commercial and multifamily
|
184,936
|
181,004
|
||||||
Construction and land
|
64,151
|
70,915
|
||||||
Total real estate loans
|
421,568
|
432,076
|
||||||
Consumer loans:
|
||||||||
Manufactured homes
|
16,038
|
15,494
|
||||||
Floating homes
|
23,746
|
23,996
|
||||||
Other consumer
|
4,244
|
3,932
|
||||||
Total consumer loans
|
44,028
|
43,422
|
||||||
Commercial business loans
|
25,307
|
26,331
|
||||||
Total loans
|
490,903
|
501,829
|
||||||
Deferred fees
|
(1,613
|
)
|
(1,828
|
)
|
||||
Total loans, gross
|
489,290
|
500,001
|
||||||
Allowance for loan losses
|
(4,838
|
)
|
(4,822
|
)
|
||||
Total loans, net
|
$
|
484,452
|
$
|
495,179
|
One- to
four-
family
|
Home
equity
|
Commercial
and
multifamily
|
Construction
and land
|
Manufactured
homes
|
Floating
homes
|
Other
consumer
|
Commercial
business
|
Un-
allocated
|
Total
|
|||||||||||||||||||||||||||||||
Allowance for loan losses:
|
||||||||||||||||||||||||||||||||||||||||
Individually evaluated for impairment
|
$
|
722
|
$
|
92
|
$
|
24
|
$
|
22
|
$
|
40
|
$
|
-
|
$
|
60
|
$
|
7
|
$
|
-
|
$
|
967
|
||||||||||||||||||||
Collectively evaluated for impairment
|
813
|
156
|
1,089
|
391
|
108
|
137
|
38
|
147
|
992
|
3,871
|
||||||||||||||||||||||||||||||
Ending balance
|
$
|
1,535
|
$
|
248
|
$
|
1,113
|
$
|
413
|
$
|
148
|
$
|
137
|
$
|
98
|
$
|
154
|
$
|
992
|
$
|
4,838
|
||||||||||||||||||||
Loans receivable:
|
||||||||||||||||||||||||||||||||||||||||
Individually evaluated for impairment
|
$
|
6,408
|
$
|
1,092
|
$
|
2,112
|
$
|
81
|
$
|
272
|
$
|
-
|
$
|
62
|
$
|
396
|
$
|
-
|
$
|
10,423
|
||||||||||||||||||||
Collectively evaluated for impairment
|
138,540
|
26,441
|
182,824
|
64,070
|
15,766
|
23,746
|
4,182
|
24,911
|
-
|
480,480
|
||||||||||||||||||||||||||||||
Ending balance
|
$
|
144,948
|
$
|
27,533
|
$
|
184,936
|
$
|
64,151
|
$
|
16,038
|
$
|
23,746
|
$
|
4,244
|
$
|
25,307
|
$
|
-
|
$
|
490,903
|
One-to-
four
family
|
Home
equity
|
Commercial
and
multifamily
|
Construction
and land
|
Manufactured
homes
|
Floating
homes
|
Other
consumer
|
Commercial
business
|
Unallocated
|
Total
|
|||||||||||||||||||||||||||||||
Allowance for loan losses:
|
||||||||||||||||||||||||||||||||||||||||
Individually evaluated for impairment
|
$
|
536
|
$
|
121
|
$
|
24
|
$
|
35
|
$
|
59
|
$
|
-
|
$
|
65
|
$
|
23
|
$
|
-
|
$
|
863
|
||||||||||||||||||||
Collectively evaluated for impairment
|
1,006
|
257
|
1,120
|
424
|
109
|
132
|
47
|
152
|
712
|
3,959
|
||||||||||||||||||||||||||||||
Ending balance
|
$
|
1,542
|
$
|
378
|
$
|
1,144
|
$
|
459
|
$
|
168
|
$
|
132
|
$
|
112
|
$
|
175
|
$
|
712
|
$
|
4,822
|
||||||||||||||||||||
Loans receivable:
|
||||||||||||||||||||||||||||||||||||||||
Individually evaluated for impairment
|
$
|
4,749
|
$
|
832
|
$
|
1,582
|
$
|
83
|
$
|
312
|
$
|
-
|
$
|
62
|
$
|
616
|
$
|
-
|
$
|
8,236
|
||||||||||||||||||||
Collectively evaluated for impairment
|
147,637
|
26,939
|
179,422
|
70,832
|
15,182
|
23,996
|
3,870
|
25,715
|
-
|
493,593
|
||||||||||||||||||||||||||||||
Ending balance
|
$
|
152,386
|
$
|
27,771
|
$
|
181,004
|
$
|
70,915
|
$
|
15,494
|
$
|
23,996
|
$
|
3,932
|
$
|
26,331
|
$
|
-
|
$
|
501,829
|
Beginning
Allowance
|
Charge-offs
|
Recoveries
|
Provision
|
Ending
Allowance
|
||||||||||||||||
One-to four- family
|
$
|
1,542
|
$
|
-
|
$
|
-
|
$
|
(7
|
)
|
$
|
1,535
|
|||||||||
Home equity
|
378
|
-
|
27
|
(157
|
)
|
248
|
||||||||||||||
Commercial and multifamily
|
1,144
|
(24
|
)
|
1
|
(8
|
)
|
1,113
|
|||||||||||||
Construction and land
|
459
|
-
|
-
|
(46
|
)
|
413
|
||||||||||||||
Manufactured homes
|
168
|
-
|
2
|
(22
|
)
|
148
|
||||||||||||||
Floating homes
|
132
|
-
|
-
|
5
|
137
|
|||||||||||||||
Other consumer
|
112
|
(5
|
)
|
15
|
(24
|
)
|
98
|
|||||||||||||
Commercial business
|
175
|
-
|
-
|
(21
|
)
|
154
|
||||||||||||||
Unallocated
|
712
|
-
|
-
|
280
|
992
|
|||||||||||||||
Total
|
$
|
4,822
|
$
|
(29
|
)
|
$
|
45
|
$
|
-
|
$
|
4,838
|
Beginning
Allowance
|
Charge-offs
|
Recoveries
|
Provision
|
Ending
Allowance
|
||||||||||||||||
One-to four- family
|
$
|
1,839
|
$
|
(65
|
)
|
$
|
-
|
$
|
(41
|
)
|
$
|
1,733
|
||||||||
Home equity
|
607
|
-
|
2
|
(12
|
)
|
597
|
||||||||||||||
Commercial and multifamily
|
921
|
-
|
-
|
346
|
1,267
|
|||||||||||||||
Construction and land
|
382
|
-
|
-
|
81
|
463
|
|||||||||||||||
Manufactured homes
|
301
|
-
|
2
|
(101
|
)
|
202
|
||||||||||||||
Floating homes
|
111
|
-
|
-
|
21
|
132
|
|||||||||||||||
Other consumer
|
77
|
(18
|
)
|
2
|
40
|
101
|
||||||||||||||
Commercial business
|
157
|
-
|
-
|
7
|
164
|
|||||||||||||||
Unallocated
|
241
|
-
|
-
|
(191
|
)
|
50
|
||||||||||||||
Total
|
$
|
4,636
|
$
|
(83
|
)
|
$
|
6
|
$
|
150
|
$
|
4,709
|
One- to
four- family
|
Home
equity
|
Commercial
and multifamily
|
Construction
and land
|
Manufactured
homes
|
Floating
homes
|
Other
consumer
|
Commercial
business
|
Total
|
||||||||||||||||||||||||||||
Grade:
|
||||||||||||||||||||||||||||||||||||
Pass
|
$
|
139,558
|
$
|
26,320
|
$
|
172,440
|
$
|
57,868
|
$
|
15,828
|
$
|
23,746
|
$
|
4,135
|
$
|
24,689
|
$
|
464,584
|
||||||||||||||||||
Watch
|
950
|
363
|
10,743
|
6,283
|
102
|
-
|
47
|
315
|
18,803
|
|||||||||||||||||||||||||||
Special Mention
|
139
|
-
|
364
|
-
|
29
|
-
|
2
|
158
|
692
|
|||||||||||||||||||||||||||
Substandard
|
4,301
|
850
|
1,389
|
-
|
79
|
-
|
60
|
145
|
6,824
|
|||||||||||||||||||||||||||
Doubtful
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||||||||||||||
Loss
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||||||||||||||
Total
|
$
|
144,948
|
$
|
27,533
|
$
|
184,936
|
$
|
64,151
|
$
|
16,038
|
$
|
23,746
|
$
|
4,244
|
$
|
25,307
|
$
|
490,903
|
One- to
four- family
|
Home
equity
|
Commercial
and multifamily
|
Construction
and land
|
Manufactured
homes
|
Floating
homes
|
Other
consumer
|
Commercial
business
|
Total
|
||||||||||||||||||||||||||||
Grade:
|
||||||||||||||||||||||||||||||||||||
Pass
|
$
|
148,617
|
$
|
26,547
|
$
|
171,678
|
$
|
67,539
|
$
|
15,288
|
$
|
23,996
|
$
|
3,821
|
$
|
25,625
|
$
|
483,111
|
||||||||||||||||||
Watch
|
998
|
536
|
8,105
|
3,376
|
78
|
-
|
49
|
326
|
13,468
|
|||||||||||||||||||||||||||
Special Mention
|
139
|
-
|
-
|
-
|
30
|
-
|
-
|
-
|
169
|
|||||||||||||||||||||||||||
Substandard
|
2,632
|
688
|
1,221
|
-
|
98
|
-
|
62
|
380
|
5,081
|
|||||||||||||||||||||||||||
Doubtful
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||||||||||||||
Loss
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||||||||||||||
Total
|
$
|
152,386
|
$
|
27,771
|
$
|
181,004
|
$
|
70,915
|
$
|
15,494
|
$
|
23,996
|
$
|
3,932
|
$
|
26,331
|
$
|
501,829
|
March 31,
2017
|
December 31,
2016
|
|||||||
One- to four- family
|
$
|
733
|
$
|
2,169
|
||||
Home equity
|
782
|
536
|
||||||
Commercial and multifamily
|
215
|
218
|
||||||
Manufactured homes
|
47
|
72
|
||||||
Commercial business
|
145
|
149
|
||||||
Total
|
$
|
1,922
|
$
|
3,144
|
30-59 Days
Past Due
|
60-89
Days
Past Due
|
90 Days
and
Greater
Past Due
|
90 Days
and
Greater
Past Due
and Still
Accruing
|
Total Past
Due
|
Current
|
Total
Loans
|
||||||||||||||||||||||
One-to four- family
|
$
|
1,079
|
$
|
63
|
$
|
530
|
$
|
-
|
$
|
1,672
|
$
|
143,276
|
$
|
144,948
|
||||||||||||||
Home equity
|
307
|
90
|
594
|
-
|
991
|
26,542
|
27,533
|
|||||||||||||||||||||
Commercial and multifamily
|
-
|
-
|
-
|
-
|
-
|
184,936
|
184,936
|
|||||||||||||||||||||
Construction and land
|
27
|
-
|
-
|
-
|
27
|
64,124
|
64,151
|
|||||||||||||||||||||
Manufactured homes
|
407
|
37
|
46
|
-
|
490
|
15,548
|
16,038
|
|||||||||||||||||||||
Floating homes
|
-
|
-
|
-
|
-
|
-
|
23,746
|
23,746
|
|||||||||||||||||||||
Other consumer
|
7
|
1
|
-
|
-
|
8
|
4,236
|
4,244
|
|||||||||||||||||||||
Commercial business
|
145
|
-
|
-
|
-
|
145
|
25,162
|
25,307
|
|||||||||||||||||||||
Total
|
$
|
1,972
|
$
|
191
|
$
|
1,170
|
$
|
-
|
$
|
3,333
|
$
|
487,570
|
$
|
490,903
|
30-59 Days
Past Due
|
60-89
Days
Past Due
|
90 Days
and
Greater
Past Due
|
90 Days
and
Greater
Past Due
and Still
Accruing
|
Total Past
Due
|
Current
|
Total
Loans
|
||||||||||||||||||||||
One-to four- family
|
$
|
2,476
|
$
|
161
|
$
|
1,787
|
$
|
-
|
$
|
4,424
|
$
|
147,962
|
$
|
152,386
|
||||||||||||||
Home equity
|
460
|
-
|
494
|
-
|
954
|
26,817
|
27,771
|
|||||||||||||||||||||
Commercial and multifamily
|
-
|
-
|
-
|
-
|
-
|
181,004
|
181,004
|
|||||||||||||||||||||
Construction and land
|
440
|
-
|
-
|
-
|
440
|
70,475
|
70,915
|
|||||||||||||||||||||
Manufactured homes
|
321
|
28
|
62
|
-
|
411
|
15,083
|
15,494
|
|||||||||||||||||||||
Floating homes
|
-
|
-
|
-
|
-
|
-
|
23,996
|
23,996
|
|||||||||||||||||||||
Other consumer
|
26
|
1
|
-
|
-
|
27
|
3,905
|
3,932
|
|||||||||||||||||||||
Commercial business
|
149
|
-
|
-
|
-
|
149
|
26,182
|
26,331
|
|||||||||||||||||||||
Total
|
$
|
3,872
|
$
|
190
|
$
|
2,343
|
$
|
-
|
$
|
6,405
|
$
|
495,424
|
$
|
501,829
|
One- to
four-
family
|
Home
equity
|
Commercial
and
multifamily
|
Construction
and land
|
Manufactured
homes
|
Floating
Homes
|
Other
consumer
|
Commercial
business
|
Total
|
||||||||||||||||||||||||||||
Performing
|
$
|
142,892
|
$
|
26,734
|
$
|
184,721
|
$
|
64,151
|
$
|
15,968
|
$
|
23,746
|
$
|
4,244
|
$
|
25,069
|
$
|
487,525
|
||||||||||||||||||
Nonperforming
|
2,056
|
799
|
215
|
-
|
70
|
-
|
-
|
238
|
3,378
|
|||||||||||||||||||||||||||
Total
|
$
|
144,948
|
$
|
27,533
|
$
|
184,936
|
$
|
64,151
|
$
|
16,038
|
$
|
23,746
|
$
|
4,244
|
$
|
25,307
|
$
|
490,903
|
One- to
four-
family
|
Home
equity
|
Commercial
and
multifamily
|
Construction
and land
|
Manufactured
homes
|
Floating
Homes
|
Other
consumer
|
Commercial
business
|
Total
|
||||||||||||||||||||||||||||
Performing
|
$
|
150,170
|
$
|
27,218
|
$
|
180,786
|
$
|
70,915
|
$
|
15,374
|
$
|
23,996
|
$
|
3,932
|
$
|
26,089
|
$
|
498,480
|
||||||||||||||||||
Nonperforming
|
2,216
|
553
|
218
|
-
|
120
|
-
|
-
|
242
|
3,349
|
|||||||||||||||||||||||||||
Total
|
$
|
152,386
|
$
|
27,771
|
$
|
181,004
|
$
|
70,915
|
$
|
15,494
|
$
|
23,996
|
$
|
3,932
|
$
|
26,331
|
$
|
501,829
|
March 31, 2017
|
||||||||||||||||
Recorded Investment
|
||||||||||||||||
Unpaid
Principal
Balance
|
Without
Allowance
|
With
Allowance
|
Related
Allowance
|
|||||||||||||
One- to four- family
|
$
|
6,512
|
$
|
2,801
|
$
|
3,607
|
$
|
722
|
||||||||
Home equity
|
1,092
|
659
|
433
|
92
|
||||||||||||
Commercial and multifamily
|
2,117
|
1,753
|
359
|
24
|
||||||||||||
Construction and land
|
81
|
-
|
81
|
22
|
||||||||||||
Manufactured homes
|
273
|
71
|
201
|
40
|
||||||||||||
Floating homes
|
-
|
-
|
-
|
-
|
||||||||||||
Other consumer
|
62
|
2
|
60
|
60
|
||||||||||||
Commercial business
|
396
|
303
|
93
|
7
|
||||||||||||
Total
|
$
|
10,533
|
$
|
5,589
|
$
|
4,834
|
$
|
967
|
December 31, 2016
|
||||||||||||||||
Recorded Investment
|
||||||||||||||||
Unpaid
Principal
Balance
|
Without
Allowance
|
With
Allowance
|
Related
Allowance
|
|||||||||||||
One- to four- family
|
$
|
5,010
|
$
|
2,454
|
$
|
2,295
|
$
|
536
|
||||||||
Home equity
|
913
|
446
|
386
|
121
|
||||||||||||
Commercial and multifamily
|
1,582
|
1,221
|
361
|
24
|
||||||||||||
Construction and land
|
83
|
-
|
83
|
35
|
||||||||||||
Manufactured homes
|
326
|
91
|
221
|
59
|
||||||||||||
Floating homes
|
-
|
-
|
-
|
-
|
||||||||||||
Other consumer
|
62
|
-
|
62
|
65
|
||||||||||||
Commercial business
|
616
|
143
|
473
|
23
|
||||||||||||
Total
|
$
|
8,592
|
$
|
4,355
|
$
|
3,881
|
$
|
863
|
March 31, 2017
|
March 31, 2016
|
|||||||||||||||
Average
Recorded
Investment
|
Interest
Income
Recognized
|
Average
Recorded
Investment
|
Interest
Income
Recognized
|
|||||||||||||
One- to four- family
|
$
|
4,959
|
$
|
84
|
$
|
5,623
|
$
|
68
|
||||||||
Home equity
|
965
|
10
|
921
|
12
|
||||||||||||
Commercial and multifamily
|
1,852
|
27
|
3,439
|
67
|
||||||||||||
Construction and land
|
82
|
1
|
90
|
1
|
||||||||||||
Manufactured homes
|
302
|
5
|
371
|
7
|
||||||||||||
Floating homes
|
-
|
-
|
-
|
-
|
||||||||||||
Other consumer
|
63
|
1
|
16
|
1
|
||||||||||||
Commercial business
|
505
|
5
|
307
|
7
|
||||||||||||
Total
|
$
|
8,728
|
$
|
133
|
$
|
10,767
|
$
|
163
|
March 31, 2017
|
Fair Value Measurements Using:
|
|||||||||||||||||||
Carrying
Value
|
Estimated
Fair Value
|
Level 1
|
Level 2
|
Level 3
|
||||||||||||||||
FINANCIAL ASSETS:
|
||||||||||||||||||||
Cash and cash equivalents
|
$
|
52,807
|
$
|
52,807
|
$
|
52,807
|
$
|
-
|
$
|
-
|
||||||||||
Available-for-sale securities
|
6,359
|
6,359
|
-
|
6,037
|
322
|
|||||||||||||||
Loans held for sale
|
1,970
|
1,970
|
-
|
1,970
|
-
|
|||||||||||||||
Loans receivable, net
|
484,452
|
483,245
|
-
|
-
|
483,245
|
|||||||||||||||
Accrued interest receivable
|
1,754
|
1,754
|
1,754
|
-
|
||||||||||||||||
Mortgage servicing rights
|
3,558
|
3,558
|
-
|
-
|
3,558
|
|||||||||||||||
FHLB stock
|
1,731
|
1,731
|
-
|
-
|
1,731
|
|||||||||||||||
FINANCIAL LIABILITIES:
|
||||||||||||||||||||
Non-maturity deposits
|
328,115
|
328,115
|
-
|
328,115
|
-
|
|||||||||||||||
Time deposits
|
152,707
|
150,573
|
-
|
150,573
|
-
|
|||||||||||||||
Borrowings
|
25,631
|
25,635
|
-
|
25,635
|
-
|
|||||||||||||||
Accrued interest payable
|
87
|
87
|
-
|
87
|
-
|
December 31, 2016
|
Fair Value Measurements Using:
|
|||||||||||||||||||
Carrying
Value
|
Estimated
Fair Value
|
Level 1
|
Level 2
|
Level 3
|
||||||||||||||||
FINANCIAL ASSETS:
|
||||||||||||||||||||
Cash and cash equivalents
|
$
|
54,582
|
$
|
54,582
|
$
|
54,582
|
$
|
-
|
$
|
-
|
||||||||||
Available-for-sale securities
|
6,604
|
6,604
|
-
|
6,257
|
347
|
|||||||||||||||
Loans held for sale
|
871
|
871
|
-
|
871
|
-
|
|||||||||||||||
Loans receivable, net
|
495,179
|
494,289
|
-
|
-
|
494,289
|
|||||||||||||||
Accrued interest receivable
|
1,816
|
1,816
|
1,816
|
-
|
-
|
|||||||||||||||
Mortgage servicing rights
|
3,561
|
3,561
|
-
|
-
|
3,561
|
|||||||||||||||
FHLB Stock
|
2,840
|
2,840
|
-
|
-
|
2,840
|
|||||||||||||||
FINANCIAL LIABILITIES:
|
||||||||||||||||||||
Non-maturity deposits
|
307,989
|
307,989
|
-
|
307,989
|
-
|
|||||||||||||||
Time deposits
|
159,742
|
159,333
|
-
|
159,333
|
-
|
|||||||||||||||
Borrowings
|
54,792
|
54,805
|
-
|
54,805
|
-
|
|||||||||||||||
Accrued interest payable
|
73
|
73
|
-
|
73
|
-
|
Fair Value at March 31, 2017
|
||||||||||||||||
Description
|
Total
|
Level 1
|
Level 2
|
Level 3
|
||||||||||||
Municipal bonds
|
$
|
3,374
|
$
|
-
|
$
|
3,374
|
$
|
-
|
||||||||
Agency mortgage-backed securities
|
2,663
|
-
|
2,663
|
-
|
||||||||||||
Non-agency mortgage-backed securities
|
322
|
-
|
-
|
322
|
||||||||||||
Mortgage servicing rights
|
3,558
|
-
|
-
|
3,558
|
Fair Value at December 31, 2016
|
||||||||||||||||
Description
|
Total
|
Level 1
|
Level 2
|
Level 3
|
||||||||||||
Municipal bonds
|
$
|
3,353
|
$
|
-
|
$
|
3,353
|
$
|
-
|
||||||||
Agency mortgage-backed securities
|
2,904
|
-
|
2,904
|
-
|
||||||||||||
Non-agency mortgage-backed securities
|
347
|
-
|
-
|
347
|
||||||||||||
Mortgage servicing rights
|
3,561
|
-
|
-
|
3,561
|
March 31, 2017
|
||||||
Financial Instrument
|
Valuation
Technique
|
Unobservable Input(s)
|
Range
(Weighted Average)
|
|||
Mortgage Servicing Rights
|
Discounted cash flow
|
Prepayment speed assumption
|
104-381% (149%)
|
|||
Discount rate
|
13-15% (13%)
|
|||||
Non-agency mortgage-backed securities
|
Discounted cash flow
|
Discount rate
|
7-9% (8%)
|
December 31, 2016
|
||||||
Financial Instrument
|
Valuation
Technique
|
Unobservable Input(s)
|
Range
(Weighted Average)
|
|||
Mortgage Servicing Rights
|
Discounted cash flow
|
Prepayment speed assumption
|
104-396% (152%)
|
|||
Discount rate
|
13%-15% (13%)
|
|||||
Non-agency mortgage-backed securities
|
Discounted cash flow
|
Discount rate
|
7%-9% (8%)
|
Three Months Ended March 31,
|
||||||||
2017
|
2016
|
|||||||
Beginning balance, at fair value
|
$
|
347
|
$
|
428
|
||||
OTTI impairment losses
|
-
|
-
|
||||||
Sales and principal payments
|
(24
|
)
|
(15
|
)
|
||||
Change in unrealized loss
|
(1
|
)
|
2
|
|||||
Ending balance, at fair value
|
$
|
322
|
$
|
415
|
Fair Value at March 31, 2017
|
||||||||||||||||
Total
|
Level 1
|
Level 2
|
Level 3
|
|||||||||||||
OREO and repossessed assets
|
$
|
952
|
$
|
-
|
$
|
-
|
$
|
952
|
||||||||
Impaired loans
|
10,423
|
-
|
-
|
10,423
|
Fair Value at December 31, 2016
|
||||||||||||||||
Total
|
Level 1
|
Level 2
|
Level 3
|
|||||||||||||
OREO and repossessed assets
|
$
|
1,172
|
$
|
-
|
$
|
-
|
$
|
1,172
|
||||||||
Impaired loans
|
8,236
|
-
|
-
|
8,236
|
March 31, 2017
|
||||||
Financial
Instrument
|
Valuation
Technique(s)
|
Unobservable Input(s)
|
Range
(Weighted Average)
|
|||
OREO
|
Market approach
|
Adjustment for differences between comparable sales
|
0-0% (0%)
|
|||
Impaired loans
|
Market approach
|
Adjustment for differences between comparable sales
|
0-100% (7%)
|
December 31, 2016
|
||||||
Financial
Instrument
|
Valuation
Technique(s)
|
Unobservable Input(s)
|
Range
(Weighted Average)
|
|||
OREO
|
Market approach
|
Adjusted for difference between comparable sales
|
0-0% (0%)
|
|||
Impaired loans
|
Market approach
|
Adjusted for difference between comparable sales
|
0-100% (10.5%)
|
Three Months Ended March 31,
|
||||||||
2017
|
2016
|
|||||||
Beginning balance, at fair value
|
$
|
3,561
|
$
|
3,249
|
||||
Servicing rights that result from transfers and purchases of financial assets
|
17
|
108
|
||||||
Changes in fair value:
|
||||||||
Due to changes in model inputs or assumptions
(1)
|
(20
|
)
|
(114
|
)
|
||||
Other
(2)
|
-
|
(148
|
)
|
|||||
Ending balance, at fair value
|
$
|
3,558
|
$
|
3,095
|
(1)
|
Represents changes in discount rates and prepayment speed assumptions, which are primarily affected by changes in interest rates.
|
(2)
|
Represents changes due to collection or realization of expected cash flows over time.
|
March 31,
2017
|
December 31,
2016
|
|||||||
Prepayment speed (Public Securities Association “PSA” model)
|
149
|
%
|
152
|
%
|
||||
Weighted-average life (years)
|
7.2
|
7.2
|
||||||
Yield to maturity discount rate
|
13
|
%
|
13
|
%
|
Three Months Ended March 31,
|
||||||||
2017
|
2016
|
|||||||
Net income
|
$
|
1,414
|
$
|
1,106
|
||||
Weighted average number of shares outstanding, basic
|
2,500
|
2,478
|
||||||
Effect of potentially dilutive common shares
(1)
|
98
|
94
|
||||||
Weighted average number of shares outstanding, diluted
|
2,597
|
2,572
|
||||||
Earnings per share, basic
|
$
|
0.57
|
$
|
0.45
|
||||
Earnings per share, diluted
|
$
|
0.54
|
$
|
0.43
|
(1)
|
Represents the effect of the assumed exercise of stock options and vesting of non-participating restricted shares, based on the treasury stock method.
|
Shares
|
Weighted-
Average
Exercise Price
|
Weighted-
Average
Remaining
Contractual Term
In Years
|
Aggregate
Intrinsic
Value
|
|||||||||||||
Outstanding at the beginning of the year
|
170,057
|
$
|
15.41
|
6.44
|
$
|
2,141,018
|
||||||||||
Granted
|
32,010
|
28.34
|
||||||||||||||
Exercised
|
(500
|
)
|
22.31
|
|||||||||||||
Forfeited
|
(600
|
)
|
28.34
|
|||||||||||||
Expired
|
-
|
-
|
||||||||||||||
Outstanding at March 31, 2017
|
200,967
|
17.42
|
6.77
|
$
|
2,877,847
|
|||||||||||
Exercisable
|
133,407
|
15.58
|
6.10
|
$
|
2,155,857
|
|||||||||||
Expected to vest, assuming a 0% forfeiture rate over the vesting term
|
67,560
|
21.05
|
8.07
|
$
|
722,296
|
Annual dividend yield
|
1.28
|
%
|
||
Expected volatility
|
22.99
|
%
|
||
Risk-free interest rate
|
2.20
|
%
|
||
Expected term
|
6.50 years
|
|||
Weighted-average grant date fair value per option granted
|
$
|
6.62
|
Annual dividend yield
|
1.03
|
%
|
||
Expected volatility
|
25.48
|
%
|
||
Risk-free interest rate
|
1.64
|
%
|
||
Expected term
|
6.92 years
|
|||
Weighted-average grant date fair value per option granted
|
$
|
5.78
|
Non-vested Shares
|
Shares
|
Weighted-Average
Grant-Date Fair
Value Per Share
|
||||||
Non-vested at January 1, 2017
|
26,138
|
$
|
18.08
|
|||||
Granted
|
576
|
$
|
28.34
|
|||||
Vested
|
(14,950
|
)
|
$
|
18.93
|
||||
Forfeited
|
-
|
-
|
||||||
Expired
|
-
|
-
|
||||||
Non-vested at March 31, 2017
|
11,764
|
$
|
19.05
|
|||||
Expected to vest assuming a 0% forfeiture rate over the vesting term
|
11,764
|
$
|
19.05
|
· |
changes in economic conditions, either nationally or in our market area;
|
· |
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 our allowance for loan losses;
|
· |
the possibility of other-than-temporary impairments of securities held in our securities portfolio;
|
· |
our ability to access cost-effective funding;
|
· |
fluctuations in the demand for loans, the number of unsold homes, land and other properties, and fluctuations in real estate values and both residential and commercial and multifamily real estate market conditions in our market area;
|
· |
secondary market conditions for loans and our ability to sell loans in the secondary market;
|
· |
our ability to attract and retain deposits;
|
· |
our ability to successfully integrate any assets, liabilities, customers, systems, and management personnel we may acquire into our operations and our ability to realize related revenue synergies and expected cost savings and other benefits within the anticipated time frames or at all, including the pending University Place, Washington branch acquisition;
|
· |
legislative or regulatory changes such as the Dodd-Frank Wall Street Reform and Consumer Protection Act and its implementing regulations that adversely affect our business, as well as changes in regulatory policies and principles, or the interpretation of regulatory capital or other rules including changes related to Basel III;
|
· |
monetary and fiscal policies of the Board of Governors of the Federal Reserve System (“Federal Reserve”) and the U.S. Government and other governmental initiatives affecting the financial services industry;
|
· |
results of examinations of Sound Financial Bancorp and Sound Community Bank by their regulators, including the possibility that the regulators may, among other things, require us to increase our allowance for loan losses or to write-down assets, change Sound Community Bank’s regulatory capital position or affect our ability to borrow funds or maintain or increase deposits, which could adversely affect our liquidity and earnings;
|
· |
increases in premiums for deposit insurance;
|
· |
our ability to control operating costs and expenses;
|
· |
the use of estimates in determining fair value of certain of our assets, which estimates may prove to be incorrect and result in significant declines in valuation;
|
· |
difficulties in reducing risks associated with the loans on our balance sheet;
|
· |
staffing fluctuations in response to product demand or the implementation of corporate strategies that affect our workforce and potential associated charges;
|
· |
our ability to keep pace with technological changes, including our ability to identify and address cyber-security risks such as data security breaches, “denial of service” attacks, “hacking” and identity theft;
|
· |
our ability to retain key members of our senior management team;
|
· |
costs and effects of litigation, including settlements and judgments;
|
· |
our ability to implement our business strategies;
|
· |
increased competitive pressures among financial services companies;
|
· |
changes in consumer spending, borrowing and savings habits;
|
· |
the availability of resources to address changes in laws, rules, or regulations or to respond to regulatory actions;
|
· |
our ability to pay dividends on our common stock;
|
· |
adverse changes in the securities markets;
|
· |
the inability of key third-party providers to perform their obligations to us;
|
· |
changes in accounting policies and practices, as may be adopted by the financial institution regulatory agencies or the Financial Accounting Standards Board, including additional guidance and interpretation on accounting issues and details of the implementation of new accounting methods; and
|
· |
other economic, competitive, governmental, regulatory, and technological factors affecting our operations, pricing, products and services and the other risks described from time to time in our filings with the U.S. Securities and Exchange Commission (the “SEC”) .
|
March 31,
2017
|
December 31,
2016
|
Amount
Change
|
Percent
Change
|
|||||||||||||
One-to-four-family
|
$
|
144,948
|
$
|
152,386
|
$
|
(7,438
|
)
|
(4.9
|
)%
|
|||||||
Home equity
|
27,533
|
27,771
|
(238
|
)
|
(0.9
|
)
|
||||||||||
Commercial and multifamily
|
184,936
|
181,004
|
3,932
|
2.2
|
||||||||||||
Construction and land
|
64,151
|
70,915
|
(6,764
|
)
|
(9.5
|
)
|
||||||||||
Manufactured homes
|
16,038
|
15,494
|
544
|
3.5
|
||||||||||||
Floating homes
|
23,746
|
23,996
|
(250
|
)
|
(1.0
|
)
|
||||||||||
Other consumer
|
4,244
|
3,932
|
312
|
7.9
|
||||||||||||
Commercial business
|
25,307
|
26,331
|
(1,024
|
)
|
(3.9
|
)
|
||||||||||
Deferred loan fees
|
(1,613
|
)
|
(1,828
|
)
|
215
|
(11.7
|
)
|
|||||||||
Total loans, gross
|
$
|
489,290
|
$
|
500,001
|
$
|
(10,711
|
)
|
(2.1
|
)
|
Nonperforming Assets
|
||||||||||||||||
March 31,
2017
|
December 31,
2016
|
Amount
Change
|
Percent
Change
|
|||||||||||||
Nonaccrual loans
|
$
|
1,922
|
$
|
3,144
|
$
|
(1,223
|
)
|
(38.9
|
)%
|
|||||||
Nonperforming TDRs
|
1,455
|
205
|
1,251
|
610.2
|
||||||||||||
Total nonperforming loans
|
3,377
|
3,349
|
28
|
0.8
|
||||||||||||
OREO and repossessed assets
|
952
|
1,172
|
(220
|
)
|
(18.8
|
)
|
||||||||||
Total nonperforming assets
|
$
|
4,329
|
$
|
4,521
|
$
|
(192
|
)
|
(4.2
|
)
|
Three Months Ended
March 31,
|
||||||||
2017
|
2016
|
|||||||
Balance at beginning of period
|
$
|
4,822
|
$
|
4,636
|
||||
Charge-offs
|
(29
|
)
|
(83
|
)
|
||||
Recoveries:
|
45
|
6
|
||||||
Net (charge-offs)/recoveries
|
16
|
(77
|
)
|
|||||
Provisions charged to operations
|
-
|
150
|
||||||
Balance at end of period
|
$
|
4,838
|
$
|
4,709
|
||||
Ratio of net charge-offs/(recoveries) during the period to average loans outstanding during the period
|
(0.1
|
)%
|
0.07
|
%
|
||||
March 31,
2017
|
December 31,
2016
|
|||||||
Allowance as a percentage of nonperforming loans (end of period)
|
143.26
|
%
|
143.98
|
%
|
||||
Allowance as a percentage of total loans (end of period)
|
0.99
|
%
|
0.96
|
%
|
March 31, 2017
|
December 31, 2016
|
|||||||||||||||
Amount
|
Wtd. Avg.
Rate
|
Amount
|
Wtd. Avg.
Rate
|
|||||||||||||
Noninterest-bearing demand
|
$
|
67,861
|
0.00
|
%
|
$
|
60,566
|
0.00
|
%
|
||||||||
Interest-bearing demand
|
157,871
|
0.35
|
150,327
|
0.34
|
||||||||||||
Savings
|
47,840
|
0.20
|
44,879
|
0.22
|
||||||||||||
Money market
|
50,773
|
0.19
|
49,042
|
0.17
|
||||||||||||
Time deposits
|
152,707
|
1.34
|
159,742
|
1.12
|
||||||||||||
Escrow
(1)
|
3,770
|
0.00
|
3,175
|
0.00
|
||||||||||||
Total deposits
|
$
|
480,822
|
0.60
|
$
|
467,731
|
0.53
|
Three Months Ended March 31,
|
Amount
|
Percent
|
||||||||||||||
2017
|
2016
|
Change
|
Change
|
|||||||||||||
Service charges and fee income
|
$
|
511
|
$
|
566
|
$
|
(55
|
)
|
(9.7
|
)%
|
|||||||
Earnings on cash surrender value of BOLI
|
81
|
84
|
(3
|
)
|
(3.6
|
)
|
||||||||||
Mortgage servicing income
|
253
|
204
|
49
|
24.0
|
||||||||||||
Fair value adjustment on mortgage servicing rights
|
(20
|
)
|
(114
|
)
|
94
|
(82.5
|
)
|
|||||||||
Net gain on sale of loans
|
171
|
210
|
(39
|
)
|
(18.6
|
)
|
||||||||||
Total noninterest income
|
$
|
996
|
$
|
950
|
$
|
46
|
4.8
|
Three Months Ended March 31,
|
Amount
|
Percent
|
||||||||||||||
2017
|
2016
|
Change
|
Change
|
|||||||||||||
Salaries and benefits
|
$
|
2,691
|
$
|
2,563
|
$
|
128
|
5.0
|
%
|
||||||||
Operations
|
1,021
|
972
|
49
|
5.0
|
||||||||||||
Regulatory assessments
|
124
|
155
|
(31
|
)
|
(20.0
|
)
|
||||||||||
Occupancy
|
373
|
385
|
(12
|
)
|
(3.1
|
)
|
||||||||||
Data processing
|
407
|
386
|
21
|
5.4
|
||||||||||||
Losses and expenses on OREO and repossessed assets
|
3
|
-
|
3
|
NM
|
||||||||||||
Total noninterest expense
|
$
|
4,619
|
$
|
4,461
|
$
|
158
|
3.5
|
March 31, 2017
|
||||
Residential mortgage commitments
|
$
|
5,699
|
||
Undisbursed portion of loans originated
|
31,692
|
|||
Unused lines of credit
|
25,187
|
|||
Irrevocable letters of credit
|
185
|
|||
Total loan commitments
|
$
|
62,763
|
Actual
|
Minimum For Capital
Adequacy Purposes
|
To Be Well Capitalized
Under Prompt Corrective
|
||||||||||||||||||||||
Amount
|
Ratio
|
Amount
|
Ratio
|
Amount
|
Ratio
|
|||||||||||||||||||
March 31, 2017
|
||||||||||||||||||||||||
Tier 1 Capital to average assets
|
$
|
59,117
|
10.25
|
%
|
$
|
23,063
|
>4.0
|
%
|
$
|
28,829
|
>5.0
|
%
|
||||||||||||
Common Equity Tier 1 (“CET1”) risk-based capital ratio
|
59,117
|
12.58
|
21,147
|
>4.5
|
%
|
30,545
|
>6.5
|
%
|
||||||||||||||||
Tier 1 Capital to risk-weighted assets
|
59,117
|
12.58
|
28,195
|
>6.0
|
%
|
37,594
|
>8.0
|
%
|
||||||||||||||||
Total Capital to risk-weighted assets
|
64,150
|
13.65
|
37,594
|
>8.0
|
%
|
46,992
|
>10.0
|
%
|
(a) |
Evaluation of Disclosure Controls and Procedures.
|
(b) |
Changes in Internal Control over Financial Reporting.
|
Exhibits : | |
3.1 |
Articles of Incorporation of Sound Financial Bancorp, Inc. (incorporated herein by reference to the Registration Statement on Form S-1 filed with the SEC on March 27, 2012 (File No. 333-180385))
|
3.2 |
Bylaws of Sound Financial Bancorp, Inc. (incorporated herein by reference to the Registration Statement on Form S-1 filed with the SEC on March 27, 2012 (File No. 333-180385))
|
4.0 |
Form of Common Stock Certificate of Sound Financial Bancorp, Inc. (incorporated herein by reference to the Registration Statement on Form S-1 filed with the SEC on March 27, 2012 (File No. 333-180385))
|
10.1 |
Form of Amended and Restated Employment Agreement dated August 30, 2016, among Sound Financial Bancorp, Inc., Sound Community Bank and Laura Lee Stewart (incorporated herein by reference to the Current Report on Form 8-K filed with the SEC on September 1, 2016 (File No. 001-35633))
|
10.2 |
Amended and Restated Supplemental Executive Retirement Agreement by and between Sound Community Bank and Laura Lee Stewart (incorporated herein by reference to the Current Report on Form 8-K filed with the SEC on November 27, 2015 (File No. 001-35633))
|
10.3 |
Amended and Restated Long Term Compensation Agreement by and between Sound Community Bank and Laura Lee Stewart (incorporated herein by reference to the Current Report on Form 8-K filed with the SEC on November 27, 2015 (File No. 001-35633))
|
10.4 |
Amended and Restated Confidentiality, Non-Competition and Non-Solicitation Agreement by and between Sound Community Bank and Laura Lee Stewart (incorporated herein by reference to the Current Report on Form 8-K filed with the SEC on November 27, 2015 (File No. 001-35633))
|
10.5 |
2008 Equity Incentive Plan (incorporated herein by reference to the Annual Report on Form 10-K filed with the SEC on March 31, 2009 (File No. 000-52889))
|
10.6 |
Forms of Incentive Stock Option Agreement, Non-Qualified Stock Option Agreement and Restricted Stock Agreements under the 2008 Equity Incentive Plan (incorporated herein by reference to the Current Report on Form 8-K filed with the SEC on January 29, 2009 (File No. 000-52889))
|
10.7 |
Summary of Annual Bonus Plan (incorporated herein by reference to the Registration Statement on Form SB-2 filed with the SEC on September 20, 2007 (File No. 333-146196))
|
10.8 |
2013 Equity Inventive Plan (included as Exhibit 10.13 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30,2013 and incorporated herein by reference (File No. 001-35633))
|
10.9 |
Form of Incentive Stock Option Agreement, Non-Qualified Stock Option Agreement and Restricted Stock Agreement under the 2013 Equity Incentive Plan (included as Exhibit 10.14 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2013 and incorporated herein by reference (File No. 001-35633))
|
10.10 |
Amended and Restated Change of Control Agreement dated June 21, 2016, by and among Sound Financial Bancorp, Inc., Sound Community Bank and Matthew P. Deines (incorporated herein by reference to the Current Report on Form 8-K filed with the SEC on June 24, 2016 (File No. 001-35633))
|
10.11 |
Change of Control Agreement dated June 21, 2016, by and among Sound Financial Bancorp, Inc., Sound Community Bank and Elliott Pierce
|
10.12 |
Adoption Agreement for the Sound Community Bank Nonqualified Deferred Compensation Plan (incorporated herein by reference to the Current Report on Form 8-K filed with the SEC on March 24, 2017 (File No. (0001140361-17-013082))
|
10.13 |
The Sound Community Bank Nonqualified Deferred Compensation Plan (incorporated herein by reference to the Current Report on Form 8-K filed with the SEC on May 16, 2016 (incorporated herein by reference to the Current Report on Form 8-K filed with the SEC on March 24, 2017 (File No. (0001140361-17-013082))
|
11 |
Statement re computation of per share earnings (See Note 9 of the Notes to Condensed Consolidated Financial Statements contained in Item 1, Part I of this Current Report on Form 10-Q.)
|
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
|
101
|
Interactive Data Files
|
Sound Financial Bancorp, Inc.
|
||
Date: May 12, 2017
|
By:
|
/s/ Laura Lee Stewart
|
Laura Lee Stewart
|
||
President and Chief Executive Officer
|
||
Date: May 12, 2017
|
By:
|
/s/ Matthew P. Deines
|
Matthew P. Deines
|
||
Executive Vice President and Chief Financial Officer
|
Exhibit No.
|
|
Change of Control Agreement dated June 21, 2016, by and among Sound Financial Bancorp, Inc., Sound Community Bank and Elliott Pierce
|
|
Rule 13(a)-14(a) Certification (Chief Executive Officer)
|
|
Rule 13(a)-14(a) Certification (Chief Financial Officer)
|
|
Section 1350 Certification
|
|
101
|
Interactive Data Files
|
If to the Executive:
|
||
If to SFBC:
|
Sound Financial Bancorp, Inc.
|
|
2005 5th Avenue, Suite 200
|
||
Seattle, Washington 98121
|
EXECUTIVE
|
|||||
ATTEST:
|
/s/ Matthew P. Deines
|
/s/ Elliott Pierce
|
|||
Elliott Pierce
|
|||||
SOUND FINANCIAL BANCORP, INC.
|
|||||
ATTEST:
|
/s/ Christine Jones
|
By:
|
/s/ Laura Lee Stewart
|
||
Laura Lee Stewart
|
|||||
President and CEO
|
|||||
SOUND COMMUNITY BANK
|
|||||
ATTEST
|
/s/ Christine Jones
|
By:
|
/s/ Laura Lee Stewart
|
||
Laura Lee Stewart
|
|||||
President and CEO
|
1. |
I have reviewed this quarterly report on Form 10-Q of Sound Financial Bancorp, 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 (the registrant’s fourth quarter in the case of an annual report)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: May 12, 2017
|
By:
|
/s/ Laura Lee Stewart
|
Laura Lee Stewart
|
||
President and Chief Executive Officer
|
||
(Principal Executive Officer)
|
1. |
I have reviewed this quarterly report on Form 10-Q of Sound Financial Bancorp, 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 (the registrant’s fourth quarter in the case of an annual report) 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: May 12, 2017
|
By:
|
/s/ Matthew P. Deines
|
Matthew P. Deines
|
||
Executive Vice President and Chief Financial Officer
|
||
(Principal Financial and Accounting Officer)
|
Date:
|
May 12, 2017
|
By:
|
/s/ Laura Lee Stewart
|
Laura Lee Stewart
|
|||
President and Chief Executive Officer
|
|||
Date:
|
May 12, 2017
|
By:
|
/s/ Matthew P. Deines
|
Matthew P. Deines
|
|||
Executive Vice President and
|
|||
Chief Financial Officer
|