Sound Financial Bancorp, Inc. (Form: 10-Q/A, Received: 11/14/2013 17:23:12)

SOUND FINANCIAL BANCORP, INC.

2013 EQUITY INCENTIVE PLAN

INCENTIVE STOCK OPTION AWARD AGREEMENT

ISO No. _______________ Grant Date: _______________

This Incentive Stock Option Award (“ISO”) is granted by Sound Financial Bancorp, Inc. (“Corporation”) to [Name] (“Option Holder”) in accordance with the terms of this Incentive Stock Option Award Agreement (“Agreement”) and subject to the provisions of the Sound Financial Bancorp, Inc. 2013 Equity Incentive Plan, as amended from time to time (“Plan”). The Plan is incorporated herein by reference.

ISO Award . The Corporation grants to Option Holder ISOs to purchase [ Number ] Shares at an Exercise Price of $ [ Number ] per Share. These ISOs are subject to forfeiture until they vest and to limits on transferability, as provided in Sections 5 and 6 of this Agreement and in Article V of the Plan.

2.	Vesting Dates . The ISOs shall vest as follows, subject to earlier vesting in the event of a termination of Service as provided in Section 6 or a Change in Control as provided in Section 7:

ISOs for

Vesting Date Number of Shares Vesting

Exercise . The Option Holder (or in the case of the death of the Option Holder, the designated legal representative or heir of the Option Holder) may exercise the ISOs during the Exercise Period by giving written notice to the [Corporate Secretary of the Corporation] in the form required by the Committee (“Exercise Notice”). The Exercise Notice must specify the number of Shares to be purchased, which shall be at least 100 unless fewer shares remain unexercised. The exercise date is the date the Exercise Notice is received by the Corporation. The Exercise Period commences on the Vesting Date and expires at 5:00 p.m., Pacific time, on the date 10 years [five years for over 10% owners of Corporation on the Grant Date] after the Grant Date, such later time and date being hereinafter referred to as the “Expiration Date,” subject to earlier expiration in the event of a termination of Service as provided in Section 6. Any ISOs not exercised as of the close of business on the last day of the Exercise Period shall be cancelled without consideration at that time.

The Exercise Notice shall be accompanied by payment in full of the Exercise Price for the Shares being purchased. Payment shall be made: (a) in cash, which may be in the form of a check, money order, cashier's check or certified check, payable to the Corporation, or (b) by delivering Shares of the Corporation already owned by the Option Holder having a Fair Market Value on the exercise date equal to the aggregate Exercise Price to be paid, [or (c) by instructing the Corporation to withhold Shares otherwise issuable upon the exercise having an aggregate Fair Market Value on the exercise date equal to the aggregate Exercise Price to be paid,] or (d) by a combination of thereof. Payment for the Shares being purchased upon exercise of the Option may also be made by delivering a properly executed Exercise Notice to the Corporation, together with a copy of irrevocable instructions to a broker to deliver promptly to the Corporation the amount of sale or loan proceeds to pay the aggregate Exercise Price and applicable tax withholding amounts (if any), in which event the Shares acquired shall be delivered to the broker promptly following receipt of payment.

Related Awards . These ISOs [are not related to any other Award under the Plan.] or [are related to stock appreciation rights granted on the Grant Date and designated SAR No. ___ . Any related stock appreciation rights do not receive the special tax treatment afforded the ISOs. To the extent any of the related stock appreciation rights are exercised, the ISOs shall terminate with respect to the same number of Shares.]

5.	Transferability . The Option Holder may not sell, assign, transfer, pledge or otherwise encumber any ISOs, except in the event of the Option Holder’s death, by will or by the laws of descent and distribution or pursuant to a Domestic Relations Order.

Termination of Service . If the Option Holder terminates Service for any reason other than in connection with a Change in Control or the death or Disability of the Option Holder, any ISOs that have not vested as of the date of that termination shall be forfeited to the Corporation, and the Exercise Period of any vested ISOs shall expire three months after that termination of Service (but in no event after the Expiration Date), except in the case of a Termination for Cause, in which case all ISOs held by the Option Holder shall expire immediately. If the Option Holder’s Service terminates on account of the Option Holder’s death or Disability, the Vesting Date for all ISOs that have not vested or been forfeited shall be accelerated to the date of that termination of Service, and the Exercise Period of all ISOs shall expire one year after that termination of Service (but in no event after the Expiration Date).

Effect of Change in Control . Upon a Change in Control, the Vesting Date for all ISOs that have not vested or been forfeited shall be accelerated to the date of the earliest event constituting a Change in Control. [May be modified at Committee’s election for 280G planning purposes for executive officers.]

8.	Option Holder’s Rights . The ISOs awarded hereby do not entitle the Option Holder to any rights of a shareholder of the Corporation.

Delivery of Shares to Option Holder . Promptly after receipt of an Exercise Notice and full payment of the Exercise Price for the Shares being acquired, the Corporation shall issue and deliver to the Option Holder (or other person validly exercising the ISO) a certificate or certificates representing the Shares of Common Stock being purchased, or evidence of the issuance of such Shares in book-entry form, registered in the name of the Option Holder (or such other person), or, upon request, in the name of the Option Holder (or such other person) and in the name of another person in such form of joint ownership as requested by the Option Holder (or such other person) pursuant to applicable state law. The Corporation’s obligation to deliver a stock certificate or evidence of the issuance of Shares in book-entry form for Shares purchased upon the exercise of an ISO can be conditioned upon the receipt of a representation of investment intent from the Option Holder (or the Option Holder’s Beneficiary) in such form as the Committee requires. The Corporation shall not be required to deliver stock certificates or evidence of the issuance of Shares in book-entry form for Shares purchased prior to: (a) the listing of those Shares on a National Exchange; or (b) the completion of any registration or qualification of those Shares required under applicable law.

10.

Notice of Sale of Shares . The Option Holder (or other person who received Shares from the exercise of the ISOs) shall give written notice to the Corporation promptly in the event of the sale or other disposition of Shares received from the exercise of the ISOs within either: (a) two years from the Grant Date; or (b) one year from the exercise date for the ISOs exercised.

11.

Adjustments in Shares . In the event of any recapitalization, forward or reverse stock split, reorganization, merger, consolidation, spin-off, combination, exchange of Shares or other securities, stock dividend, special or recurring dividend or distribution, liquidation, dissolution or other similar corporate transaction or event, the Committee, in its sole discretion, shall adjust the number of Shares or class of securities of the Corporation covered by the ISOs or the Exercise Price of the ISOs. The Option Holder agrees to execute any documents required by the Committee in connection with an adjustment under this Section 11.

12.

Tax Withholding . The Corporation shall have the right to require the Option Holder to pay to the Corporation the amount of any tax that the Corporation is required to withhold with respect to such Shares, or in lieu thereof, to retain or sell without notice, a sufficient number of Shares to cover the minimum amount required to be withheld. The Corporation shall have the right to deduct from all dividends paid with respect to the Shares the amount of any taxes that the Corporation is required to withhold with respect to such dividend payments.

13.

Plan and Committee Decisions are Controlling . This Agreement, the award of ISOs to the Option Holder and the issuance of Shares upon the exercise of the ISOs are subject in all respects to the provisions of the Plan, which are controlling. Capitalized terms herein not defined in this Agreement shall have the meaning ascribed to them in the Plan. All decisions, determinations and interpretations by the Committee respecting the Plan, this Agreement, the award of ISOs or the issuance of Shares upon the exercise of the ISOs shall be binding and conclusive upon the Option Holder, any Beneficiary of the Option Holder or the legal representative thereof.

14.

Option Holder’s Employment . Nothing in this Agreement shall limit the right of the Corporation or any of its Affiliates to terminate the Option Holder’s service or employment as a director, advisory director, director emeritus, officer or employee, or otherwise impose upon the Corporation or any of its Affiliates any obligation to employ or accept the services or employment of the Option Holder.

15.

Amendment . The Committee may waive any conditions of or rights of the Corporation or modify or amend the terms of this Agreement; provided, however, that the Committee may not amend, alter, suspend, discontinue or terminate any provision of this Agreement if such action may adversely affect the Option Holder without the Option Holder’s written consent. To the extent permitted by applicable laws and regulations, the Committee shall have the authority, in its sole discretion but with the permission of the Option Holder, to accelerate the vesting of the Shares or remove any other restrictions imposed on the Option Holder with respect to the Shares, whenever the Committee may determine that such action is appropriate.

16.

Loss of ISO Status . If any of the ISOs fail, for any reason, to qualify for the special tax treatment afforded the ISOs, they shall be treated as Non-Qualified Stock Options under the Plan. The ISOs will lose ISO status: (a) if the Option Holder is not an employee of the Corporation or its Affiliates from the Grant Date through the date three months before the exercise date; or (b) if the Shares acquired upon the exercise of the ISO are sold or disposed of within one of the time periods described in Section 10.

17.	Option Holder Acceptance . The Option Holder shall signify acceptance of the terms and conditions of this Agreement and acknowledge receipt of a copy of the Plan by signing in the space provided below and returning the signed copy to the Corporation.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the date first above written.

SOUND FINANCIAL BANCORP, INC.

By ________________________________

Its ________________________________

ACCEPTED BY OPTION HOLDER

___________________________________

(Signature)

___________________________________

(Print Name)

___________________________________

(Street Address)

___________________________________

(City, State & Zip Code)

Beneficiary Designation:

The Option Holder designates the following Beneficiary to receive the Shares upon the Option Holder’s death:

________________________________________________________________________

SOUND FINANCIAL BANCORP, INC.

2013 EQUITY INCENTIVE PLAN

NON-QUALIFIED STOCK OPTION AWARD AGREEMENT

NQSO No. _______________ Grant Date: _______________

This Non-Qualified Stock Option Award (“NQSO”) is granted by Sound Financial Bancorp, Inc. (“Corporation”) to [Name] (“Option Holder”) in accordance with the terms of this Non-Qualified Stock Option Award Agreement (“Agreement”) and subject to the provisions of the Sound Financial Bancorp, Inc. 2013 Equity Incentive Plan, as amended from time to time (“Plan”). The Plan is incorporated herein by reference.

NQSO Award . The Corporation grants to Option Holder NQSOs to purchase [ Number ] Shares at an Exercise Price of $ [ Number ] per Share. These NQSOs are subject to forfeiture and to limits on transferability until they vest, as provided in Sections 5 and 6 of this Agreement and in Article V of the Plan.

2.	Vesting Dates . The NQSOs shall vest as follows, subject to earlier vesting in the event of a termination of Service as provided in Section 6 or a Change in Control as provided in Section 7:

NQSOs for

Vesting Date Number of Shares Vesting

Exercise . The Option Holder (or in the case of the death of the Option Holder, the designated legal representative or heir of the Option Holder) may exercise the NQSOs during the Exercise Period by giving written notice to the [Corporate Secretary of the Corporation] in the form required by the Committee (“Exercise Notice”). The Exercise Notice must specify the number of Shares to be purchased, which shall be at least 100 unless fewer shares remain unexercised. The exercise date is the date the Exercise Notice is received by the Corporation. The Exercise Period commences on the Vesting Date and expires at 5:00 p.m., Pacific time, on the date ten (10) years after the Grant Date, such later time and date being hereinafter referred to as the “Expiration Date,” subject to earlier expiration in the event of a termination of Service as provided in Section 6. Any NQSOs not exercised as of the close of business on the last day of the Exercise Period shall be cancelled without consideration at that time.

The Exercise Notice shall be accompanied by payment in full of the Exercise Price for the Shares being purchased. Payment shall be made: (a) in cash, which may be in the form of a check, money order, cashier's check or certified check, payable to the Corporation, or (b) by delivering Shares of the Corporation already owned by the Option Holder having a Fair Market Value on the exercise date equal to the aggregate Exercise Price to be paid, [or (c) by instructing the Corporation to withhold Shares otherwise issuable upon the exercise having an aggregate Fair Market Value on the exercise date equal to the aggregate Exercise Price to be paid,] or (d) by a combination thereof. Payment for the Shares being purchased upon exercise of the Option may also be made by delivering a properly executed Exercise Notice to the Corporation, together with a copy of irrevocable instructions to a broker to deliver promptly to the Corporation the amount of sale or loan proceeds to pay the aggregate Exercise Price and applicable tax withholding amounts (if any), in which event the Shares acquired shall be delivered to the broker promptly following receipt of payment.

Related Awards : These NQSOs [are not related to any other Award under the Plan.] or [are related to stock appreciation rights granted on the Grant Date and designated SAR No . ___. To the extent any of the related stock appreciation rights is exercised, the NQSOs shall terminate with respect to the same number of Shares.]

Transferability . The Option Holder may not sell, assign, transfer, pledge or otherwise encumber any NQSOs, except in the event of the Option Holder’s death, by will or by the laws of descent and distribution or pursuant to a Domestic Relations Order. The Committee, in its sole and absolute discretion, may allow the Option Holder to transfer one or more NQSOs to the Option Holder’s Family Members, as provided in the Plan.

Termination of Service . If the Option Holder terminates Service for any reason other than in connection with a Change in Control or the death or Disability of the Option Holder, any NQSOs that have not vested as of the date of that termination shall be forfeited to the Corporation, and the Exercise Period of any vested NQSOs shall expire three months after that termination of Service (but in no event after the Expiration Date), except in the case of a Termination for Cause, in which case all NQSOs held by the Option Holder shall expire immediately. If the Option Holder’s Service terminates on account of the Option Holder’s death or Disability, the Vesting Date for all NQSOs that have not vested or been forfeited shall be accelerated to the date of that termination of Service, and the Exercise Period of all vested NQSOs shall expire one year after that termination of Service (but in no event after the Expiration Date).

Effect of Change in Control . Upon a Change in Control, the Vesting Date for all NQSOs that have not vested or been forfeited shall be accelerated to the date of the earliest event constituting a Change in Control. [May be modified at Committee’s election for 280G planning purposes for executive officers, or for directors holding 1% or more of the Corporation’s outstanding stock.]

8.	Option Holder’s Rights . The NQSOs awarded hereby do not entitle the Option Holder to any rights of a shareholder of the Corporation.

Delivery of Shares to Option Holder . Promptly after receipt of an Exercise Notice and full payment of the Exercise Price for the Shares being acquired, the Corporation shall issue and deliver to the Option Holder (or other person validly exercising the NQSO) a certificate or certificates representing the Shares of Common Stock being purchased, or evidence of the issuance of such Shares in book-entry form, registered in the name of the Option Holder (or such other person), or, upon request, in the name of the Option Holder (or such other person) and in the name of another person in such form of joint ownership as requested by the Option Holder (or such other person) pursuant to applicable state law. The Corporation’s obligation to deliver a stock certificate or evidence of the issuance of Shares in book-entry form for Shares purchased upon the exercise of an NQSO can be conditioned upon the receipt of a representation of investment intent from the Option Holder (or the Option Holder’s Beneficiary) in such form as the Committee requires. The Corporation shall not be required to deliver stock certificates or evidence of the issuance of Shares in book-entry form for Shares purchased prior to: (a) the listing of those Shares on a National Exchange; or (b) the completion of any registration or qualification of those Shares required under applicable law.

10.

Adjustments in Shares . In the event of any recapitalization, forward or reverse stock split, reorganization, merger, consolidation, spin-off, combination, exchange of Shares or other securities, stock dividend, special or recurring dividend or distribution, liquidation, dissolution or other similar corporate transaction or event, the Committee, in its sole discretion, shall adjust the number of Shares or class of securities of the Corporation covered by the NQSOs or the Exercise Price of the NQSOs. The Option Holder agrees to execute any documents required by the Committee in connection with an adjustment under this Section 10.

11.

12.

Plan and Committee Decisions are Controlling . This Agreement, the award of NQSOs to the Option Holder and the issuance of Shares upon the exercise of the NQSOs are subject in all respects to the provisions of the Plan, which are controlling. Capitalized terms herein not defined in this Agreement shall have the meaning ascribed to them in the Plan. All decisions, determinations and interpretations by the Committee respecting the Plan, this Agreement, the award of NQSOs or the issuance of Shares upon the exercise of the NQSOs shall be binding and conclusive upon the Option Holder, any Beneficiary of the Option Holder or the legal representative thereof.

13.

14.

15.	Option Holder Acceptance . The Option Holder shall signify acceptance of the terms and conditions of this Agreement and acknowledge receipt of a copy of the Plan by signing in the space provided below and returning the signed copy to the Corporation.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the date first above written.

SOUND FINANCIAL BANCORP, INC.

By ________________________________

Its ________________________________

ACCEPTED BY OPTION HOLDER

___________________________________

(Signature)

___________________________________

(Print Name)

___________________________________

(Street Address)

___________________________________

(City, State & Zip Code)

Beneficiary Designation:

The Option Holder designates the following Beneficiary to receive the Shares upon the Option Holder’s death:

________________________________________________________________________

SOUND FINANCIAL BANCORP, INC.

2013 EQUITY INCENTIVE PLAN

RESTRICTED STOCK AWARD AGREEMENT

RS No. _______________ Grant Date: _______________

This Restricted Stock Award (“Restricted Stock Award”) is granted by Sound Financial Bancorp, Inc. (“Corporation”) to [Name] (“Grantee”) in accordance with the terms of this Restricted Stock Award Agreement (“Agreement”) and subject to the provisions of the Sound Financial Bancorp, Inc. 2013 Equity Incentive Plan, as amended from time to time (“Plan”). The Plan is incorporated herein by reference.

Restricted Stock Award . The Corporation makes this Restricted Stock Award of [ Number ] Shares to Grantee [in exchange for a payment of $________] . These Shares are subject to forfeiture and to limits on transferability until they vest, as provided in Sections 2, 3 and 4 of this Agreement and in Article VII of the Plan.

2.	Vesting Dates : The Shares shall vest as follows:

Vesting Date Number of Shares Vesting

Transferability . The Grantee may not sell, assign, transfer, pledge or otherwise encumber any Shares that have not vested, except in the event of the Grantee’s death, by will or by the laws of descent and distribution or pursuant to a Domestic Relations Order. The Committee, in its sole and absolute discretion, may allow the Grantee to transfer all or any portion of this Restricted Stock Award to the Grantee’s Family Members, as provided in the Plan.

Termination of Service . If the Grantee terminates Service for any reason other than in connection with a Change in Control or the death or Disability of the Grantee, any Shares that have not vested as of the date of that termination shall be forfeited to the Corporation. If the Grantee’s Service terminates on account of the Grantee’s death or Disability, the Vesting Date for all Shares that have not vested or been forfeited shall be accelerated to the date of that termination of Service.

Effect of Change in Control . Upon a Change in Control, the Vesting Date for all Shares that have not vested or been forfeited shall be accelerated to the date of the earliest event constituting a Change in Control. [May be modified at Committee’s election for 280G planning purposes for executive officers, or for directors that hold 1% or more of the Corporation’s outstanding stock.]

Stock Power . The Grantee agrees to execute a stock power with respect to each stock certificate reflecting the Shares, or other evidence of book-entry stock ownership, in favor of the Corporation. The Shares shall not be issued by the Corporation until the required stock powers are delivered to the Corporation.

Delivery of Shares . The Corporation shall issue stock certificates or evidence of the issuance of such Shares in book-entry form, in the name of the Grantee reflecting the Shares vesting on each Vesting Date in Section 2. The Corporation shall retain these certificates or evidence of the issuance of Shares in book-entry form until the Shares represented thereby become vested. Prior to vesting, the Shares shall be subject to the following restriction, communicated in writing to the Corporation’s stock transfer agent:

These shares of common stock are subject to the terms of an Award Agreement between Sound Financial Bancorp, Inc. and [ name ] dated [ grant date ] made pursuant to the terms of the Sound Financial Bancorp, Inc. 2013 Equity Incentive Plan, copies of which are on file at the executive offices of Sound Financial Bancorp, Inc., and may not be sold, encumbered, hypothecated or otherwise transferred except in accordance with the terms of such Plan and Award Agreement.

Grantee’s Rights . As the owner of all Shares that have not vested, the Grantee shall be paid dividends by the Corporation with respect to those Shares at the same time as they are paid to other holders of the Corporation’s common stock. The Grantee may exercise all voting rights appurtenant to the Shares. [May be modified at Committee’s election, if desired.]

Delivery of Shares to Grantee . Upon the vesting of any Shares, the restrictions in Sections 3 and 4 shall terminate, and the Corporation shall deliver only to the Grantee (or, if applicable, the Grantee’s Beneficiary, estate or Family Member) a certificate (without the legend referenced in Section 7) or evidence of the issuance of Shares in book-entry form, and the related stock power in respect of the vesting Shares. The Corporation’s obligation to deliver a stock certificate for vested Shares, or evidence of the issuance of Shares in book-entry form, can be conditioned upon the receipt of a representation of investment intent from the Grantee (or the Grantee’s Beneficiary, estate or Family Member) in such form as the Committee requires. The Corporation shall not be required to deliver stock certificates for vested Shares, or evidence of the issuance of Shares in book-entry form, prior to: (a) the listing of those Shares on a National Exchange; or (b) the completion of any registration or qualification of those Shares required under applicable law.

10.

Adjustments in Shares . In the event of any recapitalization, forward or reverse stock split, reorganization, merger, consolidation, spin-off, combination, exchange of Shares or other securities, stock dividend, special or recurring dividend or distribution, liquidation, dissolution or other similar corporate transaction or event, the Committee, in its sole discretion, shall adjust the number of Shares or class of securities of the Corporation covered by this Agreement. Any additional Shares or other securities received by the Grantee as a result of any such adjustment shall be subject to all restrictions and requirements applicable to Shares that have not vested. The Grantee agrees to execute any documents required by the Committee in connection with an adjustment under this Section 10.

11.

Tax Election . The Grantee understands that an election may be made under Section 83(b) of the Code to accelerate the Grantee’s tax obligation with respect to receipt of the Shares from the Vesting Dates to the Grant Date by submitting an election to the Internal Revenue Service substantially in the form attached hereto.

12.

Tax Withholding . The Corporation shall have the right to require the Grantee to pay to the Corporation the amount of any tax that the Corporation is required to withhold with respect to such Shares, or in lieu thereof, to retain or sell without notice, a sufficient number of Shares to cover the minimum amount required to be withheld. The Corporation shall have the right to deduct from all dividends paid with respect to the Shares the amount of any taxes that the Corporation is required to withhold with respect to such dividend payments.

13.

Plan and Committee Decisions are Controlling . This Agreement and the award of Shares to the Grantee are subject in all respects to the provisions of the Plan, which are controlling. Capitalized terms herein not defined in this Agreement shall have the meaning ascribed to them in the Plan. All decisions, determinations and interpretations by the Committee respecting the Plan, this Agreement or the award of Shares shall be binding and conclusive upon the Grantee, any Beneficiary of the Grantee or the legal representative thereof.

14.

Grantee’s Employment . Nothing in this Agreement shall limit the right of the Corporation or any of its Affiliates to terminate the Grantee’s service or employment as a director, advisory director, director emeritus, officer or employee, or otherwise impose upon the Corporation or any of its Affiliates any obligation to employ or accept the services or employment of the Grantee.

15.

Amendment . The Committee may waive any conditions of or rights of the Corporation or modify or amend the terms of this Agreement; provided, however, that the Committee may not amend, alter, suspend, discontinue or terminate any provision of this Agreement if such action may adversely affect the Grantee without the Grantee’s written consent. To the extent permitted by applicable laws and regulations, the Committee shall have the authority, in its sole discretion but with the permission of the Grantee, to accelerate the vesting of the Shares or remove any other restrictions imposed on the Grantee with respect to the Shares, whenever the Committee may determine that such action is appropriate.

16.	Grantee Acceptance . The Grantee shall signify acceptance of the terms and conditions of this Agreement and acknowledge receipt of a copy of the Plan by signing in the space provided below and returning the signed copy to the Corporation.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the date first above written.

SOUND FINANCIAL BANCORP, INC.

By ________________________________

Its ________________________________

ACCEPTED BY GRANTEE

___________________________________

(Signature)

___________________________________

(Print Name)

___________________________________

(Street Address)

___________________________________

(City, State & Zip Code)

Beneficiary Designation:

The Grantee designates the following Beneficiary to receive the Shares upon the Grantee’s death:

__________________________________________________________________________

STOCK POWER

(One stock power for each stock certificate or grant in book-entry form issued)

For value received, I hereby sell, assign, and transfer to Sound Financial Bancorp, Inc. (the “Corporation”) ____________ shares of the capital stock of the Corporation, standing in my name on the books and records of the aforesaid Corporation, represented by Certificate No. ____________________ or otherwise identified in book-entry form as ___________________, and do hereby irrevocably constitute and appoint the Secretary of the Corporation attorney, with full power of substitution, to transfer this stock on the books and records of the aforesaid Corporation.

________________________________

Dated:

________________________

In the presence of:

________________________

83(b) ELECTION FORM

TO: Internal Revenue Service Center

[Address where the employee files his or her personal income tax return]

ELECTION UNDER SECTION 83(b)

OF THE INTERNAL REVENUE CODE OF 1986

Name: __________________________________________________________________

Address: __________________________________________________________________

___________________________________________________________________

Social Security Number ____ - __ - ____

Property with respect to which this Election is made: _______ shares of the common stock of Sound Financial Bancorp, Inc.

Date of Grant or Transfer: ____________, _____.

Taxable Year for which Election is made: Calendar Year _____.

Nature of the Restrictions to which the Property is Subject: (i) a vesting schedule pursuant to which the taxpayer will not be fully vested in the property until ___________.

Fair Market Value of the Property upon receipt by taxpayer $___________.

Amount Paid for the Property: ____________.

Copies of this Election have been furnished to ___________________________.

A copy of this Election also shall be attached to my IRS Form 1040 for calendar year _____.

__________ _____________________________________

Date Signature

[X]	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the quarterly period ended September 30, 2013
	OR
[ ]	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from to

Maryland		45-5188530
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

2005 5th Avenue, Suite 200, Seattle, Washington		98121
(Address of principal executive offices)		(Zip Code)

Large accelerated filer [ ]	Accelerated filer [ ]	Non-accelerated filer [ ]	Smaller reporting company [X]
		(Do not check if smaller reporting company)

[X]	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the quarterly period ended September 30, 2013
	OR
[ ]	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from to

Maryland		45-5188530
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

2005 5th Avenue, Suite 200, Seattle, Washington		98121
(Address of principal executive offices)		(Zip Code)

		Page Number
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets as of September 30, 2013 (unaudited) and December 31, 2012		3
Condensed Consolidated Statements of Income for the Three and Nine Month Periods Ended September 30, 2013 and 2012 (unaudited)		4
Condensed Consolidated Statements of Comprehensive Income for the Three and Nine Month Periods Ended September 30, 2013 and 2012 (unaudited)		5
Condensed Consolidated Statement of Stockholders’ Equity for the Nine Months Ended September 30, 2013 and 2012 (unaudited)		6
Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2013 and 2012 (unaudited)		7
Selected Notes to Condensed Consolidated Financial Statements		8
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations		31
Item 3. Quantitative and Qualitative Disclosures About Market Risk		40
Item 4. Controls and Procedures		40
PART II	OTHER INFORMATION
Item 1.	Legal Proceedings	41
Item 1A	Risk Factors	41
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	41
Item 3.	Defaults Upon Senior Securities	41
Item 4.	Mine Safety Disclosures	41
Item 5.	Other Information	41
Item 6.	Exhibits	42
SIGNATURES
EXHIBITS

	September 30, 2013			December 31, 2012
ASSETS	(unaudited)
Cash and cash equivalents	$	13,961		$	12,727
Available-for-sale securities, at fair value		16,639			22,900
Loans held for sale		1,664			1,725
Loans		379,786			326,744
Allowance for loan losses		(4,115	)		(4,248	)
Total Loans, net		375,671			322,496
Accrued interest receivable		1,313			1,280
Bank-owned life insurance (“BOLI”), net		10,950			7,220
Other real estate owned (“OREO”) and repossessed assets, net		981			2,503
Mortgage servicing rights, at fair value		2,843			2,306
Federal Home Loan Bank (“FHLB”) stock, at cost		2,336			2,401
Premises and equipment, net		2,174			2,256
Other assets		3,196			3,230
Total assets	$	431,728		$	381,044
LIABILITIES
Deposits
Interest-bearing	$	306,767		$	276,849
Noninterest-bearing demand		34,575			35,234
Total deposits		341,342			312,083
Accrued expenses and other liabilities		3,520			3,309
Advance payments from borrowers for taxes and insurance		562			331
Borrowings		40,381			21,864
Total liabilities		385,805			337,587
COMMITMENTS AND CONTINGENCIES (NOTE 8)
STOCKHOLDERS' EQUITY
Preferred stock, $0.01 par value, 1,000,000 shares authorized, none issued or outstanding		-			-
Common stock, $0.01 par value, 40,000,000 shares authorized, 2,550,810 and 2,587,544 shares issued and outstanding as of September 30, 2013 and December 31, 2012, respectively		26			26
Additional paid-in capital		24,370			24,789
Unearned shares - Employee Stock Ownership Plan (“ESOP”)		(1,598	)		(1,598	)
Retained earnings		23,410			20,736
Accumulated other comprehensive loss, net of tax		(285	)		(496	)
Total stockholders’ equity		45,923			43,457
Total liabilities and stockholders’ equity	$	431,728		$	381,044

	Three Months Ended September 30,					Nine Months Ended September 30,
	2013		2012			2013			2012
INTEREST INCOME
Loans, including fees	$	4,926	$	4,437		$	14,268		$	13,459
Interest and dividends on investments, cash and cash equivalents		59		105			239			244
Total interest income		4,985		4,542			14,507			13,703
INTEREST EXPENSE
Deposits		528		540			1,527			1,617
Borrowings		50		56			164			167
Total interest expense		578		596			1,691			1,784
Net interest income		4,407		3,946			12,816			11,919
PROVISION FOR LOAN LOSSES		450		1,075			1,150			3,675
Net interest income after provision for loan losses		3,957		2,871			11,666			8,244
NONINTEREST INCOME
Service charges and fee income		564		574			1,714			1,638
Earnings on cash surrender value of bank-owned life insurance		78		60			230			179
Mortgage servicing income		76		148			387			346
Fair value adjustment on mortgage servicing rights		271		(211	)		656			97
Other-than-temporary impairment losses on securities		-		(32	)		(30	)		(156	)
Net gain on sale of loans		37		668			794			1,226
Total noninterest income		1,026		1,207			3,751			3,330
NONINTEREST EXPENSE
Salaries and benefits		1,858		1,537			5,224			4,242
Operations		825		697			2,809			2,007
Regulatory assessments		57		108			239			329
Occupancy		353		314			961			918
Data processing		348		264			954			769
Net loss on OREO and repossessed assets		125		265			963			757
Total noninterest expense		3,566		3,185			11,150			9,022
Income before provision for income taxes		1,417		893			4,267			2,552
Provision for income taxes		423		281			1,333			800
Net income	$	994	$	612		$	2,934		$	1,752

Earnings per common share:
Basic	$	0.39	$	0.24		$	1.14		$	0.68
Diluted	$	0.38	$	0.23		$	1.11		$	0.67
Weighted average number of common shares outstanding:
Basic		2,576,995		2,587,669			2,583,588			2,585,694
Diluted		2,634,087		2,627,820			2,635,564			2,616,070

	Shares			Common Stock			Additional Paid-in Capital		Unearned ESOP Shares			Retained Earnings		Accumulated Other Comprehensive Loss, net of tax			Total Stockholders’ Equity
Balances at December 31, 2011		2,949,045		$	30		$	11,939	$	(693	)	$	18,096	$	(659	)	$	28,713
Net income													1,752					1,752
Other comprehensive income, net of tax															186			186
Restricted stock awards		11,000
Cancel Sound Community Bank MHC shares		(1,621,435	)		(16	)												(16	)
Exchange of common stock at 0.87423 shares per common share		(168,357	)		(2	)												(2	)
Fractional share distribution		(209	)
Proceeds from stock offering, net of offering costs		1,417,500			14			12,658										12,672
Purchase of common stock by ESOP										(1,134	)							(1,134	)
Share-based compensation								125										125
Balances at September 30, 2012		2,587,544		$	26		$	24,722	$	(1,827	)	$	19,848	$	(473	)	$	42,296

	Nine Months Ended September 30,
	2013			2012
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	2,934		$	1,752
Adjustments to reconcile net income to net cash from operating activities
Accretion of net premium on investments		402			69
Other-than-temporary impairment losses on securities		30			156
Provision for loan losses		1,150			3,675
Depreciation and amortization		340			284
Compensation expense related to stock options and restricted stock		126			125
Fair value adjustment on mortgage servicing rights		(656	)		(97	)
Additions to mortgage servicing rights		(655	)		(544	)
Amortization of mortgage servicing rights		774			774
Increase in cash surrender value of BOLI		(230	)		(179	)
Gain on sale of loans		(794	)		(1,226	)
Proceeds from sale of loans		110,658			63,865
Originations of loans held for sale		(109,803	)		(65,373	)
Loss on sale and write-downs of OREO and repossessed assets		855			314
Change in operating assets and liabilities
Accrued interest receivable		(33	)		(15	)
Other assets		(76	)		(1,398	)
Accrued interest payable		(7	)		(6	)
Other liabilities		218			366
Net cash from operating activities		5,233			4,984
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from principal payments, maturities and sales of available for sale securities		8,060			1,219
FHLB stock redeemed		65			-
Purchase of available for sale securities		(1,910	)		(19,056	)
Net increase in loans		(56,100	)		(15,074	)
Improvements to OREO and other repossessed assets		(33	)		(392	)
Proceeds from sale of OREO and other repossessed assets		2,475			2,726
Purchases of premises and equipment, net		(258	)		(136	)
Purchases of BOLI		(3,500	)		-
Net cash used by investing activities		(51,201	)		(30,713	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in deposits		29,259			13,046
Proceeds from borrowings		205,500			-
Repayment of borrowings		(186,983	)		(482	)
Dividends paid on common stock		(260	)		-
Net change in advances from borrowers for taxes and insurance		231			251
Common stock purchase by ESOP		-			(1,134	)
Repurchase of common stock		(545	)		-
Proceeds from stock offering, net of offering costs		-			12,672
Net cash from financing activities		47,202			24,353
Net increase (decrease) in cash and cash equivalents		1,234			(1,376	)
Cash and cash equivalents, beginning of period		12,727			17,031
Cash and cash equivalents, end of period	$	13,961		$	15,655
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for income taxes	$	1,340		$	750
Interest paid on deposits and borrowings	$	1,698		$	1,790
Noncash net transfer from loans to OREO and repossessed assets	$	1,775		$	2,375

	Amortized Cost		Gross Unrealized						Estimated Fair Value
			Gains		Losses 1 Year Or Less		Losses Greater Than 1 Year

September 30, 2013
Municipal bonds	$	1,910	$	38	$	-		$	-		$	1,948
Agency mortgage-backed securities		12,393		29		(220	)		-			12,202
Non-agency mortgage-backed securities		2,767		83		-			(361	)		2,489
Total	$	17,070	$	150	$	(220	)	$	(361	)	$	16,639

December 31, 2012
Agency mortgage-backed securities	$	20,378	$	27	$	(278	)	$	-		$	20,127
Non-agency mortgage-backed securities		3,273		19		-			(519	)		2,773
Total	$	23,651	$	46	$	(278	)	$	(519	)	$	22,900

	At September 30, 2013
	Amortized Cost		Fair Value
Due after ten years	$	17,070	$	16,639

	September 30, 2013
	Less Than 12 Months					12 Months or Longer					Total
	Fair Value		Unrealized Loss			Fair Value		Unrealized Loss			Fair Value		Unrealized Loss
Agency mortgage-backed securities	$	9,082	$	(220	)	$	-	$	-		$	9,082	$	(220	)
Non-agency mortgage-backed securities		-		-			646		(361	)		646		(361	)
Total	$	9,082	$	(220	)	$	646	$	(361	)	$	9,728	$	(581	)

	At September 30, 2013			At December 31, 2012
Real estate loans:
One- to four- family	$	116,616		$	95,784
Home equity		35,317			35,364
Commercial and multifamily		148,745			133,620
Construction and land		43,780			25,458
Total real estate loans		344,458			290,226
Consumer loans:
Manufactured homes		13,983			16,232
Other consumer		9,393			8,650
Total consumer loans		23,376			24,882
Commercial business loans		14,842			14,193
Total loans		382,676			329,301
Deferred fees		(1,226	)		(832	)
Loans held for sale		(1,664	)		(1,725	)
Total loans, gross		379,786			326,744
Allowance for loan losses		(4,115	)		(4,248	)
Total loans, net	$	375,671		$	322,496

	One- to four- family		Home equity		Commercial and multifamily		Construction and land		Manufactured homes		Other consumer		Commercial business		Unallocated		Total
Allowance for loan losses:
Individually evaluated for impairment	$	407	$	186	$	1	$	17	$	128	$	2	$	2	$	-	$	743
Collectively evaluated for impairment		1,422		747		507		284		116		131		60		105		3,372
Ending balance	$	1,829	$	933	$	508	$	301	$	244	$	133	$	62	$	105	$	4,115
Loans receivable:
Individually evaluated for impairment	$	4,745	$	1,894	$	3,454	$	740	$	671	$	46	$	565	$	-	$	12,115
Collectively evaluated for impairment		111,871		33,423		145,291		43,040		13,312		9,347		14,277		-		370,561
Ending balance	$	116.616	$	35,317	$	148,745	$	43,780	$	13,983	$	9,393	$	14,842	$	-	$	382,676

	One-to- four family		Home equity		Commercial and multifamily		Construction and land		Manufactured homes		Other consumer		Commercial business		Unallocated		Total
Allowance for loan losses:
Individually evaluated for impairment	$	392	$	247	$	70	$	25	$	117	$	22	$	145	$	-	$	1,018
Collectively evaluated for impairment		1,025		750		422		192		143		124		73		501		3,230
Ending balance	$	1,417	$	997	$	492	$	217	$	260	$	146	$	218	$	501	$	4,248
Loans receivable:
Individually evaluated for impairment	$	6,016	$	1,731	$	2,127	$	571	$	654	$	55	$	839	$	-	$	11,993
Collectively evaluated for impairment		89,768		33,633		131,493		24,887		15,578		8,595		13,354		-		317,308
Ending balance	$	95,784	$	35,364	$	133,620	$	25,458	$	16,232	$	8,650	$	14,193	$	-	$	329,301

	Beginning Allowance		Charge-offs			Recoveries		Provision			Ending Allowance
One-to four- family	$	1,548	$	(98	)	$	-	$	379		$	1,829
Home equity		890		(314	)		7		350			933
Commercial and multifamily		583		-			-		(75	)		508
Construction and land		447		-			-		(146	)		301
Manufactured homes		267		(61	)		1		37			244
Other consumer		154		(11	)		12		(22	)		133
Commercial business		97		-			-		(35	)		62
Unallocated		143		-			-		(38	)		105
Total	$	4,129	$	(484	)	$	20	$	450		$	4,115

	September 30, 2013		December 31, 2012
One- to four- family	$	343	$	1,013
Home equity		523		332
Commercial and multifamily		230		1,106
Construction and land		-		471
Manufactured homes		65		-
Other consumer		-		1
Commercial business		-		80
Total	$	1,161	$	3,003

	30-59 Days Past Due		60-89 Days Past Due		Greater Than 90 Days Past Due		Recorded Investment > 90 Days and Accruing		Total Past Due		Current		Total Loans
One-to four- family	$	-	$	513	$	368	$	-	$	881	$	115,735	$	116,616
Home equity		618		114		523		-		1,255		34,062		35,317
Commercial and multifamily		-		-		230		-		230		148,515		148,745
Construction and land		-		-		-		-		-		43,780		43,780
Manufactured homes		35		68		24		-		127		13,856		13,983
Other consumer		2		5		-		-		7		9,386		9,393
Commercial business		-		-		-		-		-		14,842		14,842
Total	$	655	$	700	$	1,145	$	-	$	2,500	$	380,176	$	382,676

	Recorded Investment		Unpaid Principal Balance		Related Allowance
With no related allowance recorded:
One-to four- family	$	343	$	539	$	-
Home equity		361		465		-
Commercial and multifamily		1,724		1,724		-
Construction and land		562		562		-
Manufactured homes		67		67		-
Other consumer		12		12		-
Commercial business		427		427		-
Total	$	3,496	$	3,796	$	-
With an allowance recorded:
One-to four- family	$	4,402	$	4,462	$	407
Home equity		1,533		1,533		186
Commercial and multifamily		1,730		1,730		1
Construction and land		178		178		17
Manufactured homes		604		604		128
Other consumer		34		34		2
Commercial business		138		138		2
Total	$	8,619	$	8,679	$	743
Totals:
One-to-four family	$	4,745	$	5,001		407
Home equity		1,894		1,998		186
Commercial and multifamily		3,454		3,454		1
Construction and land		740		740		17
Manufactured homes		671		671		128
Other consumer		46		46		2
Commercial business		565		565		2
Total	$	12,115	$	12,475	$	743

	Three Months Ended
	September 30, 2013				September 30, 2012
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
With no related allowance recorded:
One-to four- family	$	425	$	2	$	1,908	$	28
Home equity		332		4		783		9
Commercial and multifamily		2,269		-		1,938		26
Construction and land		563		-		574		-
Manufactured homes		67		1		70		1
Other consumer		16		-		8		1
Commercial business		238		8		847		3
Total	$	3,907	$	15	$	6,126	$	68
With an allowance recorded:
One-to four- family	$	4,421	$	55	$	5,132	$	37
Home equity		1,517		14		1,141		9
Commercial and multifamily		866		79		245		4
Construction and land		179		2		161		1
Manufactured homes		588		11		648		10
Other consumer		34		1		127		2
Commercial business		126		-		255		4
Total	$	7,729	$	162	$	7,708	$	67
Totals:
One-to four- family	$	4,845	$	57	$	7,040	$	65
Home equity		1,848		18		1,923		18
Commercial and multifamily		3,135		79		2,183		30
Construction and land		741		2		735		1
Manufactured homes		654		12		718		11
Other consumer		50		1		134		3
Commercial business		364		8		1,101		7
Total	$	11,636	$	177	$	13,833	$	135

	Nine Months Ended
	September 30, 2013				September 30, 2012
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
With no related allowance recorded:
One-to four- family	$	1,383	$	16	$	2,694	$	84
Home equity		603		9		749		32
Commercial and multifamily		1,798		47		1,874		60
Construction and land		411		1		663		21
Manufactured homes		75		3		62		4
Other consumer		12		1		14		2
Commercial business		453		18		688		13
Total	$	4,734	$	95	$	6,743	$	216
With an allowance recorded:
One-to four- family	$	4,120	$	157	$	5,268	$	129
Home equity		1,191		46		1,146		28
Commercial and multifamily		555		79		284		7
Construction and land		127		9		131		4
Manufactured homes		571		33		554		32
Other consumer		40		2		101		5
Commercial business		196		5		217		16
Total	$	6,800	$	331	$	7,700	$	221
Totals:
One-to four- family	$	5,503	$	173	$	7,962	$	213
Home equity		1,794		55		1,895		60
Commercial and multifamily		2,353		126		2,157		67
Construction and land		538		10		794		25
Manufactured homes		646		36		615		36
Other consumer		52		3		115		7
Commercial business		648		23		905		29
Total	$	11,533	$	426	$	14,443	$	437

	Nine months ended September 30, 2013
	Number of Contracts		Rate Modifications		Term Modifications		Payment Modifications		Combination Modifications		Total Modifications
One-to four- family		3	$	-	$	-	$	-	$	878	$	878
Home equity		1		-		-		-		99		99
Total		4	$	-	$	-	$	-	$	977	$	977

	Three months ended September 30, 2012
	Number of Contracts		Rate Modifications		Term Modifications		Payment Modifications		Combination Modifications		Total Modifications
One-to four- family		1	$	-	$	-	$	-	$	197	$	197
Home equity		1		-		-		-		117		117
Total		2	$	-	$	-	$	-	$	314	$	314

	Nine months ended September 30, 2012
	Number of Contracts		Rate Modifications		Term Modifications		Payment Modifications		Combination Modifications		Total Modifications
One-to four- family		5	$	-	$	-	$	-	$	561	$	561
Home equity		2		-		-		-		166		166
Commercial and multifamily		2		-		-		-		426		426
Construction and land		2		-		-		-		26		26
Other consumer		2		-		-		-		14		14
Commercial business		3	$	121		-		-		186		307
Total		16	$	121	$	-	$	-	$	1,379	$	1,500

	Three months ended September 30,				Nine months ended September 30,
	2013		2012		2013		2012
One-to four- family	$	-	$	1,246	$	-	$	1,246
Home equity		99		215		99		215
Commercial and multifamily		-		1,366		-		1,366
Manufactured homes		-		390		-		471
Other consumer		-		27		-		27
Commercial business		-		540		-		540
Total	$	99	$	3,784	$	99	$	3,865

	Fair Value at September 30, 2013
	Total		Level 1		Level 2		Level 3
FINANCIAL ASSETS:
Cash and cash equivalents	$	13,961	$	13,961	$	-	$	-
Available for sale securities		16,639		-		14,150		2,489
FHLB stock		2,336		-		-		2,336
Loans held for sale		1,664		-		1,664		-
Loans, net		378,160		-		-		378,160
Accrued interest receivable		1,313		1,313		-		-
Mortgage servicing rights		2,843		-		-		2,843
FINANCIAL LIABILITIES:
Non-maturity deposits		185,000		-		185,000		-
Time deposits		157,551		-		157,551		-
Borrowings		40,360		-		40,360		-
Accrued interest payable		76		-		76		-

	Fair Value at December 31, 2012
	Total		Level 1		Level 2		Level 3
FINANCIAL ASSETS:
Cash and cash equivalents	$	12,727	$	12,727	$	-	$	-
Available for sale securities		22,900		-		20,127		2,773
FHLB Stock		2,401		-		-		2,401
Loans held for sale		1,725		-		1,725		-
Loans, net		327,078		-		-		327,078
Accrued interest receivable		1,280		1,280		-		-
Mortgage servicing rights		2,306		-		-		2,306
FINANCIAL LIABILITIES:
Non-maturity deposits		177,097		-		177,097		-
Time deposits		134,007		-		134,007		-
Borrowings		21,708		-		21,708		-
Accrued interest payable		83		-		83		-

Financial Instrument	Valuation Technique	Unobservable Input(s)	Range (Weighted Average)
Mortgage Servicing Rights	Discounted cash flow	Prepayment speed assumption	219-550% (310%)
		Discount rate	8-12% (10%)

Non-agency mortgage-backed securities	Discounted cash flow	Discount rate	(8%)

Financial Instrument	Valuation Technique(s)	Unobservable Input(s)	Range (Weighted Average)
OREO	Market approach	Adjustment for differences between comparable sales	1.9-43% (13%)

Impaired loans	Market approach	Adjustment for differences between comparable sales	0-100% (7%)

	At September 30,
	2013			2012
Prepayment speed (Public Securities Association “PSA” model)		219	%		372	%
Weighted-average life (years)		5.98			3.86
Yield to maturity discount rate		10.01	%		10.00	%

	Shares			Weighted- Average Exercise Price		Weighted-Average Remaining Contractual Term In Years		Aggregate Intrinsic Value
Outstanding at the beginning of the year		115,936		$	8.93		6.78	$	170,426
Granted		-			-
Exercised		-			-
Forfeited		(8,480	)	$	9.07
Expired		-			-
Outstanding at September 30, 2013		107,456		$	8.92		6.09	$	665,153
Exercisable		70,115		$	9.02		5.56	$	427,000
Expected to vest, assuming a 0% forfeiture rate over the vesting term		107,456		$	8.92		6.09	$	665,153

Non-vested Shares:	Shares			Weighted-Average Grant-Date Fair Value Per Share		Aggregate Intrinsic Value Per Share
Non-vested at January 1, 2013		24,747		$	8.44
Granted		-
Vested		(9,487	)
Forfeited		(735	)
Expired		-
Non-vested at September 30, 2013		14,525		$	8.44	$	15.11
Expected to vest assuming a 0% forfeiture rate over the vesting term		14,525		$	8.44	$	15.11

	September 30, 2013		December 31, 2012		Amount Change			Percent Change
One-to-four-family	$	116,616	$	95,784	$	20,832			21.7	%
Home equity		35,317		35,364		(47	)		(0.1	)
Commercial and multifamily		148,745		133,620		15,125			11.3
Construction and land		43,780		25,458		18,322			72.0
Manufactured homes		13,983		16,232		(2,249	)		(13.9	)
Other consumer		9,393		8,650		743			8.6
Commercial business		14,842		14,193		649			4.6
Total loans	$	382,676	$	329,301	$	53,375			16.2	%

	Nonperforming Assets
	At September 30, 2013		At December 31, 2012		Amount Change			Percent Change
Nonaccrual loans	$	1,161	$	3,003	$	(1,842	)		(61.3	)%
Accruing loans 90 days or more delinquent		-		81		(81	)		(100.0	)
Nonperforming restructured loans		761		828		(67	)		(8.1	)
OREO and repossessed assets		981		2,503		(1,522	)		(60.8	)
Total nonperforming assets	$	2,903	$	6,415	$	(3,512	)		(54.7	)%

	As of September 30, 2013					As of December 31, 2012
	Amount		Wtd. Avg. Rate			Amount		Wtd. Avg. Rate
Noninterest-bearing demand	$	31,211		0.00	%	$	31,427		0.00	%
Interest-bearing demand		56,320		0.30			28,540		0.10
Savings		26,428		0.13			27,174		0.08
Money market		67,677		0.30			86,149		0.32
Certificates		156,342		1.15			134,986		1.33
Escrow		3,364		0.00			3,807		0.00
Total deposits	$	341,342		0.63	%	$	312,083		0.69	%

	Three Months Ended September 30,					Amount			Percent
	2013		2012			Change			Change
Service charges and fee income	$	564	$	574		$	(10	)		(1.7	)%
Earnings on cash surrender value of BOLI		78		60			18			30.0
Mortgage servicing income		76		148			(72	)		(48.6	)
Fair value adjustment on mortgage servicing rights		271		(211	)		482			(228.4	)
Other-than-temporary impairment losses		-		(32	)		32			(100.0	)
Net gain on sale of loans		37		668			(631	)		(94.5	)
Total noninterest income	$	1,026	$	1,207		$	(181	)		(15.0	)%