UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

 
FORM 8-K
 
CURRENT REPORT
 
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported)  January 28, 2015
 
SOUND FINANCIAL BANCORP, INC .
(Exact name of registrant as specified in its charter)


Maryland
 
001-35633
 
45-5188530
(State or other jurisdiction
of incorporation)
 
(Commission File No.)
 
(IRS Employer
Identification No.)
 


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


Registrant's telephone number, including area code:  (206) 448-0884
 


Not Applicable
(Former name or former address, if changed since last report)


Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
 
 □
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 □
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 □
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 □
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 

Items to be Included in this Report

Item 2.02.   Results of Operations and Financial Condition

On January 30, 2014, Sound Financial Bancorp, Inc. (the "Company") issued a press release announcing fourth quarter 2014 financial results.  A copy of the press release is attached hereto as Exhibit 99.1 to this Current Report and is incorporated herein by reference.

The Company also announced that its Board of Directors declared a cash dividend on Sound Financial Bancorp, Inc. common stock of $0.05 per share, payable on February 26, 2014 to stockholders of record on the close of business on February 12, 2014.
 
 
Item 5.03. Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year
 
(a)  Amendment to Bylaws.
 
Section 12.    Mandatory Retirement .
 
No person 75 years of age or older shall be eligible for election, re-election, appointment or re-appointment to the Board of Directors.  No director who has attained the age of 75 shall continue to serve as a director beyond the annual meeting of stockholders at which his or her term as a director expires.
 
A copy of the amended bylaws as of January 28, 2015 is attached hereto as Exhibit 99.3 to this Current Report and is incorporated herein by reference.
 
Item 8.01.   Other Events

On January 30, 2014, the Company issued a press release reporting that its Board of Directors approved a share repurchase program which authorizes the Company to purchase up to 2.5% of its outstanding shares of common stock.  Share repurchases may be executed through open market or in privately negotiated transactions, from time to time over a twelve-month period, in accordance with applicable Securities and Exchange Commission rules  A copy of the press release is attached hereto as Exhibit 99.2 to this Current Report and is incorporated herein by reference..


Item 9.01.   Financial Statements and Exhibits.

(d)              Exhibits
 
99.1        Press Release dated January 30, 2014
 
99.2    Press Release dated January 30, 2014
 
99.3    Bylaws of Sound Financial Bancorp, Inc as of January 28, 2015.

  BYLAWS
 
OF
 
SOUND FINANCIAL BANCORP, INC.
 
ARTICLE I
 
STOCKHOLDERS
 
Section 1. Annual Meeting.
 
The Corporation shall hold an annual meeting of its stockholders to elect directors to succeed those whose terms expire and to transact any other business within its powers, at such place, on such date, and at such time as the Board of Directors shall each year fix. Except as provided otherwise by the Corporation's Charter or by law, any business may be considered at an annual meeting without the purpose of the meeting having been specified in the notice. Failure to hold an annual meeting does not invalidate the Corporation's existence or affect any otherwise valid corporate act.
 
Section 2. Special Meetings.
 
Special meetings of stockholders of the Corporation may be called by the President or by the Board of Directors pursuant to a resolution adopted by a majority of the total number of directors which the Corporation would have if there were no vacancies on the Board of Directors (hereinafter the "Whole Board"). Special meetings of the stockholders shall be called by the Secretary at the request of stockholders only on the written request of stockholders entitled to cast at least a majority of all the votes entitled to be cast at the meeting. Such written request shall state the purpose or purposes of the meeting and the matters proposed to be acted upon at the meeting, and shall be delivered at the principal office of the Corporation addressed to the President or the Secretary. The Secretary shall inform the stockholders who make the request of the reasonably estimated cost of preparing and mailing a notice of the meeting and, upon payment of these costs to the Corporation, notify each stockholder entitled to notice of the meeting. The Board of Directors shall have the sole power to fix (1) the record date for determining stockholders entitled to request a special meeting of stockholders and the record date for determining stockholders entitled to notice of and to vote at the special meeting and (2) the date, time and place of the special meeting and the means of remote communication, if any, by which stockholders and proxy holders may be considered present in person and may vote at the special meeting.
 
Section 3. Notice of Meetings; Adjournment.
 
Not less than ten nor more than 90 days before each stockholders' meeting, the Secretary shall give notice in writing or by electronic transmission of the meeting to each stockholder entitled to vote at the meeting and to each other stockholder entitled to notice of the meeting. The notice shall state the time and place of the meeting, the means of remote communication, if any, by which stockholders and proxy holders may be deemed to be present in person and may vote at the meeting, and, if the meeting is a special meeting or notice of the purpose is required by statute, the purpose of the meeting. Notice is given to a stockholder when it is personally delivered to the stockholder, left at the stockholder's usual place of business, mailed to the stockholder at his or her address as it appears on the records of the Corporation, or transmitted to the stockholder by an electronic transmission to any address or number of the stockholder at which the stockholder receives electronic transmissions. If the Corporation has received a request from a stockholder that notice not be sent by electronic transmission, the Corporation may not provide notice to the stockholder by electronic transmission. Notwithstanding the foregoing provisions, each person who is entitled to notice waives notice if such person, before or after the meeting, delivers a written waiver or waiver by electronic transmission which is filed with the records of the stockholders' meetings, or is present at the meeting in person or by proxy.
 
A meeting of stockholders convened on the date for which it was called may be adjourned from time to time without further notice to a date not more than 120 days after the original record date. At any adjourned meeting, any business may be transacted which might have been transacted at the original meeting.
 
As used in these Bylaws, the term "electronic transmission" shall have the meaning given to such term by Section 1-101(k-1) of the Maryland General Corporation Law (the "MGCL") or any successor provision.
 
Section 4. Quorum.
 
At any meeting of the stockholders, the holders of at least one-third of all of the shares of the stock entitled to vote at the meeting, present in person or by proxy, shall constitute a quorum for all purposes, unless or except to the extent that the presence of a larger number may be required by law. Unless the Charter of the Corporation provides otherwise, where a separate vote by a class or classes is required, a majority of the shares of such class or classes, present in person or represented by proxy, shall constitute a quorum entitled to take action with respect to that vote on that matter.
If a quorum shall fail to attend any meeting, the chairman of the meeting or the holders of a majority of the shares of stock entitled to vote who are present, in person or by proxy, may, in accordance with Section 3 of this Article I, adjourn the meeting to another place, date or time.
 
Section 5. Organization and Conduct of Business.
 
Such person as the Board of Directors may have designated or, in the absence of such a person, the President of the Corporation or, in his or her absence, such person as may be chosen by the holders of a majority of the shares entitled to vote who are present, in person or by proxy, shall call to order any meeting of the stockholders and act as chairman of the meeting. In the absence of the Secretary of the Corporation, the secretary of the meeting shall be such person as the chairman appoints. The chairman of any meeting of stockholders shall determine the order of business and the procedure at the meeting, including such regulation of the manner of voting and the conduct of discussion as seem to him or her in order.
 
Section 6. Advance Notice Provisions for Business to be Transacted at Annual Meetings and Elections of Directors.
 
(a) At any annual meeting of the stockholders, only such business shall be conducted as shall have been brought before the meeting (i) as specified in the Corporation's notice of the meeting, (ii) by or at the direction of the Board of Directors or (iii) by any stockholder of the Corporation who (1) is a stockholder of record on the date of giving the notice provided for in this Section 6(a) and on the record date for the determination of stockholders entitled to vote at such annual meeting, and (2) complies with the notice procedures set forth in this Section 6(a). For business to be properly brought before an annual meeting by a stockholder pursuant to clause (iii) of the immediately preceding sentence, the stockholder must have given timely notice thereof in writing to the Secretary of the Corporation and such business must otherwise be a proper matter for action by stockholders.
 
To be timely, a stockholder's notice must be delivered or mailed to and received by the Secretary at the principal executive office of the Corporation by not later than the close of business on the 90th day prior to the first anniversary of the date of the preceding year's annual meeting and not earlier than the close of business on the 120th day prior to the first anniversary of the date of the preceding year's annual meeting; provided, however, that in the event the annual meeting is the first annual meeting of stockholders of the Corporation, notice by the stockholder to be timely must be so received by not later than the close of business on the 90 th day prior to the first anniversary of the date of the last annual meeting of stockholders of Sound Financial, Inc. ("Sound Financial") (the "Final Sound Financial Annual Meeting") and not earlier than the close of business on the 120 th day prior to the first anniversary of the date of the Final Sound Financial Annual Meeting; provided, further, that in the event that the date of the annual meeting is advanced by more than 20 days, or delayed by more than 60 days, from the anniversary date of the preceding year's annual meeting (or, in the case of the first annual meeting of stockholders of the Corporation, from the first anniversary of the Final Sound Financial Annual Meeting), notice by the stockholder to be timely must be so received not earlier than the close of business on the 120th day prior to the date of such annual meeting and not later than the close of business on the later of (A) the 90th day prior to the date of such annual meeting or (B) the tenth day following the first to occur of (i) the day on which notice of the date of the annual meeting was mailed or otherwise transmitted or (ii) the day on which public announcement of the date of the annual meeting was first made by the Corporation. No adjournment or postponement of a meeting of stockholders shall commence a new period for the giving of notice hereunder.
 
A stockholder's notice to the Secretary must set forth as to each matter such stockholder proposes to bring before the annual meeting: (i) a brief description of the business desired to be brought before the annual meeting and the reasons for conducting such business at the annual meeting; (ii) the name and address of such stockholder as they appear on the Corporation's books and of the beneficial owner, if any, on whose behalf the proposal is made; (iii) the class or series and number of shares of capital stock of the Corporation which are owned beneficially or of record by such stockholder and such beneficial owner; (iv) a description of all arrangements or understandings between such stockholder and any other person or persons (including their names) in connection with the proposal of such business by such stockholder and any material interest of such stockholder in such business; and (v) a representation that such stockholder intends to appear in person or by proxy at the annual meeting to bring such business before the meeting.
 
Notwithstanding anything in these Bylaws to the contrary, no business shall be brought before or conducted at an annual meeting except in accordance with the provisions of this Section 6(a). The officer of the Corporation or other person presiding over the annual meeting shall, if the facts so warrant, determine and declare to the meeting that business was not properly brought before the meeting in accordance with the provisions of this Section 6(a) and, if he or she should so determine, he or she shall so declare to the meeting and any such business so determined to be not properly brought before the meeting shall not be transacted.
 
At any special meeting of the stockholders, only such business shall be conducted as shall have been brought before the meeting pursuant to the Corporation's notice of the meeting.
 
(b) Only persons who are nominated in accordance with the following procedures shall be eligible for election as directors of the Corporation. Nominations of persons for election to the Board of Directors of the Corporation may be made at a meeting of stockholders at which directors are to be elected only (i) by or at the direction of the Board of Directors or a committee thereof or (ii) by any stockholder of the Corporation who (1) is a stockholder of record on the date of giving the notice provided for in this Section 6(b) and on the record date for the determination of stockholders entitled to vote at such meeting, and (2) complies with the notice procedures set forth in this Section 6(b). Such nominations, other than those made by or at the direction of the Board of Directors, shall be made by
 
timely notice in writing to the Secretary of the Corporation. To be timely, a stockholder's notice shall be delivered or mailed to and received by the Secretary at the principal executive offices of the Corporation not less than 90 days or more than 120 days prior to the date of the meeting; provided, however, that in the event that less than 100 days' notice or public announcement of the date of the meeting is given or made to stockholders, notice by the stockholder to be timely must be so received not later than the close of business on the tenth day following the day on which such notice of the date of the meeting was mailed or otherwise transmitted or the day on which public announcement of the date of the meeting was first made by the Corporation, whichever shall first occur. A stockholder's notice must be in writing and set forth (a) as to each person whom the stockholder proposes to nominate for election as a director, all information relating to such person that is required to be disclosed in connection with solicitations of proxies for election of directors, or is otherwise required, in each case pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or any successor rule or regulation; and (b) as to the stockholder giving the notice: (i) the name and address of such stockholder as they appear on the Corporation's books and of the beneficial owner, if any, on whose behalf the nomination is made; (ii) the class or series and number of shares of capital stock of the Corporation which are owned beneficially or of record by such stockholder and such beneficial owner; (iii) a description of all arrangements or understandings between such stockholder and each proposed nominee and any other person or persons (including their names) pursuant to which the nomination(s) are to be made by such stockholder; (iv) a representation that such stockholder intends to appear in person or by proxy at the meeting to nominate the persons named in its notice; and (v) any other information relating to such stockholder that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of directors pursuant to Regulation 14A under the Exchange Act or any successor rule or regulation. Such notice must be accompanied by a written consent of each proposed nominee to be named as a nominee and to serve as a director if elected. No person shall be eligible for election as a director of the Corporation unless nominated in accordance with the provisions of this Section 6(b). The officer of the Corporation or other person presiding at the meeting shall, if the facts so warrant, determine that a nomination was not made in accordance with such provisions and, if he or she should so determine, he or she shall so declare to the meeting and the defective nomination shall be disregarded.
 
(c) For purposes of subsections (a) and (b) of this Section 6, the term "public announcement" shall mean disclosure (i) in a press release reported by a nationally recognized news service, (ii) in a    document publicly filed or furnished by the Corporation with the U.S. Securities and Exchange Commission or (iii) on a website maintained by the Corporation.
 
Section 7. Proxies and Voting.
 
Unless the Charter of the Corporation provides for a greater or lesser number of votes per share or limits or denies voting rights, each outstanding share of stock, regardless of class, is entitled to one vote on each matter submitted to a vote at a meeting of stockholders; however, a share is not entitled to be voted if any installment payable on it is overdue and unpaid. In all elections for directors, directors shall be determined by a plurality of the votes cast, and except as otherwise required by law or as provided in the Charter of the Corporation, all other matters voted on by stockholders shall be determined by a majority of the votes cast on the matter.
 
A stockholder may vote the stock the stockholder owns of record either in person or by proxy. A stockholder may sign a writing authorizing another person to act as proxy. Signing may be accomplished by the stockholder or the stockholder's authorized agent signing the writing or causing the stockholder's signature to be affixed to the writing by any reasonable means, including facsimile signature. A stockholder may authorize another person to act as proxy by transmitting, or authorizing the transmission of, an authorization for the person to act as the proxy to the person authorized to act as proxy or to any other person authorized to receive the proxy authorization on behalf of the person authorized to act as the proxy, including a proxy solicitation firm or proxy support service organization. The authorization may be transmitted by a telegram, cablegram, datagram, electronic mail or any other electronic or telephonic means. Unless a proxy provides otherwise, it is not valid more than 11 months after its date. A proxy is revocable by a stockholder at any time without condition or qualification unless the proxy states that it is irrevocable and the proxy is coupled with an interest. A proxy may be made irrevocable for as long as it is coupled with an interest. The interest with which a proxy may be coupled includes an interest in the stock to be voted under the proxy or another general interest in the Corporation or its assets or liabilities.
 
Section 8. Consent of Stockholders in Lieu of Meeting.
 
Except as provided in the following sentence, any action required or permitted to be taken at a meeting of stockholders may be taken without a meeting if a unanimous consent which sets forth the action is given in writing or by electronic transmission by each stockholder entitled to vote on the matter and is filed in paper or electronic format with the records of stockholder meetings. Unless the Charter of the Corporation requires otherwise, the holders of any class of the Corporation's stock other than common stock, entitled to vote generally in the election of directors, may take action or consent to any action by delivering a consent in writing or by electronic transmission of the stockholders entitled to cast not less than the minimum number of votes that would be necessary to authorize or take the action at a meeting of the stockholders if the Corporation gives notice of the action so taken to each stockholder not later than ten days after the effective time of the action.
 
Section 9. Conduct of Voting.
 
The Board of Directors shall, in advance of any meeting of stockholders, appoint one or more persons as inspectors of election, to act at the meeting or any adjournment thereof and make a written report thereof, in accordance with applicable law. At all meetings of stockholders, the proxies and ballots shall be received, and all questions touching the qualification of voters and the validity of proxies and the acceptance or rejection of votes shall be decided or determined by the inspector of elections . All voting, including on the election of directors but excepting where otherwise required by law, may be by a voice vote; provided, however, that upon demand therefor by a stockholder entitled to vote or his or her proxy or the chairman of the meeting, a written vote shall be taken. Every written vote shall be taken by ballot, each of which shall state the name of the stockholder or proxy voting and such other information as may be required under the procedure established for the meeting. Every vote taken by ballot shall be counted by an inspector or inspectors appointed by the chairman of the meeting. No candidate for election as a director at a meeting shall serve as an inspector at such meeting.
 
Section 10. Control Share Acquisition Act.
 
Notwithstanding any other provision of the Charter of the Corporation or these Bylaws, Title 3, Subtitle 7 of the MGCL (or any successor statute) shall not apply to any acquisition by any person of shares of stock of the Corporation. This Section 10 may be repealed, in whole or in part, at any time, whether before or after an acquisition of Control Shares (as defined in Section 3-701(d) of the MGCL, or any successor provision) and, upon such repeal, may, to the extent provided by any successor bylaw, apply to any prior or subsequent Control Share Acquisition (as defined in Section 3-701(e) of the MGCL, or any successor provision).
 
ARTICLE II
 
BOARD OF DIRECTORS
 
Section 1. General Powers, Number and Term of Office.
 
The business and affairs of the Corporation shall be managed under the direction of the Board of Directors. The number of directors of the Corporation shall, by virtue of the Corporation's election made hereby to be governed by Section 3-804(b) of the MGCL, be fixed from time to time exclusively by vote of the Board of Directors; provided, however, that such number shall never be less than the minimum number of directors required by the MGCL now or hereafter in force. The Board of Directors shall annually elect a Chairman of the Board and a President from among its members and shall designate, when present, either the Chairman of the Board or the President to preside at its meetings.
 
The directors, other than those who may be elected by the holders of any series of preferred stock, shall be divided into three classes, as nearly equal in number as reasonably possible, with the term of office of the first class to expire at the first annual meeting of stockholders, the term of office of the second class to expire at the annual meeting of stockholders one year thereafter and the term of office of the third class to expire at the annual meeting of stockholders two years thereafter, with each director to hold office until his or her successor shall have been duly elected and qualified. At each annual meeting of stockholders, commencing with the first annual meeting, directors elected to succeed those directors whose terms expire shall be elected for a term of office to expire at the third succeeding annual meeting of stockholders after their election or for such shorter period of time as the Board of Directors may determine, with each director to hold office until his or her successor shall have been duly elected and qualified.
 
Section 2. Vacancies and Newly Created Directorships.
 
By virtue of the Corporation's election made hereby to be subject to Section 3-804(c) of the MGCL, any vacancies in the Board of Directors resulting from an increase in the size of the Board of Directors or the death, resignation or removal of a director may be filled only by the affirmative vote of a majority of the remaining directors in office, even if the remaining directors do not constitute a quorum, and any director elected to fill a vacancy shall hold office for the remainder of the full term of the class of directors in which the vacancy occurred and until a successor is elected and qualifies. No decrease in the number of directors constituting the Board of Directors shall shorten the term of any incumbent director.
 
Section 3. Regular Meetings.
 
Regular meetings of the Board of Directors shall be held at such place or places or by means of remote communication, on such date or dates, and at such time or times as shall have been established by the Board of Directors and publicized among all directors. A notice of each regular meeting shall not be required. Any regular meeting of the Board of Directors may adjourn from time to time to reconvene at the same or some other place, and no notice need be given of any such adjourned meeting other than by announcement.
 
Section 4. Special Meetings.
 
Special meetings of the Board of Directors may be called by one-third (1/3) of the directors then in office (rounded up to the nearest whole number) or by the Chairman of the Board or the President and shall be held at such place or by means of remote communication, on such date, and at such time as they or he or she shall fix. Notice of the place, date, and time of each such special meeting shall be given to each director by whom it is not waived by mailing written notice not less than five days before the meeting or by telegraphing or telexing or by facsimile or electronic transmission of the same not less than 24 hours before the meeting. Any director may waive notice of any special meeting, either before or after such meeting, by delivering a written waiver or a waiver by electronic transmission that is filed with the records of the meeting. Attendance of a director at a special meeting shall constitute a waiver of notice of such meeting, except where the director attends the meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at nor the purpose of any special meeting of the Board of Directors need be specified in the notice of such meeting. Any special meeting of the Board of Directors may adjourn from time to time to reconvene at the same or some other place, and no notice need be given of any such adjourned meeting other than by announcement.
 
Section 5. Quorum.
 
At any meeting of the Board of Directors, a majority of the authorized number of directors then constituting the Board shall constitute a quorum for all purposes. If a quorum shall fail to attend any meeting, a majority of those present may adjourn the meeting to another place, date, or time, without further notice or waiver thereof.
 
Section 6. Participation in Meetings By Conference Telephone.
 
Members of the Board of Directors, or of any committee thereof, may participate in a meeting of such Board or committee by means of a conference telephone or other communications equipment if all persons participating in the meeting can hear each other at the same time. Such participation shall constitute presence in person at such meeting.
 
Section 7. Conduct of Business.
 
At any meeting of the Board of Directors, business shall be transacted in such order and manner as the Board may from time to time determine, and all matters shall be determined by the vote of a majority of the directors present, except as otherwise provided in these Bylaws, the Corporation's Charter or required by law. Action may be taken by the Board of Directors without a meeting if a unanimous consent which sets forth the action is given in writing or by electronic transmission by each member of the Board of Directors and filed in paper or electronic form with the minutes of proceedings of the Board of Directors.
 
Section 8. Powers.
 
All powers of the Corporation may be exercised by or under the authority of the Board of Directors except as conferred on or reserved to the stockholders by law or by the Corporation's Charter or these Bylaws. Consistent with the foregoing, the Board of Directors shall have, among other powers, the unqualified power:
 
(i) To declare dividends from time to time in accordance with law;
 
(ii) To purchase or otherwise acquire any property, rights or privileges on such terms as it shall determine;
 
(iii) To authorize the creation, making and issuance, in such form as it may determine, of written obligations of every kind, negotiable or non-negotiable, secured or unsecured, and to do all things necessary in connection therewith;
 
 
(iv) To remove any officer of the Corporation with or without cause, and from time to time to devolve the powers and duties of any officer upon any other person for the time being;
  
  
 
(v) To confer upon any officer of the Corporation the power to appoint, remove and suspend subordinate officers, employees and agents;   
  
  
  
 
(vi) To adopt from time to time such stock, option, stock purchase, bonus or other compensation plans for directors, officers, employees and agents of the Corporation and its subsidiaries as it may determine;
  
 
(vii) To adopt from time to time such insurance, retirement, and other benefit plans for directors, officers, employees and agents of the Corporation and its subsidiaries as it may determine; and
  
 
(viii) To adopt from time to time regulations, not inconsistent with these Bylaws, for the management of the Corporation's business and affairs.
 
Section 9. Compensation of Directors.
 
Directors, as such, may receive, pursuant to resolution of the Board of Directors, fixed fees and other compensation for their services as directors, including, without limitation, their services as members of committees of the Board of Directors.
 
Section 10. Resignation.
 
Any director may resign at any time by giving written notice of such resignation to the President or the Secretary at the principal office of the Corporation. Unless otherwise specified therein, such resignation shall take effect upon receipt thereof.
 
Section 11. Presumption of Assent.
 
A director of the Corporation who is present at a meeting of the Board of Directors at which action on any corporate matter is taken shall be presumed to have assented to such action unless such director announces his dissent at the meeting and (a) such director's dissent is entered in the minutes of the meeting, (b) such director files his written dissent to such action with the secretary of the meeting before the adjournment thereof, or (c) such director forwards his written dissent within 24 hours after the meeting is adjourned, by certified mail, return receipt requested, bearing a postmark from the United States Postal Service, to the secretary of the meeting or the Secretary of the Corporation. Such right to dissent shall not apply to a director who voted in favor of such action or failed to make his dissent known at the meeting.
 
Section 12. Mandatory Retirement.
 
No person 75 years of age or older shall be eligible for election, re-election, appointment or re-appointment to the Board of Directors. No director who has attained the age of 75 shall continue to serve as a director beyond the annual meeting of stockholders at which his or her term as a director expires.
 
ARTICLE III
 
COMMITTEES
 
Section 1. Committees of the Board of Directors.
 
The Board of Directors may appoint from among its members an Executive Committee and other committees composed of one or more directors and delegate to these committees any of the powers of the Board of Directors, except the power to authorize dividends on stock (except as provided in Section 2-309(d) of the MGCL), issue stock other than as provided in the next sentence, recommend to the stockholders any action which requires stockholder approval (other than the election of directors), amend these Bylaws, or approve any merger or share exchange which does not require stockholder approval. If the Board of Directors has given general authorization for the issuance of stock providing for or establishing a method or procedure for determining the maximum number or the maximum aggregate offering price of shares to be issued, a committee of the Board of Directors, in accordance with that general authorization or any stock option or other plan or program adopted by the Board of Directors, may authorize or fix the terms of stock subject to classification or reclassification and the terms on which any stock may be issued, including all terms and conditions required or permitted to be established or authorized by the Board of Directors under Sections 2-203 and 2-208 of the MGCL. Any committee so designated may exercise the power and authority of the Board of Directors if the resolution which designated the committee or a supplemental resolution of the Board of Directors shall so provide.
 
Section 2. Conduct of Business.
 
Each committee may determine the procedural rules for meeting and conducting its business and shall act in accordance therewith, except as otherwise provided herein or required by law. Adequate provision shall be made for notice to members of all meetings; one-third (1/3) of the members shall constitute a quorum unless the committee shall consist of one or two members, in which event one member shall constitute a quorum; and all matters shall be determined by a majority vote of the members present. Action may be taken by any committee without a meeting if a unanimous consent which sets forth the action is given in writing or by electronic transmission by each member of the committee and filed in paper or electronic form with the minutes of the proceedings of such committee. The members of any committee may conduct any meeting thereof by conference telephone or other communications equipment in accordance with the provisions of Section 6 of Article II.
 
Section 3. Nominating Committee.
 
The Board of Directors may appoint a Nominating Committee of the Board, consisting of at least three members. The Nominating Committee shall have authority (i) to review any nominations for election to the Board of Directors made by a stockholder of the Corporation pursuant to Section 6(b) of Article I of these Bylaws in order to determine compliance with such Bylaw, (ii) to recommend to the Whole Board nominees for election to the Board of Directors to replace those directors whose terms expire at the annual meeting of stockholders next ensuing; and (iii) to take such other actions as may be authorized by the Board of Directors.
 
ARTICLE IV
 
OFFICERS
 
Section 1. Generally.
 
(a) The Board of Directors as soon as may be practicable after the annual meeting of stockholders shall choose a Chairman of the Board, President, one or more Vice Presidents, a Secretary and a Treasurer and from time to time may choose such other officers as it may deem proper. Any number of offices may be held by the same person, except that no person may concurrently serve as both President and Vice President of the Corporation.
 
(b) The term of office of all officers shall be until the next annual election of officers and until their respective successors are chosen, but any officer may be removed from office at any time by the affirmative vote of a majority of the authorized number of directors then constituting the Board of Directors.
 
(c) All officers chosen by the Board of Directors shall each have such powers and duties as generally pertain to their respective offices, subject to the specific provisions of this Article IV. Such officers shall also have such powers and duties as from time to time may be conferred by the Board of Directors or by any committee thereof.
 
Section 2. Chairman of the Board of Directors.
 
The Chairman of the Board of Directors of the Corporation shall act in a general executive capacity and, subject to the direction of the Board of Directors, shall have general responsibility for the supervision of the policies and affairs of the Corporation and the effective administration of the Corporation's business.
 
Section 3. President.
 
The President shall be the chief executive officer and, subject to the control of the Board of Directors, shall have general power over the management and oversight of the administration and operation of the Corporation's business and general supervisory power and authority over its policies and affairs. The President shall see that all orders and resolutions of the Board of Directors and of any committee thereof are carried into effect.
 
Section 4. Vice President.
 
The Vice President or Vice Presidents, if any, shall perform the duties of the President in the President's absence or during his or her disability to act. In addition, the Vice Presidents shall perform the duties and exercise the powers usually incident to their respective offices and/or such other duties and powers as may be properly assigned to them from time to time by the Board of Directors, the Chairman of the Board or the President.
 
Section 5. Secretary.
 
The Secretary or an Assistant Secretary shall issue notices of meetings, shall keep their minutes, shall have charge of the seal and the corporate books, shall perform such other duties and exercise such other powers as are usually incident to such offices and/or such other duties and powers as are properly assigned thereto by the Board of Directors, the Chairman of the Board or the President.
 
 
Section 6. Treasurer.
 
The Treasurer shall have charge of all monies and securities of the Corporation, other than monies and securities of any division of the Corporation which has a treasurer or financial officer appointed by the Board of Directors, and shall keep regular books of account. The funds of the Corporation shall be deposited in the name of the Corporation by the Treasurer with such banks or trust companies or other entities as the Board of Directors from time to time shall designate. The Treasurer shall sign or countersign such instruments as require his or her signature, shall perform all such duties and have all such powers as are usually incident to such office and/or such other duties and powers as are properly assigned to him or her by the Board of Directors, the Chairman of the Board or the President, and may be required to give bond for the faithful performance of his or her duties in such sum and with such surety as may be required by the Board of Directors.
 
Section 7. Assistant Secretaries and Other Officers.
 
The Board of Directors may appoint one or more assistant secretaries and one or more assistants to the Treasurer, or one appointee to both such positions, which officers shall have such powers and shall perform such duties as are provided in these Bylaws or as may be assigned to them by the Board of Directors, the Chairman of the Board or the President.
 
Section 8. Action with Respect to Securities of Other Corporations
 
Stock of other corporations or associations, registered in the name of the Corporation, may be voted by the President, a Vice President, or a proxy appointed by either of them. The Board of Directors, however, may by resolution appoint some other person to vote such shares, in which case such person shall be entitled to vote such shares upon the production of a certified copy of such resolution.
 
 
ARTICLE V
 
STOCK
 
Section 1. Certificates of Stock; Uncertificated Shares.
 
The Board of Directors may determine to issue certificated or uncertificated shares of capital stock and other securities of the Corporation. For certificated stock, each stockholder is entitled to certificates which represent and certify the shares of stock he or she holds in the Corporation. Each stock certificate shall include on its face the name of the Corporation, the name of the stockholder or other person to whom it is issued, and the class of stock and number of shares it represents. It shall also include on its face or back (a) a statement of any restrictions on transferability and a statement of the designations and any preferences, conversion and other rights, voting powers, restrictions, limitations as to dividends, qualifications, and terms and conditions of redemption of the stock of each class which the Corporation is authorized to issue, and of the differences in the relative rights and preferences between the shares of each series of preferred stock which the Corporation is authorized to issue, to the extent they have been set, and of the authority of the Board of Directors to set the relative rights and preferences of subsequent series of preferred stock or (b) a statement which provides in substance that the Corporation will furnish a full statement of such information to any stockholder on request and without charge. Such request may be made to the Secretary or to the Corporation's transfer agent. For uncertificated shares of capital stock, upon request by a stockholder, the Corporation shall send the stockholder, without charge, a written statement of the same information required above on stock certificates. Each stock certificate shall be in such form, not inconsistent with law or with the Corporation's Charter, as shall be approved by the Board
 
 
of Directors or any officer or officers designated for such purpose by resolution of the Board of Directors. Each stock certificate shall be signed by the Chairman of the Board, the President, or a Vice President, and countersigned by the Secretary, an Assistant Secretary, the Treasurer, or an Assistant Treasurer. Each certificate may be sealed with the actual corporate seal or a facsimile of it or in any other form and the signatures may be either manual or facsimile signatures. A certificate is valid and may be issued whether or not an officer who signed it is still an officer when it is issued. A certificate may not be issued until the stock represented by it is fully paid.
 
Section 2. Transfers of Stock.
 
Transfers of stock shall be made only upon the transfer books of the Corporation kept at an office of the Corporation or by one or more transfer agents designated to transfer shares of the stock of the Corporation.
 
Section 3. Record Dates or Closing of Transfer Books.
 
The Board of Directors may, and shall have the power to, set a record date or direct that the stock transfer books be closed for a stated period for the purpose of making any proper determination with respect to stockholders, including which stockholders are entitled to notice of a meeting, vote at a meeting, receive a dividend, or be allotted other rights. The record date may not be prior to the close of business on the day the record date is fixed nor, subject to Section 3 of Article I, more than 90 days before the date on which the action requiring the determination will be taken; the transfer books may not be closed for a period longer than 20 days; and, in the case of a meeting of stockholders, the record date or the closing of the transfer books shall be at least ten days before the date of the meeting. Any shares of the Corporation's own stock acquired by the Corporation between the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders and the time of the meeting may be voted at the meeting by the holder of record as of the record date and shall be counted in determining the total number of outstanding shares entitled to be voted at the meeting.
 
Section 4. Lost, Stolen or Destroyed Certificates.
 
The Board of Directors of the Corporation may determine the conditions for issuing a new stock certificate or uncertificated shares in place of a stock certificate which is alleged to have been lost, stolen, or destroyed, or the Board of Directors may delegate such power to any officer or officers of the Corporation. In their discretion, the Board of Directors or such officer or officers may require the owner of the lost, stolen or destroyed certificate to give a bond, with sufficient surety, to indemnify the Corporation against any loss or claim arising as a result of the issuance of a new certificate or uncertificated shares. In their discretion, the Board of Directors or such officer or officers may refuse to issue such new certificate or uncertificated shares without the order of a court having jurisdiction over the matter.
 
Section 5. Stock Ledger.
 
The Corporation shall maintain a stock ledger which contains the name and address of each stockholder and the number of shares of stock of each class which the stockholder holds. The stock ledger may be in written form or in any other form which can be converted within a reasonable time into written form for visual inspection. The original or a duplicate of the stock ledger shall be kept at the offices of a transfer agent for the particular class of stock or, if none, at the principal executive office of the Corporation.
 
 
Section 6. Regulations.
 
The issue, transfer, conversion and registration of shares of stock shall be governed by such other regulations as the Board of Directors may establish.
 
 
ARTICLE VI
 
MISCELLANEOUS
 
 
Section 1. Facsimile Signatures.
 
In addition to the provisions for use of facsimile signatures elsewhere specifically authorized in these Bylaws, facsimile signatures of any officer or officers of the Corporation may be used whenever and as authorized by the Board of Directors or a committee thereof.
 
Section 2. Corporate Seal.
 
The Board of Directors may provide a suitable seal, bearing the name of the Corporation, which shall be in the charge of the Secretary. The Board of Directors may authorize one or more duplicate seals and provide for the custody thereof. If the Corporation is required to place its corporate seal to a document, it is sufficient to meet the requirement of any law, rule, or regulation relating to a corporate seal to place the word "(seal)" adjacent to the signature of the person authorized to sign the document on behalf of the Corporation.
 
Section 3. Annual Statement of Affairs.
 
The President or chief accounting officer shall prepare annually a full and correct statement of the affairs of the Corporation, to include a balance sheet and a financial statement of operations for the preceding fiscal year. The statement of affairs shall be submitted at the annual meeting of the stockholders and, within 20 days after the meeting, placed on file at the Corporation's principal office, in written form or in any other form that may be converted within a reasonable time into written form for visual inspection.
 
Section 4. Books and Records.
 
The Corporation shall keep correct and complete books and records of its accounts and transactions and minutes of the proceedings of its stockholders and Board of Directors and of any committee when exercising any of the powers of the Board of Directors. The books and records of the Corporation may be in written form or in any other form which can be converted within a reasonable time into written form for visual inspection. Minutes shall be recorded in written form but may be maintained in the form of a reproduction. The original or a certified copy of these Bylaws shall be kept at the principal office of the Corporation.
 
Section 5. Reliance upon Books, Reports and Records.
 
Each director, each member of any committee designated by the Board of Directors, and each officer and agent of the Corporation shall, in the performance of his or her duties, in addition to any protections conferred upon him or her by law, be fully protected in relying in good faith upon the books of account or other records of the Corporation and upon such information, opinions, reports or statements presented to the Corporation by any of its officers or employees, or committees of the Board of Directors so designated, or by any other person as to matters which such director, committee member, officer or agent reasonably believes are within such other person's professional or expert competence and who has been selected with reasonable care by or on behalf of the Corporation.
 
 
Section 6. Fiscal Year.
 
The fiscal year of the Corporation shall be as fixed by the Board of Directors.
 
Section 7. Time Periods.
 
In applying any provision of these Bylaws which requires that an act be done or not be done a specified number of days prior to an event or that an act be done during a period of a specified number of days prior to an event, calendar days shall be used, the day of the doing of the act shall be excluded and the day of the event shall be included.
 
Section 8. Checks, Drafts, Etc.
 
All checks, drafts and orders for the payment of money, notes and other evidences of indebtedness, issued in the name of the Corporation, shall, unless otherwise provided by resolution of the Board of Directors, be signed by the President, a Vice President, an Assistant Vice President, the Treasurer or an Assistant Treasurer.
 
Section 9. Mail.
 
Any notice or other document which is required by these Bylaws to be mailed shall be deposited in the United States mail, postage prepaid.
 
Section 10. Contracts and Agreements.
 
To the extent permitted by applicable law, and except as otherwise prescribed by the Charter or these Bylaws, the Board of Directors may authorize any officer, employee or agent of the Corporation to enter into any contract or execute and deliver any instrument in the name of and on behalf of the Corporation. Such authority may be general or confined to specific instances. A person who holds more than one office in the Corporation may not act in more than one capacity to execute, acknowledge, or verify an instrument required by law to be executed, acknowledged, or verified by more than one officer.
 
 
ARTICLE VII
 
AMENDMENTS
 
These Bylaws may be adopted, amended or repealed as provided in the Charter of the Corporation.
 
 
 
 
Amended by the Board of Directors on January 28, 2015.
 

Sound Financial Bancorp, Inc. Earns $4.2 million or $1.63 per share,
Capping Another Record Year of Profitability
Declares Quarterly Dividend of $0.05 per Share
Seattle, Wash., January 30, 2015 -- Sound Financial Bancorp, Inc. (Nasdaq: SFBC), the holding company (the "Company") for Sound Community Bank (the "Bank"), today reported net income of $802,000 for the quarter ended December 31, 2014, or $0.31 per diluted common share, as compared to net income of $1.0 million, or $0.39 per diluted common share, for the quarter ended December 31, 2013.  Net income was $4.2 million for the year ended December 31, 2014, or $1.63 per diluted common share, as compared to net income of $3.9 million, or $1.49 per diluted common share, for the year ended December 31, 2013.
"We are pleased to announce record net income and earnings per share in 2014," said Sound Community Bank and Sound Financial Bancorp, Inc. President and CEO Laurie Stewart.  "Our focus on quality loan production and portfolio management coupled with strong growth in net interest income contributed to this success.  We also had a strong year of deposit growth, both from our branch acquisitions and our existing branch network."
The Company also announced today that its Board of Directors declared a cash dividend on Sound Financial Bancorp common stock of $0.05 per share, payable on February 26, 2015 to stockholders of record as the close of business on February 12, 2015.

Highlights for the fourth quarter of 2014 include:

●
 
Net interest income increased to $4. 9 million for the current quarter, an increase of 2.7 % compared to the third quarter of 2014 and 9.3 % from the same period last year;
●
 
Provision for loan losses remained unchanged at $200,000 for the current quarter ,   prior quarter and the fourth quarter of 2013;
●
 
Net l oans increased 3.1 % to $4 26.0 million at December 3 1 , 2014, compared to September 3 0 , 201 4 and increased 10.1 % from December 31 , 2013;
●
 
Deposits increased 1.3 % to $40 8.4 million at December 31 , 2014, compared to September 30 , 201 4 and increased 1 7.2 % from December 31 , 2013;
●
 
Tier 1 leverage ratio of 9.78 % and a Total risk-based capital ratio of 13.58 % at December 31 , 2014.

Highlights for the full year of 2014 include:

●
 
Net interest income increased 9.4% to $18.9 million for the year ended December 31, 2014, compared to $17.3 million for the year ended December 31, 2013;
●
 
R eturn on average assets was  0.93 % for the year ended December 31, 2014 , compared to 0.96 % for the year ended December 31, 2013 ;
●
 
Return on average equity was 8.76 % for the year ended December 31, 2014 , compared to 8.68 % for the year ended December 31, 2013 ;
●
 
Provision for loan losses decreased 40.7% to $800,000 for the year ended December 31, 2014 , compared to   $1.4 million for the year ended December 31, 2013; and
●
 
N et charge-offs decreased 26 basis points to 0.14% from 0.40% for the year ended December 31, 2013

Capital ratios exceeded regulatory requirements for a well-capitalized financial institution on both a holding company and bank level at December 31, 2014.

Operating Results
Net interest income increased $131,000 to $4.9 million in the fourth quarter of 2014, compared to $4.8 million in the third quarter of 2014 and increased $417,000 from $4.5 million in the fourth quarter of 2013.  Net interest income increased $1.6 million, or 9.4%, to $18.9 million for the year ended December 31, 2014, compared to $17.3 million for the year ended December 31, 2013.  The increase was primarily a result of higher average loan balances.
The net interest margin was 4.41% for the fourth quarter of 2014, compared to 4.43% for the third quarter of 2014 and 4.38% in the fourth quarter of 2013.
The provision for loan losses in the fourth quarter of 2014 was $200,000, which was the same as the third quarter of 2014 and the fourth quarter of 2013.  The provision for loan losses decreased $550,000 to $800,000 for the year ended December 31, 2014, compared to $1.4 million for the year ended December 31, 2013.  The decline from a year ago was primarily due to lower charge-offs which was partially offset by increases to the provision related to higher average loan balances and changes in the composition of our loan portfolio.

Noninterest income decreased $395,000, or 27.6%, to $1.0 million in the fourth quarter of 2014, compared to $1.4 million in the third quarter of 2014.  Noninterest income decreased $125,000, or 10.8%, from $1.2 million in the fourth quarter of 2013.  The decrease in the quarterly figure from a year ago was primarily a result of a reduction in loan fee income and a lower fair value adjustment on our mortgage servicing asset primarily as a result of increased prepayment speeds.  Noninterest income decreased $540,000, or 11.0%, to $4.4 million for the year ended December 31, 2014, compared to $4.9 million for the year ended December 31, 2013.  The annual decrease was primarily reflective of decreased gains on sale of loans and a lower fair value gain adjustment on mortgage servicing rights.
Noninterest expense for the third and fourth quarters of 2014 was $4.2 million, compared to $4.0 million for the fourth quarter of 2013.  For the year ended December 31, 2014, noninterest expense was $15.9 million, compared to $15.1 million for the year ended December 31, 2013.  The increase from a year ago was primarily from increased operational and data processing expenses related to three branches acquired in the third quarter of 2014, expansion of online and mobile banking offerings and higher salaries and benefits   due to an increase in full time equivalent employees.
The efficiency ratio for the fourth quarter of 2014 was 69.75%, compared to 67.09% for the third quarter of 2014 and 68.33% for the fourth quarter of 2013.  The increase in the efficiency ratio compared to prior periods was primarily due to the higher noninterest expense and lower noninterest income partially offset by an increase in interest income.
Balance Sheet Review, Capital Management and Credit Quality
The Company's total assets as of December 31, 2014 were $495.2 million, compared to $478.7 million at September 30, 2014 and $442.6 million a year ago.  This increase was primarily a result of higher loan and cash balances which increased $13.0 million and $7.2million, respectively, from September 30, 2014 and $39.4 and $14.0 million, respectively, from December 31, 2013.
The investment securities available-for-sale portfolio totaled $11.5 million at December 31, 2014, compared to $12.9 million at September 30, 2014 and $15.4 million at December 31, 2013.  At December 31, 2014, the securities available-for-sale portfolio was comprised of $7.1 million of agency mortgage-backed securities (all issued by U.S. Government-sponsored entities), $2.3 million in private-label mortgage-backed securities and $2.1 million in municipal bonds.
Loans, excluding loans held-for-sale, totaled $430.4 million at December 31, 2014, compared to $417.4 million at September 30, 2014 and $390.9 million a year ago.  We experienced growth in every loan category at December 31, 2014 compared to December 31, 2013, except for manufactured housing and home equity loans.  At December 31, 2014, commercial and multifamily real estate loans accounted for 39.0% of the portfolio and residential real estate loans accounted for 30.8% of the portfolio.  Home equity, manufactured, floating homes and other consumer loans accounted for 14.9% of the portfolio.  Construction and land loans accounted for 10.8% of the portfolio and commercial and industrial loans accounted for the remaining 4.5% of the portfolio.
The weighted average yield on the loan portfolio was 5.12% for the fourth quarter of 2014, compared to 5.19% for the third quarter of 2014 and 5.23% for the fourth quarter of 2013.
Nonperforming assets ("NPAs"), which includes non-accrual loans, accruing loans 90 days and more delinquent, nonperforming troubled debt restructurings ("TDRs"), other real estate owned ("OREO") and other repossessed assets increased to $4.2 million, or 0.84% of total assets, at December 31, 2014 compared to $3.8 million, or 0.80% of total assets at September 30, 2014 and $3.1 million, or 0.70% of total assets at December 31, 2013.  This increase from a year ago was primarily the result of a $1.5 million commercial property loan which was restructured during the third quarter of 2014 and is performing as agreed under the new loan terms.  The following table summarizes our NPAs:

Nonperforming Loans:
 
At Dec 3 1 , 2014
   
At Sep 30 , 201 4
   
At Dec 3 1 , 2013
 
(in $000s, unaudited)
 
Balance
   
% of Total
   
Balance
   
% of Total
   
Balance
   
% of Total
 
One- to four- family
 
$
1,512
     
3 6 .3
%
 
$
828
     
21.7
%
 
$
772
     
24.9
%
Home equity loans
   
386
     
9. 3
     
280
     
7.3
     
222
     
7.2
 
Commercial and multifamily
   
1,639
     
3 9.3
     
2,228
     
58.4
     
820
     
26.5
 
Construction and land
   
81
     
1.9
     
-
   
nm
     
-
   
nm
 
Manufactured
   
195
     
4.7
     
214
     
5.6
     
106
     
3.4
 
Other consumer
   
29
     
0.7
     
3
     
0.1
     
1
   
nm
 
Total nonperforming loans
   
3,842
     
92.2
     
3,553
     
93.2
     
1,921
     
62.0
 
OREO and Other Repossessed Assets:
                                               
One- to four- family
   
269
     
6.5
     
189
     
5.0
     
1,086
     
35.0
 
Manufactured
   
54
     
1.3
     
70
     
1.8
     
92
     
3.0
 
Total OREO and repossessed assets
   
323
     
7. 8
     
259
     
6.8
     
1,178
     
38.0
 
Total nonperforming assets
 
$
4, 165
     
100.0
   
$
3,812
     
100.0
%
 
$
3,099
     
100.0
%
______________
nm = not meaningful
The following table summarizes the allowance for loan losses:
 
 
For the Year Ended:
 
Allowance for Loan Losses
 
Dec 3 1 ,
   
Dec 3 1 ,
 
(in $000s, unaudited)
 
2014
   
2013
 
Balance at beginning of period
 
$
4,177
   
$
4,248
 
Provision for loan losses during the period
   
800
     
1,350
 
Net charge-offs during the period
   
(590
)
   
(1,421
)
Balance at end of period
 
$
4,387
   
$
4,177
 
 
               
Allowance for loan losses to total loans
   
1.02
%
   
1.07
%
Allowance for loan losses to total nonperforming loans
   
114.19
%
   
217.44
%

The increase in the allowance for loan losses at December 31, 2014, compared to the prior year was due to increased average loan balances which were partially offset by lower charge-offs.  Net charge-offs totaled $590,000 for the year ended December 31, 2014, compared to net charge-offs of $1.4 million for the year ended December 31, 2013.
Deposits increased to $408.4 million at December 31, 2014, compared to $403.2 million at September 30, 2014 and $348.3 million at December 31, 2013.  During the quarter ended September 30, 2014, the Company acquired $22.2 million of deposits in its branch acquisition.  FHLB borrowings were $30.6 million at December 31, 2014, compared to $20.7 million at September 30, 2014 and $43.2 million at December 31, 2013.  The increase in borrowings was a result of the Company maintaining higher levels of on-balance sheet liquidity as compared to prior periods.
The total cost of deposits decreased to 0.57% during the quarter ended December 31, 2014, from 0.60% during the third quarter of 2014 and 0.66% during the quarter ended December 31, 2013.  The total cost of deposits decreased to 0.60% during the year ended December 31, 2014, from 0.64% during the year ended December 31, 2013.  The total cost of borrowings was 0.64% during the quarter ended December 31, 2014 and September 30, 2014 and 0.51% for the quarter ended December 31, 2013.  The total cost of borrowings was 0.58% during the year ended December 31, 2014 and 0.64% for the year ended December 31, 2013.
Sound Financial Bancorp, Inc. , a bank holding company, is the parent company of Sound Community Bank, and is headquartered in Seattle, Washington with full-service branches in Seattle, Tacoma, Mountlake Terrace, Sequim, Port Angeles and Port Ludlow. Sound Community Bank is a Fannie Mae Approved Lender and Seller/Servicer with an additional Loan Production Office in the Madison Park neighborhood of Seattle, Washington. For more information, please visit www.soundcb.com .
Forward Looking Statement Disclaimer
"Safe Harbor" statement under the Private Securities Litigation Reform Act of 1995: This press release contains statements that are not historical or current fact and constitute forward-looking statements.  In some cases, you can identify these statements by words such as "may", "might", "will", "should", "expect", "plan", "intend", "anticipate", "believe", "estimate", "predict", "potential", or "continue", the negative of these terms and other comparable terminology.  Such forward-looking statements, which are based on various underlying assumptions and expectations and are subject to risks, uncertainties and other unknown factors, may include projections of our future financial performance based on our growth strategies and anticipated trends in our business.
These statements are only predictions based on our current expectations and projections about future events, and may turn out to be wrong because of inaccurate assumptions we might make, because of the factors illustrated below or because of other important factors that we cannot foresee that could cause our actual results for 2015 and beyond to be materially different from the historical results or from any future results expressed or implied by such forward -looking statements. Unless required by law, we undertake no obligation to publicly update or revise any forward-looking statement to reflect circumstances or events after the date of this press release.
There are a number of important factors that could cause future results to differ materially from historical performance and these forward-looking statements. Factors which could cause actual results to differ materially, include, but are not limited to, general and local economic conditions, changes in interest rates, deposit flows, demand for mortgage, consumer and other loans, real estate values, competition, changes in accounting principles, policies or guidelines, changes in legislation or regulation, and other economic, competitive, governmental, regulatory and technological factors affecting our operations, pricing, products and services described in the Company's latest annual Report on Form 10-K and Quarterly Reports on Form 10-Q and other filings with the Securities and Exchange Commission – which are available on our website at www.soundcb.com and on the SEC's website at www.sec.gov.
CONSOLIDATED INCOME STATEMENTS
 
Quarter Ended
   
Sequential Quarter
   
Year over Year
 
(in $000s, unaudited)
 
Dec 3 1 , 2014
   
Sep 30, 2014
   
Dec 3 1 , 2013
   
% Change
   
% Change
 
Interest income
 
$
5,51 8
   
$
5,395
   
$
5,119
     
2.3
%
   
7.8
%
Interest expense
   
60 4
     
612
     
622
     
(1. 3
)
   
( 2.9
)
Net interest income
   
4,914
     
4,783
     
4,497
     
2.7
     
9.3
 
Provision for loan losses
   
200
     
200
     
200
     
0.0
     
0.0
 
Net interest income after provision for loan losses
   
4,714
     
4,583
     
4,297
     
2.9
     
9.7
 
Noninterest income:
                                       
Service charges and fee income
   
562
     
805
     
557
     
(30.2
)
   
0.9
 
Increase in cash surrender value of life insurance
   
87
     
87
     
118
     
0.0
     
(26.3
)
Mortgage servicing income
   
242
     
202
     
70
     
19.8
     
245.7
 
Fair value adjustment on mortgage servicing rights
   
(109
)
   
153
     
24 3
     
(171.2
)
   
(144.9
)
Gain on sale of loans
   
254
     
184
     
173
     
38.0
     
46.8
 
                                       
Total noninterest income
   
1,036
     
1,431
     
1,161
     
(27.6
)
   
(10.8
)
Noninterest expense:
                                       
Salaries and benefits
   
2,2 55
     
1,998
     
1,981
     
12. 9
     
13. 8
 
Operations expense
   
9 89
     
1,155
     
1,141
     
(1 4.4
)
   
(1 3.3
)
Data processing
   
492
     
606
     
333
     
(18.8
)
   
47.7
 
Net (gain) loss on OREO and repossessed assets
   
59
     
(12
)
   
73
     
(591.7
)
   
(19.2
)
Other noninterest expense
   
431
     
447
     
442
     
(3.6
)
   
(2.5
)
Total noninterest expense
   
4, 226
     
4,194
     
3,970
     
0.8
     
6.4
 
Income before income taxes
   
1,5 24
     
1,820
     
1,488
     
( 16.3
)
   
2.4
 
Income tax expense
   
722
     
585
     
482
     
23.4
     
49.8
 
Net income
 
$
8 02
   
$
1,235
   
$
1,006
     
(3 5.1
) %
   
( 20.3
) %

KEY FINANCIAL RATIOS (in $000s, unaudited)
 
   
   
   
   
 
Return on average assets
   
0.67
%
   
1.07
%
   
0.92
%
   
(37.4
)%
   
(27.2
)%
Return on average equity
   
6.38
     
10.09
     
8.68
     
(36.8
)
   
(26.5
)
Net interest margin
   
4.41
     
4.43
     
4.38
     
(0.5
)
   
0.7
 
Efficiency ratio
   
69.75
%
   
67.09
%
   
68.33
%
   
4.0
%
   
2.1
%
 
PER COMMON SHARE DATA
 
Quarter Ended
   
Sequential Quarter
   
Year over Year
 
(in $000s, except per share data, unaudited)
 
Dec 3 1 , 2014
   
Sep 30, 2014
   
Dec 3 1 , 2013
   
% Change
   
% Change
 
Basic earnings per share
 
$
0.32
   
$
0.49
   
$
0.40
     
(34.7
)%
   
(20.0
)%
Diluted earnings per share
 
$
0.31
   
$
0.47
   
$
0.39
     
(34.0
)
   
(20.5
)
Weighted average basic shares outstanding
   
2,520
     
2,516
     
2,532
     
0.2
     
(0.5
)
Weighted average diluted shares outstanding
   
2,601
     
2,609
     
2,597
     
(0.3
)
   
0.2
 
Common shares outstanding at period-end
   
2,525
     
2,516
     
2,511
     
0.4
     
0.6
 
Book value per share
 
$
20.06
   
$
19.64
   
$
18.52
     
2.1
%
   
8.3
%
 
CONSOLIDATED INCOME STATEMENT
 
Year Ended
   
Year over Year
 
(in $000s, unaudited)
 
Dec 3 1 , 2014
   
Dec 31, 2013
   
% Change
 
Interest income
 
$
21,356
   
$
19,626
     
8.8
%
Interest expense
   
2,422
     
2,312
     
4.8
 
Net interest income
   
18,934
     
17,314
     
9.4
 
Provision for loan losses
   
800
     
1,350
     
(40.7
)
Net interest income after provision for loan losses
   
18,134
     
15,964
     
13.6
 
Noninterest income:
                       
Service charges and fee income
   
2,570
     
2,270
     
13.2
 
Increase in cash surrender value of life insurance
   
341
     
348
     
(2.0
)
Mortgage servicing income
   
509
     
457
     
11.4
 
Fair value adjustment on mortgage servicing rights
   
328
     
900
     
(63.6
)
Other than temporary impairment losses on securities
   
-
     
(30
)
   
(100.0
)
Gain on sale of loans
   
624
     
967
     
(35.5
)
                       
Total noninterest income
   
4,372
     
4,912
     
(11.0
)
Noninterest expense:
                       
Salaries and benefits
   
8,278
     
7,206
     
14.9
 
Operations expense
   
4,046
     
3,950
     
2.4
 
Data processing
   
1,770
     
1,287
     
37.5
 
Net loss on OREO and repossessed assets
   
208
     
1,036
     
(79.9
)
Other noninterest expense
   
1,626
     
1,642
     
(1.0
)
Total noninterest expense
   
15,928
     
15,121
     
5.3
 
Income before income taxes
   
6,578
     
5,755
     
14.3
 
Income tax expense
   
2,338
     
1,815
     
28.8
 
Net income
 
$
4,240
   
$
3,940
     
7.6
%

KEY FINANCIAL RATIOS (in $000s, unaudited)
 
   
   
 
Return on average assets
   
0.93
     
0.96
     
(3.1
)%
Return on average equity
   
8.76
     
8.68
     
0.9
 
Net interest margin
   
4.43
     
4.55
     
(2.6
)
Efficiency ratio
   
66.96
     
63.29
     
5.8
 

PER COMMON SHARE DATA
 
Year Ended
   
Year over Year
 
(in $000s, except per share data, unaudited)
 
Dec 3 1 , 2014
   
Dec 31, 2013
   
% Change
 
Basic earnings per share
 
$
1.69
   
$
1.52
     
11.2
%
Diluted earnings per share
 
$
1.63
   
$
1.49
     
9.4
 
Weighted average basic shares outstanding
   
2,513
     
2,571
     
(2.3
)
Weighted average diluted shares outstanding
   
2,602
     
2,626
     
(0.9
)
Common shares outstanding at period-end
   
2,525
     
2,511
     
0.6
 
Book value per share
 
$
20.06
   
$
19.64
     
2.1
%


CONSOLIDATED BALANCE SHEET
 
   
   
   
Sequential Quarter
   
Year over Year
 
(in $000's, unaudited)
 
Dec 31 , 2014
   
Sep 30 , 2014
   
Dec 3 1 , 2013
   
% Change
   
% Change
 
ASSETS
 
   
   
   
   
 
Cash and cash equivalents
 
$
29,289
   
$
22,139
   
$
15,334
     
32.3
%
   
91.0
%
Securities available-for-sale, at fair value
   
11,524
     
12,944
     
15,421
     
(11.0
)
   
(25.3
)
Loans held-for-sale
   
810
     
2,490
     
130
     
(67.5
)
   
523.1
 
Loans:
                                       
One- to four- family residential
   
132,765
     
129,167
     
117,452
     
2.8
     
13.0
 
Home equity
   
34,675
     
34,782
     
35,155
     
(0.3
)
   
(1.4
)
Commercial and multifamily
   
167,798
     
158,636
     
156,600
     
5.8
     
7.2
 
Construction and land
   
46,279
     
45,186
     
44,300
     
2.4
     
4.5
 
Manufactured homes
   
12,444
     
12,584
     
13,496
     
(1.1
)
   
(7.8
)
Other consumer
   
1 6 , 875
     
13,000
     
10,284
     
(4.3
)
   
21.0
 
Commercial business
   
19,525
     
23,996
     
13,668
     
(18.6
)
   
42.9
 
Total loans, gross
   
430,360
     
417,351
     
390,926
     
3.1
     
10.1
 
Allowance for loan losses
   
(4,387
)
   
(4,230
)
   
(4,177
)
   
3.7
     
5.0
 
Loans, net
   
425,973
     
413,121
     
386,749
     
3.1
     
10.1
 
Accrued interest receivable
   
1,497
     
1,446
     
1,366
     
3.5
     
9.6
 
Bank-owned life insurance
   
11,408
     
11,321
     
11,068
     
0.8
     
3.1
 
OREO and other repossessed assets, net
   
323
     
259
     
1,178
     
24.7
     
(72.6
)
Mortgage servicing rights, at fair value
   
3,028
     
3,115
     
2,984
     
(2.8
)
   
1.5
 
FHLB stock, at cost
   
2,224
     
2,247
     
2,314
     
(1.0
)
   
(3.9
)
Premises and equipment, net
   
5,555
     
5,621
     
2,138
     
(1.2
)
   
159.8
 
Other assets
   
3,559
     
4,002
     
3,929
     
(11.1
)
   
(9.4
)
Total assets
   
495,190
     
478,705
     
442,611
     
3.4
     
11.9
 
LIABILITIES AND SHAREHOLDERS' EQUITY
                                       
Liabilities:
                                       
Demand deposit, noninterest-bearing
   
47,941
     
44,219
     
34,594
     
8.4
     
38.6
 
Demand deposit, interest-bearing
   
100,055
     
98,739
     
70,639
     
1.3
     
41.6
 
Savings and money market
   
88,469
     
87,584
     
85,578
     
1.0
     
3.4
 
Time deposits
   
171,939
     
172,632
     
157,528
     
(0.4
)
   
9.1
 
Total deposits
   
408,404
     
403,174
     
348,339
     
1.3
     
17.2
 
Accrued interest payable and other liabilities
   
5,563
     
5,384
     
4,547
     
3.3
     
22. 2
 
Borrowings
   
30,578
     
20,738
     
43,221
     
47.4
     
(29.3
)
Total liabilities
   
444,545
     
429,296
     
396,107
     
3.6
     
12.2
 
Shareholders' Equity:
                                       
Common stock
   
25
     
25
     
25
     
0.0
     
0.0
 
Paid-in capital
   
23,552
     
23,218
     
23,829
     
1.4
     
(1.2
)
Unearned shared – ESOP
   
(1,140
)
   
(1,369
)
   
(1,369
)
   
(16.7
)
   
(16.7
)
Retained earnings
   
28,025
     
27,348
     
24,288
     
2.5
     
15.4
 
Accumulated other comprehensive loss
   
183
     
187
     
(269
)
   
(2.1
)
   
(168.0
)
Total shareholders' equity
   
50,645
     
49,409
     
46,504
     
2.5
     
8.9
 
Total liabilities and shareholders' equity
 
$
495,190
   
$
478,705
   
$
442,611
     
3.4
%
   
11.9
%

CREDIT QUALITY DATA
(in $000's, unaudited)
 
Dec 3 1 , 2014
   
Sep 30, 2014
   
Dec 31, 2013
   
Sequential Quarter
% Change
   
Year over year
% Change
 
Nonaccrual loans
 
$
1,464
   
$
904
   
$
558
     
61.9
%
   
162.4
%
Nonperforming TDRs and loans over 90 days past due and on accrual
   
2,378
     
2,649
     
1,36 3
     
(10.2
)
   
74.5
 
Total nonperforming loans
   
3,842
     
3,553
     
1,919
     
8.1
     
100.0
 
OREO and other repossessed assets
   
323
     
259
     
1,178
     
24.7
     
(72.6
)
Total nonperforming assets
   
4,165
     
3,812
     
3,099
     
9.3
     
34.4
 
Performing TDRs on accrual
   
5,117
     
4,660
     
5,404
     
9.8
     
(5.3
)
Net charge-offs during the quarter
   
43
     
161
     
138
     
(73.3
)
   
(68.8
)
Provision for loan losses during the quarter
   
200
     
200
     
200
     
0.0
     
0.0
 
Allowance for loan losses
   
4,387
     
4,230
     
4,177
     
3.7
     
5.0
 
Classified assets
   
6,043
     
7,874
     
7,192
     
(23.3
)
   
(16.0
)
Allowance for loan losses to total loans
   
1.02
%
   
1.01
%
   
1.07
%
   
1.0
     
(4.7
)
Allowance for loan losses to total nonperforming loans
   
114.19
%
   
119.05
%
   
217.44
%
   
(4.1
)
   
(47.5
)
Nonperforming loans to total loans
   
0.89
%
   
0.85
%
   
0.49
%
   
4.7
     
81.6
 
Nonperforming assets to total assets
   
0.84
%
   
0.80
%
   
0.70
%
   
5.0
     
20.0
 
 
                                       
OTHER PERIOD-END STATISTICS
                                       
(unaudited)
                                       
Sound Community Bank:
                                       
Loan to deposit ratio
   
104.30
     
102.47
     
111.74
     
1.79
     
(6.66
)
Noninterest-bearing deposits / total deposits
   
11.74
     
10.97
     
10.32
     
7.02
     
13.76
 
Leverage ratio
   
9.78
     
10.26
     
10.00
     
(4.68
)
   
(2.20
)
Tier 1 risk-based capital ratio
   
12.45
     
12.82
     
13.02
     
(2.89
)
   
(4.38
)
Total risk-based capital ratio
   
13.58
%
   
13.98
%
   
14.26
%
   
(2.86
)%
   
(4.77
)%


Media:
 
Financial:
Laurie Stewart
 
Matt Deines
President/CEO
 
EVP/CFO
(206) 448-0884 x306
 
(206) 448-0884 x305


SOUND FINANCIAL BANCORP, INC.
ANNOUNCES STOCK REPURCHASE PROGRAM

Seattle, WA – January 30, 2015 – Sound Financial Bancorp, Inc. (NASDAQ: SFBC) announced today that the Company's Board of Directors has authorized the repurchase of up to 2.5% of the Company's outstanding shares.  The shares may be purchased in the open market or in privately negotiated transactions, from time to time over a twelve-month period depending upon market conditions and other factors.

Laurie Stewart, President and Chief Executive Officer of the Company, indicated that the Board of Directors approved the repurchase program in view of the current price level of the Company's common stock and the strong capital position of the Company's subsidiary, Sound Community Bank.  Ms. Stewart stated:  "We believe the repurchase of our shares will benefit both the Company and our shareholders."

Sound Financial Bancorp, Inc. is the holding company for Sound Community Bank, a full-service bank, providing personal and business banking services in communities across the greater Puget Sound region. The Seattle-based company operates six full-service banking offices in King, Pierce, Snohomish and Clallam Counties, and is on the web at www.soundcb.com .

Forward-Looking Statements
 
Statements in this press release that are not historical facts may be "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995.  Such statements often include words such as "believe," "expect," "anticipate," "estimate," and "intend" or future or conditional verbs such as "will," "would," "should," "could," or "may." Forward-looking statements, by their nature, are subject to risks and uncertainties that could cause actual results to differ materially from the results anticipated in such statements, including increased competitive pressures, changes in the interest rate environment, changes in general economic conditions and conditions within the securities markets, legislative and regulatory changes and other factors described from time to time in documents filed and furnished by Sound Financial Bancorp, Inc. with the Securities and Exchange Commission.  Unless required by law, we undertake no obligation to publicly update or revise any forward-looking statement to reflect circumstances or events after the date of this press release.

For additional information, contact:
 
Media:
 
Financial:
Laurie Stewart
 
Matt Deines
President/CEO
 
EVP/CFO
(206) 448-0884 x306
 
(206) 448-0884 x305