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Sound Financial Bancorp Reports Improved First Quarter Results and Asset Quality

SEATTLE, April 30, 2013 (GLOBE NEWSWIRE) -- Sound Financial Bancorp, Inc. (the "Company") (Nasdaq:SFBC), holding company for Sound Community Bank (the "Bank"), today reported net income for the quarter ended March 31, 2013 of $798,000, or $0.30 per diluted share, compared to net income of $546,000, or $0.21 per diluted share, for the quarter ended March 31, 2012. Annualized return on average assets was 0.81% for the quarter ended March 31, 2013 compared to 0.64% for the quarter ended March 31, 2012. Total assets increased to $390.7 million as of March 31, 2013 compared to $381.0 million as of December 31, 2012 as net loans increased by $12.3 million or 3.8% to $334.8 million.

This is the thirteenth consecutive quarter of positive earnings for the Company.

Highlights as of and for the quarter ended March 31, 2013 include:

- The Bank opened a loan production office in the Madison Park neighborhood of Seattle to originate Fannie Mae conforming and jumbo portfolio residential real estate loans

- Provision for loan losses decreased to $250,000 for the quarter ended March 31, 2013 from $1.5 million for the quarter ended March 31, 2012

- Losses and expenses related to other real estate owned increased to $674,000 for the quarter ended March 31, 2013 from $469,000 for the quarter ended March 31, 2012

- Non-performing loans to total loans declined to 0.63% as of March 31, 2013 compared to 1.20% as of December 31, 2012 as total non-performing loans decreased by $1.8 million or 45.7% to $2.1 million at March 31, 2013 from $3.9 million at December 31, 2012

- Non-performing assets to total assets decreased to 1.17% as of March 31, 2013 compared to 1.68% as of December 31, 2012 as non-performing assets decreased by $1.8 million or 28.6% to $4.6 million at March 31, 2013 from $6.4 million at December 31, 2012

- Gain on sale of loans was $447,000 for the quarter ended March 31, 2013 compared to $251,000 for the quarter ended March 31, 2012

Laurie Stewart, President and CEO, said, "Asset quality is improving. Non-performing loans are now less than one percent of our loans outstanding." Stewart also commented on the Company's loan growth, "Loan demand improved and outstanding balances grew during the past two quarters, both for our serviced loans sold to Fannie Mae and our on balance sheet loan portfolio. Establishing these lending relationships gives us the opportunity to offer these clients additional products such as rewards checking and mobile banking with remote deposit capture, or cash management products for small businesses."

As of
03/31/2013 12/31/2012
Selected Consolidated Financial Condition Data: (unaudited)
Total assets $ 390,656 $ 381,044
Total loans, net 334,820 322,496
Loans held for sale 2,083 1,725
Available-for-sale securities, at fair value 19,713 22,900
Federal Home Loan Bank stock, at cost 2,083 1,725
Bank-owned life insurance, net 10,798 7,220
Other real estate owned and repossessed assets, net 2,453 2,503
Total deposits 316,727 312,083
Borrowings 25,703 21,864
Total stockholders' equity 44,341 43,457
Quarter Ended
03/31/2013 03/31/2012
Selected Consolidated Operating Data: (unaudited)
Total interest income $ 4,636 $ 4,563
Total interest expense 569 601
Net interest income 4,067 3,962
Provision for loan losses 250 1,500
Net interest income after provision for loan losses 3,817 2,462
Fees and service charges 598 550
Gain on sale of loans 447 251
Mortgage servicing income 127 177
Other than temporary impairment on securities (19) (91)
Fair value adjustment on mortgage servicing rights 135 384
Other non-interest income 78 66
Total non-interest income 1,366 1,337
Salaries and benefits expense 1,687 1,283
Operations expense 967 582
Occupancy expense 299 310
Losses and expenses related to other real estate owned 674 469
Other non-interest expense 388 364
Total non-interest expense 4,015 3,008
Income before provision for income taxes 1,168 791
Provision for income taxes 370 245
Net income $ 798 $ 546
Quarter Ended
03/31/2013 03/31/2012
Selected Financial Ratios and Other Data: (unaudited)
Performance ratios(1):
Return on average assets 0.81% 0.64%
Return on average equity 7.24 7.42
Net interest margin 4.55 5.23
Non-interest income to operating revenue(3) 25.14 25.23
Non-interest expense to average total assets 4.09 3.52
Average interest-earning assets to average interest-bearing liabilities 116.26 108.51
Efficiency ratio(4) 61.49 47.91
Asset quality ratios:
Nonperforming assets to total assets 1.17 2.81
Nonperforming loans to gross loans 0.63 2.57
Allowance for loan losses to nonperforming loans 190.40 56.28
Allowance for loan losses to gross loans 1.19 1.45
Net charge-offs to average loans outstanding 0.54 2.14
Per Share Data:
Diluted earnings per share $ 0.30 $ 0.21
Average number of diluted shares outstanding 2,645,109 2,603,585
_________________________
(1) All performance ratios are annualized.
(2) Net interest income divided by average interest earning assets.
(3) Noninterest income divided by the sum of noninterest income and net interest income.
(4) Noninterest expense, excluding other real estate owned and repossessed property expense, as a percentage of net interest income and total noninterest income, excluding net securities transactions.
Regulatory Capital Ratios of Sound Community Bank at March 31, 2013 (unaudited)
Actual Minimum Capital
Requirements
Minimum Required
to
Be Well-Capitalized
Under Prompt
Corrective
Action Provisions
Amount Ratio Amount Ratio Amount Ratio
(Dollars in thousands)
Tier 1 leverage ratio $39,214 10.11% $15,510 4.0% $19,387 5.0%
Tier 1 risk based capital ratio 39,214 13.10% 11,974 4.0% 17,961 6.0%
Total risked-based capital ratio 42,960 14.35% 23,948 8.0% 29,935 10.0%

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 five full-service banking offices in King, Pierce, Snohomish and Clallam Counties, and is on the web at www.soundcb.com.

Forward-Looking Statements

"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 there are or may be important factors that could cause our actual results for 2013 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.

CONTACT: For additional information, contact: Media: Laurie Stewart President/CEO (206) 448-0884 x306 Financial: Matt Deines EVP/CFO (206) 448-0884 x305Source:Sound Financial Bancorp, Inc.