Sound Financial Bancorp, Inc.
For the period ended Jun 30, 2026. Filed Aug 10, 2026.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2026 · Filed Aug 10, 2026
SFBC$45.02-0.1%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2026-03-31; filed 2026-05-12.
0001541119-26-000018
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-06-30; filed 2026-08-10.
0001541119-26-000024
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 143 previous paragraphs and 167 current paragraphs.
83 unchanged; 47 reworded; 32 added; 12 removed; 1 previous and 5 current paragraphs rearranged.
Tables are not compared: 15 previous and 20 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (32)
Current report
Q2 2026 vs Q2 2025. Net income increased $466 thousand, or 22.7%, to $2.5 million, or $0.98 per diluted common share, for the three months ended June 30, 2026, compared to $2.1 million, or $0.79 per diluted common share, for the three months ended June 30, 2025, reflecting a favorable change in the provision for credit losses, as the Company recorded a release of provision for credit losses in the current quarter compared to a provision for credit losses in the prior-year quarter, growth in net interest income, and an increase in noninterest income. These improvements were partially offset by higher noninterest expenses and an increase in income taxes.
Current report
YTD 2026 vs. YTD 2025. Net income increased $872 thousand, or 27.1%, to $4.1 million, or $1.59 per diluted common share, for the six months ended June 30, 2026, compared to $3.2 million, or $1.24 per diluted common share, for the six months ended June 30, 2025, a favorable change in the provision for credit losses, as the Company recorded a release of provision for credit losses during the current-year period compared to a provision for credit losses in the prior-year period, higher net interest income, and an increase in noninterest income. This was partially offset by higher noninterest expenses and an increase in income taxes. Overall, the improvement in net interest income, primarily resulting from lower funding costs, growth in average loan balances, and an improved net interest margin, was the primary factor behind the year-to-date improvement in profitability.
Current report
Q2 2026 vs Q2 2025. Total interest income decreased $69 thousand, or 0.5%, to $14.8 million for the three months ended June 30, 2026 from $14.9 million for the three months ended June 30, 2025, primarily due to lower yield on interest earning assets, including a 71 basis point decline in the average yield on cash and cash equivalents and an eight basis point decline in the average yield on loans. These decreases were partially offset by growth in average loan balances and investments, which increased the volume of interest-earning assets. The benefit from higher average loan balances and investments was more than offset by lower average balances of cash and cash equivalents.
Current report
Interest income on loans increased $82 thousand, or 0.6%, to $13.8 million for the three months ended June 30, 2026, from $13.7 million for the three months ended June 30, 2025. The increase was primarily due to a higher average balance of loans, partially offset by a decline in the average yield on loans to 6.06% from 6.14%. The decrease in average loan yield primarily reflected interest income recognized during the second quarter of 2025 upon the payoff of loans that had previously been classified as nonaccrual, which increased the prior-year period average yield, as well as lower yields on certain variable-rate loans following reductions in market interest rates. These decreases were partially offset by new loan originations at higher interest rates and upward repricing of certain on variable-rate loans.
Current report
Interest and dividends on investments increased $64 thousand, or 52.0%, to $187 thousand for the three months ended June 30, 2026, compared to $123 thousand for the three months ended June 30, 2025. The increase was due to a 69 basis point increase in average yield to 4.53% from 3.84% resulting from the receipt of a dividend paid from our equity investment in the second quarter of 2026, as well as an increase in the average balance of investments to $16.6 million from $12.8 million, reflecting the new $5.0 million equity investment partially offset by the continued paydown of the AFS and HTM investment portfolio.
Current report
YTD 2026 vs. YTD 2025. Total interest income increased $688 thousand, or 2.4%, to $29.3 million for the six months ended June 30, 2026, from $28.6 million for the six months ended June 30, 2025, due to higher average balances on our loans and cash and cash equivalents, a six basis points increase in average yield on loans and a higher average balance of investments. These increases were partially offset by a seven basis point decline in average yield on investments and a 71 basis point decline in average yield on cash and cash equivalents.
Current report
Interest income on loans increased $800 thousand, or 3.0%, to $27.1 million for the six months ended June 30, 2026, compared to $26.3 million for the six months ended June 30, 2025, primarily driven by a six basis point increase in the average yield on loans and a higher average balance. The average yield on total loans was 5.98% for the six months ended June 30, 2026, compared to 5.92% for the six months ended June 30, 2025. The average yield on total loans increased primarily due to variable-rate loans that repriced earlier in the year at higher market interest rates and new loan originations at higher interest rates, partially offset by the recognition of interest income from the payoff of loans previously on nonaccrual during the prior year and subsequent reductions in rates for loans with indexes tied to the Prime rate. The average balance of total loans was $913.0 million for the six months ended June 30, 2026, compared to $895.9 million for the six months ended June 30, 2025.
Current report
Interest and dividends on investments increased $52 thousand, or 22.4%, to $284 thousand for the six months ended June 30, 2026, compared to $232 thousand for the six months ended June 30, 2025. The increase was due to an increase in the average balance of investments to $16.1 million from $12.9 million, reflecting the new $5.0 million equity investment partially offset by the continued paydown of the AFS and HTM investment portfolio. This increase was partially offset by a seven basis point decline in average yield to 3.56% from 3.63% due to larger paydowns on higher yielding investments offset by the receipt of a dividend paid from our equity investment in the second quarter of 2026.
Current report
Interest income on cash and cash equivalents decreased $164 thousand, or 7.8%, to $1.9 million for the six months ended June 30, 2026, compared to $2.1 million for the six months ended June 30, 2025. The decrease was due to a 71 basis point decline in the average yield on cash and cash equivalents to 3.57% from 4.28%, which more than offset the benefit from a higher average balance of cash and cash equivalents. The decline in average yield was primarily attributable to lower market interest rates generally. The average balance of cash and cash equivalents increased to $109.7 million for the six months ended June 30, 2026, compared to $99.3 million for the same period in 2025, partially offset by the repayment of FHLB advances and the redemption of $4.0 million of subordinated debt during the fourth quarter of 2025. (Refer to “Net Interest Income” below for additional detail regarding the interest rate environment.)
Current report
YTD 2026 vs. YTD 2025. Total interest expense decreased $622 thousand, or 5.5%, to $10.7 million for the six months ended June 30, 2026, from $11.3 million for the six months ended June 30, 2025. Interest expense on deposits decreased $330 thousand, or 3.2%, to $10.1 million for the six months ended June 30, 2026, compared to $10.4 million for the six months ended June 30, 2025. The decrease was primarily the result of lower average rates paid on all categories of interest-bearing deposits, as well as a lower average balance of demand and NOW accounts, partially offset by an increase in the average balance of savings and money market accounts and certificate accounts. The average cost of total deposits decreased 18 basis points to 2.17% for the six months ended June 30, 2026, from 2.35% for the six months ended June 30, 2025.
Current report
Interest expense on borrowings, comprised solely of FHLB advances, was $198 thousand for the six months ended June 30, 2026, compared to $529 thousand for the six months ended June 30, 2025, reflecting the decreased use of FHLB advances to supplement our liquidity needs. The average cost of FHLB advances decreased nine basis points to 4.18% for the six months ended June 30, 2026, compared to 4.27% for the same period in 2025. The average cost of FHLB advances declined due to same reason noted above in the quarterly comparison. The average balance of FHLB advances was $9.6 million for the six months ended June 30, 2026, compared to $25.0 million for the six months ended June 30, 2025, due to the payoff of an FHLB advance during the fourth quarter of 2025. Interest expense on subordinated notes was $375 thousand for the six months ended June 30, 2026 and $336 thousand for the six months ended June 30, 2025. The increase was due to the same reasons noted above in the quarterly comparison.
Current report
YTD 2026 vs. YTD 2025. Net interest income increased $1.3 million, or 7.6%, to $18.6 million for the six months ended June 30, 2026, from $17.3 million for the six months ended June 30, 2025. Net interest margin (annualized) was 3.62% and 3.47% for the six months ended June 30, 2026 and 2025, respectively. The increases in net interest income and net interest margin primarily were due to lower average funding costs, higher average loan balances, and improved loan yields during the current six-month period, primarily reflecting repricing of variable-rate loans and new loan originations at higher rates, partially offset by the decline in loan yields during the second quarter of 2026 as described above.
Current report
The increases in net interest income and net interest margin primarily were due to the lower average cost of funding and the increase in average loan balances and yields, as described above in the quarterly comparison.
Current report
A release of provision for credit losses of $100 thousand was recorded for the six months ended June 30, 2026, compared to a release of the provision for credit losses of $33 thousand for the six months ended June 30, 2025. The release of provision for credit losses during the current year period was due primarily to the same reasons noted above in the quarterly comparison. During the prior year period, the release of the provision for credit losses on loans primarily related to a reduction in qualitative adjustments reflecting improved credit quality and a decrease in unfunded loan commitments, partially offset by growth in the balance of the loan portfolio and a qualitative adjustment applied to certain loan segments related to uncertainty in the market and concentrations. Net charge-offs for the six months ended June 30, 2026 totaled $49 thousand, compared to $42 thousand for the six months ended June 30, 2025.
Current report
The increase in noninterest income during the current quarter compared to the quarter ended June 30, 2025, was primarily as a result of:
Current report
•a $199 thousand improvement in the fair value adjustment on mortgage servicing rights, primarily due to changes in valuation assumptions, including the increase in the cost of servicing assumption recorded in the prior year quarter that did not recur in the current quarter and slower estimated prepayment speeds resulting from higher market interest rates during the current quarter, partially offset by the impact of a smaller servicing portfolio;
Current report
•a $8 thousand increase in other income due to costs associated with closing our Tacoma branch in the second quarter of 2026; and
Current report
Total noninterest income increased $121 thousand, or 5.5%, to $2.3 million for the six months ended June 30, 2026, as compared to $2.2 million for the six months ended June 30, 2025, as reflected below (dollars in thousands):
Current report
The increase in noninterest income during the current six-month period compared to the six months ended June 30, 2025, was primarily due to:
Current report
•a $158 thousand improvement in the fair value adjustment on mortgage servicing rights, for the same reasons noted above in the quarterly comparison; and
Current report
•a $41 thousand decrease in service charges and fee income, reflecting lower fees related to past due loans and loan payoff activity and a Mastercard volume incentive received in the first quarter of 2025, partially offset by increased interchange income; and
Current report
•a $61 thousand decrease in other income due to costs associated with closing our Tacoma branch in 2026.
Current report
The increase in noninterest expense during the current quarter compared to the quarter ended June 30, 2025 was primarily related to:
Current report
•a $324 thousand increase in salaries and benefits due to annual wage increases, lower deferred loan origination costs due to reduced loan growth, higher market valuations on our deferred compensation for key executives (partially offset by higher BOLI income recorded in noninterest income), and higher medical expense due to higher insurance premiums paid by the Company, partially offset by lower stock compensation expense and lower incentive compensation expense;
Current report
•a $78 thousand increase in data processing expense, primarily due to higher processing costs related to annual increases in software vendor contracts, increased application programming interface (“API”) and usage charges, and the addition of new features, such as fraud detection software, intended to lower operational losses.
Current report
•a $28 thousand decrease in occupancy expense, primarily due to lower building lease charges following the closure of our Tacoma branch during the second quarter of 2026.
Current report
Total noninterest expense increased $424 thousand, or 2.7%, to $16.0 million during the six months ended June 30, 2026, compared to $15.6 million during the six months ended June 30, 2025, as reflected below (dollars in thousands):
Current report
The increase in noninterest expense was primarily due to:
Current report
•a $187 thousand increase in salaries and benefits related to the same reasons noted above in the quarterly comparison;
Current report
•a $72 thousand increase in data processing expense, due to the reasons stated above in the quarterly comparison.
Current report
•a $38 thousand decrease in occupancy expense due to same reason noted above in the quarterly comparison.
Current report
Income Tax Expense. The provision for income taxes was $597 thousand and $1.0 million for the three and six months ended June 30, 2026, compared to $488 thousand and $779 thousand for the three and six months ended June 30, 2025, respectively. The effective tax rates for the three and six months ended June 30, 2026 were 19.17% and 19.34%, compared to 19.21% and 19.48% for the same periods in 2025.
Removed paragraphs (12)
Previous report
Net income increased $409 thousand, or 35.0%, to $1.6 million, or $0.61 per diluted common share, for the three months ended March 31, 2026, compared to $1.2 million, or $0.45 per diluted common share, for the three months ended March 31, 2025, reflecting strong growth in net interest income. The improvement was partially offset by higher provisions for credit losses, a modest decline in noninterest income, and slightly higher income taxes. Noninterest expenses remained relatively flat.
Previous report
Total interest income increased $759 thousand, or 5.5%, to $14.5 million for the three months ended March 31, 2026, from $13.7 million for the three months ended March 31, 2025, primarily due to higher average balances of loans and interest earning cash, and a 21 basis point increase in the average yield on loans, partially offset by a 70 basis point decline in the average yield on cash and cash equivalents.
Previous report
Interest income on loans increased $719 thousand, or 5.7%, to $13.3 million for the three months ended March 31, 2026, from $12.6 million for the three months ended March 31, 2025. The average yield on total loans rose to 5.90% for the three months ended March 31, 2026, from 5.69% for the three months ended March 31, 2025, primarily due to the origination of new loans at higher interest rates and upward repricing on variable-rate loans. The average balance of total loans was $914.1 million for the three months ended March 31, 2026, compared to $896.8 million for the three months ended March 31, 2025.
Previous report
Interest and dividends on investments decreased $11 thousand, or 10.2%, to $97 thousand for the three months ended March 31, 2026, compared to $108 thousand for the three months ended March 31, 2025. The decrease was primarily due to a decline in the average balance of investments to $11.7 million from $12.9 million, reflecting continued paydown of the investment portfolio, with a modest further impact from a three basis point decline in average yield to 3.36% from 3.39%.
Previous report
The decrease in noninterest income was primarily due to:
Previous report
•a $60 thousand decrease in service charges and fee income, primarily due to differences in the volume incentive paid by Mastercard in 2025 and 2026;
Previous report
•a $41 thousand increase in the fair value adjustment loss on mortgage servicing rights, reflecting a smaller servicing portfolio and changes in valuation assumptions related to servicing costs and interest rate movements; and
Previous report
•a $53 thousand decrease in other income due to estimated costs related to the Tacoma branch closure announced in the January 2026 and which closed in April 2026.
Previous report
While overall noninterest expense remained largely flat, there were fluctuations within certain expense categories, as noted below:
Previous report
•a $137 thousand decrease in salaries and benefits due to the impact of deferred compensation accruals for key executives and an increase in deferred salary costs associated with loan growth, partially offset by higher medical insurance premiums;
Previous report
•a $10 thousand decrease in occupancy expense, due to higher building lease charges in the first quarter of 2025 resulting from lease renewals and maintenance charges.
Previous report
Income Tax Expense. The provision for income taxes was $384 thousand for the three months ended March 31, 2026, compared to $291 thousand for the three months ended March 31, 2025. The effective tax rate decreased to 19.59% from 19.96% primarily because the first quarter of 2025 included a taxable gain recognized in connection with the surrender and exchange of BOLI policies, which elevated the prior year effective tax rate and did not recur in the current quarter.
Reworded paragraphs (47)
Previous wording
Sound Community Bank’s deposits are insured up to applicable limits by the FDIC. At March 31, 2026, Sound Financial Bancorp, on a consolidated basis, had total assets of $1.11 billion, net loans held-for-portfolio of $912.9 million, deposits of $968.5 million and stockholders’ equity of $110.4 million. The common stock of Sound Financial Bancorp is listed on the NASDAQ Capital Market under the symbol “SFBC.” Our executive offices are located at 2400 3rd Avenue, Suite 150, Seattle, Washington, 98121.
Current wording
Sound Community Bank’s deposits are insured up to applicable limits by the FDIC. At June 30, 2026, Sound Financial Bancorp, on a consolidated basis, had total assets of $1.07 billion, net loans held-for-portfolio of $883.5 million, deposits of $930.9 million and stockholders’ equity of $112.6 million. The common stock of Sound Financial Bancorp is listed on the NASDAQ Capital Market under the symbol “SFBC.” Our executive offices are located at 2400 3rd Avenue, Suite 150, Seattle, Washington, 98121.
Previous wording
General. Total assets increased $19.9 million, or 1.8%, to $1.11 billion at March 31, 2026 from $1.09 billion at December 31, 2025. The increase was primarily a result of higher balance of loans held-for-portfolio and a new equity investment in the first quarter of 2026.
Current wording
General. Total assets decreased $26.4 million, or 2.4%, to $1.07 billion at June 30, 2026 from $1.09 billion at December 31, 2025. The decrease was primarily the result of an $18.4 million decrease in cash and cash equivalents and a $13.4 million decrease in loans held-for-portfolio, net, partially offset by a $5.0 million increase in equity securities.
Previous wording
Cash and Cash Equivalents, and Investment Securities. Cash and cash equivalents decreased $469.0 thousand, or 0.3%, to $138.0 million at March 31, 2026 from $138.5 million at December 31, 2025. The decrease reflects cash deployed into higher-yielding assets, primarily loans held-for-portfolio and a new $5.0 million equity investment, partially offset by higher deposit balances.
Current wording
Cash and Cash Equivalents, and Investment Securities. Cash and cash equivalents decreased $18.4 million, or 13.3%, to $120.1 million at June 30, 2026 from $138.5 million at December 31, 2025. The decrease reflects lower deposits, repayment of FHLB borrowings, and a new $5.0 million equity investment, partially offset by cash flows from lower loan balances resulting from loan repayments exceeding new originations.
Previous wording
Investment securities decreased $190 thousand, or 2.0%, to $9.4 million at March 31, 2026, compared to $9.6 million at December 31, 2025. Held-to-maturity securities totaled $1.9 million at both March 31, 2026 and December 31, 2025. Available-for-sale securities totaled $7.5 million at March 31, 2026, compared to $7.7 million at December 31, 2025. The decrease in available-for-sale securities was related to principal paydowns or payoffs, as well as decreases in fair value.
Current wording
Investment securities decreased $140 thousand, or 1.5%, to $9.5 million at June 30, 2026, compared to $9.6 million at December 31, 2025. Held-to-maturity securities totaled $1.9 million at both June 30, 2026 and December 31, 2025. Available-for-sale securities totaled $7.6 million at June 30, 2026, compared to $7.7 million at December 31, 2025. The decrease in available-for-sale securities was related to principal paydowns or payoffs, partially offset by changes in fair value.
Previous wording
Equity securities totaled $5.0 million at March 31, 2026, compared to zero at both December 31, 2025 and March 31, 2025. The increase primarily related to the strategic decision to deploy some of our interest-earning cash into a higher yielding Community Reinvestment Act (“CRA”)-eligible workforce housing equity investment in the first quarter of 2026. While this investment carries more risk, the level of investment remains low compared to our total assets and partially replaces the runoff of our CRA-eligible available-for-sale debt securities over the past few years.
Current wording
Equity securities totaled $5.0 million at both June 30, 2026 and March 31, 2026, compared to zero at June 30, 2025. The increase primarily related to the decision to deploy some of our interest-earning cash into a higher yielding Community Reinvestment Act (“CRA”)-eligible workforce housing equity investment in the first half of 2026. While this investment has different risk characteristics than our prior CRA-eligible available-for-sale debt securities, the level of investment remains low compared to our total assets and partially replaces the runoff of those securities over the past few years.
Previous wording
Loans. Loans held-for-portfolio, net increased $16.0 million, or 1.8%, to $912.9 million at March 31, 2026, from $896.9 million at December 31, 2025.
Current wording
Loans. Loans held-for-portfolio, net decreased $13.4 million, or 1.5%, to $883.5 million at June 30, 2026, from $896.9 million at December 31, 2025.
Previous wording
The increase in total loans held-for-portfolio was driven primarily by a $21.6 million, or 43.0%, increase in construction and land loans largely due to new project loan originations in the current quarter. Given the growth in this loan category and current macroeconomic uncertainty, we have applied qualitative adjustments to our ACL for construction and land loans, as discussed further in the “Allowance for Credit Losses” section below. Home equity loans increased by $435 thousand, or 1.4%, as demand for this product remains high with homeowners utilizing their home equity lines to access liquidity as opposed to paying off their lower rate mortgages. The growth in these segments of the portfolio was partially offset by decreases in one-to-four-family loans and floating home loans of $2.7 million and $2.4 million, respectively, or 1.1% and 2.7%, primarily due to loan repayments exceeding new originations.
Current wording
The decrease in total loans held-for-portfolio was driven primarily by a decrease of $27.9 million, or 6.8%, in commercial and multifamily loans as a result of two large loans paying off early which had lower yields than our FRB cash balances and which resulted in prepayment penalties. Additional decreases in one-to-four-family loans and other consumer loans of $9.7 million and $2.7 million, respectively, or 3.8% and 16.5%, occurred primarily due to loan repayments exceeding new originations. The declines in these segments of the portfolio were partially offset by a $25.9 million, or 51.5%, increase in construction and land loans largely due to new project loan originations in the current period. Constructions and land loans generally involve greater credit risk than completed commercial real estate loans due to increased exposure to construction execution, market demand, and project completion risks. Given the growth in this loan category and current macroeconomic uncertainty, we applied qualitative adjustments to our ACL for construction and land loans beginning in the first quarter of 2026, as discussed further in the “Allowance for Credit Losses” section below. Home equity loans increased by $639 thousand, or 2.0%, as demand for this product remains high with homeowners utilizing their home equity lines to access liquidity as opposed to paying off their lower rate mortgages.
Previous wording
At March 31, 2026, our loan portfolio, net of deferred loan fees, remained well-diversified. At that date, commercial and multifamily real estate loans accounted for 44.4% of total loans, one-to-four family loans, including home equity loans, accounted for 30.6% of total loans, commercial business loans accounted for 1.6% of total loans, and consumer loans, consisting of manufactured homes, floating homes, and other consumer loans, accounted for 15.6% of total loans. Construction and land loans accounted for 7.8% of total loans at March 31, 2026.
Current wording
At June 30, 2026, our loan portfolio, net of deferred loan fees, remained diversified across multiple loan categories. At that date, commercial and multifamily real estate loans accounted for 42.7% of total loans, one-to-four family loans, including home equity loans, accounted for 30.9% of total loans, commercial business loans accounted for 1.8% of total loans, and consumer loans, consisting of manufactured homes, floating homes, and other consumer loans, accounted for 16.1% of total loans. Construction and land loans accounted for 8.5% of total loans at June 30, 2026.
Previous wording
Loans held-for-sale totaled $281 thousand at March 31, 2026, compared to $542 thousand at December 31, 2025. The decrease was primarily due to timing of mortgage originations and sales.
Current wording
Loans held-for-sale totaled $1.6 million at June 30, 2026, compared to $542 thousand at December 31, 2025. The increase was primarily due to timing of mortgage originations and sales, as well as increased volume of saleable loans throughout the first half of 2026.
Previous wording
Our ACL — loans increased $30 thousand, or 0.3%, to $8.6 million at March 31, 2026, from $8.6 million at December 31, 2025. The increase in the ACL - loans was primarily a result of an increase in the balance of our loan portfolio, as well as higher reserves on our portfolio of construction loan and land loans due to qualitative adjustments for uncertainty in market conditions and concentrations, partially offset by improvement in other consumer past due loans and commercial construction collateral values. See “Comparison of Results of Operations for the Three Months Ended March 31, 2026 and 2025 — Provision for Credit Losses.”
Current wording
Our ACL - loans decreased $185 thousand, or 2.1%, to $8.4 million at June 30, 2026, from $8.6 million at December 31, 2025. The decrease in the ACL - loans was primarily a result of a decrease in the balance of our loan portfolio, as well as changes in the composition of our loan portfolio, including changes in the relative mix of construction and land loans and other loan categories with differing loss rates, partially offset by higher reserves on our portfolio of construction loan and land loans due to qualitative adjustments for uncertainty in market conditions and concentrations added in the first quarter of 2026. See “Comparison of Results of Operations for the Three and Six Months Ended June 30, 2026 and 2025 — Provision for Credit Losses.”
Previous wording
The ratio of ACL - loans to nonaccrual loans decreased to 117.0% at March 31, 2026, from 148.8% at December 31, 2025, reflecting the increase in nonaccrual loans during the quarter. Despite this decrease, we believe our allowance remains adequate given the collateralized nature of the nonaccrual loans and the overall performance of our loan portfolio.
Current wording
The ratio of ACL - loans to nonaccrual loans decreased to 104.53% at June 30, 2026, from 148.82% at December 31, 2025, reflecting the increase in nonaccrual loans during the period. Despite this decrease, we believe our allowance remains adequate given the collateralized nature of the nonaccrual loans and the overall performance of our loan portfolio.
Previous wording
Nonperforming assets (“NPAs”), which were comprised of nonperforming loans (nonaccrual loans and nonperforming modified loans), other real estate owned (“OREO”) and repossessed assets, increased $1.4 million, or 22.1%, to $7.5 million, or 0.67% of total assets, at March 31, 2026 from $6.1 million, or 0.56% of total assets, at December 31, 2025.
Current wording
Nonperforming assets (“NPAs”), which were comprised of nonperforming loans (nonaccrual loans and nonperforming modified loans), other real estate owned (“OREO”) and repossessed assets, increased $2.0 million, or 32.3%, to $8.1 million, or 0.76% of total assets, at June 30, 2026 from $6.1 million, or 0.56% of total assets, at December 31, 2025.
Previous wording
The increase in NPAs from December 31, 2025 was primarily due to the placement of $1.8 million of loans on nonaccrual status during the quarter, including one multifamily real estate loan of $1.1 million. These additions were partially offset by loan repayments, the return of certain credits to accrual status, and the sale of OREO properties. The percentage of nonperforming loans to total loans was 0.80% at March 31, 2026, compared to 0.64% at December 31, 2025.
Current wording
The increase in NPAs from December 31, 2025 was primarily due to the placement of $2.7 million of loans on nonaccrual status during the period, including one multifamily real estate loan of $1.1 million, three one-to-four family home loans totaling $976 thousand, and one home equity loan totaling $251 thousand, with the remaining additions comprised of manufactured housing, land and other consumer loans. These additions were partially offset by loan repayments, the return of certain credits to accrual status, and the sale of OREO properties. The percentage of nonperforming loans to total loans was 0.90% at June 30, 2026, compared to 0.64% at December 31, 2025.
Previous wording
We believe the collateral value of the multifamily real estate loan placed on nonaccrual status during the quarter is sufficient to minimize loss exposure. We continue to monitor this credit and other nonaccrual loans closely. While we believe the increase in nonperforming loans reflects isolated credit events rather than a systemic portfolio trend, we remain attentive to macroeconomic conditions that may affect borrower performance.
Current wording
We believe the collateral value of the multifamily real estate loan and three one-to-four family loans placed on nonaccrual status during the period is sufficient to minimize loss exposure. We continue to monitor these credits and other nonaccrual loans closely. While we believe the increase in nonperforming loans primarily reflects specific borrower circumstances rather than broader deterioration in portfolio credit quality, we remain attentive to macroeconomic conditions that may affect borrower performance.
Previous wording
Mortgage Servicing Rights. The fair value of mortgage servicing rights decreased $87 thousand, or 2.1%, to $4.1 million at March 31, 2026 from $4.2 million at December 31, 2025. The decrease was primarily related to a decline in the size of our mortgage servicing portfolio and modest changes in valuation assumptions, including prepayment speed assumptions reflecting current interest rate expectations. We record mortgage servicing rights on loans sold with servicing retained and upon acquisition of a servicing portfolio. Mortgage servicing rights are carried at fair value. If the fair value of our mortgage servicing rights fluctuates significantly, our financial results could be materially impacted.
Current wording
Mortgage Servicing Rights. The fair value of mortgage servicing rights increased $94 thousand, or 2.2%, to $4.3 million at June 30, 2026 from $4.2 million at December 31, 2025. The increase was primarily related to changes in valuation assumptions, including prepayment speed assumptions reflecting current interest rate expectations, partially offset by a decline in the size of our mortgage servicing portfolio. We record mortgage servicing rights on loans sold with servicing retained and upon acquisition of a servicing portfolio. Mortgage servicing rights are carried at fair value. If the fair value of our mortgage servicing rights fluctuates significantly, our financial results could be materially impacted.
Previous wording
Deposits and Borrowings. Total deposits increased $19.6 million, or 2.1%, to $968.5 million at March 31, 2026 from $948.9 million at December 31, 2025. This increase was primarily due to seasonal fluctuations in customer account balances, new client deposits, and higher balances from large depositors. Noninterest-bearing deposits decreased $1.5 million, or 1.1%, to $131.1 million at March 31, 2026, compared to $132.6 million at December 31, 2025. This decline was primarily the result of normal daily fluctuations in customer account balances, reflecting routine activity rather than significant changes in overall deposit levels. Noninterest-bearing deposits represented 13.5% of total deposits at March 31, 2026, compared to 14.0% at December 31, 2025.
Current wording
Deposits and Borrowings. Total deposits decreased $18.0 million, or 1.9%, to $930.9 million at June 30, 2026 from $948.9 million at December 31, 2025. This decrease was primarily due to seasonal fluctuations in customer account balances and the managed reduction of certain higher-cost deposits, including reciprocal deposits. Noninterest-bearing deposits decreased $3.2 million, or 2.4%, to $129.3 million at June 30, 2026, compared to $132.6 million at December 31, 2025. This decline was primarily the result of normal daily fluctuations in customer account balances, reflecting routine activity rather than significant changes in overall deposit levels. Noninterest-bearing deposits represented 13.9% of total deposits at June 30, 2026, compared to 14.0% at December 31, 2025.
Previous wording
The aggregate amount of time deposits in denominations of more than $250,000 at March 31, 2026 and December 31, 2025, totaled $106.8 million and $112.4 million, respectively. Deposit amounts in excess of $250,000 are not federally insured. As of March 31, 2026, uninsured deposits totaled $197.9 million, which represented 20.4% of total deposits, as compared to uninsured deposits of $184.7 million, or 19.5% of total deposits as of December 31, 2025. The uninsured amounts are estimates based on the methodologies and assumptions used for the Bank’s regulatory reporting requirements. The increase in the balance of uninsured deposits primarily related to jumbo tier pricing offered on some of our deposit products, as well as normal fluctuations within deposit accounts.
Current wording
The aggregate amount of time deposits in denominations of more than $250,000 at June 30, 2026 and December 31, 2025, totaled $104.8 million and $112.4 million, respectively. Deposit amounts in excess of $250,000 are not federally insured. As of June 30, 2026, uninsured deposits totaled $188.9 million, which represented 20.3% of total deposits, as compared to uninsured deposits of $184.7 million, or 19.5% of total deposits as of December 31, 2025. The uninsured amounts are estimates based on the methodologies and assumptions used for the Bank’s regulatory reporting requirements. The increase in the balance of uninsured deposits primarily related to jumbo tier pricing offered on some of our deposit products, as well as normal fluctuations within deposit accounts.
Previous wording
Borrowings, comprised of FHLB advances, were $10.0 million at both March 31, 2026 and December 31, 2025. FHLB advances are primarily used to support organic loan growth and to maintain liquidity ratios in line with our asset/liability objectives. A single FHLB advance outstanding at March 31, 2026 matures in early 2028. Subordinated notes, net totaled $7.8 million at both March 31, 2026 and December 31, 2025.
Current wording
Borrowings, comprised of FHLB advances, were zero at June 30, 2026 and $10.0 million at December 31, 2025. FHLB advances are primarily used to support organic loan growth and to maintain liquidity ratios in line with our asset/liability objectives. The single remaining FHLB advance at December 31, 2025 was scheduled to mature in early 2028, which the Company repaid during the three months ended June 30, 2026. Subordinated notes, net totaled $7.8 million at both June 30, 2026 and December 31, 2025.
Previous wording
Stockholders’ Equity. Total stockholders’ equity increased $1.0 million, or 0.9%, to $110.4 million at March 31, 2026, from $109.4 million at December 31, 2025. This increase primarily reflects $1.6 million of net income earned during the three months ended March 31, 2026, partially offset by the payment of $541 thousand in cash dividends to stockholders and an $80 thousand increase in accumulated other comprehensive loss, net of tax.
Current wording
Stockholders’ Equity. Total stockholders’ equity increased $3.2 million, or 2.9%, to $112.6 million at June 30, 2026, from $109.4 million at December 31, 2025. This increase primarily reflects $4.1 million of net income earned during the six months ended June 30, 2026, partially offset by the payment of $1.1 million in cash dividends to stockholders and a $47 thousand decrease in accumulated other comprehensive loss, net of tax.
Previous wording
Comparison of Results of Operation for the Three Months Ended March 31, 2026 and 2025
Current wording
Comparison of Results of Operation for the Three and Six Months Ended June 30, 2026 and 2025
Previous wording
Interest income on cash and cash equivalents increased $51 thousand, or 5.0%, to $1.1 million for the three months ended March 31, 2026, compared to $1.0 million for the three months ended March 31, 2025. The increase was primarily due to a higher average balance of $120.7 million compared to $96.0 million for the same period in 2025, mainly attributable to higher deposit inflows and the repayment of borrowings and subordinated debt during the fourth quarter of 2025. The increase in average balance was partially offset by a 70 basis point decline in average yield to 3.57% from 4.27%, reflecting the lower market interest rate environment. (Refer to “Net Interest Income” below for additional detail regarding the interest rate environment.)
Current wording
Interest income on cash and cash equivalents decreased $215 thousand, or 19.6%, to $882 thousand for the three months ended June 30, 2026, compared to $1.1 million for the three months ended June 30, 2025. The decrease was primarily due to a 71 basis point decline in the average yield on cash and cash equivalents to 3.58% from 4.29%, reflecting the lower market interest rate environment. The decrease was also impacted by a lower average balance of $98.9 million compared to $102.6 million for the same period in 2025, reflecting the managed reduction of higher-cost reciprocal deposits and lower liquidity needs following the repayment of borrowings and subordinated debt. (Refer to “Net Interest Income” below for additional detail regarding the interest rate environment.)
Previous wording
Total interest expense decreased $217 thousand, or 3.9%, to $5.4 million for the three months ended March 31, 2026, from $5.6 million for the three months ended March 31, 2025. The decrease was primarily attributable to lower interest rates across most interest-bearing liabilities, resulting from lower market interest rates generally, partially offset by an increase in our average balance of interest-bearing liabilities.
Current wording
Q2 2026 vs Q2 2025. Total interest expense decreased $405 thousand, or 7.2%, to $5.3 million for the three months ended June 30, 2026, from $5.7 million for the three months ended June 30, 2025. The decrease was primarily attributable to lower interest rates across all interest-bearing liabilities excluding subordinated debt, resulting from lower market interest rates generally, partially offset by an increase in our average balance of interest-bearing liabilities and an increase in the rate paid on our subordinated debt.
Previous wording
Interest expense on certificate accounts declined $303 thousand, driven by a $379 thousand rate-related decrease, partially offset by a $76 thousand volume-related increase. The average balance of certificate accounts rose to $301.3 million for the three months ended March 31, 2026, from $293.0 million during the same period in 2025, while the average rate paid fell to 3.68% from 4.21%. The decline in the average rate reflected lower market interest rates and the repricing of maturing certificates into the current rate environment. In addition, interest expense on demand and NOW accounts decreased $26 thousand, due to both lower average balances and slightly lower rates. Interest expense on savings and money market accounts increased $248 thousand, or 12.1%, to $2.3 million for the three months ended March 31, 2026, from $2.1 million for the same period in 2025, primarily due to an increase in average balances to $388.6 million from $332.4 million, reflecting shifts in customer deposit preferences from certificate accounts into more liquid deposit products. This increase was partially offset by a 10 basis point decline in the average rate paid to 2.41% from 2.51%, as we implemented repricing strategies to manage overall funding costs.
Current wording
Interest expense on certificate accounts declined $156 thousand, driven by a $240 thousand rate-related decrease, partially offset by an $84 thousand volume-related increase. The average balance of certificate accounts rose to $299.7 million for the three months ended June 30, 2026, from $290.4 million during the same period in 2025, while the average rate paid fell to 3.62% from 3.95%. The decline in the average rate reflected lower market interest rates and the repricing of maturing certificates into the current rate environment. In addition, interest expense on demand and NOW accounts decreased $12 thousand, due to both lower average balances and slightly lower rates. Interest expense on savings and money market accounts decreased $81 thousand, or 3.6%, to $2.2 million for the three months ended June 30, 2026, from $2.3 million for the same period in 2025, primarily due to a 27 basis point decline in the average rate paid to 2.36% from 2.63%, as we implemented repricing strategies to manage overall funding costs. This decrease was partially offset by an increase in average balances to $370.4 million from $344.6 million, reflecting shifts in customer deposit preferences from certificate accounts into more liquid deposit products.
Previous wording
Interest expense on borrowings, comprised solely of FHLB advances, decreased $154 thousand , primarily due to a $14.4 million decline in average borrowings following the payoff of an FHLB advance during the fourth quarter of 2025. The average balance of FHLB advances was $10.6 million for the three months ended March 31, 2026, compared to $25.0 million for the three months ended March 31, 2025. The average rate paid on borrowings decreased ten basis points to 4.15% for the quarter ended March 31, 2026, compared to 4.25% for the same quarter in 2025. Interest expense on subordinated notes was $186 thousand for the three months ended March 31, 2026, compared to $168 thousand for the three months ended March 31, 2025. The increase was due to the debt converting to a variable-rate instrument that reprices on a quarterly basis from the previous fixed-rate period, partially offset by a lower average balance as a result of the paydown of $4.0 million of our subordinated debt balance in the fourth quarter of 2025.
Current wording
Interest expense on borrowings, comprised solely of FHLB advances, decreased $177 thousand, primarily due to a $16.4 million decline in average borrowings following the payoff of an FHLB advance during the fourth quarter of 2025. The average balance of FHLB advances was $9.6 million for the three months ended June 30, 2026, compared to $25.0 million for the three months ended June 30, 2025. The average rate paid on borrowings decreased 7 basis points to 4.21% for the quarter ended June 30, 2026, compared to 4.28% for the same quarter in 2025. Interest expense on subordinated notes was $189 thousand for the three months ended June 30, 2026, compared to $168 thousand for the three months ended June 30, 2025. The increase was due to the debt converting to a variable-rate instrument that reprices on a quarterly basis from the previous fixed-rate period, partially offset by a lower average balance as a result of the paydown of $4.0 million of our subordinated debt balance in the fourth quarter of 2025.
Previous wording
Net interest income increased $976 thousand, or 12.1%, to $9.0 million for the three months ended March 31, 2026, from $8.1 million for the three months ended March 31, 2025, driven by both growth in interest-earning asset balances and improvement in the net interest rate spread, reflecting higher loan yields and lower funding costs across most categories of interest-bearing liabilities. These changes were partially offset by a decrease in the average yield on investments and interest-bearing cash. Overall, the decline in average funding costs and increase in average yield on loans resulted in a 29 basis point improvement in the net interest rate spread and a 26 basis point increase in the annualized net interest margin, which rose to 3.51% for the three months ended March 31, 2026, compared to 3.25% for the same period in 2025.
Current wording
Q2 2026 vs Q2 2025. Net interest income increased $336 thousand, or 3.6%, to $9.6 million for the three months ended June 30, 2026, from $9.3 million for the three months ended June 30, 2025, driven by both growth in interest-earning asset balances and improvement in the net interest rate spread, reflecting the impact of higher average loan balances and the improvement in loan yields excluding the impact of prior-year nonaccrual loan activity, and lower funding costs across most categories of interest-bearing liabilities excluding subordinated debt. These changes were partially offset by a decrease in the average yield on investments and interest-bearing cash and an increase in the rate paid on our subordinated debt for the reasons noted above in “Interest Expense.” Overall, these changes resulted in a 10 basis point improvement in the net interest rate spread and a 7 basis point increase in the annualized net interest margin, which rose to 3.74% for the three months ended June 30, 2026, compared to 3.67% for the same period in 2025.
Previous wording
Through most of 2025, the Federal Open Market Committee of the Federal Reserve (“FOMC”) maintained the target range for the federal funds rate at 4.25% to 4.50%, where it remained until September 2025. The FOMC subsequently lowered the target range 75 basis points to 3.50% to 3.75% between September 2025 and December 2025. The FOMC maintained the target range for the federal funds rate through the first quarter of 2026. The lower interest rate environment has contributed to decreased funding costs, while loan yields have remained elevated due to repricing of variable-rate loans and higher rates on new loan originations.
Current wording
Through most of 2025, the Federal Open Market Committee of the Federal Reserve (“FOMC”) maintained the target range for the federal funds rate at 4.25% to 4.50%, where it remained until September 2025. The FOMC subsequently lowered the target range 75 basis points to 3.50% to 3.75% between September 2025 and December 2025. The FOMC maintained the target range for the federal funds rate through the first half of 2026. The lower interest rate environment has contributed to decreased funding costs, while loan yields have remained elevated due to repricing of variable-rate loans and higher rates on new loan originations.
Previous wording
The following table reflects the components of the provision for (release of) credit losses during the periods indicated (dollars in thousands):
Current wording
The following table reflects the components of the (release of) provision for credit losses during the periods indicated (dollars in thousands):
Previous wording
A provision for credit losses of $123 thousand was recorded for the quarter ended March 31, 2026, compared to a release of provision for credit losses of $203 thousand for the quarter ended March 31, 2025. The swing to a provision in the current quarter resulted primarily from annual updates to model assumptions that increased estimated loss factors, growth in the loan portfolio, and additional qualitative adjustments applied to the commercial loan segment, reflecting uncertainty surrounding geopolitical conditions and the potential impact of tariffs on our borrowers. Expected credit loss estimates consider various factors, including market conditions, borrower-specific information, projected delinquencies, and anticipated effects of economic trends on borrowers' ability to repay. Net charge-offs for the three months ended March 31, 2026 totaled $19 thousand, compared to $21 thousand for the three months ended March 31, 2025.
Current wording
A release of provision for credit losses of $223 thousand was recorded for the quarter ended June 30, 2026, compared to a provision for credit losses of $170 thousand for the quarter ended June 30, 2025. The release in the current quarter resulted primarily from a decrease in loan balances and annual updates to the model assumptions, including changes in certain economic assumptions, partially offset by additional qualitative adjustments applied to the commercial loan segments, reflecting increased uncertainty in market conditions surrounding geopolitical events, in addition to the uncertainty adjustment tied to the impact of tariffs and other external factors affecting our clients already applied to our consumer portfolio. Expected credit loss estimates consider various factors, including market conditions, borrower-specific information, projected delinquencies, and anticipated effects of economic trends on borrowers' ability to repay. Net charge-offs for the three months ended June 30, 2026 totaled $30 thousand, compared to $21 thousand for the three months ended June 30, 2025.
Previous wording
Noninterest Income. Total noninterest income decreased $188 thousand, or 17.1%, to $910 thousand for the three months ended March 31, 2026, as compared to $1.1 million for the three months ended March 31, 2025, as reflected below (dollars in thousands):
Current wording
Noninterest Income. Total noninterest income increased $309 thousand, or 27.6%, to $1.4 million for the three months ended June 30, 2026, as compared to $1.1 million for the three months ended June 30, 2025, as reflected below (dollars in thousands):
Previous wording
These decreases were partially offset by a $52 thousand increase in net gain on sale of loans due to an increase in the volume of loans sold.
Current wording
•a $68 thousand increase in net gain on sale of loans due to an increase in the volume of loans sold.
Previous wording
•a $21 thousand decrease in mortgage servicing income as a result of a smaller servicing portfolio;
Current wording
•a $38 thousand decrease in mortgage servicing income as a result of the portfolio paying down at a faster rate than originations replaced repayments;
Previous wording
•a $65 thousand decrease in earnings from BOLI, primarily due to a one-time benefit recognized in the first quarter of 2025 in connection with the surrender and exchange of existing policies into higher-yielding policies, which did not recur in the current quarter, partially offset by improved yields on the new policies;
Current wording
•a $16 thousand decrease in earnings on BOLI, primarily due to the strategic surrender and exchange of existing policies into higher-yielding policies in 2025, partially offset by changes due to market fluctuations;
Previous wording
Noninterest Expense. Total noninterest expense remained relatively unchanged during the three months ended March 31, 2026, compared to the three months ended March 31, 2025, as reflected below (dollars in thousands):
Current wording
Noninterest Expense. Total noninterest expense increased $463 thousand, or 6.0%, to $8.1 million during the three months ended June 30, 2026, compared to $7.7 million for the three months ended June 30, 2025, as reflected below (dollars in thousands):
Previous wording
These decreases were partially offset by a $136 thousand increase in operations expense, primarily due to higher costs associated with our debit card processing. These costs reflect higher transaction volumes and vendor rate adjustments and are expected to continue at a similar level in future quarters.
Current wording
•a $174 thousand increase in operations expense, primarily due to higher costs associated with our debit card processing; and
Previous wording
•a $23 thousand decrease in regulatory assessments, primarily due to reduced quarterly assessments resulting from a lower rate applied to a lower average asset balance; and
Current wording
•a $93 thousand decrease in regulatory assessments, primarily due to reduced quarterly assessments resulting from a lower rate applied to a lower average asset balance and the release of an accrual related to exam costs as actual costs incurred were lower than previously estimated; and
Previous wording
The efficiency ratio improved 723 basis points to 79.08% for the quarter ended March 31, 2026 from 86.31% for the same period in 2025, primarily reflecting significant growth in net interest income driven by lower funding costs and higher loan yields.
Current wording
The efficiency ratio improved 12 basis points to 73.76% for the quarter ended June 30, 2026 from 73.88% for the same period in 2025, primarily reflecting modest growth in net interest income driven by lower funding costs and growth in average loan balances, partially offset by lower yields on interest-earning assets.
Previous wording
The Management’s Discussion and Analysis in Item 7 of the Company’s 2025 Form 10-K contains an overview of Sound Financial Bancorp’s and the Bank’s liquidity management, sources of liquidity and cash flows. Although there have been no material changes in our liquidity management, sources of liquidity and cash flows since December 31, 2025, this discussion updates that disclosure for the three months ended March 31, 2026.
Current wording
The Management’s Discussion and Analysis in Item 7 of the Company’s 2025 Form 10-K contains an overview of Sound Financial Bancorp’s and the Bank’s liquidity management, sources of liquidity and cash flows. Although there have been no material changes in our liquidity management, sources of liquidity and cash flows since December 31, 2025, this discussion updates that disclosure for the six months ended June 30, 2026.
Previous wording
Capital. Stockholders’ equity totaled $110.4 million at March 31, 2026 and $109.4 million at December 31, 2025. In addition to net income of $1.6 million, other sources of capital during the three months ended March 31, 2026 included $57 thousand related to stock-based compensation and $3 thousand in proceeds from stock option exercises. Uses of capital during the three months ended March 31, 2026 primarily included $541 thousand of dividends paid on common stock and an $80 thousand increase in accumulated other comprehensive loss, net of tax, primarily resulting from additional unrealized losses on available-for-sale securities.
Current wording
Capital. Stockholders’ equity totaled $112.6 million at June 30, 2026 and $109.4 million at December 31, 2025. The increase primarily reflected net income of $4.1 million, $106 thousand of related to stock-based compensation, and a $47 thousand decrease in accumulated other comprehensive loss, net of tax, primarily resulting from lower unrealized losses on available-for-sale securities, partially offset by $1.1 million of dividends paid on common stock.
Previous wording
We paid cash dividends of $0.21 per common share during the three months ended March 31, 2026, compared to $0.19 per common share during the three months ended March 31, 2025, which equates to a dividend payout ratio of 34.33% and 41.73%, respectively. The Company expects to continue paying quarterly cash dividends on its common stock, subject to the Board of Directors' discretion to change this practice at any time and for any reason, without prior notice. Assuming continued payment of the regular quarterly cash dividend during the remainder of 2026 at the rate of $0.21 per share, our average total dividend paid each quarter would be approximately $539 thousand based on the number of outstanding shares as of March 31, 2026.
Current wording
We paid cash dividends of $0.42 per common share during the six months ended June 30, 2026, compared to $0.38 per common share during the six months ended June 30, 2025, which equates to a dividend payout ratio of 26.35% and 30.26%, respectively. The Company expects to continue paying quarterly cash dividends on its common stock, subject to the Board of Directors' discretion to change this practice at any time and for any reason, without prior notice. Assuming the Board’s continued payment of the regular quarterly cash dividend during the remainder of 2026 at the rate of $0.21 per share, our average total dividend paid each quarter would be approximately $539 thousand based on the number of outstanding shares as of June 30, 2026.
Previous wording
Liquidity. Liquidity measures the ability to meet current and future cash flow needs. The liquidity of a financial institution reflects its ability to meet loan requests, accommodate possible outflows in deposits and take advantage of potential opportunities presented by changes in market interest rates. The ability of a financial institution to meet its current financial obligations is a function of its balance sheet structure, its ability to liquidate assets and its access to alternative sources of funds. The objective of our liquidity management is to manage cash flows and liquidity reserves so that they are adequate to fund our operations and to meet obligations and other commitments on a timely basis and at a reasonable cost. We seek to achieve this objective and ensure that our funding needs are met by maintaining an appropriate level of liquid funds through asset/liability management, which includes managing the mix and time to maturity of financial assets and financial liabilities on our balance sheet. Our liquidity position is enhanced by our ability to raise additional funds as needed in the wholesale markets.
Current wording
Liquidity. Liquidity measures our ability to meet current and future cash flow needs. The liquidity of a financial institution reflects its ability to meet loan demand, accommodate deposit withdrawals and take advantage of opportunities presented by changes in market interest rates. Our ability to meet financial obligations depends on the composition of our balance sheet, the liquidity of our assets and access to alternative funding sources. The objective of our liquidity management is to manage cash flows and liquidity reserves so that they are adequate to fund our operations and to meet obligations and other commitments on a timely basis and at a reasonable cost. We seek to achieve this objective and ensure that our funding needs are met by maintaining an appropriate level of liquid funds through asset/liability management, which includes managing the mix and time to maturity of financial assets and financial liabilities on our balance sheet. Our liquidity position is enhanced by our ability to raise additional funds as needed in the wholesale markets.
Showing the first 40 of 47 pairs. Open the source sections for the rest.
Rearranged current paragraphs (5)
Current report — wording carried from elsewhere
(1) Calculated net of deferred loan fees, loan discounts and loans in process.
Current report — wording carried from elsewhere
(2) Total funding is the sum of average interest-bearing liabilities and average noninterest-bearing deposits. The cost of total funding is calculated as annualized total interest expense divided by total funding.
Current report — wording carried from elsewhere
•a $119 thousand increase in net gain on sale of loans due to an increase in the volume of loans sold.
Current report — wording carried from elsewhere
•a $310 thousand increase in operations expense, primarily due to higher costs associated with our debit card processing; and
Current report — wording carried from elsewhere
•a $115 thousand decrease in regulatory assessments, due to reduced quarterly assessments resulting from a lower rate applied to a lower average asset balance and the release of an accrual related to exam costs as actual costs incurred were lower than previously estimated; and
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
Stock and Subordinated Notes) and (ii) operating leases (Note 10—Leases). See the discussion below for information regarding commitments to extend credit and standby letters of credit.