| Comments from the Chief Executive Officer and President / Chief Financial Officer |
“Economic uncertainty and increasing rates are influencing business and consumer loan demand again this quarter. Given slower growth, our strong capital position and the reduced Community Bank Leverage Ratio requirement, we continued our efforts to reduce higher-cost debt, including the repayment of our remaining subordinated debt subsequent to quarter-end. Consistent balance sheet management is key to our steady performance in the third quarter, much like last quarter,” remarked
"Third-quarter results demonstrate continued progress in improving the underlying economics of our balance sheet. Net interest margin increased to 3.76%, compared to 3.74% the prior quarter and 3.48% a year ago, while our average cost of deposits declined to 2.11% from 2.15% last quarter and 2.32% a year ago. Year-to-date earnings increased 30.5% compared to the prior year. We also continued to reduce higher-cost funding, including repayment of approximately
| Q3 2026 Financial Performance | |||
| Total assets decreased Loans held-for-portfolio decreased Total deposits decreased The loans-to-deposits ratio was 97.1% at Total nonperforming loans increased | Net interest income decreased Net interest margin ("NIM"), annualized, was 3.76% for the quarter ended A $282 thousand release of provision for credit losses was recorded for the quarter ended Total noninterest income decreased Total noninterest expense decreased The Bank maintained capital levels in excess of regulatory requirements and was categorized as "well-capitalized" at | ||
Operating Results
Net Interest Income after Provision for Credit Losses
| For the Quarter Ended | Q3 2026 vs. Q2 2026 | Q3 2026 vs. Q3 2025 | |||||||||||||||||||||||
2026 | 2026 | 2025 | Amount ($) | Percentage (%) | Amount ($) | Percentage (%) | |||||||||||||||||||
| (Dollars in thousands, unaudited) | |||||||||||||||||||||||||
| Interest income | $ | 14,478 | $ | 14,846 | $ | 14,652 | $ | (368 | ) | (2.5 | )% | $ | (174 | ) | (1.2 | )% | |||||||||
| Interest expense | 4,988 | 5,255 | 5,712 | (267 | ) | (5.1 | )% | (724 | ) | (12.7 | )% | ||||||||||||||
| Net interest income | 9,490 | 9,591 | 8,940 | (101 | ) | (1.1 | )% | 550 | 6.2 | % | |||||||||||||||
| (Release of) Provision for credit losses | (282 | ) | (223 | ) | 55 | (59 | ) | 26.5 | % | (337 | ) | (612.7 | )% | ||||||||||||
| Net interest income after provision for credit losses | $ | 9,772 | $ | 9,814 | $ | 8,885 | $ | (42 | ) | (0.4 | )% | $ | 887 | 10.0 | % | ||||||||||
Q3 2026 vs. Q2 2026
Interest income decreased
Interest income on loans decreased
Interest income on investments was
Interest expense decreased
Net interest margin, annualized, increased to 3.76% for the quarter ended
A release of provision for credit losses of $282 thousand was recorded for the quarter ended
Q3 2026 vs. Q3 2025
Interest income on loans decreased
Interest income on investments was
Interest expense decreased
Subsequent to
Net interest margin, annualized, increased to 3.76% for the quarter ended
A release of provision for credit losses of $282 thousand was recorded for the quarter ended
Noninterest Income
| For the Quarter Ended | Q3 2026 vs. Q2 2026 | Q3 2026 vs. Q3 2025 | ||||||||||||||||||||||||
2026 | 2026 | 2025 | Amount ($) | Percentage (%) | Amount ($) | Percentage (%) | ||||||||||||||||||||
| (Dollars in thousands, unaudited) | ||||||||||||||||||||||||||
| Service charges and fee income | $ | 711 | $ | 684 | $ | 672 | $ | 27 | 3.9 | % | $ | 39 | 5.8 | % | ||||||||||||
| Earnings on bank-owned life insurance (“BOLI”) | 142 | 277 | 225 | (135 | ) | (48.7 | )% | (83 | ) | (36.9 | )% | |||||||||||||||
| Mortgage servicing income | 249 | 245 | 262 | 4 | 1.6 | % | (13 | ) | (5.0 | )% | ||||||||||||||||
| Fair value adjustment on mortgage servicing rights | (105 | ) | 119 | (372 | ) | (224 | ) | (188.2 | )% | 267 | (71.8 | )% | ||||||||||||||
| Net gain on sale of loans | 145 | 112 | 94 | 33 | 29.5 | % | 51 | 54.3 | % | |||||||||||||||||
| Other income | (3 | ) | (8 | ) | — | 5 | (62.5 | )% | (3 | ) | — | % | ||||||||||||||
| Total noninterest income | $ | 1,139 | $ | 1,429 | $ | 881 | $ | (290 | ) | (20.3 | )% | $ | 258 | 29.3 | % | |||||||||||
Q3 2026 vs. Q2 2026
Noninterest income during the third quarter of 2026 decreased
- a
$224 thousand decrease in the fair value adjustment on mortgage servicing rights, primarily due to changes in market valuation assumptions during the third quarter, including an increase in the cost of servicing assumption and the impact of a smaller servicing portfolio; and - a
$135 thousand decrease in earnings on BOLI, primarily due to lower market valuation in the current quarter.
The decreases were partially offset by:
- a
$33 thousand increase in gain on sale of loans, primarily due to higher loan origination volumes in the current quarter; and - a
$27 thousand increase in service charges and fee income, primarily due to an increase in the collection of loan late fees and deposit fees as a result of a new large depositor relationship in the third quarter and higher fees on existing business depositor relationships.
Loans sold during the quarter ended
Q3 2026 vs. Q3 2025
Noninterest income increased
- a
$267 thousand improvement in the fair value adjustment on mortgage servicing rights, primarily due to changes in valuation assumptions, including slower estimated prepayment speeds resulting from higher market interest rates, partially offset by an increase in the cost of servicing assumption recorded in the current quarter and by the impact of a smaller servicing portfolio; - a
$51 thousand increase in net gain on sale of loans due to an increase in the volume of loans sold resulting from lower market interest rates in the current year; and - a
$39 thousand increase in service charges and fee income primarily due to higher deposit fee income, higher loan fees associated with reconveyance activity, and higher loan late fees.
These increases were partially offset by:
- an
$83 thousand decrease in BOLI earnings primarily due to fluctuations in market conditions affecting BOLI valuations; and - a
$13 thousand decrease in mortgage servicing income, primarily due to the impact of a smaller servicing portfolio.
Noninterest Expense
| For the Quarter Ended | Q3 2026 vs. Q2 2026 | Q3 2026 vs. Q3 2025 | |||||||||||||||||||||
2026 | 2026 | 2025 | Amount ($) | Percentage (%) | Amount ($) | Percentage (%) | |||||||||||||||||
| (Dollars in thousands, unaudited) | |||||||||||||||||||||||
| Salaries and benefits | $ | 4,293 | $ | 4,645 | $ | 4,259 | $ | (352 | ) | (7.6 | )% | $ | 34 | 0.8 | % | ||||||||
| Operations | 1,701 | 1,617 | 1,483 | 84 | 5.2 | % | 218 | 14.7 | % | ||||||||||||||
| Regulatory assessments | 198 | 129 | 221 | 69 | 53.5 | % | (23 | ) | (10.4 | )% | |||||||||||||
| Occupancy | 399 | 388 | 431 | 11 | 2.8 | % | (32 | ) | (7.4 | )% | |||||||||||||
| Data processing | 1,404 | 1,332 | 1,274 | 72 | 5.4 | % | 130 | 10.2 | % | ||||||||||||||
| Net loss (gain) on OREO and repossessed assets | 10 | 17 | 8 | (7 | ) | (41.2 | )% | 2 | 25.0 | % | |||||||||||||
| Total noninterest expense | $ | 8,005 | $ | 8,128 | $ | 7,676 | $ | (123 | ) | (1.5 | )% | $ | 329 | 4.3 | % | ||||||||
Q3 2026 vs. Q2 2026
The decrease in noninterest expense during the current quarter compared to the quarter ended
- a
$352 thousand decrease in salaries and benefits due to lower incentive compensation expense, the impact of lower market valuations of investments supporting our deferred compensation arrangements for key executives (which was partially offset by decreases in BOLI income recorded in noninterest income), partially offset by higher medical expenses;
This decrease was partially offset by
- an
$84 thousand increase in operations expense, primarily due to higher costs associated with our debit card processing, partially offset by lower state and local tax expense and lower legal expenses; - a
$72 thousand increase in data processing expense, primarily due to higher processing costs related to annual increases in software vendor contracts and increased application programming interface ("API") and usage charges; - a
$69 thousand increase in regulatory assessments primarily due to the release of an accrual in the prior quarter related to exam costs, as the actual costs incurred were lower than previously estimated as compared to no release in the current quarter; and - an
$11 thousand increase in occupancy, primarily due to a refund of triple net overpayments on a leased property in the prior quarter.
Q3 2026 vs. Q3 2025
The increase in noninterest expense during the current quarter compared to the quarter ended
- a
$218 thousand increase in operations expense, primarily due to higher costs associated with debit card processing; - a
$130 thousand increase in data processing expense, primarily due to higher processing costs related to annual increases in software vendor contracts, increased API and usage charges and the addition of new features, such as fraud detection software, with the goal of lowering operational losses; and - a
$34 thousand increase in salaries and benefits, primarily due to an increase in medical expense, lower deferred loan origination costs due to fewer loan originations in the current quarter, and higher salaries, partially offset by lower market valuations on our deferred compensation for key executives (which was partially offset by the decrease in income on BOLI recorded in noninterest income), lower stock compensation expense and lower incentive compensation expense.
These increases were partially offset by:
- a
$32 thousand decrease in occupancy expense, primarily due to lower building lease charges in the third quarter of 2026 following the closure of ourTacoma branch during the second quarter of 2026; and - 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 the release of an accrual related to exam costs, as actual costs incurred were lower than previously estimated.
Balance Sheet Review, Capital Management and Credit Quality
Assets totaled
Cash and cash equivalents decreased
Investment securities decreased
Loans held-for-portfolio totaled
Equity securities totaled
Nonperforming assets (“NPAs”), which are comprised of nonaccrual loans (including nonperforming modified loans), other real estate owned (“OREO”) and other repossessed assets, increased
Nonperforming loans totaled
NPAs to total assets were 0.82%, 0.76% and 0.29% at
The following table summarizes our NPAs at the dates indicated (dollars in thousands, unaudited):
2026 | 2026 | 2026 | 2025 | 2025 | |||||||||||||||
| Nonperforming Loans: | |||||||||||||||||||
| One-to-four family | $ | 2,346 | $ | 2,458 | $ | 1,939 | $ | 1,597 | $ | 609 | |||||||||
| Home equity loans | 307 | 310 | 383 | 187 | 201 | ||||||||||||||
| Commercial and multifamily | 4,155 | 4,191 | 4,213 | 3,163 | 1,065 | ||||||||||||||
| Construction and land | 159 | 159 | 80 | 82 | 103 | ||||||||||||||
| Manufactured homes | 949 | 696 | 475 | 461 | 476 | ||||||||||||||
| Commercial business | — | — | 30 | 30 | — | ||||||||||||||
| Other consumer | 579 | 241 | 259 | 262 | 263 | ||||||||||||||
| Total nonperforming loans | 8,495 | 8,055 | 7,379 | 5,782 | 2,717 | ||||||||||||||
| OREO and Other Repossessed Assets: | |||||||||||||||||||
| One-to-four family | — | — | — | 259 | 259 | ||||||||||||||
| Manufactured homes | 77 | 47 | 99 | 85 | 85 | ||||||||||||||
| Total OREO and repossessed assets | 77 | 47 | 99 | 344 | 344 | ||||||||||||||
| Total NPAs | $ | 8,572 | $ | 8,102 | $ | 7,478 | $ | 6,126 | $ | 3,061 | |||||||||
| Percentage of Nonperforming Assets: | |||||||||||||||||||
| One-to-four family | 27.4 | % | 30.3 | % | 25.9 | % | 26.1 | % | 19.9 | % | |||||||||
| Home equity loans | 3.6 | 3.8 | 5.1 | 3.1 | 6.6 | ||||||||||||||
| Commercial and multifamily | 48.5 | 51.7 | 56.3 | 51.6 | 34.8 | ||||||||||||||
| Construction and land | 1.9 | 2.0 | 1.1 | 1.3 | 3.4 | ||||||||||||||
| Manufactured homes | 11.1 | 8.6 | 6.4 | 7.5 | 15.6 | ||||||||||||||
| Commercial business | — | — | 0.4 | 0.5 | — | ||||||||||||||
| Other consumer | 6.8 | 3.0 | 3.5 | 4.3 | 8.5 | ||||||||||||||
| Total nonperforming loans | 99.1 | 99.4 | 98.7 | 94.4 | 88.8 | ||||||||||||||
| Percentage of OREO and Other Repossessed Assets: | |||||||||||||||||||
| One-to-four family | — | — | — | 4.2 | 8.4 | ||||||||||||||
| Manufactured homes | 0.9 | 0.6 | 1.3 | 1.4 | 2.8 | ||||||||||||||
| Total OREO and repossessed assets | 0.9 | 0.6 | 1.3 | 5.6 | 11.2 | ||||||||||||||
| Total NPAs | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | |||||||||
The following table summarizes the allowance for credit losses at the dates and for the periods indicated (dollars in thousands, unaudited):
| At or For the Quarter Ended: | |||||||||||||||||||
2026 | 2026 | 2026 | 2025 | 2025 | |||||||||||||||
| Allowance for Credit Losses on Loans | |||||||||||||||||||
| Balance at beginning of period | $ | 8,420 | $ | 8,635 | $ | 8,605 | $ | 8,564 | $ | 8,536 | |||||||||
| (Release of) provision for credit losses during the period | (233 | ) | (185 | ) | 49 | 68 | 65 | ||||||||||||
| Net charge-offs during the period | (13 | ) | (30 | ) | (19 | ) | (27 | ) | (37 | ) | |||||||||
| Balance at end of period | $ | 8,174 | $ | 8,420 | $ | 8,635 | $ | 8,605 | $ | 8,564 | |||||||||
| Allowance for Credit Losses on Unfunded Loan Commitments | |||||||||||||||||||
| Balance at beginning of period | $ | 184 | $ | 222 | $ | 148 | $ | 112 | $ | 122 | |||||||||
| (Release of) provision for credit losses during the period | (49 | ) | (38 | ) | 74 | 36 | (10 | ) | |||||||||||
| Balance at end of period | 135 | 184 | 222 | 148 | 112 | ||||||||||||||
| Allowance for Credit Losses | $ | 8,309 | $ | 8,604 | $ | 8,857 | $ | 8,753 | $ | 8,676 | |||||||||
| Allowance for credit losses on loans to total loans | 0.93 | % | 0.94 | % | 0.94 | % | 0.95 | % | 0.94 | % | |||||||||
| Allowance for credit losses on loans and unfunded loan commitments to total loans | 0.95 | % | 0.96 | % | 0.96 | % | 0.97 | % | 0.95 | % | |||||||||
| Allowance for credit losses on loans to total nonperforming loans | 96.22 | % | 104.53 | % | 117.02 | % | 148.82 | % | 315.20 | % | |||||||||
| Allowance for credit losses on loans and unfunded loan commitments to total nonperforming loans | 97.81 | % | 106.82 | % | 120.03 | % | 151.38 | % | 319.32 | % | |||||||||
Total deposits decreased
There were no FHLB advances at
Stockholders’ equity totaled
Forward-Looking Statements Disclaimer
When used in this press release and in documents filed or furnished by Sound Financial Bancorp, Inc. (the "Company") with the Securities and Exchange Commission (the "SEC"), as well as in the Company's other press releases, other public or stockholder communications, and in oral statements made with the approval of an authorized executive officer, the words or phrases "may," "believe," "will likely result," "are expected to," "will continue," "is anticipated," "anticipate," "expect," "estimate," "project," "plan," "intends" or similar expressions are intended to identify "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. 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 the Company's future financial performance based on its growth strategies and anticipated trends in its business. These statements are only predictions based on the Company's current expectations and projections about future events and may turn out to be wrong because of inaccurate assumptions, the factors listed below or other factors that the Company cannot foresee that could cause the Company's actual results to be materially different from historical results or from any future results expressed or implied by such forward-looking statements. You are cautioned not to place undue reliance on any forward-looking statements, which speak only as of the date made.
Factors that could cause the Company's actual results to differ materially from those expressed or implied by these forward-looking statements and from historical performance include, but are not limited to: adverse impacts to economic conditions in the Company’s local market areas, other markets where the Company has lending relationships, or other aspects of the Company's business operations or financial markets, including, without limitation, as a result of employment levels, labor shortages and the effects of persistent inflation, recessionary pressures or slowing economic growth; changes in interest rate levels and volatility, and the timing and pace of such changes, including actions by the Board of Governors of the Federal Reserve System, which could adversely affect the Company's revenues and expenses, the values of the Company's assets and obligations and the availability and cost of capital and liquidity; the impact of inflation and related monetary and fiscal policy responses, including their effects on consumer and business behavior; the effects of a federal government shutdown, debt ceiling standoff, or other fiscal uncertainty; the impact of bank failures or adverse developments at other banks and related negative publicity about the banking industry on investor and depositor sentiment; changes in consumer spending, borrowing and savings habits; the risks of lending and investing activities, including changes in the level and direction of loan delinquencies and write-offs and changes in estimates of the adequacy of the allowance for credit losses; the Company's ability to access cost-effective funding; fluctuations in real estate values and both residential and commercial real estate market conditions; demand for loans and deposits in the Company's market area; secondary market conditions for loans; the Company's ability to implement key growth initiatives and strategic priorities; environmental, social and governance matters; results of examinations of the Company or the Sound Community Bank by their regulators; increased competition; changes in management's business strategies; the ability to adapt to rapid technological changes, including advancements related to artificial intelligence, digital banking platforms, and cybersecurity; legislation or regulatory changes, including but not limited to changes in capital requirements, banking regulations, tax laws, or consumer protection laws; vulnerabilities in information systems or third-party service providers, including disruptions, breaches, or attacks; geopolitical developments and international conflicts, as well as the imposition of new or increased tariffs and trade restrictions, any of which may disrupt financial markets, global supply chains, commodity prices, or economic activity in specific industry sectors; the effects of climate change, severe weather events, natural disasters, pandemics, epidemics and other public health crises, acts of war or terrorism, domestic political unrest and other external events on the Company's business; and other factors described in the Company's latest Annual Report on Form 10-K and subsequent Quarterly Reports on Form 10-Q and other documents filed with or furnished to the SEC, which are available at www.soundcb.com and on the SEC's website at www.sec.gov.
The Company does not undertake—and specifically disclaims any obligation—to revise any forward-looking statement to reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such statement, except as required by law.
CONSOLIDATED INCOME STATEMENTS
(Dollars in thousands, unaudited)
| For the Quarter Ended | ||||||||||||||||||||
2026 | 2026 | 2026 | 2025 | 2025 | ||||||||||||||||
| Interest income | $ | 14,478 | $ | 14,846 | $ | 14,465 | $ | 14,284 | $ | 14,652 | ||||||||||
| Interest expense | 4,988 | 5,255 | 5,418 | 5,622 | 5,712 | |||||||||||||||
| Net interest income | 9,490 | 9,591 | 9,047 | 8,662 | 8,940 | |||||||||||||||
| (Release of) provision for credit losses | (282 | ) | (223 | ) | 123 | 104 | 55 | |||||||||||||
| Net interest income after (release of) provision for credit losses | 9,772 | 9,814 | 8,924 | 8,558 | 8,885 | |||||||||||||||
| Noninterest income: | ||||||||||||||||||||
| Service charges and fee income | 711 | 684 | 624 | 649 | 672 | |||||||||||||||
| Earnings on bank-owned life insurance | 142 | 277 | 130 | 189 | 225 | |||||||||||||||
| Mortgage servicing income | 249 | 245 | 248 | 253 | 262 | |||||||||||||||
| Fair value adjustment on mortgage servicing rights | (105 | ) | 119 | (140 | ) | (160 | ) | (372 | ) | |||||||||||
| Net gain on sale of loans | 145 | 112 | 101 | 73 | 94 | |||||||||||||||
| Other income (loss) | (3 | ) | (8 | ) | (53 | ) | (137 | ) | — | |||||||||||
| Total noninterest income | 1,139 | 1,429 | 910 | 867 | 881 | |||||||||||||||
| Noninterest expense: | ||||||||||||||||||||
| Salaries and benefits | 4,293 | 4,645 | 4,458 | 3,533 | 4,259 | |||||||||||||||
| Operations | 1,701 | 1,617 | 1,501 | 1,683 | 1,483 | |||||||||||||||
| Regulatory assessments | 198 | 129 | 198 | (53 | ) | 221 | ||||||||||||||
| Occupancy | 399 | 388 | 427 | 460 | 431 | |||||||||||||||
| Data processing | 1,404 | 1,332 | 1,287 | 1,200 | 1,274 | |||||||||||||||
| Net loss on OREO and repossessed assets | 10 | 17 | 3 | 17 | 8 | |||||||||||||||
| Total noninterest expense | 8,005 | 8,128 | 7,874 | 6,840 | 7,676 | |||||||||||||||
| Income before provision for income taxes | 2,906 | 3,115 | 1,960 | 2,585 | 2,090 | |||||||||||||||
| Provision for income taxes | 584 | 597 | 384 | 339 | 395 | |||||||||||||||
| Net income | $ | 2,322 | $ | 2,518 | $ | 1,576 | $ | 2,246 | $ | 1,695 | ||||||||||
CONSOLIDATED INCOME STATEMENTS
(Dollars in thousands, unaudited)
| For the Nine Months Ended | ||||||||
| 2026 | 2025 | |||||||
| Interest income | $ | 43,789 | $ | 43,273 | ||||
| Interest expense | 15,661 | 17,007 | ||||||
| Net interest income | 28,128 | 26,266 | ||||||
| (Release of) provision for credit losses | (382 | ) | 22 | |||||
| Net interest income after release of provision for credit losses | 28,510 | 26,244 | ||||||
| Noninterest income: | ||||||||
| Service charges and fee income | 2,018 | 2,020 | ||||||
| Earnings on bank-owned life insurance | 549 | 648 | ||||||
| Mortgage servicing income | 742 | 794 | ||||||
| Fair value adjustment on mortgage servicing rights | (126 | ) | (551 | ) | ||||
| Net gain on sale of loans | 357 | 187 | ||||||
| Other income | (64 | ) | — | |||||
| Total noninterest income | 3,476 | 3,098 | ||||||
| Noninterest expense: | ||||||||
| Salaries and benefits | 13,396 | 13,175 | ||||||
| Operations | 4,819 | 4,291 | ||||||
| Regulatory assessments | 525 | 663 | ||||||
| Occupancy | 1,214 | 1,284 | ||||||
| Data processing | 4,024 | 3,821 | ||||||
| Net loss (gain) on OREO and repossessed assets | 30 | 19 | ||||||
| Total noninterest expense | 24,008 | 23,253 | ||||||
| Income before provision for income taxes | 7,978 | 6,089 | ||||||
| Provision for income taxes | 1,565 | 1,175 | ||||||
| Net income | $ | 6,413 | $ | 4,914 | ||||
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, unaudited)
2026 | 2026 | 2026 | 2025 | 2025 | ||||||||||||||||
| ASSETS | ||||||||||||||||||||
| Cash and cash equivalents | $ | 112,752 | $ | 120,072 | $ | 137,984 | $ | 138,453 | $ | 101,156 | ||||||||||
| Available-for-sale securities, at fair value | 6,978 | 7,575 | 7,517 | 7,699 | 7,637 | |||||||||||||||
| Held-to-maturity securities, at amortized cost | 1,868 | 1,876 | 1,884 | 1,892 | 1,899 | |||||||||||||||
| Equity securities | 5,000 | 5,000 | 5,000 | — | — | |||||||||||||||
| Loans held-for-sale | 283 | 1,591 | 281 | 542 | 271 | |||||||||||||||
| Loans held-for-portfolio | 878,000 | 891,969 | 921,518 | 905,533 | 909,715 | |||||||||||||||
| Allowance for credit losses - loans | (8,174 | ) | (8,420 | ) | (8,635 | ) | (8,605 | ) | (8,564 | ) | ||||||||||
| Total loans held-for-portfolio, net | 869,826 | 883,549 | 912,883 | 896,928 | 901,151 | |||||||||||||||
| Accrued interest receivable | 3,783 | 3,747 | 3,888 | 3,771 | 3,896 | |||||||||||||||
| Bank-owned life insurance, net | 24,217 | 24,055 | 23,747 | 23,327 | 23,138 | |||||||||||||||
| Other real estate owned ("OREO") and other repossessed assets, net | 77 | 47 | 99 | 344 | 344 | |||||||||||||||
| Mortgage servicing rights, at fair value | 4,268 | 4,277 | 4,096 | 4,183 | 4,305 | |||||||||||||||
| 669 | 670 | 1,120 | 1,060 | 1,735 | ||||||||||||||||
| Premises and equipment, net | 4,075 | 4,127 | 4,168 | 4,239 | 4,421 | |||||||||||||||
| Right-of-use assets | 2,643 | 2,889 | 3,133 | 3,423 | 3,679 | |||||||||||||||
| Other assets | 6,150 | 6,249 | 6,251 | 6,312 | 6,531 | |||||||||||||||
| TOTAL ASSETS | $ | 1,042,589 | $ | 1,065,724 | $ | 1,112,051 | $ | 1,092,173 | $ | 1,060,163 | ||||||||||
| LIABILITIES | ||||||||||||||||||||
| Interest-bearing deposits | $ | 778,272 | $ | 801,541 | $ | 837,409 | $ | 816,309 | $ | 767,554 | ||||||||||
| Noninterest-bearing deposits | 128,419 | 129,340 | 131,092 | 132,566 | 131,389 | |||||||||||||||
| Total deposits | 906,691 | 930,881 | 968,501 | 948,875 | 898,943 | |||||||||||||||
| Borrowings | — | — | 10,000 | 10,000 | 25,000 | |||||||||||||||
| Accrued interest payable | 623 | 634 | 496 | 674 | 774 | |||||||||||||||
| Lease liabilities | 2,836 | 3,103 | 3,364 | 3,671 | 3,943 | |||||||||||||||
| Other liabilities | 10,187 | 9,597 | 8,839 | 10,366 | 10,146 | |||||||||||||||
| Advance payments from borrowers for taxes and insurance | 2,420 | 1,119 | 2,625 | 1,387 | 2,116 | |||||||||||||||
| Subordinated notes, net | 5,833 | 7,822 | 7,812 | 7,801 | 11,791 | |||||||||||||||
| TOTAL LIABILITIES | 928,590 | 953,156 | 1,001,637 | 982,774 | 952,713 | |||||||||||||||
| STOCKHOLDERS' EQUITY: | ||||||||||||||||||||
| Common stock | 25 | 25 | 25 | 25 | 25 | |||||||||||||||
| Additional paid-in capital | 28,896 | 28,846 | 28,797 | 28,737 | 28,665 | |||||||||||||||
| Retained earnings | 86,277 | 84,496 | 82,518 | 81,483 | 79,724 | |||||||||||||||
| Accumulated other comprehensive loss, net of tax | (1,199 | ) | (799 | ) | (926 | ) | (846 | ) | (964 | ) | ||||||||||
| TOTAL STOCKHOLDERS' EQUITY | 113,999 | 112,568 | 110,414 | 109,399 | 107,450 | |||||||||||||||
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 1,042,589 | $ | 1,065,724 | $ | 1,112,051 | $ | 1,092,173 | $ | 1,060,163 | ||||||||||
KEY FINANCIAL RATIOS
(unaudited)
| For the Quarter Ended | |||||||||||||||
2026 | 2026 | 2026 | 2025 | 2025 | |||||||||||
| Annualized return on average assets | 0.88 | % | 0.94 | % | 0.58 | % | 0.84 | % | 0.63 | % | |||||
| Annualized return on average equity | 8.10 | % | 9.03 | % | 5.78 | % | 8.19 | % | 6.26 | % | |||||
| Annualized net interest margin(1) | 3.76 | % | 3.74 | % | 3.51 | % | 3.36 | % | 3.48 | % | |||||
| Annualized efficiency ratio(2) | 75.31 | % | 73.76 | % | 79.08 | % | 71.78 | % | 78.16 | % | |||||
(1) Net interest income divided by average interest earning assets.
(2) Noninterest expense divided by total revenue (net interest income and noninterest income).
PER COMMON SHARE DATA
(unaudited)
| At or For the Quarter Ended | |||||||||||||||
| Basic earnings per share | $ | 0.90 | $ | 0.98 | $ | 0.61 | $ | 0.87 | $ | 0.66 | |||||
| Diluted earnings per share | $ | 0.90 | $ | 0.98 | $ | 0.61 | $ | 0.87 | $ | 0.66 | |||||
| Weighted-average basic shares outstanding | 2,564,776 | 2,564,165 | 2,562,467 | 2,557,608 | 2,556,562 | ||||||||||
| Weighted-average diluted shares outstanding | 2,580,513 | 2,574,631 | 2,574,212 | 2,574,586 | 2,575,575 | ||||||||||
| Common shares outstanding at period-end | 2,569,649 | 2,568,043 | 2,568,043 | 2,567,953 | 2,566,069 | ||||||||||
| Book value per share | $ | 44.36 | $ | 43.83 | $ | 43.00 | $ | 42.60 | $ | 41.87 | |||||
AVERAGE BALANCE, AVERAGE YIELD EARNED, AND AVERAGE RATE PAID
(Dollars in thousands, unaudited)
The following table presents, for the periods indicated, the total dollar amount of interest income from average interest-earning assets and the resultant yields, as well as the interest expense on average interest-bearing liabilities, expressed both in dollars and rates. Income and yields on tax-exempt obligations have not been computed on a tax equivalent basis. All average balances are daily average balances. Nonaccrual loans have been included in the table as loans carrying a zero yield for the period they have been on nonaccrual (dollars in thousands).
| Three Months Ended | |||||||||||||||||||||||||||||
| Average Outstanding Balance | Interest Earned/Paid | Yield/Rate | Average Outstanding Balance | Interest Earned/Paid | Yield/Rate | Average Outstanding Balance | Interest Earned/Paid | Yield/Rate | |||||||||||||||||||||
| Interest-Earning Assets: | |||||||||||||||||||||||||||||
| Loans receivable | $ | 886,588 | $ | 13,378 | 5.99 | % | $ | 911,869 | $ | 13,777 | 6.06 | % | $ | 910,330 | $ | 13,512 | 5.89 | % | |||||||||||
| Interest-earning cash | 98,803 | 898 | 3.61 | % | 98,902 | 882 | 3.58 | % | 95,422 | 1,016 | 4.22 | % | |||||||||||||||||
| Investments | 16,077 | 202 | 4.98 | % | 16,566 | 187 | 4.53 | % | 12,541 | 124 | 3.92 | % | |||||||||||||||||
| Total interest-earning assets | $ | 1,001,468 | 14,478 | 5.74 | % | $ | 1,027,337 | $ | 14,846 | 5.80 | % | $ | 1,018,293 | 14,652 | 5.71 | % | |||||||||||||
| Interest-Bearing Liabilities: | |||||||||||||||||||||||||||||
| Savings and money market accounts | $ | 357,714 | 2,126 | 2.36 | % | $ | 370,406 | 2,177 | 2.36 | % | $ | 348,996 | 2,367 | 2.69 | % | ||||||||||||||
| Demand and NOW accounts | 126,483 | 85 | 0.27 | % | 130,208 | 95 | 0.29 | % | 132,309 | 103 | 0.31 | % | |||||||||||||||||
| Certificate accounts | 295,895 | 2,630 | 3.53 | % | 299,654 | 2,704 | 3.62 | % | 292,725 | 2,805 | 3.80 | % | |||||||||||||||||
| Subordinated notes | 5,829 | 147 | 10.01 | % | 7,819 | 189 | 9.70 | % | 11,787 | 168 | 5.65 | % | |||||||||||||||||
| Borrowings | — | — | — | % | 8,571 | 90 | 4.21 | % | 25,000 | 269 | 4.27 | % | |||||||||||||||||
| Total interest-bearing liabilities | $ | 785,921 | 4,988 | 2.52 | % | $ | 816,658 | 5,255 | 2.58 | % | $ | 810,817 | 5,712 | 2.79 | % | ||||||||||||||
| Net interest income/spread | $ | 9,490 | 3.22 | % | $ | 9,591 | 3.22 | % | $ | 8,940 | 2.91 | % | |||||||||||||||||
| Net interest margin | 3.76 | % | 3.74 | % | 3.48 | % | |||||||||||||||||||||||
| Ratio of interest-earning assets to interest-bearing liabilities | 127 | % | 126 | % | 126 | % | |||||||||||||||||||||||
| Noninterest-bearing deposits | $ | 131,276 | $ | 128,204 | $ | 127,970 | |||||||||||||||||||||||
| Total deposits | $ | 911,368 | $ | 4,841 | 2.11 | % | $ | 928,472 | $ | 4,976 | 2.15 | % | $ | 902,000 | $ | 5,275 | 2.32 | % | |||||||||||
| Total funding(1) | $ | 917,197 | $ | 4,988 | 2.16 | % | $ | 944,862 | $ | 5,255 | 2.23 | % | $ | 938,787 | $ | 5,712 | 2.41 | % | |||||||||||
(1) Total funding is the sum of average interest-bearing liabilities and average noninterest-bearing deposits. The cost of total funding is calculated as total interest expense divided by average total funding.
| Nine Months Ended | |||||||||||||||||||
| Average Outstanding Balance | Interest Earned/Paid | Yield/Rate | Average Outstanding Balance | Interest Earned/Paid | Yield/Rate | ||||||||||||||
| Interest-Earning Assets: | |||||||||||||||||||
| Loans receivable | $ | 904,089 | $ | 40,461 | 5.98 | % | $ | 900,780 | $ | 39,795 | 5.91 | % | |||||||
| Interest-earning cash | 106,049 | 2,841 | 3.58 | % | 97,996 | 3,123 | 4.26 | % | |||||||||||
| Investments | 16,099 | 487 | 4.04 | % | 12,769 | 355 | 3.72 | % | |||||||||||
| Total interest-earning assets | $ | 1,026,237 | 43,789 | 5.70 | % | $ | 1,011,545 | 43,273 | 5.72 | % | |||||||||
| Interest-Bearing Liabilities: | |||||||||||||||||||
| Savings and money market accounts | $ | 372,138 | 6,610 | 2.37 | % | $ | 342,046 | 6,684 | 2.61 | % | |||||||||
| Demand and NOW accounts | 127,543 | 261 | 0.27 | % | 137,090 | 317 | 0.31 | % | |||||||||||
| Certificate accounts | 298,943 | 8,070 | 3.61 | % | 292,028 | 8,704 | 3.98 | % | |||||||||||
| Subordinated notes | 7,145 | 522 | 9.77 | % | 11,777 | 504 | 5.72 | % | |||||||||||
| Borrowings | 6,337 | 198 | 4.18 | % | 25,002 | 798 | 4.27 | % | |||||||||||
| Total interest-bearing liabilities | $ | 812,106 | 15,661 | 2.58 | % | $ | 807,943 | 17,007 | 2.81 | % | |||||||||
| Net interest income/spread | $ | 28,128 | 3.13 | % | $ | 26,266 | 2.91 | % | |||||||||||
| Net interest margin | 3.66 | % | 3.47 | % | |||||||||||||||
| Ratio of interest-earning assets to interest-bearing liabilities | 126 | % | 125 | % | |||||||||||||||
| Noninterest-bearing deposits | $ | 131,048 | $ | 125,370 | |||||||||||||||
| Total deposits | $ | 929,672 | $ | 14,941 | 2.15 | % | $ | 896,534 | $ | 15,705 | 2.34 | % | |||||||
| Total funding(1) | $ | 943,154 | $ | 15,661 | 2.22 | % | $ | 933,313 | $ | 17,007 | 2.44 | % | |||||||
(1) 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 average total funding.
LOANS
(Dollars in thousands, unaudited)
2026 | 2026 | 2026 | 2025 | 2025 | ||||||||||||||||
| Real estate loans: | ||||||||||||||||||||
| One-to-four family | $ | 238,083 | $ | 244,168 | $ | 251,146 | $ | 253,841 | $ | 257,797 | ||||||||||
| Home equity | 34,790 | 32,107 | 31,903 | 31,468 | 29,903 | |||||||||||||||
| Commercial and multifamily | 389,734 | 381,809 | 409,810 | 409,729 | 408,802 | |||||||||||||||
| Construction and land | 57,612 | 76,158 | 71,878 | 50,261 | 52,797 | |||||||||||||||
| Total real estate loans | 720,219 | 734,242 | 764,737 | 745,299 | 749,299 | |||||||||||||||
| Consumer loans: | ||||||||||||||||||||
| Manufactured homes | 43,343 | 42,668 | 42,968 | 43,080 | 42,735 | |||||||||||||||
| Floating homes | 88,556 | 87,566 | 84,927 | 87,315 | 88,674 | |||||||||||||||
| Other consumer | 13,096 | 13,832 | 15,978 | 16,571 | 17,031 | |||||||||||||||
| Total consumer loans | 144,995 | 144,066 | 143,873 | 146,966 | 148,440 | |||||||||||||||
| Commercial business loans | 14,737 | 15,748 | 15,164 | 15,378 | 14,214 | |||||||||||||||
| Total loans | 879,951 | 894,056 | 923,774 | 907,643 | 911,953 | |||||||||||||||
| Less: | ||||||||||||||||||||
| Premiums | 553 | 583 | 610 | 627 | 644 | |||||||||||||||
| Deferred fees, net | (2,504 | ) | (2,670 | ) | (2,866 | ) | (2,737 | ) | (2,882 | ) | ||||||||||
| Allowance for credit losses - loans | (8,174 | ) | (8,420 | ) | (8,635 | ) | (8,605 | ) | (8,564 | ) | ||||||||||
| Total loans held-for-portfolio, net | $ | 869,826 | $ | 883,549 | $ | 912,883 | $ | 896,928 | $ | 901,151 | ||||||||||
DEPOSITS
(Dollars in thousands, unaudited)
2026 | 2026 | 2026 | 2025 | 2025 | |||||||||||
| Noninterest-bearing demand | $ | 128,419 | $ | 129,340 | $ | 131,092 | $ | 132,566 | $ | 131,388 | |||||
| Interest-bearing demand | 129,058 | 130,210 | 130,642 | 125,634 | 129,570 | ||||||||||
| Savings | 59,154 | 59,081 | 58,881 | 59,478 | 60,106 | ||||||||||
| Money market | 296,994 | 314,205 | 345,913 | 331,604 | 286,827 | ||||||||||
| Certificates | 293,066 | 298,045 | 301,973 | 299,593 | 291,052 | ||||||||||
| Total deposits | $ | 906,691 | $ | 930,881 | $ | 968,501 | $ | 948,875 | $ | 898,943 | |||||
CREDIT QUALITY DATA
(Dollars in thousands, unaudited)
| At or For the Quarter Ended | ||||||||||||||||||||
2026 | 2026 | 2026 | 2025 | 2025 | ||||||||||||||||
| Total nonperforming loans | $ | 8,495 | $ | 8,055 | $ | 7,379 | $ | 5,782 | $ | 2,717 | ||||||||||
| OREO and other repossessed assets | 77 | 47 | 99 | 344 | 344 | |||||||||||||||
| Total nonperforming assets | $ | 8,572 | $ | 8,102 | $ | 7,478 | $ | 6,126 | $ | 3,061 | ||||||||||
| Net charge-offs during the quarter | $ | (13 | ) | $ | (30 | ) | $ | (19 | ) | $ | (27 | ) | $ | (37 | ) | |||||
| (Release of) provision for credit losses during the quarter | (282 | ) | (223 | ) | 123 | 104 | 55 | |||||||||||||
| Allowance for credit losses - loans | 8,174 | 8,420 | 8,635 | 8,605 | 8,564 | |||||||||||||||
| Allowance for credit losses - loans to total loans | 0.93 | % | 0.94 | % | 0.94 | % | 0.95 | % | 0.94 | % | ||||||||||
| Allowance for credit losses - loans to total nonperforming loans | 96.22 | % | 104.53 | % | 117.02 | % | 148.82 | % | 315.20 | % | ||||||||||
| Nonperforming loans to total loans | 0.97 | % | 0.90 | % | 0.80 | % | 0.64 | % | 0.30 | % | ||||||||||
| Nonperforming assets to total assets | 0.82 | % | 0.76 | % | 0.67 | % | 0.56 | % | 0.29 | % | ||||||||||
OTHER STATISTICS
(Dollars in thousands, unaudited)
| At or For the Quarter Ended | ||||||||||||||||||||
2026 | 2026 | 2026 | 2025 | 2025 | ||||||||||||||||
| Total loans to total deposits | 97.05 | % | 96.04 | % | 95.38 | % | 95.65 | % | 101.45 | % | ||||||||||
| Noninterest-bearing deposits to total deposits | 14.16 | % | 13.89 | % | 13.54 | % | 13.97 | % | 14.62 | % | ||||||||||
| Average total assets for the quarter | $ | 1,047,197 | $ | 1,071,897 | $ | 1,094,501 | $ | 1,066,451 | $ | 1,063,972 | ||||||||||
| Average total equity for the quarter | $ | 113,791 | $ | 111,863 | $ | 110,575 | $ | 108,837 | $ | 107,375 | ||||||||||
Contact
| Financial: | |
| President/CFO | |
| (206) 436-8587 | |
| Media: | |
| CEO | |
| (206) 436-1495 | |
