Sound Financial Bancorp Reports 51.6% Increase in Net Income for Q1 2025

Sound Financial Bancorp, Inc. reported a significant increase in its financial performance for the first quarter of 2025, with net income rising to $1.2 million, or $0.45 per diluted share, compared to $770,000, or $0.30 per diluted share, in the same period last year. This 51.6% increase in net income was primarily driven by an $611,000 rise in net interest income, which reached $8.1 million, alongside a $170,000 increase in the release of provision for credit losses. Total interest income slightly decreased by 0.4% to $13.7 million, while interest expense fell by 10.6% to $5.6 million, reflecting lower rates across most interest-bearing liabilities.

The company's total assets increased by 7.6% to $1.07 billion as of March 31, 2025, up from $993.6 million at the end of 2024. This growth was largely attributed to a substantial increase in cash and cash equivalents, which surged by 201.3% to $131.5 million, primarily due to the return of reciprocal deposits that had been temporarily moved off balance sheet. However, loans held-for-portfolio decreased by 1.6% to $877.8 million, driven mainly by a significant decline in construction and land loans, which fell by 41.9% due to project completions and a slowdown in new financing activities.

In terms of operational metrics, total deposits rose by 8.7% to $910.3 million, with a notable increase in interest-bearing deposits. The company reported a decrease in noninterest-bearing deposits, which fell by 4.4% to $126.7 million, indicating a shift in customer preferences towards higher-yielding products. The allowance for credit losses on loans decreased to $8.4 million, reflecting a reduction in the loan portfolio, while nonperforming assets increased by 29.4% to $9.7 million, primarily due to the addition of several loans to nonaccrual status.

Looking ahead, Sound Financial Bancorp remains focused on maintaining its capital position and liquidity. The company’s stockholders’ equity increased to $104.4 million, and it continues to expect to pay quarterly cash dividends, with a payout ratio of approximately 41.73%. The management anticipates that ongoing economic conditions, including inflation and interest rate fluctuations, will influence future performance. The company is committed to monitoring its liquidity and capital resources closely to navigate potential challenges in the financial landscape.