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Fri, November 5, 2010
Thu, November 4, 2010

Sound Financial Reports Higher Third Quarter Earnings


Published on 2010-11-04 13:50:34 - Market Wire
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SEATTLE--([ BUSINESS WIRE ])--Sound Financial Inc. (OTCBB:SNFL), holding company for Sound Community Bank, today announced its third consecutive quarter of improving earnings.

"While a sustained economic recovery continues to remain elusive, we are pleased with our third quarter results and the steady progress wea™ve made each quarter this year. Our focus remains on taking care of our clients, as we balance our growth with strong capital levels."

The Company reported net income of $0.14 per share, or $421,000 for the quarter ended September 30, 2010. This compares to net income of $0.10 per share, or $278,000 in the previous quarter and net income of $0.03 per share or $76,000 for the third quarter of 2009.

Highlights for the Quarter:

- Net Interest Margin increased to 4.93% for the quarter ended 9/30/10

- Efficiency Ratio decreased to 64.76% for the quarter ended 9/30/10

- Non-Performing Loans to Total Gross Loans decreased to 0.99% at 9/30/10

- The Bank remains aWell Capitalizeda with Tier 1 Capital of 7.44% and Total Risk Based Capital of 11.31% at 9/30/10.

Laurie Stewart, President and CEO said, aWhile a sustained economic recovery continues to remain elusive, we are pleased with our third quarter results and the steady progress wea™ve made each quarter this year. Our focus remains on taking care of our clients, as we balance our growth with strong capital levels.a

As of
9/30/2010 6/30/2010 9/30/2009
(In thousands)

Selected Consolidated Financial Condition Data:

Total assets $ 345,775 $ 340,926 $ 353,760
Loans receivable, net 304,792 305,450 284,615
Loans held for sale 1,836 1,096 2,666
Mortgage-backed securities available for sale (at fair value) 4,655 4,328 35,694
Federal Home Loan Bank stock 2,444 2,444 2,444
Bank owned life insurance 6,663 6,596 6,399
Repossessed assets and real estate owned 3,313 1,847 822
Deposits 285,777 285,339 300,456
Federal Home Loan Bank advances 30,210 26,617 25,000
Stockholdersa™ Equity 26,175 25,299 25,480

Quarter Ended
9/30/2010 6/30/2010

9/30/2009

(In thousands)

Selected Consolidated Operating Data:

Total interest income

$

4,930

$

4,924

$

4,943

Total interest expense 1,043 1,152 1,803
Net interest income 3,887 3,772 3,140
Provision for loan losses 950 775 950
Net interest income after provision for loan losses 2,937 2,997 2,190
Fees and service charges 558 550 545
Gain (loss) on sale of loans 343 58 (20 )
Gain (loss) on sale of assets (202 ) (41 ) (34 )
Gain on sale of securities - (11 ) -
Other than temporary impairment on securities (47 ) (51 ) -
Fair value change in mortgage servicing rights (284 ) (210 ) -
Other non-interest income 142 220 477
Total non-interest income 510 515 968
Total non-interest expense 2,848 3,134 3,069
Income before provision (benefit) for income taxes 599 378 89
Provision (benefit) for income taxes 178 100 13
Net income 421 278 76

Selected Financial Ratios and Other Data:

Performance ratios:
Return on assets (ratio of net income to average total assets) 0.49 % 0.32 % 0.09 %
Return on equity (ratio of net income to average equity) 6.67 % 4.30 % 1.19 %
Net interest margin 4.93 % 4.77 % 3.98 %
Non-interest income to operating revenue 11.60 % 12.02 % 23.57 %
Non-interest expense to average total assets 3.35 % 3.66 % 3.62 %
Average interest-earning assets to average interest-bearing liabilities 100.91 % 103.34 % 110.19 %
Efficiency ratio 64.76 % 73.11 % 74.71 %
Asset quality ratios:
Non-performing assets to total assets 3.45 % 3.54 % 2.11 %
Non-performing loans to gross loans 0.99 % 1.36 % 1.14 %
Allowance for loan losses to non-performing loans 130.00 % 96.07 % 66.23 %
Allowance for loan losses to gross loans 1.27 % 1.29 % 0.88 %
Net charge-offs to average loans outstanding 1.32 % 1.04 % 0.43 %
Consolidated capital ratios:
Equity to total assets at end of period 7.57 % 7.42 % 7.23 %
Average equity to average assets 7.55 % 7.43 % 7.56 %

Nine Months Ended
9/30/2010 9/30/2009
(In thousands)

Selected Consolidated Operating Data:

Total interest income $ 14,624 $ 14,219
Total interest expense 3,362 5,562
Net interest income 11,262 8,657
Provision for loan losses 3,150 2,325
Net interest income after provision for loan losses 8,112 6,332
Fees and service charges 1,638 1,535
Gain on sale of loans 465 56
Loss on sale of assets (291 ) (589 )
Gain on sale of securities 64 -
Other than temporary impairment on securities (99 ) -
Fair value change in mortgage servicing rights (197 ) -
Other non-interest income 581 1,070
Total non-interest income 2,161 2,072
Total non-interest expense 9,245 8,718
Income (loss) before provision (benefit) for income taxes 1,028 (314 )
Provision (benefit) for income taxes 272 (162 )
Net income (loss) 756 (152 )

Selected Financial Ratios and Other Data:

Performance ratios:
Return on assets (ratio of net income to average total assets) 0.30 % (0.06 )%
Return on equity (ratio of net income to average equity) 3.95 % (0.79 )%
Net interest margin 4.79 % 3.90 %
Non-interest income to operating revenue 16.10 % 19.31 %
Non-interest expense to average total assets 3.62 % 3.66 %
Average interest-earning assets to average interest-bearing liabilities 100.97 % 106.59 %
Efficiency ratio 68.88 % 81.26 %

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

Forward-Looking Statements

This report contains statements that are not historical or current fact and constitute forward-looking statements. In some cases, you can identify these statements by words such as "may", "might", "will", "should", "expect", "plan", "intend", "anticipate", "believe", "estimate", "predict", "potential", or "continue", the negative of these terms and other comparable terminology. Such forward-looking statements, which are based on various underlying assumptions and expectations and are subject to risks, uncertainties and other unknown factors, may include projections of our future financial performance based on our growth strategies and anticipated trends in our business. These statements are only predictions based on our current expectations and projections about future events, and there are or may be important factors that could cause our actual results to be materially different from the historical results or from any future results expressed or implied by such forward-looking statements. Unless required by law, we undertake no obligation to publicly update or revise any forward-looking statement to reflect circumstances or events after the date of this press release.

Results of operations and business are subject to various factors which could cause actual results to differ materially from these estimates and most other statements that are not historical in nature. These factors include, but are not limited to, general and local economic conditions, changes in interest rates, deposit flows, demand for mortgage, consumer and other loans, real estate values, competition, changes in accounting principles, policies or guidelines, changes in legislation or regulation, and other economic, competitive, governmental, regulatory and technological factors affecting our operations, pricing, products and services.

Contributing Sources