Sound Financial Bancorp, Inc. reported a modest increase in total assets, reaching $993.6 million as of December 31, 2024, compared to $995.2 million in the previous year. The company's loan portfolio saw a slight uptick, with loans held-for-portfolio increasing by $5.7 million, or 0.6%, to $891.7 million. However, net income for the year fell significantly by 37.6% to $4.6 million, or $1.80 per diluted share, down from $7.4 million, or $2.86 per diluted share, in 2023. This decline was primarily attributed to a decrease in net interest income, which dropped by $2.8 million to $31 million, alongside a reduction in noninterest income.
The company experienced notable shifts in its loan composition. Commercial and multifamily loans surged by $56.2 million, or 17.8%, driven by the conversion of completed construction loans to permanent financing. In contrast, one-to-four family loans decreased by $9.8 million, or 3.5%, reflecting the impact of elevated mortgage interest rates and a constrained housing supply. Home equity loans rose by 15.7%, while floating home loans increased by 15%. The overall loan portfolio remains diversified, with commercial and multifamily real estate loans constituting 41.2% of the total.
In terms of operational metrics, total deposits increased by $11.3 million to $837.8 million, largely due to a $52 million rise in money market accounts. The company strategically shifted its focus towards higher-yielding money market accounts, resulting in a decrease in interest-bearing demand and savings accounts. The allowance for credit losses (ACL) on loans decreased to $8.5 million, or 0.94% of the total loan portfolio, down from $8.8 million, or 0.98%, in the previous year. This reduction was influenced by improvements in loan risk ratings and increased property values.
Looking ahead, Sound Financial Bancorp anticipates continued challenges from the high interest rate environment, which is expected to exert downward pressure on net interest income and net interest margin in 2025. The company remains focused on maintaining asset quality, expanding its product offerings, and enhancing customer service to drive growth. Management is committed to monitoring economic conditions closely and adjusting strategies as necessary to navigate potential risks associated with credit quality and market fluctuations.
About Sound Financial Bancorp, Inc.
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