Sound Financial Bancorp (SFBC) investor relations material

Executive summary

• Net income for Q2 2026 rose 22.7% year-over-year to $2.5 million ($0.98 per diluted share), up from $1.6 million in Q1 2026 and $2.1 million in Q2 2025; YTD net income up 27.1% to $4.1 million ($1.59 per diluted share).

• Profitability gains driven by higher net interest income, a release of provision for credit losses, increased noninterest income, and focus on prudent capital deployment, partially offset by higher noninterest expenses and income taxes.

• Board declared a $0.21 per share cash dividend, payable August 21, 2026.

• Total assets at June 30, 2026 were $1.07 billion, down 2.4% from December 2025 and 4.2% from Q1 2026, but up 0.7% year-over-year.

• Focus remains on profitability, liquidity, and prudent capital deployment amid economic uncertainty and inflation.

Financial highlights

• Net interest income increased 3.6% year-over-year to $9.6 million for Q2 2026; net interest margin improved to 3.74%.

• Total interest income for Q2 2026 was $14.8 million, down 0.5% year-over-year, while interest expense fell 7.2% to $5.3 million.

• Noninterest income rose 27.6% year-over-year to $1.4 million and 66.4% sequentially to $1.5 million, driven by improved mortgage servicing rights valuation, higher loan sale gains, and a non-recurring prepayment penalty.

• Noninterest expense increased 6.0% year-over-year and 3.2% sequentially to $8.1 million, mainly due to higher salaries, operations, and data processing costs.

• Efficiency ratio improved to 73.76% for Q2 2026, down from 79.08% in Q1 2026.

Outlook and guidance

• Management expects continued quarterly cash dividends, subject to board discretion, and remains focused on profitable growth, operating efficiency, and maintaining strong liquidity and capital ratios.

• Liquidity position remains strong, with significant borrowing capacity and no outstanding advances at quarter-end.

• No material changes in risk factors or market risk since the last annual report.

• Continued emphasis on prudent capital deployment and balance sheet optimization.