Company: SFBC
Filing Date: 2025-03-18
Form Type: 10-K
Source: 0001541119-25-000009
Chunk: 189

Company: Sound Financial Bancorp, Inc.
Filing Date: 2025-03-18
Form: 10-K
Item: Item 8
Chunk 189
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 party to the financial instrument for commitments to extend credit, is represented by the contractual notional amount of those instruments. The Company uses the same credit policies in making commitments as it does for on-balance-sheet instruments.Commitments to extend credit are agreements to lend to a client as long as there is no violation of any condition established by the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Because many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. These commitments are not reflected in the consolidated financial statements. The Company evaluates each client's creditworthiness on a case-by-case basis. The amount of collateral obtained, if it is deemed necessary by the Company, is based on management's credit evaluation of the client.Financial instruments containing commitments representing credit risk were as follows at the dates indicated (in thousands): December 31, 20242023Residential mortgage commitments$3,758 $10,465 Unfunded construction commitments25,810 34,667 Unused lines of credit26,105 27,245 Irrevocable letters of credit163 277 Total loan commitments$55,836 $72,654 At December 31, 2024, fixed-rate loan commitments totaled $3.8 million and had a weighted-average interest rate of 8.26%. At December 31, 2023, fixed-rate loan commitments totaled $10.5 million and had a weighted-average interest rate of 7.12%.At December 31, 2024 and 2023, the Company had letters of credit issued by the FHLB with a notional amount of $8.0 million and $10.0 million, respectively, in order to secure Washington State Public Funds.In the ordinary course of business, the Company sells loans without recourse that may have to be subsequently repurchased due to defects that occurred during the origination of the loan. The defects are categorized as documentation errors, underwriting errors, early payment defaults, and fraud. When a loan sold to an investor without recourse fails to perform, the investor will typically review the loan file to determine whether defects in the origination process occurred. If a defect is identified, the Company may be required to either repurchase the loan or indemnify the investor for losses sustained. If there are no defects, the Company has no obligation to repurchase the loan. At December 31, 2024 and