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

Company: Sound Financial Bancorp, Inc.
Filing Date: 2025-03-18
Form: 10-K
Item: Item 1
Chunk 25
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 indicator is a loan originated to a borrower with a credit score of 660 or lower. Of the $39.9 million in one-to-four-family loans originated in 2024, $407 thousand or 1.0% were to borrowers with a credit score under 660. Additionally, of the $9.8 million in manufactured home loans originated in 2024, $162 thousand or 1.7% were to borrowers with a credit score of 660 or lower. At December 31, 2024, the total amount of residential and consumer loans held in our loan portfolio to borrowers with a credit score of 660 or lower were $19.2 million of which $515 thousand were nonaccrual. We generally do not originate or purchase negative amortization or option adjustable-rate loans.

In addition to interest earned on loans and loan origination fees, we receive fees for loan commitments, late payments and other miscellaneous services.

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We also sell whole one-to-four family loans without recourse to Fannie Mae and other investors, subject to a provision for repurchase upon breach of representation, warranty or covenant. These loans are fixed-rate mortgages, which primarily are sold to reduce our interest-rate risk and generate noninterest income. They are generally sold for cash in amounts equal to the unpaid principal amount of the loans determined using present value yields to the buyer. These sales allow for a servicing fee on loans when the servicing is retained by us. Most one-to-four family loans are sold by us with servicing retained. At December 31, 2024, we were servicing a $423.7 million portfolio of residential mortgage loans for Fannie Mae and $2.1 million for other investors. These mortgage servicing rights are carried at fair value and had a value at December 31, 2024 of $4.8 million. We earned mortgage servicing income of $1.1 million and $1.2 million for the years ended December 31, 2024 and 2023, respectively. See “Note 6 — Mortgage Servicing Rights” in the Notes to Consolidated Financial Statements contained in “Part II. Item 8. Financial Statements and Supplementary Data” of this report on Form 10-K. We repurchased no loans in 2024 and one loan totaling $448 thousand in 2023. 

Sales of whole real estate loans may generate income at the time of sale, produce future servicing income on loans where servicing is retained, provide funds for additional lending, and increase liquidity. We sold