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CHANGE OF CONTROL AGREEMENT

THIS AGREEMENT is entered into as of the _____ day of June, 2016 (the “Effective
Date”) by and between Sound Financial Bancorp, Inc. (“SFBC”), a Maryland
corporation, Sound Community Bank (the “Bank”), a Washington state-chartered
commercial bank, and Matthew P. Deines (the “Executive”).  This Agreement amends
and restates the Change in Control Agreement between SFBC, the Bank and the
Executive as originally adopted effective October 30, 2013 (the “Prior
Agreement”).

WITNESSETH:

WHEREAS, SFBC owns 100% of the outstanding stock of the Bank;

WHEREAS, Executive is the Executive Vice President, Chief Financial Officer and
Corporate Secretary of SFBC and the Bank, and as such is a key executive officer
whose continued dedication, availability, advice and counsel to SFBC and the
Bank is deemed important to the Boards of Directors of SFBC and the Bank and to
their respective stockholders;

WHEREAS, SFBC and the Bank wish to retain the services of Executive free from
any distractions or conflicts that could arise as a result of a change of
control of SFBC or the Bank.

NOW, THEREFORE, to assure SFBC and the Bank of Executive's continued dedication
free of any distractions resulting from a Change of Control, and for other good
and valuable consideration, the receipt and adequacy which each party hereby
acknowledges, SFBC, the Bank and Executive hereby agree as follows:

1.             TERM OF AGREEMENT: This Agreement shall remain in effect until
cancelled by either party hereto, upon not less than twelve (12) months prior
written notice to the other party.

2.              ENTIRE AGREEMENT; AT-WILL EMPLOYMENT:

(a)           This Agreement constitutes the entire agreement between SFBC, the
Bank and Executive concerning the subject matter of change in control and
supersedes all prior agreements between the parties with respect to the subject
matter hereof, including, without limitation, the Prior Agreement.  No rights
are granted to Executive under this Agreement other than those specifically set
forth herein.

(b)           Executive’s employment is at-will, which means that SFBC or the
Bank may terminate Executive’s employment at any time, with or without advance
notice, and with or without Cause (as defined herein). Similarly, Executive may
resign his employment at any time, with or without advance notice, and with or
without reason.  Executive shall not be entitled to any compensation following
Executive’s last day of employment with SFBC and the Bank, except as expressly
provided for by this Agreement and/or applicable law.

3.              CHANGE OF CONTROL:  In the event there is an Involuntary
Termination (as defined herein) of the Executive’s employment by SFBC or the
Bank, concurrently with or within twelve (12) months following a Change of
Control (as defined herein), then SFBC shall:
 

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(a)       Pay to the Executive a lump sum cash amount, upon the later of the
date of such Change of Control or the effective date of the Executive’s
termination of employment with SFBC and/or the Bank, equal to two times the
Executive’s then current annual base salary; and

(b)       Maintain and provide for a period ending at the earlier of (i)
eighteen (18) months after the effective date of the Executive’s termination
(“Executive’s Termination Date”) or (ii) the date of the Executive's full time
employment by another employer that provides substantially similar benefits, at
no premium cost to the Executive, the same group health benefits and other group
insurance and group retirement benefits as the Executive would have received if
the Executive had continued to be employed by SFBC and/or the Bank, to the
extent that SFBC and the Bank can do so under the terms of applicable plans as
are maintained by SFBC and/or the Bank for the benefit of its executive officers
from time to time; and

(c)       In the event that the continued participation of the Executive in any
group insurance plan as provided in Section 3(b) would trigger the payment of an
excise tax under Section 4980D of the Code, or during the period set forth in
Section 3(b) any such group insurance plan is discontinued, then SFBC and the
Bank shall at their election either (i) arrange to provide the Executive with
alternative benefits substantially similar to those which the Executive was
entitled to receive under such group insurance plans immediately prior to the
Executive’s Termination Date, provided that the alternative benefits do not
trigger the payment of an excise tax under Section 4980D of the Code, or (ii)
pay to the Executive within 20 business days following the Executive’s
Termination Date (or within 20 business days following the discontinuation of
the benefits if later) a lump sum cash amount equal to the projected cost to
SFBC and the Bank of providing continued coverage to the Executive, with the
projected cost to be based on the costs being incurred immediately prior to the
Executive’s Termination Date (or the discontinuation of the benefits if later),
as increased by 10% each year; and

(d)       (i) Any insurance premiums payable by SFBC or the Bank or any
successor pursuant to Sections 3(b) or 3(c) shall be payable at such times and
in such amounts as if the Executive was still an employee of SFBC and the Bank,
subject to any increases in such amounts imposed by the insurance company or
COBRA, with SFBC or the Bank paying any employee portion of the premiums that
the Executive would have been required to pay if he was still an employee of
SFBC or the Bank, and (ii) the amount of insurance premiums required to be paid
by SFBC and/or the Bank in any taxable year shall not affect the amount of
insurance premiums required to be paid SFBC and/or the Bank in any other taxable
year.

(e)       Notwithstanding any other provision contained in this Agreement, if
either (i) the  time period for making any cash payment under Section 3(c)
commences in one calendar year and ends in the succeeding calendar year or (ii)
in the event any payment under this Section 3 is made contingent upon the
execution of a general release and the time period that the Executive has to
consider the terms of such general release (including any revocation period
under such release) commences in one calendar year and ends in the succeeding
calendar year, then the payment shall not be paid until the succeeding calendar
year.
 
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4.              LIMITATION OF BENEFITS: It is the intention of the parties that
no payment be made or benefit provided to the Executive that would constitute an
“excess parachute payment” within the meaning of Section 280G of the Code (as
defined herein), and any regulations thereunder, thereby resulting in a loss of
an income tax deduction by SFBC or the imposition of an excise tax on the
Executive under Section 4999 of the Code. If the independent accountants serving
as auditors for SFBC immediately prior to the date of a Change of Control
determine that some or all of the payments or benefits scheduled under this
Agreement, when combined with any other payments or benefits provided to the
Executive on a Change of Control by SFBC, the Bank and any affiliate of SFBC or
the Bank required to be aggregated with SFBC or the Bank under Section 280G of
the Code, would constitute nondeductible excess parachute payments by SFBC under
Section 280G of the Code, then the payments or benefits scheduled under this
Agreement will be reduced to one dollar less than the maximum amount which may
be paid or provided without causing any such payments or benefits scheduled
under this Agreement or otherwise provided on a Change of Control to be
nondeductible. The determination made as to the reduction of benefits or
payments required hereunder by the independent accountants shall be binding on
the parties.   If the payments and benefits under Section 3 are required to be
reduced, the cash severance shall be reduced first, followed by a reduction in
the fringe benefits.

5.              LITIGATION -OBLIGATIONS - SUCCESSORS:

(a)           If litigation shall be brought or arbitration commenced to
challenge, enforce or interpret any provision of this Agreement, and such
litigation or arbitration does not end with judgment in favor of SFBC, SFBC
hereby agrees to indemnify the Executive for his reasonable attorney's fees and
disbursements incurred in such litigation or arbitration.

(b)           SFBC's obligation to pay the Executive the compensation and
benefits and to make the arrangements provided herein shall be absolute and
unconditional and shall not be affected by any circumstances, including, without
limitation, any set-off, counterclaim, recoupment, defense or other right which
SFBC may have against him or anyone else. All amounts payable by SFBC hereunder
shall be paid without notice or demand.  The Executive shall not be required to
mitigate the amount of any payment provided for in this Agreement by seeking
other employment or otherwise.

(c)           SFBC will require any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all of the
business and/or assets of SFBC, by agreement in form and substance satisfactory
to the Executive, to expressly assume and agree to perform this Agreement in its
entirety. Failure of SFBC to obtain such agreement prior to the effectiveness of
any such succession shall be a breach of this Agreement and shall entitle the
Executive to the compensation described in Section 3.  As used in this
Agreement, “SFBC” shall mean Sound Financial Bancorp, Inc. and any successor to
its business and/or assets as aforesaid which executes and delivers the
agreement provided for in this Section 5 or which otherwise becomes bound by all
the terms and provisions of this Agreement by operation of law.

6.              NOTICES: For the purposes of this Agreement, notices and all
other communications provided for in the Agreement shall be in writing and shall
be deemed to have been duly given when delivered or mailed by United States
registered or certified mail, return receipt requested, postage prepaid,
addressed as follows:
 
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If to the Executive:
         
If to SFBC:
Sound Financial Bancorp, Inc.
   
2005 5th Avenue, Suite 200
   
Seattle, Washington 98121

or at such other address as any party may have furnished to the other in writing
in accordance herewith, except that notices of change of address shall be
effective only upon receipt.

7.              MODIFICATION - WAIVERS - APPLICABLE LAW: No provisions of this
Agreement may be modified, waived or discharged unless such waiver, modification
or discharge is agreed to in writing, signed by the Executive and on behalf of
SFBC by such officer as may be specifically designated by the Board of Directors
of SFBC. No waiver by either party hereto at any time of any breach by the other
party hereto of, or in compliance with, any condition or provision of this
Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time. No agreements or representations, oral or otherwise, express or
implied, with respect to the subject matter hereof have been made by either
party which are not set forth expressly in this Agreement. The validity,
interpretation, construction and performance of this Agreement shall be governed
by the laws of the State of Washington.

8.              INVALIDITY - ENFORCEABILITY: The invalidity or unenforceability
of any provisions of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement, which shall remain in
full force and effect. Any provision in this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
only to the extent of such prohibition or unenforceability without invalidating
or affecting the remaining provisions of this Agreement, and any such
prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.

9.             SUCCESSOR RIGHTS: This Agreement shall inure to the benefit of
and be enforceable by the Executive's personal or legal representatives,
executors, administrators, successors, heirs, distributees, devisees and
legatees. If the Executive should die while any amounts would still be payable
to him hereunder, all such amounts, unless otherwise provided herein, shall be
paid in accordance with the terms of this Agreement to his executor or, if there
is no such executor, to his estate.

10.           HEADINGS: Descriptive headings contained in this Agreement are for
convenience only and shall not control or affect the meaning or construction of
any provision in this Agreement.

11.           MEDIATION - ARBITRATION:

(a)           In the event any dispute between the parties arises under this
Agreement and the parties are unable to settle the dispute between themselves,
the parties shall on the written request of either party attempt to resolve the
dispute through a formal mediation within 90 days of the request.  If parties
cannot agree on a mediator and the place of mediation, then the mediation shall
be administered by the American Arbitration Association in Seattle Washington. 
There shall be no pre-mediation discovery unless mutually agreed upon by the
parties.
 
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(b)           In the event a dispute is not resolved via mediation as described
above, the dispute shall, on the written demand of either party, be resolved by
binding arbitration in accordance with the rules of the American Arbitration
Association then in effect, except that any dispute relating to the enforcement
of any of the provisions of Section 12 by SFBC and/or the Bank shall not be
subject to binding arbitration.  Judgment may be entered on the arbitrator’s
award in any court having jurisdiction.

12.           FUTURE CONDUCT AND OBLIGATIONS:

(a)           The Executive, for himself or herself and for his or her family
(i.e., parents, siblings and children), heirs, dependents, assigns, agents,
executors, administrators, trustees and legal representatives agrees that he
will not (and will use his best efforts to cause such affiliates to not) at any
time engage in any form of conduct, or make any statements or representations,
that disparage or otherwise impair the reputation, goodwill, or commercial
interests of SFBC, any affiliates or any of their agents, officers, directors,
employees and/or stockholders.

(b)           The Executive agrees to reasonably assist and cooperate with SFBC
or the Bank (and their outside counsel) in connection with the defense or
prosecution of any claim that may be made or threatened against or by SFBC or
any affiliate, or in connection with any ongoing or future investigation or
dispute or claim of any kind involving SFBC or any affiliate, including any
proceeding before any arbitral, administrative, judicial, legislative, or other
body or agency, including preparing for and testifying in any proceeding to the
extent such claims, investigations or proceedings relate to services performed
by the Executive, pertinent knowledge possessed by the Executive, or any act or
omission by the Executive. The Executive’s agreement under this Section 12(b) is
limited such that any assistance and cooperation shall not unreasonably
interfere with the Executive’s subsequent employment. SFBC and/or the Bank will
reimburse the Executive for the reasonable out-of-pocket expenses incurred as a
result of such cooperation.

(c)           Until the one-year anniversary of the Executive’s Involuntary
Termination, the Executive shall not, directly or indirectly, without the
written consent of SFBC (i) initiate contact with or solicit any employee or
customer of SFBC or any affiliate; (ii) hire or otherwise engage any such
employee; (iii) induce or otherwise counsel, advise or encourage any such
employee to leave the employment of SFBC or an affiliate; or (iv) induce any
supplier, licensor, licensee, business relation, representative or agent of SFBC
to terminate or modify its relationship with SFBC or any affiliate, or in any
way interfere with the relationship between SFBC or any affiliate and such other
party.

(d)           The Executive acknowledges that the future conduct and obligation
provisions of this Section 12 will not prevent Executive from obtaining other
gainful employment or cause Executive any undue hardship and are reasonable and
necessary in order to protect the legitimate interests of SFBC and its
affiliates.

13.           COMPLIANCE WITH SECTION 409A OF THE CODE: Notwithstanding anything
herein to the contrary, any payments to be made in accordance with this
Agreement shall not be made prior to the date that is 185 calendar days from the
date of termination of employment of the Executive if it is determined by SFBC
in good faith that such payments are subject to the limitations set forth in
Section 409A of the Code and regulations promulgated thereunder, and payments
made in advance of such date would result in the requirement that Executive pay
additional interest and taxes in accordance with Section 409A(a)(1)(B) of the
Code.
 
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14.           DEFINITIONS:
 
(a)           Cause shall mean the Executive’s personal dishonesty,
incompetence, willful misconduct, breach of a fiduciary duty involving personal
profit, intentional failure to perform stated duties, willful violation of any
law, rule, or regulation (other than traffic violations or similar offenses) or
final cease-and-desist order, or material breach of any provision of this
Agreement. No act or failure to act by the Executive shall be considered willful
unless the Executive acted or failed to act with an absence of good faith and
without a reasonable belief that his or action or failure to act was in the best
interest of SFBC and/or the Bank.  “Cause” shall not exist unless and until
there shall have been delivered to the Executive a copy of a resolution, duly
adopted by the affirmative vote of not less than a majority of the entire
membership of the Board of Directors at a meeting of the Board called and held
for such purpose (after reasonable notice to the Executive and an opportunity
for the Executive, together with the Executive’s counsel, to be heard before the
Board), stating that in the good faith opinion of the Board the Executive has
engaged in conduct described in the preceding sentence and specifying the
particulars thereof in detail.  The opportunity of the Executive to be heard
before the Board shall not affect the right of the Executive to mediation and
arbitration as set forth in Section 11 of this Agreement.

(b)           Change of Control shall mean the occurrence of any of the
following events: (i) any “person” or “group” (as defined in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934 (“Exchange Act”)), other than SFBC,
any subsidiary of SFBC or their employee benefit plans, directly or indirectly,
becomes the “beneficial owner” (as defined in Rule 13d-3, under the Exchange
Act) of securities of SFBC with respect to which 30% or more of the total number
of votes that may be cast for the election of SFBC’s Board of Directors; (ii) as
a result of, or in connection with, any cash tender offer, merger or other
business combination, sale of assets or contested election(s), or combination of
the foregoing, the individuals who were members of SFBC’s Board of Directors on
the Effective Date (the “Incumbent Board”) cease for any reason to constitute at
least a majority thereof, provided that any person becoming a director
subsequent to the Effective Date whose election was approved by a vote of at
least three-quarters of the directors comprising the Incumbent Board, or whose
nomination for election by SFBC’s stockholders was approved by the nominating
committee serving under an Incumbent Board, shall be considered a member of the
Incumbent Board; (iii) a tender offer or exchange offer for 30% or more of the
total outstanding shares of common stock of SFBC is completed (other than such
an offer by the SFBC); or (iv) the stockholders of SFBC approve an agreement
providing either for a transaction in which SFBC will cease to be an independent
publicly owned corporation or for a sale or other disposition of all or
substantially all the assets of SFBC, and the transaction is thereafter
consummated.  The Change of Control date is the date on which an event described
in (i), (ii), (iii) or (iv) occurs, with the date in clause (iv) being the date
the transaction is consummated.

(c)           Code shall mean the Internal Revenue Code of 1986, as amended.
 
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(d)           Involuntary Termination shall mean either (i) SFBC’s and/or the
Bank’s termination of the Executive’s employment without the Executive’s express
written consent, or (ii) termination of the Executive’s employment by the
Executive by reason of a material diminution of or interference with the
Executive’s duties, responsibilities and benefits, including  any of the
following actions, unless consented to in writing by the Executive: (1) a change
in the principal workplace of the Executive to a location outside of a 35 mile
radius from the Bank’s headquarters office as of the date hereof, (2) a material
demotion of the Executive; (3) a material reduction in the number or seniority
of other Bank personnel reporting to the Executive or a material reduction in
the frequency with which, or in the nature of the matters with respect to which,
such personnel are to report to the Executive, other than as part of a Bank-
wide reduction in staff; (4) a material adverse change in the Executive’s
salary, perquisites, benefits, contingent benefits or vacation, other than as
part of an overall program applied uniformly and with equitable effect to all
members of the senior management of the Bank; or (5) a material permanent
increase in the required hours of work or the workload of the Executive;
provided, however, that prior to any termination of employment by Executive
pursuant to clauses (1) through (5) of this Section 14(d) the Executive must
first provide written notice to the Bank within ninety (90) days of the initial
existence of the condition, describing the existence of such condition, and the
Bank shall thereafter have the right to remedy the condition within thirty (30)
days of the date the Bank received the written notice from the Executive.  If
the Bank remedies the condition within such thirty (30) day cure period, then no
Involuntary Termination shall be deemed to occur with respect to such
condition.  If the Bank does not remedy the condition within such thirty (30)
day cure period, then the Executive may deliver a notice of Involuntary
Termination at any time within sixty (60) days following the expiration of such
cure period. The term “Involuntary Termination” does not include termination for
Cause or termination of employment due to retirement, death, disability or
suspension or temporary or permanent prohibition from participation in the
conduct of the Bank’s affairs under Section 8 of the Federal Deposit Insurance
Act (“FDIA”)
 
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the Effective
Date referred to above.

     
EXECUTIVE
         
ATTEST:
            
Matthew P. Deines
               
SOUND FINANCIAL BANCORP, INC.
         
ATTEST:
   
By:
       
Laura Lee Stewart
       
President and CEO
               
SOUND COMMUNITY BANK
         
ATTEST:
   
By:
         
Laura Lee Stewart
       
President and CEO

 
 
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