Sound Financial Bancorp, Inc.SFBC
Sound Financial Bancorp, Inc. Debt Disclosure
Borrowings, FHLB Stock and Subordinated Notes
FHLB Advances
The following tables present advances from the FHLB as of the dates indicated (dollars in thousands):
December 31, | |||||||||||
| 2024 | 2023 | ||||||||||
FHLB advances: | |||||||||||
Short-term advances | — | 15,000 | |||||||||
Long-term advances | 25,000 | 25,000 | |||||||||
Total | $ | 25,000 | $ | 40,000 | |||||||
| December 31, 2024 | December 31, 2023 | ||||||||||
| Fixed Rate: | |||||||||||
| Outstanding balance | $ | 25,000 | $ | 40,000 | |||||||
| Interest rates ranging from | 4.06 | % | 4.06 | % | |||||||
| Interest rates ranging to | 4.27 | % | 4.35 | % | |||||||
| Weighted average interest rate | 4.16 | % | 4.25 | % | |||||||
The following table presents the maturity of our FHLB advances (dollars in thousands):
| December 31, 2024 | |||||
| 2025 | $ | — | |||
| 2026 | 15,000 | ||||
| 2027 | — | ||||
| 2028 | 10,000 | ||||
| $ | 25,000 | ||||
FHLB Des Moines Borrowing Capacity
The Company has a loan agreement with the FHLB of Des Moines. The terms of the agreement call for a blanket pledge of a portion of the Company’s one-to-four family mortgage loan and commercial and multifamily loan portfolios based on the outstanding balance under the Company’s loan agreement with the FHLB of Des Moines. Additionally, the Company had outstanding letters of credit from the FHLB of Des Moines to secure public deposits. The following table presents the borrowing capacity from the FHLB as of the dates indicated (dollars in thousands):
| December 31, 2024 | December 31, 2023 | ||||||||||
Amount available to borrow under credit facility(1) | $ | 385,366 | $ | 463,541 | |||||||
Loans pledged as collateral for borrowings | 333,613 | 344,572 | |||||||||
| Advance equivalent of collateral: | |||||||||||
| One-to-four family mortgage loans | 175,907 | 196,547 | |||||||||
| Commercial and multifamily mortgage loans | 29,180 | 34,464 | |||||||||
| Home equity loans | 241 | 348 | |||||||||
| Notional amount of letters of credit outstanding | 8,000 | 10,000 | |||||||||
Remaining FHLB borrowing capacity(2) | $ | 172,327 | $ | 181,360 | |||||||
(1)Subject to eligible pledged collateral.
(2)Amount remaining from the advance equivalent of collateral, less letters of credit outstanding and FHLB advances.
As a member of the FHLB, the Company is required to maintain a minimum level of investment in FHLB of Des Moines stock based on specific percentages of its outstanding FHLB advances. At December 31, 2024 and 2023, the Company had an investment of $1.7 million and $2.4 million, respectively, in FHLB of Des Moines stock.
Federal Reserve Bank of San Francisco Borrowings
The Company has a borrowing agreement with the Federal Reserve Bank of San Francisco. The terms of the agreement call for a blanket pledge of a portion of the Company’s consumer and commercial business loans based on the outstanding balance under the Company’s borrowing agreement with the Federal Reserve Bank of San Francisco. At December 31, 2024 and December 31, 2023, the amount available to borrow under this credit facility was $20.8 million and $18.3 million, respectively, subject to eligible pledged collateral. The Company had no outstanding borrowings under this arrangement at December 31, 2024 and 2023.
Other Borrowings
The Company has access to an unsecured Fed Funds line of credit from Pacific Coast Banker’s Bank. The line has a one year term maturing on June 30, 2025 and is renewable annually. As of December 31, 2024, the amount available under this line of credit was $20.0 million. There was no balance on this line of credit as of December 31, 2024 and 2023.
Subordinated Debt
In September 2020, the Company issued $12.0 million of fixed to floating rate subordinated notes that mature in 2030. The subordinated notes have an initial fixed interest rate of 5.25% to, but excluding, October 1, 2025, payable semi-annually in arrears. From, and including, October 1, 2025, the interest rate on the subordinated notes will reset quarterly to a floating rate per annum equal to a benchmark rate, which is the then-current three-month term Secured Overnight Financing Rate, or SOFR, plus 513 basis points, payable quarterly in arrears. The subordinated notes mature on May 15, 2030, and may be redeemed by the Company, in whole or in part, on October 1, 2025, or on any subsequent interest payment date. Prior to October 1, 2025, the Company may redeem these notes, in whole but not in part, only under certain limited circumstances set forth in the terms of the subordinated notes. The subordinated notes may be included in Tier 2 capital for Sound Financial Bancorp under current regulatory guidelines and interpretations. The balance of the subordinated notes, net of debt issuance costs, was $11.8 million at December 31, 2024 and $11.7 million at December 31, 2023.About Debt Disclosures
Debt disclosures detail a company's borrowing structure — the types of instruments, interest rates, maturity schedule, and covenant restrictions that define its financial obligations and flexibility. This section is essential for assessing refinancing risk, interest rate exposure, and the margin of safety against financial distress.
Key signals: the maturity schedule reveals concentration risk — large maturities within 1-2 years during tight credit markets can force dilutive refinancing or asset sales. Compare the fair value of debt against carrying amount to gauge whether the market views the company's credit risk differently than the balance sheet suggests. Watch covenant compliance disclosures for tightening cushions, especially leverage and interest coverage ratios. Variable-rate debt exposure quantifies sensitivity to interest rate changes. Secured versus unsecured mix affects recovery rates and future borrowing capacity. Compare net debt-to-EBITDA against industry peers and covenant limits to assess financial health.