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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.  20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2021
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                to
COMMISSION FILE NUMBER 001-35633
Sound Financial Bancorp, Inc.
(Exact Name of Registrant as Specified in its Charter)
Maryland45-5188530
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
2400 3rd Avenue, Suite 150, Seattle, Washington
98121
(Address of principal executive offices)(Zip Code)
Registrant’s telephone number, including area code:   (206) 448-0884
None
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $0.01 par valueSFBCThe NASDAQ Stock Market LLC

Indicate by checkmark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.   Yes ☒   No ☐
Indicate by checkmark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).   Yes ☒   No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company.  See the definitions of “large accelerated filer,” accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filer
Non-accelerated filerSmaller reporting company
 Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by checkmark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes     No ☒
Indicate the number of shares outstanding of each of the registrant’s classes of common stock as of the latest practicable date.
As of May 12, 2021, there were 2,614,219 shares of the registrant’s common stock outstanding. 


Table of Contents
SOUND FINANCIAL BANCORP, INC.
FORM 10-Q
TABLE OF CONTENTS
 Page Number
PART I    FINANCIAL INFORMATION 
 
 

2




PART I - FINANCIAL INFORMATION
Item 1. Financial Statements

SOUND FINANCIAL BANCORP, INC. AND SUBSIDIARY
Condensed Consolidated Balance Sheets (unaudited)
(In thousands, except share and per share amounts)
 March 31,
2021
December 31,
2020
ASSETS  
Cash and cash equivalents$269,593 $193,828 
Available-for-sale securities, at fair value9,078 10,218 
Loans held-for-sale10,713 11,604 
Loans held-for-portfolio614,377 613,363 
Allowance for loan losses(5,935)(6,000)
Total loans held-for-portfolio, net608,442 607,363 
Accrued interest receivable2,160 2,254 
Bank-owned life insurance (“BOLI”), net14,690 14,588 
Other real estate owned (“OREO”) and repossessed assets, net575 594 
Mortgage servicing rights, at fair value4,109 3,780 
Federal Home Loan Bank (“FHLB”) stock, at cost1,052 877 
Premises and equipment, net6,123 6,270 
Right of use assets6,475 6,722 
Other assets3,641 3,304 
Total assets$936,651 $861,402 
LIABILITIES
Deposits
Interest-bearing$628,009 $615,491 
Noninterest-bearing demand188,684 132,490 
Total deposits816,693 747,981 
Accrued interest payable133 369 
Lease liabilities6,894 7,134 
Other liabilities12,027 7,674 
Advance payments from borrowers for taxes and insurance1,746 1,168 
Subordinated debt, net11,602 11,592 
Total liabilities849,095 775,918 
COMMITMENTS AND CONTINGENCIES (NOTE 7)
STOCKHOLDERS’ EQUITY
Preferred stock, $0.01 par value, 10,000,000 shares authorized, none issued or outstanding
  
Common stock, $0.01 par value, 40,000,000 shares authorized, 2,609,806 and 2,592,587 shares issued and outstanding as of March 31, 2021 and December 31, 2020, respectively
26 25 
Additional paid-in capital27,447 27,106 
Unearned shares - Employee Stock Ownership Plan (“ESOP”)(85)(113)
Retained earnings59,975 58,226 
Accumulated other comprehensive income, net of tax193 240 
Total stockholders’ equity87,556 85,484 
Total liabilities and stockholders’ equity$936,651 $861,402 
See notes to condensed consolidated financial statements
3



SOUND FINANCIAL BANCORP, INC. AND SUBSIDIARY
Condensed Consolidated Statements of Income (unaudited)
(In thousands, except share and per share amounts)
 Three Months Ended March 31,
20212020
INTEREST INCOME  
Loans, including fees$7,886 $8,408 
Interest and dividends on investments, cash and cash equivalents
113 238 
Total interest income7,999 8,646 
INTEREST EXPENSE
Deposits1,295 1,859 
Borrowings 59 
Subordinated notes168  
Total interest expense1,463 1,918 
Net interest income6,536 6,728 
PROVISION FOR LOAN LOSSES 250 
Net interest income after provision for loan losses6,536 6,478 
NONINTEREST INCOME
Service charges and fee income532 494 
Earnings on cash surrender value of bank-owned life insurance82 15 
Mortgage servicing income312 244 
Fair value adjustment on mortgage servicing rights(275)(362)
Net gain on sale of loans2,053 318 
Total noninterest income2,704 709 
NONINTEREST EXPENSE
Salaries and benefits3,644 3,235 
Operations1,206 1,394 
Regulatory assessments101 250 
Occupancy448 497 
Data processing779 570 
Net gain on OREO and repossessed assets(16) 
Total noninterest expense6,162 5,946 
Income before provision for income taxes3,078 1,241 
Provision for income taxes627 260 
Net income$2,451 $981 
Earnings per common share:
Basic$0.95 $0.38 
Diluted$0.93 $0.38 
Weighted-average number of common shares outstanding:
Basic2,571,726 2,542,514 
Diluted2,610,986 2,587,716 
 
See notes to condensed consolidated financial statements 
4



SOUND FINANCIAL BANCORP, INC. AND SUBSIDIARY
Condensed Consolidated Statements of Comprehensive Income (unaudited)
(In thousands)
Three Months Ended March 31,
20212020
Net income$2,451 $981 
Available for sale securities:
Unrealized holding losses arising during the period(59)(23)
Income tax expense related to unrealized gains/losses12 4 
Other comprehensive loss, net of tax(47)(19)
Comprehensive income$2,404 $962 

See notes to condensed consolidated financial statements
5



SOUND FINANCIAL BANCORP, INC. AND SUBSIDIARY
Condensed Consolidated Statements of Stockholders’ Equity
For the Three Months Ended March 31, 2021 and 2020 (unaudited)
(In thousands, except share and per share amounts)
 SharesCommon
Stock
Additional Paid
-in Capital
Unearned
ESOP Shares
Retained
Earnings
Accumulated
Other
Comprehensive
Income, net of tax
Total
Stockholders’
Equity
Balance, at December 31, 20202,592,587 $25 $27,106 $(113)$58,226 $240 $85,484 
Net income2,451 2,451 
Other comprehensive loss, net of tax(47)(47)
Share-based compensation166 166 
Restricted stock awards issued10,168 — 
Cash dividends paid on common stock ($0.27 per share)
(702)(702)
Common stock surrendered(3,029)— 
Restricted shares forfeited(1,470)— 
Common stock options exercised11,550 1 103 104 
Allocation of ESOP shares72 28 — 100 
Balance, at March 31, 20212,609,806 $26 $27,447 $(85)$59,975 $193 $87,556 
Balance, at December 31, 20192,567,389 $25 $26,343 $(227)$51,410 $175 $77,726 
Net income981 981 
Other comprehensive loss, net of tax(19)(19)
Share-based compensation185 185 
Restricted stock awards issued13,600 — 
Cash dividends paid on common stock ($0.35 per share)
(903)(903)
Common stock surrendered— 
Restricted shares forfeited(180)— 
Common stock options exercised10,685 182 182 
Allocation of ESOP shares66 29 — 95 
Balance, at March 31, 20202,591,494 $25 $26,776 $(198)$51,488 $156 $78,247 

See notes to condensed consolidated financial statements
6



SOUND FINANCIAL BANCORP, INC. AND SUBSIDIARY
Condensed Consolidated Statements of Cash Flows (unaudited)
(In thousands)
 Three Months Ended March 31,
 20212020
CASH FLOWS FROM OPERATING ACTIVITIES:  
Net income$2,451 $981 
Adjustments to reconcile net income to net cash from operating activities:
Amortization of net discounts on investments56 22 
Provision for loan losses 250 
Depreciation and amortization176 245 
Compensation expense related to stock options and restricted stock166 185 
Fair value adjustment on mortgage servicing rights275 362 
Right of use assets amortization247 257 
Change in lease liabilities(240)(244)
Increase in cash surrender value of BOLI(74)(15)
Net change in advances from borrowers for taxes and insurance578 546 
Net gain on sale of loans(2,053)(318)
Proceeds from sale of loans held-for-sale69,741 19,003 
Originations of loans held-for-sale(67,401)(23,721)
Net gain on OREO and repossessed assets(16) 
Change in operating assets and liabilities:
Accrued interest receivable94 1 
Other assets(337)45 
Accrued interest payable(236)(2)
Other liabilities4,353 (878)
Net cash provided by (used in) operating activities7,780 (3,281)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of available-for-sale securities (2,489)
Proceeds from principal payments, maturities and sales of available-for-sale securities1,047 514 
Net (increase) decrease in loans(1,079)(5,485)
Reduction in (purchase of) BOLI(28)113 
Purchases of premises and equipment, net(29)(355)
Proceeds from sale of OREO and other repossessed assets35  
Net cash used in investing activities(54)(7,702)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in deposits68,712 17,840 
Proceeds from borrowings 15,650 
Repayment of borrowings (15,650)
FHLB stock purchased(175)(5)
Allocation of ESOP shares100 95 
Dividends paid on common stock(702)(903)
Proceeds from common stock option exercises104 182 
Net cash provided by financing activities68,039 17,209 
Net change in cash and cash equivalents75,765 6,226 
Cash and cash equivalents, beginning of period193,828 55,770 
Cash and cash equivalents, end of period$269,593 $61,996 
7



SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for income taxes$ $ 
Interest paid on deposits and borrowings1,699 1,920 
See notes to condensed consolidated financial statements
8



SOUND FINANCIAL BANCORP, INC. AND SUBSIDIARY
Notes to Condensed Consolidated Financial Statements (unaudited)


Note 1 – Basis of Presentation
The accompanying financial information is unaudited and has been prepared from the consolidated financial statements of Sound Financial Bancorp, Inc., and its wholly owned subsidiaries, Sound Community Bank and Sound Community Insurance Agency, Inc.  References in this document to Sound Financial Bancorp refer to Sound Financial Bancorp, Inc. and references to the “Bank” refer to Sound Community Bank. References to “we,” “us,” and “our” or the “Company” refers to Sound Financial Bancorp and its wholly-owned subsidiaries, Sound Community Bank and Sound Community Insurance Agency, Inc., unless the context otherwise requires.
These unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X as promulgated by the Securities and Exchange Commission (“SEC”). In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation of the financial position and results of operations for the periods presented have been included. Certain information and disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to the rules and regulations of the SEC. These unaudited financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2020, as filed with the SEC on March 30, 2021 (“2020 Form 10-K”). The results for the interim periods are not necessarily indicative of results for a full year.
Certain amounts in the prior period’s consolidated financial statements have been reclassified to conform to the current presentation. These classifications do not have an impact on previously reported consolidated net income, stockholders’ equity or earnings per share.

Note 2 – Accounting Pronouncements Recently Issued or Adopted
The Coronavirus Aid, Relief and Economic Security Act ("CARES Act"), signed into law on March 27, 2020, provides relief from certain accounting and financial reporting requirements under U.S. GAAP. Section 4013 of the CARES Act provides temporary relief from the accounting and reporting requirements for troubled debt restructurings (“TDRs”) under Accounting Standards Codification ("ASC") 310-40 for loan modifications related to the novel coronavirus disease 2019 ("COVID-19") pandemic. In addition, on April 7, 2020, a group of banking agencies issued an interagency statement (“Interagency Statement”) for evaluating whether loan modifications that occur in response to the COVID-19 pandemic are TDRs. The Interagency Statement was originally issued on March 22, 2020, but the banking agencies revised it to address the relationship between their TDR accounting and disclosure guidance and the TDR guidance in Section 4013 of the CARES Act. Section 4013 of the CARES Act permits the suspension of ASC 310-40 for loan modifications that are made by financial institutions in response to the COVID-19 pandemic if (1) the borrower was not more than 30 days past due as of December 31, 2019, and (2) the modifications are related to arrangements that defer or delay the payment of principal or interest, or change the interest rate on the loan. The Interagency Statement indicates that a lender can conclude that a borrower is not experiencing financial difficulty if either (1) short-term (e.g., six months) modifications are made in response to COVID-19, such as payment deferrals, fee waivers, extensions of repayment terms, or other delays in payment that are insignificant related to loans in which the borrower is less than 30 days past due on its contractual payments at the time a modification program is implemented, or (2) the modification or deferral program is mandated by the federal government or a state government. Accordingly, any loan modification made in response to the COVID-19 pandemic that meets either of these practical expedients would not be considered a TDR. The Company adopted this guidance effective March 27, 2020. On December 27, 2020, the Consolidated Appropriations Act 2021 (“CAA 2021”) was signed into law. Among other purposes, CAA 2021 provides coronavirus emergency response and relief, including extending relief offered under the CARES Act related to restructured loans as a result of COVID-19 through January 1, 2022 or 60 days after the end of the national emergency declared by the President, whichever is earlier.
In October 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-08, “Receivables – Nonrefundable Fees and Other Costs” (“ASU 2020-08”). ASU 2020-08 clarifies that the Company should reevaluate whether a callable debt security is within the scope of paragraph 310-20-35-33 for each reporting period. ASU 2020-08 is effective for fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. The adoption of ASU 2018-13 did not have a material impact on the Company's consolidated financial statements.
9



On March 2020, the FASB issued ASU No. 2020-04, "Reference Rate Reform" ("Topic 848"). This ASU provides optional guidance for a limited period of time to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting. The amendments in this update apply to contract modifications that replace a reference rate affected by reference rate reform (including rates referenced in fallback provisions) and contemporaneous modifications of other contract terms related to the replacement of the reference rate (including contract modifications to add or change fallback provisions). The following optional expedients for applying the requirements of certain Topics or Industry Subtopics in the Codification are permitted for contracts that are modified because of reference rate reform and that meet certain scope guidance: 1) Modifications of contracts within the scope of Topics 310, Receivables, and 470, Debt, should be accounted for by prospectively adjusting the effective interest rate; 2) Modifications of contracts within the scope of Topics 840, Leases, and 842, Leases, should be accounted for as a continuation of the existing contracts with no reassessments of the lease classification and the discount rate (for example, the incremental borrowing rate) or remeasurements of lease payments that otherwise would be required under those Topics for modifications not accounted for as separate contracts; and 3) Modifications of contracts do not require an entity to reassess its original conclusion about whether that contract contains an embedded derivative that is clearly and closely related to the economic characteristics and risks of the host contract under Subtopic 815-15, Derivatives and Hedging— Embedded Derivatives. In January 2021, ASU 2021-01 updated amendments in the new ASU to clarify that certain optional expedients and exceptions in Topic 848 for contract modifications and hedge accounting apply to derivatives that are affected by the discounting transition. The ASU also amends the expedients and exceptions in Topic 848 to capture the incremental consequences of the scope clarification. The amendments in this ASU have differing effective dates, beginning with interim period including and subsequent to March 12, 2020 through December 31, 2022. The Company does not expect the adoption of ASU 2020-04 to have a material impact on its consolidated financial statements.
In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. This ASU simplifies the accounting for income taxes by removing the exception to the incremental approach for intra-period tax allocation when there is a loss from continuing operations and income or a gain from other items, removing the requirement to recognize a deferred tax liability for equity method investments when a foreign subsidiary becomes an equity method investment, and removing the general methodology for calculating income taxes in an interim period when a year-to-date loss exceeds the anticipated loss for the year. This ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. The adoption of ASU 2019-12 did not have a material impact on the Company's consolidated financial statements.
In August 2018, the FASB issued ASU No. 2018-14, Compensation - Retirement Benefits - Defined Benefit Plans - General (Subtopic 715-20): Disclosure Framework - Changes to the Disclosure Requirements for Defined Benefit Plans. This ASU modifies disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans. Disclosure requirements removed from FASB Subtopic 715-20 include the amounts in accumulated other comprehensive income expected to be recognized as components of net periodic benefit cost over the next fiscal year, the amount and timing of plan assets expected to be returned to the employer, related party disclosures about the amount of future annual benefits covered by insurance and annuity contracts and significant transactions between the employer or related parties and the plan, and, for public entities, the effects of a one-percentage-point change in assumed health care cost trend rates on the aggregate of the service and interest cost components of net periodic benefit costs and benefit obligation for postretirement health care benefits. Disclosure requirements added to FASB Subtopic 715-20 include the weighted-average interest crediting rates for cash balance plans and other plans with promised interest crediting rates, and an explanation of the reasons for significant gains and losses related to changes in the benefit obligation for the period. This ASU is effective for fiscal years ending after December 15, 2020. The adoption of ASU No. 2018-14 did not have a material impact on the Company's consolidated financial statements.
In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. This ASU replaces the existing incurred loss impairment methodology that recognizes credit losses when a probable loss has been incurred with new methodology where loss estimates are based upon lifetime expected credit losses. The amendments in this ASU require a financial asset that is measured at amortized cost to be presented at the net amount expected to be collected. The income statement would then reflect the measurement of credit losses for newly recognized financial assets as well as changes to the expected credit losses that have taken place during the reporting period. The change in allowance recognized as a result of adoption will occur through a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the ASU is adopted. The new guidance may result in an increase in the allowance for loan losses; however, the Company is still in the process of determining the magnitude of the change and its impact on the Company's consolidated financial statements. The FASB issued ASU No. 2019-10, Financial Instruments - Credit Losses (Topic 326), delaying implementation of ASU No. 2016-13 for SEC smaller reporting company filers until fiscal year beginning after December 15, 2022. The Bank meets the requirements of a smaller reporting company and will delay implementation of ASU No. 2016-13.

10



Note 3 – Investments
The amortized cost and fair value of our available-for-sale (“AFS”) securities and the corresponding amounts of gross unrealized gains and losses at the dates indicated were as follows (in thousands):
 Amortized
Cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Estimated
Fair Value
March 31, 2021    
Municipal bonds$5,192 $187 $(20)$5,359 
Agency mortgage-backed securities3,642 90 (13)3,719 
Total$8,834 $277 $(33)$9,078 
December 31, 2020
Municipal bonds$5,209 $204 $ $5,413 
Agency mortgage-backed securities4,706 105 (6)4,805 
Total$9,915 $309 $(6)$10,218 
The amortized cost and fair value of AFS securities at March 31, 2021, by contractual maturity, are shown below (in thousands). Expected maturities of AFS securities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. Investments not due at a single maturity date, primarily mortgage-backed investments, are shown separately.
March 31, 2021
Amortized
Cost
Fair
Value
Due within one year$1,182 $1,188 
Due after one year through five years260 271 
Due after five years through ten years458 499 
Due after ten years3,292 3,401 
Mortgage-backed securities3,642 3,719 
Total$8,834 $9,078 
There were no pledged securities at March 31, 2021 or December 31, 2020.
There were no sales of AFS securities during the three months ended March 31, 2021 or 2020.

11



The following table summarizes the aggregate fair value and gross unrealized loss by length of time of those investments that have been in a continuous unrealized loss position at the dates indicated (in thousands):

 March 31, 2021
 Less Than 12 Months12 Months or LongerTotal
 Fair
Value
Unrealized
Loss
Fair
Value
Unrealized
Loss
Fair
Value
Unrealized
Loss
Municipal bonds$2,076 $(20)$ $ $2,076 $(20)
Agency mortgage-backed securities552 (13)  552 (13)
Total$2,628 $(33)$ $ $2,628 $(33)

 December 31, 2020
 Less Than 12 Months12 Months or LongerTotal
 Fair
Value
Unrealized
Loss
Fair
Value
Unrealized
Loss
Fair
Value
Unrealized
Loss
Agency mortgage-backed securities$1,618 $(6)$ $ $1,618 $(6)
Total$1,618 $(6)$ $ $1,618 $(6)
There were no credit losses recognized in earnings related to other than temporary impairments during the three months ended March 31, 2021 or 2020.
At March 31, 2021, the securities portfolio consisted of 12 agency mortgage-backed securities and ten municipal bonds with a total portfolio fair value of $9.1 million. At December 31, 2020, the securities portfolio consisted of 16 agency mortgage-backed securities and ten municipal bonds with a fair value of $10.2 million. At March 31, 2021, there were five securities in an unrealized loss position for less than 12 months, and there were no securities in an unrealized loss position for more than 12 months. At December 31, 2020, there were six securities in an unrealized loss position for less than 12 months, and there were no securities in an unrealized loss position for more than 12 months. The unrealized losses were caused by changes in market interest rates or the widening of market spreads subsequent to the initial purchase of these securities, and not related to the underlying credit of the issuers or the underlying collateral. It is expected that these securities will not be settled at a price less than the amortized cost of each investment. The unrealized losses on these investments are not considered other-than-temporary impairment ("OTTI") as of March 31, 2021, because the decline in fair value is not attributable to credit quality and because we do not intend, and it is not likely that we will be required, to sell these securities before recovery of their amortized cost basis. Deterioration in market and economic conditions related to the COVID-19 pandemic may, however, have an adverse impact on credit quality in the future and result in OTTI charges.

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Note 4 – Loans
The composition of the loans-held-for portfolio at the dates indicated, excluding loans held-for-sale, was as follows (in thousands):
 March 31,
2021
December 31,
2020
Real estate loans:  
One-to-four family$129,995 $130,657 
Home equity13,763 16,265 
Commercial and multifamily251,459 265,774 
Construction and land63,112 62,752 
Total real estate loans458,329 475,448 
Consumer loans:
Manufactured homes20,781 20,941 
Floating homes39,868 39,868 
Other consumer14,942 15,024 
Total consumer loans75,591 75,833 
Commercial business loans83,669 64,217 
Total loans held-for-portfolio617,589 615,498 
Deferred fees, net(3,212)(2,135)
Total loans held-for-portfolio, gross614,377 613,363 
Allowance for loan losses(5,935)(6,000)
Total loans held-for-portfolio, net$608,442 $607,363 
The Company was automatically authorized to participate in the U.S. Small Business Administration (“SBA”) Paycheck Protection Program (“PPP”), as a qualified lender since the inception of the program. As of March 31, 2021, the Bank had funded PPP loans totaling $113.9 million, $61.2 million of which remained outstanding and are included in commercial business loans above. PPP loans are 100% guaranteed by the SBA
The following tables present the balance in the allowance for loan losses and the recorded investment in loans by portfolio segment and based on impairment method as of the dates indicated (in thousands):
March 31, 2021
 Allowance: Individually evaluated for impairmentAllowance: Collectively evaluated for impairmentAllowance:
Ending balance
Loans held for investment: Individually evaluated for impairmentLoans held for investment: Collectively evaluated for impairmentLoans held for investment:
Ending balance
One-to-four family$126 $854 $980 $3,418 $126,577 $129,995 
Home equity14 97 111 286 13,477 13,763 
Commercial and multifamily 2,109 2,109 353 251,106 251,459 
Construction and land5 590 595 76 63,036 63,112 
Manufactured homes160 211 371 257 20,524 20,781 
Floating homes 291 291 514 39,354 39,868 
Other consumer29 158 187 113 14,829 14,942 
Commercial business 720 720 613 83,056 83,669 
Unallocated 571 571    
Total$334 $5,601 $5,935 $5,630 $611,959 $617,589 

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December 31, 2020
 Allowance: Individually evaluated for impairmentAllowance: Collectively evaluated for impairmentAllowance:
Ending balance
Loans held for investment: Individually evaluated for impairmentLoans held for investment: Collectively evaluated for impairmentLoans held for investment:
Ending balance
One-to-four family$165 $898 $1,063 $3,705 $126,952 $130,657 
Home equity14 133 147 293 15,972 16,265 
Commercial and multifamily 2,370 2,370 353 265,421 265,774 
Construction and land6 572 578 77 62,675 62,752 
Manufactured homes163 366 529 265 20,676 20,941 
Floating homes 328 328 518 39,350 39,868 
Other consumer30 258 288 114 14,910 15,024 
Commercial business 291 291 615 63,602 64,217 
Unallocated 406 406    
Total$378 $5,622 $6,000 $5,940 $609,558 $615,498 
The following tables summarize the activity in the allowance for loan losses for the periods indicated (in thousands):
Three Months Ended March 31, 2021
 Beginning
Allowance
Charge-offsRecoveriesProvision (Recapture)Ending
Allowance
One-to-four family$1,063 $(62)$ $(21)$980 
Home equity147   (36)111 
Commercial and multifamily2,370   (261)2,109 
Construction and land578   17 595 
Manufactured homes529  1 (159)371 
Floating homes328   (37)291 
Other consumer288 (9)3 (95)187 
Commercial business291