Sound Financial in Seattle turned a smaller profit in 2011 than it first reported after its auditors advised it to set aside additional funds for potential loan losses.

The company said late Tuesday that it raised its loan-loss provision by $246,000, after taxes, to about $4.6. As a result, its earnings fell to $1.6 million from the previously reported $1.8 million.

Sound also announced that the Office of the Comptroller of the Currency has lifted a July 2010 memorandum of understanding against its banking unit, the $340 million-asset Sound Community Bank. Under the memorandum, the bank had to maintain a core capital ratio of 8% and a total risk-based capital ratio of 12%.

At Dec. 31, the bank’s core capital ratio was 8.33% and its total risk-based capital ratio was 12.03%, according to Sound Financial’s 10-K filing with the Securities and Exchange Commission.

A similar enforcement order with the holding company was terminated in July.

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