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SaviBank Earns $353,000 in Third Quarter of 2019; Loans Increase 23% and Deposits Increase 28%, Year-Over-Year

694 Days ago

BURLINGTON, Wash., Oct. 31, 2019 (GLOBE NEWSWIRE) -- Savi Financial Corporation, Inc. (OTC Pink: SVVB), the bank holding company for SaviBank, today reported third quarter 2019 earnings of $353,000, or $0.08 per diluted share, compared to $390,000, or $0.09 per diluted share, in the third quarter of 2018.  Earnings were impacted by an increase in operating costs as a result of implementing the company’s branch expansion strategy.  In the first nine months of the year, Savi reported net income of $1.26 million, or $0.29 per diluted share, compared to $1.57 million, or $0.36 per diluted share, in the first nine months of 2018.

“We have been actively building out our infrastructure, and hiring key talent, in an effort to expand our customer base and take advantage of market disruptions,” said Michal D. Cann, Chairman and CEO.  “While the costs associated with our organic franchise expansion impacted earnings again this quarter, we believe we have the foundation in place for improved operating results going forward."

“We generated 23% year-over-year loan growth and 28% deposit growth, while maintaining an above average net interest margin,” said Andrew Hunter, President.  “We are realizing positive results from our efforts and remain intensely focused on improving our operating performance.  Our markets in Northwest Washington continue to generate excellent opportunities for growth, and we are now well positioned to foster long-term customer relationships.”

Total revenue, consisting of net interest income and non-interest income, increased 14% to $3.21 million in the third quarter of 2019, compared to $2.82 million in the third quarter a year ago, and decreased 8% from $3.47 million in the second quarter of 2019.  Year-to-date, revenues increased 18% to $9.96 million from $8.46 million in the like period a year earlier. 

“Our net interest margin compressed during the quarter, primarily due to increased competition for deposits.  However, our strong loan growth and higher loan yields continue to keep our net interest margin above industry averages,” said Hunter.  Net interest margin was 4.15% in the third quarter of 2019 from 4.48% in the third quarter a year ago.  The net interest margin remains significantly higher than the peer average of 3.72% posted by the 469 banks that comprised the SNL Microcap U.S. Bank Index at June 30, 2019.  In the first nine months of 2019, net interest margin remained healthy at 4.39% compared to 4.41% in the first nine months of 2018.

Third Quarter 2019 Highlights:

  • Pretax income was $452,000 in the third quarter, compared to $497,000 in the third quarter of 2018, and $483,000 in the second quarter of 2019.
  • Earnings per diluted share were $0.08 in the third quarter, compared to $0.09 in both the third quarter a year ago and preceding quarter.
  • Net interest income increased 18% to $2.95 million in the third quarter of 2019, compared to $2.49 million in the third quarter a year ago, and was down from $3.05 million in the second quarter of 2019. 
  • Average third quarter total loans increased 26%, to $251.7 million, compared to $200.3 million a year ago, and grew 3% from $244.5 million in the second quarter of 2019.  Total loans at September 30, 2019, increased 23% to $255.0 million from $207.1 million a year ago and grew 1% from $251.3 at June 30, 2019.
  • SBA and USDA loan production for the twelve months ended September 30, 2019 totaled 17 loans for $9.5 million, compared to production of 26 loans for $10.4 million in the year-ago period.
  • Average third quarter total deposits grew 29% to $250.2 million from $194.5 million, in the third quarter a year ago, and increased 5% from $238.4 million in the second quarter of 2019.  Total deposits grew 28% to $256.2 million, at September 30, 2019, from $200.6 million a year ago, and grew 5% from $244.3 million at June 30, 2019.  
  • Asset quality remained strong with nonperforming loans at 0.07% of total loans at September 30, 2019. This compares to nonperforming loans at 0.01% of total loans at September 30, 2018, and nonperforming loans at 0.11% of total loans at June 30, 2019. 
  • Nonperforming assets (“NPAs”) were 0.24% at September 30, 2019, compared to 0.20% a year ago and 0.25% three months earlier.  The current NPAs reflects the stability of the loan portfolio and paydowns in principle balances.
  • Net recoveries were $7,000 in the third quarter of 2019, compared to net charge-offs of $6,000 in the third quarter a year ago, and net charge-offs of $32,000 in the preceding quarter. 
  • Allowance for loan losses, as a percentage of total loans, was 0.99% at September 30, 2019, compared to 1.00%, at September 30, 2018.
  • SaviBank capital levels remained above the threshold for well-capitalized institutions. The total risk-based capital ratio was 11.80% and the tier-1 leverage ratio was 10.07%. 

“Our branch expansion strategy in Northwest Washington this year has been robust,” said Cann.  “We opened a full-service branch in Concrete on October 7, 2019, and we expanded our loan production office into a full-service branch in Anacortes on September 9, 2019.  Additionally, we opened our new Oak Harbor branch at the end of May, relocated our main Burlington branch in March, opened our Sedro Woolley branch in March and opened a Mt. Vernon branch in January.  As a result, costs associated with this expansion have affected operating results for the current quarter.  We believe that with these additional locations we have the infrastructure and the key talent in place to expand our client outreach, contribute to future earnings growth, and increase our franchise value.”

About Northwest Washington

SaviBank currently operates six branches in Skagit County, two branches in Island County, and one branch in Whatcom County.

The Skagit, Whatcom and Island counties region stretches north from the greater Seattle/Everett/Bellevue metropolis to the Canadian border.  Northwest Washington continues to be one of the most vibrant regions in the country, with a solid employment base, moderate climate and a strong housing market.  

The housing market in Skagit, Island and Whatcom Counties remains healthy.  According the Northwest Multiple Listing Service, the average home in Skagit County sold for $380,000, up 4.11% in September 2019 compared to a year ago, and there was a 2.47 month supply of homes on the market.  For Island County, the average house sold for $390,000, up 8.33% from a year ago and supply totaled 2.18 months.  For Whatcom County, the average home sold for $382,000, up 3.72% from a year ago and supply totaled 2.59 months.

Skagit County’s economy is dominated by manufacturing, which accounts for 33.4% of GDP with food, machinery and oil and petroleum products the leading contributors.  Skagit’s population is projected to grow 5.71% from 2020 through 2025, and median household income is projected to increase by 16.18% during the same time frame.  

Whatcom County is home to Western Washington University and is the nation’s largest producer of raspberries.  Whatcom County’s population is projected to grow 6.26% from 2020 through 2025, and median household income is projected to increase by 13.28%. 

Island County is home to Naval Air Station Whidbey Island.  Whidbey Island’s population is 86,280, with approximately 23,575 in Oak Harbor.  Island County’s population is projected to grow 5.19% from 2020 through 2025 and median household income is projected to increase by 6.07%.

Sources:

http://www.northwestmls.com/library/CorporateContent/statistics/Recaps.pdf
www.SNL.com
https://www.usnews.com/news/best-states/rankings

About Savi Financial Corporation Inc. and SaviBank –

Savi Financial Corporation is the bank holding company of SaviBank. The Bank began operations April 11, 2005, and has 9 branch locations in Anacortes, Burlington, Bellingham, Concrete, Mount Vernon, Oak Harbor, Freeland and Sedro-Woolley, Washington. The Bank provides loan and deposit services to customers who are predominantly small and middle-market businesses and individuals in and around Skagit, Island, and Whatcom counties. As a locally-owned community bank, we believe that when everyone becomes Savi about their finances, our entire community benefits. Call us or stop by one of our branches and we’ll show you how to bank Savi. For additional information about SaviBank visit http://www.savibank.com.

Forward Looking Statement

This release may contain “forward-looking statements” that are subject to risks and uncertainties. Readers should not place undue reliance on forward-looking statements, which reflect management’s views only as of the date hereof. All statements, other than statements of historical fact, regarding our financial position, business strategy and management’s plans and objectives for future operations are forward-looking statements. When used in this report, the words “anticipate,” “believe,” “estimate,” “expect,” and “intend” and words or phrases of similar meaning, as they relate to SaviBank or management, are intended to help identify forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Although we believe that management’s expectations as reflected in forward-looking statements are reasonable, we cannot assure readers that those expectations will prove to be correct. Forward-looking statements are subject to various risks and uncertainties that may cause our actual results to differ materially and adversely from our expectations as indicated in the forward-looking statements. These risks and uncertainties include our ability to maintain or expand our market share or net interest margins, and to implement our marketing and growth strategies. Further, actual results may be affected by our ability to compete on price and other factors with other financial institutions; customer acceptance of new products and services; the regulatory environment in which we operate; and general trends in the local, regional and national banking industry and economy, as those factors relate to our cost of funds and return on assets. In addition, there are risks inherent in the banking industry relating to collectability of loans and changes in interest rates. Many of these risks, as well as other risks may have a material adverse impact on our operations and business.


SELECTED FINANCIAL DATA 
(In thousands of dollars, except for ratios and per share amounts) 
Unaudited 
  Three Months Ended   Nine Months Ended
  September 30, 2019   September 30, 2018   Var %   June 30, 2019   Var %   September 30, 2019   September 30, 2018   Var %
SUMMARY OF OPERATIONS                                              
Interest income $ 3,820     $ 2,966     29 %   $ 3,853     (1 )%   $ 11,346     $ 8,277     37 %
Interest expense (866 )   (472 )   83     (801 )   8     (2,389 )   (1,249 )   91  
  Net interest income 2,954     2,494     18     3,052     (3 )   8,957     7,028     27  
  Provision for loan losses (30 )   (98 )   (69 )   (179 )   (61 )   (305 )   (137 )   123  
                                               
NII after loss provision 2,924     2,396     22     2,873     2     8,652     6,891     26  
Non-interest income 252     329     (23 )   413     (39 )   1,003     1,436     (30 )
Non-interest expense (2,724 )   (2,228 )   22     (2,803 )   (3 )   (8,053 )   (6,337 )   27  
Income before tax  452     497     (9 )   483     (6 )   1,602     1,990     (19 )
  Federal income tax expense 99     107     (7 )   102     (3 )   343     424     (19 )
  Net income $ 353     $ 390     (9 )%   $ 381     (7 )%   $ 1,259     $ 1,566     (20 )%
                                               
PER COMMON SHARE DATA                                               
Number of shares outstanding (000s) 3,433     3,423     0 %   3,433     %   3,433     3,423     0.29 %
Earnings per share, diluted $ 0.08     $ 0.09     (10 )   $ 0.09     (7 )   $ 0.29     $ 0.36     (20 )
Market value 10.45     12.07     (13 )   10.77     (3 )   10.45     12.07     (13 )
Book value 9.50     8.88     7     9.39     1     9.50     8.88     7  
Market value to book value 109.97 %   135.93 %   (19 )   114.68 %   (4 )   109.97 %   135.93 %   (19 )
                                               
BALANCE SHEET DATA                                              
Assets $ 310,134     $ 247,111     26 %   $ 299,731     3 %   $ 310,134     $ 247,111     26 %
Investments securities 10,805     9,120     18     11,147     (3 )   10,805     9,120     18  
Total loans  254,960     207,129     23     251,321     1     254,960     207,129     23  
Total deposits 256,228     200,600     28     244,256     5     256,228     200,600     28  
Borrowings  20,000     15,000     33     22,000     (9 )   20,000     15,000     33  
Shareholders’ equity 32,623     30,394     7     32,240     1     32,623     30,394     7  
                                               
AVERAGE BALANCE SHEET DATA                                              
Average assets $ 304,933     $ 240,738     27 %   $ 290,604     5 %   $ 288,929     $ 227,611     27 %
Average total loans 251,662     200,295     26     244,542     3     242,673     190,669     27  
Average total deposits 250,242     194,475     29     238,422     5     232,333     187,477     24  
Average shareholders' equity 32,432     30,192     7     31,967     1     31,873     29,450     8  
                                               
ASSET QUALITY RATIOS                                              
Net (charge-offs) recoveries $ 7     $ (6 )   N/M     $ (32 )   N/M     $ (39 )   $ (12 )   225  
Net (charge-offs) recoveries to average loans 0.01 %   (0.01 )%   N/M     (0.05 )%   N/M     (0.02 )%   (0.01 )%   155  
Non-performing loans as a % of loans 0.07     0.01     630     0.11     (34 )   0.07     0.01     630  
Non-performing assets as a % of assets 0.24     0.20     20     0.25     (4 )   0.24     0.20     20  
Allowance for loan losses as a % of total loans 0.99     1.00     (1 )   1.01     (2 )   0.99     1.00     (1 )
Allowance for loan losses as a % of non-performing loans 1,361.29     18,827.27     (93 )   1,351.08     1     1,361.29     18,827.27     (93 )
                                               
FINANCIAL RATIOS\STATISTICS                                              
Return on average equity 4.35 %   5.17 %   (16 )%   4.77 %   (9 )%   5.27 %   7.09 %   (26 )%
Return on average assets 0.46     0.65     (29 )   0.52     (12 )   0.58     0.92     (37 )
Net interest margin 4.15     4.48     (7 )   4.47     (7 )   4.39     4.41     (0 )
Efficiency ratio 83.73     76.54     9     79.60     5     79.70     73.17     9  
Average number of employees (FTE) 98     75     31     89     10     98     75     31  
                                               
CAPITAL RATIOS                                              
                                               
Tier 1 leverage ratio  -- Bank  10.07     11.79     (15 )%   10.32     (3 )%   10.07     11.79     (15 )%
Common equity tier 1 ratio  -- Bank  10.85     12.56     (14 )   11.13     (2 )   10.85     12.56     (14 )
Tier 1 risk-based capital ratio  -- Bank  10.85     12.56     (14 )   11.13     (2 )   10.85     12.56     (14 )
Total risk-based capital ratio --Bank  11.80     13.53     (13 )   12.09     (2 )   11.80     13.53     (13 )


Contact: 



Michal D. Cann
Chairman, CEO & President
Savi Financial Corporation
(360) 707-2272

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