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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:
“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%.
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)|
|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|
|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|
|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||)|
|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 to book value||109.97||%||135.93||%||(19||)||114.68||%||(4||)||109.97||%||135.93||%||(19||)|
|BALANCE SHEET DATA|
|AVERAGE BALANCE SHEET DATA|
|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||)|
|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||)|
|Average number of employees (FTE)||98||75||31||89||10||98||75||31|
|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||)|
||Michal D. Cann
Chairman, CEO & President
Savi Financial Corporation