SaviBank YTD Profits Increased 95% to $1.4 Million from 2016 Period; Net Interest Margin Expanded to 4.46% with Strong Loan and Deposit Growth

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| Source: SaviBank

BURLINGTON, Wash., Nov. 02, 2017 (GLOBE NEWSWIRE) -- SaviBank (OTC Pink:SVVB), today reported for the first nine months of 2017 net income almost doubled to $1.37 million, or $0.0802 per share, compared to $703,000, or $0.0601per share, for the first nine months of 2016.  Third quarter 2017 profits increased 23% to $408,000, or $0.0239 per share, compared to $333,000, or $0.0285 per share for the third quarter of 2016, and grew 1% from the near record $404,000, or $0.0236 per share, earned in the second quarter of 2017.  Profitability was fueled by 20% loan growth, and 10% deposit growth, and expanding net interest margin, year-over-year. All results are unaudited.

“In October, we opened our newest branch in Bellingham, WA., a vibrant community that is 21 miles south of the Canadian border and 90 miles north of Seattle,” said Michal D. Cann, Chairman and Chief Executive Officer.  “The new branch replaces an older facility and provides drive-up banking services and a full complement of lending and deposit products.  Bellingham is a great market for us, with affordable housing, excellent livability characteristics and a growing small business community.  Our Northwest Washington franchise continues to generate strong growth in loans and deposits, fueling our profitability.

In addition, we have begun the process of forming a Bank Holding Company, with applications to our regulators and notification to our shareholders,” Cann continued.  “The new bank holding company structure will facilitate access to capital and provide additional avenues for revenue growth.”

“We continue to generate an above average net interest margin, which was 4.46% in the third quarter of 2017, up 9 basis points in the quarter and 5 basis points year-over-year,” noted Rob Woods, Chief Financial Officer.  The net interest margin is significantly better than the peer average of 3.64% posted by the 535 micro-cap banks in the SNL Financials Microcap Bank Index as of June 30, 2017.      

“Our SBA and USDA loan production was the major contributor to non-interest income during the quarter, generating $256,000 in gains on the sale of 3 loans compared to $374,000 in gains on the sale of 7 loans in the second quarter of 2017,” said Andrew Hunter, President.  “SBA and USDA lending can be somewhat variable from one quarter to the next, and timing of sales can impact revenue from this source in any given quarter.  Year-to-date, gains from SBA sales contributed $833,508, up 4.6% from $797,000 in the first nine months of 2016.  We believe SBA loans can provide significant advantages for small to mid-size business owners, and we expect to continue to show consistent growth in this area.”

Third Quarter and First Nine Months 2017 Highlights (at, or for the period September 30, 2017)

  • Earnings per share were $0.0239 in the third quarter, reflecting the capital raise in the second quarter that added 5.4 million shares to the ownership base.  EPS was $0.0236 in the second quarter of 2017 and $0.0285 in the third quarter a year ago.  For the first nine months of 2017, EPS increased 33% to $0.0802 from $0.0601 in the first nine months of 2016.

  • Net interest income increased 27% to $2.15 million in the third quarter of 2017, compared to $1.68 million a year ago, and grew 7% from $2.01 million in the second quarter of 2017.  For the first nine months of 2017, net interest income grew 29% to $6.03 million from $4.67 million in the same period of 2016.

  • Non-interest income increased 52% to $417,000 in the third quarter of 2017, from $275,000 in the third quarter of 2016, and decreased 22% from $537,000 in the preceding quarter, reflecting the variability in gains from sale of SBA loans.

  • For the third quarter of 2017, net interest margin (“NIM”) was 4.46% compared to 4.41% for the third quarter of 2016, and 4.37% for the second quarter of 2017.

  • Kari Holmly was promoted to Chief Retail Banking Officer following the end of the third quarter to assure more focus on deposit growth and continuing exceptional service to our customers.

  • Average third quarter total loans increased 22%, to $172.6 million, compared to $141.1 million a year ago, and grew 4% from $166.0 million in the second quarter of 2017.  End of quarter total loans increased 20% to $176.7 million, compared to $147.2 million a year ago and grew 3% from $171.5 million at June 30, 2017.

  • Average third quarter total deposits grew 10% to $156.5 million from $142.0 million in the third quarter a year ago, and increased 8% from $144.6 million in the second quarter of 2017.  End of period deposits grew 10% to $163.8 million from $149.0 million a year ago, and grew 9% from $150.4 million at the end of the second quarter of 2017.

  • Asset quality remains exceptionally strong with nonperforming loans at 0.02% of total loans at September 30, 2017 and June 30, 2017, compared to 0.06% at September 30, 2016.

  • Net recoveries were minimal in the third quarter of 2017, down from $129,000 in the second quarter of 2017.  For the first nine months of 2017, net recoveries totaled $451,000 compared to $3,000 in the first nine months of 2016.

  • Allowance for loan losses, as a percentage of total loans was 1.13% at September 30, 2017, compared to 1.00%, at September 30, 2016.

  • With the new capital raised during the second quarter, SaviBank capital levels remain above the threshold for well-capitalized institutions. The total risk-based capital ratio was 15.09% and the tier-1 leverage ratio was 12.72%.

  • Book value per share was $1.75 at September 30, 2017, compared to $1.29 a year ago.

About Northwest Washington

SaviBank operates two branches and one loan production office in Skagit County, two branches in Island County, and one branch in Whatcom County. The new Bellingham branch in Whatcom County opened in October 2017. 

CNBC.com named Washington state as the “Top State for Business” in 2017.  The state earned the top ranking based on economic growth, a well-educated workforce, a friendly business climate, solid infrastructure, and quality lifestyle factors.  CNBC.com noted the following statistics:

“Washington's economy grew 3.7% in 2016, nearly two and a half times the national rate.
“The nation's largest concentration of STEM (science, technology, engineering and math) workers reside in Washington state.
“Washington state follows California in the most patents filed last year.
“Washington state has no income or corporate income tax, but wages and rent are among the highest in the United States."

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.   

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 5.22% from 2017 through 2022, and median household income is projected to increase by 7.98% 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 5.93% from 2017 through 2022, and median household income is projected to increase by 6.86%. 

Island County is home to Naval Air Station Whidbey Island, which supports approximately 7,000 military personnel, with an additional 14,000 family members, over 14,000 retirees, 350+ reservists, and 2,400 civilian employees. Island County’s population is projected to grow 4.57% from 2017 through 2022 and median household income is projected to increase by 11.02%. 

Sources: https://patch.com/washington/seattle/washington-has-best-economy-u-s-new-report-says
https://www.cnbc.com/2017/07/11/washington-is-americas-top-state-for-business-in-2017.html
 https://fortress.wa.gov/esd/employmentdata/reports-publications/regional-reports/county-profiles/skagit-county-profilehttps://esd.wa.gov/labormarketinfo/county-profiles/whatcomhttps://www.snl.com/interactiveX/DemographicProfileReport.aspx?ID=4100094&Ownership=Current&MarketType=County&submit3=Apply; http://www.militaryinstallations.dod.mil/MOS/f?p=MI:CONTENT:0::::P4_INST_ID,P4_CONTENT_TITLE,P4_CONTENT_EKMT_ID,P4_CONTENT_DIRECTORY:5080,Installation%20Overview,30.90.30.30.30.0.0.0.0,1

About SaviBank –

SaviBank (formerly known as Business Bank) is a commercial bank chartered in the State of Washington with a community bank focus. The Bank began operations April 11, 2005, and has five branch locations in Burlington, Bellingham, Mt. Vernon, Oak Harbor, and Freeland, Washington, and a loan production office in Anacortes, 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 
  September 30,
2017
   September 30,
2016
   Var %   June 30,
2017
   Var % 
 SUMMARY OF OPERATIONS                  
 Interest income$2,438    $1,908    28%    $2,287    7% 
 Interest expense (292)    (224)   30     (278)   5  
 Net interest income 2,146     1,684    27     2,009    7  
 Provision for loan losses      (81)   (100)        -  
 NII after loss provision 2,146     1,603    34     2,009    7  
 Non-interest income 417     275    52     537    (22) 
 Non-interest expense (1,941)    (1,545)   26     (1,928)   1  
 Income before tax 622     333    87     618    1  
 Federal income tax expense 214     -    -     214    -  
 Net income$408    $333    23%    $404    1% 
                    
 PER COMMON SHARE DATA                  
 Number of shares outstanding (000s) 17,098     11,695    46%     17,088    0% 
 Earnings per share, basic and diluted$0.0239    $0.0285    (16)   $0.0236    1  
 Market value 1.95     1.15    70     1.70    15  
 Book value 1.75     1.29    36     1.73    1  
 Market value to book value 111.24%      88.84%    25     98.18%    13  
                    
 BALANCE SHEET DATA                  
 Assets$211,157    $174,669    21%    $211,175    (0)% 
 Investments securities 10,140     8,068    26     10,320    (2) 
 Total loans 176,665     147,150    20     171,530    3  
 Total deposits 163,818     148,977    10     150,433    9  
 Borrowings 16,300     10,000    63     30,300    (46) 
 Shareholders’ equity 29,973     15,139    98     29,587    1  
                    
 AVERAGE BALANCE SHEET DATA                  
 Average assets$207,239    $163,409    27%    $198,321    4% 
 Average total loans 172,631     141,114    22     165,954    4  
 Average total deposits 156,546     142,008    10     144,559    8  
 Average shareholders' equity 29,991     15,060    99     27,529    9  
                    
 ASSET QUALITY RATIOS                  
 Net (charge-offs) recoveries$7    $9    (22)%     $129    (95)% 
 Net (charge-offs) recoveries to average loans 0.02%      0.03%     (33)    0.31%     (95) 
 Non-performing loans as a % of loans 0.02     0.06    (69)    0.02    (7) 
 Non-performing assets as a % of assets 0.24     1.07    (78)    0.24    (1) 
 Allowance for loan losses as a % of total loans 1.13     1.00    13     1.16    (3) 
 Allowance for loan losses as a % of non-performing loans 6,054.55     1,632.22    271     4,856.10    25  
                    
 FINANCIAL RATIOS\STATISTICS                  
 Return on average equity 5.44%    8.84%   (38)%    5.87%   (7)% 
 Return on average assets 0.79     0.82    (3)    0.81    (3) 
 Net interest margin 4.46     4.41    1     4.37    2  
 Efficiency ratio 76.17     78.87    (3)    75.99    0  
 Average number of employees (FTE) 58     54    7     55    5  
                    
 CAPITAL RATIOS                  
                    
 Tier 1 leverage ratio  -- Bank 12.72     9.18    39%    12.97    (2)% 
 Common equity tier 1 ratio  -- Bank 13.97     9.53    47     14.06    (1) 
 Tier 1 risk-based capital ratio  -- Bank 13.97     9.53    47     14.06    (1) 
 Total risk-based capital ratio --Bank 15.09     10.51    44     15.21    (1) 
                    


            
 SELECTED FINANCIAL DATA          
 (In thousands of dollars, except for ratios and per share amounts)         
 Unaudited          
  Nine Months Ended 
  September 30,
2017
   September 30,
2016
   Var % 
 SUMMARY OF OPERATIONS          
 Interest income$6,860    $5,313    29% 
 Interest expense (831)    (641)   30  
 Net interest income 6,029     4,672    29  
 Provision for loan losses (23)    (229)   (90) 
 NII after loss provision 6,006     4,443    35  
 Non-interest income 1,326     797    66  
 Non-interest expense (5,533)    (4,537)   22  
 Income before tax 1,799     703    156  
 Federal income tax expense 428     -    -  
 Net income$1,371    $703    95% 
            
 PER COMMON SHARE DATA          
 Number of shares outstanding (000s) 17,098     11,695    46% 
 Earnings per share, basic and diluted$0.0802    $0.0601    33  
 Market value 1.95     1.15    70  
 Book value 1.75     1.29    36  
 Market value to book value 111.24%     88.84%    25  
            
 BALANCE SHEET DATA          
 Assets$211,175    $174,669    21% 
 Investments securities 10,140     8,068    26  
 Total loans 176,665     147,150    20  
 Total deposits 163,818     148,977    10  
 Borrowings 16,300     10,000    63  
 Shareholders’ equity 29,973     15,139    98  
            
 AVERAGE BALANCE SHEET DATA          
 Average assets$197,246    $151,526    30% 
 Average total loans 164,842     131,006    26  
 Average total deposits 145,261     127,907    14  
 Average shareholders' equity 26,084     14,790    76  
            
 ASSET QUALITY RATIOS          
 Net (charge-offs) recoveries$451    $3    n/a  
 Net (charge-offs) recoveries to average loans 0.36%     0.00%    n/a  
 Non-performing loans as a % of loans 0.02     0.06    (67) 
 Non-performing assets as a % of assets 0.24     1.07    (78) 
 Allowance for loan losses as a % of total loans 1.13     1.00    13  
 Allowance for loan losses as a % of non-performing loans 6,054.55     1,632.22    271  
            
 FINANCIAL RATIOS\STATISTICS          
 Return on average equity 7.01%    6.35%   10% 
 Return on average assets 0.93     0.62    49  
 Net interest margin 4.41     4.44    (1) 
 Efficiency ratio 75.60     82.96    (9) 
 Average number of employees (FTE) 58     54    7  
            
 CAPITAL RATIOS          
            
 Tier 1 leverage ratio  -- Bank 12.72     9.18    39% 
 Common equity tier 1 ratio  -- Bank 13.97     9.53    47  
 Tier 1 risk-based capital ratio  -- Bank 13.97     9.53    47  
 Total risk-based capital ratio --Bank 15.09     10.51    44  
            

CONTACT
Michal D. Cann, Chairman & CEO
(360) 707-2272

The Cereghino Group
IR CONTACT: 206-388-5785