BURLINGTON, Wash., Oct. 29, 2020 (GLOBE NEWSWIRE) -- Savi Financial Corporation, Inc. (OTC Pink: SVVB), the bank holding company for SaviBank, today reported third quarter 2020 earnings of $236,000, or $0.05 per diluted share, compared to $353,000, or $0.08 per diluted share, in the third quarter of 2019. In the first nine months of 2020, Savi reported net income of $860,000, or $0.20 per diluted share, compared to $1.26 million, or $0.29 per diluted share, in the first nine months of 2019.
“We made steady progress in strengthening Savi’s core operations, with total revenue increasing 13% to $3.61 million in the third quarter, from $3.21 million in the third quarter a year ago. Strong deposit growth also contributed to third quarter results, increasing 28% year-over-year,” said Michal D. Cann, Chairman and CEO of SaviBank. “We continue to prioritize the safety of our customers and employees as we navigate through the uncertain economic climate resulting from COVID-19. Even though we continue to operate with sound credit quality metrics and minimal charge-offs, we recorded a higher provision for loan losses during the third quarter based on the impact of the pandemic on our Northwest Washington markets. As a result, we added $869,000 to our loan loss reserves over the last three quarters, bringing our allowance to loan losses, excluding SBA guaranteed Paycheck Protection Program (“PPP”) loans, to 1.24% as a percentage of total loans.”
“Our participation in the PPP offered through the SBA helped service the needs of our business customers as well as new customers in our community,” said Andrew Hunter, President of SaviBank. “Through September 30, 2020 we assisted approximately 664 customers who received $62.3 million in PPP funding, while adding new relationships with strong future growth opportunities. We received $2.5 million in fees for processing PPP loans, but due to accounting guidelines those fees will be recognized as income over the 24-month term of the loans.
“We also offered loan accommodation options to support our clients who have been affected by the economic impacts of COVID-19,” Hunter continued. “As of September 30, 2020, approximately 94% of loans originally modified are now performing according to the loan agreements, bringing total deferred loans to 0.70% of total loans.”
“Lower loan yields due to the $62.3 million in PPP loans on our books contributed to our net interest margin contracting during the quarter, in addition to the 150-basis point Federal Funds rate cut in March 2020,” said Rob Woods, Chief Financial Officer of SaviBank. “However, decreases in funding costs helped to keep our net interest margin above industry averages.” Net interest margin was 3.50% in the third quarter of 2020 compared to 3.79% in the preceding quarter and 4.15% in the third quarter a year ago. The net interest margin remains higher than the peer average of 3.36% posted by the 482 banks that comprised the SNL Microcap U.S. Bank Index at June 30, 2020. In the first nine months of 2020, the net interest margin was 3.76% compared to 4.39% in the first nine months of 2019.
Third Quarter 2020 Highlights:
- Pretax, pre-provision income was $496,000 in the third quarter of 2020, compared to $482,000 in the third quarter of 2019, and $833,000 in the second quarter of 2020.
- Earnings per diluted share were $0.05 in the third quarter, compared to $0.08 in the third quarter a year ago and $0.12 in the preceding quarter.
- Net interest income increased 12% to $3.31 million in the third quarter of 2020, compared to $2.95 million in the third quarter a year ago, and decreased 1% from $3.36 million in the second quarter of 2020.
- Total revenue, consisting of net interest income and non-interest income, increased 13% to $3.61 million in the third quarter of 2020, compared to $3.21 million in the third quarter a year ago and decreased compared to $3.82 million in the preceding quarter.
- Average third quarter of 2020 total loans increased 33%, to $334.8 million, compared to $251.7 million in the third quarter year ago, and grew 6% from $315.0 million in the second quarter of 2020. Total loans at September 30, 2020, increased 31% to $334.7 million from $255.0 million a year ago and grew modestly from $333.4 million at June 30, 2020. The loan growth compared to the prior year was in part due to the origination of $62.3 million in PPP loans during the second and third quarters of 2020.
- SBA and USDA loan production for the twelve months ended September 30, 2020, totaled 16 loans for $17.1 million, compared to production of 17 loans for $10.9 million in the year-ago period.
- Average third quarter of 2020 total deposits grew 30% to $325.2 million from $250.2 million, in the third quarter a year ago, and increased 9% from $297.8 million in the second quarter of 2020. Total deposits grew 28% to $328.3 million, at September 30, 2020, from $256.2 million a year ago, and increased 4% from $317.1 million at June 30, 2020.
- The provision for loan losses was $207,000 in the third quarter of 2020, compared to $30,000 in the third quarter of 2019, and 300,000 in the second quarter of 2020. Year-to-date, the provision for loan losses was $869,000 compared to $305,000 for the first nine months of 2019.
- Allowance for loan losses, as a percentage of total loans, was 1.01% at September 30, 2020, compared to 1.00% at September 30, 2019, and 0.96% at June 30, 2020. The allowance for loan losses, excluding PPP loans that are 100% secured by the SBA, was 1.24% of total loans, as of September 30, 2020.
- Nonperforming loans, as a percentage of total loans, was 0.31% at September 30, 2020, compared to 0.07% at September 30, 2019, and 0.32% at June 30, 2020.
- Nonperforming assets, as a percentage of total assets, was 0.40% at September 30, 2020, compared to 0.24% a year ago and 0.39% three months earlier.
- Net charge-offs were $1,000 in the third quarter of 2020, compared to net recoveries of $7,000 in the third quarter of 2019, and net charge-offs of $112,000 in the second quarter of 2020.
- SaviBank capital levels remained above the threshold for well-capitalized institutions with a tier-1 leverage ratio of 8.00% at September 30, 2020.
“Our branch expansion strategy implemented in 2019 is contributing to our balance sheet growth, particularly helping us gather low cost core deposit,” said Hunter. “In 2019, we opened full-service branches in Concrete, Sedro Woolley and Mt. Vernon, all communities in northwest Washington State. We also relocated our loan production office into a full-service branch in Anacortes and relocated to our Oak Harbor branch and our main Burlington branch. We believe that by investing in these additional locations, we now have both the infrastructure and the people in place to continue to grow the company.”
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 $435,000 up 14.47% in September 2020 compared to a year ago, and there was a 0.86 month supply of homes on the market. For Island County, the average house sold for $456,000, up 16.92% from a year ago and supply totaled 0.71 months. For Whatcom County, the average home sold for $439,900, up 15.16% from a year ago and supply totaled 1.02 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
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 (2), 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 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, 2020 | September 30, 2019 | Var % | June 30, 2020 | Var % | September 30, 2020 | September 30, 2019 | Var % | |||||||||||||||||||||||||
| SUMMARY OF OPERATIONS | ||||||||||||||||||||||||||||||||
| Interest income | $ | 3,934 | $ | 3,820 | 3 | % | $ | 4,057 | (3 | )% | $ | 11,869 | $ | 11,346 | 5 | % | ||||||||||||||||
| Interest expense | (621 | ) | (866 | ) | (28 | ) | (695 | ) | (11 | ) | (2,115 | ) | (2,389 | ) | (11 | ) | ||||||||||||||||
| Net interest income | 3,313 | 2,954 | 12 | 3,362 | (1 | ) | 9,754 | 8,957 | 9 | |||||||||||||||||||||||
| Provision for loan losses | (207 | ) | (30 | ) | 590 | (300 | ) | (31 | ) | (869 | ) | (305 | ) | 185 | ||||||||||||||||||
| NII after loss provision | 3,106 | 2,924 | 6 | 3,062 | 1 | 8,885 | 8,652 | 3 | ||||||||||||||||||||||||
| Non-interest income | 295 | 252 | 17 | 458 | (36 | ) | 1,142 | 1,003 | 14 | |||||||||||||||||||||||
| Non-interest expense | (3,112 | ) | (2,724 | ) | 14 | (2,844 | ) | 9 | (8,946 | ) | (8,053 | ) | 11 | |||||||||||||||||||
| Income before tax | 289 | 452 | (36 | ) | 676 | (57 | ) | 1,081 | 1,602 | (33 | ) | |||||||||||||||||||||
| Federal income tax expense | 53 | 99 | (46 | ) | 143 | (63 | ) | 221 | 343 | (36 | ) | |||||||||||||||||||||
| Net income | $ | 236 | $ | 353 | (33 | )% | $ | 533 | (56 | )% | $ | 860 | $ | 1,259 | (32 | )% | ||||||||||||||||
| PER COMMON SHARE DATA | ||||||||||||||||||||||||||||||||
| Number of shares outstanding (000s) | 3,433 | 3,433 | - | % | 3,433 | - | % | 3,433 | 3,433 | - | % | |||||||||||||||||||||
| Earnings per share, diluted | $ | 0.05 | $ | 0.08 | (33 | ) | $ | 0.12 | (56 | ) | $ | 0.20 | $ | 0.29 | (32 | ) | ||||||||||||||||
| Market value | 7.70 | 10.45 | (26 | ) | 7.62 | 1 | 7.70 | 10.45 | (26 | ) | ||||||||||||||||||||||
| Book value | 9.83 | 9.50 | 3 | 9.75 | 1 | 9.83 | 9.50 | 3 | ||||||||||||||||||||||||
| Market value to book value | 78.34 | % | 109.97 | % | (29 | ) | 78.14 | % | 0 | 78.34 | % | 109.97 | % | (29 | ) | |||||||||||||||||
| BALANCE SHEET DATA | ||||||||||||||||||||||||||||||||
| Assets | $ | 388,111 | $ | 310,134 | 25 | % | $ | 396,736 | (2 | )% | $ | 388,111 | $ | 310,134 | 25 | % | ||||||||||||||||
| Investments securities | 8,765 | 10,805 | (19 | ) | 9,222 | (5 | ) | 8,765 | 10,805 | (19 | ) | |||||||||||||||||||||
| Total loans | 334,727 | 254,960 | 31 | 333,351 | 0 | 334,727 | 254,960 | 31 | ||||||||||||||||||||||||
| Total deposits | 328,263 | 256,228 | 28 | 317,113 | 4 | 328,263 | 256,228 | 28 | ||||||||||||||||||||||||
| Borrowings | 25,000 | 20,000 | 25 | 45,000 | (44 | ) | 25,000 | 20,000 | 25 | |||||||||||||||||||||||
| Shareholders’ equity | 33,742 | 32,623 | 3 | 33,479 | 1 | 33,742 | 32,623 | 3 | ||||||||||||||||||||||||
| AVERAGE BALANCE SHEET DATA | ||||||||||||||||||||||||||||||||
| Average assets | $ | 392,424 | $ | 304,933 | 29 | % | $ | 365,661 | 7 | % | $ | 350,317 | $ | 288,929 | 21 | % | ||||||||||||||||
| Average total loans | 334,783 | 251,662 | 33 | 315,045 | 6 | 307,460 | 242,673 | 27 | ||||||||||||||||||||||||
| Average total deposits | 325,199 | 250,242 | 30 | 297,804 | 9 | 288,446 | 232,333 | 24 | ||||||||||||||||||||||||
| Average shareholders' equity | 33,111 | 32,432 | 2 | 33,189 | (0 | ) | 33,264 | 31,873 | 4 | |||||||||||||||||||||||
| ASSET QUALITY RATIOS | ||||||||||||||||||||||||||||||||
| Net (charge-offs) recoveries | $ | (1 | ) | $ | 7 | N/M | $ | (112 | ) | N/M | $ | (122 | ) | $ | (39 | ) | N/M | |||||||||||||||
| Net (charge-offs) recoveries to average loans | (0.00 | )% | 0.01 | % | N/M | (0.14 | )% | N/M | (0.05 | )% | (0.02 | )% | N/M | |||||||||||||||||||
| Non-performing loans as a % of loans | 0.31 | 0.07 | 332 | 0.32 | (2 | ) | 0.31 | 0.07 | 332 | |||||||||||||||||||||||
| Non-performing assets as a % of assets | 0.40 | 0.24 | 66 | 0.39 | 2 | 0.40 | 0.24 | 66 | ||||||||||||||||||||||||
| Allowance for loan losses as a % of total loans | 1.01 | 1.00 | 1 | 0.96 | 5 | 1.01 | 1.00 | 1 | ||||||||||||||||||||||||
| Allowance for loan losses as a % of non-performing loans | 321.63 | 1,361.29 | (76 | ) | 301.61 | 7 | 321.63 | 1,361.29 | (76 | ) | ||||||||||||||||||||||
| FINANCIAL RATIOS\STATISTICS | ||||||||||||||||||||||||||||||||
| Return on average equity | 2.85 | % | 4.35 | % | (35 | )% | 6.42 | % | (56 | )% | 3.45 | % | 5.27 | % | (35 | )% | ||||||||||||||||
| Return on average assets | 0.24 | 0.46 | (48 | ) | 0.58 | (59 | ) | 0.33 | 0.58 | (44 | ) | |||||||||||||||||||||
| Net interest margin | 3.50 | 4.15 | (16 | ) | 3.79 | (8 | ) | 3.76 | 4.39 | (14 | ) | |||||||||||||||||||||
| Efficiency ratio | 85.52 | 83.73 | 2 | 73.29 | 17 | 81.19 | 79.70 | 2 | ||||||||||||||||||||||||
| Average number of employees (FTE) | 94 | 98 | (4 | ) | 92 | 2 | 94 | 98 | (4 | ) | ||||||||||||||||||||||
| CAPITAL RATIOS | ||||||||||||||||||||||||||||||||
| Tier 1 leverage ratio -- Bank | 8.00 | 10.07 | (20 | )% | 8.32 | (4 | )% | 8.00 | 10.07 | (20 | )% | |||||||||||||||||||||
Contact:
Michal D. Cann
Chairman & President
Savi Financial Corporation
(360) 707-2272