BURLINGTON, Wash., April 30, 2018 (GLOBE NEWSWIRE) -- Savi Financial Corporation, Inc. (OTC Pink:SVVB), the small bank holding company for SaviBank, today reported first quarter 2018 earnings grew 82% to $661,000, or $0.04 per share, compared to $363,000, or $0.02 per share in the first quarter of 2017.  In the fourth quarter of 2017, the net loss was $1.14 million, which included the $1.49 million valuation charge for its deferred tax asset (DTA).  Profitability was fueled by 15% loan growth and 36% deposit growth year-over-year, excellent asset quality and strong net interest margin. All results are unaudited.

“We are continuing to build our franchise, implementing plans to expand our branch network, investing in technology and recruiting seasoned bankers while establishing and deepening our customer relationships,” said Michal D. Cann, Chairman and CEO.  “The markets we serve in Northwest Washington continue to generate excellent growth in household income, employment and population.”

“While the changes in the tax law reduced earnings in 2017, our marginal tax rate in the first quarter dropped to 21% from 34%, which contributed to profitability,” said Rob Woods, Chief Financial Officer. 

Total revenue, consisting of net interest income and non-interest income, increased 26% to $2.83 million in the first quarter of 2018, compared to $2.25 million in the first quarter a year ago, and grew 17% from $2.43 million in the fourth quarter of 2017, reflecting the strong market for Small Business Administration loans.

Net interest margin, remains well above average, at 4.30% in the first quarter of 2018, compared to 4.23% in the fourth quarter and 4.43% in the first quarter a year ago.  “With the recent increase in interest rates, we are seeing the benefits of repricing 26% of the loan portfolio that carries an adjustable rate.  Deposit costs have been relatively stable, but we anticipate that both cost of deposits and cost of borrowings will begin to rise in the future,” Cann noted. The net interest margin is significantly better than the peer average of 3.72% posted by the 518 micro-cap banks in the SNL Financials Microcap Bank Index as of December 31, 2017.   

“The robust SBA and USDA loan production generated during the quarter contributed to the rise in non-interest income year-over-year.  Non-interest income increased 70% in the first quarter 2018 to $633,000, of which $449,000 was from gains on the sale of loans, compared to $372,000, of which $203,000 was from loan sales in the first quarter of 2017,” said Andrew Hunter, President.  “Our local economic growth is primarily driven by construction, manufacturing, agriculture and retail businesses, generating strong loan demand from these owners in our markets.”

First Quarter 2018 Highlights (at, or for the period March 31, 2018)

  • Earnings per share improved to $0.039 in the first quarter on 17.1 million shares outstanding, up from $0.024, on 14.8 million shares outstanding in the first quarter of 2017. In the fourth quarter of 2017, change to the DTA valuation reduced EPS to ($0.067).

  • Net interest income increased 17% to $2.20 million in the first quarter of 2018, compared to $1.87 million a year ago, and was up 3% from $2.13 million in the fourth quarter of 2017. 

  • Average first quarter total loans increased 17%, to $182.6 million, compared to $156.3 million a year ago, and grew 4% from $176.1 million in the fourth quarter of 2017.  End of quarter total loans increased 15% to $185.8 million, compared to $162.0 million a year ago and grew 1% from $183.3 million at December 31, 2017.

  • Average first quarter total deposits grew 34% to $179.9 million from $134.4 million in the first quarter a year ago, and increased 3% from $175.3 million in the fourth quarter of 2017.  End of period deposits grew 36% to $186.2 million from $136.9 million a year ago, and grew 4% from $178.3 million at the end of the fourth quarter of 2017. 

  • Asset quality remained exceptionally strong with nonperforming loans at 0.01% of total loans at March 31, 2018, and 0.03% at March 31, 2017.  Nonperforming assets were 0.22% at the end of the first quarter, down from 0.79% a year ago.

  • Net recoveries were $2,000 in the first quarter of 2018 and $315,000 in the first quarter a year ago.  In the fourth quarter of 2018 net charge-offs were $51,000. 

  • Allowance for loan losses, as a percentage of total loans was 1.05% at March 31, 2018, compared to 1.15%, at March 31, 2017.

  • With the new capital raised during the second half of 2017, SaviBank capital levels remained above the threshold for well-capitalized institutions. The total risk-based capital ratio was 14.44% and the tier-1 leverage ratio was 12.12%. 

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 building in Whatcom County opened in October 2017. 

According to USNews.com, Washington state ranked 3rd for the best economy in the nation.  Washington also ranked 2nd in the nation for healthcare, 6th for education and 4th for infrastructure. 

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 and Whatcom Counties continues to accelerate.  “People from Seattle are buying homes up here for cash. Because of the difference in the average price ($650,000 in Seattle vs. $350,000 in Bellingham) they sell and use their equity to buy for cash and enjoy the quality of life in a more affordable area,” stated Dan Washburn, owner of Windermere Real Estate in Whatcom County

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://www.usnews.com/news/best-states/rankings/economy
http://www.bellinghamherald.com/news/local/article188262154.html
https://www.whatcombusinessalliance.com/industry/seven-industry-leaders-forecast-2018/
https://fortress.wa.gov/esd/employmentdata/reports-publications/regional-reports/county-profiles/skagit-county-profile; 
https://esd.wa.gov/labormarketinfo/county-profiles/whatcom; 
https://www.snl.com
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 Savi Financial Corporation Inc. and SaviBank –

Savi Financial Corporation is the small bank holding company of SaviBank. 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)        
UnauditedThree Months Ended
 March 31, 2018 December 31, 2017 Var % March 31, 2017 Var %
SUMMARY OF OPERATIONS         
Interest income$  2,579  $  2,487  4% $  2,135  21%
Interest expense   (378)    (354) 7     (261) 45 
  Net interest income   2,201     2,133    3     1,874    17 
  Provision for loan losses   -     -    -     (23)  NM  
NII after loss provision   2,201     2,133    3     1,851    19 
Investment security gains (losses) -     -    -     -    - 
Non-interest income   633     295    115     372    70 
Non-interest expense   (1,995)    (1,939)   3     (1,664)   20 
Income before tax    839     489    72     559    50 
  Federal income tax expense   178     1,628   NM      196    (9)
  Net income$  661  $  (1,139)  NM   $  363    82 
          
PER COMMON SHARE DATA          
Number of shares outstanding (000s)   17,113     17,113   NM     14,820    15 
Earnings per share, basic and diluted$  0.039  $  (0.067)  NM  $  0.024    58 
Market value   2.01     2.00  NM     1.60    26 
Book value   1.72     1.69  NM     1.72   NM 
Market value to book value 116.69%  118.68%  NM   93.05% NM 
          
BALANCE SHEET DATA         
Assets$  221,648  $  217,271  2% $  198,235  12%
Investments securities   9,569     9,979    (4)    10,440    (8)
Total loans    185,757     183,847    1     162,013    15 
Total deposits   186,219     178,274    4     136,896    36 
Borrowings    5,000     9,000    (44)    35,300    (86)
Shareholders’ equity   29,478     28,838    2     25,483    16 
          
AVERAGE BALANCE SHEET DATA         
Average assets$  218,450  $  215,205  2% $  185,943  17%
Average total loans   182,614     176,143  4     156,279  17 
Average total deposits   179,863     175,309  3     134,434  34 
Average shareholders' equity   28,848     30,306  -5     20,628  40 
          
ASSET QUALITY RATIOS         
Net (charge-offs) recoveries$  2  $  (51)   $  315   
Net (charge-offs) recoveries to average loans   0.00%    (0.12)%      0.81%  
Non-performing loans as a % of loans   0.01     0.04       0.03   
Non-performing assets as a % of assets   0.22     0.25       0.79   
Allowance for loan losses as a % of total loans   1.05     1.06       1.15   
Allowance for loan losses as a % of non-performing loans   8,473.91     2,702.78       3,879.17   
          
FINANCIAL RATIOSSTATISTICS         
Return on average equity 9.17%  (15.03)%    7.04%  
Return on average assets   1.21     (2.12)      0.78   
Net interest margin   4.30     4.23       4.43   
Efficiency ratio   70.40     79.88       74.09   
Average number of employees (FTE)   66     61       58   
          
CAPITAL RATIOS         
Tier 1 leverage ratio  -- Bank      12.12     12.37       11.58   
Common equity tier 1 ratio  -- Bank      13.41     14.08       12.50   
Tier 1 risk-based capital ratio  -- Bank      13.41     14.08       12.50   
Total risk-based capital ratio  --Bank    14.44     15.15       13.65   


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

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