MOUNT VERNON, Wash., May 01, 2024 (GLOBE NEWSWIRE) -- Savi Financial Corporation, Inc. (OTC Pink: SVVB), the bank holding company for SaviBank, today announced a net loss of $416,000, or a loss of $0.09 per diluted share, for the first quarter of 2024. This compared to a net loss of $1.54 million, or a loss of $0.35 per diluted share in the preceding quarter, and net income of $468,000, or $0.11 per diluted share, in the first quarter of 2023. Net income for the current quarter was impacted by higher interest expense on deposits, lower noninterest income due to the slowing SBA market and merger related expenses. All results are unaudited.
“Our operating results for the first quarter of 2024 produced solid growth in loans and deposits, reflecting our successful outreach in our Western Washington markets,” said Michal D. Cann, Chairman and President of Savi Financial Corporation. “The challenging interest rate environment continues to impact net interest income, however, with higher interest expense on deposits and borrowings, which affected our first quarter operating performance. Also impacting first quarter results was a decrease in noninterest income due to lower SBA and mortgage loan income as well as higher operating costs due to merger related expenses. We anticipate improved non-interest income during the second quarter of 2024. Additionally, we continue to have access to funds at the holding company which can be used to maintain strong capital ratios, and our credit quality remains strong. We added to our reserves during the quarter, and we are feeling confident about the health of our loan portfolio.”
“Loan production continues to be solid, increasing 2% from the preceding quarter and 10% compared to a year ago,” said Andrew Hunter, President and CEO of SaviBank. “We continue to seek out lending opportunities from new and existing customers and anticipate slightly slower than historic loan growth in the year ahead.”
“Our net interest margin (NIM) contracted during the current quarter, as the increase in loan yields was more than offset by higher funding costs,” said Rob Woods, Chief Financial Officer of SaviBank. The Company’s NIM was 3.40% in the first quarter of 2024, compared to 3.54% in the preceding quarter, and 3.96% in the first quarter a year ago. The NIM remains higher than the peer average of 3.11% posted by the 125 banks that comprised the Dow Jones U.S. Microcap Bank Index as of March 31, 2024. The cost of funds increased to 242 basis points during the first quarter of 2024, compared to 204 basis points in the preceding quarter.
Merger
“The highlight of the first quarter was our previously announced merger with Harborstone Credit Union,” said Cann. “We look forward to working with Harborstone Credit Union to continue our tradition of fostering meaningful customer relationships while having a positive impact in our local communities. We are deeply focused on providing resources and services for our customers to succeed, and believe that the additional services, products and locations Harborstone Credit Union provides will help us continue to meet the financial needs of our customers. Through the unique structure of this acquisition by Harborstone Credit Union, we believe we are maximizing value to our shareholders who have supported us over the years.”
On March 22, 2024, the Company announced that it had signed a Purchase and Assumption agreement whereby Lakewood, WA. based Harborstone Credit Union will acquire SaviBank in an all-cash transaction. The transaction is structured as a purchase agreement with Harborstone Credit Union purchasing substantially all assets and assuming substantially all liabilities of SaviBank. The transaction is anticipated to be completed in the first quarter of 2025, subject to receiving all regulatory approvals, approval by the stockholders of Savi Financial, and other customary closing conditions.
First Quarter 2024 Highlights:
- The Company reported a net loss of $416,000 for the first quarter of 2024, compared to net loss of $1.54 million for the fourth quarter of 2023, and net income of $468,000 for the first quarter of 2023.
- Losses per diluted share were $0.09 in the first quarter of 2024, compared to losses per diluted share of $0.35 in the preceding quarter, and earnings per diluted share of $0.11 in the first quarter of 2023.
- Net interest income was $4.63 million in the first quarter of 2024, compared to $4.78 million in the fourth quarter of 2023, and $5.12 million in the first quarter of 2023.
- Total revenue, consisting of net interest income and non-interest income, was $5.21 million in the first quarter of 2024, compared to $5.48 million in the preceding quarter and $6.09 million in the first quarter a year ago.
- Non-interest expense was $5.53 million in the first quarter of 2024, compared to $7.17 million in the preceding quarter, and $5.53 million in the first quarter a year ago.
- Average first quarter 2024 total loans increased 1% to $491.9 million, compared to $488.7 million in the fourth quarter of 2023, and increased 11% from $444.3 million in the first quarter of 2023. Total loans at March 31, 2024, increased 2% to $497.3 million from $488.7 million at December 31, 2023, and increased 10% compared to $453.8 million at March 31, 2023.
- SBA and USDA loan production for the twelve months ended March 31, 2024, totaled 14 loans for $6.51 million, compared to production of 26 loans for $33.65 million in the year-ago period.
- Average first quarter 2024 total deposits grew 1% to $486.6 million, from $482.7million in the preceding quarter, and increased 8% from $449.1 million in the first quarter of a year ago. Total deposits increased 1% to $489.4 million, at March 31, 2024, compared to $483.8 million at December 31, 2023, and increased 5% compared to $467.5 million at March 31, 2023.
- The Company recorded a $237,000 provision for credit losses in the first quarter of 2024, compared to a $287,000 provision in the fourth quarter of 2023, and a $17,000 provision in the first quarter of 2023.
- Allowance for loan losses, as a percentage of total loans, was 1.17% at March 31, 2024, compared to 1.18% at December 31, 2023, and 1.27% at March 31, 2023.
- Nonperforming loans, as a percentage of total loans, was 0.35% at March 31, 2024, compared to 0.06% at December 31, 2023. There were no nonperforming loans at March 31, 2023.
- Nonperforming assets, as a percentage of total assets, was 0.40% at March 31, 2024, compared to 0.16% at December 31, 2023, and 0.12% a year ago.
- Net charge-offs were $173,000 in the first quarter of 2024, compared to $128,000 in the fourth quarter of 2023, and $82,000 in the first quarter a year ago.
- SaviBank capital levels remained above the threshold for well-capitalized institutions with a tier-1 leverage ratio of 8.06% at March 31, 2024.
About Northwest Washington
SaviBank currently operates six branches in Skagit County, two branches in Island County, one branch in Whatcom County, one branch in San Juan County and a loan production office in Thurston County. The Skagit, Whatcom, Island and San Juan counties region stretches north from the greater Seattle/Everett/Bellevue metropolis to the Canadian border.
The housing market in Skagit, Island, Whatcom and San Juan counties remains healthy, although it has fallen off the record high levels from the past few years. According to the Northwest Multiple Listing Service, the average home in Skagit County sold for $555,000, up 1.83% in March 31, 2024, compared to a year ago, and there was a 2.19 month supply of homes on the market. For Island County, the average house sold for $510,000, down 11.23% from a year ago and supply totaled 2.54 months. For Whatcom County, the average home sold for $620,000, up 10.71% from a year ago and supply totaled 1.78 months. For San Juan County, the average home sold for $780,000, down 12.79% from a year ago and supply totaled 6.38 months.
Skagit’s population is projected to grow 3.84% from 2024 through 2029, and median household income is projected to increase by 11.41% during the same time frame. Whatcom County’s population is projected to grow 4.97% from 2024 through 2029, and median household income is projected to increase by 10.99%. Island County’s population is projected to grow 2.24% from 2024 through 2029, and median household income is projected to increase by 12.83%. San Juan County’s population is projected to grow 6.78% from 2024 through 2029, and median household income is projected to increase by 10.88%.
Sources:
https://www.nwmls.com/real-estate-news/monthly-market-snapshot/
https://www.capitaliq.spglobal.com/
About Savi Financial Corporation Inc. and SaviBank
Savi Financial Corporation is the bank holding company which owns SaviBank. The Bank began operations April 11, 2005, and has 10 branch locations in Anacortes, Burlington, Bellingham, Concrete, Mount Vernon (2), Oak Harbor, Freeland, Sedro-Woolley, and Friday Harbor, Washington, and a Mortgage Loan Production Office in Olympia. The Bank provides loan and deposit services to customers who are predominantly small and middle-market businesses and individuals in and around Skagit, Island, Whatcom and San Juan counties. As a locally-owned community bank, we believe that when everyone becomes Savi about their finances, our entire community benefits. For additional information about SaviBank, visit: www.SaviBank.com.
About Harborstone Credit Union
Harborstone Credit Union is a Washington-chartered and federally insured credit union headquartered in Lakewood, Washington. Founded in 1955 as McChord Federal Credit Union, serving airmen on McChord Air Force Base (now Joint Base Lewis McChord), Harborstone Credit Union has grown to become one of the largest credit unions in Washington State with over 88,000 members and approximately $1.9 billion in total assets. Harborstone Credit Union has fifteen branches located throughout King, Pierce, and Thurston counties and offers members a full range of products and services with the aim to assist members in achieving financial well-being through innovative financial solutions that foster thriving communities and economic vitality. For more information, please visit www.harborstone.com.
Forward-Looking Statements
Certain statements in this news release contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, such as statements relating to future plans and expectations, and are thus prospective. Such forward-looking statements are subject to risks, uncertainties, and other factors, such as the businesses of Harborstone Credit Union and SaviBank may not be integrated successfully or such integration may take longer to accomplish than expected, the expected cost savings and any revenue synergies from the acquisition may not be fully realized within the expected timeframes, disruption from the acquisition may make it more difficult to maintain relationships with customers, associates, or suppliers, the required governmental approvals of the acquisition may not be obtained on the proposed terms and schedule, or Savi Financial shareholders may not approve the acquisition, any of which could cause actual results to differ materially from future results expressed or implied by such forward-looking statements. Although we believe that the assumptions underlying the forward-looking statements are reasonable, any of the assumptions could prove to be inaccurate. Therefore, we can give no assurance that the results contemplated in the forward-looking statements will be realized. The inclusion of this forward-looking information should not be construed as a representation by the companies or any person that the future events, plans, or expectations contemplated by the companies will be achieved. All subsequent written and oral forward-looking statements concerning the companies or any person acting on their behalf is expressly qualified in its entirety by the cautionary statements above. None of Harborstone Credit Union, Savi Financial or SaviBank undertake any obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, to reflect circumstances or events that occur after the date the forward-looking statements are made.
| SELECTED FINANCIAL DATA | ||||||||||||||||||
| (In thousands of dollars, except for ratios and per share amounts) | ||||||||||||||||||
| Unaudited | ||||||||||||||||||
| Three Months Ended | ||||||||||||||||||
| March 31, 2024 | December 31, 2023 | Var % | March 31, 2023 | Var % | ||||||||||||||
| SUMMARY OF OPERATIONS | ||||||||||||||||||
| Interest income | $ | 7,835 | $ | 7,549 | 4 | % | $ | 6,573 | 19 | % | ||||||||
| Interest expense | (3,204 | ) | (2,773 | ) | 16 | (1,456 | ) | 120 | ||||||||||
| Net interest income | 4,631 | 4,776 | (3 | ) | 5,117 | (9 | ) | |||||||||||
| Provision for loan losses | (237 | ) | (287 | ) | (17 | ) | — | N/M | ||||||||||
NII after loss provision | 4,394 | 4,489 | (2 | ) | 5,117 | (14 | ) | |||||||||||
| Non-interest income | 581 | 708 | (18 | ) | 974 | (40 | ) | |||||||||||
| Non-interest expense | (5,531 | ) | (7,173 | ) | (23 | ) | (5,529 | ) | 0 | |||||||||
| Income before tax | (556 | ) | (1,976 | ) | (72 | ) | 562 | (199 | ) | |||||||||
| Federal income tax expense | (140 | ) | (437 | ) | (68 | ) | 94 | (249 | ) | |||||||||
Net income | $ | (416 | ) | $ | (1,539 | ) | (73 | )% | $ | 468 | (189 | )% | ||||||
| PER COMMON SHARE DATA | ||||||||||||||||||
| Number of shares outstanding (000s) | 3,465 | 3,460 | 0 | % | 3,452 | 0 | % | |||||||||||
| # of Shares/options/warrants issued | 4,417 | 4,419 | (0 | ) | 4,405 | 0 | ||||||||||||
| Earnings per share, basic | $ | (0.12 | ) | $ | (0.44 | ) | (73 | ) | $ | 0.14 | (189 | ) | ||||||
| Earnings per share, diluted | $ | (0.09 | ) | $ | (0.35 | ) | (73 | ) | $ | 0.11 | (189 | ) | ||||||
| Market value | 14.60 | 7.01 | 108 | 7.60 | 92 | |||||||||||||
| Book value | 10.56 | 10.75 | (2 | ) | 10.85 | (3 | ) | |||||||||||
| Market value to book value | 138.30 | % | 65.22 | % | 112 | 70.07 | % | 97 | ||||||||||
| BALANCE SHEET DATA | ||||||||||||||||||
| Assets | $ | 603,333 | $ | 593,481 | 2 | % | $ | 563,324 | 7 | % | ||||||||
| Investments securities | 36,548 | 35,451 | 3 | 38,105 | (4 | ) | ||||||||||||
| Total loans | 497,290 | 488,747 | 2 | 453,807 | 10 | |||||||||||||
| Total deposits | 489,366 | 483,833 | 1 | 467,507 | 5 | |||||||||||||
| Borrowings | 57,500 | 52,500 | 10 | 36,450 | 58 | |||||||||||||
| Sub Debt – Savi Financial Only | 17,000 | 17,000 | 17,000 | |||||||||||||||
| Shareholders’ equity | 36,579 | 37,187 | (2 | ) | 37,443 | (2 | ) | |||||||||||
| AVERAGE BALANCE SHEET DATA | ||||||||||||||||||
| Average assets | $ | 603,333 | $ | 592,442 | 2 | % | $ | 563,324 | 7 | % | ||||||||
| Average total loans | 491,928 | 488,740 | 1 | 444,322 | 11 | |||||||||||||
| Average total deposits | 486,600 | 482,655 | 1 | 449,108 | 8 | |||||||||||||
| Average shareholders' equity | 36,883 | 37,537 | (2 | ) | 36,860 | 0 | ||||||||||||
| ASSET QUALITY RATIOS | ||||||||||||||||||
| Net (charge-offs) recoveries | $ | (173 | ) | $ | (128 | ) | N/M | $ | (82 | ) | 111 | % | ||||||
| Net (charge-offs) recoveries to average loans | (0.14 | )% | (0.10 | )% | N/M | (0.07 | )% | 91 | ||||||||||
| Non-performing loans as a % of loans | 0.35 | 0.06 | 486 | 0.00 | 7,151 | |||||||||||||
| Non-performing assets as a % of assets | 0.40 | 0.16 | 149 | 0.12 | 232 | |||||||||||||
| Allowance for loan losses as a % of total loans | 1.17 | 1.18 | (1 | ) | 1.27 | (8 | ) | |||||||||||
| Allowance for loan losses as a % of non-performing loans | 333.12 | 1,866.34 | (82 | ) | 26,118.18 | (99 | ) | |||||||||||
| FINANCIAL RATIOS\STATISTICS | ||||||||||||||||||
| Return on average equity | -4.51 | % | -16.40 | % | (72 | )% | 5.08 | % | (189 | )% | ||||||||
| Return on average assets | (0.28 | ) | (1.04 | ) | (73 | ) | 0.33 | (183 | ) | |||||||||
| Net interest margin | 3.40 | 3.54 | (4 | ) | 3.96 | (14 | ) | |||||||||||
| Efficiency ratio | 106.12 | 108.48 | (2 | ) | 90.79 | 17 | ||||||||||||
| Average number of employees (FTE) | 146 | 147 | (1 | ) | 150 | (3 | ) | |||||||||||
| CAPITAL RATIOS | ||||||||||||||||||
| Tier 1 leverage ratio – Bank | 8.06 | 8.11 | (1 | )% | 8.26 | (2 | )% | |||||||||||
| Common equity tier 1 ratio – Bank | 8.93 | 8.95 | (0 | )% | 8.92 | 0 | % | |||||||||||
| Tier 1 risk-based capital ratio – Bank | 8.93 | 8.95 | (0 | )% | 8.92 | 0 | % | |||||||||||
| Total risk-based capital ratio – Bank | 10.10 | 10.12 | (0 | )% | 10.17 | (1 | )% | |||||||||||
