BURLINGTON, Wash., July 31, 2019 (GLOBE NEWSWIRE) -- Savi Financial Corporation, Inc. (OTC Pink: SVVB), the bank holding company for SaviBank, today reported second quarter 2019 earnings of $381,000, or $0.09 per diluted share, compared to $519,000, or $0.12 per diluted share, in the second quarter of 2018. Results were impacted by an increase in operating costs as a result of the company’s branch expansion strategy. In the first six months of the year, Savi reported net income of $906,000, or $0.21 per diluted share, compared to $1.18 million, or $0.27 per diluted share, in the first six months of 2018
“We have spent the first six months of the year organically expanding our branch structure, taking advantage of market disruptions within our three-county footprint,” said Michal D. Cann, Chairman and CEO. “As a result, we generated 26% year-over-year loan growth and 30% deposit growth. Although the costs associated with this expansion impacted earnings, we are now seeing positive results of our efforts and remain intensely focused on growing our asset base and improving future earnings.”
“Our net interest margin remains healthy and well above industry averages, primarily due to strong loan growth and higher loan yields,” said Cann. Net interest margin improved to 4.47% in the second quarter of 2019 from 4.43% in the second quarter a year ago. For the first quarter of 2019, net interest margin was 4.54%, of which 23 basis points was attributable to a one-time loan swap. The net interest margin remains significantly better than the peer average of 3.71% posted by the 476 banks that comprised the SNL Microcap U.S. Bank Index at March 31, 2019. In the first six months of 2019, net interest margin improved 14 basis points to 4.54% compared to 4.40% in the first six months of 2018.
Total revenue, consisting of net interest income and non-interest income, increased 23% to $3.47 million in the second quarter of 2019, compared to $2.81 million in the second quarter a year ago, and increased 5% from $3.29 million in the first quarter of 2019. Year-to-date, revenues increased 20% to $6.75million from $5.64 million in the same period a year earlier.
“Our SBA lending team continues to broaden our lending relationships, and as a result had another solid year of production. This is especially impressive given the government shutdown during that period,” said Andrew Hunter, President. SBA and USDA loan production for the twelve months ended June 30, 2019 totaled 18 loans for $9.72 million, compared to production of 27 loans for $10.31 million in the year-ago period.
Second Quarter 2019 Highlights
- Pretax income was $483,000 in the second quarter, compared to $654,000 in the second quarter of 2018, and $667,000 in the first quarter of 2019.
- Earnings per diluted share were $0.09 in the second quarter, compared to $0.12 in both the second quarter a year ago and preceding quarter.
- Net interest income increased 31% to $3.05 million in the second quarter of 2019, compared to $2.33 million in the second quarter a year ago, and was up 3% from $2.95 million in the first quarter of 2019.
- Average second quarter total loans increased 29%, to $244.5 million, compared to $188.9 million a year ago, and grew 6% from $231.6 million in the first quarter of 2019. Total loans at June 30, 2019, increased 26% to $248.8 million from $197.9 million a year ago and grew 6% from $234.2 at March 31, 2019.
- Average second quarter total deposits grew 27% to $238.4 million from $188.3 million, in the second quarter a year ago, and increased 8% from $220.5 million in the first quarter of 2019. Total deposits grew 30% to $244.3 million, at June 30, 2019, from $188.4 million a year ago, and grew 5% from $232.6 million at the end of the first quarter of 2019.
- Asset quality remained strong with nonperforming loans at 0.11% of total loans at June 30, 2019. This compares to nonperforming loans at 0.14% of total loans at June 30, 2018, and nonperforming loans at 0.11% of total loans at March 31,2019. Nonperforming assets (“NPAs”) were 0.25% at June 30, 2019, compared to 0.32% a year ago and 0.21% three months earlier. The current NPAs reflects the stability of the loan portfolio and paydowns in principle balances.
- Net charge-offs were $32,000 in the second quarter of 2019, compared to net charge-offs of $8,000 in the second quarter a year ago, and recoveries of $7,000 in the preceding quarter.
- Allowance for loan losses, as a percentage of total loans, was 1.01% at June 30, 2019, compared to 1.00%, at June 30, 2018.
- SaviBank capital levels remained above the threshold for well-capitalized institutions. The total risk-based capital ratio was 12.09% and the tier-1 leverage ratio was 10.32%.
“We have been very busy with our branch expansion strategy this year,” said Cann. “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 these additional locations will help expand our client base in our key markets, contribute to future earnings growth, and increase our franchise value.”
About Northwest Washington
SaviBank currently operates four branches and one loan production office in Skagit County, two branches in Island County, and one branch in Whatcom County.
According to USNews.com, Washington state ranked 6th overall and came in 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. According to a study by Sperling’s Best Places and published by Farmers Insurance, Bellingham Washington is the 3rd safest mid-size city and Mount-Vernon-Anacortes is the 17th safest small city in the United States.
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 $377,450, up 11.51% in June 2019 compared to a year ago, and there was a 2.13 month supply of homes on the market. For Island County, the average house sold for $399,000, up 6.40% from a year ago and supply totaled 1.95 months. For Whatcom County, the average home sold for $404,000, up 9.19% from a year ago and supply totaled 1.98 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 5.46% from 2019 through 2024, and median household income is projected to increase by 12.54% 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 6.22% from 2019 through 2024, and median household income is projected to increase by 9.64%.
Island County is home to Naval Air Station Whidbey Island. Whidbey Island’s population is 85,018, with approximately 23,000 in Oak Harbor. Island County’s population is projected to grow 5.07% from 2019 through 2024 and median household income is projected to increase by 13.48%.
Sources:
http://www.northwestmls.com/library/CorporateContent/statistics/Recaps.pdf
https://www.usnews.com/news/best-states/rankings
https://www.bestplaces.net/docs/studies/secure.aspx
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 seven branch locations in Burlington, Bellingham, Mount Vernon, Oak Harbor, Freeland and Sedro-Woolley, 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 | Six Months Ended | |||||||||||||||||||||||||||
| June 30, 2019 | June 30, 2018 | Var % | March 31, 2019 | Var % | June 30, 2019 | June 30, 2018 | Var % | |||||||||||||||||||||
| SUMMARY OF OPERATIONS | ||||||||||||||||||||||||||||
| Interest income | $ | 3,853 | $ | 2,732 | 41 | % | $ | 3,673 | 5 | % | $ | 7,526 | $ | 5,311 | 42 | % | ||||||||||||
| Interest expense | (801 | ) | (399 | ) | 101 | (722 | ) | 11 | (1,523 | ) | (777 | ) | 96 | |||||||||||||||
| Net interest income | 3,052 | 2,333 | 31 | 2,951 | 3 | 6,003 | 4,534 | 32 | ||||||||||||||||||||
| Provision for loan losses | (179 | ) | (39 | ) | N/M | (96 | ) | N/M | (275 | ) | (39 | ) | 605 | |||||||||||||||
| NII after loss provision | 2,873 | 2,294 | 25 | 2,855 | 1 | 5,728 | 4,495 | 27 | ||||||||||||||||||||
| Non-interest income | 413 | 474 | (13 | ) | 338 | 22 | 751 | 1,107 | (32 | ) | ||||||||||||||||||
| Non-interest expense | (2,803 | ) | (2,114 | ) | 33 | (2,526 | ) | 11 | (5,329 | ) | (4,109 | ) | 30 | |||||||||||||||
| Income before tax | 483 | 654 | (26 | ) | 667 | (28 | ) | 1,150 | 1,493 | (23 | ) | |||||||||||||||||
| Federal income tax expense | 102 | 135 | (24 | ) | 142 | (28 | ) | 244 | 313 | (22 | ) | |||||||||||||||||
| Net income | $ | 381 | $ | 519 | (27 | )% | $ | 525 | (27 | )% | $ | 906 | $ | 1,180 | (23 | )% | ||||||||||||
| PER COMMON SHARE DATA | ||||||||||||||||||||||||||||
| Number of shares outstanding (000s) | 3,433 | 3,423 | 0.29 | % | 3,424 | 0.26 | % | 3,433 | 3,423 | 0.29 | % | |||||||||||||||||
| Earnings per share, basic | $ | 0.11 | $ | 0.15 | (27 | ) | $ | 0.15 | (28 | ) | $ | 0.26 | $ | 0.34 | (23 | ) | ||||||||||||
| Earnings per share, diluted | $ | 0.09 | $ | 0.12 | (27 | ) | $ | 0.12 | (27 | ) | $ | 0.21 | $ | 0.27 | (24 | ) | ||||||||||||
| Market value | 10.77 | 12.00 | (10 | ) | 11.05 | (3 | ) | 10.77 | 12.00 | (10 | ) | |||||||||||||||||
| Book value | 9.39 | 8.76 | 7 | 9.26 | 1 | 9.39 | 8.76 | 7 | ||||||||||||||||||||
| Market value to book value | 114.68 | % | 136.97 | % | (16 | ) | 119.33 | % | (4 | ) | 114.68 | % | 136.97 | % | (16 | ) | ||||||||||||
| BALANCE SHEET DATA | ||||||||||||||||||||||||||||
| Assets | $ | 299,731 | $ | 234,364 | 28 | % | $ | 281,476 | 6 | % | $ | 299,731 | $ | 234,364 | 28 | % | ||||||||||||
| Investments securities | 11,147 | 9,132 | 22 | 11,756 | (5 | ) | 11,147 | 9,132 | 22 | |||||||||||||||||||
| Total loans | 248,808 | 197,916 | 26 | 234,227 | 6 | 248,808 | 197,916 | 26 | ||||||||||||||||||||
| Total deposits | 244,256 | 188,350 | 30 | 232,588 | 5 | 244,256 | 188,350 | 30 | ||||||||||||||||||||
| Borrowings | 22,000 | 15,000 | 47 | 16,000 | 38 | 22,000 | 15,000 | 47 | ||||||||||||||||||||
| Shareholders’ equity | 32,240 | 29,990 | 8 | 31,694 | 2 | 32,240 | 29,990 | 8 | ||||||||||||||||||||
| AVERAGE BALANCE SHEET DATA | ||||||||||||||||||||||||||||
| Average assets | $ | 290,604 | $ | 226,280 | 28 | % | $ | 274,600 | 6 | % | $ | 283,727 | $ | 222,387 | 28 | % | ||||||||||||
| Average total loans | 244,542 | 188,904 | 29 | 231,595 | 6 | 238,104 | 185,776 | 28 | ||||||||||||||||||||
| Average total deposits | 238,422 | 188,268 | 27 | 220,513 | 8 | 226,347 | 184,089 | 23 | ||||||||||||||||||||
| Average shareholders' equity | 31,967 | 29,734 | 8 | 31,409 | 2 | 31,682 | 29,414 | 8 | ||||||||||||||||||||
| ASSET QUALITY RATIOS | ||||||||||||||||||||||||||||
| Net (charge-offs) recoveries | $ | (32 | ) | $ | (8 | ) | N/M | $ | 7 | N/M | $ | (39 | ) | $ | (6 | ) | N/M | |||||||||||
| Net (charge-offs) recoveries to average loans | (0.05 | )% | (0.02 | )% | N/M | 0.01 | % | N/M | (0.03 | )% | (0.01 | )% | N/M | |||||||||||||||
| Non-performing loans as a % of loans | 0.11 | 0.14 | (20 | ) | 0.11 | 2 | 0.11 | 0.14 | (20 | ) | ||||||||||||||||||
| Non-performing assets as a % of assets | 0.25 | 0.32 | (22 | ) | 0.21 | 19 | 0.25 | 0.32 | (22 | ) | ||||||||||||||||||
| Allowance for loan losses as a % of total loans | 1.01 | 1.00 | 1 | 1.01 | - | 1.01 | 1.00 | 1 | ||||||||||||||||||||
| Allowance for loan losses as a % of non-performing loans | 1,351.08 | 711.87 | 90 | 917.05 | 47 | 1,351.08 | 711.87 | 90 | ||||||||||||||||||||
| FINANCIAL RATIOS\STATISTICS | ||||||||||||||||||||||||||||
| Return on average equity | 4.77 | % | 6.98 | % | (32 | )% | 6.69 | % | (29 | )% | 5.72 | % | 8.02 | % | (29 | )% | ||||||||||||
| Return on average assets | 0.52 | 0.92 | (43 | ) | 0.76 | (31 | ) | 0.64 | 1.06 | (40 | ) | |||||||||||||||||
| Net interest margin | 4.47 | 4.43 | 1 | 4.54 | (2 | ) | 4.54 | 4.40 | 3 | |||||||||||||||||||
| Efficiency ratio | 79.60 | 74.31 | 7 | 75.88 | 5 | 77.79 | 71.49 | 9 | ||||||||||||||||||||
| Average number of employees (FTE) | 89 | 69 | 29 | 82 | 9 | 89 | 69 | 29 | ||||||||||||||||||||
| CAPITAL RATIOS | ||||||||||||||||||||||||||||
| Tier 1 leverage ratio -- Bank | 10.32 | 12.01 | (14 | )% | 10.67 | (3 | )% | 10.32 | 12.01 | (14 | )% | |||||||||||||||||
| Common equity tier 1 ratio -- Bank | 11.13 | 12.77 | (13 | ) | 11.66 | (5 | ) | 11.13 | 12.77 | (13 | ) | |||||||||||||||||
| Tier 1 risk-based capital ratio -- Bank | 11.13 | 12.77 | (13 | ) | 11.66 | (5 | ) | 11.13 | 12.77 | (13 | ) | |||||||||||||||||
| Total risk-based capital ratio --Bank | 12.09 | 13.76 | (12 | ) | 12.64 | (4 | ) | 12.09 | 13.76 | (12 | ) | |||||||||||||||||