BURLINGTON, Wash., Jan. 29, 2019 (GLOBE NEWSWIRE) -- Savi Financial Corporation, Inc. (OTC Pink: SVVB), the bank holding company for SaviBank, today reported fourth quarter 2018 earnings increased to $674,000, or $0.16 per diluted share, compared to $390,000, or $0.09 per diluted share in the third quarter of 2018. Fourth quarter profitability was fueled by 24% loan growth and 17% deposit growth year-over-year, excellent asset quality and a strong net interest margin.
In the fourth quarter of 2017, following a $1.49 million valuation charge for its deferred tax asset (DTA) due to tax reforms enacted in 2017, Savi reported a net loss of $1.14 million. By comparison, in the fourth quarter of 2016, Savi recognized a tax benefit for its DTA valuation of $5.00 million. All results are unaudited and reflect the 1-for-5 reverse split effected on September 11, 2018.
For the year 2018, earnings grew to $2.24 million, or $0.52 per diluted share. In 2017, including the $1.49 million valuation charge for its DTA, net income was $27,000, or $0.01 per diluted share. Pre-tax income increased 25% to $2.85 million, compared to $2.28 million in 2017.
“Our 2018 financial results reflect the stability and strength of our banking franchise, managing our position in a rising rate environment, and the lower corporate tax rates enacted last year,” said Michal D. Cann, Chairman and CEO. “As a result, we produced record net income for the year, while maintaining excellent asset quality and a healthy net interest margin. We generated 24% year-over-year loan growth and 17% deposit growth through organic expansion in our franchise base and our strong lending team. We plan to continue expanding our branch network in the high growth markets we serve.”
“Our SBA lending team continues to expand our lending relationships, and as a result had another solid year of production,” said Andrew Hunter, President. SBA and USDA loan production for the twelve months ended December 31, 2018 totaled 22 loans for $10.05 million, compared to production of 23 loans for $13.24 million in the 12 month period ended December 31,2017.
Net interest margin remains well above average at 4.48% in the fourth quarter of 2018, the same as in the preceding quarter, and increased 25 basis points compared to 4.23% in the fourth quarter a year ago. The net interest margin is significantly better than the peer average of 3.75% posted by the 409 banks that comprised the SNL Microcap U.S. Bank Index at September 30, 2018. For the full year, net interest margin was 4.42% compared to 4.37% in 2017.
“With the four 25-basis-point rate hikes implemented in 2018, we are benefiting from the repricing of the 24.3% of the loan portfolio that is tied to prime,” said Rob Woods, Chief Financial Officer.
Total revenue, consisting of net interest income and non-interest income, increased 31% to $3.19 million in the fourth quarter of 2018, compared to $2.43 million in the fourth quarter a year ago, and increased 13% from $2.82 million in the third quarter of 2018. For 2018, total revenue increased 18% to $11.65 million from $9.88 million for 2017.
Fourth Quarter 2018 Highlights (at, or for the period December 31, 2018)
- Pretax income increased 75% to $855,000 in the fourth quarter, compared to $489,000 in the fourth quarter of 2017, and increased 72% compared to $497,000 in the third quarter of 2018. For the full year in 2018, pretax income increased 25% to $2.85 million, from $2.28 million in 2017.
- Earnings per diluted share were $0.16 in the fourth quarter, compared to $0.09 in the third quarter of 2018. Earnings per share were a loss of $0.29 in the fourth quarter of 2017, reflecting the DTA valuation charge. For the full year in 2018, EPS was $0.52 from $0.01 in 2017.
- Net interest income increased 25% to $2.67 million in the fourth quarter of 2018, compared to $2.13 million in the fourth quarter a year ago, and was up 7% from $2.49 million in the third quarter of 2018. For the full year 2018, net interest income grew 19% to $9.70 million, from $8.16 million in 2017.
- Average fourth quarter total loans increased 22%, to $214.2 million, compared to $176.1 million a year ago, and grew 7% from $200.3 million in the third quarter of 2018. End of year total loans increased 24% to $227.6 million from $183.8 million a year ago and grew 10% from $207.1 at the end of the third quarter of 2018.
- Average fourth quarter total deposits grew 17% to $204.5 million from $175.3 million in the fourth quarter a year ago and increased 5% from $194.5 million in the third quarter of 2018. End of year deposits also grew 17% to $208.4 million from $178.3 million a year ago and grew 4% from $200.6 million at the end of the third quarter of 2018.
- Asset quality remained excellent with no nonperforming loans at December 31, 2018. This compares to nonperforming loans at 0.04% of total loans at December 31, 2017, and 0.01% at September 30, 2018. Nonperforming assets (“NPAs”) were 0.16% at the end of the fourth quarter, down from 0.25% a year ago and 0.20% three months earlier. The improvement in NPAs reflects the stability of the loan portfolio and paydowns in principle balances.
- Net charge-offs were $4,000 in the fourth quarter of 2018, compared to $51,000 in the fourth quarter a year ago and $6,000 in the preceding quarter.
- Allowance for loan losses, as a percentage of total loans, was 1.00% at December 31, 2018, compared to 1.06%, at December 31, 2017.
- SaviBank capital levels remained above the threshold for well-capitalized institutions. The total risk-based capital ratio was 12.70% and the tier-1 leverage ratio was 11.29%.
“We continue to take advantage of the disruption in our markets by executing on our strategy to modernize and expand our branch network,” said Cann. “Earlier this month, we opened a new full-service branch office in Mt. Vernon, with plans to open a new branch office in Sedro Wooley within the next few months. In addition, we are in the process of building out a new Oak Harbor branch, which is operating in temporary facilities until the new branch is completed, and our main office in Burlington will be moving into a new modern facility in the spring.”
About Northwest Washington
SaviBank currently operates three branches and one loan production office in Skagit County, two branches in Island County, and one branch in Whatcom County. As we referred to above, substantial branch expansion is anticipated in the first half of 2019.
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 $357,000, up 16.1% in December 2018 compared to a year ago, and there was a 3.40 month supply of homes on the market. For Island County, the average house sold for $339,500, up 4.62% from a year ago and supply totaled 2.49 months. For Whatcom County, the average home sold for $379,900, up 11.08% from a year ago and supply totaled 2.64 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. According to the Whidbey Island Air Station fact sheet, “the direct economic impact of the air station on Whidbey Island is close to $600 million, comprising 88 percent of all economic activity and 68 percent of all county jobs. That impact is expected to grow in the near future as the base prepares for the arrival of the Navy’s new Maritime Patrol and Reconnaissance (P-8 Poseidon) and additional Expeditionary Electronic Attack (EA-18 Growler) squadrons.” 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
www.snl.com
https://www.usnews.com/news/best-states/rankings
https://www.bestplaces.net/docs/studies/secure.aspx
https://www.cnic.navy.mil/content/dam/cnic/cnrnw/pdfs/NASWIfactsheets/Whidbey%20Fact%20Sheet%20for%20final%20review.pdf
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 six branch locations in Burlington, Bellingham, Mount 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 | Year Ended | |||||||||||||||||||||||||||||||||||||||||||||||
| December 31, 2018 | December 31, 2017 | Var % | September 30, 2018 | Var % | December 31, 2018 | December 31, 2017 | Var % | |||||||||||||||||||||||||||||||||||||||||
| SUMMARY OF OPERATIONS | ||||||||||||||||||||||||||||||||||||||||||||||||
| Interest income | $ | 3,248 | $ | 2,487 | 31 | % | $ | 2,966 | 10 | % | $ | 11,525 | $ | 9,348 | 23 | % | ||||||||||||||||||||||||||||||||
| Interest expense | (579 | ) | (354 | ) | 64 | (472 | ) | 23 | (1,828 | ) | (1,185 | ) | 54 | |||||||||||||||||||||||||||||||||||
| Net interest income | 2,669 | 2,133 | 25 | 2,494 | 7 | 9,697 | 8,163 | 19 | ||||||||||||||||||||||||||||||||||||||||
| Provision for loan losses | (177 | ) | - | N/M | (98 | ) | 81 | (314 | ) | (23 | ) | 1,265 | ||||||||||||||||||||||||||||||||||||
| NII after loss provision | 2,492 | 2,133 | 17 | 2,396 | 4 | 9,383 | 8,140 | 15 | ||||||||||||||||||||||||||||||||||||||||
| Non-interest income | 517 | 295 | 75 | 329 | 57 | 1,953 | 1,714 | 14 | ||||||||||||||||||||||||||||||||||||||||
| Non-interest expense | (2,154 | ) | (1,939 | ) | 11 | (2,228 | ) | (3 | ) | (8,491 | ) | (7,571 | ) | 12 | ||||||||||||||||||||||||||||||||||
| Income before tax | 855 | 489 | 75 | 497 | 72 | 2,845 | 2,283 | 25 | ||||||||||||||||||||||||||||||||||||||||
| Federal income tax expense | 181 | 1,628 | (89 | ) | 107 | 69 | 605 | 2,256 | (73 | ) | ||||||||||||||||||||||||||||||||||||||
| Net income | $ | 674 | $ | (1,139 | ) | N/M | $ | 390 | 73 | % | $ | 2,240 | $ | 27 | 8,196 | % | ||||||||||||||||||||||||||||||||
| PER COMMON SHARE DATA | ||||||||||||||||||||||||||||||||||||||||||||||||
| Number of shares outstanding (000s) | 3,423 | 3,423 | - | % | 3,423 | - | % | 3,423 | 3,423 | - | % | |||||||||||||||||||||||||||||||||||||
| Earnings per share, diluted | $ | 0.16 | $ | (0.29 | ) | (154 | ) | $ | 0.09 | 73 | $ | 0.52 | $ | 0.01 | 7,519 | |||||||||||||||||||||||||||||||||
| Market value | 10.50 | 10.00 | 5 | 12.07 | (13 | ) | 10.50 | 10.00 | 5 | |||||||||||||||||||||||||||||||||||||||
| Book value | 9.09 | 8.43 | 8 | 8.88 | 2 | 9.09 | 8.43 | 8 | ||||||||||||||||||||||||||||||||||||||||
| Market value to book value | 115.48 | % | 118.61 | % | (3 | ) | 135.92 | % | (15 | ) | 115.48 | % | 118.61 | % | (3 | ) | ||||||||||||||||||||||||||||||||
| BALANCE SHEET DATA | ||||||||||||||||||||||||||||||||||||||||||||||||
| Assets | $ | 267,723 | $ | 217,291 | 23 | % | $ | 247,111 | 8 | % | $ | 267,723 | $ | 217,291 | 23 | % | ||||||||||||||||||||||||||||||||
| Investments securities | 11,091 | 9,979 | 11 | 9,120 | 22 | 11,091 | 9,979 | 11 | ||||||||||||||||||||||||||||||||||||||||
| Total loans | 227,625 | 183,847 | 24 | 207,129 | 10 | 227,625 | 183,847 | 24 | ||||||||||||||||||||||||||||||||||||||||
| Total deposits | 208,437 | 178,274 | 17 | 200,600 | 4 | 208,437 | 178,274 | 17 | ||||||||||||||||||||||||||||||||||||||||
| Borrowings | 27,000 | 9,000 | 200 | 15,000 | 80 | 27,000 | 9,000 | 200 | ||||||||||||||||||||||||||||||||||||||||
| Shareholders’ equity | 31,123 | 28,859 | 8 | 30,394 | 2 | 31,123 | 28,859 | 8 | ||||||||||||||||||||||||||||||||||||||||
| AVERAGE BALANCE SHEET DATA | ||||||||||||||||||||||||||||||||||||||||||||||||
| Average assets | $ | 257,417 | $ | 215,205 | 20 | % | $ | 240,738 | 7 | % | $ | 234,748 | $ | 201,772 | 16 | % | ||||||||||||||||||||||||||||||||
| Average total loans | 214,173 | 176,143 | 22 | 200,295 | 7 | 196,593 | 167,691 | 17 | ||||||||||||||||||||||||||||||||||||||||
| Average total deposits | 204,519 | 175,309 | 17 | 194,475 | 5 | 180,636 | 152,835 | 18 | ||||||||||||||||||||||||||||||||||||||||
| Average shareholders' equity | 30,759 | 30,306 | 1 | 30,192 | 2 | 29,991 | 27,149 | 10 | ||||||||||||||||||||||||||||||||||||||||
| ASSET QUALITY RATIOS | ||||||||||||||||||||||||||||||||||||||||||||||||
| Net (charge-offs) recoveries | $ | (4 | ) | $ | (51 | ) | (92 | )% | $ | (6 | ) | (33 | )% | $ | (16 | ) | $ | 399 | N/M | |||||||||||||||||||||||||||||
| Net (charge-offs) recoveries to average loans | (0.01 | )% | (0.12 | )% | (94 | ) | (0.01 | )% | (38 | ) | (0.01 | )% | 0.24 | % | N/M | |||||||||||||||||||||||||||||||||
| Non-performing loans as a % of loans | 0.00 | 0.04 | (98 | ) | 0.01 | (91 | ) | 0.00 | 0.04 | (98 | ) | |||||||||||||||||||||||||||||||||||||
| Non-performing assets as a % of assets | 0.16 | 0.25 | (35 | ) | 0.20 | (19 | ) | 0.16 | 0.25 | (35 | ) | |||||||||||||||||||||||||||||||||||||
| Allowance for loan losses as a % of total loans | 1.00 | 1.06 | (6 | ) | 1.00 | 0 | 1.00 | 1.06 | (6 | ) | ||||||||||||||||||||||||||||||||||||||
| Allowance for loan losses as a % of non-performing loans | 113,850.00 | 2,702.78 | 4,112 | 18,827.27 | 505 | 113,850.00 | 2,702.78 | 4,112 | ||||||||||||||||||||||||||||||||||||||||
| FINANCIAL RATIOSSTATISTICS | ||||||||||||||||||||||||||||||||||||||||||||||||
| Return on average equity | 8.76 | % | -15.03 | % | N/M | 5.17 | % | 70 | 7.47 | % | 0.10 | % | 7,410 | % | ||||||||||||||||||||||||||||||||||
| Return on average assets | 1.05 | (2.12 | ) | N/M | 0.65 | 62 | 0.95 | 0.01 | 7,031 | |||||||||||||||||||||||||||||||||||||||
| Net interest margin | 4.48 | 4.23 | 6 | 4.48 | (0 | ) | 4.42 | 4.37 | 1 | |||||||||||||||||||||||||||||||||||||||
| Efficiency ratio | 66.43 | 79.88 | (17 | ) | 76.54 | (13 | ) | 71.33 | 76.65 | (7 | ) | |||||||||||||||||||||||||||||||||||||
| Average number of employees (FTE) | 76 | 61 | 25 | 75 | 1 | 76 | 61 | 25 | ||||||||||||||||||||||||||||||||||||||||
| CAPITAL RATIOS | ||||||||||||||||||||||||||||||||||||||||||||||||
| Tier 1 leverage ratio -- Bank | 11.29 | 12.37 | (9 | )% | 11.79 | (4 | )% | 11.29 | 12.37 | (9 | )% | |||||||||||||||||||||||||||||||||||||
| Common equity tier 1 ratio -- Bank | 11.74 | 14.08 | (17 | ) | 12.56 | (7 | ) | 11.74 | 14.08 | (17 | ) | |||||||||||||||||||||||||||||||||||||
| Tier 1 risk-based capital ratio -- Bank | 11.74 | 14.08 | (17 | ) | 12.56 | (7 | ) | 11.74 | 14.08 | (17 | ) | |||||||||||||||||||||||||||||||||||||
| Total risk-based capital ratio --Bank | 12.70 | 15.15 | (16 | ) | 13.53 | (6 | ) | 12.70 | 15.15 | (16 | ) | |||||||||||||||||||||||||||||||||||||
Contact:
Michal D. Cann
Chairman & CEO
Savi Financial Corporation
(360) 707-2272
