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SaviBank Earns $91,000 in First Quarter of 2020; Loans Increase 16% and Deposits Increase 10%, Year-Over-Year Results Reflect Effect of COVID-19

BURLINGTON, Wash., April 30, 2020 (GLOBE NEWSWIRE) -- Savi Financial Corporation, Inc. (OTC Pink: SVVB), the bank holding company for SaviBank, today reported first quarter 2020 earnings of $91,000, or $0.02 per diluted share, compared to $525,000, or $0.12 per diluted share, in the first quarter of 2019. First quarter earnings were impacted by a higher than normal $362,000 provision expense responding to the COVID-19 pandemic and an increase in operating costs as a result of implementing the company’s branch expansion strategy.

“In just a few short weeks, the COVID-19 pandemic, an unprecedented event, has affected us all in ways we never imagined,” said Michal D. Cann, Chairman and CEO of SaviBank. “We began preparations for the COVID-19 pandemic in mid-March by restricting lobby activities at all branches and encouraging the use of drive-up services, ATM machines and digital banking operations. Nearly half of our staff is working remotely, and we will continue with this structure until the mandated “Stay-Home-Stay-Healthy” order has been lifted by the State of Washington. We will continue to respond to and assist our customers with their financial needs during this difficult time.”

On March 27, 2020, Congress passed the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) providing economic relief for the country, including the $349 billion Small Business Administration (“SBA”) Paycheck Protection Program (“PPP”) to fund short-term loans for small businesses. The funds allocated to the PPP from the CARES Act had been fully allocated as of April 16, 2020, and Congress recently approved a second round of funding for the PPP. “Small businesses that form the backbone of our economy, and the majority of SaviBank’s customer base, have had to suspend operations and lay off valued employees. As a preferred SBA lender, we began actively taking loan applications under the PPP for our business clients immediately after the program was approved,” said Andrew Hunter, President of SaviBank. “As of April 17, 2020, we had over $44 million in approved SBA PPP loans to 323 participants in the first round of funding. Additionally, we are working with the SBA to qualify additional approvals during its second round of PPP funding.”

“The 150 basis point reductions in the Federal Funds Rate during the quarter contributed to our net interest margin compression during the quarter; however, our strong loan growth and higher loan yields continue to keep our net interest margin above industry averages,” said Hunter. Net interest margin was 4.03% in the first quarter of 2020 compared to 4.08% in the preceding quarter and 4.54% in the first quarter a year ago. The net interest margin remains higher than the peer average of 3.61% posted by the 379 banks that comprised the SNL Microcap U.S. Bank Index at December 31, 2019.

First Quarter 2020 Highlights:

  • Pretax income was $116,000 in the first quarter of 2020, compared to $667,000 in the first quarter of 2019, and $198,000 in the fourth quarter of 2019.

  • Earnings per diluted share were $0.02 in the first quarter, compared to $0.12 in the first quarter a year ago and $0.04 in the preceding quarter.

  • Net interest income increased 4% to $3.08 million in the first quarter of 2020, compared to $2.95 million in the first quarter a year ago, and increased 5% from $2.94 million in the fourth quarter of 2019.

  • Total revenue, consisting of net interest income and non-interest income was $3.47 million in the first quarter of 2020, compared to $3.22 million in the preceding quarter and $3.29 million in the first quarter a year ago.

  • Average first quarter total loans increased 18%, to $272.3 million, compared to $231.6 million in the first quarter year ago, and grew 6% from $257.3 million in the fourth quarter of 2019. Total loans at March 31, 2020, increased 16% to $275.2 million from $236.6 million a year ago and grew 4% from $264.2 million at December 31, 2019.

  • SBA and USDA loan production for the twelve months ended March 31, 2020, totaled 15 loans for $13.7 million, compared to production of 20 loans for $9.0 million in the year-ago period.

  • Average first quarter total deposits grew 15% to $253.2 million from $220.5 million, in the first quarter a year ago, and increased nominally from $252.4 million in the fourth quarter of 2019. Total deposits grew 10% to $256.0 million, at March 31, 2020, from $232.6 million a year ago, and increased 3% from $248.6 million at December 31, 2019.

  • The provision for loan losses was $362,000 in the first quarter of 2020, compared to $123,000 in the preceding quarter and 96,000 in the first quarter a year ago.

  • Allowance for loan losses, as a percentage of total loans, was 1.09% at March 31, 2020 and 1.00% at December 31, 2019 and March 31, 2019.

  • Nonperforming loans totaled 0.30% of total loans at March 31, 2020, compared to 0.07% at December 31, 2019, and 0.11% at March 31, 2019.

  • Nonperforming assets (“NPAs”) were 0.45% at March 31, 2020, compared to 0.21% both a year ago and three months earlier.

  • Net recoveries were $8,000 in the first quarter of 2020, compared to net recoveries of $7,000 in the first quarter a year ago, and net loan charge-offs of 30,000 in the preceding quarter. The increase during the preceding quarter was due to a $48,000 write down on an OREO property.

  • SaviBank capital levels remained above the threshold for well-capitalized institutions. The total risk-based capital ratio was 11.39% and the tier-1 leverage ratio was 9.57% at March 31, 2020.

“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 new Oak Harbor branch and our main Burlington branch. As a result, costs associated with this expansion have affected operating results during the first quarter of 2020. We believe that by investing in these additional locations, we now have both the infrastructure and the people in place to grow the company,” said Cann.

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 $381,500, up 4.82% in March 2020 compared to a year ago, and there was a 2.0 month supply of homes on the market. For Island County, the average house sold for $395,000, up 10.49% from a year ago and supply totaled 2.2 months. For Whatcom County, the average home sold for $407,500, up 13.50% from a year ago and supply totaled 2.2 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
https://www.usnews.com/news/best-states/rankings

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, 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 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

March 31, 2020

December 31, 2019

Var %

March 31, 2019

Var %

SUMMARY OF OPERATIONS

Interest income

$

3,878

$

3,750

3

%

$

3,673

6

%

Interest expense

(799

)

(808

)

(1

)

(722

)

11

Net interest income

3,079

2,942

5

2,951

4

Provision for loan losses

(362

)

(123

)

194

(96

)

277

NII after loss provision

2,717

2,819

(4

)

2,855

(5

)

Non-interest income

389

282

38

338

15

Non-interest expense

(2,990

)

(2,903

)

3

(2,526

)

18

Income before tax

116

198

(41

)

667

(83

)

Federal income tax expense

25

44

(43

)

142

(82

)

Net income

$

91

$

154

(41

)%

$

525

(83

)%

PER COMMON SHARE DATA

Number of shares outstanding (000s)

3,433

3,433

-

%

3,424

0

%

Earnings per share, diluted

$

0.02

$

0.04

(41

)

$

0.12

(83

)

Market value

7.75

11.65

(33

)

11.05

(30

)

Book value

9.58

9.55

0

9.26

4

Market value to book value

80.87

%

121.99

%

(34

)

119.38

%

(32

)

BALANCE SHEET DATA

Assets

$

334,586

$

312,523

7

%

$

281,476

19

%

Investments securities

9,382

9,767

(4

)

11,756

(20

)

Total loans

275,183

264,242

4

236,592

16

Total deposits

255,967

248,628

3

232,588

10

Borrowings

45,000

30,000

50

16,000

181

Shareholders’ equity

32,899

32,786

0

31,694

4

AVERAGE BALANCE SHEET DATA

Average assets

$

323,555

$

311,329

4

%

$

274,600

18

%

Average total loans

272,254

257,307

6

231,595

18

Average total deposits

253,210

252,428

0

220,513

15

Average shareholders' equity

32,843

32,705

0

31,409

5

ASSET QUALITY RATIOS

Net (charge-offs) recoveries

$

8

$

(30

)

N/M

$

7

14

%

Net (charge-offs) recoveries to average loans

0.01

%

(0.05

)%

N/M

0.01

%

(3

)

Non-performing loans as a % of loans

0.30

0.07

329

0.11

176

Non-performing assets as a % of assets

0.45

0.21

113

0.21

117

Allowance for loan losses as a % of total loans

1.09

1.00

9

1.00

9

Allowance for loan losses as a % of non-performing loans

362.39

1,420.43

(74

)

917.05

(60

)

FINANCIAL RATIOSSTATISTICS

Return on average equity

1.11

%

1.88

%

(41

)%

6.69

%

(83

)%

Return on average assets

0.11

0.20

(43

)

0.76

(85

)

Net interest margin

4.03

4.08

(1

)

4.54

(11

)

Efficiency ratio

85.38

88.69

(4

)

75.88

13

Average number of employees (FTE)

94

92

2

82

15

CAPITAL RATIOS

Tier 1 leverage ratio -- Bank

9.57

9.97

(4

)%

10.67

(10

)%

Common equity tier 1 ratio -- Bank

10.34

10.70

(3

)

11.66

(11

)

Tier 1 risk-based capital ratio -- Bank

10.34

10.70

(3

)

11.66

(11

)

Total risk-based capital ratio -- Bank

11.39

11.67

(2

)

12.64

(10

)


Contact:

Michal D. Cann

Chairman & President

Savi Financial Corporation

(360) 707-2272