MOUNT VERNON, Wash., April 27, 2023 (GLOBE NEWSWIRE) — Savi Financial Corporation, Inc. (OTC Pink: SVVB), the bank holding company for SaviBank, today reported net income of $468,000, or $0.11 per diluted share, for the first quarter of 2023, compared to $1.09 million, or $0.25 per diluted share, in the preceding quarter and $964,000, or $0.22 per diluted share, in the first quarter of 2022. Results for the current quarter were driven by strong loan and deposit growth. All results are unaudited.
“Savi’s first quarter operating results reflected solid balance sheet expansion and excellent credit quality metrics,” said Michal D. Cann, Chairman and President of Savi Financial Corporation. “Total deposits grew during the quarter, as we continue to see consistent loyalty in our customer base. Operating expenses were lower during the preceding quarter due to some nonrecurring expense reversals, which impacted our linked quarter net income comparison. Overall, operating income was negatively impacted by the increase in interest rates in the first quarter. Despite the challenges and headwinds facing the banking industry, our ability to grow our balance sheet organically will ultimately further enhance the value of our Company over time. We are well-positioned to come out stronger and more profitable on the other side of this current economic cycle.”
“Loan production continues to be strong, with total loans increasing 4% for the quarter, and increasing 24% compared to a year ago,” said Andrew Hunter, President and CEO of SaviBank. “While higher interest rates have dampened consumer demand for mortgage loans, and small business (SBA) loans during the first few months of the year, we have the right teams in place and are well positioned to grow these loan portfolios when interest rates stabilize or decrease.”
“At the end of March, our negative $3.0 million accumulated other comprehensive income (“AOCI”) was related to our unrealized loss on available for sale securities, and this was only 8% of our overall capital. With the liquidity we carry on our balance sheet, we have no intention of liquidating any securities prior to maturity,” said Hunter.
“The net interest margin (”NIM”) contraction we experienced during the quarter was primarily related to pressure from the funding side of the balance sheet,” said Rob Woods, Chief Financial Officer of SaviBank. The cost of funds increased to 114 basis points during the quarter, compared to 41 basis points in the preceding quarter. SaviBank’s NIM was 3.96% in the first quarter of 2023, compared to 4.57% in the preceding quarter, and 3.63% in the first quarter a year ago. The NIM remains higher than the peer average of 3.77% posted by the 158 banks that comprised the Dow Jones U.S. Microcap Bank Index at December 31, 2022.
First Quarter 2023 Highlights:
- Net income was $468,000 in the first quarter of 2023, compared to $964,000 in the first quarter of 2022, and $1.09 million in the fourth quarter of 2022.
- Earnings per share were $0.11 in the first quarter of 2023, compared to $0.22 in the first quarter a year ago, and $0.25 in the preceding quarter.
- Net interest income increased 28% to $5.12 million in the first quarter of 2023, compared to $4.00 million in the first quarter a year ago, and decreased 4% compared to $5.34 million in the fourth quarter of 2022.
- Total revenue, consisting of net interest income and non-interest income, was $6.09 million in the first quarter of 2023, compared to $6.07 million in the first quarter a year ago and decreased 4% compared to $6.37 million in the preceding quarter.
- Non-interest expense was $5.53 million in the first quarter of 2023, compared to $4.87 million in the first quarter a year ago, and $4.68 million in the preceding quarter.
- Average first quarter 2023 total loans increased 25% to $444.3 million, compared to $354.5 million in the first quarter a year ago, and increased 6% from $420.9 million in the fourth quarter of 2022. Total loans at March 31, 2023, increased 24% to $453.8 million from $364.6 million a year ago and increased 4% compared to $434.4 million at December 31, 2022.
- SBA and USDA loan production for the twelve months ended March 31, 2023, totaled 26 loans for $33.6 million, compared to production of 27 loans for $32.7 million in the year-ago period.
- Average first quarter 2023 total deposits grew 2% to $449.1 million from $440.5 million in the first quarter a year ago, and increased 1% from $444.6 million in the fourth quarter of 2022. Total deposits increased 4% to $467.5 million, at March 31, 2023, from $448.3 million a year ago, and increased 9% from $430.7 million at December 31, 2022. Uninsured deposits totaled approximately 20% of total deposits at March 31, 2023.
- Due to strong credit quality, the company recorded no provision for loan losses in the first quarter of 2023 or the first quarter a year ago. This compared to a provision for loan losses of $335,000 in the fourth quarter of 2022.
- Allowance for loan losses, as a percentage of total loans, was 1.27% at March 31, 2023, compared to 1.16% at March 31, 2022, and 1.34% at December 31, 2022.
- The Company had zero nonperforming loans on its books at March 31, 2023. This compared to nonperforming loans, as a percentage of total loans, of 0.40% at March 31, 2022, and 0.11% at December 31, 2022.
- Nonperforming assets, as a percentage of total assets, was 0.12% at March 31, 2023, compared to 0.47% a year ago and 0.21% three months earlier.
- Net charge-offs were $82,000 in the first quarter of 2023, compared to net charge-offs of $1,000 in the first quarter of 2022, and net recoveries of $39,000 in the prior quarter.
- SaviBank capital levels remained above the threshold for well-capitalized institutions with a tier-1 leverage ratio of 8.26% at March 31, 2023.
“Our newly proposed community bank in Bellingham, WA., named Orca Bank, is pending regulatory approval, and is on schedule to open during the third quarter of 2023,” Cann continued. “The formation of Orca Bank came from a local group of community-minded businesspeople from Whatcom County, with the help of Savi Financial Corporation, the parent company of SaviBank. This stand-alone community bank will focus on serving the communities in Whatcom County, the largest county in which Savi Financial Corporation operates. This transaction will enable us to better serve the banking needs of Whatcom County, with a local board of directors and management making local decisions.”
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 has fallen off the record high levels from a year ago. According to the Northwest Multiple Listing Service, the average home in Skagit County sold for $545,000, down 0.91% in March 2023, compared to a year ago, and there was a 1.56 month supply of homes on the market. For Island County, the average house sold for $575,000, down 5.82% from a year ago and supply totaled 1.56 months. For Whatcom County, the average home sold for $560,000, down 9.67% from a year ago and supply totaled 2.04 months. For San Juan County, the average home sold for $860,000, down 4.18% from a year ago and supply totaled 3.84 months.
Skagit’s population is projected to grow 3.93% from 2023 through 2028, and median household income is projected to increase by 12.04% during the same time frame. Whatcom County’s population is projected to grow 3.74% from 2023 through 2028, and median household income is projected to increase by 18.03%. Island County’s population is projected to grow 3.59% from 2023 through 2028, and median household income is projected to increase by 16.96%. San Juan County’s population is projected to grow 7.64% from 2023 through 2028, and median household income is projected to increase by 14.38%.
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
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, 2023 |
December 31, 2022 |
Var % | March 31, 2022 |
Var % | |||||||||||||
| SUMMARY OF OPERATIONS | |||||||||||||||||
| Interest income | $ | 6,573 | $ | 5,889 | 12 | % | $ | 4,305 | 53 | % | |||||||
| Interest expense | (1,456 | ) | (554 | ) | 163 | (307 | ) | 374 | |||||||||
| Net interest income | 5,117 | 5,335 | (4 | ) | 3,998 | 28 | |||||||||||
| Provision for loan losses | — | (335 | ) | N/M | — | N/M | |||||||||||
| NII after loss provision | 5,117 | 5,000 | 2 | 3,998 | 28 | ||||||||||||
| Non-interest income | 974 | 1,032 | (6 | ) | 2,068 | (53 | ) | ||||||||||
| Non-interest expense | (5,529 | ) | (4,681 | ) | 18 | (4,873 | ) | 13 | |||||||||
| Income before tax | 562 | 1,351 | (58 | ) | 1,193 | (53 | ) | ||||||||||
| Federal income tax expense | 94 | 259 | (64 | ) | 229 | (59 | ) | ||||||||||
| Net income | $ | 468 | $ | 1,092 | (57 | )% | $ | 964 | (51 | )% | |||||||
| PER COMMON SHARE DATA | |||||||||||||||||
| Number of shares outstanding (000s) | 3,452 | 3,442 | 0 | % | 3,439 | 0 | % | ||||||||||
| Earnings per share, diluted | $ | 0.11 | $ | 0.25 | (57 | ) | $ | 0.22 | (52 | ) | |||||||
| Market value | 7.60 | 8.40 | (10 | ) | 10.78 | (29 | ) | ||||||||||
| Book value | 10.85 | 10.54 | 3 | 10.86 | (0 | ) | |||||||||||
| Market value to book value | 70.07 | % | 79.70 | % | (12 | ) | 99.23 | % | (29 | ) | |||||||
| BALANCE SHEET DATA | |||||||||||||||||
| Assets | $ | 563,324 | $ | 523,516 | 8 | % | $ | 511,578 | 10 | % | |||||||
| Investments securities | 38,105 | 38,103 | 0 | 48,489 | (21 | ) | |||||||||||
| Total loans | 453,807 | 434,419 | 4 | 364,634 | 24 | ||||||||||||
| Total deposits | 467,507 | 430,709 | 9 | 448,251 | 4 | ||||||||||||
| Borrowings | 53,450 | 54,500 | (2 | ) | 24,500 | 118 | |||||||||||
| Shareholders’ equity | 37,443 | 36,277 | 3 | 37,361 | 0 | ||||||||||||
| AVERAGE BALANCE SHEET DATA | |||||||||||||||||
| Average assets | $ | 563,324 | $ | 522,150 | 8 | % | $ | 495,571 | 14 | % | |||||||
| Average total loans | 444,322 | 420,947 | 6 | 354,454 | 25 | ||||||||||||
| Average total deposits | 449,108 | 444,632 | 1 | 440,497 | 2 | ||||||||||||
| Average shareholders’ equity | 36,860 | 35,828 | 3 | 37,500 | (2 | ) | |||||||||||
| ASSET QUALITY RATIOS | |||||||||||||||||
| Net (charge-offs) recoveries | $ | (82 | ) | $ | 39 | N/M | $ | (1 | ) | 8,100 | % | ||||||
| Net (charge-offs) recoveries to average loans | (0.07 | )% | 0.04 | % | N/M | (0.00 | )% | 6,441 | |||||||||
| Non-performing loans as a % of loans | 0.00 | 0.11 | (96 | ) | 0.40 | (99 | ) | ||||||||||
| Non-performing assets as a % of assets | 0.12 | 0.21 | (43 | ) | 0.47 | (74 | ) | ||||||||||
| Allowance for loan losses as a % of total loans | 1.27 | 1.34 | (6 | ) | 1.16 | 9 | |||||||||||
| Allowance for loan losses as a % of non-performing loans | 26,118.18 | 1,258.96 | 1,975 | 289.54 | 8,921 | ||||||||||||
| FINANCIAL RATIOS\STATISTICS | |||||||||||||||||
| Return on average equity | 5.08 | % | 12.19 | % | (58 | )% | 10.28 | % | (51 | )% | |||||||
| Return on average assets | 0.33 | 0.84 | (60 | ) | 0.78 | (57 | ) | ||||||||||
| Net interest margin | 3.96 | 4.57 | (13 | ) | 3.63 | 9 | |||||||||||
| Efficiency ratio | 90.79 | 69.77 | 30 | 78.58 | 16 | ||||||||||||
| Average number of employees (FTE) | 150 | 148 | 1 | 132 | 14 | ||||||||||||
| CAPITAL RATIOS | |||||||||||||||||
| Tier 1 leverage ratio — Bank | 8.26 | 8.72 | (5 | )% | 7.97 | 4 | % | ||||||||||
| Common equity tier 1 ratio — Bank | 8.92 | 9.13 | (2 | )% | 9.64 | (7 | )% | ||||||||||
| Tier 1 risk-based capital ratio — Bank | 8.92 | 9.13 | (2 | )% | 9.64 | (7 | )% | ||||||||||
| Total risk-based capital ratio — Bank | 10.17 | 10.38 | (2 | )% | 10.72 | (5 | )% | ||||||||||
| Contact: | Michal D. Cann |
| Chairman & President | |
| Savi Financial Corporation | |
| (360) 707-2272 |
