Savi Financial Corporation Earns $490,000 in Fourth Quarter of 2020 and $1.35 Million for the Year; Loans Increase 31%, and Deposits Increase 40%, Year-Over-Year

January 28, 2021 9:00 AM EST

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BURLINGTON, Wash., Jan. 28, 2021 (GLOBE NEWSWIRE) -- Savi Financial Corporation, Inc. (OTC Pink: SVVB), the bank holding company for SaviBank, today reported fourth quarter 2020 earnings of $490,000, or $0.11 per diluted share, compared to $154,000, or $0.04 per diluted share, in the fourth quarter of 2019. For the year ended December 31, 2020, Savi reported net income of $1.35 million, or $0.31 per diluted share, compared to $1.41 million, or $0.33 per diluted share, for the year ended December 31, 2019.

“Our 2020 financial results reflect the steady progress we are making in strengthening Savi’s core operations, with top line revenue increasing 27.4% during the fourth quarter, compared to the fourth quarter a year ago, and increasing 13.8% for the year 2020 from 2019. Strong deposit growth also contributed to fourth quarter results, increasing 40% year-over-year,” said Michal D. Cann, Chairman and President of Savi Financial Corporation. “Results for the fourth quarter and the year were affected by increases to the loan loss provision as a result of the pandemic’s effect on the economy and its impact on our Northwest Washington markets. We recorded a $356,000 provision for loan losses in the fourth quarter, and a $1.23 million provision for the year, bringing our allowance for loan losses to 1.31% of total loans, excluding SBA guaranteed Paycheck Protection Program (“PPP”) loans, at year-end. We believe this reserve level is adequate to cover potential future loan losses.”

“We were strong participants in the SBA’s PPP program, servicing the needs of our business customers as well as new customers in our community,” said Andrew Hunter, President and CEO of SaviBank. “During the second and third quarters of 2020, we assisted approximately 664 customers who received $62.3 million in PPP funding. We added new relationships with strong future growth opportunities, generating receivables of approximately $2.5 million in total PPP loan fees. As of December 31, 2020, we had received payment from the SBA for 40 borrowers totaling $9.9 million. Approximately $455,000 of the income recorded during the fourth quarter was related to recognizing origination fees for PPP loan payoffs, and we utilized this additional income to add to our allowance for loan losses.

“We also offered loan accommodation options to support our clients who have been affected by the economic impacts of COVID-19,” Hunter continued. “As of December 31, 2020, approximately 88.3% of loans originally modified are now performing according to the loan agreements, bringing total deferred loans to 1.13% of total loans.”

“The positive impact relating to PPP loan forgiveness contributed to a 52-basis point increase in net interest margin during the fourth quarter compared to the prior quarter, and helped to keep our net interest margin above industry averages,” said Rob Woods, Chief Financial Officer of SaviBank. Savi’s net interest margin was 4.02% in the fourth quarter of 2020, compared to 3.50% in the preceding quarter, and 4.08% in the fourth quarter a year ago. The net interest margin remains higher than the peer average of 3.29% posted by the 440 banks that comprised the SNL Microcap U.S. Bank Index at September 30, 2020. The net interest margin for the year was 3.82% compared to 4.30% in 2019.

Fourth Quarter 2020 Highlights:

  • Net income was $490,000 in the fourth quarter of 2020, compared to $154,000 in the fourth quarter of 2019, and $236,000 in the third quarter of 2020.
  • Earnings per diluted share were $0.11 in the fourth quarter, compared to $0.04 in the fourth quarter a year ago and $0.05 in the preceding quarter.
  • Net interest income increased 28% to $3.76 million in the fourth quarter of 2020, compared to $2.94 million in the fourth quarter a year ago, and increased 13% from $3.31 million in the third quarter of 2020.
  • Total revenue, consisting of net interest income and non-interest income, increased 27% to $4.11 million in the fourth quarter of 2020, compared to $3.22 million in the fourth quarter a year ago and increased 14% compared to $3.61 million in the preceding quarter.
  • Average fourth quarter 2020 total loans increased 29%, to $332.5 million, compared to $257.3 million in the fourth quarter a year ago, and decreased 1% from $334.8 million in the third quarter of 2020. Total loans at December 31, 2020, increased 31% to $345.8 million from $264.2 million a year ago and grew 3% from $334.7 million at September 30, 2020. The loan growth compared to the prior year was in part due to the origination of $62.3 million in PPP loans during the second and third quarters of 2020.
  • SBA and USDA loan production for the twelve months ended December 31, 2020, totaled 18 loans for $23.6 million, compared to production of 15 loans for $8.4 million in the year-ago period.
  • Average fourth quarter 2020 total deposits grew 34% to $338.6 million from $252.4 million, in the fourth quarter a year ago, and increased 4% from $325.2 million in the third quarter of 2020. Total deposits grew 40% to $348.9 million, at December 31, 2020, from $248.6 million a year ago, and increased 6% from $328.3 million at September 30, 2020.
  • The provision for loan losses was $356,000 in the fourth quarter of 2020, compared to $123,000 in the fourth quarter of 2019, and $207,000 in the third quarter of 2020. For the full year, the provision for loan losses was $1.23 million compared to $428,000 for 2019.
  • Allowance for loan losses, as a percentage of total loans, was 1.07% at December 31, 2020, compared to 1.00% at December 31, 2019, and 1.01% at September 30, 2020. The allowance for loan losses, excluding PPP loans that are 100% secured by the SBA, was 1.31% of total loans, as of December 31, 2020.
  • Nonperforming loans, as a percentage of total loans, was 0.36% at December 31, 2020, compared to 0.07% at December 31, 2019, and 0.31% at September 30, 2020.
  • Nonperforming assets, as a percentage of total assets, was 0.43% at December 31, 2020, compared to 0.21% a year ago and 0.40% three months earlier.
  • Net charge-offs were $45,000 in the fourth quarter of 2020, compared to $30,000 in the fourth quarter of 2019, and $1,000 in the third quarter of 2020.
  • SaviBank capital levels remained above the threshold for well-capitalized institutions with a tier-1 leverage ratio of 8.16% at December 31, 2020.

“Our bankers have done an excellent job of growing the balance sheet, with double digit loan and deposit growth year-over-year,” said Hunter. “The branch expansion strategy we implemented in 2019 is also contributing to our success. We opened full-service branches in Concrete, Sedro Woolley and Mt. Vernon in 2019, all communities in northwest Washington State. We also relocated our loan production office into a full-service branch in Anacortes and relocated our Oak Harbor branch and our main Burlington branch. We believe that the investments in these additional locations is starting to pay off, and we now have both the infrastructure and the people in place to grow the company.”

Recent Events

Savi Financial Corporation announced that SaviBank President Andrew Hunter has been promoted to President/CEO of Savi Bank, succeeding Michal D. Cann. Hunter has been with the bank since 2010, and has been serving as President of Savi Bank since 2013. Michal D. Cann will continue his positions as Chairman of SaviBank and Chairman and President of Savi Financial Corporation.

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 to the Northwest Multiple Listing Service, the average home in Skagit County sold for $431,000 up 16.52% in December 2020 compared to a year ago, and there was a 0.58 month supply of homes on the market. For Island County, the average house sold for $423,500, up 11.59% from a year ago and supply totaled 0.42 months. For Whatcom County, the average home sold for $466,000, up 23.53% from a year ago and supply totaled 0.78 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 5.86% from 2021 through 2026, and median household income is projected to increase by 15.16% 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 6.49% from 2021 through 2026, and median household income is projected to increase by 6.92%.

Island County is home to Naval Air Station Whidbey Island. Whidbey Island’s population is 86,704, with approximately 23,578 in Oak Harbor. Island County’s population is projected to grow 5.32% from 2021 through 2026 and median household income is projected to increase by 13.68%.

Sources:

http://www.northwestmls.com/library/CorporateContent/statistics/Recaps.pdfwww.SNL.com

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 (2), 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: 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, 2020   December 31, 2019   Var %   September 30, 2020   Var %   December 31, 2020   December 31, 2019   Var % 
SUMMARY OF OPERATIONS                              
Interest income$4,302    $3,750    15%   $3,934    9%  $16,171    $15,096    7% 
Interest expense (546)    (808)   (32)    (621)   (12)    (2,661)    (3,197)   (17) 
  Net interest income 3,756     2,942    28     3,313    13     13,510     11,899    14  
   Provision for loan losses (356)    (123)   189     (207)   72     (1,225)    (428)   186  
NII after loss provision 3,400     2,819    21     3,106    9     12,285     11,471    7  
Non-interest income 351     282    24     295    19     1,493     1,285    16  
Non-interest expense (3,119)    (2,903)   7     (3,112)   0     (12,065)    (10,956)   10  
Income before tax 632     198    219     289    119     1,713     1,800    (5) 
  Federal income tax expense 142     44    223     53    168     363     387    (6) 
  Net income$490    $154    218%   $236    108%  $1,350    $1,413    (4)% 
                               
PER COMMON SHARE DATA                              
Number of shares outstanding (000s) 3,434     3,433    0%    3,433    0.03%    3,434     3,433    0.03% 
Earnings per share, diluted$0.11    $0.04    218    $0.05    108    $0.31    $0.33    (6) 
Market value 8.00     11.65    (31)    7.70    4     8.00     11.65    (31) 
Book value 9.97     9.55    4     9.83    1     9.97     9.55    4  
Market value to book value 80.25%      121.99%     (34)    78.34%     2     80.25%      121.99%      (34) 
                               
BALANCE SHEET DATA                              
Assets$409,379    $312,523    31%   $388,111    5%  $409,379    $312,523    31% 
Investments securities 9,216     9,767    (6)    8,765    5     9,216     9,767    (6) 
Total loans 345,810     264,242    31     334,727    3     345,810     264,242    31  
Total deposits 348,926     248,628    40     328,263    6     348,926     248,628    40  
Borrowings 25,000     30,000    (17)    25,000    -     25,000     30,000    (17) 
Shareholders’ equity 34,233     32,786    4     33,742    1     34,233     32,786    4  
                               
AVERAGE BALANCE SHEET DATA                              
Average assets$398,745    $311,329    28%   $392,424    2%  $360,951    $290,123    24% 
Average total loans 332,470     257,307    29     334,783    (1)    313,747     246,362    27  
Average total deposits 338,595     252,428    34     325,199    4     298,777     228,533    31  
Average shareholders' equity 33,488     32,705    2     33,111    1     33,510     31,955    5  
                               
ASSET QUALITY RATIOS                              
Net (charge-offs) recoveries$(45)   $(30)   N/M   $(1)   N/M   $(166)   $(62)   N/M 
Net (charge-offs) recoveries to average loans (0.05)      (0.05)     N/M    (0.00)     N/M    (0.05)     (0.03)     N/M 
Non-performing loans as a % of loans 0.36     0.07    398     0.31    17     0.36     0.07    398  
Non-performing assets as a % of assets 0.43     0.21    103     0.40    6     0.43     0.21    103  
Allowance for loan losses as a % of total loans 1.07     1.00    7     1.01    6     1.07     1.00    7  
Allowance for loan losses as a % of non-performing loans 294.67     1,420.43    (79)    321.63    (8)    294.67     1,420.43    (79) 
                               
FINANCIAL RATIOS\STATISTICS                              
Return on average equity 5.85%    1.88%   211%    2.85%   105%   4.03%    4.42%   (9)% 
Return on average assets 0.49     0.20    148     0.24    104     0.37     0.49    (23) 
Net interest margin 4.02     4.08    (1)    3.50    15     3.82     4.30    (11) 
Efficiency ratio 75.28     88.69    (15)    85.52    (12)    79.57     81.90    (3) 
Average number of employees (FTE) 99     92    8     94    5     96     92    4  
                               
CAPITAL RATIOS                              
                               
Tier 1 leverage ratio -- Bank 8.16     9.97    (18)%    8.00    2%    8.16     9.97    (18)% 
                               

Contact:Michal D. Cann
 Chairman & President
 Savi Financial Corporation
 (360) 707-2272

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Source: Savi Financial Corporation, Inc.


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