SaviBank 2017 3rd Quarter Results
SaviBank YTD Profits Increased 95% to $1.4 Million from 2016 Period; Net Interest Margin Expanded to 4.46% with Strong Loan and Deposit Growth
Burlington, WA – November 2, 2017 — SaviBank (OTC Pink: SVVB), today reported for the first nine months of 2017 net income almost doubled to $1.37 million, or $0.0802 per share, compared to $703,000, or $0.0601 per share, for the first nine months of 2016. Third quarter 2017 profits increased 23% to $408,000, or $0.0239 per share, compared to $333,000, or $0.0285 per share for the third quarter of 2016, and grew 1% from the near record $404,000, or $0.0236 per share, earned in the second quarter of 2017. Profitability was fueled by 20% loan growth, and 10% deposit growth, and expanding net interest margin, year-over-year. All results are unaudited.
“In October, we opened our newest branch in Bellingham, WA., a vibrant community that is 21 miles south of the Canadian border and 90 miles north of Seattle,” said Michal D. Cann, Chairman and Chief Executive Officer. “The new branch replaces an older facility and provides drive-up banking services and a full complement of lending and deposit products. Bellingham is a great market for us, with affordable housing, excellent livability characteristics and a growing small business community. Our Northwest Washington franchise continues to generate strong growth in loans and deposits, fueling our profitability.
In addition, we have begun the process of forming a Bank Holding Company, with applications to our regulators and notification to our shareholders,” Cann continued. “The new bank holding company structure will facilitate access to capital and provide additional avenues for revenue growth.”
“We continue to generate an above average net interest margin, which was 4.46% in the third quarter of 2017, up 9 basis points in the quarter and 5 basis points year-over-year,” noted Rob Woods, Chief Financial Officer. The net interest margin is significantly better than the peer average of 3.64% posted by the 535 micro-cap banks in the SNL Financials Microcap Bank Index as of June 30, 2017.
“Our SBA and USDA loan production was the major contributor to non-interest income during the quarter, generating $256,000 in gains on the sale of 3 loans compared to $374,000 in gains on the sale of 7 loans in the second quarter of 2017,” said Andrew Hunter, President. “SBA and USDA lending can be somewhat variable from one quarter to the next, and timing of sales can impact revenue from this source in any given quarter. Year-to-date, gains from SBA sales contributed $833,508, up 4.6% from $797,000 in the first nine months of 2016.
We believe SBA loans can provide significant advantages for small to mid-size business owners, and we expect to continue to show consistent growth in this area.”
Third Quarter and First Nine Months 2017 Highlights (at, or for the period September 30, 2017)
- Earnings per share were $0.0239 in the third quarter, reflecting the capital raise in the second quarter that added 5.4 million shares to the ownership base. EPS was $0.0236 in the second quarter of 2017 and $0.0285 in the third quarter a year ago. For the first nine months of 2017, EPS increased 33% to $0.0802 from $0.0601 in the first nine months of 2016.
- Net interest income increased 27% to $2.15 million in the third quarter of 2017, compared to $1.68 million a year ago, and grew 7% from $2.01 million in the second quarter of 2017. For the first nine months of 2017, net interest income grew 29% to $6.03 million from $4.67 million in the same period of 2016.
- Non-interest income increased 52% to $417,000 in the third quarter of 2017, from $275,000 in the third quarter of 2016, and decreased 22% from $537,000 in the preceding quarter, reflecting the variability in gains from sale of SBA loans.
- For the third quarter of 2017, net interest margin (“NIM”) was 4.46% compared to 4.41% for the third quarter of 2016, and 4.37% for the second quarter of 2017.
- Kari Holmly was promoted to Chief Retail Banking Officer following the end of the third quarter to assure more focus on deposit growth and continuing exceptional service to our customers.
- Average third quarter total loans increased 22%, to $172.6 million, compared to $141.1 million a year ago, and grew 4% from $166.0 million in the second quarter of 2017. End of quarter total loans increased 20% to $176.7 million, compared to $147.2 million a year ago and grew 3% from $171.5 million at June 30, 2017.
- Average third quarter total deposits grew 10% to $156.5 million from $142.0 million in the third quarter a year ago, and increased 8% from $144.6 million in the second quarter of 2017. End of period deposits grew 10% to $163.8 million from $149.0 million a year ago, and grew 9% from $150.4 million at the end of the second quarter of 2017.
- Asset quality remains exceptionally strong with nonperforming loans at 0.02% of total loans at September 30, 2017 and June 30, 2017, compared to 0.06% at September 30, 2016.
- Net recoveries were minimal in the third quarter of 2017, down from $129,000 in the second quarter of 2017. For the first nine months of 2017, net recoveries totaled $451,000 compared to $3,000 in the first nine months of 2016.
- Allowance for loan losses, as a percentage of total loans was 1.13% at September 30, 2017, compared to 1.00%, at September 30, 2016.
- With the new capital raised during the second quarter, SaviBank capital levels remain above the threshold for well-capitalized institutions. The total risk-based capital ratio was 15.09% and the tier-1 leverage ratio was 12.72%.
- Book value per share was $1.75 at September 30, 2017, compared to $1.29 a year ago.
About Northwest Washington
SaviBank operates two branches and one loan production office in Skagit County, two branches in Island County, and one branch in Whatcom County. The new Bellingham branch in Whatcom County opened in October 2017.
CNBC.com named Washington state as the “Top State for Business” in 2017. The state earned the top ranking based on economic growth, a well-educated workforce, a friendly business climate, solid infrastructure, and quality lifestyle factors. CNBC.com noted the following statistics:
“Washington’s economy grew 3.7% in 2016, nearly two and a half times the national rate.”
“The nation’s largest concentration of STEM (science, technology, engineering and math) workers reside in Washington state.”
“Washington state follows California in the most patents filed last year.”
“Washington state has no income or corporate income tax, but wages and rent are among the highest in the United States.”
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.
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 5.22% from 2017 through 2022, and median household income is projected to increase by 7.98% 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 5.93% from 2017 through 2022, and median household income is projected to increase by 6.86%.
Island County is home to Naval Air Station Whidbey Island, which supports approximately 7,000 military personnel, with an additional 14,000 family members, over 14,000 retirees, 350+ reservists, and 2,400 civilian employees. Island County’s population is projected to grow 4.57% from 2017 through 2022 and median household income is projected to increase by 11.02%.
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.