Savi Financial Corporation Earns Record $986,000 in First Quarter of 2021

Rhea-AI Summary

Savi Financial Corporation (SVVB) reported substantial growth in Q1 2021, with net income rising to $986,000, or $0.23 per diluted share, compared to $91,000 in Q1 2020. Total loans increased by 32% year-over-year, while deposits surged by 51%. Key drivers included PPP loan forgiveness and SBA loan sales, with net interest income up 31% to $4.05 million. The company maintained a strong capital position, with a tier-1 leverage ratio of 8.47%. Additionally, SVVB plans to enhance its presence with a new branch acquisition set to close on April 30, 2021.

Positive

• Net income increased 1,084% YoY to $986,000 in Q1 2021.
• Total loans grew 32% YoY to $368.5 million.
• Deposits rose 51% YoY to $385.8 million.
• Net interest income increased 31% YoY to $4.05 million.
• Net interest margin improved to 4.09%, above the industry average.

Negative

• Nonperforming loans increased to 0.75% of total loans.
• Loan losses allowance decreased slightly to 1.03% of total loans.

Loans Increase 32%, and Deposits Increase 51%, Year-Over-Year

BURLINGTON, Wash., April 26, 2021 (GLOBE NEWSWIRE) -- Savi Financial Corporation, Inc. (OTC Pink: SVVB), the bank holding company for SaviBank, today reported first quarter 2021 earnings increased substantially to $986,000, or $0.23 per diluted share, compared to $91,000, or $0.02 per diluted share, in the first quarter of 2020.

“Savi delivered record earnings for the quarter, supported by strong revenue generation from Paycheck Protection Program (PPP) loan forgiveness and SBA loan sales,” said Michal D. Cann, Chairman and President of Savi Financial Corporation. “Loan growth remains solid, with total loans increasing 32% compared to a year ago, and non PPP loans increasing 11.5% compared to a year ago. Additionally, loan accommodations continued to decline during the quarter as our clients experienced steady recoveries and local markets resumed activity. We continued to take a conservative stance by adding to our allowance for loan losses, and believe our reserve levels are adequate to cover potential loan losses stemming from the pandemic. As the Federal Reserve anticipates economic growth in the second half of the year, and as vaccinations continue to roll out, we have laid a solid foundation from which to emerge from this pandemic even stronger.”

“At the onset of the pandemic, we were strong participants in the SBA PPP, 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 March 31, 2021, we had received payment from the SBA for 153 borrowers totaling $25.6 million. Approximately $446,000 of the income recorded during the first quarter of 2021 was related to recognizing origination fees for PPP loan payoffs, compared to $455,000 during the fourth quarter of 2020.”

Another key activity during the first quarter related to the additional COVID-19 stimulus relief, which was signed into law in late 2020, allowing for a second round of PPP funding through May 31, 2021. The program offers PPP loans for companies that did not receive PPP funds in 2020, in addition to “second draw” loans targeted at hard-hit businesses that exhausted their initial PPP proceeds. “Consistent with the first round, we have been active participants in this new program in the first quarter of 2021, closing over 291 loans with total originations of $29.9 million, with total 2^nd round PPP loan fees of nearly $1.5 million in receivables that will be recognized over the earlier of five years or at loan forgiveness,” said Hunter.

“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 March 31, 2021, approximately 95% of loans originally modified are now performing according to the loan agreements, bringing total deferred loans to 0.6% of total loans.”

“The 7-basis point increase in net interest margin (NIM) during the first quarter, compared to the prior quarter, was primarily related to a reduction on our cost of funds, and helped to keep our NIM above industry averages,” said Rob Woods, Chief Financial Officer of SaviBank. The Company’s NIM was 4.09% in the first quarter of 2021, compared to 4.02% in the preceding quarter, and 4.03% in the first quarter a year ago. The NIM remains higher than their peer average of 3.40% posted by the 460 banks that comprised the SNL Microcap U.S. Bank Index at December 31, 2020.

First Quarter 2021 Highlights:

• Net income increased substantially to $986,000 in the first quarter of 2021, compared to $91,000 in the first quarter of 2020, and $490,000 in the fourth quarter of 2020.
• Earnings per diluted share were $0.23 in the first quarter, compared to $0.02 in the first quarter a year ago and $0.11 in the preceding quarter.
• Net interest income increased 31% to $4.05 million in the first quarter of 2021, compared to $3.08 million in the first quarter a year ago, and increased 8% from $3.76 million in the fourth quarter of 2020.
• Total revenue, consisting of net interest income and non-interest income, increased 42% to $4.92 million in the first quarter of 2021, compared to $3.47 million in the first quarter a year ago and increased 20% compared to $4.11 million in the preceding quarter.
• Average first quarter 2021 total loans increased 31%, to $356.3 million, compared to $272.3 million in the first quarter a year ago, and increased 7% from $332.5 million in the fourth quarter of 2020. Total loans at March 31, 2021, increased 32% to $368.5 million from $278.2 million a year ago and grew 7% from $345.8 million at December 31, 2020. The loan growth compared to the prior quarter was in part due to the origination of $29.9 million in new PPP loans during the first quarter of 2021. Non PPP loans increased $8.5 million, or 11.5%, compared to a year ago.
• SBA and USDA loan production for the twelve months ended March 31, 2021, totaled 18 loans for $26.5 million, compared to production of 16 loans for $13.8 million in the year-ago period.
• Average first quarter 2021 total deposits grew 40% to $353.9 million from $253.2 million, in the first quarter a year ago, and increased 5% from $338.6 million in the fourth quarter of 2020. Total deposits grew 51% to $385.8 million, at March 31, 2021, from $256.0 million a year ago, and increased 11% from $348.9 million at December 31, 2020.
• The provision for loan losses was $140,000 in the first quarter of 2021, compared to $362,000 in the first quarter of 2020, and $356,000 in the fourth quarter of 2020.
• Allowance for loan losses, as a percentage of total loans, was 1.03% at March 31, 2021, compared to 1.08% at March 31, 2020, and 1.07% at December 31, 2020. The allowance for loan losses, excluding PPP loans that are 100% secured by the SBA, was 1.26% of total loans, as of March 31, 2021.
• Nonperforming loans, as a percentage of total loans, was 0.75% at March 31, 2021, compared to 0.30% at March 31, 2020, and 0.36% at December 31, 2020. The increase during the quarter was primarily due to one lending relationship added not indicative of issues in the total loan portfolio.
• Nonperforming assets, as a percentage of total assets, was 0.71% at March 31, 2021, compared to 0.45% a year ago and 0.43% three months earlier.
• Net recoveries were $37,000 in the first quarter of 2021, compared to net recoveries of $8,000 in the first quarter of 2020, and net charge offs of $45,000 in the fourth quarter of 2020.
• SaviBank capital levels remained above the threshold for well-capitalized institutions with a tier-1 leverage ratio of 8.47% at March 31, 2021. In an abundance of caution, Savi Financial Corporation drew down $2.5 million in borrowings during the first quarter of 2021, of which $2.0 million was down streamed to SaviBank as additional capital for future growth.
  

“During the quarter we announced plans to purchase the Freeland branch from Coastal Community Bank, a banking subsidiary of Coastal Financial Corporation (NASDAQ: CCB), with plans to relocate from our existing Freeland branch to the new location after the sale closes,” said Hunter. “This new branch is in a better location, and will help us expand our footprint in Freeland and throughout Whidbey Island. We have received FDIC approval and are scheduled to close the transaction on April 30, 2021.”

“This new branch complements our expansion efforts put into place in 2019, when we opened full-service branches in Concrete, Sedro Woolley and Mt. Vernon, relocated our loan production office into a full-service branch in Anacortes and relocated our Oak Harbor branch and our main Burlington branch,” Hunter continued. “We believe that the investment in these additional locations is starting to pay off, and we will continue to look for additional opportunities to expand our franchise.”

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 $486,000 up 27.27% in March 2021 compared to a year ago, and there was a 0.67 month supply of homes on the market. For Island County, the average house sold for $479,500, up 21.39% from a year ago and supply totaled 0.45 months. For Whatcom County, the average home sold for $492,000, up 20.80% from a year ago and supply totaled 0.82 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.pdf
www.SNL.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 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
	March 31, 2021				December 31, 2020				Var %			March 31, 2020				Var %
SUMMARY OF OPERATIONS
Interest income	$	4,536			$	4,302			5	%		$	3,878			17	%
Interest expense		(490	)			(546	)		(10	)			(799	)		(39	)
Net interest income		4,046				3,756			8				3,079			31
Provision for loan losses		(140	)			(356	)		(61	)			(362	)		(61	)%
NII after loss provision		3,906				3,400			15				2,717			44
Non-interest income		870				351			148				389			124
Non-interest expense		(3,530	)			(3,119	)		13				(2,990	)		18
Income before tax		1,246				632			97				116			974
Federal income tax expense		260				142			83				25			940
Net income	$	986			$	490			101	%		$	91			984	%
PER COMMON SHARE DATA
Number of shares outstanding (000s)		3,434				3,434			-	%			3,433			0	%
Earnings per share, diluted	$	0.23			$	0.11			101			$	0.02			984
Market value		11.00				8.00			38				7.75			42
Book value		10.25				9.97			3				9.58			7
Market value to book value		107.36	%			80.25	%		34				80.87	%		33
BALANCE SHEET DATA
Assets	$	449,740			$	409,379			10	%		$	334,586			34	%
Investments securities		11,066				9,216			20				9,382			18
Total loans		368,501				345,810			7				278,177			32
Total deposits		385,807				348,926			11				255,967			51
Borrowings		27,500				25,000			10				45,000			(39	)
Shareholders’ equity		35,183				34,233			3				32,899			7
AVERAGE BALANCE SHEET DATA
Average assets	$	429,560			$	398,745			8	%		$	323,555			33	%
Average total loans		356,300				332,470			7				272,254			31
Average total deposits		353,867				338,595			5				253,213			40
Average shareholders' equity		34,708				33,488			4				32,843			6
ASSET QUALITY RATIOS
Net (charge-offs) recoveries	$	37			$	(45	)		N/M			$	8			363	%
Net (charge-offs) recoveries to average loans		0.04	%			(0.05	)%		N/M				0.01	%		253
Non-performing loans as a % of loans		0.75				0.36			107				0.30			153
Non-performing assets as a % of assets		0.71				0.43			66				0.45			58
Allowance for loan losses as a % of total loans		1.03				1.07			(4	)			1.08			(4	)
Allowance for loan losses as a % of non-performing loans		137.08				294.67			(53	)			362.39			(62	)
FINANCIAL RATIOS\STATISTICS
Return on average equity		11.36	%			5.85	%		94	%			1.11	%		925	%
Return on average assets		0.92				0.49			87				0.11			716
Net interest margin		4.09				4.02			2				4.03			1
Efficiency ratio		70.25				75.28			(7	)			85.38			(18	)
Average number of employees (FTE)		110				99			11				94			17
CAPITAL RATIOS
Tier 1 leverage ratio -- Bank		8.47				8.16			4	%			9.57			(11	)%

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

FAQ

What were Savi Financial Corporation's earnings for Q1 2021?

Savi Financial Corporation reported earnings of $986,000, or $0.23 per diluted share, for Q1 2021.

How much did loans increase for Savi Financial Corporation in Q1 2021?

Total loans increased by 32% year-over-year, reaching $368.5 million.

What is the loan growth percentage for Savi Financial Corporation in Q1 2021?

Loan growth for Savi Financial Corporation was 32% compared to a year ago.

How much did Savi Financial Corporation's deposits increase in Q1 2021?

Deposits increased by 51% year-over-year to $385.8 million.

What is Savi Financial Corporation's net interest margin for Q1 2021?

The net interest margin for Q1 2021 was 4.09%, higher than the industry average.