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SaviBank 2016 Pre-Tax Profits Increase 67% to $1.2 Million, or $0.10 Per Share; Growing Profitability Generates Tax Benefit of $4.6 Million, or $0.39 Per Share

BURLINGTON, Wash., Jan. 24, 2017 (GLOBE NEWSWIRE) -- SaviBank (OTCPink: SVVB), today reported loans grew 31% and deposits grew 14% during the year, boosting profitability. Pre-tax net income grew 67% to $1.2 million, or $0.10 per share, in 2016, compared to $703,000, or $0.06 per share, in 2015, both pretax and after tax. Fourth quarter 2016 pretax earnings increased 227%, year-over-year, and 41% in the fourth quarter to $471,000, or $0.04 per share, from $144,000, or $0.01 per share for the fourth quarter of 2015, and $334,000, or $0.03 per share, in the third quarter of 2016. All results are unaudited. In the fourth quarter, SaviBank booked a one-time $4.6 million tax benefit for its deferred tax assets based on consistent and accelerating profitability over the past three years. Consequently, net income in 2016 was $5.7 million, or $0.49 per share.

“Our 2016 financial results demonstrate the growing strength of our franchise in almost every metric we measure for profitability and balance sheet strength,” said Michal D. Cann, Chairman and Chief Executive Officer. “Based on growing and consistent profitability, we were able to record a deferred tax asset, which allows us to carry forward operating losses into future periods. While this benefit is a non-cash event, it boosted our book value by $0.39 to $1.72 per share.”

“We continue to generate above average net interest margin, which was 4.41% in 2016 up 40 basis points from 2015,” noted Andrew Hunter, President. The net interest margin is significantly better than the 3.58% posted by the 655 micro-cap banks in the SNL Financials Microcap Bank Index as of September 30, 2016.

Fourth Quarter and Full Year 2016 Highlights (at, or for the period December 31, 2016):

  • Net interest income increased 30% to $6.4 million for 2016, compared to $4.9 million a year ago. For the fourth quarter of 2016, net interest income grew 35% to $1.7 million, from $1.3 million in the fourth quarter of 2015, and was equal to the record levels generated in the preceding quarter.

  • Non-interest income decreased to $1.3 million in 2016 from $1.6 million in 2015, which included $1.1 million in gains from sale of SBA and other loans. In the fourth quarter, non-interest income increased 46% year over year and 22% in the quarter. “Our SBA loan production remains strong, and our sales of these assets is consistently growing but tends to be somewhat variable from one quarter to the next,” said Rob Woods, CFO.

  • For the fourth quarter of 2016, net interest margin (“NIM”) was 4.36% compared to 4.09% for the fourth quarter of 2015 and 4.41% for the third quarter of 2016. Net interest margin was 4.40% for 2016, up from 4.07% for 2015.

  • Average fourth quarter total loans increased 30%, to $149.5 million, compared to $114.6 million at December 31, 2015, and grew 6%, from $141.1 million at September 30, 2016. End of year total loans were $152.0 million, compared to $116.5 million a year ago.

  • Average fourth quarter total deposits grew 21% to $143.0 million from $118.1 million in the fourth quarter a year ago, and increased 1% from $142.0 million in the third quarter of 2016. End of period deposits totaled $137.2 million reflecting the seasonality of the deposit flows in our market.

  • Asset quality continues to improve with nonperforming assets decreasing to 0.84% of total assets, at December 31, 2016, compared to 2.76% of total assets a year earlier, and 1.07% of total assets, at September 30, 2016.

  • Allowance for loan losses, as a percentage of total loans, was 1.00% at December 31, 2016, compared to 1.10% at December 31, 2015.

  • SaviBank remained well capitalized with total risk-based capital ratio of 10.68% and a tier-1 leverage ratio of 9.34%.

  • Book value per share was $1.72 at December 31, 2016, compared to $1.23 a year ago.

About Northwest Washington

SaviBank operates two branches in Skagit County, and one branch each in Whatcom and Island Counties. It also operates Loan Production Offices in Skagit and Island Counties. The Skagit, Whatcom and Island counties region stretches north from the greater Seattle/Everett/Bellevue metropolis to the Canadian border. 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 the Whidbey Island Naval Air Base 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%.

Sources: https://fortress.wa.gov/esd/employmentdata/reports-publications/regional-reports/county-profiles/skagit-county-profile; https://esd.wa.gov/labormarketinfo/county-profiles/whatcom;
https://www.snl.com/interactiveX/DemographicProfileReport.aspx?ID=4100094&Ownership=Current&MarketType=County&submit3=Apply; https://www.thebalance.com/overview-naval-air-station-whidbey-island-

About SaviBank –

SaviBank (formerly known as Business Bank) is a commercial bank chartered in the State of Washington. The Bank began operations April 11, 2005 and has four branch locations in Burlington, Bellingham, Mt. Vernon, and Oak Harbor, Washington. A loan production center was opened in Anacortes, Washington in May 2013 and in Freeland in February 2016. 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 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 Year Ended
December
31, 2016
December
31, 2015
Var % September
30, 2016
Var % December
31, 2016
December
31, 2015
Var %
SUMMARY OF OPERATIONS
Interest income $1,963 $1,501 31% $1,908 3% $7,276 $5,753 26%
Interest expense (221) (209) 6 (224) (1) (862) (838) 3
Net interest income 1,742 1,292 35 1,684 3 6,414 4,915 30
Provision for loan losses (85) (33) 158 (81) 0 (314) (287) 9
NII after loss provision 1,657 1,259 32 1,603 3 6,100 4,628 32
Non-interest income 409 281 46 335 22 1,324 1,637 (19)
Non-interest expense (1,595) (1,396) 14 (1,604) (1) (6,249) (5,562) 12
Income before tax 471 144 227 334 41 1,175 703 67
Federal income tax expense (4,554) - - - - (4,554) - -
Net income $5,025 $144 3,390% $334 1,404% $5,729 $703 715%
PER COMMON SHARE DATA
Number of shares outstanding (000s) 11,695 11,630 1% 11,695 -% 11,695 11,630 1%
Earnings per share, basic and diluted $0.43 $0.01 3,370 $0.03 1,404 $0.49 $0.06 710
Market value 1.25 1.25 - 1.15 9 1.25 1.25 -
Book value 1.72 1.23 40 1.29 33 1.72 1.23 40
Market value to book value 72.69% 101.55% (28) 88.84% (18) 72.69% 101.55% (28)
BALANCE SHEET DATA
Assets $186,342 $139,598 33% $174,669 7% $186,342 $139,598 33%
Investments securities 8,952 4,927 82 8,068 11 8,952 4,927 82
Total loans 152,019 116,483 31 147,150 3 152,019 116,483 31
Total deposits 137,162 119,836 14 148,977 (8) 137,162 119,836 14
Borrowings 28,500 5,000 470 10,000 185 28,500 5,000 470
Shareholders’ equity 20,112 14,315 40 15,139 33 20,112 14,315 40
AVERAGE BALANCE SHEET DATA
Average assets $171,016 $137,198 25% $163,450 5% $156,362 $131,484 19%
Average total loans 149,545 114,643 30 141,147 6 135,620 111,428 22
Average total deposits 143,025 118,134 21 142,054 1 131,649 109,962 20
Average shareholders' equity 16,255 13,548 20 15,061 8 15,156 13,032 16
ASSET QUALITY RATIOS
Net (charge-offs) recoveries $(30) $72 - $9 - $(74) $(368) (80)%
Net (charge-offs) recoveries to average loans (0.08)% 0.25% - 0.03% - (0.07)% (0.44)% (83)
Non-performing loans as a % of loans 0.03 1.66 (98) 0.06 (43) 0.03 1.66 (98)
Non-performing assets as a % of assets 0.84 2.76 (70) 1.07 (21) 0.84 2.76 (70)
Allowance for loan losses as a % of total loans 1.00 1.10 (9) 1.00 0 1.00 1.10 (9)
Allowance for loan losses as a % of non-performing loans 2,930.77 66.60 4,301 1,632.22 80 2,930.77 66.60 4,301
FINANCIAL RATIOS\STATISTICS
Return on average equity 123.65% 4.37% 2,730% 8.86% 1,296% 37.80% 5.38% 603%
Return on average assets 11.75 0.43 2,633 0.82 1,338 3.66 0.53 585
Net interest margin 4.36 4.09 7 4.41 (1) 4.40 4.07 8
Efficiency ratio 74.15 88.75 (16) 79.45 (7) 80.76 84.89 (5)
Average number of employees (FTE) 55 45 22 54 2 55 45 22
CAPITAL RATIOS
Tier 1 leverage ratio -- Bank 9.34 10.38 (10) 9.18 2 9.34 10.38 (10)
Common equity tier 1 ratio -- Bank 9.69 11.44 (15) 9.53 2 9.69 11.44 (15)
Tier 1 risk-based capital ratio -- Bank 9.69 11.44 (15) 9.53 2 9.69 11.44 (15)
Total risk-based capital ratio -- Bank 10.68 12.52 (15) 10.51 2 10.68 12.52 (15)

CONTACT: Michal D. Cann, Chairman & CEO (360) 707-2272 The Cereghino Group IR CONTACT: 206-388-5785

Source:SaviBank