Savi Financial Corporation, Inc. the bank holding company for SaviBank, reported net income for the second quarter of 2022 was $572,000, or $0.13 per diluted share, compared to $964,000, or $0.22 per diluted share in the preceding quarter, and record quarterly results of $1.24 million, or $0.28 per diluted share, in the second quarter of 2021. Strong loan and deposit growth and net interest margin expansion contributed to profitability for the quarter. In the first six months of 2022, net income was $1.54 million, or $0.35 per diluted share, compared to $2.23 million, or $0.51 per diluted share, in the first six months of 2021.
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Earnings for the second quarter of 2022 were impacted by a $79,000 provision for loan losses as a result of quarterly loan growth. This compared to no provision expense recorded during the preceding quarter and a $38,000 provision for loan losses in the second quarter a year ago. Also impacting second quarter results was a $165,000 write down on the sale of a property that SaviBank had held in OREO since 2013, and lower income from the Mortgage division due to rising interest rates.
“The highlights of the second quarter included substantial growth in the loan portfolio, increases to our core deposit base, and expansion of our net interest margin,” said Michal D. Cann, Chairman and President of Savi Financial Corporation. “We continue to look for new strategies to continue to grow the Company, both through organic growth and with new business partners. We are located in some of the most vibrant Northwest Washington markets, and with our strong core operations and ample capital base, we are well positioned to take advantage of new opportunities.”
“Loan production was stronger than anticipated during the second quarter, with net loan growth increasing $32.1 million, or 9% during the quarter, and growing $59.7 million, or 18% compared to a year ago,” said Andrew Hunter, President and CEO of SaviBank. “Additionally, our loan pipeline remains strong, and we remain optimistic for loan growth in the short term.”
“Over the last two years, we generated over $94.4 million in SBA Paycheck Protection Program (“PPP”) loans, helping our business customers in our communities,” continued Hunter. “Due to PPP loan payoffs and forgiveness, we no longer had a material amount of PPP loans on our balance sheet at quarter end, resulting in no income related to recognizing origination fees for PPP loan payoffs during the second quarter of 2022. This compared to $107,500 of income related to PPP loan payoffs during the preceding quarter, and $820,000 of income during the second quarter a year ago.”
“Our net interest margin improved 27 basis points during the quarter, compared to the prior quarter, largely due to interest rate increases and the shifting of lower yielding assets into higher yielding loans,” said Rob Woods, Chief Financial Officer of SaviBank. “We anticipate additional net interest margin improvement over the next few quarters, as our variable loans adjust rates quarterly.” SaviBank’s NIM was 3.90% in the second quarter of 2022, compared to 3.63% in the preceding quarter, and 4.01% in the second quarter a year ago. The NIM remains higher than the peer average of 3.17% posted by the 155 banks that comprised the Dow Jones U.S. Microcap Bank Index at March 31, 2022.
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“We continued to see good growth in deposits during the quarter, even while allowing higher cost CDs to run off. While deposit costs have remained steady, we expect to be more competitive on deposit pricing in future quarters,” said Woods. The cost of funds for the second quarter remained steady at 16 basis points, compared to 36 basis points in the second quarter of 2021, and 18 basis points in the prior quarter.
Second Quarter 2022 Highlights:
- Net income was $572,000 in the second quarter of 2022, compared to $1.24 million in the second quarter of 2021, and $964,000 in the first quarter of 2022.
- Earnings per share were $0.13 in the second quarter, compared to $0.28 in the second quarter a year ago, and $0.22 in the preceding quarter.
- Net interest income was $4.26 million in the second quarter of 2022, compared to $4.31 million in the second quarter a year ago, and $4.00 million in the first quarter of 2022.
- Total revenue, consisting of net interest income and non-interest income, increased 9% to $6.07 million in the second quarter of 2022, compared to $5.58 million in the second quarter a year ago and was unchanged compared to the preceding quarter.
- Non-interest expense was $5.28 million in the second quarter compared to $3.97 million in the second quarter a year ago and $4.87 million in the preceding quarter.
- Average second quarter 2022 total loans increased 9% to $382.5 million, compared to $352.1 million in the second quarter a year ago, and increased 8% from $354.5 million in the first quarter of 2022. Total loans at June 30, 2022, increased 18% to $396.7 million from $337.0 million a year ago and increased 9% compared to $364.6 million at March 31, 2022.
- SBA and USDA loan production for the twelve months ended June 30, 2022, totaled 30 loans for $42.6 million, compared to production of 19 loans for $25.2 million in the year-ago period.
- Average second quarter 2022 total deposits grew 18% to $451.4 million, from $381.2 million in the second quarter a year ago, and increased 2% from $440.5 million in the first quarter of 2022. Total deposits grew 13% to $454.6 million, at June 30, 2022, from $403.5 million a year ago, and increased 1% from $448.3 million at March 31, 2022.
- Due to strong loan production, the Company recorded a $79,000 provision for loan losses in the second quarter of 2022. This compared to a $38,000 provision for loan losses in the second quarter of 2021, and no provision in the first quarter of 2022.
- Allowance for loan losses, as a percentage of total loans, was 1.08% at June 30, 2022, compared to 1.13% at June 30, 2021, and 1.16% at March 31, 2022.
- Nonperforming loans, as a percentage of total loans, was 0.42% at June 30, 2022, compared to 0.82% at June 30, 2021, and 0.40% at March 31, 2022.
- Nonperforming assets, as a percentage of total assets, was 0.45% at June 30, 2022, compared to 0.66% a year ago and 0.47% three months earlier.
- Net charge-offs were $35,000 in the second quarter of 2022, compared to net recoveries of $22,000 in the second quarter of 2021, and net recoveries of $1,000 in the first quarter of 2022.
- SaviBank capital levels remained above the threshold for well-capitalized institutions with a tier-1 leverage ratio of 8.00% at June 30, 2022.
“Over the past few years, we have been actively growing Savi Financial Corporation and expanding our presence in and around the Northwest Washington communities we serve,” said Cann. “Last year we expanded into the Friday Harbor market, completed the Freeland branch purchase on Whidbey Island from Coastal Community Bank, relocated from our existing Freeland branch to a new location, and formed our mortgage lending division. We will continue to search for opportunities to expand our franchise, for the benefit of our customers, shareholders and communities.”
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