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SaviBank Fourth Quarter and 2016 Results

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, WA – January 24, 2017 — 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%.

Attachment: SVVB 4Q16 Final (PDF)

Sources:

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.


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 five branch locations in Burlington, Bellingham, Mount Vernon, Oak Harbor and Freeland, Washington. A loan production center was opened in Anacortes, Washington, in May 2013. 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.

Contact
Mike Cann, Chairman of the Board & CEO
Andy Hunter, President
(888) 707-2060

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