Riverview Bancorp Reports Second Quarter Earnings of $2.5 Million, Results Reflect Decreases in the Provision for Loan Losses and Loan Modifications

Riverview Bancorp Inc
·27-min read

VANCOUVER, Wash., Oct. 29, 2020 (GLOBE NEWSWIRE) -- Riverview Bancorp, Inc. (Nasdaq GSM: RVSB) (Riverview or the Company) today reported earnings of $2.5 million, or $0.11 per diluted share for the second fiscal quarter ended September 30, 2020, compared to $480,000, or $0.02 per diluted share, in the preceding quarter, and $4.5 million, or $0.20 per diluted share, in the second fiscal quarter a year ago. In the first six months of fiscal 2021, net income was $3.0 million, or $0.14 per diluted share, compared to $8.7 million, or $0.38 per diluted share, in the first six months of fiscal 2020.

Riverviews second quarter financial results continue to demonstrate the strength and resilience of our franchise, stated Kevin Lycklama, president and chief executive officer. We have remained focused on credit quality, maintaining our strong capital position and our continuous pursuit of improving operating efficiencies. I am extremely proud of the outstanding job by our entire team, who have shown tremendous resiliency during the ongoing pandemic and continue to provide the personal attention that our local business partners have come to expect from Riverview.

Second Quarter Highlights (at or for the period ended September 30, 2020)

  • Net income was $2.5 million, or $0.11 per diluted share.

  • Pre-tax, pre-provision for loan losses income (non-GAAP) was $5.0 million for the quarter compared to $5.1 million in the previous quarter and $5.9 million for the quarter ended September 30, 2019.

  • Net interest margin (NIM) was 3.33%.

  • Provision for loan losses was $1.8 million, reflecting improved economic conditions and specific industry exposure in the loan portfolio.

  • Total loans were $975.2 million at September 30, 2020. SBA PPP loans totaled $110.8 million.

  • Total deposits increased $41.2 million, or 14.1% annualized, during the quarter to $1.20 billion.

  • Non-performing assets decreased to 0.09% of total assets.

  • Total risk-based capital ratio was 17.53% and Tier 1 leverage ratio was 9.82%.

  • Paid a quarterly cash dividend of $0.05 per share.

We are encouraged by the positive improvements noted during the quarter. Deposit activity has remained strong with annualized growth of nearly 15%. Loan accommodations decreased significantly during the quarter as our clients have experienced steady recoveries as local markets reopen. The improvement in regional business activity also had a positive impact on our non-interest income during the quarter and we effectively executed on our ongoing expense control measures, Lycklama added.

COVID-19 Operational Update :

  • Industry Exposure: Both Washington and Oregon have modified phased reopening plans in place for businesses. While the economic impact is widespread, some industries are more acutely affected by the current business decline. Riverviews loan portfolio exposure to industries most affected by the COVID-19 pandemic include:

    • Hotel/Motel ($108.2 million, 11.0% of total loans)

    • Retail Strip Centers ($79.6 million, 8.1% of total loans)

    • Restaurants/Fast Food ($14.9 million, 1.5% of total loans)

Loans to these clients are generally secured by real estate and had strong financial performance heading into the current pandemic. The weighted average loan-to-value and debt service coverage ratio for these portfolios were as follows: Hotel/Motel (51% and 1.90x), Retail Strip Centers (53% and 1.56x), and Restaurants/Fast Food (57% and 1.58x).

The Company continues to diligently monitor the effects of the pandemic on our customers. We have allocated additional staffing resources to conduct enhanced monitoring of our loan portfolio and identify at-risk borrowers. We remain in close contact and continue to work with these borrowers to develop longer term strategies to mitigate potential credit losses.

  • Loan Accommodations :

    • Commercial Loans. Loan modifications decreased 87% during the quarter. As of September 30, 2020, Riverview had 13 commercial loan accommodations totaling $49.7 million, a decrease from 98 loans totaling $161.6 million at June 30, 2020. Of these 13 loans, two were new loan accommodations approved during the quarter totaling $2.1 million. In October, Riverview received three new loan accommodation requests totaling $1.1 million to two different borrowers.  

    • Consumer Loans . As of September 30, 2020, there were four consumer loan accommodations in our portfolio totaling $471,000, a decrease from 43 loans totaling $10.1 million at June 30, 2020.

    • Since all these loans were performing and current on payments prior to COVID-19, these loan modifications are not considered to be troubled debt restructurings pursuant to provisions contained within the Coronavirus Aid, Relief, and Economic Security Act (CARES Act).

  • Loan Loss Reserve: Riverview recorded a $1.8 million provision for loan losses for the quarter ended September 30, 2020, bringing the allowance for loan losses to $18.9 million, or 1.93% of total loans, at September 30, 2020 compared to $17.1 million, or 1.70% of total loans, at June 30, 2020. Our provision for loan losses decreased during the quarter and reflects the improvement in asset quality metrics in our portfolio and positive economic trends in our local markets. We believe we are adequately reserved for the current environment and are well-positioned to support our long-term growth initiatives, said David Lam, executive vice president and chief financial officer.

  • Paycheck Protection Program ( PPP ) Loans: At September 30, 2020, Riverview had originated 790 loans totaling approximately $116.4 million with an average loan size of $147,000. Riverview did not originate any new PPP loans during the second fiscal quarter of 2021. The following table presents the breakdown of PPP loans as of September 30, 2020 (in thousands):

 

Range

Number of loans

 

 

Total

 

 

Under $50,000

365

 

$

8,671

 

 

$50,001 to $150,000

251

 

 

21,633

 

 

$150,001 to $350,000

107

 

 

23,996

 

 

$350,001 to $2,000,000

59

 

 

40,191

 

 

Over $2,000,000

8

 

 

21,937

 

 

Total

790

 

$

116,428

 

PPP loan fees totaled $4.1 million of which $2.8 million remains unamortized as of September 30, 2020. These fees are deferred and are realized over the life of the loan or will be recognized in proportion to the amount of the loan when forgiven by the SBA. We are now starting to process applications for PPP loan forgiveness for customers. We expect the timing of the loan forgiveness to have a meaningful benefit to operating results beginning in the fourth quarter of fiscal year 2021, said Lycklama.

Income Statement

Return on average assets was 0.71% in the second quarter of fiscal 2021 compared to 0.15% in the preceding quarter. Return on average equity and return on average tangible equity (non-GAAP) was 6.71% and 8.23%, respectively, compared to 1.28% and 1.57% for the prior quarter.  

Riverviews net interest income for the quarter was $11.1 million, flat compared to the preceding quarter and slightly lower than the $11.7 million reported in the second quarter of the prior year. In the first six months of fiscal 2021, net interest income was $22.2 million compared to $23.2 million in the first six months of fiscal 2020.

The Companys NIM continues to be impacted by the increased level of excess liquidity. Second fiscal quarter NIM (GAAP) was 3.33% compared to 3.65% in the prior quarter and 4.36% in the second quarter of fiscal 2020. The decrease in NIM was primarily due to the increase in liquidity and the decrease in the yield on interest earning assets, which were partially offset by decreases in the cost of interest-bearing liabilities. In the first six months of fiscal 2021, the net interest margin was 3.48% compared to 4.35% in the same period a year earlier.

The average balance of our overnight cash balances increased $109.8 million sequentially and $194.0 million compared to the prior year as a result of the increase in deposit balances. The increase in overnight cash balances resulted in a 27 basis point decrease in the NIM compared to the prior quarter and a 55 basis point decrease compared to the same quarter a year ago.

The accretion on purchased loans totaled $123,000 compared to $137,000 during the preceding quarter and $78,000 in the same period a year ago, resulting in a four basis point increase in the NIM for the current period compared to a five basis point increase for the preceding quarter and a two basis point increase for the same period a year ago. Net fees on loan prepayments, which included purchased SBA loan premiums, decreased interest income by $77,000 which negatively affected the NIM by two basis points during the second fiscal quarter of 2021. This compares to $100,000 in net fees on loan prepayments decreasing the NIM by four basis points for the first fiscal quarter of 2021 and $112,000 in net fees on loan prepayments adding four basis points to the NIM for the second fiscal quarter a year ago. SBA PPP loans and related income and fees decreased the NIM by six basis points during the quarter, and by four basis points during the preceding quarter. This resulted in a core-NIM (non-GAAP) of 3.37% in the current quarter compared to 3.68% in the preceding quarter and 4.30% in the second fiscal quarter a year ago.

Loan yield decreased 11 basis points during the quarter to 4.58% compared to 4.69% in the preceding quarter primarily as a result of the impact from the lower yielding SBA PPP loans and the decline in market interest rates. Loan yield excluding SBA PPP loans was 4.81% for the second quarter compared to 4.83% in the preceding quarter.

The cost of deposits decreased to 0.22% during the second quarter compared to 0.31% in the preceding quarter and 0.27% during the second quarter of fiscal 2020. The sequential decrease in deposit costs during the September 30, 2020 quarter reflects the impact from the recent cuts in the federal funds target rate by the Federal Reserve in response to the COVID-19 pandemic. Deposit costs are expected to further decrease as a result of the continued low interest rate environment and as certificates of deposit reach maturity. There are $83.6 million in CD balances that mature within one year of September 30, 2020, with a weighted average rate of 1.35%.

Non-interest income increased $196,000 during the quarter to $2.8 million compared to $2.6 million in the preceding quarter and was lower when compared to $3.2 million in the second fiscal quarter of 2020. Fees and service charges increased compared to the prior quarter as economic activity and consumer spending improved in Riverviews local markets; however, these amounts remain lower than prior year due to the overall impact of the COVID pandemic. In the first six months of fiscal 2021, non-interest income was $5.4 million compared to $6.3 million in the same period a year ago.

Asset management fees decreased to $883,000 during the second fiscal quarter compared to $974,000 in the preceding quarter and $1.1 million in the prior year. The year over year decrease was primarily due to the impact from the decline in interest rates on fee generating products. Riverview Trust Companys assets under management was $1.3 billion at September 30, 2020, unchanged from three months earlier. Assets under management were $690.5 million a year earlier.

Non-interest expense was $8.8 million compared to $8.7 million in the preceding quarter and $9.0 million in the second fiscal quarter a year ago. Salaries and employee benefits was $5.4 million compared to $5.2 million in the preceding quarter and $5.7 million in the second fiscal quarter a year ago. Salaries and employee benefits during the prior quarter included the deferral of compensation related to origination costs of SBA PPP loans of $553,000. Occupancy and depreciation expense remained comparable to the preceding quarter but was higher than a year ago, as Riverview continues to invest in its technology infrastructure. FDIC insurance premiums increased compared to the preceding quarter to $84,000 due to the Company utilizing its remaining FDIC assessment credits. Year-to-date, non-interest expense was $17.5 million compared to $18.2 million in the first six months of fiscal 2020.

The efficiency ratio was 63.7% for the second fiscal quarter compared to 63.2% in the preceding quarter and 60.5% in the second fiscal quarter a year ago.

Riverviews effective tax rate for the second quarter of fiscal year 2021 was 21.7% compared to 23.0% for the second quarter a year ago.

Balance Sheet Review

Riverviews total loans decreased $27.5 million during the quarter to $975.2 million compared to $1.00 billion in the preceding quarter and increased $93.9 million compared to $881.3 million a year ago. Loan growth for the quarter was impacted by continued payoffs and paydowns. The year over year increase was primarily driven by SBA PPP loans originated during the prior quarter. SBA PPP loans balances totaled $110.8 million at September 30, 2020. The decrease in real estate one-to-four family loans was due to the strategic decision to broker all new loan originations to third-party mortgage companies. The Companys loan pipeline increased to $74.6 million at September 30, 2020 compared to $27.9 million at the end of the prior quarter, as increased economic activity in our markets helped stabilize and improve lending activity.

Undisbursed construction loans totaled $12.0 million at September 30, 2020 compared to $18.1 million in the preceding quarter, with the majority of the undisbursed construction loans expected to fund over the next several quarters. Revolving commercial business loan commitments totaled $73.9 million at September 30, 2020. Utilization on these loans totaled 8.7% at September 30, 2020 compared to 16.0% at June 30, 2020. The weighted average rate on loan originations during the quarter was 4.12% at September 30, 2020 compared to 3.36% at June 30, 2020.

Deposits increased $41.2 million during the quarter to $1.20 billion at September 30, 2020 compared to $1.16 billion in the preceding quarter and increased $217.7 million compared to $982.3 million a year earlier. The increase in deposits during the quarter was primarily concentrated in checking accounts, which increased $23.9 million. Checking accounts as a percentage of total deposits increased to 51.4% at September 30, 2020 from 48.7% at September 30, 2019.

Shareholders equity was $149.0 million at September 30, 2020 compared to $147.5 million three months earlier and $143.1 million a year earlier. Tangible book value per share (non-GAAP) increased to $5.43 at September 30, 2020 compared to $5.38 at June 30, 2020 and $5.06 at September 30, 2019. Riverview paid a quarterly cash dividend of $0.05 per share on October 20, 2020, consistent with the prior quarter.

Credit Quality

Non-performing loans totaled $1.3 million, or 0.13% of total loans, at September 30, 2020, flat compared to three months earlier. Non-performing loans were $1.5 million, or 0.17% of total loans, at September 30, 2019. Net loan charge-offs were $10,000 during the second fiscal quarter of 2021 compared to $48,000 in the preceding quarter and $6,000 in the second fiscal quarter a year ago.

Classified assets totaled $4.8 million at September 30, 2020 compared to $5.0 million at June 30, 2020 and $4.3 million at September 30, 2019. The classified asset to total capital ratio was 3.2% at September 30, 2020 compared to 3.3% three months earlier and 3.0% a year earlier.

At September 30, 2020, the allowance for loan losses increased to $18.9 million compared to $17.1 million in the preceding quarter and $11.4 million one year earlier. The allowance for loan losses represented 1.93% of total loans at September 30, 2020 compared to 1.70% in the preceding quarter and 1.30% a year earlier. The allowance for loan losses to loans, net of SBA guaranteed loans (including SBA PPP loans) (non-GAAP), was 2.35% at September 30, 2020, and 2.08% at June 30, 2020. Included in the carrying value of loans are net discounts on the MBank purchased loans, which may reduce the need for an allowance for loan losses on these loans because they are carried at an amount below the outstanding principal balance. The remaining net discount on these purchased loans was $871,000 at September 30, 2020 compared to $994,000 three months earlier.

Capital

Riverview continues to maintain capital levels well in excess of the regulatory requirements to be categorized as well capitalized with a total risk-based capital ratio of 17.53% and a Tier 1 leverage ratio of 9.82% at September 30, 2020. Tangible common equity to average tangible assets ratio (non-GAAP) was 8.68% at September 30, 2020.

Branch Consolidation

Riverview continues to actively review its branch network for efficiencies due to customers increased usage of online and mobile banking technologies. On September 28, 2020, Riverview consolidated two of its branches in Clark County, Washington and simultaneously opened a new branch in the Cascade Park neighborhood of Vancouver. The Company also announced the consolidation of one additional branch scheduled for January 2021. Riverview plans to open a new location in Ridgefield, Washington which is expected to open during the summer of 2021.

Non-GAAP Financial Measures

In addition to results presented in accordance with generally accepted accounting principles (GAAP), this press release contains certain non-GAAP financial measures. Management has presented these non-GAAP financial measures in this earnings release because it believes that they provide useful and comparative information to assess trends in Riverview's core operations reflected in the current quarter's results and facilitate the comparison of our performance with the performance of our peers. However, these non-GAAP financial measures are supplemental and are not a substitute for any analysis based on GAAP. Where applicable, comparable earnings information using GAAP financial measures is also presented. Because not all companies use the same calculations, our presentation may not be comparable to other similarly titled measures as calculated by other companies. For a reconciliation of these non-GAAP financial measures, see the tables below.

 

 

 

 

 

 

 

 

 

 

 

 

Tangible shareholders' equity to tangible assets and tangible book value per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Dollars in thousands)

 

September 30, 2020

 

June 30, 2020

 

September 30, 2019

 

March 31, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shareholders' equity (GAAP)

 

$

149,046

 

 

$

147,478

 

 

$

143,119

 

 

$

148,843

 

 

 

 

Exclude: Goodwill

 

 

(27,076

)

 

 

(27,076

)

 

 

(27,076

)

 

 

(27,076

)

 

 

 

Exclude: Core deposit intangible, net

 

 

(689

)

 

 

(724

)

 

 

(839

)

 

 

(759

)

 

 

 

Tangible shareholders' equity (non-GAAP)

 

$

121,281

 

 

$

119,678

 

 

$

115,204

 

 

$

121,008

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total assets (GAAP)

 

$

1,425,171

 

 

$

1,377,374

 

 

$

1,173,019

 

 

$

1,180,808

 

 

 

 

Exclude: Goodwill

 

 

(27,076

)

 

 

(27,076

)

 

 

(27,076

)

 

 

(27,076

)

 

 

 

Exclude: Core deposit intangible, net

 

 

(689

)

 

 

(724

)

 

 

(839

)

 

 

(759

)

 

 

 

Tangible assets (non-GAAP)

 

$

1,397,406

 

 

$

1,349,574

 

 

$

1,145,104

 

 

$

1,152,973

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shareholders' equity to total assets (GAAP)

 

 

10.46

%

 

 

10.71

%

 

 

12.20

%

 

 

12.61

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tangible common equity to tangible assets (non-GAAP)

 

 

8.68

%

 

 

8.87

%

 

 

10.06

%

 

 

10.50

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares outstanding

 

 

22,336,235

 

 

 

22,245,472

 

 

 

22,748,385

 

 

 

22,544,285

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Book value per share (GAAP)

 

 

6.67

 

 

 

6.63

 

 

 

6.29

 

 

 

6.60

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tangible book value per share (non-GAAP)

 

 

5.43

 

 

 

5.38

 

 

 

5.06

 

 

 

5.37

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pre-tax, pre-provision income

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Six Months Ended

 

(Dollars in thousands)

 

September 30, 2020

 

June 30, 2020

 

September 30, 2019

 

September 30, 2020

 

September 30, 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (GAAP)

 

$

2,543

 

 

$

480

 

 

$

4,534

 

 

$

3,023

 

 

$

8,726

 

 

Include: Provision for income taxes

 

 

704

 

 

 

86

 

 

 

1,351

 

 

 

790

 

 

 

2,571

 

 

Include: Provision for loan losses

 

 

1,800

 

 

 

4,500

 

 

 

-

 

 

 

6,300

 

 

 

-

 

 

Pre-tax, pre-provision income (non-GAAP)

 

$

5,047

 

 

$

5,066

 

 

$

5,885

 

 

$

10,113

 

 

$

11,297

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest margin reconciliation to core net interest margin

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Six Months Ended

 

(Dollars in thousands)

 

September 30, 2020

 

June 30, 2020

 

September 30, 2019

 

September 30, 2020

 

September 30, 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income (GAAP)

 

$

11,064

 

 

$

11,128

 

 

$

11,719

 

 

$

22,192

 

 

$

23,189

 

 

Tax equivalent adjustment

 

 

5

 

 

 

6

 

 

 

11

 

 

 

11

 

 

 

23

 

 

Net fees on loan prepayments

 

 

77

 

 

 

100

 

 

 

(112

)

 

 

177

 

 

 

(144

)

 

Accretion on purchased MBank loans

 

 

(123

)

 

 

(137

)

 

 

(78

)

 

 

(260

)

 

 

(186

)

 

SBA PPP loans interest income and fees

 

 

(760

)

 

 

(666

)

 

 

-

 

 

 

(1,426

)

 

 

-

 

 

Adjusted net interest income (non-GAAP)

 

$

10,263

 

 

$

10,431

 

 

$

11,540

 

 

$

20,694

 

 

$

22,882

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Six Months Ended

 

(Dollars in thousands)

 

September 30, 2020

 

June 30, 2020

 

September 30, 2019

 

September 30, 2020

 

September 30, 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

Average balance of interest-earning assets (GAAP)

 

$

1,318,803

 

 

$

1,222,686

 

 

$

1,069,209

 

 

$

1,271,007

 

 

$

1,067,737

 

 

SBA PPP loans (average)

 

 

(110,573

)

 

 

(84,809

)

 

 

-

 

 

 

(97,762

)

 

 

-

 

 

Average balance of interest-earning assets

 

 

 

 

 

 

 

 

 

 

 

excluding SBA PPP loans (non-GAAP)

 

$

1,208,230

 

 

$

1,137,877

 

 

$

1,069,209

 

 

$

1,173,245

 

 

$

1,067,737

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Six Months Ended

 

 

 

September 30, 2020

 

June 30, 2020

 

September 30, 2019

 

September 30, 2020

 

September 30, 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest margin (GAAP)

 

 

3.33

 

%

 

3.65

 

%

 

4.36

 

%

 

3.48

 

%

 

4.35

 

%

Net fees on loan prepayments

 

 

0.02

 

 

 

0.04

 

 

 

(0.04

)

 

 

0.03

 

 

 

(0.03

)

 

Accretion on purchased MBank loans

 

 

(0.04

)

 

 

(0.05

)

 

 

(0.02

)

 

 

(0.04

)

 

 

(0.04

)

 

SBA PPP loans

 

 

0.06

 

 

 

0.04

 

 

 

0.00

 

 

 

0.05

 

 

 

0.00

 

 

Core net interest margin (non-GAAP)

 

 

3.37

 

%

 

3.68

 

%

 

4.30

 

%

 

3.52

 

%

 

4.28

 

%


 

 

 

 

 

 

 

 

 

Allowance for loan losses reconciliation, excluding SBA purchased and PPP loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Dollars in thousands)

 

September 30, 2020

 

June 30, 2020

 

September 30, 2019

 

March 31, 2020

 

 

 

 

 

 

 

 

 

Allowance for loan losses

 

$

18,866

 

 

$

17,076

 

 

$

11,436

 

 

$

12,624

 

 

 

 

 

 

 

 

 

 

Loans receivable (GAAP)

 

$

975,174

 

 

$

1,002,720

 

 

$

881,316

 

 

$

911,509

 

Exclude: SBA purchased loans

 

 

(61,990

)

 

 

(70,853

)

 

 

(68,932

)

 

 

(74,797

)

Exclude: SBA PPP loans

 

 

(110,794

)

 

 

(110,341

)

 

 

-

 

 

 

-

 

Loans receivable excluding SBA purchased and PPP loans (non-GAAP)

 

$

802,390

 

 

$

821,526

 

 

$

812,384

 

 

$

836,712

 

 

 

 

 

 

 

 

 

 

Allowance for loan losses to loans receivable (GAAP)

 

 

1.93

%

 

 

1.70

%

 

 

1.30

%

 

 

1.38

%

 

 

 

 

 

 

 

 

 

Allowance for loan losses to loans receivable excluding SBA purchased and PPP loans (non-GAAP)

 

 

2.35

%

 

 

2.08

%

 

 

1.41

%

 

 

1.51

%

A bout Riverview

Riverview Bancorp, Inc. (www.riverviewbank.com) is headquartered in Vancouver, Washington just north of Portland, Oregon, on the I-5 corridor. With assets of $1.43 billion at September 30, 2020, it is the parent company of the 97-year-old Riverview Community Bank, as well as Riverview Trust Company. The Bank offers true community banking services, focusing on providing the highest quality service and financial products to commercial and retail clients through 18 branches, including 14 in the Portland-Vancouver area, and 3 lending centers. For the past 7 years, Riverview has been named Best Bank by the readers of The Vancouver Business Journal and The Columbian .

Safe Harbor statement under the Private Securities Litigation Reform Act of 1995: This press release contains forward-looking statements that are subject to risks and uncertainties, including, but not limited to: the effect of the COVID-19 pandemic, including on our credit quality and business operations, as well as the impact on general economic and financial conditions and other uncertainties resulting from the COVID-19 pandemic, such as the extent and duration of the impact on public health, the U.S. and global economies, and consumer and corporate customers, including economic activity, employment levels and market liquidity; the Companys ability to raise common capital ; the credit risks of lending activities, including changes in the level and trend of loan delinquencies and write-offs and changes in the Companys allowance for loan losses and provision for loan losses that may be impacted by deterioration in the housing and commercial real estate markets; changes in general economic conditions, either nationally or in the Companys market areas; changes in the levels of general interest rates, and the relative differences between short and long term interest rates, deposit interest rates, the Companys net interest margin and funding sources; fluctuations in the demand for loans, the number of unsold homes, land and other properties and fluctuations in real estate values in the Companys market areas; secondary market conditions for loans and the Companys ability to sell loans in the secondary market; results of examinations of us by the Office of Comptroller of the Currency or other regulatory authorities, including the possibility that any such regulatory authority may, among other things, require us to increase the Companys reserve for loan losses, write-down assets, change Riverview Community Banks regulatory capital position or affect the Companys ability to borrow funds or maintain or increase deposits, which could adversely affect its liquidity and earnings; legislative or regulatory changes that adversely affect the Companys business including changes in regulatory policies and principles, or the interpretation of regulatory capital or other rules; the Companys ability to attract and retain deposits; further increases in premiums for deposit insurance; the Companys ability to control operating costs and expenses; the use of estimates in determining fair value of certain of the Companys assets, which estimates may prove to be incorrect and result in significant declines in valuation; difficulties in reducing risks associated with the loans on the Companys balance sheet; staffing fluctuations in response to product demand or the implementation of corporate strategies that affect the Companys workforce and potential associated charges; computer systems on which the Company depends could fail or experience a security breach; the Companys ability to retain key members of its senior management team; costs and effects of litigation, including settlements and judgments; the Companys ability to successfully integrate any assets, liabilities, customers, systems, and management personnel it may in the future acquire into its operations and the Companys ability to realize related revenue synergies and cost savings within expected time frames and any future goodwill impairment due to changes in the Companys business, changes in market conditions, including as a result of the COVID-19 pandemic and other factors related thereto; increased competitive pressures among financial services companies; changes in consumer spending, borrowing and savings habits; the availability of resources to address changes in laws, rules, or regulations or to respond to regulatory actions; the Companys ability to pay dividends on its common stock; and interest or principal payments on its junior subordinated debentures; adverse changes in the securities markets; inability of key third-party providers to perform their obligations to us; changes in accounting policies and practices, as may be adopted by the financial institution regulatory agencies or the Financial Accounting Standards Board, including additional guidance and interpretation on accounting issues and details of the implementation of new accounting methods; other economic, competitive, governmental, regulatory, and technological factors affecting the Companys operations, pricing, products and services and the other risks described from time to time in our filings with the SEC.

Such forward-looking statements may include projections. Any such projections were not prepared in accordance with published guidelines of the American Institute of Certified Public Accountants or the Securities Exchange Commission regarding projections and forecasts nor have such projections been audited, examined or otherwise reviewed by independent auditors of the Company. In addition, such projections are based upon many estimates and inherently subject to significant economic and competitive uncertainties and contingencies, many of which are beyond the control of management of the Company. Accordingly, actual results may be materially higher or lower than those projected. The inclusion of such projections herein should not be regarded as a representation by the Company that the projections will prove to be correct.

The Company cautions readers not to place undue reliance on any forward-looking statements. Moreover, you should treat these statements as speaking only as of the date they are made and based only on information then actually known to the Company. The Company does not undertake and specifically disclaims any obligation to revise any forward-looking statements to reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such statements. These risks could cause o u r actual results for fiscal 202 1 and beyond to differ materially from those expressed in any forward-looking statements by, or on behalf of, us, and could negatively affect the Companys operating and stock price performance.



RIVERVIEW BANCORP, INC. AND SUBSIDIARY

 

 

 

 

 

 

 

Consolidated Balance Sheets

 

 

 

 

 

 

 

(In thousands, except share data) (Unaudited)

September 30, 2020

 

June 30, 2020

 

September 30, 2019

 

March 31, 2020

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash (including interest-earning accounts of $226,583, $143,017,

$

238,016

 

$

157,835

 

$

48,888

 

$

41,968

$32,632 and $27,866)

 

 

 

 

 

 

 

Certificate of deposits held for investment

 

249

 

 

249

 

 

249

 

 

249

Loans held for sale

 

-

 

 

-

 

 

310

 

 

275

Investment securities:

 

 

 

 

 

 

 

Available for sale, at estimated fair value

 

126,273

 

 

137,749

 

 

163,682

 

 

148,291

Held to maturity, at amortized cost

 

24

 

 

26

 

 

31

 

 

28

Loans receivable (net of allowance for loan losses of $18,866,

 

 

 

 

 

 

 

$17,076, $11,436, and $12,624)

 

956,308

 

 

985,644

 

 

869,880

 

 

898,885

Prepaid expenses and other assets

 

16,018

 

 

9,062

 

 

8,136

 

 

7,452

Accrued interest receivable

 

5,341

 

 

5,202

 

 

3,827

 

 

3,704

Federal Home Loan Bank stock, at cost

 

2,620

 

 

2,620

 

 

1,380

 

 

1,420

Premises and equipment, net

 

17,296

 

 

16,124

 

 

13,943

 

 

15,570

Financing lease right-of-use assets

 

1,470

 

 

1,489

 

 

1,547

 

 

1,508

Deferred income taxes, net

 

3,076

 

 

3,067

 

 

3,296

 

 

3,277

Mortgage servicing rights, net

 

128

 

 

162

 

 

247

 

 

191

Goodwill

 

27,076

 

 

27,076

 

 

27,076

 

 

27,076

Core deposit intangible, net

 

689

 

 

724

 

 

839

 

 

759

Bank owned life insurance

 

30,587

 

 

30,345

 

 

29,688

 

 

30,155

 

 

 

 

 

 

 

 

TOTAL ASSETS

$

1,425,171

 

$

1,377,374

 

$

1,173,019

 

$

1,180,808

 

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS' EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES:

 

 

 

 

 

 

 

Deposits

$

1,199,972

 

$

1,158,749

 

$

982,275

 

$

990,448

Accrued expenses and other liabilities

 

16,087

 

 

11,472

 

 

17,502

 

 

11,783

Advance payments by borrowers for taxes and insurance

 

1,011

 

 

632

 

 

1,117

 

 

703

Federal Home Loan Bank advances

 

30,000

 

 

30,000

 

 

-

 

 

-

Junior subordinated debentures

 

26,705

 

 

26,684

 

 

26,619

 

 

26,662

Capital lease obligations

 

2,350

 

 

2,359

 

 

2,387

 

 

2,369

Total liabilities

 

1,276,125

 

 

1,229,896

 

 

1,029,900

 

 

1,031,965

 

 

 

 

 

 

 

 

SHAREHOLDERS' EQUITY:

 

 

 

 

 

 

 

Serial preferred stock, $.01 par value; 250,000 authorized,

 

 

 

 

 

 

 

issued and outstanding, none

 

-

 

 

-

 

 

-

 

 

-

Common stock, $.01 par value; 50,000,000 authorized,

 

 

 

 

 

 

 

September 30, 2020 - 22,336,235 issued and outstanding;

 

 

 

 

 

 

 

June 30, 2020 22,245,472 issued and outstanding;

 

222

 

 

222

 

 

227

 

 

225

September 30, 2019 - 22,748,385 issued and outstanding;

 

 

 

 

 

 

 

March 31, 2020 22,748,385 issued and 22,544,285 outstanding;

 

 

 

 

 

 

 

Additional paid-in capital

 

63,420

 

 

63,254

 

 

65,559

 

 

64,649

Retained earnings

 

82,666

 

 

81,240

 

 

77,112

 

 

81,870

Accumulated other comprehensive income

 

2,738

 

 

2,762

 

 

221

 

 

2,099

Total shareholders equity

 

149,046

 

 

147,478

 

 

143,119

 

 

148,843

 

 

 

 

 

 

 

 

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$

1,425,171

 

$

1,377,374

 

$

1,173,019

 

$

1,180,808



RIVERVIEW BANCORP, INC. AND SUBSIDIARY

 

 

 

 

 

 

Consolidated Statements of Income

 

 

 

 

 

 

 

Three Months Ended

 

Six Months Ended

(In thousands, except share data) (Unaudited)

Sept. 30, 2020

June 30, 2020

Sept. 30, 2019

 

Sept. 30, 2020

Sept. 30, 2019

INTEREST INCOME:

 

 

 

 

 

 

Interest and fees on loans receivable

$

11,346

$

11,528

$

11,893

 

$

22,874

$

23,447

Interest on investment securities - taxable

 

505

 

655

 

860

 

 

1,160

 

1,738

Interest on investment securities - nontaxable

 

17

 

18

 

36

 

 

35

 

73

Other interest and dividends

 

81

 

37

 

93

 

 

118

 

180

Total interest and dividend income

 

11,949

 

12,238

 

12,882

 

 

24,187

 

25,438

 

 

 

 

 

 

 

INTEREST EXPENSE:

 

 

 

 

 

 

Interest on deposits

 

657

 

858

 

660

 

 

1,515

 

1,011

Interest on borrowings

 

228

 

252

 

503

 

 

480

 

1,238

Total interest expense

 

885

 

1,110

 

1,163

 

 

1,995

 

2,249

Net interest income

 

11,064

 

11,128

 

11,719

 

 

22,192

 

23,189

Provision for loan losses

 

1,800

 

4,500

 

-

 

 

6,300

 

-

 

 

 

 

 

 

 

Net interest income after provision for loan losses

 

9,264

 

6,628

 

11,719

 

 

15,892

 

23,189

 

 

 

 

 

 

 

NON-INTEREST INCOME:

 

 

 

 

 

 

Fees and service charges

 

1,663

 

1,398

 

1,752

 

 

3,061

 

3,389

Asset management fees

 

883

 

974

 

1,090

 

 

1,857

 

2,233

Net gain on sale of loans held for sale

 

-

 

28

 

46

 

 

28

 

142

Bank ...

owned life insurance 242 190 204 432 397Other, net 31 33 77 64 144Total non-interest income, net 2,819 2,623 3,169 5,442 6,305 NON-INTEREST EXPENSE: Salaries and employee benefits 5,379 5,192 5,697 10,571 11,412Occupancy and depreciation 1,457 1,450 1,277 2,907 2,597Data processing 697 661 669 1,358 1,349Amortization of core deposit intangible 35 35 41 70 81Advertising and marketing 110 129 298 239 508FDIC insurance premium 84 48 - 132 80State and local taxes 204 204 174 408 369Telecommunications 85 86 76 171 162Professional fees 321 320 263 641 588Other 464 560 508 1,024 1,051Total non-interest expense 8,836 8,685 9,003 17,521 18,197 INCOME BEFORE INCOME TAXES 3,247 566 5,885 3,813 11,297PROVISION FOR INCOME TAXES 704 86 1,351 790 2,571NET INCOME$2,543$480$4,534 $3,023$8,726 Earnings per common share: Basic$0.11$0.02$0.20 $0.14$0.39Diluted$0.11$0.02$0.20 $0.14$0.38Weighted average number of common shares outstanding: Basic 22,261,709 22,178,427 22,643,103 22,259,201 22,631,406Diluted 22,276,312 22,198,065 22,702,696 22,276,308 22,694,067



(Dollars in thousands)

At or for the three months ended

At or for the six months ended

Sept. 30, 2020

June 30, 2020

Sept. 30, 2019

Sept. 30, 2020

Sept. 30, 2019

AVERAGE BALANCES

Average interest–earning assets

$

1,318,803

$

1,222,686

$

1,069,209

$

1,271,007

$

1,067,737

Average interest-bearing liabilities

854,303

808,715

708,846

831,634

718,856

Net average earning assets

464,500

413,971

360,363

439,373

348,881

Average loans

983,737

986,816

889,208

985,268

883,350

Average deposits

1,190,551

1,105,540

952,283

1,148,277

936,507

Average equity

150,401

150,707

142,195

150,553

139,409

Average tangible equity (non-GAAP)

122,615

122,885

114,256

122,749

111,450

ASSET QUALITY

Sept. 30, 2020

June 30, 2020

Sept. 30, 2019

Non-performing loans

$

1,275

$

1,288

$

1,485

Non-performing loans to total loans

0.13

%

0.13

%

0.17

%

Real estate/repossessed assets owned

$

-

$

-

$

-

Non-performing assets

$

1,275

$

1,288

$

1,485

Non-performing assets to total assets

0.09

%

0.09

%

0.13

%

Net loan charge-offs in the quarter

$

10

$

48

$

6

Net charge-offs in the quarter/average net loans

0.00

%

0.02

%

0.00

%

Allowance for loan losses

$

18,866

$

17,076

$

11,436

Average interest-earning assets to average

interest-bearing liabilities

154.37

%

151.19

%

150.84

%

Allowance for loan losses to

non-performing loans

1479.69

%

1325.78

%

770.10

%

Allowance for loan losses to total loans

1.93

%

1.70

%

1.30

%

Shareholders’ equity to assets

10.46

%

10.71

%

12.20

%

CAPITAL RATIOS

Total capital (to risk weighted assets)

17.53

%

17.40

%

17.27

%

Tier 1 capital (to risk weighted assets)

16.26

%

16.14

%

16.02

%

Common equity tier 1 (to risk weighted assets)

16.26

%

16.14

%

16.02

%

Tier 1 capital (to average tangible assets)

9.82

%

10.55

%

11.79

%

Tangible common equity (to average tangible assets) (non-GAAP)

8.68

%

8.87

%

10.06

%

DEPOSIT MIX

Sept. 30, 2020

June 30, 2020

Sept. 30, 2019

March 31, 2020

Interest checking

$

229,879

$

216,041

$

178,854

$

187,798

Regular savings

251,547

247,966

196,340

226,880

Money market deposit accounts

200,829

182,328

186,842

169,798

Non-interest checking

386,408

376,372

299,062

271,031

Certificates of deposit

131,309

136,042

121,177

134,941

Total deposits

$

1,199,972

$

1,158,749

$

982,275

$

990,448



COMPOSITION OF COMMERCIAL AND CONSTRUCTION LOANS

Other

Commercial

Commercial

Real Estate

Real Estate

& Construction

Business

Mortgage

Construction

Total

September 30, 2020

(Dollars in thousands)

Commercial business

$

170,876

$

-

$

-

$

170,876

SBA PPP

110,794

-

-

110,794

Commercial construction

-

-

20,260

20,260

Office buildings

-

129,865

-

129,865

Warehouse/industrial

-

75,160

-

75,160

Retail/shopping centers/strip malls

-

79,155

-

79,155

Assisted living facilities

-

837

-

837

Single purpose facilities

-

240,960

-

240,960

Land

-

14,531

-

14,531

Multi-family

-

49,878

-

49,878

One-to-four family construction

-

-

8,048

8,048

Total

$

281,670

$

590,386

$

28,308

$

900,364

March 31, 2020

Commercial business

$

179,029

$

-

$

-

$

179,029

Commercial construction

-

-

52,608

52,608

Office buildings

-

113,433

-

113,433

Warehouse/industrial

-

91,764

-

91,764

Retail/shopping centers/strip malls

-

76,802

-

76,802

Assisted living facilities

-

1,033

-

1,033

Single purpose facilities

-

224,839

-

224,839

Land

-

14,026

-

14,026

Multi-family

-

58,374

-

58,374

One-to-four family construction

-

-

12,235

12,235

Total

$

179,029

$

580,271

$

64,843

$

824,143

LOAN MIX

Sept. 30, 2020

June 30, 2020

Sept. 30, 2019

March 31, 2020

Commercial and construction

Commercial business

$

281,670

$

281,832

$

167,782

$

179,029

Other real estate mortgage

590,386

600,093

541,715

580,271

Real estate construction

28,308

37,824

83,174

64,843

Total commercial and construction

900,364

919,749

792,671

824,143

Consumer

Real estate one-to-four family

71,940

79,582

82,578

83,150

Other installment

2,870

3,389

6,067

4,216

Total consumer

74,810

82,971

88,645

87,366

Total loans

975,174

1,002,720

881,316

911,509

Less:

Allowance for loan losses

18,866

17,076

11,436

12,624

Loans receivable, net

$

956,308

$

985,644

$

869,880

$

898,885



DETAIL OF NON-PERFORMING ASSETS

Other

Southwest

Oregon

Washington

Other

Total

September 30, 2020

Commercial business

$

-

$

191

$

-

$

191

Commercial real estate

851

154

-

1,005

Consumer

-

58

21

79

Total non-performing assets

$

851

$

403

$

21

$

1,275

DETAIL OF LAND DEVELOPMENT AND SPECULATIVE CONSTRUCTION LOANS

Northwest

Other

Southwest

Oregon

Oregon

Washington

Total

September 30, 2020

(dollars in thousands)

Land development

$

2,125

$

1,803

$

10,603

$

14,531

Speculative construction

-

-

6,377

6,377

Total land development

and speculative construction

$

2,125

$

1,803

$

16,980

$

20,908

DETAIL OF LOAN MODIFICATIONS

Number of Loan Deferrals

6/30/2020

Ended

New

9/30/2020

Change

Hotel / Motel

25

(19

)

2

8

(68.0)%

Retail strip centers

15

(12

)

-

3

(80.0)%

Restaurants

10

(10

)

-

-

(100.0)%

Gas Station / Auto Repair

12

(12

)

-

-

(100.0)%

Other - Commercial

36

(34

)

-

2

(94.4)%

Total Commercial

98

(87

)

2

13

(86.7)%

Consumer

43

(36

)

-

4

(90.7)%

Total

141

(123

)

2

17

(87.9)%

Loan Deferrals

6/30/2020

Ended

New

9/30/2020

Change

(dollars in thousands)

Hotel / Motel

$

78,397

$

(45,417

)

$

2,079

$

35,059

(55.3)%

Retail strip centers

21,544

(14,751

)

-

6,793

(68.5)%

Restaurants

7,179

(7,179

)

-

-

(100.0)%

Gas Station / Auto Repair

16,599

(16,599

)

-

-

(100.0)%

Other - Commercial

37,881

(30,049

)

-

7,832

(79.3)%

Total Commercial

161,600

(113,995

)

2,079

49,684

(69.3)%

Consumer

10,100

(9,629

)

-

471

(95.3)%

Total

$

171,700

$

(123,624

)

$

2,079

$

50,155

(70.8)%


At or for the three months ended

At or for the six months ended

SELECTED OPERATING DATA

Sept. 30, 2020

June 30, 2020

Sept. 30, 2019

Sept. 30, 2020

Sept. 30, 2019

Efficiency ratio (4)

63.65

%

63.16

%

60.47

%

63.40

%

61.70

%

Coverage ratio (6)

125.22

%

128.13

%

130.17

%

126.66

%

127.43

%

Return on average assets (1)

0.71

%

0.15

%

1.55

%

0.44

%

1.51

%

Return on average equity (1)

6.71

%

1.28

%

12.68

%

4.00

%

12.52

%

Return on average tangible equity (1) (non-GAAP)

8.23

%

1.57

%

15.79

%

4.91

%

15.66

%

NET INTEREST SPREAD

Yield on loans

4.58

%

4.69

%

5.32

%

4.63

%

5.31

%

Yield on investment securities

1.62

%

1.95

%

2.15

%

1.79

%

2.12

%

Total yield on interest-earning assets

3.60

%

4.02

%

4.80

%

3.80

%

4.77

%

Cost of interest-bearing deposits

0.33

%

0.45

%

0.40

%

0.39

%

0.31

%

Cost of FHLB advances and other borrowings

1.53

%

2.02

%

3.72

%

1.75

%

3.53

%

Total cost of interest-bearing liabilities

0.41

%

0.55

%

0.65

%

0.48

%

0.63

%

Spread (7)

3.19

%

3.47

%

4.15

%

3.32

%

4.14

%

Net interest margin

3.33

%

3.65

%

4.36

%

3.48

%

4.35

%

PER SHARE DATA

Basic earnings per share (2)

$

0.11

$

0.02

$

0.20

$

0.14

$

0.39

Diluted earnings per share (3)

0.11

0.02

0.20

0.14

0.38

Book value per share (5)

6.67

6.63

6.29

6.67

6.29

Tangible book value per share (5) (non-GAAP)

5.43

5.38

5.06

5.43

5.06

Market price per share:

High for the period

$

5.31

$

6.12

$

8.55

$

6.12

$

8.55

Low for the period

3.82

4.20

6.87

3.82

6.87

Close for period end

4.15

5.65

7.38

4.15

7.38

Cash dividends declared per share

0.0500

0.0500

0.0450

0.1000

0.0900

Average number of shares outstanding:

Basic (2)

22,261,709

22,178,427

22,643,103

22,259,201

22,631,406

Diluted (3)

22,276,312

22,198,065

22,702,696

22,276,308

22,694,067

(1) Amounts for the quarterly periods are annualized.
(2) Amounts exclude ESOP shares not committed to be released.
(3) Amounts exclude ESOP shares not committed to be released and include common stock equivalents.
(4) Non-interest expense divided by net interest income and non-interest income.
(5) Amounts calculated based on shareholders’ equity and include ESOP shares not committed to be released.
(6) Net interest income divided by non-interest expense.
(7) Yield on interest-earning assets less cost of funds on interest-bearing liabilities.

Contact:

Kevin Lycklama or David Lam

Riverview Bancorp, Inc. 360-693-6650