Riverview Bancorp, Inc. (Nasdaq GSM: RVSB) (“Riverview” or the
“Company”) today reported earnings of $2.8 million, or $0.13 per
diluted share, in the first fiscal quarter ended June 30, 2023,
compared to $3.0 million, or $0.14 per diluted share, in the fourth
fiscal quarter ended March 31, 2023, and $4.7 million, or $0.21 per
diluted share, in the first fiscal quarter a year ago.
“We delivered solid first fiscal quarter
earnings, despite the economic challenges facing the banking
industry,” stated Kevin Lycklama, president and chief executive
officer. “The continued rise in interest rates, combined with a
slowing economic outlook and inflationary pressures, has had an
impact on bank profitability nationally, including our operations.
We remain committed to building a strong franchise, and our ability
to hire talent, generate loans, and digitize our products and
services will only further enhance the value of our company over
time. Our capital levels remain strong and we are well-positioned
to come out stronger and more profitable on the other side of the
current economic cycle.”
First Quarter Highlights (at or for the
period ended June 30, 2023)
- Net income was $2.8 million, or
$0.13 per diluted share.
- Pre-tax, pre-provision for credit
losses income (non-GAAP) was $3.7 million for the quarter, compared
to $4.8 million for the preceding quarter, and $6.0 million for the
year ago quarter.
- Net interest income was $10.4
million for the quarter, compared to $11.8 million in the preceding
quarter and $12.7 million in the first fiscal quarter a year
ago.
- Net interest margin (“NIM”) was 2.79% for the quarter, compared
to 3.16% in the preceding quarter and 3.11% for the year ago
quarter.
- Return on average assets was 0.72% and return on average equity
was 7.31%.
- Asset quality remained strong, with
non-performing assets excluding SBA and USDA government guaranteed
loans (non-GAAP) at $210,000, or 0.01% of total assets at June 30,
2023.
- Riverview recorded no provision for
credit losses during the current quarter, compared to a $750,000
provision for credit losses during the preceding quarter, and no
provision for credit losses in the first fiscal quarter a year
ago.
- The allowance for credit losses was
$15.3 million, or 1.53% of total loans.
- Total loans were $1.00 billion at
June 30, 2023, compared to $1.01 billion three months earlier and
one year earlier.
- Total deposits were $1.24 billion
compared to $1.27 billion three months earlier.
- Riverview has approximately $231.1
million in available liquidity at June 30, 2023, including $175.7
million of borrowing capacity from Federal Home Loan Bank of Des
Moines (“FHLB”) and $55.4 million from the Federal Reserve Bank of
San Francisco (“FRB”). Riverview has access but has yet to utilize
the Federal Reserve Bank’s Bank Term Funding Program ("BTFP"). At
June 30, 2023, the Bank had $136.1 million in outstanding FHLB
borrowings.
- The uninsured deposit ratio was
15.9% at June 30, 2023.
- Total risk-based capital ratio was
16.82% and Tier 1 leverage ratio was 10.54%.
- Paid a quarterly cash dividend
during the quarter of $0.06 per share.
Income Statement Review
Riverview’s net interest income was $10.4
million in the current quarter, compared to $11.8 million in the
preceding quarter, and $12.7 million in the first fiscal quarter a
year ago. The decrease in net interest income compared to the prior
quarter was driven primarily by an increase in interest expense on
deposits and borrowings due to rising interest rates.
Riverview’s NIM was 2.79% for the first quarter
of fiscal 2024, a 37 basis-point contraction compared to 3.16% in
the preceding quarter and a 32 basis-point decrease compared to
3.11% in the first quarter of fiscal 2023. “The NIM contraction
during the current quarter, compared to the prior quarter, was a
result of higher interest expense due to increased rates on our
deposit products and the interest expense related to our
borrowings,” said David Lam, executive vice president and chief
financial officer.
Investment securities totaled $444.2 million at
June 30, 2023, compared to $455.3 million at March 31, 2023. The
average securities balances for the quarters ended June 30, 2023,
March 31, 2023, and June 30, 2022, were $476.1 million, $483.3
million, and $441.6 million, respectively. The weighted average
yields on securities balances for those same periods were 2.05%,
2.07%, and 1.74%, respectively. The duration of the investment
portfolio at June 30, 2023 was approximately 5.1 years. The
anticipated investment cashflows over the next twelve months is
approximately $40.6 million.
Riverview’s yield on loans was stable at 4.50%
during the first fiscal quarter and in the preceding quarter, and
improved from 4.39% in the first fiscal quarter a year ago. Loan
yields remain under pressure due to the concentration of fixed-rate
loans in the Company’s portfolio. Deposit costs increased to 0.44%
during the first fiscal quarter compared to 0.19% in the preceding
quarter, and 0.07% in the first fiscal quarter a year ago.
Non-interest income increased to $3.3 million
during the first fiscal quarter compared to $3.0 million in the
preceding quarter and $3.1 million in the first fiscal quarter of
2023. Overall, fees and service charges increased as a result of an
increase in debit interchange and brokered loan fee income compared
to last quarter.
Asset management fees increased to $1.4 million
during the first fiscal quarter compared to $1.3 million in the
preceding quarter, and $1.2 million in the first fiscal quarter a
year ago. Riverview Trust Company’s assets under management were
$901.6 million at June 30, 2023, compared to $890.6 million at
March 31, 2023 and $1.2 billion at June 30, 2022.
Non-interest expense was $10.0 million during
the first quarter, which was unchanged compared to the preceding
quarter. Non-interest expense was $9.8 million in the first fiscal
quarter a year ago. Salary and employee benefits were lower during
the quarter as a result of some current open positions due to the
competitive landscape for attracting and retaining employees. Data
processing expenses increased during the quarter due to some
billing credits recognized in the prior quarter which reduced our
expenses. Advertising and marketing expenses increased during the
quarter as a result of an ongoing focus on the new core customer
acquisition and marketing efforts for our 100th anniversary. The
efficiency ratio was 73.1% for the first fiscal quarter compared to
67.3% in the preceding quarter and 61.9% in the first fiscal
quarter a year ago.
Return on average assets was 0.72% in the first
quarter of fiscal 2024 compared to 0.76% in the preceding quarter.
Return on average equity and return on average tangible equity
(non-GAAP) were 7.31% and 8.86%, respectively, compared to 7.80%
and 9.48%, respectively, for the prior quarter.
Riverview’s effective tax rate for the first
quarter of fiscal 2024 was 22.4%, compared to 27.0% for the
preceding quarter and 22.7% for the year ago quarter.
Balance Sheet Review
Total loans were stable at $1.00 billion at June
30, 2023, compared to $1.01 billion three months earlier and a year
earlier. The decrease compared to the prior quarter was mainly due
to normal amortization and loan payoffs. Riverview’s loan pipeline
grew to $75.8 million at June 30, 2023, compared to $54.5 million
at the end of the prior quarter. New loan originations during the
quarter totaled $20.3 million compared to $20.8 million in the
preceding quarter and $90.7 million in the first quarter a year
ago.
Undisbursed construction loans totaled $45.3
million at June 30, 2023, compared to $36.8 million at March 31,
2023, with the majority of the undisbursed construction loans
expected to fund over the next several quarters. Undisbursed
homeowner association loans for the purpose of common area
maintenance and repairs totaled $21.7 million at June 30,
2023, compared to $23.2 million at March 31, 2023. Revolving
commercial business loan commitments totaled $62.5 million at June
30, 2023, which was nearly unchanged compared to three months
earlier. Utilization on these loans totaled 27.0% at June 30, 2023,
compared to 20.3% at March 31, 2023. The weighted average rate on
loan originations during the quarter was 6.53% compared to 6.80% in
the preceding quarter.
The office building loan portfolio totaled
$116.2 million at June 30, 2023 compared to $117.0 million a year
ago. The average loan balance of this loan portfolio was $1.5
million and had an average loan-to-value ratio of 56.2% and an
average debt service coverage ratio of 2.0.
Total deposits were $1.24 billion at June 30,
2023, compared to $1.27 billion at March 31, 2023, and $1.50
billion a year ago. The decrease was attributed to deposit pricing
pressures and customers seeking out higher yielding investment
alternatives, including Riverview Trust Company’s money market
accounts. Non-interest checking and interest checking accounts, as
a percentage of total deposits, totaled 50.1% at June 30, 2023,
compared to 52.1% at March 31, 2023 and 52.0% at June 30, 2022.
FHLB advances were $136.1 million at June 30,
2023 and were comprised of overnight advances and a short-term
borrowing. This compared to $123.8 million at March 31, 2023 and no
outstanding FHLB advances a year earlier. These FHLB advances were
utilized to partially offset the decrease in deposit balances. The
BTFP was created by the Federal Reserve to support and make
additional funding available to eligible depository institutions to
help banks meet the needs of their depositors. Riverview has
registered and is eligible to utilize the BTFP. Riverview does not
intend to utilize the BTFP, but could do so should the need
arise.
Shareholders’ equity was $154.1 million at June
30, 2023, compared to $155.2 million three months earlier and
$154.4 million a year earlier. The decrease in shareholders’ equity
at June 30, 2023, compared to the prior quarter was primarily due
to a $2.2 million increase in accumulated other comprehensive loss
related to an increase in the unrealized loss on available for sale
securities, reflecting the increase in interest rates during the
current quarter. Tangible book value per share (non-GAAP) was $6.00
at June 30, 2023, compared to $6.02 at March 31, 2023, and
$5.78 at June 30, 2022. Riverview paid a quarterly cash dividend of
$0.06 per share on July 24, 2023, to shareholders of record on
July 11, 2023.
Credit Quality
In accordance with changes in generally accepted
accounting principles, Riverview adopted the new credit loss
accounting standard known as Current Expected Credit Loss (“CECL”)
on April 1, 2023. With the adoption, the allowance for credit
losses (“ACL”) for loans increased by $42,000. Under CECL, the ACL
is based on expected credit losses rather than on incurred losses.
Adoption of CECL, which includes the ACL and allowance for unfunded
loan commitments, resulted in a cumulative effect after-tax
adjustment to stockholders’ equity as of April 1, 2023, of $53,000,
which had no impact on earnings.
Asset quality remained strong, with
non-performing loans, excluding SBA and USDA government guaranteed
loans (“government guaranteed loans”) (non-GAAP), at $210,000, or
0.02% of total loans as of June 30, 2023, compared to $265,000, or
0.03% of total loans at March 31, 2023, and $262,000, or 0.03% of
total loans at June 30, 2022. Including government guaranteed
loans, non-performing assets were $1.0 million, or 0.06% of total
assets, at June 30, 2023, compared to $1.9 million, or 0.12% of
total assets, three months earlier and $27.5 million, or 1.62% of
total assets, at June 30, 2022. The $1.0 million includes
non-performing government guaranteed loans where payments have been
delayed due to the servicing transfer of these loans between two
third-party servicers. Once the servicing transfer is complete,
Riverview expects to receive the delayed payments and expects
non-performing assets to decrease even further. The Company
continues to work through the reconciliation of the remaining
government guaranteed loans with the third-party servicer.
Riverview recorded net loan charge offs of
$8,000 during the first fiscal quarter. This compared to net loan
recoveries of $1,000 for the preceding quarter. Riverview recorded
no provision for credit losses for the first fiscal quarter. In the
prior quarter, Riverview recorded a $750,000 provision for credit
losses as a result of a downgrade in a mixed use office building
located in downtown Portland. This loan remains well secured with a
loan-to-value of approximately 36%. The Company does not expect to
recognize any loss on this loan.
Classified assets were $1.1 million at June 30,
2023, compared to $2.6 million at March 31, 2023, and $6.4 million
at June 30, 2022. The classified asset to total capital ratio
was 0.6% at June 30, 2023, compared to 1.5% three months earlier
and 3.7% a year earlier. Criticized assets were $24.5 million at
June 30, 2023, compared to $19.1 million at March 31, 2023 and $1.3
million at June 30, 2022. The increase in criticized assets during
the current quarter was due to a relationship downgrade during the
quarter but the Company does not believe this is a systemic credit
issue.
The allowance for credit losses was $15.3
million at June 30, 2023 compared to $15.3 million at March 31,
2023, and $14.6 million one year earlier. The allowance for credit
losses represented 1.53% of total loans at June 30, 2023,
compared to 1.52% at March 31, 2023, and 1.44% a year earlier. The
allowance for credit losses to loans, net of SBA guaranteed loans
(including SBA purchased and PPP loans) (non-GAAP), was 1.62% at
June 30, 2023, and at March 31, 2023, and 1.53% a year 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 16.82%
and a Tier 1 leverage ratio of 10.54% at June 30, 2023. Tangible
common equity to average tangible assets ratio (non-GAAP) was 8.14%
at June 30, 2023.
Stock Repurchase Program
In November 2022, Riverview announced that its
Board of Directors authorized the repurchase of up to $2.5 million
of the Company’s outstanding shares in the open market, based on
prevailing market prices, or in privately negotiated transactions,
over a period beginning on November 28, 2022, and continuing until
the earlier of the completion of the repurchase or May 28, 2023,
depending upon market conditions. During the first fiscal quarter
of fiscal year 2024, the Company repurchased 109,162 shares at an
average price of $5.29 per share. As of May 5, 2023, Riverview had
completed the full $2.5 million authorized, repurchasing 394,334
shares at an average price of $6.34 per share.
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) |
June 30, 2023 |
|
|
March 31, 2023 |
|
|
June 30, 2022 |
|
|
|
|
|
|
|
|
|
|
Shareholders’ equity (GAAP) |
$ |
154,066 |
|
|
$ |
155,239 |
|
|
$ |
154,433 |
|
Exclude: Goodwill |
(27,076 |
) |
|
(27,076 |
) |
|
(27,076 |
) |
Exclude: Core deposit intangible, net |
(352 |
) |
|
(379 |
) |
|
(466 |
) |
Tangible shareholders’ equity (non-GAAP) |
$ |
126,638 |
|
|
$ |
127,784 |
|
|
$ |
126,891 |
|
|
|
|
|
|
|
|
|
|
Total assets (GAAP) |
$ |
1,582,817 |
|
|
$ |
1,589,712 |
|
|
$ |
1,697,711 |
|
Exclude: Goodwill |
(27,076 |
) |
|
(27,076 |
) |
|
(27,076 |
) |
Exclude: Core deposit intangible, net |
(352 |
) |
|
(379 |
) |
|
(466 |
) |
Tangible assets
(non-GAAP) |
$ |
1,555,389 |
|
|
$ |
1,562,257 |
|
|
$ |
1,670,169 |
|
|
|
|
|
|
|
|
|
|
Shareholders’ equity to total
assets (GAAP) |
9.73% |
|
|
9.77% |
|
|
9.10% |
|
|
|
|
|
|
|
|
|
|
Tangible common equity to
tangible assets (non-GAAP) |
8.14% |
|
|
8.18% |
|
|
7.60% |
|
|
|
|
|
|
|
|
|
|
Shares outstanding |
21,115,919 |
|
|
22,221,960 |
|
|
21,943,160 |
|
|
|
|
|
|
|
|
|
|
Book value per share
(GAAP) |
$ |
7.30 |
|
|
$ |
7.32 |
|
|
$ |
7.04 |
|
|
|
|
|
|
|
|
|
|
Tangible book value per share
(non-GAAP) |
$ |
6.00 |
|
|
$ |
6.02 |
|
|
$ |
5.78 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pre-tax, pre-provision
income |
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
(Dollars in thousands) |
June 30, 2023 |
|
|
March 31, 2023 |
|
|
June 30, 2022 |
|
|
|
|
|
|
|
|
|
|
Net income (GAAP) |
$ |
2,843 |
|
|
$ |
2,983 |
|
|
$ |
4,652 |
|
Include: Provision for income taxes |
823 |
|
|
1,102 |
|
|
1,366 |
|
Include: Provision for credit losses |
- |
|
|
750 |
|
|
- |
|
Pre-tax, pre-provision income (non-GAAP) |
$ |
3,666 |
|
|
$ |
4,835 |
|
|
$ |
6,018 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance
for credit losses reconciliation, excluding SBA purchased and PPP
loans |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in thousands) |
June 30, 2023 |
|
|
March 31, 2023 |
|
|
June 30, 2022 |
|
|
|
|
|
|
|
|
|
|
Allowance for credit losses |
$ |
15,343 |
|
|
$ |
15,309 |
|
|
$ |
14,559 |
|
|
|
|
|
|
|
|
|
|
Loans receivable (GAAP) |
$ |
1,004,407 |
|
|
$ |
1,008,856 |
|
|
$ |
1,012,465 |
|
Exclude: SBA purchased loans |
(54,963 |
) |
|
(55,488 |
) |
|
(59,943 |
) |
Loans receivable excluding SBA
purchased loans (non-GAAP) |
$ |
949,444 |
|
|
$ |
953,368 |
|
|
$ |
952,522 |
|
|
|
|
|
|
|
|
|
|
Allowance for credit losses to
loans receivable (GAAP) |
1.53% |
|
|
1.52% |
|
|
1.44% |
|
|
|
|
|
|
|
|
|
|
Allowance for credit losses to
loans receivable excluding SBA purchased and PPP loans
(non-GAAP) |
1.62% |
|
|
1.61% |
|
|
1.53% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-performing loans reconciliation, excluding SBA
Government Guaranteed Loans |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
(Dollars in thousands) |
June 30, 2023 |
|
|
March 31, 2023 |
|
|
June 30, 2022 |
|
|
|
|
|
|
|
|
|
|
Non-performing loans
(GAAP) |
$ |
1,025 |
|
|
$ |
1,852 |
|
|
$ |
27,534 |
|
Less:
Non-performing SBA Government Guaranteed loans |
(815 |
) |
|
(1,587 |
) |
|
(27,272 |
) |
Adjusted non-performing loans excluding SBA Government Guaranteed
loans (non-GAAP) |
$ |
210 |
|
|
$ |
265 |
|
|
$ |
262 |
|
|
|
|
|
|
|
|
|
|
Non-performing loans to total
loans (GAAP) |
0.10% |
|
|
0.18% |
|
|
2.72% |
|
|
|
|
|
|
|
|
|
|
Non-performing loans,
excluding SBA Government Guaranteed loans to total loans
(non-GAAP) |
0.02% |
|
|
0.03% |
|
|
0.03% |
|
|
|
|
|
|
|
|
|
|
Non-performing loans to total
assets (GAAP) |
0.06% |
|
|
0.12% |
|
|
1.62% |
|
|
|
|
|
|
|
|
|
|
Non-performing loans,
excluding SBA Government Guaranteed loans to total assets
(non-GAAP) |
0.01% |
|
|
0.02% |
|
|
0.02% |
|
|
|
|
|
|
|
|
|
|
About 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 $1.58 billion at June
30, 2023, it is the parent company of the 100-year-old Riverview
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 17 branches, including 13 in the Portland-Vancouver
area, and 3 lending centers. For the past 10 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 which include statements with
respect to our beliefs, plans, objectives, goals, expectations,
assumptions, future economic performance and projections of
financial items. These forward-looking statements are subject to
known and unknown risks, uncertainties and other factors that could
cause actual results to differ materially from the results
anticipated or implied by our forward-looking statements,
including, but not limited to: potential adverse impacts to
economic conditions in our local market areas, other markets where
the Company has lending relationships, or other aspects of the
Company’s business operations or financial markets, including,
without limitation, as a result of employment levels, labor
shortages and the effects of inflation, a potential recession, the
failure of the U.S. Congress to increase the debt ceiling, or
slowed economic growth caused by increasing political instability
from acts of war including Russia’s invasion of Ukraine, as well as
supply chain disruptions, recent bank failures and any governmental
or societal responses thereto; the credit risks of lending
activities, including changes in the level and trend of loan
delinquencies and write-offs and changes in the Company’s allowance
for credit losses and provision for credit losses that may be
impacted by deterioration in the housing and commercial real estate
markets; changes in the levels of general interest rates, and the
relative differences between short and long-term interest rates,
deposit interest rates, the Company’s net interest margin and
funding sources; the transition away from London Interbank Offered
Rate toward new interest rate benchmarks; fluctuations in the
demand for loans, the number of unsold homes, land and other
properties and fluctuations in real estate values in the Company’s
market areas; secondary market conditions for loans and the
Company’s ability to originate loans for sale and sell loans in the
secondary market; results of examinations of the Bank by the
Federal Deposit Insurance Corporation and the Washington State
Department of Financial Institutions, Division of Banks, and of the
Company by the Board of Governors of the Federal Reserve System, or
other regulatory authorities, including the possibility that any
such regulatory authority may, among other things, require the
Company to increase its allowance for credit losses, write-down
assets, reclassify its assets, change the Bank’s regulatory capital
position or affect the Company’s 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 Company’s business including changes in
banking, securities and tax law, and in regulatory policies and
principles, or the interpretation of regulatory capital or other
rules; the Company’s ability to attract and retain deposits; the
unexpected outflow of uninsured deposits that may require us to
sell investment securities at a loss; the Company’s ability to
control operating costs and expenses; the use of estimates in
determining fair value of certain of the Company’s 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 Company’s consolidated balance sheet;
staffing fluctuations in response to product demand or the
implementation of corporate strategies that affect the Company’s
workforce and potential associated charges; disruptions, security
breaches or other adverse events, failures or interruptions in or
attacks on our information technology systems or on the third-party
vendors who perform several of our critical processing functions;
the Company’s ability to retain key members of its senior
management team; costs and effects of litigation, including
settlements and judgments; the Company’s ability to implement its
business strategies; the Company’s ability to successfully
integrate any assets, liabilities, customers, systems, and
management personnel it may acquire into its operations and the
Company’s ability to realize related revenue synergies and cost
savings within expected time frames; future goodwill impairment due
to changes in Riverview’s business, changes in market conditions,
or other factors; 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 Company’s ability to pay dividends on its common stock; the
quality and composition of our securities portfolio and the impact
of and adverse changes in the securities markets, including market
liquidity; 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 standards; the effects of climate
change, severe weather events, natural disasters, pandemics,
epidemics and other public health crises, acts of war or terrorism,
and other external events on our business; and other economic,
competitive, governmental, regulatory, and technological factors
affecting the Company’s operations, pricing, products and services,
and the other risks described from time to time in our reports
filed with and furnished to the U.S. Securities and Exchange
Commission.
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 included in
this report or the reasons why actual results could differ from
those contained in such statements, whether as a result of new
information or to reflect the occurrence of anticipated or
unanticipated events or circumstances after the date of such
statements. These risks could cause our actual results for fiscal
2024 and beyond to differ materially from those expressed in any
forward-looking statements by, or on behalf of, us and could
negatively affect the Company’s consolidated financial condition
and consolidated results of operations as well as its stock price
performance.
|
|
|
|
|
|
|
|
|
RIVERVIEW BANCORP,
INC. AND SUBSIDIARY |
|
|
|
|
|
|
|
|
Consolidated Balance
Sheets |
|
|
|
|
|
|
|
|
(In thousands, except share data)
(Unaudited) |
June 30, 2023 |
|
|
March 31, 2023 |
|
|
June 30, 2022 |
|
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash (including interest-earning accounts of $15,771, $10,397, |
$ |
29,947 |
|
|
$ |
22,044 |
|
|
$ |
141,836 |
|
and $127,859) |
|
|
|
|
|
|
|
|
Certificate of deposits held for investment |
- |
|
|
249 |
|
|
249 |
|
Investment securities: |
|
|
|
|
|
|
|
|
Available for sale, at estimated fair value |
204,319 |
|
|
211,499 |
|
|
181,697 |
|
Held to maturity, at amortized cost |
239,853 |
|
|
243,843 |
|
|
256,002 |
|
Loans receivable (net of allowance for credit losses of
$15,343, |
|
|
|
|
|
|
|
|
$15,309 and $14,559) |
989,064 |
|
|
993,547 |
|
|
997,906 |
|
Prepaid expenses and other assets |
14,147 |
|
|
15,950 |
|
|
26,925 |
|
Accrued interest receivable |
4,765 |
|
|
4,790 |
|
|
5,012 |
|
Federal Home Loan Bank stock, at cost |
7,360 |
|
|
6,867 |
|
|
2,019 |
|
Premises and equipment, net |
21,692 |
|
|
20,119 |
|
|
16,973 |
|
Financing lease right-of-use assets |
1,259 |
|
|
1,278 |
|
|
1,336 |
|
Deferred income taxes, net |
10,998 |
|
|
10,286 |
|
|
9,060 |
|
Goodwill |
27,076 |
|
|
27,076 |
|
|
27,076 |
|
Core deposit intangible, net |
352 |
|
|
379 |
|
|
466 |
|
Bank owned life insurance |
31,985 |
|
|
31,785 |
|
|
31,154 |
|
|
|
|
|
|
|
|
|
|
TOTAL ASSETS |
$ |
1,582,817 |
|
|
$ |
1,589,712 |
|
|
$ |
1,697,711 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES: |
|
|
|
|
|
|
|
|
Deposits |
$ |
1,243,322 |
|
|
$ |
1,265,217 |
|
|
$ |
1,495,605 |
|
Accrued expenses and other liabilities |
19,631 |
|
|
15,730 |
|
|
18,026 |
|
Advance payments by borrowers for taxes and insurance |
574 |
|
|
625 |
|
|
523 |
|
Junior subordinated debentures |
26,940 |
|
|
26,918 |
|
|
26,854 |
|
Federal Home Loan Bank advances |
136,069 |
|
|
123,754 |
|
|
- |
|
Finance lease liability |
2,215 |
|
|
2,229 |
|
|
2,270 |
|
Total liabilities |
1,428,751 |
|
|
1,434,473 |
|
|
1,543,278 |
|
|
|
|
|
|
|
|
|
|
SHAREHOLDERS’ EQUITY: |
|
|
|
|
|
|
|
|
Serial preferred stock, $.01 par value; 250,000 authorized, |
|
|
|
|
|
|
|
|
issued and outstanding, none |
- |
|
|
- |
|
|
- |
|
Common stock, $.01 par value; 50,000,000 authorized, |
|
|
|
|
|
|
|
|
June 30, 2023 – 21,115,919 issued and outstanding; |
|
|
|
|
|
|
|
|
March 31, 2023 – 21,221,960 issued and outstanding; |
211 |
|
|
212 |
|
|
219 |
|
June 30, 2022 – 22,154,170 issued and 21,943,160 outstanding; |
|
|
|
|
|
|
|
|
Additional paid-in capital |
55,016 |
|
|
55,511 |
|
|
60,838 |
|
Retained earnings |
119,351 |
|
|
117,826 |
|
|
108,266 |
|
Accumulated other comprehensive loss |
(20,512 |
) |
|
(18,310 |
) |
|
(14,890 |
) |
Total shareholders’ equity |
154,066 |
|
|
155,239 |
|
|
154,433 |
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND
SHAREHOLDERS’ EQUITY |
$ |
1,582,817 |
|
|
$ |
1,589,712 |
|
|
$ |
1,697,711 |
|
|
|
|
|
|
|
|
|
|
RIVERVIEW BANCORP,
INC. AND SUBSIDIARY |
|
|
|
Consolidated
Statements of Income |
|
|
|
|
Three Months Ended |
(In thousands, except share data)
(Unaudited) |
June 30, 2023 |
March 31, 2023 |
June 30, 2022 |
INTEREST INCOME: |
|
|
|
Interest and fees on loans receivable |
$ |
11,210 |
$ |
11,248 |
$ |
10,897 |
Interest on investment securities - taxable |
2,334 |
2,381 |
1,834 |
Interest on investment securities - nontaxable |
66 |
65 |
66 |
Other interest and dividends |
347 |
247 |
397 |
Total interest and dividend income |
13,957 |
13,941 |
13,194 |
|
|
|
|
INTEREST EXPENSE: |
|
|
|
Interest on deposits |
1,373 |
605 |
281 |
Interest on borrowings |
2,225 |
1,522 |
252 |
Total interest expense |
3,598 |
2,127 |
533 |
Net interest income |
10,359 |
11,814 |
12,661 |
Provision for credit
losses |
- |
750 |
- |
|
|
|
|
Net interest income after
provision for credit losses |
10,359 |
11,064 |
12,661 |
|
|
|
|
NON-INTEREST INCOME: |
|
|
|
Fees and service charges |
1,600 |
1,459 |
1,721 |
Asset management fees |
1,381 |
1,275 |
1,160 |
Bank owned life insurance ("BOLI") |
200 |
195 |
190 |
Other, net |
104 |
42 |
55 |
Total non-interest income, net |
3,285 |
2,971 |
3,126 |
|
|
|
|
NON-INTEREST EXPENSE: |
|
|
|
Salaries and employee benefits |
6,043 |
6,163 |
5,952 |
Occupancy and depreciation |
1,583 |
1,571 |
1,514 |
Data processing |
674 |
538 |
778 |
Amortization of core deposit intangible |
27 |
29 |
29 |
Advertising and marketing |
313 |
229 |
197 |
FDIC insurance premium |
177 |
183 |
116 |
State and local taxes |
226 |
263 |
191 |
Telecommunications |
53 |
51 |
50 |
Professional fees |
343 |
277 |
301 |
Other |
539 |
646 |
641 |
Total non-interest expense |
9,978 |
9,950 |
9,769 |
|
|
|
|
INCOME BEFORE INCOME
TAXES |
3,666 |
4,085 |
6,018 |
PROVISION FOR INCOME
TAXES |
823 |
1,102 |
1,366 |
NET INCOME |
$ |
2,843 |
$ |
2,983 |
$ |
4,652 |
|
|
|
|
Earnings per common
share: |
|
|
|
Basic |
$ |
0.13 |
$ |
0.14 |
$ |
0.21 |
Diluted |
$ |
0.13 |
$ |
0.14 |
$ |
0.21 |
Weighted average number of
common shares outstanding: |
|
|
|
Basic |
21,136,097 |
21,391,759 |
22,027,874 |
Diluted |
21,141,184 |
21,400,278 |
22,037,320 |
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in thousands) |
At or for the three months ended |
|
June 30, 2023 |
|
March 31, 2023 |
|
|
June 30, 2022 |
|
AVERAGE
BALANCES |
|
|
|
|
|
|
|
Average interest–earning assets |
$ |
1,496,201 |
|
$ |
1,518,641 |
|
|
$ |
1,635,048 |
|
Average interest-bearing
liabilities |
1,013,649 |
|
991,470 |
|
|
1,056,807 |
|
Net average earning assets |
482,552 |
|
527,171 |
|
|
578,241 |
|
Average loans |
1,001,103 |
|
1,012,975 |
|
|
995,066 |
|
Average deposits |
1,250,358 |
|
1,315,519 |
|
|
1,518,961 |
|
Average equity |
156,460 |
|
155,146 |
|
|
156,636 |
|
Average tangible equity
(non-GAAP) |
129,015 |
|
127,673 |
|
|
129,080 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ASSET
QUALITY |
June 30, 2023 |
|
March 31, 2023 |
|
|
June 30, 2022 |
|
|
|
|
|
|
|
|
|
Non-performing loans |
$ |
1,025 |
|
$ |
1,852 |
|
|
$ |
27,534 |
|
Non-performing loans excluding
SBA Government Guarantee (non-GAAP) |
$ |
210 |
|
$ |
265 |
|
|
$ |
262 |
|
Non-performing loans to total
loans |
0.10% |
|
0.18% |
|
|
2.72% |
|
Non-performing loans to total
loans excluding SBA Government Guarantee (non-GAAP) |
0.02% |
|
0.03% |
|
|
0.03% |
|
Real estate/repossessed assets
owned |
$ |
- |
|
$ |
- |
|
|
$ |
- |
|
Non-performing assets |
$ |
1,025 |
|
$ |
1,852 |
|
|
$ |
27,534 |
|
Non-performing assets excluding
SBA Government Guarantee (non-GAAP) |
$ |
210 |
|
$ |
265 |
|
|
$ |
262 |
|
Non-performing assets to total
assets |
0.06% |
|
0.12% |
|
|
1.62% |
|
Non-performing assets to total
assets excluding SBA Government Guarantee (non-GAAP) |
0.01% |
|
0.02% |
|
|
0.02% |
|
Net loan charge-offs (recoveries)
in the quarter |
$ |
8 |
|
$ |
(1 |
) |
|
$ |
(36 |
) |
Net charge-offs (recoveries) in
the quarter/average net loans |
0.00% |
|
0.00% |
|
|
(0.01)% |
|
|
|
|
|
|
|
|
|
Allowance for credit losses |
$ |
15,343 |
|
$ |
15,309 |
|
|
$ |
14,559 |
|
Average interest-earning assets
to average |
|
|
|
|
|
|
|
interest-bearing liabilities |
147.61% |
|
153.17% |
|
|
154.72% |
|
Allowance for credit losses
to |
|
|
|
|
|
|
|
non-performing loans |
1496.88% |
|
826.62% |
|
|
52.88% |
|
Allowance for credit losses to
total loans |
1.53% |
|
1.52% |
|
|
1.44% |
|
Shareholders’ equity to
assets |
9.73% |
|
9.77% |
|
|
9.10% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CAPITAL
RATIOS |
|
|
|
|
|
|
|
Total capital (to risk weighted
assets) |
16.82% |
|
16.94% |
|
|
16.31% |
|
Tier 1 capital (to risk weighted
assets) |
15.56% |
|
15.69% |
|
|
15.06% |
|
Common equity tier 1 (to risk
weighted assets) |
15.56% |
|
15.69% |
|
|
15.06% |
|
Tier 1 capital (to average
tangible assets) |
10.54% |
|
10.47% |
|
|
9.29% |
|
Tangible common equity (to
average tangible assets) (non-GAAP) |
8.14% |
|
8.18% |
|
|
7.60% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DEPOSIT
MIX |
June 30, 2023 |
|
March 31, 2023 |
|
|
June 30, 2022 |
|
|
|
|
|
|
|
|
|
Interest checking |
$ |
240,942 |
|
$ |
254,522 |
|
|
$ |
301,047 |
|
Regular savings |
231,838 |
|
255,147 |
|
|
326,337 |
|
Money market deposit
accounts |
242,558 |
|
221,778 |
|
|
281,300 |
|
Non-interest checking |
381,834 |
|
404,937 |
|
|
476,618 |
|
Certificates of deposit |
146,150 |
|
128,833 |
|
|
110,303 |
|
Total deposits |
$ |
1,243,322 |
|
$ |
1,265,217 |
|
|
$ |
1,495,605 |
|
|
|
|
|
|
|
|
|
COMPOSITION OF COMMERCIAL AND CONSTRUCTION
LOANS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other |
|
|
|
Commercial |
|
Commercial |
|
Real Estate |
|
Real Estate |
|
& Construction |
|
Business |
|
Mortgage |
|
Construction |
|
Total |
June 30, 2023 |
(Dollars in thousands) |
Commercial business |
$ |
244,725 |
|
$ |
- |
|
$ |
- |
|
$ |
244,725 |
Commercial construction |
- |
|
- |
|
32,159 |
|
32,159 |
Office buildings |
- |
|
116,156 |
|
- |
|
116,156 |
Warehouse/industrial |
- |
|
108,936 |
|
- |
|
108,936 |
Retail/shopping centers/strip
malls |
- |
|
81,986 |
|
- |
|
81,986 |
Assisted living facilities |
- |
|
392 |
|
- |
|
392 |
Single purpose facilities |
- |
|
249,169 |
|
- |
|
249,169 |
Land |
- |
|
6,367 |
|
- |
|
6,367 |
Multi-family |
- |
|
54,340 |
|
- |
|
54,340 |
One-to-four family
construction |
- |
|
- |
|
11,781 |
|
11,781 |
Total |
$ |
244,725 |
|
$ |
617,346 |
|
$ |
43,940 |
|
$ |
906,011 |
|
|
|
|
|
|
|
|
March 31, 2023 |
|
|
|
|
|
|
|
Commercial business |
$ |
232,868 |
|
|
- |
|
|
- |
|
$ |
232,868 |
Commercial construction |
- |
|
- |
|
29,565 |
|
29,565 |
Office buildings |
- |
|
117,045 |
|
- |
|
117,045 |
Warehouse/industrial |
- |
|
106,693 |
|
- |
|
106,693 |
Retail/shopping centers/strip
malls |
- |
|
82,700 |
|
- |
|
82,700 |
Assisted living facilities |
- |
|
396 |
|
- |
|
396 |
Single purpose facilities |
- |
|
257,662 |
|
- |
|
257,662 |
Land |
- |
|
6,437 |
|
- |
|
6,437 |
Multi-family |
- |
|
55,836 |
|
- |
|
55,836 |
One-to-four family
construction |
- |
|
- |
|
18,197 |
|
18,197 |
Total |
$ |
232,868 |
|
$ |
626,769 |
|
$ |
47,762 |
|
$ |
907,399 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LOAN MIX |
June 30, 2023 |
|
March 31, 2023 |
|
June 30, 2022 |
|
|
Commercial and construction |
(Dollars in thousands) |
|
Commercial business |
$ |
244,725 |
|
$ |
232,868 |
|
$ |
227,023 |
|
|
Other real estate mortgage |
617,346 |
|
626,769 |
|
647,363 |
|
|
Real estate construction |
43,940 |
|
47,762 |
|
30,754 |
|
|
Total commercial and
construction |
906,011 |
|
907,399 |
|
905,140 |
|
|
Consumer |
|
|
|
|
|
|
|
Real estate one-to-four
family |
96,607 |
|
99,673 |
|
105,775 |
|
|
Other installment |
1,789 |
|
1,784 |
|
1,550 |
|
|
Total consumer |
98,396 |
|
101,457 |
|
107,325 |
|
|
|
|
|
|
|
|
|
|
Total loans |
1,004,407 |
|
1,008,856 |
|
1,012,465 |
|
|
|
|
|
|
|
|
|
|
Less: |
|
|
|
|
|
|
|
Allowance for credit losses |
15,343 |
|
15,309 |
|
14,559 |
|
|
Loans receivable, net |
$ |
989,064 |
|
$ |
993,547 |
|
$ |
997,906 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DETAIL OF
NON-PERFORMING ASSETS |
|
|
|
|
|
|
|
|
Southwest |
|
|
|
|
|
|
|
Washington |
|
Other |
|
Total |
|
|
June 30, 2023 |
(Dollars in thousands) |
|
|
Commercial business |
$ |
74 |
|
$ |
- |
|
$ |
74 |
|
|
Commercial real estate |
95 |
|
- |
|
95 |
|
|
Consumer |
41 |
|
- |
|
41 |
|
|
Subtotal |
210 |
|
- |
|
210 |
|
|
|
|
|
|
|
|
|
|
SBA Government Guaranteed |
- |
|
815 |
|
815 |
|
|
|
|
|
|
|
|
|
|
Total non-performing
assets |
$ |
210 |
|
$ |
815 |
|
$ |
1,025 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At or for the three months ended |
SELECTED OPERATING DATA |
June 30, 2023 |
|
March 31, 2023 |
|
June 30, 2022 |
|
|
|
|
|
|
Efficiency ratio (4) |
73.13% |
|
67.30% |
|
61.88% |
Coverage ratio (6) |
103.82% |
|
118.73% |
|
129.60% |
Return on average assets
(1) |
0.72% |
|
0.76% |
|
1.08% |
Return on average equity
(1) |
7.31% |
|
7.80% |
|
11.91% |
Return on average tangible
equity (1) (non-GAAP) |
8.86% |
|
9.48% |
|
14.46% |
|
|
|
|
|
|
NET INTEREST SPREAD |
|
|
|
|
|
Yield on loans |
4.50% |
|
4.50% |
|
4.39% |
Yield on investment
securities |
2.05% |
|
2.07% |
|
1.74% |
Total yield on
interest-earning assets |
3.76% |
|
3.73% |
|
3.24% |
|
|
|
|
|
|
Cost of interest-bearing
deposits |
0.65% |
|
0.28% |
|
0.11% |
Cost of FHLB advances and
other borrowings |
5.61% |
|
5.46% |
|
3.47% |
Total cost of interest-bearing
liabilities |
1.43% |
|
0.87% |
|
0.20% |
|
|
|
|
|
|
Spread (7) |
2.33% |
|
2.86% |
|
3.04% |
Net interest margin |
2.79% |
|
3.16% |
|
3.11% |
|
|
|
|
|
|
PER SHARE DATA |
|
|
|
|
|
Basic earnings per share (2) |
$ |
0.13 |
|
$ |
0.14 |
|
$ |
0.21 |
Diluted earnings per share
(3) |
0.13 |
|
0.14 |
|
0.21 |
Book value per share (5) |
7.30 |
|
7.32 |
|
7.04 |
Tangible book value per share
(5) (non-GAAP) |
6.00 |
|
6.02 |
|
5.78 |
Market price per share: |
|
|
|
|
|
High for the period |
$ |
5.55 |
|
$ |
7.90 |
|
$ |
7.56 |
Low for the period |
4.17 |
|
5.25 |
|
6.09 |
Close for period end |
5.04 |
|
5.34 |
|
6.58 |
Cash dividends declared per
share |
0.0600 |
|
0.0600 |
|
0.0600 |
|
|
|
|
|
|
Average number of shares
outstanding: |
|
|
|
|
|
Basic (2) |
21,136,097 |
|
21,391,759 |
|
22,027,874 |
Diluted (3) |
21,141,184 |
|
21,400,278 |
|
22,037,320 |
|
|
|
|
|
|
(1) |
Amounts for the periods shown 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 |
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