×

Riverview Bancorp Earnings Increase to $1.6 Million in First Fiscal Quarter; Led by On-Going Credit Quality Improvements

VANCOUVER, Wash., July 21, 2015 (GLOBE NEWSWIRE) -- Riverview Bancorp, Inc. (Nasdaq:RVSB) ("Riverview" or the "Company") today reported net income of $1.6 million, or $0.07 per diluted share, in the first fiscal quarter ended June 30, 2015 compared to $1.5 million, or $0.07 per diluted share, in the preceding quarter and $740,000, or $0.03 per diluted share, in the first fiscal quarter a year ago.

"Profitability has continued to improve as we execute on our strategic initiatives and capitalize on the strength of the economy in the greater Vancouver/Portland marketplace," said Pat Sheaffer, chairman and chief executive officer. "Loan demand has remained strong in our market area and we have continued to build on the improvement in our asset quality and enhanced operating efficiencies. As the only community bank headquartered in Clark County, we take great pride in helping to serve the needs of our communities and we are confident in our ability to continue to enhance shareholder value in the coming fiscal year."

First Quarter Highlights (at or for the period ended June 30, 2015)

  • Net income increased to $1.6 million, or $0.07 per diluted share.
  • Net interest margin was 3.69% compared to 3.46% a year ago.
  • Total loans were $570.2 million compared to $547.0 million a year ago.
  • Classified assets decreased $2.1 million during the quarter to $14.7 million.
  • Non-performing assets ("NPA") declined to 0.60% of total assets compared to 2.30% a year ago.
  • Riverview Asset Management and Trust Company's ("RAMCO") assets under management increased $7.4 million during the quarter to $416.7 million.
  • Total risk-based capital ratio was 16.48% and Tier 1 leverage ratio was 11.17%.
  • Quarterly cash dividend of $0.0125 per share was paid on July 20, 2015.

Balance Sheet Review

"Loan activity remained robust during the quarter as our commercial bankers continue to focus on developing new relationships," said Ron Wysaske, president and chief operating officer. "Our loan pipeline grew to a record high of $88.7 million at June 30, 2015. However, loan growth was muted during the quarter due to an increase in loan payoffs and normal principal reductions as well as the timing of loan fundings."

Loan balances increased to $570.2 million at June 30, 2015 compared to $547.0 million a year ago, but were down slightly compared to the preceding quarter. Loan originations totaled $40.9 million during the quarter compared to $47.1 million in the preceding quarter. At June 30, 2015, there was $25.3 million in undisbursed construction loans, the majority of which are expected to fund during the current fiscal year.

Total deposits increased to $722.5 million at June 30, 2015, compared to $686.6 million a year earlier and $720.9 million in the preceding quarter. Average deposit balances increased $11.6 million during the quarter and were $41.0 million higher than the first quarter a year ago. Checking account balances increased $15.1 million during the quarter as the Company continues to focus on core deposits and building customer relationships. Checking account balances represented 39.1% of total deposits at June 30, 2015.

At June 30, 2015, shareholders' equity increased $639,000 to $104.4 million compared to $103.8 million in the preceding quarter. The increase was primarily due to net income of $1.6 million, which was partially offset by dividends of $281,000 and a decrease in unrealized holding gain on securities available for sale. Tangible book value per share improved to $3.49 compared to $3.46 at March 31, 2015. The Company paid a $0.0125 cash dividend on July 20, 2015.

Income Statement

Net interest income for the first fiscal quarter was $7.1 million, an increase of $765,000 compared to the first fiscal quarter a year ago. The increase was primarily due to the growth in the loan and investment portfolios during the past fiscal year.

Riverview's net interest margin was 3.69% in the first fiscal quarter compared to 3.46% in the first fiscal quarter a year ago and 3.71% in the preceding quarter. "Net interest margin was impacted during the quarter primarily due to an increase in our average excess cash balances to $52.8 million, which resulted in a decrease of approximately 18 basis points," said Kevin Lycklama, executive vice president and chief financial officer. "This reduction was almost completely offset by an improvement in yields in both our loan and investment portfolios. In addition, the Company collected approximately $128,000 of past due interest on two prior nonaccrual loans during the quarter which contributed an additional six basis points to the net interest margin."

Non-interest income increased to $2.5 million in the first quarter compared to $2.2 million in both the preceding quarter and the first quarter a year ago. Fees and service charges increased $226,000 from the prior year primarily due to the collection of prepayment penalties of $171,000 on loan payoffs. Mortgage loan originations increased during the current quarter resulting in a $95,000 increase in gain on sale of loans held for sale from the prior year.

RAMCO's assets under management increased $7.4 million during the quarter. "We had a record quarter with revenue of $824,000 and total assets under management of $416.7 million at June 30, 2015," stated John Karas, president and chief executive officer of RAMCO. "We have been able to capitalize on the relationships we have built over the past 15 years serving the Southwest Washington market. During the past year we have grown our assets under management by more than 11%. We are excited about our opportunities for further growth in the coming fiscal year."

Riverview's non-interest expense was $7.7 million in the first quarter which was comparable to both the first quarter a year ago and the preceding quarter. Real estate owned ("REO") expenses decreased $337,000 during the quarter compared to the prior year as a result of fewer REO write-downs and a reduction in the number of REO properties. However, compared to the preceding quarter REO expenses increased primarily due write-downs of $135,000 on existing properties and a one-time expense of $117,000 on a separate property.

Credit Quality

"Riverview's credit quality metrics improved again during the quarter, with both non-performing loans and REO balances declining," said Dan Cox, executive vice president and chief credit officer. "This improvement reflects the hard work of our credit teams, as well as the improving local economy."

Non-performing loans ("NPL") decreased during the quarter to $3.8 million, or 0.66% of total loans, compared to $5.3 million, or 0.92% of total loans, at March 31, 2015. During the last 12 months NPL have declined by $9.3 million, or 71.1%. Loans past due 30-89 days were 0.14% of total loans at June 30, 2015 compared to 0.26% of total loans at March 31, 2015.

REO balances were $1.3 million at June 30, 2015 compared to $1.6 million three months earlier. Sales of REO properties totaled $119,000 during the quarter, with $135,000 in write-downs and no new additions.

Classified assets decreased $2.1 million during the quarter to $14.7 million at June 30, 2015 compared to $16.8 million at March 31, 2015. The classified asset ratio decreased to 14.4% at June 30, 2015 compared to 17.0% three months earlier. During the past twelve months, Riverview has reduced its classified assets by $19.0 million, or 56.3%.

Riverview recorded a $500,000 recapture of loan losses during the first quarter of fiscal 2016 compared to a $750,000 recapture of loan losses during the preceding quarter. The recapture of loan losses reflects the improvement in credit quality and the decline in loan charge-offs during the past year.

Net loan recoveries were $75,000 during the quarter compared to net charge-offs of $189,000 in the preceding quarter. The allowance for loan losses at June 30, 2015 totaled $10.3 million, representing 1.81% of total loans and 274.0% of nonperforming loans.

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 16.48%, Tier 1 leverage ratio of 11.17% and tangible common equity to tangible assets of 9.41% at June 30, 2015.

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. Riverview believes that certain non-GAAP financial measures provide investors with information useful in understanding the Company's financial performance; however, readers of this report are urged to review these non-GAAP financial measures in conjunction with GAAP results as reported.

Financial measures that exclude intangible assets are non-GAAP measures. To provide investors with a broader understanding of capital adequacy, Riverview provides non-GAAP financial measures for tangible common equity, along with the GAAP measure. Tangible common equity is calculated as shareholders' equity less goodwill and other intangible assets. In addition, tangible assets are total assets less goodwill and other intangible assets.

The following table provides a reconciliation of ending shareholders' equity (GAAP) to ending tangible shareholders' equity (non-GAAP), and ending total assets (GAAP) to ending tangible assets (non-GAAP).

(Dollars in thousands) June 30, 2015 March 31, 2015 June 30, 2014
Shareholders' equity $ 104,440 $ 103,801 $ 99,366
Goodwill 25,572 25,572 25,572
Other intangible assets, net 411 401 393
Tangible shareholders' equity $ 78,457 $ 77,828 $ 73,401
Total assets $ 860,165 $ 858,750 $ 824,642
Goodwill 25,572 25,572 25,572
Other intangible assets, net 411 401 393
Tangible assets $ 834,182 $ 832,777 $ 798,677

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 $860 million, it is the parent company of the 92 year-old Riverview Community Bank, as well as Riverview Asset Management Corp. The Bank offers true community banking services, focusing on providing the highest quality service and financial products to commercial and retail customers. There are 17 branches, including twelve in the Portland-Vancouver area and three lending centers.

"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 Company's 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 Company's 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 Company's 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 Company's 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 Company's market areas; secondary market conditions for loans and the Company's 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 Company's reserve for loan losses, write-down assets, change Riverview Community 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 regulatory policies and principles, or the interpretation of regulatory capital or other rules; the Company's ability to attract and retain deposits; further increases in premiums for deposit insurance; 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 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; computer systems on which the Company depends could fail or experience a security breach; 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 successfully integrate any assets, liabilities, customers, systems, and management personnel it may in the future acquire into its operations and the Company's ability to realize related revenue synergies and cost savings within expected time frames and any goodwill charges 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 Company's 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 Company's 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 our actual results for fiscal 2016 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 operating and stock price performance.

RIVERVIEW BANCORP, INC. AND SUBSIDIARY
Consolidated Balance Sheets
(In thousands, except share data) (Unaudited) June 30, 2015 March 31, 2015 June 30, 2014
ASSETS
Cash (including interest-earning accounts of $33,271, $45,490 and $23,815) $ 48,149 $ 58,659 $ 41,556
Certificate of deposits 25,471 25,969 34,435
Loans held for sale 215 778 795
Investment securities available for sale, at fair value 15,678 15,751 21,549
Mortgage-backed securities held to maturity, at amortized 83 86 98
Mortgage-backed securities available for sale, at fair value 124,296 96,712 98,413
Loans receivable (net of allowance for loan losses of $10,337, $10,762 and $12,281) 559,844 569,010 534,712
Real estate and other pers. property owned 1,349 1,603 5,926
Prepaid expenses and other assets 3,635 3,236 3,858
Accrued interest receivable 2,069 2,139 1,964
Federal Home Loan Bank stock, at cost 988 5,924 6,533
Premises and equipment, net 15,172 15,434 16,260
Deferred income taxes, net 12,128 12,568 14,748
Mortgage servicing rights, net 411 399 373
Goodwill 25,572 25,572 25,572
Core deposit intangible, net -- 2 20
Bank owned life insurance 25,105 24,908 17,830
TOTAL ASSETS $ 860,165 $ 858,750 $ 824,642
LIABILITIES AND EQUITY
LIABILITIES:
Deposit accounts $ 722,461 $ 720,850 $ 686,641
Accrued expenses and other liabilities 7,363 8,111 12,759
Advance payments by borrowers for taxes and insurance 415 495 365
Junior subordinated debentures 22,681 22,681 22,681
Capital lease obligation 2,254 2,276 2,340
Total liabilities 755,174 754,413 724,786
EQUITY:
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, 2015 – 22,507,890 issued and outstanding; 225 225 225
March 31, 2015 – 22,489,890 issued and outstanding;
June 30, 2014 – 22,471,890 issued and outstanding;
Additional paid-in capital 65,331 65,268 65,218
Retained earnings 39,144 37,830 34,332
Unearned shares issued to employee stock ownership trust (258) (284) (361)
Accumulated other comprehensive loss (2) 762 (48)
Total shareholders' equity 104,440 103,801 99,366
Noncontrolling interest 551 536 490
Total equity 104,991 104,337 99,856
TOTAL LIABILITIES AND EQUITY $ 860,165 $ 858,750 $ 824,642
RIVERVIEW BANCORP, INC. AND SUBSIDIARY
Consolidated Statements of Income
Three Months Ended
(In thousands, except share data) (Unaudited) June 30, 2015 March 31, 2015 June 30, 2014
INTEREST INCOME:
Interest and fees on loans receivable $ 6,860 $ 6,741 $ 6,171
Interest on investment securities-taxable 64 100 84
Interest on mortgage-backed securities 518 409 480
Other interest and dividends 119 97 131
Total interest income 7,561 7,347 6,866
INTEREST EXPENSE:
Interest on deposits 303 302 360
Interest on borrowings 134 132 147
Total interest expense 437 434 507
Net interest income 7,124 6,913 6,359
Less recapture of loan losses (500) (750) (300)
Net interest income after recapture of loan losses 7,624 7,663 6,659
NON-INTEREST INCOME:
Fees and service charges 1,296 1,057 1,070
Asset management fees 824 727 820
Gain on sale of loans held for sale 221 161 126
Bank owned life insurance income 197 188 138
Other 11 45 56
Total non-interest income 2,549 2,178 2,210
NON-INTEREST EXPENSE:
Salaries and employee benefits 4,414 4,818 4,174
Occupancy and depreciation 1,169 1,146 1,087
Data processing 490 408 470
Amortization of core deposit intangible 2 6 6
Advertising and marketing expense 176 106 150
FDIC insurance premium 126 129 175
State and local taxes 137 143 137
Telecommunications 73 72 76
Professional fees 233 241 289
Real estate owned expenses 279 93 616
Other 646 527 555
Total non-interest expense 7,745 7,689 7,735
INCOME BEFORE INCOME TAXES 2,428 2,152 1,134
PROVISION FOR INCOME TAXES 833 634 394
NET INCOME $ 1,595 $ 1,518 $ 740
Earnings per common share:
Basic $ 0.07 $ 0.07 $ 0.03
Diluted $ 0.07 $ 0.07 $ 0.03
Weighted average number of shares outstanding:
Basic 22,434,327 22,404,870 22,382,595
Diluted 22,477,006 22,460,054 22,408,775
(Dollars in thousands) At or for the three months ended
June 30, 2015 March 31, 2015 June 30, 2014
AVERAGE BALANCES
Average interest–earning assets $ 775,558 $ 755,848 $ 737,717
Average interest-bearing liabilities 588,841 588,664 578,959
Net average earning assets 186,717 167,184 158,758
Average loans 574,710 586,159 538,096
Average deposits 723,095 711,536 682,113
Average equity 105,615 103,837 99,695
Average tangible equity 79,639 77,858 73,730
ASSET QUALITY June 30, 2015 March 31, 2015 June 30, 2014
Non-performing loans 3,773 5,318 13,052
Non-performing loans to total loans 0.66% 0.92% 2.39%
Real estate/repossessed assets owned 1,349 1,603 5,926
Non-performing assets 5,122 6,921 18,978
Non-performing assets to total assets 0.60% 0.81% 2.30%
Net loan charge-offs (recoveries) in the quarter (75) 189 (30)
Net charge-offs in the quarter/average net loans (0.05)% 0.13% (0.02)%
Allowance for loan losses 10,337 10,762 12,281
Average interest-earning assets to average
interest-bearing liabilities 131.71% 128.40% 127.42%
Allowance for loan losses to
non-performing loans 273.97% 202.37% 94.09%
Allowance for loan losses to total loans 1.81% 1.86% 2.25%
Shareholders' equity to assets 12.14% 12.09% 12.05%
CAPITAL RATIOS
Total capital (to risk weighted assets) 16.48% 15.89% 16.58%
Tier 1 capital (to risk weighted assets) 15.22% 14.63% 15.31%
Common equity tier 1 (to risk weighted assets) 15.22% 14.63% N/A
Tier 1 capital (to leverage assets) 11.17% 10.89% 10.93%
Tangible common equity (to tangible assets) 9.41% 9.35% 9.19%
DEPOSIT MIX June 30, 2015 March 31, 2015 June 30, 2014
Interest checking $ 121,648 $ 115,461 $ 101,490
Regular savings 78,844 77,132 67,344
Money market deposit accounts 226,533 237,465 228,317
Non-interest checking 160,830 151,953 134,546
Certificates of deposit 134,606 138,839 154,944
Total deposits $ 722,461 $ 720,850 $ 686,641
COMPOSITION OF COMMERCIAL AND CONSTRUCTION LOANS
Commercial Commercial
Real Estate Real Estate & Construction
Commercial Mortgage Construction Total
June 30, 2015
Commercial $ 79,764 $ -- $ -- $ 79,764
Commercial construction -- -- 16,449 16,449
Office buildings -- 100,896 -- 100,896
Warehouse/industrial -- 42,510 -- 42,510
Retail/shopping centers/strip malls -- 57,058 -- 57,058
Assisted living facilities -- 1,838 -- 1,838
Single purpose facilities -- 112,089 -- 112,089
Land -- 14,780 -- 14,780
Multi-family -- 19,520 -- 19,520
One-to-four family -- -- 3,948 3,948
Total $ 79,764 $ 348,691 $ 20,397 $ 448,852
March 31, 2015
Commercial $ 77,186 $ -- $ -- $ 77,186
Commercial construction -- -- 27,967 27,967
Office buildings -- 86,813 -- 86,813
Warehouse/industrial -- 42,173 -- 42,173
Retail/shopping centers/strip malls -- 60,736 -- 60,736
Assisted living facilities -- 1,846 -- 1,846
Single purpose facilities -- 108,123 -- 108,123
Land -- 15,358 -- 15,358
Multi-family -- 30,457 -- 30,457
One-to-four family -- -- 2,531 2,531
Total $ 77,186 $ 345,506 $ 30,498 $ 453,190
LOAN MIX June 30, 2015 March 31, 2015 June 30, 2014
(Dollars in Thousands)
Commercial and construction
Commercial $ 79,764 $ 77,186 $ 75,702
Other real estate mortgage 348,691 345,506 327,287
Real estate construction 20,397 30,498 18,347
Total commercial and construction 448,852 453,190 421,336
Consumer
Real estate one-to-four family 87,837 89,801 93,550
Other installment 33,492 36,781 32,107
Total consumer 121,329 126,582 125,657
Total loans 570,181 579,772 546,993
Less:
Allowance for loan losses 10,337 10,762 12,281
Loans receivable, net $ 559,844 $ 569,010 $ 534,712
DETAIL OF NON-PERFORMING ASSETS
Northwest Other Southwest Other
Oregon Oregon Washington Washington Other Total
June 30, 2015 (Dollars in thousands)
Non-performing assets
Commercial real estate $ 281 $ 1,360 $ 926 $ -- $ -- $ 2,567
Land -- 801 -- -- -- 801
Consumer -- -- 80 233 92 405
Total non-performing loans 281 2,161 1,006 233 92 3,773
REO 687 -- 617 45 -- 1,349
Total non-performing assets $ 968 $ 2,161 $ 1,623 $ 278 $ 92 $ 5,122
DETAIL OF LAND DEVELOPMENT AND SPEC CONSTRUCTION LOANS
Northwest Other Southwest
Oregon Oregon Washington Total
June 30, 2015 (Dollars in thousands)
Land development and spec construction loans
Land development loans $ 105 $ 2,867 $ 11,808 $ 14,780
Spec construction loans -- 161 2,979 3,140
Total land development and spec construction $ 105 $ 3,028 $ 14,787 $ 17,920
At or for the three months ended
SELECTED OPERATING DATA June 30, 2015 March 31, 2015 June 30, 2014
Efficiency ratio (4) 80.07% 84.58% 90.27%
Coverage ratio (6) 91.98% 89.91% 82.21%
Return on average assets (1) 0.75% 0.73% 0.36%
Return on average equity (1) 6.07% 5.93% 2.98%
NET INTEREST SPREAD
Yield on loans 4.80% 4.66% 4.60%
Yield on investment securities 2.04% 1.80% 1.94%
Total yield on interest earning assets 3.92% 3.94% 3.73%
Cost of interest bearing deposits 0.22% 0.22% 0.26%
Cost of FHLB advances and other borrowings 2.16% 2.14% 2.36%
Total cost of interest bearing liabilities 0.30% 0.30% 0.35%
Spread (7) 3.62% 3.64% 3.38%
Net interest margin 3.69% 3.71% 3.46%
PER SHARE DATA
Basic earnings per share (2) $ 0.07 $ 0.07 $ 0.03
Diluted earnings per share (3) 0.07 0.07 0.03
Book value per share (5) 4.64 4.62 4.42
Tangible book value per share (5) 3.49 3.46 3.27
Market price per share:
High for the period $ 4.52 $ 4.74 $ 4.03
Low for the period 4.08 4.32 3.38
Close for period end 4.28 4.50 3.88
Cash dividends declared per share 0.01250 0.01125 --
Average number of shares outstanding:
Basic (2) 22,434,327 22,404,870 22,382,595
Diluted (3) 22,477,006 22,460,054 22,408,775
(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: Pat Sheaffer, Ron Wysaske or Kevin Lycklama, Riverview Bancorp, Inc. 360-693-6650Source:Riverview Bancorp, Inc.