RVSB Riverview Bancorp Inc

Riverview Bancorp, Inc. (Nasdaq:RVSB) (“Riverview” or the “Company”) today reported net income of $1.7 million, or $0.08 per diluted share, in the first fiscal quarter ended June 30, 2016. This compares to $1.4 million, or $0.06 per diluted share, in the preceding quarter and $1.6 million, or $0.07 per diluted share, in the first fiscal quarter a year ago.

“We started our fiscal 2017 year with another quarter of consistent profitability, supported by the expansion of our net interest margin, strong loan and deposit growth, enhanced operating efficiencies, and continuing improvement in asset quality, ” said Pat Sheaffer, chairman and chief executive officer. “We are well positioned to continue to grow the profitability of our Bank as the Portland-Vancouver area continues to benefit from a strong economy and a population that is rising faster than the national average.”

First Quarter Highlights (at or for the period ended June 30, 2016)

• Net income improved to $1.7 million, or $0.08 per diluted share.
• Net interest margin improved seven basis points to 3.74%.
• Net loans increased $4.9 million during the quarter and $60.0 million year-over-year to $619.9 million.
• Loan originations were $70.6 million during the first quarter.
• Total deposits increased $9.8 million during the quarter and $67.1 million year-over-year to $789.6 million.
• Non-performing assets declined to 0.31% of total assets.
• Total risk-based capital ratio was 16.26% and Tier 1 leverage ratio was 11.16%.
• Declared quarterly cash dividend of $0.02 per share, generating a current dividend yield of 1.7%.

Balance Sheet Review

“Riverview generated solid loan growth during the quarter which was fueled by a strong local economy, combined with the calling efforts of our lenders and branch network,” said Ron Wysaske, president and chief operating officer. “We continue to see good loan demand, however, with a strong economy comes loan payoffs and that remains a challenge. Our loan pipeline totaled $92.9 million at the end of the quarter, as our lenders continue expanding relationships with businesses throughout the Portland metro area.”

Net loans increased $4.9 million during the quarter and increased $60.0 million, or 10.7%, compared to one year ago.  Loan originations were offset by several large loan payoffs at the end of the quarter. Average loans increased by $17.0 million during the quarter.

“Commercial real estate loans had the largest increase during the quarter, which were focused primarily in hotel as well as industrial warehouse and retail loan categories,” noted Wysaske. Organic loan originations totaled $70.6 million during the first quarter compared to $69.1 million in the preceding quarter. Total undisbursed construction loans increased to $50.9 million at June 30, 2016. The majority of these undisbursed construction loans are expected to fund during the next few quarters.

Total deposits increased $9.8 million to $789.6 million at June 30, 2016 compared to $779.8 million at March 31, 2016. Average deposit balances increased $23.0 million during the quarter. “We continue to focus our efforts on improving our core deposit mix by bringing in low cost deposits from new and existing customers,” said Wysaske. “As a result checking account balances increased to 42.8% of total deposits compared to 39.1% a year ago.”

At June 30, 2016, Riverview’s shareholders’ equity improved to $110.0 million compared to $108.3 million at March 31, 2016. Tangible book value per share improved to $3.75 at June 30, 2016 compared to $3.67 at March 31, 2016. A quarterly cash dividend of $0.02 per share was paid on July 25, 2016, generating a current yield of 1.7% based on the recent stock price.

Income Statement

Net interest income for the first fiscal quarter increased to $7.8 million compared to $7.4 million in the preceding quarter and $7.1 million in the first fiscal quarter a year ago.

First quarter net interest margin improved seven basis points to 3.74% compared to the preceding quarter. “The increase in net interest margin was partially boosted by the collection of $51,000 of interest on a payoff of a nonaccrual loan and $68,000 in deferred loan fees on loan payoffs during the quarter,” noted Kevin Lycklama, executive vice president and chief financial officer. “These two items resulted in approximately six basis points of the increase to the net interest margin during the quarter.”  

Non-interest income was $2.5 million in the first quarter compared to $2.2 million in the preceding quarter and $2.5 million in the first quarter one year ago. Fees and service charges increased to $1.3 million, which included the collection of approximately $160,000 in prepayment penalties on loan payoffs during the quarter.  

Asset management fees were $822,000 during the first fiscal quarter compared to $824,000 in the first quarter a year ago. Riverview Trust Company’s assets under management were $396.0 million at June 30, 2016 compared to $416.7 million a year ago.

Non-interest expense was $7.8 million during the first fiscal quarter compared to $7.6 million in the preceding quarter and $7.7 million in the first fiscal quarter a year ago.  

Credit Quality

Riverview recorded no provision for loan losses during the first fiscal quarter of 2017 compared to a $350,000 recapture of loan losses during the preceding quarter and a $500,000 recapture of loan losses during the first quarter one year ago. The lack of a provision for loan losses is a result of our continued improvement in credit quality as well as the decline in loan charge-offs during the past several years.

Total nonperforming assets decreased to $2.9 million at June 30, 2016 compared to $3.3 million three months earlier and $5.1 million a year ago.

Nonperforming loans decreased to $2.4 million, or 0.37% of total loans, at June 30, 2016 compared to $2.7 million, or 0.43% of total loans, at March 31, 2016.

REO balances were $569,000 at June 30, 2016 compared to $595,000 at March 31, 2016. Sales of REO properties totaled $26,000 during the quarter, with no write-downs and no new additions during the quarter.

Classified assets decreased to $5.7 million at June 30, 2016 compared to $6.8 million at March 31, 2016. The classified asset to total capital ratio was 5.2% at June 30, 2016 compared to 6.4% three months earlier. During the past twelve months, Riverview has reduced its classified assets by 61%, or $9.0 million.

Net loan recoveries were $75,000 during the first fiscal quarter of 2017 compared to $62,000 in the preceding quarter. The allowance for loan losses at June 30, 2016 totaled $10.0 million, representing 1.58% of total loans and 422.8% 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 16.26%, Tier 1 leverage ratio of 11.16% and tangible common equity to tangible assets ratio of 9.31% at June 30, 2016.

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, 2016				March 31, 2016				June 30, 2015
Shareholders' equity		$	109,991			$	108,273			$	104,440
Goodwill			25,572				25,572				25,572
Tangible shareholders' equity		$	84,419			$	82,701			$	78,868
Total assets		$	932,447			$	921,229			$	860,165
Goodwill			25,572				25,572				25,572
Tangible assets		$	906,875			$	895,657			$	834,593

 

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 $932 million at June 30, 2016, it is the parent company of the 93 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 customers. There are 17 branches, including twelve in the Portland-Vancouver area and three lending centers. For the past 3 years, Riverview has been named Best Bank by the readers of The Vancouver Business Journal, The Columbian and The Gresham Outlook.

“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 2017 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 and per share data)  (Unaudited)	June 30, 2016				March 31, 2016				June 30, 2015
ASSETS
Cash and cash equivalents (including interest-earning accounts of	$	50,377			$	55,400			$	48,149
$36,120, $40,317 and $33,271)
Certificate of deposits held for investment		16,271				16,769				25,471
Loans held for sale		457				503				215
Investment securities:
Available for sale, at estimated fair value		163,684				150,690				139,974
Held to maturity, at amortized cost		72				75				83
Loans receivable (net of allowance for loan losses of $9,960, $9,885
and $10,337)		619,854				614,934				559,844
Real estate owned		569				595				1,349
Prepaid expenses and other assets		3,286				3,405				3,635
Accrued interest receivable		2,451				2,384				2,069
Federal Home Loan Bank stock, at cost		1,060				1,060				988
Premises and equipment, net		14,403				14,595				15,172
Deferred income taxes, net		8,141				9,189				12,128
Mortgage servicing rights, net		381				380				411
Goodwill		25,572				25,572				25,572
Bank owned life insurance		25,869				25,678				25,105
TOTAL ASSETS	$	932,447			$	921,229			$	860,165
LIABILITIES AND EQUITY
LIABILITIES:
Deposits	$	789,555			$	779,803			$	722,461
Accrued expenses and other liabilities		7,229				7,388				7,363
Advanced payments by borrowers for taxes and insurance		521				609				415
Junior subordinated debentures		22,681				22,681				22,681
Capital lease obligation		2,470				2,475				2,254
Total liabilities		822,456				812,956				755,174
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, 2016 – 22,507,890 issued and outstanding;		225				225				225
March 31, 2016 - 22,507,890 issued and outstanding;
June 30, 2015 – 22,507,890 issued and outstanding;
Additional paid-in capital		64,421				64,418				65,331
Retained earnings		43,976				42,728				39,144
Unearned shares issued to employee stock ownership plan		(155	)			(181	)			(258	)
Accumulated other comprehensive income (loss)		1,524				1,083				(2	)
Total shareholders’ equity		109,991				108,273				104,440
Noncontrolling interest		-				-				551
Total equity		109,991				108,273				104,991
TOTAL LIABILITIES AND EQUITY	$	932,447			$	921,229			$	860,165

RIVERVIEW BANCORP, INC. AND SUBSIDIARY
Consolidated Statements of Income
			Three Months Ended
(In thousands, except share and per share data)  (Unaudited)			June 30, 2016			March 31, 2016			June 30, 2015
INTEREST AND DIVIDEND INCOME:
Interest and fees on loans receivable			$	7,440		$	7,037		$	6,860
Interest on investment securities				720			723			582
Other interest and dividends				102			104			119
Total interest and dividend income				8,262			7,864			7,561
INTEREST EXPENSE:
Interest on deposits				281			280			303
Interest on borrowings				158			152			134
Total interest expense				439			432			437
Net interest income				7,823			7,432			7,124
Recapture of loan losses				-			(350	)		(500	)
Net interest income after recapture of loan losses				7,823			7,782			7,624
NON-INTEREST INCOME:
Fees and service charges				1,323			1,106			1,296
Asset management fees				822			757			824
Net gain on sales of loans held for sale				139			100			221
Bank owned life insurance				191			190			197
Other, net				39			40			11
Total non-interest income				2,514			2,193			2,549
NON-INTEREST EXPENSE:
Salaries and employee benefits				4,640			4,592			4,414
Occupancy and depreciation				1,137			1,204			1,169
Data processing				495			430			490
Advertising and marketing				193			136			176
FDIC insurance premium				122			125			126
State and local taxes				139			148			137
Telecommunications				73			74			73
Professional fees				258			231			233
Real estate owned				15			56			279
Other				743			573			648
Total non-interest expense				7,815			7,569			7,745
INCOME BEFORE INCOME TAXES				2,522			2,406			2,428
PROVISION FOR INCOME TAXES				825			1,001			833
NET INCOME			$	1,697		$	1,405		$	1,595
Earnings per common share:
Basic			$	0.08		$	0.06		$	0.07
Diluted			$	0.08		$	0.06		$	0.07
Weighted average number of common shares outstanding:
Basic				22,467,861			22,461,703			22,434,327
Diluted				22,514,235			22,502,111			22,477,006

(Dollars in thousands)		At or for the three months ended
		June 30, 2016				March 31, 2016				June 30, 2015
AVERAGE BALANCES
Average interest–earning assets		$	839,427			$	815,431			$	775,558
Average interest-bearing liabilities			625,624				610,568				588,841
Net average earning assets			213,803				204,863				186,717
Average loans			632,967				616,015				574,710
Average deposits			782,827				759,836				723,095
Average equity			109,809				108,023				105,615
Average tangible equity			84,237				82,451				80,042
ASSET QUALITY		June 30, 2016				March 31, 2016				June 30, 2015
Non-performing loans		$	2,356			$	2,714			$	3,773
Non-performing loans to total loans			0.37	%			0.43	%			0.66	%
Real estate/repossessed assets owned		$	569			$	595			$	1,349
Non-performing assets		$	2,925			$	3,309			$	5,122
Non-performing assets to total assets			0.31	%			0.36	%			0.60	%
Net loan charge-offs in the quarter		$	(75	)		$	(62	)		$	(75	)
Net charge-offs in the quarter/average net loans			(0.05	)%			(0.04	)%			(0.05	)%
Allowance for loan losses		$	9,960			$	9,885			$	10,337
Average interest-earning assets to average
interest-bearing liabilities			134.17	%			133.55	%			131.71	%
Allowance for loan losses to
non-performing loans			422.75	%			364.22	%			273.97	%
Allowance for loan losses to total loans			1.58	%			1.58	%			1.81	%
Shareholders’ equity to assets			11.80	%			11.75	%			12.14	%
CAPITAL RATIOS
Total capital (to risk weighted assets)			16.26	%			16.07	%			16.48	%
Tier 1 capital (to risk weighted assets)			15.01	%			14.81	%			15.22	%
Common equity tier 1 (to risk weighted assets)			15.01	%			14.81	%			15.22	%
Tier 1 capital (to leverage assets)			11.16	%			11.18	%			11.17	%
Tangible common equity (to tangible assets)			9.31	%			9.23	%			9.45	%
DEPOSIT MIX		June 30, 2016				March 31, 2016				June 30, 2015
Interest checking		$	151,339			$	144,740			$	121,648
Regular savings			98,808				96,994				78,844
Money market deposit accounts			237,936				239,544				226,533
Non-interest checking			186,451				179,143				160,830
Certificates of deposit			115,021				119,382				134,606
Total deposits		$	789,555			$	779,803			$	722,461

COMPOSITION OF COMMERCIAL AND CONSTRUCTION  LOANS
						Other								Commercial
						Real Estate				Real Estate				& Construction
		Commercial				Mortgage				Construction				Total
June 30, 2016		(Dollars in thousands)
Commercial		$	61,696			$	-			$	-			$	61,696
Commercial construction			-				-				20,327				20,327
Office buildings			-				107,126				-				107,126
Warehouse/industrial			-				57,978				-				57,978
Retail/shopping centers/strip malls			-				62,432				-				62,432
Assisted living facilities			-				1,800				-				1,800
Single purpose facilities			-				140,625				-				140,625
Land			-				11,137				-				11,137
Multi-family			-				30,441				-				30,441
One-to-four family construction			-				-				14,231				14,231
Total		$	61,696			$	411,539			$	34,558			$	507,793
March 31, 2016
Commercial		$	69,397			$	-			$	-			$	69,397
Commercial construction			-				-				16,716				16,716
Office buildings			-				107,986				-				107,986
Warehouse/industrial			-				55,830				-				55,830
Retail/shopping centers/strip malls			-				61,600				-				61,600
Assisted living facilities			-				1,809				-				1,809
Single purpose facilities			-				126,524				-				126,524
Land			-				12,045				-				12,045
Multi-family			-				33,733				-				33,733
One-to-four family construction			-				-				10,015				10,015
Total		$	69,397			$	399,527			$	26,731			$	495,655
LOAN MIX		June 30, 2016				March 31, 2016				June 30, 2015
		(Dollars in Thousands)
Commercial and construction
Commercial business		$	61,696			$	69,397			$	79,764
Other real estate mortgage			411,539				399,527				348,691
Real estate construction			34,558				26,731				20,397
Total commercial and construction			507,793				495,655				448,852
Consumer
Real estate one-to-four family			86,515				88,780				87,837
Other installment			35,506				40,384				33,492
Total consumer			122,021				129,164				121,329
Total loans			629,814				624,819				570,181
Less:
Allowance for loan losses			9,960				9,885				10,337
Loans receivable, net		$	619,854			$	614,934			$	559,844

DETAIL OF NON-PERFORMING ASSETS
				Northwest				Other				Southwest				Other
				Oregon				Oregon				Washington				Washington				Other				Total
June 30, 2016				(Dollars in thousands)
Non-performing assets
Commercial real estate				$	-			$	1,289			$	-			$	-			$	-			$	1,289
Land					-				801				-				-				-				801
Consumer					112				-				91				-				63				266
Total non-performing loans					112				2,090				91				-				63				2,356
REO					271				-				-				298				-				569
Total non-performing assets				$	383			$	2,090			$	91			$	298			$	63			$	2,925
DETAIL OF LAND DEVELOPMENT AND SPECULATIVE CONSTRUCTION LOANS
				Northwest				Other				Southwest
				Oregon				Oregon				Washington				Total
June 30, 2016				(Dollars in thousands)
Land development				$	94			$	2,642			$	8,401			$	11,137
Speculative construction					1,365				50				11,199				12,614
Total land development and speculative construction				$	1,459			$	2,692			$	19,600			$	23,751

	At or for the three months ended
SELECTED OPERATING DATA		June 30, 2016			March 31, 2016			June 30, 2015
Efficiency ratio (4)		75.60	%		78.64	%		80.07	%
Coverage ratio (6)		100.10	%		98.19	%		91.98	%
Return on average assets (1)		0.74	%		0.63	%		0.75	%
Return on average equity (1)		6.20	%		5.23	%		6.07	%
NET INTEREST SPREAD
Yield on loans		4.71	%		4.59	%		4.80	%
Yield on investment securities		1.85	%		1.91	%		2.04	%
Total yield on interest earning assets		3.95	%		3.88	%		3.92	%
Cost of interest bearing deposits		0.19	%		0.19	%		0.22	%
Cost of FHLB advances and other borrowings		2.52	%		2.43	%		2.16	%
Total cost of interest bearing liabilities		0.28	%		0.28	%		0.30	%
Spread (7)		3.67	%		3.60	%		3.62	%
Net interest margin		3.74	%		3.67	%		3.69	%
PER SHARE DATA
Basic earnings per share (2)	$	0.08		$	0.06		$	0.07
Diluted earnings per share (3)		0.08			0.06			0.07
Book value per share (5)		4.89			4.81			4.64
Tangible book value per share (5)		3.75			3.67			3.50
Market price per share:
High for the period	$	4.89		$	4.76		$	4.52
Low for the period		4.30			4.20			4.08
Close for period end		4.73			4.20			4.28
Cash dividends declared per share		0.02000			0.02000			0.01250
Average number of shares outstanding:
Basic (2)		22,467,861			22,461,703			22,434,327
Diluted (3)		22,514,235			22,502,111			22,477,006
(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.

Contacts: Pat Sheaffer, Ron Wysaske or Kevin Lycklama,                                         
Riverview Bancorp, Inc. 360-693-6650