Riverview Bancorp Reports Second Quarter Earnings of $2.5 Million, Results Reflect Decreases in the Provision for Loan Losses and Loan Modifications
10/29/2020 - 04:57 PM
VANCOUVER, Wash., Oct. 29, 2020 (GLOBE NEWSWIRE) -- Riverview Bancorp, Inc. (Nasdaq GSM: RVSB) (“Riverview” or the “Company”) today reported earnings of $2.5 million , or $0.11 per diluted share for the second fiscal quarter ended September 30, 2020, compared to $480,000 , or $0.02 per diluted share, in the preceding quarter, and $4.5 million , or $0.20 per diluted share, in the second fiscal quarter a year ago. In the first six months of fiscal 2021, net income was $3.0 million , or $0.14 per diluted share, compared to $8.7 million , or $0.38 per diluted share, in the first six months of fiscal 2020.
“Riverview’s second quarter financial results continue to demonstrate the strength and resilience of our franchise,” stated Kevin Lycklama, president and chief executive officer. “We have remained focused on credit quality, maintaining our strong capital position and our continuous pursuit of improving operating efficiencies. I am extremely proud of the outstanding job by our entire team, who have shown tremendous resiliency during the ongoing pandemic and continue to provide the personal attention that our local business partners have come to expect from Riverview.”
Second Quarter Highlights (at or for the period ended September 30, 2020)
Net income was $2.5 million , or $0.11 per diluted share. Pre-tax, pre-provision for loan losses income (non-GAAP) was $5.0 million for the quarter compared to $5.1 million in the previous quarter and $5.9 million for the quarter ended September 30, 2019. Net interest margin (NIM) was 3.33% . Provision for loan losses was $1.8 million , reflecting improved economic conditions and specific industry exposure in the loan portfolio. Total loans were $975.2 million at September 30, 2020. SBA PPP loans totaled $110.8 million . Total deposits increased $41.2 million , or 14.1% annualized, during the quarter to $1.20 billion . Non-performing assets decreased to 0.09% of total assets. Total risk-based capital ratio was 17.53% and Tier 1 leverage ratio was 9.82% . Paid a quarterly cash dividend of $0.05 per share. “We are encouraged by the positive improvements noted during the quarter. Deposit activity has remained strong with annualized growth of nearly 15% . Loan accommodations decreased significantly during the quarter as our clients have experienced steady recoveries as local markets reopen. The improvement in regional business activity also had a positive impact on our non-interest income during the quarter and we effectively executed on our ongoing expense control measures,” Lycklama added.
COVID-19 Operational Update
Industry Exposure: Both Washington and Oregon have modified phased reopening plans in place for businesses. While the economic impact is widespread, some industries are more acutely affected by the current business decline. Riverview’s loan portfolio exposure to industries most affected by the COVID-19 pandemic include: Hotel/Motel ($108.2 million , 11.0% of total loans) Retail Strip Centers ($79.6 million , 8.1% of total loans) Restaurants/Fast Food ($14.9 million , 1.5% of total loans) Loans to these clients are generally secured by real estate and had strong financial performance heading into the current pandemic. The weighted average loan-to-value and debt service coverage ratio for these portfolios were as follows: Hotel/Motel (51% and 1.90x), Retail Strip Centers (53% and 1.56x), and Restaurants/Fast Food (57% and 1.58x).
The Company continues to diligently monitor the effects of the pandemic on our customers. We have allocated additional staffing resources to conduct enhanced monitoring of our loan portfolio and identify at-risk borrowers. We remain in close contact and continue to work with these borrowers to develop longer term strategies to mitigate potential credit losses.
Loan Accommodations : Commercial Loans. Loan modifications decreased 87% during the quarter. As of September 30, 2020, Riverview had 13 commercial loan accommodations totaling $49.7 million , a decrease from 98 loans totaling $161.6 million at June 30, 2020. Of these 13 loans, two were new loan accommodations approved during the quarter totaling $2.1 million . In October, Riverview received three new loan accommodation requests totaling $1.1 million to two different borrowers. Consumer Loans . As of September 30, 2020, there were four consumer loan accommodations in our portfolio totaling $471,000 , a decrease from 43 loans totaling $10.1 million at June 30, 2020.Since all these loans were performing and current on payments prior to COVID-19, these loan modifications are not considered to be troubled debt restructurings pursuant to provisions contained within the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”). Loan Loss Reserve: Riverview recorded a $1.8 million provision for loan losses for the quarter ended September 30, 2020, bringing the allowance for loan losses to $18.9 million , or 1.93% of total loans, at September 30, 2020 compared to $17.1 million , or 1.70% of total loans, at June 30, 2020. “Our provision for loan losses decreased during the quarter and reflects the improvement in asset quality metrics in our portfolio and positive economic trends in our local markets. We believe we are adequately reserved for the current environment and are well-positioned to support our long-term growth initiatives,” said David Lam, executive vice president and chief financial officer.Paycheck Protection Program (“ PPP ”) Loans: At September 30, 2020, Riverview had originated 790 loans totaling approximately $116.4 million with an average loan size of $147,000. Riverview did not originate any new PPP loans during the second fiscal quarter of 2021. The following table presents the breakdown of PPP loans as of September 30, 2020 (in thousands): Range Number of loans Total Under $50,000 365 $ 8,671 $50,001 t o $150,000 251 21,633 $150,001 t o $350,000 107 23,996 $350,001 t o $2,000,000 59 40,191 Over $2,000,000 8 21,937 Total 790 $ 116,428
PPP loan fees totaled $4.1 million of which $2.8 million remains unamortized as of September 30, 2020. These fees are deferred and are realized over the life of the loan or will be recognized in proportion to the amount of the loan when forgiven by the SBA. “We are now starting to process applications for PPP loan forgiveness for customers. We expect the timing of the loan forgiveness to have a meaningful benefit to operating results beginning in the fourth quarter of fiscal year 2021,” said Lycklama.
Income Statement
Return on average assets was 0.71% in the second quarter of fiscal 2021 compared to 0.15% in the preceding quarter. Return on average equity and return on average tangible equity (non-GAAP) was 6.71% and 8.23% , respectively, compared to 1.28% and 1.57% for the prior quarter.
Riverview’s net interest income for the quarter was $11.1 million , flat compared to the preceding quarter and slightly lower than the $11.7 million reported in the second quarter of the prior year. In the first six months of fiscal 2021, net interest income was $22.2 million compared to $23.2 million in the first six months of fiscal 2020.
The Company’s NIM continues to be impacted by the increased level of excess liquidity. Second fiscal quarter NIM (GAAP) was 3.33% compared to 3.65% in the prior quarter and 4.36% in the second quarter of fiscal 2020. The decrease in NIM was primarily due to the increase in liquidity and the decrease in the yield on interest earning assets, which were partially offset by decreases in the cost of interest-bearing liabilities. In the first six months of fiscal 2021, the net interest margin was 3.48% compared to 4.35% in the same period a year earlier.
The average balance of our overnight cash balances increased $109.8 million sequentially and $194.0 million compared to the prior year as a result of the increase in deposit balances. The increase in overnight cash balances resulted in a 27 basis point decrease in the NIM compared to the prior quarter and a 55 basis point decrease compared to the same quarter a year ago.
The accretion on purchased loans totaled $123,000 compared to $137,000 during the preceding quarter and $78,000 in the same period a year ago, resulting in a four basis point increase in the NIM for the current period compared to a five basis point increase for the preceding quarter and a two basis point increase for the same period a year ago. Net fees on loan prepayments, which included purchased SBA loan premiums, decreased interest income by $77,000 which negatively affected the NIM by two basis points during the second fiscal quarter of 2021. This compares to $100,000 in net fees on loan prepayments decreasing the NIM by four basis points for the first fiscal quarter of 2021 and $112,000 in net fees on loan prepayments adding four basis points to the NIM for the second fiscal quarter a year ago. SBA PPP loans and related income and fees decreased the NIM by six basis points during the quarter, and by four basis points during the preceding quarter. This resulted in a core-NIM (non-GAAP) of 3.37% in the current quarter compared to 3.68% in the preceding quarter and 4.30% in the second fiscal quarter a year ago.
Loan yield decreased 11 basis points during the quarter to 4.58% compared to 4.69% in the preceding quarter primarily as a result of the impact from the lower yielding SBA PPP loans and the decline in market interest rates. Loan yield excluding SBA PPP loans was 4.81% for the second quarter compared to 4.83% in the preceding quarter.
The cost of deposits decreased to 0.22% during the second quarter compared to 0.31% in the preceding quarter and 0.27% during the second quarter of fiscal 2020. The sequential decrease in deposit costs during the September 30, 2020 quarter reflects the impact from the recent cuts in the federal funds target rate by the Federal Reserve in response to the COVID-19 pandemic. Deposit costs are expected to further decrease as a result of the continued low interest rate environment and as certificates of deposit reach maturity. There are $83.6 million in CD balances that mature within one year of September 30, 2020, with a weighted average rate of 1.35% .
Non-interest income increased $196,000 during the quarter to $2.8 million compared to $2.6 million in the preceding quarter and was lower when compared to $3.2 million in the second fiscal quarter of 2020. Fees and service charges increased compared to the prior quarter as economic activity and consumer spending improved in Riverview’s local markets; however, these amounts remain lower than prior year due to the overall impact of the COVID pandemic. In the first six months of fiscal 2021, non-interest income was $5.4 million compared to $6.3 million in the same period a year ago.
Asset management fees decreased to $883,000 during the second fiscal quarter compared to $974,000 in the preceding quarter and $1.1 million in the prior year. The year over year decrease was primarily due to the impact from the decline in interest rates on fee generating products. Riverview Trust Company’s assets under management was $1.3 billion at September 30, 2020, unchanged from three months earlier. Assets under management were $690.5 million a year earlier.
Non-interest expense was $8.8 million compared to $8.7 million in the preceding quarter and $9.0 million in the second fiscal quarter a year ago. Salaries and employee benefits was $5.4 million compared to $5.2 million in the preceding quarter and $5.7 million in the second fiscal quarter a year ago. Salaries and employee benefits during the prior quarter included the deferral of compensation related to origination costs of SBA PPP loans of $553,000. Occupancy and depreciation expense remained comparable to the preceding quarter but was higher than a year ago, as Riverview continues to invest in its technology infrastructure. FDIC insurance premiums increased compared to the preceding quarter to $84,000 due to the Company utilizing its remaining FDIC assessment credits. Year-to-date, non-interest expense was $17.5 million compared to $18.2 million in the first six months of fiscal 2020.
The efficiency ratio was 63.7% for the second fiscal quarter compared to 63.2% in the preceding quarter and 60.5% in the second fiscal quarter a year ago.
Riverview’s effective tax rate for the second quarter of fiscal year 2021 was 21.7% compared to 23.0% for the second quarter a year ago.
Balance Sheet Review
Riverview’s total loans decreased $27.5 million during the quarter to $975.2 million compared to $1.00 billion in the preceding quarter and increased $93.9 million compared to $881.3 million a year ago. Loan growth for the quarter was impacted by continued payoffs and paydowns. The year over year increase was primarily driven by SBA PPP loans originated during the prior quarter. SBA PPP loans balances totaled $110.8 million at September 30, 2020. The decrease in real estate one-to-four family loans was due to the strategic decision to broker all new loan originations to third-party mortgage companies. The Company’s loan pipeline increased to $74.6 million at September 30, 2020 compared to $27.9 million at the end of the prior quarter, as increased economic activity in our markets helped stabilize and improve lending activity.
Undisbursed construction loans totaled $12.0 million at September 30, 2020 compared to $18.1 million in the preceding quarter, with the majority of the undisbursed construction loans expected to fund over the next several quarters. Revolving commercial business loan commitments totaled $73.9 million at September 30, 2020. Utilization on these loans totaled 8.7% at September 30, 2020 compared to 16.0% at June 30, 2020. The weighted average rate on loan originations during the quarter was 4.12% at September 30, 2020 compared to 3.36% at June 30, 2020.
Deposits increased $41.2 million during the quarter to $1.20 billion at September 30, 2020 compared to $1.16 billion in the preceding quarter and increased $217.7 million compared to $982.3 million a year earlier. The increase in deposits during the quarter was primarily concentrated in checking accounts, which increased $23.9 million . Checking accounts as a percentage of total deposits increased to 51.4% at September 30, 2020 from 48.7% at September 30, 2019.
Shareholders’ equity was $149.0 million at September 30, 2020 compared to $147.5 million three months earlier and $143.1 million a year earlier. Tangible book value per share (non-GAAP) increased to $5.43 at September 30, 2020 compared to $5.38 at June 30, 2020 and $5.06 at September 30, 2019. Riverview paid a quarterly cash dividend of $0.05 per share on October 20, 2020, consistent with the prior quarter.
Credit Quality
Non-performing loans totaled $1.3 million , or 0.13% of total loans, at September 30, 2020, flat compared to three months earlier. Non-performing loans were $1.5 million , or 0.17% of total loans, at September 30, 2019. Net loan charge-offs were $10,000 during the second fiscal quarter of 2021 compared to $48,000 in the preceding quarter and $6,000 in the second fiscal quarter a year ago.
Classified assets totaled $4.8 million at September 30, 2020 compared to $5.0 million at June 30, 2020 and $4.3 million at September 30, 2019. The classified asset to total capital ratio was 3.2% at September 30, 2020 compared to 3.3% three months earlier and 3.0% a year earlier.
At September 30, 2020, the allowance for loan losses increased to $18.9 million compared to $17.1 million in the preceding quarter and $11.4 million one year earlier. The allowance for loan losses represented 1.93% of total loans at September 30, 2020 compared to 1.70% in the preceding quarter and 1.30% a year earlier. The allowance for loan losses to loans, net of SBA guaranteed loans (including SBA PPP loans) (non-GAAP), was 2.35% at September 30, 2020, and 2.08% at June 30, 2020. Included in the carrying value of loans are net discounts on the MBank purchased loans, which may reduce the need for an allowance for loan losses on these loans because they are carried at an amount below the outstanding principal balance. The remaining net discount on these purchased loans was $871,000 at September 30, 2020 compared to $994,000 t hree months earlier.
Capital
Riverview continues to maintain capital levels well in excess of the regulatory requirements to be categorized as “well capitalized” with a total risk-based capital ratio of 17.53% and a Tier 1 leverage ratio of 9.82% at September 30, 2020. Tangible common equity to average tangible assets ratio (non-GAAP) was 8.68% at September 30, 2020.
Branch Consolidation
Riverview continues to actively review its branch network for efficiencies due to customers’ increased usage of online and mobile banking technologies. On September 28, 2020, Riverview consolidated two of its branches in Clark County, Washington and simultaneously opened a new branch in the Cascade Park neighborhood of Vancouver. The Company also announced the consolidation of one additional branch scheduled for January 2021. Riverview plans to open a new location in Ridgefield, Washington which is expected to open during the summer of 2021.
Non-GAAP Financial Measures
In addition to results presented in accordance with generally accepted accounting principles (“GAAP”), this press release contains certain non-GAAP financial measures. Management has presented these non-GAAP financial measures in this earnings release because it believes that they provide useful and comparative information to assess trends in Riverview's core operations reflected in the current quarter's results and facilitate the comparison of our performance with the performance of our peers. However, these non-GAAP financial measures are supplemental and are not a substitute for any analysis based on GAAP. Where applicable, comparable earnings information using GAAP financial measures is also presented. Because not all companies use the same calculations, our presentation may not be comparable to other similarly titled measures as calculated by other companies. For a reconciliation of these non-GAAP financial measures, see the tables below.
Tangible shareholders' equity to tangible assets and tangible book value per share: (Dollars in thousands) September 30, 2020 June 30, 2020 September 30, 2019 March 31, 2020 Shareholders' equity (GAAP) $ 149,046 $ 147,478 $ 143,119 $ 148,843 Exclude: Goodwill (27,076 ) (27,076 ) (27,076 ) (27,076 ) Exclude: Core deposit intangible, net (689 ) (724 ) (839 ) (759 ) Tangible shareholders' equity (non-GAAP) $ 121,281 $ 119,678 $ 115,204 $ 121,008 Total assets (GAAP) $ 1,425,171 $ 1,377,374 $ 1,173,019 $ 1,180,808 Exclude: Goodwill (27,076 ) (27,076 ) (27,076 ) (27,076 ) Exclude: Core deposit intangible, net (689 ) (724 ) (839 ) (759 ) Tangible assets (non-GAAP) $ 1,397,406 $ 1,349,574 $ 1,145,104 $ 1,152,973 Shareholders' equity to total assets (GAAP) 10.46 % 10.71 % 12.20 % 12.61 % Tangible common equity to tangible assets (non-GAAP) 8.68 % 8.87 % 10.06 % 10.50 % Shares outstanding 22,336,235 22,245,472 22,748,385 22,544,285 Book value per share (GAAP) 6.67 6.63 6.29 6.60 Tangible book value per share (non-GAAP) 5.43 5.38 5.06 5.37 Pre-tax, pre-provision income Three Months Ended Six Months Ended (Dollars in thousands) September 30, 2020 June 30, 2020 September 30, 2019 September 30, 2020 September 30, 2019 Net income (GAAP) $ 2,543 $ 480 $ 4,534 $ 3,023 $ 8,726 Include: Provision for income taxes 704 86 1,351 790 2,571 Include: Provision for loan losses 1,800 4,500 - 6,300 - Pre-tax, pre-provision income (non-GAAP) $ 5,047 $ 5,066 $ 5,885 $ 10,113 $ 11,297 Net interest margin reconciliation to core net interest margin Three Months Ended Six Months Ended (Dollars in thousands) September 30, 2020 June 30, 2020 September 30, 2019 September 30, 2020 September 30, 2019 Net interest income (GAAP) $ 11,064 $ 11,128 $ 11,719 $ 22,192 $ 23,189 Tax equivalent adjustment 5 6 11 11 23 Net fees on loan prepayments 77 100 (112 ) 177 (144 ) Accretion on purchased MBank loans (123 ) (137 ) (78 ) (260 ) (186 ) SBA PPP loans interest income and fees (760 ) (666 ) - (1,426 ) - Adjusted net interest income (non-GAAP) $ 10,263 $ 10,431 $ 11,540 $ 20,694 $ 22,882 Three Months Ended Six Months Ended (Dollars in thousands) September 30, 2020 June 30, 2020 September 30, 2019 September 30, 2020 September 30, 2019 Average balance of interest-earning assets (GAAP) $ 1,318,803 $ 1,222,686 $ 1,069,209 $ 1,271,007 $ 1,067,737 SBA PPP loans (average) (110,573 ) (84,809 ) - (97,762 ) - Average balance of interest-earning assets excluding SBA PPP loans (non-GAAP) $ 1,208,230 $ 1,137,877 $ 1,069,209 $ 1,173,245 $ 1,067,737 Three Months Ended Six Months Ended September 30, 2020 June 30, 2020 September 30, 2019 September 30, 2020 September 30, 2019 Net interest margin (GAAP) 3.33 % 3.65 % 4.36 % 3.48 % 4.35 % Net fees on loan prepayments 0.02 0.04 (0.04 ) 0.03 (0.03 ) Accretion on purchased MBank loans (0.04 ) (0.05 ) (0.02 ) (0.04 ) (0.04 ) SBA PPP loans 0.06 0.04 0.00 0.05 0.00 Core net interest margin (non-GAAP) 3.37 % 3.68 % 4.30 % 3.52 % 4.28 %
Allowance for loan losses reconciliation, excluding SBA purchased and PPP loans (Dollars in thousands) September 30, 2020 June 30, 2020 September 30, 2019 March 31, 2020 Allowance for loan losses $ 18,866 $ 17,076 $ 11,436 $ 12,624 Loans receivable (GAAP) $ 975,174 $ 1,002,720 $ 881,316 $ 911,509 Exclude: SBA purchased loans (61,990 ) (70,853 ) (68,932 ) (74,797 ) Exclude: SBA PPP loans (110,794 ) (110,341 ) - - Loans receivable excluding SBA purchased and PPP loans (non-GAAP) $ 802,390 $ 821,526 $ 812,384 $ 836,712 Allowance for loan losses to loans receivable (GAAP) 1.93 % 1.70 % 1.30 % 1.38 % Allowance for loan losses to loans receivable excluding SBA purchased and PPP loans (non-GAAP) 2.35 % 2.08 % 1.41 % 1.51 %
A bout Riverview
Riverview Bancorp, Inc. (www.riverviewbank.com) is headquartered in Vancouver, Washington – just north of Portland, Oregon, on the I-5 corridor. With assets of $1.43 billion at September 30, 2020, it is the parent company of the 97-year-old Riverview Community Bank, as well as Riverview Trust Company. The Bank offers true community banking services, focusing on providing the highest quality service and financial products to commercial and retail clients through 18 branches, including 14 in the Portland-Vancouver area, and 3 lending centers. For the past 7 years, Riverview has been named Best Bank by the readers of The Vancouver Business Journal and The Columbian .
“Safe Harbor” statement under the Private Securities Litigation Reform Act of 1995: This press release contains forward-looking statements that are subject to risks and uncertainties, including, but not limited to: the effect of the COVID-19 pandemic, including on our credit quality and business operations, as well as the impact on general economic and financial conditions and other uncertainties resulting from the COVID-19 pandemic, such as the extent and duration of the impact on public health, the U.S. and global economies, and consumer and corporate customers, including economic activity, employment levels and market liquidity; the 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 future goodwill impairment due to changes in the Company’s business, changes in market conditions, including as a result of the COVID-19 pandemic and other factors related thereto; increased competitive pressures among financial services companies; changes in consumer spending, borrowing and savings habits; the availability of resources to address changes in laws, rules, or regulations or to respond to regulatory actions; the 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 o u r actual results for fiscal 202 1 and beyond to differ materially from those expressed in any forward-looking statements by, or on behalf of, us, and could negatively affect the Company’s operating and stock price performance.
RIVERVIEW BANCORP, INC. AND SUBSIDIARY Consolidated Balance Sheets (In thousands, except share data) (Unaudited) September 30, 2020 June 30, 2020 September 30, 2019 March 31, 2020 ASSETS Cash (including interest-earning accounts of $226,583 , $143,017 , $ 238,016 $ 157,835 $ 48,888 $ 41,968 $32,632 and $27,866) Certificate of deposits held for investment 249 249 249 249 Loans held for sale - - 310 275 Investment securities: Available for sale, at estimated fair value 126,273 137,749 163,682 148,291 Held to maturity, at amortized cost 24 26 31 28 Loans receivable (net of allowance for loan losses of $18,866 , $17,076 , $11,436 , and $12,624) 956,308 985,644 869,880 898,885 Prepaid expenses and other assets 16,018 9,062 8,136 7,452 Accrued interest receivable 5,341 5,202 3,827 3,704 Federal Home Loan Bank stock, at cost 2,620 2,620 1,380 1,420 Premises and equipment, net 17,296 16,124 13,943 15,570 Financing lease right-of-use assets 1,470 1,489 1,547 1,508 Deferred income taxes, net 3,076 3,067 3,296 3,277 Mortgage servicing rights, net 128 162 247 191 Goodwill 27,076 27,076 27,076 27,076 Core deposit intangible, net 689 724 839 759 Bank owned life insurance 30,587 30,345 29,688 30,155 TOTAL ASSETS $ 1,425,171 $ 1,377,374 $ 1,173,019 $ 1,180,808 LIABILITIES AND SHAREHOLDERS' EQUITY LIABILITIES: Deposits $ 1,199,972 $ 1,158,749 $ 982,275 $ 990,448 Accrued expenses and other liabilities 16,087 11,472 17,502 11,783 Advance payments by borrowers for taxes and insurance 1,011 632 1,117 703 Federal Home Loan Bank advances 30,000 30,000 - - Junior subordinated debentures 26,705 26,684 26,619 26,662 Capital lease obligations 2,350 2,359 2,387 2,369 Total liabilities 1,276,125 1,229,896 1,029,900 1,031,965 SHAREHOLDERS' EQUITY: Serial preferred stock, $.01 par value; 250,000 authorized, issued and outstanding, none - - - - Common stock, $.01 par value; 50,000,000 authorized, September 30, 2020 - 22,336,235 issued and outstanding; June 30, 2020 – 22,245,472 issued and outstanding; 222 222 227 225 September 30, 2019 - 22,748,385 issued and outstanding; March 31, 2020 – 22,748,385 issued and 22,544,285 outstanding; Additional paid-in capital 63,420 63,254 65,559 64,649 Retained earnings 82,666 81,240 77,112 81,870 Accumulated other comprehensive income 2,738 2,762 221 2,099 Total shareholders’ equity 149,046 147,478 143,119 148,843 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 1,425,171 $ 1,377,374 $ 1,173,019 $ 1,180,808
RIVERVIEW BANCORP, INC. AND SUBSIDIARY Consolidated Statements of Income Three Months Ended Six Months Ended (In thousands, except share data) (Unaudited) Sept. 30, 2020 June 30, 2020 Sept. 30, 2019 Sept. 30, 2020 Sept. 30, 2019 INTEREST INCOME: Interest and fees on loans receivable $ 11,346 $ 11,528 $ 11,893 $ 22,874 $ 23,447 Interest on investment securities - taxable 505 655 860 1,160 1,738 Interest on investment securities - nontaxable 17 18 36 35 73 Other interest and dividends 81 37 93 118 180 Total interest and dividend income 11,949 12,238 12,882 24,187 25,438 INTEREST EXPENSE: Interest on deposits 657 858 660 1,515 1,011 Interest on borrowings 228 252 503 480 1,238 Total interest expense 885 1,110 1,163 1,995 2,249 Net interest income 11,064 11,128 11,719 22,192 23,189 Provision for loan losses 1,800 4,500 - 6,300 - Net interest income after provision for loan losses 9,264 6,628 11,719 15,892 23,189 NON-INTEREST INCOME: Fees and service charges 1,663 1,398 1,752 3,061 3,389 Asset management fees 883 974 1,090 1,857 2,233 Net gain on sale of loans held for sale - 28 46 28 142 Bank owned life insurance 242 190 204 432 397 Other, net 31 33 77 64 144 Total non-interest income, net 2,819 2,623 3,169 5,442 6,305 NON-INTEREST EXPENSE: Salaries and employee benefits 5,379 5,192 5,697 10,571 11,412 Occupancy and depreciation 1,457 1,450 1,277 2,907 2,597 Data processing 697 661 669 1,358 1,349 Amortization of core deposit intangible 35 35 41 70 81 Advertising and marketing 110 129 298 239 508 FDIC insurance premium 84 48 - 132 80 State and local taxes 204 204 174 408 369 Telecommunications 85 86 76 171 162 Professional fees 321 320 263 641 588 Other 464 560 508 1,024 1,051 Total non-interest expense 8,836 8,685 9,003 17,521 18,197 INCOME BEFORE INCOME TAXES 3,247 566 5,885 3,813 11,297 PROVISION FOR INCOME TAXES 704 86 1,351 790 2,571 NET INCOME $ 2,543 $ 480 $ 4,534 $ 3,023 $ 8,726 Earnings per common share: Basic $ 0.11 $ 0.02 $ 0.20 $ 0.14 $ 0.39 Diluted $ 0.11 $ 0.02 $ 0.20 $ 0.14 $ 0.38 Weighted average number of common shares outstanding: Basic 22,261,709 22,178,427 22,643,103 22,259,201 22,631,406 Diluted 22,276,312 22,198,065 22,702,696 22,276,308 22,694,067
(Dollars in thousands) At or for the three months ended At or for the six months ended Sept. 30, 2020 June 30, 2020 Sept. 30, 2019 Sept. 30, 2020 Sept. 30, 2019 AVERAGE BALANCES Average interest–earning assets $ 1,318,803 $ 1,222,686 $ 1,069,209 $ 1,271,007 $ 1,067,737 Average interest-bearing liabilities 854,303 808,715 708,846 831,634 718,856 Net average earning assets 464,500 413,971 360,363 439,373 348,881 Average loans 983,737 986,816 889,208 985,268 883,350 Average deposits 1,190,551 1,105,540 952,283 1,148,277 936,507 Average equity 150,401 150,707 142,195 150,553 139,409 Average tangible equity (non-GAAP) 122,615 122,885 114,256 122,749 111,450 ASSET QUALITY Sept. 30, 2020 June 30, 2020 Sept. 30, 2019 Non-performing loans $ 1,275 $ 1,288 $ 1,485 Non-performing loans to total loans 0.13 % 0.13 % 0.17 % Real estate/repossessed assets owned $ - $ - $ - Non-performing assets $ 1,275 $ 1,288 $ 1,485 Non-performing assets to total assets 0.09 % 0.09 % 0.13 % Net loan charge-offs in the quarter $ 10 $ 48 $ 6 Net charge-offs in the quarter/average net loans 0.00 % 0.02 % 0.00 % Allowance for loan losses $ 18,866 $ 17,076 $ 11,436 Average interest-earning assets to average interest-bearing liabilities 154.37 % 151.19 % 150.84 % Allowance for loan losses to non-performing loans 1479.69 % 1325.78 % 770.10 % Allowance for loan losses to total loans 1.93 % 1.70 % 1.30 % Shareholders’ equity to assets 10.46 % 10.71 % 12.20 % CAPITAL RATIOS Total capital (to risk weighted assets) 17.53 % 17.40 % 17.27 % Tier 1 capital (to risk weighted assets) 16.26 % 16.14 % 16.02 % Common equity tier 1 (to risk weighted assets) 16.26 % 16.14 % 16.02 % Tier 1 capital (to average tangible assets) 9.82 % 10.55 % 11.79 % Tangible common equity (to average tangible assets) (non-GAAP) 8.68 % 8.87 % 10.06 % DEPOSIT MIX Sept. 30, 2020 June 30, 2020 Sept. 30, 2019 March 31, 2020 Interest checking $ 229,879 $ 216,041 $ 178,854 $ 187,798 Regular savings 251,547 247,966 196,340 226,880 Money market deposit accounts 200,829 182,328 186,842 169,798 Non-interest checking 386,408 376,372 299,062 271,031 Certificates of deposit 131,309 136,042 121,177 134,941 Total deposits $ 1,199,972 $ 1,158,749 $ 982,275 $ 990,448
COMPOSITION OF COMMERCIAL AND CONSTRUCTION LOANS Other Commercial Commercial Real Estate Real Estate & Construction Business Mortgage Construction Total September 30, 2020 (Dollars in thousands) Commercial business $ 170,876 $ - $ - $ 170,876 SBA PPP 110,794 - - 110,794 Commercial construction - - 20,260 20,260 Office buildings - 129,865 - 129,865 Warehouse/industrial - 75,160 - 75,160 Retail/shopping centers/strip malls - 79,155 - 79,155 Assisted living facilities - 837 - 837 Single purpose facilities - 240,960 - 240,960 Land - 14,531 - 14,531 Multi-family - 49,878 - 49,878 One-to-four family construction - - 8,048 8,048 Total $ 281,670 $ 590,386 $ 28,308 $ 900,364 March 31, 2020 Commercial business $ 179,029 $ - $ - $ 179,029 Commercial construction - - 52,608 52,608 Office buildings - 113,433 - 113,433 Warehouse/industrial - 91,764 - 91,764 Retail/shopping centers/strip malls - 76,802 - 76,802 Assisted living facilities - 1,033 - 1,033 Single purpose facilities - 224,839 - 224,839 Land - 14,026 - 14,026 Multi-family - 58,374 - 58,374 One-to-four family construction - - 12,235 12,235 Total $ 179,029 $ 580,271 $ 64,843 $ 824,143 LOAN MIX Sept. 30, 2020 June 30, 2020 Sept. 30, 2019 March 31, 2020 Commercial and construction Commercial business $ 281,670 $ 281,832 $ 167,782 $ 179,029 Other real estate mortgage 590,386 600,093 541,715 580,271 Real estate construction 28,308 37,824 83,174 64,843 Total commercial and construction 900,364 919,749 792,671 824,143 Consumer Real estate one-to-four family 71,940 79,582 82,578 83,150 Other installment 2,870 3,389 6,067 4,216 Total consumer 74,810 82,971 88,645 87,366 Total loans 975,174 1,002,720 881,316 911,509 Less: Allowance for loan losses 18,866 17,076 11,436 12,624 Loans receivable, net $ 956,308 $ 985,644 $ 869,880 $ 898,885
DETAIL OF NON-PERFORMING ASSETS Other Southwest Oregon Washington Other Total September 30, 2020 Commercial business $ - $ 191 $ - $ 191 Commercial real estate 851 154 - 1,005 Consumer - 58 21 79 Total non-performing assets $ 851 $ 403 $ 21 $ 1,275 DETAIL OF LAND DEVELOPMENT AND SPECULATIVE CONSTRUCTION LOANS Northwest Other Southwest Oregon Oregon Washington Total September 30, 2020 (dollars in thousands) Land development $ 2,125 $ 1,803 $ 10,603 $ 14,531 Speculative construction - - 6,377 6,377 Total land development and speculative construction $ 2,125 $ 1,803 $ 16,980 $ 20,908 DETAIL OF LOAN MODIFICATIONS Number of Loan Deferrals 6/30/2020 Ended New 9/30/2020 Change Hotel / Motel 25 (19 ) 2 8 (68.0)% Retail strip centers 15 (12 ) - 3 (80.0)% Restaurants 10 (10 ) - - (100.0)% Gas Station / Auto Repair 12 (12 ) - - (100.0)% Other - Commercial 36 (34 ) - 2 (94.4)% Total Commercial 98 (87 ) 2 13 (86.7)% Consumer 43 (36 ) - 4 (90.7)% Total 141 (123 ) 2 17 (87.9)% Loan Deferrals 6/30/2020 Ended New 9/30/2020 Change (dollars in thousands) Hotel / Motel $ 78,397 $ (45,417 ) $ 2,079 $ 35,059 (55.3)% Retail strip centers 21,544 (14,751 ) - 6,793 (68.5)% Restaurants 7,179 (7,179 ) - - (100.0)% Gas Station / Auto Repair 16,599 (16,599 ) - - (100.0)% Other - Commercial 37,881 (30,049 ) - 7,832 (79.3)% Total Commercial 161,600 (113,995 ) 2,079 49,684 (69.3)% Consumer 10,100 (9,629 ) - 471 (95.3)% Total $ 171,700 $ (123,624 ) $ 2,079 $ 50,155 (70.8)%
At or for the three months ended At or for the six months ended SELECTED OPERATING DATA Sept. 30, 2020 June 30, 2020 Sept. 30, 2019 Sept. 30, 2020 Sept. 30, 2019 Efficiency ratio (4) 63.65 % 63.16 % 60.47 % 63.40 % 61.70 % Coverage ratio (6) 125.22 % 128.13 % 130.17 % 126.66 % 127.43 % Return on average assets (1) 0.71 % 0.15 % 1.55 % 0.44 % 1.51 % Return on average equity (1) 6.71 % 1.28 % 12.68 % 4.00 % 12.52 % Return on average tangible equity (1) (non-GAAP) 8.23 % 1.57 % 15.79 % 4.91 % 15.66 % NET INTEREST SPREAD Yield on loans 4.58 % 4.69 % 5.32 % 4.63 % 5.31 % Yield on investment securities 1.62 % 1.95 % 2.15 % 1.79 % 2.12 % Total yield on interest-earning assets 3.60 % 4.02 % 4.80 % 3.80 % 4.77 % Cost of interest-bearing deposits 0.33 % 0.45 % 0.40 % 0.39 % 0.31 % Cost of FHLB advances and other borrowings 1.53 % 2.02 % 3.72 % 1.75 % 3.53 % Total cost of interest-bearing liabilities 0.41 % 0.55 % 0.65 % 0.48 % 0.63 % Spread (7) 3.19 % 3.47 % 4.15 % 3.32 % 4.14 % Net interest margin 3.33 % 3.65 % 4.36 % 3.48 % 4.35 % PER SHARE DATA Basic earnings per share (2) $ 0.11 $ 0.02 $ 0.20 $ 0.14 $ 0.39 Diluted earnings per share (3) 0.11 0.02 0.20 0.14 0.38 Book value per share (5) 6.67 6.63 6.29 6.67 6.29 Tangible book value per share (5) (non-GAAP) 5.43 5.38 5.06 5.43 5.06 Market price per share: High for the period $ 5.31 $ 6.12 $ 8.55 $ 6.12 $ 8.55 Low for the period 3.82 4.20 6.87 3.82 6.87 Close for period end 4.15 5.65 7.38 4.15 7.38 Cash dividends declared per share 0.0500 0.0500 0.0450 0.1000 0.0900 Average number of shares outstanding: Basic (2) 22,261,709 22,178,427 22,643,103 22,259,201 22,631,406 Diluted (3) 22,276,312 22,198,065 22,702,696 22,276,308 22,694,067
(1) Amounts for the quarterly periods are annualized.
Contact: Kevin Lycklama or David Lam Riverview Bancorp, Inc. 360-693-6650
