Loading, Please Wait...
VANCOUVER, Wash., Jan. 24, 2019 (GLOBE NEWSWIRE) -- Riverview Bancorp, Inc. (Nasdaq GSM: RVSB) (“Riverview” or the “Company”) today reported net income increased to $4.4 million, or $0.19 per diluted share, in its third fiscal quarter ended December 31, 2018, compared to $4.2 million, or $0.19 per diluted share, in the preceding quarter and $1.5 million, or $0.07 per diluted share, in the third fiscal quarter a year ago.
“We reported strong third quarter operating results, delivering steady loan growth and solid revenue while expanding our net interest margin,” said Kevin Lycklama, president and chief executive officer. “Overall, these factors contributed to a return on average assets of 1.53% and a return on average equity of 13.90% for the quarter. The economic fundamentals in our market are strong and we remain optimistic about the upcoming fiscal year.”
Third Quarter Highlights (at or for the period ended December 31, 2018)
Third quarter net interest income was $11.7 million, a modest increase compared to $11.6 million in the preceding quarter, and an $884,000 increase compared to $10.8 million in the third fiscal quarter a year ago. The increase in net interest income was due to higher rates on earning assets and an increase in outstanding loans. In the first nine months of fiscal 2019, net interest income increased 8.8% to $34.8 million, compared to $32.0 million in the first nine months of fiscal 2018.
“Our robust loan growth, coupled with our low cost of deposits, contributed to the net interest margin expansion during the quarter,” said David Lam, executive vice president and chief financial officer. “However, increased competition for loans and deposits and a flattening yield curve remains a challenge.”
Riverview’s third fiscal quarter net interest margin increased six basis points to 4.39% compared to 4.33% in the second fiscal quarter and increased 33 basis points when compared to 4.06% in the third fiscal quarter a year ago. In the preceding quarter, the collection of $98,000 of non-accrual interest from a prior charged-off loan added four basis points to the NIM. The accretion on purchased loans totaled $172,000 during the current quarter and $152,000 during the linked quarter resulting in a seven basis point increase in the NIM for both periods. In the first nine months of fiscal 2019, Riverview’s NIM increased 31 basis points to 4.37%, compared to the same period a year earlier.
The weighted average rate on loans originated during the quarter ended December 31, 2018, increased to 6.04% compared to 5.63% for the quarter ended September 30, 2018, and 4.75% for the quarter ended December 31, 2017.
Non-interest income was $2.8 million in the third fiscal quarter compared to $3.0 million in the preceding quarter and $2.9 million in the same quarter a year ago. Year to date, non-interest income was $8.9 million compared to $8.3 million in the same period in the prior year. During the preceding quarter, other non-interest income included a net gain of approximately $70,000 on the sale of deposit accounts associated with the closing of the Company’s Longview, WA branch. Additionally, prepayment fees decreased $122,000 to $54,000 for the third fiscal quarter compared to $176,000 in the preceding quarter.
Asset management fees were $935,000 in the third fiscal quarter of 2019 compared to $943,000 in the preceding quarter and $911,000 in the third fiscal quarter a year ago. Riverview Trust Company’s assets under management decreased to $570.4 million at December 31, 2018, compared to $614.0 million three months earlier but increased compared to $490.1 million one year earlier. The current quarter decrease was primarily due to the recent stock market volatility.
The efficiency ratio improved to 60.9% for the third fiscal quarter compared to 61.0% in the preceding quarter and 62.5% in the third fiscal quarter a year ago. Non-interest expense decreased to $8.8 million during the third fiscal quarter of 2019 compared to $8.9 million in the preceding quarter, primarily related to a $355,000 gain on sale of the building related to the Longview branch closing. Offsetting this decrease was an increase in salaries and employee benefits and professional fees as the Company continues to invest in employees and technology infrastructure. In the first nine months of fiscal 2019, non-interest expense was $26.7 million compared to $26.5 million in the same period a year earlier.
Riverview’s effective tax rate for the first nine months of fiscal year 2019 was 22.4% compared to 47.6% for the same prior year period. The decrease was a result of the passage of the Tax Cuts and Jobs Act in December 2017.
Balance Sheet Review
Riverview’s total loans increased $18.8 million during the quarter to $868.6 million at December 31, 2018, an annualized growth rate of 8.8%. The increase was primarily concentrated in commercial construction loans and single purpose commercial real estate facilities. Total loan balances also continue to be impacted by elevated pay downs on existing loans.
The loan pipeline totaled $33.6 million at December 31, 2018 compared to $91.9 million at the end of the prior quarter. Undisbursed construction loans totaled $79.0 million at December 31, 2018 compared to $82.0 million three months earlier. The majority of the undisbursed construction loans are expected to fund over the next several quarters.
“Loan demand remains robust in our market area, and our lending teams are doing an outstanding job of capitalizing on opportunities,” said Lycklama. “While we did experience a decrease in our loan pipeline, this was mostly expected due to seasonal conditions as well as the strong loan originations during the quarter.”
Total deposits decreased to $943.6 million at December 31, 2018 compared to $982.3 million three months earlier and $972.2 million a year ago. Money market, certificates of deposit and other interest-rate sensitive accounts continue to experience the greatest pressure due to an increase in competition and pricing pressures in our market area.
Shareholders’ equity improved to $128.1 million at December 31, 2018, compared to $122.4 million three months earlier and $116.8 million a year earlier. Tangible book value per share (non-GAAP) increased to $4.43 at December 31, 2018, compared to $4.17 at September 30, 2018 and $3.93 at December 31, 2017. A quarterly cash dividend of $0.04 per share was paid on January 22, 2019.
As a result of improving asset quality and a low level of net charge-offs, Riverview recorded no provision for loan losses during the third fiscal quarter of 2019. This compares to a $250,000 recapture for loan losses in the preceding quarter and no provision for loan losses for the third fiscal quarter a year ago.
Non-performing loans improved to $1.6 million, or 0.19% of total loans, at December 31, 2018, compared to $2.3 million, or 0.27% of total loans, three months earlier and $2.7 million, or 0.33% of total loans at December 31, 2017. Riverview had no real estate owned balances at December 31, 2018 and September 30, 2018. Riverview had $298,000 in real estate owned balances as of December 31, 2017.
Net loan charge offs were $11,000 during the third fiscal quarter of 2019 compared to net loan charge offs of $86,000 during the second fiscal quarter of 2019 and net loan recoveries of $250,000 during the third fiscal quarter a year ago.
Classified assets totaled $6.0 million at December 31, 2018, compared to $6.2 million at September 30, 2018, and $6.9 million at December 31, 2017. The classified asset to total capital ratio was 4.4% at December 31, 2018, compared to 4.7% three months earlier and 5.7% a year earlier.
The allowance for loan losses totaled $11.5 million, which was unchanged compared to the preceding quarter end. The allowance for loan losses represented 1.32% of total loans at December 31, 2018, compared to 1.35% of total loans at September 30, 2018. 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 $1.7 million at December 31, 2018, compared to $1.9 million at the end of the prior quarter.
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 16.35% and a Tier 1 leverage ratio of 11.22% at December 31, 2018. In addition, at that date the Company’s tangible common equity to average tangible assets ratio (non-GAAP) was 8.91%.
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. We believe 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 shareholders’ 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. We calculate tangible book value per share by dividing tangible shareholders’ equity by the number of common shares outstanding. This non-GAAP financial measure has inherent limitations, is not required to be uniformly applied and is not audited. Further, the non-GAAP financial measure should not be considered in isolation or as a substitute for book value per share or total shareholders' equity determined in accordance with GAAP and may not be comparable to similarly titled measures reported by other companies. Reconciliations of the GAAP and non-GAAP financial measures are presented below.
|(Dollars in thousands)||December 31, 2018||September 30, 2018||December 31, 2017||March 31, 2018|
|Core deposit intangible, net||966||1,011||1,161||1,103|
|Tangible shareholders' equity||$||100,052||$||94,323||$||88,566||$||88,722|
|Core deposit intangible, net||966||1,011||1,161||1,103|
Riverview Bancorp, Inc. (www.riverviewbank.com) is headquartered in Vancouver, Washington – just north of Portland, Oregon on the I-5 corridor. With assets of $1.15 billion at December 31, 2018, it is the parent company of the 95-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 14 in the Portland-Vancouver area and three lending centers. For the past 5 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 2019 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)||December 31, 2018||September 30, 2018||December 31, 2017||March 31, 2018|
|Cash (including interest-earning accounts of $4,641, $12,537 $3,739||$||23,394||$||27,080||$||23,105||$||44,767|
|Certificate of deposits held for investment||747||3,984||6,963||5,967|
|Loans held for sale||-||-||351||210|
|Available for sale, at estimated fair value||182,280||190,792||224,931||213,221|
|Held to maturity, at amortized cost||36||38||44||42|
|Loans receivable (net of allowance for loan losses of $11,502, $11,513|
|$10,867, and $10,766)||857,134||838,329||786,460||800,610|
|Real estate owned||-||-||298||298|
|Prepaid expenses and other assets||4,021||5,104||4,843||3,870|
|Accrued interest receivable||3,789||3,671||3,464||3,477|
|Federal Home Loan Bank stock, at cost||2,735||1,353||1,223||1,353|
|Premises and equipment, net||14,940||15,403||15,680||15,783|
|Deferred income taxes, net||4,680||5,352||3,988||4,813|
|Mortgage servicing rights, net||325||344||399||388|
|Core deposit intangible, net||966||1,011||1,161||1,103|
|Bank owned life insurance||29,102||28,910||28,356||28,557|
|LIABILITIES AND SHAREHOLDERS' EQUITY|
|Accrued expenses and other liabilities||15,855||13,767||9,117||9,391|
|Advance payments by borrowers for taxes and insurance||192||1,050||260||637|
|Federal Home Loan Bank advances||34,543||-||1,050||-|
|Junior subordinated debentures||26,553||26,530||26,461||26,484|
|Capital lease obligations||2,410||2,418||2,437||2,431|
|Serial preferred stock, $.01 par value; 250,000 authorized,|
|issued and outstanding, none||-||-||-||-|
|Common stock, $.01 par value; 50,000,000 authorized,|
|December 31, 2018 - 22,598,712 issued and outstanding;|
|September 30, 2018 - 22,598,712 issued and outstanding;||226||226||226||226|
|December 31, 2017 - 22,551,912 issued and outstanding;|
|March 31, 2018 – 22,570,179 issued and outstanding;|
|Additional paid-in capital||65,056||65,044||64,703||64,871|
|Accumulated other comprehensive loss||(4,314||)||(6,502||)||(2,004||)||(4,748||)|
|Total shareholders’ equity||128,094||122,410||116,803||116,901|
|TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY||$||1,151,225||$||1,148,447||$||1,128,342||$||1,151,535|
|RIVERVIEW BANCORP, INC. AND SUBSIDIARY|
|Consolidated Statements of Income|
|Three Months Ended||Nine Months Ended|
|(In thousands, except share data) (Unaudited)||Dec. 31, 2018||Sept. 30, 2018||Dec. 31, 2017||Dec. 31, 2018||Dec. 31, 2017|
|Interest and fees on loans receivable||$||11,129||$||10,943||$||9,978||$||32,849||$||29,761|
|Interest on investment securities - taxable||1,110||1,116||1,201||3,424||3,413|
|Interest on investment securities - nontaxable||37||36||31||110||59|
|Other interest and dividends||60||118||168||271||483|
|Total interest and dividend income||12,336||12,213||11,378||36,654||33,716|
|Interest on deposits||240||259||298||759||933|
|Interest on borrowings||416||352||284||1,126||829|
|Total interest expense||656||611||582||1,885||1,762|
|Net interest income||11,680||11,602||10,796||34,769||31,954|
|Provision for loan losses||-||250||-||50||-|
|Net interest income after provision for loan losses||11,680||11,352||10,796||34,719||31,954|
|Fees and service charges||1,511||1,690||1,451||4,956||4,348|
|Asset management fees||935||943||911||2,804||2,582|
|Net gain on sale of loans held for sale||82||44||140||278||522|
|Bank owned life insurance||192||174||207||545||618|
|Total non-interest income, net||2,782||3,016||2,890||8,850||8,341|
|Salaries and employee benefits||5,794||5,283||5,383||16,655||16,056|
|Occupancy and depreciation||1,306||1,351||1,347||4,016||4,105|
|Amortization of core deposit intangible||45||46||58||137||174|
|Advertising and marketing||151||266||137||609||627|
|FDIC insurance premium||85||85||108||246||389|
|State and local taxes||125||182||96||475||427|
|Total non-interest expense||8,803||8,915||8,558||26,737||26,491|
|INCOME BEFORE INCOME TAXES||5,659||5,453||5,128||16,832||13,804|
|PROVISION FOR INCOME TAXES||1,271||1,224||3,608||3,773||6,571|
|Earnings per common share:|
|Weighted average number of common shares outstanding:|
|(Dollars in thousands)||At or for the three months ended||At or for the nine months ended|
|Dec. 31, 2018||Sept. 30, 2018||Dec. 31, 2017||Dec. 31, 2018||Dec. 31, 2017|
|Average interest–earning assets||$||1,057,199||$||1,064,386||$||1,055,600||$||1,056,750||$||1,045,283|
|Average interest-bearing liabilities||707,618||717,085||744,431||716,890||746,262|
|Net average earning assets||349,581||347,301||311,169||339,860||299,021|
|Average tangible equity (non-GAAP)||97,182||94,515||90,562||94,182||88,074|
|ASSET QUALITY||Dec. 31, 2018||Sept. 30, 2018||Dec. 31, 2017|
|Non-performing loans to total loans||0.19%||0.27%||0.33%|
|Real estate/repossessed assets owned||$||-||$||-||$||298|
|Non-performing assets to total assets||0.14%||0.20%||0.26%|
|Net loan charge-offs (recoveries) in the quarter||$||11||$||86||$||(250)|
|Net charge-offs (recoveries) in the quarter/average net loans||0.01%||0.04%||(0.13)%|
|Allowance for loan losses||$||11,502||$||11,513||$||10,867|
|Average interest-earning assets to average|
|Allowance for loan losses to|
|Allowance for loan losses to total loans||1.32%||1.35%||1.36%|
|Shareholders’ equity to assets||11.13%||10.66%||10.35%|
|Total capital (to risk weighted assets)||16.35%||15.82%||15.07%|
|Tier 1 capital (to risk weighted assets)||15.10%||14.54%||13.82%|
|Common equity tier 1 (to risk weighted assets)||15.10%||14.54%||13.82%|
|Tier 1 capital (to average tangible assets)||11.22%||10.72%||9.82%|
|Tangible common equity (to average tangible assets) (non-GAAP)||8.91%||8.42%||8.05%|
|DEPOSIT MIX||Dec. 31, 2018||Sept. 30, 2018||Dec. 31, 2017||March 31, 2018|
|Money market deposit accounts||242,081||252,738||270,193||265,661|
|Certificates of deposit||95,809||107,846||130,893||123,144|
|COMPOSITION OF COMMERCIAL AND CONSTRUCTION LOANS|
|Commercial||Real Estate||Real Estate||& Construction|
|December 31, 2018||(Dollars in thousands)|
|Retail/shopping centers/strip malls||-||64,317||-||64,317|
|Assisted living facilities||-||2,790||-||2,790|
|Single purpose facilities||-||191,237||-||191,237|
|One-to-four family construction||-||-||18,321||18,321|
|March 31, 2018|
|Retail/shopping centers/strip malls||-||68,932||-||68,932|
|Assisted living facilities||-||2,934||-||2,934|
|Single purpose facilities||-||165,289||-||165,289|
|One-to-four family construction||-||-||16,426||16,426|
|LOAN MIX||Dec. 31, 2018||Sept. 30, 2018||Dec. 31, 2017||March 31, 2018|
|(Dollars in thousands)|
|Commercial and construction|
|Other real estate mortgage||541,797||533,258||516,223||529,014|
|Real estate construction||76,518||62,795||40,743||39,584|
|Total commercial and construction||772,675||751,540||687,926||706,270|
|Real estate one-to-four family||86,240||86,950||91,752||90,109|
|Allowance for loan losses||11,502||11,513||10,867||10,766|
|Loans receivable, net||$||857,134||$||838,329||$||786,460||$||800,610|
|DETAIL OF NON-PERFORMING ASSETS|
|December 31, 2018||(dollars in thousands)|
|Commercial real estate||924||188||-||1,112|
|Total non-performing loans||$||924||$||524||$||164||$||1,612|
|DETAIL OF LAND DEVELOPMENT AND SPECULATIVE CONSTRUCTION LOANS|
|December 31, 2018||(dollars in thousands)|
|Total land development and speculative construction||$||3,285||$||2,008||$||28,618||$||33,911|
|At or for the three months ended||At or for the nine months ended|
|SELECTED OPERATING DATA||Dec. 31, 2018||Sept. 30, 2018||Dec. 31, 2017||Dec. 31, 2018||Dec. 31, 2017|
|Efficiency ratio (4)||60.87||%||60.99||%||62.53||%||61.30||%||65.74||%|
|Coverage ratio (6)||132.68||%||130.14||%||126.15||%||130.04||%||120.62||%|
|Return on average assets (1)||1.53||%||1.46||%||0.53||%||1.52||%||0.85||%|
|Return on average equity (1)||13.90||%||13.68||%||5.07||%||14.17||%||8.25||%|
|NET INTEREST SPREAD|
|Yield on loans||5.17||%||5.17||%||5.04||%||5.22||%||5.03||%|
|Yield on investment securities||2.38||%||2.27||%||2.24||%||2.32||%||2.20||%|
|Total yield on interest-earning assets||4.63||%||4.56||%||4.28||%||4.61||%||4.29||%|
|Cost of interest-bearing deposits||0.14||%||0.15||%||0.17||%||0.15||%||0.17||%|
|Cost of FHLB advances and other borrowings||4.35||%||4.82||%||3.89||%||4.49||%||3.80||%|
|Total cost of interest-bearing liabilities||0.37||%||0.34||%||0.31||%||0.35||%||0.31||%|
|Net interest margin||4.39||%||4.33||%||4.06||%||4.37||%||4.06||%|
|PER SHARE DATA|
|Basic earnings per share (2)||$||0.19||$||0.19||$||0.07||$||0.58||$||0.32|
|Diluted earnings per share (3)||0.19||0.19||0.07||0.58||0.32|
|Book value per share (5)||5.67||5.42||5.18||5.67||5.18|
|Tangible book value per share (5) (non-GAAP)||4.43||4.17||3.93||4.43||3.93|
|Market price per share:|
|High for the period||$||8.75||$||9.91||$||9.45||$||9.91||$||9.45|
|Low for the period||7.03||8.47||8.44||7.03||6.51|
|Close for period end||7.28||8.84||8.67||7.28||8.67|
|Cash dividends declared per share||0.0400||0.0350||0.0300||0.1100||0.0750|
|Average number of shares outstanding:|
(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.
Kevin Lycklama or David Lam
Riverview Bancorp, Inc. 360-693-6650