News Details

VANCOUVER, Wash.--(BUSINESS WIRE)-- Riverview Bancorp, Inc. (NASDAQ:RVSB) (“Riverview” or the “Company”) today reported a net loss of $1.8 million, or $0.08 per share, in its first fiscal quarter ended June 30, 2012, compared to a net loss of $16.0 million, or $0.71 per share in the preceding quarter and net income of $714,000, or $0.03 per share, in its first fiscal quarter a year ago.

“Identifying and resolving problem credits and maintaining an adequate reserve balance remains a top priority,” said Pat Sheaffer, Chairman and CEO. “We continue to aggressively make progress in these areas and our non-performing loan balances and net charge-offs are steadily being reduced.”

Credit Quality

Riverview recorded a $4.0 million provision for loan losses in the first quarter of fiscal year 2013, compared to $17.5 million in the preceding quarter and $1.6 million in the first quarter of fiscal year 2012. The total allowance for loan losses increased to $21.0 million at June 30, 2012, compared to $19.9 million at March 31, 2012. The allowance for loan losses represented 3.39% of total loans and 57.02% of non-performing loans (NPLs) at June 30, 2012. NPLs decreased to $36.8 million, or 5.95% of total loans at June 30, 2012, compared to $44.2 million, or 6.45% of total loans at March 31, 2012.

Net charge-offs in the first quarter of fiscal 2013 totaled $2.9 million, compared to $13.5 million in the fourth quarter of fiscal 2012 and $459,000 in the first quarter a year ago.

“We continue to maintain elevated levels of reserves while working our way through this difficult credit cycle,” said Ron Wysaske, President and COO. “The local and regional economy remains challenging and our top priority is to focus our diligent efforts on reducing and resolving nonperforming assets. Riverview remains an important economic participant as one of the few community banks in the region and the only community bank headquartered in Clark County.”

Riverview’s real estate owned (REO) increased $3.3 million during the quarter to $22.1 million at June 30, 2012 due to the transfer of $8.5 million in loans to REO during the quarter. REO sales during the quarter totaled $4.4 million with write-downs of $787,000. Despite the increase in REO during the quarter, the Company remains optimistic that it will be able to decrease REO over the remainder of the year due to the accelerating sales during the past several quarters. Specifically, the Company has seen a rise in sales activity for land and building lots.

Non-performing assets (NPAs) declined to $58.9 million at June 30, 2012 compared to $62.9 million at March 31, 2012 and $40.3 million a year ago. At June 30, 2012, Riverview’s NPAs were 7.22% of total assets, compared to 7.35% at the end of the preceding quarter and 4.55% a year ago.

Balance Sheet Review

“During the first quarter we sold $31.4 million in single-family mortgage loans to the Federal Home Loan Mortgage Corporation (FHLMC),” said Wysaske. “We were able to take advantage of the favorable interest rates to sell a block of loans for a gain of $650,000. The sale of these loans resulted in a reduction in the Bank’s interest rate risk and increased our overall capital and liquidity positions.” Net loans totaled $597.1 million at June 30, 2012 compared to $664.9 million at March 31, 2012 and $677.3 million a year ago.

Riverview has continued to focus on reducing its concentration in land development and speculative construction loans. The balance of these portfolios declined to $34.0 million at June 30, 2012 compared to $49.6 million three months earlier. Land development loans totaled $29.1 million, and speculative construction loans totaled $4.9 million, representing a combined 5.5% of the total loan portfolio at June 30, 2012 compared to 7.3% of the total loan portfolio three months earlier. “This steady reduction has significantly reduced our exposure to these market segments,” stated Wysaske.

The Company currently has identified 21% of the land development portfolio as impaired and has charged these loans down to their estimated fair value, less selling costs, based on updated third party appraisals. Additionally, the Company currently has a $4.0 million allowance on the outstanding land development portfolio.

The commercial real estate (“CRE”) loan portfolio totaled $346.2 million as of June 30, 2012, of which 28% was owner-occupied and 72% was investor-owned. At June 30, 2012, the CRE portfolio contained nine loans totaling $16.7 million that were non-performing, representing 4.8% of the total CRE portfolio and 45.4% of total nonperforming loans.

Deposits decreased $38.6 million as a result of the Company’s targeted efforts to reduce its higher cost deposits, using the $31.4 million loan sale to FHLMC while also increasing the Bank’s capital. The deposit reduction was comprised of an $8.8 million reduction in Internet deposits, an $11.4 million reduction in other non-branch deposits and a planned $14.9 million reduction in the Bank’s only deposit concentration to its largest corporate depositor.

Total deposits stood at $705.9 million at June 30, 2012 compared to $744.5 million at March 31, 2012 and $742.9 million a year ago. Core deposits, which include checking accounts, savings accounts, money market deposit accounts and retail CDs, accounted for 94.8% of total deposits at June 30, 2012 compared to 92.5% at March 31, 2012 and 90.7% a year ago. The loan to deposit ratio is currently at 88% as of June 30, 2012.

Net Interest Margin

Riverview’s net interest margin was 4.22% for the first fiscal quarter compared to 4.12% for the preceding quarter. The increase in net interest margin from the preceding quarter was primarily due to fewer interest income reversals due to the slowdown of new loans placed on non-accrual status during the quarter. The reversal of interest on non-accrual loans decreased the net interest margin by three basis points during the first quarter. The cost of interest bearing deposits during the current quarter was 0.54%, a decrease of five basis points from the preceding quarter and a decrease of 27 basis points from the first quarter a year ago. The reductions in high cost deposits should also help to improve the Bank’s overall cost of deposits in future quarters.

Income Statement

Net interest income was $8.1 million in the first fiscal quarter, compared to $8.0 million in the preceding quarter and $8.8 million in the first quarter a year ago. Non-interest income was $2.4 million in the first fiscal quarter compared to $1.6 million in the preceding quarter and $1.9 million in the first fiscal quarter a year ago. The increase in non-interest income this quarter was driven by the sale of $31.4 million in single-family mortgages to the FHLMC, which resulted in a $650,000 gain on sale of loans. The increase was also due partially to an increase in mortgage banking activity during the quarter.

Non-interest expense, or operating expense, was $8.3 million in the first fiscal quarter compared to $8.2 million in the preceding quarter and $8.2 million in the first quarter a year ago.

In fiscal 2012, the Company established a valuation allowance against its deferred tax asset. At June 30, 2012, the total valuation allowance was $17.6 million. Management will review the deferred tax asset on a quarterly basis to determine the appropriate valuation allowance, if needed. Any future reversals of the deferred tax asset valuation allowance would decrease the Company’s income tax expense and increase its after tax net income in the period of reversal.

Capital and Liquidity

The Bank continues to maintain capital levels in excess of the regulatory requirements to be categorized as “well capitalized” with a total risk-based capital ratio of 13.18% and a Tier 1 leverage ratio of 9.35% at June 30, 2012.

At June 30, 2012, the Bank had available total and contingent liquidity of over $500 million, including over $300 million of borrowing capacity from the Federal Home Loan Bank of Seattle and the Federal Reserve Bank of San Francisco, and more than $100 million from cash and short-term investments.

Gresham Branch

In June 2012, Riverview opened its eighteenth branch and its fourth in Oregon. This new full service branch will fill a long-standing need for community banking in the Gresham market area.

Non-GAAP Financial Measures

In addition to results presented in accordance with generally accepted accounting principles in the United States of America (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 assets (GAAP) to ending tangible assets (non-GAAP).

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 $815 million, it is the parent company of the 89 year-old Riverview Community Bank, as well as Riverview Asset Management Corp. The Bank offers true community banking services, focusing on providing the highest quality service and financial products to commercial and retail customers. There are 18 branches, including thirteen in the Portland-Vancouver area and three lending centers.

“Safe Harbor” statement under the Private Securities Litigation Reform Act of 1995: This press release contains forward-looking statements that are subject to risks and uncertainties, including, but not limited to: the Company’s ability to raise common capital, the amount of capital it intends to raise and its intended use of that 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; the Company’s compliance with regulatory enforcement actions we have entered into with the OCC as successor to the OTS and the possibility that our noncompliance could result in the imposition of additional enforcement actions and additional requirements or restrictions on our operations; 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 Securities and Exchange Commission.

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 2012 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.
Pat Sheaffer or Ron Wysaske, 360-693-6650

Source: Riverview Bancorp, Inc.