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Riverview Bancorp Earns $5.5 Million in Third Fiscal Quarter of 2022; Results Driven by Solid Loan Growth and Strong Loan Pipeline

·33 min read

VANCOUVER, Wash., Jan. 27, 2022 (GLOBE NEWSWIRE) -- Riverview Bancorp, Inc. (Nasdaq GSM: RVSB) (“Riverview” or the “Company”) today reported earnings of $5.5 million, or $0.25 per diluted share, in the third fiscal quarter ended December 31, 2021, compared to $6.4 million, or $0.29 per diluted share, in the preceding quarter and $4.0 million, or $0.18 per diluted share, in the third fiscal quarter a year ago.

In the first nine months of fiscal 2022, net income increased to $17.7 million, or $0.80 per diluted share, compared to $7.1 million, or $0.32 per diluted share, in the first nine months of fiscal 2021.

“Our fiscal third quarter results reflect the continued successful implementation of our growth strategies, which resulted in the expansion of the loan portfolio,” stated Kevin Lycklama, president and chief executive officer. “Net income increased from a year ago fueled by strong operating income generation, and we delivered a return on average equity of 13.47% and a return on average assets of 1.28%. We had exceptional organic loan growth during the quarter and our loan pipeline remains strong. We remain focused on organic loan growth and pursuing a full relationship approach with our customers while continuing to provide excellent customer service. We remain committed to providing long-term value for our shareholders as we continue to strengthen our franchise.”

Third Quarter Highlights (at or for the period ended December 31, 2021)

  • Net income was $5.5 million, or $0.25 per diluted share.

  • Pre-tax, pre-provision for loan losses income (non-GAAP) was $5.9 million for the quarter compared to $7.3 million in the preceding quarter and $5.2 million for the quarter ended December 31, 2020.

  • Net interest income was $12.1 million for the quarter compared to $12.4 million in the preceding quarter and $11.5 million in the third fiscal quarter a year ago.

  • Net interest margin (“NIM”) was 2.96%.

  • Riverview recorded a recapture of loan losses of $1.3 million during the quarter.

  • The allowance for loan losses was $15.2 million, or 1.58% of total loans. The allowance for loan losses excluding SBA purchased and SBA PPP loans (non-GAAP) was 1.68% of total loans.

  • Total loans increased $47.7 million, or 20.9% annualized, during the quarter. The net increase consisted of an increase of $66.0 million in non-PPP loans offset by a decrease of $18.3 million in SBA PPP loans.

    • Of the $66.0 million in third quarter loan growth, Riverview purchased $35.1 million of pooled loans and its organic loan portfolio increased by $30.2 million, 13.6% annualized.

  • Total deposits decreased $33.2 million during the quarter to $1.47 billion.

  • Non-performing assets were 0.11% of total assets.

  • Total risk-based capital ratio was 16.72% and Tier 1 leverage ratio was 9.10%.

  • Paid a quarterly cash dividend during the quarter of $0.055 per share.

Income Statement Review

Riverview’s net interest income was $12.1 million in the current quarter compared to $12.4 million in the preceding quarter and $11.5 million in the third fiscal quarter a year ago. The decrease in net interest income compared to the prior quarter was due to a decrease in the average yield on loans, a decrease in SBA PPP loan interest and fee income as this portfolio continues to decrease due to the forgiveness, and a decrease in net prepayment fees collected in the quarter of $250,000, compared to $485,000 during the previous quarter. The preceding quarter also included the recognition of $251,000 of interest income on a previously restructured loan that paid off. Investment income continues to supplement interest income due to the overall growth in the investment portfolio. Additionally, the low interest rate environment produced lower interest expense on deposits. The adjusted net interest income (non-GAAP) increased to $10.9 million in the quarter compared to $10.8 million in the preceding quarter and $10.0 million in the third fiscal quarter a year ago.

In the first nine months of fiscal 2022, net interest income increased to $35.7 million compared to $33.7 million in the first nine months of fiscal 2021.

During the third quarter of fiscal 2022, $781,000 of interest and net fee income was earned through PPP loan forgiveness and normal amortization. This compared to $928,000 of interest and net fee income on PPP loans during the preceding quarter and $1.4 million in the third quarter of the prior year.

Riverview’s NIM was 2.96% for the third quarter of fiscal 2022, a 16 basis-point decrease compared to 3.12% in the preceding quarter and a 44 basis-point decrease compared to 3.40% in the third quarter of fiscal 2021. “The NIM contraction during the quarter was primarily due to a decrease in loan yields which were partially offset by a decrease in deposit costs and an increase in investment yields,” said David Lam, executive vice president and chief financial officer. In the first nine months of fiscal 2022, the net interest margin was 3.05% compared to 3.46% in the same period a year earlier.

During the third fiscal quarter of 2022, net fees on loan prepayments, which included purchased SBA loan premiums, increased net interest income by $250,000 and increased the NIM by six basis points. This compared to $485,000 in net fees on loan prepayments adding 13 basis points to NIM in the preceding quarter. The interest accretion on purchased loans totaled $64,000 and resulted in a two basis point increase in the NIM during the third quarter, compared to $89,000 and a three basis point increase in the NIM during the preceding quarter. SBA PPP loan interest and fees added 15 basis points to the NIM both for the current quarter and for the preceding quarter. The average overnight cash balances were $307.4 million during the quarter ended December 31, 2021, compared to $345.8 million in the preceding quarter and $235.2 million for the third fiscal quarter a year ago. Without the elevated level in overnight cash balances, NIM would have been 62 basis points higher in the current quarter, 79 basis points higher in the prior quarter and 72 basis points higher in the third quarter a year ago. These items resulted in a core-NIM (non-GAAP) of 3.35% in the current quarter compared to 3.60% in the preceding quarter and 3.93% in the third fiscal quarter a year ago. The following table represents the components of (non-GAAP) Core NIM:

Three Months Ended

December 31, 2021

September 30, 2021

December 31, 2020

Net interest margin (GAAP)

2.96

%

3.12

%

3.40

%

Net fees on loan prepayments

(0.06

)

(0.13

)

0.00

Accretion on purchased MBank loans

(0.02

)

(0.03

)

(0.02

)

SBA PPP loans

(0.15

)

(0.15

)

(0.17

)

Excess FRB liquidity

0.62

0.79

0.72

Core net interest margin (non-GAAP)

3.35

%

3.60

%

3.93

%

During the third fiscal quarter of 2022, Riverview continued to deploy excess cash into its investment portfolio. Investment securities totaled $395.0 million at December 31, 2021, compared to $350.3 million at September 30, 2021. During the quarter, the Company purchased $58.6 million in new securities with a weighted average yield of 1.57%. Investment purchases were comprised primarily of agency securities and MBS backed by government agencies. Riverview transferred $85.8 million of investment securities classified as available for sale to investment securities classified as held to maturity during the third fiscal quarter of 2022.

Average securities balances for the quarters ended December 31, 2021, September 30, 2021, and December 31, 2020 were $368.6 million, $326.1 million and $154.3 million, respectively. The weighted average yields on securities balances for those same periods were 1.50%, 1.47% and 1.56%, respectively.

Average PPP loans were $23.8 million in the third quarter compared to $46.2 million in the preceding quarter and $99.9 million in the third quarter a year ago. During the quarter, the Company recorded $60,000 in interest income on PPP loans and $721,000 in loan fee amortization into income. This compared to $118,000 in interest income on PPP loans and $810,000 in loan fee amortization during the preceding quarter and $252,000 in interest income on PPP loans and $1.2 million in loan fee amortization during the third fiscal quarter a year ago.

Loan yields decreased during the quarter to 4.67% compared to 5.11% in the preceding quarter and 4.82% in the third fiscal quarter a year ago. Loan yields excluding PPP loans were 4.45% for the quarter compared to 4.95% in the preceding quarter and 4.67% in the year-ago quarter. The decrease in the loan yields compared to the prior quarter is attributed to a decrease in net fees on loan prepayments compared to the preceding quarter and the recognition of interest income on a previously restructured loan that paid off in the preceding quarter.

Riverview’s cost of deposits decreased to 0.08% during the third fiscal quarter compared to 0.11% in the preceding quarter and 0.18% in the third fiscal quarter a year ago. The sequential decrease in deposit costs during the quarter reflects the continued low interest rate environment and the maturity of higher cost certificate of deposit accounts.

Non-interest income was $3.1 million during the current quarter and in the preceding quarter, and $2.8 million in the third fiscal quarter of 2021. Interchange and merchant bankcard fee income was higher due to the continued increase in economic activity in Oregon and Washington as the economic recovery continues. Brokered loan fee income also increased due to the continued strong activity in the mortgage and refinance market. In the first nine months of fiscal 2022, non-interest income was $9.8 million compared to $8.3 million in the same period a year ago.

Asset management fees increased to $1.1 million during the third fiscal quarter compared to $928,000 in the preceding quarter and $889,000 in the third fiscal quarter a year ago. The increase in the asset management fees was primarily due to the collection of a one-time fee of approximately $200,000. Riverview Trust Company’s assets under management was $1.4 billion at December 31, 2021, compared to $1.3 billion at both September 30, 2021 and December 31, 2020.

Non-interest expense was $9.3 million during the quarter compared to $8.2 million in the preceding quarter and $9.1 million in the third fiscal quarter a year ago. The increase in the sequential quarter was primarily due to Riverview recognizing a $1.0 million gain on sale of a former branch property, during the second fiscal quarter of 2022, which reduced non-interest expense. Rising wages are impacting every industry, including Riverview. The Company continues to manage its non-interest expenses in the current economic environment and look for opportunities to improve operating efficiencies. Year-to-date, non-interest expense was $26.6 million, which was unchanged compared to the first nine months of fiscal 2021. The gain on sale as mentioned above offset non-interest expense during the nine months of fiscal 2022 which was not present for the nine months of fiscal 2021, however, the nine months of fiscal 2021 included salary offsets of approximately $553,000 related to SBA PPP loans that were not present for the nine months of fiscal 2022.

Return on average assets was 1.28% in the third quarter of fiscal 2022 compared to 1.52% in the preceding quarter. Return on average equity and return on average tangible equity (non-GAAP) was 13.47% and 16.23%, respectively, compared to 15.96% and 19.31%, respectively, for the prior quarter. The efficiency ratio was 61.2% for the third fiscal quarter compared to 53.0% in the preceding quarter and 63.5% in the third fiscal quarter a year ago.

Riverview’s effective tax rate for the third quarter of fiscal 2022 was 23.2% compared to 23.1% for the preceding quarter and 22.9% for the year ago quarter.

Balance Sheet Review

Total loans were $962.2 million at December 31, 2021, compared to $914.5 million three months earlier and $931.5 million a year ago. The $47.7 million increase in loan balances compared to the prior quarter was driven by a number of factors. In addition to growing its organic loans by $30.2 million, Riverview completed the purchase of a $20.8 million pool of mortgage loans to partially replace mortgage loans within its portfolio that paid down during the last year. Additionally, Riverview purchased approximately $11.9 million of commercial business loans originated from a third party and purchased $2.4 million of SBA guaranteed loans. These increases were partly offset by $18.3 million of SBA PPP loan forgiveness during the quarter. SBA PPP loans, net of fees, totaled $14.3 million at December 31, 2021, compared to $32.7 million at September 30, 2021, and $80.8 million at December 31, 2020.

Riverview’s loan pipeline totaled $81.2 million at December 31, 2021, compared to $104.5 million at the end of the prior quarter. Loan activity remained strong, with new loan originations during the quarter totaling $112.2 million compared to $127.9 million in the preceding quarter and $85.9 million in the third quarter a year ago. “The Company has continued to focus on loan originations and emphasize business development activities over the last few quarters,” said Lycklama. “Organic loan growth was robust during the quarter despite the continued heightened competition for loans. We continue to see strong loan demand in our local markets. As with many others in the industry, overall loan growth continues to be impacted by an increased level of loan payoffs.”

Undisbursed construction loans totaled $28.0 million at both December 31, 2021 and September 30, 2021, with the majority of the undisbursed construction loans expected to fund over the next several quarters. Revolving commercial business loan commitments totaled $67.4 million at December 31, 2021, compared to $66.0 million three months earlier. Utilization on these loans totaled 19.2% at December 31, 2021, compared to 8.6% at September 30, 2021. The weighted average rate on loan originations during the quarter was 3.80% compared to 3.82% in the preceding quarter and 3.68% in the third quarter a year ago.

Total deposits were $1.47 billion at December 31, 2021 compared to $1.51 billion at September 30, 2021. Total deposits increased $236.5 million, or 19.1%, compared to a year earlier. The growth in deposits over the last year came primarily from core checking, savings and money market accounts. Non-interest bearing checking accounts increased $76.1 million, or 19.4%, year-over-year to $469.1 million at December 31, 2021. Checking accounts, as a percentage of total deposits, totaled 51.2% at December 31, 2021.

Shareholders’ equity increased to $163.1 million at December 31, 2021, compared to $159.8 million three months earlier and $151.9 million a year earlier. Tangible book value per share (non-GAAP) increased to $6.11 at December 31, 2021, compared to $5.96 at September 30, 2021, and $5.56 at December 31, 2020. Riverview paid a quarterly cash dividend of $0.055 per share on January 17, 2022.

Credit Quality

Non-performing assets were $1.8 million, or 0.11% of total assets, at December 31, 2021, compared to $490,000, or 0.03% of total assets, three months earlier and $393,000, or 0.03% of total assets, at December 31, 2020. The increase is attributed to an increase in non-performing SBA government guaranteed loans where payments have been delayed due to the servicing transfer of these loans between two third-party servicers. Once the servicing transfer is complete, Riverview expects to receive the delayed payments and expects non-performing loans to decrease. Riverview recorded net loan charge-offs during the quarter of $52,000. This compared to net loan recoveries during the prior quarter of $10,000 and net loan recoveries of $326,000 in the third fiscal quarter a year ago.

Due to the improvement in economic conditions, and the overall quality of the loan portfolio, Riverview recorded a recapture of loan losses of $1.3 million during the third fiscal quarter. This compared to a recapture of loan losses of $1.1 million in the prior quarter and no provision for loan losses during the third fiscal quarter a year ago.

Riverview had no commercial or consumer loan modifications remaining on its books at December 31, 2021, or at September 30, 2021. Riverview’s hotel/motel portfolio performance has steadily improved over the last several quarters and there are no remaining hotel/motel loans with COVID modifications.

Classified assets were $6.5 million at December 31, 2021, compared to $10.3 million at September 30, 2021 and $4.0 million at December 31, 2020. The classified asset to total capital ratio was 3.9% at December 31, 2021, compared to 6.2% three months earlier and 2.5% a year earlier. Criticized assets decreased to $14.0 million at December 31, 2021, compared to $31.3 million at September 30, 2021, and $46.5 million at December 31, 2020. These balances may decline further over the next several quarters as the Company receives updated financial statements from these borrowers. The criticized assets balance reflects risk rating changes primarily associated with loans that had been granted COVID-19 loan modifications.

At December 31, 2021, the allowance for loan losses was $15.2 million, compared to $16.5 million at September 30, 2021, and $19.2 million one year earlier. The allowance for loan losses represented 1.58% of total loans at December 31, 2021, compared to 1.80% in the preceding quarter and 2.06% a year earlier. The allowance for loan losses to loans, net of SBA guaranteed loans (including SBA PPP loans) (non-GAAP), was 1.68% at December 31, 2021, compared to 1.97% at September 30, 2021 and 2.41% a year earlier. 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 $497,000 at December 31, 2021, compared to $562,000 three 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 16.72% and a Tier 1 leverage ratio of 9.10% at December 31, 2021. Tangible common equity to average tangible assets ratio (non-GAAP) was 8.19% at December 31, 2021.

PPP Loans

During Round 1, Riverview originated 790 PPP loans totaling approximately $112.9 million, net of deferred fees, with an average loan size of $147,000. In PPP Round 2, Riverview originated 414 PPP loans totaling approximately $54.1 million, net of deferred fees, with an average loan size of $131,000. Unamortized PPP deferred loan fees at December 31, 2021 totaled $522,000 for all PPP loans. In total, 1,089 PPP loans totaling $152.7 million, or 91.4%, have been forgiven by the SBA or repaid by the borrower. There was one Round 1 PPP loan remaining at December 31, 2021 totaling $4,000. The following table presents the breakdown and balance, net of deferred fees, of all PPP loans (Round 1 and Round 2) at December 31, 2021:

Range

Number of loans

Total
(in 000s)

Up to $150,000

82

$

3,486

$150,001 to $350,000

26

5,860

$350,001 to $2,000,000

7

4,976

Total

115

$

14,322

Stock Repurchase Program

On June 10, 2021, Riverview announced that its Board of Directors authorized the repurchase up to $5.0 million of the Company’s outstanding shares, in the open market, based on prevailing market prices, or in privately negotiated transactions, over a period beginning on June 21, 2021, and continuing until the earlier of the completion of the repurchase or the next six months. The repurchase program expired on December 21, 2021, and at that time, Riverview had repurchased 249,908 shares at an average price of $6.89 per share.

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)

December 31, 2021

September 30, 2021

December 31, 2020

March 31, 2021

Shareholders' equity (GAAP)

$

163,141

$

159,760

$

151,874

$

151,594

Exclude: Goodwill

(27,076

)

(27,076

)

(27,076

)

(27,076

)

Exclude: Core deposit intangible, net

(526

)

(557

)

(654

)

(619

)

Tangible shareholders' equity (non-GAAP)

$

135,539

$

132,127

$

124,144

$

123,899

Total assets (GAAP)

$

1,683,076

$

1,716,352

$

1,436,184

$

1,549,158

Exclude: Goodwill

(27,076

)

(27,076

)

(27,076

)

(27,076

)

Exclude: Core deposit intangible, net

(526

)

(557

)

(654

)

(619

)

Tangible assets (non-GAAP)

$

1,655,474

$

1,688,719

$

1,408,454

$

1,521,463

Shareholders' equity to total assets (GAAP)

9.69

%

9.31

%

10.57

%

9.79

%

Tangible common equity to tangible assets (non-GAAP)

8.19

%

7.82

%

8.81

%

8.14

%

Shares outstanding

22,176,612

22,164,707

22,345,235

22,351,235

Book value per share (GAAP)

7.36

7.21

6.80

6.78

Tangible book value per share (non-GAAP)

6.11

5.96

5.56

5.54


Pre-tax, pre-provision income

Three Months Ended

Nine Months Ended

(Dollars in thousands)

December 31, 2021

September 30, 2021

December 31, 2020

December 31, 2021

December 31, 2020

Net income (GAAP)

$

5,510

$

6,430

$

4,035

$

17,695

$

7,058

Include: Provision for income taxes

1,661

1,933

1,199

5,174

1,989

Include: Provision for (recapture of) loan losses

(1,275

)

(1,100

)

-

(3,975

)

6,300

Pre-tax, pre-provision income (non-GAAP)

$

5,896

$

7,263

$

5,234

$

18,894

$

15,347

Net interest margin reconciliation to core net interest margin

Three Months Ended

Nine Months Ended

(Dollars in thousands)

December 31, 2021

September 30, 2021

December 31, 2020

December 31, 2021

December 31, 2020

Net interest income (GAAP)

$

12,059

$

12,376

$

11,529

$

35,719

$

33,721

Tax equivalent adjustment

21

17

14

54

25

Net fees on loan prepayments

(250

)

(485

)

11

(778

)

141

Accretion on purchased MBank loans

(64

)

(89

)

(58

)

(224

)

(252

)

SBA PPP loans interest income and net fees

(781

)

(928

)

(1,405

)

(2,602

)

(2,707

)

Income on excess FRB liquidity

(114

)

(129

)

(61

)

(320

)

(129

)

Adjusted net interest income (non-GAAP)

$

10,871

$

10,762

$

10,030

$

31,849

$

30,799

Three Months Ended

Nine Months Ended

(Dollars in thousands)

December 31, 2021

September 30, 2021

December 31, 2020

December 31, 2021

December 31, 2020

Average balance of interest-earning assets (GAAP)

$

1,619,775

$

1,577,652

$

1,346,324

$

1,559,165

$

1,296,203

SBA PPP loans (average)

(23,769

)

(46,169

)

(99,851

)

(49,972

)

(98,461

)

Excess FRB liquidity (average)

(307,437

)

(345,806

)

(235,163

)

(308,656

)

(178,464

)

Average balance of interest-earning assets excluding

SBA PPP loans and excess FRB liquidity (non-GAAP)

$

1,288,569

$

1,185,677

$

1,011,310

$

1,200,537

$

1,019,278

Three Months Ended

Nine Months Ended

December 31, 2021

September 30, 2021

December 31, 2020

December 31, 2021

December 31, 2020

Net interest margin (GAAP)

2.96

%

3.12

%

3.40

%

3.05

%

3.46

%

Net fees on loan prepayments

(0.06

)

(0.13

)

0.00

(0.07

)

0.01

Accretion on purchased MBank loans

(0.02

)

(0.03

)

(0.02

)

(0.02

)

(0.03

)

SBA PPP loans

(0.15

)

(0.15

)

(0.17

)

(0.13

)

(0.01

)

Excess FRB liquidity

0.62

0.79

0.72

0.69

0.58

Core net interest margin (non-GAAP)

3.35

%

3.60

%

3.93

%

3.52

%

4.01

%

Allowance for loan losses reconciliation, excluding SBA purchased and PPP loans

(Dollars in thousands)

December 31, 2021

September 30, 2021

December 31, 2020

March 31, 2021

Allowance for loan losses

$

15,173

$

16,500

$

19,192

$

19,178

Loans receivable (GAAP)

$

962,223

$

914,532

$

931,468

$

943,235

Exclude: SBA purchased loans

(46,152

)

(43,709

)

(53,743

)

(47,379

)

Exclude: SBA PPP loans

(14,322

)

(32,666

)

(80,785

)

(93,444

)

Loans receivable excluding SBA purchased and PPP loans (non-GAAP)

$

901,749

$

838,157

$

796,940

$

802,412

Allowance for loan losses to loans receivable (GAAP)

1.58

%

1.80

%

2.06

%

2.03

%

Allowance for loan losses to loans receivable excluding SBA purchased and PPP loans (non-GAAP)

1.68

%

1.97

%

2.41

%

2.39

%

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 $1.68 billion at December 31, 2021, it is the parent company of the 98-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 16 branches, including 12 in the Portland-Vancouver area, and 3 lending centers. For the past 9 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 our actual results for fiscal 2022 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, 2021

September 30, 2021

December 31, 2020

March 31, 2021

ASSETS

Cash (including interest-earning accounts of $227,635, $352,187,

$

239,857

$

368,122

$

235,834

$

265,408

$220,597 and $254,205)

Certificate of deposits held for investment

249

249

249

249

Investment securities:

Available for sale, at estimated fair value

182,303

278,224

153,219

216,304

Held to maturity, at amortized cost

212,722

72,109

33,425

39,574

Loans receivable (net of allowance for loan losses of $15,173,

$16,500, $19,192, and $19,178)

947,050

898,032

912,276

924,057

Prepaid expenses and other assets

11,597

11,681

13,365

13,189

Accrued interest receivable

4,580

4,772

5,283

5,236

Federal Home Loan Bank stock, at cost

1,722

1,722

1,420

1,722

Premises and equipment, net

17,410

16,307

17,909

17,824

Financing lease right-of-use assets

1,374

1,393

1,451

1,432

Deferred income taxes, net

5,791

5,467

3,141

5,419

Mortgage servicing rights, net

41

52

102

81

Goodwill

27,076

27,076

27,076

27,076

Core deposit intangible, net

526

557

654

619

Bank owned life insurance

30,778

30,589

30,780

30,968

TOTAL ASSETS

$

1,683,076

$

1,716,352

$

1,436,184

$

1,549,158

LIABILITIES AND SHAREHOLDERS' EQUITY

LIABILITIES:

Deposits

$

1,473,454

$

1,506,679

$

1,236,933

$

1,346,060

Accrued expenses and other liabilities

17,163

20,165

18,155

21,906

Advance payments by borrowers for taxes and insurance

211

650

156

521

Junior subordinated debentures

26,812

26,791

26,726

26,748

Finance lease liability

2,295

2,307

2,340

2,329

Total liabilities

1,519,935

1,556,592

1,284,310

1,397,564

SHAREHOLDERS' EQUITY:

Serial preferred stock, $.01 par value; 250,000 authorized,

issued and outstanding, none

-

-

-

-

Common stock, $.01 par value; 50,000,000 authorized,

December 31, 2021 – 22,426,520 issued and 22,176,612 outstanding;

September 30, 2021 – 22,414,615 issued and 22,164,707 outstanding;

221

221

223

223

December 31, 2020 - 22,345,235 issued and outstanding;

March 31, 2021 – 22,351,235 issued and outstanding;

Additional paid-in capital

62,234

62,122

63,539

63,650

Retained earnings

102,023

97,727

85,584

87,881

Accumulated other comprehensive income (loss)

(1,337

)

(310

)

2,528

(160

)

Total shareholders’ equity

163,141

159,760

151,874

151,594

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$

1,683,076

$

1,716,352

$

1,436,184

$

1,549,158


RIVERVIEW BANCORP, INC. AND SUBSIDIARY

Consolidated Statements of Income

Three Months Ended

Nine Months Ended

(In thousands, except share data) (Unaudited)

Dec. 31, 2021

Sept. 30, 2021

Dec. 31, 2020

Dec. 31, 2021

Dec. 31, 2020

INTEREST INCOME:

Interest and fees on loans receivable

$

11,046

$

11,626

$

11,601

$

33,448

$

34,475

Interest on investment securities - taxable

1,303

1,136

549

3,438

1,709

Interest on investment securities - nontaxable

66

55

44

171

79

Other interest and dividends

136

148

98

379

216

Total interest and dividend income

12,551

12,965

12,292

37,436

36,479

INTEREST EXPENSE:

Interest on deposits

300

399

556

1,141

2,071

Interest on borrowings

192

190

207

576

687

Total interest expense

492

589

763

1,717

2,758

Net interest income

12,059

12,376

11,529

35,719

33,721

Provision for (recapture of) loan losses

(1,275

)

(1,100

)

-

(3,975

)

6,300

Net interest income after provision for (recapture of) loan losses

13,334

13,476

11,529

39,694

27,421

NON-INTEREST INCOME:

Fees and service charges

1,759

1,814

1,654

5,428

4,715

Asset management fees

1,137

928

889

3,041

2,746

Bank owned life insurance ("BOLI")

189

234

193

613

625

BOLI death benefit in excess of cash surrender value

-

21

-

500

-

Other, net

31

77

76

196

168

Total non-interest income, net

3,116

3,074

2,812

9,778

8,254

NON-INTEREST EXPENSE:

Salaries and employee benefits

5,880

5,635

5,698

17,269

16,269

Occupancy and depreciation

1,367

1,309

1,434

4,085

4,341

Data processing

698

724

638

2,187

1,996

Amortization of core deposit intangible

32

31

35

94

105

Advertising and marketing

155

180

144

487

383

FDIC insurance premium

113

113

89

321

221

State and local taxes

195

221

190

614

598

Telecommunications

51

55

74

152

245

Professional fees

285

343

321

945

962

Gain on sale of premises and equipment, net

-

(1,001

)

-

(993

)

5

Other

503

577

484

1,442

1,503

Total non-interest expense

9,279

8,187

9,107

26,603

26,628

INCOME BEFORE INCOME TAXES

7,171

8,363

5,234

22,869

9,047

PROVISION FOR INCOME TAXES

1,661

1,933

1,199

5,174

1,989

NET INCOME

$

5,510

$

6,430

$

4,035

$

17,695

$

7,058

Earnings per common share:

Basic

$

0.25

$

0.29

$

0.18

$

0.80

$

0.32

Diluted

$

0.25

$

0.29

$

0.18

$

0.80

$

0.32

Weighted average number of common shares outstanding:

Basic

22,166,130

22,179,829

22,320,699

22,229,832

22,279,774

Diluted

22,177,120

22,191,487

22,337,644

22,242,035

22,296,827


(Dollars in thousands)

At or for the three months ended

At or for the nine months ended

Dec. 31, 2021

Sept. 30, 2021

Dec. 31, 2020

Dec. 31, 2021

Dec. 31, 2020

AVERAGE BALANCES

Average interest–earning assets

$

1,619,775

$

1,577,652

$

1,346,324

$

1,559,165

$

1,296,203

Average interest-bearing liabilities

1,032,089

1,023,389

878,526

1,005,003

847,321

Net average earning assets

587,686

554,263

467,798

554,162

448,882

Average loans

938,113

902,971

955,183

922,071

975,203

Average deposits

1,503,736

1,469,311

1,236,601

1,448,986

1,177,826

Average equity

162,282

159,794

151,636

159,034

150,915

Average tangible equity (non-GAAP)

134,661

132,142

123,886

131,383

123,129

ASSET QUALITY

Dec. 31, 2021

Sept. 30, 2021

Dec. 31, 2020

Non-performing loans

$

1,840

$

490

$

393

Non-performing loans to total loans

0.19

%

0.05

%

0.04

%

Real estate/repossessed assets owned

$

-

$

-

$

-

Non-performing assets

$

1,840

$

490

$

393

Non-performing assets to total assets

0.11

%

0.03

%

0.03

%

Net loan charge-offs in the quarter

$

52

$

(10

)

$

(326

)

Net charge-offs in the quarter/average net loans

0.02

%

0.00

%

(0.14

)%

Allowance for loan losses

$

15,173

$

16,500

$

19,192

Average interest-earning assets to average

interest-bearing liabilities

156.94

%

154.16

%

153.25

%

Allowance for loan losses to

non-performing loans

824.62

%

3367.35

%

4883.46

%

Allowance for loan losses to total loans

1.58

%

1.80

%

2.06

%

Shareholders’ equity to assets

9.69

%

9.31

%

10.57

%

CAPITAL RATIOS

Total capital (to risk weighted assets)

16.72

%

17.42

%

17.58

%

Tier 1 capital (to risk weighted assets)

15.47

%

16.16

%

16.32

%

Common equity tier 1 (to risk weighted assets)

15.47

%

16.16

%

16.32

%

Tier 1 capital (to average tangible assets)

9.10

%

9.08

%

9.80

%

Tangible common equity (to average tangible assets) (non-GAAP)

8.19

%

7.82

%

8.81

%

DEPOSIT MIX

Dec. 31, 2021

Sept. 30, 2021

Dec. 31, 2020

March 31, 2021

Interest checking

$

285,807

$

288,242

$

237,051

$

258,014

Regular savings

327,887

329,462

267,901

291,769

Money market deposit accounts

277,355

277,321

211,129

240,554

Non-interest checking

469,100

491,313

393,023

435,098

Certificates of deposit

113,305

120,341

127,829

120,625

Total deposits

$

1,473,454

$

1,506,679

$

1,236,933

$

1,346,060


COMPOSITION OF COMMERCIAL AND CONSTRUCTION LOANS

Other

Commercial

Commercial

Real Estate

Real Estate

& Construction

Business

Mortgage

Construction

Total

December 31, 2021

(Dollars in thousands)

Commercial business

$

208,213

$

-

$

-

$

208,213

SBA PPP

14,322

-

-

14,322

Commercial construction

-

-

7,887

7,887

Office buildings

-

125,139

-

125,139

Warehouse/industrial

-

97,414

-

97,414

Retail/shopping centers/strip malls

-

79,860

-

79,860

Assisted living facilities

-

712

-

712

Single purpose facilities

-

263,531

-

263,531

Land

-

11,351

-

11,351

Multi-family

-

53,865

-

53,865

One-to-four family construction

-

-

10,478

10,478

Total

$

222,535

$

631,872

$

18,365

$

872,772

March 31, 2021

Commercial business

$

171,701

$

-

$

-

$

171,701

SBA PPP

93,444

-

-

93,444

Commercial construction

-

-

9,810

9,810

Office buildings

-

135,526

-

135,526

Warehouse/industrial

-

87,880

-

87,880

Retail/shopping centers/strip malls

-

85,414

-

85,414

Assisted living facilities

-

854

-

854

Single purpose facilities

-

233,793

-

233,793

Land

-

14,040

-

14,040

Multi-family

-

45,014

-

45,014

One-to-four family construction

-

-

7,180

7,180

Total

$

265,145

$

602,521

$

16,990

$

884,656

LOAN MIX

Dec. 31, 2021

Sept. 30, 2021

Dec. 31, 2020

March 31, 2021

Commercial and construction

(Dollars in thousands)

Commercial business

$

222,535

$

206,709

$

252,687

$

265,145

Other real estate mortgage

631,872

623,423

595,709

602,521

Real estate construction

18,365

13,621

16,922

16,990

Total commercial and construction

872,772

843,753

865,318

884,656

Consumer

Real estate one-to-four family

87,821

69,079

63,621

56,405

Other installment

1,630

1,700

2,529

2,174

Total consumer

89,451

70,779

66,150

58,579

Total loans

962,223

914,532

931,468

943,235

Less:

Allowance for loan losses

15,173

16,500

19,192

19,178

Loans receivable, net

$

947,050

$

898,032

$

912,276

$

924,057

DETAIL OF NON-PERFORMING ASSETS

Southwest

Washington

Other

Total

December 31, 2021

(Dollars in thousands)

Commercial business

$

105

$

-

$

105

Commercial real estate

127

-

127

Consumer

56

1,552

1,608

Total non-performing assets

$

288

$

1,552

$

1,840


At or for the three months ended

At or for the nine months ended

SELECTED OPERATING DATA

Dec. 31, 2021

Sept. 30, 2021

Dec. 31, 2020

Dec. 31, 2021

Dec. 31, 2020

Efficiency ratio (4)

61.15

%

52.99

%

63.50

%

58.47

%

63.44

%

Coverage ratio (6)

129.96

%

151.17

%

126.59

%

134.27

%

126.64

%

Return on average assets (1)

1.28

%

1.52

%

1.11

%

1.42

%

0.67

%

Return on average equity (1)

13.47

%

15.96

%

10.56

%

14.77

%

6.21

%

Return on average tangible equity (1) (non-GAAP)

16.23

%

19.31

%

12.92

%

17.88

%

7.61

%

NET INTEREST SPREAD

Yield on loans

4.67

%

5.11

%

4.82

%

4.81

%

4.69

%

Yield on investment securities

1.50

%

1.47

%

1.56

%

1.50

%

1.71

%

Total yield on interest-earning assets

3.08

%

3.26

%

3.63

%

3.19

%

3.74

%

Cost of interest-bearing deposits

0.12

%

0.16

%

0.26

%

0.16

%

0.34

%

Cost of FHLB advances and other borrowings

2.62

%

2.59

%

2.17

%

2.63

%

1.86

%

Total cost of interest-bearing liabilities

0.19

%

0.23

%

0.34

%

0.23

%

0.43

%

Spread (7)

2.89

%

3.03

%

3.29

%

2.96

%

3.31

%

Net interest margin

2.96

%

3.12

%

3.40

%

3.05

%

3.46

%

PER SHARE DATA

Basic earnings per share (2)

$

0.25

$

0.29

$

0.18

$

0.80

$

0.32

Diluted earnings per share (3)

0.25

0.29

0.18

0.80

0.32

Book value per share (5)

7.36

7.21

6.80

7.36

6.80

Tangible book value per share (5) (non-GAAP)

6.11

5.96

5.56

6.11

5.56

Market price per share:

High for the period

$

8.07

$

7.60

$

5.72

$

8.07

$

6.12

Low for the period

7.19

6.76

4.21

6.47

3.82

Close for period end

7.69

7.27

5.26

7.69

5.26

Cash dividends declared per share

0.0550

0.0550

0.0500

0.1600

0.1500

Average number of shares outstanding:

Basic (2)

22,166,130

22,179,829

22,320,699

22,229,832

22,279,774

Diluted (3)

22,177,120

22,191,487

22,337,644

22,242,035

22,296,827

(1) Amounts for the periods shown are annualized.
(2) Amounts exclude ESOP shares not committed to be released.
(3) Amounts exclude ESOP shares not committed to be released and include common stock equivalents.
(4) Non-interest expense divided by net interest income and non-interest income.
(5) Amounts calculated based on shareholders’ equity and include ESOP shares not committed to be released.
(6) Net interest income divided by non-interest expense.
(7) Yield on interest-earning assets less cost of funds on interest-bearing liabilities.

Contact:

Kevin Lycklama or David Lam

Riverview Bancorp, Inc. 360-693-6650