VANCOUVER, Wash., July 15, 2008 (PRIME NEWSWIRE) -- Riverview Bancorp, Inc. (Nasdaq:RVSB) today reported that following a $2.75 million addition to its loan loss reserve, net income for the first quarter of fiscal 2009 was $793,000, or $0.07 per diluted share, compared to $2.8 million, or $0.25 per diluted share in the first quarter of fiscal 2008. The increased loan loss provision is due partly to trends in the risk rating migration of certain loans in the loan portfolio, as well as regional market conditions with regard to the decrease in home and land values.
"During the past several months, changes in the national economy affected our local markets in southwest Washington and metropolitan Portland; however, we do expect our local economy to continue to compare more favorably going forward," said Pat Sheaffer, Chairman and CEO. "While loan growth remains robust, we have seen a substantial slowdown in residential real estate sales in all our markets which directly impacted our land development and speculative construction lending portfolio. We continue to monitor the credit risk and quality of our loan portfolio as well as the current economic market conditions and believe we are well positioned as we move through this difficult period and limit credit losses. Riverview does not have sub-prime residential real estate in its loan portfolio and does not believe that it has any exposure to sub-prime lending in its Mortgage Backed Securities portfolio."
Credit Quality
"Our primary emphasis in fiscal 2009 continues to be managing the quality of our loan portfolio," said Ron Wysaske, President and COO. "Riverview has resolutely applied a disciplined approach to the loan approval process as well as continuously monitoring our entire loan portfolio for signs of credit deterioration. Although we have seen an increase in nonperforming loans recently, these problem loans are limited to a few lending relationships and are not a trend in the overall loan portfolio. We are working closely with our borrowers to help them and are doing everything possible to ensure Riverview is repaid in a timely manner." Non-performing assets increased to $23.6 million, or 2.67% of total assets, at June 30, 2008, compared to $8.2 million, or 0.92% of total assets, at March 31, 2008 and $226,000, or 0.03% of total assets, at June 30, 2007.
The increase in non-performing assets consists of twenty loans to sixteen borrowers, which includes six land-acquisition and development loans totaling $16.4 million, three construction loans totaling $2.3 million, two commercial loans totaling $1.2 million and three other real estate mortgage loans totaling $2.4 million. All of the loans are to borrowers located in Oregon and Washington, with the exception of one land acquisition and development loan totaling $3.5 million to a Washington borrower who has property located in Southern California. Riverview had $639,000 in other real estate owned (OREO) at the end of June 2008.
The allowance for loan losses, including unfunded loan commitments of $299,000, was $13.4 million, or 1.73% of total loans at quarter end, compared with $11.0 million, or 1.44% of total loans at March 31, 2008, and $9.1 million, or 1.36% of total loans, at June 30, 2007. Management believes the allowance for loan losses is adequate and appropriate based on its current analysis of the loan portfolio's credit quality, current economic conditions, and underlying collateral values. Net loan charge-offs were $330,000, or an annualized rate of 0.17% of total loans, for the quarter ended June 30, 2008.
Operating Results
Net interest income in the first fiscal quarter of 2009 was $8.4 million, down from $8.8 million in the first fiscal quarter a year ago, largely due to interest-bearing assets re-pricing down faster than interest-bearing liabilities as the Federal Reserve cut rates. For the first quarter of fiscal 2009, the net interest margin was 4.20% compared to 4.41% in the previous linked quarter and 4.83% in the first fiscal quarter a year ago. "Margin compression remains a challenge for Riverview as well as the entire banking industry, and we expect our margin to remain under pressure during the second half of the calendar year," said Wysaske.
Non-interest income was $2.2 million for the quarter, compared to $2.3 million for the same quarter a year ago. "Fee income from Riverview Asset Management Corp. increased 14% compared to the same quarter in the prior year, but was offset by a $263,000 decline in mortgage broker loan fees, reflecting the continued slowdown in the real estate market," said Wysaske.
Non-interest expense was $6.7 million in the first quarter of fiscal 2009, compared to $6.8 million in the first quarter of fiscal 2008. Riverview's efficiency ratio was 63.20% for the first quarter, compared to 60.93% in the first quarter a year ago. "Last year we increased our infrastructure to accommodate our expanding franchise in Southwest Washington and into Oregon," said Wysaske. "During the first quarter, revenues have remained steady, notwithstanding the economic slowdown and real estate problems in our markets. Operating expenses, likewise, have held firm. The reduction in net income and earnings per share is directly attributable to increased credit costs," he continued.
Return on average assets was 0.36% for the first quarter of fiscal 2009, compared to 1.39% for the first quarter of fiscal 2008 and return on average equity was 3.35% for the first quarter, compared to 11.16% for the same quarter last year.
Balance Sheet Growth
"Our focus remains on keeping a well-diversified, high quality loan portfolio despite the current challenging economic environment," said Sheaffer. "Although we started our fiscal year at double digit growth, we expect our loan growth for the remainder of the year to be moderate compared to the record setting pace of the past few years as we continue to experience competitive loan pricing in our markets." Net loans increased 15% to $764 million at June 30, 2008, compared to $663 million a year ago. At June 30, 2008, commercial loans accounted for 71% and construction loans accounted for 18% of the total loan portfolio compared to 66% and 24% respectively at June 30, 2007.
"The local housing markets have slowed significantly compared to the last few years and as a result, our one-to-four family real estate construction portfolio is now down to $87 million from $102 million a year ago," said Wysaske. "However, population growth in the Southwest Washington and the metropolitan Portland, Oregon area continues to increase faster than the national average, despite the slowing housing market. We believe this provides an opportunity for us to grow our customer base, as well as our balance sheet, during the remainder of this year."
"During the quarter we reduced our exposure to real estate construction and shrunk that portfolio to $142 million at quarter-end from $149 million at the end of the linked quarter and $159 million at the end of June 2007," added Wysaske. "We should continue to see reductions in our real estate construction portfolio as we focus on other lending opportunities."
The following table breaks out the composition of commercial and construction loan types based on loan purpose:
COMPOSITION OF COMMERCIAL AND CONSTRUCTION LOAN TYPES BASED
ON LOAN PURPOSE
Other
Real Commercial &
Estate Real Estate Construction
June 30, 2008 Commercial Mortgage Construction Total
------------- --------- --------- --------- ---------
(Dollars in thousands)
Commercial $ 110,620 $ -- $ -- $ 110,620
Commercial
construction -- -- 54,821 54,821
Office buildings -- 85,386 -- 85,386
Warehouse/industrial -- 44,270 -- 44,270
Retail/shopping
centers/strip malls -- 78,042 -- 78,042
Assisted living
facilities -- 30,651 -- 30,651
Single purpose
facilities -- 73,478 -- 73,478
Land -- 102,509 -- 102,509
Multi-family -- 24,574 -- 24,574
One-to-four family -- -- 87,385 87,385
-------------------------------------------
Total $ 110,620 $ 438,910 $ 142,206 $ 691,736
===========================================
"We continue to focus on core deposit growth by expanding our commercial banking products," said Sheaffer. "Earlier this year we began offering remote deposit capture of checks to selected customers and enhancing our cash management product line." Following the payoff of $25.2 million in brokered CDs, Riverview's total deposits were $629 million at June 30, 2008, compared to $692 million a year ago. Riverview currently chooses to have no brokered deposits. Non-interest checking balances represent 12% of total deposits and interest checking balances represent 15% of total deposits. Core deposits, defined as all deposits excluding certificates of deposit, were $374 million at the end of June 2008, and represent 59% of total deposits.
Total assets increased 6% to $885 million at June 30, 2008, compared to $832 million a year ago.
Shareholders' Equity
Shareholders' equity was $92.0 million at June 30, 2008, compared to $99.7 million a year ago. Book value per share was $8.43 at the end of June 2008, compared to $8.62 a year earlier. Riverview's capital position remains strong, and the bank remains "well-capitalized" by regulatory definition. At June 30, 2008, the total capital ratio was 11.03% compared to 10.99% at March 31, 2008 and 11.09% at June 30, 2007.
About the Company
Riverview Bancorp, Inc. (www.riverviewbank.com) is headquartered in Vancouver, Washington - just north of Portland, Oregon on the I-5 corridor. With assets of $885 million, it is the parent company of the 85 year-old Riverview Community Bank, as well as Riverview Mortgage and Riverview Asset Management Corp. There are 18 branches, including ten in fast growing Clark County, three in the Portland metropolitan area and four lending centers. The Bank offers true community banking services, focusing on providing the highest quality service and financial products to commercial and retail customers.
Statements concerning future performance, developments or events, concerning expectations for growth and market forecasts, and any other guidance on future periods, constitute forward-looking statements, which are subject to a number of risks and uncertainties that might cause actual results to differ materially from stated objectives. These factors include but are not limited to: RVSB's ability to acquire shares according to internal repurchase guidelines, regional economic conditions and the company's ability to efficiently manage expenses. Additional factors that could cause actual results to differ materially are disclosed in Riverview Bancorp's recent filings with the SEC, including but not limited to Annual Reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K.
RIVERVIEW BANCORP, INC. AND SUBSIDIARY
Consolidated Balance Sheets
June 30, 2008, March 31, 2008 and June 30, 2007
(In thousands, except share data) June 30, March 31, June 30,
(Unaudited) 2008 2008 2007
-------------------------------------------------------------------
ASSETS
Cash (including interest-earning
accounts of $9,429, $14,238 and
$47,085) $ 28,271 $ 36,439 $ 68,082
Investment securities held to
maturity, at amortized cost (fair
value of $536, none and none) 536 -- --
Investment securities available for
sale, at fair value (amortized
cost of $7,786, $7,825 and
$13,734) 6,876 7,487 13,756
Mortgage-backed securities held to
maturity, at amortized cost (fair
value of $767, $892 and $1,150) 762 885 1,135
Mortgage-backed securities
available for sale, at fair value
(amortized cost of $4,963, $5,331
and $6,405) 4,915 5,338 6,201
Loans receivable (net of allowance
for loan losses of $13,107,
$10,687 and $8,728) 763,631 756,538 663,430
Real estate and other pers.
property owned 639 494 --
Prepaid expenses and other assets 2,473 2,679 2,878
Accrued interest receivable 3,080 3,436 3,686
Federal Home Loan Bank stock, at
cost 7,350 7,350 7,350
Premises and equipment, net 20,698 21,026 21,155
Deferred income taxes, net 4,799 4,571 4,126
Mortgage servicing rights, net 282 302 347
Goodwill 25,572 25,572 25,572
Core deposit intangible, net 521 556 669
Bank owned life insurance 14,322 14,176 13,753
--------- --------- ---------
TOTAL ASSETS $ 884,727 $ 886,849 $ 832,140
========= ========= =========
LIABILITIES AND SHAREHOLDERS'
EQUITY
LIABILITIES:
Deposit accounts $ 629,407 $ 667,000 $ 692,168
Accrued expenses and other
liabilities 8,034 8,654 9,675
Advance payments by borrowers for
taxes and insurance 128 393 162
Federal Home Loan Bank advances 129,760 92,850 5,000
Junior subordinated debentures 22,681 22,681 22,681
Capital lease obligation 2,677 2,686 2,713
--------- --------- ---------
Total liabilities 792,687 794,264 732,399
SHAREHOLDERS' EQUITY:
Serial preferred stock, $.01 par
value; 250,000 authorized, issued
and outstanding, none -- -- --
Common stock, $.01 par value;
50,000,000 authorized, June 30,
2008 - 10,923,773 issued and
outstanding; 109 109 115
March 31, 2008 - 10,913,773 issued
and outstanding;
June 30, 2007 - 11,566,980 issued
and outstanding
Additional paid-in capital 46,826 46,799 56,450
Retained earnings 46,703 46,871 44,379
Unearned shares issued to employee
stock ownership trust (980) (976) (1,083)
Accumulated other comprehensive
loss (618) (218) (120)
--------- --------- ---------
Total shareholders' equity 92,040 92,585 99,741
--------- --------- ---------
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY $ 884,727 $ 886,849 $ 832,140
========= ========= =========
RIVERVIEW BANCORP, INC. AND SUBSIDIARY
Consolidated Statements of Income for the
Three Months Ended June 30, 2008 and 2007 Three Months Ended
(In thousands, except share data) June 30,
(Unaudited) 2008 2007
-------------------------------------------------------------------
INTEREST INCOME:
Interest and fees on loans receivable $ 13,324 $ 14,880
Interest on investment securities-taxable 56 172
Interest on investment securities-non
taxable 32 38
Interest on mortgage-backed securities 61 91
Other interest and dividends 93 243
------------------------
Total interest income 13,566 15,424
INTEREST EXPENSE:
Interest on deposits 4,106 6,190
Interest on borrowings 1,093 406
------------------------
Total interest expense 5,199 6,596
------------------------
Net interest income 8,367 8,828
Less provision for loan losses 2,750 50
------------------------
Net interest income after
provision for loan losses 5,617 8,778
NON-INTEREST INCOME:
Fees and service charges 1,210 1,427
Asset management fees 624 548
Net gain on sale of loans held for sale 52 91
Loan servicing income 28 39
Bank owned life insurance 146 139
Other 122 58
------------------------
Total non-interest income 2,182 2,302
NON-INTEREST EXPENSE:
Salaries and employee benefits 3,884 3,968
Occupancy and depreciation 1,233 1,302
Data processing 199 168
Amortization of core deposit intangible 35 42
Advertising and marketing expense 181 282
FDIC insurance premium 114 19
State and local taxes 175 171
Telecommunications 124 104
Professional fees 202 223
Other 520 502
------------------------
Total non-interest expense 6,667 6,781
------------------------
INCOME BEFORE INCOME TAXES 1,132 4,299
PROVISION FOR INCOME TAXES 339 1,460
------------------------
NET INCOME $ 793 $ 2,839
========================
Earnings per common share:
Basic $ 0.07 $ 0.25
Diluted $ 0.07 $ 0.25
Weighted average number of shares
outstanding:
Basic 10,677,999 11,391,825
Diluted 10,698,292 11,527,586
At or for the three months At or for the year
ended June 30, ended March 31,
2008 2007 2008
---- ---- ----
FINANCIAL
CONDITION
DATA (Dollars in thousands)
----------
Average
interest-
earning
assets $800,295 $734,135 $751,023
Average
interest-
bearing
liabilities 698,571 620,930 643,265
Net average
earning
assets 101,724 113,205 107,758
Non-performing
assets 23,596 226 8,171
Non-performing
loans 22,957 226 7,677
Allowance for
loan losses 13,107 8,728 10,687
Allowance for
loan losses
and unfunded
loan
commitments 13,406 9,110 11,024
Average
interest-
earning
assets to
average
interest-
bearing
liabilities 114.56% 118.23% 116.75%
Allowance for
loan losses
to non-
performing
loans 57.09% 3861.95% 139.21%
Allowance for
loan losses
to total loans 1.69% 1.30% 1.39%
Allowance for
loan losses
and unfunded
loan
commitments
to total loans 1.73% 1.36% 1.44%
Non-performing
loans to
total loans 2.96% 0.03% 1.00%
Non-performing
assets to
total assets 2.67% 0.03% 0.92%
Shareholders'
equity to
assets 10.40% 11.99% 10.44%
Number of
banking
facilities 20 19 20
LOAN DATA
---------
Commercial
and
construction
Commercial $110,620 14.24% $ 90,896 13.52% $109,585 14.28%
Other real
estate
mortgage 438,910 56.51% 350,219 52.10% 429,422 55.97%
Real estate
construction 142,206 18.31% 158,598 23.60% 148,631 19.37%
----------------------------------------------------
Total
commercial
and
construction 691,736 89.06% 599,713 89.22% 687,638 89.62%
Consumer
Real estate
one-to-four
family 81,625 10.51% 67,815 10.09% 75,922 9.90%
Other
installment 3,377 0.43% 4,630 0.69% 3,665 0.48%
----------------------------------------------------
Total
consumer 85,002 10.94% 72,445 10.78% 79,587 10.38%
----------------------------------------------------
Total loans 776,738 100.00% 672,158 100.00% 767,225 100.00%
======= ======= =======
Less:
Allowance for
loan losses 13,107 8,728 10,687
-------- -------- --------
Loans
receivable,
net $763,631 $663,430 $756,538
======== ======== ========
COMPOSITION OF COMMERCIAL AND CONSTRUCTION LOAN TYPES BASED
ON LOAN PURPOSE
------------------------------------------------------------
Other
Real Real Commercial &
Estate Estate Construction
Commercial Mortgage Construction Total
---------- -------- ------------ -----
June 30, 2008 (Dollars in thousands)
-------------
Commercial $110,620 $ -- $ -- $110,620
Commercial
construction -- -- 54,821 54,821
Office buildings -- 85,386 -- 85,386
Warehouse/industrial -- 44,270 -- 44,270
Retail/shopping
centers/ strip malls -- 78,042 -- 78,042
Assisted living
facilities -- 30,651 -- 30,651
Single purpose
facilities -- 73,478 -- 73,478
Land -- 102,509 -- 102,509
Multi-family -- 24,574 -- 24,574
One-to-four family -- -- 87,385 87,385
------------------------------------------
Total $110,620 $438,910 $142,206 $691,736
==========================================
March 31, 2008
--------------
Commercial $109,585 $ -- $ -- $109,585
Commercial
construction -- -- 55,277 55,277
Office buildings -- 88,106 -- 88,106
Warehouse/industrial -- 39,903 -- 39,903
Retail/shopping
centers/ strip malls -- 70,510 -- 70,510
Assisted living
facilities -- 28,072 -- 28,072
Single purpose
facilities -- 65,756 -- 65,756
Land -- 108,030 -- 108,030
Multi-family -- 29,045 -- 29,045
One-to-four family -- -- 93,354 93,354
------------------------------------------
Total $109,585 $429,422 $148,631 $687,638
==========================================
At the year
At the three months ended June 30, ended March 31,
2008 2007 2008
---- ---- ----
(Dollars in thousands)
DEPOSIT DATA
------------
Interest
checking $ 94,536 15.02% $161,299 23.30% $102,489 15.37%
Regular savings 26,822 4.26% 27,849 4.02% 27,401 4.11%
Money market
deposit
accounts 175,364 27.86% 240,251 34.71% 189,309 28.38%
Non-interest
checking 77,721 12.35% 81,512 11.78% 82,121 12.31%
Certificates of
deposit 254,964 40.51% 181,257 26.19% 265,680 39.83%
--------------------------------------------------
Total deposits $629,407 100.00% $692,168 100.00% $667,000 100.00%
==================================================
At or for
At or for the three the year
months ended June 30, ended March 31,
SELECTED OPERATING DATA 2008 2007 2008
----------------------- ---- ---- ----
(Dollars in thousands, except share data)
Efficiency ratio (4) 63.20% 60.93% 63.40%
Efficiency ratio net of
intangible amortization 62.62% 60.34% 62.78%
Coverage ratio (6) 125.50% 130.19% 125.77%
Coverage ratio net of
intangible amortization 126.16% 131.00% 126.47%
Return on average assets (1) 0.36% 1.39% 1.04%
Return on average equity (1) 3.35% 11.16% 8.92%
Average rate earned on
interest-earned assets 6.81% 8.44% 8.09%
Average rate paid on
interest-bearing
liabilities 2.99% 4.26% 4.00%
Spread (7) 3.82% 4.18% 4.09%
Net interest margin 4.20% 4.83% 4.66%
PER SHARE DATA
Basic earnings per share (2) $ 0.07 $ 0.25 $ 0.79
Diluted earnings per
share (3) 0.07 0.25 0.79
Book value per share (5) 8.43 8.62 8.48
Tangible book value per
share (5) 6.01 6.32 6.06
Market price per share:
High for the period $ 9.790 $16.280 $16.280
Low for the period 7.420 13.690 9.930
Close for period end 7.420 13.690 9.980
Cash dividends declared per
share 0.090 0.110 0.420
Average number of shares
outstanding:
Basic (2) 10,677,999 11,391,825 10,915,271
Diluted (3) 10,698,292 11,527,586 11,006,673
(1) Amounts are annualized.
(2) Amounts calculated exclude ESOP shares not committed to be
released.
(3) Amounts calculated 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 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.