Riverview Bancorp Inc. Earns $793,000 in First Quarter; Net Loans Increase 15 Percent to $764 Million


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.


            

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