HALIFAX, PA--(Marketwired - Jul 31, 2014) - Riverview Financial Corporation (
Net income was $542,000, or $0.20 per diluted share, for the three months ended June 30, 2014 compared with $561,000, or $0.33 per diluted share, for the three months ended June 30, 2013. For the six months ended June 30, 2014, net income was $1.55 million, or $0.57 per diluted share, compared with $1.04 million, or $0.61 per diluted share, for the six months ended June 30, 2013.
The company's financial results in second quarter and first half 2014 reflect the impact of the merger of Riverview and Union Bancorp, Inc. completed November 1, 2013. The financial results relating to second quarter and first half 2013 reflect Riverview and its operating divisions only.
Robert Garst, Riverview Financial's CEO, commented: "The company's most recent core operating results and considerable year-over-year balance sheet growth reflect the increased size, scale, and earnings potential the company has attained as a result of our fourth quarter 2013 merger with Union. We rapidly and successfully completed the integration of Union, and have established what we feel is a solid platform for growth.
"During first half 2014, we streamlined existing operations and fully integrated Union, achieving 40% in direct cost savings from the merged institution. We experienced several extraordinary gain and expense items, but we do not expect merger-related 'noise' in future periods. Concurrently, we invested in people, facilities and operations to drive revenue and productivity, as we look to leverage our franchise to grow contributions from all business lines, including wealth management and commercial lending."
Second Quarter, Six Months 2014 Highlights
- Total assets were $440.00 million at June 30, 2014 compared with $314.83 million at June 30, 2013 and up $7.12 million compared with total assets of $432.88 million at December 31, 2013.
- Year-to-date return on average assets was 0.73%, return on average equity was 8.33%, and the company's shareholders' equity to assets ratio climbed to 8.65%. Shareholders' equity increased by $1.83 million to $38.06 million during the six months of 2014.
- Tangible book value at June 30, 2014 was $12.67, up from $11.93 at December 31, 2013.
- Net interest income in second quarter 2014 was $4.31 million compared with $2.57 million in second quarter 2013, reflecting increased scale following the merger, and a 15% reduction of interest expense year-over-year. On a consecutive quarter basis, net interest income increased $481,000 compared with first quarter 2013.
- In first half 2014, net interest income was $8.14 million compared with $5.07 million in first half 2013, driven by a larger base of interest accruing loans and reduced interest expense. The company had no loan loss provision in either first half 2014 or first half 2013.
- Total net loans, after allowance for loan losses, were $326.21 million at June 30, 2014, compared with $236.39 million at June 30, 2013, and up from $319.67 million at December 31, 2013.
- Average interest-earning assets in second quarter 2014 were $393.17 million, up from a pre-merger total of $285.45 million in second quarter 2013.
- Reflecting the company's initiatives in first half 2014 to remove legacy troubled credits from the balance sheet, non-performing loans declined to $4.41 million at June 30, 2014 compared with $8.16 million at December 31, 2013.
- The ratio of non-performing loans to total loans was 1.34% at June 30, 2014 compared with 1.80% at June 30, 2013. The ratio of non-performing assets to total assets was 1.24% at June 30, 2014 compared with 1.95% at June 30, 2013.
- Riverview Bank's capital strength was reflected in ratios that were well above regulatory standards for "well-capitalized" banks, with a Tier 1 leverage ratio of 7.83%, a Tier 1 risk-based capital ratio of 10.22%, and a total risk-based capital ratio of 11.25% at June 30, 2014.
Garst commented: "Our focus in the months following the acquisition has been to solidify credit and underwriting standards throughout the organization. With much of this work completed, we are excited to turn our attention to driving profitable growth and expanding our presence in key markets."
Operating Results
Merger-Related and Extraordinary Items
Second quarter 2014 net income of $542,000, or $0.20 per diluted share, for the three months ended June 30, 2014. For the six months ended June 30, 2014, net income was $1.55 million, or $0.57 per diluted share. First half 2014 net income included a one-time gain on the recovery of $168,484 of non-accrued interest related to two loans, one of which was acquired from Union, and a $602,700 recovery of loan interest income on the settlement of an outstanding loan acquired from Union.
First half 2014 expenses included $72,887 in one-time legal costs associated with the settlement of the above-mentioned loan acquired from Union, valuation adjustments to other real estate owned of $217,718, net charge-offs of $307,854 related to impaired loans, and $226,287 of computer and systems-related expenses, primarily reflecting data systems conversion costs related to the Union acquisition.
Income Statement
Total interest income for the three months ended June 30, 2014 was $4.84 million compared with $3.19 million for the three months ended June 30, 2013, and was $433,000 higher compared with the three months ended March 31, 2014. Total interest income for the six months ended June 30, 2014 was $9.24 million compared with $6.39 million for the six months ended June 30, 2013, primarily reflecting a larger base of loans and income from the company's investment portfolio.
Total interest expense for the three months ended June 30, 2014 declined to $528,000 compared with $620,000 for the three months ended June 30, 2013. For the six months ended June 30, 2014, total interest expense declined to $1.10 million compared with $1.33 million at June 30, 2013.
Net interest income after provision for loan losses was $4.31 million in second quarter 2014 compared with $2.57 million in second quarter 2013. In first half 2014, net interest income after provision for loan losses was $8.14 million compared with $5.07 million in first half 2013. None of the periods had a loss provision.
The company's net interest margin on a tax equivalent basis and excluding one-time extraordinary events was 3.89% at June 30, 2014, expanding from 3.73% a year earlier, and the company's net interest spread was 3.80% compared with 3.64% a year ago.
Garst said: "We feel we have effectively managed our cost of funds in a continuing low-interest environment, including through our focus on building lower-cost and non-interest bearing demand deposits. We have allowed certain higher-cost deposits to run off, and the company is utilizing attractively priced short-term borrowings to fund lending activity when appropriate."
Total noninterest income was $373,000 in second quarter 2014, compared with $577,000 in second quarter 2013. In first half 2014, total noninterest income was $1.20 million compared with $1.10 million in first half 2014. Both 2014 periods reflected increased service charges and fees, increased income from the company's wealth management business, and losses taken on the sale and write-down of other real estate owned.
Noninterest expense in second quarter 2014 was $3.87 million compared with $2.39 million in second quarter 2013. Noninterest expense in first half 2014 was $7.20 million compared with $4.77 million in first half 2013, partially reflecting previously mentioned expenses relating to the consolidation of Union. Employee-related costs, occupancy and other operating expenses increased, reflecting the company's increased size. Garst noted that year-over-year salaries and employee benefits increases not only reflected additional employees due to the merger, but the addition of key hires to drive revenue.
Balance Sheet and Asset Quality
Total net loans after allowance for losses were $326.21 million at June 30, 2014 compared with $236.39 million at June 30, 2013, primarily reflecting the company's increased scale following the Union acquisition. Total net loans increased by $6.54 million from $319.67 million at December 31, 2013. The company's allowance for loan losses of $3.36 million at June 30, 2014 was relatively consistent with the allowance at June 30, 2013 and December 31, 2013.
Total assets were $440.00 million at June 30, 2014 compared with $314.83 million at June 30, 2013, primarily reflecting the acquisition. Total assets were $432.88 million at December 31, 2013.
Total deposits were $375.12 million at June 30, 2014 compared with $278.65 million at June 30, 2013, and $382.35 million at December 31, 2013. The company's level of core deposits was stable during first half 2014, and the company trimmed higher-cost time deposits, utilizing attractively priced short-term borrowings to support lending activity.
Balance sheet and asset quality reflected consistent strength of performing loans, and initiatives in the first half to move non-performing loans off the balance sheet. Non-performing loans were $4.41 million at June 30, 2014 compared with $8.16 million at December 31, 2013. Non-performing assets were $5.47 million at June 30, 2014 compared with $9.29 million at December 31, 2013. Restructured loans, accruing, declined to $916,000 at June 30, 2014 compared with $1.15 million at December 31, 2013.
The ratio of non-performing loans to total loans was 1.34% at June 30, 2014 compared with 1.80% at December 31, 2013, and the ratio of non-performing assets to total assets was 1.24% at June 30, 2014 compared with 1.95% at December 31, 2013. Net charge-offs of loans in first half 2014 were $307,854, with a ratio of net charge-offs to average loans of 0.19% in first half 2014.
Capital and Shareholder Value Measures
Capital ratios for Riverview Bank remained above regulatory standards for "well-capitalized" banks, with a Tier 1 leverage ratio of 7.83%, a Tier 1 risk-based capital ratio of 10.22%, and a total risk-based capital ratio of 11.25% at June 30, 2014.
Total shareholders' equity was $38.06 million at June 30, 2014 compared with $26.74 million at June 30, 2013 and up 5% from $36.23 million at December 31, 2013. Tangible book value at June 30, 2014 was $12.67, up from $11.93 at December 31, 2013. Return on average assets was 0.73% for the six months ended June 30, 2014 and return on average shareholders' equity was 8.33% for the six months ended June 30, 2014.
Outlook
Garst concluded: "With the completion of the Union integration, strengthening the company's balance sheet and trimming owned assets, we are well positioned to drive profitable growth on a number of fronts. We have made investments to build our presence in our served markets, with a particular focus on Schuylkill and Berks counties. We look forward to increasing efficiency and productivity throughout our franchise in the second half of the year, and to continue on the path of generating increased value for our shareholders."
Profile
Riverview Financial Corporation is a community bank holding company, and parent company of Riverview Bank and its operating divisions, serving the greater Harrisburg market and six counties in central Pennsylvania. The company's stock trades on the OTCQB exchange under the symbol "RIVE".
Forward Looking Statements
Certain statements contained herein are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such forward-looking statements may be identified by reference to a future period or periods, or by the use of forward-looking terminology, such as "may," "will," "believe," "expect," "estimate," "anticipate," "continue," or similar terms or variations on those terms, or the negative of those terms. Forward-looking statements are subject to numerous risks and uncertainties, including, but not limited to, those related to the economic environment, particularly in the market areas in which the company operates, competitive products and pricing, fiscal and monetary policies of the U.S. Government, changes in government regulations affecting financial institutions, including compliance costs and capital requirements, changes in prevailing interest rates, acquisitions and the integration of acquired businesses, credit risk management, asset-liability management, the financial and securities markets and the availability of and costs associated with sources of liquidity.
The company wishes to caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. The company wishes to advise readers that the factors listed above could affect the company's financial performance and could cause the company's actual results for future periods to differ materially from any opinions or statements expressed with respect to future periods in any current statements. The company does not undertake and specifically declines any obligation to publicly release the result of any revisions, that may be made to any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.
-Selected Financial Tables Follow-
| Consolidated Selected Financial Information | |||||||||
| (Dollars in thousands, except per share data) | |||||||||
| As of and for the periods ended | |||||||||
| June 30, 2014 (Unaudited) |
December 31, 2013 (Audited) |
June 30, 2013 (Unaudited) |
|||||||
| Selected Balance Sheet Data: | |||||||||
| Total assets | $ | 440,004 | $ | 432,882 | $ | 314,829 | |||
| Investment securities available for sale | 63,935 | 57,246 | 32,680 | ||||||
| Total loans, net of allowance | 326,214 | 319,674 | 236,394 | ||||||
| Total deposits | 375,119 | 382,345 | 278,649 | ||||||
| Borrowings | 22,713 | 10,000 | 7,000 | ||||||
| Shareholders' equity | 38,056 | 36,228 | 26,735 | ||||||
| Non-performing loans | 4,414 | 8,158 | 4,328 | ||||||
| Non-performing assets | 5,474 | 9,285 | 6,137 | ||||||
| Common shares outstanding | 2,703,840 | 2,703,840 | 1,716,316 | ||||||
| Book value per common share | $ | 14.07 | $ | 13.40 | $ | 15.58 | |||
| As of and for the three months ended |
As of and for the six months ended |
|||||||||||
| June 30, 2014 | June 30, 2013 | June 30, 2014 | June 30, 2013 | |||||||||
| Selected Operations Data - Unaudited: | ||||||||||||
| Total interest income | $ | 4,836 | $ | 3,190 | $ | 9,239 | $ | 6,393 | ||||
| Total interest expense | 528 | 620 | 1,104 | 1,326 | ||||||||
| Net interest income before provision for loan losses | 4,308 | 2,570 | 8,135 | 5,067 | ||||||||
| Provision for loan losses | - | - | - | - | ||||||||
| Net interest income after provision for loan losses | 4,308 | 2,570 | 8,135 | 5,067 | ||||||||
| Total non-interest income | 373 | 577 | 1,198 | 1,099 | ||||||||
| Total non-interest expense | 3,873 | 2,385 | 7,204 | 4,768 | ||||||||
| Income before taxes | 808 | 762 | 2,129 | 1,398 | ||||||||
| Income tax expense | 266 | 201 | 577 | 354 | ||||||||
| Net income | $ | 542 | $ | 561 | $ | 1,552 | $ | 1,044 | ||||
| Per Share Data - Unaudited: | ||||||||||||||||
| Net income per share (basic) | $ | 0.20 | $ | 0.33 | $ | 0.57 | $ | 0.61 | ||||||||
| Net income per share (diluted) | $ | 0.20 | $ | 0.33 | $ | 0.57 | $ | 0.61 | ||||||||
| Cash dividends per common share | 13.98 | % | 12.53 | % | 26.48 | % | 25.00 | % | ||||||||
| As of and for the three months ended |
As of and for the six months ended |
|||||||||||
| June 30, 2014 | June 30, 2013 | June 30, 2014 | June 30, 2013 | |||||||||
| Performance Ratios: | ||||||||||||
| Return on average total assets | 0.50 | % | 0.72 | % | 0.73 | % | 0.67 | % | ||||
| Return on average total shareholders' equity | 5.67 | % | 8.35 | % | 8.33 | % | 7.82 | % | ||||
| Net interest margin, tax equivalent | 3.89 | % | 3.75 | % | 3.89 | % | 3.73 | % | ||||
| Net interest spread, tax equivalent | 3.80 | % | 3.68 | % | 3.80 | % | 3.64 | % | ||||
| Efficiency ratio | 82.74 | % | 75.79 | % | 77.19 | % | 77.33 | % | ||||
| Non-interest income to average assets | 0.35 | % | 0.74 | % | 0.56 | % | 0.71 | % | ||||
| Non-interest expense to average assets | 3.60 | % | 3.04 | % | 3.37 | % | 3.07 | % | ||||
| Average loan to average deposit ratio | 86.54 | % | 86.79 | % | 86.36 | % | 87.31 | % | ||||
| Average interest earning assets to average interest bearing liabilities | 116.22 | % | 109.12 | % | 116.01 | % | 109.37 | % | ||||
| Asset Quality Ratios: | |||||||||||||
| Non-performing loans to total loans | 1.34 | % | 1.80 | % | 1.34 | % | 1.80 | % | |||||
| Allowance for loan losses to: | |||||||||||||
| Total loans | 1.02 | % | 1.57 | % | 1.02 | % | 1.57 | % | |||||
| Non-performing loans | 76.01 | % | 87.18 | % | 76.01 | % | 87.18 | % | |||||
| Net charge-offs to average loans (annualized) | 0.31 | % | - | 0.19 | % | - | |||||||
| Non-performing assets to total assets | 1.24 | % | 1.95 | % | 1.24 | % | 1.95 | % | |||||
| Capital Ratios: | ||||||||||||
| Stockholders' equity to assets | 8.65 | % | 8.49 | % | 8.65 | % | 8.49 | % | ||||
| Tier 1 risk-based capital (Bank only) | 10.22 | % | 10.84 | % | 10.22 | % | 10.84 | % | ||||
| Total risk-based capital (Bank only) | 11.25 | % | 12.09 | % | 11.25 | % | 12.09 | % | ||||
| Tier 1 leverage ratio (Bank only) | 7.83 | % | 8.30 | % | 7.83 | % | 8.30 | % | ||||
| Other: | ||||||||
| Number of bank subsidiaries | 1 | 1 | 1 | 1 | ||||
| Number of banking facilities | 17 | 11 | 17 | 11 | ||||
| Number of full-time equivalent employees | 101 | 72 | 101 | 72 |