Riverview Bancorp Earns $5.8 Million in First Fiscal Quarter of 2022; Results Highlighted by Double Digit Deposit Growth and Strong Loan Pipeline


VANCOUVER, Wash., July 29, 2021 (GLOBE NEWSWIRE) -- Riverview Bancorp, Inc. (Nasdaq GSM: RVSB) (“Riverview” or the “Company”) today reported earnings of $5.8 million, or $0.26 per diluted share, in the first fiscal quarter ended June 30, 2021 compared to $3.4 million, or $0.15 per diluted share, in the preceding quarter and $480,000, or $0.02 per diluted share, in the first fiscal quarter a year ago.

“Earnings for our first fiscal quarter were strong, driven by an increase in net interest income, higher non-interest income, and lower operating expenses compared to last quarter,” stated Kevin Lycklama, president and chief executive officer. “Our continued focus on building customer relationships contributed to our core deposits increasing 22% over the last year. Additionally, our loan pipeline grew by more than 200% and we are encouraged by the increased business activity and loan demand in our markets. With Oregon and Washington fully reopened and most COVID restrictions lifted in Washington and Oregon, and the high vaccination rates in our states, we anticipate increased loan growth opportunities for the remainder of our fiscal year.”

First Quarter Highlights (at or for the period ended June 30, 2021)

  • Net income increased to $5.8 million, or $0.26 per diluted share.
  • Pre-tax, pre-provision for loan losses income (non-GAAP) was $5.7 million for the quarter compared to $4.4 million in the previous quarter and $5.1 million for the quarter ended June 30, 2020.
  • Total loan modifications decreased substantially to a single commercial loan totaling $563,000.
  • Net interest income increased to $11.3 million compared to $11.2 million in the preceding quarter and $11.1 million in the first quarter a year ago.
  • Riverview recorded a recapture for loan losses of $1.6 million during the quarter.
  • The allowance for loan losses was $17.6 million, or 1.98% of total loans. The allowance for loan losses excluding SBA purchased and SBA PPP loans (non-GAAP) was 2.22% of total loans.
  • Total loans were $889.5 million. SBA PPP loans totaled $55.5 million.
  • Loan pipeline increased 235% during the quarter to $84.2 million.
  • Total deposits increased $66.9 million, or 19.9% annualized, during the quarter to $1.41 billion.
  • Non-performing assets were 0.02% of total assets.
  • Total risk-based capital ratio was 17.49% and Tier 1 leverage ratio was 9.37%.

Income Statement

Net income was $5.8 million in the first fiscal quarter ended June 30, 2021 compared to $3.4 million in the preceding quarter and $480,000 in the first fiscal quarter a year ago. Pre-tax, pre-provision for loan losses income was $5.7 million for the quarter compared to $4.4 million in the previous quarter and $5.1 million for the quarter ended June 30, 2020.

Return on average assets was 1.46% in the first quarter of fiscal 2022 compared to 0.93% in the preceding quarter. Return on average equity and return on average tangible equity (non-GAAP) was 14.89% and 18.13%, respectively, compared to 9.00% and 10.97%, respectively, for the prior quarter.

Riverview’s core net interest income (non-GAAP) increased $373,000 compared to the preceding quarter. Reported net interest income was $11.3 million in the current quarter compared to $11.2 million in the preceding quarter and $11.1 million in the first quarter a year ago. Interest income on loans declined compared to prior quarters due to lower loan fee amortization income from Paycheck Protection Program (“PPP”) loans which was partially offset by a decrease in interest expense on deposits. However, interest income from investment securities increased as a result of investment purchases during the quarter. Net interest income is expected to continue to grow over the next several quarters based on the Company’s loan growth forecasts and deployment of its excess cash into higher yielding loans and investment securities.   

During the first quarter of fiscal 2022, $892,000 of interest and net fee income was earned through PPP loan forgiveness and normal amortization. This compares to $1.3 million of interest and net fee income on PPP loans during the preceding quarter and $611,000 in the first quarter of the prior year.

During the first quarter of fiscal 2022, net interest margin (“NIM”) was 3.07% compared to 3.26% in the preceding quarter and 3.65% in the first quarter of fiscal 2021. The decrease in NIM was primarily due to the higher balance of on-balance sheet liquidity and the lower level of loan fee amortization on PPP loans which resulted in a 13 basis point and 10 basis point decline, respectively.

The average overnight cash balances increased to $272.3 million during the quarter ended June 30, 2021 compared to $248.1 million in the preceding quarter and $94.9 million for the first fiscal quarter a year ago, due to the growth in deposits. Without the increase in overnight cash balances, NIM would have been 69 basis points higher in the current quarter, 72 basis points higher in the prior quarter and 35 basis points higher in the first quarter a year ago.

During the first fiscal quarter of 2022, Riverview continued the deployment of excess cash into its investment portfolio. Investment securities totaled $308.1 million at June 30, 2021 compared to $255.9 million at March 31, 2021. During the quarter, the Company purchased $52.2 million in new securities with a weighted average yield of 1.48%. Investment purchases were comprised primarily of agency securities, MBS backed by government agencies and municipal securities.

Average securities balances for the quarters ended June 30, 2021, March 31, 2021, and June 30, 2020 were $279.0 million, $204.8 million and $139.6 million, respectively. The weighted average yields on securities balances for those same periods were 1.53%, 1.54% and 1.95%, respectively.

The accretion on purchased loans totaled $71,000 during the first quarter compared to $92,000 during the preceding quarter and $72,000 in the first quarter a year ago, resulting in a two-basis point increase in the NIM for each of the three quarters. Net fees on loan prepayments, which included purchased SBA loan premiums, increased net interest income by $43,000 in the first fiscal quarter of 2022, which increased the NIM by two basis points for the quarter. This compares to a $72,000 decrease in net interest income related to net fees on loan prepayments that decreased the NIM by two basis points during the fourth fiscal quarter of 2021, and a $100,000 decrease in net interest income related to net fees on loan prepayments that decreased the NIM by four basis points during the first fiscal quarter a year ago. For the first fiscal quarter of 2022, SBA PPP loan interest and fees added eight basis points to the NIM compared to 20 basis points for the preceding quarter. The increase in the current quarter and the prior quarter were due primarily to the recognition of PPP loan fees as a part of the loan forgiveness process. For the first fiscal quarter of 2021, PPP loan income negatively affected the NIM by three basis points due to it being the initial quarter since the launch of PPP and the low rate of 1% affected the NIM, and there was no fee income from forgiveness. The above items resulted in a core-NIM (non-GAAP) of 3.64% in the current quarter compared to 3.78% in the preceding quarter and 4.05% in the first fiscal quarter a year ago.

Average PPP loans were $80.3 million in the first quarter compared to $90.3 million in the preceding quarter, and $84.8 million in the first quarter a year ago. During the quarter, the Company recorded $203,000 in interest income on PPP loans and $689,000 in loan fee amortization into income. This compares to $229,000 in interest income on PPP loans and $1.1 million in loan fee amortization during the preceding quarter and $226,000 in interest income on PPP loans and $385,000 in loan fee amortization during the first fiscal quarter a year ago.

Loan yields decreased 10 basis points during the quarter to 4.67% compared to 4.77% in the preceding quarter due primarily to the decrease in loan fee amortization income for these PPP loans. Loan yields were 4.69% in the first fiscal quarter a year ago. Loan yields excluding PPP loans were 4.69% for the quarter compared to 4.65% in the preceding quarter and 4.85% in the year-ago quarter.

Riverview’s cost of deposits decreased to 0.13% during the first fiscal quarter compared to 0.15% in the preceding quarter and 0.31% in the first quarter a year ago. The sequential decrease in deposit costs during the quarter reflects the continued low interest rate environment and are expected to decrease further as certificates of deposit reprice at maturity.

Non-interest income increased to $3.6 million during the quarter compared to $2.8 million in the preceding quarter and $2.6 million in the first fiscal quarter of 2021. Interchange and merchant bankcard fee income increased during the quarter, due to the continued increase in economic activity as Oregon and Washington ease pandemic restrictions. Brokered loan fee income has also been strong due to the continued strong mortgage and refinance market. Non-interest income during the quarter also included a $479,000 BOLI death benefit.

Asset management fees were $976,000 during the first fiscal quarter compared to $900,000 in the preceding quarter and $974,000 in the first fiscal quarter a year ago. Asset management fees continue to contribute meaningfully to total non-interest income. Riverview Trust Company’s assets under management remained at $1.3 billion at June 30, 2021, March 31, 2021 and June 30, 2020.

For the first fiscal quarter of 2022, non-interest expense was $9.1 million compared to $9.6 million in the preceding quarter and $8.7 million in the first fiscal quarter a year ago. Salaries and employee benefits decreased during the quarter to $5.8 million compared to $6.3 million in the preceding quarter. The prior quarter included higher year-end incentive payments for employees contributing to a majority of the decrease for the current quarter. In the first fiscal quarter of 2021, salary and employee benefits were $5.2 million, which included the deferral of $553,000 in compensation expenses related to loan origination costs for SBA PPP loans. Riverview continues to manage its non-interest expenses in the current economic environment and continues to look for opportunities to improve operating efficiencies.

The efficiency ratio improved to 61.4% for the first fiscal quarter compared to 68.6% in the preceding quarter and 63.2% in the first fiscal quarter a year ago.

Riverview’s effective tax rate for the first quarter of fiscal 2022 was 21.5% compared to 22.5% for the preceding quarter and 15.2% for the year-ago quarter.

Balance Sheet Review

Riverview’s total loans were $889.5 million at June 30, 2021 compared to $943.2 million three months earlier and $1.00 billion a year ago. The decrease in loan balances during the current quarter was primarily driven by forgiveness of SBA PPP loans, partially offset by an increase in commercial real estate loan balances. SBA PPP loans, net of fees, totaled $55.5 million at June 30, 2021 compared to $93.4 million at March 31, 2021 and $110.3 million at June 30, 2020. Organic loan growth continues to be impacted by loan payoffs as well as strong competition for high-quality loans in our markets.

The Company’s loan pipeline totaled $84.2 million at June 30, 2021, an increase of 235% from $25.1 million at the end of the prior quarter. The increase was largely due to an improvement in economic activity in our primary markets of Oregon and Washington as well as our internal focus on loan growth and increased business development activities. Based on our forecasts and outlook for our markets, we expect loan growth to accelerate for the remainder of our fiscal year as we anticipate the loan pipeline and production will continue to grow and we prioritize the deployment of our excess liquidity into higher yielding assets.

Undisbursed construction loans totaled $14.0 million at both June 30, 2021 and March 31, 2021, with the majority of the undisbursed construction loans expected to fund over the next several quarters. Revolving commercial business loan commitments totaled $58.0 million at June 30, 2021 compared to $69.7 million three months earlier. Utilization on these loans totaled 6.0% at June 30, 2021 compared to 11.0% at March 31, 2021. The weighted average rate on loan originations during the quarter was 3.98% compared to 3.90% in the preceding quarter and 3.36% in the first quarter a year ago.

Deposits increased $66.9 million, or 5.0%, to $1.41 billion at June 30, 2021 compared to the preceding quarter and increased $254.2 million, or 21.9%, compared to a year earlier. Non-interest bearing checking accounts increased $67.4 million, or 17.9% year-over-year, to $443.8 million at June 30, 2021. Checking accounts, as a percentage of total deposits, totaled 50.8% at June 30, 2021.

Shareholders’ equity increased to $157.0 million at June 30, 2021 compared to $151.6 million three months earlier and $147.5 million a year earlier. Tangible book value per share (non-GAAP) increased to $5.80 at June 30, 2021 compared to $5.54 at March 31, 2021 and $5.38 at June 30, 2020. Riverview paid a quarterly cash dividend of $0.05 per share on July 22, 2021, consistent with the past seven quarters.

Credit Quality

As one of the key metrics we manage, asset quality remains exceptionally strong. Non-performing assets decreased to $383,000, or 0.02% of total assets, at June 30, 2021 compared to $571,000, or 0.04% of total assets, three months earlier and $1.3 million, or 0.09% of total assets, at June 30, 2020. Riverview recorded net loan recoveries during the quarter of $12,000. This compared to net loan charge-offs during the prior quarter of $14,000 and $48,000 in the first fiscal quarter a year ago.

Due to the improvement in economic conditions, we recorded a recapture of loan losses of $1.6 million during the first fiscal quarter. This compares to no provision for loan losses in the prior quarter and a $4.5 million provision for loan losses during the first fiscal quarter a year ago.

At June 30, 2021, Riverview had one commercial loan modification remaining totaling $563,000. This compares to five commercial loans totaling $18.1 million at March 31, 2021, and 98 loans totaling $161.6 million at the peak on June 30, 2020. Riverview had no new commercial loan accommodation requests through the date of this press release. There were no consumer loan modifications as of June 30, 2021 or March 31, 2021.

Riverview’s hotel/motel portfolio performance has steadily improved over the last several quarters. Occupancy, RevPar and financial performance has improved for these borrowers and at June 30, 2021 there were no remaining hotel/motel loans with COVID modifications. Loans in this portfolio are primarily concentrated in Northwest Oregon and Southwest Washington with a few properties located on the Oregon Coast and in the Columbia River Gorge. This portfolio is comprised of mainly flagged properties versus independent hotel/motels and are in the midscale and economy categories.

Classified assets were $5.9 million at June 30, 2021 compared to $7.7 million at March 31, 2021 and $5.0 million at June 30, 2020. The classified asset to total capital ratio was 3.6% at June 30, 2021 compared to 4.8% three months earlier and 3.3% a year earlier.

Criticized assets decreased to $40.3 million at June 30, 2021 compared to $42.5 million at March 31, 2021. This balance reflects risk rating changes primarily associated with loans that had been granted COVID-19 loan modifications. In general, borrowers whose loans were paying as agreed prior to COVID-19, remain well-secured and have provided acceptable plans for returning to full payment status were downgraded to a pass/watch rating. Modifications that extended beyond six months were generally downgraded to a special mention/criticized rating unless other mitigating considerations exist that lowered the bank’s credit risk. Borrowers who could not provide a plan or whose business was closed with no plan for re-opening in a reasonable timeframe, were moved to a substandard/classified rating. In addition, the risk rating was also downgraded for certain borrowers who were not granted COVID-19 loan modifications, but who still have been impacted negatively by the COVID-19 pandemic.

At June 30, 2021, the allowance for loan losses was $17.6 million compared to $19.2 million at March 31, 2021 and $17.1 million one year earlier. The allowance for loan losses represented 1.98% of total loans at June 30, 2021 compared to 2.03% in the preceding quarter and 1.70% a year earlier. The allowance for loan losses to loans, net of SBA guaranteed loans (including SBA PPP loans) (non-GAAP), was 2.22% at June 30, 2021 compared to 2.39% at March 31, 2021 and 2.08% 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 an amount below the outstanding principal balance. The remaining net discount on these purchased loans was $652,000 at June 30, 2021 compared to $722,000 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 17.49% and a Tier 1 leverage ratio of 9.37% at June 30, 2021. Tangible common equity to average tangible assets ratio (non-GAAP) was 8.14% at June 30, 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. Unamortized PPP deferred loan fees at June 30, 2021 totaled $68,000 for Round 1. The following table presents the breakdown and balance, net of deferred fees, of Round 1 PPP loans at June 30, 2021:

RangeNumber of loans  Total
(in 000s)
     
Up to $150,00026 $1,362
$150,001 to $350,0007  1,503
$350,001 to $2,000,0002  895
Over $2,000,0001  2,136
Total36 $5,896

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 June 30, 2021 totaled $2.0 million for Round 2. The following table presents the breakdown and balance, net of deferred fees, of Round 2 PPP loans at June 30, 2021:

RangeNumber of loans  Total
(in 000s)
     
Up to $150,000300 $14,208
$150,001 to $350,00062  13,717
$350,001 to $2,000,00026  19,745
Over $2,000,0001  1,945
Total389 $49,615

In total, 779 PPP loans totaling $111.5 million (72%) have been forgiven by the SBA or repaid by the borrower.

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 extent to which the Company repurchases its shares and the timing of such repurchase will depend upon market conditions and other corporate considerations.

Charter Conversion

Effective April 28, 2021, Riverview Community Bank converted from a federal savings bank to a Washington chartered commercial bank. As a result of that charter conversion Riverview Bancorp, Inc. applied and received approval from the Federal Reserve and converted from a savings and loan holding company to a bank holding company on April 28, 2021.

Branch Consolidation

Riverview continues to actively review its branch network for efficiencies due to customers’ increased usage of online and mobile banking technologies. In January 2021, Riverview consolidated one branch in the Heights neighborhood of Vancouver and consolidated its branch in the Montavilla neighborhood of Portland in May 2021. In September 2020, Riverview also consolidated two of its branches in Clark County, Washington and simultaneously opened a new branch in the Cascade Park neighborhood of Vancouver. Riverview plans to open a new location in Ridgefield, Washington, one of the fastest growing cities in Clark County, during the fall of 2021.

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) June 30, 2021 March 31, 2021 June 30, 2020 
        
Shareholders' equity (GAAP) $156,976  $151,594  $147,478  
Exclude: Goodwill  (27,076)  (27,076)  (27,076) 
Exclude: Core deposit intangible, net  (588)  (619)  (724) 
Tangible shareholders' equity (non-GAAP) $129,312  $123,899  $119,678  
        
Total assets (GAAP) $1,617,016  $1,549,158  $1,377,374  
Exclude: Goodwill  (27,076)  (27,076)  (27,076) 
Exclude: Core deposit intangible, net  (588)  (619)  (724) 
Tangible assets (non-GAAP) $1,589,352  $1,521,463  $1,349,574  
        
Shareholders' equity to total assets (GAAP)  9.71%  9.79%  10.71% 
        
Tangible common equity to tangible assets (non-GAAP) 8.14%  8.14%  8.87% 
        
Shares outstanding  22,277,868   22,351,235   22,245,472  
        
Book value per share (GAAP)  7.05   6.78   6.63  
        
Tangible book value per share (non-GAAP)  5.80   5.54   5.38  
        
        
Pre-tax, pre-provision income       
  Three Months Ended 
(Dollars in thousands) June 30, 2021 March 31, 2021 June 30, 2020 
        
Net income (GAAP) $5,755  $3,414  $480  
Include: Provision for income taxes  1,580   992   86  
Include: Provision for (recapture of) loan losses  (1,600)  -   4,500  
Pre-tax, pre-provision income (non-GAAP) $5,735  $4,406  $5,066  
        
        
Net interest margin reconciliation to core net interest margin     
  Three Months Ended 
(Dollars in thousands) June 30, 2021 March 31, 2021 June 30, 2020 
        
Net interest income (GAAP) $11,284  $11,196  $11,128  
  Tax equivalent adjustment  16   16   6  
  Net fees on loan prepayments  (43)  72   100  
  Accretion on purchased MBank loans  (71)  (92)  (72) 
  SBA PPP loans interest income and net fees  (892)  (1,292)  (611) 
  Income on excess FRB liquidity  (77)  (56)  (18) 
Adjusted net interest income (non-GAAP) $10,217  $9,844  $10,533  
        
        
  Three Months Ended 
(Dollars in thousands) June 30, 2021 March 31, 2021 June 30, 2020 
        
Average balance of interest-earning assets (GAAP) $1,478,715  $1,393,153  $1,222,686  
  SBA PPP loans (average)  (80,297)  (90,268)  (84,809) 
  Excess FRB liquidity (average)  (272,331)  (248,100)  (94,901) 
Average balance of interest-earning assets excluding       
SBA PPP loans and excess FRB liquidity (non-GAAP)$1,126,087  $1,054,785  $1,042,976  
        
        
  Three Months Ended 
  June 30, 2021 March 31, 2021 June 30, 2020 
        
Net interest margin (GAAP)  3.07% 3.26% 3.65%
  Net fees on loan prepayments  (0.02)  0.02   0.04  
  Accretion on purchased MBank loans  (0.02)  (0.02)  (0.02) 
  SBA PPP loans  (0.08)  (0.20)  0.03  
  Excess FRB liquidity  0.69   0.72   0.35  
Core net interest margin (non-GAAP)  3.64% 3.78% 4.05%
        
        
Allowance for loan losses reconciliation, excluding SBA purchased and PPP loans   
        
(Dollars in thousands) June 30, 2021 March 31, 2021 June 30, 2020 
        
Allowance for loan losses $17,590  $19,178  $17,076  
        
Loans receivable (GAAP) $889,479  $943,235  $1,002,720  
Exclude: SBA purchased loans  (42,213)  (47,379)  (70,853) 
Exclude: SBA PPP loans  (55,511)  (93,444)  (110,341) 
Loans receivable excluding SBA purchased and PPP loans (non-GAAP) $791,755  $802,412  $821,526  
        
Allowance for loan losses to loans receivable (GAAP)  1.98%  2.03%  1.70% 
        
Allowance for loan losses to loans receivable excluding SBA purchased and PPP loans (non-GAAP)  2.22%  2.39%  2.08% 
              

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 $1.62 billion at June 30, 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 7 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)June 30, 2021 March 31, 2021 June 30, 2020 
ASSETS      
       
Cash (including interest-earning accounts of $318,639, $254,205,$334,741 $265,408  $157,835 
and $143,017)      
Certificate of deposits held for investment 249  249   249 
Investment securities:      
Available for sale, at estimated fair value 268,853  216,304   137,749 
Held to maturity, at amortized cost 39,225  39,574   26 
Loans receivable (net of allowance for loan losses of $17,590,      
$19,178 and $17,076) 871,889  924,057   985,644 
Prepaid expenses and other assets 12,912  13,189   9,062 
Accrued interest receivable 4,940  5,236   5,202 
Federal Home Loan Bank stock, at cost 1,722  1,722   2,620 
Premises and equipment, net 17,940  17,824   16,124 
Financing lease right-of-use assets 1,413  1,432   1,489 
Deferred income taxes, net 5,047  5,419   3,067 
Mortgage servicing rights, net 66  81   162 
Goodwill 27,076  27,076   27,076 
Core deposit intangible, net 588  619   724 
Bank owned life insurance 30,355  30,968   30,345 
       
TOTAL ASSETS$1,617,016 $1,549,158  $1,377,374 
       
LIABILITIES AND SHAREHOLDERS' EQUITY      
       
LIABILITIES:      
Deposits$1,412,966 $1,346,060  $1,158,749 
Accrued expenses and other liabilities 17,431  21,906   11,472 
Advance payments by borrowers for taxes and insurance 555  521   632 
Federal Home Loan Bank Advances -  -   30,000 
Junior subordinated debentures 26,770  26,748   26,684 
Capital lease obligations 2,318  2,329   2,359 
Total liabilities 1,460,040  1,397,564   1,229,896 
       
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, 2021 - 22,351,235 issued and 22,277,868 outstanding;      
March 31, 2021 - 22,351,235 issued and outstanding; 222  223   222 
June 30, 2020 – 22,245,472 issued and outstanding;      
Additional paid-in capital 63,213  63,650   63,254 
Retained earnings 92,522  87,881   81,240 
Accumulated other comprehensive income (loss) 1,019  (160)  2,762 
Total shareholders’ equity 156,976  151,594   147,478 
       
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY$1,617,016 $1,549,158  $1,377,374 
       



RIVERVIEW BANCORP, INC. AND SUBSIDIARY    
Consolidated Statements of Income    
 Three Months Ended 
(In thousands, except share data) (Unaudited)June 30, 2021March 31, 2021June 30, 2020 
INTEREST INCOME:    
Interest and fees on loans receivable$10,776 $11,023$11,528 
Interest on investment securities - taxable 999  713 655 
Interest on investment securities - nontaxable 50  50 18 
Other interest and dividends 95  79 37 
Total interest and dividend income 11,920  11,865 12,238 
     
INTEREST EXPENSE:    
Interest on deposits 442  473 858 
Interest on borrowings 194  196 252 
Total interest expense 636  669 1,110 
Net interest income 11,284  11,196 11,128 
Provision for (recapture of) loan losses (1,600) - 4,500 
     
Net interest income after provision for (recapture of loan losses 12,884  11,196 6,628 
     
NON-INTEREST INCOME:    
Fees and service charges 1,855  1,667 1,398 
Asset management fees 976  900 974 
Bank owned life insurance ("BOLI") 190  188 190 
BOLI death benefit in excess of cash surrender value 479  - - 
Other, net 88  81 61 
Total non-interest income, net 3,588  2,836 2,623 
     
NON-INTEREST EXPENSE:    
Salaries and employee benefits 5,754  6,301 5,192 
Occupancy and depreciation 1,409  1,439 1,450 
Data processing 765  666 661 
Amortization of core deposit intangible 31  35 35 
Advertising and marketing 152  83 129 
FDIC insurance premium 95  98 48 
State and local taxes 198  196 204 
Telecommunications 46  50 86 
Professional fees 317  269 320 
Other 370  489 560 
Total non-interest expense 9,137  9,626 8,685 
     
INCOME BEFORE INCOME TAXES 7,335  4,406 566 
PROVISION FOR INCOME TAXES 1,580  992 86 
NET INCOME$5,755 $3,414$480 
     
Earnings per common share:    
Basic$0.26 $0.15$0.02 
Diluted$0.26 $0.15$0.02 
Weighted average number of common shares outstanding:    
Basic 22,344,785  22,346,368 22,256,665 
Diluted 22,358,764  22,361,730 22,276,303 



        
(Dollars in thousands) At or for the three months ended 
  June 30, 2021 March 31, 2021 June 30, 2020 
AVERAGE BALANCES       
Average interest–earning assets $1,478,715  $1,393,153  $1,222,686  
Average interest-bearing liabilities  959,033   906,124   808,715  
Net average earning assets  519,682   487,029   413,971  
Average loans  925,161   938,162   986,816  
Average deposits  1,373,086   1,289,259   1,105,540  
Average equity  154,981   153,896   150,707  
Average tangible equity (non-GAAP)  127,299   126,180   122,885  
        
        
ASSET QUALITY June 30, 2021 March 31, 2021 June 30, 2020 
        
Non-performing loans $383  $571  $1,288  
Non-performing loans to total loans  0.04%  0.06%  0.13% 
Real estate/repossessed assets owned $-  $-  $-  
Non-performing assets $383  $571  $1,288  
Non-performing assets to total assets  0.02%  0.04%  0.09% 
Net loan charge-offs (recoveries) in the quarter $(12) $14  $48  
Net charge-offs (recoveries) in the quarter/average net loans  (0.01)%  0.01%  0.02% 
        
Allowance for loan losses $17,590  $19,178  $17,076  
Average interest-earning assets to average       
  interest-bearing liabilities  154.19%  153.75%  151.19% 
Allowance for loan losses to       
  non-performing loans  4592.69%  3358.67%  1325.78% 
Allowance for loan losses to total loans  1.98%  2.03%  1.70% 
Shareholders’ equity to assets  9.71%  9.79%  10.71% 
        
        
CAPITAL RATIOS       
Total capital (to risk weighted assets)  17.49%  17.35%  17.40% 
Tier 1 capital (to risk weighted assets)  16.23%  16.09%  16.14% 
Common equity tier 1 (to risk weighted assets)  16.23%  16.09%  16.14% 
Tier 1 capital (to average tangible assets)  9.37%  9.63%  10.55% 
Tangible common equity (to average tangible assets) (non-GAAP)  8.14%  8.14%  8.87% 
        
        
DEPOSIT MIX June 30, 2021 March 31, 2021 June 30, 2020 
        
Interest checking $274,081  $258,014  $216,041  
Regular savings  307,026   291,769   247,966  
Money market deposit accounts  265,894   240,554   182,328  
Non-interest checking  443,797   435,098   376,372  
Certificates of deposit  122,168   120,625   136,042  
Total deposits $1,412,966  $1,346,060  $1,158,749  



          
COMPOSITION OF COMMERCIAL AND CONSTRUCTION LOANS     
          
    Other   Commercial 
  Commercial Real Estate Real Estate & Construction 
  Business Mortgage Construction Total 
June 30, 2021 (Dollars in thousands) 
Commercial business $160,617 $- $- $160,617 
SBA PPP  55,511  -  -  55,511 
Commercial construction  -  -  2,994  2,994 
Office buildings  -  136,580  -  136,580 
Warehouse/industrial  -  90,097  -  90,097 
Retail/shopping centers/strip malls  -  85,392  -  85,392 
Assisted living facilities  -  808  -  808 
Single purpose facilities  -  236,070  -  236,070 
Land  -  14,922  -  14,922 
Multi-family  -  44,804  -  44,804 
One-to-four family construction  -  -  8,392  8,392 
  Total $216,128 $608,673 $11,386 $836,187 
          
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 June 30, 2021 March 31, 2021 June 30, 2020   
Commercial and construction         
  Commercial business $216,128 $265,145 $281,832   
  Other real estate mortgage  608,673  602,521  600,093   
  Real estate construction  11,386  16,990  37,824   
    Total commercial and construction  836,187  884,656  919,749   
Consumer         
  Real estate one-to-four family  51,480  56,405  79,582   
  Other installment  1,812  2,174  3,389   
    Total consumer  53,292  58,579  82,971   
          
Total loans  889,479  943,235  1,002,720   
          
Less:         
  Allowance for loan losses  17,590  19,178  17,076   
  Loans receivable, net $871,889 $924,057 $985,644   
          



DETAIL OF NON-PERFORMING ASSETS       
             
    Southwest        
    Washington Total      
June 30, 2021          
             
Commercial business $177 $177       
Commercial real estate  138  138       
Consumer  68  68       
             
 Total non-performing assets $383 $383       
             
             
             
             
DETAIL OF LOAN MODIFICATIONS        
             
    Number of Loan Deferrals
    3/31/2021 Ended New 6/30/2021 Change
             
Hotel / Motel  3  (3)  -  - (100.0)%
Retail strip centers  1  -   -  1 (0.0)%
Other - Commercial  1  (1)  -  - 100.0%
 Total  5  (4)  -  1 (80.0)%
             
             
    Loan Deferrals
    3/31/2021 Ended New 6/30/2021 Change
    (dollars in thousands)
             
Hotel / Motel $10,220 $(10,220) $- $- (100.0)%
Retail strip centers  563  -   -  563 (0.0)%
Other - Commercial  7,302  (7,302)  -  - 100.0%
 Total $18,085 $(17,522) $- $563 (96.9)%



      
               At or for the three months ended
SELECTED OPERATING DATAJune 30, 2021 March 31, 2021 June 30, 2020
      
Efficiency ratio (4) 61.44%  68.60%  63.16%
Coverage ratio (6) 123.50%  116.31%  128.13%
Return on average assets (1) 1.46%  0.93%  0.15%
Return on average equity (1) 14.89%  9.00%  1.28%
Return on average tangible equity (1) (non-GAAP) 18.13%  10.97%  1.57%
      
NET INTEREST SPREAD     
Yield on loans 4.67%  4.77%  4.69%
Yield on investment securities 1.53%  1.54%  1.95%
    Total yield on interest-earning assets 3.24%  3.46%  4.02%
      
Cost of interest-bearing deposits 0.19%  0.22%  0.45%
Cost of FHLB advances and other borrowings 2.68%  2.73%  2.02%
    Total cost of interest-bearing liabilities 0.27%  0.30%  0.55%
      
Spread (7) 2.97%  3.16%  3.47%
Net interest margin 3.07%  3.26%  3.65%
      
PER SHARE DATA     
Basic earnings per share (2)$0.26 $0.15 $0.02
Diluted earnings per share (3) 0.26 $0.15  0.02
Book value per share (5) 7.05  6.78  6.63
Tangible book value per share (5) (non-GAAP) 5.80  5.54  5.38
Market price per share:     
  High for the period$7.35 $7.58 $6.12
  Low for the period 6.47  5.12  4.20
  Close for period end 7.09  6.93  5.65
Cash dividends declared per share 0.0500  0.0500  0.0500
      
Average number of shares outstanding:     
  Basic (2) 22,344,785  22,346,368  22,256,665
  Diluted (3) 22,358,764  22,361,730  22,276,303

(1)      Amounts for the quarterly periods 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.

Note: Transmitted on Globe Newswire on July 29, 2021, at 1:00 p.m. PDT.

Contact:         
Kevin Lycklama or David Lam                                        
Riverview Bancorp, Inc. 360-693-6650