Riverview Bancorp Revises Fiscal Fourth Quarter And Year End Results

Riverview Bancorp, Inc. (Nasdaq:RVSB) (“Riverview” or the “Company”), the parent company of Riverview Community Bank (the “Bank”) today announced that it has increased its provision for loan losses an additional $3.2 million for its fourth fiscal quarter ended March 31, 2012. As a result, the Company’s net loss was $16.0 million, or $0.71 per share, for the quarter ended March 31, 2012, compared to a net loss of $16.6 million, or $0.74 per share in the preceding quarter and net income of $854,000, or $0.04 per share, in its fourth fiscal quarter a year ago. For the fiscal year, Riverview’s net loss was $31.7 million, or $1.42 per share, compared to net income of $4.3 million, or $0.24 per share, for fiscal year 2011.

“The increase in the provision for loan losses was necessary as a result of updated information received by the Bank on three commercial properties as well as the current regulatory guidance for these individual properties,” said Pat Sheaffer, Chairman and CEO. “This additional provision for loan losses increases the Bank’s reserves as we remain diligent in our efforts to reduce our non-performing assets.”

Credit Quality

Riverview’s provision for loan losses totaled $17.5 million for the fourth quarter of fiscal year 2012, compared to $8.1 million in the preceding quarter and $500,000 in the fourth quarter of fiscal year 2011. The allowance for loan losses increased to $19.9 million at March 31, 2012, representing 2.91% of total loans and 45.11% of non-performing loans (NPLs). NPLs decreased to $44.2 million, or 6.45% of total loans at March 31, 2012, as a result of an additional charge-off of $867,000 on a nonperforming commercial real estate loan.

The additional provision for loan losses was primarily related to three individual properties. The first was a $2.7 million commercial real estate property located in Portland, Oregon. The second was a $992,000 commercial real estate loan to a related borrower located in Portland, Oregon. The Company increased its provision for loan losses $926,000 and charged-off a total of $1.9 million for these two properties. Both of these loans have continued to pay as agreed and have not missed any of their required payments. An additional provision of $600,000 was for a land development project located in southwest Washington. The Company also bolstered its general allowance by an additional $1.7 million.

The Company’s non-performing assets totaled to $62.9 million at March 31, 2012. At March 31, 2012, Riverview’s non-performing assets were 7.35% of total assets, compared to 6.11% at the end of the preceding quarter and 4.65% a year ago. Additionally, as previously reported, the Company sold several additional non-performing assets subsequent to March 31, 2012. These asset sales have totaled more than $7 million, resulting in a net loss of $218,000.

Capital and Liquidity

“From a capital standpoint, the Bank remains sound and strong,” said Ron Wysaske, President and COO. “Additionally, the positive movements we have seen in REO and land sales during the last several months should prove beneficial to the Bank over the next several quarters.”

The Bank continues to maintain capital levels in excess of the regulatory requirements to be categorized as “well capitalized” with a total risk-based capital ratio of 12.11% and a Tier 1 leverage ratio of 8.76% at March 31, 2012. To be considered “well capitalized” a bank has to have a total risk-based capital ratio of 10% and a Tier 1 leverage ratio of 5%. Subsequent to March 31, 2012, the Company invested an additional $2.7 million into the Bank, increasing the Bank’s total risk-based capital ratio to approximately 12.78% and its Tier 1 leverage ratio to 9.25%.

At March 31, 2012, the Bank had available total and contingent liquidity of over $500 million, including over $300 million of borrowing capacity from the Federal Home Loan Bank of Seattle and the Federal Reserve Bank of San Francisco, and more than $80 million of cash and short-term investments.

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 $856 million, it is the parent company of the 89 year-old Riverview Community Bank, as well as Riverview Asset Management Corp. The Bank offers true community banking services, focusing on providing the highest quality service and financial products to commercial and retail customers. There are 17 branches, including twelve in the Portland-Vancouver area and three lending centers, with a new branch scheduled to open in the rapidly growing metropolitan area of Gresham, Oregon in the summer of 2012.

“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 Company’s ability to raise common capital, the amount of capital it intends to raise and its intended use of that 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 (OCC) 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; the Company’s compliance with regulatory enforcement actions we have entered into with the OCC as successor to the Office of Thrift Supervision and the possibility that our noncompliance could result in the imposition of additional enforcement actions and additional requirements or restrictions on our operations; 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 goodwill charges 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 Securities and Exchange Commission.

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 2012 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)   March 31, 2012   December 31, 2011   March 31, 2011
ASSETS      
 

Cash (including interest-earning accounts of $33,437, $23,146 and $37,349)
$ 46,393 $ 36,313 $ 51,752
Certificate of deposits 41,473 42,718 14,900
Loans held for sale 480 659 173
Investment securities held to maturity, at amortized cost 493 493 506
Investment securities available for sale, at fair value 6,314 6,337 6,320
Mortgage-backed securities held to maturity, at amortized 171 177 190
Mortgage-backed securities available for sale, at fair value 974 1,146 1,777

Loans receivable (net of allowance for loan losses of $19,921, $15,926 and $14,968)
664,888 678,626 672,609
Real estate and other pers. property owned 18,731 20,667 27,590
Prepaid expenses and other assets 6,362 6,087 5,887
Accrued interest receivable 2,158 2,378 2,523
Federal Home Loan Bank stock, at cost 7,350 7,350 7,350
Premises and equipment, net 17,068 16,351 16,100
Deferred income taxes, net 603 594 9,447
Mortgage servicing rights, net 278 299 396
Goodwill 25,572 25,572 25,572
Core deposit intangible, net 137 157 219
Bank owned life insurance   16,553     16,406     15,952  
 
TOTAL ASSETS $ 855,998   $ 862,330   $ 859,263  
 
LIABILITIES AND EQUITY
 
LIABILITIES:
Deposit accounts $ 744,455 $ 735,046 $ 716,530
Accrued expenses and other liabilities 9,398 9,574 9,396
Advance payments by borrowers for taxes and insurance 800 409 680
Junior subordinated debentures 22,681 22,681 22,681
Capital lease obligation   2,513     2,531     2,567  
Total liabilities 779,847 770,241 751,854
 
EQUITY:
Shareholders' equity

Serial preferred stock, $.01 par value; 250,000 authorized, issued and outstanding, none
- - -
Common stock, $.01 par value; 50,000,000 authorized,
March 31, 2012 – 22,471,890 issued and outstanding; 225 225 225
December 31, 2011 - 22,471,890 issued and outstanding;
March 31, 2011 – 22,471,890 issued and outstanding;
Additional paid-in capital 65,610 65,621 65,639
Retained earnings 11,536 27,493 43,193
Unearned shares issued to employee stock ownership trust (593 ) (619 ) (696 )
Accumulated other comprehensive loss   (1,171 )   (1,153 )   (1,417 )
Total shareholders’ equity 75,607 91,567 106,944
 
Noncontrolling interest   544     522     465  
Total equity   76,151     92,089     107,409  
 
TOTAL LIABILITIES AND EQUITY $ 855,998   $ 862,330   $ 859,263  
RIVERVIEW BANCORP, INC. AND SUBSIDIARY
 
Consolidated Statements of Operations
  Three Months Ended   Twelve Months Ended
(In thousands, except share data) (Unaudited)   March 31, 2012   Dec. 31, 2011   March 31, 2011   March 31, 2012   March 31, 2011
INTEREST INCOME:      
Interest and fees on loans receivable $ 9,130 $ 9,669 $ 10,239 $ 38,894 $ 42,697
Interest on investment securities-taxable 36 28 49 145 164
Interest on investment securities-non taxable 7 11 12 42 55
Interest on mortgage-backed securities 10 12 18 51 88
Other interest and dividends   127       109       70   400       210

Total interest income
9,310 9,829 10,388 39,532 43,214
 
INTEREST EXPENSE:
Interest on deposits 908 1,061 1,337 4,357 6,569
Interest on borrowings   387       381       364   1,508       1,483
Total interest expense   1,295       1,442       1,701   5,865       8,052
Net interest income 8,015 8,387 8,687 33,667 35,162
Less provision for loan losses   17,500       8,100       500   29,350       5,075
 
Net interest income (loss) after provision for loan losses (9,485 ) 287 8,187 4,317 30,087
 
NON-INTEREST INCOME:
Fees and service charges 914 962 916 3,996 4,047
Asset management fees 604 568 546 2,367 2,079
Gain on sale of loans held for sale 87 29 54 160 393
Bank owned life insurance income 146 151 150 601 601
Other   (190 )     (180 )     73   (297 )     769
Total non-interest income 1,561 1,530 1,739 6,827 7,889
 
NON-INTEREST EXPENSE:
Salaries and employee benefits 3,850 4,014 4,601 15,889 16,716
Occupancy and depreciation 1,253 1,211 1,180 4,793 4,677
Data processing 285 306 293 1,421 1,067
Amortization of core deposit intangible 20 20 24 82 96
Advertising and marketing expense 184 286 172 998 749
FDIC insurance premium 288 289 400 1,136 1,640
State and local taxes 139 150 136 549 638
Telecommunications 110 109 111 434 428
Professional fees 283 334 352 1,254 1,310
Real estate owned expenses 1,130 2,781 634 5,097 1,817
Other   687       692       663   2,770       2,358
Total non-interest expense   8,229       10,192       8,566   34,423       31,496
 
INCOME (LOSS) BEFORE INCOME TAXES (16,153 ) (8,375 ) 1,360 (23,279 ) 6,480
PROVISION (BENEFIT) FOR INCOME TAXES   (196 )     8,220       506   8,378       2,165
NET INCOME (LOSS) $ (15,957 )   $ (16,595 )   $ 854 $ (31,657 )   $ 4,315
 
Earnings (loss) per common share:
Basic $ (0.71 ) $ (0.74 ) $ 0.04 $ (1.42 ) $ 0.24
Diluted $ (0.71 ) $ (0.74 ) $ 0.04 $ (1.42 ) $ 0.24
Weighted average number of shares outstanding:
Basic 22,327,171 22,321,011 22,302,538 22,317,933 18,341,191
Diluted 22,327,171 22,321,011 22,302,538 22,317,933 18,341,308
 
(Dollars in thousands) At or for the three months ended   At or for the twelve months ended
March 31, 2012   Dec. 31, 2011   March 31, 2011 March 31, 2012   March 31, 2011

AVERAGE BALANCES
 
Average interest–earning assets $ 788,488 $ 790,922 $ 748,907 $ 777,864 $ 758,847
Average interest-bearing liabilities 652,607 651,368 639,503 645,369 649,342
Net average earning assets 135,881 139,554 109,404 132,495 109,505
Average loans 695,973 694,205 685,507 694,382 703,861
Average deposits 741,320 742,899 705,456 731,089 708,169
Average equity 91,171 109,301 108,114 104,869 100,643
Average tangible equity 65,156 83,238 81,896 78,779 74,337
 
 

ASSET QUALITY
March 31, 2012 Dec. 31, 2011   March 31, 2011
 
Non-performing loans 44,163 32,037 12,323
Non-performing loans to total loans 6.45 % 4.61 % 1.79 %
Real estate/repossessed assets owned 18,731 20,667 27,590
Non-performing assets 62,894 52,704 39,913
Non-performing assets to total assets 7.35 % 6.11 % 4.65 %
Net loan charge-offs in the quarter 13,505 6,846 2,995
Net charge-offs in the quarter/average net loans 7.80 % 3.91 % 1.77 %
 
Allowance for loan losses 19,921 15,926 14,968

Average interest-earning assets to average interest-bearing liabilities
120.82 % 121.42 % 117.11 %

Allowance for loan losses to non-performing loans
45.11 % 49.71 % 121.46 %
Allowance for loan losses to total loans 2.91 % 2.29 % 2.18 %
Shareholders’ equity to assets 8.83 % 10.62 % 12.45 %
 
 

CAPITAL RATIOS
Total capital (to risk weighted assets) 12.11 % 13.14 % 14.61 %
Tier 1 capital (to risk weighted assets) 10.84 % 11.89 % 13.35 %
Tier 1 capital (to leverage assets) 8.76 % 9.74 % 11.24 %
Tangible common equity (to tangible assets) 5.98 % 7.84 % 9.69 %
 
 

DEPOSIT MIX
March 31, 2012 Dec. 31, 2011   March 31, 2011
 
Interest checking $ 106,904 $ 96,757 $ 77,399
Regular savings 45,741 42,453 37,231
Money market deposit accounts 244,919 235,902 236,321
Non-interest checking 116,882 116,854 102,429
Certificates of deposit   230,009     243,080     263,150  
Total deposits $ 744,455   $ 735,046   $ 716,530  
 

COMPOSITION OF COMMERCIAL AND CONSTRUCTION LOANS
       
Commercial

Commercial

Real Estate

Mortgage

Real Estate

Construction

Commercial

& Construction

Total

March 31, 2012
(Dollars in thousands)
Commercial $ 87,238 $ - $ - $ 87,238
Commercial construction - - 13,496 13,496
Office buildings - 94,541 - 94,541
Warehouse/industrial - 48,605 - 48,605
Retail/shopping centers/strip malls - 80,595 - 80,595
Assisted living facilities - 35,866 - 35,866
Single purpose facilities - 93,473 - 93,473
Land - 38,888 - 38,888
Multi-family - 42,795 - 42,795
One-to-four family   -   -   12,295   12,295
Total $ 87,238 $ 434,763 $ 25,791 $ 547,792

 

March 31, 2011
(Dollars in thousands)
Commercial $ 85,511 $ - $ - $ 85,511
Commercial construction - - 8,608 8,608
Office buildings - 95,529 - 95,529
Warehouse/industrial - 49,627 - 49,627
Retail/shopping centers/strip malls - 85,719 - 85,719
Assisted living facilities - 35,162 - 35,162
Single purpose facilities - 98,651 - 98,651
Land - 55,258 - 55,258
Multi-family - 42,009 - 42,009
One-to-four family   -   -   18,777   18,777
Total $ 85,511 $ 461,955 $ 27,385 $ 574,851
 
 
 
 

LOAN MIX
March 31, 2012 Dec. 31, 2011 March 31, 2011
Commercial and construction
Commercial $ 87,238 $ 86,759 $ 85,511
Other real estate mortgage 434,763 448,288 461,955
Real estate construction   25,791   27,544   27,385
Total commercial and construction 547,792 562,591 574,851
Consumer
Real estate one-to-four family 134,975 129,780 110,437
Other installment   2,042   2,181   2,289
Total consumer 137,017 131,961 112,726
     
Total loans 684,809 694,552 687,577
 
Less:
Allowance for loan losses   19,921   15,926   14,968
Loans receivable, net $ 664,888 $ 678,626 $ 672,609
 

DETAIL OF NON-PERFORMING ASSETS
           

Northwest

Oregon

Other

Oregon

Southwest

Washington

Other

Washington
Other Total

March 31, 2012
(Dollars in thousands)
Non-performing assets
 
Commercial $ 194 $ 746 $ 2,990 $ - $ - $ 3,930
Commercial real estate 1,867 - 9,735 - 2,348 13,950
Land - 1,902 6,383 - 4,700 12,985
Multi-family 627 1,000 - - - 1,627
Commercial construction - - - - - -
One-to-four family construction 1,246 6,117 393 - - 7,756
Real estate one-to-four family 678 189 3,048 - - 3,915
Consumer   -   -   -   -   -   -
Total non-performing loans 4,612 9,954 22,549 - 7,048 44,163
 
REO   2,477   5,863   6,825   3,566   -   18,731
 
Total non-performing assets $ 7,089 $ 15,817 $ 29,374 $ 3,566 $ 7,048 $ 62,894
 
 
 
 
 

DETAIL OF SPEC CONSTRUCTION AND LAND DEVELOPMENT LOANS
 

Northwest

Oregon

Other

Oregon

Southwest

Washington

Other

Washington
Other Total

March 31, 2012
(Dollars in thousands)
Land and spec construction loans
 
Land development loans $ 6,044 $ 3,672 $ 24,472 $ - $ 4,700 $ 38,888
Spec construction loans   1,246   6,117   3,006   392   -   10,761
 
Total land and spec construction $ 7,290 $ 9,789 $ 27,478 $ 392 $ 4,700 $ 49,649
 
  At or for the three months ended   At or for the twelve months ended

SELECTED OPERATING DATA
March 31, 2012   Dec. 31, 2011   March 31, 2011 March 31, 2012   March 31, 2011
 
Efficiency ratio (4) 85.93 % 102.77 % 82.16 % 85.01 % 73.16 %
Coverage ratio (6) 97.40 % 82.29 % 101.41 % 97.80 % 111.64 %
Return on average assets (1) -7.40 % -7.42 % 0.41 % -3.64 % 0.51 %
Return on average equity (1) -70.39 % -60.24 % 3.20 % -30.19 % 4.29 %
 

NET INTEREST SPREAD
Yield on loans 5.32 % 5.53 % 6.06 % 5.60 % 6.07 %
Yield on investment securities 2.36 % 2.66 % 3.12 % 2.63 % 2.96 %
Total yield on interest earning assets 4.79 % 4.93 % 5.63 % 5.08 % 5.70 %
 
Cost of interest bearing deposits 0.59 % 0.67 % 0.88 % 0.70 % 1.06 %
Cost of FHLB advances and other borrowings 6.23 % 5.99 % 5.83 % 5.97 % 4.59 %
Total cost of interest bearing liabilities 0.80 % 0.88 % 1.08 % 0.91 % 1.24 %
 
Spread (7) 3.99 % 4.05 % 4.55 % 4.17 % 4.46 %
Net interest margin 4.12 % 4.21 % 4.71 % 4.33 % 4.64 %
 

PER SHARE DATA
Basic earnings per share (2) $ (0.71 ) $ (0.74 ) $ 0.04 $ (1.42 ) $ 0.24
Diluted earnings per share (3) (0.71 ) (0.74 ) 0.04 (1.42 ) 0.24
Book value per share (5) 3.36 4.07 4.76 3.36 4.76
Tangible book value per share (5) 2.21 2.92 3.59 2.21 3.59
Market price per share:
High for the period $ 2.46 $ 2.50 $ 3.21 $ 3.18 $ 3.81
Low for the period 2.03 2.11 2.69 2.03 1.73
Close for period end 2.26 2.37 3.04 2.26 3.04
Cash dividends declared per share - - - - -
 
Average number of shares outstanding:
Basic (2) 22,327,171 22,321,011 22,302,538 22,317,933 18,341,191
Diluted (3) 22,327,171 22,321,011 22,302,538 22,317,933 18,341,308
 
(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.

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