VANCOUVER, Wash., April 25, 2024 (GLOBE NEWSWIRE) -- Riverview Bancorp, Inc. (Nasdaq GSM: RVSB) ("Riverview" or the "Company") today announced that late in the fourth fiscal quarter of 2024 it strategically restructured a portion of its balance sheet by selling approximately $46.2 million of its investment securities portfolio and utilizing the proceeds totaling $43.5 million from the sale of these lower-yielding investment securities to repay higher-cost Federal Home Loan Bank of Des Moines ("FHLB") advances. The total pre-tax loss of this transaction was $2.7 million, with a tax benefit of $655,000, resulting in an after-tax impact of $2.1 million, or $0.10 per diluted share impact to diluted earnings per share. "Given the challenging interest rate environment, we believed it was prudent to take this opportunity to restructure the balance sheet as we look toward the future. Together these transactions will improve our future profitability by decreasing both our high-cost debt and our low-yielding assets," stated Dan Cox, Chief Operating Officer, Acting President and Chief Executive Officer. "In addition to lowering our cost of funds, we anticipate future benefits will include an expanded net interest margin, an improved interest rate risk position, stronger performance metrics, and ultimately increased profitability and enhanced shareholder value. With this step, we have eliminated a drag on earnings that has obscured the true value and performance of our Company." Riverview determined that as of the quarter-ended March 31, 2024, there was potential liability resulting from pending litigation involving a former Riverview business client related to their real estate investments offered by a business owned by that client. Given the recent development of a proposed global settlement of the litigation, the Company recorded a $2.3 million expense that is recorded in other non-interest expense for the fourth fiscal quarter of 2024. This expense reflects Riverview's estimate of litigation costs that exceeds the Company's insurance coverage. The settlement of the litigation remains subject to approval by the court. "While Riverview has defended itself vigorously and continues to believe there was no wrongdoing on the part of the Company, we feel that establishing a reserve is the best course of action given the uncertainties inherent in such complex litigation," said Cox. Including the effects of the investment portfolio restructuring and litigation charge, Riverview reported a net loss of $3.0 million, or $0.14 per diluted share, in the fourth fiscal quarter ended March 31, 2024. This compared to net income of $1.5 million, or $0.07 per diluted share, in the third fiscal quarter ended December 31, 2023, and $3.0 million, or $0.14 per diluted share, in the fourth fiscal quarter a year ago. For fiscal 2024, net income was $3.8 million, or $0.18 per diluted share, compared to $18.1 million, or $0.83 per diluted share in fiscal 2023. Fourth Quarter Highlights (at or for the period ended March 31, 2024) Completed balance sheet restructuring transactions. Net interest income was $8.6 million for the quarter, compared to $9.3 million in the preceding quarter and $11.8 million in the fourth fiscal quarter a year ago. Net interest margin ("NIM") was 2.32% for the quarter, compared to 2.49% in the preceding quarter and 3.16% for the year ago quarter. Asset quality remained pristine, with non-performing assets at $178,000, or 0.01% of total assets at March 31, 2024. Riverview recorded no provision for credit losses during the current quarter, or the preceding quarter, and recorded a $750 provision for credit losses in the year ago quarter. The allowance for credit losses was $15.4 million, or 1.50% of total loans. Total loans were $1.02 billion at March 31, 2024, and December 31, 2023, and $1.01 billion at March 31, 2023. Total deposits were $1.23 billion, compared to $1.22 billion three months earlier and $1.27 billion a year earlier. Riverview bolstered its liquidity position and has approximately $495.7 million in available liquidity at March 31, 2024, including $211.2 million of borrowing capacity from the FHLB and $284.5 million from the Federal Reserve Bank of San Francisco ("FRB"). At March 31, 2024, the Bank had $88.3 million in outstanding FHLB borrowings. The uninsured deposit ratio was 24.1% at March 31, 2024. Total risk-based capital ratio was 16.32% and Tier 1 leverage ratio was 10.29%. Paid a quarterly cash dividend during the quarter of $0.06 per share. The Company has contracted with an executive search firm specializing in community banks to conduct a nationwide search to assist in selecting a permanent President/CEO. It is anticipated a permanent President/CEO will be identified over the course of the next three to six months. Income Statement Review Riverview's net interest income was $8.6 million in the current quarter, compared to $9.3 million in the preceding quarter, and $11.8 million in the fourth fiscal quarter a year ago. The decrease in net interest income compared to the prior quarter was driven primarily by an increase in interest expense on deposits and borrowings due to higher interest rates. In fiscal 2024, net interest income was $38.1 million compared to $51.6 million in fiscal 2023. Riverview's NIM was 2.32% for the fourth quarter of fiscal 2024, a 17 basis-point decrease compared to 2.49% in the preceding quarter and an 84 basis-point decrease compared to 3.16% in the fourth quarter of fiscal 2023. "The ‘higher for longer' interest rate environment continued to have an impact on our NIM during the current quarter, compared to the prior quarter and year ago quarter, as a result of increased interest expense, due to higher rates on our deposit products, and the interest expense related to our borrowings," said David Lam, EVP and Chief Financial Officer. In fiscal 2024, NIM was 2.56% compared to 3.26% in fiscal 2023. Investment securities decreased $56.4 million during the quarter to $372.7 million at March 31, 2024, compared to $429.1 million at December 31, 2023, and decreased $82.6 million compared to $455.3 million at March 31, 2023. The average securities balances for the quarters ended March 31, 2024, December 31, 2023, and March 31, 2023, were $444.1 million, $458.0 million, and $483.3 million, respectively. The weighted average yields on securities balances for those same periods were 2.02%, 2.01%, and 2.07%, respectively. Going forward, following the investment sale, the weighted average yield on the securities balance is approximately 1.95%. The duration of the investment portfolio at March 31, 2024, was approximately 5.2 years. The anticipated investment cashflows over the next twelve months is approximately $55.4 million. Riverview's yield on loans improved to 4.63% during the fourth fiscal quarter, compared to 4.56% in the preceding quarter, and 4.50% in the fourth fiscal quarter a year ago. While loan yields improved during the current quarter, they remain under pressure due to the concentration of fixed-rate loans in the Company's portfolio. Deposit costs increased to 1.00% during the fourth fiscal quarter compared to 0.68% in the preceding quarter, and 0.19% in the fourth fiscal quarter a year ago. Non-interest income decreased to $494,000 during the fourth fiscal quarter compared to $3.1 million in the preceding quarter and $3.0 million in the fourth fiscal quarter of 2023. The decrease during the fourth fiscal quarter was primarily due to the $2.7 million loss on sale of investment securities resulting from the previously mentioned balance sheet restructuring. Excluding the securities loss, non-interest income for the fourth fiscal quarter of 2024 would have been $3.2 million. Lower fees and service charges from a decrease in fintech referral partnership income was more than offset by higher asset management fees during the current quarter. In fiscal 2024, non-interest income was $10.2 million compared to $12.2 million in fiscal 2023. Asset management fees were $1.4 million during the fourth fiscal quarter, compared to $1.3 million in both the preceding quarter, and in the fourth fiscal quarter a year ago. In fiscal 2024, asset management fees increased 12.5% to $5.3 million, compared to $4.7 million in fiscal 2023. Riverview Trust Company's assets under management were $961.8 million at March 31, 2024, compared to $942.4 million at December 31, 2023, and $890.6 million at March 31, 2023. Non-interest expense was $13.1 million during the fourth quarter, compared to $10.6 million in the preceding quarter and $10.0 million in the fourth fiscal quarter a year ago. Other expenses included the previously mentioned $2.3 million litigation expense incurred during the current quarter. Salary and employee benefits were up during the current quarter compared to the preceding quarter, as a result of the full quarterly impact of salary increases, higher health insurance costs and higher payroll taxes. Occupancy and depreciation costs increased during the quarter due to updates and modernization of Riverview's facilities. The efficiency ratio was 144.9% for the fourth fiscal quarter, and 91.8% excluding the securities loss and litigation. This compared to 85.2% in the preceding quarter and 67.3% in the fourth fiscal quarter a year ago. In fiscal 2024, non-interest expense was $43.7 million compared to $39.4 million in fiscal 2023. Riverview's effective tax rate for the fourth quarter of fiscal 2024 was (27.0)%, compared to 20.6% for the preceding quarter and 27.0% for the year ago quarter. Balance Sheet Review "Quarterly loan growth has moderated, as we remain selective with the loans we are putting on the balance sheet while placing an emphasis on credit quality," said Lam. Total loans increased $5.8 million during the quarter to $1.02 billion at March 31, 2024, compared to three months earlier and increased $15.2 million compared to $1.01 billion a year earlier. Riverview's loan pipeline was $18.4 million at March 31, 2024, compared to $29.3 million at the end of the prior quarter. New loan originations during the quarter totaled $12.7 million, compared to $51.3 million in the preceding quarter and $20.8 million in the fourth quarter a year ago. Undisbursed construction loans totaled $58.3 million at March 31, 2024, compared to $63.1 million at December 31, 2023, with the majority of the undisbursed construction loans expected to fund over the next several quarters. Undisbursed homeowner association loans for the purpose of common area maintenance and repairs totaled $16.4 million at March 31, 2024, compared to $20.7 million at December 31, 2023. Revolving commercial business loan commitments totaled $50.4 million at March 31, 2024 and December 31, 2023. Utilization on these loans totaled 14.61% at March 31, 2024, compared to 11.27% at December 31, 2023. The weighted average rate on loan originations during the quarter was 8.41% compared to 7.14% in the preceding quarter. The office building loan portfolio totaled $114.7 million at March 31, 2024, compared to $115.6 million at December 31, 2023. The average loan balance of the office building loan portfolio was $1.5 million with an average loan-to-value ratio of 55.0% and an average debt service coverage ratio of 1.95%. Total deposits increased $12.8 million during the quarter to $1.23 billion at March 31, 2024, compared to $1.22 billion at December 31, 2023, and decreased $33.5 million compared to $1.27 billion a year ago. The increase during the current quarter was in large part due to moving some trust company deposits back to the bank. Excluding this, deposit balances were essentially flat during the quarter, as customers continue to use up deposit balances instead of borrowing due to the higher interest rate environment. Non-interest checking and interest checking accounts, as a percentage of total deposits, totaled 51.9% at March 31, 2024, compared to 51.1% at December 31, 2023 and 52.1% at March 31, 2023. FHLB advances decreased $68.8 million during the quarter to $88.3 million at March 31, 2024, as proceeds from the securities sale were used to pay down borrowings. FHLB advances were $157.1 million at December 31, 2023, and $123.8 million a year earlier. These FHLB advances were utilized to partially offset the decrease in deposit balances and to fund the increase in loans receivable. Shareholders' equity was $155.6 million at March 31, 2024, compared to $158.5 million three months earlier and $155.2 million one year earlier. Tangible book value per share (non-GAAP) was $6.07 at March 31, 2024, compared to $6.21 at December 31, 2023, and $6.02 at March 31, 2023. Riverview paid a quarterly cash dividend of $0.06 per share on April 22, 2024, to shareholders of record on April 11, 2024. Credit Quality In accordance with changes in generally accepted accounting principles, Riverview adopted the new credit loss accounting standard known as Current Expected Credit Loss ("CECL") on April 1, 2023. Under CECL, the ACL is based on expected credit losses rather than on incurred losses. Adoption of CECL, which includes the ACL and allowance for unfunded loan commitments, resulted in a cumulative effect after-tax adjustment to stockholders' equity as of April 1, 2023, of $53,000, which had no impact on earnings. Asset quality remained strong, with non-performing loans, excluding SBA and USDA government guaranteed loans ("government guaranteed loans") (non-GAAP), at $173,000 or 0.02% of total loans as of March 31, 2024, compared to $186,000, or 0.02% of total loans at December 31, 2023, and $265,000, or 0.03% of total loans at March 31, 2023. There was one non-performing government guaranteed loan totaling $5,000 at March 31, 2024 and no non-performing government guaranteed loans at December 31, 2023. At March 31, 2023, including government guaranteed loans, non-performing assets were $1.9 million, or 0.12% of total assets. Previously, there were non-performing government guaranteed loans where payments had been delayed due to the servicing transfer of these loans between two third-party servicers and the service transfer has been completed. Riverview recorded net loan recoveries of $3,000 during the fourth fiscal quarter. This compared to net loan recoveries of $15,000 for the preceding quarter. Riverview recorded no provision for credit losses for the fourth fiscal quarter, or for the preceding quarter. Classified assets were $723,000 at March 31, 2024, compared to $215,000 at December 31, 2023, and $2.6 million at March 31, 2023. The classified asset to total capital ratio was 0.1% at March 31, 2024, and at December 31, 2023, compared to 1.5% a year earlier. Criticized assets were $36.7 million at March 31, 2024, compared to $37.2 million at December 31, 2023, and $19.1 million at March 31, 2023. The increase in criticized assets compared to a year ago was mainly due to one relationship downgrade in the preceding quarter which has plans in place to pay off outstanding loans or meet certain loan covenants. The Company does not believe this is a systemic credit issue. The allowance for credit losses was $15.4 million at March 31, 2024, which was unchanged compared to December 31, 2023, and an increase compared to $15.3 million one year earlier. The allowance for credit losses represented 1.50% of total loans at March 31, 2024, compared to 1.51% at December 31, 2023, and 1.52% a year earlier. The allowance for credit losses to loans, net of government guaranteed loans (non-GAAP), was 1.58% at March 31, 2024, compared to 1.59% at December 31, 2023, and 1.61% a year 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 16.32% and a Tier 1 leverage ratio of 10.29% at March 31, 2024. Tangible common equity to average tangible assets ratio (non-GAAP) was 8.58% at March 31, 2024. 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)   March 31, 2024   December 31, 2023   March 31, 2023                               Shareholders' equity (GAAP)   $ 155,588     $ 158,472     $ 155,239           Exclude: Goodwill     (27,076 )     (27,076 )     (27,076 )         Exclude: Core deposit intangible, net     (271 )     (298 )     (379 )         Tangible shareholders' equity (non-GAAP)   $ 128,241     $ 131,098     $ 127,784                                 Total assets (GAAP)   $ 1,521,529     $ 1,590,623     $ 1,589,712           Exclude: Goodwill     (27,076 )     (27,076 )     (27,076 )         Exclude: Core deposit intangible, net     (271 )     (298 )     (379 )         Tangible assets (non-GAAP)   $ 1,494,182     $ 1,563,249     $ 1,562,257                                 Shareholders' equity to total assets (GAAP)     10.23 %     9.96 %     9.77 %                               Tangible common equity to tangible assets (non-GAAP)     8.58 %     8.39 %     8.18 %                               Shares outstanding     21,111,043       21,111,043       21,221,960                                 Book value per share (GAAP)     7.37       7.51       7.32                                 Tangible book value per share (non-GAAP)     6.07       6.21       6.02                                                       Pre-tax, pre-provision income                         Three Months Ended   Twelve Months Ended (Dollars in thousands)   March 31, 2024   December 31, 2023   March 31, 2023   March 31, 2024   March 31, 2023                       Net income (loss) (GAAP)   $ (2,968 )   $ 1,452     $ 2,983     $ 3,799   $ 18,069 Include: Provision (credit) for income taxes     (1,095 )     377       1,102       802     5,610 Include: Provision for credit losses     -       -       750       -     750 Pre-tax, pre-provision income (loss) (non-GAAP)   $ (4,063 )   $ 1,829     $ 4,835     $ 4,601   $ 24,429                                             Net income (loss) and earnings (loss) per share excluding securities restructure and litigation expense                                       Three Months Ended   Twelve Months Ended (Dollars in thousands)   March 31, 2024   December 31, 2023   March 31, 2023   March 31, 2024   March 31, 2023                       Net income (loss) (GAAP)   $ (2,968 )   $ 1,452     $ 2,983     $ 3,799   $ 18,069 Exclude impact of securities loss restructure, net of tax     2,074       -       -       2,074     - Exclude impact of litigation expense, net of tax     1,748       -       -       1,748     - Net income excluding securities restructure and litigation expense (non-GAAP)   $ 854     $ 1,452     $ 2,983     $ 7,621   $ 18,069                       Basic earnings (loss) per share (GAAP)   $ (0.14 )   $ 0.07     $ 0.14     $ 0.18   $ 0.84 Exclude impact of securities loss restructure, net of tax     0.10       -       -       0.10     - Exclude impact of litigation expense, net of tax     0.08       -       -       0.08     - Basic earnings per share excluding securities restructure and litigation expense (GAAP)   $ 0.04     $ 0.07     $ 0.14     $ 0.36   $ 0.84                       Diluted earnings (loss) per share (GAAP)   $ (0.14 )   $ 0.07     $ 0.14     $ 0.18   $ 0.83 Exclude impact of securities loss restructure, net of tax     0.10       -       -       0.10     - Exclude impact of litigation expense, net of tax     0.08       -       -       0.08     - Diluted earnings per share excluding securities restructure and litigation expense (GAAP)   $ 0.04     $ 0.07     $ 0.14     $ 0.36   $ 0.83                                             Allowance for credit losses reconciliation, excluding Government Guaranteed loans                                   (Dollars in thousands)   March 31, 2024   December 31, 2023   March 31, 2023                               Allowance for credit losses   $ 15,364     $ 15,361     $ 15,309                                 Loans receivable (GAAP)   $ 1,024,013     $ 1,018,199     $ 1,008,856           Exclude: Government Guaranteed loans     (51,013 )     (51,809 )     (55,488 )         Loans receivable excluding Government Guaranteed loans (non-GAAP)   $ 973,000     $ 966,390     $ 953,368                                 Allowance for credit losses to loans receivable (GAAP)     1.50 %     1.51 %     1.52 %                               Allowance for credit losses to loans receivable excluding Government Guaranteed loans (non-GAAP)     1.58 %     1.59 %     1.61 %                                                     Non-performing loans reconciliation, excluding Government Guaranteed Loans                                         Three Months Ended         (Dollars in thousands)   March 31, 2024   December 31, 2023   March 31, 2023                               Non-performing loans (GAAP)   $ 178     $ 186     $ 1,852             Less: Non-performing Government Guaranteed loans     (5 )     -       (1,587 )         Adjusted non-performing loans excluding Government Guaranteed loans (non-GAAP)   $ 173     $ 186     $ 265                                 Non-performing loans to total loans (GAAP)     0.02 %     0.02 %     0.18 %                               Non-performing loans, excluding Government Guaranteed loans to total loans (non-GAAP)     0.02 %     0.02 %     0.03 %                               Non-performing loans to total assets (GAAP)     0.01 %     0.01 %     0.12 %                               Non-performing loans, excluding Government Guaranteed loans to total assets (non-GAAP)     0.01 %     0.01 %     0.02 %         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 $1.52 billion at March 31, 2024, it is the parent company of the 100-year-old Riverview Bank, as well as Riverview Trust Company. The Bank offers true ...