Riverview Bancorp Earnings Increase to $1.6 Million in First Fiscal Quarter; Led by On-Going Credit Quality Improvements

VANCOUVER, Wash., July 21, 2015 (GLOBE NEWSWIRE) -- Riverview Bancorp, Inc. (Nasdaq:RVSB) ("Riverview" or the "Company") today reported net income of $1.6 million, or $0.07 per diluted share, in the first fiscal quarter ended June 30, 2015 compared to $1.5 million, or $0.07 per diluted share, in the preceding quarter and $740,000, or $0.03 per diluted share, in the first fiscal quarter a year ago.

"Profitability has continued to improve as we execute on our strategic initiatives and capitalize on the strength of the economy in the greater Vancouver/Portland marketplace," said Pat Sheaffer, chairman and chief executive officer. "Loan demand has remained strong in our market area and we have continued to build on the improvement in our asset quality and enhanced operating efficiencies. As the only community bank headquartered in Clark County, we take great pride in helping to serve the needs of our communities and we are confident in our ability to continue to enhance shareholder value in the coming fiscal year."

First Quarter Highlights (at or for the period ended June 30, 2015)

• Net income increased to $1.6 million, or $0.07 per diluted share.
• Net interest margin was 3.69% compared to 3.46% a year ago.
• Total loans were $570.2 million compared to $547.0 million a year ago.
• Classified assets decreased $2.1 million during the quarter to $14.7 million.
• Non-performing assets ("NPA") declined to 0.60% of total assets compared to 2.30% a year ago.
• Riverview Asset Management and Trust Company's ("RAMCO") assets under management increased $7.4 million during the quarter to $416.7 million.
• Total risk-based capital ratio was 16.48% and Tier 1 leverage ratio was 11.17%.
• Quarterly cash dividend of $0.0125 per share was paid on July 20, 2015.

Balance Sheet Review

"Loan activity remained robust during the quarter as our commercial bankers continue to focus on developing new relationships," said Ron Wysaske, president and chief operating officer. "Our loan pipeline grew to a record high of $88.7 million at June 30, 2015. However, loan growth was muted during the quarter due to an increase in loan payoffs and normal principal reductions as well as the timing of loan fundings."

Loan balances increased to $570.2 million at June 30, 2015 compared to $547.0 million a year ago, but were down slightly compared to the preceding quarter. Loan originations totaled $40.9 million during the quarter compared to $47.1 million in the preceding quarter. At June 30, 2015, there was $25.3 million in undisbursed construction loans, the majority of which are expected to fund during the current fiscal year.

Total deposits increased to $722.5 million at June 30, 2015, compared to $686.6 million a year earlier and $720.9 million in the preceding quarter. Average deposit balances increased $11.6 million during the quarter and were $41.0 million higher than the first quarter a year ago. Checking account balances increased $15.1 million during the quarter as the Company continues to focus on core deposits and building customer relationships. Checking account balances represented 39.1% of total deposits at June 30, 2015.

At June 30, 2015, shareholders' equity increased $639,000 to $104.4 million compared to $103.8 million in the preceding quarter. The increase was primarily due to net income of $1.6 million, which was partially offset by dividends of $281,000 and a decrease in unrealized holding gain on securities available for sale. Tangible book value per share improved to $3.49 compared to $3.46 at March 31, 2015. The Company paid a $0.0125 cash dividend on July 20, 2015.

Income Statement

Net interest income for the first fiscal quarter was $7.1 million, an increase of $765,000 compared to the first fiscal quarter a year ago. The increase was primarily due to the growth in the loan and investment portfolios during the past fiscal year.

Riverview's net interest margin was 3.69% in the first fiscal quarter compared to 3.46% in the first fiscal quarter a year ago and 3.71% in the preceding quarter. "Net interest margin was impacted during the quarter primarily due to an increase in our average excess cash balances to $52.8 million, which resulted in a decrease of approximately 18 basis points," said Kevin Lycklama, executive vice president and chief financial officer. "This reduction was almost completely offset by an improvement in yields in both our loan and investment portfolios. In addition, the Company collected approximately $128,000 of past due interest on two prior nonaccrual loans during the quarter which contributed an additional six basis points to the net interest margin."

Non-interest income increased to $2.5 million in the first quarter compared to $2.2 million in both the preceding quarter and the first quarter a year ago. Fees and service charges increased $226,000 from the prior year primarily due to the collection of prepayment penalties of $171,000 on loan payoffs. Mortgage loan originations increased during the current quarter resulting in a $95,000 increase in gain on sale of loans held for sale from the prior year.

RAMCO's assets under management increased $7.4 million during the quarter. "We had a record quarter with revenue of $824,000 and total assets under management of $416.7 million at June 30, 2015," stated John Karas, president and chief executive officer of RAMCO. "We have been able to capitalize on the relationships we have built over the past 15 years serving the Southwest Washington market. During the past year we have grown our assets under management by more than 11%. We are excited about our opportunities for further growth in the coming fiscal year."

Riverview's non-interest expense was $7.7 million in the first quarter which was comparable to both the first quarter a year ago and the preceding quarter. Real estate owned ("REO") expenses decreased $337,000 during the quarter compared to the prior year as a result of fewer REO write-downs and a reduction in the number of REO properties. However, compared to the preceding quarter REO expenses increased primarily due write-downs of $135,000 on existing properties and a one-time expense of $117,000 on a separate property.

Credit Quality

"Riverview's credit quality metrics improved again during the quarter, with both non-performing loans and REO balances declining," said Dan Cox, executive vice president and chief credit officer. "This improvement reflects the hard work of our credit teams, as well as the improving local economy."

Non-performing loans ("NPL") decreased during the quarter to $3.8 million, or 0.66% of total loans, compared to $5.3 million, or 0.92% of total loans, at March 31, 2015. During the last 12 months NPL have declined by $9.3 million, or 71.1%. Loans past due 30-89 days were 0.14% of total loans at June 30, 2015 compared to 0.26% of total loans at March 31, 2015.

REO balances were $1.3 million at June 30, 2015 compared to $1.6 million three months earlier. Sales of REO properties totaled $119,000 during the quarter, with $135,000 in write-downs and no new additions.

Classified assets decreased $2.1 million during the quarter to $14.7 million at June 30, 2015 compared to $16.8 million at March 31, 2015. The classified asset ratio decreased to 14.4% at June 30, 2015 compared to 17.0% three months earlier. During the past twelve months, Riverview has reduced its classified assets by $19.0 million, or 56.3%.

Riverview recorded a $500,000 recapture of loan losses during the first quarter of fiscal 2016 compared to a $750,000 recapture of loan losses during the preceding quarter. The recapture of loan losses reflects the improvement in credit quality and the decline in loan charge-offs during the past year.

Net loan recoveries were $75,000 during the quarter compared to net charge-offs of $189,000 in the preceding quarter. The allowance for loan losses at June 30, 2015 totaled $10.3 million, representing 1.81% of total loans and 274.0% of nonperforming loans.

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 16.48%, Tier 1 leverage ratio of 11.17% and tangible common equity to tangible assets of 9.41% at June 30, 2015.

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. Riverview believes that certain non-GAAP financial measures provide investors with information useful in understanding the Company's financial performance; however, readers of this report are urged to review these non-GAAP financial measures in conjunction with GAAP results as reported.

Financial measures that exclude intangible assets are non-GAAP measures. To provide investors with a broader understanding of capital adequacy, Riverview provides non-GAAP financial measures for tangible common equity, along with the GAAP measure. Tangible common equity is calculated as shareholders' equity less goodwill and other intangible assets. In addition, tangible assets are total assets less goodwill and other intangible assets.

The following table provides a reconciliation of ending shareholders' equity (GAAP) to ending tangible shareholders' equity (non-GAAP), and ending total assets (GAAP) to ending tangible assets (non-GAAP).

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 $860 million, it is the parent company of the 92 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.

"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 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 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 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 2016 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.