10-Q: Riverview Bancorp Reports Mixed Results for Quarter Ended December 31, 2024

Riverview Bancorp's net income decreased for both the three and nine months ended December 31, 2024, primarily due to increased interest paid on deposits.

Summary

• Riverview Bancorp reported a net income of $1.2 million, or $0.06 per diluted share, for the three months ended December 31, 2024, compared to $1.5 million, or $0.07 per diluted share, for the same period in the prior year.
• Net income for the nine months ended December 31, 2024, was $3.8 million, or $0.18 per diluted share, compared to $6.8 million, or $0.32 per diluted share, for the same period in 2023.
• The decrease in net income was primarily due to increased interest paid on deposits, partially offset by a decrease in interest paid on borrowings.
• Net interest income for the three and nine months ended December 31, 2024, was $9.4 million and $27.2 million, respectively.
• Net interest margin for the three and nine months ended December 31, 2024, was 2.60% and 2.51%, respectively.
• Loans receivable, net, totaled $1.03 billion at December 31, 2024, compared to $1.01 billion at March 31, 2024.
• Deposits decreased $12.7 million to $1.22 billion at December 31, 2024, compared to $1.23 billion at March 31, 2024.
• Shareholders' equity increased $2.7 million to $158.3 million at December 31, 2024, compared to $155.6 million at March 31, 2024.
• Nonperforming assets were $469,000, or 0.03% of total assets, at December 31, 2024, compared to $178,000, or 0.01% of total assets, at March 31, 2024.
• The ACL for loans was $15.4 million, or 1.47% of total loans, at December 31, 2024.

Sentiment

Score: 5

Explanation: The report presents mixed results, with some positive aspects like loan growth and strong asset quality, but also negative aspects like decreased net income and increased expenses. The outlook is cautiously optimistic.

Positives

• Loans receivable, net, increased to $1.03 billion.
• Shareholders' equity increased to $158.3 million.
• Asset management fees income increased by $177,000 and $514,000 for the three and nine months ended December 31, 2024, respectively, compared to the same periods in the prior year due to new client relationships and continued positive equity market performance during the three and nine months ended December 31, 2024.

Negatives

• Net income decreased to $1.2 million for the quarter and $3.8 million for the nine months ended December 31, 2024.
• Deposits decreased to $1.22 billion.
• Nonperforming assets increased to $469,000, representing 0.03% of total assets.
• The decrease in fees and service charges for the three and nine months ended December 31, 2024 primarily resulted from a decrease in employee retention credit income of $18,000 and $186,000 and a decrease in interchange income of $41,000 and $108,000, respectively.

Risks

• A material increase in the ACL may be required if there is a deterioration in national or local economic conditions, results of regulatory examinations, or other relevant factors.
• Future events affecting borrowers and collateral values cannot be predicted with certainty, and there is no guarantee that the current ACL will remain adequate.
• A sustained decline in the value of the company's stock price, declines in revenue beyond current forecasts, significant adverse changes in the operating environment for the financial industry, or an increase in the value of assets without an increase in the value of the reporting unit may result in a future impairment charge.

Future Outlook

The Company plans to continue its focus on core deposits and on building customer relationships as opposed to obtaining deposits through the wholesale markets.

Management Comments

• Management believes the Bank met all capital adequacy requirements to which it was subject as of December 31, 2024.
• Management considers the ACL for loans and unfunded loan commitments to be adequate at December 31, 2024 based on an evaluation of various factors affecting the loan portfolio.

Industry Context

The report reflects the challenges faced by community banks in a rising interest rate environment, where deposit costs increase while managing loan growth and asset quality remains a priority.

Comparison to Industry Standards

• Without specific peer data, it's difficult to provide a detailed comparison, but generally, a net interest margin around 3% is considered healthy for community banks.
• Asset quality metrics, such as nonperforming assets to total assets, are closely watched, and Riverview's 0.03% is quite low, indicating strong asset quality compared to some peers.
• Capital ratios are also key, and Riverview's capital levels appear to be well above regulatory minimums, which is a positive sign.

Legal Proceedings

• The Company was involved in litigation with a former business client concerning real estate investments offered by a business owned by that client.
• The settlement was subsequently approved by all relevant courts in July 2024 and the final settlement payment of $2.3 million was made in August 2024, fully releasing the Company from all claims related to the litigation.

Stakeholder Impact

• Shareholders may be concerned about the decrease in net income and earnings per share.
• Customers may benefit from the Company's focus on core deposits and building customer relationships.
• Employees may be affected by changes in compensation and benefits.

Next Steps

• The Company will continue to seek to expand its franchise through de novo branches, the selective acquisition of individual branches, loan purchases and whole bank transactions that meet its investment and market objectives.
• The Company intends to selectively add other products to further diversify revenue sources and to capture more of each customers banking relationship by cross selling loan and deposit products and additional services, including services provided through the Trust Company to increase its fee income.

Key Dates

Keywords

financial results, net income, loans, deposits, asset quality, Riverview Bancorp, banking