RVSB Riverview Bancorp Inc

Riverview Bancorp, Inc. (Nasdaq:RVSB) today reported strong organic growth, coupled with contributions from a recent acquisition, generated improved net interest income and contributed to a 35% increase in fiscal second quarter profits compared to the same period in the prior year. Net income was $2.6 million, or $0.45 per diluted share, in the second quarter of fiscal 2006 ended September 30, 2005, compared to $1.9 million, or $0.39 per diluted share, in the same period a year ago. For the first six months of fiscal 2006 net income increased 7% to $4.4 million, or $0.78 per diluted share, compared to $4.1 million, or $0.84 per diluted share, in the same period a year ago. "We are continuing to focus on building a well-rounded commercial bank," said Pat Sheaffer, Chairman and CEO. "Our business fundamentals remain strong as our revenues, loans and deposits have steadily increased. We are also moving forward with expanding our franchise. The acquisition of American Pacific Bank is already contributing to profitability, and expands our footprint into the large greater Portland, (Oregon) market. We are also in the process of building two new bank facilities in Vancouver, Washington, which we expect to open in the third quarter of fiscal year 2006." Second Quarter Financial Highlights (at or periods ended September 30, 2005 compared to September 30, 2004) -- Net income increased 35% to a record $2.6 million. -- Net interest income increased 40% to $8.1 million. -- Revenues increased 42% to $10.6 million. -- Total assets increased 41% to $739 million. -- Loans increased 50% to $579 million, with an increasing concentration of commercial real estate loans. -- Deposits grew 46% to $600 million, with a 48% increase in transaction account balances. -- Non-performing assets were just 0.14% of total assets. Operating Results Revenues (net interest income before the provision for loan losses plus non-interest income) increased 42% to $10.6 million for the quarter compared to $7.5 million in the same quarter a year ago. Net interest income before the provision for loan loss increased 40% to $8.1 million in the second quarter of fiscal 2006 compared to $5.8 in the second quarter a year ago. Non-interest income increased 46% to $2.5 million in the second fiscal quarter of 2006 compared to $1.7 million in the prior year's second quarter. This increase was largely due to a 40% increase in fee based transaction accounts and mortgage broker activity, which contributed $1.6 million to second quarter revenue, compared to $1.1 million in the same quarter a year ago. Riverview also sold the American Pacific Bank's credit card portfolio in the second fiscal quarter, which led to a pre-tax gain on sale of $304,000. For the first half of fiscal 2006 revenues increased 27% to $19.9 million compared to $15.7 million in the six-month period a year ago. Year-to-date net interest income before the provision for loan losses increased 34% to $15.2 million compared to $11.3 million in the same period a year ago. Non-interest income increased 8% to $4.7 million in the first six months of fiscal 2006 compared to $4.3 million in the first six months of fiscal 2005. "Our objective is to position our asset and liability mix to maintain or improve our net interest margin as interest rates change in either direction. In the past twelve months the fed funds rate has increased 200 basis points. Our net interest margin has increased 4 basis points from a 4.89% net interest margin at September 30, 2004, to a 4.93% net interest margin at September 30, 2005," said Ron Wysaske, President and COO. "Our relatively stable interest rate risk profile has allowed the net interest margin to absorb the increasing interest rates and still provide a respectable net interest margin." "We saw a significant increase in non-interest expense for the quarter and for the first six months of the fiscal year as a result of the acquisition of American Pacific Bank and Sarbanes-Oxley related expenses," said Ron Wysaske. Non-interest expense was $6.3 million in the second quarter compared to $4.6 million during the same period a year ago. For the first half of the fiscal year, non-interest expenses were $12.4 million up from $9.4 million in the like period a year ago. Net of intangible amortization, the efficiency ratio improved 253 basis points to 58.28% for the quarter, compared to the same quarter a year ago. Balance Sheet Growth "Our focus has been to grow our loan portfolio while maintaining strong loan quality," said Wysaske. "The loans we added from American Pacific Bank have all undergone thorough underwriting for quality control. These loans, along with internally generated loans, combined to increase commercial real estate loans by 91%." Commercial real estate loans now account for 63% of the portfolio at September 30, 2005, compared to 49% a year ago. Net loans at September 30, 2005, were $579 million compared to $386 million at September 30, 2004. Permanent single-family loans represent just 6% of Riverview's loan portfolio. Total assets increased 41% to $739 million at September 30, 2005, compared to $525 million a year ago. Deposits grew 46% to $600 million compared to $412 million at September 30, 2004. "Building transaction accounts continues to be our focus, while we decrease the emphasis on certificate of deposits," added Wysaske. "We reduced interest sensitive wholesale deposits by $5 million, while we increased core deposits by $130 million; a 48% increase over core deposits at this time last year." Including the issuance of $16.7 million in stock associated with the American Pacific Bank acquisition, shareholders' equity increased 32% to $89.1 million, from $67.7 million at the end of the second fiscal quarter last year. Book value was $15.34 at September 30, 2005, compared to $13.55 a year earlier. Tangible book value was $10.56 at September 30, 2005, compared to $11.46 a year ago. Credit Quality and Performance Measures Credit quality remains exceptional, as non-performing assets were just 0.14% of total assets at September 30, 2005, a 14 basis point improvement compared to 0.28% of total assets at September 30, 2004. The allowance for loan losses was $6.8 million, or 1.15% of total net loans outstanding at September 30, 2005, compared to $4.4 million or 1.13% of total net loans at September 30, 2004. "As a reflection of our loan growth, last quarter we stepped up our provision for loan losses even though our loan quality remains strong," added Sheaffer. The provision for loan losses for the second quarter was $450,000, compared to $50,000 in the same quarter of 2004 and $450,000 for the quarter ended June 30, 2005. Riverview's second fiscal quarter 2006 return on average assets was 1.40% compared to return on average assets of 1.45% for the second fiscal quarter of 2005. Return on average equity was 11.36% for the quarter compared to 11.14% for the same period last year. Conference Call Riverview Bancorp will host a conference call Tuesday, October 18, at 8:00 a.m. PDT, to discuss second quarter results. The conference call can be accessed live by telephone at 303-262-2138. To listen to the call online go to www.actioncast.acttel.com and use event ID 30623. An archived recording of the call can be accessed by dialing 303-590-3000 access code 11040263# until Tuesday, October 25, 2005, or via the Internet at www.actioncast.acttel.com event ID 30623. Riverview Bancorp, Inc. (www.riverviewbank.com) is headquartered in Vancouver, Washington -- just north of Portland, Oregon on the I-5 corridor. With assets of $739 million, it is the parent company of the 82 year-old Riverview Community Bank, as well as Riverview Mortgage and Riverview Asset Management Corp. There are 16 branches, including nine in fast growing Clark County, and one lending center. The bank offers true community banking services, focusing on providing the highest quality service and financial products to commercial and retail customers. On April 22, 2005, the company completed its acquisition of American Pacific Bank (Nasdaq:AMPB), based in Portland, Oregon, with assets of $125 million. Statements concerning future performance, developments or events, concerning expectations for growth and market forecasts, and any other guidance on future periods, constitute forward-looking statements, which are subject to a number of risks and uncertainties that might cause actual results to differ materially from stated objectives. These factors include but are not limited to: RVSB's ability to integrate the American Pacific acquisition and efficiently manage expenses. Additional factors that could cause actual results to differ materially are disclosed in Riverview Bancorp's recent filings with the SEC, including but not limited to Annual Reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K. -0- *T RIVERVIEW BANCORP, INC. AND SUBSIDIARY CONSOLIDATED BALANCE SHEETS SEPTEMBER 30, 2005, MARCH 31, 2005 AND SEPTEMBER 30, 2004 (In thousands, except share data) SEPT. 30, MARCH 31, SEPT. 30, (Unaudited) 2005 2005 2004 ---------------------------------------- --------- --------- --------- ASSETS Cash (including interest-earning accounts of $33,110, $45,501 and $35,404) $ 56,486 $ 61,719 $ 49,644 Loans held for sale - 510 444 Investment securities available for sale, at fair value (amortized cost of $24,147 , $22,993 and $30,712) 24,143 22,945 29,813 Mortgage-backed securities held to maturity, at amortized cost (fair value of $2,223, $2,402 and $2,487) 2,202 2,343 2,428 Mortgage-backed securities available for sale, at fair value (amortized cost of $10,047, $11,756 and $13,445) 9,898 11,619 13,579 Loans receivable (net of allowance for loan losses of $6,752, $4,395 and $4,424) 579,443 429,449 386,063 Real estate owned - 270 - Prepaid expenses and other assets 1,824 1,538 1,234 Accrued interest receivable 2,807 2,151 1,803 Federal Home Loan Bank stock, at cost 7,350 6,143 6,119 Premises and equipment, net 11,862 8,391 8,401 Deferred income taxes, net 2,377 2,624 3,111 Mortgage servicing intangible, net 414 470 564 Goodwill 26,354 9,214 9,214 Core deposit intangible, net 1,001 578 643 Bank owned life insurance 12,848 12,607 12,397 -------- -------- -------- TOTAL ASSETS $739,009 $572,571 $525,457 ======== ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY LIABILITIES: Deposit accounts $599,680 $456,878 $411,702 Accrued expenses and other liabilities 8,920 5,858 5,776 Advance payments by borrowers for taxes and insurance 325 313 286 Federal Home Loan Bank advances 40,938 40,000 40,000 -------- -------- -------- Total liabilities 649,863 503,049 457,764 SHAREHOLDERS' EQUITY: Serial preferred stock, $.01 par value; 250,000 authorized, issued and outstanding, none - - - Common stock, $.01 par value; 50,000,000 authorized September 30, 2005 - 5,811,940 issued, 5,811,936 outstanding; March 31, 2005 - 5,015,753 issued, 5,015,749 outstanding; September 30, 2004 - 4,997,300 issued, 4,997,296 outstanding; 58 50 50 Additional paid-in capital 58,139 41,112 40,698 Retained earnings 32,339 29,874 28,945 Unearned shares issued to employee stock ownership trust (1,289) (1,392) (1,495) Accumulated other comprehensive loss (101) (122) (505) -------- -------- -------- Total shareholders' equity 89,146 69,522 67,693 -------- -------- -------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $739,009 $572,571 $525,457 ======== ======== ======== RIVERVIEW BANCORP, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF INCOME FOR THE THREE AND SIX MONTHS ENDED SEPTEMBER 30, 2005 AND 2004 Three Months Ended Six Months Ended (In thousands, except September 30, September 30, share data)(Unaudited) 2005 2004 2005 2004 ---------------------- ---------- ----------- ---------- ---------- INTEREST INCOME: Interest and fees on loans receivable $ 11,010 $ 6,997 $ 20,607 $ 13,623 Interest on investment securities-taxable 195 125 381 249 Interest on investment securities-non taxable 43 43 86 87 Interest on mortgage- backed securities 138 164 283 324 Other interest and dividends 250 201 504 340 ---------- ---------- ---------- ---------- Total interest income 11,636 7,530 21,861 14,623 ---------- ---------- ---------- ---------- INTEREST EXPENSE: Interest on deposits 3,059 1,260 5,530 2,303 Interest on borrowings 482 504 1,138 1,000 ---------- ---------- ---------- ---------- Total interest expense 3,541 1,764 6,668 3,303 ---------- ---------- ---------- ---------- Net interest income 8,095 5,766 15,193 11,320 Less provision for loan losses 450 50 900 190 ---------- ---------- ---------- ---------- Net interest income after provision for loan losses 7,645 5,716 14,293 11,130 ---------- ---------- ---------- ---------- NON-INTEREST INCOME: Fees and service charges 1,598 1,142 3,084 2,312 Asset management fees 342 257 706 529 Gain on sale of loans held for sale 77 137 203 312 Gain on sale of real estate owned - - 21 - Loan servicing income (expense) (8) 15 19 34 Gain on sale of land and fixed assets - 1 - 829 Gain on sale of credit card portfolio 304 - 304 - Bank owned life insurance 122 122 242 276 Other 47 24 90 46 ---------- ---------- ---------- ---------- Total non-interest income 2,482 1,698 4,669 4,338 ---------- ---------- ---------- ---------- NON-INTEREST EXPENSE: Salaries and employee benefits 3,441 2,587 6,840 5,233 Occupancy and depreciation 883 739 1,686 1,512 Data processing 373 237 738 486 Amortization of core deposit intangible 55 34 104 115 Advertising and marketing expense 306 222 537 473 FDIC insurance premium 17 15 32 30 State and local taxes 148 122 283 275 Telecommunications 99 70 162 134 Professional fees 388 129 752 252 Other 551 459 1,223 936 ---------- ---------- ---------- ---------- Total non-interest expense 6,261 4,614 12,357 9,446 ---------- ---------- ---------- ---------- INCOME BEFORE INCOME TAXES 3,866 2,800 6,605 6,022 PROVISION FOR INCOME TAXES 1,304 898 2,222 1,921 ---------- ---------- ---------- ---------- NET INCOME $ 2,562 $ 1,902 $ 4,383 $ 4,101 ========== ========== ========== ========== Earnings per common share: Basic $ 0.45 $ 0.40 $ 0.79 $ 0.85 Diluted 0.45 0.39 0.78 0.84 Weighted average number of shares outstanding: Basic 5,654,661 4,812,154 5,553,872 4,801,528 Diluted 5,721,905 4,885,447 5,621,343 4,875,146 RIVERVIEW BANCORP, INC. AND SUBSIDIARY FINANCIAL HIGHLIGHTS (UNAUDITED) At or At or for the six for the months ended year ended September 30, March 31, 2005 2004 2005 ----------------------------------- FINANCIAL CONDITION DATA (Dollars in thousands, except share data) ---------------------------------------------------------------------- Average interest-earning assets $631,307 $464,861 $479,512 Average interest-bearing liabilities 522,114 378,081 388,426 Net average earning assets 109,193 86,780 91,086 Non-performing assets 1,043 1,478 726 Non-performing loans 1,043 1,478 456 Allowance for loan losses 6,752 4,424 4,395 Average interest-earning assets to average interest-bearing liabilities 120.91% 122.95% 123.45% Allowance for loan losses to non- performing loans 647.36% 299.32% 963.82% Allowance for loan losses to net loans 1.15% 1.13% 1.01% Non-performing loans to total net loans 0.18% 0.38% 0.10% Non-performing assets to total assets 0.14% 0.28% 0.13% Shareholders' equity to assets 12.06% 12.88% 12.14% Number of banking facilities 17 14 14 At three months At year At six months ended ended ended September 30, June 30, March 31, LOAN DATA 2005 2004 2005 2005 ---------------------------- -------- -------- -------- ---------- Residential: One-to-four-family $ 32,251 $ 40,681 $ 34,324 $ 36,514 Multi-family 2,019 4,060 2,037 2,568 Construction: One-to-four-family 44,618 38,991 48,932 44,415 Commercial real estate 54,224 1,453 29,390 11,138 Commercial 69,401 58,965 67,239 58,042 Consumer: Secured 28,730 29,896 29,040 28,782 Unsecured 1,688 1,897 4,811 1,668 Land 42,532 25,346 36,924 29,151 Commercial real estate 314,776 192,097 318,631 224,691 -------- -------- -------- ---------- 590,239 393,386 571,328 436,969 Less: Deferred loan fees, net 4,044 2,899 3,791 3,125 Allowance for loan losses 6,752 4,424 6,526 4,395 -------- -------- -------- ---------- Loans receivable, net $579,443 $386,063 $561,011 $ 429,449 ======== ======== ======== ========== RIVERVIEW BANCORP, INC. AND SUBSIDIARY FINANCIAL HIGHLIGHTS (UNAUDITED) For the three months For the six months ended September 30, ended September 30, SELECTED OPERATING DATA 2005 2004 2005 2004 ---------------------- ---------- ---------- ---------- ---------- Efficiency ratio (4) 59.19% 61.82% 62.21% 60.33% Efficiency ratio net of intangible amortization 58.28% 60.81% 61.32% 59.10% Coverage ratio net of intangible amortization 130.44% 125.90% 123.99% 121.32% Return on average assets (1) 1.40% 1.45% 1.25% 1.59% Return on average equity (1) 11.36% 11.14% 10.19% 12.21% Average rate earned on interest-earning assets 7.08% 6.38% 6.92% 6.32% Average rate paid on interest-bearing liabilities 2.61% 1.84% 2.55% 1.74% Spread 4.47% 4.54% 4.37% 4.57% Net interest margin 4.93% 4.89% 4.82% 4.90% At or for the three At or for the six months ended months ended September 30, September 30, PER SHARE DATA 2005 2004 2005 2004 ---------------------- ---------- ---------- ---------- ---------- Basic earnings per share (2) $ 0.45 $ 0.40 $ 0.79 $ 0.85 Diluted earnings per share (3) 0.45 0.39 0.78 0.84 Book value per share 15.34 13.55 15.34 13.55 Tangible book value per share 10.56 11.46 10.56 11.46 Market price per share: High for period 22.100 21.650 22.100 21.650 Low for the period 20.750 19.850 20.330 19.490 Close for period end 20.810 21.360 20.810 21.360 Cash dividends declared per share 0.170 0.155 0.340 0.310 Average number of shares outstanding: Basic (2) 5,654,661 4,812,154 5,553,872 4,801,528 Diluted (3) 5,721,905 4,885,447 5,621,343 4,875,146 (1) Amounts are annualized. (2) Amounts calculated exclude ESOP shares not committed to be released. (3) Amounts calculated exclude ESOP shares not committed to be released and include common stock equivalents. (4) Non-interest expense divided by net interest income plus non-interest income. *T