Riverview Bancorp, Inc. — FY2024 Form 10-K
Reporting period: Fiscal year ended March 31, 2024; comparisons are primarily with the year ended March 31, 2023. This is an annual filing, not a calendar-year 2023 fourth-quarter report. Riverview is a community bank serving southwest Washington and parts of Oregon, with 17 branches and a trust and investment services business.
Financial performance and condition
| Metric | FY2024 / March 31, 2024 | FY2023 / March 31, 2023 |
|---|---|---|
| Total assets | $1.522 billion | $1.590 billion |
| Net loans | $1.009 billion | $993.5 million |
| Deposits | $1.232 billion | $1.265 billion |
| FHLB advances | $88.3 million | $123.8 million |
| Shareholders’ equity | $155.6 million | $155.2 million |
| Net interest income | $38.1 million | $51.6 million |
| Net income | $3.8 million | $18.1 million |
| Diluted earnings per share | $0.18 | $0.83 |
| Net interest margin | 2.56% | 3.26% |
| Return on average assets / equity | 0.24% / 2.43% | 1.08% / 11.71% |
- Interest and dividend income rose 1.6% to $56.6 million, but interest expense increased 354.9% to $18.5 million as deposit and borrowing costs rose. Average interest-bearing deposit cost increased to 0.97% from 0.16%; average FHLB advances rose to $146.6 million from $21.0 million.
- Non-interest income fell to $10.2 million from $12.2 million, including a $2.7 million pretax loss on securities sales. Non-interest expense increased 11.2% to $43.7 million, including $2.3 million of estimated litigation costs above insurance coverage. The efficiency ratio rose to 90.48% from 61.71%.
- Operating cash flow was $12.8 million, investing cash flow was positive $63.6 million, and financing cash flow was negative $74.7 million. Cash and cash equivalents ended at $23.6 million. Investing inflows included $43.5 million of securities-sale proceeds; financing outflows included net deposit runoff and net repayment of borrowings.
- Total debt-like funding included $88.3 million of FHLB advances and $27.0 million of junior subordinated debentures. The Bank reported regulatory capital ratios of 16.32% total risk-based capital, 15.06% CET1 and 10.29% leverage, and was categorized as well capitalized.
- Cash plus available-for-sale securities totaled $166.8 million, or 11.0% of assets. Management reported $857.4 million of total available liquidity, including borrowing sources subject to collateral and other conditions. The Bank had no Federal Reserve borrowings at year-end.
Material changes and credit profile
- Net income declined 79.0%, chiefly because net interest income fell $13.5 million and non-interest expense rose $4.4 million. A $750,000 prior-year credit-loss provision did not recur.
- Loans grew $15.1 million. Commercial and construction loans were 90.4% of loans; commercial real estate (CRE) alone was 57.0%, and CRE plus multifamily loans were $654.3 million. Management’s strategy continues to emphasize commercial lending and core-deposit growth.
- Deposits fell $33.5 million. Core branch deposits declined $26.9 million amid pricing competition; certificates of deposit increased to $191.0 million. Estimated uninsured deposits increased to $297.2 million from $225.7 million. No wholesale-brokered deposits were outstanding.
- Nonperforming assets decreased to $178,000 from $1.9 million, largely reflecting resolution of servicing-transfer delays involving government-guaranteed loans. The allowance for credit losses was $15.4 million, or 1.50% of loans; there was no FY2024 provision or recapture.
- Criticized loans increased to $36.7 million from $19.1 million, mainly after downgrades of commercial relationships. Classified loans, all substandard, declined to $723,000 from $2.6 million. CRE concentration was 314% of risk-based capital under the company’s cited supervisory measure.
- Available-for-sale and held-to-maturity securities totaled $372.7 million, down from $455.3 million. Unrealized losses were primarily attributed to interest rates and other market factors, not credit deterioration; AOCI was a $16.1 million loss at year-end. In the fourth quarter, the company sold about $46.2 million of lower-yielding available-for-sale securities and used $43.5 million of proceeds to repay higher-cost FHLB advances. The transaction generated a $2.7 million pretax loss and $2.1 million after-tax impact.
Outlook, risks and unusual items
- No formal earnings or margin guidance is provided. Management plans to continue originating selected construction loans and managing that portfolio proactively. It expects approximately $838,000 of premises-and-equipment capital expenditures in FY2025 and expects to continue quarterly dividends at $0.06 per share, subject to Board discretion. The FY2024 dividend payout ratio was 133.33% of diluted earnings.
- Management cites deposit competition and customer movement to higher-yielding alternatives, interest-rate sensitivity, local economic conditions and CRE exposure as material risks. The filing’s rate model estimates net interest income would decline 7.5% over 12 months under an instantaneous 100-basis-point increase and rise 4.6% under a 100-basis-point decrease; actual results may differ.
- Uninsured deposits, CRE office and other property values, higher funding costs, and the increase in criticized loans warrant monitoring. Management considers the credit allowance adequate but warns that weaker economic conditions, regulatory examinations or collateral deterioration could require higher provisions.
- A proposed global settlement of litigation involving a former business client resulted in a $2.3 million fourth-quarter expense; settlement remains subject to court approval. The auditor issued an unqualified opinion on the financial statements and identified the allowance for credit losses as a critical audit matter. The auditor did not provide an opinion on internal control; management reported its controls effective.
- Other disclosed risks include cybersecurity and third-party service-provider disruptions, regulatory changes, interest-rate and securities valuation risk, and the possibility of future goodwill impairment. The FY2024 goodwill review found no impairment.
Key investor verification points
- Track deposit retention, deposit pricing, uninsured balances and certificate maturities, and confirm the availability and collateral requirements of stated borrowing capacity.
- Review subsequent CRE and construction loan performance, criticized-loan migrations, borrower concentrations and collateral valuations, particularly the related-borrower downgrades described in the filing.
- Assess whether the securities repositioning improves funding costs and net interest margin enough to offset the realized loss, and monitor remaining unrealized losses and liquidity needs.
- Confirm the court’s disposition of the proposed litigation settlement and whether final costs exceed the recorded estimate or available insurance.
- Evaluate the sustainability of the $0.06 quarterly dividend given FY2024 earnings, payout ratio and holding-company reliance on Bank distributions.
- Compare FY2025 results with management’s stated capital-spending plan and monitor margin, earnings and credit trends; the filing provides no formal earnings forecast.