Riverview Bancorp, Inc. (NASDAQ: RVSB) is a progressive, community-oriented financial services company that has been serving the Pacific Northwest region for nearly a century. With a focus on local, personal service, the company has established itself as a trusted partner for residents and businesses in its primary market area, which includes Clark, Klickitat, and Skamania counties in Washington, as well as Multnomah, Washington, and Marion counties in Oregon.

Business Overview

Riverview Bancorp's strategic plan emphasizes targeting the commercial banking customer base in its primary market area, with a particular focus on small and medium-sized businesses, professionals, and wealth-building individuals. The company's loan portfolio is predominantly composed of commercial business, commercial real estate, multi-family real estate, land, real estate construction, and consumer loans, reflecting its commitment to supporting the growth and development of the local economy.

Financials

For the fiscal year ended March 31, 2024, Riverview Bancorp reported annual net income of $3,799,000 and annual revenue of $66,797,000. The company's annual operating cash flow stood at $12,754,000, while its annual free cash flow reached $7,142,000. These financial metrics demonstrate Riverview Bancorp's ability to generate consistent earnings and maintain a strong liquidity position, even in the face of the challenges faced by the banking industry in recent years.

In the latest quarter, ended December 31, 2023, Riverview Bancorp reported net income of $1,452,000, a decrease from the $5,240,000 reported in the same period of the prior year. This decline was primarily attributable to increased funding costs, as well as a modest increase in non-interest expense, which was partially offset by a slight increase in non-interest income.

The company's net interest margin for the three months ended December 31, 2023, was 2.49%, compared to 3.48% in the same period of the prior year. This decrease was primarily due to the rise in interest expense on deposits and borrowings, as well as a slight decrease in total average interest-earning assets.

Loan Portfolio

Riverview Bancorp's loan portfolio remained stable, with total loans of $1.02 billion as of December 31, 2023, compared to $993.5 million as of March 31, 2023. The company's loan mix continues to be heavily weighted towards commercial and real estate-related loans, which accounted for 90.4% of the total loan portfolio at the end of the third quarter of fiscal 2024.

Asset Quality

The company's asset quality remained strong, with nonperforming assets of just $186,000, or 0.01% of total assets, as of December 31, 2023. This represents a significant improvement from the $1.9 million, or 0.12% of total assets, reported as of March 31, 2023. The decrease in nonperforming assets was primarily due to a reduction in nonperforming government-guaranteed loans.

Riverview Bancorp's allowance for credit losses (ACL) for loans was $15.4 million, or 1.51% of total loans, as of December 31, 2023, compared to $15.3 million, or 1.52% of total loans, as of March 31, 2023. The company did not record a provision for credit losses during the nine months ended December 31, 2023, or the same period in the prior year, reflecting the strength of its loan portfolio and the effectiveness of its credit risk management practices.

Capital Ratios

The company's capital ratios remained strong, with a total risk-based capital ratio of 16.67% and a tier 1 leverage ratio of 10.53% as of December 31, 2023. These ratios exceeded the regulatory requirements for a "well-capitalized" institution, providing Riverview Bancorp with the financial flexibility to support its growth initiatives and weather any potential economic headwinds.

Liquidity

Riverview Bancorp's liquidity position also remained robust, with cash and cash equivalents, including interest-earning deposits, totaling $37.6 million as of December 31, 2023. The company had additional borrowing capacity of $137.8 million from the Federal Home Loan Bank (FHLB), providing ample access to funding sources to support its lending activities and meet its financial obligations.

Outlook

The company's strategic focus on commercial banking, coupled with its strong asset quality, capital position, and liquidity, positions Riverview Bancorp well to navigate the evolving banking landscape. The company's emphasis on building customer relationships, expanding its commercial loan portfolio, and diversifying its revenue streams through its trust and wealth management services have been key drivers of its success.

Looking ahead, Riverview Bancorp remains cautiously optimistic about the future. The company's management team is closely monitoring the economic environment, including the potential impact of inflation, interest rate changes, and the possibility of a recession. While these factors present risks, the company's diversified business model and prudent risk management practices provide a solid foundation for weathering any challenges that may arise.

Conclusion

Overall, Riverview Bancorp's performance in the latest quarter and fiscal year demonstrates its ability to adapt to the evolving banking landscape and deliver value to its shareholders. The company's focus on serving the needs of its local communities, coupled with its strong financial position, positions it well for continued success in the years to come.