Riverview Bancorp reported earnings of $480,000, or $0.02 per diluted share for the first fiscal quarter ended June 30 compared to $2.9 million, or $0.13 per diluted share, in the preceding quarter, and $4.2 million, or $0.18 per diluted share, in the first fiscal quarter a year ago. During the quarter, Riverview recognized a provision for loan losses of $4.5 million reflecting the current economic environment. The pre-tax, pre-provision income (non-GAAP) was $5.1 million for the quarter, compared to $5.1 million in the preceding quarter and $5.4 million in the first fiscal quarter a year ago.
First quarter highlights included:
- Net income was $480,000, or $0.02 per diluted share.
- Pre-tax, pre-provision income was $5.1 million for the quarter compared to $5.1 million in the previous quarter and $5.4 million for the quarter ended June 30, 2019.
- Net interest margin was 3.65%.
- Provision for loan losses was $4.5 million, reflecting a challenging economic environment and specific industry exposure in our loan portfolio.
- Total loans increased $91.2 million during the quarter to $1.00 billion at June 30, 2020. SBA PPP loans totaled $110.3 million at June 30, 2020.
- Total deposits increased $168.3 million, or 17.0%, during the quarter to $1.16 billion at June 30, 2020.
- Non-performing assets decreased to 0.09% of total assets.
- Total risk-based capital ratio was 17.40% and Tier 1 leverage ratio was 10.55%.
- Returned $2.6 million of capital to shareholders during the quarter through share repurchases totaling $1.4 million and a quarterly cash dividend payment of $0.05 per share.
COVID-19 operational update:
- Industry exposure: Both Washington and Oregon have modified phased reopening plans in place for businesses. While the economic impact is widespread, some industries will be more acutely affected by the current business decline. Riverview’s loan portfolio exposure to industries most affected by these mandates include:
- Hotel/Motel ($108.1 million, 10.8% of total loans)
- Retail Strip Centers ($82.1 million, 8.2% of total loans)
- Multi-Family ($58.1, 5.8% of total loans)
- Gas Station/Auto Repair ($41.3 million, 4.1% of total loans)
- Restaurants/Fast Food ($17.2 million, 1.6%)
Loans to these clients are generally secured by real estate and had strong financial performance heading into the current pandemic. The weighted average loan-to-value and debt service coverage ratio for these portfolios were as follows: Hotel/Motel (53% and 1.84x), Retail Strip Centers (53% and 1.77x), Multi-Family (53% and 1.92x), Gas Station/Auto Repair (52% and 3.18x) and Restaurants/Fast Food (57% and 1.45x).
- Loan Accommodations:
- Commercial Loans. As of June 30, Riverview had approved payment deferrals for 98 commercial loans that were impacted by the pandemic totaling $161.6 million. Of those totals, 23 borrowers have requested a 3-month extension to their original 3-month deferral totaling $75.1 million. In July 2020, Riverview received two new payment deferral requests totaling $2.1 million.
- Consumer Loans. As of June 30, there were 43 consumer loan accommodations totaling $10.1 million that were made during the first fiscal quarter. In addition to the 43 loans that are held in our loan portfolio, there were 19 mortgage loans serviced for FHLMC totaling $3.3 million that were approved for payment deferrals. Since June 30, 2020, there have been no new requests or extensions to any existing consumer payment deferrals.
- Since all of these loans were performing and current on their payments prior to COVID-19, these loan modifications are not considered to be troubled debt restructurings pursuant to provisions contained within the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”).