SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) of
----- THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2000
------------------
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) of
----- THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
----- -----
Commission File Number: 0-22957
RIVERVIEW BANCORP, INC.
(Exact name of registrant as specified in its charter)
Washington 91-1838969
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
900 Washington, Suite 900 Vancouver, WA 98660
(Address of principal executive office)
Registrant's telephone number, including area code: (360)693-6650
Check whether the registrant: (1) filed all reports required to be filed by
Sections 13 or 15(d) of the Exchange Act during the past 12 months (or for
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. Yes X No .
--- --
APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares
outstanding of each of the issuer's classes of common stock, as of the latest
practicable date: Common Stock, $.01 par value---4,564,128 shares as of
November 3, 2000.
<PAGE>
Form 10-Q
RIVERVIEW BANCORP, INC. AND SUBSIDIARY
INDEX
Part I. Financial Information Page
--------------------- ----
Item 1: Financial Statements (Unaudited)
Consolidated Balance Sheets
as of September 30, 2000 and March 31, 2000 1
Consolidated Statements of Income: Three and Six
Months Ended September 30, 2000 and 1999 2
Consolidated Statements of Shareholders' Equity
for the Year Ended March 31, 2000 and for the
Six Months Ended September 30, 2000 3
Consolidated Statements of Cash Flows for the
Six Months Ended September 30, 2000 and 1999 4
Notes to Consolidated Financial Statements 5-10
Item 2: Management's Discussion and Analysis of
Financial Condition and Results of
Operations 11-19
Item 3: Quantitative and Qualitative Disclosures
About Market Risk 19
Part II. Other Information 20-21
SIGNATURES 22
EXHIBITS 23-24
<PAGE>
RIVERVIEW BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 2000 and MARCH 31, 2000
SEPTEMBER 30, MARCH 31,
(In thousands, except share data) (Unaudited) 2000 2000
----------------------------------------------------------------------------
ASSETS
Cash (including interest-earning accounts
of $3,463 and $5,378) $ 14,416 $ 15,786
Loans held for sale 378 -
Investment securities held to maturity,
at amortized cost (fair value of $882
and $854) 882 903
Investment securities available for sale,
at fair value (amortized cost of $19,420
and $14,421) 18,029 12,883
Mortgage-backed securities held to maturity,
at amortized cost (fair value of $7,373
and $8,595) 7,368 8,657
Mortgage-backed securities available for
sale, at fair value (amortized cost of
$36,580 and $40,974) 35,000 39,378
Loans receivable (net of allowance for
loan losses of $1,886 and $1,362) 272,800 249,034
Real estate owned 1,089 65
Prepaid expenses and other assets 894 875
Accrued interest receivable 2,259 1,881
Federal Home Loan Bank stock, at cost 4,292 3,074
Premises and equipment, net 10,625 9,088
Land held for development - 471
Deferred income taxes, net 1,416 1,236
Core deposit intangible, net 1,186 1,349
--------- ---------
TOTAL ASSETS $ 370,634 $ 344,680
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES:
Deposit accounts $ 242,468 $ 232,355
Accrued expenses and other liabilities 3,739 3,147
Advance payments by borrowers for taxes
and insurance 193 139
Federal Home Loan Bank advances 74,500 60,550
--------- ---------
Total liabilities 320,900 296,191
COMMITMENTS AND CONTINGENCIES (NOTE 12)
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, 2000 - 4,912,285
issued, 4,536,133 outstanding;
March 31, 2000 - 4,902,503 issued,
4,521,209 outstanding 49 49
Additional paid-in capital 38,488 38,457
Retained earnings 16,586 15,652
Unearned shares issued to employee stock
ownership trust (2,320) (2,422)
Unearned shares held by the management
recognition and development plan (1,108) (1,178)
Accumulated other comprehensive loss (1,961) (2,069)
--------- ---------
Total shareholders' equity 49,734 48,489
--------- ---------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 370,634 $ 344,680
========= =========
See notes to consolidated financial statements.
1
<PAGE>
RIVERVIEW BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended Six Months Ended
September 30, September 30,
(In thousands, except share 2000 1999 2000 1999
data)(Unaudited)
------------------------------------------------------------------------------
INTEREST INCOME:
Interest and fees on loans
receivable $ 6,497 $ 4,890 $ 12,630 $ 9,503
Interest on investment
securities 207 224 415 478
Interest on mortgage-backed
securities 774 878 1,580 1,821
Other interest and dividends 245 161 343 323
---------- ---------- ---------- ----------
Total interest income 7,723 6,153 14,968 12,125
---------- ---------- ---------- ----------
INTEREST EXPENSE:
Interest on deposits 2,680 2,087 5,108 4,111
Interest on borrowings 1,342 538 2,417 1,059
---------- ---------- ---------- ----------
Total interest expense 4,022 2,625 7,525 5,170
---------- ---------- ---------- ----------
Net interest income 3,701 3,528 7,443 6,955
Less provision for loan
losses - 90 594 180
---------- ---------- ---------- ----------
Net interest income
after provision for
loan losses 3,701 3,438 6,849 6,775
---------- ---------- ---------- ----------
NON-INTEREST INCOME:
Fees and service charges 774 620 1,482 1,296
Gain on sale of loans held
for sale 14 9 19 14
Gain on sale of other real
estate owned 11 13 11 38
Gain on sale of land and
fixed assets 309 - 309 1
Loan servicing income 32 39 64 72
Other 20 47 41 70
---------- ---------- ---------- ----------
Total non-interest
income 1,160 728 1,926 1,491
---------- ---------- ---------- ----------
NON-INTEREST EXPENSE:
Salaries and employee
benefits 1,674 1,334 3,304 2,731
Occupancy and depreciation 452 336 835 667
Data Processing 218 184 426 369
Amortization of core
deposit intangible 81 81 163 163
Marketing expense 227 195 395 338
FDIC insurance premium 12 29 23 58
Other 462 453 903 914
---------- ---------- ---------- ----------
Total non-interest expense 3,126 2,612 6,049 5,240
---------- ---------- ---------- ----------
INCOME BEFORE FEDERAL INCOME
TAXES 1,735 1,554 2,726 3,026
PROVISION FOR FEDERAL INCOME
TAXES 556 523 869 1,032
---------- ---------- ---------- ----------
NET INCOME
$ 1,179 $ 1,031 $ 1,857 $ 1,994
========== ========== ========== ==========
Earnings per common share:
Basic $ 0.26 $ 0.20 $ 0.41 $ 0.38
Diluted 0.26 0.19 0.40 0.37
Weighted average number of
shares outstanding:
Basic 4,551,528 5,207,396 4,542,328 5,264,843
Diluted 4,621,247 5,320,304 4,614,340 5,377,878
See notes to consolidated financial statements.
2
<PAGE>
<TABLE>
RIVERVIEW BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
FOR THE YEAR ENDED MARCH 31, 2000
AND THE SIX MONTHS ENDED SEPTEMBER 3O, 2000
(Unaudited)
Unearned
Shares
Issued to Accum-
Employee ulated
Common Addi- Stock Unearned Other
Stock tional Owner- Shares Compre-
(In thousands, except ---------------- Paid-in Retained ship Issued to hensive
per share data) Shares Amount Capital Earnings Trust MRDP (Loss) Total
---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance April 1, 1999 5,346,322 $ 58 $ 48,120 $ 13,602 $ (2,743) $ (1,571) $ (599) $ 56,867
Cash Dividends - - - (1,827) - - - (1,827)
Exercise of stock options 34,096 - 137 - - - - 137
Stock repurchased and
retired (912,404) (9) (9,825) - - - - (9,834)
Earned ESOP shares 24,629 - 25 - 321 - - 346
Earned MRDP shares 28,566 - - - - 393 - 393
--------- ---- -------- -------- -------- -------- ------- --------
4,521,209 49 38,457 11,775 (2,422) (1,178) (599) 46,082
Comprehensive income:
Net income - - - 3,877 - - - 3,877
Other comprehensive loss:
Unrealized holding loss
on securities of $1,454
(net of $749 tax benefit)
less reclassification
adjustment for gains
included in net income
of $16 (net of $8 tax
expense) - - - - - - (1,470) (1,470)
--------
Total comprehensive income - - - - - - - 2,407
--------- ---- -------- -------- -------- -------- ------- --------
Balance, March 31, 2000 4,521,209 49 38,457 15,652 (2,422) (1,178) (2,069) 48,489
Cash dividends - - - (923) - - (923)
Exercise of stock options 9,782 - 28 - - - - 28
Earned ESOP shares - - 3 - 102 - - 105
Earned MRDP shares 5,142 - - - - 70 - 70
--------- ---- -------- -------- -------- -------- ------- --------
4,536,133 49 38,488 14,729 (2,320) (1,108) (2,069) 47,769
Comprehensive income:
Net income - - - 1,857 - - - 1,857
Other comprehensive income:
Unrealized holding gain
on securities of $108
(net of $56 tax
expense) - - - - - - 108 108
--------
Total comprehensive income 1,965
--------- ---- -------- -------- -------- -------- ------- --------
Balance, September 30, 2000 4,536,133 $ 49 $ 38,488 $ 16,586 $ (2,320) $ (1,108) $(1,961) $ 49,734
========= ==== ======== ======== ======== ======== ======= ========
See notes to consolidated financial statements.
3
</TABLE>
<PAGE>
RIVERVIEW BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED SEPTEMBER 30,
(In thousands) 2000 1999
------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 1,857 $ 1,994
Adjustments to reconcile net income
to cash provided by operating
activities:
Depreciation and amortization 684 668
Provision for losses on loans 594 180
Provision (Credit) for deferred income taxes (236) (107)
Noncash expense related to ESOP benefit 104 146
Noncash expense related to MRDP benefit 220 196
Increase in deferred loan origination
fees, net of amortization 69 384
Federal Home Loan Bank stock dividend (123) (96)
Net gain(loss) on sale of real estate
owned, mortgage-backed and investment
securities and premises and equipment (291) 39
Changes in assets and liabilities:
(Increase) Decrease in loans held for sale (378) 341
(Increase) Decrease in prepaid expenses
and other assets (65) 30
Increase in accrued interest receivable (377) (119)
Increase in accrued expenses and other
liabilities 444 220
--------- ---------
Net cash provided by operating activities 2,508 3,876
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Loan originations (79,712) (90,784)
Principal repayments on loans 51,259 52,086
Loans sold 2,835 2,754
Proceeds from call, maturity or sale of
investment securities available for sale - 1,000
Purchase of investment securities available
for sale - (1,673)
Purchase of equity securities (5,000) -
Principal repayments on mortgage-backed
securities held to maturity 1,293 2,653
Principal repayments on mortgage-backed
securities available for sale 4,356 7,724
Principal repayments on investment securities
held to maturity 21 20
Proceeds from call or maturity of investment
securities held to maturity - 4,000
Purchase of premises and equipment (2,056) (1,114)
Purchase of Federal Home Loan Bank stock (1,095) -
Proceeds from sale of real estate 999 448
--------- ---------
Net cash used in investing activities (27,100) (22,886)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in deposit accounts 10,113 14,902
Dividends paid (923) (947)
Repurchase of common stock - (3,549)
Proceeds from Federal Home Loan Bank advances 129,686 32,000
Repayment of Federal Home Loan Bank advances (115,736) (30,000)
Net increase in advance payments by
borrowers 54 62
Proceeds from exercise of stock options 28 137
--------- ---------
Net cash provided by financing activities 23,222 12,605
--------- ---------
NET DECREASE IN CASH (1,370) (6,405)
CASH, BEGINNING OF PERIOD 15,786 17,207
--------- ---------
CASH, END OF PERIOD $ 14,416 $ 10,802
========= =========
SUPPLEMENTAL DISCLOSURES:
Cash paid during the period for:
Interest $ 7,323 $ 5,246
Income taxes 1,240 960
NONCASH INVESTING AND FINANCING ACTIVITIES:
Transfer of loans to real estate owned $ 1,189 $ 841
Dividends declared and accrued in other
liabilities 923 468
Fair value adjustment to securities
available for sale 163 (1,624)
Income tax effect related to fair value
adjustment (56) 552
See notes to consolidated financial statements.
4
<PAGE>
RIVERVIEW BANCORP, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(Unaudited)
(1) Organization and Basis of Presentation
--------------------------------------
The accompanying unaudited consolidated financial statements were prepared in
accordance with instructions for Form 10-Q and, therefore, do not include all
disclosures necessary for a complete presentation of financial condition,
results of operations, and cash flows in conformity with accounting principles
generally accepted in the United States of America. However, all adjustments
that are, in the opinion of management, necessary for a fair presentation of
the interim unaudited financial statements have been included. All such
adjustments are of a normal recurring nature.
The unaudited consolidated financial statements should be read in conjunction
with the audited financial statements included in the Riverview Bancorp, Inc.
2000 Annual Report on Form 10-K. The results of operations for the six months
ended September 30, 2000 are not necessarily indicative of the results that
may be expected for the entire fiscal year.
(2) Principles of Consolidation
---------------------------
The accompanying unaudited consolidated financial statements of Riverview
Bancorp, Inc. and Subsidiary (the "Company") include all the accounts of
Riverview Bancorp, Inc. and the consolidated accounts of its wholly-owned
subsidiary, Riverview Community Bank (the "Community Bank"), and the Community
Bank's majority-owned subsidiary, Riverview Asset Management Corporation
(RAMCORP.") and wholly-owned subsidiary, Riverview Services, Inc. All
references to the Company herein include the Community Bank where applicable.
Significant inter-company balances and transactions have been eliminated in
the consolidation.
(3) Comprehensive Income
--------------------
Comprehensive income is defined as the change in equity during a period from
transactions and other events from nonowner sources. Comprehensive income is
the total of net income and other comprehensive income, which for the Company
is comprised entirely of unrealized gains and losses on securities available
for sale and gains and losses on sale of securities available for sale.
For the three months and six months ended September 30, 2000, the Company's
total comprehensive income was $1.4 million and $2.0 million, respectively,
compared to $1.1 million and $922,000 for the three and six months ended
September 30, 1999, respectively.
Total comprehensive income for the three months and six months ended September
30, 2000 is comprised of net income of $1.2 million and $1.9 million and other
comprehensive gain of $260,000 and $108,000, net of tax, respectively. Other
comprehensive income for the three months and six months ended September 30,
2000, consists of unrealized securities gains of $260,000 and $108,000, net of
tax, respectively.
Total comprehensive income for the three months and six months ended September
30, 1999 is comprised of net income of $1.0 million and $2.0 million and other
comprehensive gain of $96,000 and loss of $1.1 million net of taxes,
respectively. Other comprehensive income for the three months and six months
ended September 30, 1999, consists of unrealized securities gains of $96,000
and unrealized securities losses of $1.1 million, net of tax, respectively.
5
<PAGE>
(4) Earnings Per Share
------------------
Basic Earnings per Share ("EPS") is computed by dividing net income applicable
to common stock by the weighted average number of common shares outstanding
during the period, without considering any dilutive items. Diluted EPS is
computed by dividing net income applicable to common stock by the weighted
average number of common shares and common stock equivalents for items that
are dilutive, net of shares assumed to be repurchased using the treasury stock
method at the average share price for the Company's common stock during the
period. Common stock equivalents arise from assumed conversion of outstanding
stock options and awarded but not released Management Recognition and
Development Plan ("MRDP") shares. Employee Stock Ownership Plan ("ESOP")
shares are not considered outstanding for EPS purposes until they are
committed to be released.
Three Months Ended
September 30,
---------------------
2000 1999
---- ----
Basic EPS computation:
Numerator-Net Income $1,179,000 $1,031,000
Denominator-Weighted average
common shares outstanding 4,551,528 5,207,396
Basic EPS $ 0.26 $ 0.20
========== ==========
Diluted EPS computation:
Numerator-Net Income $1,179,000 $1,031,000
Denominator-Weighted average
common shares outstanding 4,551,528 5,207,396
Effect of dilutive stock options 69,719 106,302
Effect of dilutive MRDP - 6,606
---------- ----------
Weighted average common shares
and common stock equivalents 4,621,247 5,320,304
Diluted EPS $ 0.26 $ 0.19
========== ==========
Six Months Ended
September 30,
---------------------
2000 1999
---- ----
Basic EPS computation:
Numerator-Net Income $1,857,000 $1,994,000
Denominator-Weighted average
common shares outstanding 4,542,328 5,264,843
Basic EPS $ 0.41 $ 0.38
========== ==========
Diluted EPS computation:
Numerator-Net Income $1,857,000 $1,994,000
Denominator-Weighted average
common shares outstanding 4,542,328 5,264,843
Effect of dilutive stock options 72,012 109,111
Effect of dilutive MRDP - 3,924
---------- ----------
Weighted average common shares
and common stock equivalents 4,614,340 5,377,878
Diluted EPS $ 0.40 $ 0.37
========== ==========
6
<PAGE>
(5) Investment Securities
---------------------
The amortized cost and approximate fair value of investment securities held to
maturity consisted of the following (in thousands):
Gross Gross Estimated
Amortized Unrealized Unrealized Fair
September 30, 2000 Cost Gains Losses Value
--------- ---------- ---------- --------
Municipal securities $ 882 $ - $ - $ 882
========= ========== ========== ========
March 31, 2000
Municipal securities $ 903 $ - $ (49) $ 854
========= ========== ========== ========
The contractual maturities of securities held to maturity are as follows (in
thousands):
Amortized Estimated
September 30, 2000 Cost Fair Value
--------- ----------
Due after ten years $ 882 $ 882
--------- ----------
$ 882 $ 882
========= ==========
There were no sales of investment securities classified as held to maturity
during the period ended September 30, 2000 and 1999.
The amortized cost and approximate fair value of investment securities
available for sale consisted of the following (in thousands):
Gross Gross Estimated
Amortized Unrealized Unrealized Fair
September 30, 2000 Cost Gains Losses Value
--------- ---------- ---------- --------
Agency securities $ 10,490 $ - $ (846) $ 9,644
Equity securities 6,356 - (466) 5,890
School district bonds 2,574 - (79) 2,495
--------- ---------- ---------- --------
$ 19,420 $ - $ (1,391) $ 18,029
========= ========== ========== ========
March 31, 2000
Agency securities $ 10,489 $ - $ (780) $ 9,709
Equity securities 1,356 - (617) 739
School district bonds 2,576 - (141) 2,435
--------- ---------- ---------- --------
$ 14,421 $ - $ (1,538) $ 12,883
========= ========== ========== ========
The contractual maturities of securities available for sale are as follows (in
thousands):
Amortized Estimated
September 30, 2000 Cost Fair Value
--------- ----------
Due after one year through five years $ 3,000 $ 2,971
Due after five years through ten years 4,458 4,283
Due after ten years 11,962 10,775
--------- ----------
$ 19,420 $ 18,029
========= ==========
7
<PAGE>
(6) Mortgage-backed Securities
--------------------------
Mortgage-backed securities held to maturity consisted of the following (in
thousands):
Gross Gross Estimated
Amortized Unrealized Unrealized Fair
September 30, 2000 Cost Gains Losses Value
--------- ---------- ---------- --------
REMICs $ 1,805 $ 12 $ - $ 1,817
FHLMC mortgage-backed
securities 1,999 10 (27) 1,982
FNMA mortgage-backed
securities 3,564 37 (27) 3,574
--------- ---------- ---------- --------
$ 7,368 $ 59 $ (54) $ 7,373
========= ========== ========== ========
March 31, 2000
REMICs $ 1,985 $ 2 $ (14) $ 1,973
FHLMC mortgage-backed
securities 2,377 20 (46) 2,351
FNMA mortgage-backed
securities 4,295 28 (52) 4,271
--------- ---------- ---------- --------
$ 8,657 $ 50 $ (112) $ 8,595
========= ========== ========== ========
Mortgage-backed securities held to maturity with an amortized cost of $265,000
and $322,000 and a fair value of $262,000 and $314,000 at September 30, 2000
and March 31, 2000, respectively, were pledged as collateral for public funds
held by the Company. The real estate mortgage investment conduits ("REMICs")
consist of Federal Home Loan Mortgage Corporation ("FHLMC") and Federal
National Mortgage Association ("FNMA") securities.
The contractual maturities of mortgage-backed securities classified as held to
maturity are as follows (in thousands):
Amortized Estimated
September 30, 2000 Cost Fair Value
--------- ----------
Due after one year through five years $ 3,096 $ 3,055
Due after five years through ten years 356 353
Due after ten years 3,916 3,965
--------- ----------
$ 7,368 $ 7,373
========== ==========
There were no sales of mortgage-backed securities held to maturity during the
period ended September 30, 2000 and 1999.
Mortgage-backed securities available for sale consisted of the following (in
thousands):
Gross Gross Estimated
Amortized Unrealized Unrealized Fair
September 30, 2000 Cost Gains Losses Value
--------- ---------- ---------- --------
REMICs $ 34,222 $ - $ (1,574) $ 32,648
FHLMC mortgage-backed
securities 472 - (2) 470
FNMA mortgage-backed
securities 1,886 6 (10) 1,882
--------- ---------- ---------- --------
$ 36,580 $ 6 $ (1,586) $ 35,000
========= ========== ========== ========
March 31, 2000
REMICs $ 38,137 $ - $ (1,576) $ 36,561
FHLMC mortgage-backed
securities 619 - (7) 612
FNMA mortgage-backed
securities 2,218 9 (22) 2,205
--------- ---------- ---------- --------
$ 40,974 $ 9 $ (1,605) $ 39,378
========= ========== ========== ========
The contractual maturities of mortgage-backed securities available for sale
are as follows (in thousands):
Amortized Estimated
September 30, 2000 Cost Fair Value
--------- ----------
Due after one year through five years $ 1,680 $ 1,669
Due after five years through ten years 2,094 2,078
Due after ten years 32,806 31,253
--------- ----------
$ 36,580 $ 35,000
========= ==========
8
<PAGE>
Expected maturities of mortgage-backed securities held to maturity will differ
from contractual maturities because borrowers may have the right to prepay
obligations with or without prepayment penalties.
Mortgage-backed securities available for sale with an amortized cost of $17.0
million and $20.9 million and a fair value of $15.6 million and $19.6 million
at September 30, 2000 and March 31, 2000, respectively, were pledged as
collateral for the discount window at the Federal Reserve Bank. Mortgage-
backed securities with an amortized cost of $5.1 million and $5.1 million and
a fair value of $5.0 million and $5.0 million at September 30, 2000 and March
31, 2000, respectively, were pledged as collateral for treasury tax and loan
funds held by the Company.
(7) Loans Receivable
----------------
Loans receivable consisted of the following (in thousands):
September 30, March 31,
2000 2000
------------- ---------
One- to- four family $ 110,455 $ 102,542
Multi-family 11,663 10,921
Construction:
One- to- four family 52,844 49,338
Multi-family 880 4,669
Commercial real estate 4,648 3,597
Commercial 20,417 15,976
Consumer:
Secured 20,407 14,488
Unsecured 2,285 2,755
Land 25,900 25,475
Commercial real estate 50,010 42,871
--------- ---------
299,509 272,632
Less:
Undisbursed portion of loans 21,398 18,880
Deferred loan fees 3,424 3,355
Allowance for loan losses 1,886 1,362
Unearned discounts 1 1
--------- ---------
Loans receivable, net $ 272,800 $ 249,034
========= =========
(8) Loans held for Sale
-------------------
The Company identifies loans held for sale at the time of origination and are
carried at the lower of cost or estimated market value on an aggregate
portfolio basis. Market values are derived from available market quotations
for comparable pools of mortgage loans. Adjustments for unrealized losses, if
any, are charged to income.
(9) Borrowings
----------
Borrowings are summarized as follows (in thousands):
September 30, March 31,
2000 2000
------------- ---------
Federal Home Loan Bank Advances $74,500 $60,550
======= =======
Weighted average interest rate: 6.94% 5.47%
==== ====
Borrowings have the following maturities at September 30, 2000 (in thousands):
2000 $30,000
2002 29,500
2005 15,000
-------
$74,500
=======
9
<PAGE>
(10) Shareholders' Equity
--------------------
Repurchase of Common Stock
On January 20, 2000, the Company received regulatory approval to repurchase up
to 10% or 545,834 shares of its outstanding common stock at December 31, 1999.
At March 31, 2000, 555,834 common stock shares had been repurchased at an
average cost of $9.96 per share, which includes 10,000 shares authorized under
the February 9, 1999 approval. Since the State of Washington treats all
treasury stock as retired upon purchase, all purchases of treasury stock
reduce stock issued and the cost of treasury stock acquired is charged to par
value and paid-in capital.
On February 9, 1999, the Company received regulatory approval to repurchase up
to 10% or 601,324 shares of its outstanding common stock at December 31, 1998.
At December 31, 1999, 591,324 common stock shares had been repurchased at an
average cost of $12.46 per share.
(11) Recently Issued Accounting Pronouncements
-----------------------------------------
In June 1998, the Financial Accounting Standards Board released Statement of
Financial Accounting Standards ("SFAS") No. 133, Accounting for Derivative
Instruments and Hedging Activities. SFAS No. 133 establishes accounting and
reporting standards for derivative instruments, including certain derivative
instruments embedded in other contracts (collectively referred to as
derivatives) and for hedging activities. It requires that an entity recognize
all derivatives as either assets or liabilities on the balance sheet and
measure those instruments at fair value.
The effective date of this statement was deferred by the issuance of SFAS No.
137, Accounting for Derivative Instruments and Hedging Activities Deferral
of the Effective Date of FASB No. 133. SFAS No. 133 was amended by SFAS No.
138, Accounting for Certain Derivative Instruments and Certain Hedging
Activities. These statements are now effective for the Company's fiscal year
ending March 31, 2001. The Company does not anticipate that the adoption of
SFAS No. 133, as amended, will have a material effect on its financial
position or results of operations.
(12) Commitments and Contingencies
-----------------------------
The Company is a party to financial instruments with off-balance sheet risk in
the normal course of business to meet the financing needs of its customers.
These financial instruments generally include commitments to originate
mortgage and consumer loans. Those instruments involve, to varying degrees,
elements of credit and interest rate risk in excess of the amount recognized
in the balance sheet. The Company's maximum exposure to credit loss in the
event of nonperformance by the borrower is represented by the contractual
amount of those instruments. The Company uses the same credit policies in
making commitments as it does for on-balance sheet instruments. Commitments
to extend credit are conditional 14-day agreements to lend to a customer
subject to the Company's usual terms and conditions. Collateral is not
required to support commitments.
At September 30, 2000, the Company had commitments to originate fixed rate
mortgages of $2.2 million at interest rates ranging from 7.50% to 9.25%. At
September 30, 2000 adjustable rate mortgage loan commitments were $747,000 at
an average interest rate of 11.02%. Undisbursed balance of mortgage loans
closed was $21.4 million at September 30, 2000. Consumer loan commitments
totaled $963,000 and unused lines of consumer credit totaled $10.4 million at
September 30, 2000. Commercial and commercial real estate loan commitments
totaled $1.7 million and unused lines of commercial and commercial real estate
credit totaled $15.5 million at September 30, 2000. The Company is a party to
litigation arising in the ordinary course of business. In the opinion of
management, these actions will not have a material effect, if any, on the
Company's financial position, results of operation, or liquidity.
10
<PAGE>
Item 2. RIVERVIEW BANCORP, INC. AND SUBSIDIARY MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Safe Harbor Clause. This report contains certain "forward-looking
statements." The Company desires to take advantage of the "safe harbor"
provisions of the Private Securities Litigation Reform Act of 1995 and is
including this statement for the express purpose of availing itself of the
protection of such safe harbor with forward-looking statements. These
forward-looking statements, which are included in Management's Discussion and
Analysis, describe future plans or strategies and include the Company's
expectations of future financial results. The words "believe," "expect,"
"anticipate," "estimate," "project," and similar expressions identify
forward-looking statements. The Company's ability to predict results or the
effect of future plans or strategies is inherently uncertain. Factors that
could affect actual results include interest rate trends, the economic climate
in the Company's market area and the country as a whole, loan delinquency
rates, and changes in federal and state regulation. These factors should be
considered in evaluating the forward-looking statements, and undue reliance
should not be placed on such statements.
General
The Company, a Washington corporation, was organized on June 23, 1997 for the
purpose of becoming the holding company for Riverview Community Bank (formerly
Riverview Savings Bank, FSB) upon Riverview Savings Bank's reorganization as a
wholly owned subsidiary of the Company resulting from the conversion of
Riverview, M.H.C. from a federal mutual holding company to a stock holding
company ("Conversion and Reorganization"). The Conversion and Reorganization
was completed on September 30, 1997. Riverview Savings Bank, FSB changed its
name to Riverview Community Bank effective June 29, 1998.
The Community Bank is regulated by the Office of Thrift Supervision ("OTS"),
its primary regulator, and by the Federal Deposit Insurance Corporation
("FDIC"), the insurer of its deposits. The Community Bank's deposits are
insured by the FDIC up to applicable legal limits under the Savings
Association Insurance Fund ("SAIF"). The Community Bank has been a member of
the Federal Home Loan Bank ("FHLB") System since 1937.
The Community Bank is a community-oriented, financial institution, offering
traditional financial services to residents of its primary market area. The
Community Bank considers Clark, Cowlitz, Klickitat and Skamania counties of
Washington as its primary market area. The primary business of the Community
Bank is attracting deposits from the general public and using such funds to
originate fixed-rate mortgage loans and adjustable rate mortgage loans secured
by one to four family residential real estate located in its primary market
area. The Community Bank is also an active originator of construction loans,
commercial loans, commercial real estate loans and consumer loans. The
Community Bank operates twelve branches in southwest Washington, including
eight branches in Clark County. The new Washougal branch opened the first
quarter of fiscal year 2001 and replaced the existing Washougal branch.
Riverview Mortgage, a mortgage broker division of the Community Bank,
originates mortgage loans (including construction loans) for various mortgage
companies predominantly in the Portland and Seattle metropolitan areas, as
well as for the Community Bank. The Business and Professional Banking
Division located at the downtown Vancouver Main branch offers commercial
lending and business banking services. On November 25, 1998 the Community Bank
received regulatory approval to offer trust and investment services to its
customers. RAMCORP., a subsidiary of the
11
<PAGE>
Community Bank, was established to operate the trust and investment
activities. The headquarters of RAMCORP. are in the Community Bank's
Vancouver Main branch, which officially opened in October 1998. Assets
totaling approximately $84.7 million at September 30, 2000 were managed by the
RAMCORP. in fiduciary or agency capacity. The Company's main office for
administration relocated from Camas to the Vancouver address of 900
Washington, a 16,000 square foot leased facility, during the second quarter of
fiscal year 2001.
Financial Condition
At September 30, 2000, the Company had total assets of $370.6 million compared
with $344.7 million at March 31, 2000. The $25.9 million, or 7.5% increase in
assets reflects the growth in loans. Cash, including interest-earning
accounts, totaled $14.4 million at September 30, 2000, compared to $15.8
million at March 31, 2000. At September 30, 2000, the Company had $299.5
million in gross loans, an increase of $26.9 million compared to $272.6
million at March 31, 2000. Commercial loans increased $4.0 million to $20.0
million at September 30, 2000 from $16.0 million at March 31, 2000. The $4.0
million increase was comprised of several loans and occurred in commercial
loans secured by equipment, commercial loans secured by other collateral and
unsecured commercial loans. Commercial real estate loans increased $7.1
million to $50.0 million at September 2000 from $42.9 million at March 31,
2000. Loans receivable (Note 7) provides a detailed analysis of the $299.5
million gross loan portfolio at September 30, 2000 as compared to the $272.6
million gross loan portfolio at March 31, 2000. Consumer, commercial, and land
loans carry higher interest rates and generally a higher degree of credit risk
compared to one- to- four family mortgage loans. Deposits totaled $242.5
million at September 30, 2000 compared to $232.4 million at March 31, 2000.
FHLB advances totaled $74.5 million at September 30, 2000 and $60.6 million at
March 31, 2000. During the quarter ended September 30, 2000, the Company
replaced $10.0 million of matured FHLB short-term fixed rate advance with $4.5
million of FHLB long-term fixed rate borrowings and $15.0 million of fixed
rate FHLB putable advance (a fixed rate advance in which FHLB purchases from
the Company the option to terminate the advance on specific dates through its
term after a specified period of time) with optional termination dates
beginning July 14, 2001 and each quarter thereafter.
Capital Resources
Total shareholders' equity was at $49.7 million at September 30, 2000 compared
to $48.5 million at March 31, 2000. The activity in shareholders' equity for
the six months ended September 30, 2000 was $1.9 million in earnings for the
year to date, dividends of $923,000, exercise of stock options of $28,000,
earned ESOP shares $105,000, earned MRDP shares $70,000 and $108,000 change in
net unrealized gain on securities available for sale, net of tax.
The Company is not subject to any regulatory capital requirement. The
Community Bank is subject to various regulatory capital requirements
administered by the federal banking agencies. Failure to meet minimum capital
requirements can initiate certain mandatory and possibly additional
discretionary actions by regulators, that if undertaken could have a direct
material effect on the Company and the Community Bank's financial statements.
Under capital adequacy guidelines and the regulatory framework for prompt
corrective action, the Community Bank must meet specific capital guidelines
that involve quantitative measures of the Community Bank's assets,
liabilities, and certain off-balance sheet items as calculated under
regulatory accounting practices. The Community Bank's capital amounts and
classification are also subject to
12
<PAGE>
qualitative judgments by the regulators about components, risk weightings, and
other factors.
Quantitative measures established by regulation to ensure capital adequacy
required the Community Bank to maintain amounts and ratios of tangible and
core capital to adjusted total assets and of total risk-based capital to
risk-weighted assets of 1.5%, 3.0%, and 8.0%, respectively. As of September
30, 2000, the Community Bank met all capital adequacy requirements to which it
was subject.
As of September 30, 2000, the most recent notification from the OTS
categorized the Community Bank as "well capitalized" under the regulatory
framework for prompt corrective action. To be categorized as "well
capitalized," the Community Bank must maintain minimum core and total
risk-based capital ratios of 5.0% and 10.0%, respectively. At September 30,
2000, the Community Bank's tangible, core and risk-based total capital ratios
amounted to 11.8%, 11.8%, and 17.2%, respectively. There are no conditions or
events since that notification that management believes have changed the
Community Bank's category.
The Community Bank's actual and required minimum capital amounts and ratios
are presented in the following table (dollars in thousands):
Categorized as
For "Well Capitalized"
Capital Under
Adequacy Prompt Corrective
Actual Purpose Action Provision
--------------------------------------------------
Amount Ratio Amount Ratio Amount Ratio
As of September 30, 2000 ------ ----- ------ ----- ------ -----
Total Capital:
(To Risk Weighted Assets) $45,293 17.93% $20,214 8.0% $25,268 10.0%
Tier I Capital:
(To Risk Weighted Assets) 43,407 17.18 N/A N/A 15,161 6.0
Core Capital:
(To Total Assets) 43,407 11.83 11,008 3.0 18,347 5.0
Tangible Capital:
(To Tangible Assets) 43,407 11.83 5,504 1.5 N/A N/A
As of March 31, 2000
Total Capital:
(To Risk Weighted Assets) $42,543 19.93% $17,079 8.0% $21,349 10.0%
Tier I Capital:
(To Risk Weighted Assets) 41,652 19.51 N/A N/A 12,809 6.0
Core Capital:
(To Total Assets) 41,652 12.27 10,185 3.0 16,976 5.0
Tangible Capital:
(To Tangible Assets) 41,652 12.27 5,093 1.5 N/A N/A
The following table is a reconciliation of the Community Bank's capital,
calculated according to accounting principles generally accepted in the United
States, to regulatory tangible and risk-based capital at September 30, 2000
(in thousands):
13
<PAGE>
Equity $44,262
Net unrealized loss on securities
available for sale 1,637
Core deposit intangible asset (1,186)
Deferred tax and servicing asset (1,306)
-------
Tangible capital 43,407
General valuation allowance 1,886
-------
Total capital $45,293
=======
Bank Liquidity
OTS regulations require the Community Bank to maintain an average daily
balance of liquid assets as a percentage of average daily net withdrawable
deposit accounts plus short-term borrowings of at least 4%. The Community
Bank's regulatory liquidity ratio was 24.5% at September 30, 2000 compared to
27.1% at March 31, 2000. The Community Bank anticipates that it will have
sufficient funds available to meet current loan commitments and other cash
needs.
Cash, including interest-earning overnight investments, was $14.4 million at
September 30, 2000 compared to $15.8 million at March 31, 2000. Investment
securities and mortgage-backed securities available for sale at September 30,
2000 were $18.0 million and $35.0 million, respectively, compared to $12.9
million and $39.4 million, respectively, at March 31, 2000. See "Financial
Condition."
Asset Quality
Allowance for loan losses was $1.9 million at September 30, 2000, compared to
$1.4 million at March 31, 2000. Management deemed the allowance for loan
losses at September 30, 2000 to be adequate at that date. No assurances,
however, can be given that future additions to the allowance for loan losses
will not be necessary. The allowance for loan losses is maintained at a level
sufficient to provide for estimated loan losses based on evaluating known and
inherent risks in the loan portfolio. Pertinent factors considered include
size and composition of the portfolio, actual loss experience, industry
trends, industry data, current and anticipated economic conditions, and
detailed analysis of individual loans. The appropriate allowance level is
estimated based upon factors and trends identified by management at the time
the consolidated financial statements are prepared. During the second quarter
of fiscal year 2001 no provision for loan losses was made. Review of the
pertinent factors showed that the allowance for loan losses was adequate. The
September 30, 2000 ratio of allowance to gross loans remained a favorable
ratio of 0.63% compared 0.50% at year end March 31, 2000. The $46,000 in net
losses experienced during the second of quarter of fiscal year 2001 was in
consumer loans and residential real estate construction. The Company's past
loss experience with respect to its commercial loan portfolio may not be
representative of the risk of loss in such portfolios in the future. The two
major reasons for this fact is because the size of the commercial loan
portfolio has increased significantly and most of the loans comprising the
portfolio are unseasoned, having been originated within the last two years.
Commercial loans are considered to involve a higher degree of credit risk than
one- to- four residential loans, and to be more vulnerable to adverse
conditions in the real estate market and deteriorating economic conditions.
Non-performing assets were $1.5 million, or 0.41% of total assets at September
30, 2000 compared with $1.3 million, or 0.39% of total assets at March 31,
2000. The real estate owned at September 30, 2000 totaled $1.1 million and
consisted of three land development loans totaling $422,000, five one- to-
four residential real estate loans totaling
14
<PAGE>
$667,000. The following table sets forth information with respect to the
Company's non-performing assets at the dates indicated:
September 30, 2000 March 31, 2000
------------------ --------------
(Dollars in thousands)
Loans accounted for on
a non-accrual basis:
Real Estate
Residential $ 210 $1,153
Commercial 29 99
Consumer 186 26
------ ------
Total 425 1,278
====== ======
Accruing loans which are
contractually past due 90
days or more - -
------ ------
Total of non-accrual and
90 days past due loans 425 1,278
------ ------
Real estate owned 1,089 30
Other personal property owned - 35
------ ------
Total non-performing assets $1,514 $1,343
====== ======
Total loans delinquent 90
days or more to net loans 0.16% 0.51%
Total loans delinquent 90
days or more to total assets 0.11 0.37
Total non-performing assets
to total assets 0.41 0.39
Comparison of Operating Results for the Three Months Ended
September 30, 2000 and 1999
The Company's net income depends primarily on its net interest income, which
is the difference between interest earned on its loans and investments and the
interest paid on interest-bearing liabilities. Net interest income is
determined by (a) the difference between the yield earned on interest-earning
assets and rates paid on interest-bearing liabilities (interest rate spread)
and (b) the relative amounts of interest-earning assets and interest-bearing
liabilities. The Company's interest rate spread is affected by regulatory,
economic and competitive factors that influence rates, loan demand and deposit
flows. Net interest margin is calculated by dividing net interest income by
the average interest-earning assets. Net interest income and net interest
margin are affected by changes in interest rates, volume and the mix of
interest-earning assets and interest-bearing liabilities, and the level of
non-performing assets. The Company's net income is also affected by the
generation of non-interest income, which primarily consists of fees and
service charges, loan servicing income, gains on sale of securities, gains
from sale of loans and other income. In addition, net income is affected by
the level of operating expenses and establishment of a provision for loan
losses.
Net income for the three months ended September 30, 2000 was $1.2 million,
$0.26 per basic share ($0.26 per diluted share). This compares to net income
of $1.0 million, $0.20 per basic share ($0.19 per diluted
15
<PAGE>
share) for the same period in fiscal year 2000. Non-interest income increased
$432,000 or 59.3% for the three months ended September 30, 2000 compared to
the prior year. The $432,000 increase reflects the sale of a branch site and
land held for future development resulting in a pretax gain of $309,000.
Average interest-earning assets increased to $346.7 million for the three
months ending September 30, 2000 from $298.6 million for the three months
ending September 30, 1999. The $48.1 million increase is due primarily to
growth in the loan portfolio, which was partially offset by principal pay
downs in the mortgage-backed securities portfolio.
Interest income for the three months ended September 30, 2000 was $7.7
million, an increase of $1.5 million, or 24.2% over the $6.2 million interest
income for the same period in fiscal 2000. Yield on interest-earning assets
for the second quarter of fiscal year 2001 was 8.83% compared to 8.21% for the
same three month period in fiscal year 2000. The higher second quarter fiscal
2001 yield reflects the higher yield on loans, mortgage-backed securities and
investment securities as compared to the second quarter in fiscal year 2000.
The higher interest income in the second quarter of fiscal year 2001 as
compared to the fiscal year 2000 second quarter resulted primarily from growth
in the loan portfolio.
Interest expense was $4.0 million for the second quarter in fiscal year 2001
as compared to $2.6 million for the second quarter in the prior year. The cost
of interest-bearing liabilities for the second quarter of fiscal year 2000 was
5.52% compared to 4.38% for the same three month period in prior year. The
increased cost of interest-bearing liabilities reflects the increase in
interest rates and volumes of money market accounts, certificates of deposits
and FHLB advances. Money market accounts continued to have strong growth
reaching $45.7 million in average balance for the period ended September 30,
2000 compared to an average balance of $36.4 million for the period ended
September 30, 1999.
Net interest income increased $173,000, or 4.9%, to $3.7 million for the three
months ended September 30, 2000, compared to $3.5 million for the three months
ended September 30, 1999. Net interest income increased $619,000 due to the
change in volume of average interest-earning assets and liabilities for the
three months in fiscal 2001 compared to the same period in prior year. The
change in interest rates for these three month periods reduced net interest
income $219,000. The change in rate volume mix for the same three month
periods reduced net interest income $227,000. The interest rate spread
decreased from 3.83% for the three month 2000 period to 3.36% for the three
month 2001 period. The net interest margin decreased to 4.28% during the
second quarter ended September 30, 2000 from 4.71% for the second quarter
ended September 30, 1999. The decreased fiscal year 2001 net interest margin
reflects the reduced amount of loan fees amortized to income in the first
quarter of fiscal 2001 compared to the same period for the prior year and the
fact that increases in the cost of interest-bearing liabilities have been
larger than increases in earnings on interest-earning assets. Average
interest-earning assets increased by $48.1 million to $346.7 million during
the second quarter ended September 30, 2000 from $298.6 million for the second
quarter ended September 30, 1999. The $46.3 million increase in average
interest-earning assets was offset by the $50.6 million increase in average
interest-bearing liabilities. Average interest-bearing liabilities increased
to $289.1 million during the quarter ended September 30, 2000 from $238.6
million for the quarter ended September 30, 1999.
There was no provision for loan losses during the three months ended September
30, 2000. There was $40,000 and $6,000 in net charge-offs of consumer and
residential construction loans, respectively, during the three months ended
September 30, 2000.
16
<PAGE>
Non-interest income increased $432,000 or 59.3% to $1.2 million for the three
months ended September 30, 2000 from $728,000 for the three months ended
September 30, 1999. The 59.3% increase is a reflection of the sale of the
branch site and land held for investment, increase in fees received from ATMs,
service charges on deposit accounts and trust. During the second quarter of
fiscal year 2001, the Company sold a branch site that had been replaced by a
new facility and land that had been held for future development resulting in a
non-interest income pretax gain of $309,000.
Non-interest expense increased $514,000, or 19.7%, from $2.6 million for the
quarter ended September 30, 1999 to $3.1 million for the quarter ended
September 30, 2000. Salaries and employee benefits increased $340,000 to $1.7
million for the quarter ended September 30, 2000 from $1.3 million compared to
the same quarter in 1999. There were 24 more full-time equivalent employees
during the 2001 quarter over the 2000 quarter. The increase in full-time
equivalent employees was due to the expansion occurring in branches,
commercial lending, trust company, mortgage brokers and support functions. In
November 1999 and March 2000 two new branches were opened in Clark County
increasing the total number of branches to twelve. The Company's main office
for administration relocated from Camas to the Vancouver address of 900
Washington, a 16,000 square foot leased facility, in September 2000.
Provision for federal income taxes for the second quarter of fiscal year 2001
was $556,000, resulting in an effective tax rate of 32%, compared to $523,000
and 34% for the same quarter of fiscal year 2000. The decrease in the
effective tax rate for three months ended September 30, 2000 is primarily
attributable to the impact of tax exempt interest, ESOP dividends and the
dividend received deduction.
Comparison of Operating Results for the Six Months Ended
September 30, 2000 and 1999
Net income for the six months ended September 30, 2000 was $1.9 million, $0.41
per basic share ($0.40 per diluted share). This compares to net income of
$2.0 million, $0.38 per basic share ($0.37 per diluted share) for the same
period in fiscal year 2000. Non-interest income for second quarter of fiscal
year 2001 includes a $309,000 pretax gain on sale of fixed assets and land.
Average interest-earning assets increased to $338.4 million for the six months
ending September 30, 2000 from $294.1 million for the six months ending
September 30, 1999.
Interest income for the six months ended September 30, 2000 was $15.0 million,
an increase of $2.9 million or 23.4% over $12.1 million for the same period in
1999. Yield on interest-earning assets for the six month 2000 period was 8.85%
compared to 8.26% for the six month 1999 period. The higher fiscal year 2001
yield on interest-earning assets reflects the higher interest yield on
mortgage loans, mortgage-backed securities and investment securities as
compared to the same prior year period. The higher interest income for the six
month period ended September 30, 2000 as compared to the same period in 1999
resulted from growth in the loan portfolio.
Interest expense for the six months ended September 30, 2000 was $7.5 million,
an increase of $2.3 million, or 45.6% over $5.2 million for the same period in
1999. The cost of interest-bearing liabilities for the fiscal year 2001 six
months was 5.35% compared to 4.40% for the fiscal year 2000 six months. The
increased interest expense is due to a 19.5% growth in interest-bearing
liabilities from $235.0 million at September 30, 1999 to $280.8 million at
September 30, 2000 and to the increased cost of interest-bearing liabilities.
Growth in the six month average
17
<PAGE>
balance of money market accounts from $31.8 million for the six month period
ended September 30, 1999 to $45.0 million for the six month period ended
September 30, 2000 contributed to reducing the cost of interest-bearing
liabilities for the 2001 fiscal period.
Net interest income increased $488,000, or 7.0%, to $7.4 million for the six
months ended September 30, 2000, compared to $7.0 million for the six months
ended September 30, 1999. The change in volume of year to date average
interest-earning assets and liabilities compared at September 30, 2000 and
September 30, 1999 increased net interest income $1.3 million. The change in
interest rates decreased net interest income $437,000 and the rate volume mix
decreased net interest income $416,000 for the six month period ended
September 30, 2000 over the six month period ended September 30, 1999. The
$488,000 increase in net interest income for the six months ended September
30, 2000 was due primarily to the 15.1% increase in average interest-earning
assets to $338.4 million at September 30, 2000 from $294.1 million at
September 30, 1999. The interest rate spread decreased from 3.86% for the six
month 1999 period to 3.51% for the six month 2000 period. The net interest
margin decreased to 4.42% during the six month period ended September 30, 2000
from 4.75% for the six month period ended September 30, 1999. The decreased
margin reflects the reduction in loan fee income and the lagging deposit
growth relative to the growth in total earning assets and the resultant
increase in the Community Bank's incremental cost of borrowing.
The provision for loan losses was $594,000 and there were $70,000 in net
charge-offs during the six months ended September 30, 2000 compared to a
$180,000 provision and $164,000 in net charge-offs during the six months ended
September 30, 1999. The increase in the provision for loan losses is the
result of growth in the loan portfolio and the change in mix and risks. Loan
receivable (Note 7) provides a detailed analysis of the $23.8 million increase
in gross loans. Total nonperforming assets to total assets has increased from
0.39% at March 31, 2000 to 0.41% at September 30, 2000. Nonaccrual loans have
decreased to $425,000 at September 30, 2000 from $1.3 million at March 31,
2000. Real estate owned has increased from $65,000 at March 31, 2000 to $1.1
million at September 30, 2000. The loan loss provision was deemed necessary
based upon management's analysis of historical and anticipated loss rates,
current loan growth, and other factors considered.
Non-interest income increased $435,000 or 29.2% to $1.9 million for the six
months ended September 30, 2000 compared to $1.5 million for the same period
for the prior year. Excluding the $309,000 pretax gain on sale of land and
fixed assets, non-interest income increased $126,000 or 8.5 % for the six
months ended September 30, 2000 when compared to the same period in the prior
year. The $126,000 increase in non-interest income was fueled by the increase
in fees received from ATMs, service charges on deposit accounts and trust.
Non-interest expense increased $809,000, or 15.4%, from $5.2 million for the
six months ended September 30, 1999 to $6.0 for the six months ended September
30, 2000. The $809,000 increase reflects the addition of 24 full-time
equivalent employees and increased occupancy expense. Full time equivalent
employees increased to 143 at September 30, 2000 compared to 119 at September
30, 1999 due to expansion of branches, commercial lending, mortgage brokers,
trust company and support functions. Salaries and employee benefits increased
$573,000 to $3.3 million for the six months ended September 30, 2000 as
compared to $2.7 million for the same period in fiscal year 2000.
Provision for federal income taxes for the six months ended September 30, 2000
was $869,000 million resulting in an effective tax rate of 32%, compared to
$1.0 million and 34% for the same period a year ago. The 2% decrease in the
effective tax rate for the six months ended September 30,
18
<PAGE>
2000 is primarily attributable to the impact of tax exempt interest, ESOP
dividends and the ESOP market value adjustment.
ITEM 3. Quantitative and Qualitative Disclosures About Market
Risk
There has not been any material change in the market risk disclosures
contained in the Company's Annual Report on Form 10-K for the fiscal year
ended March 31, 2000.
19
<PAGE>
RIVERVIEW BANCORP, INC. AND SUBSIDIARY
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
-----------------
Not applicable
Item 2. Changes in Securities and Use of Proceeds
-----------------------------------------
Not applicable
Item 3. Defaults Upon Senior Securities
-------------------------------
Not applicable
Item 4. Submission of Matters to a Vote of Security Holders
---------------------------------------------------
The Annual Meeting of Stockholders of Riverview Bancorp, Inc.
was held on July 19, 2000. The results of the vote on the
matters presented at the meeting is as follows:
1. The following individuals were elected as directors:
For Withheld
No. of
No. of Votes Percentage Votes Percentage
------------ ---------- ----- ----------
Robert K. Leick 3,864,307 99.76 9,273 0.24
(three year term)
Gary R. Douglass 3,864,674 99.77 8,906 0.23
(three year term)
2. Deloitte & Touche LLP was appointed as independent auditors
for the fiscal year ending March 31, 2001:
For: 3,864,099 (99.75%) Against: 4,500 (0.12%) Abstain: 4,981 (0.13%)
Item 5. Other Information
-----------------
Not applicable
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
(a) Exhibits:
3.1 Articles of Incorporation of the Registrant*
3.2 Bylaws of Registrant*
10.1 Employment Agreement with Patrick Sheaffer**
10.2 Employment Agreement with Ron Wysaske**
10.3 Employment Agreement with Michael C. Yount**
10.4 Employment Agreement with Karen Nelson**
10.5 Severance Compensation Agreement**
10.6 Employee Stock Ownership Plan***
10.7 1998 Stock Option Plan****
10.8 The Riverview Bancorp, Inc. Management Recognition and
Development Plan****
21 Subsidiaries of Registrant***
27 Financial Data Schedule
(b) Reports on Form 8-K: No Forms 8-K were filed during the
quarter ended September 30, 2000.
20
<PAGE>
-------------
* Filed as an exhibit to the registrant's Registration Statement on Form
S-1, as amended (333-30203), and incorporated herein by reference.
** Filed as an exhibit to the Registrant's Form 10-Q for the quarter ended
September 30, 1997, and incorporated herein by reference.
*** Filed as an exhibit to the Registrant's Form 10-K for the year ended
March 31, 1998, and incorporated herein by reference.
**** Filed as an exhibit to the Registrant's definitive proxy statement dated
June 5, 1998, and incorporated herein by reference.
21
<PAGE>
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
RIVERVIEW BANCORP, INC.
DATE: November 10, 2000 BY: /S/ Patrick Sheaffer
Patrick Sheaffer
President
DATE: November 10, 2000 BY: /S/ Ron Wysaske
Ron Wysaske
Executive Vice President/Treasurer
22
<PAGE>
