Contacts: Pat Sheaffer or Ron Wysaske,
Riverview Bancorp, Inc. 360-693-6650
Riverview Bancorp Reports Net Income of $579,000 in the Third Fiscal Quarter,
Highlighted by Net Interest Margin Expansion and Credit Quality Improvements
Vancouver, WA – January 27, 2011 – Riverview Bancorp, Inc. (“Riverview” or the “Company”) (NASDAQ GSM: RVSB), the parent company of Riverview Community Bank (“Bank”), today reported its net income increased to $579,000, or $0.03 per diluted share, for the third fiscal quarter ended December 31, 2010, compared to a net loss of $1.3 million, or $0.12 per diluted share, for the third fiscal quarter a year ago. For the first nine months of fiscal 2011, Riverview earned $3.5 million, or $0.20 per diluted share, compared to a net loss of $741,000, or $0.07 per diluted share, for the first nine months of fiscal 2010.
“We posted our third consecutive profitable quarter, with net interest margin expansion and credit quality improvements,” said Pat Sheaffer, Chairman and CEO. “We have reduced both our non-performing loan and non-performing asset balances while significantly increasing our reserve levels to 103.5% of non-performing loans. Although credit costs remained elevated, we have seen a significant slowdown in new problem loans and we believe that the worst of this credit cycle is behind us.”
Third Quarter Fiscal 2011 Highlights (at or for the period ended December 31, 2010)
| · | Net income of $579,000, or $0.03 per diluted share. |
| · | Net interest margin improved to 4.60%. |
| · | Non-performing loans decreased 52.2% from the prior quarter to $16.9 million (2.49% of total loans). |
| · | Non-performing assets decreased 13.7% from the prior quarter to $47.6 million (5.68% of total assets). |
| · | Allowance for loan losses was 2.58% of total loans and 103.5% of non-performing loans. |
| · | Reduced concentration in land development and speculative construction loans by 13.6% during the quarter. These two segments accounted for 11.1% of the total loan portfolio at December 31, 2010. |
| · | Improved capital levels - total risk-based capital ratio of 14.39% and Tier 1 leverage ratio of 11.38%. |
| · | Tangible common equity ratio of 9.8%. |
Credit Quality
“We continue to see many positive trends not only in our earnings and capital levels, but also importantly in our asset quality,” said Dave Dahlstrom, EVP and Chief Credit Officer. “During the quarter, we saw continued improvements in non-performing loans, non-performing assets and new loan delinquencies. We have been in the process of working many of our problem credits for 12-18 months and are getting closer to the resolution phase of the foreclosure process.”
Non-performing loans (NPLs) decreased to $16.9 million at December 31, 2010 compared to $35.3 million at September 30, 2010 and were at their lowest level since March 31, 2008. NPLs represented 2.49% of total loans at December 31, 2010, compared to 5.06% of total loans at September 30, 2010. “The decrease in NPLs during the quarter was attributable to the transfer of several properties into real estate owned as well as principal repayments totaling $2.6 million on past due loans,” said Dahlstrom. The transfer of new loans into nonaccrual also slowed significantly with only $1.6 million of new loans added during the current quarter compared to $11.9 million in the prior linked quarter. The balance of NPLs has declined $24.2 million, or 58.9%, from its peak of $41.1 million at June 30, 2009.
Loans delinquent 30 to 89 days improved to 0.71% of total loans compared to 1.30% of total loans at September 30, 2010. The bulk of these delinquencies were concentrated in single-family residential loans totaling $2.3 million.
As expected, real estate owned (REO) increased to $30.7 million at December 31, 2010 compared to $19.8 million at September 30, 2010. The Company expected this increase based on expected foreclosure dates and agreements made with certain borrowers. The REO balance consisted primarily of completed residential properties and residential building land and lots, all of which have been written down to their net realizable value based on recent or updated appraisals.
RVSB Third Quarter Fiscal 2011 Results
January 27, 2011
Page 2
“We continue to convert non-performing loans to REO as quickly as possible, enabling us to actively market and liquidate these properties,” said Dahlstrom. “During the third quarter, we added properties that totaled $12.8 million to REO, we sold properties totaling $1.2 million and have several additional properties which we expect will be sold during the next three months.”
NPAs decreased $7.5 million during the quarter to $47.6 million, or 5.68% of total assets, at December 31, 2010.
Riverview’s allowance for loan losses was $17.5 million at December 31, 2010 representing 2.58% of total loans. The ratio of allowance for loan losses to non-performing loans was 103.5% at December 31, 2010 compared to 53.8% at September 30, 2010. The provision for loan losses was $1.6 million in the third fiscal quarter compared to $1.7 million in the preceding quarter and $4.5 million in the third quarter a year ago. Charge-offs for the third fiscal quarter were $3.2 million compared to $2.2 million in the prior quarter. Charge-offs during the quarter exceeded the provision for loan losses due primarily to specific impairment reserves established by the Company in previous quarters which were charged off during the current quarter.
Net Interest Margin
Riverview’s net interest margin was 4.60% for the third quarter. This represented an improvement of 14 basis points compared to the preceding quarter and 17 basis points compared to the third quarter a year ago. For the first nine months of fiscal 2011 the net interest margin was 4.62%, a 28 basis point improvement compared to the first nine months of fiscal 2010. “The increase in the net interest margin compared to the preceding quarter is primarily the result of decreasing interest expense on deposits,” said Kevin Lycklama, EVP and CFO. “For the fourteenth consecutive quarter the Company was able to reduce the cost of its deposits. The cost of deposits was 0.87% during the current quarter, a decrease of 11 basis points from the prior quarter and 53 basis points for the same quarter in prior year. However, our net interest margin continues to be negatively impacted by the larger levels of interest-bearing cash invested at the current low yields. The margin expansion was also offset by a two basis point reduction for loans placed on nonaccrual during the quarter.”
Income Statement
Third quarter net interest income was $8.8 million compared to $8.7 million in both the preceding quarter and the third quarter a year ago. In the first nine months of fiscal 2011 net interest income was $26.5 million, compared to $26.3 million in the first nine months of fiscal 2010. Operating revenue, which consists of net interest income plus non-interest income, was $10.7 million in the third quarter and in the prior linked quarter, however, this was an increase from $10.2 million in the third quarter a year ago.
Non-interest income was $1.9 million in the third quarter compared to $2.1 million in the preceding quarter and $1.5 million in the third quarter a year ago. For the first nine months of fiscal 2011 non-interest income increased 13.5% to $6.2 million compared to $5.4 million for the first nine months of fiscal 2010. The increase from the prior year is primarily due to a $915,000 impairment charge on an investment security in the prior year.
Riverview Asset Management Corp. (“RAMCorp”), a trust company subsidiary of the Bank, increased its fee income 13% compared to same quarter in the prior year. Assets under management increased to $308 million, a 10% increase since December 31, 2009. “RAMCorp continues to be a very important part of the Bank’s operations,” said Ron Wysaske, President and COO. “Through the products and services offered by the RAMCorp, we are able to add a sustainable source of non-interest income that we would not otherwise have.”
Non-interest expense was $8.3 million in the third quarter compared to $7.4 million in the preceding quarter and $7.8 million in the third quarter a year ago. On a linked quarter basis, non-interest expense increased $841,000 primarily as a result of an increase in REO expenses and valuation write downs. For the first nine months of fiscal 2011 non-interest expense improved to $22.9 million compared to $23.0 million a year ago.
Balance Sheet Review
Loan balances declined during the current quarter, reflecting the continued lack of loan demand caused by the weak economic conditions and the Company’s planned reduction in the construction and land development portfolios. The Company’s loan portfolio continues to be well-diversified and the Company believes it has reduced the credit risk of its loan portfolio by recent actions taken including reducing its exposure to construction and land development loans and reducing the balance of non-performing loans. Net loans declined $19.9 million during the quarter to $660.1 million at December 31, 2010, compared to $679.9 million at September 30, 2010.
RVSB Third Quarter Fiscal 2011 Results
January 27, 2011
Page 3
Riverview continues to reduce its exposure to land development and speculative construction loans, reducing the balance of these portfolios to $75.1 million at December 31, 2010 compared to $87.0 million in the prior quarter and $108.0 million at a year ago. Speculative construction loans declined $5.2 million from the preceding quarter to $19.2 million, and represent only 2.8% of the total loan portfolio while land development loans declined $6.6 million from the prior quarter to $56.0 million and represent 8.3% of the total loan portfolio at December 31, 2010.
The total commercial real estate (CRE) loan portfolio was $359.7 million as of December 31, 2010, of which 29% was owner-occupied and 71% was investor-owned. At December 31, 2010, the CRE portfolio contained three loans totaling $1.4 million that were more than 90 days past due, representing 0.4% of the total commercial real estate portfolio. There were no CRE loans delinquent 30 to 89 days at December 31, 2010.
Total deposits were $696.7 million at December 31, 2010 compared to $718.0 million at September 30, 2010 and $679.6 million a year ago. Average total deposits were $711.3 million for the third quarter compared to $716.3 million in the prior quarter. The decline in deposits was primarily due to a $10.0 million payoff in brokered deposits. At December 31, 2010, the Bank had no wholesale-brokered deposits. During the current quarter, average customer branch deposits increased $3.0 million. The loan to deposit ratio was 97% at December 31, 2010 compared to 109% a year ago.
Capital and Liquidity
The Bank continues to maintain capital levels significantly in excess of the requirements to be categorized as “well capitalized” with a total risk-based capital ratio of 14.39% and a Tier 1 leverage ratio of 11.38% at December 31, 2010. Riverview’s tangible common equity was 9.8% of tangible assets at December 31, 2010. The Company also has an additional $12.1 million in cash that could be used in the future to boost the Bank’s capital levels or support future growth.
Riverview Community Bank’s actual and required minimum capital amounts and ratios are presented as follows:
| Dec. 31, 2010 | | Actual | | | Adequately Capitalized | | | Well Capitalized | |
| | | Amount | | | Ratio | | | Amount | | | Ratio | | | Amount | | | Ratio | |
| Total Capital | | (dollars in thousands) | |
| (To Risk-Weighted Assets) | | $ | 99,906 | | | | 14.39 | % | | $ | 55,560 | | | | 8.00 | % | | $ | 69,450 | | | | 10.00 | % |
| Tier 1 Capital | | | | | | | | | | | | | | | | | | | | | | | | |
| (To Risk-Weighted Assets) | | | 91,160 | | | | 13.13 | % | | | 27,780 | | | | 4.00 | % | | | 41,670 | | | | 6.00 | % |
| Tier 1 Capital | | | | | | | | | | | | | | | | | | | | | | | | |
| (To Adjusted Tangible Assets) | | | 91,160 | | | | 11.38 | % | | | 32,032 | | | | 4.00 | % | | | 40,040 | | | | 5.00 | % |
Non-GAAP Financial Measures
In addition to results presented in accordance with generally accepted accounting principles in the United States of America (GAAP), this press release contains certain non-GAAP financial measures. Riverview believes that certain non-GAAP financial measures provide investors with information useful in understanding the company’s financial performance; however, readers of this report are urged to review these non-GAAP financial measures in conjunction with GAAP results as reported.
Financial measures that exclude intangible assets are non-GAAP measures. To provide investors with a broader understanding of capital adequacy, Riverview provided non-GAAP financial measures for tangible common equity, along with the GAAP measure. Tangible common equity is calculated as shareholders’ equity less goodwill and other intangible assets. In addition, tangible assets are total assets less goodwill and other intangible assets.
RVSB Third Quarter Fiscal 2011 Results
January 27, 2011
Page 4
The following table provides reconciliations of ending shareholders’ equity (GAAP) to ending tangible shareholders’ equity (non-GAAP), and ending assets (GAAP) to ending tangible assets (non-GAAP).
| | | Dec. 31, | | | Sept. 30, | | | Dec. 31, | | | March 31, |
(Dollars in thousands) | | 2010 | | | 2010 | | | 2009 | | | 2010 |
| | | | | | | | | | | | |
| Shareholders’ equity | $ | 106,030 | | $ | 105,719 | | $ | 88,607 | | $ | 83,934 |
| Goodwill | | 25,572 | | | 25,572 | | | 25,572 | | | 25,572 |
| Other intangible assets, net | | 665 | | | 735 | | | 853 | | | 823 |
| | | | | | | | | | | | |
| Tangible shareholders’ equity | $ | 79,793 | | $ | 79,412 | | $ | 62,182 | | $ | 57,539 |
| | | | | | | | | | | | |
| Total assets | $ | 838,417 | | $ | 858,865 | | $ | 857,597 | | $ | 837,953 |
| Goodwill | | 25,572 | | | 25,572 | | | 25,572 | | | 25,572 |
| Other intangible assets, net | | 665 | | | 735 | | | 853 | | | 823 |
| | | | | | | | | | | | |
| Tangible assets | $ | 812,180 | | $ | 832,558 | | $ | 831,172 | | $ | 811,558 |
Because Riverview has not taken part in the US Treasury’s TARP/CPP program, all its shareholder equity is common stock. The Company’s tangible common equity ratio is 9.8%.
About Riverview
Riverview Bancorp, Inc. (www.riverviewbank.com) is headquartered in Vancouver, Washington – just north of Portland, Oregon on the I-5 corridor. With assets of $838 million, it is the parent company of the 87 year-old Riverview Community Bank, as well as Riverview Asset Management Corp. There are 17 branches, including twelve in the Portland-Vancouver area and three lending centers. The Bank offers true community banking services, focusing on providing the highest quality service and financial products to commercial and retail customers.
“Safe Harbor” statement under the Private Securities Litigation Reform Act of 1995:This press release contains forward-looking statements that are subject to risks and uncertainties, including, but not limited to: the Company’s ability to raise common capital, the amount of capital it intends to raise and its intended use of that capital. The credit risks of lending activities, including changes in the level and trend of loan delinquencies and write-offs and changes in the Company’s allowance for loan losses and provision for loan losses that may be impacted by deterioration in the housing and commercial real estate markets; changes in general economic conditions, either nationally or in the Company’s market areas; changes in the levels of general interest rates, and the relative differenc es between short and long term interest rates, deposit interest rates, the Company’s net interest margin and funding sources; fluctuations in the demand for loans, the number of unsold homes, land and other properties and fluctuations in real estate values in the Company’s market areas; secondary market conditions for loans and the Company’s ability to sell loans in the secondary market; results of examinations of us by the Office of Thrift Supervision or other regulatory authorities, including the possibility that any such regulatory authority may, among other things, require us to increase the Company’s reserve for loan losses, write-down assets, change Riverview Community Bank’s regulatory capital position or affect the Company’s ability to borrow funds or maintain or increase deposits, which could adversely affect its liquidity and earnings; the Company’s compliance with regulatory enforcement actions; we have entered into with the OTS and the possibility that ou r noncompliance could result in the imposition of additional enforcement actions and additional requirements or restrictions on our operations; legislative or regulatory changes that adversely affect the Company’s business including changes in regulatory policies and principles, or the interpretation of regulatory capital or other rules; the Company’s ability to attract and retain deposits; further increases in premiums for deposit insurance; the Company’s ability to control operating costs and expenses; the use of estimates in determining fair value of certain of the Company’s assets, which estimates may prove to be incorrect and result in significant declines in valuation; difficulties in reducing risks associated with the loans on the Company’s balance sheet; staffing fluctuations in response to product demand or the implementation of corporate strategies that affect the Company’s workforce and potential associated charges; computer systems on which the Company depends could fail or experience a security breach; the Company’s ability to retain key members of its senior management team; costs and effects of litigation, including settlements and judgments; the Company’s ability to successfully integrate any assets, liabilities, customers, systems, and management personnel it may in the future acquire into its operations and the Company’s ability to realize related revenue synergies and cost savings within expected time frames and any goodwill charges related thereto; increased competitive pressures among financial services companies; changes in consumer spending, borrowing and savings habits; the availability of resources to address changes in laws, rules, or regulations or to respond to regulatory actions; the Company’s ability to pay dividends on its common stock; and interest or principal payments on its junior subordinated debentures; adverse changes in the securities markets; inability of key third-party providers to perform their obligations to us; changes in accounting policies and practices, as may be adopted by the financial institution regulatory agencies or the Financial Accounting Standards Board, including additional guidance and interpretation on accounting issues and details of the implementation of new accounting methods; other economic, competitive, governmental, regulatory, and technological factors affecting the Company’s operations, pricing, products and services and the other risks described from time to time in our filings with the Securities and Exchange Commission.
The Company cautions readers not to place undue reliance on any forward-looking statements. Moreover, you should treat these statements as speaking only as of the date they are made and based only on information then actually known to the Company. The Company does not undertake and specifically disclaims any obligation to revise any forward-looking statements to reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such statements. These risks could cause our actual results for fiscal 2010 and beyond to differ materially from those expressed in any forward-looking statements by, or on behalf of, us, and could negatively affect the Company’s operating and stock price performance.
RVSB Third Quarter Fiscal 2011 Results
January 27, 2011
Page 5
| RIVERVIEW BANCORP, INC. AND SUBSIDIARY | | | | | | | | | | | | |
| Consolidated Balance Sheets | | | | | | | | | | | | |
| (In thousands, except share data) (Unaudited) | | December 31, 2010 | | | September 30, 2010 | | | December 31, 2009 | | | March 31, 2010 | |
| ASSETS | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| Cash (including interest-earning accounts of $27,548, $36,002, $1,157 | | $ | 35,900 | | | $ | 48,505 | | | $ | 15,506 | | | $ | 13,587 | |
| and $3,384) | | | | | | | | | | | | | | | | |
| Certificate of deposits | | | 17,141 | | | | 14,951 | | | | - | | | | - | |
| Loans held for sale | | | 581 | | | | 417 | | | | 250 | | | | 255 | |
| Investment securities held to maturity, at amortized cost | | | 505 | | | | 512 | | | | 517 | | | | 517 | |
| Investment securities available for sale, at fair value | | | 6,255 | | | | 6,688 | | | | 6,923 | | | | 6,802 | |
| Mortgage-backed securities held to maturity, at amortized | | | 194 | | | | 199 | | | | 331 | | | | 259 | |
| Mortgage-backed securities available for sale, at fair value | | | 2,007 | | | | 2,306 | | | | 3,102 | | | | 2,828 | |
| Loans receivable (net of allowance for loan losses of $17,463, $19,029, | | | | | | | | | | | | | |
| $18,229, and $21,642) | | | 660,075 | | | | 679,925 | | | | 721,180 | | | | 712,837 | |
| Real estate and other pers. property owned | | | 30,704 | | | | 19,766 | | | | 23,051 | | | | 13,325 | |
| Prepaid expenses and other assets | | | 6,206 | | | | 6,541 | | | | 8,982 | | | | 7,934 | |
| Accrued interest receivable | | | 2,498 | | | | 2,644 | | | | 2,639 | | | | 2,849 | |
| Federal Home Loan Bank stock, at cost | | | 7,350 | | | | 7,350 | | | | 7,350 | | | | 7,350 | |
| Premises and equipment, net | | | 15,655 | | | | 15,893 | | | | 18,267 | | | | 16,487 | |
| Deferred income taxes, net | | | 11,307 | | | | 11,209 | | | | 7,869 | | | | 11,177 | |
| Mortgage servicing rights, net | | | 423 | | | | 470 | | | | 512 | | | | 509 | |
| Goodwill | | | 25,572 | | | | 25,572 | | | | 25,572 | | | | 25,572 | |
| Core deposit intangible, net | | | 242 | | | | 265 | | | | 341 | | | | 314 | |
| Bank owned life insurance | | | 15,802 | | | | 15,652 | | | | 15,205 | | | | 15,351 | |
| | | | | | | | | | | | | | | | | |
| TOTAL ASSETS | | $ | 838,417 | | | $ | 858,865 | | | $ | 857,597 | | | $ | 837,953 | |
| | | | | | | | | | | | | | | | | |
| LIABILITIES AND EQUITY | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| LIABILITIES: | | | | | | | | | | | | | | | | |
| Deposit accounts | | $ | 696,749 | | | $ | 718,028 | | | $ | 679,570 | | | $ | 688,048 | |
| Accrued expenses and other liabilities | | | 9,697 | | | | 8,898 | | | | 5,263 | | | | 6,833 | |
| Advance payments by borrowers for taxes and insurance | | | 227 | | | | 507 | | | | 148 | | | | 427 | |
| Federal Home Loan Bank advances | | | - | | | | - | | | | - | | | | 23,000 | |
| Federal Reserve Bank advances | | | - | | | | - | | | | 58,300 | | | | 10,000 | |
| Junior subordinated debentures | | | 22,681 | | | | 22,681 | | | | 22,681 | | | | 22,681 | |
| Capital lease obligation | | | 2,578 | | | | 2,589 | | | | 2,620 | | | | 2,610 | |
| Total liabilities | | | 731,932 | | | | 752,703 | | | | 768,582 | | | | 753,599 | |
| | | | | | | | | | | | | | | | | |
| EQUITY: | | | | | | | | | | | | | | | | |
| Shareholders' equity | | | | | | | | | | | | | | | | |
| Serial preferred stock, $.01 par value; 250,000 authorized, | | | | | | | | | | | | | | | | |
| issued and outstanding, none | | | - | | | | - | | | | - | | | | - | |
| Common stock, $.01 par value; 50,000,000 authorized, | | | | | | | | | | | | | | | | |
| December 31, 2010 - 22,471,890 issued and outstanding; | | | | | | | | | | | | | | | | |
| September 30, 2010 – 22,471,890 issued and outstanding; | | | 225 | | | | 225 | | | | 109 | | | | 109 | |
| December 31, 2009 – 10,923,773 issued and outstanding; | | | | | | | | | | | | | | | | |
| March 31, 2010 – 10,923,773 issued and outstanding; | | | | | | | | | | | | | | | | |
| Additional paid-in capital | | | 65,642 | | | | 65,746 | | | | 46,920 | | | | 46,948 | |
| Retained earnings | | | 42,339 | | | | 41,760 | | | | 43,581 | | | | 38,878 | |
| Unearned shares issued to employee stock ownership trust | | | (722 | ) | | | (748 | ) | | | (825 | ) | | | (799 | ) |
| Accumulated other comprehensive loss | | | (1,454 | ) | | | (1,264 | ) | | | (1,178 | ) | | | (1,202 | ) |
| Total shareholders’ equity | | | 106,030 | | | | 105,719 | | | | 88,607 | | | | 83,934 | |
| | | | | | | | | | | | | | | | | |
| Noncontrolling interest | | | 455 | | | | 443 | | | | 408 | | | | 420 | |
| Total equity | | | 106,485 | | | | 106,162 | | | | 89,015 | | | | 84,354 | |
| | | | | | | | | | | | | | | | | |
| TOTAL LIABILITIES AND EQUITY | | $ | 838,417 | | | $ | 858,865 | | | $ | 857,597 | | | $ | 837,953 | |
RVSB Third Quarter Fiscal 2011 Results
January 27, 2011
Page 6
| RIVERVIEW BANCORP, INC. AND SUBSIDIARY | | | | | | |
| Consolidated Statements of Operations | | | | | | |
| | Three Months Ended | | Nine Months Ended |
| (In thousands, except share data) (Unaudited) | Dec. 31, 2010 | Sept. 30, 2010 | Dec. 31, 2009 | | Dec. 31, 2010 | Dec. 31, 2009 |
| INTEREST INCOME: | | | | | | |
| Interest and fees on loans receivable | $ 10,593 | $ 10,672 | $ 11,376 | | $ 32,458 | $ 34,725 |
| Interest on investment securities-taxable | 28 | 32 | 56 | | 115 | 220 |
| Interest on investment securities-non taxable | 14 | 14 | 26 | | 43 | 89 |
| Interest on mortgage-backed securities | 21 | 23 | 32 | | 70 | 107 |
| Other interest and dividends | 77 | 48 | 23 | | 140 | 63 |
| Total interest income | 10,733 | 10,789 | 11,513 | | 32,826 | 35,204 |
| | | | | | | |
| INTEREST EXPENSE: | | | | | | |
| Interest on deposits | 1,567 | 1,764 | 2,391 | | 5,232 | 7,533 |
| Interest on borrowings | 359 | 375 | 396 | | 1,119 | 1,352 |
| Total interest expense | 1,926 | 2,139 | 2,787 | | 6,351 | 8,885 |
| Net interest income | 8,807 | 8,650 | 8,726 | | 26,475 | 26,319 |
| Less provision for loan losses | 1,600 | 1,675 | 4,500 | | 4,575 | 10,050 |
| | | | | | | |
| Net interest income after provision for loan losses | 7,207 | 6,975 | 4,226 | | 21,900 | 16,269 |
| | | | | | | |
| NON-INTEREST INCOME: | | | | | | |
| Fees and service charges | 955 | 1,077 | 1,121 | | 3,131 | 3,516 |
| Asset management fees | 520 | 492 | 460 | | �� 1,533 | 1,434 |
| Gain on sale of loans held for sale | 96 | 124 | 152 | | 339 | 712 |
| Impairment of investment security | - | - | (456) | | - | (915) |
| Bank owned life insurance income | 151 | 150 | 154 | | 451 | 456 |
| Other | 142 | 207 | 91 | | 696 | 217 |
| Total non-interest income | 1,864 | 2,050 | 1,522 | | 6,150 | 5,420 |
| | | | | | | |
| NON-INTEREST EXPENSE: | | | | | | |
| Salaries and employee benefits | 4,090 | 4,085 | 3,741 | | 12,115 | 11,305 |
| Occupancy and depreciation | 1,208 | 1,148 | 1,241 | | 3,497 | 3,691 |
| Data processing | 274 | 248 | 228 | | 774 | 705 |
| Amortization of core deposit intangible | 23 | 23 | 26 | | 72 | 84 |
| Advertising and marketing expense | 187 | 255 | 212 | | 577 | 522 |
| FDIC insurance premium | 402 | 417 | 378 | | 1,240 | 1,518 |
| State and local taxes | 184 | 147 | 106 | | 502 | 406 |
| Telecommunications | 105 | 105 | 107 | | 317 | 336 |
| Professional fees | 311 | 321 | 292 | | 958 | 926 |
| Real estate owned expenses | 897 | 120 | 826 | | 1,183 | 1,788 |
| Other | 572 | 543 | 635 | | 1,695 | 1,766 |
| Total non-interest expense | 8,253 | 7,412 | 7,792 | | 22,930 | 23,047 |
| | | | | | | |
| INCOME (LOSS) BEFORE INCOME TAXES | 818 | 1,613 | (2,044) | | 5,120 | (1,358) |
| PROVISION (BENEFIT) FOR INCOME TAXES | 239 | 496 | (758) | | 1,659 | (617) |
| NET INCOME (LOSS) | $ 579 | $ 1,117 | $ (1,286) | | $ 3,461 | $ (741) |
| | | | | | | |
| Earnings (loss) per common share: | | | | | | |
| Basic | $ 0.03 | $ 0.06 | $ (0.12) | | $ 0.20 | $ (0.07) |
| Diluted | $ 0.03 | $ 0.06 | $ (0.12) | | $ 0.20 | $ (0.07) |
| Weighted average number of shares outstanding: | | | | | | |
| Basic | 22,296,378 | 18,033,354 | 10,723,628 | | 17,044,751 | 10,717,493 |
| Diluted | 22,297,043 | 18,033,354 | 10,723,628 | | 17,044,751 | 10,717,493 |
RVSB Third Quarter Fiscal 2011 Results
January 27, 2011
Page 7
| (Dollars in thousands) | | At or for the three months ended | | | At or for the nine months ended | |
| | | Dec. 31, 2010 | | | Sept. 30, 2010 | | | Dec. 31, 2009 | | | Dec. 31, 2010 | | | Dec. 31, 2009 | |
| AVERAGE BALANCES | | | | | | | | | | | | | | | |
| Average interest–earning assets | | $ | 760,826 | | | $ | 769,423 | | | $ | 783,028 | | | $ | 761,816 | | | $ | 805,989 | |
| Average interest-bearing liabilities | | | 645,014 | | | | 658,973 | | | | 680,654 | | | | 653,352 | | | | 705,012 | |
| Net average earning assets | | | 115,812 | | | | 110,450 | | | | 102,374 | | | | 108,464 | | | | 100,977 | |
| Average loans | | | 692,025 | | | | 707,944 | | | | 743,949 | | | | 709,868 | | | | 766,900 | |
| Average deposits | | | 711,305 | | | | 716,279 | | | | 677,437 | | | | 709,057 | | | | 659,639 | |
| Average equity | | | 107,728 | | | | 100,306 | | | | 91,327 | | | | 98,198 | | | | 91,039 | |
| Average tangible equity | | | 81,443 | | | | 73,969 | | | | 64,874 | | | | 71,864 | | | | 64,414 | |
| ASSET QUALITY | | Dec. 31, 2010 | | | Sept. 30, 2010 | | | Dec. 31, 2009 | |
| | | | | | | | | | |
| Non-performing loans | | | 16,879 | | | | 35,346 | | | | 36,402 | |
| Non-performing loans to total loans | | | 2.49 | % | | | 5.06 | % | | | 4.92 | % |
| Real estate/repossessed assets owned | | | 30,704 | | | | 19,766 | | | | 23,051 | |
| Non-performing assets | | | 47,583 | | | | 55,112 | | | | 59,453 | |
| Non-performing assets to total assets | | | 5.68 | % | | | 6.42 | % | | | 6.93 | % |
| Net loan charge-offs in the quarter | | | 3,166 | | | | 2,211 | | | | 4,342 | |
| Net charge-offs in the quarter/average net loans | | | 1.82 | % | | | 1.24 | % | | | 2.32 | % |
| | | | | | | | | | | | | |
| Allowance for loan losses | | | 17,463 | | | | 19,029 | | | | 18,229 | |
| Allowance for loan losses and unfunded loan | | | | | | | | | | | | |
| commitments | | | 17,634 | | | | 19,188 | | | | 18,502 | |
| Average interest-earning assets to average | | | | | | | | | | | | |
| interest-bearing liabilities | | | 117.95 | % | | | 116.76 | % | | | 115.04 | % |
| Allowance for loan losses to | | | | | | | | | | | | |
| non-performing loans | | | 103.46 | % | | | 53.84 | % | | | 50.08 | % |
| Allowance for loan losses to total loans | | | 2.58 | % | | | 2.72 | % | | | 2.47 | % |
| Allowance for loan losses and | | | | | | | | | | | | |
| unfunded loan commitments to total loans | | | 2.60 | % | | | 2.75 | % | | | 2.50 | % |
| Shareholders’ equity to assets | | | 12.65 | % | | | 12.31 | % | | | 10.33 | % |
| LOAN MIX | | Dec. 31, 2010 | | | Sept. 30, 2010 | | | Dec. 31, 2009 | | | March 31, 2010 | |
| Commercial and construction | | | | | | | | | | | | |
| Commercial | | $ | 85,768 | | | $ | 93,026 | | | $ | 111,662 | | | $ | 108,368 | |
| Other real estate mortgage | | | 454,058 | | | | 458,621 | | | | 454,345 | | | | 459,178 | |
| Real estate construction | | | 32,870 | | | | 52,262 | | | | 82,116 | | | | 75,456 | |
| Total commercial and construction | | | 572,696 | | | | 603,909 | | | | 648,123 | | | | 643,002 | |
| Consumer | | | | | | | | | | | | | | | | |
| Real estate one-to-four family | | | 102,488 | | | | 92,682 | | | | 88,507 | | | | 88,861 | |
| Other installment | | | 2,354 | | | | 2,363 | | | | 2,779 | | | | 2,616 | |
| Total consumer | | | 104,842 | | | | 95,045 | | | | 91,286 | | | | 91,477 | |
| | | | | | | | | | | | | | | | | |
| Total loans | | | 677,538 | | | | 698,954 | | | | 739,409 | | | | 734,479 | |
| | | | | | | | | | | | | | | | | |
| Less: | | | | | | | | | | | | | | | | |
| Allowance for loan losses | | | 17,463 | | | | 19,029 | | | | 18,229 | | | | 21,642 | |
| Loans receivable, net | | $ | 660,075 | | | $ | 679,925 | | | $ | 721,180 | | | $ | 712,837 | |
RVSB Third Quarter Fiscal 2011 Results
January 27, 2011
Page 8
| COMPOSITION OF COMMERCIAL AND CONSTRUCTION LOANS | | | | | | | |
| | | | | | | | | | | | | |
| | | | | | Commercial | | | | | | Commercial | |
| | | | | | Real Estate | | | Real Estate | | | & Construction | |
| | | Commercial | | | Mortgage | | | Construction | | | Total | |
| December 31, 2010 | | (Dollars in thousands) | |
| Commercial | | $ | 85,768 | | | $ | - | | | $ | - | | | $ | 85,768 | |
| Commercial construction | | | - | | | | - | | | | 10,853 | | | | 10,853 | |
| Office buildings | | | - | | | | 94,394 | | | | - | | | | 94,394 | |
| Warehouse/industrial | | | - | | | | 49,059 | | | | - | | | | 49,059 | |
| Retail/shopping centers/strip malls | | | - | | | | 85,324 | | | | - | | | | 85,324 | |
| Assisted living facilities | | | - | | | | 33,568 | | | | - | | | | 33,568 | |
| Single purpose facilities | | | - | | | | 97,372 | | | | - | | | | 97,372 | |
| Land | | | - | | | | 55,976 | | | | - | | | | 55,976 | |
| Multi-family | | | - | | | | 38,365 | | | | - | | | | 38,365 | |
| One-to-four family | | | - | | | | - | | | | 22,017 | | | | 22,017 | |
| Total | | $ | 85,768 | | | $ | 454,058 | | | $ | 32,870 | | | $ | 572,696 | |
| March 31, 2010 | | (Dollars in thousands) | |
| Commercial | | $ | 108,368 | | | $ | - | | | $ | - | | | $ | 108,368 | |
| Commercial construction | | | - | | | | - | | | | 40,017 | | | | 40,017 | |
| Office buildings | | | - | | | | 90,000 | | | | - | | | | 90,000 | |
| Warehouse/industrial | | | - | | | | 46,731 | | | | - | | | | 46,731 | |
| Retail/shopping centers/strip malls | | | - | | | | 80,982 | | | | - | | | | 80,982 | |
| Assisted living facilities | | | - | | | | 39,604 | | | | - | | | | 39,604 | |
| Single purpose facilities | | | - | | | | 93,866 | | | | - | | | | 93,866 | |
| Land | | | - | | | | 74,779 | | | | - | | | | 74,779 | |
| Multi-family | | | - | | | | 33,216 | | | | - | | | | 33,216 | |
| One-to-four family | | | - | | | | - | | | | 35,439 | | | | 35,439 | |
| Total | | $ | 108,368 | | | $ | 459,178 | | | $ | 75,456 | | | $ | 643,002 | |
| (Dollars in thousands) | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| DEPOSIT MIX | | Dec. 31, 2010 | | | Sept. 30, 2010 | | | Dec. 31, 2009 | | | March 31, 2010 | |
| | | | | | | | | | | | | |
| Interest checking | | $ | 85,733 | | | $ | 82,318 | | | $ | 74,199 | | | $ | 70,837 | |
| Regular savings | | | 34,913 | | | | 35,132 | | | | 30,153 | | | | 32,131 | |
| Money market deposit accounts | | | 216,155 | | | | 207,607 | | | | 195,117 | | | | 209,580 | |
| Non-interest checking | | | 86,863 | | | | 93,590 | | | | 83,396 | | | | 83,794 | |
| Certificates of deposit | | | 273,085 | | | | 299,381 | | | | 296,705 | | | | 291,706 | |
| Total deposits | | $ | 696,749 | | | $ | 718,028 | | | $ | 679,570 | | | $ | 688,048 | |
RVSB Third Quarter Fiscal 2011 Results
January 27, 2011
Page 9
| DETAIL OF NON-PERFORMING ASSETS | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | Northwest | | | Other | | | Southwest | | | Other | | | | | | | |
| | | Oregon | | | Oregon | | | Washington | | | Washington | | | Other | | | Total | |
| December 31, 2010 | | (Dollars in thousands) | |
| Non-performing assets | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| Commercial | | $ | 1,285 | | | $ | 981 | | | $ | 1,762 | | | $ | - | | | $ | - | | | $ | 4,028 | |
| Commercial real estate | | | - | | | | 692 | | | | 751 | | | | - | | | | - | | | | 1,443 | |
| Land | | | - | | | | - | | | | 1,816 | | | | - | | | | 1,379 | | | | 3,195 | |
| Multi-family | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | |
| Commercial construction | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | |
| One-to-four family construction | | | 3,079 | | | | 2,436 | | | | 1,129 | | | | - | | | | - | | | | 6,644 | |
| Real estate one-to-four family | | | 243 | | | | 310 | | | | 1,016 | | | | - | | | | - | | | | 1,569 | |
| Consumer | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | |
| Total non-performing loans | | | 4,607 | | | | 4,419 | | | | 6,474 | | | | - | | | | 1,379 | | | | 16,879 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| REO | | | 5,239 | | | | 8,932 | | | | 12,051 | | | | 4,482 | | | | - | | | | 30,704 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Total non-performing assets | | $ | 9,846 | | | $ | 13,351 | | | $ | 18,525 | | | $ | 4,482 | | | $ | 1,379 | | | $ | 47,583 | |
| DETAIL OF SPEC CONSTRUCTION AND LAND DEVELOPMENT LOANS | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | Northwest | | | Other | | | Southwest | | | Other | | | | | | | |
| | | Oregon | | | Oregon | | | Washington | | | Washington | | | Other | | | Total | |
| December 31, 2010 | | (Dollars in thousands) | |
| Land and Spec Construction Loans | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| Land Development Loans | | $ | 6,081 | | | $ | 4,171 | | | $ | 37,124 | | | $ | - | | | $ | 8,600 | | | $ | 55,976 | |
| Spec Construction Loans | | | 3,079 | | | | 8,746 | | | | 7,305 | | | | 37 | | | | - | | | | 19,167 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Total Land and Spec Construction | | $ | 9,160 | | | $ | 12,917 | | | $ | 44,429 | | | $ | 37 | | | $ | 8,600 | | | $ | 75,143 | |
RVSB Third Quarter Fiscal 2011 Results
January 27, 2011
Page 10
| | | At or for the three months ended | | | At or for the nine months ended | |
| SELECTED OPERATING DATA | | Dec. 31, 2010 | | | Sept. 30, 2010 | | | Dec. 31, 2009 | | | Dec. 31, 2010 | | | Dec. 31, 2009 | |
| | | | | | | | | | | | | | | | |
| Efficiency ratio (4) | | | 77.34 | % | | | 69.27 | % | | | 76.03 | % | | | 70.28 | % | | | 72.61 | % |
| Coverage ratio (6) | | | 106.71 | % | | | 116.70 | % | | | 111.99 | % | | | 115.46 | % | | | 114.20 | % |
| Return on average assets (1) | | | 0.27 | % | | | 0.52 | % | | | -0.59 | % | | | 0.54 | % | | | -0.11 | % |
| Return on average equity (1) | | | 2.13 | % | | | 4.42 | % | | | -5.59 | % | | | 4.68 | % | | | -1.08 | % |
| Average rate earned on interest-earned assets | | | 5.60 | % | | | 5.57 | % | | | 5.84 | % | | | 5.72 | % | | | 5.81 | % |
| Average rate paid on interest-bearing liabilities | | | 1.18 | % | | | 1.29 | % | | | 1.62 | % | | | 1.29 | % | | | 1.67 | % |
| Spread (7) | | | 4.42 | % | | | 4.28 | % | | | 4.22 | % | | | 4.43 | % | | | 4.14 | % |
| Net interest margin | | | 4.60 | % | | | 4.46 | % | | | 4.43 | % | | | 4.62 | % | | | 4.34 | % |
| | | | | | | | | | | | | | | | | | | | | |
| PER SHARE DATA | | | | | | | | | | | | | | | | | | | | |
| Basic earnings per share (2) | | $ | 0.03 | | | $ | 0.06 | | | $ | (0.12 | ) | | $ | 0.20 | | | $ | (0.07 | ) |
| Diluted earnings per share (3) | | | 0.03 | | | | 0.06 | | | | (0.12 | ) | | | 0.20 | | | | (0.07 | ) |
| Book value per share (5) | | | 4.72 | | | | 4.70 | | | | 8.11 | | | | 4.72 | | | | 8.11 | |
| Tangible book value per share (5) | | | 3.55 | | | | 3.53 | | | | 5.69 | | | | 3.55 | | | | 5.69 | |
| Market price per share: | | | | | | | | | | | | | | | | | | | | |
| High for the period | | $ | 2.80 | | | $ | 2.49 | | | $ | 3.93 | | | $ | 3.81 | | | $ | 4.32 | |
| Low for the period | | | 2.00 | | | | 1.73 | | | | 2.24 | | | | 1.73 | | | | 2.24 | |
| Close for period end | | | 2.72 | | | | 1.98 | | | | 2.24 | | | | 2.72 | | | | 2.24 | |
| Cash dividends declared per share | | | - | | | | - | | | | - | | | | - | | | | - | |
| | | | | | | | | | | | | | | | | | | | | |
| Average number of shares outstanding: | | | | | | | | | | | | | | | | | | | | |
| Basic (2) | | | 22,296,378 | | | | 18,033,354 | | | | 10,723,628 | | | | 17,044,751 | | | | 10,717,493 | |
| Diluted (3) | | | 22,297,043 | | | | 18,033,354 | | | | 10,723,628 | | | | 17,044,751 | | | | 10,717,493 | |
| (1) | Amounts for the quarterly periods are annualized. |
| (2) | Amounts exclude ESOP shares not committed to be released. |
| (3) | Amounts exclude ESOP shares not committed to be released and include common stock equivalents. |
| (4) | Non-interest expense divided by net interest income and non-interest income. |
| (5) | Amounts calculated based on shareholders’ equity and include ESOP shares not committed to be released. |
| (6) | Net interest income divided by non-interest expense. |
| (7) | Yield on interest-earning assets less cost of funds on interest bearing liabilities. |
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