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 December 31, 2002
-----------------
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_.
Check whether the registrant is an accelerated filer (as defined in Rule 12b-2
of the Exchange Act). Yes___ No X
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---4,334,119 shares as of
December 31, 2002.
Form 10-Q
RIVERVIEW BANCORP, INC. AND SUBSIDIARY
INDEX
Part I. Financial Information Page
--------------------- ----
Item 1: Financial Statements (Unaudited)
Consolidated Balance Sheets
as of December 31, 2002 and March 31, 2002 1
Consolidated Statements of Income: Three and Nine
Months Ended December 31, 2002 and 2001 2
Consolidated Statements of Shareholders' Equity
for the Year Ended March 31, 2002 and the
Nine Months Ended December 31, 2002 3
Consolidated Statements of Cash Flows for the
Nine Months Ended December 31, 2002 and 2001 4
Notes to Consolidated Financial Statements 5-13
Item 2: Management's Discussion and Analysis of
Financial Condition and Results of Operations 14-23
Item 3: Quantitative and Qualitative Disclosures
About Market Risk 24
Item 4: Controls and Procedures 24
Part II. Other Information 25
SIGNATURES 26
Certifications 27-30
Part I. Financial Information
Item I. Financial statements (Unaudited)
RIVERVIEW BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2002 and MARCH 31, 2002
DECEMBER 31, MARCH 31,
(In thousands, except share data) (Unaudited) 2002 2002
- ------------------------------------------------------------------------------
ASSETS
Cash (including interest-earning accounts of
$29,645 and $14,369) $ 50,980 $ 22,492
Loans held for sale 1,357 1,826
Investment securities available for sale, at fair
value (amortized cost of $22,566 and $18,925) 20,980 18,275
Mortgage-backed securities held to maturity, at
amortized cost (fair value of $3,584 and $4,485) 3,520 4,386
Mortgage-backed securities available for sale, at
fair value (amortized cost of $18,226 and $36,462) 18,767 36,999
Loans receivable (net of allowance for loan losses
of $2,806 and $2,537) 305,701 286,704
Real estate owned 954 853
Prepaid expenses and other assets 744 525
Accrued interest receivable 1,509 1,902
Federal Home Loan Bank stock, at cost 5,563 5,317
Premises and equipment, net 9,850 10,607
Deferred income taxes, net 1,084 607
Mortgage servicing rights, net 680 912
Core deposit intangible, net 451 696
--------- ---------
TOTAL ASSETS $ 422,140 $ 392,101
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES:
Deposit accounts $ 314,388 $ 259,690
Accrued expenses and other liabilities 3,904 4,001
Advance payments by borrowers for taxes and insurance 97 233
Federal Home Loan Bank advances 50,000 74,500
--------- ---------
Total liabilities 368,389 338,424
COMMITMENTS AND CONTINGENCIES (NOTE 14)
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, 2002 - 4,560,958 issued, 4,334,119
outstanding
March 31, 2002 - 4,735,066 issued, 4,458,456
outstanding 46 47
Additional paid-in capital 33,273 35,725
Retained earnings 23,000 20,208
Unearned shares issued to employee stock ownership
trust (1,856) (2,010)
Unearned shares held by the management recognition
and development plan (22) (218)
Accumulated other comprehensive loss (690) (75)
--------- ---------
Total shareholders' equity 53,751 53,677
--------- ---------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 422,140 $ 392,101
========= =========
See notes to consolidated financial statements.
1
RIVERVIEW BANCORP, INC. AND SUBSIDIARY
Consolidated Statements of Income
Three Months Ended Nine Months Ended
(In thousands, except December 31, December 31,
share data)(Unaudited) 2002 2001 2002 2001
- ------------------------------------------------------------------------------
INTEREST INCOME:
Interest and fees on loans
receivable $ 5,869 $ 6,019 $ 17,842 $ 19,118
Interest on investment securities 74 42 132 296
Interest on mortgage-backed
securities 236 719 1,052 2,142
Other interest and dividends 315 466 1,058 1,643
------- ------- -------- --------
Total interest income 6,494 7,246 20,084 23,199
------- ------- -------- --------
INTEREST EXPENSE:
Interest on deposits 1,293 1,857 4,348 7,281
Interest on borrowings 642 1,389 2,418 4,465
------- ------- -------- --------
Total interest expense 1,935 3,246 6,766 11,746
------- ------- -------- --------
Net interest income 4,559 4,000 13,318 11,453
Less provision for loan losses 190 210 517 720
------- ------- -------- --------
Net interest income after
provision for loan losses 4,369 3,790 12,801 10,733
------- ------- -------- --------
NON-INTEREST INCOME:
Fees and service charges 1,221 1,005 3,183 2,759
Asset management services 179 176 549 564
Gain on sale of loans held for sale 494 396 1,108 777
Gain on sale of securities 162 - 162 863
Gain on sale of other real estate
owned 13 14 42 32
Gain on sale of land and fixed assets - - - 4
Loan servicing income (expense) (97) 28 (438) 40
Other 22 18 62 51
------- ------- -------- --------
Total non-interest income 1,994 1,637 4,668 5,090
------- ------- -------- --------
NON-INTEREST EXPENSE:
Salaries and employee benefits 2,095 1,981 6,164 5,722
Occupancy and depreciation 619 539 1,853 1,612
Data processing 197 176 614 571
Amortization of core deposit
intangible 82 82 245 245
Marketing expense 92 101 502 464
FDIC insurance premium 13 13 35 39
State and local taxes 94 103 285 305
Telecommunications 59 65 157 181
Professional fees 105 81 310 244
Other 339 328 939 956
------- ------- -------- --------
Total non-interest expense 3,695 3,469 11,104 10,339
------- ------- -------- --------
INCOME BEFORE FEDERAL INCOME TAXES 2,668 1,958 6,365 5,484
PROVISION FOR FEDERAL INCOME TAXES 896 599 2,027 1,672
------- ------- -------- --------
NET INCOME $ 1,772 $ 1,359 $ 4,338 $ 3,812
======= ======= ======== ========
Earnings per common share:
Basic $ 0.41 $ 0.30 $ 0.99 $ 0.83
Diluted 0.40 0.30 0.98 0.82
Weighted average number of
shares outstanding:
Basic 4,322,835 4,523,853 4,369,492 4,604,082
Diluted 4,377,413 4,560,202 4,428,155 4,645,716
See notes to consolidated financial statements.
2
RIVERVIEW BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
FOR THE YEAR ENDED MARCH 31, 2002
AND THE NINE MONTHS ENDED DECEMBER 31, 2002
(Unaudited)
Unearned
Shares Accum-
Issued to ulated
Employee Other
Common Addi- Stock Unearned Compre-
Stock tional Owner- Shares hensive
(In thousands, except ---------------- Paid-in Retained ship Issued to Income
per share data) Shares Amount Capital Earnings Trust MRDP (Loss) Total
- ---------------------------------------------------------------------------------------------------------
<s> <c> <c> <c> <c> <c> <c> <c> <c>
Balance, April 1, 2001 4,655,040 $ 50 $ 38,687 $ 17,349 $ (2,217) $ (762) $ (386) $52,721
Cash dividends - - - (2,009) - - - (2,009)
Exercise of stock options 22,345 - 91 - - - - 91
Stock repurchased and
retired (268,700) (3) (3,120) - - - - (3,123)
Earned ESOP shares 24,633 - 77 - 207 - - 284
Earned MRDP shares 25,138 - (10) - - 544 - 534
4,458,456 47 35,725 15,340 (2,010) (218) (386) 48,498
--------- ---- -------- -------- -------- -------- ------- -------
Comprehensive income
Net Income - - - 4,868 - - - 4,868
Other Comprehensive Income:
Unrealized holding gain on
securities of $881 (net of
$454 tax effect) less re-
classification adjustment
for net gains included in
net income of $570
net of $293 tax effect - - - - - - 311 311
-------
Total comprehensive income - - - - - - - 5,179
--------- ---- -------- -------- -------- -------- ------- -------
Balance, March 31, 2002 4,458,456 47 35,725 20,208 (2,010) (218) (75) 53,677
Cash dividends - - - (1,633) - - - (1,633)
Exercise of stock options 3,992 - 31 - - - - 31
Stock repurchased and
retired (178,100) (1) (2,598) - - - - (2,599)
Earned ESOP shares 24,633 - 117 27 154 - - 298
Earned MRDP shares 25,138 - (2) 60 - 196 - 254
--------- ---- -------- -------- -------- -------- ------- -------
4,334,119 46 33,273 18,662 (1,856) (22) (75) 50,058
Comprehensive Income
Net Income - - - 4,338 - - - 4,338
Other Comprehensive Loss:
Unrealized holding loss on
securities of $508 (net of
$262 tax effect) less re-
classification adjustment
for net gains included in
net income of $107
net of $55 tax effect - - - - - - (615) (615)
-------
Total comprehensive income - - - - - - - 3,723
--------- ---- -------- -------- -------- -------- ------- -------
Balance, December 31, 2002 4,334,119 $ 46 $ 33,273 $ 23,000 $ (1,856) $ (22) $ (690) $53,751
========= ==== ======== ======== ========= ======== ======= =======
See notes to consolidated financial statements.
3
RIVERVIEW BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED DECEMBER 31,
(In thousands) (Unaudited) 2002 2001
- ------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 4,338 $ 3,812
Adjustments to reconcile net income to cash
provided by operating activities:
Depreciation and amortization 1,803 1,225
Provision for losses on loans 517 720
Origination of loans held for sale (38,177) (26,428)
Proceeds from sales of loans held for sale 38,810 24,641
Disposition of allowance for loan losses - (29)
Credit for deferred income taxes (161) 131
Noncash expense related to ESOP benefit 271 204
Noncash expense related to MRDP benefit 194 440
Decrease in deferred loan origination fees, net
of amortization 536 (35)
Federal Home Loan Bank stock dividend (246) (265)
Net gain on sale of real estate owned, mortgage-
backed and investment securities and premises
and equipment (1,119) (1,631)
Changes in assets and liabilities:
(Increase) Decrease in prepaid expenses and other
assets (225) 1,229
Decrease in accrued interest receivable 297 576
Decrease in accrued expenses and other liabilities (36) (204)
-------- --------
Net cash provided by operating activities 6,802 4,386
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Loan originations (189,503) (170,693)
Principal repayments on loans 168,538 147,394
Principal repayments on mortgage-backed securities
held to maturity 865 1,574
Principal repayments on investment securities
held to maturity - 22
Purchase of mortgage-backed securities available
for sale - (4,967)
Proceeds from sale of mortgage-backed securities
available for sale - 25,944
Principal repayments on mortgage-backed securities
available for sale 18,183 14,255
Purchase of investment securities available for sale (5,000) -
Principal repayments on investment securities
available for sale - 4,641
Proceeds from call or maturity of investment
securities available for sale 1,356 2,500
Purchase of premises, equipment and other (120) (1,651)
Purchase of Federal Home Loan Bank stock - (543)
Proceeds from sale of real estate 1,456 885
-------- --------
Net cash (used in) provided by investing
activities (4,225) 19,361
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase (decrease) in deposit accounts 54,698 (31,576)
Dividends paid (1,584) (1,515)
Repurchase of common stock (2,599) (2,552)
Proceeds from Federal Home Loan Bank advances 5,000 20,000
Repayment of Federal Home Loan Bank advances (29,500) (25,000)
Net increase in advance payments by borrowers (135) (131)
Proceeds from exercise of stock options 31 43
-------- --------
Net cash provided by (used in)
financing activities 25,911 (40,731)
-------- --------
NET INCREASE (DECREASE) IN CASH 28,488 (16,984)
CASH, BEGINNING OF PERIOD 22,492 38,935
-------- --------
CASH, END OF PERIOD $ 50,980 $ 21,951
======== ========
SUPPLEMENTAL DISCLOSURES:
Cash paid during the period for:
Interest $ 6,972 $ 12,057
Income taxes 1,912 1,525
NONCASH INVESTING AND FINANCING ACTIVITIES:
Mortgage loans securitized and classified as
mortgage-backed securities available for sale $ - $ 40,347
Transfer of loans to real estate owned 1,527 2,219
Dividends declared and accrued in other liabilities 539 497
Fair value adjustment to securities available for sale (932) 844
Income tax effect related to fair value adjustment 317 (287)
See notes to consolidated financial statements.
4
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.
2002 Annual Report on Form 10-K. The results of operations for the three and
nine months ended December 31, 2002 are not necessarily indicative of the
results, which 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.
All inter-company balances and transactions have been eliminated upon
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 of unrealized gains and losses on securities available for sale
adjusted for gains and losses on securities available for sale included in
non-interest income.
For the three months and nine months ended December 31, 2002, the Company's
total comprehensive income was $1.0 million and $3.7 million, respectively,
compared to $1.1 million and $4.4 million for the three and nine months ended
December 31, 2001, respectively.
Total comprehensive income for the three and nine months ended December 31,
2002 is comprised of net income of $1.8 million and $4.3 million and other
comprehensive loss of $818,000 and $615,000, net of tax effect, respectively.
Other comprehensive income for the three months and nine months ended December
31, 2002, consists of unrealized securities loss of $711,000 and $508,000, net
of tax effect, less gain on securities available for sale included in
non-interest income of $107,000 for both periods, net of tax effect,
respectively.
Total comprehensive income for the three and nine months ended December 31,
2001 is comprised of net income of $1.4 million and $3.8 million and other
comprehensive (loss) income of ($258,000) and $557,000, net of tax effect,
respectively. Other comprehensive income for the three months and nine months
ended December 31, 2001, consists of unrealized securities (loss) gains of
($258,000) and $1.1 million, net of tax effect, respectively, less gains on
securities available for sale included in non-interest income of $570,000 for
the nine month period, net of tax effect.
5
(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
December 31,
------------------------------
2002 2001
---- ----
Basic EPS computation:
Numerator-Net Income $ 1,772,000 $ 1,359,000
Denominator-Weighted average common
shares outstanding 4,322,835 4,523,853
Basic EPS $ 0. 41 $ 0. 30
============= ============
Diluted EPS computation:
Numerator-Net Income $ 1,772,000 $ 1,359,000
Denominator-Weighted average common
shares outstanding 4,322,835 4,523,853
Effect of dilutive stock options 52,393 36,349
Effect of dilutive MRDP 2,185 -
------------- ------------
Weighted average common shares
and common stock equivalents 4,377,413 4,560,202
Diluted EPS $ 0.40 $ 0.30
============= ============
Nine Months Ended
December 31,
------------------------------
2002 2001
---- ----
Basic EPS computation:
Numerator-Net Income $ 4,338,000 $ 3,812,000
Denominator-Weighted average
common shares outstanding 4,369,492 4,604,082
Basic EPS $ 0. 99 $ 0. 83
============= ============
Diluted EPS computation:
Numerator-Net Income $ 4,338,000 $ 3,812,000
Denominator-Weighted average
common shares outstanding 4,369,492 4,604,082
Effect of dilutive stock options 46,235 32,268
Effect of dilutive MRDP 12,428 9,366
------------- ------------
Weighted average common shares
and common stock equivalents 4,428,155 4,645,716
Diluted EPS $ 0.98 $ 0.82
============= ============
6
(5) Investment Securities
---------------------
There were no sales of investment securities classified as held to maturity
during the periods ended December 31, 2002 and 2001.
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
December 31, 2002 Cost Gains Losses Value
--------- ---------- ---------- ---------
Trust preferred securities $ 5,000 $ - $ (50) $ 4,950
Equity securities 15,000 - (1,700) 13,300
School district bonds 2,566 164 - 2,730
--------- ---------- ---------- ---------
$ 22,566 $ 164 $ (1,750) $ 20,980
========= ========== ========== =========
March 31, 2002
Equity securities $ 16,356 $ 27 $ (709) $ 15,674
School district bonds 2,569 34 (2) 2,601
--------- ---------- ---------- ---------
$ 18,925 $ 61 $ (711) $ 18,275
========= ========== ========== =========
Investment securities with an amortized cost of $15.0 million and $15.0
million and a fair value of $13.3 million and $14.4 million at December 31,
2002 and March 31, 2002, respectively, were pledged as collateral for advances
at the Federal Home Loan Bank.
The contractual maturities of securities available for sale are as follows (in
thousands):
Amortized Estimated
December 31, 2002 Cost Fair Value
--------- ----------
Due after one year through
five years $ 908 $ 972
Due after five years through
ten years 1,041 1,116
Due after ten years 20,617 18,892
--------- ---------
$ 22,566 $ 20,980
========= =========
(6) Mortgage-backed Securities
--------------------------
Mortgage-backed securities held to maturity consisted of the following (in
thousands):
Gross Gross Estimated
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
--------- ---------- ---------- ---------
December 31, 2002
REMICs $ 1,804 $ 16 $ - $ 1,820
FHLMC mortgage-backed
securities 659 11 - 670
FNMA mortgage-backed
securities 1,057 37 - 1,094
--------- ---------- ---------- ---------
$ 3,520 $ 64 $ - $ 3,584
========= ========== ========== =========
March 31, 2002
REMICs $ 1,804 $ 40 $ - $ 1,844
FHLMC mortgage-backed
securities 964 12 - 976
FNMA mortgage-backed
securities 1,618 47 - 1,665
--------- ---------- ---------- ---------
$ 4,386 $ 99 $ - $ 4,485
========= ========== ========== =========
7
The contractual maturities of mortgage-backed securities classified as held to
maturity are as follows (in thousands):
Amortized Estimated
December 31, 2002 Cost Fair Value
--------- ----------
Due after one year through
five years $ 753 $ 773
Due after five years through
ten years 2 2
Due after ten years 2,765 2,809
--------- ---------
$ 3,520 $ 3,584
========= =========
Mortgage-backed securities held to maturity with an amortized cost of $2.3
million and $2.8 million and a fair value of $2.4 million and $2.9 million at
December 31, 2002 and March 31, 2002, respectively, were pledged as collateral
for governmental public funds held by the Company. The real estate mortgage
investment conduits ("REMICs") consist of Federal Home Mortgage Corporation
("FHLMC"), Federal National Mortgage Association ("FNMA") and privately issued
securities.
There were no sales of mortgage-backed securities held to maturity during the
periods ended December 31, 2002 and 2001.
Mortgage-backed securities available for sale consisted of the following (in
thousands):
Gross Gross Estimated
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
--------- ---------- ---------- ---------
December 31, 2002
REMICs $ 10,115 $ 160 $ (36) $ 10,239
FHLMC mortgage-backed
securities 7,482 396 - 7,878
FNMA mortgage-backed
securities 629 21 - 650
--------- ---------- ---------- ---------
$ 18,226 $ 577 $ (36) $ 18,767
========= ========== ========== =========
March 31, 2002
REMICs $ 25,053 $ 144 $ (83) $ 25,114
FHLMC mortgage-backed
securities 10,519 453 - 10,972
FNMA mortgage-backed
securities 890 23 - 913
--------- ---------- ---------- ---------
$ 36,462 $ 620 $ (83) $ 36,999
========= ========== ========== =========
The contractual maturities of mortgage-backed securities available for sale
are as follows (in thousands):
Amortized Estimated
December 31, 2002 Cost Fair Value
--------- ----------
Due after one year through
five years $ 7,998 $ 8,410
Due after five years through
ten years 801 803
Due after ten years 9,427 9,554
--------- ----------
$ 18,226 $ 18,767
========= ==========
Expected maturities of mortgage-backed securities held to maturity will differ
rom 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 $6.3
million and a fair value of $6.3 million March 31, 2002 were pledged as
collateral for borrowings from the discount window at the Federal Reserve Bank
8
of San Francisco. Mortgage-backed securities with an amortized cost of $15.1
million and $23.3 million and a fair value of $15.6 million and $23.8 million
at December 31, 2002 and March 31, 2002, respectively, were pledged as
collateral for advances at the Federal Home Loan Bank. Mortgage-backed
securities with an amortized cost of $2.1 million and $4.9 million and a fair
value of $2.1 million and $4.8 million at December 31, 2002 and March 31,
2002, 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):
December 31, March 31,
2002 2002
--------- ---------
Residential:
One- to- four family $ 65,556 $ 71,710
Multi-family 6,955 9,895
Construction:
One- to- four family 64,519 71,148
Multi-family 2,100 4,000
Commercial real estate 7,296 5,230
Commercial 34,293 23,319
Consumer:
Secured 23,799 24,932
Unsecured 1,448 1,447
Land 36,005 27,406
Commercial real estate 100,152 84,094
--------- ---------
342,123 323,181
Less:
Undisbursed portion of loans 30,689 30,970
Deferred loan fees 2,927 2,970
Allowance for loan losses 2,806 2,537
--------- ---------
Loans receivable, net $ 305,701 $ 286,704
========= =========
(8) Allowance for Loan Losses
-------------------------
A reconciliation of the allowances for loan losses is as follows (in
thousands):
Three Months Ended Nine Months Ended
December 31, December 31,
------------------ -----------------
2002 2001 2002 2001
---- ---- ---- ----
Beginning balance $ 2,689 $ 2,234 $ 2,537 $ 1,916
Provision for losses 190 210 517 720
Charge-offs (77) (227) (261) (340)
Recoveries 4 6 13 8
Dispositions - - - (81)
------- ------- ------- -------
Ending balance $ 2,806 $ 2,223 $ 2,806 $ 2,223
======= ======= ======= =======
At December 31, 2002 and March 31, 2002, the Company's recorded investment in
loans for which impairment has been recognized under the guidance of Statement
of Financial Accounting Standards ("SFAS") No. 114 and SFAS No. 118 was
$327,000 and $1.4 million, respectively. The allowance for loan losses in
excess of specific reserves is available to absorb losses from all loans,
although allocations have been made for certain loans and loan categories as
part of management's analysis of the allowance. The average investment in
impaired loans was approximately $1.3 million, $937,000 and $1.1 million
9
during the nine months ended December 31, 2002, December 31, 2001 and the year
ended March 31, 2002 respectively.
(9) Loans held for Sale
-------------------
The Company identifies loans held for sale at the time of origination and they
are carried at the lower of aggregate cost or net realizable value. Market
values are derived from available market quotations for comparable pools of
mortgage loans. Adjustments for unrealized losses, if any, are charged to
income.
(10) Intangible Assets
-----------------
The results for the quarter ended December 31, 2002, include the effect of
adopting SFAS No. 142, Goodwill and Other Intangible Assets. SFAS No. 142
provides that goodwill is no longer amortized and the value of an identifiable
intangible asset must be amortized over its useful life, unless the asset is
determined to have an indefinite life. The Company does not have goodwill,
but does have identifiable intangible assets of core deposit intangible and
mortgage servicing rights ("MSR") that will continue to be amortized. The
Company adopted SFAS No. 142 on April 1, 2002.
Intangible asset balances (excluding MSR) consisted of the following (in
thousands):
December 31, 2002
----------------------------------
Carrying Accumulated
Amount Amortization Net
------ ------------ ---
Core deposit intangible $ 3,269 $ 2,818 $ 451
======= ======= =====
March 31, 2002
----------------------------------
Carrying Accumulated
Amount Amortization Net
------ ------------ ---
Core deposit intangible $ 3,269 $ 2,573 $ 696
======= ======= =====
Amortization Expense
Quarter Ended December 31,
2002 2001
--------------------------
Core deposit intangible $ 82 $ 82
==== ====
Amortization Expense
Nine Months Ended
December 31,
2002 2001
--------------------------
Core deposit intangible $245 $245
==== ====
The value of the MSR asset is subject to prepayment risk. Future expected net
cash flows from servicing a loan in the servicing portfolio are not realized
if the loan pays off earlier than anticipated. If loans payoff earlier than
anticipated there is no economic benefit since loans in our servicing
portfolio do not contain penalty provisions for early payoff.
10
An estimated fair value of MSR is determined quarterly using a discounted cash
flow model. The model estimates the present value of the future net cash
flows of the servicing portfolio based on various factors, such as servicing
costs, servicing income, expected prepayments speeds, discount rate, loan
maturity and interest rate. MSR impairment is recorded in the amount that the
estimated fair value is less than the MSR carrying value.
Changes in balance of MSR, net of valuation, were as follows (in thousands):
Three Months Ended December 31,
2002 2001
-------------------------------
Beginning balance $ 636 $ 751
Additions 227 144
Amortization (75) (57)
Impairment adjustment (108) -
----- -----
Total $ 680 $ 838
===== =====
Allowance at beginning of period $ 477 $ 93
Provision for impairment 108 -
----- -----
Allowance at end of period $ 585 $ 93
===== =====
Nine Months Ended December 31,
2002 2001
-------------------------------
Beginning balance $ 912 $ 447
Additions 461 565
Amortization (202) (130)
Impairment adjustment (491) (44)
----- -----
Total $ 680 $ 838
===== =====
Allowance at beginning of period $ 94 $ 49
Provision for impairment 491 44
----- -----
Allowance at end of period $ 585 $ 93
===== =====
Amortization expense for the net carrying amount of intangible assets at
December 31, 2002 is estimated to be as follows (in thousands):
Fiscal year
--------------
2003 $ 158
2004 593
2005 249
2006 127
2007 4
------
Total $1,131
======
(11) Borrowings
Borrowings are summarized as follows (in thousands):
December 31, March 31,
2002 2002
---- ----
Federal Home Loan Bank Advances $50,000 $74,500
======= =======
Weighted average interest rate: 5.04% 6.10%
==== ====
11
Borrowings have the following maturities at December 31, 2002 (in thousands):
Fiscal Year
-----------
2003 $ 10,000
2004 -
2005 -
2006 15,000
2007 20,000
2008 5,000
---------
$ 50,000
=========
(12) Shareholders' Equity
--------------------
Repurchase of Common stock
In September 2002, the Company announced a stock repurchase of up to 5%, or
14,000 shares, of its outstanding common stock. At December 31, 2002, no
shares had been repurchased under this plan.
In July 2001, the Company received regulatory approval to repurchase up to
10% or 465,504 shares of its outstanding shares at June 30, 2001. At December
31, 2002 446,800 shares had been repurchased at an average cost of $12.81 per
share. Since the Company is a Washington corporation and 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.
(13) Recently Issued Accounting Pronouncements
-----------------------------------------
In December 2002, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") SFAS No. 148, Accounting
for Stock-Based Compensation -- Transition and Disclosure, an amendment of
FASB Statement No. 123. This Statement amends FASB Statement No. 123,
Accounting for Stock-Based Compensation, to provide alternative methods of
transition for a voluntary change to the fair value based method of accounting
for stock-based employee compensation. In addition, this Statement amends the
disclosure requirements of Statement 123 to require prominent disclosures in
both annual and interim financial statements about the method of accounting
for stock-based employee compensation and the effect of the method used on
reported results. Upon the adoption of the provisions of SFAS No. 148 on
March 31, 2003 the Company does not believe there will be a material effect on
the its financial statements, as the Company does not currently use the fair
value based method of accounting for stock-based employee compensation.
In September 2002, the FASB issued SFAS No. 147, Acquisitions of Certain
Financial Institutions. This Statement removes acquisitions of financial
institutions from the scope of both SFAS No. 72, Accounting for Certain
Acquisitions of Banking or Thrift Institutions, and FASB Interpretation No. 9,
Applying APB Opinions No. 16 and 17 When a Savings and Loan Association or a
Similar Institution Is Acquired in a Business Combination Accounted for by the
Purchase Method, and requires that those transactions be accounted for in
accordance with SFAS No. 141, Business Combinations, and SFAS No. 142,
Goodwill and Other Intangible Assets. As a result, the requirement in SFAS
No. 72 to recognize (and subsequently amortize) any excess of the fair value
of liabilities assumed over the fair value of tangible and identifiable
intangible assets acquired as an unidentifiable intangible asset no longer
applies to acquisitions within the scope of this Statement.
In addition, this Statement amends SFAS No. 144, Accounting for the Impairment
or Disposal of Long-Lived Assets, to include in its scope long-term customer-
12
relationship intangible assets of financial institutions such as depositor-
and borrower-relationship intangible assets and credit cardholder intangible
assets. Consequently, those intangible assets are subject to the same
undiscounted cash flow recoverability test and impairment loss recognition and
measurement provisions that SFAS No. 144 requires for other long-lived assets
that are held and used.
This Statement is effective for acquisitions under the purchase method of
accounting for which the date of acquisition is on or after October 1, 2002.
The provisions in this Statement related to accounting for the impairment or
disposal of certain long-term customer-relationship intangible assets are
effective on October 1, 2002. Transition provisions for previously recognized
unidentifiable intangible assets are effective on October 1, 2002, with
earlier application permitted. The Company believes there will be no current
impact of adopting the provisions of this statement on its financial
statements.
In July 2001, the FASB issued SFAS No. 142, Goodwill and Other Intangible
Assets. The Statement required discontinuing the amortization of goodwill and
other intangible assets with indefinite useful lives. Instead, these assets
will be tested periodically for impairment and written down to their fair
market value as necessary. Upon the adoption of the provisions of SFAS No. 142
at April 1, 2002 there was no effect on the Company's financial statements, as
the Company does not currently have any goodwill. The Company's current
intangible assets consist of core deposit intangibles and mortgage servicing
rights.
(14) 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, consumer and commercial 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, and are honored for up to 45
days subject to the Company's usual terms and conditions. Collateral is not
required to support commitments.
At December 31, 2002, the Company had commitments to originate fixed rate
mortgages of $5.7 million at interest rates ranging from 4.375% to 7.625%. At
December 31, 2002 adjustable rate mortgage loan commitments were $3.0 million
at an average interest rate of 6.447%. The undisbursed balance of mortgage
loans closed was $30.7 million at December 31, 2002. Consumer loan
commitments totaled $1.0 million and unused lines of consumer credit totaled
$15.7 million at December 31, 2002. Commercial real estate loan commitments
totaled $8.8 million and unused lines of commercial real estate credit totaled
$6.3 million at December 31, 2002. Commercial loan commitments totaled
$520,000 and unused commercial lines of credit totaled $18.3 million at
December 31, 2002.
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
operations, or liquidity.
13
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Safe Harbor Clause. This report on Form 10-Q 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,
which 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 and other risks
detailed in the Company's reports filed with the Securities and Exchange
Commission. These factors should be considered in evaluating the
forward-looking statements, and undue reliance should not be placed on such
statements.
Critical Accounting Policies
The Company has established various accounting policies that govern the
application of accounting principles generally accepted in the United States
of America in the preparation of the Company's consolidated financial
statements. The Company has identified two policies that due to judgments,
estimates and assumptions inherent in those policies are critical to an
understanding of the Company's consolidated financial statements. These
policies relate to the methodology for the determination of the allowance for
loan losses and the valuation of mortgage servicing rights. These policies
and the judgments, estimates and assumptions are described in greater detail
in Management's Discussion and Analysis and in Note 1, Note 6 and Note 8 to
the Consolidated Financial Statements included in the Company's 2002 Annual
Report on Form 10-K. Management believes that the judgments, estimates and
assumptions used in the preparation of the Company's consolidated financial
statements are appropriate given the factual circumstances at the time.
However, given the sensitivity of the Company's consolidated financial
statements to these critical accounting policies, the use of other judgments,
estimates and assumptions could result in material differences in our results
of operations or financial condition.
General
The Company is a progressive community-oriented, financial institution, which
emphasizes local, personal service to residents of its primary market area.
The Company considers Clark, Cowlitz, Klickitat and Skamania counties of
Washington as its primary market area. The Company is engaged primarily in the
business of attracting deposits from the general public and using such funds
in its primary market area to originate mortgage loans secured by one- to-
four family residential real estate, multi-family, commercial construction,
commercial real estate and non-mortgage loans providing financing for business
commercial ("commercial") and consumer purposes. Commercial real estate loans
and commercial loans have grown from 5.22% and 0.93% of the loan portfolio,
respectively, in fiscal year 1998 to 31.41% and 10.02% respectively, at
December 31, 2002. The Company continues to change the composition of its
loan portfolio and deposit base as part of its migration to commercial
banking, subject to market conditions. The consolidation among financial
institutions in the Company's primary market area has created a significant
gap in the ability of the resulting financial institutions to serve customers.
The Company's strategic plan includes targeting this customer base,
14
specifically small and medium size businesses, professionals and wealth
building individuals. In pursuit of these goals, the Company will emphasize
controlled growth and the diversification of its loan portfolio to include a
higher portion of commercial and commercial real estate loans. A related goal
is to increase the proportion of personal and business checking account
deposits used to fund these new loans. Significant portions of these new loan
products carry adjustable rates, higher yields, or shorter terms and higher
credit risk than the traditional fixed-rate mortgages. The strategic plan
stresses increased emphasis on non-interest income, including increased fees
for asset management and deposit service charges. The strategic plan is
designed to enhance earnings, reduce interest rate risk, and provide a more
complete range of financial services to customers and the local communities
the Company serves. The Company is well positioned to attract new customers
and to increase its market share given that the administrative headquarters
and eight of its twelve branches are located in Clark County, the fastest
growing county in the state of Washington according to the U.S Census Bureau.
In order to support its strategy of growth, without compromising its local,
personal service to its customers and a commitment to asset quality, the
Company has made significant investments in experienced branch, lending, asset
management and support personnel and has incurred significant costs in
facility expansion. Control of non-interest expenses remains a high priority
for the management of the Company.
The Company continuously reviews new products and services to give its
customers more financial options. With an emphasis on growth of non-interest
income and control of non-interest expense, all new technology and services
are reviewed for business development and cost saving purposes. The Company
continues to experience growth in the customer usage of the online banking
services and has recently introduced check image services to its customers.
Customers are able to conduct a full range of services on a real-time basis,
including balance inquiries, transfers and electronic bill-paying. This
online service has also enhanced the delivery of cash management services to
commercial customers. The internet banking branch web site is
www.riverviewbank.com.
The Company conducts operations from its home office in Vancouver and twelve
branch offices in Camas, Washougal, Stevenson, White Salmon, Battle Ground,
Goldendale, Vancouver (five branch offices) and Longview, Washington. The
Company's market area for lending and deposit taking activities encompasses
Clark, Cowlitz, Skamania and Klickitat counties, throughout the Columbia River
Gorge area. The Company operates a trust and financial services company,
AMCORP., located in downtown Vancouver, Washington. Riverview Mortgage, a
mortgage broker division of the Company originates mortgage loans (including
construction loans) for various mortgage companies predominantly in the
Portland metropolitan area, as well as for the Company. The Business and
Professional Banking Division located at the downtown Vancouver main branch
offers commercial and business banking services. Vancouver is located in Clark
County, which is just north of Portland, Oregon.
Several businesses are located in the Vancouver area because of the favorable
tax structure and relatively lower energy costs in Washington as compared to
Oregon. Washington has no state income tax and Clark County operates a public
electric utility that provides relatively lower cost electricity. Located in
the Vancouver area are Sharp Electronics, Hewlett Packard, Georgia Pacific,
Underwriters Laboratory and Wafer Tech, as well as several support industries.
In addition to this industrial base, the Columbia River Gorge Scenic Area has
been a source of tourism, which has transformed the area from its past
dependence on the timber industry.
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
15
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.
Financial Condition
At December 31, 2002, the Company had total assets of $422.1 million compared
with $392.1 million at March 31, 2002. The increase in total assets reflects
the growth in loans.
At December 31, 2002, the Company had $342.1 million in gross loans, an
increase of $18.9 million compared to $323.2 million at March 31, 2002. One-
to- four family residential mortgage loans decreased $6.1 million to $65.6
million at December 31, 2002 from $71.7 million at March 31, 2002 as a result
of management's plan to sell most of the fixed mortgage loans to the FHLMC and
retain the loan servicing of such loans. Commercial loans increased $11.0
million to $34.3 million at December 31, 2002 from $23.3 million at March 31,
2002. The $11.0 million increase consisted of $7.2 million increase in secured
and unsecured lines of credit and $3.8 million increase in term loans.
Commercial real estate loans increased $16.1 to $100.2 million at December 31,
2002 from $84.1 million at March 31, 2002. Land loans increased $8.6 million
to $36.0 million at December 31, 2002 from $27.4 million at March 31, 2002.
The $8.6 million increase reflects the addition of four residential
development loans. Loans receivable (Note 7) provides a detailed analysis of
the gross loan portfolio at December 31, 2002 as compared to the gross loan
portfolio at March 31, 2002. Consumer, commercial, and land loans carry higher
interest rates and generally a higher degree of credit risk compared to one-
to- four family residential mortgage loans.
Low interest rates continue to cause high prepayments in the Company's REMICs
and mortgage-backed securities portfolio. These high prepayments have
accelerated the decrease in the balance of REMICs and mortgage-backed
securities. Mortgage-backed Securities (Note 6) provides the balance detail.
Deposits totaled $314.4 million at December 31, 2002 compared to $259.7
million at March 31, 2002. The $54.7 million deposit increase is attributable
to an inflow of funds in all categories of deposits, except for certificates
of deposit, which experienced a $24.6 million decrease. The year to date total
average outstanding balance of checking accounts, Now accounts and money
market accounts ("transaction accounts") increased 38.4% to $160.2 million at
December 31, 2002, compared to $115.7 million at March 31, 2002. Transaction
accounts represented 54.4% and 43.0% of the year to date average total
outstanding balance of deposits at December 31, 2002 and March 31, 2002,
respectively.
FHLB advances totaled $50.0 million at December 31, 2002, a decrease of $24.5
million from $74.5 million at March 31, 2002. The decrease is a result of the
repayment of $29.5 million in FHLB advances and the borrowing of $5.0 million
from the FHLB Seattle during the first nine months of fiscal year 2003.
Capital Resources
Total shareholders' equity increased $74,000 to $53.8 million at December 31,
2002 compared to $53.7 million at March 31, 2002. The activity in
shareholders' equity for the first nine months of fiscal year 2003 was $4.3
million in earnings, dividends of $1.6 million, exercise of stock options
$31,000, stock repurchased $2.6 million, earned ESOP shares $298,000, earned
MRDP shares of $254,000 and $615,000 increase in net unrealized loss on
securities available for sale, net of tax benefit.
16
The Company is not subject to any regulatory capital requirements. The
Community Bank, however, is subject to various regulatory capital requirements
implemented 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 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 December 31,
2002, the Community Bank met all capital adequacy requirements to which it was
subject.
As of December 31, 2002, 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 December 31, 2002, the Community Bank's
tangible, core and risk-based total capital ratios amounted to 12.42%, 12.42%,
and 17.02%, 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 "Well
Capitalized" Under
For Capital Prompt Corrective
Actual Adequacy Purpose Action Provision
-----------------------------------------------------------
Amount Ratio Amount Ratio Amount Ratio
------ ----- ------ ----- ------ -----
As of December
31, 2002
Total Capital:
(To Risk
Weighted
Assets) $55,018 17.02% $25,867 8.0% $32,334 10.0%
Tier I Capital:
(To Risk
Weighted
Assets) 52,212 16.15 N/A N/A 19,400 6.0
Core Capital:
(To Total
Assets) 52,212 12.42 12,617 3.0 21,028 5.0
Tangible
Capital:
(To Tangible
Assets) 52,212 12.42 6,308 1.5 N/A N/A
As of March
31, 2002
Total Capital:
(To Risk
Weighted
Assets) $51,077 17.04% $23,987 8.0% $29,984 10.0%
Tier I Capital:
(To Risk
Weighted
Assets) 48,549 16.19 N/A N/A 17,900 6.0
Core Capital:
(To Total
Assets) 48,549 12.52 11,637 3.0 19,395 5.0
Tangible Capital:
(To Tangible
Assets) 48,549 12.52 5,819 1.5 N/A N/A
17
The following table is a reconciliation of the Community Bank's capital,
calculated according to generally accepted accounting principles, to
regulatory tangible and risk-based capital at December 31, 2002 (in
thousands):
Equity $52,040
Net unrealized loss on
securities available for
sale, net of tax 690
Core deposit intangible asset (451)
Deferred tax and servicing
asset (67)
-------
Tangible capital 52,212
General valuation allowance 2,806
-------
Total capital $55,018
=======
Liquidity
The Financial Regulatory Relief and Economic Efficiency Act of 2000 repealed
the statutory liquidity requirement for savings associations, citing the
requirement as unnecessary effective July 18, 2001. In light of this action,
the OTS repealed its liquidity regulations, with some exceptions. These
exceptions provide that: savings associations must continue to maintain
sufficient liquidity to ensure safe and sound operation; and the appropriate
level of liquidity will vary depending on the activities in which the savings
association engages. Management does not believe this rule change has had any
adverse impact on the Community Bank's operations.
Sources of capital and liquidity for the Company on a stand-alone basis
include distributions from the Community Bank. Dividends and other capital
distributions from the Community Bank are subject to regulatory restrictions.
Cash, including interest-earning overnight investments, was $51.0 million at
December 31, 2002 compared to $22.5 million at March 31, 2002. The $28.5
million increase in interest-earning overnight investments is attributable to
the increase liquidity caused by the high level of prepayment experienced in
the Company's mortgage loan portfolio and mortgage-backed securities
portfolio. Investment securities and mortgage-backed securities available for
sale at December 31, 2002 were $21.0 million and $18.8 million, respectively,
compared to $18.3 million and $37.0 million, respectively, at March 31, 2002.
See "Financial Condition."
Asset Quality
Allowance for loan losses was $2.8 million at December 31, 2002, compared to
$2.5 million at March 31, 2002. Management believes the allowance for loan
losses at December 31, 2002 is adequate to cover potential credit losses
existing in the loan portfolio 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 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. Commercial loans are considered to involve
a higher degree of credit risk than one- to- four family residential loans,
and to be more vulnerable to adverse conditions in the real estate market and
deteriorating economic conditions.
18
Non-performing assets were $1.3 million, or 0.30% of total assets at December
31, 2002 compared with $2.4 million, or 0.61% of total assets at March 31,
2002. The $327,000 balance of non-accrual loans is composed of one
residential property totaling $127,000, two land loans totaling $133,000 and
four consumer loans totaling $67,000. The $954,000 balance of other real
estate owned consists of two lot loans, one land loan, a one- to- four family
loan and a one- to- four family construction loan. The following table sets
forth information with respect to the Company's non-performing assets at the
dates indicated:
December 31, 2002 March 31, 2002
----------------- --------------
(Dollars in thousands)
Loans accounted for on
a non-accrual basis:
Real Estate
Residential $ 127 $ 830
Commercial - 297
Land 133 180
Commercial - 54
Consumer 67 39
-------- --------
Total 327 1,400
-------- --------
Accruing loans which are
contractually past due 90 days
or more 2 122
-------- --------
Total of non-accrual and 90 days
past due loans 329 1,522
-------- --------
Real estate owned (net) 954 853
-------- --------
Total non-performing assets $ 1,283 $ 2,375
======== ========
Total loans delinquent 90 days
or more to net loans 0.11% 0.53%
Total loans delinquent 90 days
or more to total assets 0.08 0.39
Total non-performing assets to
total assets 0.30 0.61
Comparison of Operating Results for the Three Months Ended
December 31, 2002 and 2001
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 and losses on sales of
securities, gains and losses from sale of loans and other income. In
19
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 December 31, 2002 was $1.8 million, or
$0.41 per basic share ($0.40 per diluted share) compared to net income of $1.4
million, or $0.30 per basic share ($0.30 per diluted share) for the same
period in fiscal 2002. Net interest income increased $559,000, or 14.0%, to
$4.6 million for the current quarter as compared to $4.0 million during the
same prior year period. Non-interest income includes a $108,000 mortgage
servicing impairment charge for the third quarter of fiscal year 2003 compared
to none in the same prior year period. The increase in net interest income
was the result of a shift in the deposit mix from higher interest rate
certificates of deposit to lower interest rate transaction accounts. The total
quarterly average outstanding balance of checking accounts, Now accounts and
money market accounts ("transaction accounts")increased $52.8 million, or
42.6%, to $176.6 million at December 31, 2002, compared to $123.8 million at
December 31, 2001. The quarterly average outstanding balance of certificates
of deposits decreased 15.3% to $105.9 million from $125.1 million at December
31, 2002 and December 31, 2001, respectively. The decrease in average balance
of certificates of deposit reflected the outflow of funds caused by the lower
interest rate the Company paid. The payoff of FHLB advances in the second
quarter of fiscal year 2003 also contributed to the increase of net interest
income.
Net interest income increased $941,000 as a result of the change in volume of
average interest-earning assets and liabilities for the three months in fiscal
2003 compared to the same fiscal 2002 period. The change in interest rates for
this same period of comparison decreased net interest income $177,000. Change
in the rate volume mix for the same three month periods reduced net interest
income $205,000. The interest rate spread increased from 3.49% for the three
month period ended December 31, 2001 to 4.31% for the three month period ended
December 31, 2002. The net interest margin increased to 4.78% during the
third quarter ended December 31, 2002 from 4.17% for the third quarter ended
December 31, 2001.
Interest income for the three months ended December 31, 2002 was $6.5 million,
a decrease of $752,000, or 10.4% from the $7.2 million interest income for the
same period in the prior fiscal year. Yield on interest-earning assets for the
third quarter of fiscal year 2003 was 6.79% compared to 7.49% for the same
three month period in fiscal year 2002. The lower third quarter fiscal 2003
yield reflects the lower interest rate environment. The Federal Reserve
discount rate has decreased from 2.50% at September 17, 2001 to 0.75% at
November 6, 2002 during this time period and this change in the discount rate
is reflected in the interest rates of the interest-bearing assets. The lower
interest income in the third quarter of fiscal year 2003 as compared to the
same period in fiscal year 2002 reflects this lower interest rate environment.
Average interest-earning assets decreased to $383.7 million for the three
months ended December 31, 2002 from $388.9 million for the three months ended
December 31, 2001. The decrease in the average quarterly balance of
interest-earning assets consisted of decreases in mortgage loans,
mortgage-backed securities and daily interest bearing investments partially
offset by an increase in non-mortgage loans and investment securities.
Interest income decreased $149,000 as a result of the decrease in the current
quarter's volume of average interest-earning assets as compared to the volume
of average interest-earning assets in the same fiscal 2002 period.
Interest expense decreased $1.3 million, or 40.4%, to $1.9 million for the
three months ended December 31, 2002 as compared to $3.2 million for the same
three months ended December 31, 2001. The cost of average interest-bearing
liabilities for the second quarter of year 2003 was 2.48% compared to 4.00%
for the same three month period in fiscal year 2002. The lower interest
expense for the three-month period ended December 31, 2002 is the result of
20
the previously mentioned change in the deposit mix, lower interest rates as
well as the reduction of FHLB borrowings in the second quarter of fiscal year
2003 compared to the same period in the prior year. Average interest-bearing
liabilities decreased to $309.6 million at December 31, 2002, from $322.3
million for the third quarter ended December 31, 2001. The interest expense
impact of the $12.7 million decrease in average interest-earning liabilities
more than offset the interest income impact of the $5.3 million decrease in
average interest-bearing assets. The decrease in the average balance of
interest-bearing liabilities was the result of a decrease in the average
balances of certificates of deposit and FHLB borrowings partially offset by
growth in transaction accounts. Growth in NOW accounts was used to repay
$25.0 million in FHLB borrowings in the second quarter of fiscal 2003. NOW
accounts continued to have growth during the third quarter of fiscal year 2003
as compared to the same period in the prior year.
The change in interest rates between the periods resulted in a $202,000
reduction in net interest income. This quarterly comparison of the impact of
the changes in interest rates illustrates the asset sensitivity of the balance
sheet for this period of comparison. The decrease in interest rates reduced
net interest income as a result of repricing the liabilities, especially money
market accounts, certificates of deposit and FHLB borrowings was lagged to the
repricing of loans and securities. Floors (minimum interest rates) and fixed
rates in the loans and securities helped to reduce the interest rate
sensitivity of the assets.
The provision for loan losses for the three-month period ended December 31,
2002 was $190,000 compared to $210,000 for the same period in the prior year.
There was $73,000 in net charge-offs during the three months ended December
31, 2002, compared to $221,000 in net charge-offs for the three months ended
December 31, 2001. Based upon management's analysis of historical and
anticipated loss rates, current loan growth, and other factors considered, the
allowance for loan losses at December 31, 2002 is believed to be adequate for
the losses inherent in the loan portfolio.
The 21.8% increase in non-interest income to $2.0 million for the quarter
ended December 31, 2002 compared to $1.6 million for the quarter ended
December 31, 2001 reflects increased fee income from deposit service charges,
mortgage broker fees, asset management fees, gains on sale of loans held for
sale and gains on sale of securities offset by the write down of mortgage
servicing rights asset. The lower interest rate environment has increased
prepayment on residential mortgages, which has shortened the duration on
mortgage servicing rights assets. In the third quarter of fiscal year 2003 a
$108,000 mortgage servicing rights impairment charge was made to non-interest
income as compared to no impairment charge to non-interest income for the same
period in the prior year.
Non-interest expense increased $226,000 to $3.7 million for the three months
ended December 31, 2002 from $3.5 million for the three months ended December
31, 2001. Salaries and employee benefits increased $114,000 to $2.1 million
for the quarter ended December 31, 2002 as compared to the same quarter in the
prior year. There were eight more full-time equivalent employees during the
fiscal year 2003 quarter over the fiscal year 2002 quarter. The fiscal year
2003 quarter salaries and employee benefits also reflect the increases in
mortgage broker commissions when compared to the same period in the prior
year.
Provision for federal income taxes for the second quarter of fiscal year 2003
was $896,000, resulting in an effective tax rate of 33.6%, compared to
$599,000 and 30.6% for the same quarter of fiscal year 2002. The 3% increase
in the effective tax rate for three months ended December 31, 2002 is
primarily attributable to the impact of the ESOP market value adjustment and
reduced tax exempt income.
21
Comparison of Operating Results for the Nine Months Ended
December 31, 2002 and 2001
Net income for the nine months ended December 31, 2002 was $4.3 million, or
$0.99 per basic share ($0.98 per diluted share) compared to net income of $3.8
million, or $0.83 per basic share ($0.82 per diluted share) for the same
period in fiscal year 2002. Net interest income increased $1.9 million to
$13.3 million for the nine months ended December 31, 2002, compared to $11.5
million for the nine months ended December 31, 2001. Non-interest income
includes $491,000 and $44,000 mortgage servicing rights impairment charge for
the nine months of fiscal year 2003 and 2002, respectively. Non-interest
income for the nine months of fiscal year 2003 includes $1.1 million pretax
gain on sale of loans and $162,000 pretax gain on sale of securities compared
to the same period in fiscal year 2002, which includes $777,000 pretax gain on
sale of loans and $863,000 pretax gain on sale of MBS.
The increase in net interest income was due to the shift in the deposit mix
from higher interest rate certificates of deposit to lower interest rate
transaction accounts. The total nine month average outstanding balance for
transaction accounts (i.e., checking accounts, Now accounts and money market
accounts) increased 39.7% to $160.2 million at December 31, 2002, compared to
$114.7 million at December 31, 2001. The nine month average outstanding
balance for certificates of deposits decreased 20.3% to $111.5 million from
$139.9 million, respectively, at December 31, 2002 and December 31, 2001. The
decrease in average balance of certificates of deposit reflected the outflow
of public funds caused by the lower interest rate the Company paid. The
payoff of FHLB advances also contributed to the increase of net interest
income.
Average interest-earning assets decreased to $380.9 million for the nine
months ending December 31, 2002 from $402.9 million for the nine months ending
December 31, 2001. The decrease in the nine month average balance of
interest-earning assets consisted of decreases in mortgage loans,
mortgage-backed securities, investment securities and daily interest bearing
investments partially offset by an increase in non-mortgage loans. The change
in the mix of average interest-earning assets reflects the securitization of
$40.3 million of fixed rate mortgage loans and subsequent sale of $25.1
million of mortgage-backed securities in the quarter ended September 30, 2001.
The change in volume of year to date average interest-earning assets and
liabilities compared at December 31, 2002 and December 31, 2001 increased net
interest income $2.1 million. The change in interest rates increased net
interest income $318,000 and the rate volume mix decreased net interest income
$562,000 for same time period. The interest rate spread increased from 3.09%
for the nine month period in fiscal year 2002 to 4.19% for the nine month
period in fiscal year 2003. The net interest margin increased to 4.72% during
the nine month period ended December 31, 2002 from 3.86% for the nine month
period ended December 31, 2001. The increased margin is the result of the more
rapid repricing in interest-bearing liabilities as compared to interest
earning assets and the change in the balance sheet mix of assets and
liabilities.
Interest income for the nine months ended December 31, 2002 was $20.1 million,
a decrease of $3.1 million, or 13.4%, from $23.2 million for the same period
in 2001. Yield on interest-earning assets for the first nine months of the
fiscal year 2003 was 7.08% compared to 7.73% for the same nine month period in
fiscal year 2002. The lower fiscal year 2003 yield on interest-earning assets
reflects the lower interest rate environment in the current period as compared
to the same period a year ago. The lower interest income for the nine month
period ended December 31, 2002 as compared to the same period in the prior
22
year resulted from reduced balances and lower interest rates of interest-
earning assets.
Interest expense for the nine months ended December 31, 2002 was $6.8 million,
a decrease of $5.0 million, or 42.4% from $11.7 million for the same period in
2001. The cost of interest-bearing liabilities for the first nine months of
fiscal year 2003 was 2.89% compared to 4.64% for the first nine months of
fiscal year 2002. The decreased interest expense reflects the change in mix of
liabilities and the reduced interest rate environment when the current nine
month period is compared to the same period a year ago. The balance sheet mix
of liabilities continues to have growth in transaction accounts and a
reduction in certificates of deposits resulting in a lower cost of funds.
Transaction accounts (i.e., checking accounts, Now accounts and money market
accounts) total nine month average outstanding balance increased 39.7% to
$160.2 million at December 31, 2002, compared to $114.7 million at December
31, 2001. The nine month average outstanding balance for certificates of
deposits decreased 20.3% to $111.5 million at December 31, 2002 from $139.9
million at December 31, 2001 primarily as result a of lower interest rates
paid on public funds. A decrease in long-term mortgage interest rates during
the nine months of fiscal year 2003 has led to higher prepayment rates on both
the mortgage loan portfolio and the mortgage-backed securities portfolio. The
resultant increase in payments has reduced the Community Bank's utilization of
FHLB advances, which has contributed to the reduction in interest expense.
The provision for loan losses was $517,000 and net charge-offs was $248,000
during the nine months ended December 31, 2002 compared to a $720,000
provision for loan losses and net charge-offs of $332,000 during the nine
months ended December 31, 2001. The ratio of total non-performing assets to
total assets decreased from 0.66% at December 31, 2001 to 0.30% at December
31, 2002. Non-accrual loans decreased from $1.3 million at December 31, 2001
to $327,000 at December 31, 2002. The decrease reflects decreased non-accrual
loan balances in residential real estate and commercial real estate partially
offset by increased non-accrual loan balances in land and consumer. Real
estate owned decreased from $1.6 million at December 31, 2001 to $954,000 at
December 31, 2002. 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 decreased $422,000 or 8.3% to $4.7 million for the nine
months ended December 31, 2002, compared to $5.1 million for the same period
in the prior year. Excluding the pretax gain on sale of securities of $863,000
and $162,000 during the nine months ended December 31, 2001 and 2002
respectively, non-interest income increased $279,000 in the current nine month
period as compared to the same period in the prior year. Increased
non-interest income is the result of service charge income, fees from ATMs,
brokered loan fees and gains on loans sales partially offset by the mortgage
service right impairment charge and reduced trust fee income.
Non-interest expense increased $765,000, or 7.4%, to $11.1 million for the
nine months ended December 31, 2002 from $10.3 million for the nine months
ended December 31, 2001. The $765,000 increase reflects the addition of eight
full-time equivalent employees, increased mortgage broker commissions,
increased occupancy expenses, data processing cost and marketing costs which
are required to continue to provide local personal service. Full time
equivalent employees increased to 152 at December 31, 2002 compared to 144 at
December 31, 2001. Salaries and employee benefits increased $442,000 to $6.2
million for the nine months ended December 31, 2002 as compared to $5.7
million for the same period in fiscal year 2002.
Provision for federal income taxes for the nine months ended December 31, 2002
was $2.0 million resulting in an effective tax rate of 31.8%, compared to $1.7
million and 30.5% for the same period a year ago.
23
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, 2002.
ITEM 4. Controls and Procedures
(a) Evaluation of Disclosure Controls and Procedures: An evaluation of
the Company's disclosure controls and procedures (as defined in Section
13(a)-14(c) of the Securities Exchange Act of 1934 (the "Act)) was carried out
under the supervision and with the participation of the Company's Chief
Executive Officer, Chief Financial Officer and several other members of the
Company's senior management within the 90-day period preceding the filing date
of this quarterly report. The Company's Chief Executive Officer and Chief
Financial Officer concluded that the Company's disclosure controls and
procedures as currently in effect are effective in ensuring that the
information required to be disclosed by the Company in the reports it files or
submits under the Act is (i) accumulated and communicated to the Company's
management (including the Chief Executive Officer and Chief Financial Officer)
in a timely manner, and (ii) recorded, processed, summarized and reported
within the time periods specified in the SEC's rules and forms.
(b) Changes in Internal Controls: In the quarter ended December 31,
2002, the Company did not make any significant changes in, nor take any
corrective actions regarding, its internal controls or other factors that
could significantly affect these controls.
24
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
---------------------------------------------------
Not applicable
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(1)
3.2 Bylaws of the Registrant(1)
4 Form of Certificate of Common Stock of the Registrant(1)
10.1 Employment Agreement with Patrick Sheaffer(2)
10.2 Employment Agreement with Ronald A. Wysaske(2)
10.3 Severance Agreement with Michael C. Yount(2)
10.4 Severance Agreement with Karen Nelson(2)
10.5 Severance Agreement with John A. Karas(5)
10.6 Employee Severance Compensation Plan(2)
10.7 Employee Stock Ownership Plan(3)
10.8 Management Recognition and Development Plan(4)
10.9 1998 Stock Option Plan(4)
10.10 1993 Stock Option and Incentive Plan(4)
21 Subsidiaries of Registrant(3)
99.1 Certifications Pursuant to Section 906 of the
Sarbanes-Oxley Act.
(b) Reports on Form 8-K: no Forms 8-K were filed during the quarter
ended December 31, 2002.
- ---------------
(1) Filed as an exhibit to the Registrant's Registration Statement on Form
S-1 (Registration No. 333-30203), and incorporated herein by reference.
(2) Filed as an exhibit to the Registrant's Form 10-Q for the quarter ended
September 30, 1997, and incorporated herein by reference.
(3) Filed as an exhibit to the Registrant's Form 10-K for the year ended
March 31, 1998, and incorporated herein by reference.
(4) Filed on October 23, 1998, as an exhibit to the Registrant's
Registration Statement on Form S-8, and incorporated herein by
reference.
(5) Filed as an exhibit to the Registrant's form 10-K for the year ended
March 31, 2002, and incorporated by reference.
25
SIGNATURES
----------
In accordance with the requirements of the Securities Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
RIVERVIEW BANCORP, INC.
DATE: January 31, 2003 BY: /S/ Patrick Sheaffer
----------------------------------
Patrick Sheaffer
President
DATE: January 31, 2003 BY: /S/ Ronald Wysaske
----------------------------------
Ronald Wysaske
Executive Vice President/Treasurer
26
Certification Required
By Rules 13a-14 and 15d-14 under the Securities Exchange Act of 1934
I, Patrick Sheaffer, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Riverview
Bancorp, Inc.;
2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in
this quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
we have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this
quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of date within 90 days prior to the filing date
of this quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on
our evaluation as of the Evaluation Date:
5. The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the
audit committee of registrant's board of directors (or persons
performing the equivalent function):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors and material weaknesses in
internal controls; and
b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant
deficiencies and material weaknesses.
Date: January 31, 2003 /S/ Patrick Sheaffer
-----------------------------------------
Patrick Sheaffer
President and Chief Executive Officer
27
Certification Required
By Rules 13a-14 and 15d-14 under the Securities Exchange Act of 1934
I, Ronald Wysaske, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Riverview
Bancorp, Inc.;
2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in
this quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
we have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this
quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of date within 90 days prior to the filing date
of this quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on
our evaluation as of the Evaluation Date:
5. The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the
audit committee of registrant's board of directors (or persons
performing the equivalent function):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors and material weaknesses in
internal controls; and
b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant
deficiencies and material weaknesses.
Date: January 31, 2003 /S/ Ronald Wysaske
---------------------------
Ronald Wysaske
Chief Financial Officer
28
EXHIBIT 99.1
Certification Pursuant to Section 906 of the Sarbanes-Oxley Act
29
CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER OF
RIVERVIEW BANCORP, INC.
PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
The undersigned herby certify, pursuant to Section 906 of the Sarbanes-Oxley
act of 2002 and in connection with this quarterly report on Form 10Q that:
1. the report fully complies with the requirements of sections 13(a)
and 15(d) of the Securities Exchange Act of 1934, as amended, and
2. the information contained in the report fairly presents, in all
material respects, the company's financial condition and results of
operations.
/S/ Patrick Sheaffer /S/ Ronald Wysaske
--------------------------- ---------------------------
Patrick Sheaffer Ronald Wysaske
Chief Executive Officer Chief Financial Officer
Dated: January 31, 2003
30