Riverview Bancorp Inc has a market cap of $47.6 million; its shares were traded at around $2.24 with and P/S ratio of 0.8.
Highlight of Business Operations:During the quarter-ended September 30, 2010, the Company raised $18.9 million in net proceeds through an underwritten public offering. The Company issued a total of 11.5 million shares of its common stock, including 1.5 million shares pursuant to the underwriter s over-allotment option, at a price of $1.80 per share. Cost associated with the common stock offering totaled $463,000. The Company intends to use the net proceeds from the offering to support the growth and related capital needs of the Bank. To that end, at September 30, 2010, the Company had invested $7.0 million as additional paid-in common equity in the Bank. As a result, the Bank s total risk-based capital ratio increased to 14.07% as of September 30, 2010. The Company expects to use the remaining net proceeds for general working capital purposes, including additional investments in the Bank if appropriate.
Focusing on Asset Quality. The Company is focused on monitoring existing performing loans, resolving nonperforming loans and selling foreclosed assets. The Company has aggressively sought to reduce its level of nonperforming assets through write-downs, collections, modifications and sales of nonperforming loans and real estate owned. The Company has taken proactive steps to resolve its nonperforming loans, including negotiating repayment plans, forbearances, loan modifications and loan extensions with borrowers when appropriate, and accepting short payoffs on delinquent loans, particularly when such payoffs result in a smaller loss than foreclosure. Beginning in 2008, in connection with the downturn in real estate markets, the Company applied more conservative and stringent underwriting practices to new loans, including, among other things, increasing the amount of required collateral or equity requirements, reducing loan-to-value ratios and increasing debt service coverage ratios. Nonperforming assets increased from $49.3 million at March 31, 2010 to $55.1 million at September 30, 2010. The Company has continued to reduce its exposure to land development and speculative construction loans, which represented $17.2 million or 48.6% of its nonperforming loans at September 30, 2010. The total land development and speculative construction loan portfolios declined to $87.0 million at September 30, 2010 compared to $105.4 million at March 31, 2010.
Net income for the three months ended September 30, 2010 was $1.1 million, or $0.06 per diluted share, compared to net income of $202,000, or $0.02 per diluted share, for the three months ended September 30, 2009. Net interest income after provision for loan losses increased $1.3 million to $7.0 million for the three months ended September 30, 2010 compared to $5.7 million for the same quarter last year as the provision for loan losses was $1.7 million this quarter as compared to $3.2 million for the same quarter last year. Non-interest income increased $255,000 to $2.1 million for the three months ended September 30, 2010 compared to $1.8 million for the same quarter last year. The increase was partially due to an other than temporary impairment (“OTTI”) charge on an investment security taken during the three months ended September 30, 2009 totaling $201,000 while there was no similar OTTI charge for the quarter ended September 30, 2010. The increase in non-interest income can also be attributed to a $127,000 increase in gains on sale of real estate owned properties offset by a $74,000 reduction in fees and service charge income. Non-interest expense increased $145,000 to $7.4 million for the three months ended September 30, 2010 compared to $7.3 million for the same quarter last year. The increase can be attributed to and increase in salaries and employee benefits of $396,000 along with an increase in advertising and marketing of $104,000. These increases were offset by a decrease in real estate owned expenses of $233,000 and occupancy and depreciation of $69,000.
Cash, including interest-earning accounts, totaled $48.5 million at September 30, 2010 compared to $13.6 million at March 31, 2010. The $34.9 million increase was attributed to the Company s planned balance sheet restructuring strategy and the Company s decision to increase its liquidity position for regulatory and asset-liability purposes. As part of this strategy, beginning in fiscal year 2011, the Company also began investing in short-term certificates of deposit. At September 30, 2010, certificates of deposit held for investment totaled $15.0 million. The increase was also attributable to the increase in deposit balances and the decline in loans receivable during this period. Additionally, the Company s $18.9 million capital raise resulted in an increase in cash balances.
Loans receivable, net, totaled $679.9 million at September 30, 2010, compared to $712.8 million at March 31, 2010, a decrease of $32.9 million due primarily to continuing weak loan demand in the Company s primary market area and the Company s planned balance sheet restructuring strategy, with a continued focus on reducing construction and land development loans. The Company s strategic focus concerning loan growth will be focused on commercial business loans, owner occupied commercial real estate loans and to a lesser extent certain one-to-four family mortgage loans. The total commercial real estate loan portfolio was $360.0 million as of September 30, 2010, compared to $351.2 million as of March 31, 2010. Of this total, 28% of these properties are owner occupied, and 72% are non-owner occupied as of September 30, 2010. A substantial portion of the loan portfolio is secured by real estate, either as primary or secondary collateral, located in the Company s primary market areas. Risks associated with loans secured by real estate include decreasing land and property values, increases in interest rates, deterioration in local economic conditions, tightening credit or refinancing markets, and a concentration of loans within any one area. The Company has no option adjustable-rate mortgage (ARM), teaser, or sub-prime residential real estate loans in its portfolio.
Deposit accounts increased $30.0 million to $718.0 million at September 30, 2010, compared to $688.0 million at March 31, 2010. The Company had $10.0 million in wholesale-brokered deposits as of September 30, 2010 compared to no brokered deposits at March 31, 2010. Core branch deposits (comprised of all demand, savings and interest checking accounts, plus all time deposits and excludes wholesale-brokered deposits, Trust account deposits, Interest on Lawyer Trust Accounts (“IOLTA”), public funds and Internet based deposits) accounted for 89.6% of total deposits at September 30, 2010, compared to 94.8% at March 31, 2010. The decline in core deposits as a percentage of total deposits was primarily due to the increase in wholesale-brokered deposits discussed above and an increase in Internet based deposits. Despite this decrease, the Company will remain focused on growing its core deposits and on building customer relationships as opposed to obtaining deposits through the wholesale markets.
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