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Riverview Bancorp Inc.

11/07/2025 | Press release | Distributed by Public on 11/07/2025 13:12

Quarterly Report for Quarter Ending September 30, 2025 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations

This report contains certain financial information determined by methods other than in accordance with accounting principles generally accepted in the United States of America ("GAAP"). These measures include net interest income on a fully tax equivalent basis and net interest margin on a fully tax equivalent basis. Management uses these non-GAAP measures in its analysis of the Company's performance. The tax equivalent adjustment to net interest income recognizes the income tax savings when comparing taxable and tax-exempt assets. Management believes that it is a standard practice in the banking industry to present net interest income and net interest margin on a fully tax equivalent basis, and believes that providing these measures may be useful for peer comparison purposes. These disclosures should not be viewed as substitutes for the results determined to be in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies.

Critical Accounting Policies and Estimates

Critical accounting policies and estimates are discussed in our 2025 Form 10-K under Part II. Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Estimates" and Part II. Item 8, "Note 1. Summary of Significant Accounting Policies" in the Notes to the Consolidated Financial Statements." That discussion highlights estimates that the Company makes that involve uncertainty or potential for substantial change. There have not been any material changes in the Company's critical accounting policies and estimates as compared to the disclosures contained in the Company's 2025 Form 10-K.

Executive Overview

As a progressive, community-oriented financial services business, the Company emphasizes local, personal service to residents of its primary market area. The Company considers Clark, Klickitat and Skamania counties of Washington, and Multnomah, Washington and Marion counties of Oregon as its primary market area.

The Company is engaged primarily in attracting deposits from the general public and using those funds within its primary market area to originate commercial business, commercial real estate, multi-family real estate, land, real estate construction, residential real estate and other consumer loans. In addition, the Company periodically purchases commercial business loans originated by a third party located outside the Company's primary market area to supplement loan originations and diversify the commercial loan portfolio. The Company also purchases the guaranteed portion of SBA loans, originated by another financial institution and serviced by the seller, to further diversify the loan portfolio, supplement originations, and achieve higher yields than short-term investments. These SBA loans are also originated outside the Company's primary market area. The Company's loans receivable, net, totaled $1.05 billion at both September 30, 2025 and March 31, 2025.

The Bank's subsidiary, Riverview Trust Company (the "Trust Company"), is a trust and financial services company with offices located in downtown Vancouver, Washington, and Lake Oswego, Oregon. The Trust Company provides full-service brokerage, trust and asset management services. The Bank's Business and Professional Banking Division, which operates out of two lending offices in Vancouver and one in Portland, offers commercial and business banking services.

The Company's strategic plan is centered on five priorities: being the employer of choice, profitable growth, digital experience, data empowerment and client experience.

Employer of choice: With the vision "to be the preferred place to bank and work in the Pacific Northwest," - the Company focuses on recruiting, investing in, and retaining top talent across all areas of Riverview.

Profitable growth: Aiming for sustainable, well-managed expansion that supports long-term financial health and market competitiveness by increasing revenues, deepening client relationships, growing market share, and acquiring new clients, while enhancing profitability through strategic investments, prudent risk management, and cost control.

Digital experience: Delivering seamless, intuitive, and secure online interactions by leveraging leading technologies to provide personalized services, easy access to solutions, and efficient transactions.

Data empowerment: Utilizing data to support informed decision-making and deliver tailored client experiences. Effective data provides insights into client behavior, market trends, and operational efficiencies.

Client experience: Enhancing every client interaction across all channels, from initial contact through ongoing relationship with a goal of delivering a best-in-class banking experience that builds trust and advocacy within the community.

The Company targets commercial banking clients, including businesses, professionals, and wealth-building individuals, for both loan originations and deposit growth within its primary market area. Consistent with its strategic, asset/liability, and capital management objectives, the Company seeks to increase its loan portfolio with an emphasis on commercial business and commercial real estate loans. These loans typically feature adjustable rates, higher yields, shorter terms, and higher credit risk, relative to traditional fixed-rate one-to-four family consumer real estate loans.

Our strategic plan also includes a focus on increasing non-interest income, including higher fee income from asset management services through the Trust Company and enhanced deposit-related service charges. The plan is designed to support earnings growth, reduce interest rate risk, and expand the Company's financial service offerings to clients and the communities the Company serves.

With 17 branch locations, 10 in Clark County, three in the Portland metropolitan area, and three lending centers, management believes the Company is well positioned to attract new clients and increase market share.

Operating Strategy

Fiscal year 2026 marks the 102^nd anniversary for Riverview Bank, which opened for business in 1923. Our primary business strategy is to provide comprehensive banking and related financial services within our primary market area. The Company's goal is to deliver returns to shareholders by increasing higher-yielding assets (in particular, commercial real estate, commercial business and business banking loans), increasing core deposit balances, managing problem assets, reducing expenses, hiring experienced employees with a commercial lending focus and exploring expansion opportunities. The Company seeks to achieve these results by focusing on the following objectives:

Execution of our Business Plan. The Company remains focused on expanding its loan portfolio, particularly higher-yielding commercial and construction loans, and growing its core deposit base by deepening client relationships throughout its primary market areas. While residential real estate lending was historically a primary focus, the Company has diversified its loan portfolio in recent years through the strategic growth of its commercial and construction loan portfolios. At September 30, 2025, commercial and construction loans represented 88.7% of total loans. Commercial lending, including CRE, generally involves greater credit risk than residential lending. However, these risks are often compensated by higher interest margins and fee income, contributing to enhanced loan portfolio profitability. To support its growth and profitability objectives, the Company is committed to a relationship-based banking model designed to strengthen client loyalty, identify new lending opportunities, and improve client-level profitability through cross-selling deposit, treasury management, and other banking services. The Company continues to build its core deposit base by offering competitive products, enhancing digital banking capabilities, and prioritizing high-quality client service. Additionally, the Company seeks to expand its banking franchise through de novo branch development, selective acquisitions of branches or loan portfolios, and whole bank transactions that align with its strategic and financial goals.

Maintaining Strong Asset Quality. The Company believes that strong asset quality is a key to long-term financial success. The Company has actively managed delinquent loans and nonperforming assets by aggressively pursuing the collection of consumer debts, marketing saleable properties upon foreclosure or repossession, and through workouts of classified assets and loan charge-offs. The Company's approach to credit management uses well defined policies and procedures and disciplined underwriting criteria resulting in our strong asset quality and credit metrics in fiscal year 2026. Although the Company intends to prudently increase the percentage of its assets consisting of higher-yielding commercial real estate, real estate construction and commercial business and business banking loans, which offer higher risk-adjusted returns, shorter maturities and more sensitivity to interest rate fluctuations, the Company intends to manage credit exposure using experienced bankers in these areas and a conservative approach to its lending.

Introduction of New Products and Services. The Company continuously reviews new products and services to provide its clients with more financial options. All new technology and services are generally reviewed for business development and cost saving purposes. The Company continues to experience growth in client use of its online banking services, where the Bank provides a full array of traditional cash management products as well as online banking products including mobile banking, mobile deposit, bill pay, e-statements, and new deposit products. The products are tailored to meet the needs of businesses and households in the markets we serve. The Company intends to selectively add other products to further diversify revenue sources and to capture more of each client's banking relationship by cross-selling loan and deposit products and additional services, including services provided through the Trust Company to increase its fee income. Assets under management by the Trust Company totaled $927.0 million and $877.9 million at September 30, 2025 and March 31, 2025, respectively. The Company also offers a third-party identity theft product to its clients. The identity theft product assists our clients in monitoring their credit and includes an identity theft restoration service.

Attracting Core Deposits and Other Deposit Products. The Company offers a variety of deposit products, including personal checking, savings, and money market accounts, which generally represent lower-cost and more stable sources of funding compared to certificates of deposit. These core deposits are less sensitive to interest rate fluctuations and play a key role in supporting the Company's funding and liquidity strategy. To strengthen its funding base, the Company continues to prioritize the growth of core deposits over higher-cost funding sources, such as brokered deposits, FHLB advances, and FRB borrowings. This approach supports loan growth while helping to manage interest expense and reduce reliance on more volatile wholesale funding sources. A key element of this strategy is enhancing and deepening client relationships. The Company believes its continued focus on relationship banking will support the expansion of both core deposits and locally sourced retail certificates of deposit. In particular, the Company seeks to grow demand deposits by building business banking relationships, supported by a suite of expanded product offerings tailored to meet the specific needs of its business clients. To further encourage growth in lower-cost deposits, the Company has invested in technology-based solutions designed to improve the client experience and support cash management needs. These include personal financial management tools, business cash management services, and remote deposit capture products, which allow the Company to effectively compete with financial institutions of all sizes. As of September 30, 2025, core branch deposits decreased $8.5 million compared to March 31, 2025. Core branch deposits accounted for 97.1% of total deposits at September 30, 2025, compared to 98.1% at March 31, 2025.

Recruiting and Retaining Highly Competent Personnel with a Focus on Commercial Lending. The Company's ability to continue to attract and retain banking professionals with strong community relationships and significant knowledge of its markets will be a key to its success. The Company believes that it enhances its market position and adds profitable growth opportunities by focusing on hiring and retaining experienced bankers focused on owner occupied commercial real estate and commercial lending, and the deposit balances that accompany these relationships. The Company emphasizes to its employees the importance of delivering exemplary client service and pursuing opportunities to deepen client relationship. The goal is to compete with other financial service providers by relying on the strength of the Company's client service and relationship banking approach. The Company believes that one of its strengths is that its employees are also shareholders through the Company's ESOP and 401(k) plans.

Commercial and Construction Loan Composition

The following tables set forth the composition of the Company's commercial and construction loan portfolios, based on loan purpose, at the dates indicated (in thousands):



	Commercial Business		Commercial Real Estate Mortgage		Real Estate Construction		Commercial and Construction Total
September 30, 2025

Commercial business	$	227,594	$	-	$	-	$	227,594
Commercial construction		-		-		14,134		14,134
Office buildings		-		109,339		-		109,339
Warehouse/industrial		-		112,417		-		112,417
Retail/shopping centers/strip malls		-		87,785		-		87,785
Assisted living facilities		-		347		-		347
Single purpose facilities		-		293,073		-		293,073
Land		-		3,930		-		3,930
Multi-family		-		88,991		-		88,991
One-to-four family construction		-		-		11,641		11,641
Total	$	227,594	$	695,882	$	25,775	$	949,251


March 31, 2025

Commercial business	$	232,935	$	-	$	-	$	232,935
Commercial construction		-		-		18,368		18,368
Office buildings		-		110,949		-		110,949
Warehouse/industrial		-		114,926		-		114,926
Retail/shopping centers/strip malls		-		88,815		-		88,815
Assisted living facilities		-		358		-		358
Single purpose facilities		-		277,137		-		277,137
Land		-		4,610		-		4,610
Multi-family		-		91,451		-		91,451
One-to-four family construction		-		-		10,814		10,814
Total	$	232,935	$	688,246	$	29,182	$	950,363

Comparison of Financial Condition at September 30, 2025 and March 31, 2025

Cash and cash equivalents, including interest-earning deposits in other banks, totaled $32.8 million at September 30, 2025 compared to $29.4 million at March 31, 2025. The Company's cash balances typically fluctuate based upon funding needs, deposit activity and investment securities activity. Based on the Company's asset/liability management program and liquidity objectives, the Company may deploy excess cash to purchase investment securities depending on the rate environment and other considerations. As a part of this strategy, the Company may choose to invest in short-term certificates of deposit held for investment, all of which are fully insured by the Federal Deposit Insurance Corporation (the "FDIC").

Investment securities totaled $311.2 million and $322.5 million at September 30, 2025 and March 31, 2025, respectively. The decrease was due to normal pay downs, calls and maturities. The Company had no sales of investment securities during the six months ended September 30, 2025. The Company's investment securities primarily consist of a combination of securities backed by government agencies (FHLMC, FNMA, SBA or GNMA). At September 30, 2025, the Company determined that none of its investment securities required an allowance for credit losses ("ACL"). For additional information on the Company's investment securities, see Note 5 of the Notes to the Consolidated Financial Statements contained in Item 1 of this Form 10-Q.

Loans receivable, net, totaled $1.05 billion at both September 30, 2025 and March 31, 2025. While the overall balance remained unchanged, the composition of the portfolio shifted. Commercial real estate loans increased by $10.8 million,

and consumer loans increased by $8.8 million, consisting of a $1.3 million increase in real estate one-to-four family loans and a $7.5 million increase in other installment loans. The increases in commercial real estate loans and consumer loans were primarily driven by loan purchases, as discussed below. These increases were partially offset by decreases of $5.3 million in commercial business, $3.4 million in real estate construction and $2.5 million in multi-family loans, reflecting scheduled repayments and reduced origination activity in these categories.

The Company no longer funds one-to-four family mortgage loans; however, will from time to time purchase these loans consistent with its asset/liability objectives. Additionally, the Company purchases loans originated by third parties outside the Company's primary market area to supplement originations and diversify the portfolio. Purchased loans totaled $40.5 million at September 30, 2025 compared to $35.3 million at March 31, 2025, an increase of $5.2 million. This increase was primarily attributable to consumer loan purchases totaling $10.5 million, partially offset by normal paydowns and payoffs. The Company also purchases the guaranteed portion of SBA loans to help portfolio diversification, supplement originations and generate higher yields than overnight cash or other short-term investments. These SBA loans are originated through other financial institution located outside the Company's primary market area and are purchased with servicing retained by the seller. At September 30, 2025, the Company's purchased SBA loan portfolio was $44.6 million compared to $47.4 million at March 31, 2025.

Deposits increased $4.1 million to $1.24 billion at September 30, 2025, compared to $1.23 billion at March 31, 2025 due to a concentrated effort by the Company to increase deposits through customer outreach and relationship-building initiatives, targeted promotions, etc. Certificates of deposit and interest bearing accounts increased $27.1million and $1.9 million, respectively. These increases were partially offset by decreases of $13.6 million in money market accounts and $11.7 million in regular savings accounts. The Company had no wholesale-brokered deposits at September 30, 2025 and March 31, 2025. Core branch deposits accounted for 97.1% of total deposits at September 30, 2025 compared to 98.1% at March 31, 2025. The Company plans to continue focusing on core deposits and on building client relationships rather than relying on wholesale funding sources.

Accrued expenses and other liabilities increased $12.5 million to $27.2 million at September 30, 2025 compared to $14.8 million at March 31, 2025. The increase was primarily due to an outstanding balance in Trust sweep funds of $12.4 million at September 30, 2025, which was subsequently disbursed the following business day.

FHLB advances decreased $24.1 million to $52.3 million at September 30, 2025 compared to $76.4 million at March 31, 2025. FHLB advances at September 30, 2025 were comprised entirely of overnight advances. FHLB advances at March 31, 2025 were comprised of overnight advances and short-term borrowings of $51.4 million and $25.0 million, respectively. The decrease in advances primarily reflected scheduled repayments and reduced reliance on FHLB funding, as growth in deposits and loan repayments provided sufficient liquidity.

Shareholders' equity increased $3.5 million to $163.5 million at September 30, 2025, compared to $160.0 million at March 31, 2025. The increase was mainly attributable to net income of $2.3 million and a decrease in the accumulated other comprehensive loss related to the change in unrealized holding losses on securities available for sale, net of tax, of $2.5 million for the six months ended September 30, 2025. These increases were partially offset by the payment of cash dividends of $838,000 and stock repurchases of $811,000.

Capital Resources

The Bank is a state-chartered, federally insured institution subject to various regulatory capital requirements administered by the FDIC and Washington State Department of Financial Institutions, Division of Banks. Failure to meet minimum capital requirements can result in the initiation of certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Bank's financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank must meet specific capital guidelines that involve quantitative measures of the Bank's assets, liabilities and certain off-balance sheet items as calculated under regulatory accounting practices. The 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 require the Bank to maintain minimum amounts and ratios of total and tier I capital to risk-weighted assets, core capital to total assets and tangible capital to tangible assets (set forth in the table below). Management believes the Bank met all capital adequacy requirements to which it was subject as of September 30, 2025.

As of September 30, 2025, the Bank was categorized as "well capitalized" under the FDIC's regulatory framework for prompt corrective action. The Bank's actual and required minimum capital amounts and ratios were as follows at the dates indicated (dollars in thousands):


									"Well Capitalized"
					For Capital				Under Prompt
	Actual				Adequacy Purposes				Corrective Action
	Amount		Ratio		Amount		Ratio		Amount		Ratio
September 30, 2025
Total Capital:
(To Risk-Weighted Assets)	$	180,261	16.51	%	$	87,326	8.0	%	$	109,158	10.0	%
Tier 1 Capital:
(To Risk-Weighted Assets)		166,591	15.26			65,495	6.0			87,326	8.0
Common equity tier 1 Capital:
(To Risk-Weighted Assets)		166,591	15.26			49,121	4.5			70,952	6.5
Tier 1 Capital (Leverage):
(To Average Tangible Assets)		166,591	11.26			59,204	4.0			74,005	5.0

March 31, 2025
Total Capital:
(To Risk-Weighted Assets)	$	178,452	16.48	%	$	86,625	8.0	%	$	108,281	10.0	%
Tier 1 Capital:
(To Risk-Weighted Assets)		164,891	15.23			64,969	6.0			86,625	8.0
Common equity tier 1 Capital:
(To Risk-Weighted Assets)		164,891	15.23			48,726	4.5			70,383	6.5
Tier 1 Capital (Leverage):
(To Average Tangible Assets)		164,891	11.10			59,406	4.0			74,257	5.0

In addition to the minimum common equity tier 1 ("CET1"), Tier 1 and total capital ratios, the Bank is required to maintain a capital conservation buffer consisting of additional CET1 capital greater than 2.5% of risk-weighted assets above the required minimum capital levels. Failure to maintain the required buffer could result in limitations on the Bank's ability to pay dividends, repurchase shares, and pay discretionary bonuses, based on specified percentages of eligible retained income. As of September 30, 2025, the Bank's CET1 capital exceeded the required capital conservation buffer at an amount greater than 2.5%.

For a bank holding company, such as the Company, the capital guidelines apply on a bank only basis. The Federal Reserve expects the holding company's subsidiary banks to be well capitalized under the prompt corrective action regulations. If the Company was subject to regulatory guidelines for bank holding companies at September 30, 2025, the Company would have exceeded all regulatory capital requirements.

At periodic intervals, the Company's banking regulators routinely examine the Company's financial condition and risk management processes as part of their legally prescribed oversight. Based on their examinations, these regulators can direct that the Company's consolidated financial statements be adjusted in accordance with their findings. Examiners may require adjustment to the allowance based on information available to them at the time, which could also have a material adverse impact on the Company's financial condition and results of operations.

Liquidity

Liquidity is essential to the operation of our business. The objectives of the Bank's liquidity management are to maintain ample cash flows to meet obligations for depositor withdrawals, to fund the borrowing needs of loan clients, and to fund ongoing operations. Core relationship deposits are the primary source of the Bank's liquidity. As such, the Bank focuses on deposit relationships with local consumer and business clients who maintain multiple accounts and services at the Bank.

Liquidity management is both a short and long-term responsibility of the Company's management. The Company adjusts its investments in liquid assets based upon management's assessment of (i) expected loan demand, (ii) projected loan sales, (iii) expected deposit flows, (iv) yields available on interest-bearing deposits and (v) its asset/liability management program objectives. Excess liquidity is generally invested in interest-bearing overnight deposits and other short-term government and agency obligations. If the Company requires funds beyond its ability to generate them internally, it has additional diversified and reliable sources of funds with the FHLB, the FRB and other wholesale facilities. These sources of funds may be used on a long or short-term basis to compensate for a reduction in other sources of funds or on a long-term basis to support lending activities.

The Company's primary sources of funds are client deposits, proceeds from principal and interest payments on loans, securities, the sale of loans, maturing securities, FHLB advances and FRB borrowings. While maturities and scheduled amortization of loans and securities are a predictable source of funds, deposit flows and prepayment of mortgage loans and mortgage-backed securities are greatly influenced by general interest rates, economic conditions and competition. Management believes that its focus on core relationship deposits coupled with access to borrowings through reliable counterparties provides reasonable and prudent assurance that ample liquidity is available. However, depositor or counterparty behavior could change in response to competition, economic or market situations or other unforeseen circumstances, which could have liquidity implications that may require different strategic or operational actions.

The Company must maintain an adequate level of liquidity to ensure the availability of sufficient funds for loan originations, deposit withdrawals, continuing operations, satisfying other financial commitments, and taking advantage of investment opportunities. During the six months ended September 30, 2025, deposits remained relatively stable; however, the Bank utilized its funding sources primarily to support loan commitments and manage deposit withdrawals influenced by competitive and pricing pressures.

At September 30, 2025, cash and cash equivalents and available for sale investment securities totaled $151.3 million, or 10.0% of total assets. Management believes that the Company's securities portfolio is of high quality and therefore readily marketable. The levels of these assets depends on the Company's operating, financing, lending, and investing activities during any given period. The Bank generally maintains sufficient cash and short-term investments to meet short-term liquidity needs; however, its primary liquidity management practice is to manage short-term borrowings, consistent with its asset/liability objectives. In addition to these primary sources of funds, the Bank has several secondary borrowing sources available, including FRB borrowings and FHLB advances. At September 30, 2025, the Bank had no advances outstanding with the FRB and maintained a credit facility with an available borrowing capacity of $288.5 million, subject to sufficient collateral. At September 30, 2025, the Bank had $52.3 million in outstanding FHLB advances and an additional borrowing capacity of $207.6 million, subject to sufficient collateral and stock investment. At September 30, 2025, the Bank had sufficient unpledged collateral to utilize its available borrowing capacity from both the FRB and the FHLB. Borrowing capacity may, however, fluctuate based on acceptability and risk rating of loan collateral, and counterparties could adjust discount rates applied to such collateral at their discretion.

An additional source of wholesale funding includes brokered certificates of deposit. While the Company has utilized brokered deposits from time to time, historically it has not extensively relied on brokered deposits to fund its operations. At September 30, 2025 and March 31, 2025, the Bank had no wholesale brokered deposits. The Bank also participates in the Certificate of Deposit Account Registry Services ("CDARS") and Insured Cash Sweep ("ICS") deposit products, which allow the Company to accept deposits in excess of the FDIC insurance limit for depositors while obtaining "pass-through" insurance for total deposits. The Bank's CDARS and ICS balances were $33.5 million, or 2.71% of total deposits, and $36.0 million, or 2.92% of total deposits, at September 30, 2025 and March 31, 2025, respectively. The combination of all the Bank's funding sources gives the Bank available liquidity of $792.0 million, or 52.47% of total assets at September 30, 2025.

At September 30, 2025, the Company had total commitments of $130.4 million, which included commitments to extend credit of $13.5 million, unused lines of credit of $91.3 million, undisbursed real estate construction loans of $24.0 million, and standby letters of credit of $1.6 million. The Company anticipates having sufficient funds available to meet these commitments. Certificates of deposit scheduled to mature in less than one year from September 30, 2025 totaled $250.3 million, and historically, the Bank has been able to retain a significant portion of maturing deposits. Offsetting these cash

outflows are scheduled maturities of loan and investment securities of $42.7 million and $11.0 million, respectively, within one year of September 30, 2025.

The Company incurs capital expenditures on an ongoing basis to expand and improve product offerings, enhance and modernize technology infrastructure, and to introduce new technology-based products to compete effectively. We evaluate capital expenditure projects based on a variety of factors, including expected strategic impacts (such as forecasted impact on revenue growth, productivity, expenses, service levels and client retention) and our expected return on investment. The amount of capital investment is influenced by, among other things, current and projected demand for our services and products, cash flow generated by operating activities, cash required for other purposes and regulatory considerations. Based on our current capital allocation objectives, during the remainder of fiscal 2026 we expect cash expenditures of approximately $915,000 for capital investment in premises and equipment.

For further information regarding the Company's off-balance sheet arrangements and other contractual obligations, see Notes 13 and 14 of the Notes to Consolidated Financial Statements contained in Item 1 of this Form 10-Q.

Riverview Bancorp, Inc., as a separate legal entity from the Bank, must provide for its own liquidity. Sources of capital and liquidity for Riverview Bancorp, Inc. include dividends from the Bank, as well as the potential issuance of debt or equity securities. Dividends and other capital distributions from the Bank are subject to regulatory notice and may be subject to additional limitations depending on the Bank's financial condition and applicable regulations. Management currently expects to continue the Company's current practice of paying quarterly cash dividends on its common stock subject to the Board of Directors' discretion to modify or terminate this practice at any time and for any reason without prior notice. As of September 30, 2025, the quarterly common stock dividend rate was $0.02 per share, as approved by the Board of Directors. Management believes this dividend rate appropriately balances the Company's objectives of supporting investment in the Bank, while returning capital to shareholders. Assuming continued payment during fiscal 2026 at this rate of $0.02 per share, average total dividends paid each quarter would be approximately $419,000 based on the number of the Company's outstanding shares as of September 30, 2025. At September 30, 2025, Riverview Bancorp, Inc. had $5.2 million in cash to meet its liquidity needs.

Asset Quality

Nonperforming assets were $776,000 or 0.05% of total assets at September 30, 2025, compared to $155,000 or 0.01% of total assets at March 31, 2025. The Company had net recoveries totaling $53,000 for the six months ended September 30, 2025 compared to net charge-offs of $90,000 during fiscal 2025. The Company had no other real estate owned or foreclosed assets at September 30, 2025 or March 31, 2025.

The following table sets forth information regarding the Company's nonperforming loans, consisting of nonaccrual loans at the dates indicated (dollars in thousands):


	September 30, 2025			March 31, 2025
	Number of			Number of
	Loans	Balance		Loans	Balance

Commercial business	3	$	670	1	$	37
Commercial real estate	2		77	2		88
Consumer	1		29	1		30
Total	6		776	4		155

The ACL for loans was $15.4 million or 1.44% of total loans at September 30, 2025, and $15.4 million or 1.45% of total loans at March 31, 2025. The Company did not record a provision for credit losses for the six months ended September 30, 2025, compared to $100,000 provision for the same period in the prior fiscal year. At September 30, 2025, the ACL provided coverage of more than 1,900% of nonperforming loans, compared to approximately 9,900% at March 31, 2025, reflecting continued asset quality strength and conservative reserve levels. The general valuation allowance on pooled, or collectively evaluated, loans was 1.42% at September 30, 2025 and 1.45% at March 31, 2025.

Management considers the ACL for loans and unfunded loan commitments to be adequate at September 30, 2025 based on an evaluation of various factors affecting the loan portfolio. The Company believes the ACL has been established in accordance with GAAP; however, material increases may be required if economic conditions worsen, regulatory outcomes change, or other relevant factors emerge. Significant increases in the ACL may also be necessary if borrower credit quality deteriorates or collateral values decline. Such an increase could negatively impact the Company's future financial condition and results of operations. For further information regarding the Company's individually evaluated loans and ACL for loans and unfunded loan commitments, see Note 6 of the Notes to Consolidated Financial Statements contained in Item 1 of this Form 10-Q.

The following table sets forth information regarding the Company's nonperforming assets at the dates indicated (dollars in thousands):



	September 30, 2025		March 31, 2025

Loans accounted for on a non-accrual basis:
Commercial business	$	670	$	37
Commercial real estate		77		88
Consumer		29		30
Total nonperforming loans		776		155
Real estate owned ("REO")		-		-
Total nonperforming assets	$	776	$	155

Foregone interest on non-accrual loans ⁽¹⁾	$	23	$	16

(1)

Six months ended September 30, 2025 and year ended March 31, 2025.

The following tables set forth information regarding the Company's nonperforming assets by loan type and geographical area at the dates indicated (in thousands):


	Southwest
	Washington		Total
September 30, 2025

Commercial business	$	670	$	670
Commercial real estate		77		77
Consumer		29		29
Total nonperforming assets	$	776	$	776


	Southwest
	Washington		Total

March 31, 2025

Commercial business	$	37	$	37
Commercial real estate		88		88
Consumer		30		30
Total nonperforming assets	$	155	$	155

At September 30, 2025, loans delinquent 30-89 days totaled $3.5 million or 0.33% of total loans, down from $4.1 million or 0.38% of total loans at March 31, 2025. The decrease was primarily attributable to the decrease in fully guaranteed SBA and USDA loans. These loans, while delinquent are classified as pass rated loans and are excluded from nonperforming and ACL calculations due to the full government guarantee and the expectation that all contractual principal and interest will be collected. The Company had no accruing loans 90 days or more delinquent at September 30, 2025 and March 31, 2025.

At September 30, 2025, CRE loans represented the largest portion of the loan portfolio at 56.3% of total loans and commercial business represented 21.3% of total loans.

Goodwill Valuation

Goodwill is recorded when the purchase price paid for an acquisition exceeds the estimated fair value of the net identified tangible and intangible assets acquired. Goodwill is presumed to have an indefinite useful life and is tested at least annually for impairment at the reporting unit level. The Company has two reporting units, the Bank and the Trust Company, for purposes of evaluating goodwill for impairment. All of the Company's recorded goodwill has been allocated to the Bank reporting unit. The Company performs an annual review in the third quarter of each fiscal year, or more frequently if indications of potential impairment exist, to determine whether recorded goodwill is impaired. If the fair value of a reporting unit exceeds its carrying amount, goodwill is not considered impaired. If the carrying amount exceeds fair value, an impairment loss would be recognized equal to the amount of excess, limited to the amount of total goodwill allocated to that reporting unit.

A significant amount of judgment is involved in determining if an indicator of impairment has occurred. Such indicators may include, among others: a significant decline in our expected future cash flows; a sustained, significant decline in our stock price and market capitalization; a significant adverse change in legal factors or in the business climate; adverse action or assessment by a regulator; and unanticipated competition. Any adverse change in these factors could have a significant impact on the recoverability of goodwill and could have a material impact on the Company's consolidated financial statements.

The Company performed its annual goodwill impairment test as of October 31, 2024, and determined that no impairment of goodwill existed. The Company also completed a qualitative assessment of goodwill as of September 30, 2025, and concluded that it is more likely than not that the fair value of the Bank (the reporting unit), exceeds its carrying value at that date. Accordingly, no goodwill impairment was recognized.

Future impairment charges could occur if adverse events or changes in circumstances arise, including, but not limited to: (i) a sustained decline in the Company's stock price or that of peer institutions, (ii) revenue declines beyond current forecasts, (iii) significant adverse changes in the operating environment for the financial industry, or (iv) increases in the value of the Company's assets without a corresponding increase in the value of the reporting unit. Changes in circumstances at or after the measurement date, or changes in the assumptions and estimates used in assessing goodwill, could also result in a partial or full impairment.

While any such impairment charge would adversely affect the Company's financial condition and results of operations, it would not impact the Company's liquidity, operations, or regulatory capital ratios.

Comparison of Operating Results for the Three and Six Months Ended September 30, 2025 and 2024

Net Income. Net income was $1.1 million, or $0.05 per diluted share, for the three months ended September 30, 2025, compared to $1.6 million, or $0.07 per diluted share, for the same period in the prior year. Net income for the six months ended September 30, 2025 and 2024 was $2.3 million, or $0.11 per diluted share, and $2.5 million, or $0.12 per diluted share, respectively. The decrease in net income for both the three- and six-month periods ended September 30, 2025, compared to the same periods in the prior year, was due to increases in non-interest expense of $1.5 million and $2.3 million, respectively. Net income was also impacted by an increase in interest on deposits of $506,000 and $832,000 for the three and six months ended September 30, 2025, respectively, partially offset by a decrease in interest expense on borrowings of $915,000 and $1.3 million for the same periods.

Net Interest Income. The Company's profitability depends primarily on its net interest income, which is the difference between the income it receives on interest-earning assets and the interest paid on deposits and borrowings. When the rate earned on interest-earning assets equals or exceeds the rate paid on interest-bearing liabilities, this positive interest rate spread will generate net interest income. The Company's results of operations are also significantly affected by general economic and competitive conditions, particularly changes in market interest rates, government legislation and regulation, and monetary and fiscal policies.

Net interest income for the three and six months ended September 30, 2025, was $9.8 million and $19.6 million, respectively, representing an increase of $839,000 and $1.9 million compared to the same periods in 2024. These increases were primarily due to increased interest and fees on loans receivable and a decrease in interest expense on borrowings. Net interest margin for the three and six months ended September 30, 2025 was 2.76% and 2.77%, respectively, compared to 2.46% for both periods in 2024. The increase in net interest margin primarily reflects higher yields on loans, partially offset by growth in average interest-earning assets.

Interest and Dividend Income. Interest and dividend income for the three and six months ended September 30, 2025 was $15.4 million and $30.7 million, compared to $14.9 million and $29.3 million for the same periods in the prior year, respectively. The increases were due to increases in interest income on loans receivable of $984,000 and $2.3 million, respectively, when compared to the same periods in 2024, due to both increases in the average balance of net loans and improved yields.

The average yield on loans increased to 5.11% and 5.08% for the three and six months ended September 30, 2025, compared to 4.80% and 4.75% for the same periods in 2024. Mortgage loan yields rose to 5.13% and 5.09% for the three and six months ended September 30, 2025, up from 4.78% and 4.75% while non-mortgage loan yields increased to 5.06% and 5.04%, compared to 4.85% and 4.75% for the same periods last year. The average balance of net loans increased to $1.06 billion for both the three- and six -months periods, compared to $1.05 billion and $1.04 billion in the prior year. The average balance of mortgage loans increased $3.8 million and $11.0 million to $787.6 million and $789.4 million, respectively, for the three and six months ended September 30, 2025, while the average balance of non-mortgage loans increased $8.3 million and $12.6 million to $273.0 million and $272.4 million, respectively, compared to the same period last year.

Interest earned on investment securities decreased $480,000 and $785,000 for the three and six months ended September 30, 2025, compared to the same periods in the prior year, reflecting decreases in both the average balance of and yield earned on investment securities. The average balance of investment securities decreased $49.4 million and $51.7 million to $329.1 million and $333.1 million for the three and six months ended September 30, 2025, compared to $378.4 million and $384.8 million for the same periods in the prior year, respectively. The decrease in the average balance of investment securities was attributable to normal paydown activities. The average yield on investment securities was 1.78% and 1.94% for the three and six months ended September 30, 2025, compared to 2.05% and 2.08 % for the same periods in the prior year, consistent with the lower reinvestment rates and reduced balances.

Interest Expense. Interest expense totaled $5.6 million and $11.1 million for the three and six months ended September 30, 2025, compared to $6.0 million and $11.6 million for the three and six months ended September 30, 2024, respectively. The decreases were primarily due to decreases in interest expense on FHLB advances, due to both decreases in the average balance of FHLB advances and lower rates, partially offset by increases in interest expense on deposits.

Interest expense on deposits increased $505,000 and $832,000 for the three and six months ended September 30, 2025, respectively, compared to the same periods the prior year. The increases were primarily due to higher rates and average balances in interest checking and money market accounts, as well as an increase in the balance of higher-cost certificates of deposit, partially offset by lower rates paid on certificates of deposit.

The average rate on money market accounts increased 17 and 27 basis points for the three and six months ended September 30, 2025, respectively, while the average balance increased $7.5 million and $13.8 million compared to the same periods in the prior year. The average rate on interest checking accounts increased 24 and 7 basis points, with the average balance increasing $26.9 million and $11.6 million for the same periods. Certificates of deposit experienced a decrease in average rates of 34 and 28 basis points, while the average balances increased $30.5 million and $28.0 million for the three and six months ended September 30, 2025, respectively, compared to the same periods the prior year.

Interest expense on borrowings decreased $914,000 and $1.3 million for the three and six months ended September 30, 2025, respectively, compared to the same periods in the prior year, primarily due to lower average balances and rates on FHLB advances. The average balance of FHLB advances was $63.3 million and $86.7 million for the three and six months ended September 30, 2025, respectively, compared to $114.5 million and $113.1 million for the same periods in the prior year. The average rate on FHLB advances declined to 4.57% and 4.58% for the three and six months ended September 30, 2025, respectively, compared to 5.44% and 5.52% for the same periods the prior year.

The following tables set forth, for the periods indicated, information regarding average balances of assets and liabilities as well as the total dollar amounts of interest income earned on average interest-earning assets and interest expense paid on average interest-bearing liabilities, resultant yields, interest rate spread, ratio of interest-earning assets to interest-bearing liabilities and net interest margin (dollars in thousands):


	Three Months Ended September 30,
	2025						2024
			Interest						Interest
	Average		and				Average		and
	Balance		Dividends		Yield/Cost		Balance		Dividends		Yield/Cost

Interest-earning assets:
Mortgage loans	$	787,649	$	10,188	5.13	%	$	783,819	$	9,449	4.78	%
Non-mortgage loans		272,994		3,479	5.06			264,717		3,234	4.85
Total net loans ⁽¹⁾		1,060,643		13,667	5.11			1,048,536		12,683	4.80

Investment securities ⁽²⁾		329,063		1,480	1.78			378,421		1,960	2.05
Interest-earning deposits in other banks		14,307		150	4.16			12,198		161	5.24
Other earning assets		4,589		95	8.21			6,943		159	9.09
Total interest-earning assets		1,408,602		15,392	4.34			1,446,098		14,963	4.11

Non-interest-earning assets:
Office properties and equipment, net		22,908						22,340
Other non-interest-earning assets		65,840						65,224
Total assets	$	1,497,350					$	1,533,662

Interest-bearing liabilities:
Regular savings accounts	$	158,582		60	0.15		$	176,054		26	0.06
Interest checking accounts		287,695		969	1.34			260,766		721	1.10
Money market accounts		224,955		1,144	2.02			217,503		1,014	1.85
Certificates of deposit		244,160		2,187	3.55			213,641		2,094	3.89
Total interest-bearing deposits		915,392		4,360	1.89			867,964		3,855	1.76

Junior subordinated debentures		27,121		464	6.79			27,035		536	7.87
FHLB advances		63,315		729	4.57			114,534		1,570	5.44
Other interest-bearing liabilities		2,073		38	7.08			2,155		39	7.18
Total interest-bearing liabilities		1,007,901		5,591	2.20			1,011,688		6,000	2.35

Non-interest-bearing liabilities:
Non-interest-bearing deposits		312,185						348,805
Other liabilities		13,852						14,741
Total liabilities		1,333,938						1,375,234
Shareholders' equity		163,412						158,428
Total liabilities and shareholders' equity	$	1,497,350					$	1,533,662
Net interest income			$	9,801					$	8,963
Interest rate spread					2.14	%					1.76	%
Net interest margin					2.76	%					2.46	%

Ratio of average interest-earning assets to average interest-bearing liabilities					139.76	%					142.94	%

Tax equivalent adjustment ⁽³⁾			$	20					$	21

(1)	Includes non-accrual loans.

(2)	For purposes of the computation of average yield on investment securities available for sale, historical cost balances were utilized; therefore, the yield information does not give effect to changes in fair value that are reflected as a component of shareholders' equity.

(3)	Tax-equivalent adjustment relates to non-taxable investment interest income and preferred equity securities dividend income.


	Six Months Ended September 30,
	2025						2024
			Interest						Interest
	Average		and				Average		and
	Balance		Dividend		Yield/Cost		Balance		Dividends		Yield/Cost

Interest-earning assets:
Mortgage loans	$	789,375	$	20,133	5.09	%	$	778,386	$	18,543	4.75	%
Non-mortgage loans		272,413		6,886	5.04			259,827		6,192	4.75
Total net loans ⁽¹⁾		1,061,788		27,019	5.08			1,038,213		24,735	4.75

Investment securities ⁽²⁾		333,102		3,233	1.94			384,802		4,018	2.08
Interest-earning deposits in other banks		13,921		291	4.17			11,802		310	5.24
Other earning assets		5,640		245	8.66			6,880		320	9.28
Total interest-earning assets		1,414,451		30,788	4.34			1,441,697		29,383	4.07

Non-interest-earning assets:
Office properties and equipment, net		23,095						22,525
Other non-interest-earning assets		65,634						64,152
Total assets	$	1,503,180					$	1,528,374

Interest-bearing liabilities:
Regular savings accounts	$	161,259		104	0.13		$	179,456		52	0.06
Interest checking accounts		275,411		1,601	1.16			263,777		1,440	1.09
Money market accounts		227,231		2,312	2.03			213,466		1,888	1.76
Certificates of deposit		234,914		4,117	3.50			206,953		3,922	3.78
Total interest-bearing deposits		898,815		8,134	1.80			863,652		7,302	1.69

Junior subordinated debentures		27,111		925	6.81			27,024		1,069	7.89
FHLB advances		86,684		1,991	4.58			113,121		3,129	5.52
Other interest-bearing liabilities		2,106		75	7.10			2,175		78	7.15
Total interest-bearing liabilities		1,014,716		11,125	2.19			1,005,972		11,578	2.30

Non-interest-bearing liabilities:
Non-interest-bearing deposits		312,867						350,755
Other liabilities		13,093						14,651
Total liabilities		1,340,676						1,371,378
Shareholders' equity		162,504						156,996
Total liabilities and shareholders' equity	$	1,503,180					$	1,528,374
Net interest income			$	19,663					$	17,805
Interest rate spread					2.15	%					1.77	%
Net interest margin					2.77	%					2.46	%

Ratio of average interest-earning assets to average interest-bearing liabilities					139.39	%					143.31	%

Tax equivalent adjustment ⁽³⁾			$	41					$	42

(1)	Includes non-accrual loans.

(2)	For purposes of the computation of average yield on investment securities available for sale, historical cost balances were utilized; therefore, the yield information does not give effect to changes in fair value that are reflected as a component of shareholders' equity.

(3)	Tax-equivalent adjustment relates to non-taxable investment interest income and preferred equity securities dividend income.

The following table sets forth the effects of changing rates and volumes on net interest income of the Company for the three and six months ended September 30, 2025, compared to the three and six months ended September 30, 2024. Variances that were insignificant have been allocated based upon the percentage relationship of changes in volume and changes in rate to the total net change (in thousands).


	Three Months Ended September 30,						Six Months Ended September 30,
	2025 vs 2024						2025 vs 2024
	Increase (Decrease) Due to						Increase (Decrease) Due to
					Total						Total
					Increase						Increase
	Volume		Rate		(Decrease)		Volume		Rate		(Decrease)
Interest Income:
Mortgage loans	$	46	$	693	$	739	$	262	$	1,328	$	1,590
Non-mortgage loans		103		142		245		307		387		694
Investment securities ⁽¹⁾		(238)		(241)		(479)		(522)		(262)		(784)
Interest-earning deposits in other banks		25		(36)		(11)		50		(69)		(19)
Other earning assets		(50)		(14)		(64)		(55)		(20)		(75)
Total interest income		(114)		544		430		42		1,364		1,406

Interest Expense:
Regular savings accounts		(3)		37		34		(5)		57		52
Interest checking accounts		80		168		248		66		95		161
Money market accounts		36		94		130		125		299		424
Certificates of deposit		285		(192)		93		502		(307)		195
Junior subordinated debentures		2		(74)		(72)		3		(147)		(144)
FHLB advances		(619)		(222)		(841)		(659)		(479)		(1,138)
Other interest-bearing liabilities		(1)		-		(1)		(2)		(1)		(3)
Total interest expense		(220)		(189)		(409)		30		(483)		(453)
Net interest income	$	106	$	733	$	839	$	12	$	1,847	$	1,859

(1)	Interest is presented on a fully tax-equivalent basis.

Provision for Credit Losses. The Company recorded no provision for credit losses for the three and six months ended September 30, 2025, compared to a provision for credit losses of $100,000 for the three and six months ended September 30, 2024. The lack of a provision in the current periods reflects management's assumptions regarding the economic outlook, including the effects of local, national and global events. Expected loss estimates also incorporate client-specific information, changes in risk ratings, projected delinquencies, and the impact of economic conditions on borrowers' ability to repay.

Net recoveries totaled $1,000 for the three months ended September 30, 2025 and $53,000 for the six months ended September 30, 2025, compared to net recoveries of $2,000 for both the three and six month ended September 30, 2024. Net charge-offs/recoveries were insignificant for three months ended September 30, 2025. Net recoveries were $106,000 for the six months ended September 30, 2025. Net charge-offs/recoveries were insignificant for both the three and six months ended September 30, 2024.

While we believe the estimates and assumptions used in determining the adequacy of the ACL are reasonable, there can be no assurance that such estimates and assumptions will not prove to be incorrect, or that future provisions will not exceed historical levels. Any increase in the ACL could have a material adverse effect on our financial condition and results of operations. A further deterioration in national or local economic conditions, such as those driven by inflation, recession, or slowed economic growth, could result in a material increase in the ACL. In addition, the ACL is subject to periodic regulatory review as part of the routine examination process. Examiners may require adjustment to the allowance based on information available to them at the time, which could also have a material adverse impact on the Company's financial condition and results of operations.

Nonperforming loans were $776,000 at September 30, 2025, compared to $155,000 at March 31, 2025. The ratio of the ACL for loans to nonperforming loans exceeded 1,900% at September 30, 2025 compared to 9,900% at March 31, 2025.

See "Asset Quality" above for additional information related to asset quality that management considers in determining the appropriate level of the ACL.

Non-Interest Income. Non-interest income was $3.8 million for both the three months ended September 30, 2025 and 2024, as changes within various income categories offset one another. For the six months ended September 30, 2025, non-interest income increased $58,000 to $7.3 million, compared to $7.2 million for the same period in the prior year. Fees and service charges increase $113,000 and $145,000 for the three and six months ended September 30, 2025, compared to the same periods the prior year, primarily attributable to fee income in connection with an employee retention credit partnership and ATM interchange fee income. Asset management fees increased $94,000 and $88,000, respectively, reflecting growth in assets under management. These increases were offset by a decrease in other non-interest income of $219,000 and $197,000 during the three and six months ended September 30, 2025, compared to the same periods the prior year, as the prior year included a $500,000 legal expense recovery related to a settled litigation matter, partially offset in the current year by a $294,000 employee retention credit.

Non-Interest Expense. Non-interest expense increased $1.5 million and $2.3 million to $12.2 million and $23.9 million for the three and six months ended September 30, 2025, compared to $10.7 million and $21.7 million for the same periods in the prior year. The increases were primarily due to higher salaries and employee benefits, which increased $827,000 and $1.7 million, reflecting increases in compensation and bonus expenses. Other non-interest expense increased $634,000 and $729,000 for the three and six months ended September 30, 2025, compared to the same periods in the prior year mainly due to a one-time business and occupation tax accrual in September 2025 of $242,000 and fraud-related losses of $113,000. These increases were partially offset by decreases in occupancy and depreciation expense of $62,000 and $89,000, and a decrease in marketing expenses of $34,000 and $107,000 for the three and six months ended September 30, 2025, respectively, compared to the same periods the prior year.

Income Taxes. The provision for income taxes was $296,000 and $618,000 for the three and six months ended September 30, 2025, compared to $425,000 and $678,000 for the same periods in the prior year. The decrease reflects lower pre-tax income. The Company's effective tax rate was 21.2% and 21.0% for the three and six months ended September 30, 2025, compared to 21.4% and 21.2% for the same periods in 2024. At September 30, 2025, management concluded that a valuation allowance related to the Company's deferred tax asset was not necessary. At September 30, 2025, the net deferred tax asset totaled $7.8 million, compared to $8.6 million at March 31, 2025.

Riverview Bancorp Inc. published this content on November 07, 2025, and is solely responsible for the information contained herein. Distributed via Edgar on November 07, 2025 at 19:13 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]