SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q/A
AMENDMENT NO.1
(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, 2003
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 offices) (Zip Code)
(360)693-6650
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 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 .
----- -----
Indicate by check mark 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 per share, 4,772,911 shares
outstanding as of January 15, 2004.
EXPLANATORY NOTE
This Amendment No. 1 on Form 10-Q/A amends the registrant's Quarterly Report
on Form 10-Q for the quarter ended December 31, 2003, and is being filed
solely to correct a typographical error in the number of shares of common
stock outstanding at December 31, 2003 on the Riverview Bancorp, Inc. and
Subsidiary Consolidated Balance Sheets. The registrant's Consolidated
Financial Statements included in this Amendment No. 1 on Form 10-Q/A have not
changed in any other respect. Exhibit Numbers 31.1, 31.2 and 32 are being
currently dated but are otherwise unchanged.
Part I. Financial Information
Item I. Financial Statements (Unaudited)
RIVERVIEW BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2003 AND MARCH 31, 2003
DECEMBER 31, MARCH 31,
(In thousands, except share data) (Unaudited) 2003 2003
------------------------------------------------------------------------------
ASSETS
Cash (including interest-earning accounts of
$22,485 and $42,464) $ 44,778 $ 60,858
Loans held for sale 423 1,501
Investment securities available for sale, at fair
value (amortized cost of $37,269 and $20,265) 37,051 20,426
Mortgage-backed securities held to maturity, at
amortized cost (fair value of $2,739 and $3,403) 2,667 3,301
Mortgage-backed securities available for sale, at
fair value (amortized cost of $11,285 and $12,669) 11,464 13,069
Loans receivable (net of allowance for loan losses
of $4,885 and $2,739) 372,136 300,310
Real estate owned 868 425
Prepaid expenses and other assets 3,859 854
Accrued interest receivable 1,851 1,492
Federal Home Loan Bank stock, at cost 5,986 5,646
Premises and equipment, net 10,164 9,703
Deferred income taxes, net 3,031 1,321
Mortgage servicing rights, net 668 629
Goodwill 9,214 -
Core deposit intangible, net 879 369
Bank-owned life insurance 9,002 -
-------- --------
TOTAL ASSETS $514,041 $419,904
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES:
Deposit accounts $405,553 $320,742
Accrued expenses and other liabilities 4,565 4,364
Advance payments by borrowers for taxes and
insurance 108 287
Federal Home Loan Bank advances 40,000 40,000
-------- --------
Total liabilities 450,226 365,393
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, 2003 - 4,954,479 issued,
4,772,911 outstanding
March 31, 2003 - 4,585,543 issued, 4,358,704
outstanding 50 46
Additional paid-in capital 40,038 33,525
Retained earnings 25,402 22,389
Unearned shares issued to employee stock
ownership trust (1,649) (1,804)
Unearned shares held by the management recognition
and development plan - (15)
Accumulated other comprehensive (loss) income (26) 370
-------- --------
Total shareholders' equity 63,815 54,511
-------- --------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $514,041 $419,904
======== ========
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 share data) December 31, December 31,
(Unaudited) 2003 2002 2003 2002
------------------------------------------------------------------------------
INTEREST INCOME:
Interest and fees on loans
receivable $ 6,673 $ 5,869 $ 19,069 $ 17,842
Interest on investment securities 146 74 301 132
Interest on mortgage-backed
securities 143 236 478 1,052
Other interest and dividends 229 315 701 1,058
------- ------- -------- --------
Total interest income 7,191 6,494 20,549 20,084
------- ------- -------- --------
INTEREST EXPENSE:
Interest on deposits 1,230 1,293 3,564 4,348
Interest on borrowings 499 642 1,491 2,418
------- ------- -------- --------
Total interest expense 1,729 1,935 5,055 6,766
------- ------- -------- --------
Net interest income 5,462 4,559 15,494 13,318
Less provision for loan losses - 190 70 517
------- ------- -------- --------
Net interest income after
provision for loan losses 5,462 4,369 15,424 12,801
------- ------- -------- --------
NON-INTEREST INCOME:
Fees and service charges 954 1,221 3,372 3,183
Asset management services 229 179 666 549
Gain on sale of loans held for
sale 198 494 789 1,108
Gain on sale of securities - 162 - 162
Gain on sale of other real estate
owned 1 13 49 42
Loan servicing income (expense) (2) (97) 149 (438)
Other 39 22 59 62
------- ------- -------- --------
Total non-interest income 1,419 1,994 5,084 4,668
------- ------- -------- --------
NON-INTEREST EXPENSE:
Salaries and employee benefits 2,575 2,095 7,324 6,164
Occupancy and depreciation 782 619 2,137 1,853
Data processing 233 197 675 614
Amortization of core deposit
intangible 121 82 310 245
Marketing expense 183 92 696 502
FDIC insurance premium 24 13 49 35
State and local taxes 110 94 317 285
Telecommunications 64 59 185 157
Professional fees 147 105 341 310
Other 331 339 1,049 939
------- ------- -------- --------
Total non-interest expense 4,570 3,695 13,083 11,104
------- ------- -------- --------
INCOME BEFORE FEDERAL INCOME TAXES 2,311 2,668 7,425 6,365
PROVISION FOR FEDERAL INCOME TAXES 772 896 2,468 2,027
------- ------- -------- --------
NET INCOME $ 1,539 $ 1,772 $ 4,957 $ 4,338
======= ======= ======== ========
Earnings per common share:
Basic $ 0.32 $ 0.41 $ 1.08 $ 0.99
Diluted 0.32 0.40 1.06 0.98
Weighted average number of shares
outstanding:
Basic 4,757,750 4,331,305 4,594,958 4,372,325
Diluted 4,844,247 4,382,873 4,673,038 4,428,332
Cash dividends per common share $ 0.140 $ 0.125 $ 0.420 $ 0.375
See notes to consolidated financial statements.
2
RIVERVIEW BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
FOR THE YEAR ENDED MARCH 31, 2003
AND THE NINE MONTHS ENDED DECEMBER 31, 2003
(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
---------------------------------------------------------------------------------------------------------
Balance, April 1, 2002 4,458,456 $ 47 $ 35,725 $ 20,208 $ (2,010) $ (218) $ (75) $ 53,677
Cash dividends - - - (2,178) - - - (2,178)
Exercise of stock options 46,577 - 417 - - - - 417
Stock repurchased and
retired (196,100) (1) (2,881) - - - - (2,882)
Earned ESOP shares 24,633 - 166 - 206 - - 372
Tax benefit associated
with MRDP - - 98 - - - - 98
Earned MRDP shares 25,138 - - - - 203 - 203
--------- ---- -------- -------- -------- -------- ------- --------
4,358,704 46 33,525 18,030 (1,804) (15) (75) 49,707
Comprehensive income
Net Income - - - 4,359 - - - 4,359
Other Comprehensive Income:
Unrealized holding gain on
securities of $966 (net of
$498 tax effect) less re-
classification adjustment
for net losses included in
net income of $1,411 ( net
of $727 tax effect) - - - - - - 445 445
--------
Total comprehensive income - - - - - - - 4,804
--------- ---- -------- -------- -------- -------- ------- --------
Balance, March 31, 2003 4,358,704 46 33,525 22,389 (1,804) (15) 370 54,511
Cash dividends - - - ( 1,944) - - - (1,944)
Exercise of stock options 35,281 - 422 - - - - 422
Stock repurchased and
retired (81,500) (1) (1,509) - - - - (1,510)
Stock issued in connection
with acquisition (Note 15) 430,655 5 7,343 - - - - 7,348
Earned ESOP shares 24,633 - 198 - 155 - - 353
Tax benefit associated
with MRDP - - 59 - - - - 59
Earned MRDP shares 5,138 - - - - 15 - 15
--------- ---- -------- -------- -------- -------- ------- --------
4,772,911 50 40,038 20,445 (1,649) - 370 59,254
Comprehensive income
Net Income - - - 4,957 - - - 4,957
Other Comprehensive Income:
Unrealized holding loss on
securities of $396 (net of
$204 tax effect) - - - - - - (396) (396)
--------
Total comprehensive income - - - - - - - 4,561
--------- ---- -------- -------- -------- -------- ------- --------
Balance, December 31, 2003 4,772,911 $ 50 $ 40,038 $ 25,402 $ (1,649) $ - $ (26) $ 63,815
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) 2003 2002
------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 4,957 $ 4,338
Adjustments to reconcile net income to cash
provided by operating activities:
Depreciation and amortization 1,641 1,312
Mortgage servicing rights impairment (304) 491
Provision for losses on loans 70 517
Origination of loans held for sale (43,706) (38,177)
Proceeds from sales of loans held for sale 44,888 38,810
Provision (credit) for deferred income taxes 237 (161)
Noncash expense related to ESOP benefit 353 271
Noncash expense related to MRDP benefit 15 194
Decrease in deferred loan origination fees, net
of amortization 669 536
Federal Home Loan Bank stock dividend (182) (246)
Net gain on sale of loans, real estate owned and
premises and equipment (699) (1,119)
Changes in assets and liabilities:
Increase in prepaid expenses and other assets (2,949) (225)
Decrease in accrued interest receivable 195 297
Decrease in accrued expenses and other liabilities (815) (36)
--------- ---------
Net cash provided by operating activities 4,370 6,802
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Loan originations (232,828) (189,503)
Principal repayments on loans 245,679 168,538
Principal repayments on mortgage-backed securities
held to maturity 632 865
Principal repayments on mortgage-backed securities
available for sale 6,823 18,183
Purchase of mortgage-backed securities available
for sale (4,937) -
Purchase of investment securities available for sale (11,000) (5,000)
Proceeds from call or maturity of investment
securities available for sale 250 1,356
Purchase of premises, equipment and other (380) (120)
Acquisition, net of cash received 7,206 -
Purchase of first mortgage or improvement to REO (159) -
Purchase bank-owned life insurance (9,000) -
Proceeds from sale of real estate 654 1,456
--------- ---------
Net cash provided by (used in) investing activities 2,940 (4,225)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net (decrease) increase in deposit accounts (20,302) 54,698
Dividends paid (1,821) (1,584)
Repurchase of common stock (1,510) (2,599)
Proceeds from Federal Home Loan Bank advances - 5,000
Repayment of Federal Home Loan Bank advances - (29,500)
Net decrease in advance payments by borrowers (179) (135)
Proceeds from exercise of stock options 422 31
--------- ---------
Net cash (used in) provided by financing activities (23,390) 25,911
--------- ---------
NET (DECREASE) INCREASE IN CASH (16,080) 28,488
CASH, BEGINNING OF PERIOD 60,858 22,492
--------- ---------
CASH, END OF PERIOD $ 44,778 $ 50,980
========= =========
SUPPLEMENTAL DISCLOSURES:
Cash paid during the period for:
Interest $ 5,158 $ 6,972
Income taxes 2,170 1,912
NONCASH INVESTING AND FINANCING ACTIVITIES:
Transfer of loans to real estate owned $ 688 $ 1,527
Dividends declared and accrued in other liabilities 668 539
Fair value adjustment to securities available for sale (599) (932)
Income tax effect related to fair value adjustment 204 317
Common stock issued upon business combination 7,347 -
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.
Annual Report on Form 10-K for the year ended March 31, 2003. The results of
operations for the three and nine months ended December 31, 2003 are not
necessarily indicative of the results which may be expected for the entire
fiscal year. The preparation of financial statements in conformity with
accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts
of revenue and expenses during the reporting period. Actual results could
differ from those estimates.
(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 ("RAM
CORP.") 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) Stock Based Compensation
------------------------
In December 2002, Statement of Financial Accounting Standards ("SFAS") No.
148, Accounting for Stock-Based Compensation -- Transition and Disclosure, an
amendment of Financial Accounting Standards Board ("FASB") Statement No. 123,
was issued. 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 No. 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.
Effective March 31, 2003, and in accordance with Statement No. 148, the
Company elected to continue to account for stock-based awards under the
guidance of Accounting Principles Board ("APB") Opinion No. 25.
5
Had compensation cost for the Company's stock-based compensation plans been
determined using the fair value method consistent with Statement No. 123 for
all periods presented, the Company's net income per share would have been
reduced to the pro forma amounts indicated below:
Three Months Ended
December 31,
--------------------------
2003 2002
----------- -----------
Net income
As reported $ 1,539,000 $ 1,772,000
Deduct: Total stock-based employee
compensation expense determined
under fair value method for all
awards, net of related tax effects (16,542) (23,890)
----------- -----------
Pro forma $ 1,522,458 $ 1,748,110
=========== ===========
Earnings per common share - basic:
As reported $ 0.32 $ 0.41
Pro forma 0.32 0.40
Earnings per common share - fully
diluted:
As reported 0.32 0.40
Pro forma 0.32 0.40
Nine Months Ended
December 31,
--------------------------
2003 2002
----------- -----------
Net income
As reported $ 4,957,000 $ 4,338,000
Deduct: Total stock-based employee
compensation expense determined
under fair value method for all
awards, net of related tax effects (49,626) (71,670)
----------- -----------
Pro forma $ 4,907,374 $ 4,266,330
=========== ===========
Earnings per common share - basic:
As reported $ 1.08 $ 0.99
Pro forma 1.07 0.98
Earnings per common share - fully
diluted:
As reported 1.06 0.98
Pro forma 1.05 0.97
6
(4) 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 and nine months ended December 31, 2003, the Company's total
comprehensive income was $885,000 and $4.6 million, respectively, compared to
$954,000 and $3.7 million for the three and nine months ended December 31,
2002, respectively.
Total comprehensive income for the three and nine months ended December 31,
2003 is comprised of net income of $1.5 million and $5.0 million and other
comprehensive losses of $654,000 and $396,000, net of tax effect,
respectively. Other comprehensive income for the three months and nine months
ended December 31, 2003 consists of unrealized securities losses of $654,000
and $396,000, net of tax effect.
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 and nine months ended December 31,
2002, consists of unrealized securities loss of $711,000 and $508,000, net of
tax effect, respectively, less gain on securities available for sale included
in non-interest income of $107,000 for both periods, net of tax effect.
(5) Earnings Per Share
------------------
Basic earnings per share ("EPS") is computed by dividing net income applicable
to common stock by the weighted average number of shares of common stock
outstanding during the period, without considering the effect of any dilutive
items. Diluted EPS is computed by dividing net income applicable to common
stock by the weighted average number of shares of common stock 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.
7
Three Months Ended
December 31,
--------------------------
2003 2002
----------- -----------
Basic EPS computation:
Numerator-Net Income $ 1,539,000 $ 1,772,000
Denominator-Weighted average common
shares outstanding 4,757,750 4,322,832
Basic EPS $ 0. 32 $ 0.41
=========== ===========
Diluted EPS computation:
Numerator-Net Income $ 1,539,000 $ 1,772,000
Denominator-Weighted average
common shares outstanding 4,757,750 4,331,305
Effect of dilutive stock options 86,497 49,383
Effect of dilutive MRDP - 2,185
----------- -----------
Weighted average common shares and
common stock equivalents 4,844,247 4,382,873
Diluted EPS $ 0.32 $ 0.40
=========== ===========
Nine Months Ended
December 31,
--------------------------
2003 2002
----------- -----------
Basic EPS computation:
Numerator-Net Income $ 4,957,000 $ 4,338,000
Denominator-Weighted average
common shares outstanding 4,594,958 4,372,325
Basic EPS $ 1.08 $ 0. 99
=========== ===========
Diluted EPS computation:
Numerator-Net Income $ 4,957,000 $ 4,338,000
Denominator-Weighted average
common shares outstanding 4,594,958 4,372,325
Effect of dilutive stock options 75,260 43,579
Effect of dilutive MRDP 2,820 12,428
----------- -----------
Weighted average common shares
and common stock equivalents 4,673,038 4,428,332
Diluted EPS $ 1.06 $ 0.98
=========== ===========
(6) Investment Securities
---------------------
There were no sales of investment securities classified as held to maturity
during the three and nine month periods ended December 31, 2003 and 2002.
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
Cost Gains Losses Value
--------- ---------- ---------- ---------
December 31, 2003
Trust preferred securities $ 5,000 $ - $ - $ 5,000
U.S. Treasury securities 4,006 4 - 4,010
Agency securities 13,000 110 - 13,110
Equity securities 12,700 - (525) 12,175
School district bonds 2,563 193 - 2,756
-------- ------ ------- --------
$ 37,269 $ 307 $ (525) $ 37,051
======== ====== ======= ========
8
March 31, 2003
Trust preferred securities $ 5,000 $ - $ (25) $ 4,975
Equity securities 12,700 - - 12,700
School district bonds 2,565 186 - 2,751
-------- ------ ------- --------
$ 20,265 $ 186 $ (25) $ 20,426
======== ====== ======= ========
Investment securities with an amortized cost of $15.0 million and $12.7
million and a fair value of $14.6 million and $12.7 million at December 31,
2003 and March 31, 2003, respectively, were pledged as collateral for advances
at the Federal Home Loan Bank. Investment securities with an amortized cost
of $500,000 and $753,000 and a fair value of $502,000 and $760,000 at December
31, 2003 and March 31, 2003, respectively, were pledged as collateral for
government public funds held by the Community Bank. Investment securities
with an amortized cost of $500,000 and a fair value of $500,000 at December
31, 2003 were pledged as collateral for treasury tax and loan funds held by
the Community Bank.
The contractual maturities of securities available for sale are as follows (in
thousands):
Amortized Estimated
December 31, 2003 Cost Fair Value
--------- ----------
Due in one year or less $ 4,006 $ 4,010
Due after one year through five years 14,415 14,636
Due after five years through ten years 530 579
Due after ten years 18,318 17,826
-------- --------
$ 37,269 $ 37,051
======== ========
(7) 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, 2003
REMICs $ 1,802 $ 48 $ - $ 1,850
FHLMC mortgage-backed securities 362 8 - 370
FNMA mortgage-backed securities 503 16 - 519
------- ------ ------ -------
$ 2,667 $ 72 $ - $ 2,739
======= ====== ====== =======
March 31, 2003
REMICs $ 1,803 $ 57 $ - $ 1,860
FHLMC mortgage-backed securities 589 13 - 602
FNMA mortgage-backed securities 909 32 - 941
------- ------ ------ -------
$ 3,301 $ 102 $ - $ 3,403
======= ====== ====== =======
The contractual maturities of mortgage-backed securities classified as held to
maturity are as follows (in thousands):
9
Amortized Estimated
December 31, 2003 Cost Fair Value
--------- ----------
Due in one or less $ 79 $ 81
Due after one year through five years 57 60
Due after five years through ten years 9 10
Due after ten years 2,522 2,588
------- -------
$ 2,667 $ 2,739
======= =======
Mortgage-backed securities held to maturity with an amortized cost of $1.9
million and $2.2 million and a fair value of $1.9 million and $2.3 million at
December 31, 2003 and March 31, 2003, respectively, were pledged as collateral
for governmental public funds held by the Community Bank. Mortgage-backed
securities held to maturity with an amortized cost of $355,000 and $385,000
and a fair value of $366,000 and $399,000 at December 31, 2003 and March 31,
2003, respectively, were pledged as collateral for treasury tax and loan funds
held by the Community Bank. The real estate mortgage investment conduits
("REMICs") consist of Federal Home Loan Mortgage Corporation ("FHLMC"),
Federal National Mortgage Association ("FNMA") and privately issued
securities.
Expected maturities of mortgage-backed securities held to maturity will differ
from contractual maturities because borrowers may have the right to prepay
obligations with or without prepayment penalties.
There were no sales of mortgage-backed securities held to maturity during the
three and nine month periods ended December 31, 2003 and 2002.
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, 2003
REMICs $ 3,326 $ 73 $ (3) $ 3,396
FHLMC mortgage-backed securities 7,517 94 - 7,611
FNMA mortgage-backed securities 442 15 - 457
-------- ------ ------ --------
$ 11,285 $ 182 $ (3) $ 11,464
======== ====== ====== ========
March 31, 2003
REMICs $ 6,327 $ 100 $ (6) $ 6,421
FHLMC mortgage-backed securities 5,811 286 - 6,097
FNMA mortgage-backed securities 531 20 - 551
-------- ------ ------ --------
$ 12,669 $ 406 $ (6) $ 13,069
======== ====== ====== ========
The contractual maturities of mortgage-backed securities available for sale
are as follows (in thousands):
Amortized Estimated
December 31, 2003 Cost Fair Value
---------- ----------
Due in one year or less $ 39 $ 39
Due after one year through five years 3,063 3,137
Due after five year through ten years 4,890 4,912
Due after ten years 3,293 3,376
-------- --------
$ 11,285 $ 11,464
======== ========
10
Expected maturities of mortgage-backed securities available for sale will
differ from contractual maturities because borrowers may have the right to
prepay obligations with or without prepayment penalties.
Mortgage-backed securities with an amortized cost of $5.9 million and $11.9
million and a fair value of $6.0 million and $12.2 million at December 31,
2003 and March 31, 2003, respectively, were pledged as collateral for advances
at the Federal Home Loan Bank. Mortgage-backed securities with an amortized
cost of $274,000 and a fair value of $283,000 at December 31, 2003 were
pledged as collateral for governmental public funds held by the Community
Bank. Mortgage-backed securities with an amortized cost of $114,000 and
$316,000 and a fair value of $120,000 and $327,000 at December 31, 2003 and
March 31, 2003, respectively, were pledged as collateral for treasury tax and
loan funds held by the Community Bank.
(8) Loans Receivable
----------------
Loans receivable consisted of the following (in thousands):
December 31, March 31,
2003 2003
----------- ---------
Residential:
One- to- four family $ 47,049 $ 58,498
Multi-family 5,529 6,313
Construction:
One- to- four family 72,428 70,397
Multi-family 2,100 2,100
Commercial real estate 1,437 4,531
Commercial 58,633 34,239
Consumer:
Secured 28,280 23,458
Unsecured 1,933 1,334
Land 29,748 34,630
Commercial real estate 164,204 101,672
--------- ---------
411,341 337,172
Less:
Undisbursed portion of loans 31,182 31,222
Deferred loan fees 3,138 2,901
Allowance for loan losses 4,885 2,739
--------- ---------
Loans receivable, net $ 372,136 $ 300,310
========= =========
(9) Allowance for Loan Losses
-------------------------
A reconciliation of the allowance for loan losses is as follows (in
thousands):
Three Months Ended Nine Months Ended
December 31, December 31,
------------------ -------------------
2003 2002 2003 2002
------- ------- ------- -------
Beginning balance $ 5,205 $ 2,689 $ 2,739 $ 2,537
Provision for losses - 190 70 517
Charge-offs (333) (77) (575) (261)
Recoveries 13 4 51 13
Acquisition - - 2,639 -
Net change in allowance for
unfunded loan commitments and
lines of credit - - (39) -
------- ------- ------- -------
Ending balance $ 4,885 $ 2,806 $ 4,885 $ 2,806
======= ======= ======= =======
11
At December 31, 2003 and March 31, 2003, the Company's recorded investment in
loans for which impairment has been recognized under the guidance of SFAS No.
114 and SFAS No. 118 was $2.0 million and $323,000, 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 $1.0 million, $1.3
million and $1.1 million during the nine months ended December 31, 2003,
December 31, 2002 and the year ended March 31, 2003 respectively.
(10) 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.
(11) Intangible Assets
-----------------
The Company adopted SFAS No. 142, Goodwill and Other Intangible Assets, on
April 1, 2002. 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.
During the quarter ended September 30, 2003, the Company's purchase of Today's
Bancorp, Inc. ("Today's Bancorp") resulted in the recording of $9.2 million of
goodwill (see note 16 for further details). The Company will review this
balance on an annual basis for impairment. The annual test for impairment
will be a two-step process. The first step will be to compare the current fair
value of Riverview Bancorp, Inc. with its book value, including goodwill. If
the current fair value exceeds the book value, goodwill will not be considered
to be impaired and the test is completed. If the book value is greater than
the current fair value, the implied value of the goodwill will be analyzed
against the carrying value of the goodwill. Any noted impairment losses will
be taken at that time.
The Company also has identifiable intangible assets of core deposit intangible
and mortgage servicing rights ("MSR") that will continue to be amortized. As
part of the Today's Bancorp acquisition, core deposit intangibles increased
$820,0000.
Intangible asset balances (excluding MSR) consisted of the following (in
thousands):
December 31, 2003
-----------------------------------
Carrying Accumulated
Amount Amortization Net
-------- ------------ -----
Core deposit intangible $ 4,088 $ 3,209 $ 879
======= ======= =====
March 31, 2003
-----------------------------------
Carrying Accumulated
Amount Amortization Net
-------- ------------ -----
Core deposit intangible $ 3,269 $ 2,900 $ 369
======= ======= =====
12
Amortization Expense
Quarter Ended December 31,
2003 2002
--------------------------
Core deposit intangible $ 121 $ 82
===== ====
Amortization Expense
Nine Months Ended
December 31,
2003 2002
----------------------
Core deposit intangible $ 310 $ 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 because loans in our servicing
portfolio do not contain penalty provisions for early payoff.
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,
2003 2002
-------------------------------
Beginning balance $ 718 $ 636
Additions 36 227
Amortization (87) (75)
Impairment adjustment 1 (108)
----- -----
Total $ 668 $ 680
===== =====
Allowance at beginning of period $ 110 $ 477
Provision for impairment (1) 108
----- -----
Allowance at end of period $ 109 $ 585
===== =====
Nine Months Ended December 31,
2003 2002
------------------------------
Beginning balance $ 629 $ 912
Additions 166 461
Amortization (431) (202)
Impairment adjustment 304 (491)
----- -----
Total $ 668 $ 680
===== =====
Allowance at beginning of period $ 413 $ 94
Provision for impairment (304) 491
----- -----
Allowance at end of period $ 109 $ 585
===== =====
13
Amortization expense for the net carrying amount of intangible assets at
December 31, 2003 is estimated to be as follows (in thousands):
Fiscal year
---------------
2004 $ 189
2005 389
2006 237
2007 192
2008 172
Beyond
5 years 368
------
Total $1,547
======
(12) Borrowings
----------
Borrowings are summarized as follows (in thousands):
December 31, March 31,
2003 2003
------------ ---------
Federal Home Loan Bank advances $40,000 $40,000
======= =======
Weighted average interest rate: 4.88% 5.53%
==== ====
Borrowings have the following maturities at December 31, 2003 (in thousands):
Fiscal Year
2004 $ -
2005 -
2006 15,000
2007 20,000
2008 5,000
--------
$ 40,000
========
(13) Shareholders' Equity
--------------------
Repurchase of Common stock
In September 2002, the Company announced a stock repurchase of up to 5%, or
214,000 shares, of its outstanding common stock. At December 31, 2003, 81,500
shares had been repurchased at an average cost of $18.53 per share.
In July 2001, the Company received regulatory approval to repurchase up to 10%
or 465,504 shares of its outstanding common stock at June 30, 2001. At
December 31, 2003, 465,504 shares had been repurchased at an average cost of
$12.93 per share. Because 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.
(14) Recently Issued Accounting Pronouncements
-----------------------------------------
In May 2003, the FASB issued Statement No. 150, Accounting for Certain
Financial Instruments with Characteristics of both Liabilities and Equity.
This Statement establishes standards for how an issuer classifies and measures
14
certain financial instruments with characteristics of both liabilities and
equity. It requires that an issuer classify a financial instrument that is
within its scope as a liability (or an asset in some circumstances). Such
instruments may have been previously classified as equity. This Statement is
effective for financial instruments entered into or modified after May 31,
2003, and otherwise is effective at the beginning of the first interim period
beginning after June 15, 2003. Adoption of this standard has not had a
significant effect on the Company's reported equity.
(15) 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 applicable 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, 2003, the Company had commitments to originate fixed rate
mortgages of $1.9 million at interest rates ranging from 4.625% to 7.000%. At
December 31, 2003 adjustable rate mortgage loan commitments were $2.7 million
at an average interest rate of 6.051%. The undisbursed balance of mortgage
loans closed was $31.2 million at December 31, 2003. Consumer loan
commitments totaled $53,500 and unused lines of consumer credit totaled $17.9
million at December 31, 2003. Commercial real estate loan commitments totaled
$2.8 million and unused lines of commercial real estate credit totaled $17.9
million at December 31, 2003. Commercial loan commitments totaled $1.1
million and unused commercial lines of credit totaled $27.1 million at
December 31, 2003.
The allowance for unfunded commitments was $214,192 at December 31, 2003.
At December 31, 2003, the Company had firm commitments to sell $423,000 of
residential loans to FHLMC. These agreements are short term fixed rate
commitments and no material gain or loss is likely.
In connection with certain asset sales, the Community Bank typically makes
representations and warranties about the underlying assets conforming to
specified guidelines. If the underlying assets do not conform to the
specifications, the Community Bank may have an obligation to repurchase the
assets or indemnify the purchaser against loss. As of December 31, 2003,
loans under warranty totaled $124.7 million, which substantially represents
the unpaid principal balance of the Community Bank's loans serviced for others
portfolio. The Community Bank believes that the potential for loss under
these arrangements is remote. Accordingly, no contingent liability is
recorded in the financial statements.
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.
15
(16) ACQUISITION
-----------
On July 18, 2003 the Company completed the acquisition of Today's Bancorp.
Each share of Today's Bancorp common stock was exchanged for 0.826 shares of
the Company's common stock, or $13.64 in cash, or combination thereof
resulting in the issuance of 430,655 additional shares. The acquisition was
accounted for using the purchase method of accounting and, accordingly, the
assets and liabilities of Today's Bancorp were recorded at their respective
fair value. Goodwill, the excess of the purchase price over the net fair
value of the assets and liabilities acquired, was recorded at $9.2 million.
The merger of the two community-oriented institutions will give the Company a
stronger presence as a business and retail commercial bank in the growing
Vancouver and Clark County market area.
The following unaudited actual and pro forma financial information for the
three and nine months ended December 31, 2003 and 2002 assumes that the
Today's Bancorp acquisition occurred as of March 31, 2002, after giving effect
to certain adjustments. The pro forma results have been prepared for
comparative purposes only and are not necessarily indicative of the results of
operations which may occur in the future or that would have occurred had the
Today's Bancorp acquisition been consummated on the date indicated.
Financial Information for the
Three Months Ended December 31,
2003 2002
-------------------------------
Actual Pro Forma
-------------------------------
(in thousands)
Net Interest Income $ 5,462 $ 5,647
Non-interest Income 1,419 2,003
Non-interest Expense 4,570 4,626
Net Income 1,539 417
Pro Forma Financial Information for the
Nine Months Ended December 31,
-------------------------------
2003 2002
-------------------------------
(in thousands)
Net Interest Income $ 16,596 $ 17,157
Non-interest Income 5,182 4,780
Non-interest Expense 14,424 13,591
Net Income 5,138 3,703
16
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of 1934,
the registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
RIVERVIEW BANCORP, INC.
DATE: July 1, 2004 BY: /S/ Patrick Sheaffer
-----------------------------------
Patrick Sheaffer
Chief Executive Officer
DATE: July 1, 2004 BY: /S/ Ron Dobyns
-----------------------------------
Ron Dobyns
Senior Vice President and
Chief Financial Officer
17
EXHIBIT 31.1
Certification of the Chief Executive Officer Pursuant to Section 302
of the Sarbanes-Oxley Act
18
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 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
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this 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 report;
4. The registrant's other certifying officer(s) and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant
and have:
(a) Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our
supervision, 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 report is being prepared;
(b) Evaluated the effectiveness of the registrant's disclosure controls
and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the
end of the period covered by this report based on such evaluation;
and
(c) Disclosed in this report any change in the registrant's internal
control over financial reporting that occurred during the
registrant's most recent fiscal quarter (the registrant's fourth
fiscal quarter in the case of an annual report) that has materially
affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting; and
5. The registrant's other certifying officer(s) and I have disclosed, based
on our most recent evaluation of internal control over financial
reporting, to the registrant's auditors and the audit committee of the
registrant's board of directors (or persons performing the equivalent
functions):
(a) All significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant's ability to
record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
control over financial reporting.
Date: July 1, 2004 /S/ Patrick Sheaffer
----------------------------------------
Patrick Sheaffer
Chief Executive Officer
19
EXHIBIT 31.2
Certification of the Chief Financial Officer Pursuant to Section 302
of the Sarbanes-Oxley Act
20
I, Ron Dobyns, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q of Riverview Bancorp,
Inc.;
2. Based on my knowledge, this 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
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this 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 report;
4. The registrant's other certifying officer(s) and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant
and have:
(a) Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our
supervision, 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 report is being prepared;
(b) Evaluated the effectiveness of the registrant's disclosure controls
and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end
of the period covered by this report based on such evaluation; and
(c) Disclosed in this report any change in the registrant's internal
control over financial reporting that occurred during the registrant's
most recent fiscal quarter (the registrant's fourth fiscal quarter in
the case of an annual report) that has materially affected, or is
reasonably likely to materially affect, the registrant's internal
control over financial reporting; and
5. The registrant's other certifying officer(s)and I have disclosed, based on
our most recent evaluation of internal control over financial reporting,
to the registrant's auditors and the audit committee of the registrant's
board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant's ability to
record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
control over financial reporting.
Date: July 1, 2004 /S/ Ron Dobyns
---------------------------------------
Ron Dobyns
Chief Financial Officer
21
EXHIBIT 32
Certification Pursuant to Section 906 of the Sarbanes-Oxley Act
22
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 10-Q 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/ Ron Dobyns
----------------------------- -----------------------------
Patrick Sheaffer Ron Dobyns
Chairman and Chief Executive Officer Senior Vice President and
Chief Financial Officer
Dated: July 1, 2004
23