Riverview Bancorp(RVSB) - 2024 Q4 - Annual Results

Executive Summary & Highlights Riverview Bancorp reported a Q4 FY2024 net loss from balance sheet restructuring and litigation, maintaining strong asset quality and capital Company Announcement & Strategic Actions Riverview Bancorp strategically restructured its balance sheet, selling lower-yielding securities to repay FHLB advances, incurring a $2.7 million pre-tax loss and a $2.3 million litigation charge - Riverview strategically restructured its balance sheet by selling approximately $46.2 million of lower-yielding investment securities and using the $43.5 million proceeds to repay higher-cost Federal Home Loan Bank (FHLB) advances[1] - The balance sheet restructuring resulted in a total pre-tax loss of $2.7 million, with an after-tax impact of $2.1 million, or $0.10 per diluted share[1] - The Company recorded a $2.3 million expense in other non-interest expense for the fourth fiscal quarter of 2024, reflecting an estimate of litigation costs exceeding insurance coverage for a proposed global settlement involving a former business client[2] Fourth Quarter & Fiscal Year 2024 Highlights Riverview reported a net loss of $3.0 million, or $0.14 per diluted share, for Q4 FY2024, primarily due to balance sheet restructuring and litigation, with fiscal year 2024 net income at $3.8 million Net Income (Loss) and Diluted EPS | Period | Net Income (Loss) | Diluted EPS | | :-------------------- | :---------------- | :---------- | | Q4 FY2024 | $(3.0) million | $(0.14) | | Q3 FY2024 | $1.5 million | $0.07 | | Q4 FY2023 | $3.0 million | $0.14 | | FY2024 | $3.8 million | $0.18 | | FY2023 | $18.1 million | $0.83 | - Completed balance sheet restructuring transactions[5] Net Interest Income and Margin (NIM) | Metric | Q4 FY2024 | Q3 FY2024 | Q4 FY2023 | | :---------------- | :-------- | :-------- | :-------- | | Net Interest Income | $8.6 million | $9.3 million | $11.8 million | | NIM | 2.32% | 2.49% | 3.16% | - Asset quality remained pristine, with non-performing assets at $178,000, or 0.01% of total assets at March 31, 2024[12] - Riverview recorded no provision for credit losses during the current quarter or the preceding quarter[12] - Total loans were $1.02 billion and total deposits were $1.23 billion at March 31, 2024[12] - Available liquidity was approximately $495.7 million at March 31, 2024[12] - Total risk-based capital ratio was 16.32% and Tier 1 leverage ratio was 10.29%[12] - The Company has initiated a nationwide search for a permanent President/CEO, anticipated to be identified within three to six months[12] Income Statement Review The income statement reflects a decrease in net interest income and a significant increase in non-interest expense, leading to a net loss for the quarter Net Interest Income and Margin (NIM) Net interest income decreased to $8.6 million in Q4 FY2024, driven by higher interest expense on deposits and borrowings, with NIM declining to 2.32% Net Interest Income Trends | Period | Net Interest Income | | :-------------------- | :------------------ | | Q4 FY2024 | $8.6 million | | Q3 FY2024 | $9.3 million | | Q4 FY2023 | $11.8 million | | FY2024 | $38.1 million | | FY2023 | $51.6 million | Net Interest Margin (NIM) Trends | Period | NIM | | :-------------------- | :------ | | Q4 FY2024 | 2.32% | | Q3 FY2024 | 2.49% | | Q4 FY2023 | 3.16% | | FY2024 | 2.56% | | FY2023 | 3.26% | - Investment securities decreased $56.4 million during the quarter to $372.7 million at March 31, 2024, with a weighted average yield of 2.02% for Q4 FY2024[9] - Yield on loans improved to 4.63% during Q4 FY2024, compared to 4.56% in the preceding quarter and 4.50% a year ago, though fixed-rate loan concentration continues to exert pressure[10] - Deposit costs increased to 1.00% during Q4 FY2024, up from 0.68% in the preceding quarter and 0.19% a year ago[10] Non-Interest Income Non-interest income significantly decreased to $494,000 in Q4 FY2024, primarily due to a $2.7 million loss on investment securities, despite positive growth in asset management fees Non-Interest Income Trends | Period | Non-Interest Income | | :-------------------- | :------------------ | | Q4 FY2024 | $494,000 | | Q3 FY2024 | $3.1 million | | Q4 FY2023 | $3.0 million | | FY2024 | $10.2 million | | FY2023 | $12.2 million | - The decrease in Q4 FY2024 non-interest income was primarily due to a $2.7 million loss on sale of investment securities; excluding this loss, non-interest income would have been $3.2 million[11] Asset Management Fees and Assets Under Management (AUM) | Metric | Q4 FY2024 | Q3 FY2024 | Q4 FY2023 | FY2024 | FY2023 | | :-------------------- | :-------- | :-------- | :-------- | :------- | :------- | | Asset Management Fees | $1.4 million | $1.3 million | $1.3 million | $5.3 million | $4.7 million | | AUM (period end) | $961.8 million | $942.4 million | $890.6 million | - | - | - Asset management fees increased 12.5% to $5.3 million in fiscal 2024 compared to $4.7 million in fiscal 2023[14] Non-Interest Expense Non-interest expense increased significantly to $13.1 million in Q4 FY2024, driven by a $2.3 million litigation expense, higher salary and benefits, and increased occupancy costs, resulting in a 144.9% efficiency ratio Non-Interest Expense Trends | Period | Non-Interest Expense | | :-------------------- | :------------------- | | Q4 FY2024 | $13.1 million | | Q3 FY2024 | $10.6 million | | Q4 FY2023 | $10.0 million | | FY2024 | $43.7 million | | FY22023 | $39.4 million | - Non-interest expense included a $2.3 million litigation expense incurred during Q4 FY2024[15] - Salary and employee benefits increased due to the full quarterly impact of salary increases, higher health insurance costs, and higher payroll taxes[15] - The efficiency ratio was 144.9% for Q4 FY2024, compared to 85.2% in the preceding quarter and 67.3% a year ago; excluding the securities loss and litigation, the efficiency ratio was 91.8%[15] Net Income (Loss) and EPS The effective tax rate for Q4 FY2024 was (27.0)%, reflecting the pre-tax loss reported for the quarter Effective Tax Rate | Period | Effective Tax Rate | | :-------------------- | :----------------- | | Q4 FY2024 | (27.0)% | | Q3 FY2024 | 20.6% | | Q4 FY2023 | 27.0% | Balance Sheet Review The balance sheet reflects slight loan growth, an increase in deposits primarily from trust company movements, and a significant reduction in FHLB advances Loans Total loans increased slightly to $1.02 billion at March 31, 2024, reflecting moderated growth due to selective lending and an emphasis on credit quality, with reductions in new originations and pipeline - Total loans increased $5.8 million during the quarter to $1.02 billion at March 31, 2024, and increased $15.2 million compared to a year earlier[17] - The loan pipeline was $18.4 million at March 31, 2024, down from $29.3 million at the end of the prior quarter[17](index=1