Riverview 2Q profits up 453%
Bank cut new loss reserves nearly in half
Wednesday, October 27, 2010
Riverview Bancorp’s profits climbed 453 percent last quarter from a year ago, according to a quarterly earnings report released Tuesday.
The Vancouver-based parent of Riverview Community Bank reported net income of $1.1 million or 6 cents per share in its fiscal second quarter, which ended Sept. 30, compared with $202,000 or 2 cents per share a year ago.
The bank has reduced its total loans by 7 percent since last year, dragging down its interest income. But the bank also cut its addition to loan-loss reserves nearly in half, driving its profits up, said Kevin Lycklama, chief financial officer for Riverview.
Also contributing to the boost in profits over last year were stabilizing real estate values in the Vancouver metro area. The bank recouped about $1.6 million on foreclosed real estate sales, which added $133,000 to its non-interest income, Lycklama said.
It was the bank’s second consecutive quarter in the black after experiencing three quarters of losses over the past three years. Profits this quarter fell nearly 37 percent from the three months ending June 30, when Riverview posted a $1.7 million profit, due in part to a bump in bad loans.
Despite the bank’s continued efforts to offload its bad loans, the default of one commercial real estate loan in particular, totaling $6.3 million, pushed non-performing loans to $35.3 million in the quarter, up $2.3 million from June 30, according to Riverview.
Unlike previous real estate loan defaults, however, the bank doesn’t expect to lose money on this loan. A good appraisal means the property will likely sell for more than the loan value, according to the bank.
“We’ve seen the valuations in real estate stabilize and we’ve had a lot fewer new problem loans coming up,” Lycklama said. “It’s a sign of the overall economic times, where it’s better than last year but still not back to normal.”
The bank also achieved greater financial stability last quarter by raising $18.9 million through a public offering.