Riverview Bancorp posts $16.6 million loss

Still-shaky economy hampers company based in Vancouver

By Gordon Oliver, Columbian business editor

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photoRon Wysaske is president and COO of Riverview Community Bank.

Riverview Bancorp reported a $16.6 million loss for the fiscal quarter ending Dec. 31 as it continued to struggle with losses on its old development loans and weak demand for new commercial loans.

The Vancouver-based bank holding company, parent to Riverview Community Bank, increased its reserve for loan losses by $8.1 million. That move was not unexpected; it had disclosed in mid-January that it would set aside up to that amount because of the reduced value of about a half-dozen properties with outstanding loans.

The surprise in Riverview’s quarterly earnings report was an $8.7 million set-aside required in large part because of its financial loss. Riverview officials emphasized that the set-aside, called a Deferred Tax Asset Valuation, is a non-cash bookkeeping entry that can be reversed if the bank returns to profitability. The $16.6 million loss amounted to a loss of 74 cents per diluted share.

Ron Wysaske, Riverview Community Bank’s president and chief operations officer, said the losses reflect continued weaknesses in the local economy. “Our tagline is that we reflect our community’s strengths,” he said in an interview at the bank’s Vancouver headquarters. “It turns out that we reflect our community’s weaknesses, too.”

Wysaske emphasized the strengths, saying that Riverview enjoyed steady growth in deposits in 2011 and that its 13.4 percent capital reserve is more than adequate to maintain its regulatory designation as a “well capitalized” bank. One reason for its healthy reserve, which includes $80 million in cash, is because “we haven’t been making a lot of loans,” Wysaske said.

The impending sale of First Independent Bank’s banking operations to Spokane-based Sterling Savings Bank will make Riverview the last locally based bank in Clark County. Wysaske said there are no discussions about selling the bank, which has $862 million in assets, and said no bank has approached Riverview about an acquisition. As a publicly traded bank, he said, Riverview would have to entertain an offer if one was made.

“As far as looking forward, you never know,” he said.

But such thoughts are not in the minds of bank executives, said Kevin Lycklama, Riverview’s chief financial officer. “We’re not looking to sell, and we’re not setting it up to sell,” he said.

Riverview’s troubles continue to flow largely from development loans made during the construction boom during the last decade. The collapse of housing demand caused a drop in property values, forcing the bank to reduce the book value of properties that back some of those construction loans. That change contributed to the reported losses.

Riverview reported $32 million in non-performing loans for the quarter, representing 4.6 percent of total loans. That’s up from the previous quarter’s $29.7 million. However, Riverview was able to reduce its bank-owned real estate to $20.7 million, down from $25.6 million three months earlier.

Wysaske likened Riverview’s current status as akin to a person being treated for a large tumor, with the troubled construction loans being Riverview’s tumor. “It’s shrunk a great deal,” he said of the troubled loan package. “It’s getting manageable from here on out.”

On the positive side, total deposits increased $5.8 million during the quarter to $735 million. Riverview hopes to capitalize on its impending status as the last locally-based bank in Clark County to further increase its customer base.

“We’re seeing increased deposits and growth in business customers. That’s telling us the message is getting through,” Wysaske said.