Vancouver-based Riverview Bancorp, parent of Riverview Community Bank, on Monday reported a loss of $12.8 million for the company’s fiscal fourth quarter ending March 31. It was the bank’s second straight quarterly loss, and it raised Riverview’s net loss for the full fiscal year to $28.5 million, or $1.28 per share.
The report didn’t come as a surprise. Riverview disclosed last month that it would add up to $15 million to loan-loss reserves, and it had predicted a net quarterly loss of 55 to 60 cents per share. In its Monday earnings report, the bank said the actual amount of the quarterly loan loss set-aside was $14.3 million and it pegged the bank’s loss at 57 cents per share. Riverview’s set-aside for troubled loans now stands at $18.6 million.
Riverview struggles reflect the continuing weakness of the local real estate market, where most of the bank’s troubled loans reside. In a news release, Riverview said it increased its provision for loan losses after obtaining updated proposals on several properties, and in response to the bank’s ongoing loan reviews.
“For the second consecutive quarter, we have significantly increased our loan-loss provision in an effort to position Riverview for recovery in an economy that remains sluggish,” said Pat Sheaffer, Riverview’s chairman and CEO, in a news release. “We continue to focus on strengthening the bank and working diligently, side by side with our clients, on problem assets. Riverview remains an important economic participant as one of the few community banks in the region and the only community bank headquartered in Clark County.”
Regulatory changes
The set-aside amount represents 2.7 percent of total loans and 41.3 percent of non-performing loans, the bank said. But those loans are increasing, at least on paper, in part due to regulatory changes unleashed by new federal oversight rules. Riverview’s nonperforming loans increased to $45 million, or 6.6 percent of all loans, at the end of the quarter. By comparison, such non-performing loans represented 4.6 percent of Riverview’s portfolio on Dec. 31, and just 1.8 percent on March 31, 2011.
Kim Capeloto, Riverview’s executive vice president for operations and marketing, said the bank is seeing signs of stabilization in property values, as well as an uptick in construction. He said Riverview worked longer than many banks with borrowers to help them maintain their property even as values declined, and that many holders of troubled loans have remained current with payments.
“We have tried to be a true community bank,” Capeloto said. “A majority of our peers did a lot of this (losses) two and three years ago.” Capeloto said the bank has no plans to reduce branches or lay off staff, but is aggressively pursuing cost-saving measures.
Riverview also recorded a bookkeeping set-aside called a deferred tax asset valuation allowance, of $15.7 million. That noncash accounting entry could be taken off the books in the future if the bank returns to sustained profitability.
Riverview’s stock has been hammered of late. It closed Monday at $1.63 per share, a one-day increase of 3.82 percent. At the end of March, the bank’s stock was trading for $2.29 per share.
Last month, the banking analyst firm Wonderlich Securities downgraded the company’s stock from “hold” to “sell.”
