HALIFAX, PA--(Marketwired - Oct 30, 2014) - Riverview Financial Corporation (
Net income was $659,000, or $0.25 per diluted share, for the three months ended September 30, 2014, up 36.2% compared with $484,000, or $0.28 per diluted share, for the three months ended September 30, 2013. Quarterly net income increased from $542,000, or $0.20 per diluted share, in second quarter 2014.
For the nine months ended September 30, 2014, net income was $2.21 million, or $0.82 per diluted share, compared with $1.53 million or $0.89 per diluted share, for the nine months ended September 30, 2013.
The company's financial results in the third quarter and nine months of 2014 reflect the impact of the consolidation of Riverview and Union Bancorp, Inc. The financial results relating to the third quarter and nine months of 2013 reflect Riverview and its operating divisions only. Earnings per share for the third quarter and nine month period ended September 30, 2014 reflect the issuance of common shares related to the company's consolidation with Union Bancorp. The company's common share count at September 30, 2014 was 2,708,840 compared with 1,716,316 shares at September 30, 2013.
Third Quarter, Nine Months of 2014 Highlights
- Total assets were $434.75 million at September 30, 2014 compared with $316.69 million at September 30, 2013 and up compared with total assets of $432.88 million at December 31, 2013.
- Year-to-date return on average assets was 0.68%, return on average equity was 7.81%, and the company's shareholders' equity to assets ratio increased to 8.82% from 8.42% a year ago. Total shareholders' equity increased by $2.11 million to $38.34 million during the nine months of 2014.
- Tangible book value at September 30, 2014 increased to $12.77 per share, an $0.84 increase from $11.93 at December 31, 2013.
- Net interest income after provision for loan losses was $3.70 million in third quarter 2014, up 39% from $2.66 million in third quarter 2013, primarily reflecting increased scale following the consolidation, and a reduction of interest expense year-over-year.
- In the nine months of 2014, net interest income after provision for loan losses was $11.84 million, up 53% from $7.73 million in the nine months of 2014, reflecting a larger base of interest accruing loans and a decline in total interest expense.
- Total net loans, after allowance for loan losses, were $325.93 million, up from $319.67 million at December 31, 2013. Reflecting the addition of loans added in the Union consolidation, total loans, net of allowance for loan losses, were up 34% from $243.37 million at September 30, 2013.
- The ratio of non-performing assets to total assets declined to 1.52% at September 30, 2014, down from 1.65% at September 30, 2013.
- Riverview Bank's capital strength was reflected in ratios that were above regulatory standards for "well-capitalized" banks, with a Tier 1 leverage ratio of 7.84%, a Tier 1 risk-based capital ratio of 10.69%, and a total risk-based capital ratio of 11.79% at September 30, 2014.
Robert Garst, Riverview Financial's CEO, commented: "Our quarterly and year-to-date net income reflects the continued momentum our company has built as we leverage the scale and efficiencies of a larger organization. Interest earning assets in 2014 are up 40% from a year ago, which has driven strong growth in net interest income and we have further improved asset quality metrics. Fee income from brokerage, trust and our expanding wealth management business, grew to $636,000 in the nine months of 2014 compared with $408,000 in the nine months of 2013.
"We are excited about the growth potential presented by our expanded presence in Schuylkill County, Pennsylvania, and our new full-service office in Wyomissing, Pennsylvania, opened in September 2014, which will serve the Reading metro market and Berks County. We have significant growth prospects, and have worked during the past year to develop an efficient infrastructure we feel positions Riverview to deliver quality earnings."
Operating Results
Third quarter 2014 net income was $659,000 or $0.25 per diluted share, a 36% increase from $484,000 in third quarter 2013. On a consecutive quarter basis, net income increased from $542,000, or $0.20 per diluted share, for the three months ended September 30, 2014, reflecting interest expense management, primarily attributed to lower cost core deposit growth and a reduced reliance on time deposits.
For the nine months ended September 30, 2014, net income was $2.21 million a 45% increase from $1.53 million for the nine months ended September 30, 2013. Net income for the nine months of 2014 included a one-time gain on the recovery of $168,484 of non-accrued interest related to two loans, one of which was acquired from Union, and a $602,700 recovery of loan interest income on the settlement of an outstanding loan acquired from Union. Year-to-date 2014 included approximately $515,326 of extraordinary expenses primarily related to merger-related costs and actions, including charge-offs of selected loans, taken to strengthen the company's balance sheet.
Income Statement
Total interest income for the three months ended September 30, 2014 was $4.33 million compared with $3.27 million for the three months ended September 30, 2013. Total interest income for the nine months ended September 30, 2014, was $13.57 million compared with $9.66 million for the nine months ended September 30, 2013, with a larger base of loans driving 35% growth in interest income from loans.
Total interest expense for the three months ended September 30, 2014 was $504,000, down from $559,000 for the three months ended September 30, 2013, and from $528,000 in second quarter 2014. For the nine months ended September 30, 2014, total interest expense was $1.61 million compared with $1.89 million for the nine months ended September 30, 2013.
"Our strategy to build core deposits, particularly those linked to commercial lending relationships, while utilizing attractively priced short-term borrowings for funding as needed, and trimming higher-cost time deposits, has enabled the company to maintain its net interest margin during the prolonged low interest rate environment," Garst explained. The company's cost of funds declined to 63 basis points in third quarter 2014 compared with 96 basis points in third quarter 2013, he added.
The company's net interest margin on a tax equivalent basis was 3.89% for the three months ended September 30, 2014, up from 3.86% for the three months ended September 30, 2013 and equivalent to the net interest margin in second quarter 2014. For the nine months ended September 30, 2014, the company's net interest margin was 4.15% compared with 3.77% for the nine months ended September 30, 2013. The net interest spread on a tax equivalent basis was 3.80% in third quarter 2014 and 4.06% for the nine months of 2014 -- both reflecting increases versus the prior year's third quarter and nine month periods.
Total noninterest income for the three months ended September 30, 2014 was $712,000 compared with $373,000 for the three months ended September 30, 2013. For the nine months of 2014, total noninterest increased $1.91 million, up from $1.47 million for the nine months of 2013. Both 2014 periods reflected increased service charges and fees, increased fee income from the company's wealth management business, modest gains on the sale of securities, offset by modest losses on the sale and write-down of other real estate owned as the company continued to trim its portfolio of foreclosed properties, and the expenses associated with managing those assets.
Noninterest expense in third quarter 2014 was $3.59 million compared with $2.39 million in third quarter 2013. Noninterest expense in the nine months of 2014 was $10.79 million compared with $7.16 million in the nine months of 2013, reflecting expenses relating to the consolidation of Union, and employee-related costs, occupancy and other operating expenses that reflected the company's increased size. Garst noted that year-over-year salaries and employee benefits increases reflected additional employees due to the consolidation, and the addition of key hires to drive revenue.
Balance Sheet and Asset Quality
Total net loans after allowance for losses were $325.93 million at September 30, 2014 compared with $319.67 million at December 31, 2013, and $243.37 million at September 30, 2013. The company's allowance for loan and lease losses of $3.50 million at September 30, 2014 remained stable compared with totals at December 31, 2013 and September 30, 2013.
Total assets were $434.75 million at September 30, 2013 compared with $432.88 million at December 31, 2013.
Total deposits declined to $374.79 million at September 30, 2014 compared with $382.35 million at December 31, 2013. Interest bearing and noninterest bearing demand deposits increased to $184.44 million from $178.17 million at year-end 2013, while the company trimmed both savings and money market accounts and time deposits as part of its interest expense management strategy. As previously noted, demand deposit growth and the use of attractively priced short-term borrowings had a positive impact on the company's cost of funds in 2014.
Balance sheet and asset quality reflected consistent strength of performing loans, and initiatives to move non-performing loans off the balance sheet. Non-performing loans were $5.58 million at September 30, 2014 compared with $8.16 million at December 31, 2013. Non-performing assets declined to $6.61 million at September 30, 2014 compared with $9.29 million at December 31, 2013.
The ratio of non-performing loans to total loans was 1.69% at September 30, 2014 compared with 2.52% at December 31, 2013, and the ratio of non-performing assets to total assets was 1.52% at September 30, 2014 compared with 2.14% at December 31, 2013.
Capital, Shareholder Value and Outlook
Capital ratios for Riverview Bank remained above regulatory standards for "well-capitalized" banks, with a Tier 1 leverage ratio of 7.84%, a Tier 1 risk-based capital ratio of 10.69%, and a total risk-based capital ratio of 11.79% at September 30, 2014.
The company's total shareholders' equity was $38.34 million at September 30, 2014, up from $36.23 million at December 31, 2013. Tangible book value at September 30, 2014 was $12.77, up from $11.93 at December 31, 2013 and $12.67 at June 30, 2014. Return on average total assets was 0.68% for the nine months ended September 30, 2014 and return on average shareholders' equity was 7.81% for the same period.
Garst concluded: "Throughout our organization, there is great enthusiasm among our Riverview team members for the opportunities ahead. We anticipate that our expanded resources will support growth in established markets in the Harrisburg, Pennsylvania metropolitan area, and open doors to expansion in two important counties. We have delivered increasing value for shareholders in recent periods. Our shareholders can expect a continued focus by management on growing the company's earnings, along with total asset and market share expansion, which we expect to drive accelerating franchise value."
Profile
Riverview Financial Corporation is a community bank holding company, and parent company of Riverview Bank and its operating divisions, serving the greater Harrisburg market and six counties in central Pennsylvania. The company's stock trades on the OTCQX exchange under the symbol "RIVE".
Forward Looking Statements
Certain statements contained herein are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such forward-looking statements may be identified by reference to a future period or periods, or by the use of forward-looking terminology, such as "may," "will," "believe," "expect," "estimate," "anticipate," "continue," or similar terms or variations on those terms, or the negative of those terms. Forward-looking statements are subject to numerous risks and uncertainties, including, but not limited to, those related to the economic environment, particularly in the market areas in which the company operates, competitive products and pricing, fiscal and monetary policies of the U.S. Government, changes in government regulations affecting financial institutions, including compliance costs and capital requirements, changes in prevailing interest rates, acquisitions and the integration of acquired businesses, credit risk management, asset-liability management, the financial and securities markets and the availability of and costs associated with sources of liquidity.
The company wishes to caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. The company wishes to advise readers that the factors listed above could affect the company's financial performance and could cause the company's actual results for future periods to differ materially from any opinions or statements expressed with respect to future periods in any current statements. The company does not undertake and specifically declines any obligation to publicly release the result of any revisions, that may be made to any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.
-Selected Financial Tables Follow-
The balance sheet and statements of income for the quarter and nine months ended September 30, 2014 reflect the impact of the consolidation of Riverview and Union Bancorp, Inc. ("Union") under the purchase accounting method of accounting. The financial information relating to the periods prior to November 1, 2013, which was the effective date of the consolidation, reflect the financial information and operating results for Riverview only.
| Consolidated Selected Financial Information | |||||||||
| (Dollars in thousands, except per share data) | |||||||||
| As of and for the periods ended | |||||||||
| September 30, 2014 (Unaudited) |
December 31, 2013 (Audited) |
September 30, 2013 (Unaudited) |
|||||||
| Selected Balance Sheet Data: | |||||||||
| Total assets | $ | 434,750 | $ | 432,882 | $ | 316,692 | |||
| Investment securities available for sale | 58,858 | 57,246 | 31,376 | ||||||
| Total loans, net of allowance | 325,930 | 319,674 | 243,374 | ||||||
| Total deposits | 374,786 | 382,345 | 280,621 | ||||||
| Borrowings | 17,684 | 10,000 | 7,000 | ||||||
| Shareholders' equity | 38,336 | 36,228 | 26,669 | ||||||
| Non-performing loans | 5,576 | 8,158 | 3,696 | ||||||
| Non-performing assets | 6,612 | 9,285 | 5,215 | ||||||
| Common shares outstanding | 2,708,840 | 2,703,840 | 1,716,316 | ||||||
| Book value per common share | $ | 14.15 | $ | 13.40 | $ | 15.54 | |||
| As of and for the three months ended September 30, | As of and for the nine months ended September 30, | |||||||||||
| 2014 | 2013 | 2014 | 2013 | |||||||||
| Selected Operations Data - Unaudited: | ||||||||||||
| Total interest income | $ | 4,331 | $ | 3,270 | $ | 13,570 | $ | 9,663 | ||||
| Total interest expense | 504 | 559 | 1,608 | 1,885 | ||||||||
| Net interest income before provision for loan losses | 3,827 | 2,711 | 11,962 | 7,778 | ||||||||
| Provision for loan losses | 126 | 47 | 126 | 47 | ||||||||
| Net interest income after provision for loan losses | 3,701 | 2,664 | 11,836 | 7,731 | ||||||||
| Total non-interest income | 712 | 373 | 1,910 | 1,472 | ||||||||
| Total non-interest expense | 3,590 | 2,391 | 10,794 | 7,159 | ||||||||
| Income before taxes | 823 | 646 | 2,952 | 2,044 | ||||||||
| Income tax expense | 164 | 162 | 741 | 516 | ||||||||
| Net income | $ | 659 | $ | 484 | $ | 2,211 | $ | 1,528 | ||||
Per Share Data - Unaudited: |
||||||||||||
| Net income per share (basic) | $ | 0.25 | $ | 0.28 | $ | 0.82 | $ | 0.89 | ||||
| Net income per share (diluted) | $ | 0.25 | $ | 0.28 | $ | 0.82 | $ | 0.89 | ||||
| As of and for the three months ended September 30, | As of and for the nine months ended September 30, | |||||||||||
| 2014 | 2013 | 2014 | 2013 | |||||||||
| Performance Ratios: | ||||||||||||
| Return on average total assets | 0.60 | % | 0.61 | % | 0.68 | % | 0.65 | % | ||||
| Return on average total shareholders' equity | 6.80 | % | 7.22 | % | 7.81 | % | 7.62 | % | ||||
| Net interest margin, tax equivalent | 3.89 | % | 3.86 | % | 4.15 | % | 3.77 | % | ||||
| Net interest spread, tax equivalent | 3.80 | % | 3.78 | % | 4.06 | % | 3.68 | % | ||||
| Efficiency ratio | 79.09 | % | 77.53 | % | 77.81 | % | 77.39 | % | ||||
| Non-interest income to average assets | 0.64 | % | 0.47 | % | 0.59 | % | 0.63 | % | ||||
| Non-interest expense to average assets | 3.25 | % | 3.00 | % | 3.33 | % | 3.04 | % | ||||
| Average loan to average deposit ratio | 87.53 | % | 86.59 | % | 86.75 | % | 87.06 | % | ||||
| Average interest earning assets to average interest bearing liabilities | 116.60 | % | 109.58 | % | 116.32 | % | 109.54 | % | ||||
| Asset Quality Ratios: | |||||||||||||
| Non-performing loans to total loans | 1.69 | % | 1.50 | % | 1.69 | % | 1.50 | % | |||||
| Allowance for loan losses to: | |||||||||||||
| Total loans | 1.06 | % | 1.44 | % | 1.06 | % | 1.44 | % | |||||
| Non-performing loans | 62.79 | % | 96.21 | % | 62.79 | % | 96.21 | % | |||||
| Net charge-offs to average loans (annualized) | 0.00 | % | 0.43 | % | 0.12 | % | 0.13 | % | |||||
| Non-performing assets to total assets | 1.52 | % | 1.65 | % | 1.52 | % | 1.65 | % | |||||
| Capital Ratios: | ||||||||||||
| Stockholders' equity to assets | 8.82 | % | 8.42 | % | 8.82 | % | 8.42 | % | ||||
| Tier 1 risk-based capital (Bank only) | 10.69 | % | 10.78 | % | 10.69 | % | 10.78 | % | ||||
| Total risk-based capital (Bank only) | 11.79 | % | 12.04 | % | 11.79 | % | 12.04 | % | ||||
| Tier 1 leverage ratio (Bank only) | 7.84 | % | 8.32 | % | 7.84 | % | 8.32 | % | ||||
| Other: | ||||||||
| Number of bank subsidiaries | 1 | 1 | 1 | 1 | ||||
| Number of banking facilities | 16 | 11 | 16 | 11 | ||||
| Number of full-time equivalent employees | 105 | 69 | 105 | 69 |