December 15th, 2015

Riverview Financial Corporation Reports Third Quarter Financial Results For 2020

HARRISBURG, Pa., Oct. 26, 2020 /PRNewswire/ -- Riverview Financial Corporation (the "Company" or "Riverview") (NASDAQ: RIVE), the holding company for Riverview Bank (the "Bank"), today reported net income of $695 thousand, or $0.08 per basic and diluted weighted average common share, for the third quarter of 2020, compared to net income of $2.3 million, or $0.25 per basic and diluted weighted average common share, for the third quarter of 2019. For the nine months ended September 30, 2020, Riverview reported a net loss of $22.8 million, or $(2.46) per basic and diluted weighted average common share, compared to net income of $3.0 million, or $0.33 per basic and diluted weighted average common share, for the same period last year.

(PRNewsfoto/Riverview Financial Corporation)

The decrease in the Company's earnings for the three months ended September 30, 2020 as compared to the same period in 2019 was the result of an increase in the provision for loan losses coupled with the recognition of severance and furlough expenses and nonrecurring occupancy expenses. The loan loss provision increased $795 thousand comparing the three months ended September 30, 2020 and 2019. In addition, the Company recognized $579 thousand in costs associated with severance and furlough expenses related to the implementation of a cost reduction strategy aimed at substantially lowering operating costs. Also impacting third quarter 2020 results was the recognition of write downs of fair values on certain held for sale properties and the acceleration of lease payments on a closed office totaling $469 thousand

The decrease in the Company's earnings for the nine months ended September 30, 2020 as compared to the same period in 2019 was primarily the result of a non-cash charge related to the recognition of goodwill impairment and an increase in the provision for loan losses, both stemming from the COVID-19 pandemic. The goodwill impairment of $24.8 million had no impact on tangible book value, regulatory capital ratios, liquidity or the Company's cash balances. For the nine months ended September 30, 2020, the provision for loan losses totaled $5.7 million compared to $2.3 million for the comparable period in 2019. The increase in the year over year provision for loan losses is the combined result of year to date 2020 organic loan growth, excluding 100% SBA guaranteed Payroll Protection Loans, and changes in qualitative factors used in our ALLL model, accounting for increased economic risks and the direct impact on our customers resulting from the COVID-19 pandemic as of September 30, 2020. As the Company continues to evaluate the impact of the COVID-19 pandemic on our overall financial performance and operations, including its effects on our loan portfolio, our provision for loan losses may increase in future periods, which could adversely affect our results of operations.  The Company's earnings were further impacted as a result of a $2.3 million reduction of net accretion on acquired assets and assumed liabilities during the nine months ended September 30, 2020, as compared to the same period last year.

The impact of these reductions was offset by the recognition of an $815 thousand net gain on the sale of investment securities in order to provide liquidity to fund loan demand and limit exposure to falling rates through the disposition of adjustable rate securities. The Company also recognized interest and fees on origination of loans pursuant to the Paycheck Protection Program ("PPP") of $2.8 million during the nine months ended September 30, 2020. The results for the nine months ended September 30, 2019 included the first quarter recognition of $2.2 million in nonrecurring executive separation expenses along with the $456 thousand in severance charges recorded in the second quarter of 2019. 

As mentioned in prior earnings releases, as well as herein, the Company began implemented cost reduction strategies beginning in 2019, and those efforts continued subsequent to the end of the second quarter of 2020 by implementing additional efficiency initiatives aimed at substantially lowering operating costs. This action implemented on September 1, 2020 is expected to lower salaries and benefits expense by $3.4 million annually on a pre-tax basis. In concert with our earlier announcement that we have suspended dividend payments until further notice, additional measures were taken to further strengthen the safety and soundness of the Bank's capital position,  support future growth, and potentially take advantage of potential strategic opportunities focused upon enhancing shareholder value, the Company completed a private placement of $25 million of 5.75% Fixed to Floating Rate Subordinated Notes, due 2030 to certain qualified institutional buyers and accredited investors subsequent to the end of the third quarter 2020.

In addition to evaluating its results of operations in accordance with accounting principles generally accepted in the United States of America ("GAAP"), Riverview routinely supplements its evaluation with an analysis of certain non-GAAP financial measures, such as tangible book value per share and return on average tangible stockholders' equity. Riverview believes these non-GAAP financial measures provide information useful to investors in understanding its operating performance and trends. Where non-GAAP disclosures are used in this press release, a reconciliation to the comparable GAAP measures is provided in the accompanying tables. The non-GAAP financial measures Riverview uses may differ from the non-GAAP financial measures other financial institutions use to measure their results of operations.

HIGHLIGHTS

  • As part of ongoing efficiency initiatives, management implemented additional cost reduction strategies, primarily becoming effective beginning September 1, 2020, including the reduction of salaries and benefits expense by $3.4 million annually.
  • As of September 30, 2020, we granted loan payment deferrals of $6.5 million to consumer and commercial loan customers for 209 loans with outstanding balances totaling $137 million, or 11.8%, of total loans. Comparatively, at June 30, 2020, we granted loan payment deferrals of $9.1 million to consumer and commercial loan customers for 501 loans with outstanding balances totaling $256.4 million, or 22.0%, of total loans.
  • Interest and fees recognized on the origination of $273.8 million of PPP loans totaled $2.8 million in the nine months ended September 30, 2020.
  • Remaining accrued and unearned Small Business Administration PPP origination fees total $6.0 million at September 30, 2020. 
  • Tangible stockholders' equity to tangible assets, excluding PPP loans, was 8.62% at September 30, 2020.
  • Total interest-bearing fund costs declined to 0.56% for the third quarter 2020 compared to 0.67% for the prior quarter and 0.99% for the same quarter 2019.
  • The allowance for loan losses increased $4.5 million to $11.6 million, or 1.30% of loans, net, excluding 100% SBA guaranteed PPP loan balances, at September 30, 2020 from $7.1 million or 0.80% of loans, net at September 30, 2019,
  • Net charge-offs to average loans, net improved to (0.02)% in the third quarter of 2020 as compared to 0.20% in the second quarter of 2020 and 0.43% in the third quarter of 2019.

Brett D. Fulk, President and Chief Executive Officer, commented "while the ultimate impact of the Corona virus pandemic upon our customers remains largely unknown at this time, we have taken the necessary steps to bolster capital, increase our loan loss reserves, monitor credit quality, and proactively manage higher risk credit relationships. Given the aforementioned efforts I have a high degree of confidence that we will successfully manage our way through the current economic challenges we face. Furthermore, continuing improvement in our core pre-allowance for loan losses and pre-tax expenses demonstrates that our efficiency initiatives are generating the desired results." Fulk went on to say "while reported earnings for 2020 will continue to be negatively impacted by the goodwill impairment expense taken in the second quarter of this year, I am extremely pleased that our team's efforts are positioning Riverview for a bright future. While optimistic about the impact all our efforts are producing, I realize my optimism must remain tempered by the current pandemic and the remaining economic uncertainties faced by our economy and our industry. Therefore, our short-term goals shall remain focused on credit quality, managing our way through this current pandemic environment, and expense management."

INCOME STATEMENT REVIEW

Tax-equivalent net interest income for the three months ended September 30, decreased to $10.5 million in 2020 from $11.4 million in 2019. The decrease in tax-equivalent net interest income was primarily attributable to a decline in the tax-equivalent loan yield and the realization of lower levels of loan accretion from purchase accounting marks established from previous M&A activity. The tax-equivalent net interest margin for the three months ended September 30, 2020, decreased to 3.26% from 4.46% for the comparable period of 2019. The tax-equivalent net interest margin, excluding income and fees earned on PPP loans, would have been 3.41% in the third quarter of 2020. The tax-equivalent yield on the loan portfolio decreased to 3.94% in the third quarter of 2020 compared to 5.67% in third quarter of 2019. The actions taken by the Federal Open Market Committee in March 2020 to reduce its target federal funds rate by 150 basis points impacted the loan portfolio yield as it had a corresponding adverse effect on our floating and adjustable rate loans. Also influencing the decline was recognizing the lower yield earned on the addition of PPP loans. The yield earned on PPP loans from interest and fees was 2.41% for the nine months ended September 30, 2020. Investments yielded 2.33% on a tax-equivalent basis in the third quarter of 2020 compared to 2.96% for the same period last year. For the three months ended September 30, the cost of deposits decreased 43 basis points to 0.56% in 2020 from 0.99% in 2019. Loans, net averaged $1.2 billion in the third quarter of 2020 and $882.6 million in the third quarter of 2019. Average investments totaled $76.9 million in 2020 and $93.0 million in 2019. Average interest-bearing liabilities increased to $1.1 billion in 2020 from $817.4 million in 2019.

For the nine months ended September 30, tax-equivalent net interest income declined $2.8 million to $29.1 million in 2020 from $31.9 million in 2019. The decrease was attributable to a reduction in the net interest margin which more than offset the increase in average earning assets. For the nine months ended September 30, tax-equivalent net interest margin was 3.37% in 2020 compared to 4.18% in 2019. The tax-equivalent net interest margin excluding purchase accounting and income and fees earned on PPP loans would have been 3.45% for the nine months ended September 30, 2020. The tax-equivalent yield on the loan portfolio decreased to 4.18% in the nine months ended September 30, 2020 compared to 5.37% for the same period in 2019. For the nine months ended September 30, investments yielded 2.69% on a tax-equivalent basis in 2020 compared to 3.06% for the same period last year. The cost of deposits decreased 29 basis points to 0.71% in the nine months ended September 30, 2020 from 1.00% for the same period in 2019. The cost of interest-bearing liabilities decreased to 0.71% in 2020 from 1.06% in 2019.  Comparing the nine months ended September 30, 2020 and 2019, average earning assets increased $130.5 million which outpaced the $124.4 million increase in average interest-bearing liabilities.  Loans averaged $153.4 million higher while investments averaged $25.9 million lower comparing the nine months ended September 30, 2020 and 2019. With respect to the growth in interest-bearing liabilities, deposits averaged $3.9 million more in 2020 compared to last year while average borrowing grew by more than $120.5 million comparing the two periods.

The provision for loan losses totaled $1.8 million for the quarter ended September 30, 2020, compared to $1.0 million for the same period in 2019. The provision for loan losses totaled $5.7 million for the nine months ended September 30, 2020, compared to $2.3 million for the same period in 2019. The increase in the provision for loan losses was the combined result of organic loan growth, excluding PPP loan balances outstanding, and changes in qualitative factors related to the allowance for loan losses reserve associated with increasing risks within the economy and our credit portfolio due to the effects of COVID-19, as of September 30, 2020. 

For the quarter ended September 30, noninterest income totaled $2.2 million in 2020 versus $2.0 million in 2019. The increase was primarily attributable to a $250 thousand increase in mortgage banking income due to an increase in  refinancing activity brought on by the reduction in mortgage interest rates. Service charges, fees and commissions decreased $30 thousand while trust and wealth management income declined $68 thousand and $6 thousand, respectively, comparing the third quarters of 2020 and 2019.

For the nine months ended September 30, noninterest income increased by $1.2 million to $7.1 million in 2020 from $5.9 million in 2019. The primary contributors to the overall increase were $815 thousand in gains on the sale of investment securities and the recognition of higher comparable mortgage banking income of $543 thousand. Offsetting the increases were reductions in trust commissions and fees and wealth management income of $186 thousand and $73 thousand, respectively, comparing the nine months ended September 30, 2020 and 2019, which is partially driven by the impact the Corona virus pandemic has had upon equity market valuations during 2020 compared to market valuations throughout 2019.  Additionally, we experienced reductions in overdraft fee income, ATM income, and reduced late charge fee income as we proactively worked with customers and noncustomers alike in an effort to minimize the financial impact of Covid-19 within the communities we serve.

Noninterest expense increased to $10.0 million for the three months ended September 30, 2020, from $9.4 million for the same period last year. The overall increase was primarily due to an increase of $179 thousand in salaries and employee benefit expenses due to nonrecurring severance and furlough costs, as well as a  one-time charge  of $387 thousand in net occupancy and equipment expense resulting from the closure of an office during 2019 that we have now determined to be a permanent closure. Other expenses decreased $61 thousand comparing the third quarters of 2020 and 2019 due to implementing efficiency initiatives and selective expense reductions made during the COVID-19 shutdowns within our market footprint.

For the nine months ended September 30, noninterest expense increased to $53.1 million in 2020 compared to $31.9 million for the same period in 2019. Excluding the second quarter, nonrecurring goodwill impairment charge, noninterest expense would have decreased by $3.5 million, or 11.0%, in the nine months ended 2020 as compared to the same period in 2019.

BALANCE SHEET REVIEW

Total assets, loans, net, and deposits totaled $1.4 billion, $1.2 billion, and $1.0 billion, respectively, at September 30, 2020. For the nine months ended September 30, 2020, total assets, loans and deposits increased $276.8 million, $311.3 million and $90.8 million, respectively. Business lending, including commercial and commercial real estate loans, increased $315.7 million due primarily to the addition of $273.8 million in PPP loans and originations in new and existing markets in the nine months of 2020. For this same period, construction lending increased $2.5 million while retail lending, which includes nonconforming residential mortgage, home equity and consumer loans, decreased $6.9 million. Total investments increased to $98.8 million at September 30, 2020, compared to $91.2 million at December 31, 2019 as security purchases more than offset payments and prepayments. The increase in total deposits consisted of increases in noninterest-bearing deposits of $30.8 million and interest-bearing deposits of $60.0 million. As a percentage of total deposits, noninterest-bearing deposits amounted to 17.3% at September 30, 2020 and 15.7% at December 31, 2019. Long term debt increased $210.1 million primarily through the use of the Federal Reserve's  PPPLF program, intended to provide low cost funding  options to entities issuing PPP loans. For the third quarter ended September 30, 2020, total assets and deposits increased $10.0 million and $8.2 million, respectively, while loans, net, decreased $2.0 million.

Stockholders' equity totaled $95.4 million, or $10.28 per share, at September 30, 2020, $118.1 million, or $12.81 per share, at December 31, 2019, and $117.3 million, or $12.77 per share, at September 30, 2019. The decrease in stockholders' equity for the nine months ended September 30, 2020 was due  to the goodwill impairment charge taken at the end of the second quarter of 2020. Tangible stockholders' equity per common share increased to $10.04 at September 30, 2020, compared to $9.75 at September 30, 2019. 

ASSET QUALITY REVIEW

Nonperforming assets were $13.0 million, or 1.12% of loans, net, and foreclosed assets at September 30, 2020, $13.4 million or 1.15% at June 30, 2020, and $5.1 million or 0.60% at December 31, 2019. Accruing Troubled debt restructured ("TDR") loans increased $7.0 million from year end 2019 to $9.6 million at the end of the third quarter of 2020. In March 2020, a joint statement was issued by federal and state regulatory agencies to clarify that short-term loan modifications are not TDRs if made on a good-faith basis in response to COVID-19 to borrowers who were current prior to the implementation of our deferral programs. The Company reevaluates these credits granted deferrals under this guidance each quarter under its existing TDR framework, and where such a loan modification would meet traditional TDR concession definitions , the loan will be accounted for as a TDR. Adjusting for accruing restructured loans, nonperforming assets were $3.4 million, or 0.29% of loans, net and foreclosed assets at September 30, 2020, and $2.4 million, or 0.28%, at December 31, 2019. The allowance for loan losses balance equaled $11.6 million, or 1.0%, of loans, net, 1.30% excluding 100% SBA guaranteed PPP loan balances outstanding, at September 30, 2020, compared to $7.5 million, or 0.88%, at December 31, 2019. The coverage ratio, the allowance for loan losses as a percentage of nonperforming assets, was 89.4% at September 30, 2020 and 148.0% at December 31, 2019. Excluding accruing restructured loans, the coverage ratio would be 346.2% at September 30, 2020. Loans charged-off, net of recoveries, equaled $1.5 million for the nine months ended September 30, 2020 and 2019. 

Riverview Financial Corporation is the parent company of Riverview Bank. An independent community bank, Riverview Bank serves the Pennsylvania market areas of Berks, Blair, Bucks, Centre, Clearfield, Cumberland, Dauphin, Huntingdon, Lebanon, Lehigh, Lycoming, Perry, Schuylkill and Somerset Counties through 27 community banking offices and 3 limited purpose offices. Each office, interdependent with the community, offers a comprehensive array of financial products and services to individuals, businesses, not-for-profit organizations and government entities. Riverview's business philosophy includes offering direct access to senior management and other officers and providing friendly, informed and courteous service, local and timely decision making, flexible and reasonable operating procedures and consistently applied credit policies. The Company's common stock trades on the NASDAQ Global Market under the symbol "RIVE". The Investor Relations site can be accessed at https://www.riverviewbankpa.com/.

Safe Harbor Forward-Looking Statements:

We make statements in this press release, and we may from time to time make other statements regarding our outlook or expectations for future financial or operating results and/or other matters regarding or affecting Riverview Financial Corporation, Riverview Bank, and its subsidiaries (collectively, "Riverview") that may be considered "forward-looking statements" as defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such forward-looking statements may be identified by the use of such words as "believe," "expect," "anticipate," "should," "planned," "estimated," "intend" and "potential." For these statements, Riverview claims the protection of the statutory safe harbors for forward-looking statements.

Riverview cautions you that a number of important factors could cause actual results to differ materially from those currently anticipated in any forward-looking statement. Such factors include, but are not limited to: prevailing economic and political conditions, particularly in our market area; credit risk associated with our lending activities; changes in interest rates, loan demand, real estate values and competition; changes in accounting principles, policies, and guidelines; changes in any applicable law, rule, regulation or practice with respect to tax or legal issues; and other economic, competitive, governmental, regulatory and technological factors affecting Riverview's operations, pricing, products and services and other factors that may be described in Riverview's Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q as filed with the Securities and Exchange Commission from time to time. Most recently in December 2019, a novel strain of coronavirus surfaced in Wuhan, China, and spread around the world, with resulting business and social disruption.  The coronavirus was declared a Public Health Emergency of International Concern by the World Health Organization on January 30, 2020. The risk factors associated with this event could have a material adverse effect on significant estimates, operations and business results of Riverview. Significant estimates as disclosed in Riverview's Forms 10-K and 10-Q include allowance for loan losses, fair value of financial instruments, the valuation of real estate acquired in connection with foreclosures or in satisfaction of loan, determination of other-than-temporary impairment losses on securities, impairment of goodwill and intangible assets.

Furthermore, the COVID-19 pandemic is having an adverse impact on the Company, its customers and the communities it serves. Given its ongoing and dynamic nature, it is difficult to predict the full impact of the COVID-19 outbreak on the Company's business. The extent of such impact will depend on future developments, which are highly uncertain, including when the coronavirus can be controlled and abated and when and how the economy may be reopened. As the result of the COVID-19 pandemic and the related adverse local and national economic consequences, the Company could be subject to any of the following risks, any of which could have a material, adverse effect on the Company's business, financial condition, liquidity, and results of operations: the demand for Bank's products and services may decline, making it difficult to grow assets and income; if the economy is unable to substantially reopen, and high levels of unemployment continue for an extended period of time, loan delinquencies, problem assets, and foreclosures may increase, resulting in increased charges and reduced income; collateral for loans, especially real estate, may decline in value, which could cause loan losses to increase; the Company's allowance for loan losses may increase if borrowers experience financial difficulties, which will adversely affect the Company's net income; the net worth and liquidity of loan guarantors may decline, impairing their ability to honor commitments to the Company; as the result of the decline in the Federal Reserve Board's target federal funds rate to near 0%, the yield on the Company's assets may decline to a greater extent than the decline in the Company's cost of interest-bearing liabilities, reducing the Company's net interest margin and spread and reducing net income; the Company's wealth management revenues may decline with continuing market turmoil; and the Company's cybersecurity risks are increased as the result of an increase in the number of employees working remotely.

In addition to these risks, acquisitions and business combinations present risks other than those presented by the nature of the business acquired. Acquisitions and business combinations may be substantially more expensive to complete than originally anticipated, and the anticipated benefits may be significantly harder, or take longer, to achieve than expected. As a regulated financial institution, our pursuit of attractive acquisition and business combination opportunities could be negatively impacted by regulatory delays or other regulatory issues. Regulatory and/or legal issues related to the pre­acquisition operations of an acquired or combined business may cause reputational harm to Riverview following the acquisition or combination, and integration of the acquired or combined business with ours may result in additional future costs arising as a result of those issues. 

The forward-looking statements are made as of the date of this release, and, except as may be required by applicable law or regulation, Riverview assumes no obligation to update the forward-looking statements or to update the reasons why actual results could differ from those projected in the forward-looking statements.

In addition to evaluating its results of operations in accordance with accounting principles generally accepted in the United States of America ("GAAP"), Riverview routinely presents and supplements its evaluation with an analysis of certain non-GAAP financial measures, such as tangible stockholders' equity and Core net income ratios. The reported results for the three and nine months ended September 30, 2020 and 2019, contain items which Riverview considers non-core, namely net gains on sales of investment securities available-for-sale, acquisition related expenses and the adjustment to tax expense due to the enactment of the Tax Act. Riverview presents the non-GAAP financial measures because it believes that these measures provide useful and comparative information to assess trends in Riverview's results of operation. Presentation of these non-GAAP financial measures is consistent with how Riverview evaluates its performance internally and these non-GAAP financial measures are frequently used by securities analysts, investors and other interested parties in evaluation of companies in Riverview's industry. Where non-GAAP measures are used in this press release, reconciliations to the comparable GAAP measures are provided in the accompanying tables. The non-GAAP financial measures Riverview uses may differ from similarly titled non-GAAP financial measures of other financial institutions. These non-GAAP financial measures would not be considered a substitute for GAAP basis measures, and Riverview strongly encourages a review of its condensed consolidated financial statements in their entirety. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP measures are presented in the tabular material that follows.

[TABULAR MATERIAL FOLLOWS]

Summary Data

Riverview Financial Corporation

Five Quarter Trend

(In thousands, except per share data)








Sep 30

Jun 30

Mar 31

Dec 31

Sep 30


2020

2020

2020

2019

2019

Key performance data:






Per common share data:






Net income (loss)

$   0.08

$(2.61)

$  0.07

$  0.14

$  0.25

Core net income (1)

$   0.07

$  0.05

$  0.00

$  0.13

$  0.25

Cash dividends declared

$   0.00

$  0.08

$  0.08

$  0.08

$  0.08

Book value

$ 10.28

$10.20

$12.82

$12.81

$12.77

Tangible book value (1)

$ 10.04

$  9.94

$  9.87

$  9.83

$  9.75

Market value:






High

$  7.77

$  7.60

$13.60

$12.50

$11.68

Low

$  5.25

$  4.13

$  5.25

$  11.10

$  9.90

Closing

$  6.76

$  5.38

$  6.47

$  12.49

$  11.68

Market capitalization

$62,729

$49,839

$59,757

$115,116

$107,252

Common shares outstanding

9,279,503

9,263,697

9,236,039

9,216,616

9,182,565







Selected ratios:












Return on average stockholders' equity

2.88%

(81.21)%

2.14%

4.28%

7.62%







Core return on average stockholders' equity (1)

2.88%

1.55%

(0.04)%

4.09%

7.76%







Return on average tangible stockholders' equity (1)

2.95%

(104.88)%

2.77%

5.59%

9.97%







Core return on average tangible stockholders' equity (1)

2.95%

2.00%

(0.05)%

5.33%

10.16%







Tangible stockholders' equity to tangible assets (1)

6.88%

6.85%

8.36%

8.61%

8.28%







Return on average assets

0.20%

(7.50)%

0.23%

0.46%

0.81%







Core return on average assets (1)

0.20%

0.14%

0.00%

0.44%

0.82%







Stockholders' equity to total assets

7.03%

7.01%

10.60%

10.94%

10.57%







Efficiency ratio (2)

77.46%

76.84%

82.49%

84.24%

69.11%







Nonperforming assets to loans, net, and foreclosed assets

1.12%

1.15%

0.65%

0.60%

0.66%







Net charge-offs to average loans, net

(0.02)%

0.20%

0.49%

(0.12)%

0.43%







Allowance for loan losses to loans, net

1.00%

0.84%

0.93%

0.88%

0.80%







Earning assets yield (FTE) (3)

3.73%

3.85%

4.39%

4.54%

5.31%







Cost of funds

0.56%

0.67%

0.95%

0.99%

1.05%







Net interest spread (FTE) (3)

3.17%

3.18%

3.44%

3.55%

4.26%







Net interest margin (FTE) (3)

3.26%

3.29%

3.60%

3.74%

4.46%



(1)

See Reconciliation of Non-GAAP financial measures.

(2)

Total noninterest expense less amortization of intangible assets and goodwill impairment charge divided by tax-equivalent net interest income and noninterest income less net gain (loss) on sale of investment securities available-for-sale.

(3)

Tax-equivalent adjustments were calculated using the prevailing federal statutory tax rate.

 


Riverview Financial Corporation



Consolidated Statements of Income (Loss)



(In thousands, except per share data)









Nine Months Ended

Sep 30


Sep 30




2020


2019



Interest income:






Interest and fees on loans:






Taxable

$31,649


$34,651



Tax-exempt

704


722



Interest and dividends on investment securities:






Taxable

1,291


2,113



Tax-exempt

176


159



Dividends






Interest on interest-bearing deposits in other banks

112


647



Interest on federal funds sold






Total interest income

33,932


38,292









Interest expense:






Interest on deposits

4,384


6,199



Interest on short-term borrowings

28





Interest on long-term debt

652


392



Total interest expense

5,064


6,591



Net interest income

28,868


31,701



Provision for loan losses

5,656


2,250



Net interest income after provision for loan losses

23,212


29,451









Noninterest income:






Service charges, fees and commissions

3,491


3,497



Commissions and fees on fiduciary activities

669


855



Wealth management income

636


709



Mortgage banking income

900


357



Life insurance investment income

578


574



Net gain (loss) on sale of investment securities available-for-sale

815


(95)



Total noninterest income

7,089


5,897









Noninterest expense:






Salaries and employee benefits expense

15,452


18,572



Net occupancy and equipment expense

3,676


3,174



Amortization of intangible assets

509


582



Goodwill impairment

24,754





Net cost of operation of other real estate owned

40


20



Other expenses

8,713


9,531



Total noninterest expense

53,144


31,879



Income (loss) before income taxes

(22,843)


3,469



Income tax expense (benefit)

(49)


456



Net income (loss)

$(22,794)


$3,013



    Other comprehensive income:






Unrealized gain on investment securities available-for-sale

$2,007


$2,703



Reclassification adjustment for (gain) loss included in net income

(815)


95



Change in pension liability






Change in cash flow hedge

11





Income tax expense related to other comprehensive income

253


588



Other comprehensive income, net of income taxes

950


2,210



Comprehensive income (loss)

$(21,844)


$5,223









Per common share data:






Net income:






         Basic

$(2.46)


$0.33



         Diluted

$(2.46)


$0.33



Average common shares outstanding:






         Basic

9,248,856


9,159,281



         Diluted

9,248,856


9,172,015



Cash dividends declared

$0.15


$0.28


 

Riverview Financial Corporation


Consolidated Statements of Income (Loss)


(In thousands, except per share data)









Three months ended

Sep 30

Jun 30

Mar 31

Dec 31

Sep 30



2020

2020

2020

2019

2019


Interest income:







Interest and fees on loans:







Taxable

$  11,265

$  10,602

$  9,782

$  10,216

$  12,283


Tax-exempt

223

236

245

257

259


Interest and dividends on investment securities available-for-sale:







Taxable

360

396

535

622

641


Tax-exempt

71

68

37

41

43


Dividends







Interest on interest-bearing deposits in other banks

11

12

89

119

200


Interest on federal funds sold







Total interest income

11,930

11,314

10,688

11,255

13,426









Interest expense:







Interest on deposits

1,200

1,395

1,789

1,887

2,027


Interest on short-term borrowings


23

5




Interest on long-term debt

304

225

123

122

127


Total interest expense

1,504

1,643

1,917

2,009

2,154


Net interest income

10,426

9,671

8,771

9,246

11,272


Provision for loan losses

1,844

2,012

1,800

156

1,049


Net interest income after provision for loan losses

8,582

7,659

6,971

9,090

10,223









Noninterest income:







Service charges, fees and commissions

1,099

1,011

1,381

1,689

1,129


Commissions and fees on fiduciary activities

246

210

213

225

314


Wealth management income

220

196

220

231

226


Mortgage banking income

401

391

108

210

151


Life insurance investment income

192

193

193

189

193


Net gain (loss) on sale of investment securities available-for-sale



815

73

(53)


        Total noninterest income

2,158

2,001

2,930

2,617

1,960









Noninterest expense:







Salaries and employee benefits expense

5,411

4,985

5,056

5,273

5,232


Net occupancy and equipment expense

1,428

1,068

1,180

1,183

1,041


Amortization of intangible assets

170

169

170

191

194


Goodwill impairment


24,754





Net cost (benefit) of operation of other real estate owned

51


(11)

47

(15)


Other expenses

2,918

2,978

2,817

3,495

2,979


Total noninterest expense

9,978

33,954

9,212

10,189

9,431


Income (loss) before income taxes

762

(24,294)

689

1,518

2,752


Income tax expense (benefit)

67

(172)

56

245

486


Net income (loss)

$   695

$(24,122)

$    633

$    1,273

$    2,266









Other comprehensive income (loss):







Unrealized gain (loss) on investment securities available-for-sale

$   114

$       840

$ 1,053

$       134

$    (256)


Reclassification adjustment for (gain) loss included in net income



(815)

(73)

53


Change in pension liability




16



Change in cash flow hedge

49

(38)





Income tax expense (benefit) related to other comprehensive income (loss)

35

168

50

16

(42)


Other comprehensive income (loss), net of income taxes

128

634

188

61

(161)


Comprehensive income (loss)

$   823

$(23,488)

$821

$1,334

$2,105









Per common share data:







Net income (loss):







         Basic

$ 0.08

$(2.61)

$ 0.07

$ 0.14

$ 0.25


         Diluted

$ 0.08

$(2.61)

$ 0.07

$ 0.14

$ 0.25


Average common shares outstanding:







         Basic

9,273,666

9,249,184

9,223,445

9,191,551

9,173,901


         Diluted

9,273,666

9,249,184

9,233,060

9,210,646

9,181,076


Cash dividends declared

$ 0.00

$ 0.08

$ 0.08

$ 0.08

$ 0.08


 

Riverview Financial Corporation


Details of Net Interest and Net Interest Margin


(In thousands, fully taxable equivalent basis)









Three months ended

Sep 30

Jun 30

Mar 31

Dec 31

Sep 30



2020

2020

2020

2019

2019


Net interest income:







Interest income







Loans, net:







Taxable

$  11,265

$  10,602

$  9,782

$  10,216

$  12,283


Tax-exempt

282

299

310

325

328


Total loans, net

11,547

10,901

10,092

10,541

12,611


Investments:







Taxable

360

396

535

622

641


Tax-exempt

90

86

47

52

54


Total investments

450

482

582

674

695


Interest on interest-bearing balances in other banks

11

12

89

119

200


Federal funds sold







Total interest income

12,008

11,395

10,763

11,334

13,506


Interest expense:







Deposits

1,200

1,395

1,789

1,887

2,027


Short-term borrowings


23

5




Long-term debt

304

225

123

122

127


Total interest expense

1,504

1,643

1,917

2,009

2,154


Net interest income

$  10,504

$   9,752

$  8,846

$   9,325

$  11,352









Yields on earning assets:







Loans, net:







Taxable

3.95%

4.10%

4.69%

4.93%

5.77%


Tax-exempt

3.57%

3.46%

3.50%

3.47%

3.47%


Total loans, net

3.94%

4.08%

4.64%

4.86%

5.67%


Investments:







Taxable

2.17%

2.74%

2.78%

2.69%

2.90%


Tax-exempt

3.31%

4.10%

4.08%

4.19%

4.08%


Total investments

2.33%

2.91%

2.85%

2.77%

2.96%


Interest-bearing balances with banks

0.11%

0.10%

1.17%

1.39%

2.31%


Federal funds sold







Total earning assets

3.73%

3.85%

4.39%

4.54%

5.31%


Costs of interest-bearing liabilities:







Deposits

0.56%

0.67%

0.90%

0.94%

0.99%


Short-term borrowings


0.33%

2.03%




Long-term debt

0.56%

0.74%

4.19%

6.95%

7.26%


Total interest-bearing liabilities

0.56%

0.67%

0.95%

0.99%

1.05%


Net interest spread

3.17%

3.18%

3.44%

3.55%

4.26%


Net interest margin

3.26%

3.29%

3.60%

3.74%

4.46%


 

Riverview Financial Corporation


Consolidated Balance Sheets


(In thousands, except per share data)




Sep 30

Jun 30

Mar 31

Dec 31

Sep 30

At period end

2020

2020

2020

2019

2019







Assets:






Cash and due from banks

$  10,646

$  10,195

$  12,128

$  11,838

$  13,108

Interest-bearing balances in other banks

21,312

33,033

61,107

38,510

16,733

Federal funds sold






Investment securities available-for-sale

98,846

74,134

68,402

91,247

106,637

Loans held for sale

4,547

4,252

272

81

336

Loans, net

1,163,442

1,165,453

887,449

852,109

883,506

Less: allowance for loan losses

11,624

9,736

8,251

7,516

7,097

Net loans

1,151,818

1,155,717

879,198

844,593

876,409

Premises and equipment, net

18,419

18,668

18,875

17,852

18,115

Accrued interest receivable

3,218

1,826

2,589

2,414

2,751

Goodwill



24,754

24,754

24,754

Other intangible assets, net

2,227

2,397

2,566

2,736

2,927

Other assets

45,739

46,578

47,152

45,929

47,989

Total assets

$1,356,772

$1,346,800

$1,117,043

$1,079,954

$1,109,759













Liabilities:






Deposits:






Noninterest-bearing

$  178,168

$  173,567

$  148,633

$  147,405

$  161,211

Interest-bearing

853,145

849,586

809,870

793,075

808,372

Total deposits

1,031,313

1,023,153

958,503

940,480

969,583

Short-term borrowings






Long-term debt

217,031

217,010

26,992

6,971

6,951

Accrued interest payable

591

457

424

435

432

Other liabilities

12,413

11,728

12,683

13,958

15,538

Total liabilities

1,261,348

1,252,348

998,602

961,844

992,504







Stockholders' equity:






Common stock

102,672

102,552

102,386

102,206

101,807

Capital surplus

190

161

134

112

300

Retained earnings (accumulated deficit)

(8,040)

(8,735)

16,081

16,140

15,557

Accumulated other comprehensive income (loss)

602

474

(160)

(348)

(409)

Total stockholders' equity

95,424

94,452

118,441

118,110

117,255

Total liabilities and stockholders' equity

$1,356,772

$1,346,800

$1,117,043

$1,079,954

$1,109,759

 

Riverview Financial Corporation


Consolidated Balance Sheets


(In thousands except per share data)










Sep 30

Jun 30

Mar 31

Dec 31

Sep 30


Average quarterly balances

2020

2020

2020

2019

2019









Assets:







Loans, net:







Taxable

$1,134,625

$1,041,161

$838,825

$822,667

$845,103


Tax-exempt

31,451

34,723

35,595

37,194

37,523


Total loans, net

1,166,076

1,075,884

874,420

859,861

882,626


Investments:







Taxable

66,049

58,230

77,400

91,665

87,753


Tax-exempt

10,812

8,442

4,628

4,929

5,257


Total investments

76,861

66,672

82,028

96,594

93,010


Interest-bearing balances with banks

38,334

48,174

30,490

33,882

34,323


Federal funds sold







Total earning assets

1,281,271

1,190,730

986,938

990,337

1,009,959


Other assets

73,079

102,097

98,407

99,930

101,242


Total assets

$1,354,350

$1,292,827

$1,085,345

$1,090,267

$1,111,201









Liabilities and stockholders' equity:







Deposits:







Noninterest-bearing

$175,402

$171,500

$144,630

$152,596

$159,320


Interest-bearing

853,782

837,512

795,084

797,577

810,430


Total deposits

1,029,184

1,009,012

939,714

950,173

969,750


Short-term borrowings


28,417

989




Long-term debt

217,021

122,875

11,817

6,962

6,942


Other liabilities

12,135

13,062

13,668

15,179

16,581


Total liabilities

1,258,340

1,173,366

966,188

972,314

993,273


Stockholders' equity

96,010

119,461

119,157

117,953

117,928


Total liabilities and stockholders' equity

$1,354,350

$1,292,827

$1,085,345

$1,090,267

$1,111,201


 

Riverview Financial Corporation

Asset Quality Data

(In thousands)








Sep 30

Jun 30

Mar 31

Dec 31

Sep 30


2020

2020

2020

2019

2019

At quarter end:






Nonperforming assets:






Nonaccrual loans

$3,225

$3,241

$2,048

$2,287

$2,927

Accruing restructured loans

9,648

9,592

2,646

2,666

2,692

Accruing loans past due 90 days or more

108

183

691

45

100

Foreclosed assets

25

363

346

82

87

Total nonperforming assets

$13,006

$13,379

$5,731

$5,080

$5,806







Three months ended:






Allowance for loan losses:






Beginning balance

$9,736

$8,251

$7,516

$7,097

$7,002

Charge-offs

42

574

1,123

237

985

Recoveries

86

47

58

500

31

Provision for loan losses

1,844

2,012

1,800

156

1,049

Ending balance

$11,624

$9,736

$8,251

$7,516

$7,097

 

Riverview Financial Corporation

Reconciliation of Non-GAAP Financial Measures

(In thousands, except per share data)








Sep 30

Jun 30

Mar 31

Dec 31

Sep 30

Three months ended:

2020

2020

2020

2019

2019

Core net income (loss) per common share:






Net income (loss)

$695

$(24,122)

$633

$1,273

$2,266

Adjustments:






Less: Gain (loss) on sale of investment securities, net of tax



644

58

(42)

Add: Acquisition related expenses, net of tax






Add: Goodwill impairment


24,581




Net income (loss) – Core

$695

$459

$(11)

$1,215

$2,308







Average common shares outstanding

9,273,666

9,249,184

9,223,445

9,191,551

9,173,901

Core net income per common share

$ 0.07

$ 0.05

$ 0.00

$ 0.13

$ 0.25







Tangible book value:






Total stockholders' equity

$95,424

$94,452

$118,441

$118,110

$117,255

Less: Goodwill



24,754

24,754

24,754

Less: Other intangible assets, net

2,227

2,397

2,566

2,736

2,927

Total tangible stockholders' equity

$93,197

$92,055

$91,121

$90,620

$89,574







Common shares outstanding

9,279,491

9,263,697

9,236,039

9,216,616

9,182,565







Tangible book value per share

$10.04

$9.94

$9.87

$9.83

$9.75







Tangible stockholders' equity to tangible assets:






Total stockholders' equity

$95,424

$94,452

$118,441

$118,110

$117,255

Less: Goodwill



24,754

24,754

24,754

Less: Other intangible assets, net

2,227

2,397

2,566

2,736

2,927

Total tangible stockholders' equity

$93,197

$92,055

$91,121

$90,620

$89,574







Total assets

$1,356,772

$1,346,800

$1,117,043

$1,079,954

$1,109,759

Less: Goodwill



24,754

24,754

24,754

Less: Other intangible assets, net

2,227

2,397

2,566

2,736

2,927

Total tangible assets

$1,354,545

$1,344,403

$1,089,723

$1,052,464

$1,082,078







Tangible stockholders' equity to tangible assets

6.88%

6.85%

8.36%

8.61%

8.28%







Core return on average stockholders' equity:






Net income (loss) GAAP

$695

$(24,122)

$633

$1,273

$2,266

Adjustments:






Less: Gain (loss) on sale of investment securities, net of tax



644

58

(42)

Add: Acquisition related expenses, net of tax






Add: Goodwill impairment


24,581




Net income (loss) – Core

$695

$459

$(11)

$1,215

$2,308







Average stockholders' equity

$96,010

$119,461

$119,157

$117,953

$117,928

Core return on average stockholders' equity

2.88%

1.55%

(0.04)%

4.09%

7.76%







Return on average tangible equity:






Net income (loss) GAAP

$695

$(24,122)

$633

$1,273

$2,266







Average stockholders' equity

$96,010

$119,461

$119,157

$117,953

$117,928

Less: average intangibles

2,310

26,961

27,401

27,579

27,775

Average tangible stockholders' equity

$93,700

$92,500

$91,756

$90,374

$90,153







Return on average tangible stockholders' equity

2.95%

(104.88)%

2.77%

5.59%

9.97%

 

Riverview Financial Corporation

Reconciliation of Non-GAAP Financial Measures

(In thousands, except per share data)








Sep 30

Jun 30

Mar 31

Dec 31

Sep 30

Three months ended:

2020

2020

2020

2019

2019

Core return on average tangible stockholders' equity:






Net income (loss) GAAP

$695

$(24,122)

$633

$1,273

$2,266

Adjustments:






Less: Gain (loss) on sale of investment securities, net of tax



644

58

(42)

Add: Acquisition related expenses, net of tax






Add: Goodwill impairment


24,581




Net income (loss) – Core

$695

$459

$(11)

$1,215

$2,308







Average stockholders' equity

$96,010

$119,461

$119,157

$117,953

$117,928

Less: average intangibles

2,310

26,961

27,401

27,579

27,775

Average tangible stockholders' equity

$93,700

$92,500

$91,756

$90,374

$90,153







Core return on average tangible stockholders' equity

2.95%

2.00%

(0.05)%

5.33%

10.16%







Core return on average assets:






Net income (loss) GAAP

$695

$(24,122)

$633

$1,273

$2,266

Adjustments:






Less: Gain (loss) on sale of investment securities, net of tax



644

58

(42)

Add: Acquisition related expenses, net of tax






Add: Goodwill impairment


24,581




Net income (loss) – Core

$695

$459

$(11)

$1,215

$2,308







Average assets

$1,354,350

$1,292,827

$1,085,345

$1,090,267

$1,111,201

Core return on average assets

0.20%

0.14%

0.00%

0.44%

0.82%

 

Riverview Financial Corporation

Reconciliation of Non-GAAP Financial Measures

(In thousands, except per share data)







Sep 30

Sep 30



2020

2019

Nine months ended:








Core net income per common share:




Net income (loss)


$(22,794)

$3,013

Adjustments:




   Less: Gains (loss) on sale of investment securities, net of tax


644

(75)

   Add: Executive separation expense, net of tax



1,752

    Add: Goodwill impairment


24,581


Net income (loss) – core


$1,143

$4,840





Average common shares outstanding


9,248,856

9,159,281





Core net income (loss) per common share


$0.12

$0.53

 

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SOURCE Riverview Financial Corporation

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