Riverview Financial Corp. Reports First Quarter Earnings For 2019

HARRISBURG – Riverview Financial Corp. has reported unaudited financial results at and for the three months that ended March 31, 2019.

Riverview reported a net loss of $687 thousand, or $(0.08) per basic and diluted weighted average common share, for the first quarter of 2019, compared to net income of $2.8 million, or $0.31 per basic and diluted weighted average common share, for the first quarter of 2018.

The results for the first three months ended March 31, 2019 included the recognition of a nonrecurring executive separation pre-tax expense totaling $2.2 million, which primarily contributed to the first quarter net loss.

The year over year decline was also due to the recognition of lower loan interest income resulting from a decline in loan balances due to anticipated merger related attrition throughout 2018, including payoffs of acquired purchase credit impaired and certain risk related loans and steadfast adherence to both credit quality underwriting standards and pricing discipline.

In addition to evaluating its results of operations in accordance with accounting principles generally accepted in the United States of America, 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.

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.


Book value per share and tangible book value per share increased $0.47 or 3.94 percent and $0.58 or 6.63 percent, respectively, at March 31, 2019, compared to the same period last year.

Tax-equivalent net interest margin was to 3.86 percent in the first quarter of 2019 compared to 4.38 percent for the same period last year.

Tax-equivalent net interest margin, excluding the impact of purchase accounting, improved to 3.67 percent in the first quarter of 2019 compared to 3.62 percent for the same period last year.

Continued strength in asset quality as nonperforming assets as a percentage of loans, net and other real estate owned was 0.68 percent at the end of the first quarter of 2019, an improvement from 0.81 percent at Dec. 31, 2018 and 0.90 percent at March 31, 2018.

Riverview incurred a pre-tax nonrecurring expense of $2.2 million in the first quarter of 2019 associated with a separation agreement of a contract employee.

“While recording a net operating loss in the first quarter of 2019 is the result of recognizing nonrecurring expenses primarily associated with an executive separation agreement, management’s focus on core results and the need to take advantage of our current scale through improved operating efficiencies is unwavering”, said Brett D. Fulk, president and chief executive officer.

“In addition to the anticipated cost savings associated with the separation of service with the aforementioned executive, we have initiated specific strategic measures to enhance noninterest income, improve operating efficiencies and increase interest income.

“One such initiative was the closure of two offices with successful transition of customers to nearby offices during the first quarter of 2019.

“With respect to interest income, we anticipate loan growth opportunities through the addition of several experienced commercial relationship managers resulting from ongoing market disruption, chiefly among our largest competitors.

“Additionally, we continue to analyze and take action with respect to our delivery system by repositioning our branch footprint to markets with greater growth and profitability potential.

“Lastly, we have identified or developed a number of new products and services that will be introduced throughout 2019, all with demonstrated ability to either enhance revenue or decrease expenses.”

“In closing, management recognizes the need to address efficiencies, maintain expense discipline, while continuing to grow our balance sheet in a measured, profitable manner.

“There is no higher priority in our company at the present time than positioning Riverview Financial Corp. to capitalize on our current scale for the purpose of enhancing shareholder value,” concluded Fulk.


Tax-equivalent net interest income for the three months ended March 31, decreased $1,663 thousand to $9,830 thousand in 2019 from $11,493 thousand in 2018.

The decrease in tax-equivalent net interest income was primarily attributable to the decline in loan balances and the realization of lower levels of loan accretion from purchase accounting marks.

The tax-equivalent net interest margin for the three months ended March 31, 2019, decreased to 3.86 percent from 4.38 percent for the comparable period of 2018.

The tax-equivalent yield on earnings assets was 4.73 percent and the cost of funds was 1.06 percent in the first quarter of 2019.

The tax-equivalent yield on the loan portfolio decreased to 5.02 percent in 2019 compared to 5.38 percent in 2018.

The tax-equivalent net interest margin excluding the loan accretion would have been 3.67 percent in the first three months of 2019 compared to 3.62 percent for the same period last year.

Investments yielded 3.10 percent on a tax-equivalent basis in the first quarter of 2019 compared to 2.74 percent for the same period last year.

For the three months ended March 31, the cost of deposits increased 29 basis points to 1.01 percent in 2019 from 0.72 percent in 2018. Loans net averaged $886.8 million in 2019 and $945.7 million in 2018.

Average investments totaled $108.3 million in 2019 and $92.8 million in 2018. Average interest-bearing liabilities decreased to $842.6 million in 2019 from $896.5 million in 2018.

The provision for loan losses totaled $583 thousand for the quarter ended March 31, 2019, compared to $390 thousand in 2018. Management does not believe this increase to be a reflection of rising systemic risk within the loan portfolio.

For the quarter ended March 31, noninterest income totaled $1,811 thousand in 2019, a decrease of $142 thousand from $1,953 thousand in 2018.

The overall reduction was primarily driven by decreases in service charges, fees and commission of $175 thousand, and mortgage banking income of $64 thousand.

Service charge income realized a decrease in NSF and overdraft income, while mortgage banking income decreased due to higher mortgage origination rates and normal seasonal stagnation.

Positive increases were made in both trust and wealth management as income for the first quarter of 2019 increased by $50 thousand and $93 thousand, respectively, when compared against the first quarter of 2018.

Additionally, net losses on the sale of investment securities of $42 thousand were recognized in the first quarter of 2019 in order to dispose of certain investments with low yields and higher risk characteristics.

Noninterest expense increased $2,428 thousand, or 25.5 percent, to $11,964 thousand for the three months ended March 31, 2019, from $9,536 thousand for the same period last year.

The increase was primarily due to $2.2 million in nonrecurring expense from an executive separation agreement.  The net cost of operation of other real estate owned was $127 thousand for the first quarter of 2019 versus $(1) thousand in the first quarter of 2018.

Other expenses increased $172 thousand, or 6.0 percent to $3,044 thousand for the first quarter of 2019 from $2,872 thousand for the same period last year.

Offsets to the overall increase in noninterest expense were realized through reduced costs in net occupancy and equipment of $33 thousand, and in the amortization expense of intangible assets of $27 thousand when comparing the first quarter of 2019 to the first quarter of 2018.


Total assets, loans, net and deposits totaled $1.1 billion, $878.1 million, and $1.0 billion, respectively, at March 31, 2019.

For the three months ended March 31, 2019, total assets increased $1.1 million while loans, net and deposits decreased $15.1 million and $3.6 million, respectively.

Business lending, including commercial and commercial real estate loans decreased $11.5 million while retail lending, including residential mortgages and consumer loans decreased $7.3 million during the three months ended March 31, 2019.

Offsetting the declines for the same period were increases of $3.7 million in construction lending.  Loan originations during the first quarter of 2019 represented a more moderate pace as compared to 2018 as management has continued its emphasize on strong credit quality underwriting standards and pricing discipline.

Total investments were $100.7 million at March 31, 2019, compared to $104.7 million at Dec. 31, 2018. Total deposits decreased $3.6 million in 2019 since year-end 2018.

Noninterest-bearing deposits increased $2.3 million, while interest-bearing deposits decreased $5.9 million during the first three months of 2019.

As a percentage of total deposits, noninterest-bearing deposits amounted to 16.5 percent at March 31, 2019 and 16.2 percent at Dec. 31, 2018.

Stockholders’ equity totaled $113.5 million, or $12.40 per share, at March 31, 2019, as compared with $113.9 million, or $12.49 per common share, at Dec. 31, 2018.

The decrease in equity in the three months ended March 31, 2019 was a result primarily of a net loss of $687 thousand and dividends declared of $915 thousand, offset partially by a reduction of $841 million in the accumulated other comprehensive loss.

A net increase of $341 thousand was realized in common stock and related surplus through the issuance of shares through shareholder and employee issuance and option plans.

Tangible stockholders’ equity per common share decreased to $9.33 at March 31, 2019, compared to $9.39 at Dec. 31, 2018.


Nonperforming assets were $6.0 million, or 0.68 percent of loans, net and foreclosed assets at March 31, 2019 compared to $7.2 million or 0.81 percent at Dec. 31, 2018.

Adjusting for accruing restructured loans, nonperforming assets were $3.2 million, or 0.37 percent of loans, net and foreclosed assets at March 31, 2019, and $4.3 million, or 0.48 percent, at Dec. 31, 2018.

The allowance for loan losses equaled $6.5 million, or 0.74 percent, of loans, net at March 31, 2019, compared to $6.3 million, or 0.71 percent, at Dec.31, 2018.

Adding accounting marks for purchased credit impaired loans to the allowance for loan losses would result in a ratio of 1.14 percent as a percentage of loans, net at March 31, 2019.

The coverage ratio, allowance for loan losses as a percentage of nonperforming assets, was 108.9 percent at March 31, 2019 versus 88.1 percent at Dec.31, 2018.

Excluding accruing restructured loans, the coverage ratio would be 201.1 percent at March 31, 2019. Loans charged-off, net of recoveries, for the three months ended March 31, 2019, equaled $445 thousand, compared to $181 thousand for the same period last year.

Riverview Financial Corp. is the parent company of Riverview Bank and its operating divisions Citizens Neighborhood Bank, CBT Bank, Riverview Wealth Management and CBT Financial and Trust Management.

An independent community bank, Riverview Bank serves the Pennsylvania market areas of Berks, Blair, Centre, Clearfield, Dauphin, Huntingdon, Lebanon, Lycoming, Northumberland, Perry, Schuylkill and Somerset counties through 28 community banking offices and four 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.

The Wealth Management and Trust divisions, with assets under management exceeding $350 million, provide trust and investment advisory services to the general public, businesses and not-for-profit organizations.

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/.

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