Riverview Bancorp (RVSB) Q1 EPS Down 40%

Riverview Bancorp (RVSB 0.62%), a community bank based in the Pacific Northwest, released results for Q1 FY2026 on July 29, 2025. The quarter's main news was that both GAAP earnings and revenue fell short of Wall Street estimates: GAAP earnings per share were $0.06 (analysts expected $0.10), while GAAP revenue was $13.2 million compared to the $14.9 million forecast. Despite a year-over-year rise in GAAP revenue and earnings, the results underscored ongoing challenges with efficiency and costs. Overall, the period showed modest operational progress, but the GAAP shortfall against expectations highlighted continued pressure on profitability.

Source: Analyst estimates for the quarter provided by FactSet.

About Riverview Bancorp and Its Core Business

Riverview Bancorp is a community-focused financial institution with a presence across Washington and Oregon. It primarily serves local businesses, professionals, and individuals with banking and financial services. The company’s main earnings drivers are its traditional commercial real estate and business lending activities, along with a growing fee-based trust and wealth management service.

In recent years, Riverview has concentrated on prudent credit risk management, deposit growth from core relationships, regulatory compliance, and digital banking enhancements. It closely manages loan exposure, especially in commercial real estate, and seeks to maintain strong asset quality, stable funding, and capital adequacy -- all considered essential for sustained growth and risk mitigation.

Quarter Highlights: Financial Performance and Business Trends

However, the figure came in $1.7 million short of analyst estimates, reflecting ongoing revenue headwinds. GAAP net interest income rose 11.4% year-over-year to $9.8 million, driven by higher asset yields as more loans were originated and repriced at favorable rates. The net interest margin, which measures the bank’s profit on its core lending activity, improved by 0.31 percentage points to 2.78% in Q1 FY2026. This was helped by higher loan yields, which reached 5.02%, and disciplined deposit cost management with only a slight year-over-year increase in deposit costs to 1.72% from 1.61%.

Non-interest income, which includes trust and wealth management fees, remained about level with last year. The trust business remained a stable contributor, with assets under management climbing to $900.1 million. The efficiency ratio -- a key banking metric that measures cost efficiency -- remained high at 88.3%.

In terms of credit quality, Non-performing assets (GAAP) stayed at 0.01% of total assets, indicating solid loan performance. The allowance for credit losses (GAAP) as a percentage of total loans was 1.44%, matching last quarter's 1.45%, and there were positive net recoveries with no new provision needed. However, Classified assets jumped to $10.8 million from $228,000 in Q1 FY2025 due to one specific lending relationship, though management stated it does not expect a loss on this account.

The company’s lending portfolio showed growth. Total loans (GAAP) ended at $1.07 billion, up $23.0 million year over year. Commercial business loans accounted for 21.9% of total loans at March 31, 2025. The bank’s loan pipeline increased, with a weighted average yield on new loans reaching 7.51%. Meanwhile, total deposits fell $9.8 million year over year, mainly due to seasonality and tax payments. Certificates of deposit, which are higher-cost funding sources, grew as customers responded to higher interest rates. Liquidity stood strong, with $449.2 million available and Federal Reserve and Federal Home Loan Bank borrowing capacity well above uninsured deposits.

Capital levels remained robust. The total capital ratio improved to 16.56%. and the tier 1 leverage ratio reached 11.16%, both comfortably above regulatory minimums. The tangible common equity ratio (non-GAAP) and book value per share (GAAP) also rose. Asset quality metrics and strong capital continued to anchor the company’s financial stability. The quarterly dividend was maintained at $0.02 per share, and management finished a $2.0 million stock buyback as of February 2, 2025 (Q4 FY2025), with a new $2.0 million authorization in place as of April 24, 2025.

Business Lines and Recent Initiatives

Riverview’s primary business remains core community banking -- lending to local businesses and property owners, along with personal and commercial deposit services. The trust and asset management operation, offered through Trust Company assets, provides investment and fiduciary services. This segment again delivered stable fee income and growth in assets under management.

The company’s commercial real estate and business loan portfolios drive most of its interest revenue, but they also concentrate risk if real estate values or business conditions deteriorate. The average loan yield (GAAP) increased, aided by higher rates. Consumer loans and deposit products round out the portfolio, but are much smaller contributors to total revenue or risk.

From a funding perspective, the mix of non-interest and interest checking accounts shifted slightly toward higher-cost certificates of deposit as customers pursued better returns. This trend, paired with increased Federal Home Loan Bank borrowings, is worth watching as it could push up funding costs if deposit competition remains intense. On the cost side, salary and benefit expenses were the main drivers of the rise in overall non-interest expense, as the company pressed on with technology upgrades and strategic hiring. Operating leverage -- the relationship between revenue and expense growth -- was negative, a notable point for profitability.

One material event in the quarter was the sharp rise in classified assets, though management clarified this related to one lending relationship for which a resolution plan is in place. There were no other significant credit issues or large credit losses, and Non-performing loans and assets (GAAP) stayed near record lows. Management also completed a previously announced $2.0 million share buyback as of February 2, 2025, further returning capital to shareholders.

Looking Ahead: Guidance and Investor Focus Points

Management did not provide specific financial guidance for upcoming quarters or the full fiscal year. However, it did note strong demand in its loan pipeline and focused hiring in lending teams. The bank’s inclusion in the Russell 2000 and Russell 3000 indices was seen as a move to drive greater visibility and liquidity.

In the coming quarters, investors should track loan growth within the commercial real estate and business segments, and any changes to credit quality or classified asset levels. With capital ratios strong and digital investments ongoing, operating efficiency and deposit mix will remain central challenges. The quarterly dividend was maintained at $0.02 per share.

Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.