As filed
with the Securities and Exchange Commission on June
7 , 2010
Registration
No. 333-162621
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
AMENDMENT
NO. 3
TO
FORM
S-1
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933
RIVERVIEW
BANCORP, INC.
(Exact
Name of Registrant as Specified in Its Charter)
|
Washington
(State
or Other Jurisdiction
of
Incorporation or Organization)
|
000-22957
(Primary
Standard Industrial
Classification
Code Number)
|
91-1838969
(I.R.S.
Employer
Identification
Number)
|
900
Washington Street, Suite 900, Vancouver, Washington 98660 (360) 693-6650
(Address,
Including Zip Code, and Telephone Number, Including Area Code, of Registrant's
Principal Executive Offices)
Patrick
Sheaffer, Chairman and CEO
Riverview
Bancorp, Inc.
900
Washington Street, Suite 900
Vancouver,
Washington 98660; (360) 693-6650
(Address,
Including Zip Code, and Telephone Number, Including Area Code, of Agent for
Service)
Copies
to:
|
John
F. Breyer, Jr., Esquire
Breyer
& Associates PC
8180
Greensboro Drive, Suite 785
McLean,
Virginia 22102
(703)
883-1100
|
Dave
M. Muchnikoff, P.C.
Silver,
Freedman & Taff, L.L.P.
3299
K Street, N.W., Suite 100
Washington,
D.C. 20007
(202)
295-4500
|
|
Lori
M. Beresford, Esquire
Kilpatrick
Stockton LLP
607
14th
Street, NW, Suite 900
Washington
DC 20005
|
|
Approximate date of commencement of
proposed sale to the public: As soon as practicable after this
registration statement becomes effective.
If any of
the securities being registered on this Form are to be offered on a delayed or
continuous basis pursuant to Rule 415 under the Securities Act of 1933, check
the following box: [ ]
If this
Form is filed to register additional shares for an offering pursuant to Rule
462(b) under the Securities Act, please check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same
offering: [ ]
If this
Form is a post-effective amendment filed pursuant to Rule 462(c) under the
Securities Act, check the following box and list the Securities Act registration
statement number of the earlier effective registration statement for the same
offering: [ ]
If this
Form is a post-effective amendment filed pursuant to Rule 462(d) under the
Securities Act, check the following box and list the Securities Act registration
statement number of the earlier effective registration statement for the same
offering: [ ]
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting
company. See the definitions of "large accelerated filer,"
"accelerated filer" and "smaller reporting company" in Rule 12b-2 of the
Exchange Act.
|
Large
accelerated filer [ ]
|
Accelerated
filer [X]
|
||
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Non-accelerated
filer [ ] (Do not check if a smaller reporting
company)
|
Smaller
reporting company [ ]
|
CALCULATION
OF REGISTRATION FEE
|
Title
of each class of
securities
to be registered
|
Amount
to
be
registered
|
Proposed
maximum
aggregate
offering
price(1)
|
Amount
of
registration
fee
|
|
Common
Stock, par value $.01 per share
|
7,931,035 shares
|
$23,000,001
|
$1,640 (2)
|
(1) Estimated
solely for the purpose of calculating the registration fee pursuant to Section
457(o) under the Securities Act.
(2) Previously paid a registration fee
of $1,605.
The
registrant hereby amends this registration statement on such date or dates as
may be necessary to delay its effective date until the registrant shall file a
further amendment which specifically states that this registration shall
thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the registration statement shall become
effective on such date as the Securities and Exchange Commission, acting
pursuant to said Section 8(a), may determine.
The
Information in this prospectus is not complete and may be changed. We
may not sell these securities until the registration statement filed with the
Securities and Exchange Commission
is effective. This prospectus is not an offer to sell these
securities and is not soliciting an offer to buy these securities in any state
where the offer or sale is not permitted.
Subject
to Completion, Dated __________ __, 2010
PRELIMINARY PROSPECTUS
6,896,552 Shares
 |
Common
Stock
We are
offering 6,896,552 shares of our common
stock. Our common stock is listed on the Nasdaq Global Select Market
under the symbol “RVSB.” On June 3 , 2010,
the last reported sale price of our common stock on the Nasdaq Global Select
Market was $ 2.90 per share.
Investing
in our common stock involves significant
risks. See “Risk Factors” beginning on page 8 of this prospectus to
read about factors you should consider before buying our common
stock.
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Per Share
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|
Total
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|||||||
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Public
offering price
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$
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$
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20,000,000
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||||
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Underwriting
discounts and commissions
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$
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$
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||||||
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Proceeds
to Riverview Bancorp, Inc. (before expenses)
|
|
$
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$
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||||||
The
underwriters have the option to purchase up to an additional 1,034,483 shares of our common stock at the public
offering price, less underwriting discounts and commissions, within 30 days of
the date of this prospectus solely to cover over-allotments, if
any.
Neither
the Securities and Exchange Commission nor any state securities commission has
approved or disapproved of these securities or passed upon the adequacy or
accuracy of this prospectus. Any representation to the contrary is a criminal
offense.
The
shares of common stock are not savings accounts, deposits or other obligations
of a bank or savings institution and are not insured by the Federal Deposit
Insurance Corporation or any other government agency.
The
underwriters expect to deliver the common stock in book-entry form only, through
the facilities of The Depository Trust Company, against payment on or
about ,
2010.
| Wunderlich Securities |
Howe
Barnes Hoefer & Arnett
|
The date
of this prospectus is _____________ ,
2010
Prospectus
|
Page
|
|
| CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS | iii |
| PROSPECTUS SUMMARY | 1 |
|
RISK
FACTORS
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8 |
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USE
OF PROCEEDS
|
25 |
|
CAPITALIZATION
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26 |
|
PRICE
RANGE OF COMMON STOCK AND DIVIDEND INFORMATION
|
27 |
| DESCRIPTION OF CAPITAL STOCK | 28 |
|
CERTAIN
ANTI-TAKEOVER PROVISIONS IN OUR ARTICLES OF INCORPORATION AND
BYLAWS
|
29 |
| ERISA CONSIDERATIONS | 31 |
| UNDERWRITING | 32 |
| LEGAL MATTERS | 34 |
| EXPERTS | 34 |
|
WHERE
YOU CAN FIND MORE INFORMATION
|
35 |
| INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE | 35 |
You
should rely only on the information contained in or incorporated by reference in
this prospectus and any “free writing prospectus” we authorize to be delivered
to you. We have not, and the underwriter s have not,
authorized anyone to provide you with additional information or information
different from that contained in or incorporated by reference in this prospectus
and any such “free writing prospectus.” If anyone provides you different or
inconsistent information, you should not rely on it. We are offering to sell,
and seeking offers to buy, our common stock only in jurisdictions where those
offers and sales are permitted. The information contained in or incorporated by
reference in this prospectus and any such “free writing prospectus” is accurate
only as of their respective dates. Our business, financial condition, results of
operations and prospects may have changed since those dates.
This
prospectus describes the specific details regarding this offering and the terms
and conditions of the common stock being offered hereby and the risks of
investing in our common stock. To the extent information in this prospectus is
inconsistent with any of the documents incorporated by reference into this
prospectus, you should rely on this prospectus. You should read this prospectus,
the documents incorporated by reference in this prospectus and the additional
information about us described in the section entitled “Where You Can Find More
Information” before making your investment decision.
As used
in this prospectus, the terms “we,” “our,” “us” and “Riverview” refer to
Riverview Bancorp, Inc. and its consolidated subsidiaries, unless the context
indicates otherwise. When we refer to “Riverview Community
Bank” in this prospectus, we are referring to Riverview Community Bank, a
wholly owned subsidiary of Riverview Bancorp, Inc.
This
prospectus and the documents incorporated herein by reference may contain
forward-looking statements. These forward-looking statements are
intended to be covered by the safe harbor for forward-looking statements
provided by the Private Securities Litigation Reform Act of 1995.
Forward-looking statements are not statements of historical fact and often
include the words “believes,” “expects,” “anticipates,” “estimates,”
“forecasts,” “intends,” “plans,” “targets,” “potentially,” “probably,”
“projects,” “outlook” or similar expressions or future or conditional verbs such
as “may,” “will,” “should,” “would” and “could.” Forward-looking statements
include statements with respect to our beliefs, plans, objectives, goals,
expectations, assumptions and statements about future
performance. These forward-looking statements are subject to known
and unknown risks, uncertainties and other factors that could cause actual
results to differ materially from the results anticipated, including, but not
limited to:
|
·
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the
credit risks of lending activities, including changes in the level and
trend of loan delinquencies and write-offs and changes in our allowance
for loan losses and provision for loan losses that may be impacted by
deterioration in the housing and commercial real estate
markets;
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·
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changes
in general economic conditions, either nationally or in our market
areas;
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·
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changes
in the levels of general interest rates, and the relative differences
between short and long term interest rates, deposit interest rates, our
net interest margin and funding
sources;
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·
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fluctuations
in the demand for loans, the number of unsold homes, land and other
properties and fluctuations in real estate values in our market
areas;
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·
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secondary
market conditions for loans and our ability to sell loans in the secondary
market;
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·
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results
of examinations of us by the Office of Thrift Supervision, or OTS , or other regulatory authorities, including
the possibility that any such regulatory authority may, among other
things, require us to increase our reserve for loan losses, write-down
assets, change our regulatory capital position or affect our ability to
borrow funds or maintain or increase deposits, which could adversely
affect our liquidity and earnings;
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·
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our
compliance with regulatory enforcement actions we have entered into with the OTS and the possibility that
our noncompliance could result in the imposition of additional enforcement
actions and additional requirements or restrictions on our
operations;
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·
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legislative
or regulatory changes that adversely affect our business including changes
in regulatory policies and principles, or the interpretation of
regulatory capital or other rules;
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·
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our
ability to attract and retain
deposits;
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·
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further
increases in premiums for deposit
insurance;
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·
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our
ability to control operating costs and
expenses;
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·
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the
use of estimates in determining fair value of certain of our assets, which
estimates may prove to be incorrect and result in significant declines in
valuation;
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·
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difficulties
in reducing risks associated with the loans on our balance
sheet;
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·
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staffing
fluctuations in response to product demand or the implementation of
corporate strategies that affect our workforce and potential associated
charges;
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·
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computer
systems on which we depend could fail or experience a security
breach;
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·
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our
ability to retain key members of our senior management
team;
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iii
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·
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costs
and effects of litigation, including settlements and
judgments;
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·
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our
ability to implement our business
strategies;
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·
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our
ability to successfully integrate any assets, liabilities, customers,
systems, and management personnel we may acquire into our operations and
our ability to realize related revenue synergies and cost savings within
expected time frames and any goodwill charges related
thereto;
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·
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increased
competitive pressures among financial services
companies;
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·
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changes
in consumer spending, borrowing and savings
habits;
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·
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the
availability of resources to address changes in laws, rules, or
regulations or to respond to regulatory
actions;
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·
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our
ability to pay dividends on our common stock and
interest or principal payments on our junior subordinated
debentures;
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·
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adverse
changes in the securities markets;
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·
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inability
of key third-party providers to perform their obligations to
us;
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·
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changes
in accounting policies and practices, as may be adopted by the financial
institution regulatory agencies or the Financial Accounting Standards
Board, including additional guidance and interpretation on accounting
issues and details of the implementation of new accounting methods;
and
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·
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other
economic, competitive, governmental, regulatory, and technological factors
affecting our operations, pricing, products and services and the other
risks described elsewhere in this prospectus and the incorporated
documents.
|
Some of
these and other factors are discussed in this prospectus under the caption “Risk
Factors” and elsewhere in this prospectus and in the documents incorporated by
reference herein. Such developments could have an adverse impact on our
financial position and our results of operations.
Any
forward-looking statements are based upon management’s beliefs and assumptions
at the time they are made. We undertake no obligation to publicly update or
revise any forward-looking statements included or incorporated by reference in
this prospectus or to update the reasons why actual results could differ from
those contained in such statements, whether as a result of new information,
future events or otherwise. In light of these risks, uncertainties and
assumptions, the forward-looking statements discussed in this prospectus or the
documents incorporated by reference herein might not occur, and you should not
put undue reliance on any forward-looking statements.
iv
PROSPECTUS
SUMMARY
This
summary highlights information contained elsewhere in, or incorporated by
reference into, this prospectus. As a result, it does not contain all of the
information that may be important to you or that you should consider before
investing in our common stock. You should read this entire prospectus, including
the “Risk Factors” section, and the documents incorporated by reference herein,
which are described under “Incorporation of Certain Documents by Reference” in
this prospectus. Unless otherwise expressly stated or where the
context otherwise requires, all information in this prospectus assumes that the
underwriter s do not
exercise their option to purchase additional shares
of our common stock to cover over-allotments, if any.
Riverview
Bancorp, Inc.
Riverview
Bancorp, Inc., a Washington corporation, is the savings and loan holding company
of Riverview Community Bank. At March 31, 2010 , we
had total assets of $ 838.0 million, total deposit
accounts of $ 688.0 million and shareholders' equity
of $ 83.9 million. Substantially all of
our business is conducted through Riverview
Community Bank, which is headquartered in Vancouver, Washington, within the Portland, Oregon metropolitan statistical area .
We are engaged predominantly in the
business of attracting deposits from the general public and using such funds in
our primary market area to originate commercial real estate, land
development and residential construction loans as well as commercial loans.
Through Riverview Community Bank’s subsidiary, Riverview Asset Management Corp., or
RAMCorp, we engage
in full-service brokerage activities, trust and asset management
services. At March 31, 2010 , RAMCorp had
over $ 279.5 million in assets under
management.
We are a
community-oriented financial services company, emphasizing local, personalized
service to our customers within our primary market area. We consider Clark,
Cowlitz, Klickitat and Skamania counties of Washington and Multnomah, Clackamas
and Marion counties of Oregon as our primary market area and serve these
counties through our seventeen branches, including ten in Clark County, two in
the Portland metropolitan area and three lending centers.
Riverview
Community Bank is a member of the Federal Home Loan Bank System and its deposits
are insured by the Federal Deposit Insurance Corporation, or FDIC, up to
applicable legal limits. Riverview Community Bank is
subject to comprehensive regulation, examination and supervision by the OTS and the
FDIC.
As of March 31, 2010, our directors and executive officers as a
group beneficially owned 1,420,814 shares of our common stock which represented
approximately 13.0% of our outstanding shares as of that date. These individuals
have indicated that they intend to increase their ownership interest through
purchasing 200,000 additional shares of our common stock in this
offering. Our common stock is traded on the Nasdaq Global Select Market
under the ticker symbol "RVSB."
Our
executive offices are located at 900 Washington Street, Suite 900, Vancouver
Washington 98660. Our telephone number is (360)
693-6650.
Business Strategy
During 2008, the national and regional
residential lending market experienced a notable slowdown. This downturn, which
has continued into 2010, has negatively affected the
economy in our market area. As a result, we have experienced a decline in the
values of real estate collateral supporting our construction real estate and
land acquisition and development loans, and experienced increased loan
delinquencies and defaults. Loan charge-offs and
write-downs associated with these loans contributed to our $5.4 million loss for
the year ended March 31, 2010. As a result of our losses and elevated level of
nonperforming assets, Riverview Community Bank entered into a memorandum of
understanding with the OTS in January 2009. Under that agreement, Riverview
Community Bank must, among other things, develop a plan for achieving and
maintaining a minimum Tier 1 Capital (Leverage) Ratio of 8% and a minimum Total
Risk-Based Capital Ratio of 12%, compared to its current minimum required
regulatory Tier 1 Capital (Leverage) Ratio of 4% and Total Risk-Based Capital
Ratio of 8%. As of March 31, 2010, Riverview Community Bank’s
leverage ratio was 9.84% (1.84% over the new required minimum) and its
risk-based capital ratio was 12.11% (0.11% over the new required minimum) and we
expect the net proceeds of this
1
offering
will further enhance our ability to comply with these heightened regulatory
capital requirements for at least the next twelve
months. See “Risk Factors - - Risks Associated with Our Business --We are
required to comply with the terms of two memoranda of understanding and a
supervisory letter directive issued by the OTS and lack of compliance could
result in monetary penalties and /or additional regulatory
actions.”
In
response to these financial challenges, we have taken and are continuing to take
a number of actions aimed at preserving existing capital, reducing our lending
concentrations and associated capital requirements, and increasing liquidity.
The tactical actions we have taken include, but are not limited to: focusing on
reducing the amount of nonperforming assets, adjusting our balance sheet by
reducing loan receivables, selling real estate owned, reducing controllable
operating costs, increasing retail deposits while maintaining available secured
borrowing facilities to improve liquidity and eliminating dividends to
shareholders.
Our goal is to deliver returns to
shareholders by managing our problem assets, increasing our higher-yielding
assets (in particular commercial real estate and commercial loans), increasing
our core deposit balances, reducing expenses, hiring experienced employees with
a commercial lending focus and exploring opportunistic acquisitions. We seek to
achieve these results by focusing on the following objectives:
Focusing on Asset Quality. We
are focused on monitoring existing performing loans, resolving nonperforming
loans and selling foreclosed assets. We have aggressively sought to reduce our
level of nonperforming assets through write-downs, collections, modifications
and sales of nonperforming loans and real estate owned. We have taken proactive
steps to resolve our nonperforming loans, including negotiating repayment plans,
forbearances, loan modifications and loan extensions with our borrowers when
appropriate, and accepting short payoffs on delinquent loans, particularly when
such payoffs result in a smaller loss to us than foreclosure. We also have added
experienced personnel to the department that monitors our loans to enable us to
better identify problem loans in a timely manner and reduce our exposure to a
further deterioration in asset quality. Beginning in 2008, in connection with
the downturn in real estate markets, we applied more conservative and stringent
underwriting practices to our new loans, including, among other things,
increasing the amount of required collateral or equity requirements, reducing
loan-to-value ratios and increasing debt service coverage
ratios. Although nonperforming assets increased from
$ 41.7 million at March 31,
2009 to $ 49.3 million at March 31, 2010 , we have continued to reduce our exposure to
land development and speculative construction loans which represented $23.9 million or
66% of our nonperforming loans at March 31, 2010.
The total land development and speculative construction loan portfolios
declined to $105.4 million compared to $149.6
million a year ago.
Improving our Earnings by Expanding
Our Product Offerings. We intend to prudently increase the percentage of
our assets consisting of higher-yielding commercial real estate and commercial
loans, which offer higher risk-adjusted returns, shorter maturities and more
sensitivity to interest rate fluctuations. We also intend to
selectively add additional products to further diversify revenue sources and to
capture more of each customer’s banking relationship by cross selling our loan
and deposit products and additional services to our customers, including
services provided through RAMCorp to increase the fee income it provides to us.
Assets under management by RAMCorp totaled $279.5 million
at March 31, 2010. In December 2008, we began operating as a
merchant bankcard "agent bank" facilitating credit and debit card transactions
for business customers through an outside merchant bankcard processor. This
allows us to underwrite and approve merchant bankcard applications and retain
interchange income that, under our previous status as a "referral bank," was earned by a third party.
Attracting Core Deposits and Other
Deposit Products. Our strategic focus is to emphasize total relationship
banking with our customers to internally fund our loan growth. We are
also focused on reducing our reliance on other wholesale funding sources,
including Federal Home Loan Bank of Seattle and Federal Reserve Bank of San
Francisco advances, through the continued growth of our core customer deposits.
We believe that a continued focus on customer relationships will help to
increase our level of core deposits and locally-based retail certificates of
deposit.
In addition to our
retail branches, we maintain state of the art technology-based products, such as
on-line personal financial management, business cash management, and business
remote deposit products
, that enable
us to compete effectively with banks of all sizes. We recently increased our
emphasis on enhancing our cash management product line with the hiring of an
experienced cash management officer. The formation of a team consisting of this
cash management officer and existing employees is expected to lead to an
improved cash management product line for our commercial
customers. Our branch deposits have
increased from
2
$ 603.2 million at March 31, 2009 to $ 654.5
million at March 31, 2010 . Our advances
from the Federal Home Loan Bank of Seattle and Federal Reserve Bank of San
Francisco have decreased from $ 122.9 million at
March 31, 2009 to $ 33.0
million at March 31, 2010 .
Continued Expense Control.
Beginning in fiscal 2009 and continuing into fiscal 2010, management has
undertaken several initiatives to reduce non-interest expense and will continue
to make it a priority to identify cost savings opportunities throughout all
phases of our operations. Beginning in fiscal 2009, we instituted expense
control measures such as reducing many of our marketing expenses, cancelling
certain projects and capital purchases, and reducing travel and entertainment
expenditures. We have also reduced our full-time equivalent employees from 247 at March 31, 2009 to 233 at March
31, 2010 . During October 2009, a branch and a loan origination
office, were closed as a result of their failure to meet management’s growth standards. As a result of the
reduction in personnel and closure of the offices we will save approximately
$1.3 million per year.
Recruiting and Retaining Highly
Competent Personnel With a Focus on Commercial Lending. Our ability to
continue to attract and retain banking professionals with strong community
relationships and significant knowledge of our markets will be a key to our
success. We believe that we enhance our market position and add profitable
growth opportunities by focusing on hiring and retaining experienced bankers
focused on owner occupied commercial real estate and commercial lending, and the
deposit balances that accompany these relationships. We emphasize to our
employees the importance of delivering exemplary customer service and seeking
opportunities to build further relationships with our customers. Our goal is to
compete with other financial service providers by relying on the strength of our
customer service and relationship banking approach. We believe that one of our
strengths is that our employees are also significant shareholders, who hold approximately 12.9% of our outstanding shares
through our employee stock ownership (ESOP) and 401(k) plans at March 31, 2010. We also offer an incentive
system that is designed to reward well-balanced and high quality growth amongst
our employees.
Disciplined Franchise
Expansion. We believe that opportunities currently exist
within our current market area to grow our franchise. We anticipate
organic growth, through our marketing efforts targeted to take advantage of the
opportunities being created as a result of the consolidation of financial
institutions that is occurring in our market area. Although our current focus is on managed growth utilizing our
current resources, we may in the future possibly grow our franchise
through the acquisition of individual branches and whole
bank transactions that meet our investment and market
objectives. Our long term goal is to
gradually expand our operations further in the Portland Oregon
metropolitan area which has a population of approximately two million
people. Any future acquisitions and de
novo or branching acquisitions
will be located in the Pacific Northwest markets we know and understand.
We currently have no arrangements, agreements or understandings related to any
acquisition or de novo branching.
Risk Factors
An
investment in our common stock involves certain risks. You should carefully
consider the risks described under “Risk Factors” beginning on page 8 of
this prospectus and in the “Risk Factors” section included in our Annual Report
on Form 10-K for the fiscal year ended March 31, 2010 , as well as other information included or
incorporated by reference into this prospectus, including our financial
statements and the notes thereto, before making an investment
decision. See “Incorporation of Certain Documents by
Reference.”
3
The Offering
|
Common
stock we are offering, excluding the underwriters’ over-allotment
option
|
6,896,552 shares
|
|
Common
stock to be outstanding after this offering
|
17,820,325 shares (1)(2)
|
|
Over-allotment
option
|
1,034,483 shares
|
|
Use
of proceeds
|
Our
estimated net proceeds from this offering will be approximately
$ million, or approximately
$ million if the underwriters exercise their over-allotment option in full, after
deducting underwriting discounts and commissions and other estimated
expenses of this offering. We intend to use the net proceeds
from this offering to contribute $ 17.0 million
to Riverview Community Bank to support its
growth and related capital needs. We expect to use the
remaining net proceeds for general working capital purposes, which may
include quarterly payments of interest on our junior subordinated
debentures including the quarterly interest payment
of $300,000 that is currently deferred , as well as future
investments in Riverview Community Bank to
support growth or capital needs. Pending allocation to specific
uses, we intend to invest the proceeds in short-term interest-bearing
investment grade securities.
|
|
Nasdaq
Global Select Market symbol
|
RVSB
|
|
Settlement
date
|
Delivery
of shares of our common stock will be made against payment therefore on or
about June __,
2010.
|
________________________
|
(1)
|
The
number of our shares outstanding immediately after the closing of this
offering is based on 10,923,773 shares of common stock outstanding as of
March 31, 2010.
|
|
(2)
|
Unless
otherwise indicated, the number of shares of common stock presented in
this prospectus excludes shares issuable pursuant to the exercise of the
underwriters’ over-allotment option and 465,700 shares of common stock
issuable upon the exercise of outstanding stock options as of March 31, 2010 , with a weighted average exercise
price of $9.35 per share.
|
4
Summary
of Selected Consolidated Financial Information
The
following table presents selected consolidated financial data for Riverview
Bancorp, Inc. at or for the fiscal years ended March 31, 2010 , 2009, 2008, 2007, and 2006 (which have been derived
from our audited consolidated financial statements). The results of operations
for the year ended March 31,
2010 are not necessarily indicative of the results of operations to be
expected for any future period. This information should be read in
conjunction with our consolidated financial statements and related notes
included in our Annual Report on Form 10-K for the fiscal year ended March
31, 2010 which has been filed with the Securities and
Exchange Commission, or SEC, and is incorporated herein by
reference. See “Incorporation of Certain Documents by
Reference.”
|
At
March 31,
|
|||||||||||||||
| 2010 | 2009 | 2008 | 2007 |
2006(1)
|
|||||||||||
|
(In
thousands)
|
|||||||||||||||
|
Balance
Sheet Data:
|
|||||||||||||||
|
Total
assets
|
|
$
|
837,953
|
|
$
|
914,333
|
|
$
|
886,849
|
|
$
|
820,348
|
|
$
|
763,847
|
|
Loans
receivable, net
|
712,837
|
784,117
|
756,538
|
682,951
|
623,016
|
||||||||||
|
Loans
held for sale
|
255
|
1,332
|
-
|
-
|
65
|
||||||||||
|
Mortgage-backed
securities held
to
maturity, at amortized cost
|
259
|
570
|
885
|
1,232
|
1,805
|
||||||||||
|
Mortgage-backed
securities available
for
sale
|
2,828
|
4,066
|
5,338
|
6,640
|
8,134
|
||||||||||
|
Cash
and interest-bearing deposits
|
13,587
|
19,199
|
36,439
|
31,423
|
31,346
|
||||||||||
|
Investment
securities held to maturity
|
517
|
529
|
-
|
-
|
-
|
||||||||||
|
Investment
securities available for sale
|
6,802
|
8,490
|
7,487
|
19,267
|
24,022
|
||||||||||
|
Deposit
accounts
|
688,048
|
670,066
|
667,000
|
665,405
|
606,964
|
||||||||||
|
FHLB
advances
|
23,000
|
37,850
|
92,850
|
35,050
|
46,100
|
||||||||||
|
Federal
Reserve Bank advances
|
10,000
|
85,000
|
-
|
-
|
-
|
||||||||||
|
Shareholders’
equity
|
83,934
|
88,663
|
92,585
|
100,209
|
91,687
|
||||||||||
|
Tangible
shareholders’ equity(2)
|
57,539
|
62,198
|
66,155
|
73,575
|
64,836
|
||||||||||
|
For
the Year Ended March 31,
|
|||||||||||||||
|
2010
|
2009
|
2008
|
2007
|
2006(1)
|
|||||||||||
|
(In
thousands)
|
|||||||||||||||
|
Income
Statement Data:
|
|||||||||||||||
|
Interest
income
|
$
|
46,262
|
$
|
52,850
|
|
$
|
60,682
|
|
$
|
61,300
|
|
$
|
47,229
|
||
|
Interest
expense
|
11,376
|
19,183
|
25,730
|
24,782
|
14,877
|
||||||||||
|
Net
interest income
|
34,886
|
33,667
|
34,952
|
36,518
|
32,352
|
||||||||||
|
Provision
for loan losses
|
15,900
|
16,150
|
2,900
|
1,425
|
1,500
|
||||||||||
|
Net
interest income after provision
for
loan losses
|
18,986
|
17,517
|
32,052
|
35,093
|
30,852
|
||||||||||
|
Gains
(losses) from sale of loans,
securities
and real estate owned
|
1,032
|
729
|
368
|
434
|
382
|
||||||||||
|
Impairment
on investment security
|
(1,003
|
)
|
(3,414
|
)
|
-
|
-
|
-
|
||||||||
|
Other
non-interest income
|
7,237
|
8,215
|
8,514
|
8,600
|
8,455
|
||||||||||
|
Non-interest
expenses
|
34,973
|
27,259
|
27,791
|
26,353
|
25,374
|
||||||||||
|
Income
(loss) before income taxes
|
(8,721
|
)
|
(4,212
|
)
|
13,143
|
17,774
|
14,315
|
||||||||
|
Provision
(benefit) for income taxes
|
(3,277
|
)
|
(1,562
|
)
|
4,499
|
6,168
|
4,577
|
||||||||
|
Net
income (loss)
|
$
|
(5,444
|
)
|
$
|
(2,650
|
)
|
$
|
8,644
|
$
|
11,606
|
$
|
9,738
|
|||
5
|
At
or for
the Year Ended March 31,
|
|||||||||||||||
|
2010
|
2009
|
2008
|
2007
|
2006(1)
|
|||||||||||
|
Per
Share Data:
|
|||||||||||||||
|
Earnings
(loss) per share:
|
|||||||||||||||
|
Basic
|
$
|
(0.51)
|
$
|
(0.25)
|
|
$
|
0.79
|
$
|
1.03
|
$
|
0.87
|
||||
|
Diluted
|
|
(0.51)
|
|
(0.25)
|
|
0.79
|
|
1.01
|
|
0.86
|
|||||
|
Book
value per share(2)
|
7.68
|
8.12
|
8.48
|
8.56
|
7.94
|
||||||||||
|
Tangible
book value per share(3)
|
5.27
|
5.69
|
6.06
|
6.28
|
5.62
|
||||||||||
|
Dividends
per share
|
-
|
0.135
|
0.42
|
0.395
|
0.34
|
||||||||||
|
Shares
outstanding
|
10,923,773
|
10,923,773
|
10,913,773
|
11,707,980
|
5,772,690
|
||||||||||
|
Capital
Ratios:
|
|||||||||||||||
|
Average
equity to average assets
|
10.29
|
%
|
10.29
|
%
|
11.65
|
%
|
12.01
|
%
|
12.39
|
%
|
|||||
|
Equity
to assets at end of fiscal
year
|
10.02
|
9.70
|
10.44
|
12.22
|
12.00
|
||||||||||
|
Tangible
shareholders’ equity to
tangible
assets (3)
|
7.09
|
7.01
|
7.69
|
9.27
|
8.80
|
||||||||||
|
Total
risk-based capital ratio (4)
|
12.11
|
11.46
|
10.99
|
11.38
|
11.48
|
||||||||||
|
Tier
1 risk-based capital (4)
|
10.85
|
10.21
|
9.78
|
10.22
|
10.42
|
||||||||||
|
Tier
1 capital (leverage) ratio (4)
|
9.84
|
9.50
|
9.29
|
9.60
|
9.70
|
||||||||||
|
Asset
Quality Ratios:
|
|||||||||||||||
|
Average
interest-earning assets to
interest-bearing
liabilities
|
114.21
|
%
|
114.85
|
%
|
116.75
|
%
|
118.96
|
%
|
121.14
|
%
|
|||||
|
Allowance
for loan losses to total
net
loans at end of period
|
2.95
|
2.12
|
1.39
|
1.25
|
1.15
|
||||||||||
|
Net
charge-offs to average
outstanding
loans during the
period
|
1.48
|
1.24
|
0.12
|
-
|
0.10
|
||||||||||
|
Ratio
of nonperforming loans
to
total loans
|
4.90
|
3.44
|
1.00
|
0.03
|
0.07
|
||||||||||
|
Ratio
of nonperforming assets to
total
assets
|
5.89
|
4.57
|
0.92
|
0.03
|
0.05
|
||||||||||
|
Performance
Ratios:
|
|||||||||||||||
|
Return
(loss) on average assets
|
(0.62)
|
%
|
(0.29)
|
%
|
1.04
|
%
|
1.43
|
%
|
1.36
|
%
|
|||||
|
Return
(loss) on average equity
|
(6.00)
|
(2.85)
|
8.92
|
11.88
|
10.95
|
||||||||||
|
Dividend
payout ratio (5)
|
-
|
(54.00)
|
53.16
|
38.35
|
39.08
|
||||||||||
|
Interest
rate spread (6)
|
4.19
|
3.73
|
4.09
|
4.37
|
4.55
|
||||||||||
|
Net
interest margin (7)
|
4.39
|
4.08
|
4.66
|
5.01
|
5.03
|
||||||||||
|
Non-interest
expense to average
assets
|
3.97
|
3.02
|
3.34
|
3.24
|
3.54
|
||||||||||
|
Efficiency
ratio (8)
|
82.97
|
69.50
|
63.40
|
57.85
|
61.60
|
||||||||||
|
Loan
to deposit ratio
|
106.75
|
119.55
|
115.03
|
103.94
|
103.83
|
||||||||||
__________________
| (1) |
On
April 22, 2005, Riverview Bancorp, Inc. acquired American Pacific
Bank.
|
| (2) | Calculated based on shareholders' equity. |
| (3) |
Tangible
shareholders' equity, tangible book value per
share and tangible shareholders’ equity to tangible assets are non-GAAP
financial measures. We calculate tangible shareholders’ equity by
excluding the balance of goodwill and other intangible assets from
shareholders’ equity. We calculate tangible assets by excluding the
balance of goodwill and other intangible assets from the calculation of
risk-based capital ratios. We believe that this is consistent
with the treatment by our regulatory agencies, which exclude goodwill and
other intangible assets from the calculation of risk-based capital
ratios. Accordingly, management believes that these non-GAAP
financial measures provide information to investors that is useful in
understanding the basis of our risk-based capital ratios. In
addition, by excluding preferred equity (the level of which may vary from
company to company), it allows investors to more easily compare our
capital adequacy to other companies in the industry who also use this
measure. However, these non-GAAP financial measures are
supplemental and are not a substitute for any analysis based on GAAP
financial measures. Because not all companies use the same
calculation of tangible common equity and tangible assets, this
presentation may not be comparable to other similarly titled measures as
calculated by other companies. A reconciliation of the non-GAAP
financial measures is provided below.
|
| (4) |
Regulatory
capital ratios are calculated for Riverview Community Bank and not
Riverview on a consolidated
basis.
|
6
|
At
March 31,
|
|||||||||||||||||||
| 2010 | 2009 | 2008 | 2007 | 2006(1) | |||||||||||||||
| (In thousands) | |||||||||||||||||||
|
Shareholders’
equity
|
$
|
83,934
|
$
|
88,663
|
$
|
92,585
|
$
|
100,209
|
$
|
91,687
|
|||||||||
|
Goodwill
|
25,572
|
25,572
|
25,572
|
25,572
|
25,572
|
||||||||||||||
|
Other
intangible assets, net
|
823
|
893
|
858
|
1,062
|
1,279
|
||||||||||||||
|
Tangible
shareholders’ equity
|
$
|
57,539
|
$
|
62,198
|
$
|
66,155
|
$
|
73,575
|
$
|
64,836
|
|||||||||
|
Total
assets
|
$
|
837,953
|
$
|
914,333
|
$
|
886,849
|
$
|
820,348
|
$
|
763,847
|
|||||||||
|
Goodwill
|
25,572
|
25,572
|
25,572
|
25,572
|
25,572
|
||||||||||||||
|
Other
intangible assets, net
|
823
|
893
|
858
|
1,062
|
1,279
|
||||||||||||||
|
Tangible
assets
|
$
|
811,558
|
$
|
887,868
|
$
|
860,419
|
$
|
793,714
|
$
|
736,996
|
|||||||||
|
(6)
|
Difference
between weighted average yield on interest-earning assets and weighted
average rate on interest-bearing
liabilities.
|
|
(7)
|
Net
interest margin is net income divided by average interest-earning assets.
|
|
(8)
|
The
efficiency ratio is non-interest expense divided by the sum of net
interest income and non-interest
income.
|
7
RISK
FACTORS
An
investment in our common stock involves certain risks. Before you invest in our
common stock, you should be aware that there are various risks, including those
described below, which could affect the value of your investment in the future.
The trading price of our common stock could decline as a result of any of these
risks, and you may lose all or part of your investment. The risk factors
described in this section, as well as any cautionary language in this
prospectus, provide examples of risks, uncertainties and events that could have
a material adverse effect on our business, including our operating results and
financial condition. This prospectus also contains forward-looking statements
that involve risks and uncertainties. These risks could cause our actual results
to differ materially from the expectations that we describe in our
forward-looking statements. You should carefully consider the risks described
below and the risk factors included in our Annual Report on Form 10-K for
the fiscal year ended March 31, 2010 , as
well as the other information included or incorporated by reference in this
prospectus, before making an investment decision.
Risks
Associated with Our Business
We
are required to comply with the terms of two memoranda of understanding and a
supervisory letter directive issued by the OTS and lack of compliance could
result in monetary penalties and /or additional regulatory actions.
In
January 2009, Riverview Community Bank entered into
a Memorandum of Understanding, or MOU, with the OTS. Under that
agreement, Riverview Community Bank must, among
other things, develop a plan for achieving and maintaining a minimum Tier 1
Capital (Leverage) Ratio of 8% and a minimum Total Risk-Based Capital Ratio of
12%, compared to its current minimum required regulatory Tier 1 Capital
(Leverage) Ratio of 4% and Total Risk-Based Capital Ratio of 8%. As
of March 31, 2010, Riverview Community Bank’s Tier 1 Capital (Leverage) Ratio was 9.84% (1.84% over the
new required minimum) and its Total Risk-Based
Capital ratio was 12.11% (0.11% over the new
required minimum). The MOU also requires Riverview Community Bank to:
|
·
|
remain
in compliance with the minimum capital ratios contained in Riverview Community Bank’s business
plan;
|
|
·
|
provide
notice to and obtain a non-objection from the OTS prior to declaring a
dividend;
|
|
·
|
maintain
an adequate allowance for loan and lease
losses;
|
|
·
|
engage
an independent consultant to conduct a comprehensive evaluation of Riverview Community Bank’s asset
quality;
|
|
·
|
submit
a quarterly update to its written comprehensive plan to reduce classified
assets, that is acceptable to the OTS;
and
|
|
·
|
obtain
written approval of the loan committee and the Board prior to the
extension of credit to any borrower with a classified
loan.
|
On June
9, 2009 the OTS issued a Supervisory Letter Directive, or SLD, to Riverview Community Bank that restricts its brokered deposits (including Certificate of Deposit Account Registry Service, or CDARS)
to 10% of total deposits. At March 31,
2010 and June 9, 2009, we did not have any wholesale-brokered deposits as
compared to $19.9 million, or 3.0% of total deposits, at March 31, 2009. Riverview Community Bank participates in the CDARS
product, which allows Riverview Community Bank to
accept deposits in excess of the FDIC insurance limit for that depositor and
obtain “pass-through” insurance for the total deposit. Riverview Community Bank’s CDARS balance was $ 31.9 million, or 4.6% of total
deposits, and $22.2 million, or 3.3% of total deposits, at March 31, 2010 and March 31, 2009,
respectively.
In
October 2009 Riverview entered into a separate MOU with the OTS. Under this
agreement, Riverview must, among other things, support Riverview Community Bank’s compliance with its MOU issued
in January 2009. The MOU also requires Riverview to:
|
·
|
provide
notice to and obtain written non-objection from the OTS prior to declaring
a dividend or redeeming any capital stock or receiving dividends or other
payments from Riverview Community
Bank;
|
8
| · |
provide
notice to and obtain written non-objection from the OTS prior to
incurring, issuing, renewing or repurchasing any new debt;
and
|
| · | submit to the OTS within prescribed time periods an operations plan and a consolidated capital plan that respectively addresses Riverview’s ability to meet its financial obligations through December 2012 and how Riverview Community Bank will maintain capital ratios mandated by its MOU. |
Riverview
Community Bank was not permitted by the OTS to make a dividend payment to us in
May 2010, resulting in the deferral of interest on our outstanding trust
preferred securities. See “– Risks Relating to the Offering and our
Common Stock – We have deferred payments of interest on our outstanding junior
subordinated debentures and as a result we are prohibited from declaring or
paying dividends or distributions on, and from making liquidation payments with
respect to, our common stock.”
The MOUs
and SLD will remain in effect until stayed, modified, terminated or suspended by
the OTS. If the OTS were to determine that Riverview or Riverview Community Bank were not in compliance with their
respective MOUs, it would have available various remedies, including among
others, the power to enjoin "unsafe or unsound" practices, to require
affirmative action to correct any conditions resulting from any violation or
practice, to direct an increase in capital, to restrict the growth of Riverview
or Riverview Community Bank, to remove officers
and/or directors, and to assess civil monetary penalties. Management of
Riverview and Riverview Community Bank have been
taking action and implementing programs to comply with the requirements of the
MOUs and SLD. Although compliance with the MOUs and SLD will be determined by
the OTS, management believes that Riverview and Riverview
Community Bank have complied in all material respects with the provisions
of the MOUs and SLD required to be complied with as of the date of this
prospectus, including the capital requirements and restrictions on brokered
deposits imposed by the OTS. The OTS may determine, however, in its
sole discretion that the issues raised by the MOUs and SLD have not been
addressed satisfactorily, or that any current or past actions, violations or
deficiencies could be the subject of further regulatory enforcement actions.
Such enforcement actions could involve penalties or limitations on our business
at Riverview Community Bank or Riverview and
negatively affect our ability to implement our business plan, pay dividends on
our common stock and the value of our common stock
as well as our financial condition and results of operations.
The
current economic recession in the market areas we serve may continue to
adversely impact our earnings and could increase the credit risk associated with
our loan portfolio.
Substantially
all of our loans are to businesses and individuals in the states of Washington
and Oregon. A continuing decline in the economies of the seven counties in which
we operate, including the Portland, Oregon metropolitan area, which we consider
to be our primary market areas, could have a material adverse effect on our
business, financial condition, results of operations and
prospects. In particular, Washington and Oregon have experienced
substantial home price declines and increased foreclosures and have experienced
above average unemployment rates.
A further
deterioration in economic conditions in the market areas we serve could result
in the following consequences, any of which could have a materially adverse
impact on our business, financial condition and results of
operations:
|
·
|
loan
delinquencies, problem assets and foreclosures may
increase;
|
|
·
|
demand
for our products and services may
decline;
|
|
·
|
collateral
for loans made may decline further in value, in turn reducing customers’
borrowing power, reducing the value of assets and collateral associated
with existing loans;
|
|
·
|
the
amount of our low-cost or non-interest bearing deposits may decrease; and
|
|
·
|
the
price of our common stock may
decrease.
|
9
Our real estate construction and land
acquisition or development loans are based upon estimates of costs and the value
of the completed project.
We make
real estate construction loans to individuals and builders, primarily for the
construction of residential properties. We originate these loans
whether or not the collateral property underlying the loan is under contract for
sale. At March 31, 2010, construction loans totaled
$ 75.5 million, or 10.3%
of our total loan portfolio, of which $ 35.4 million
were for residential real estate projects. Approximately $ 4.8 million of our residential construction loans were
made to finance the construction of owner-occupied homes and are structured to
be converted to permanent loans at the end of the construction
phase. Land loans, which are loans made with land as security,
totaled $ 74.8 million, or 10.2% , of our total loan portfolio at March 31, 2010 . Land loans include raw land and land
acquisition and development loans. These loans
carry additional risks from other types of real estate based
lending. In general, construction and land lending involves
additional risks because of the inherent difficulty in estimating a property's
value both before and at completion of the project as well as the estimated cost
of the project. Construction costs may exceed original estimates as a
result of increased materials, labor or other costs. In addition,
because of current uncertainties in the residential real estate market, property
values have become more difficult to determine than they have historically
been. Construction loans and land acquisition and development loans
often involve the disbursement of funds with repayment dependent, in part, on
the success of the project and the ability of the borrower to sell or lease the
property or refinance the indebtedness, rather than the ability of the borrower
or guarantor to repay principal and interest. These loans are also
generally more difficult to monitor. In addition, speculative
construction loans to a builder are often associated with homes that are not
pre-sold, and thus pose a greater potential risk than construction loans to
individuals on their personal residences. At March 31,
2010 , $ 105.4 million of our construction and
land loans were for speculative construction loans. Approximately $ 23.9 million, or 22.7% , of our
speculative construction and land loans were nonperforming at March 31, 2010. A material increase in our nonperforming
construction and land loans could have a material adverse effect on our
financial condition and results of operations.
Our
emphasis on commercial real estate lending may expose us to increased lending
risks.
Our
current business strategy is focused on the expansion of commercial real estate
lending. This type of lending activity, while potentially more profitable than
single-family residential lending, is generally more sensitive to regional and
local economic conditions, making loss levels more difficult to predict.
Collateral evaluation and financial statement analysis in these types of loans
requires a more detailed analysis at the time of loan underwriting and on an
ongoing basis. In our primary market of southwest Washington and northwest
Oregon, the housing market has slowed, with weaker demand for housing, higher
inventory levels and longer marketing times. A further downturn in housing, or
the real estate market, could increase loan delinquencies, defaults and
foreclosures, and significantly impair the value of our collateral and our
ability to sell the collateral upon foreclosure. Many of our commercial
borrowers have more than one loan outstanding with us. Consequently, an adverse
development with respect to one loan or one credit relationship can expose us to
a significantly greater risk of loss and adversely affect
our results of operations.
At March 31, 2010 , we had $ 384.4
million of commercial and multi-family real estate mortgage loans, representing
52.3% of our total loan portfolio. These loans typically
involve higher principal amounts than other types of loans, and repayment is
dependent upon income generated, or expected to be generated, by the property
securing the loan in amounts sufficient to cover operating expenses and debt
service, which may be adversely affected by changes in the economy or local
market conditions. For example, if the cash flow from the borrower’s project is
reduced as a result of leases not being obtained or renewed, the borrower’s
ability to repay the loan may be impaired. Commercial and multi-family mortgage
loans also expose a lender to greater credit risk than loans secured by
residential real estate because the collateral securing these loans typically
cannot be sold as easily as residential real estate. In addition, many of our
commercial and multi-family real estate loans are not fully amortizing and
contain large balloon payments upon maturity. Such balloon payments may require
the borrower to either sell or refinance the underlying property in order to
make the payment, which may increase the risk of default or
non-payment.
A
secondary market for most types of commercial real estate and multi-family loans is not readily liquid, so we have less
opportunity to mitigate credit risk by selling part or all of our interest in
these loans.
10
As a
result of these characteristics, if we foreclose on a commercial or multi-family
real estate loan, our holding period for the collateral typically is longer than
for one-to-four family residential mortgage loans because there are fewer
potential purchasers of the collateral. Accordingly, charge-offs on commercial
and multi-family real estate loans may be larger on a per loan basis than those
incurred with our residential or consumer loan portfolios.
The
level of our commercial real estate loan portfolio may subject us to additional
regulatory scrutiny.
The FDIC,
the Federal Reserve and the OTS have promulgated
joint guidance on sound risk management practices for financial institutions
with concentrations in commercial real estate lending. Under this guidance, a
financial institution that, like us, is actively involved in commercial real
estate lending should perform a risk assessment to identify concentrations. A
financial institution may have a concentration in commercial real estate lending
if, among other factors (i) total reported loans for construction, land
development, and other land represent 100% or more of total capital, or (ii)
total reported loans secured by multifamily and non-farm residential properties,
loans for construction, land development and other land, and loans otherwise
sensitive to the general commercial real estate market, including loans to
commercial real estate related entities, represent 300% or more of total
capital. The particular focus of the guidance is on exposure to commercial real
estate loans that are dependent on the cash flow from the real estate held as
collateral and that are likely to be at greater risk to conditions in the
commercial real estate market (as opposed to real estate collateral held as a
secondary source of repayment or as an abundance of caution). The
purpose of the guidance is to guide banks in developing risk management
practices and capital levels commensurate with the level and nature of real
estate concentrations. The guidance states that management should
employ heightened risk management practices including board and management
oversight and strategic planning, development of underwriting standards, risk
assessment and monitoring through market analysis and stress testing. We have
concluded that we have a concentration in commercial real estate lending under
the foregoing standards because our $ 317.4 million
balance in commercial real estate loans at March 31,
2010 represents 300% or more of total capital. While we believe we have
implemented policies and procedures with respect to our commercial real estate
loan portfolio consistent with this guidance, bank regulators could require us
to implement additional policies and procedures consistent with their
interpretation of the guidance that may result in additional costs to us and an adjustment to our growth strategies.
Repayment
of our commercial loans is often dependent on the cash flows of the borrower,
which may be unpredictable, and the collateral securing these loans may
fluctuate in value.
At March 31, 2010, we had $ 108.4
million or 14.8% of total loans in commercial
loans. Commercial lending involves risks that are different from
those associated with residential and commercial real estate lending. Real
estate lending is generally considered to be collateral based lending with loan
amounts based on predetermined loan to collateral values and liquidation of the
underlying real estate collateral being viewed as the primary source of
repayment in the event of borrower default. Our commercial loans are primarily
made based on the cash flow of the borrower and secondarily on the underlying
collateral provided by the borrower. The borrower’s
cash flow may be unpredictable, and collateral securing these loans may
fluctuate in value. Although commercial loans are often collateralized by
equipment, inventory, accounts receivable, or other business assets, the
liquidation of collateral in the event of default is often an insufficient
source of repayment because accounts receivable may be uncollectible and
inventories may be obsolete or of limited use, among other
things. Accordingly, the repayment of commercial loans depends
primarily on the cash flow and credit worthiness of the borrower and secondarily
on the underlying collateral provided by the borrower.
Our
business may be adversely affected by credit risk associated with residential
property.
At March 31, 2010, $91.5 million, or 12.5% of our total loan portfolio, was secured by
one-to-four single-family mortgage loans and home equity lines of credit. This type of lending is
generally sensitive to regional and local economic conditions that significantly
impact the ability of borrowers to meet their loan payment obligations, making
loss levels difficult to predict. The decline in residential real estate values
as a result of the downturn in the Washington and Oregon housing markets has
reduced the value of the real estate collateral securing these types of loans
and increased the risk that we would incur losses if borrowers default on their
loans. Continued declines in both the volume of real estate sales and the sales
prices coupled with the current recession and the associated increases in
unemployment may result in higher than expected loan delinquencies or problem
assets, a decline in demand for our products and services, or lack of growth or
a decrease
11
in
deposits. These potential negative events may cause us to incur losses,
adversely affect our capital and liquidity, and damage our financial condition
and business operations.
High
loan-to-value ratios on a portion of our residential mortgage loan portfolio
exposes us to greater risk of loss.
Many of
our residential mortgage loans are secured by liens on mortgage properties in
which the borrowers have little or no equity because either we originated upon
purchase a first mortgage with an 80% loan-to-value ratio, have originated a
home equity loan with a combined loan-to-value ratio of up to 90% or because of
the decline in home values in our market areas. Residential loans with high
loan-to-value ratios will be more sensitive to declining property values than
those with lower combined loan-to-value ratios and, therefore, may experience a
higher incidence of default and severity of losses. In addition, if the
borrowers sell their homes, such borrowers may be unable to repay their loans in
full from the sale. As a result, these loans may experience higher rates of
delinquencies, defaults and losses.
Our
provision for loan losses has increased substantially and we may be required to
make further increases in our provision for loan losses and to charge-off
additional loans in the future, which could adversely affect our results of
operations.
For the
fiscal years ended March 31, 2010 and 2009 we recorded a provision for loan losses of $ 15.9 million and $16.2 million, respectively. We also recorded net loan charge-offs of
$ 11.2 million and $9.9 million for the fiscal years ended March 31, 2010 and 2009, respectively. During these last two fiscal
years , we experienced increasing loan delinquencies
and credit losses. With the exception of residential construction and
development loans, nonperforming loans and assets generally reflect unique
operating difficulties for individual borrowers rather than weakness in the
overall economy of the Pacific Northwest; however, more recently the
deterioration in the general economy has become a significant contributing
factor to the increased levels of delinquencies and nonperforming loans. Slower
sales and excess inventory in the housing market has been the primary cause of
the increase in delinquencies and foreclosures for residential construction and
land development loans, which represent 66.3% of our
nonperforming loan balance at March 31,
2010 . At March 31, 2010 our total
nonperforming assets had increased to $ 49.3 million
compared to $ 41.7 million at March 31, 2009 . Further, our portfolio
is concentrated in construction and land loans and commercial and commercial
real estate loans, all of which have a higher risk of loss than residential
mortgage loans.
If
current trends in the housing and real estate markets continue, we expect that
we will continue to experience higher than normal delinquencies and credit
losses. Moreover, until general economic conditions improve, we expect that we
will continue to experience significantly higher than normal delinquencies and
credit losses. As a result, we could be required to make further increases in
our provision for loan losses and to charge off additional loans in the future,
which could have a material adverse effect on our financial condition and
results of operations.
We
may have continuing losses.
We
reported a net loss of $ 5.4 million and $2.7 million
for the fiscal years ended March 31, 2010 and 2009,
respectively. These losses primarily resulted from our high level of
nonperforming assets and the resultant increased provision for loan losses and real estate owned (“REO”) related expenses and write-downs.
We may continue to suffer further losses which could materially adversely affect
our financial conditions and require us to raise additional
capital. See “– Risks Relating to the Offering and our Common Stock –
There may be future sales of additional common stock or other dilution of our
equity, which may adversely affect the market price of our common
stock.”
12
Our
allowance for loan losses may prove to be insufficient to absorb losses in our
loan portfolio.
Lending
money is a substantial part of our business and each loan carries a certain risk
that it will not be repaid in accordance with its terms or that any underlying
collateral will not be sufficient to assure repayment. This risk is affected by,
among other things:
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the
cash flow of the borrower and/or the project being
financed;
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changes
and uncertainties as to the future value of the collateral, in the case of
a collateralized loan;
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the
duration of the loan;
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the
credit history of a particular borrower; and
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changes
in economic and industry
conditions.
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We
maintain an allowance for loan losses, which is a reserve established through a
provision for loan losses charged to expense, which we believe is appropriate to
provide for probable losses in our loan portfolio. The amount of this allowance
is determined by our management through periodic reviews and consideration of
several factors, including, but not limited to:
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•
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our
general reserve, based on our historical default and loss experience and
certain macroeconomic factors based on management’s expectations of future
events; and
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our
specific reserve, based on our evaluation of nonperforming loans and their
underlying collateral.
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The
determination of the appropriate level of the allowance for loan losses
inherently involves a high degree of subjectivity and requires us to make
various assumptions and judgments about the collectability of our loan
portfolio, including the creditworthiness of our borrowers and the value of the
real estate and other assets serving as collateral for the repayment of many of
our loans. In determining the amount of the allowance for loan losses, we review
our loans and the loss and delinquency experience, and evaluate economic
conditions and make significant estimates of current credit risks and future
trends, all of which may undergo material changes. If our estimates are
incorrect, the allowance for loan losses may not be sufficient to cover losses
inherent in our loan portfolio, resulting in the need for additions to our
allowance through an increase in the provision for loan
losses. Continuing deterioration in economic conditions affecting
borrowers, new information regarding existing loans, identification of
additional problem loans and other factors, both within and outside of our
control, may require an increase in the allowance for loan
losses. Our allowance for loan losses was $21.6
million or 2.95% of gross loans held for investment and 60.10% of nonperforming loans at March 31, 2010 . In addition, bank regulatory agencies
periodically review our allowance for loan losses and may require an increase in
the provision for possible loan losses or the recognition of further loan
charge-offs, based on judgments different than those of management. If
charge-offs in future periods exceed the allowance for loan losses, we will need
additional provisions to increase the allowance for loan losses. Any increases
in the provision for loan losses will result in a decrease in net income and may
have a material adverse effect on our financial condition, results of operations
and our capital.
If
our investments in real estate are not properly valued or sufficiently reserved
to cover actual losses, or if we are required to increase our valuation
reserves, our earnings could be reduced.
We obtain
updated valuations in the form of appraisals and broker price opinions when a
loan has been foreclosed upon and the property taken
in as REO , and at certain other times during the
assets holding period. Our net book value (“NBV”) in the loan at the
time of foreclosure and thereafter is compared to the updated market value of
the foreclosed property less estimated selling costs (fair value). A charge-off
is recorded for any excess in the asset’s NBV over its fair value. If
our valuation process is incorrect, the fair value of our investments in real
estate may not be sufficient to recover our NBV in such assets, resulting in the
need for additional charge-offs. Additional material charge-offs to our
investments in real estate could have a material adverse effect on our financial
condition and results of operations.
13
In
addition, bank regulators periodically review our REO and may require us to
recognize further charge-offs. Any increase in our charge-offs, as
required by such regulators, may have a material adverse effect on our financial
condition and results of operations.
The
ability to treat Trust Preferred Securities as regulatory capital may be
compromised by proposed legislation.
We currently have $22.7 million of
trust preferred securities issued in connection with our sponsorship of two
statutory business trusts and we are able to include this entire amount as Tier
1 regulatory capital. There is current proposed legislation that
could compromise our ability to treat our trust preferred securities as Tier 1
capital. While it is unknown what the overall impact on us would be
if this legislation were to pass, it could have a meaningful
impact on our regulatory capital levels and ratios that could materially
adversely affect our business operations and
strategies.
Other-than-temporary
impairment charges in our investment securities portfolio could result in additional losses .
During the fiscal
year ended March 31, 2010 , we recognized a
$1.0 million non-cash other than temporary
impairment (“OTTI”) charge on a single trust preferred investment security we
hold for investment. At March 31, 2010
the fair value of this security was $1.0 million.
Management concluded that the decline of the estimated fair value below the cost
of the security was other than temporary and recorded a credit loss of $1.0 million through non-interest income. We determined
the remaining decline in value was not related to specific credit
deterioration. We do not intend to sell this security and it is not
more likely than not that we will be required to sell the security before
anticipated recovery of the remaining amortized cost basis.
We closely monitor this security and
our other investment securities for changes in credit risk. The valuation of our
investment securities also is influenced by external market and other factors,
including implementation of Securities and Exchange Commission and Financial
Accounting Standards Board guidance on fair value accounting. Our valuation of
our trust preferred security will be influenced by the default rates of specific
financial institutions whose securities provide the underlying collateral for
this security. The current market environment significantly limits our ability
to mitigate our exposure to valuation changes in this security by selling it.
Accordingly, if market conditions deteriorate further and we determine our
holdings of this or other investment securities are other
than temporary , our results of operations
could be adversely affected.
Our
real estate lending also exposes us to the risk of environmental
liabilities.
In the
course of our business, we may foreclose and take title to real estate, and we
could be subject to environmental liabilities with respect to these properties.
We may be held liable to a governmental entity or to third persons for property
damage, personal injury, investigation, and clean-up costs incurred by these
parties in connection with environmental contamination, or may be required to
investigate or clean up hazardous or toxic substances, or chemical releases at a
property. The costs associated with investigation or remediation activities
could be substantial. In addition, as the owner or former owner of a
contaminated site, we may be subject to common law claims by third parties based
on damages and costs resulting from environmental contamination emanating from
the property. If we ever become subject to significant environmental
liabilities, our business, financial condition and results of operations could
be materially and adversely affected.
Fluctuating
interest rates can adversely affect our profitability.
Our profitability is dependent to a
large extent upon net interest income, which is the difference, or spread,
between the interest earned on loans, securities and other interest-earning
assets and the interest paid on deposits, borrowings, and other interest-bearing
liabilities. Because of the differences in maturities and repricing
characteristics of our interest-earning assets and interest-bearing liabilities,
changes in interest rates do not produce equivalent changes in interest income
earned on interest-earning assets and interest paid on interest-bearing
14
Our
loan portfolio possesses increased risk due to our level of adjustable rate
loans.
A substantial majority of our real
estate secured loans held are adjustable-rate loans. Any rise in
prevailing market interest rates may result in increased payments for borrowers
who have adjustable rate mortgage loans, increasing the possibility of defaults
that may adversely affect our profitability.
Increases
in deposit insurance premiums and special FDIC assessments will hurt
our earnings.
Beginning
in late 2008, the economic environment caused higher levels of bank failures,
which dramatically increased FDIC resolution costs and led to a significant
reduction in the Deposit Insurance Fund. As a result, the FDIC has significantly
increased the initial base assessment rates paid by financial institutions for
deposit insurance. The base assessment rate was increased by seven basis points
(seven cents for every $100 of deposits) for the first quarter of 2009.
Effective April 1, 2009, initial base assessment rates were changed to
range from 12 basis points to 45 basis points across all risk categories with
possible adjustments to these rates based on certain debt-related components.
These increases in the base assessment rate have increased our deposit insurance
costs and negatively impacted our earnings. In addition, in May 2009, the FDIC
imposed a special assessment on all insured institutions due to recent bank and
savings association failures. The emergency assessment amounts to five basis
points on each institution’s assets minus Tier 1 capital as of June 30,
2009, subject to a maximum equal to 10 basis points times the institution’s
assessment base. Our FDIC deposit insurance expense for fiscal 2010 was $1.9 million, including the special assessment of $417,000
recorded in June 2009 and paid on September 30, 2009.
Further, the FDIC may impose additional emergency special
assessments of up to five basis points per quarter on each institution’s
assets minus Tier 1 capital if necessary to maintain public confidence in
federal deposit insurance or as a result of deterioration in the Deposit
Insurance Fund reserve ratio due to institution
failures. Additionally, in November
2009 , the FDIC announced that financial
institutions are required to prepay their estimated quarterly risk-based assessment for the fourth quarter of 2009 and for all of 2010, 2011
and 2012. In December 2009, we prepaid $5.4
million, which will be expensed over this three-year period. This
prepayment did not immediately impact our earnings as the payment will be
expensed over time, however, any additional emergency special assessment imposed
by the FDIC will adversely affect our
earnings.
We
participate in the FDIC's Transaction Account Guarantee Program, or TAGP, for
non-interest-bearing transaction deposit accounts. The TAGP is a component of
the FDIC's Temporary Liquidity Guarantee Program, or TLGP. The TAGP was
originally set to expire on December 31, 2009, but the FDIC established an
extension period for the TAGP to run from January 1, 2010 through
June 30, 2010, and subsequently extended it through December 31, 2010 with
the possibility of a further extension through December 31, 2011. During the
extension period, the fees for participating banks range from 15 to 25 basis
points on the amounts in such accounts above the amounts covered by FDIC deposit
insurance, depending on the risk category to which the bank is assigned for
deposit insurance assessment purposes.
To the
extent that assessments under the TAGP are insufficient to cover any loss or
expenses arising from the TLGP, the FDIC is authorized to impose an emergency
special assessment on all FDIC-insured depository institutions. The FDIC has
authority to impose charges for the TLGP upon depository institution holding
companies, as well. These charges would cause the premiums and TAGP assessments
charged by the FDIC to increase. These actions could significantly increase our
non-interest expense.
15
Liquidity
risk could impair our ability to fund operations and jeopardize our financial
condition, growth and prospects.
Liquidity
is essential to our business. An inability to raise funds through deposits,
borrowings, the sale of loans and other sources could have a substantial
negative effect on our liquidity. We rely on customer deposits and advances from
the FHLB of Seattle (“FHLB”), borrowings from the
Federal Reserve Bank of San Francisco ("FRB") and other borrowings to fund our
operations. Although we have historically been able to replace maturing deposits
and advances if desired, we may not be able to replace such funds in the future
if, among other things, our financial condition, the financial condition of the
FHLB or FRB, or market conditions change. Our access to funding sources in
amounts adequate to finance our activities or the terms of which are acceptable
could be impaired by factors that affect us specifically or the financial
services industry or economy in general - such as a disruption in the
financial
markets or negative views and expectations about the prospects for the financial
services industry in light of the recent turmoil faced by banking organizations
and the continued deterioration in credit markets. Factors that could
detrimentally impact our access to liquidity sources include a decrease in the
level of our business activity as a result of a downturn in the Washington or
Oregon markets where our loans are concentrated or adverse regulatory action
against us. In addition, the OTS has limited our ability to use
brokered deposits as a source of liquidity by restricting them to not more than
10% of our total deposits. At March 31, 2010 our
brokered deposits (consisting exclusively of CDARs deposits) totaled $31.9
million or 4.6% of total deposits.
Our
financial flexibility will be severely constrained if we are unable to maintain
our access to funding or if adequate financing is not available to accommodate
future growth at acceptable interest rates. Although we consider our sources of
funds adequate for our liquidity needs, we may seek additional debt in the
future to achieve our long-term business objectives. Additional borrowings, if
sought, may not be available to us or, if available, may not be available on
reasonable terms. If additional financing sources are unavailable, or are not
available on reasonable terms, our financial condition, results of operations,
growth and future prospects could be materially adversely
affected. In addition, Riverview may not incur additional debt
without the prior written non-objective of the OTS. Finally, if we
are required to rely more heavily on more expensive funding sources to support
future growth, our revenues may not increase proportionately to cover our
costs.
Decreased
volumes and lower gains on sales and brokering of mortgage loans sold could
adversely impact net income.
We
originate and sell mortgage loans as well as broker mortgage loans. Changes in
interest rates affect demand for our loan products and the revenue realized on
the sale of loans. A decrease in the volume of loans sold/brokered can
decrease our revenues and net income.
A
general decline in economic conditions may adversely affect the fees generated
by our asset management company.
To the
extent our asset management clients and their assets become adversely affected
by weak economic and stock market conditions, they may choose to withdraw the
amount of assets managed by us and the value of their assets may decline. Our
asset management revenues are based on the value of the assets we manage. If our
clients withdraw assets or the value of their assets decline, the revenues
generated by Riverview Asset Management Corp. will be adversely
affected.
Our
growth or future losses may require us to raise additional capital in the
future, but that capital may not be available when it is needed or the cost of
that capital may be very high.
We are
required by federal regulatory authorities to maintain adequate levels of
capital to support our operations. With the proceeds
of this offering, we anticipate that our capital resources will satisfy
our capital requirements for the foreseeable future,
including the heightened capital requirements under Riverview Community Bank’s
MOU. Nonetheless, we may at some point need to raise additional
capital to support continued growth.
Our
ability to raise additional capital, if needed, will depend on conditions in the
capital markets at that time, which are outside our control, and on our
financial condition and performance. Accordingly, we cannot make
16
assurances that we will be able to raise additional capital if needed on
terms that are acceptable to us, or at all. If we cannot raise additional
capital when needed, our operations could be
materially impaired and our financial condition and liquidity could be
materially and adversely affected. In addition,
if we are unable to raise additional capital when required by the OTS, we may be
subject to additional adverse regulatory action. See “We are required
to comply with the terms of two memoranda of understanding and a supervisory
letter directive issued by the OTS and lack of compliance could result in
monetary penalties and /or additional regulatory actions.”
We
operate in a highly regulated environment and may be adversely affected by
changes in federal and state laws and regulations, including changes that may
restrict our ability to foreclose on single-family home loans and offer
overdraft protection.
We are
subject to extensive examination, supervision and comprehensive regulation by
the OTS and the FDIC. Banking regulations are primarily intended to protect
depositors' funds, federal deposit insurance funds, and the banking system as a
whole, and not holders of our common stock. These regulations affect our lending
practices, capital structure, investment practices, dividend policy, and growth,
among other things. Congress and federal regulatory agencies continually review
banking laws, regulations, and policies for possible changes. Changes to
statutes, regulations, or regulatory policies, including changes in
interpretation or implementation of statutes, regulations, or policies, could
affect us in substantial and unpredictable ways. Such changes could subject us
to additional costs, limit the types of financial services and products we may
offer, restrict mergers and acquisitions, investments, access to capital, the
location of banking offices, and/or increase the ability of non-banks to offer
competing financial services and products, among other things. Failure to comply
with laws, regulations or policies could result in sanctions by regulatory
agencies, civil money penalties and/or reputational damage, which could have a
material adverse effect on our business, financial condition and results of
operations. While we have policies and procedures designed to prevent any such
violations, there can be no assurance that such violations will not
occur.
New
legislation proposed by Congress may give bankruptcy courts the power to reduce
the increasing number of home foreclosures by giving bankruptcy judges the
authority to restructure mortgages and reduce a borrower’s payments. Property
owners would be allowed to keep their property while working out their debts.
Other similar
bills placing additional temporary moratoriums on foreclosure sales or otherwise
modifying foreclosure procedures to the benefit of borrowers and the detriment
of lenders may be enacted by either Congress or the States of Washington and
Oregon in the future. These laws may further restrict our collection efforts on
one-to-four single-family loans. Additional legislation proposed or under
consideration in Congress would give current debit and credit card holders the
chance to opt out of an overdraft protection program and limit overdraft fees
which could result in additional operational costs and a reduction in our
non-interest income.
Further,
our regulators have significant discretion and authority to prevent or remedy
unsafe or unsound practices or violations of laws by financial institutions and
holding companies in the performance of their supervisory and enforcement
duties. In this regard, banking regulators are considering additional
regulations governing compensation which may adversely affect our ability to
attract and retain employees. On June 17, 2009, the Obama Administration
published a comprehensive regulatory reform plan that is intended to modernize
and protect the integrity of the United States financial system. The President’s
plan contains several elements that would have a direct effect on Riverview and
Riverview Community Bank. Under the reform plan, the federal thrift charter and
the OTS would be eliminated and all companies that control an insured depository
institution must register as a bank holding company. Draft legislation would
require Riverview Community Bank to become a national bank or adopt a state
charter and require Riverview Bancorp to register as a bank holding company.
Registration as a bank holding company would represent a significant change, as
there currently exist significant differences between savings and loan holding
company and bank holding company supervision and regulation. For example, the
Federal Reserve imposes leverage and risk-based capital requirements on bank
holding companies whereas the OTS does not impose any capital requirements on
savings and loan holding companies. The reform plan also proposes the creation
of a new federal agency, the Consumer Financial Protection Agency that would be
dedicated to protecting consumers in the financial products and services market.
The creation of this agency could result in new regulatory requirements and
raise the cost of regulatory compliance. In addition, legislation stemming from
the reform plan could require changes in regulatory capital requirements, and
compensation practices. If implemented, the foregoing regulatory reforms may
have a material impact on our operations.
17
We
may experience future goodwill impairment, which could reduce our
earnings.
We
performed our annual goodwill impairment test during the quarter ended December
31, 2009, but no impairment was identified. Our assessment of the fair value of
goodwill is based on an evaluation of current purchase transactions, discounted
cash flows from forecasted earnings, our current market capitalization, and a
valuation of our assets. Our evaluation of the fair value of goodwill involves a
substantial amount of judgment. If an impairment of
goodwill was deemed to exist, we would be required to write down our assets
resulting in a charge to earnings, which would
adversely affect our results of operations, perhaps materially; however, it
would have no impact on our liquidity, operations or regulatory
capital.
Our
litigation related costs might continue to increase.
Riverview Community Bank is subject to a variety of legal
proceedings that have arisen in the ordinary course of Riverview Community Bank’s business. In the current
economic environment Riverview Community Bank’s
involvement in litigation has increased significantly, primarily as a result of
defaulted borrowers asserting claims in order to defeat or delay foreclosure
proceedings. Riverview Community Bank believes that
it has meritorious defenses in legal actions where it has been named as a
defendant and is vigorously defending these suits. Although management, based on
discussion with litigation counsel, believes that such proceedings will not have
a material adverse effect on the financial condition or operations of Riverview Community Bank, there can be no assurance that a
resolution of any such legal matters will not result in significant liability to
Riverview Community Bank nor have a material adverse
impact on its financial condition and results of operations or Riverview Community Bank’s ability to meet applicable
regulatory requirements. Moreover, the expenses of pending legal proceedings
will adversely affect Riverview Community Bank’s
results of operations until they are resolved. There can be no assurance that
Riverview Community Bank’s loan workout and other
activities will not expose Riverview Community Bank
to additional legal actions, including lender liability or environmental
claims.
Our
investment in Federal Home Loan Bank stock may become impaired.
At March 31, 2010 , we owned $7.4 million in FHLB stock. As a condition of
membership at the FHLB, we are required to purchase and hold a certain amount of
FHLB stock. Our stock purchase requirement is based, in part, upon the
outstanding principal balance of advances from the FHLB and is calculated in
accordance with the Capital Plan of the FHLB. Our FHLB stock has a par value of
$100, is carried at cost, and it is subject to recoverability testing per applicable
accounting standards. The FHLB has
announced that it had a risk-based capital deficiency under the regulations of
the Federal Housing Finance Agency (the "FHFA"), its primary regulator, as of
December 31, 2008, and that it would suspend future dividends and the repurchase
and redemption of outstanding common stock. As a result, the FHLB has not paid a
dividend since the fourth quarter of 2008. The FHLB has communicated that it
believes the calculation of risk-based capital under the current rules of the
FHFA significantly overstates the market risk of the FHLB's private-label
mortgage-backed securities in the current market environment and that it has
enough capital to cover the risks reflected in its balance sheet. As a result,
we have not recorded an other-than-temporary impairment on our investment in
FHLB stock. However, continued deterioration in the FHLB's financial position
may result in impairment in the value of those securities. We will continue to
monitor the financial condition of the FHLB as it relates to, among other
things, the recoverability of our investment.
If
other financial institutions holding deposits for government related entities in
Washington State fail, we may be assessed a pro-rata share of the uninsured
portion of the deposits by the State of Washington.
We
participate in the Washington Public Deposit Protection Program by accepting
deposits from local governments, school districts and other municipalities
located in the State of Washington. Under the recovery provisions of
the 1969 Public Deposits Protection Act, when a participating bank fails and has
public entity deposits that are not insured by the FDIC, the remaining banks
that participate in the program are assessed a pro-rata share of the uninsured
deposits.
18
We
could see declines in our uninsured deposits, which would reduce the funds we
have available for lending and other funding purposes.
The FDIC
in the fourth quarter of 2008 increased the federal insurance of deposit
accounts from $100,000 to $250,000 and provided 100% insurance coverage for
noninterest-bearing transaction accounts for participating members including
Riverview Community Bank. These increases of coverage, with the
exception of IRA and certain retirement accounts, are scheduled to expire
December 31, 2013. With the increase of bank failures, depositors are reviewing
deposit relationships to maximize federal deposit insurance
coverage. We may see outflows of uninsured deposits as customers
restructure their banking relationships in setting up multiple accounts in
multiple banks to maximize federal deposit insurance
coverage.
Competition
with other financial institutions could adversely affect our
profitability.
The
banking and financial services industry is very competitive. Legal and
regulatory developments have made it easier for new and sometimes unregulated
competitors to compete with us. Consolidation among financial service providers
has resulted in fewer very large national and regional banking and financial
institutions holding a large accumulation of assets. These institutions
generally have significantly greater resources, a wider geographic presence or
greater accessibility. Our competitors sometimes are also able to offer more
services, more favorable pricing or greater customer convenience than we do. In
addition, our competition has grown from new banks and other financial services
providers that target our existing or potential customers. As consolidation
continues, we expect additional institutions to try to exploit our
market.
Technological
developments have allowed competitors including some non-depository
institutions, to compete more effectively in local markets and have expanded the
range of financial products, services and capital available to our target
customers. If we are unable to implement, maintain and use such technologies
effectively, we may not be able to offer products or achieve cost-efficiencies
necessary to compete in our industry. In addition, some of these competitors
have fewer regulatory constraints and lower cost structures.
We
rely heavily on the proper functioning of our technology.
We rely
heavily on communications and information systems to conduct our
business. Any failure, interruption or breach in security of these
systems could result in failures or disruptions in our customer relationship
management, general ledger, deposit, loan and other systems. While we
have policies and procedures designed to prevent or limit the effect of the
failure, interruption or security breach of our information systems, there can
be no assurance that any such failures, interruptions or security breaches will
not occur or, if they do occur, that they will be adequately
addressed. The occurrence of any failures, interruptions or security
breaches of our information systems could damage our reputation, result in a
loss of customer business, subject us to additional regulatory scrutiny, or
expose us to civil litigation and possible financial liability, any of which
could have a material adverse effect on our financial condition and results of
operations.
We rely
on third-party service providers for much of our communications, information,
operating and financial control systems technology. If any of our third-party
service providers experience financial, operational or technological
difficulties, or if there is any other disruption in our relationships with
them, we may be required to locate alternative sources of such services, and we
cannot assure that we could negotiate terms that are as favorable to us, or
could obtain services with similar functionality, as found in our existing
systems, without the need to expend substantial resources, if at all. Any of
these circumstances could have an adverse effect on our
business.
Changes
in accounting standards may affect our performance.
Our
accounting policies and methods are fundamental to how we record and report our
financial condition and results of operations. From time to time
there are changes in the financial accounting and reporting standards that
govern the preparation of our financial statements. These changes can
be difficult to predict and can materially impact how we report and record our
financial condition and results of operations. In some cases, we
could be required to apply a new or revised standard retroactively, resulting in
a retrospective adjustment to prior financial statements.
19
An
increase in interest rates, change in the programs offered by governmental
sponsored entities (“GSE”) or our ability to qualify for such programs may
reduce our mortgage revenues, which would negatively impact our non-interest
income.
Our
mortgage banking operations provide a significant portion of our non-interest
income. We generate mortgage revenues primarily from gains on the
sale of single-family mortgage loans pursuant to programs currently offered by
Fannie Mae, Freddie Mac and non-GSE investors. These entities account
for a substantial portion of the secondary market in residential mortgage
loans. Any future changes in these programs, our eligibility to
participate in such programs, the criteria for loans to be accepted or laws that
significantly affect the activity of such entities could, in turn, materially
adversely affect our results of operations. Further, in a rising or
higher interest rate environment, our originations of mortgage loans may
decrease, resulting in fewer loans that are available to be sold to
investors. This would result in a decrease in mortgage banking
revenues and a corresponding decrease in non-interest income. In
addition, our results of operations are affected by the amount of non-interest
expense associated with
mortgage banking activities, such as salaries and employee benefits, occupancy,
equipment and data processing expense and other operating
costs. During periods of reduced loan demand, our results of
operations may be adversely affected to the extent that we are unable to reduce
expenses commensurate with the decline in loan
originations.
We
may engage in FDIC-assisted transactions, which could present additional risks
to our business.
We may
have opportunities to acquire the assets and liabilities of failed banks in
FDIC-assisted transactions, including transactions in the states of Washington,
Oregon and Idaho. Although these FDIC-assisted transactions typically
provide for FDIC assistance to an acquirer to mitigate certain risks, such as
sharing exposure to loan losses and providing indemnification against certain
liabilities of the failed institution, we are (and would be in future
transactions) subject to many of the same risks we would face in acquiring
another bank in a negotiated transaction, including risks associated with
maintaining customer relationships and failure to realize the anticipated
acquisition benefits in the amounts and within the timeframes we
expect. In addition, because these acquisitions are structured in a
manner that would not allow us the time and access to information normally
associated with preparing for and evaluating a negotiated acquisition, we may
face additional risks in FDIC-assisted transactions, including additional strain
on management resources, management of problem loans, problems related to
integration of personnel and operating systems and impact to our capital
resources requiring us to raise additional capital. We cannot provide
assurance that we would be successful in overcoming these risks or any other
problems encountered in connection with FDIC-assisted
transactions. Our inability to overcome these risks could have a
material adverse effect on our business, financial condition and results of
operations.
We
are dependent on key personnel and the loss of one or more of those key
personnel may materially and adversely affect our prospects.
Competition
for qualified employees and personnel in the banking industry is intense and
there are a limited number of qualified persons with knowledge of, and
experience in, the community banking industry where Riverview Community Bank
conducts its business. The process of recruiting personnel with the
combination of skills and attributes required to carry out our strategies is
often lengthy. Our success depends to a significant degree upon our ability to
attract and retain qualified management, loan origination, finance,
administrative, marketing and technical personnel and upon the continued
contributions of our management and personnel. In particular, our success
has been and continues to be highly dependent upon the abilities of key
executives, including our President, and certain other employees. In
addition, our success has been and continues to be highly dependent upon the
services of our directors, many of whom are at or nearing retirement age, and we
may not be able to identify and attract suitable candidates to replace such
directors.
Our
business may be adversely affected by an increasing prevalence of fraud and
other financial crimes.
Our loans
to businesses and individuals and our deposit relationships and related
transactions are subject to exposure to the risk of loss due to fraud and other
financial crimes. Nationally, reported incidents of fraud and other
financial crimes have increased. We have also experienced an increase
in apparent fraud and other financial crimes; however, we have not recently
experienced material losses due to such crimes. While we have
policies and procedures designed to prevent such losses, there can be no
assurance that such losses will not occur.
20
Managing
reputational risk is important to attracting and maintaining customers,
investors and employees.
Threats
to our reputation can come from many sources, including adverse sentiment about
financial institutions generally, unethical practices, employee misconduct,
failure to deliver minimum standards of service or quality, compliance
deficiencies, and questionable or fraudulent activities of our
customers. We have policies and procedures in place to protect our
reputation and promote ethical conduct, but these policies and procedures may
not be fully effective. Negative publicity regarding our business,
employees, or customers, with or without merit, may result in the loss of
customers, investors and employees, costly litigation, a decline in revenues and
increased governmental regulation.
Our
assets as of March 31, 2010 include a deferred tax asset and we may not be able
to realize the full amount of such asset.
We
recognize deferred tax assets and liabilities based on differences between the
financial statement carrying amounts and the tax bases of assets and
liabilities. At March 31, 2010, the net deferred tax asset was approximately
$11.2 million, an increase from a balance of approximately $8.2
million at March 31, 2009. The increase in Riverview Community Bank’s net
deferred tax asset resulted mainly from loan loss provisions and REO
write-downs, neither of which is currently deductible for federal income tax
reporting purposes. The deferred tax asset balance at March 31, 2010
attributable to our loan loss reserves and REO write-downs was $7.7 million and
$2.3 million, respectively.
We regularly review our net deferred
tax assets for recoverability based on history of earnings, expectations for
future earnings and expected timing of reversals of temporary differences.
Realization of deferred tax assets ultimately depends on the existence of
sufficient taxable income, including taxable income in prior carryback years, as
well as future taxable income. We believe the recorded net deferred tax asset at
March 31, 2010 is fully realizable; however, if we determine that we will be
unable to realize all or part of the net deferred tax asset, we would adjust
this net deferred tax asset, which would negatively impact our earnings or
increase our net loss.
Risks
Relating to the Offering and our Common Stock
The
price of our common stock may fluctuate significantly, and this may make it
difficult for you to resell our common stock when you want or at prices you find
attractive.
We cannot
predict how our common stock will trade in the future. The market value of our
common stock will likely continue to fluctuate in response to a number of
factors including the following, most of which are beyond our control, as well
as the other factors described in this “Risk Factors” section:
|
·
|
actual
or anticipated quarterly fluctuations in our operating and financial
results;
|
|
·
|
developments
related to investigations, proceedings or litigation that involve
us;
|
|
·
|
changes
in financial estimates and recommendations by financial
analysts;
|
|
·
|
dispositions,
acquisitions and financings;
|
|
·
|
actions
of our current shareholders, including sales of common stock by existing
shareholders and our directors and executive
officers;
|
|
·
|
fluctuations
in the stock prices and operating results of our
competitors;
|
|
·
|
regulatory
developments; and
|
|
·
|
other
developments related to the financial services
industry.
|
The
market value of our common stock may also be affected by conditions affecting
the financial markets in general, including price and trading fluctuations.
These conditions may result in (i) volatility in the level of, and
21
fluctuations in, the market prices of stocks generally and, in
turn, our common stock and (ii) sales of substantial amounts of our common
stock in the market, in each case that could be unrelated or disproportionate to
changes in our operating performance. These broad market fluctuations may
adversely affect the market value of our common stock and there is no assurance
that purchasers of common stock in the offering will be able to sell shares
after the offering at a price equal to or greater than the actual purchase
price.
There
may be future sales of additional common stock or other dilution of our equity,
which may adversely affect the market price of our common stock.
Except as
described under “Underwriting,” we are not restricted from issuing additional
common stock or preferred stock, including any securities that are convertible
into or exchangeable for, or that represent the right to receive, common stock
or preferred stock or any substantially similar securities. The market price of
our common stock could decline as a result of sales by us of a large number of
shares of common stock or preferred stock or similar securities in the market
after this offering or from the perception that such sales could
occur. Further, any issuances of common stock would dilute our
shareholders’ ownership interests and may dilute the per share book value of our
common stock.
Our board
of directors is authorized generally to cause us to issue additional common
stock, as well as series of preferred stock, without any action on the part of
our shareholders except as may be required under the listing requirements of the
Nasdaq Stock Market. In addition, the board has the power, without
shareholder approval, to set the terms of any
such series of preferred stock that may be issued, including voting rights,
dividend rights and preferences over the common stock with respect to dividends
or upon the liquidation, dissolution or winding-up of our business and other
terms. If we issue preferred stock in the future that has a preference over the
common stock with respect to the payment of dividends or upon liquidation,
dissolution or winding-up, or if we issue preferred stock with voting rights
that dilute the voting power of the common stock, the rights of holders of the
common stock or the market price of the common stock could be adversely
affected.
We
will retain broad discretion in using the net proceeds from this offering, and
may not use the proceeds effectively.
We intend
to use the net proceeds of this offering for general corporate purposes, which
may include, without limitation, investments at the holding company level,
providing capital to support the growth of Riverview
Community Bank or business combinations. We have not
designated the amount of net proceeds we will use for any particular
purpose. Accordingly, our management will retain broad discretion to
allocate the net proceeds of this offering. The net proceeds may be applied in
ways with which you and other investors in the offering may not agree. Moreover,
our management may use the proceeds for corporate purposes that may not increase
our market value or make us more profitable. In addition, it may take us some
time to effectively deploy the proceeds from this offering. Until the proceeds
are effectively deployed, our return on equity and earnings per share may be
negatively impacted. Management’s failure to use the net proceeds of this
offering effectively could have an adverse effect on our business, financial
condition and results of operations.
Regulatory
and contractual restrictions may limit or prevent us from paying dividends on
our common stock.
Holders
of our common stock are only entitled to receive such dividends as our board of
directors may declare out of funds legally available for such payments.
Furthermore, holders of our common stock are subject to the prior dividend
rights of any holders of our preferred stock at any time outstanding or
depositary shares representing such preferred stock then outstanding. Although
we have historically declared cash dividends on our common stock, we are not
required to do so. We suspended our cash dividend during the quarter ended
December 31, 2008 and we do not know if we will resume the payment of dividends
in the future. In addition, under the terms of the October 2009 MOU
the payment of dividends by Riverview to its shareholders is also subject to the
prior written non-objection of the OTS. As an entity separate and
distinct from Riverview Community Bank, Riverview
derives substantially all of its revenue in the form of dividends from Riverview Community Bank. Accordingly,
Riverview is and will be dependent upon dividends from Riverview Community Bank to satisfy its cash needs and to
pay dividends on its common stock. The inability to receive
dividends from Riverview Community Bank could have a material adverse effect on
Riverview’s business, financial condition and results of
22
We have deferred payments of interest on our outstanding
junior subordinated debentures and as a result we
are prohibited from declaring or paying dividends or distributions on,
and from making liquidation payments with respect to, our common
stock.
In the first
quarter of fiscal 2011, we elected to defer regularly scheduled interest
payments on our outstanding $22.7 million aggregate principal amount of
junior subordinated debentures issued in connection with the sale of trust
preferred securities through statutory business trusts. There are currently two
separate series of these junior subordinated debentures outstanding, each series
having been issued under a separate indenture and with a separate guarantee
from Riverview. During the deferral period, interest will
continue to accrue on the junior subordinated debentures at the stated coupon
rate, including the deferred interest, and Riverview may not, among other things
and with limited exceptions, pay cash dividends on or repurchase its common
stock nor make any payment on outstanding debt obligations that rank equally
with or are junior to the junior subordinated debentures.
We may, without notice to or consent
from the holders of our common stock, issue additional series of junior
subordinated debentures in the future with terms similar to those of our
existing junior subordinated debentures or enter into other financing agreements
that limit our ability to purchase or to pay dividends or distributions on our
capital stock, including our common stock. Under Riverview’s MOU the issuance of
any new debt is subject to the non-objection of the OTS. Assuming we were to
receive such non-objection, as a result of our deferral of interest on the
junior subordinated debentures, it is likely that we will not be able to raise
funds through the offering of debt securities until we become current on these
obligations or these obligations are restructured.
This deferral may
also adversely affect our ability to obtain debt financing on commercially
reasonable terms, or at all. In addition, if Riverview defers interest payments
on the junior subordinated debentures for more than 20 consecutive quarters, it
would be in default under the indentures governing these debentures and the
amount due under such agreements would be immediately due and
payable. Events of
default under the indenture generally consist of our failure to pay interest on
the junior subordinated debt securities under certain circumstances, our failure
to pay any principal of or premium on such junior subordinated debt securities
when due, our failure to comply with certain covenants under the indenture, and
certain events of bankruptcy, insolvency or liquidation relating to us or Riverview Community Bank.
We anticipate using $300,000 of the net
proceeds from this offering to become current on our junior subordinated
debentures, however, for so long as we defer interest payments, we will likely
have greater difficulty in obtaining financing and have fewer financing sources.
In addition, the market value of our common stock may be adversely
affected.
23
Our
common stock constitutes equity and is subordinate to our existing and future
indebtedness, and effectively subordinated to all the indebtedness of and other
non-common equity claims against Riverview Community
Bank.
The
shares of our common stock represent equity interests in us and do not
constitute indebtedness. Accordingly, the shares of our common stock will rank
junior to all of our existing and future indebtedness and to other non-equity
claims on Riverview with respect to assets available to satisfy claims on
Riverview.
In
addition, our right to participate in any distribution of assets of Riverview Community Bank upon liquidation or otherwise,
and thus your ability as a holder of our common stock to benefit indirectly from
such distribution, will be subject to the prior claims of creditors and
depositors of Riverview Community Bank, except to
the extent that any of our claims as a creditor of Riverview Community Bank may be recognized. As a result,
holders of our common stock will be effectively subordinated to all existing and
future liabilities and obligations of Riverview
Community Bank. At March 31, 2010,
Riverview Community Bank’s total deposits and borrowings were
approximately $743.7 million.
Our
common stock trading volume may not provide adequate liquidity for
investors.
Shares of
our common stock are listed on the Nasdaq Global Select
Market. However, the average daily trading volume in our common stock
is less than that of many larger financial services companies. A public trading
market having the desired characteristics of depth, liquidity and orderliness
depends on the presence in the marketplace
of a sufficient number of willing buyers and sellers of the common stock at any
given time. This presence depends on the individual decisions of investors and
general economic and market conditions over which we have no control. Given the
daily average trading volume of our common stock, significant sales of the
common stock in a brief period of time, or the expectation of these sales, could
cause a decline in the price of our common stock.
Our
directors and executive officers could have the ability to influence shareholder
actions in a manner that may be adverse to your personal investment
objectives.
As of
March 31, 2010 , our directors and executive officers
as a group beneficially owned 1,420,814 shares of
our common stock (including 143,000 shares issuable
under exercisable stock options within sixty days of March
31, 2010 ), which represented approximately 13.0% of our outstanding shares as of that date (including
in total shares outstanding the 143,000 shares
issuable under exercisable options held by the group). Due to their
significant collective ownership interest, our directors and executive officers
may be able to exercise significant influence over our management and business
affairs. For example, using their voting power, the directors and executive
officers may be able to influence the outcome of director elections or block
significant transactions, such as a merger or acquisition, or any other matter
that might otherwise be favored by other shareholders.
Anti-takeover
provisions could negatively impact our shareholders.
Provisions
in our articles of incorporation and bylaws, the corporate law of the State of
Washington and federal regulations could delay, defer or prevent a third party
from acquiring us, despite the possible benefit to our shareholders, or
otherwise adversely affect the market price of our common
stock. These provisions include: supermajority voting requirements
for certain business combinations with any person who beneficially owns 15% or
more of our outstanding common stock; limitations on voting by any person
holding more than 10% of any class of
24
These
provisions may discourage potential takeover attempts, discourage bids for our
common stock at a premium over market price or adversely affect the market price
of, and the voting and other rights of the holders of, our common
stock. These provisions could also discourage proxy contests and make
it more difficult for holders of our common stock to elect directors other than
the candidates nominated by our board of directors.
25
USE
OF PROCEEDS
Our
estimated net proceeds from this offering are approximately
$ million, or approximately
$ million if the underwriters exercise their over-allotment option in full, after
deducting underwriting discounts and commissions and other estimated expenses of
this offering. We intend to use the net proceeds from this offering
to contribute $17.0 million to Riverview Community Bank to support its growth and related
capital needs. We expect to use the remaining net proceeds for
general working capital purposes, which may include quarterly payments of
interest on our junior subordinated debentures, including
the quarterly interest payment of $300,000 that is currently
deferred, as
well as future investments in Riverview Community
Bank to support its growth or capital needs. Pending allocation to
specific uses, we intend to invest the proceeds in short-term interest-bearing
investment grade securities.
26
The following table shows our actual
consolidated capitalization as of March 31, 2010 and
as adjusted to give effect to the issuance of the common stock offered by this
prospectus. You should read the following table together with the
section entitled “Summary of Selected Consolidated Financial Information” and
our consolidated financial statements and notes, which are incorporated by
reference into this prospectus. Our capitalization is presented on a
historical basis and on a pro forma basis as if the offering had been completed
as of March 31, 2010 based on the
following:
|
·
|
the
sale of 6,896,552 shares of common stock at a
price of $2.90 per share based on a closing price of the common stock on the NASDAQ
Global Select Market on June 3, 2010; the price at which the common stock
is sold in the offering may be higher or lower than $2.90, and we may sell
a greater or lower number of shares in the
offering;
|
|
·
|
the
net proceeds to us in this offering, after deducting underwriting
discounts and commissions and estimated offering expenses payable by us in
this offering of $1.6 million, are $18.4
million;
|
|
·
|
$17.0 million of the net proceeds to us in this
offering are contributed to Riverview Community
Bank;
|
|
·
|
no
liquid assets of Riverview other than the net proceeds from this offering
are contributed to Riverview Community Bank;
and
|
|
·
|
the
underwriters’ over-allotment option is not
exercised.
|
|
At
March 31, 2010
|
||||||||
|
Actual
|
As
Adjusted
|
|||||||
|
(dollars
in thousands
except
per share data)
|
||||||||
|
DEBT
|
||||||||
|
FHLB
borrowings and other long-term
debt
|
$
|
55,681
|
$
|
55,681
|
||||
|
Total
debt
|
$
|
55,681
|
$
|
55,681
|
||||
|
SHAREHOLDERS’
EQUITY
|
||||||||
|
Preferred
stock, $.01 par value, authorized 250,000 shares;
none
issued and
outstanding
|
$
|
-
|
$
|
-
|
||||
|
Common
stock, $.01 par value, authorized 50,000,000 shares,
10,923,773
shares
issued, and 10,923,773 shares outstanding, and
17,820,325 shares
outstanding,
as adjusted at March 31,
2010
|
109
|
178
|
||||||
|
Additional
paid-in
capital
|
46,948
|
65,229
|
||||||
|
Retained
income, substantially
restricted
|
38,878
|
38,878
|
||||||
|
Accumulated
other comprehensive loss, net of income taxes
|
(799)
|
(799)
|
||||||
|
Unearned
stock
compensation
|
(1,202)
|
(1,202)
|
||||||
|
Total
shareholders’ equity
|
83,934
|
102,284
|
||||||
|
Noncontrolling
interest
|
420
|
420
|
||||||
|
Total
equity
|
84,354
|
102,704
|
||||||
|
Total
capitalization
|
$
|
140,035
|
$
|
158,385
|
||||
|
Book
value per common share (1)
|
$
|
7.68
|
$
|
5.74
|
||||
|
Shareholder
equity to total assets ratio
|
10.02
|
%
|
11.94
|
% | ||||
|
Regulatory
capital ratios (2)
|
||||||||
|
Total Risk-Based Capital
ratio
|
12.11
|
% |
14.42
|
% | ||||
|
Tier
1 Risk-Based Capital ratio
|
10.85
|
13.16
|
||||||
|
Tier 1 ( Leverage )
ratio
|
9.84
|
11.69
|
||||||
__________________________________
| (1) | Calculated based on shareholders' equity. |
|
(2)
|
Regulatory
capital ratios are calculated for Riverview Community Bank and not
Riverview on a consolidated basis.
|
27
PRICE
RANGE OF COMMON STOCK AND DIVIDEND INFORMATION
Our common stock is traded on the
Nasdaq Global Select Market under the symbol "RVSB." At June 3, 2010 , there were 10,923,773 shares of our common
stock issued and outstanding. Based on our most recent shareholder
list we had 819 shareholders of record and an
estimated 1,614 holders in nominee or "street name"
through various brokerage firms.
The
following table sets forth the high and low trading prices, as reported by
Nasdaq, and cash dividends paid for each quarter during the periods presented.
At June 3, 2010 , there were 21 market makers in our common stock as reported by the
Nasdaq Global Select Market.
|
Fiscal
Year Ended March 31, 2011
|
High
|
Low
|
Cash
Dividends
Declared
|
|
First
Quarter (through June 3, 2010)
|
$ 3.81
|
$ 2.24
|
$0.000
|
|
Fiscal
Year Ended March 31, 2010
|
High
|
Low
|
Cash
Dividends
Declared
|
|
First
Quarter
|
$ 3.90
|
$ 2.63
|
$0.000
|
|
Second
Quarter
|
4.32
|
2.95
|
0.000
|
|
Third
Quarter
|
3.93
|
2.24
|
0.000
|
|
Fourth
Quarter
|
2.94
|
2.21
|
0.000
|
|
Fiscal
Year Ended March 31, 2009
|
High
|
Low
|
Cash
Dividends
Declared
|
|
First
quarter
|
$ 9.79
|
$ 7.42
|
$0.090
|
|
Second
quarter
|
7.38
|
4.52
|
0.045
|
|
Third
quarter
|
6.10
|
2.25
|
0.000
|
|
Fourth
quarter
|
4.35
|
1.60
|
0.000
|
The timing and amount of cash
dividends paid on our common stock depends on our earnings, capital
requirements, financial condition and other relevant factors and is subject to
the discretion of our board of directors. After consideration of
these factors, during the quarter ended December 31, 2008 we eliminated our
dividend payout to preserve our capital. The primary source for
dividends paid to our shareholders is dividends paid to us from Riverview
Community Bank. There are regulatory restrictions on the ability of
our subsidiary bank to pay dividends. Under federal regulations, the
dollar amount of dividends an institution may pay depends upon its capital
position and recent net income. Generally, Riverview Community Bank may not declare or pay a cash
dividend on its stock if it would cause its regulatory capital to be reduced
below the amount required for the liquidation account established in the mutual
to stock conversion of Riverview Community Bank or
to meet applicable regulatory capital requirements. Pursuant to the OTS
regulations, Riverview Community Bank generally may make capital distributions
during any calendar year equal to retained net income for the calendar
year-to-date plus retained net income for the previous two calendar year-to-date
periods, assuming the distribution would not cause regulatory capital to be
reduced below the required amount. Riverview
Community Bank is required under its MOU to
provide notice to the OTS 30 days prior to the declaration of a dividend to
provide the OTS an
28
opportunity to object to the payment. At March 31, 2010 , Riverview Community Bank would not have
been permitted under OTS regulations to make capital a distributions as a result
of the calculation above and prior distributions made. To declare a dividend in
excess of this amount, Riverview Community Bank
would be required to file an application with the OTS subject to its review and
approval. Unlike Riverview Community Bank, we are
not subject to any regulatory restrictions on the payment of dividends; however,
we are subject to the requirements of Washington law. Under
Washington law, dividends may be paid unless the corporation would not be able
to pay its liabilities as they become due in the usual course of business or the
corporation’s total assets would be less than its total
liabilities. In order to pay such cash dividends, however, we must
have available cash either from dividends received from Riverview Community Bank or earnings on our
assets.
DESCRIPTION
OF CAPITAL STOCK
General
We are
authorized to issue 50,000,000 shares of common stock having a par value of $.01
per share and 250,000 shares of preferred stock having a par value of $.01 per
share. Each share of common stock has the same relative rights as, and is
identical in all respects with, each other share of common stock. Our
outstanding shares of common stock are, and the shares of common stock to be
issued in this offering will be, validly issued, fully paid and non
assessable.
The
following description of our capital stock does not purport to be complete and
is qualified in all respects by reference to our articles of incorporation and
bylaws, and the Washington Business Corporation Act. See “Where You
Can Find More Information.”
Common
Stock
The
rights and privileges of holders of our common stock will be subject to the
rights and preferences established for any series of preferred stock that we may
issue in the future.
Dividends. We can pay
dividends out of statutory surplus or from certain net profits if, as and when
declared by our board of directors. Our payment of dividends is subject to
limitations that are imposed by law and applicable regulation and any other
restrictions that may be imposed by our regulators. The holders of common stock
are entitled to receive and share equally in any dividends declared by our board
of directors out of funds legally available for the payment of dividends. If we
issue a series of preferred stock, the holders of such series of preferred stock
may have a priority over the holders of the common stock with respect to
dividends.
Voting Rights. The holders of
common stock possess exclusive voting rights in us. They elect our board of
directors and act on any other matters as are required to be presented to them
under applicable law or as are otherwise presented to them by the board of
directors. Each holder of common stock is entitled to one vote per share and
does not have any right to cumulate votes in the election of directors. In
addition, our articles of incorporation provide that a holder of common stock
who owns, together with certain affiliates or persons acting in concert, in
excess of 10% of the then-outstanding shares of common stock cannot vote any
shares in excess of 10% unless permitted by our board of directors. If we issue
a series of preferred stock, holders of such series of preferred stock may also
possess voting rights. Certain matters require the vote of 80% of the
outstanding shares entitled to vote thereon.
Liquidation. In the event of
liquidation, dissolution or winding up of us, the holders of our common stock
would be entitled to receive, after payment or provision for payment of all our
debts and liabilities, all of our assets available for distribution. If we issue
a series of preferred stock, the holders of such series of preferred stock may
have a priority over the holders of the common stock in the event of liquidation
or dissolution.
Preemptive Rights. Holders of
our common stock are not entitled to preemptive rights with respect to any
shares that may be issued. The common stock is not subject to
redemption.
29
Preferred
Stock
We may
issue preferred stock with such designations, powers, preferences and rights as
our board of directors may from time to time determine. Our board of directors
can, without shareholder approval except to the extent required under the rules
of the Nasdaq Stock Market, issue preferred stock with voting, dividend,
liquidation and conversion rights that could dilute the voting strength of the
holders of the common stock and may assist management in impeding an unfriendly
takeover or attempted change in control.
Generally
any preferred stock issued will rank senior to common stock with respect to the
payment of dividends or amounts paid upon our liquidation, winding up or
dissolution, or both. Under certain circumstances, the issuance of
shares of preferred stock, or merely the existing authorization of our board of
directors to issue shares of preferred stock, may tend to discourage or impede a
merger or other change in control.
Transfer
Agent
The
transfer agent and registrar for our common stock is Computershare Trust
Company, N.A.
CERTAIN
ANTI-TAKEOVER PROVISIONS IN OUR
ARTICLES
OF INCORPORATION AND BYLAWS
Our
articles of incorporation and bylaws contain certain provisions that could make
more difficult an acquisition of us, by means of a tender offer, proxy context
or otherwise. Certain provisions also render the removal of the incumbent board
of directors or management more difficult. These provisions may have the effect
of deterring or defeating a future takeover attempt that is not approved by our
board of directors, but which our shareholders may deem to be in their best
interests or in which shareholders may receive a substantial premium for their
shares over then current market prices. As a result, shareholders who might
desire to participate in such a transaction might not have the opportunity to do
so. The following description of these provisions is only a summary and does not
provide all of the information contained in Riverview’s articles of
incorporation and bylaws. See "Where You Can Find More Information" as to where
to obtain a copy of these documents.
Business
Combinations with Related Persons
The
articles of incorporation require the approval of the holders of at least 80% of
our outstanding shares of voting stock to approve certain business combinations
involving a "related person" except in cases where the proposed transaction has
been approved in advance by a two-thirds vote of those members of our board of
directors who are unaffiliated with the related person and who were either
directors prior to the time when the related person became a related person or
were recommended to succeed such a director by a majority of the unaffiliated
board of directors members who were directors prior to that time.
The term
"related person" includes any individual or entity that together with its
affiliates owns beneficially or controls, directly or indirectly, 10% or more of
the outstanding shares of voting stock of Riverview.
A
"business combination" includes:
|
·
|
any
merger or consolidation of us with or into any related person, or any
merger or consolidation of a related person with or into us or any
subsidiary;
|
|
·
|
any
sale, lease, exchange, mortgage, transfer or other disposition of more
than 25% of our assets or the assets of any subsidiary, or any sale,
lease, exchange, transfer or other disposition of more than 25% of the
assets of a related person to us or any
subsidiary;
|
|
·
|
the
issuance of any of our securities or any subsidiary to a related person,
or the acquisition by us or any subsidiary of any securities of a related
person;
|
|
·
|
any
reclassification of our common stock or any recapitalization involving our
common stock;
|
30
|
·
|
any
liquidation of us; or
|
|
·
|
any
agreement or other arrangement providing for any of the
foregoing.
|
Limitation
on Voting Rights
Our
articles of incorporation provide that no record owner of any outstanding common
stock which is beneficially owned, directly or indirectly, by a person who
beneficially owns in excess of 10% of the then outstanding shares of common
stock will be entitled or permitted to any vote in respect of the shares held in
excess of the 10% limit, unless permitted by a resolution adopted by a majority
of our board of directors. Beneficial ownership is determined pursuant to the
federal securities laws and includes shares beneficially owned by such person or
any of his or her affiliates (as defined in the articles of incorporation),
shares which such person or his or her affiliates have the right to acquire upon
the exercise of conversion rights or options and shares as to which such person
and his or her affiliates have or share investment or voting power, but does not
include shares that are subject to a
revocable proxy and that are not otherwise beneficially, or deemed by us to be
beneficially, owned by such person and his or her affiliates.
Board
of Directors
Classified Board. Our board
of directors is divided into three classes, each of which contains approximately
one-third of the number of directors. The shareholders elect one class of
directors each year for a term of three years. The classified board makes it
more difficult and time consuming for a shareholder group to fully use its
voting power to gain control of our board of directors without the consent of
the incumbent directors.
Filling of Vacancies;
Removal. The articles of incorporation provide that any vacancy occurring
in our board of directors, including a vacancy created by an increase in the
number of directors, may be filled by a vote of a majority of the directors then
in office. The articles also provide that a director may be removed from the
board prior to the expiration of his or her term only for cause and only upon
the vote of at least 80% of the outstanding shares entitled to vote for
directors. These provisions make it more difficult for shareholders to remove
directors and replace them with their own nominees.
Special
Meetings of Shareholders
The
articles of incorporation provide that only the president or a majority of our
board of directors may call a special meeting of the Riverview shareholders.
Shareholders are not able to call a special meeting or require the board to do
so. This provision prevents shareholders from forcing consideration of a
proposal between annual meetings over the opposition of the president and the
board by calling a special meeting of the shareholders.
Advance
Notice Provisions for Shareholder Nominations and Proposals
Our
articles of incorporation establish an advance notice procedure for shareholders
to nominate directors or bring other business before a shareholders meeting. A
person may not be nominated for election as a director unless that person is
nominated by or at the direction of our board of directors or by a shareholder
who has given appropriate notice to us before the meeting. Similarly, a
shareholder may not bring business before a meeting unless the shareholder has
given us appropriate notice of its intention to bring that business before the
meeting. Our secretary must receive notice of the nomination or proposal not
less than 30 nor more than 60 days prior to the meeting. A shareholder who
desires to raise new business must provide certain information to us concerning
the nature of the new business, the shareholder and the shareholder's interest
in the business matter. Similarly, a shareholder wishing to nominate any person
for election as a director must provide us with certain information concerning
the nominee and the proposing shareholder.
Advance
notice of nominations or proposed business by shareholders gives our board of
directors time to consider the qualifications of the proposed nominees, the
merits of the proposals and, to the extent deemed necessary or desirable by the
Board, to inform shareholders and make recommendations about those
matters.
31
Preferred
Stock
The
articles of incorporation authorize our board of directors to establish one or
more series of preferred stock and, for any series of preferred stock, to
determine the terms and rights of the series, including voting rights,
conversion rates, and liquidation preferences. Although our board of directors
has no current intention to do so, it could issue a series of preferred stock
that could, depending on its terms, impede a merger, tender offer or other
takeover attempt. Our board of directors will make any determination to issue
shares with those terms based on its judgment as to the best interests of us and
our shareholders.
Amendment
of Articles of Incorporation
Our
articles of incorporation require the affirmative vote of at least 80% of the
votes entitled to be cast to amend or repeal certain provisions of the articles
of incorporation, including the provisions limiting voting rights and those
relating to approval of business combinations with related persons, calling
special meetings, director and officer indemnification and amendment of the
bylaws and articles of incorporation. These supermajority voting requirements
make it more difficult for the shareholders to amend these
provisions.
Federal Law. Riverview
Community Bank is a federal savings bank. Acquisitions of control of Riverview
Community Bank by an individual are governed by the Change in Bank Control Act,
and by another company are governed by Section 10 of the Home Owners’ Loan Act.
The OTS has promulgated regulations under these laws.
The
Change in Bank Control Act provides that no person, acting directly or
indirectly or through or in concert with one or more other individuals, may
acquire control of a federal savings bank, unless the OTS has been given 60 days
prior written notice. Similar notice is required to be provided to the OTS by an
individual acquiring a similar ownership interest in a savings and loan holding
company. The Home Owners’ Loan Act provides that no company may acquire
“control” of a savings association without the prior approval of the OTS. Any
company that acquires such control becomes a savings and loan holding company
subject to registration, examination and regulation by the OTS. In addition,
acquisitions of control of a savings and loan holding company by another company
are subject to the approval of the OTS.
Pursuant
to OTS regulations, control of a savings institution or its holding company is
conclusively deemed to have occurred by, among other things, the acquisition of
more than 25% of any class of voting stock of the institution or its holding
company or the ability to control the election of a majority of the directors of
an institution or its holding company. Moreover, control is presumed to have
been occurred, subject to rebuttal, upon the acquisition of more than 10% of any
class of voting stock, or of more than 25% of any class of stock of a savings
institution or its holding company, where certain enumerated “control factors”
are also present in the acquisition. The OTS may prohibit an acquisition of
control if:
|
·
|
it
would result in a monopoly or substantially lessen
competition;
|
|
·
|
the
financial condition of the acquiring person might jeopardize the financial
stability of the institution; or
|
|
·
|
the
competence, experience or integrity of the acquiring person indicates that
it would not be in the interest of the depositors or of the public to
permit the acquisition of control by such
person.
|
These
restrictions do not apply to the acquisition of a savings institution’s or its
holding company’s capital stock by one or more tax-qualified employee stock
benefit plans, provided that the plans do not have beneficial ownership of more
than 25% of any class of equity security of the savings
institution.
Each
fiduciary of a pension, profit-sharing or other employee benefit plan or
arrangement to which Part 4 of Title I of the Employee Retirement Income
Security Act of 1974 (which we refer to as “ERISA”) applies (which we
refer to as an “ERISA
plan”) should consider the fiduciary standards of ERISA in the context of
the plan’s particular circumstances before allowing the plan to purchase our
common stock. Accordingly, among other factors, the fiduciary should consider
whether the purchase would be consistent with the prudence and diversification
requirements of ERISA and would be consistent with the documents and instruments
governing the ERISA plan and whether the purchase could constitute a “prohibited
transaction” under ERISA or the Code.
32
Section 406
of ERISA and Section 4975 of the Code prohibit an ERISA plan as well as any
individual retirement account and other arrangement to which Section 4975
of the Code applies (which together with an ERISA plan we refer to individually
as a “statutory plan”),
from engaging in specified transactions involving “plan assets” with persons who
are “parties in interest” under ERISA or “disqualified persons” under the Code
(which we refer to individually as a “party in interest”) with
respect to any such statutory plan, which transactions are commonly called
“prohibited transactions.” Riverview or the underwriter may be
considered a party in interest with respect to a statutory plan. For
example, if the underwriter or any of its affiliates are engaged in providing
services to such plan the underwriter or its affiliate would be a party in
interest. A violation of the “prohibited transaction” rules may
result in an excise tax under Section 4975 of the Code for such persons
unless exemptive relief is available under an applicable statutory or
administrative exemption. In addition, the fiduciary of a statutory plan that
engages in a non-exempt prohibited transaction may be subject to penalties and
liabilities under ERISA.
There is
a risk that a purchase of our common stock by a statutory plan could constitute
a prohibited transaction under ERISA and Section 4975 of the Code. For
example, if a statutory plan sponsored by Riverview purchases our common stock
either directly or indirectly by reason of the activities of one or more of its
affiliates, the
purchase of our common stock could be prohibited by Section 406(a)(1) of
ERISA and Section 4975(c)(1) of the Code unless exemptive relief were
available under an applicable statutory or administrative
exemption.
The U.S.
Department of Labor has issued three administrative prohibited transaction class
exemptions (which we refer to as “PTCEs”) that may provide
exemptive relief for direct or indirect prohibited transactions resulting from
the purchase of our common stock. These class exemptions are:
|
·
|
PTCE
96-23, for specified transactions determined by in-house asset
managers;
|
|
·
|
PTCE
84-14, for specified transactions determined by independent qualified
professional asset managers; and
|
|
·
|
PTCE
75-1, as amended, for purchases of underwritten securities in a public
offering.
|
Furthermore, there are employee
benefit plans other than statutory plans (such as governmental plans, as defined
in Section 3(32) of ERISA, church plans, as defined in Section 3(33)
of ERISA, and foreign plans, as described in Section 4(b)(4) of ERISA)
which, while not subject to the requirements of Part 4 of Title I of ERISA or
Section 4975 of the Code, may be subject to laws which have a similar
purpose or effect to the fiduciary and prohibited transaction provisions under
Part 4 of Title I of ERISA and Section 4975 of the Code (which we
refer to as “Similar
Laws”).
Based on
the foregoing, our common stock should not be purchased by any person investing
“plan assets” of any statutory plan, any entity whose underlying assets include
“plan assets” under ERISA by reason of any statutory plan’s investment in the
entity, or any employee benefit plan which is subject to Similar Laws, unless
the fiduciary for any such plan or entity can determine that such purchase will
not result in a prohibited transaction under Part 4 of Title I of ERISA, Section
4975 of the Code, or any comparable provision under Similar Law. Any
person who is a fiduciary for such a plan or entity should consult with counsel
regarding the risk, if any, of a prohibited transaction arising from the
purchase of our common stock and whether any exemptive relief is necessary and
available in light of such risk.
UNDERWRITING
We are
offering the shares of our common stock described in this prospectus through
Wunderlich Securities as representative of the
underwriters (referred to below as the “Underwriters”). We have entered into an
underwriting agreement with the Underwriters, dated ________ ___, 2010 (the
“Underwriting Agreement”). Subject to the terms and conditions of the
Underwriting Agreement, each of the Underwriters has severally agreed to
purchase the number of shares of common stock listed next to its name in the
following table:
33
|
Underwriter
of Shares
|
Number
|
|
|
Wunderlich Securities, Inc.
|
||
|
Howe
Barnes Hoefer & Arnett, Inc.
|
||
|
Total
|
Our
common stock is offered subject to a number of conditions, including receipt and
acceptance of the common stock by the Underwriters.
In
connection with this offering, the Underwriters or securities dealers may
distribute prospectuses electronically.
Director
and Officer Participation
Our
management, directors, principal shareholders, or their affiliates may acquire
shares in this offering. Furthermore, any purchases by management, directors,
principal shareholders, or their affiliates must be made on the same terms and
conditions as purchases by nonaffiliated investors and with a view toward
investment, not resale.
Over-allotment
Option
We have
granted to the Underwriters an option to buy 1,035,000 additional shares of our common stock. The
Underwriters may exercise this option solely for the purpose of covering
over-allotments, if any, made in connection with this offering. The Underwriters
have thirty (30) days from the date of this prospectus to exercise this
option.
Commissions
and Discounts
Shares of
common stock sold by the Underwriters to the public will initially be offered at
the public offering price set forth on the cover of this prospectus. Any shares
of common stock sold by the Underwriters to securities dealers may be sold at a
discount of up to $____ per share from the public offering price. Any of these
securities dealers may resell any shares of common stock purchased from the
Underwriters to other brokers or dealers at a discount of up to $_____ per share
from the public offering price. If all the shares of common stock are not sold
at the public offering price, the representative may change the offering price
and the other selling terms. Sales of shares of common stock made outside of the
United States may be made by affiliates of the Underwriters.
The
following table shows the per share and total underwriting discounts and
commissions we will pay to the Underwriters, assuming both no exercise and full
exercise of the Underwriters’ option to purchase an additional shares of common
stock:
|
No
Exercise
|
Full
Exercise
|
|||||
|
Per
Share Total
|
$
|
$
|
||||
|
Total
|
$
|
$
|
||||
We have
agreed to reimburse the Underwriters, for certain expenses incurred by them in
connection with the offering, the amount of such expenses not to exceed $75,000 without our prior written
approval. We estimate that the total expenses of this offering
payable by us, not including the underwriting discounts and commissions, will be
approximately $_______.
34
No
Sales of Similar Securities
We and
our executive officers and directors have entered into lock-up agreements with
the Underwriters. Under these agreements, we and each of these persons may not,
without the prior written approval of the representative, subject to limited
exceptions, offer, sell, contract to sell or otherwise dispose of or hedge our
common stock or securities convertible into or exercisable or exchangeable for
our common stock. These restrictions will be in effect for a period of ninety
(90) days after the date of this prospectus. At any time and without public
notice, the representative may, in its sole discretion, release all or some of
the securities from these lock-up agreements.
Indemnification
and Contribution
We have
agreed to indemnify the Underwriters and their affiliates and controlling
persons against certain liabilities, including liabilities under the Securities
Act of 1933. If we are unable to provide this indemnification, we
will contribute to the payments the Underwriters, their affiliates and their
controlling persons may be required to make in respect of those
liabilities.
Nasdaq
Listing
Our
common stock is quoted on the Nasdaq Global Select Market under the symbol
“RVSB.”
Price
Stabilization and Short Positions
Until the
distribution of the shares of common stock offered by this prospectus is
completed, the rules of the SEC may limit the ability of the Underwriters to bid
for and to purchase our securities. As an exception to these rules,
the Underwriters may engage in transactions effected in accordance with
Regulation M under the Securities Exchange Act of 1934 that are intended to
stabilize, maintain, or otherwise affect the price of our common
stock. The Underwriters may engage in over-allotment sales, syndicate
covering transactions, stabilizing transactions and penalty bids in accordance
with Regulation M, including:
|
·
|
stabilizing
transactions;
|
|
·
|
short
sales; and
|
|
·
|
purchases
to cover positions created by short
sales.
|
Stabilizing
transactions consist of bids or purchases made for the purpose of preventing or
retarding a decline in the market price of our common stock while this offering
is in progress. These transactions may also include making short sales of our
common stock, which involve the sale by the Underwriters of a greater number of
shares of common stock than they are required to purchase in this offering.
Short sales may be “covered short sales,” which are short positions in an amount
not greater than the Underwriters’ over-allotment option referred to above, or
may be “naked short sales,” which are short positions in excess of that
amount.
The
Underwriters may close out any covered short position either by exercising their
over-allotment option, in whole or in part, or by purchasing shares in the open
market. In making this determination, the Underwriters will consider, among
other things, the price of shares available for purchase in the open market
compared to the price at which they may purchase shares through the
over-allotment option. The Underwriters must close out any naked short position
by purchasing shares in the open market. A naked short position is more likely
to be created if the Underwriters are concerned that there may be downward
pressure on the price of the common stock in the open market that could
adversely affect investors who purchased in this offering.
As a
result of these activities, the price of our common stock may be higher than the
price that otherwise might exist in the open market. If these activities are
commenced, the Underwriters may discontinue them at any time. The Underwriters
may carry out these transactions on the Nasdaq Stock Market, in the
over-the-counter market or otherwise.
35
Affiliations
The
Underwriters and their affiliates have provided and may continue to provide
certain commercial banking, financial advisory and investment banking services
for us for which they receive fees.
The
Underwriters and their affiliates may from time to time in the future engage in
transactions with us and perform services for us in the ordinary course of their
business.
36
Certain
matters relating to the offering of the common stock will be passed upon for us
by Breyer & Associates PC, McLean, Virginia.
Kilpatrick Stockton LLP,
Washington, D.C., will act as counsel for the underwriters .
EXPERTS
The consolidated financial statements
incorporated in this prospectus by reference from our Annual Report on Form 10-K
for the year ended March 31, 2010 , and the
effectiveness of our internal control over financial reporting have been audited
by Deloitte & Touche LLP, an independent registered public accounting firm,
as stated in their reports, which are incorporated herein by
reference. Such consolidated financial statements have been so
incorporated
in reliance upon the reports of such firm given upon their authority as experts
in accounting and auditing.
WHERE
YOU CAN FIND MORE INFORMATION
We are
subject to the information requirements of the Securities Exchange Act of 1934,
as amended, which means we are required to file annual, quarterly and current
reports, proxy statements and other information with the SEC. You may
inspect without charge any documents filed by us at the Public Reference Room of
the SEC, at 100 F Street, N.E., Washington, D.C. 20549. You may obtain copies of
all or any part of these materials from the SEC upon the payment of certain fees
prescribed by the SEC. Please call the SEC at 1-800-SEC-0330 for further
information on the Public Reference Room. The SEC also maintains an Internet
site that contains reports, proxy and information statements and other
information regarding issuers that file electronically with the SEC. Our filings
with the SEC are available to the public through the SEC’s website at www.sec.gov.
We have
filed with the SEC a registration statement on Form S-1 relating to the
securities covered by this prospectus. This prospectus is part of the
registration statement and does not contain all of the information in the
registration statement. You will find additional information about us in the
registration statement. Any statement made in this prospectus concerning a
contract or other document of ours is not necessarily complete, and you should
read the documents that are filed as exhibits to the registration statement or
otherwise filed with the SEC for a more complete understanding of the document
or matter. Each such statement is qualified in all respects by reference to the
document to which it refers. You may inspect without charge a copy of the
registration statement at the SEC's Public Reference Room in Washington D.C., as
well as through the SEC’s website.
INCORPORATION
OF CERTAIN DOCUMENTS BY REFERENCE
As
allowed by the SEC's rules, we “incorporate by
reference” certain information that we file with the SEC, which means
that we can disclose important information to you by referring you to other
documents. The information incorporated by reference is an important part of
this prospectus.
We
incorporate by reference into this prospectus the documents listed
below:
|
·
|
Our
Annual Report on Form 10-K filed on May 28,
2010 for the fiscal year ended March 31, 2010;
and
|
|
·
|
The
portions of our definitive proxy statement on Schedule 14A filed on June
4, 2010 and incorporated by reference into our
Annual Report on Form 10-K for the fiscal year ended March 31, 2010.
|
37
Nothing
in this prospectus shall be deemed to incorporate information deemed furnished
but not filed with the SEC.
These
documents are available without charge to you on the Internet at http://www.riverviewbank.com or
if you call or write to: Phyllis Kreibich, Secretary, Riverview Bancorp, Inc.,
900 Washington Street, Suite 900, Vancouver, Washington 98660, telephone: (360)
693-6650. The reference to our website is not intended to be an active link and
the information on our website is not, and you must not consider the information
to be, a part of this prospectus.
38
6,896,552 Shares
Common
Stock
________________________________
PROSPECTUS
___________________________
Wunderlich
Securities
Howe
Barnes Hoefer & Arnett
,
2010
PART
II: INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13. Other Expenses of Issuance
and Distribution
|
|
|
Amount
|
|||
|
SEC
Registration Fee
|
$ | 1,640 | |||
|
|
|
Registrant's
Legal Fees and Expenses
|
|
175,000 | |
|
|
|
Registrant's
Accounting Fees and Expenses
|
|
60,000 | |
|
|
|
Printing,
EDGAR and engraving fees
|
|
12,000 | |
|
|
|
FINRA
Filing Fees
|
|
4,000 | |
|
|
Blue
Sky legal fees and filing fees
|
15,000 | |||
|
|
|
Other
|
|
10,000 | |
|
|
|
Total
|
|
$
|
277,640 |
Item 14. Indemnification of Directors
and Officers
Riverview
is organized under the Washington Business Corporation Act (the “WBCA”) which,
in general, empowers Washington corporations to indemnify a person made a party
to a threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative and whether formal or informal, other
than an action by or in the right of the corporation, by reason of the fact that
such person is or was a director, officer, employee or agent of the corporation,
or is or was serving at the request of the corporation as a director, officer,
partner, trustee, employee or agent of another enterprise, against expenses,
including attorney's fees, judgments, amounts paid in settlements, penalties and
fines actually and reasonably incurred in connection therewith if the person
acted in good faith and in a manner reasonably believed to be in or not opposed
to the best interests of the corporation or its shareholders and, with respect
to a criminal action or proceeding, if the person had no reasonable cause to
believe his or her conduct was unlawful. Washington corporations may not
indemnify a person in connection with such proceedings if the person was
adjudged to have received an improper personal benefit.
The WBCA
also empowers Washington corporations to provide similar indemnity to such a
person in connection with actions or suits by or in the right of the corporation
if the person acted in good faith and in a manner the person reasonably believed
to be in or not opposed to the interests of the corporation or its shareholders,
unless the person was adjudged liable to the corporation.
If
authorized by the articles of incorporation of a Washington corporation or by
its shareholders, a Washington corporation may indemnify and advance expenses to
the persons described above without regard to the limitations described above,
provided that such indemnity will not cover acts or omissions of the person
finally adjudged to be intentional misconduct or a knowing violation of law,
conduct finally adjudged to involve a violation of WBCA Section 310 (related to
certain unlawful distributions), and any transaction with respect to which it
was finally adjudged that the person received a benefit to which such person was
not legally entitled.
The WBCA
also permits a Washington corporation to purchase and maintain on behalf of such
person insurance against liabilities incurred in such capacities. Riverview has
obtained a policy of directors' and officers' liability insurance.
The WBCA
further permits Washington corporations to limit the personal liability of
directors for a breach of their fiduciary duty. However, the WBCA does not
eliminate or limit the liability of a director for any of the following: (i)
acts or omissions that involve intentional misconduct by a director or a knowing
violation of law by a director; (ii) conduct violating WBCA Section 310; or
(iii) any transaction from which the director will personally receive a benefit
in money, property or services to which the director is not legally
entitled.
Riverview's
Articles of Incorporation and Bylaws
Riverview's
articles of incorporation limit the personal liability of directors for a breach
of their fiduciary duty except for under the circumstances required to be
excepted under Washington law described above.
II-1
Riverview's
articles of incorporation generally require Riverview to indemnify directors,
officers, employees and agents to the fullest extent legally possible under the
WBCA. In addition, the articles of incorporation require Riverview to similarly
indemnify any such person who is or was serving at the request of Riverview as a
director, officer, partner, trustee, employee or agent of another entity.
Riverview's articles of incorporation further provide for the advancement of
expenses under certain circumstances.
Other
Riverview
maintains directors’ and officers’ liability insurance for the benefit of its
directors and officers.
Item 15. Recent Sales of Unregistered
Securities
Not Applicable.
Item 16. Exhibits and Financial
Statement Schedules:
The
exhibits and financial statement schedules filed as part of this registration
statement are as follows:
| (a) | List of Exhibits | |
| See the Exhibit Index filed as part of this Registration Statement. | ||
|
|
(b)
|
Financial
Statement Schedules
|
| No financial statement schedules are filed because the required information is not applicable or is included in the consolidated financial statements or related notes. |
Item 17. Undertakings
The
undersigned Registrant hereby undertakes:
|
(1)
|
For
purposes of determining any liability under the Securities Act of 1933,
the information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the registrant pursuant to Rule 424(b)
(1) or (4) or 497(h) under the Securities Act shall be deemed to
be part of this registration statement as of the time it was declared
effective.
|
|
(2)
|
For
the purpose of determining any liability under the Securities Act of 1933,
each post-effective amendment that contains a form of prospectus shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering
thereof.
|
Insofar as indemnification for
liabilities arising under the Securities Act of 1933 may be permitted to
directors, officers and controlling persons of the registrant pursuant to the
foregoing provisions, or otherwise, the registrant has been advised that in the
opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act, and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities (other
than the payment by the registrant of expenses incurred or paid by a director,
officer or controlling person of the registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the registrant will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
II-2
SIGNATURES
Pursuant
to the requirements of the Securities Act of 1933, the registrant has duly
caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of Vancouver, State of
Washington, on June 7 , 2010.
| RIVERVIEW BANCORP, INC. | |
| /s/ Patrick Sheaffer | |
| By: Patrick Sheaffer | |
| Chairman and Chief Executive Officer |
Pursuant
to the requirements of the Securities Act of 1933, this registration statement
has been signed by the following persons in the capacities and on the dates
indicated.
| /s/Patrick Sheaffer | June 7 , 2010 |
| Patrick Sheaffer | |
|
Chairman
and Chief Executive Officer
(Principal
Executive Officer)
|
|
| /s/Ronald A. Wysaske | June 7 , 2010 |
|
Ronald
A. Wysaske
President,
Chief Operating Officer and Director
|
|
| /s/Kevin Lycklama* | June 7 , 2010 |
|
Kevin
Lycklama
Executive
Vice President and Chief Financial Officer
(Principal
Financial and Accounting Officer)
|
|
| /s/Michael D. Allen* | June 7 , 2010 |
|
Michael
D. Allen
Director
|
|
| /s/Gary R. Douglass* | June 7 , 2010 |
|
Gary
R. Douglass
Director
|
|
| /s/Edward R. Geiger* | June 7 , 2010 |
|
Edward
R. Geiger
Director
|
II-3
| /s/Gerald L. Nies* | June 7 , 2010 |
|
Gerald
L. Nies
Director
|
|
| /s/Jerry C. Olson* | June 7 , 2010 |
|
Jerry
C. Olson
Director
|
|
| /s/Paul L. Runyan* | June 7 , 2010 |
|
Paul
L. Runyan
Director
|
|
| * By power of attorney dated October 22, 2009 |
II-4
EXHIBIT
INDEX
Exhibits:
| 1.1 | Form of Underwriting Agreement * |
|
3.1
|
Articles
of Incorporation of Riverview Bancorp, Inc.
(1)
|
|
3.2
|
Amended and Restated Bylaws of Riverview Bancorp,
Inc. (2)
|
|
5.1
|
Opinion
of Breyer and Associates, PC re: Legality of Securities Being
Registered *
|
|
10.1
|
Form
of Employment Agreement between the Bank and Patrick Sheaffer, Ronald A.
Wysaske, David A. Dahlstrom and John A. Karas (3)
|
|
10.2
|
Form
of Change in Control Agreement between the Bank and Kevin J. Lycklama
(3)
|
|
10.3
|
Employee
Severance Compensation Plan (4)
|
|
10.4
|
Employee
Stock Ownership Plan (5)
|
|
10.5
|
1998
Stock Option Plan (6)
|
|
10.6
|
2003
Stock Option Plan (7)
|
|
10.7
|
Form
of Incentive Stock Option Award Pursuant to 2003 Stock Option Plan (8)
|
|
10.8
|
Form
of Non-qualified Stock Option Award Pursuant to 2003 Stock Option Plan
(8)
|
|
10.9
|
2008
Deferred Compensation Plan (9)
|
| 21.0 | Subsidiaries of the Registrant (10) |
| 23.1 | Consent of Breyer and Associates, PC (included in Exhibit 5.1) * |
| 23.2 | Consent of Deloitte & Touche LLP |
| 24.1 | Power of Attorney, included in signature page* |
__________
| * | Previously filed. |
|
(1)
|
Filed
as an exhibit to the Registrant's Registration Statement on Form S-1
(Registration No. 333-30203), and incorporated herein by
reference.
|
|
(2)
|
Filed
as an exhibit to the Registrant’s Current Report on Form 8-K filed with
the SEC on June 4, 2010, and incorporated herein by
reference.
|
|
(3)
|
Filed
as an exhibit to the Registrant’s Current Report on Form 8-K filed with
the SEC on September 18, 2007, and incorporated herein by
reference.
|
|
(4)
|
Filed
as an exhibit to the Registrant’s Quarterly Report on Form 10-Q for the
quarter ended September 30, 1997, and incorporated herein by
reference.
|
| (5) |
Filed
as an exhibit to the Registrant's Annual Report on Form 10-K for the year
ended March 31, 1998, and incorporated herein by
reference.
|
| (6) |
Filed
as an exhibit to the Registrant’s Registration Statement on Form S-8
(Registration No. 333-66049), and incorporated herein by
reference.
|
| (7) |
Filed
as an exhibit to the Registrant’s Definitive Annual Meeting Proxy
Statement (000-22957), filed with the Commission on June 5, 2003, and
incorporated herein by reference.
|
| (8) |
Filed
as an exhibit to the Registrant’s Quarterly Report on Form 10-Q for the
quarter ended December 31, 2005, and incorporated herein by
reference.
|
| (9) |
Filed
as an exhibit to the Registrant’s Annual Report on Form 10-K for the year
ended June 30, 2009, and incorporated herein by
reference.
|
| (10) |
Filed
as an exhibit to the Registrant’s Annual Report on Form 10-K for the year
ended March 31, 2007, and incorporated herein by
reference.
|