As filed
with the Securities and Exchange Commission on October 22, 2009
Registration
No. 333-_______
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
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]
|
||
|
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
|
8,738,602
shares
|
$28,750,000
|
$1,605
|
(1) Estimated
solely for the purpose of calculating the registration fee pursuant to Section
457(o) under the Securities Act.
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 __________ __, 2009
PROSPECTUS
Shares
 |
Common
Stock
We are
offering shares
of our common stock. Our common stock is listed on the Nasdaq Global
Select Market under the symbol “RVSB.” On
, 2009, the last reported sale
price of our common stock on the Nasdaq Global Select Market was
$ per
share.
Investing
in our common stock involves risks. See “Risk Factors” beginning on
page 13 of this prospectus to read about factors you should consider before
buying our common stock.
|
|
Per Share
|
|
Total
|
|||||||
|
Public
offering price
|
|
$
|
|
|
$
|
|
||||
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Underwriting
discounts and commissions
|
|
$
|
|
$
|
||||||
|
Proceeds
to Riverview Bancorp, Inc. (before expenses)
|
|
$
|
|
$
|
||||||
The
underwriter has the option to purchase up to an additional
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
underwriter expects to deliver the common stock in book-entry form only, through
the facilities of The Depository Trust Company, against payment on or
about , 2009.
Keefe,
Bruyette & Woods
The date
of this prospectus is _____________ __, 2009
Prospectus
|
Page
|
|
| CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS |
3
|
| PROSPECTUS SUMMARY |
5
|
| RISK FACTORS |
13
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| USE OF PROCEEDS |
26
|
| CAPITALIZATION |
27
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| PRICE RANGE OF COMMON STOCK AND DIVIDEND INFORMATION |
28
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| DESCRIPTION OF CAPITAL STOCK |
29
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| CERTAIN ANTI-TAKEOVER PROVISIONS IN OUR ARTICLES OF INCORPORATION AND BYLAWS |
30
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| ERISA CONSIDERATIONS |
32
|
| UNDERWRITING |
33
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| LEGAL MATTERS |
36
|
| EXPERTS |
37
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| WHERE YOU CAN FIND MORE INFORMATION |
37
|
| INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE |
37
|
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 has 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 the “Bank” and “Riverview Community Bank”
in this prospectus, we are referring to Riverview Community Bank, a wholly owned
subsidiary of Riverview Bancorp, Inc.
2
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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|
·
|
results
of examinations of us by the Office of Thrift Supervision 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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our
compliance with regulatory enforcement
actions;
|
|
·
|
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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our
ability to attract and retain
deposits;
|
|
·
|
further
increases in premiums for deposit
insurance;
|
|
·
|
our
ability to control operating costs and
expenses;
|
|
·
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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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difficulties
in reducing risks associated with the loans on our balance
sheet;
|
|
·
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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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computer
systems on which we depend could fail or experience a security
breach;
|
|
·
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our
ability to retain key members of our senior management
team;
|
|
·
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costs
and effects of litigation, including settlements and
judgments;
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3
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·
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our
ability to successfully integrate any assets, liabilities, customers,
systems, and management personnel we may in the future 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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increased
competitive pressures among financial services
companies;
|
|
·
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changes
in consumer spending, borrowing and savings
habits;
|
|
·
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the
availability of resources to address changes in laws, rules, or
regulations or to respond to regulatory
actions;
|
|
·
|
our
ability to pay dividends on our common
stock;
|
|
·
|
adverse
changes in the securities markets;
|
|
·
|
inability
of key third-party providers to perform their obligations to
us;
|
|
·
|
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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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.
4
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 does not exercise its 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 June 30, 2009, we had total assets of $920.4
million, total deposit accounts of $649.1 million and shareholders' equity of
$89.1 million. Substantially all of our business is conducted through
the Bank, which is headquartered in Vancouver, Washington, just north of
Portland, Oregon.
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 the Bank’s subsidiary, Riverview Asset Management Corp., or
RAMCorp, we engage in full-service brokerage activities, trust and asset
management services. At June 30, 2009, RAMCorp had over $275 million
in assets under management.
We are a
progressive, 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. The Bank is subject to comprehensive regulation,
examination and supervision by the Office of Thrift Supervision, or OTS, and the
FDIC.
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
continued into 2009, 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. 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
5
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.
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.
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.
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 264
at September 30, 2008 to 245 at September 30, 2009. During October
2009, a branch and a loan origination office, were closed as a result of their
failure to meet required 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 through our employee stock ownership (ESOP) and 401(k)
plans. We also offer an incentive system that is designed to reward
well-balanced and high quality growth amongst our employees.
6
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. We will also seek
to grow our franchise through the acquisition of individual branches and
FDIC-assisted whole bank transactions that meet our investment and market
objectives. We have a proven ability to execute acquisitions, with
two bank acquisitions in the past six years. We expect to gradually
expand our operations further in the Portland Oregon metropolitan area which has
a population of approximately two million people. We will continue to
be disciplined as it pertains to future acquisitions and de novo branching
focusing on the Pacific Northwest markets we know and understand.
Risk
Factors
An
investment in our common stock involves certain risks. You should carefully
consider the risks described under “Risk Factors” beginning on page 13 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, 2009, 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.”
7
The
Offering
|
Common
stock we are offering, excluding the
underwriter’s
over allotment option
|
shares
|
|
Common
stock to be outstanding after this offering
|
shares
(1)(2)
|
|
Over-allotment
option
|
shares
|
|
Use
of proceeds
|
Our
estimated net proceeds from this offering will be approximately
$ million, or approximately
$ million if the underwriter exercises its
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 for general corporate
purposes, which may include without limitation, providing capital to
support the Bank’s growth, including the origination of, commercial real
estate and commercial loans in its market area. The Bank will also use the
proceeds to strengthen its regulatory capital ratios.
|
|
Dividends
on common stock
|
Historically,
we have paid quarterly cash dividends on our common
stock. However, since the quarter ended December 31, 2008, we
have not paid a dividend. We may pay dividends in the future,
but our ability to do so will depend on a number of factors including our
earnings, our capital needs and regulatory restrictions. We
cannot give you any assurance that we will pay dividends or, if we do,
that their amount will not be reduced in the future. See “Price
Range of Common Stock and Dividend Information.”
|
|
Nasdaq
Global Select Market symbol
|
RVSB
|
|
Settlement
date
|
Delivery
of shares of our common stock will be made against payment therefor on or
about November __, 2009.
|
|
(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
October 31, 2009.
|
|
(2)
|
Unless
otherwise indicated, the number of shares of common stock presented in
this prospectus excludes shares issuable pursuant to the exercise of the
underwriter’s over-allotment option and 455,700 shares of common stock
issuable upon the exercise of outstanding stock options as of September
30, 2009, with a weighted average exercise price of $9.48 per
share.
|
8
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, 2009, 2008, 2007, 2006,
and 2005 (which has been derived from our audited consolidated financial
statements) and at or for the three months ended June 30, 2009 and 2008 (which
is unaudited). The unaudited financial information as of and for the three
months ended June 30, 2009 and 2008 has been prepared on the same basis as our
audited financial statements and includes, in the opinion of management, all
adjustments necessary to fairly present the data for such periods. The results
of operations for the three months ended June 30, 2009 are not necessarily
indicative of the results of operations to be expected for the full year or 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, 2009 and our
Quarterly Report on Form 10-Q for the quarter ended June 30,
2009. See “Incorporation of Certain Documents by
Reference.”
|
At
June
30,
|
At
March 31,
|
||||||||||||||||||||
|
2009
|
2008
|
2009
|
2008
|
2007
|
2006(1)
|
2005
|
|||||||||||||||
|
(Unaudited)
|
(In
thousands)
|
||||||||||||||||||||
|
Balance
Sheet Data:
|
|||||||||||||||||||||
|
Total
assets
|
|
$
|
920,390
|
|
$ 884,727
|
|
$
|
914,333
|
|
$
|
886,849
|
|
$
|
820,348
|
|
$
|
763,847
|
|
$
|
572,571
|
|
|
Loans
receivable, net
|
760,283
|
763,631
|
784,117
|
756,538
|
682,951
|
623,016
|
429,449
|
||||||||||||||
|
Loans
held for sale
|
180
|
-
|
1,332
|
-
|
-
|
65
|
510
|
||||||||||||||
|
Mortgage-backed
securities held
to
maturity, at amortized cost
|
479
|
762
|
570
|
885
|
1,232
|
1,805
|
2,343
|
||||||||||||||
|
Mortgage-backed
securities available
for
sale
|
3,701
|
4,915
|
4,066
|
5,338
|
6,640
|
8,134
|
11,619
|
||||||||||||||
|
Cash
and interest-bearing deposits
|
43,868
|
28,271
|
19,199
|
36,439
|
31,423
|
31,346
|
61,719
|
||||||||||||||
|
Investment
securities held to maturity
|
523
|
536
|
529
|
-
|
-
|
-
|
-
|
||||||||||||||
|
Investment
securities available for sale
|
13,349
|
6,876
|
8,490
|
7,487
|
19,267
|
24,022
|
22,945
|
||||||||||||||
|
Deposit
accounts
|
649,068
|
629,407
|
670,066
|
667,000
|
665,405
|
606,964
|
456,878
|
||||||||||||||
|
FHLB
advances
|
5,000
|
129,760
|
37,850
|
92,850
|
35,050
|
46,100
|
40,000
|
||||||||||||||
|
Federal
Reserve Bank advances
|
145,000
|
-
|
85,000
|
-
|
-
|
-
|
-
|
||||||||||||||
|
Shareholders'
equity
|
89,114
|
92,040
|
88,663
|
92,585
|
100,209
|
91,687
|
69,522
|
||||||||||||||
|
Tangible
shareholders' equity(2)
|
62,602
|
65,665
|
62,198
|
66,155
|
73,575
|
64,836
|
59,260
|
||||||||||||||
9
|
For
the
Three
Months Ended
June
30,
|
For
the Year Ended March 31,
|
||||||||||||||||||||
|
2009
|
|
2008
|
2009
|
2008
|
2007
|
2006(1)
|
2005
|
||||||||||||||
|
(Unaudited)
|
(In
thousands)
|
||||||||||||||||||||
|
Income
Statement Data:
|
|||||||||||||||||||||
|
Interest
income
|
$
|
11,894
|
$
|
13,566
|
$
|
52,850
|
$
|
60,682
|
|
$
|
61,300
|
|
$
|
47,229
|
|
$
|
29,968
|
||||
|
Interest
expense
|
3,214
|
5,199
|
19,183
|
25,730
|
24,782
|
14,877
|
7,395
|
||||||||||||||
|
Net
interest income
|
8,680
|
8,367
|
33,667
|
34,952
|
36,518
|
32,352
|
22,573
|
||||||||||||||
|
Provision
for loan losses
|
2,350
|
2,750
|
16,150
|
2,900
|
1,425
|
1,500
|
410
|
||||||||||||||
|
Net
interest income after provision
for
loan losses
|
6,330
|
5,617
|
17,517
|
32,052
|
35,093
|
30,852
|
22,163
|
||||||||||||||
|
Gains
(losses) from sale of loans,
securities
and real estate owned
|
401
|
52
|
729
|
368
|
434
|
382
|
(672)
|
||||||||||||||
|
Impairment
on investment security
|
(258
|
)
|
-
|
(3,414
|
)
|
-
|
-
|
-
|
-
|
||||||||||||
|
Gain
on sale of land and fixed assets
|
-
|
-
|
-
|
6
|
3
|
2
|
830
|
||||||||||||||
|
Other
non-interest income
|
1,960
|
2,130
|
8,215
|
8,508
|
8,597
|
8,453
|
6,348
|
||||||||||||||
|
Non-interest
expenses
|
7,988
|
6,667
|
27,259
|
27,791
|
26,353
|
25,374
|
19,104
|
||||||||||||||
|
Income
(loss) before income taxes
|
445
|
1,132
|
(4,212
|
)
|
13,143
|
17,774
|
14,315
|
9,565
|
|||||||||||||
|
Provision
(benefit) for income taxes
|
102
|
339
|
(1,562
|
)
|
4,499
|
6,168
|
4,577
|
3,036
|
|||||||||||||
|
Net
income (loss)
|
$
|
343
|
$
|
793
|
$
|
(2,650
|
)
|
$
|
8,644
|
$
|
11,606
|
$
|
9,738
|
$
|
6,529
|
||||||
10
|
At
or
For
the
Three
Months
Ended
June 30,
|
At
or
For
the Year Ended March 31,
|
|||||||||||||||||||||
|
2009
|
|
2008
|
2009
|
2008
|
2007
|
2006(1)
|
2005
|
|||||||||||||||
|
Per
Share Data:
|
||||||||||||||||||||||
|
Earnings
(loss) per share:
|
||||||||||||||||||||||
|
Basic
|
$
|
0.03
|
$
|
0.07
|
$
|
(0.25
|
) |
$
|
0.79
|
$
|
1.03
|
$
|
0.87
|
$
|
0.68
|
|||||||
|
Diluted
|
0.03
|
0.07
|
(0.25
|
) |
0.79
|
1.01
|
0.86
|
0.67
|
||||||||||||||
|
Book
value per share
|
8.16
|
8.43
|
8.12
|
8.48
|
8.56
|
7.94
|
6.93
|
|||||||||||||||
|
Tangible
book value per share(2)
|
5.73
|
6.01
|
5.69
|
6.06
|
6.28
|
5.62
|
5.91
|
|||||||||||||||
|
Dividends
per share
|
--
|
0.09
|
0.135
|
0.42
|
0.395
|
0.34
|
0.31
|
|||||||||||||||
|
Shares
outstanding
|
10,923,773
|
10,923,773
|
10,923,773
|
10,913,773
|
11,707,980
|
5,772,690
|
5,015,753
|
|||||||||||||||
|
Capital
Ratios:
|
||||||||||||||||||||||
|
Average
equity to average assets
|
9.95
|
%
|
10.82
|
%
|
10.29
|
%
|
11.65
|
%
|
12.01
|
%
|
12.39
|
%
|
12.92
|
%
|
||||||||
|
Equity
to assets at end of fiscal
year
|
9.68
|
10.40
|
9.70
|
10.44
|
12.22
|
12.00
|
12.14
|
|||||||||||||||
|
Tangible
shareholders’ equity to
tangible
assets (2)
|
7.00
|
7.65
|
7.01
|
7.69
|
9.27
|
8.80
|
10.54
|
|||||||||||||||
|
Total
risk-based capital ratio
|
11.91
|
11.03
|
11.46
|
10.99
|
11.38
|
11.48
|
12.37
|
|||||||||||||||
|
Tier
1 risk-based capital
|
10.66
|
9.87
|
10.21
|
9.78
|
10.22
|
10.42
|
11.42
|
|||||||||||||||
|
Tier
1 leverage ratio
|
9.50
|
9.43
|
9.50
|
9.29
|
9.60
|
9.70
|
9.54
|
|||||||||||||||
|
Asset
Quality Ratios:
|
||||||||||||||||||||||
|
Average
interest-earning assets to
interest-bearing
liabilities
|
113.03
|
%
|
114.56
|
%
|
114.85
|
%
|
116.75
|
%
|
118.96
|
%
|
121.14
|
%
|
123.45
|
%
|
||||||||
|
Allowance
for loan losses to total
net
loans at end of period
|
2.28
|
1.69
|
2.12
|
1.39
|
1.25
|
1.15
|
1.01
|
|||||||||||||||
|
Net
charge-offs to average
outstanding
loans during the
period
|
0.78
|
0.17
|
1.24
|
0.12
|
-
|
0.10
|
0.13
|
|||||||||||||||
|
Ratio
of nonperforming assets to
total
assets
|
6.20
|
2.67
|
4.57
|
0.92
|
0.03
|
0.05
|
0.13
|
|||||||||||||||
|
Performance
Ratios:
|
||||||||||||||||||||||
|
Return
(loss) on average assets
|
0.15
|
%
|
0.36
|
%
|
(0.29
|
)%
|
1.04
|
%
|
1.43
|
%
|
1.36
|
%
|
1.24
|
%
|
||||||||
|
Return
(loss) on average equity
|
1.52
|
3.35
|
(2.85
|
) |
8.92
|
11.88
|
10.95
|
9.56
|
||||||||||||||
|
Dividend
payout ratio (3)
|
-
|
128.57
|
(54.00
|
) |
53.16
|
38.35
|
39.08
|
45.59
|
||||||||||||||
|
Interest
rate spread (4)
|
4.05
|
3.82
|
3.73
|
4.09
|
4.37
|
4.55
|
4.38
|
|||||||||||||||
|
Net
interest margin (5)
|
4.25
|
4.20
|
4.08
|
4.66
|
5.01
|
5.03
|
4.74
|
|||||||||||||||
|
Non-interest
expense to average
assets
|
3.52
|
3.04
|
3.02
|
3.34
|
3.24
|
3.54
|
3.62
|
|||||||||||||||
|
Efficiency
ratio (6)
|
74.08
|
63.20
|
69.50
|
63.40
|
57.85
|
61.60
|
65.70
|
|||||||||||||||
__________________
|
(1)
|
On
April 22, 2005, Riverview Bancorp, Inc. acquired American Pacific
Bank.
|
|
(2)
|
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.
|
11
|
At
June 30,
|
At
March 31,
|
||||||||||||||||||||||||||
|
2009
|
2008
|
2009
|
2008
|
2007
|
2006
|
2005
|
|||||||||||||||||||||
|
(In
thousands)
|
|||||||||||||||||||||||||||
|
Shareholders’
equity
|
$
|
89,114
|
$
|
92,040
|
$
|
88,663
|
$
|
92,585
|
$
|
100,209
|
$
|
91,687
|
$
|
69,522
|
|||||||||||||
|
Goodwill
|
25,572
|
25,572
|
25,572
|
25,572
|
25,572
|
25,572
|
9,214
|
||||||||||||||||||||
|
Other
intangible assets, net
|
940
|
803
|
893
|
858
|
1,062
|
1,279
|
1,048
|
||||||||||||||||||||
|
Tangible
shareholders’ equity
|
62,602
|
65,665
|
62,198
|
66,155
|
73,575
|
64,836
|
59,260
|
||||||||||||||||||||
|
Total
assets
|
$
|
920,390
|
$
|
884,727
|
$
|
914,333
|
$
|
886,849
|
$
|
820,348
|
$
|
763,847
|
$
|
572.571
|
|||||||||||||
|
Goodwill
|
25,572
|
25,572
|
25,572
|
25,572
|
25,572
|
25,572
|
9,214
|
||||||||||||||||||||
|
Other
intangible assets, net
|
940
|
803
|
893
|
858
|
1,062
|
1,279
|
1,048
|
||||||||||||||||||||
|
Tangible
assets
|
$
|
893,878
|
$
|
858,352
|
$
|
887,868
|
$
|
860,419
|
$
|
793,714
|
$
|
736,996
|
$
|
562,309
|
|||||||||||||
|
(4)
|
Difference
between weighted average yield on interest-earning assets and weighted
average rate on interest-bearing
liabilities.
|
|
(5)
|
Net
interest margin is net income divided by average interest-earning assets.
Ratios for the three month periods are
annualized.
|
|
(6)
|
The
efficiency ratio is non-interest expense divided by the sum of net
interest income and non-interest
income.
|
12
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, 2009, 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, the OTS determined that the Bank required special supervisory
attention and entered into a Memorandum of Understanding or MOU with the Bank.
Under that agreement, the Bank must 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 Tier 1 Capital (Leverage)
Ratio of 4% and Total Risk-Based Capital Ratio of 8%. As of June 30, 2009, the
Bank's leverage ratio was 9.50% (1.50% over the new required minimum) and its
risk based capital ratio was 11.91% (0.09% less than the new required
minimum). In addition, the MOU requires, among other things, the Bank
to provide notice to and obtain a non-objection from the OTS prior to the Bank
declaring a dividend and to develop a plan of reducing its classified
assets.
On June
9, 2009 the OTS issued a Supervisory Letter Directive or SLD to the Bank that
restricts the Bank’s brokered deposits (including CDARS) to 10% of
total deposits.
In
October 2009 Riverview entered into a separate MOU with the OTS that restricts
Riverview from paying a dividend or making a capital distribution without the
prior written non-objection of the OTS. Riverview is further
prohibited from incurring or renewing any debt. In addition, the MOU requires
Riverview to develop an operations plan through calendar year 2012.
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
the 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 the Bank, to remove officers and/or
directors, and to assess civil monetary penalties. Management of Riverview and
the Bank have been taking action and implementing programs to comply with the
requirements of the MOU. Although compliance with the MOUs will be determined by
the OTS, management believes that Riverview and the Bank have complied in all
material respects with the provisions of the MOUs required to be complied with
as of the date of this prospectus. The OTS may determine, however, in its sole
discretion that the issues raised by the MOUs 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 the Bank or
Riverview and negatively affect our ability to implement our business plan, pay
dividends on or our common stock the value of our common stock as well as our
financial condition and results of operations.
13
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; and
|
|
·
|
the
amount of our low-cost or non-interest bearing deposits may
decrease.
|
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 June
30, 2009, construction loans totaled $123.5 million, or 15.9% of our total loan
portfolio, of which $57.4 million were for residential real estate projects.
Approximately $10.4 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 $87.8 million, or 11.3%, of our total loan portfolio at June 30, 2009.
Land loans include raw land and land acquisition and development
loans. 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 June 30, 2009, $134.9 million of
our construction and land loans were for speculative construction loans.
Approximately $31.4 million, or 14.9%, of our total real estate construction and
land loans were nonperforming at June 30, 2009.
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
14
At June
30, 2009, we had $349.8 million of commercial and multi-family real estate
mortgage loans, representing 45.0% 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 construction 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. 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 Office of Thrift Supervision 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. Management should also 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. 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.
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 June
30, 2009, we had $127.4 million or 16.4% 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 borrowers' 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
15
Our
business may be adversely affected by credit risk associated with residential
property.
At
June 30, 2009, $86.7 million, or 11.1% 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 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 year ended March 31, 2009 and quarter ended June 30, 2009 we recorded a
provision for loan losses of $16.2 million and $2.4 million, respectively,
compared to $2.9 million for the fiscal year ended March 31, 2008 and $2.8
million for quarter ended June 30, 2008, respectively. We also recorded net loan
charge-offs of $9.9 million and $1.5 million for the fiscal year ended March 31,
2009 and quarter ended June 30, 2009, respectively, compared to $866,000 and
$330,000 for the year ended March 31, 2008 and quarter ended June 30, 2008,
respectively. We are experiencing 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 76.4% of our nonperforming assets at June 30,
2009. At June 30, 2009 our total nonperforming assets had increased
to $57.1 million compared to $23.6 million at June 30, 2008. 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.
16
We
may have continuing losses.
We
reported net income of $8.6 million and $11.6 million, respectively, for the
fiscal years ended March 31, 2008 and 2007 as compared to a net loss of $2.7
million for the fiscal year ended March 31, 2009. This loss primarily resulted
from our high level of nonperforming assets and the resultant increased
provision for loan losses. We may continue to suffer further
losses.
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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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 2.3% of gross loans held for investment and 43.3%
of nonperforming loans at June 30, 2009. 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.
17
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 and the property taken in as real estate owned (“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.
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.
Other-than-temporary
impairment charges in our investment securities portfolio could result in
significant losses and cause Riverview Community Bank to become significantly
undercapitalized and adversely affect our continuing operations.
During the quarter ended June 30, 2009,
we recognized a $258,000 non-cash other than temporary impairment (“OTTI”)
charge on a single trust preferred investment security we hold for
investment. At June 30, 2009 the fair value of this security was $1.1
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
$258,000 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 OTTI, our future earnings,
shareholders’ equity, regulatory capital and continuing operations could be
materially 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
18
equivalent
changes in interest income earned on interest-earning assets and interest paid
on interest-bearing liabilities. We principally manage interest rate
risk by managing our volume and mix of our earning assets and funding
liabilities. In a changing interest rate environment, we may not be able to
manage this risk effectively. Changes in interest rates also can
affect: (1) our ability to originate and/or sell loans; (2) the value of our
interest-earning assets, which would negatively impact shareholders’ equity, and
our ability to realize gains from the sale of such assets; (3) our ability to
obtain and retain deposits in competition with other available investment
alternatives; and (4) the ability of our borrowers to repay adjustable or
variable rate loans. Interest rates are highly sensitive to many
factors, including government monetary policies, domestic and international
economic and political conditions and other factors beyond our
control. If we are unable to manage interest rate risk effectively,
our business, financial condition and results of operations could be materially
harmed.
Additionally, 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 default.
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
$695,000, including the special assessment of $417,000 recorded in June 2009 and
paid on September 30, 2009.
In
addition, 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. The latest date possible for imposing any
such additional special assessment is December 31, 2009, with collection on
March 30, 2010. Any additional emergency special assessment imposed by the
FDIC will hurt our earnings. Additionally, as a potential alternative
to special assessments, in September 2009, the FDIC proposed a rule that would
require financial institutions to prepay its estimated quarterly risk-based
assessment for the fourth quarter of 2009 and for all of 2010, 2011 and
2012. This proposal would not immediately impact our earnings as the
payment would be expensed over time.
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”), 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
19
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 the offering made
by this prospectus, we anticipate that our capital resources will satisfy our
capital requirements for the foreseeable future. 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 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 ability to further expand our operations through internal growth and
acquisitions could be materially impaired and our financial condition and
liquidity could be materially and adversely affected.
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,
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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.
However, because the legislation needed to implement the President’s reform plan
has not been introduced, and because the final legislation may differ
significantly from the legislation proposed by the Administration, we cannot
determine the specific impact of regulatory reform at this time.
We
may experience future goodwill impairment, which could reduce our
earnings.
We
performed our test for goodwill impairment for fiscal year 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 our judgment was incorrect and 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.
The Bank
is subject to a variety of legal proceedings that have arisen in the ordinary
course of the Bank’s business. In the current economic environment the 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. The 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
21
Our
investment in Federal Home Loan Bank stock may become impaired.
At June
30, 2009, 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 SFAS
No. 144, Accounting for the
Impairment or Disposal of Long-Lived Assets. The FHLB recently 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.
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:
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actual
or anticipated quarterly fluctuations in our operating and financial
results;
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developments
related to investigations, proceedings or litigation that involve
us;
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changes
in financial estimates and recommendations by financial
analysts;
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dispositions,
acquisitions and financings;
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actions
of our current shareholders, including sales of common stock by existing
shareholders and our directors and executive
officers;
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fluctuations
in the stock prices and operating results of our
competitors;
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regulatory
developments; and
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other
developments related to the financial services
industry.
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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
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
22
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
shareholders 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 the 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 the Bank, Riverview derives substantially all of its revenue
in the form of dividends from the Bank. Accordingly, Riverview is and
will be dependent upon dividends from the Bank to satisfy its cash needs and to
pay dividends on its common stock. The Bank’s ability to pay
dividends is subject to its ability to earn net income and, to meet certain
regulatory requirements. As discussed above, the Bank may not pay
dividends to Riverview without prior notice to the OTS which limits Riverview’s
ability to pay dividends on its common stock. The lack of a cash dividend could
adversely affect the market price of our common stock.
23
If
we defer payments of interest on our outstanding junior subordinated debentures
or if certain defaults relating to those debentures occur, we will be prohibited
from declaring or paying dividends or distributions on, and from making
liquidation payments with respect to, our common stock.
As of June 30, 2009 we had 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. We have also guaranteed these trust preferred
securities. 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. Each of these indentures, together with
the related guarantee, prohibits us, subject to limited exceptions, from
declaring or paying any dividends or distributions on, or redeeming,
repurchasing, acquiring or making any liquidation payments with respect to, any
of our capital stock at any time when (i) there shall have occurred and be
continuing an event of default under such indenture or any event, act or
condition that with notice or lapse of time or both would constitute an event of
default under such indenture; (ii) we are in default with respect to payment of
any obligations under such guarantee; or (iii) we have deferred payment of
interest on the junior subordinated debentures outstanding under that indenture.
In that regard, we are entitled, at our option but subject to certain
conditions, to defer payments of interest on the junior subordinated debentures
of each series from time to time for up to five years.
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 the
Bank.
As a result of these provisions, if we
were to elect to defer payments of interest on any series of junior subordinated
debentures, or if any of the other events described in clause (i) or (ii) of the
first paragraph of this risk factor were to occur, we would be prohibited from
declaring or paying any dividends on our common stock, from repurchasing or
otherwise acquiring any such common stock, and from making any payments to
holders of common stock in the event of our liquidation, which would likely have
a material adverse effect on the market value of our common stock. Moreover,
without notice to or consent from the holders of our common stock, we may 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.
Also, under the terms of the MOU
Riverview entered into with the OTS we may not pay interest on the junior
subordinated debentures without the prior written non-objection of the
OTS.
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 the 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 the Bank
upon the Bank’s 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 the Bank, except to the
extent that any of our claims as a creditor of the 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 the Bank. At June
30, 2009, the Bank’s total deposits and borrowings were approximately $821.7
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
24
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
September 30, 2009, our directors and executive officers as a group beneficially
owned 1,399,586 shares of our common stock (including 142,000 shares issuable
under exercisable stock options within sixty days of September 30, 2009), which
represented approximately 12.8% of our outstanding shares as of that date
(including in total shares outstanding the 142,000 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 Riverview equity securities; the election
of directors to staggered terms of three years; advance notice requirements for
nominations for election to our board of directors and for proposing matters
that shareholders may act on at shareholder meetings, a requirement that only
directors may fill a vacancy in our board of directors, supermajority voting
requirements to remove any of our directors and the other provisions described
under “Certain Anti-Takeover Provisions in Our Articles of Incorporation and
Bylaws.” Our articles of incorporation also authorize our board of
directors to issue preferred stock, and preferred stock could be
issued as a defensive measure in response to a takeover proposal. For
further information, see “Description of Capital Stock—Preferred
Stock.” In addition, pursuant to OTS regulations, as a general
matter, no person or company, acting individually or in concert with others, may
acquire more than 10% of our common stock without prior approval from the
OTS.
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 underwriter
exercises its 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 for
general corporate purposes, which may include without limitation, providing
capital to support the Bank’s growth, particularly to take advantage of
opportunities in its market by originating more commercial real estate and
commercial loans. The Bank will also use the proceeds to strengthen its
regulatory capital ratios. We expect to use the remaining net
proceeds for general working capital purposes. 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 (unaudited) as of June 30, 2009 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 June 30, 2009 based on the following:
|
·
|
the
sale of ________ shares of common stock at a price of $_____ per
share;
|
|
·
|
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 $____ million, are $___
million;
|
|
·
|
$_______
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
underwriter’s over-allotment option for _____ shares is not
exercised.
|
|
At
June 30, 2009
|
||||||||
|
Actual
|
As
Adjusted
|
|||||||
|
(dollars
in thousands
except
per share data)
|
||||||||
|
DEBT
|
||||||||
|
FHLB
borrowings and other long-term
debt
|
$
|
172,681
|
||||||
|
Total
debt
|
$
|
172,681
|
||||||
|
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 _________ shares outstanding, and _____ shares
outstanding,
as adjusted at June 30,
2009
|
109
|
|||||||
|
Additional
paid-in
capital
|
46,872
|
|||||||
|
Retained
income, substantially
restricted
|
44,665
|
|||||||
|
Accumulated
other comprehensive loss, net of income taxes
|
(1,656
|
) | ||||||
|
Unearned
stock
compensation
|
(876
|
) | ||||||
|
Total
shareholders’ equity
|
89,114
|
|||||||
|
Noncontrolling
interest
|
382
|
|||||||
|
Total equity
|
89,496
|
|||||||
|
Total
capitalization
|
$
|
262,177
|
||||||
|
Book
value per common share
|
$
|
8.16
|
||||||
|
Shareholder
equity to total assets ratio
|
9.68
|
%
|
||||||
|
Regulatory
capital ratios(1)
|
||||||||
|
Bank
total risk-based capital ratio
|
$
|
11.91
|
||||||
|
Tier
1 risk-based capital ratio
|
10.66
|
|||||||
|
Leverage
ratio
|
9.50
|
|||||||
__________________________________
|
(1)
|
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
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 September 30, 2009, there were 17 market makers in our common stock as
reported by the Nasdaq Global Select Market.
|
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 (through November ___, 2009) | |||
|
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
|
|
Fiscal
Year Ended March 31, 2008
|
High
|
Low
|
Cash
Dividends
Declared
|
|
First
quarter
|
$16.28
|
$13.69
|
$0.110
|
|
Second
quarter
|
15.73
|
13.30
|
0.110
|
|
Third
quarter
|
15.36
|
11.55
|
0.110
|
|
Fourth
quarter
|
12.84
|
9.93
|
0.090
|
28
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.
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,
29
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;
|
|
·
|
any
liquidation of us; or
|
|
·
|
any
agreement or other arrangement providing for any of the
foregoing.
|
30
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.
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
31
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.
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
32
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
Keefe, Bruyette & Woods, Inc. as sole underwriter (the “Underwriter”).
We have entered into an underwriting agreement with the Underwriter, dated
__________, 2009 (the “Underwriting Agreement”). Subject to the terms and
conditions of the Underwriting Agreement, the Underwriter has agreed to purchase
_____ shares of our common stock, $.01 par value per shares at the public
offering price, less the underwriting discount and commission set forth on
the cover page of this prospectus.
Our
common stock is offered subject to a number of conditions, including receipt and
acceptance of the common stock by the Underwriter.
In
connection with this offering, the Underwriter or securities dealers may
distribute prospectuses electronically.
33
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 Underwriter an option to buy _________ additional shares of our
common stock. The Underwriter may exercise this option solely for the purpose of
covering over-allotments, if any, made in connection with this offering. The
Underwriter has thirty (30) days from the date of this prospectus to
exercise this option.
Commissions
and Discounts
Shares of
common stock sold by the Underwriter 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 Underwriter 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
Underwriter 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 Underwriter.
The
following table shows the per share and total underwriting discounts and
commissions we will pay to the Underwriter, assuming both no exercise and full
exercise of the Underwriter’s option to purchase an additional shares of common
stock:
|
No
Exercise
|
Full
Exercise
|
|||||
|
Per
Share Total
|
$
|
$
|
||||
|
Total
|
$
|
$
|
||||
We have
agreed to reimburse the Underwriter, for certain expenses incurred by it in
connection with the offering, the amount of such expenses not to exceed
$______ 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 $______.
No
Sales of Similar Securities
We and
our executive officers and directors have entered into lock-up agreements with
the Underwriter. Under these agreements, we and each of these persons may not,
without the prior written approval of the Keefe, Bruyette & Woods, 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, Keefe, Bruyette & Woods 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 Underwriter and its affiliates and controlling persons
against certain liabilities. If we are unable to provide this
indemnification, we will contribute to the payments the Underwriter, its
affiliates and its controlling persons may be required to make in respect of
those liabilities.
34
Nasdaq
Listing
Our
common stock is quoted on the Nasdaq Global Select Market under the symbol
“RVSB.”
Price
Stabilization and Short Positions
In
connection with this offering, the Underwriter may engage in activities that
stabilize, maintain or otherwise affect the price of our common stock,
including:
|
·
|
stabilizing
transactions;
|
|
·
|
short
sales;
|
|
·
|
purchases
to cover positions created by short
sales;
|
|
·
|
imposition
of penalty bids;
|
|
·
|
syndicate
covering transactions; and
|
|
·
|
passive
market making.
|
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 Underwriter 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 Underwriter’s over-allotment option referred to above, or
may be “naked short sales,” which are short positions in excess of that
amount.
The
Underwriter may close out any covered short position either by exercising its
over-allotment option, in whole or in part, or by purchasing shares in the open
market. In making this determination, the Underwriter 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 Underwriter 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 Underwriter is 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 Underwriter
may carry out these transactions on the Nasdaq Stock Market, in the
over-the-counter market or otherwise.
Affiliations
The
Underwriter and its affiliates have provided and may continue to provide certain
commercial banking, financial advisory and investment banking services for us
for which it receives fees.
The
Underwriter and its 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.
35
Selling
Restrictions
European
Economic Area
In
relation to each Member State of the European Economic Area which has
implemented the Prospectus Directive (each, a Relevant Member State), the
Underwriter has represented and agreed that with effect from and including the
date on which the Prospectus Directive is implemented in that Relevant Member
State (the Relevant Implementation Date) it has not made and will not make an
offer of shares to the public in that Relevant Member State prior to the
publication of a prospectus in relation to the shares which has been approved by
the competent authority in that Relevant Member State or, where appropriate,
approved in another Relevant Member State and notified to the competent
authority in that Relevant Member State, all in accordance with the Prospectus
Directive, except that it may, with effect from and including the Relevant
Implementation Date, make an offer of shares to the public in that Relevant
Member State at any time:
|
(a)
|
to
legal entities which are authorized or regulated to operate in the
financial markets or, if not so authorized or regulated, whose corporate
purpose is solely to invest in
securities;
|
|
(b)
|
to
any legal entity which has two or more of (1) an average of at least
250 employees during the last financial year; (2) a total balance
sheet of more than €43,000,000; and (3) an annual net turnover of
more than €50,000,000, as shown in its last annual or consolidated
accounts;
|
|
(c)
|
to
fewer than 100 natural or legal persons (other than qualified investors as
defined in the Prospectus Directive);
or
|
|
(d)
|
in
any other circumstances which do not require the publication by the Issuer
of a prospectus pursuant to Article 3 of the Prospectus
Directive.
|
For the
purposes of this provision, the expression an “offer of shares to the public” in
relation to any shares in any Relevant Member State means the communication in
any form and by any means of sufficient information on the terms of the offer
and the shares to be offered so as to enable an investor to decide to purchase
or subscribe for the shares, as the same may be varied in that Relevant
Member State by any measure implementing the Prospectus Directive in that
Relevant Member State, and the expression Prospectus Directive means Directive
2003/71/EC and includes any relevant implementing measure in each Relevant
Member State.
United
Kingdom
The
Underwriter has represented and agreed that:
|
(a)
|
it
has only communicated or caused to be communicated and will only
communicate or cause to be communicated an invitation or inducement to
engage in investment activity (within the meaning of Section 21 of
the Financial Services and Markets Act 2000, as amended (the “FSMA”))
received by it in connection with the issue or sale of the shares in
circumstances in which Section 21(1) of the FSMA does not apply to
the Issuer; and
|
|
(b)
|
it
has complied and will comply with all applicable provisions of the FSMA
with respect to anything done by it in relation to the shares in, from or
otherwise involving the United
Kingdom.
|
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 Underwriter.
36
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, 2009, 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 Securities and Exchange Commission, or 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:
|
·
|
Annual
Report on Form 10-K for the fiscal year ended March 31, 2009;
and
|
|
·
|
Our
Quarterly Report on Form 10-Q for the quarter ended June 30,
2009.
|
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.
37
________
Shares
Common
Stock
________________________________
PROSPECTUS
___________________________
Keefe,
Bruyette & Woods
,
2009
PART
II: INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13. Other Expenses of Issuance
and Distribution
|
|
|
Amount
|
|||
|
SEC
Registration Fee
|
$1,605.00
|
||||
|
*
|
|
Registrant's
Legal Fees and Expenses
|
|
||
|
*
|
|
Registrant's
Accounting Fees and Expenses
|
|
||
|
*
|
|
Printing,
EDGAR and engraving fees
|
|
||
|
*
|
|
FINRA
Filing Fees
|
|
||
|
*
|
Blue
Sky legal fees and filing fees
|
||||
|
*
|
Printing
expenses
|
||||
|
*
|
|
Other
|
|
||
|
*
|
|
Total
|
|
$
|
|
|
___________
|
|||||
|
*
|
To
be filed by amendment
|
||||
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 October 22, 2009.
| RIVERVIEW BANCORP, INC. | |
| /s/ Patrick Sheaffer | |
| By: Patrick Sheaffer | |
| Chairman and Chief Executive Officer |
KNOW ALL MEN BY THESE
PRESENTS, that each person whose signature appears below constitutes and
appoints Patrick Sheaffer and Ronald A. Wysaske, or either of them, his or her
true and lawful attorney-in-fact and agent, with full power of substitution and
re-substitution, for him or her and in his or her name, place and stead, in any
and all capacities, to sign any and all amendments (including post-effective
amendments) to this Registration Statement, and to file the same, with all
exhibits thereto, and all other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorney-in-fact and
agent full power and authority to do and perform each and every act and thing
requisite and necessary to be done, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all said
attorney-in-fact and agent or his substitute or substitutes may lawfully do or
cause to be done by virtue hereof.
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 | October 22, 2009 |
| Patrick Sheaffer | |
|
Chairman
and Chief Executive Officer
(Principal
Executive Officer)
|
|
| /s/Ronald A. Wysaske | October 22, 2009 |
|
Ronald
A. Wysaske
President,
Chief Operating Officer and Director
|
|
| /s/Kevin Lycklama | October 22, 2009 |
|
Kevin
Lycklama
Executive
Vice President and Chief Financial Officer
(Principal
Financial and Accounting Officer)
|
|
| /s/Michael D. Allen | October 22, 2009 |
|
Michael
D. Allen
Director
|
|
| /s/Gary R. Douglass | October 22, 2009 |
|
Gary
R. Douglass
Director
|
|
| /s/Edward R. Geiger | October 22, 2009 |
|
Edward
R. Geiger
Director
|
II-3
| /s/Gerald L. Nies | October 22, 2009 |
|
Gerald
L. Nies
Director
|
|
| /s/Jerry C. Olson | October 22, 2009 |
|
Jerry
C. Olson
Director
|
|
| /s/Paul L. Runyan | October 22, 2009 |
|
Paul
L. Runyan
Director
|
II-4
EXHIBIT
INDEX
Exhibits:
| 1.1 | Form of Underwriting Agreement* |
|
3.1
|
Articles
of Incorporation of Riverview Bancorp, Inc.
(1)
|
|
3.2
|
Bylaws
of Riverview Bancorp, Inc. (1)
|
|
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
(2)
|
|
10.2
|
Form
of Change in Control Agreement between the Bank and Kevin J. Lycklama
(2)
|
|
10.3
|
Employee
Severance Compensation Plan (3)
|
|
10.4
|
Employee
Stock Ownership Plan (4)
|
|
10.5
|
1998
Stock Option Plan (5)
|
|
10.6
|
2003
Stock Option Plan (6)
|
|
10.7
|
Form
of Incentive Stock Option Award Pursuant to 2003 Stock Option Plan
(7)
|
|
10.8
|
Form
of Non-qualified Stock Option Award Pursuant to 2003 Stock Option Plan
(7)
|
|
10.9
|
2008
Deferred Compensation Plan (8)
|
| 21.0 | Subsidiaries of the Registrant (9) |
| 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 |
__________
| * | To be filed by amendment. |
|
(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 September 18, 2007, and incorporated herein by
reference.
|
|
(3)
|
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.
|
|
(4)
|
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.
|
|
(5)
|
Filed
as an exhibit to the Registrant’s Registration Statement on Form S-8
(Registration No. 333-66049), and incorporated herein by
reference.
|
|
(6)
|
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.
|
|
(7)
|
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.
|
|
(8)
|
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.
|
|
(9)
|
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.
|