What changed in this filing

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Item 1. Business

2023-06-14 compared with 2022-06-15 · 201 added, 184 removed, 660 unchanged (37% of the section changed)

Riverview Bancorp, Inc., a Washington corporation, is the bank holding company of Riverview Community Bank (the “Bank”).

Riverview Bancorp, Inc., a Washington corporation, is the bank holding company of Riverview Bank.

At March 31, 2023, the Company had total assets of $1.6 billion, total deposits of $1.3 billion and total shareholders’ equity of $155.2 million.

The Company’s executive offices are located in Vancouver, Washington.

The Bank’s subsidiary, Riverview Trust Company (the “Trust Company”), is a trust and financial services company located in downtown Vancouver, Washington, and provides full-service brokerage activities, trust and asset management services.

The Bank has two subsidiaries Riverview Trust Company (the “Trust Company”) and Riverview Services, Inc.

(“Riverview Services”).

The Trust Company is a trust and financial services company located in downtown Vancouver, Washington, and provides full-service brokerage activities, trust and asset management services.

Riverview Services acts as a trustee for deeds of trust on mortgage loans granted by the Bank and receives a reconveyance fee for each deed of trust.

Substantially all of the Company’s business is conducted through the Bank, which until April 28, 2021, was a federal savings bank subject to extensive regulation by the Office of the Comptroller of the Currency (“OCC”).

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The Company’s loans receivable, net, totaled $993.5 million at March 31, 2023 compared to $975.9 million at March 31, 2022.

During the last two fiscal years the Bank participated in the U.S.

Small Business Administration (“SBA”) Paycheck Protection Program (“PPP”), a guaranteed unsecured loan program enacted under the CARES Act to provide near-term relief to help small businesses impacted by COVID-19 sustain operations.

The PPP ended on May 31, 2021.

Under this program we began processing applications for loan forgiveness in the fourth calendar quarter of 2020.

As of March 31, 2022, the Company held SBA PPP loans with a total outstanding balance of $3.1 million.

The Company’s strategic plan includes targeting the commercial banking customer base in its primary market area for loan originations and deposit growth, specifically small and medium size businesses, professionals and wealth building individuals.

In pursuit of these goals, the Company will seek to increase the loan portfolio consistent with its strategic plan and asset/liability and regulatory capital objectives, which includes maintaining a significant amount of commercial business and commercial real estate loans in its loan portfolio which carry adjustable rates, higher yields or shorter terms and higher credit risk than traditional fixed-rate consumer real estate one-to-four family mortgages.

In pursuit of these goals, the Company will seek to increase the loan portfolio consistent with its strategic plan and asset/liability and regulatory capital objectives, which includes maintaining a significant amount of commercial business and commercial real estate loans in its loan portfolio which typically carry adjustable rates, higher yields and shorter terms, as well as higher credit risk, compared to traditional fixed-rate consumer real estate one-to-four family loans.

Our strategic plan also stresses increased emphasis on non-interest income, including increased fees for asset management through the Trust Company and deposit service charges.

The strategic plan is designed to enhance earnings, reduce interest rate risk and provide a more complete range of financial services to customers and the local communities the Company serves.

We believe we are well positioned to attract new customers and to increase our market share through our seventeen branc hes, including, among others, ten in Clark County, three in the Portland metropolitan area and three lending centers.

The Company conducts operations from its home office in Vancouver, Washington and seventeen branch offices located in Camas, Washougal, Stevenson, White Salmon, Battle Ground, Goldendale, Ridgefield and Vancouver, Washington (six branch offices), and Portland, Gresham, Tualatin and Aumsville, Oregon.

We believe we are well positioned to attract new customers and to increase our market share through our 17 branch locations, including, among others, 10 in Clark County, three in the Portland metropolitan area and three lending centers.

The Company conducts operations from its home office in Vancouver, Washington and 17 branch offices located in Camas, Washougal, Stevenson, White Salmon, Battle Ground, Goldendale, Ridgefield and Vancouver, Washington (six branch offices), and Portland, Gresham, Tualatin and Aumsville, Oregon.

The Trust Company has two locations, one in downtown Vancouver, Washington and one in Lake Oswego, Oregon, providing full-service brokerage activities, trust and asset management services.

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The regulatory limit of loans we can make to one borrower is 20% of total risk-based capital, or $36.4 million, at March 31, 2023.

At this date, the Bank’s largest lending relationship with one borrower was $30.3 million, which consisted of a multi-family loan of $18.0 million, a commercial real estate loan of $12.2 million and a consumer loan of $45,000.

All loans were performing in accordance with their original payment terms at March 31, 2022.

At this date, the Bank’s largest lending relationship with one borrower was $29.5 million, which consisted of a multi-family loan of $17.6 million and a commercial real estate loan of $11.9 million, both of which were performing in accordance with their original payment terms at March 31, 2023.

Loan Portfolio Analysis .

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Commercial Business Lending.

At March 31, 2022, the commercial business loan portfolio totaled $228.1 million, or 23.0% of total loans, including $3.1 million of SBA PPP loans.

At March 31, 2023, the commercial business loan portfolio totaled $232.9 million, or 23.1% of total loans.

Commercial business loans are typically secured by business equipment, accounts receivable, inventory or other property.

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Other Real Estate Mortgage Lending.

The Company originates other real estate mortgage loans secured by office buildings, warehouse/industrial, retail, assisted living facilities and single-purpose facilities (collectively “commercial real estate loans” or “CRE”) and land and multi-family loans primarily located in its market area, collectively referred to herein as the “other real estate mortgage loan portfolio”.

At March 31, 2023, the other real estate mortgage loan portfolio totaled $564.5 million, or 56.0% of total loans.

as well as land and multi-family loans primarily located in its market area.

At March 31, 2022, owner occupied properties accounted for 27.6% and non-owner occupied properties accounted for 72.4% of the Company’s commercial real estate loan portfolio.

At March 31, 2023, owner occupied properties accounted for 27.8% and non-owner occupied properties accounted for 72.2% of the Company’s commercial real estate loans.

Commercial real estate and multi-family loans typically have higher loan balances, are more difficult to evaluate and monitor, and involve a higher degree of risk than residential one-to-four family loans.

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For more information concerning risks related to commercial real estate loans, see Item 1A.

“Risk Factors – Risks Related to Our Lending – Our emphasis on commercial real estate lending may expose us to increased lending risks.”

Land acquisition and development loans are included in the other real estate mortgage loan portfolio balance and represent loans made to developers for the purpose of acquiring raw land and/or for the subsequent development and sale of residential lots.

Such loans typically finance land purchases and infrastructure development of properties (e.g.

roads, utilities, etc.) with the aim of making improved lots ready for subsequent sales to consumers or builders for ultimate construction of residential units.

“Risk Factors – Risks Related to Our Lending – Commercial and multi-family real estate lending involves higher risks than one-to-four family real estate and other consume lending, which exposes us to increased lending risks.”

Land loans represent loans made to developers for the purpose of acquiring raw land and/or for the subsequent development and sale of residential lots.

Such loans typically finance land purchases and infrastructure development of properties (e.g., roads, utilities, etc.) with the aim of making improved lots ready for subsequent sales to consumers or builders for ultimate construction of residential units.

The primary source of repayment is generally the cash flow from developer sale of lots or improved parcels of land, secondary sources and personal guarantees, which may provide an additional measure of security for such loans.

At March 31, 2022, land acquisition and development loans totaled $11.6 million, or 1.16% of total loans compared to $14.0 million, or 1.49% of total loans at March 31, 2021.

The largest land acquisition and development loan had an outstanding balance at March 31, 2022 of $3.3 million and was performing according to its original payment terms.

At March 31, 2022, all of the land acquisition and development loans were secured by properties located in Washington and Oregon.

At March 31, 2022 and 2021, the Company had no land acquisition and development loans on non-accrual status.

At March 31, 2023, land loans totaled $6.4 million, or 0.64% of total loans, compared to $11.6 million, or 1.16% of total loans at March 31, 2022.

The largest land loan had an outstanding balance at March 31, 2023 of $1.8 million and was performing according to its original payment terms.

At March 31, 2023, all of the land loans were secured by properties located in Washington and Oregon.

At March 31, 2023 and 2022, the Company had no land loans on non-accrual status.

Real Estate Construction.

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Custom/presold construction

Construction/permanent

(1) Includes undisbursed funds of $36.6 million and $39.0 million at March 31, 2023 and 2022, respectively.

At March 31, 2023, the balance of the Company’s construction loan portfolio, including undisbursed funds, was $84.3 million compared to $63.2 million at March 31, 2022.

The $32.6 million increase was primarily due to a $22.8 million increase in commercial/multi-family construction loans along with an increase of $13.0 million in speculative construction loans.

The $21.1 million increase was primarily due to a $26.5 million increase in commercial/multi-family construction loans, partially offset by a decrease of $5.0 million in custom/presold construction loans.

The Company plans to continue to proactively manage its construction loan portfolio in fiscal year 2024 while continuing to originate new construction loans to selected customers.

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The home buyer may be identified either during or after the construction period, with the risk that the builder will have to service the speculative construction loan and finance real estate taxes and other carrying costs of the completed home for a significant period of time after the completion of construction until a home buyer is identified.

The largest speculative construction loan at March 31, 2022 was a loan to finance the construction of thirty-six townhomes totaling $2.5 million that is secured by property located in the Company’s market area.

The largest speculative construction loan at March 31, 2023 was a loan to finance the construction of 36 townhomes totaling $8.1 million that is secured by property located in the Company’s market area.

The average balance of loans in the speculative construction loan portfolio at March 31, 2023 was $959,000.

At March 31, 2023 and 2022, the Company had no speculative construction loans on non-accrual status.

The composition of land acquisition and development and speculative construction loans by geographical area is as follows at the dates indicated (in thousands):

Presold construction loans are made to homebuilders who, at the time of construction, have a signed contract with a home buyer who has a commitment for permanent financing for the finished home from the Company or another lender.

Presold construction loans are generally originated for a term of 12 months.

At March 31, 2023 and 2022, presold construction loans totaled $4.1 million and $4.5 million, respectively.

The composition of land and speculative/presold construction loans by geographical area is as follows at the dates indicated (in thousands):

March 31, 2023

Land acquisition and development

Speculative and presold construction

March 31, 2022

Land acquisition and development

Speculative and presold construction

Unlike speculative construction loans, presold construction loans are made for homes that have buyers.

Presold construction loans are generally originated for a term of 12 months.

At March 31, 2022 and 2021, presold construction loans totaled $4.5 million and $4.0 million, respectively.

Unlike speculative and presold construction loans, custom construction loans are made directly to the homeowner.

At March 31, 2022 and 2021, the Company had no custom construction loans.

Construction/permanent loans are originated to the homeowner rather than the homebuilder along with a commitment by the Company to originate a permanent loan to the homeowner to repay

the construction loan at the completion of construction.

Construction/permanent loans are originated to the homeowner rather than the homebuilder along with a commitment by the Company to originate a permanent loan to the homeowner to repay the construction loan at the completion of construction.

The construction phase of a construction/permanent loan generally lasts six to nine months.

At the completion of construction, the Company may either originate a fixed-rate mortgage loan or an adjustable rate mortgage (“ARM”) loan or use its mortgage brokerage capabilities to obtain permanent financing for the customer with another lender.

At the completion of construction, the Company may either originate a fixed-rate mortgage loan or an adjustable rate mortgage (“ARM”) loan or use its mortgage

brokerage capabilities to obtain permanent financing for the customer with another lender.

For adjustable rate loans, the interest rates adjust on their first adjustment date.

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Consumer Lending.

Consumer loans totaled $83.6 million at March 31, 2022 and were comprised of $70.7 million of one-to-four family mortgage loans, $10.5 million of home equity lines of credit, $820,000 of land loans to consumers for the future construction of one-to-four family homes and $1.5 million of other secured and unsecured consumer loans, which included one purchased automobile loan of $6,000.

One-to-four family residences located in the Company’s primary market area secure the majority of the residential loans.

Underwriting standards require that one-to-four family portfolio loans generally be owner occupied and that originated loan amounts not exceed 80% (95% with private mortgage insurance) of the lesser of current appraised value or cost of the underlying collateral.

Consumer loans totaled $101.5 million at March 31, 2023 and were comprised of $88.8 million of real estate one-to-four family loans, $10.3 million of home equity lines of credit, $552,000 of land loans to consumers for the future construction of one-to-four family homes and $1.8 million of other secured and unsecured consumer loans.

The majority of our real estate one-to-four family loans are located in the Company’s primary market area.

Underwriting standards require that real estate one-to-four family loans generally be owner occupied and that originated loan amounts not exceed 80% (95% with private mortgage insurance) of the lesser of current appraised value or cost of the underlying collateral.

Terms typically range from 15 to 30 years.

At March 31, 2022, the Company had two residential real estate loans totaling $51,000 on non-accrual status compared to three residential real estate loans totaling $64,000 at March 31, 2021.

At March 31, 2023, the Company had three residential real estate loans totaling $86,000 on non-accrual status compared to two residential real estate loans totaling $51,000 at March 31, 2022.

All of these loans were secured by properties located in Oregon and Washington.

The Company no longer originates one-to-four family mortgage loans.

During the fiscal year 2022, the Company purchased $43.4 million of one-to-four family loans as a way to supplement loan originations in this category.

The Company no longer originates real estate one-to-four family loans.

During the fiscal year 2023, the Company purchased $26.8 million real estate one-to-four family loans as a way to supplement loan originations in this category.

The Company also originates a variety of installment loans, including loans for debt consolidation and other purposes, automobile loans, boat loans and savings account loans.

At March 31, 2022, the Company had no installment loans on non-accrual status.

At March 31, 2021, the Company had no installment loans on non-accrual status other than one purchased automobile loan of $6,000.

At March 31, 2023 and 2022, the Company had no installment loans on non-accrual status.

The Company did not purchase any automobile loans during fiscal years 2023 and 2022 and does not have plans to purchase any additional automobile loan pools.

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The remaining deficiency often does not warrant further collection efforts against the borrower beyond obtaining a deficiency judgment.

In addition, consumer loan collections are dependent on the borrower’s continuing financial stability and are more likely to be adversely

affected by job loss, divorce, illness or personal bankruptcy.

In addition, consumer loan collections are dependent on the borrower’s continuing financial stability and are more likely to be adversely affected by job loss, divorce, illness or personal bankruptcy.

Furthermore, the application of various federal and state laws, including bankruptcy and insolvency laws, may limit our ability to recover on such loans.

Loan Maturity.

The following table sets forth certain information at March 31, 2022 regarding the dollar amount of loans maturing in the Company’s total loan portfolio based on their contractual terms to maturity but does not include potential prepayments.

Demand loans, loans having no stated schedule of repayments or stated maturity and overdrafts are reported as due in one year or less.

The following table sets forth certain information at March 31, 2023 regarding the dollar amount of loans maturing in the loan portfolio based on their contractual terms to maturity, but does not include potential prepayments.

loans, loans having no stated schedule of repayments or stated maturity and overdrafts are reported as due in one year or less.

Loan balances are reported net of deferred fees (in thousands):

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Loan Commitments .

The Company issues commitments to originate commercial loans, other real estate mortgage loans, construction loans, residential mortgage loans and other installment loans conditioned upon the occurrence of certain events.

The Company issues commitments to originate commercial loans, other real estate mortgage loans, construction loans, real estate one-to-four family loans and other installment loans conditioned upon the occurrence of certain events.

The Company uses the same credit policies in making commitments as it does for on-balance sheet instruments.

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The Company does, however, continue to service its existing FHLMC portfolio.

Brokered loans totaled $58.1 million and $63.0 million for the fiscal years ended March 31, 2022 and 2021, respectively.

There were no loans brokered to the Company

for the fiscal year ended March 31, 2022 compared to $5.2 million for the fiscal year ended March 31, 2021.

Gross fees of $1.1 million, including brokered loan fees, were earned in the fiscal year ended March 31, 2022.

Brokered loans totaled $22.0 million and $58.1 million as of March 31, 2023 and 2022, respectively.

There were no loans brokered to the Company for the fiscal year ended March 31, 2023 and 2022.

Gross fees of $346,000, including brokered loan fees, were earned in the fiscal year ended March 31, 2023.

For the fiscal year ended March 31, 2022, gross fees earned were $1.1 million, which included brokered loan fees and fees for loans sold to the FHLMC.

The interest rate environment has a strong influence on the loan volume and amount of fees generated from the mortgage broker activity.

In general, during periods of rising interest rates, the volume of loans and the amount of loan fees generally decrease as a result of decreased mortgage loan demand.

In general, during periods of rising interest rates, the volume of loans and the amount

of loan fees generally decrease as a result of decreased mortgage loan demand.

Conversely, during periods of falling interest rates, the volume of loans and the amount of loan fees generally increase as a result of the increased mortgage loan demand.

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Nonperforming Assets.

Nonperforming assets were $22.1 million or 1.27% of total assets at March 31, 2022 compared with $571,000 or 0.04% of total assets at March 31, 2021.

The Company had net charge-offs totaling $30,000 during fiscal 2022 compared to net recoveries of $254,000 during fiscal 2021.

The increase in nonperforming assets is attributed to an increase in nonperforming SBA and United States Department of Agriculture (“USDA”) government guaranteed loans totaling $21.8 million where payments have been delayed due to the servicing transfer of these loans between two third-party servicers.

Loans are reviewed regularly and it is the Company’s general policy that when a loan is 90 days delinquent or when collection of principal or interest appears doubtful, it is placed on non-accrual status, at which time the accrual of interest ceases and a reserve for any unrecoverable accrued interest is established and charged against operations.

Nonperforming assets were $1.9 million or 0.12% of total assets at March 31, 2023 compared with $22.1 million or 1.27% of total assets at March 31, 2022.

The Company had net recoveries totaling $36,000 during fiscal 2023 compared to net charge-offs of $30,000 during fiscal 2022.

The decrease in nonperforming assets is attributed to the progress made in resolving the delay in servicing transfer between two third-party servicers of SBA and United States Department of Agriculture (“USDA”) government guaranteed loans, as further discussed below.

Non-performing SBA government guaranteed loans totaled $1.6 million at March 31, 2023 compared to $21.8 million at March 31, 2022.

Loans are reviewed regularly and it is the Company’s general policy that when a loan is 90 days or more delinquent or when collection of principal or interest appears doubtful, it is placed on non-accrual status, at which time the accrual of interest ceases and a reserve for any unrecoverable accrued interest is established and charged against operations.

In general, payments received on non-accrual loans are applied to reduce the outstanding principal balance on a cash-basis method.

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Commercial real estate

SBA Government Guaranteed

The Company continues its efforts to work out problem loans, seek full repayment or pursue foreclosure proceedings and is making progress in regards to the SBA and USDA government guaranteed loan servicing transfer.

The Bank holds approximately $29.0 million of the government guaranteed portion of SBA and USDA loans originated by other banks that, when purchased, were placed into a Direct Registration Certificate (“DRC”) program by the SBA’s former fiscal transfer agent, Colson Inc.

SBA and USDA Government Guaranteed

The Company continues its efforts to work out problem loans, seek full repayment or pursue foreclosure proceedings and has made significant progress in regards to the SBA and USDA government guaranteed loan servicing transfer.

At March 31, 2023, the Bank holds approximately $1.6 million of the government guaranteed portion of SBA and USDA loans originated by other banks that, when purchased, were placed into a Direct Registration Certificate (“DRC”) program by the SBA’s former fiscal transfer agent, Colson Inc.

(“Colson”) that remain to be reconciled.

Under the DRC program, Colson was required to remit monthly payments to the investor holding the guaranteed balance, whether or not a payment had actually been received from the borrower.

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In late 2021, Guidehouse, under their contract with the SBA, declined to continue the DRC program.

After declining to continue the DRC program, all payments under the DRC program began to be held by Guidehouse or Colson until the DRC program could

be unwound and the DRC holdings converted into normal pass through certificates.

After declining to continue the DRC program, all payments under the DRC program began to be held by Guidehouse or Colson until the DRC program could be unwound and the DRC holdings converted into normal pass through certificates.

As part of unwinding the DRC program, Colson has requested investors who had received payments in advance of the borrower actually remitting payment return advanced funds before they will process the conversion of certificates.

The Bank continues to work with Colson on the reconciliation and transfer of these loans.

The Bank expects the reconciliation and unwinding process to continue and until these processes are completed for all loans being transferred, all of these loans will be reflected as past due.

These nonperforming government guaranteed loans are not considered to be nonaccrual loans because there is no concern of the collectability of the full principal and interest given the Company purchased the guaranteed portion of these loans which is backed by government guaranteed interest certificates.

continues to work with Colson on the reconciliation and transfer of the two remaining loans.

The Bank expects the reconciliation and unwinding process to continue and until these processes are completed for all loans being transferred, with such loans continuing to be reflected as past due.

These nonperforming government guaranteed loans are not considered non-accrual loans because there is no concern of the collectability of the full principal and interest given the Company purchased the guaranteed portion of these loans which is backed by government guaranteed interest certificates.

At March 31, 2023, all of the Company’s nonperforming loans exclusive of the SBA and USDA government guaranteed loans are to borrowers with properties located in Southwest Washington.

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There were no reserves associated with these nonperforming loans that were measured for impairment at March 31, 2023.

At March 31, 2022, the largest single nonperforming loan was a USDA government guaranteed loan for $1.1 million.

The largest single non-performing loan exclusive of the SBA and USDA government guaranteed loans was a commercial real estate loan for $122,000 at March 31, 2022.

At March 31, 2023, the largest single nonperforming loan was a USDA government guaranteed loan for $879,000.

The largest single nonperforming loan exclusive of the SBA and USDA government guaranteed loans was a commercial real estate loan for $100,000 at March 31, 2023.

The following table sets forth information regarding the Company’s nonperforming assets at the dates indicated (in thousands):

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Commercial real estate

SBA Government Guaranteed

SBA and USDA Government Guaranteed

Total nonperforming assets

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Commercial real estate

SBA and USDA Government Guaranteed

Total nonperforming assets

Other loans of concern, which are classified as substandard loans and are not presently included in the non-accrual category, consist of loans where the borrowers have cash flow problems, or the collateral securing the respective loans may be inadequate.

In either or both of these situations, the borrowers may be unable to comply with the present loan repayment terms, and the loans

may subsequently be included in the non-accrual category.

In either or both of these situations, the borrowers may be unable to comply with the present loan repayment terms, and the loans may subsequently be included in the non-accrual category.

Management considers the allowance for loan losses to be adequate at March 31, 2023, to cover the probable losses inherent in these and other loans.

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At March 31, 2023 and 2022, loans delinquent 30 – 89 days were 0.20% and 0.81% of total loans, respectively.

At March 31, 2022, loans 30 – 89 days past due were comprised of SBA government guaranteed loans (which are included in commercial business), real estate construction and consumer loans.

At March 31, 2023, loans 30 – 89 days past due were comprised of SBA government guaranteed loans (which are included in commercial business), commercial business and consumer loans.

The SBA government guaranteed loans comprise a substantial amount of the total loans 30-89 days past due at March 31, 2023.

At March 31, 2021, loans 30 – 89 days past due were comprised of commercial business and consumer loans.

There were no loans 30 – 89 days past due in our commercial real estate (“CRE”) portfolio at March 31, 2022 or March 31, 2021.

At March 31, 2022, loans 30 – 89 days past due were comprised of SBA government guaranteed loans, residential real estate construction and consumer loans.

There were no commercial real estate (“CRE”) loans 30 – 89 days past at March 31, 2023 or March 31, 2022.

At March 31, 2023, CRE loans represent the largest portion of our loan portfolio at 55.95% of total loans and commercial business loans represent 23.08% of total loans.

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All of the Company’s TDRs were paying as agreed at March 31, 2023.

The related amount of interest income recognized on these TDR loans was $24,000 for the year ended March 31, 2022.

The related amount of interest income recognized on these TDR loans was $24,000 for the fiscal year ended March 31, 2023.

The Company has determined that, in certain circumstances, it is appropriate to split a loan into multiple notes.

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In addition, loans discharged in bankruptcy proceedings are charged-off.

Loans under bankruptcy protection with no payments received for four consecutive months are charged-off.

Loans under bankruptcy protection with no payments

received for four consecutive months are charged-off.

The outstanding balance of a secured loan that is in excess of the net realizable value is generally charged-off if no payments are received for four to five consecutive months.

However, charge-offs

are postponed if alternative proposals to restructure, obtain additional guarantors, obtain additional assets as collateral or a potential sale of the underlying collateral would result in full repayment of the outstanding loan balance.

However, charge-offs are postponed if alternative proposals to restructure, obtain additional guarantors, obtain additional assets as collateral or a potential sale of the underlying collateral would result in full repayment of the outstanding loan balance.

Once any other potential sources of repayment are exhausted, the impaired portion of the loan is charged-off.

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Net charge-offs (recoveries)

All of the loans on non-accrual status as of March 31, 2022 were categorized as classified loans with the exception of one commercial business loan for $18,000 which is fully guaranteed by the SBA.

Classified loans at March 31, 2022 were comprised of three commercial business loans totaling $145,000, four commercial real estate loans totaling $6.2 million (the largest of which was $3.6 million) and two one-to-four family real estate loans totaling $51,000.

The net decrease in classified loans is primarily attributed to the downgrade of two commercial real estate loans totaling $2.4 million offset by risk rating upgrades totaling $3.6 million.

All loans on non-accrual status as of March 31, 2023 were categorized as classified loans with the exception of one commercial business loan for $18,000 which is fully guaranteed by the SBA.

Classified loans at March 31, 2023 were comprised of three commercial business loans totaling $117,000, three commercial real estate loans totaling $2.4 million (the largest of which was $1.5 million) and three one-to-four family real estate loans totaling $86,000.

The net decrease in classified loans is primarily attributed to the upgrade of one commercial real estate loan totaling $3.6 million.

As discussed earlier, nonperforming SBA and USDA government guaranteed loans totaled $1.6 million.

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For additional discussion of the Company’s methodology for assessing the appropriate level of the allowance for loan losses see Item 7.

“Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Policies.”

“Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Estimates.”

In accordance with GAAP, loans acquired from MBank during the fiscal year ended March 31, 2017 were recorded at their estimated fair value, which resulted in a net discount to the loans’ contractual amounts, of which a portion reflects a discount for possible credit losses.

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The net discount on these acquired loans was $228,000 and $371,000 at March 31, 2023 and 2022, respectively.

The Company recorded a recapture of loan losses of $4.6 million for the year ended March 31, 2022 compared to a provision for loan losses of $6.3 million for the year ended March 31, 2021.

The decrease in the allowance for loan losses in fiscal year 2022 was primarily due to the continued improvement since March 31, 2021 in the national and local economy associated with the recovery from the COVID-19 pandemic.

Our SBA PPP loans were omitted from the calculation of the required allowance for loan losses at March 31, 2022 and 2021 as these loans are fully guaranteed by the SBA and management expected that a majority of SBA PPP borrowers at those dates would seek full or partial forgiveness of their loan obligations from the SBA, which in turn, will reimburse the Bank for the amount forgiven.

At March 31, 2022, the Company had an allowance for loan losses of $14.5 million, or 1.47% of total loans, compared to $19.2 million, or 2.03% at March 31, 2021.

Net charge-offs totaled $30,000 for the fiscal year ended March 31, 2022 compared to net recoveries of $254,000 in the prior fiscal year.

Criticized loans decreased $34.7 million to $7.8 million at March 31, 2022 from $42.5 million at March 31, 2021.

The Company recorded a provision for loan losses of $750,000 for the fiscal year ended March 31, 2023 compared to a recapture of loan losses of $4.6 million for the fiscal year ended March 31, 2022.

The increase in the allowance for loan losses in fiscal year 2023 is mainly attributed to an isolated downgrade of a commercial real estate loan for $15.9 million that occurred in the fourth quarter.

At March 31, 2023, the Company had an allowance for loan losses of $15.3 million, or 1.52% of total loans, compared to $14.5 million, or 1.47% of total loans at March 31, 2022.

Net recoveries totaled $36,000 for the fiscal year ended March 31, 2023 compared to net charge-offs of $30,000 in the prior fiscal year.

Criticized loans, which are comprised of watch and special mention loans, increased $11.3 million to $19.1 million at March 31, 2023 from $7.8 million at March 31, 2022.

Classified loans decreased $3.8 million to $2.6 million at March 31, 2023 compared to $6.4 million at March 31, 2022.

The decrease in criticized and classified loans reflects risk rating upgrades primarily associated with loans that were previously downgraded due to COVID-19 loan modifications.

The coverage ratio of allowance for loan losses to nonperforming loans was 65.72% at March 31, 2022 compared to 3,358.67% at March 31, 2021.

The net increase in criticized loans is mainly attributed to the downgrade of the $15.9 million commercial real estate loan mentioned above offset by the upgrade to a pass rating of a $6.6 million commercial real estate loan that was part of the criticized total at March 31, 2022.

Additionally, the criticized balance at March 31, 2023 includes three commercial business loans and one commercial real estate loan totaling $1.3 million to a related borrower that were downgraded in the third quarter.

The decrease in classified loans is mainly due to the upgrade to a pass rating of a $3.6 million commercial real estate loan.

The coverage ratio of allowance for loan losses to nonperforming loans was 826.62% at March 31, 2023 compared to 65.72% at March 31, 2022, and excluding SBA and USDA government guaranteed loans was 5777.0% at March 31, 2023.

The Company’s general valuation allowance to non-impaired loans was 1.52% and 1.47% at March 31, 2023 and 2022, respectively.

The level of delinquent and non-performing loans at March 31, 2022 has increased significantly compared to March 31, 2021.

However, a substantial amount of the increases in both categories are purchased commercial business loans that are fully guaranteed by the SBA or USDA.

Since these loans are fully guaranteed by the SBA or USDA, these government guaranteed loans are not considered to be nonaccrual loans given the Company expects to receive all principal and interest and not considered to be classified loans because there are no well-defined weaknesses or risk of loss.

Given these government guaranteed loans are neither nonaccrual loans nor classified loans, these loans are not considered to be impaired loans based on the Company’s policy.

As these loans are not considered to be impaired loans and are fully guaranteed by the SBA or USDA, these loans are omitted from the required allowance calculation.

The coverage ratio of allowance for loan losses to nonperforming loans not including the SBA and USDA government guaranteed loans is 5,319.78%.

Management considers the allowance for loan losses to be adequate at March 31, 2023 to cover probable losses inherent in the loan portfolio based on the assessment of various factors affecting the loan portfolio, and the Company believes it has established its existing allowance for loan losses in accordance with GAAP.

However, a decline in national and local economic conditions (including declines as a result of the COVID-19 pandemic), results of examinations by the Company’s banking regulators, or other factors could result in a material increase in the allowance for loan losses and may adversely affect the Company’s future financial condition and results of operations.

However, a decline in national and local economic conditions (including a recession and continued inflationary pressures), results of examinations by the Company’s banking regulators, or other factors could result in a material increase in the allowance for loan losses and may adversely affect the Company’s future financial condition and results of operations.

In addition, because future events affecting borrowers and collateral cannot be predicted with certainty, there can be no assurance that the existing allowance for loan losses will be adequate or that substantial increases will not be necessary should the quality of any loans deteriorate or should collateral values decline as a result of the factors discussed elsewhere in this document.

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Total allowance for loan losses

The following table shows certain credit ratios at and for the periods indicated and each component of the ratio’s calculations.

At or For the Year Ended March 31,

Allowance for loan losses as a percentage of total loans outstanding at period end

Allowance for loan losses

Total loans outstanding

Non-accrual loans as a percentage of total loans outstanding at period end

Total non-accrual loans

Total loans outstanding

Allowance for loan losses as a percentage of non-accrual loans at period end

Allowance for loan losses

Total non-accrual loans

Net charge-offs/(recoveries) during period to average loans outstanding:

Commercial business:

Net charge-offs/(recoveries)

Average loans receivable, net

Commercial real estate:

Net charge-offs/(recoveries)

Average loans receivable, net

Net charge-offs/(recoveries)

Average loans receivable, net

Multi-family:

Net charge-offs/(recoveries)

Average loans receivable, net

Real estate construction:

Net charge-offs/(recoveries)

Average loans receivable, net

Net charge-offs/(recoveries)

Average loans receivable, net

Total net recoveries/(recoveries)

Total average loans receivable, net

Investment Activities

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At March 31, 2023, no investment securities were held for trading purposes.

At March 31, 2022, the Company’s investment portfolio consists of debt securities and does not include any equity securities.

“Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Policies.”

The Company primarily purchases agency securities with maturities of five years or less and purchases a combination of MBS backed by government agencies (FHLMC, Fannie Mae (“FNMA”), SBA or Ginnie Mae (“GNMA”)).

At March 31, 2023, the Company’s investment portfolio consisted of solely debt securities and no equity securities.

“Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Estimates.”

The Company primarily purchases agency securities and a combination of MBS backed by government agencies (FHLMC, Fannie Mae (“FNMA”), SBA or Ginnie Mae (“GNMA”)).

FHLMC and FNMA securities are not backed by the full faith and credit of the U.S.

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At March 31, 2023, the Company owned no privately issued MBS.

Our REMICS are MBS issued by FHLMC, FNMA and GNMA and our CRE MBS are issued by FNMA.

Our REMICS are MBS issued by FHLMC, FNMA and GNMA and our

CRE MBS are issued by FNMA.

The Company does not believe that it has any exposure to sub-prime lending in its investment securities portfolio.

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The following table sets forth the maturities and weighted average yields in the securities portfolio at March 31, 2023 (dollars in thousands):

More Than Five to

Less Than One Year

One to Five Years

After One Year

After Five Years

One Year or Less

Through Five Years

Through Ten Years

After Ten Years

Available for sale:

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Yields on tax-exempt investments are not calculated on a fully tax equivalent basis.

Management reviews investment securities quarterly for the presence of other than temporary impairment (“OTTI”), taking into consideration current market conditions, the extent and nature of changes in estimated fair value, issuer rating changes and trends, financial condition of the underlying issuers, current analysts’ evaluations, the Company’s ability and intent to hold investments until a recovery of estimated fair value, which may be maturity, as well as other factors.

until a recovery of estimated fair value, which may be maturity, as well as other factors.

There was no OTTI charge for investment securities for the years ended March 31, 2023, 2022 or 2021.

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The Company continues to focus on core deposits and growth generated by customer relationships as opposed to obtaining deposits through the wholesale markets, although the Company continued to experience competition for customer deposits within its market area during fiscal year 2023.

Core branch deposits (comprised of all demand, savings, interest checking accounts and all time deposits excluding wholesale-brokered deposits, trust account deposits, Interest on Lawyer Trust Accounts (“IOLTA”), public funds, and internet based deposits) increased $172.5 million since March 31, 2021 reflecting the Company’s commitment to increasing core deposits through organic growth in customer relationships versus relying on wholesale funding as well as deposits generated from SBA PPP loans, government stimulus checks being deposited directly into customer accounts and reduced withdrawals from deposit accounts due to a change in spending habits as a result of COVID-19.

At March 31, 2023, the Company had $22.8 million, or 1.80% of total deposits, in Certificate of Deposit Account Registry Service (“CDARS”) and Insured Cash Sweep (“ICS”) deposits, which were gathered from customers within the Company’s primary market-area.

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At March 31, 2023 and 2022, the Company also had $21.3 million and $25.9 million, respectively, in deposits from public entities located in the States of Washington and Oregon, all of which were fully covered by FDIC insurance or secured by pledged collateral.

The Company is enrolled in an internet deposit listing service.

Under this listing service, the Company may post certificates of deposit rates on an internet site where institutional investors have the ability to deposit funds with the Company.

At March 31, 2023 and 2022, the Company did not have any deposits through this listing service as the Company chose not to utilize these internet-based deposits.

Although the Company did not originate any internet based deposits during the fiscal year ended March 31, 2023, the Company may do so in the future consistent with its asset/liability objectives.

Deposit growth remains a key strategic focus for the Company and our ability to achieve deposit growth, particularly in core deposits, is subject to many risk factors including the effects of competitive pricing pressures, changing customer deposit behavior, and increasing or decreasing interest rate environments.

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The uninsured amounts are estimates based on the methodologies and assumptions used for the Bank’s regulatory reporting requirements.

The following table presents the maturity period, amount and weighted average rate of certificates of deposit greater than $250,000 at March 31, 2022 (dollars in thousands):

The following table presents the maturity period and amount of certificates of deposit greater than $250,000 at March 31, 2023 (dollars in thousands):

Maturity Period

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For more information, see also Note 8 of the Notes to Consolidated Financial Statements contained in Item 8 of this Form 10-K.

The Company relies upon advances from the FHLB and borrowings from the Federal Reserve Bank of San Francisco (“FRB”) to supplement its supply of lendable funds and to meet deposit withdrawal requirements.

Advances from the FHLB and borrowings from the FRB are typically secured by the Bank’s commercial business loans, commercial real estate loans and first mortgage residential loans.

At March 31, 2022 and 2021, the Bank did not have any FHLB advances or FRB borrowings.

The Company relies upon advances from the FHLB and borrowings from the Federal Reserve Bank of San Francisco (“FRB”), as needed, to supplement its supply of lendable funds and to meet deposit withdrawal requirements.

Advances from the FHLB and borrowings from the FRB are typically secured by the Bank’s commercial business loans, commercial real estate loans and real estate one-to-four family loans.

At March 31, 2023, the Bank had FHLB advances totaling $123.8 million and no FRB borrowings.

At March 31, 2022, the Bank did not have any FHLB advances or FRB borrowings.

The FHLB functions as a central reserve bank providing credit for member financial institutions.

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To facilitate talent attraction and retention, we strive to make the Bank an inclusive, safe and healthy workplace, with opportunities for our employees to grow and develop in their careers, supported by competitive compensation and benefits programs.

Approximately 66.5% of our workforce was female and 33.5% male, 61.9% of our management roles were held by females and 38.1% were held by males and our average tenure was 7.5 years.

Approximately 65.8% of our workforce was female and 34.2% male, 58.0% of our management roles were held by females and 42.0% were held by males and our average tenure was seven years.

The ethnicity of our workforce was 84.0% White, 5.4% Asian, 4.6% Hispanic or Latinx, 1.3% two or more races, 1.7% American Indian or Alaskan Native, 1.3% Native Hawaiian or Pacific Islander and 1.7% African American or Black.

Additional programs include quarterly or annual incentive opportunities, a Company sponsored Employee Stock Ownership Plan (“ESOP”), a Company-matched 401(k) Plan, healthcare and insurance benefits, health savings and flexible spending accounts, paid time off, family leave, and employee assistance programs including educational reimbursement opportunities.

Benefit programs include quarterly or annual incentive opportunities, a Company sponsored Employee Stock Ownership Plan (“ESOP”), a Company-matched 401(k) Plan, healthcare and insurance benefits, health savings and flexible spending accounts, paid time off, family leave, and employee assistance programs including educational reimbursement opportunities.

The success of our business is fundamentally connected to the well-being of our people.

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In response to the COVID-19 pandemic, we implemented significant operating environment changes that we determined were in the best interest of our employees, as well as the communities in which we operate, and which comply with government regulations.

This includes having the many of our employees work from home, while implementing additional safety measures for employees continuing critical on-site work.

Additionally, the Bank provided up to 80 hours of paid time off in addition to The Family First Coronavirus Response Act (“FFCRA”) benefit to employees for COVID-19 related absences.

We continue to utilize a hybrid work model which is supported by technology that promotes flexibility to work remotely while also recognizing the benefits of in-person collaboration.

The Company recognizes that the skills and knowledge of its employees are critical to the success of the organization, and promotes training and continuing education as an ongoing function for its employees.

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Subsidiary Activities

Riverview Bancorp, Inc.

has one operating subsidiary, the Bank.

The Bank has one wholly-owned subsidiary, Riverview Services, Inc.

(“Riverview Services”) and a majority-owned subsidiary, the Trust Company.

Riverview has one operating subsidiary, the Bank.

The Bank has two wholly-owned subsidiaries, Riverview Services and the Trust Company.

Riverview Services acts as a trustee for deeds of trust on mortgage loans granted by the Bank and receives a reconveyance fee for each deed of trust.

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The Trust Company earns fees on the management of assets held in fiduciary or agency capacity.

At March 31, 2022, total assets under management were $1.3 billion.

At March 31, 2023, total assets under management were $890.6 million.

The Trust Company’s operations are included in the Consolidated Financial Statements of the Company contained in Item 8 of this Form 10-K.

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Executive Vice President and Chief Credit Officer

Executive Vice President and Chief Retail Banking Officer

Executive Vice President and Chief Lending Officer

Christopher P.

President and Chief Executive Officer of Riverview Trust Company

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Lam is a CPA, holds a chartered global management accountant designation and is a member of both the American Institute of CPAs and Oregon Society of CPAs.

Cox is Executive Vice President and Chief Credit Officer and is responsible for credit administration related to the Bank’s commercial, mortgage and consumer loan activities.

Cox joined Riverview in August 2002 and spent five years as a commercial lender and progressed through the credit administration function, most recently serving as Senior Vice President of Credit Administration.

Cox is Executive Vice President and Chief Credit Officer of the Bank and is responsible for credit administration related to the Bank’s commercial, mortgage and consumer loan activities.

Cox joined the Bank in August 2002 and spent five years as a commercial lender and progressed through the credit administration function, most recently serving as Senior Vice President of Credit Administration.

He holds a Bachelor of Arts degree from Washington State University and was an Honor Roll graduate of the Pacific Coast Banking School.

Cox is an active mentor in the local schools and was the Past Treasurer and Endowment Chair for the Washougal Schools Foundation and Past Board Member of Camas-Washougal Chamber of Commerce.

Plambeck is Executive Vice President and Chief Lending Officer, a position he has held since March 2018.

Jellison is Executive Vice President and Chief Retail Banking Officer of the Bank, a position she has held since June 2022.

Jellison is responsible for the oversight of the bank’s retail branches.

Prior to June 2022, Mrs.

Jellison served as Senior Vice President and Commercial Lending Team Leader of the Portland Commercial Lending Team.

Jellison has spent her entire professional career working in banking and is passionate about delivering high level service to all clients.

Jellison attended The University of San Diego, studying music, and is a graduate of Flight Safety.

Plambeck is Executive Vice President and Chief Lending Officer of the Bank, a position he has held since March 2018.

Plambeck is responsible for all loan production including commercial, consumer, mortgage and builder/developer construction loans.

Plambeck joined Riverview in January 2011 as Director of Medical Banking.

Plambeck joined the Bank in January 2011 as Director of Medical Banking.

For the past two years Mr.

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Plambeck is also a member of the Medical and Dental Advisory Team.

Christopher P.

Cline is President and Chief Executive Officer of the Trust Company, a majority-owned subsidiary of the Bank.

Cline joined the Trust Company in 2016, after having spent eight years managing the trust department of Wells Fargo’s Private Bank in Oregon and Southwest Washington.

Prior to that, Mr.

Cline was an estate planning attorney for 17 years, most recently as a partner at Holland & Knight.

Cline manages all aspects of the trust business, is a Fellow of the American College of Trust and Estate Counsel and is a nationally recognized speaker and author, having written books on estate planning and trust administration.

Cline holds a Bachelor of Arts degree from San Francisco State University and a Juris Doctor degree from Hastings College of the Law in San Francisco.

Evan Sowers is President and Chief Executive Officer of the Trust Company, a wholly-owned subsidiary of the Bank.

Sowers joined the Trust Company in 2022, after having spent twenty-two years working in trusts and investments.

Sowers was managing director of private banking and wealth management and led the region for a large trust company in the Midwest.

Sowers holds an MBA in Finance, Accounting and Investment Banking from Washington University and an undergraduate degree from the University of Missouri.

On April 28, 2021, the Bank converted from a federally chartered savings bank to a Washington state-chartered commercial bank.

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The WDFI and FDIC have extensive enforcement authority over all Washington state-chartered commercial banks, including the Bank.

The Federal Reserve has the same type of authority over Riverview Bancorp, Inc.

The Federal Reserve has the same type of authority over Riverview.

Regulation and Supervision of the Bank

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The Bank also must maintain a capital conservation buffer consisting of additional CET1 capital greater than 2.5% of risk-weighted assets above the required minimum risk-based capital levels in order to avoid limitations on paying dividends, engaging in share repurchases, and paying discretionary bonuses.

In order to be considered well-capitalized under the prompt corrective action regulations, the Bank must maintain a CET1 risk-based ratio of 6.5%, a Tier 1 risk-based ratio of 8%, a total risk-based capital ratio of 10% and a leverage ratio of 5%, and the Bank must not be subject to an individualized order, directive or agreement under which its primary federal banking regulator requires it to maintain a specific capital level.

In order to be considered well-capitalized under the prompt corrective action regulations described below, the Bank must maintain a CET1 risk-based ratio of 6.5%, a Tier 1 risk-based ratio of 8%, a total risk-based capital ratio of 10% and a leverage ratio of 5%, and the Bank must not be subject to an individualized order, directive or agreement under which its primary federal banking regulator requires it to maintain a specific capital level.

As of March 31, 2023, the Bank met the requirements to be “well capitalized” and met the fully phased-in capital conservation buffer requirement.

For a complete description of the Bank’s required and actual capital levels on March 31, 2023, see Note 13 of the Notes to Consolidated Financial Statements contained in Item 8 of this Form 10-K.

The Financial Accounting Standards Board (“FASB”) has adopted a new accounting standard for GAAP that will be effective for us for our first fiscal year beginning after December 15, 2022.

The Financial Accounting Standards Board (“FASB”) has adopted a new accounting standard for GAAP that is effective for us for our first fiscal year beginning after December 15, 2022.

This standard, referred to as Current Expected Credit Loss (“CECL”) requires FDIC-insured institutions and their holding companies (banking organizations) to recognize credit losses expected over the life of certain financial assets.

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At March 31, 2023, the Bank held $6.9 million

in FHLB stock, which was in compliance with this requirement.

During the year ended March 31, 2022, the Bank purchased $297,000 of FHLB membership stock at par.

in FHLB stock, which is comprised of $1.9 million of membership stock and $5.0 million of activity stock from borrowing activities.

At March 31, 2023, the Bank is in compliance with FHLB stock requirements.

During the fiscal year ended March 31, 2023, the Bank redeemed $102,000 of FHLB membership stock at par due to the decrease in the Bank’s consolidated assets at December 31, 2022 as compared to December 31, 2021.

The FHLB continues to contribute to low- and moderately-priced housing programs through direct loans or interest subsidies on advances targeted for community investment and low- and moderate-income housing projects.

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Total base assessment rates currently range from 3 to 30 basis points subject to certain adjustments.

Extraordinary growth in insured deposits during the first and second quarters of 2020 caused the DIF reserve ratio to decline below the statutory minimum of 1.35 percent as of June 30, 2020.

In September 2020, the FDIC Board of Directors adopted a Restoration Plan to restore the reserve ratio to at least 1.35 percent within eight years, absent extraordinary circumstances, as required by the Federal Deposit Insurance Act.

The Restoration Plan maintained the assessment rate schedules in place at the time and required the FDIC to update its analysis and projections for the deposit insurance fund balance and reserve ratio at least semiannually.

In the semiannual update for the Restoration Plan in June 2022, the FDIC projected that the reserve ratio was at risk of not reaching the statutory minimum of 1.35 percent by September 30, 2028, the statutory deadline to restore the reserve ratio.

Based on this update, the FDIC Board approved an Amended Restoration Plan, and concurrently proposed an increase in initial base deposit insurance assessment rate schedules uniformly by two basis points, applicable to all insured depository institutions.

In October 2022, the FDIC Board finalized the increase with an effective date of January 1, 2023, applicable to the first quarterly assessment period of 2023.

The revised assessment rate schedules are intended to increase the likelihood that the reserve ratio of the DIF reaches the statutory minimum level of 1.35 percent by September 30, 2028.

Revised assessment rate schedules will remain in effect unless and until the reserve ratio meets or exceeds two percent, absent further action by the FDIC Board.

A significant increase in insurance premiums or a special assessment levied by the FDIC could likely have an adverse effect on the operating expenses and results of operations of the Bank.

There can be no prediction as to what changes in insurance assessment rates may be made in the future.

For the fiscal year ended March 31, 2023, the Bank’s FDIC deposit insurance premiums totaled $534,000.

The FDIC has authority to increase insurance assessments, and any significant increases would have an adverse effect on the operating expenses and results of operations of the Company.

Management cannot predict what assessment rates will be in the future.

In a banking industry emergency, the FDIC may also impose a special assessment.

As insurer, the FDIC is authorized to conduct examinations of and to require reporting by FDIC-insured institutions.

The FDIC also may prohibit any insured institution from engaging in any activity the FDIC determines by regulation or order to pose a serious risk to the DIF.

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Transactions with Affiliates.

Riverview Bancorp, Inc.

and the Bank are separate and distinct legal entities.

The Bank is an affiliate of Riverview Bancorp, Inc.

and any non-bank subsidiary of Riverview Bancorp, Inc., federal laws strictly limit the ability of banks to engage in certain transactions with their affiliates.

Riverview and the Bank are separate and distinct legal entities.

The Bank is an affiliate of Riverview and any non-bank subsidiary of Riverview, federal laws strictly limit the ability of banks to engage in certain transactions with their affiliates.

Transactions deemed to be a “covered transaction” under Section 23A of the Federal Reserve Act between a bank and an affiliate are limited to 10% of a bank’s capital and surplus and, with respect to all affiliates, to an aggregate of 20% of a bank’s capital and surplus.

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The regulatory agency’s assessment of the Bank’s record is made available to the public.

Further, a bank’s CRA performance must be considered in

connection with a bank’s application, to among other things, establish a new branch office that will accept deposits, relocate an existing office or merge or consolidate with, or acquire the assets or assume the liabilities of, a federally regulated financial institution.

Further, a bank’s CRA performance must be considered in connection with a bank’s application, to among other things, establish a new branch office that will accept deposits, relocate an existing office or merge or consolidate with, or acquire the assets or assume the liabilities of, a federally regulated financial institution.

An unsatisfactory rating may be the basis for denial of certain applications.

The Bank received a “satisfactory” rating during its most recent CRA examination.

The amount of dividends payable by the Bank to Riverview Bancorp, Inc.

depends upon the Bank’s earnings and capital position, and is limited by federal and state laws, regulations and policies.

According to Washington law, the Bank may not declare or pay a cash dividend on its capital stock if it would cause its net worth to be reduced below (1) the amount required for liquidation accounts or (2) the net worth requirements, if any, imposed by the Director of the WDFI.

On May 5, 2022, the federal bank regulatory agencies overhauled the CRA and jointly issued a proposal to strengthen and modernize regulations implementing the CRA.

The proposed regulations included major changes from the current regulation and will be effective on the first day of the first calendar quarter that begins at least 60 days after the publication date of the final rules.

The new rules as proposed are intended to, (1) provide expanded access to credit, investment, and basic banking services in low- and moderate-income communities, (2) address changes in the banking industry, including internet and mobile banking, (3) yield greater clarity, consistency, and transparency, (4) tailor CRA evaluations and data collection to bank size and type, and (5) maintain a unified approach amongst the regulating agencies.

The amount of dividends payable by the Bank to Riverview depends upon the Bank’s earnings and capital position, and is limited by federal and state laws, regulations and policies.

Under Washington law, the Bank may not declare or pay a cash dividend on its capital stock if it would cause its net worth to be reduced below (1) the amount required for liquidation accounts or (2) the net worth requirements, if any, imposed by the Director of the WDFI.

In addition, dividends may not be declared or paid if the Bank is in default in payment of any assessments due to the FDIC.

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The Federal Reserve requires all depository institutions to maintain reserves at specified levels against their transaction accounts, primarily checking accounts.

In response to the COVID-19 pandemic, the Federal Reserve reduced reserve requirement ratios to zero percent effective on March 26, 2020, to support lending to households and businesses.

In response to the COVID-19 pandemic, the Federal Reserve reduced

reserve requirement ratios to zero percent effective on March 26, 2020, to support lending to households and businesses.

At March 31, 2023, the Bank was not required to maintain any reserve balances.

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Since the enactment of the CERCLA, this “secured creditor exemption” has been the subject of judicial interpretations which have left open the possibility that lenders could be liable for cleanup costs on contaminated property that they hold as collateral for a loan.

To the extent that legal uncertainty exists in this area, all creditors, including the Bank, that have made loans secured by properties with potential hazardous waste contamination (such as petroleum contamination) could be subject to liability for cleanup costs, which could substantially exceed the value of the collateral property.

To the extent that legal uncertainty exists in this area, all creditors, including the Bank, that have made loans secured by properties with potentially hazardous waste contamination (such as petroleum contamination) could be subject to liability for cleanup costs, which could substantially exceed the value of the collateral property.

Anti-Money Laundering and Customer Identification.

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In addition, Washington State and other federal and state cybersecurity and data privacy laws and regulations may expose the Bank to risk and result in certain risk management costs.

In addition, on November 18, 2021, the federal banking agencies announced the adoption of a final rule providing for new notification requirements for banking organizations and their service providers for significant cybersecurity incidents.

In addition, on November 18, 2021, the federal banking agencies announced the adoption of a final rule providing for new

notification requirements for banking organizations and their service providers for significant cybersecurity incidents.

Specifically, the new rule requires a banking organization to notify its primary federal regulator as soon as possible, and no later than 36 hours after, the banking organization determines that a “computer-security incident” rising to the level of a “notification incident” has occurred.

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Service providers are required under the rule to notify affected banking organization customers as soon as possible when the provider determines that it has experienced a computer-security incident that has materially affected or is reasonably likely to materially affect the banking organization’s customers for four or more hours.

Compliance with the new rule is required by May 1, 2022.

Compliance with the new rule was required by May 1, 2022.

Non-compliance with federal or similar state privacy and cybersecurity laws and regulations could lead to substantial regulatory imposed fines and penalties, damages from private causes of action and/or reputational harm

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The Bank is subject to a broad array of federal and state consumer protection laws and regulations that govern almost every aspect of its business relationships with consumers.

the 21st Century Act, laws governing flood insurance, laws governing consumer protections in connection with the sale of insurance, federal and state laws prohibiting unfair and deceptive business practices and various regulations that implement some or all of the foregoing.

While not exhaustive, these laws and regulations include the Truth-in-Lending Act, the Truth in Savings Act, the Electronic Fund Transfer Act, the Expedited Funds Availability Act, the Equal Credit Opportunity Act, the Fair Housing Act, the Real Estate Settlement Procedures Act, the Home Mortgage Disclosure Act, the Fair Credit Reporting Act, the Fair Debt Collection Practices Act, the Right to Financial Privacy Act, the Home Ownership and Equity Protection Act, the Consumer Leasing Act, the Fair Credit Billing Act, the Homeowners Protection Act, the Check Clearing for the 21st Century Act, laws governing flood insurance, laws governing consumer protections in connection with the sale of insurance, federal and state laws prohibiting unfair and deceptive business practices and various regulations that implement some or all of the foregoing.

These laws and regulations mandate certain disclosure requirements and regulate the manner in which financial institutions must deal with customers when taking deposits, making loans, collecting loans and providing other services.

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Regulation and Supervision of Riverview Bancorp, Inc.

Riverview Bancorp, Inc., as sole shareholder of the Bank, is a bank holding company registered with the Federal Reserve.

Bank holding companies are subject to comprehensive regulation by the Federal Reserve under the Bank Holding Company Act of 1956, as amended (“BHCA”), and the regulations of the FRB.

Accordingly, Riverview Bancorp, Inc.

is required to file semi-annual reports with the Federal Reserve and provide additional information as the Federal Reserve may require.

The Federal Reserve may examine Riverview Bancorp, Inc., and any of its subsidiaries, and charge Riverview Bancorp, Inc.

for the cost of the examination.

Riverview as sole shareholder of the Bank, is a bank holding company registered with the Federal Reserve.

Bank holding companies are subject to comprehensive regulation by the Federal Reserve under the Bank Holding Company Act of 1956, as amended (“BHCA”), and the regulations of the Federal Reserve.

Accordingly, Riverview is required to file semi-annual reports with the Federal Reserve and provide additional information as the Federal Reserve may require.

The Federal Reserve may examine Riverview, and any of its subsidiaries, and charge Riverview for the cost of the examination.

The Federal Reserve also has extensive enforcement authority over bank holding companies, including, among other things, the ability to assess civil money penalties, to issue cease and desist or removal orders and to require that a holding company divest subsidiaries (including its bank subsidiaries).

In general, enforcement actions may be initiated for violations of law and regulations and unsafe or unsound practices.

Riverview Bancorp, Inc.

is also required to file certain reports with, and otherwise comply with the rules and regulations of the SEC.

Riverview, as a public company, is also required to file certain reports and otherwise comply with the rules and regulations of the SEC.

See “Federal Securities Laws” below.

The Bank Holding Company Act.

Under the BHCA, Riverview Bancorp, Inc.

is supervised by the Federal Reserve.

Under the BHCA, Riverview is supervised by the Federal Reserve.

The Federal Reserve has a policy that a bank holding company is required to serve as a source of financial and managerial strength to its subsidiary bank and may not conduct its operations in an unsafe or unsound manner.

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No regulations have yet been proposed by the Federal Reserve to implement the source of strength provisions required by the Dodd-Frank Act.

Riverview Bancorp, Inc.

and any subsidiaries that it may control are considered “affiliates” within the meaning of the Federal Reserve Act, and transactions between the Bank and affiliates are subject to numerous restrictions.

With some exceptions, Riverview Bancorp, Inc.

and its subsidiaries are prohibited from tying the provision of various services, such as extensions of credit, to other services offered by Riverview Bancorp, Inc.

or by its affiliates.

Riverview and any subsidiaries that it may control are considered “affiliates” within the meaning of the Federal Reserve Act, and transactions between the Bank and affiliates are subject to numerous restrictions.

With some exceptions, Riverview and its

subsidiaries are prohibited from tying the provision of various services, such as extensions of credit, to other services offered by Riverview or by its affiliates.

Acquisitions.

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As discussed above, pursuant to the “Small Bank Holding Company” exception, effective August 30, 2018, bank holding companies with less than $3 billion in consolidated assets were generally no longer subject to the Federal Reserve’s capital regulations, which are generally the same as the capital regulations applicable to the Bank.

At the time of this change, Riverview Bancorp, Inc.

was considered “well capitalized” as defined for a bank holding company with a total risk-based capital ratio of 10.0% or more and a Tier 1 risk-based capital ratio of 8.0% or more, and was not subject to an individualized order, directive or agreement under which the Federal Reserve requires it to maintain a specific capital level.

At the time of this change, Riverview was considered “well capitalized” as defined for a bank holding company with a total risk-based capital ratio of 10.0% or more and a Tier 1 risk-based capital ratio of 8.0% or more, and was not subject to an individualized order, directive or agreement under which the Federal Reserve requires it to maintain a specific capital level.

Restrictions on Dividends.

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The Federal Reserve policy statement also indicates that it would be inappropriate for a company experiencing serious financial problems to borrow funds to pay dividends.

Under Washington corporate law, Riverview Bancorp, Inc.

generally may not pay dividends if after that payment it would not be able to pay its liabilities as they become due in the usual course of business, or its total assets would be less than its total liabilities.

Under Washington corporate law, Riverview generally may not pay dividends if after that payment it would not be able to pay its liabilities as they become due in the usual course of business, or its total assets would be less than its total liabilities.

The capital conservation buffer requirement may also limit or preclude dividends payable by the Company.

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Federal Securities Laws.

Riverview Bancorp, Inc.’s common stock is registered with the SEC under Section 12(b) of the Securities Exchange Act of 1934, as amended (“Exchange Act”).

Riverview’s common stock is registered with the SEC under Section 12(b) of the Securities Exchange Act of 1934, as amended (“Exchange Act”).

The Company is subject to information, proxy solicitation, insider trading restrictions and other requirements under the Exchange Act.

COVID-19 Legislation.

In response to the COVID-19 pandemic, the U.S.

Congress, through the enactment of the CARES Act and CAA 2021, and the federal banking agencies, though rulemaking, interpretive guidance and modifications to agency policies and procedures, have taken a series of actions to provide national emergency economic relief measures including, among others the CARES Act and CAA 2021.

As the on-going COVID-19 pandemic evolves, federal and state regulatory authorities continue to issue additional guidance with respect to COVID-19.

In addition, it is possible that the U.S.

Congress will enact supplementary COVID-19 response legislation.

The Company continues to assess the impact of the CARES Act, CAA 2021, and other statues, regulations and supervisory guidance related to the COVID-19 pandemic.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business