What changed in this filing

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Item 7. Management’s Discussion and Analysis

2025-06-12 compared with 2024-06-14 · 148 added, 140 removed, 321 unchanged (47% of the section changed)

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Future additions to our ACL, as well as charge-offs in excess of reserves, will reduce our earnings,” in this Form 10-K.

Valuation of Investment Securities.

Fair Value Accounting and Measurement

The Company determines the estimated fair value of certain assets that are classified as Level 3 under the fair value hierarchy established under GAAP.

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The Company performed its annual goodwill impairment test as of October 31, 2024.

The goodwill impairment test involves a two-step process.

Step one of the goodwill impairment test estimates the fair value of the reporting unit utilizing the allocation of corporate value approach, the income approach, the whole bank transaction approach and the market approach in order to derive an enterprise value of the Company.

The goodwill impairment test estimates the fair value of the reporting unit utilizing the allocation of corporate value approach, the income approach, the whole bank transaction approach and the market approach in order to derive an enterprise value of the Company.

The allocation of corporate value approach applies the aggregate market value of the Company and divides it among the reporting units.

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The Company used an expected control premium of 30%, which was based on comparable transactional history.

The income approach uses a reporting unit’s projection of estimated operating results and cash

flows that are discounted using a rate that reflects current market conditions.

The income approach uses a reporting unit’s projection of estimated operating results and cash flows that are discounted using a rate that reflects current

market conditions.

The projection uses management’s best estimates of economic and market conditions over the projected period including growth rates in loans and deposits, estimates of future expected changes in net interest margins and cash expenditures.

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In applying the market approach method, the Company selected four publicly traded comparable institutions.

After selecting comparable institutions, the Company derived the fair value of the reporting unit by completing a comparative analysis of the relationship between their financial metrics listed above and their market values utilizing a market multiple of 0.87 times book value, a market multiple of 0.93 times tangible book value and an earnings multiple of 9.3 times.

The Company calculated a fair value of its reporting unit of $150.0 million using the corporate value approach, $180.0 million using the income approach, $181.0 million using the whole bank transaction approach and $171.0 million using the market approach, with a final concluded value of $177.0 million, with ten percent weight given to the corporate value approach and market approach and forty percent weight given to the whole bank transaction and income approach.

After selecting comparable institutions, the Company derived the fair value of the reporting unit by completing a comparative analysis of the relationship between their financial metrics listed above and their market values utilizing a market multiple of 0.90 times book value, a market multiple of 1.00 times tangible book value, due to comparable bank volatility its belief that earnings multiples do not give meaningful results.

The Company calculated a fair value of its reporting unit of $128.0 million using the corporate value approach, $177.0 million using the income approach, $186.0 million using the whole bank transaction approach and $200.0 million using the market approach, with a final concluded value of $182.0 million, with ten percent weight given to the corporate value approach and thirty percent weight given to the whole bank transaction, market approach and income approach.

The results of the Company’s step one test indicated that the reporting unit’s fair value was greater than its carrying value and therefore no impairment of goodwill exists.

The Company also completed a qualitative assessment of goodwill as of March 31, 2025, and concluded that it is more likely than not that the fair value of the Bank (the reporting unit), exceeds its carrying value at that date.

Even though the Company determined that there was no goodwill impairment, a sustained decline in the value of its stock price as well as values of other financial institutions, declines in revenue for the Company beyond our current forecasts, significant adverse changes in the operating environment for the financial industry or an increase in the value of our assets without an increase in the value of the reporting unit may result in a future impairment charge.

It is also possible that changes in circumstances existing at the measurement date or at other times in the future, or in the numerous estimates associated with management’s judgments, assumptions and estimates made in assessing the fair value of our goodwill, could result in an impairment charge of a portion or all of our goodwill.

If the Company recorded an impairment charge, its financial position and results of operations would be adversely affected;

however, such an impairment charge would have no impact on our liquidity, operations or regulatory capital.

Accordingly, no goodwill impairment was recognized.

However, future impairment charges could occur if adverse events or changes in circumstances arise, including, but not limited to:

(i) a sustained decline in the Company’s stock price or that of peer institutions, (ii) revenue declines beyond current forecasts, (iii) significant adverse changes in the operating environment for the financial industry, or (iv) increases in the value of the Company’s assets without a corresponding increase in the value of the reporting unit .

Additionally, changes in circumstances at or after the measurement date, or changes in the assumptions and estimates used in assessing goodwill, could result in a partial or full impairment of goodwill.

While any such impairment charge would adversely affect the Company’s financial condition and results of operations, it would not impact the Company’s liquidity, operations, or regulatory capital ratios.

For additional information concerning critical accounting policies, see Note 1 of the Notes to Consolidated Financial Statements contained in "Item 8.

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Operating Strategy and Selected Financial Information

Fiscal year 2024 marked the 100th anniversary for Riverview Bank, which opened for business in 1923.

Fiscal year 2025 marked the 101 st anniversary for Riverview Bank, which opened for business in 1923.

Our primary business strategy is to provide comprehensive banking and related financial services within our primary market area.

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Execution of our Business Plan .

The Company is focused on increasing its loan portfolio, especially higher yielding commercial and construction loans, and its core deposits by expanding its customer base throughout its primary market areas.

While the Company historically emphasized residential real estate lending, since 1998 it has been diversifying its loan portfolio through the expansion of its commercial and construction loan portfolios.

Moreover, in fiscal year 2021, the Company ceased originating residential real estate loans;

however, it will from time to time purchase these loans consistent with asset/liability objectives.

The Company remains focused on expanding its loan portfolio, particularly higher-yielding commercial and construction loans, and growing its core deposit base by deepening client relationships throughout its primary market areas.

While residential real estate lending was historically a primary focus, the Company has diversified its loan portfolio in recent years through the strategic growth of its commercial and construction loan portfolios.

In fiscal year 2021, the Company ceased originating one-to-four family residential real estate loans but continues to purchase such loans consistent with its asset/liability management objectives.

At March 31, 2025, commercial and construction loans represented 89.5% of total loans.

Commercial lending, including commercial real estate loans, typically involves more credit risk than residential lending, justifying higher interest margins and fees on loans which can increase the loan portfolio’s profitability.

In addition, by emphasizing total relationship banking, the Company intends

to deepen the relationships with its customers and increase individual customer profitability through cross-marketing programs, which allows the Company to better identify lending opportunities and services for customers.

To build its core deposit base, the Company will continue to utilize additional product offerings, technology and a focus on customer service in working toward this goal.

The Company will also continue to seek to expand its franchise through de novo branches, the selective acquisition of individual branches, loan purchases and whole bank transactions that meet its investment and market objectives.

In this regard, the Company recently opened three new branches located in Clark County, Washington, to complement its existing branch network.

Commercial lending, including CRE, generally involves greater credit risk than residential lending.

However, these risks are often compensated by higher interest margins and fee income, contributing to enhanced loan portfolio profitability.

To support its growth and profitability objectives, the Company is committed to a relationship-based banking model designed to strengthen client

loyalty, identify new lending opportunities, and improve client-level profitability through cross-selling deposit, treasury management, and other banking services.

The Company continues to build its core deposit base by offering competitive products, enhancing digital banking capabilities, and prioritizing high-quality client service.

Additionally, the Company seeks to expand its banking franchise through de novo branch development, selective acquisitions of branches or loan portfolios, and whole bank transactions that align with its strategic and financial goals.

Maintaining Strong Asset Quality .

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Introduction of New Products and Services .

The Company continuously reviews new products and services to provide its customers more financial options.

The Company continuously reviews new products and services to provide its clients more financial options.

All new technology and services are generally reviewed for business development and cost saving purposes.

The Company continues to experience growth in customer use of its online banking services, where the Bank provides a full array of traditional cash management products as well as online banking products including mobile banking, mobile deposit, bill pay, e-statements, and new deposit products.

The Company continues to experience growth in client use of its online banking services, where the Bank provides a full array of traditional cash management products as well as online banking products including mobile banking, mobile deposit, bill pay, e-statements, and new deposit products.

The products are tailored to meet the needs of small to medium size businesses and households in the markets we serve.

The Company intends to selectively add other products to further diversify revenue sources and to capture more of each customer’s banking relationship by cross selling loan and deposit products and additional services, including services provided through the Trust Company to increase its fee income.

The Company intends to selectively add other products to further diversify revenue sources and to capture more of each client’s banking relationship by cross selling loan and deposit products and additional services, including services provided through the Trust Company to increase its fee income.

Assets under management by the Trust Company totaled $877.9 million and $961.8 million at March 31, 2025 and March 31, 2024, respectively.

The Company also offers a third-party identity theft product to its customers.

The identity theft product assists our customers in monitoring their credit and includes an identity theft restoration service.

The Company also offers a third-party identity theft product to its clients.

The identity theft product assists our clients in monitoring their credit and includes an identity theft restoration service.

Attracting Core Deposits and Other Deposit Products .

The Company offers personal checking, savings and money-market accounts, which generally are lower-cost sources of funds than certificates of deposit and are less likely to be withdrawn when interest rates fluctuate.

To build its core deposit base, the Company has sought to reduce its dependence on traditional higher cost deposits in favor of stable lower cost core deposits to fund loan growth and decrease its reliance on other wholesale funding sources, including brokered deposits, FHLB advances and FRB borrowings.

The Company believes that its continued focus on building customer relationships will help to increase the level of core deposits and locally-based retail certificates of deposit.

In addition, the Company intends to increase demand deposits by growing business banking relationships through expanded product lines tailored to meet its target business customers’ needs.

The Company maintains technology-based products to encourage the growth of lower cost deposits, such as personal financial management, business cash management, and business remote deposit products, that enable it to meet its customers’ cash management needs and compete effectively with banks of all sizes.

Core branch deposits decreased $26.9 million at March 31, 2024 compared to March 31, 2023 due to deposit pricing pressures in our markets, resulting in the Company’s use of higher costing FHLB advances during fiscal 2024.

The Company offers a variety of deposit products, including personal checking, savings, and money market accounts, which generally represent lower-cost and more stable sources of funding compared to certificates of deposit.

These core deposits are less sensitive to interest rate fluctuations and play a key role in supporting the Company’s funding and liquidity strategy.

To strengthen its funding base, the Company continues to prioritize the growth of core deposits over higher-cost funding sources, such as brokered deposits, FHLB advances, and FRB borrowings.

This approach supports loan growth while helping to manage interest expense and reduce reliance on more volatile wholesale funding sources.

A key element of this strategy is enhancing and deepening client relationships.

The Company believes its continued focus on relationship banking will support the expansion of both core deposits and locally sourced retail certificates of deposit.

In particular, the Company seeks to grow demand deposits by building business banking relationships, supported by a suite of expanded product offerings tailored to meet the specific needs of its business clients.

To further encourage growth in lower-cost deposits, the Company has invested in technology-based solutions designed to improve the client experience and support cash management needs.

These include personal financial management tools, business cash management services, and remote deposit capture products, which allow the Company to effectively compete with financial institutions of all sizes.

As of March 31, 2025, core branch deposits increased $2.2 million compared to March 31, 2024, reflecting the Company’s concentrated efforts to retain and grow deposits in light of the strong completion within its market area.

Core branch deposits accounted for 98.1% of total deposits at March 31, 2025 compared to 98.0% at March 31, 2024.

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The Company believes that it enhances its market position and adds 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.

The Company emphasizes to its employees the importance of delivering exemplary customer service and seeking opportunities to build further relationships with its customers.

The goal is to compete with other financial service providers by relying on the strength of the Company’s customer service and relationship banking approach.

The Company emphasizes to its employees the importance of delivering exemplary client service and seeking opportunities to build further relationships with its clients.

The goal is to compete with other financial service providers by relying on the strength of the Company’s client service and relationship banking approach.

The Company believes that one of its strengths is that its employees are also shareholders through the Company’s ESOP and 401(k) plans.

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The following financial condition data as of March 31, 2025 and 2024 and operating data and key financial ratios for the fiscal years ended March 31, 2025, 2024, and 2023 have been derived from the Company’s audited consolidated financial statements.

The information below is qualified in its entirety by the detailed information included elsewhere

herein and should be read along with this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Item 8.

The information below is qualified in its entirety by the detailed information included elsewhere herein and should be read along with this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Item 8.

“Financial Statements and Supplementary Data” included in this Form 10-K.

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Net interest income

Provision for (recapture of) credit/loan losses

Net interest income after provision for (recapture of) credit/loan losses

Provision for credit/loan losses (1)

Net interest income after provision for credit/loan losses

Other non-interest income

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Dividends per share

(1) The Company adopted the CECL methodology on April 1, 2023, in accordance with ASC 326.

Financial results and disclosures for periods prior to adoption continue to reflect the incurred loss methodology under previously applicable GAAP.

As a result, amounts reported for prior periods are not directly comparable to those calculated under the CECL methodology.

At or For the Years Ended March 31,

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Asset Quality Ratios:

Allowance for credit losses to total loans at end of period

Allowance for credit losses to nonperforming loans

Allowance for credit/loan losses to total loans at end of period (3)

Allowance for credit/loan losses to nonperforming loans (3)

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

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(2) Non-interest expense divided by the sum of net interest income and non-interest income.

(3) The Company adopted the CECL methodology on April 1, 2023, in accordance with ASC 326.

Financial results and disclosures for periods prior to adoption continue to reflect the incurred loss methodology under previously applicable GAAP.

As a result, amounts reported for prior periods are not directly comparable to those calculated under the CECL methodology.

Comparison of Financial Condition at March 31, 2025 and 2024

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Fluctuations in cash balances are typical due to funding requirements, deposit activity and investments in securities.

In accordance with the Company’s asset/liability management program and liquidity objectives, surplus cash may be used to acquire investment securities, contingent on prevailing interest rates and other factors.

In accordance with the Company’s asset/liability management strategy and liquidity objectives, surplus cash may be used to acquire investment securities, contingent on prevailing interest rates and other factors.

Additionally, a portion of excess cash is invested in short-term certificates of deposit for investment purposes, all of which are fully insured by the FDIC.

There were no certificates of deposits held for investment at March 31, 2024 compared to $249,000 at March 31, 2023.

There were no certificates of deposits held for investment at both March 31, 2025 and 2024.

Investment securities totaled $322.5 million and $372.7 million at March 31, 2025 and 2024, respectively.

The decrease was primarily due to investment sales of $46.2 million in the fourth quarter of fiscal year 2024 in addition to normal pay downs, calls and maturities.

There were no sales of investment securities for fiscal year 2023.

There were no investment securities purchased during fiscal year 2024 compared to $81.8 million for 2023.

The decrease was due to normal pay downs, calls and maturities.

The Company did not make any purchases of investment securities during fiscal 2025, instead prioritizing deployment of available funds into its loan portfolio.

For additional information on the Company’s investment securities, see Note 3 of the Notes to Consolidated Financial Statements contained in Item 8 of this Form 10-K.

Loans receivable, net, totaled $1.01 billion at March 31, 2024, compared to $993.5 million at March 31, 2023, an increase of $15.1 million.

The increase was primarily attributed to increases in commercial real estate loans of $19.0 million and multi-family loans of $14.9 million.

These increases were partially offset by decreases in real estate construction, commercial business, and real estate one-to-four family loans of $11.2 million, $3.5 million, and $3.3 million, respectively, since March 31, 2023.

The Company no longer originates real estate one-to-four family loans and will from time to time purchase these loans consistent with its asset/liability objectives.

Additionally, the Company will purchase commercial business loans to supplement loan originations and diversify the commercial loan portfolio.

Purchased loans are originated by a third-party located outside of the Company’s primary market area and totaled $27.2 million and $26.2 million at March 31, 2024 and 2023, respectively.

The Company also purchases the guaranteed portion of SBA loans as a way to supplement loan originations, to further diversify its loan portfolio and earn a higher yield than earned on its cash or short-term investments.

These SBA loans are originated through another financial institution located outside of the Company’s primary market area and are purchased with servicing retained by the seller.

Loans receivable, net, totaled $1.05 billion at March 31, 2025, compared to $1.01 billion at March 31, 2024, an increase of $38.4 million.

The increase was primarily attributable to increases in multi-family loans of $20.7 million, commercial real estate loans of $8.7 million and commercial business loans of $3.5 million, consistent with the Company’s strategic focus on expanding its commercial lending platform.

In addition, other installment loans increased of $12.8 million due to purchased consumer loans of $15.6 million during the fiscal year ended 2025.

These increases were partially offset by a decrease in real estate construction loans of $7.4 million reflecting the completion and pay-off of projects originated in prior periods.

The Company no longer originates real estate one-to-four family loans but may, from time to time, purchase such loans consistent with its asset/liability management objectives.

Additionally, the Company supplements its commercial loan originations and enhances portfolio diversification through the purchase of commercial business loans.

These purchased loans are originated by third-parties located outside of the Company’s primary market area and totaled $35.3 million and $27.2 million at March 31, 2025 and 2024, respectively.

The Company also purchases the guaranteed portion of SBA originated loans as part of its strategy to diversify the loan portfolio and enhance yields relative to cash and other short-term investments.

These SBA loans are originated by other financial institutions outside of the Company’s primary market area and are purchased with servicing retained by the seller.

Because the purchased portions are fully guaranteed by the U.S.

government, they carry minimal credit risk.

At March 31, 2025, the Company’s purchased SBA loan portfolio was $46.7 million compared to $51.0 million at March 31, 2024.

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For additional information on our goodwill impairment testing, see “Goodwill Valuation” included in this Item 7.

Deposits decreased $33.5 million to $1.2 billion at March 31, 2024 compared to $1.3 billion at March 31, 2023 due to increased competition, pricing and an overall decrease in market liquidity.

The decrease in deposits was attributable to reductions in regular savings accounts of $62.5 million, non-interest checking accounts of $55.9 million and money market accounts of $12.6 million.

These decreases were partially offset by increases of $62.1 million in certificates of deposit accounts and $35.3 million in interest checking accounts.

Deposits totaled $1.23 billion at both March 31, 2025 and 2024.

While overall deposit levels remained stable, there was a shift in the composition of the deposits.

Increases in certificates of deposits of $36.5 million and money market accounts of $26.9 million were partially offset by decreases in non-interest checking accounts of $33.6 million, regular savings accounts of $24.4 million, and interest checking accounts of $4.8 million.

The migration away from lower- or non-interest-bearing accounts toward time deposits and money market products is consistent with industry trends, as depositors seek to optimize returns on their funds.

The Company had no wholesale-brokered deposits at March 31, 2025 and 2024.

Core branch deposits accounted for 98.1% of total deposits at March 31, 2025 compared to 98.0% at March 31, 2024.

The Company plans to continue its focus on core deposits and on building customer relationships as opposed to obtaining deposits through the wholesale markets.

FHLB advances decreased $35.5 million to $88.3 million at March 31, 2024 compared to $123.8 million at March 31, 2023, and was comprised of overnight advances.

FHLB advances were $123.8 million at March 31, 2023 and were comprised of overnight advances and a short-term borrowing of $73.8 million and $50.0 million, respectively.

Shareholders’ equity increased $349,000 to $155.6 million at March 31, 2024 from $155.2 million at March 31, 2023.

The increase was mainly attributable to the increase in the accumulated other comprehensive income related to the change in unrealized holding losses on securities available for sale, net of tax, of $2.2 million and net income of $3.8 million during fiscal year 2024.

These increases were partially offset by cash dividend payments totaling $5.1 million and the repurchase of 109,162 shares of common stock totaling $577,000.

The Company remains focused on building and retaining core deposit relationships through targeted client engagement strategies and competitive product offerings, rather than relying on wholesale funding sources.

FHLB advances decreased $11.9 million to $76.4 million at March 31, 2025 compared to $88.3 million at March 31, 2024.

FHLB advances at March 31, 2025 were comprised of overnight advances and short-term borrowings of $51.4 million and $25.0 million, respectively.

In contrast, all FHLB advances at March 31, 2024 were comprised entirely of overnight advances.

While overall FHLB borrowing declined, the Company continued to strategically utilize available FHLB advances, particularly short-tern advances, to support loan originations and manage liquidity in accordance with its asset/liability objectives.

Shareholders’ equity increased $4.4 million to $160.0 million at March 31, 2025 from $155.6 million at March 31, 2024.

The increase was mainly attributable to net income of $4.9 million recorded during fiscal year 2025 and an improvement in other comprehensive income of $2.8 million, which reflected a reduction in unrealized holding losses on securities available for sale, net of tax.

These increases were partially offset by cash dividend payments totaling $1.7 million and the repurchase of 358,631 shares of common stock at a total cost of $2.0 million.

Comparison of Operating Results for the Years Ended March 31, 2025 and 2024

Net income decreased $14.3 million or 79.0% to $3.8 million, or $0.18 per diluted share, for the fiscal year ended March 31, 2024, compared to $18.1 million, or $0.83 per diluted share, for the fiscal year ended March 31, 2023.

The decrease was primarily due to a $13.5 million decrease in net interest income before provision for credit losses resulting from higher funding costs and a $4.4 million increase in non-interest expense, partially offset by a $750,000 decrease in the provision for credit losses.

Additionally, during the fourth quarter of fiscal 2024, the Company restructured a portion of the balance sheet by selling approximately $46.2 million of its lower-yielding available for sale investment securities and utilizing the proceeds totaling $43.5 million to repay higher-cost FHLB advances.

The total pre-tax loss of this transaction was $2.7 million, with a tax benefit of $655,000, resulting in an after-tax impact of $2.1 million.

Net income was $4.9 million, or $0.23 per diluted share, for the fiscal year ended March 31, 2025, compared to $3.8 million, or $0.18 per diluted share, for the fiscal year ended March 31, 2024.

The Company’s net income increased primarily as a result of an increase in interest income of $2.4 million and non-interest income on $4.0 million.

The increase in non-interest income was primarily due to a loss on sales of available for sale investment securities of $2.7 million as part of a balance sheet restructure completed during the fourth quarter of fiscal 2024, that was not present during fiscal year ended March 31, 2025.

In addition, net income was also impacted by an increase in interest expense of $4.1 million for fiscal year ended March 31, 2025 compared to the prior fiscal year due to increased interest paid on deposits, partially offset by a decrease in interest paid on borrowings.

Net Interest Income.

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The Company’s results of operations are also significantly affected by general economic and competitive conditions, particularly changes in market interest rates, government legislation and regulation, and monetary and fiscal policies.

Net interest income for fiscal year 2024 decreased $13.5 million, or 26.2%, to $38.1 million compared to $51.6 million in fiscal year 2023.

The decrease was primarily due to increased interest expense on deposits and borrowings.

The net interest margin for the fiscal year ended March 31, 2024 was 2.56% compared to 3.26% for the prior fiscal year.

The decrease in the net interest margin was primarily attributable the increase in interest expense, partially offset by a decrease in total average interest earning assets.

Net interest income for fiscal 2025 decreased $1.7 million, or 4.57%, to $36.3 million compared to $38.1 million in fiscal 2024.

The decrease was primarily due to increased interest expense on deposits.

Net interest margin for the fiscal year ended March 31, 2025 was 2.54% compared to 2.56% for the prior fiscal year.

The decrease in the net interest margin was primarily attributable the increase in interest expense on deposits and the decrease in total average interest earning assets.

Interest and Dividend Income.

Interest and dividend income increased $889,000 to $56.6 million for the fiscal year ended March 31, 2024 from $55.7 million for the fiscal year ended March 31, 2023.

The increase was primarily related to the increase in interest and fees on loans receivable due to the overall increase in the yield earned on loans and, to a lesser extent, an increase in the average balance of net loans.

Interest and fees on loans receivable increased $1.3 million to $46.0 million during the year ended March 31, 2024 compared to $44.7 million during the year ended March 31, 2023.

The average yield on non-mortgage loans increased 48 basis points to 4.56% while the average yield on mortgage loans decreased one basis point to 4.55% for the fiscal year ended March 31, 2024 compared to the fiscal year ended March 31, 2023.

The average balance of loans receivable increased $4.4 million to $1.01 billion for the fiscal year ended March 31, 2024 compared to the prior fiscal year, with the average balance of non-mortgage loans increasing $6.4 million to $252.6 million and the average balance of mortgage loans decreasing $2.0 million to $758.8 million.

Interest income earned on investment securities increased $186,000, or 2.0%, to $9.3 million for the fiscal year ended March 31, 2024 from $9.1 million for the fiscal year ended March 31, 2023 due to a nine basis point increase in the yield to 2.02%.

As previously mentioned, the Company restructured a portion of its balance sheet during the fourth quarter of fiscal 2024 by selling approximately $46.2 million of its lower-yielding available for sale investment securities and utilizing the proceeds from the sale to repay higher-cost FHLB advances.

The average balance of investment securities was $461.1 million during fiscal 2024 compared to $472.4 million during fiscal 2023.

Interest earned on other earning assets increased $623,000 due to the increase in the average yield earned on other earning assets, which increased 568 basis points to 8.47% for the year ended March 31, 2024 compared to 2.79% for the prior fiscal year.

Additionally, the average balance of other earning assets increased to $8.6 million for the year ended March 31, 2024 compared to $3.7 million for the year ended March 31, 2023.

The increase in the average balance of other assets was primarily due to the increase in the average balance of FHLB stock due to the required purchase of activity stock in connection with increases in average outstanding FHLB advances, resulting in higher dividends received from the FHLB.

Interest earned on interest-bearing deposits in other banks decreased $1.2 million to $566,000 for the year ended March 31, 2024 compared to $1.8 million during the prior fiscal year.

The decrease was due to a decrease in the average balance to $11.0 million during fiscal 2024 compared to $100.7 during fiscal 2023, partially offset by a 340 basis point increase in the yield earned on such deposits to 5.16% for fiscal 2024 compared to 1.76% for fiscal 2023.

The decrease in the average balance was primarily due to the decrease in excess cash held at the FRB due to the decrease in deposits, while the increase in the yield on interest-bearing deposits in other banks was due to the increases in the federal funds target rate by the Federal Reserve that have occurred since March 2022.

Interest and dividend income increased $2.4 million to $59.0 million for the fiscal year ended March 31, 2025 from $56.6 million for the fiscal year ended March 31, 2024.

The increase was primarily related to the increase in interest and fees on loans receivable due to the overall increase in average balance of and yield on total net loans.

Interest and fees on loans receivable increased $4.6 million to $50.6 million at March 31, 2025 compared to $46.0 million at March 31, 2024.

The average balance of loans receivable increased $33.0 million to $1.04 billion compared to $1.01 billion at March 31, 2024.

The average yield on loans increased 30 basis points to 4.85% at March 31, 2025 compared to 4.55% at March 31, 2024.

Interest earned on investment securities decreased $2.1 million for the fiscal year ended March 31, 2025, compared to the prior fiscal year.

The decrease was primarily the result of a $91.0 million decline in the average balance of investment securities to $370.0 million for fiscal year ended March 31, 2025, compared to $461.1 million for fiscal year ended March 31, 2024.

This decline reflects, in part, the Company’s balance sheet restructuring during the fourth quarter of fiscal 2024, which included the sale of approximately $46.2 million of lower-yielding available for sale investment securities.

The remaining decrease in the investment portfolio resulted from normal paydowns and maturities.

The average yield on investment securities was 1.96% for the fiscal year ended March 31, 2025 compared to 2.02% for the prior fiscal year.

Interest Expense.

Interest expense for the fiscal year ended March 31, 2025 totaled $22.6 million, a $4.1 million or 22.46% increase from $18.5 million for the fiscal year ended March 31, 2024.

The increase was primarily the result of a 140 basis point increase in the weighted average interest rate on interest-bearing liabilities and a $125.5 million increase in the average balance of FHLB advances for the fiscal year ended March 31, 2024 compared to the prior fiscal year.

The weighted average interest rate on interest-bearing deposits increased 81 basis points to 0.97% for the fiscal year ended March 31, 2024 from 0.16% for the prior fiscal year.

In addition, while the overall average balance of interest-bearing deposits decreased $113.4 million, or 11.7% to $852.3 million for the fiscal year ended March 31, 2024 compared to $965.7 million for the fiscal year ended March 31, 2023,the average balance of higher costing certificates of deposit increased $53.6 million or 51.9% to $157.1 million for the fiscal year ended March 31, 2024 compared to $103.5 million for the fiscal year ended March 31, 2023.

Interest expense on borrowings increased $7.6 million for the fiscal year ended March 31, 2024 compared to the prior fiscal year due primarily to an increase in the average balance of FHLB advances.

The average balance of FHLB advances increased to $146.6 million for the fiscal year ended March 31, 2024 compared to $21.0 million for the same period in the prior year.

The weighted average interest rate on FHLB advances increased to 5.40% for the fiscal year ended March 31, 2024 compared to 4.88% for the prior fiscal year.

Similarly, the weighted average interest rate on the junior subordinated debentures increased 273 basis points to 7.82% for the fiscal year ended March 31, 2024 compared to 5.09% for the prior fiscal year.

Interest expense on deposits increased $7.0 million for fiscal year ended March 31, 2025, compared to the prior fiscal year primarily due to the increase in the average rates paid on all deposit accounts, as well as an increase in the average balance of certificates of deposits.

The average rate paid on certificates of deposit increased 91 basis points to 3.78% for the fiscal year ended March 31, 2025 compared to 2.87% for the prior fiscal year.

The average balance of certificates of deposit increased $64.6 million for the fiscal year ended March 31, 2025 compared to the prior fiscal year.

The average rate paid on all interest bearing deposits increased 77 basis points to 1.74% for fiscal year ended March 31, 2025, compared to 0.97% for the prior fiscal year.

Interest expense on borrowings decreased $2.9 million for the fiscal year ended March 31, 2025 compared to the prior fiscal year due primarily to a decrease in the average balance of FHLB advances.

The average balance of FHLB advances decreased to $99.0 million for fiscal year ended March 31, 2025 compared to $146.6 million for the same period in the prior year.

The weighted average interest rate on FHLB advances decreased to 5.17% for the fiscal year ended March 31, 2025 compared to 5.40% for the prior fiscal year.

Provision for credit losses .

The Company recorded no provision or recapture of credit losses for the fiscal year ended March 31, 2024 compared to a provision for loan losses of $750,000 under the prior incurred loss method for the fiscal year ended March 31, 2023.

The provision for loan losses for the fiscal year 2023 was due to an isolated loan downgrade that affected the allowance for loan losses.

The Company adopted the CECL methodology as of April 1, 2023, which resulted in a one-time upward adjustment to the ACL of $42,000, and an after-tax decrease to opening retained earnings of $53,000.

All amounts prior to April 1, 2023 were calculated using the previous incurred loss methodology to compute our allowance for loan losses, which is not directly comparable to the new CECL methodology.

The lack of provision for credit losses for the fiscal year ended March 31, 2024 also reflects assumptions related to our forecast concerning the economic environment as a result of local, national and global events, including recent bank failures.

In addition, expected loss estimates consider various factors, including customer-specific information, changes in risk ratings, projected delinquencies, and the impact of economic conditions on borrowers' ability to repay.

The Company recorded a provision for credit losses of $100,000 for the fiscal year ended March 31, 2025 compared to no provision for credit losses for the fiscal year ended March 31, 2024.

The provision recorded in fiscal 2025, primarily reflects growth in the loan portfolio.

In contrast, the absence of a provision in fiscal 2024 was based on management’s assumptions related to the economic outlook, including the impact of national and global events, such as regional bank failures, which influenced the forecast at that time.

Expected credit loss estimates incorporate a variety of qualitative and quantitative factors, including borrower-specific information, changes in internal risk ratings, projected delinquencies, and the anticipated effects of economic conditions on borrowers' ability to repay.

At March 31, 2025, the Company had an ACL of $15.4 million, or 1.45% of total loans, compared to $15.4 million, or 1.50% of total loans at March 31, 2024.

Net recoveries totaled $13,000 for the fiscal year ended March 31, 2024, compared to $36,000 for the prior fiscal year.

Net recoveries to average net loans were insignificant for the fiscal years ended March 31, 2024 and 2023, respectively.

Nonperforming loans were $178,000 at March 31, 2024, compared to $1.9 million at March 31, 2023.

The ratio of the ACL for loans to nonperforming loans was 8,631.46% at March 31, 2024 compared to 826.62% at March 31, 2023.

Based on a comprehensive analysis, management believes the ACL to be adequate to cover expected credit losses inherent in the loan portfolio at March 31, 2024.

See Note 4 of the Notes to Consolidated Financial Statements in Item 8 of this Form 10-K for additional information regarding the allowance for credit losses.

Net charge-offs totaled $90,000 for the fiscal year ended March 31, 2025, compared to net recoveries of $13,000 for the prior fiscal year.

At March 31, 2025, the Company’s ACL was more than sufficient to cover nonperforming loans, with a coverage ratio exceeding 9,900%, compared to 8,600% at the end of the prior fiscal year.

Non-Interest Income.

Non-interest income decreased $2.0 million or 16.4% to $10.2 million for the fiscal year ended March 31, 2024 from $12.2 million for fiscal year 2023.

The decrease is primarily due to the $2.7 million loss on sale of available for sale investment securities resulting from the Company’s balance sheet restructuring in the fourth quarter of fiscal 2024.

Other changes in non-interest income during the fiscal year ended March 31, 2024 compared to the same prior year period include a decrease in fees and service charges of $93,000 due to a decrease in fintech referral partnership income offset by an increase in asset management fees of $594,000 due to an increase in custody fees of $277,000, irrevocable trust fees of $185,000 and living trust fees of $126,000 partially offset by a decrease in estate guardianship fee and trust tax prep fees of $49,000 and $37,000, respectively.

In addition, income from BOLI increased $70,000 and other non-interest income increased $206,000 compared to the prior year.

Non-interest income increased $4.0 million to $14.3 million for the fiscal year ended March 31, 2025 from $10.2 million for fiscal year 2024.

The increase was primarily attributable to the absence of a $2.7 million loss on the sale of available for sale investment securities that occurred in fiscal 2024 as part of a balance sheet restructuring.

In addition, fiscal 2025 results included approximately $844,000 in other non-interest income related to a legal expense recovery from settled litigation in the prior year and $261,000 in income related to a BOLI death benefit.

The Company also recorded an increase of $578,000 in asset management fee income.

These increases were partially offset by a $267,000 decrease in fees and service charges, due to lower transaction activity.

Non-Interest Expense.

Non-interest expense increased $4.4 million or 11.2% to $43.7 million for the year ended March 31, 2024 from $39.4 million for fiscal year 2023.

The increase was primarily due to an increase in other expenses of $2.6 million, which included litigation expenses of $2.3 million.

In connection with a proposed global settlement of some ongoing litigation, the Company recorded a $2.3 million expense in other non-interest expense for the fourth fiscal quarter of 2024, reflecting an estimate of litigation costs that exceed the Company’s insurance coverage.

The settlement of the litigation remains subject to the approval of the court.

Additionally, occupancy and depreciation expense for the fiscal year ended March 31, 2024 increased $701,000 mainly due to increases in depreciation and repair and maintenance expenses as the Company continues to update and modernize certain branch locations.

Advertising and marketing expense increased $353,000 due to expenses related to implementing a high-performance growth deposit strategy and additional sponsorships and events when compared to the prior fiscal year.

Additionally, salaries and employee benefits increased $222,000 over the prior fiscal year due to increases in compensation expenses, group insurance and personnel expense, offset by a decrease in bonus expense and retail incentives.

Non-interest expense increased $535,000 million to $44.3 million for the year ended March 31, 2025 from $43.7 million for fiscal 2024.

The increase was primarily due to higher salaries and employee benefits of $1.9 million, which reflected merit-based salary adjustments.

Additionally, occupancy and depreciation expense increased $688,000, mainly due to higher computer software, depreciation, repair and maintenance expenses as the Company continues to update and modernize certain branch locations.

A one-time lease termination fee was also incurred in September 2024 in connection with the Company’s purchase of its Orchards branch location.

Professional fees increased $425,000 due to additional consulting fees.

These increases were partially offset by a $2.6 million decrease in other non-interest expense, primarily reflecting the absence of litigation related accruals that were recognized in the prior fiscal year, as well as higher recoveries of previously expensed fraud losses.

This decrease was partially offset by increased accruals for business and occupation taxes.

For further information regarding litigation, see “Note 16.

Commitments and Contingencies.”

Income Taxes.

The provision for income taxes was $802,000 and $5.6 million for the fiscal years ended March 31, 2024 and 2023, respectively.

The provision for income taxes was $1.3 million and $802,000 for the fiscal years ended March 31, 2025 and 2024, respectively.

The increase in the provision for income taxes was due to higher pre-tax income for the fiscal year ended March 31, 2025 compared to the same period in the prior year.

The effective tax rate was 21.4% for the fiscal year ended March 31, 2025 compared to 17.8% for the fiscal year ended March 31, 2024.

The decrease in the provision for income taxes and effective tax rate is attributable to lower pre-tax income for the fiscal year ended March 31, 2024 compared to the same period in the prior year.

The effective tax rate may be affected by the effects of apportioned income for state and local jurisdictions where we do business.

At March 31, 2024, the Company had a deferred tax asset of $9.8 million.

As of March 31, 2024, management deemed that a deferred tax asset valuation allowance related to the Company’s deferred tax asset was not necessary.

See Note 10 of the Notes to Consolidated Financial Statements contained in Item 8 of this Form 10-K for further discussion of the Company’s income taxes.

The year-over-year increase in the effective tax rate was primarily attributable to changes in the mix of taxable income across state and local jurisdictions, which impacts the overall apportionment of income and related tax liability.

At March 31, 2025, the Company reported a net deferred tax asset of $8.6 million.

Management evaluated the realizability of this asset and concluded that no valuation allowance was required, as it is more likely than not that the deferred tax asset will be fully realized based on projected future taxable income and available tax planning strategies.

See “Note 10.

Income Taxes” for further discussion of the Company’s income taxes.

Comparison of Operating Results for the Years Ended March 31, 2024 and 2023

See Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the fiscal year ended March 31, 2024, previously filed with the SEC.

Average Balance Sheet .

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(1) Interest on municipal securities is presented on a fully tax-equivalent basis.

Comparison of Operating Results for the Years Ended March 31, 2023 and 2022

See Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the fiscal year ended March 31, 2024, previously filed with the SEC.

Asset and Liability Management

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The strategy for liabilities has been to shorten the maturities for both deposits and borrowings.

The longer-term objective is to increase the proportion of non-interest-bearing demand deposits, low interest- bearing demand deposits, money market accounts, and savings deposits relative to certificates of deposit to reduce our overall cost of funds.

The longer-term objective is to increase the proportion of non-interest-bearing demand deposits, low interest- bearing

demand deposits, money market accounts, and savings deposits relative to certificates of deposit to reduce our overall cost of funds.

Consumer loans, such as home equity lines of credit and installment loans, commercial loans and construction loans typically have shorter terms and higher yields than real estate one-to-four family loans, and accordingly reduce the Company’s exposure to fluctuations in interest rates.

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Liquidity is essential to our business.

The objective of the Bank’s liquidity management is to maintain ample cash flows to meet obligations for depositor withdrawals, to fund the borrowing needs of loan customers, and to fund ongoing operations.

The objective of the Bank’s liquidity management is to maintain ample cash flows to meet obligations for depositor withdrawals, to fund the borrowing needs of loan clients, and to fund ongoing operations.

Core relationship deposits are the primary source of the Bank’s liquidity.

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These sources of funds may be used on a long or short-term basis to compensate for a reduction in other sources of funds or on a long-term basis to support lending activities.

The Company’s primary sources of funds are customer deposits, proceeds from principal and interest payments on loans, proceeds from the sale of loans, maturing securities, FHLB advances and FRB borrowings.

The Company’s primary sources of funds are client deposits, proceeds from principal and interest payments on loans, proceeds from the sale of loans, maturing securities, FHLB advances and FRB borrowings.

While maturities and scheduled amortization of loans and securities are a predictable source of funds, deposit flows and prepayment of mortgage loans and mortgage-backed securities are greatly influenced by general interest rates, economic conditions and competition.

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The Company must maintain an adequate level of liquidity to ensure the availability of sufficient funds for loan originations, deposit withdrawals and continuing operations, satisfy other financial commitments and take advantage of investment opportunities.

During the fiscal year ended March 31, 2024, the Bank used its sources of funds primarily to fund deposit withdrawals resulting from increased competition and pricing pressure and to fund loan commitments.

During the fiscal year ended March 31, 2025, deposits remained relatively stable;

however, the Bank utilized its funding sources primarily to support loan commitments and manage deposit withdrawals influenced by competitive and pricing pressures.

At March 31, 2025, cash and cash equivalents and available for sale investment securities totaled $148.9 million, or 9.8% of total assets.

Management believes that the Company’s security portfolio is of high quality and its securities would therefore be marketable.

The levels of these assets are dependent on the Company’s operating, financing, lending, and investing activities during any given period.

Management believes that the Company’s security portfolio is of high quality and generally marketable.

The level of liquid assets is influenced by the Company’s operating, financing, lending, and investing activities during any given period.

The Bank generally maintains sufficient cash and short-term investments to meet short-term liquidity needs.

however, its primary liquidity management practice is to manage short-term borrowings, consistent with its asset/liability objectives.

In addition to these primary sources of funds, the Bank has several secondary borrowing sources available to meet potential funding

requirements, including FRB borrowings and FHLB advances.

At March 31, 2024, the Bank had no advances from the FRB and maintains a credit facility with the FRB with available borrowing capacity of $284.5 million, subject to sufficient collateral.

At March 31, 2024, FHLB advances totaled $88.3 million and the Bank had an available borrowing capacity of $299.5 million, subject to sufficient collateral and stock investment.

Its primary liquidity management strategy is to manage short-term borrowings, consistent with its asset/liability objectives.

In addition to these primary sources of funds, the Bank has several secondary borrowing sources available to meet potential funding requirements, including FRB borrowings and FHLB advances.

At March 31, 2025, the Bank had no advances from the FRB and maintained a credit facility with the FRB with available borrowing capacity of $297.3 million, subject to sufficient collateral.

FHLB advances totaled $76.4 million at the same date, with additional borrowing capacity of $174.0 million, also subject to adequate collateral and stock investment.

At March 31, 2025, the Bank had sufficient unpledged collateral to allow it to utilize its available borrowing capacity from the FRB and the FHLB.

Borrowing capacity may, however, fluctuate based on acceptability and risk rating of loan collateral and counterparties could adjust discount rates applied to such collateral at their discretion.

During the fiscal years ended March 31, 2024 and 2023, deposits decreased $33.5 million and $268.7 million, respectively.

Borrowing capacity may, however, fluctuate based on the quality and risk rating of pledged loan collateral, and counterparties may adjust discount rates applied to such collateral at their discretion.

During the fiscal years ended March 31, 2025, deposits increased $649,000 compared to a decrease of $33.5 million for the fiscal year ended March 31, 2024.

An additional source of wholesale funding includes brokered certificates of deposit.

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The combination of all the Bank’s funding sources gives the Bank available liquidity of $812.6 million, or 53.7% of total assets at March 31, 2025.

At March 31, 2024, the Company had total commitments of $160.8 million, which includes commitments to extend credit of $10.0 million, unused lines of credit totaling $93.3 million, undisbursed construction loans totaling $55.9 million, and standby letters of credit totaling $1.6 million.

At March 31, 2025, the Company had total commitments of $102.6 million, which included commitments to extend credit of $5.5 million, unused lines of credit totaling $79.0 million, undisbursed construction loans totaling $16.6 million, and standby letters of credit totaling $1.6 million.

For additional information regarding future financial commitments, see Note 16 of the Notes to Consolidated Financial Statements contained in Item 8 of this Form 10-K.

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The Company incurs capital expenditures on an ongoing basis to expand and improve our product offerings, enhance and modernize our technology infrastructure, and to introduce new technology-based products to compete effectively in our markets.

We evaluate capital expenditure projects based on a variety of factors, including expected strategic impacts (such as forecasted impact on revenue growth, productivity, expenses, service levels and customer retention) and our expected return on investment.

We evaluate capital expenditure projects based on a variety of factors, including expected strategic impacts (such as forecasted impact on revenue growth, productivity, expenses, service levels and client retention) and our expected return on investment.

The amount of capital investment is influenced by, among other things, current and projected demand for our services and products, cash flow generated by operating activities, cash required for other purposes and regulatory considerations.

Based on our current capital allocation objectives, during fiscal 2025 we expect cash expenditures of approximately $838,000 for capital investment in premises and equipment.

Based on our current capital allocation objectives, during fiscal 2026 we expect cash expenditures of approximately $2.1 million for capital investment in premises and equipment.

Riverview, as a separate legal entity from the Bank, must provide for its own liquidity.

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The current quarterly common stock dividend rate is $0.02 per share, as approved by the Board of Directors, which management believes is a dividend rate per share which enables the Company to balance our multiple objectives of managing and investing in the Bank and returning a substantial portion of the Company’s cash to its shareholders.

Assuming continued payment during fiscal year 2025 at this rate of $0.06 per share, average total dividends paid each quarter would be approximately $1.3 million based on the number of the Company’s outstanding shares at March 31, 2024.

Assuming continued payment during fiscal year 2026 at this rate of $0.02 per share, average total dividends paid each quarter would be approximately $420,000 based on the number of the Company’s outstanding shares at March 31, 2025.

At March 31, 2025, Riverview had $5.7 million in cash to meet its liquidity needs.

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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 7. Management’s Discussion and Analysis