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Item 7. Management’s Discussion and Analysis

2026-06-12 compared with 2025-06-12 · 111 added, 128 removed, 341 unchanged (41% of the section changed)

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The Company has identified policies that due to the significant level of judgement, estimation and assumptions inherent in those policies are critical to an understanding of the Company’s consolidated financial statements.

These policies include our accounting policies related to the methodology for the determination of the ACL, the valuation of investment securities and goodwill valuations.

These policies include our accounting policies related to the methodology for the determination of the ACL, fair value accounting and measurement, and goodwill valuation.

The following is a discussion of the critical accounting estimates involved with those accounting policies.

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The ACL is considered a critical accounting policy by management because of the high degree of judgment involved, the subjectivity of the assumptions used, and the potential for changes in the economic environment that could result in changes to the amount of the recorded ACL.

The provision for credit losses reflects the amount required to maintain the ACL at an appropriate level based upon management’s evaluation of the adequacy of general and specific loss reserves.

The provision for credit losses reflects the amount required to maintain the ACL at an appropriate level based upon management’s evaluation of the adequacy of collectively and individually evaluated loan components.

Determining the amount of the ACL involves a high degree of judgment.

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The specific component relates to loans that have been individually evaluated because all contractual amounts of principal and interest will not be paid as scheduled.

Based on the individual analysis, a specific reserve may be established.

Based on the individual analysis, an individual reserve may be established.

The ACL is based upon factors and trends identified by us at the time financial statements are prepared.

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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.

These Level 3 assets are valued using significant unobservable inputs that are supported by little or no market activity and that are significant to the estimated fair value of the assets.

These Level 3 assets are certain loans measured for impairment for which there is neither an active market for identical assets from which to determine fair value, nor is there sufficient, current market information about similar assets to use as observable, corroborated data for all significant inputs in a valuation model.

Under these circumstances, the estimated fair values of these assets are determined using pricing models, discounted cash flow methodologies, appraisals, and other valuation methods in accordance with accounting standards, for which the determination of fair value requires significant management judgment or estimation.

Valuations using models or other techniques are dependent upon assumptions used for the significant inputs.

Where market data is available, the inputs used for valuation reflect that information as of the valuation date.

In periods of extreme volatility, lessened liquidity or in illiquid markets, there may be more variability in market pricing or a lack of market data to use in the valuation process.

Judgment is then applied in formulating those inputs.

Certain loans included in the loan portfolio were evaluated individually for a loss reserve at March 31, 2025.

Accordingly, loans evaluated individually were classified as Level 3 in the fair value hierarchy as there is no active market for these loans.

Loans that are individually evaluated require judgment and estimates, and the eventual outcomes may differ from those estimates.

A reserve for such loans is determined based on a number of factors, including recent independent appraisals which are further reduced for estimated selling costs or by estimating the present value of expected future cash flows, discounted at the loan’s effective interest rate.

For additional information on our Level 1, 2 and 3 fair value measurements see Note 14 of the Notes to Consolidated Financial Statements contained in Item 8 of this Form 10-K.

We use fair value measurements to record certain financial assets and liabilities at their estimated fair value.

A hierarchical disclosure framework associated with the level of pricing observability is utilized in measuring financial instruments at fair value.

The degree of judgement utilized in measuring the fair value of financial instruments generally correlates to the level of pricing observability.

Financial instruments with readily available active quoted prices or for which fair value can be measured from actively quoted prices generally will have a higher degree of pricing observability and a lesser degree of judgement utilized in measuring fair value.

Conversely, financial instruments rarely traded or not quoted will generally have little or no pricing observability and a higher degree of judgement utilized in measuring fair value.

Determining the fair value of financial instruments with unobservable inputs requires a significant amount of judgement.

For more information regarding fair value accounting, see Note 14 of the Notes to Consolidated Financial Statements contained in Item 8 of this Form 10-K.

Goodwill Valuation

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If the fair value exceeds the carrying value, goodwill at the reporting unit level is not considered impaired and no additional analysis is necessary.

If the carrying value of the reporting unit is greater than its fair value, there is an indication that impairment may exist and additional analysis must be performed to measure the amount of impairment loss, if any.

The amount of impairment is determined by comparing the implied fair value of the reporting unit’s goodwill to the carrying value of the goodwill in the same manner as if the reporting unit was being acquired in a business combination.

Specifically, the Company would allocate the fair value to all of the assets and liabilities of the reporting unit, including unrecognized intangible assets, in a hypothetical analysis that would calculate the implied fair value of goodwill.

If the implied fair value of goodwill is less than the recorded goodwill, the Company would record an impairment charge for the difference.

If the carrying value of the reporting unit is greater than its fair value, the amount of impairment loss is measured as the amount by which the carrying value of the reporting unit exceeds its fair value, not to exceed the total amount of goodwill allocated to the reporting unit.

A significant amount of judgment is involved in determining if an indicator of impairment has occurred.

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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 0.90 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.

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 1.0 times book value and a market multiple of 1.1 times tangible book value, due to comparable bank volatility and its belief that earnings multiples do not give meaningful results.

The Company calculated a fair value of its reporting unit of $141.0 million using the corporate value approach, $199.2 million using the income

approach, $250.0 million using the whole bank transaction approach and $232.0 million using the market approach, with a final concluded value of $218.0 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 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, 2026, 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.

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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 .

(i) a sustained decline in the Company’s stock price or that of peer institutions, (ii) revenue declines beyond current forecasts, or (iii) significant adverse changes in the operating environment for the financial industry.

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.

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Operating Strategy and Selected Financial Information

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

Fiscal year 2026 marked the 102 nd 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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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.

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.

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

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 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.

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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.

In particular, the Company seeks to increase 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.

As of March 31, 2026, core branch deposits increased $25.2 million compared to March 31, 2025, reflecting the Company’s concentrated efforts to retain and grow deposits in light of the strong competition within its market area.

Core branch deposits accounted for 98.4% of total deposits at March 31, 2026 compared to 98.1% at March 31, 2025.

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Net interest income

Provision for credit/loan losses (1)

Net interest income after provision for credit/loan losses

Provision for credit losses

Net interest income after provision for credit losses

Other non-interest income

Non-interest expense

Income before income taxes

Provision for income taxes

Earnings per share:

(Loss) income before income taxes

(Benefit) provision for income taxes

Net (loss) income

(Loss) earnings per share:

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

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

Allowance for credit losses to total loans at end of period

Allowance for credit losses to nonperforming loans

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, 2026 and 2025

Cash and cash equivalents, including interest-earning deposits in other banks, totaled $116.9 million at March 31, 2026 compared to $29.4 million at March 31, 2025.

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 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 both March 31, 2025 and 2024.

The increase reflects the proceeds received from the sale of investment securities during the fourth quarter of fiscal year 2026 that had not yet been fully redeployed into loans or investment securities as of year-end.

Pending redeployment, these funds are invested in interest-earning deposits and other short-term instruments.

The Company intends to deploy these funds into loans and investment securities in accordance with its asset/liability management objectives as market conditions and loan demand warrant.

The Company's cash balances typically fluctuate based upon funding needs, deposit activity and investment securities activity.

Investment securities totaled $154.8 million and $322.5 million at March 31, 2026 and 2025, respectively.

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

The decrease was primarily due to investment securities sales of $149.3 million in the fourth quarter of fiscal year 2026 in addition to normal pay downs, calls and maturities, partially offset by purchases of investment securities totaling $25.5 million.

The sale of investment securities, while resulting in a pre-tax loss of $11.4 million, was undertaken to reposition the portfolio away from lower-yielding securities and improve the ongoing yield of the investment portfolio.

Management estimates the economic loss will be recovered through improved portfolio earnings within approximately 3.5 years, although actual results will depend on market conditions and the yield at which proceeds are redeployed, and there can be no assurance that this estimate will prove accurate.

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

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Loans receivable, net, totaled $1.08 billion at March 31, 2026, compared to $1.05 billion at March 31, 2025, an increase of $30.2 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.

The increase was primarily attributable to increases in commercial real estate loans of $19.4 million, other installment loans of $13.1 million, multi-family loans of $12.2 million and land loans of $4.5 million.

These increases were partially offset by a decrease in commercial business loans of $13.1 million and real estate construction loans of $5.1 million.

The Company no longer funds one-to-four family mortgage loans but may occasionally purchase such loans consistent with its asset/liability objectives.

Additionally, the Company purchases loans originated by third parties outside the Company’s primary market area to supplement originations and diversify the portfolio.

Purchased loans totaled $43.6 million at March 31, 2026 compared to $35.3 million at March 31, 2025, an increase of $8.3 million.

This increase was primarily attributable to consumer loan purchases totaling $21.1 million, partially offset by normal paydowns and payoffs.

The Company also purchases the guaranteed portion of SBA loans to help portfolio diversification, supplement originations and generate higher yields than overnight cash or other short-term investments.

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

At March 31, 2026, the Company’s purchased SBA loan portfolio was $42.7 million compared to $47.4 million at March 31, 2025

Goodwill was $27.1 million at both March 31, 2025, and 2024.

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

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

Deposits totaled $1.25 billion at March 31, 2026 compared to $1.23 billion at March 31,2025.

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.

Increases in interest checking of $31.4 million, certificates of deposit of $21.2 million and money market accounts of $6.1 million were partially offset by decreases in non-interest checking accounts of $22.0 million and regular savings accounts of $14.8 million.

The migration away from lower- or non-interest-bearing accounts toward interest checking, 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, 2026 and 2025.

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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.

Accrued expenses and other liabilities increased $3.3 million to $18.1 million at March 31, 2026 compared to $14.8 million at March 31, 2025.

The increase was primarily due to an increase in outstanding balance in Trust sweep funds of $3.3 million at March 31, 2026, which was subsequently disbursed the following business day.

FHLB advances decreased $60.3 million to $16.1 million at March 31, 2026 compared to $76.4 million at March 31, 2025, as the Company used excess liquidity resulting from the sale of investment securities to pay down borrowings.

FHLB advances at March 31, 2026 were comprised entirely of overnight advances.

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

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

Shareholders’ equity decreased $14.4 million to $145.6 million at March 31, 2026 from $160.0 million at March 31, 2025.

The decrease was mainly attributable to the increase in the accumulated other comprehensive loss related to the change in unrealized holding losses on securities, net of tax, of $6.1 million, a net loss of $4.3 million, the repurchase of 514,009 shares of common stock totaling $2.7 million, and the payment of cash dividends totaling $1.7 million.

Comparison of Operating Results for the Years Ended March 31, 2026 and 2025

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 Income (Loss).

The Company reported a net loss of $4.3 million, or ($0.21) per diluted share, for the fiscal year ended March 31, 2026, compared to net income of $4.9 million, or $0.23 per diluted share, for the fiscal year ended March 31, 2025.

The net loss for the fiscal year ended March 31, 2026 was primarily due to the $11.4 million loss on sale of securities included in non-interest income, which resulted from the portfolio repositioning transaction completed in the fourth quarter of fiscal year 2026.

Absent this transaction, the Company's underlying operating performance improved year over year, primarily reflecting an increase in net interest income of $4.0 million.

Offsetting the improvement in net interest income were increases in non-interest expense of $3.4 million and provision for credit losses of $1.3 million.

The increase in net interest income was primarily due to an increase in interest and fees on loans receivable of $4.4 million and a decrease in interest expense related to interest on borrowings of $2.4 million.

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 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 income for fiscal 2026 increased $4.0 million, or 11.0%, to $40.3 million compared to $36.3 million in fiscal 2025.

The increase was due to an increase in interest and dividend income and a decrease in interest expense.

Net interest margin for the fiscal year ended March 31, 2026 was 2.86% compared to 2.54% 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.

The increase in the net interest margin was primarily attributable to both the higher average balance and yield on net loans and the decrease in the average balance and yield on FHLB advances.

Interest and Dividend Income.

Interest and dividend income increased $3.0 million to $62.0 million for the fiscal year ended March 31, 2026 from $59.0 million for the fiscal year ended March 31, 2025.

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.

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

Interest and fees on loans receivable increased $4.4 million to $55.0 million at March 31, 2026 compared to $50.6 million at March 31, 2025.

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The decrease was primarily the result of a $48.4 million decline in the average balance of investment securities to $321.6 million for fiscal year ended March 31, 2026, compared to $370.0 million for fiscal year ended March 31, 2025.

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.

This decline reflects, in part, the Company’s portfolio repositioning during the fourth quarter of fiscal 2026, which included the sale of approximately $149.3 million of lower-yielding book value investment securities.

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

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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.

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.

Interest expense for the fiscal year ended March 31, 2026 totaled $21.7 million, a $958,000 or 4.2% decrease from $22.6 million for the fiscal year ended March 31, 2025.

Interest expense on deposits increased $1.4 million for the fiscal year ended March 31, 2026, compared to the prior fiscal year, primarily due to higher average rates and balances on interest checking and money market accounts.

The average rate paid on interest checking accounts increased 23 basis points to 1.23%, while the average balance increased $35.6 million compared to the prior fiscal year.

The average rate paid on money market accounts increased 16 basis points to 2.02%, while the average balance increased $2.6 million to $226.7 million.

Partially offsetting these increases, the average rate paid on certificates of deposit decreased 33 basis points to 3.45%, reflecting the repricing of higher-rate certificates at current market rates, while the average balance increased $18.7 million to $240.4 million, resulting in certificates of deposit interest expense that was essentially unchanged from the prior fiscal year.

The average rate paid on all interest-bearing deposits increased eight basis points to 1.82% compared to 1.74% for the prior fiscal year.

Interest expense on borrowings decreased $2.4 million for the fiscal year ended March 31, 2026 compared to the prior fiscal year due primarily to both a decrease in the average balance of FHLB advances and lower rates on FHLB advances and junior subordinated debentures.

The average balance of FHLB advances decreased $31.5 million to $67.5 million, reflecting reduced reliance on borrowings as deposit balances grew and securities sale proceeds provided additional liquidity.

The average rate paid on FHLB advances decreased 76 basis points to 4.41% and the average rate paid on junior subordinated debentures decreased 93 basis points to 6.57%, both reflecting the decline in short-term market interest rates resulting from Federal Reserve rate reductions during the fiscal year.

Provision for credit losses .

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.

The Company recorded a provision for credit losses of $1.3 million for the fiscal year ended March 31, 2026 compared to $100,000 for the fiscal year ended March 31, 2025.

The provision recorded in fiscal 2026 primarily reflects growth in the loan portfolio and charge-offs recognized during the fiscal year.

During the fourth quarter of fiscal year 2026, nonperforming loans increased approximately $7.6 million, primarily due to an increase in non-accrual commercial real estate loans of approximately $7.1 million.

These loans are collateral dependent.

The increase in nonperforming loans primarily reflects the circumstances of this specific borrower rather than broader weakness in the commercial real estate loan category.

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 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.

At March 31, 2026, the ACL totaled $15.2 million, or 1.40% of total loans, compared to $15.4 million, or 1.45% of total loans at March 31, 2025.

The decline in the ACL balance reflects the $1.3 million of net charge-offs recognized during the fiscal year, partially offset by the provision recorded.

The coverage ratio of ACL to nonperforming loans was 196% at March 31, 2026 compared to 9,900% at March 31, 2025, with the decline reflecting the significant increase in nonperforming loans during the fiscal year 2026 rather than any deterioration in the overall adequacy of the ACL.

The Company continues to actively monitor the identified credit relationships and does not currently anticipate losses beyond amounts already reflected in the ACL.

Non-Interest Income.

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 income decreased $11.5 million to $2.7 million for the fiscal year ended March 31, 2026 from $14.3 million for fiscal year 2025.

The decrease was attributable to the $11.4 million loss on the sale of investment securities.

Other changes in non-interest income during the fiscal year ended March 31, 2026 compared to the same prior year period include an increase in fees and service charges of $269,000 due to higher non-sufficient fund charges and increases in asset management fees of $328,000 primarily due to increases in irrevocable trust fees of $159,000 and agency fees of $122,000.

Other non-interest income decreased $552,000 for fiscal year 2026 compared to the prior fiscal year, primarily due to $844,000 in litigation settlement recoveries recognized in fiscal year 2025 that did not recur in fiscal year 2026, partially offset by $294,000 employee retention credit in the current fiscal year.

Non-Interest Expense.

Non-interest expense increased $3.4 million to $47.7 million for the year ended March 31, 2026 from $44.3 million for fiscal 2025.

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.”

The increase was primarily due to higher salaries and employee benefits of $2.7 million, due to the expansion of our business banking teams and the filling of key positions aligned with our growth objectives.

Other non-interest expense increased $792,000 compared to prior fiscal year, primarily due to a one-time business and occupation tax assessment of $248,000 and a decrease in fraud recoveries of $243,000.

Data processing expense increased $280,000 for fiscal year 2026 compared to the prior fiscal year, reflecting continued investment in technology infrastructure.

These increases were partially offset by a decrease in marketing expenses and professional services of $219,000 and $218,000, respectively.

Income Taxes.

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 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.

The Company recorded an income tax benefit of $1.5 million for the fiscal year ended March 31, 2026 compared to a provision for income taxes of $1.3 million for the fiscal year ended March 31, 2025.

The tax benefit reflects the pre-tax loss of $5.8 million for fiscal year 2026, which was primarily driven by the $11.4 million pre-tax loss on the sale of investment securities.

The effective tax rate was (25.6%) for the fiscal year ended March 31, 2026, applied against a pre-tax loss, compared to an effective tax rate of 21.4% applied against pre-tax income for the fiscal year ended March 31, 2025.

The net deferred tax asset increased $3.5 million to $12.1 million at March 31, 2026, reflecting the tax effect of the current year pre-tax loss and the increase in unrealized losses in accumulated other comprehensive loss.

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.

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Variances that were insignificant have been allocated based upon the percentage relationship of changes in volume and changes in rate to the total net change (in thousands).

The changes noted in the table below include tax equivalent adjustments, and as a result, will not agree to the amounts reflected on the Company’s consolidated statements of income for the categories that have been adjusted to reflect tax equivalent income.

The changes noted in the table below include tax equivalent adjustments, and as a result, will not agree to the amounts reflected on the Company’s consolidated statements of income (loss) for the categories that have been adjusted to reflect tax equivalent income.

Year Ended March 31,

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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 Company’s 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 the Company’s overall cost of funds, however the deposit mix during fiscal year 2026 moved in the opposite direction as depositors sought higher-yielding products, consistent with broader industry trends.

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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Government agencies.

At March 31, 2025, the combined investment portfolio carried at $322.5 million had an average life of 5.7 years.

At March 31, 2026, the combined investment portfolio of $154.8 million had an average life of 7.1 years, reflecting the composition of the repositioned portfolio following the investment securities sales completed during the fourth quarter of fiscal year 2026.

Adjustable rate mortgage-backed securities totaled $1.8 million at March 31, 2026 compared to $2.2 million at March 31, 2025.

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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, 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.

Deposits increased $21.9 million during the fiscal year ended March 31, 2026, providing a stable funding base.

The elevated level of cash and liquid assets at March 31, 2026 reflects securities sale proceeds that had not yet been fully redeployed into loans or investment securities as of year-end.

At March 31, 2026 cash and cash equivalents and available for sale investment securities totaled $271.6 million, or 18.6% of total assets.

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

Management believes that the Company’s securities 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.

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.

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At March 31, 2026, 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 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.

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.

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

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Partially offsetting these cash outflows are scheduled loan maturities of less than one year totaling $54.7 million at March 31, 2026.

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 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 2026 we expect cash expenditures of approximately $2.1 million for capital investment in premises and equipment.

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

The Company evaluates 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 its expected return on investment.

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

Based on its current capital allocation objectives, during fiscal 2027 the Company expects cash expenditures of approximately $2.2 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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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