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Section 1: 8-K (FORM 8-K)

Form 8-K

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): October 18, 2018

 

 

Riverview Financial Corporation

(Exact name of registrant as specified in its charter)

 

 

 

Pennsylvania   001-38627   38-3917371
(State or other jurisdiction of incorporation)   (Commission File Number)   (IRS Employer Identification No.)

 

3901 North Front Street,

Harrisburg, Pennsylvania

  17110
(Address of principal executive offices)   (Zip Code)

(717) 827-4042

(Registrant’s telephone number, including area code)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2) of this chapter.)

Emerging growth company  ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

 

 

 


CURRENT REPORT ON FORM 8-K

 

Item 2.02

Results of Operations and Financial Condition.

On October 18, 2018, Riverview Financial Corporation issued a press release reporting its earnings for the three and nine months ended September 30, 2018. A copy of the press release is attached as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference.

 

Item 9.01

Financial Statements and Exhibits.

 

(a)

Financial Statements of Businesses Acquired.

None.

 

(b)

Pro Forma Financial Information.

None.

 

(c)

Shell Company Transactions.

None.

 

(d)

Exhibits.

 

Exhibit Number

  

Description

99.1

   Press release issued by Riverview Financial Corporation on October 18, 2018 announcing its earnings for the three and nine months ended September 30, 2018.


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Current Report on Form 8-K to be signed on its behalf by the undersigned, thereunto duly authorized.

 

      RIVERVIEW FINANCIAL CORPORATION
      (Registrant)
Dated: October 18, 2018       /s/ Kirk D. Fox
      Kirk D. Fox
      Chief Executive Officer
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Section 2: EX-99.1 (EX-99.1)

EX-99.1
NEWS RELEASE   Exhibit 99.1

RIVERVIEW FINANCIAL CORPORATION

REPORTS THIRD QUARTER 2018 FINANCIAL RESULTS

HARRISBURG, PA, October 18, 2018 / PRNEWSWIRE / Riverview Financial Corporation (“Riverview”) (NASDAQ: RIVE), today reported unaudited financial results at and for the three and nine months ended September 30, 2018. Riverview, which completed a merger with CBT Financial Corp. (“CBT”) on October 1, 2017, reported net income of $2.8 million, or $0.30 per basic and diluted weighted average common share, for the third quarter of 2018, compared to net income of $401 thousand, or $0.08 per basic and diluted weighted average common share, for the comparable period of 2017.

For the nine months ended September 30, 2018, Riverview reported net income of $8.4 million, or $0.92 per basic and diluted weighted average common share, compared to net income of $13 thousand, or $0.03 per basic and diluted weighted average common share, for the same period last year. The results for the first nine months ended September 30, 2018 include pre-tax merger related costs of $504 thousand. The earnings increase was primarily a result of the inclusion of the results of operations for both Riverview and CBT for the nine months ended September 30, 2018, compared to Riverview on a standalone basis for the same period last year. The year over year improvement was also a function of the recognition of higher loan interest income from achieving significant organic loan growth in 2017, excluding acquired loans from the merger, and the recognition of net accretion income on acquired assets and assumed liabilities.

In addition to evaluating its results of operations in accordance with accounting principles generally accepted in the United States of America (“GAAP”), Riverview routinely supplements its evaluation with an analysis of certain non-GAAP financial measures, such as tangible book value per share and return on average tangible stockholders’ equity. Riverview believes these non-GAAP financial measures provide information useful to investors in understanding its operating performance and trends. Where non-GAAP disclosures are used in this press release, a reconciliation to the comparable GAAP measure is provided in the accompanying tables. The non-GAAP financial measures Riverview uses may differ from the non-GAAP financial measures other financial institutions use to measure their results of operations.

HIGHLIGHTS

 

   

Riverview’s common stock began actively trading on the Global Market of the Nasdaq Stock Market LLC on August 14, 2018.

 

   

Market capitalization amounted to $123.9 million at September 30, 2018.

 

   

Annualized return on average assets, return on average stockholders’ equity and return on average tangible stockholders’ equity were 0.96%, 9.89% and 13.29%, respectively, for the third quarter of 2018.

 

   

Tangible book value per share improved $0.67 or 7.9% to $9.17 at the end of the third quarter of 2018 compared to $8.50 at year-end 2017.

 

   

Tax-equivalent net interest margin improved to 4.15% in the third quarter of 2018 compared to 3.57% for the same period last year.

 

   

For the quarter ended September 30, noninterest income totaled $2,054 thousand in 2018, an increase of $1,219 thousand from $835 thousand in 2017. For the nine months ended September 30, noninterest income increased to $6,540 thousand in 2018 compared to $2,416 thousand in 2017.

 

   

Continued strength in asset quality as nonperforming assets as a percentage of loans, net and other real estate owned was 0.91% in the third quarter of 2018 which remained relatively unchanged over the past four quarters.

 

   

Riverview incurred a non-recurring expense of $375 thousand in the third quarter of 2018 associated with a separation agreement of a contract employee.


“We are pleased to report continued stability in linked quarter earning results during the third quarter. On August 14, 2018, our Company’s common stock began trading on the Nasdaq Stock Market LLC. We are excited to be afforded the opportunity to list on the Nasdaq Global Market as it will provide many advantages including increased liquidity for existing shareholders, potential broadening of our shareholder base by attracting new retail investors and increasing the appeal of our Company stock to institutional investors. As a result of the significant inorganic and organic growth achieved from the beginning of the first quarter of 2017, we felt the need to provide a higher level of exposure for our common stock by listing on the exchange with the most companies representing the highest daily trading volume of all stock exchanges worldwide.” said Kirk D. Fox, Chief Executive Officer.

INCOME STATEMENT REVIEW

Tax-equivalent net interest income for the three and nine months ended September 30 were $11.0 million and $32.9 million in 2018 compared to $5.5 million and $15.0 million in 2017. The increase in tax-equivalent net interest income was primarily attributable to the growth in average earning assets from the merger and organic loan growth coupled with an improvement in the tax equivalent net interest margin. For the three months ended September 30, the tax-equivalent net interest margin increased to 4.15% in 2018 from 3.57% in 2017. The loan portfolio yield on a tax-equivalent basis improved to 5.24% in the third quarter of 2018 compared to 4.38% for the same period last year. The cost of funds increased 20 basis points comparing the third quarter of 2018 and 2017. Average earning asset growth outpaced that of average interest-bearing liabilities by $100.6 million comparing the three months ended September 30, 2018 and 2017.

For the nine months ended September 30, the tax-equivalent net interest margin was 4.16% in 2018 compared to 3.58% in 2017. The tax-equivalent net interest margin excluding purchase accounting adjustments would have been 3.64% in the nine months ended September 30, 2018. The tax-equivalent yield on earnings assets was 4.88% and the cost of funds was 0.88% in 2018. The tax-equivalent yield on the loan portfolio increased to 5.19% in 2018 compared to 4.35% in 2017. The tax-equivalent yield on the loan portfolio would have been 4.65% in the nine months of 2018 excluding loan accretion of $3.8 million included in loan interest income related to acquired loans. For the nine months ended September 30, investments yielded 2.79% on a tax-equivalent basis in 2018 compared to 3.42% for the same period last year. The cost of deposits increased 19 basis points to 0.80% in 2018 from 0.61% in 2017. The cost of interest bearing liabilities increased to 0.88% in 2018 from 0.69% in 2017. The growth in average earning assets outpaced that of average interest-bearing liabilities by $93.4 million comparing the nine months of 2018 and 2017. Loans, net averaged $935.3 million in 2018 and $478.0 million in 2017. Average investments totaled $92.2 million in 2018 and $71.3 million in 2017. Average interest-bearing liabilities increased to $875.6 million in 2018 from $472.8 million in 2017.

For the quarter ended September 30, the provision for loan losses was $225 thousand in 2018 compared to $610 thousand for the same period in 2017. The provision for loan losses totaled $615 thousand for the nine months ended September 30, 2018, compared to $1,734 thousand in 2017. The decrease in the provision for loan losses in 2018 was primarily influenced by a decrease in the net volume of loans originated in the first nine months of 2018 versus 2017, coupled with continuing solid results and positive trends in asset quality.

For the quarter ended September 30, noninterest income totaled $2,054 thousand in 2018, an increase of $1,219 thousand from $835 thousand in 2017. The increase in noninterest income for the quarter was due primarily to increases in services charges, fees and commissions of $997 thousand, trust income of $195 thousand, and bank owned life insurance investment income of $87 thousand. For the nine months ended September 30, noninterest income increased to $6,540 thousand in 2018 compared to $2,416 thousand in 2017. Wealth management income decreased $59 thousand comparing the first nine months of 2018 and 2017 due to the dissolution of a business acquired in 2016. Service charges and fees, and commissions and trust income improved $3,247 thousand and $579 thousand, respectively, comparing the nine months of 2018 and 2017. Mortgage banking income in the three quarters of 2018 improved to $527 thousand compared to $434 thousand in 2017. Income from bank owned life insurance increased to $584 thousand in the nine months of 2018 compared to $254 thousand for the comparable period in 2017.


Noninterest expense increased $4,174 thousand to $9,341 thousand for the three months ended September 30, 2018, from $5,167 thousand for the same period last year. The increase in noninterest expense for the quarter was due primarily to increases in salaries and employee benefits expense of $2,104 thousand and other expenses of $1,491 thousand. The increases were primarily attributable to the merger with CBT due to increased operating costs of the larger company. For the nine months ended September 30, noninterest expense increased to $28,285 thousand in 2018 compared to $15,371 thousand in 2017. The majority of this increase relates to salaries and employee benefit expense, which was a result of the merger with CBT and related costs. Additions to facilities as a result of the CBT merger along with offices to support the lending teams were primarily responsible for the $1,247 thousand increase in occupancy and equipment costs. The majority of the $4,394 thousand increase in other expenses comparing the nine months of 2018 and 2017 was a result of the business combination with CBT.

BALANCE SHEET REVIEW

Total assets, loans, net and deposits totaled $1.2 billion, $915.5 million, and $1.0 billion, respectively, at September 30, 2018. For the three months ended September 30, 2018, total assets and deposits increased $4.9 million and $3.1 million, respectively, while loans, net decreased $24.4 million. Year to date loans, net, decreased $40.5 million comparing the end of the third quarter of 2018 to year end 2017. All major categories of loans declined in 2018. Business lending, including commercial and commercial real estate loans decreased $25.2 million while retail lending, including residential mortgages and consumer loans decreased $15.3 million during the nine months ended September 30, 2018. Loan originations in the first nine months of 2018 represented a more moderate pace as compared to the same period of 2017. The reduction in loan growth was a result of management’s decision to focus on improving margins on loan originations and maintaining strong underwriting standards. Total investments were $97.1 million at September 30, 2018, compared to $93.2 million at December 31, 2017. Total deposits decreased $5.7 million in the nine months of 2018. Noninterest-bearing deposits increased $6.5 million, while interest-bearing deposits decreased $12.2 million. As a percentage of total deposits, noninterest-bearing deposits amounted to 15.9% at September 30, 2018 and 15.2% at December 31, 2017.

Stockholders’ equity totaled $112.0 million or $12.30 per share at September 30, 2018, $110.5 million or $12.15 per share at June 30, 2018, and $106.3 million or $11.72 per common share at December 31, 2017. The increase in equity in the nine months ended September 30, 2018 was a result primarily of net income of $8.4 million offset partially by an increase of $1.2 million in the accumulated other comprehensive loss and dividends declared of $1.8 million. Tangible stockholders’ equity per common share increased to $9.17 at September 30, 2018, compared to $8.99 at June 30, 2018 and $8.50 at December 31, 2017. Dividends declared for the third quarter of 2018 amounted to $0.10 per share representing a dividend payout ratio of 32.6%.

ASSET QUALITY REVIEW

Nonperforming assets were $8.3 million, or 0.91% of loans, net and foreclosed assets at September 30, 2018 compared to $8.4 million or 0.89% at June 30, 2018 and $8.2 million, or 0.85% at December 31, 2017. This asset quality ratio remains significantly improved from 1.26%, at September 30, 2017. Adjusting for accruing restructured loans, nonperforming assets were $3.7 million, or 0.40% of loans, net and foreclosed assets at September 30, 2018, $3.7 million or 0.39% at June 30, 2018 and $2.7 million, or 0.28%, at December 31, 2017. The allowance for loan losses equaled $6.5 million, or 0.71% of loans, net at September 30, 2018, compared to $6.4 million or 0.68% at June 30 2018 and $6.3 million, or 0.66% at December 31, 2017. Adding purchase accounting adjustments for credit deterioration on acquired loans to the allowance for loan losses would result in a ratio of 1.71% as a percentage of loans, net at September 30, 2018. The coverage ratio, allowance for loan losses as a percentage of nonperforming assets, was 77.5% at September 30, 2018. Excluding accruing restructured loans, the coverage ratio would be 175.7% at September 30, 2018. Loans charged-off, net of recoveries, for the three and nine months ended September 30, 2018, equaled $154 thousand and $449 thousand, compared to $40 thousand and $62 thousand for the same period last year.


Riverview Financial Corporation is the parent company of Riverview Bank and its operating divisions Citizens Neighborhood Bank, CBT Bank, Riverview Wealth Management and CBT Financial and Trust Management. An independent community bank, Riverview Bank serves the Pennsylvania market areas of Berks, Blair, Centre, Clearfield, Dauphin, Huntingdon, Lebanon, Lycoming, Northumberland, Perry, Schuylkill and Somerset Counties through 30 community banking offices and 3 limited purpose offices. Each office, interdependent with the community, offers a comprehensive array of financial products and services to individuals, businesses, not-for-profit organizations and government entities. The Wealth Management and Trust divisions, with assets under management exceeding $350 million, provide trust and investment advisory services to the general public, businesses and not-for-profit organizations. Riverview’s business philosophy includes offering direct access to senior management and other officers and providing friendly, informed and courteous service, local and timely decision making, flexible and reasonable operating procedures and consistently applied credit policies. The Company’s common stock trades on the Nasdaq Global Market under the symbol “RIVE”. The Investor Relations site can be accessed at https://www.riverviewbankpa.com/.

SOURCE: Riverview Financial Corporation

Contact: Scott A. Seasock, CFO at 717.827.4039 or [email protected]

Safe Harbor Forward-Looking Statements:

We make statements in this press release, and we may from time to time make other statements regarding our outlook or expectations for future financial or operating results and/or other matters regarding or affecting Riverview Financial Corporation, Riverview Bank, and its subsidiaries (collectively, “Riverview”) that may be considered “forward-looking statements” as defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such forward-looking statements may be identified by the use of such words as “believe,” “expect,” “anticipate,” “should,” “planned,” “estimated,” “intend” and “potential.” For these statements, Riverview claims the protection of the statutory safe harbors for forward-looking statements.

Riverview cautions you that a number of important factors could cause actual results to differ materially from those currently anticipated in any forward-looking statement. Such factors include, but are not limited to: prevailing economic and political conditions, particularly in our market area; credit risk associated with our lending activities; changes in interest rates, loan demand, real estate values and competition; changes in accounting principles, policies, and guidelines; changes in any applicable law, rule, regulation or practice with respect to tax or legal issues; and other economic, competitive, governmental, regulatory and technological factors affecting Riverview’ operations, pricing, products and services and other factors that may be described in Riverview’ Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q as filed with the Securities and Exchange Commission from time to time.

In addition to these risks, acquisitions and business combinations present risks other than those presented by the nature of the business acquired. Acquisitions and business combinations may be substantially more expensive to complete than originally anticipated, and the anticipated benefits may be significantly harder-or take longer-to achieve than expected. As regulated financial institutions, our pursuit of attractive acquisition and business combination opportunities could be negatively impacted by regulatory delays or other regulatory issues. Regulatory and/or legal issues related to the pre-acquisition operations of an acquired or combined business may cause reputational harm to Riverview following the acquisition or combination, and integration of the acquired or combined business with ours may result in additional future costs arising as a result of those issues.

The forward-looking statements are made as of the date of this release, and, except as may be required by applicable law or regulation, Riverview assumes no obligation to update the forward-looking statements or to update the reasons why actual results could differ from those projected in the forward-looking statements.

In addition to evaluating its results of operations in accordance with accounting principles generally accepted in the United States of America (“GAAP”), Riverview routinely presents and supplements its evaluation with an analysis of certain non-GAAP financial measures, such as tangible stockholders’ equity and adjusted net income ratios. The reported results for the three and nine months ended September 30, 2018 and 2017, contain items which Riverview considers non-adjusted, namely net gains on sales of investment securities available-for-sale, acquisition related expenses and the adjustment to tax expense due to the enactment of the Tax Act. Riverview presents the non-GAAP financial measures because it believes that these measures provide useful and comparative information to assess trends in Riverview’s results of operation. Presentation of these non-GAAP financial measures is consistent with how Riverview evaluates its performance internally and these non-GAAP financial measures are frequently used by securities analysts, investors and other interested parties in evaluation of companies in Riverview’s industry. Where non-GAAP measures are used in this press release, reconciliations to the comparable GAAP measures are provided in the accompanying tables. The non-GAAP financial measures Riverview uses may differ from similarly titled non-GAAP financial measures of other financial institutions. These non-GAAP financial measures would not be considered a substitute for GAAP basis measures, and Riverview strongly encourages a review of its condensed consolidated financial statements in their entirety. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP measures are presented in the tabular material that follows.

[TABULAR MATERIAL FOLLOWS]


Summary Data

Riverview Financial Corporation

Five Quarter Trend

(In thousands, except per share data)

 

     Sept 30
2018
    Jun 30
2018
    Mar 31
2018
    Dec 31
2017
    Sept 30
2017
 

Key performance data:

          

Per common share data:

          

Net income (loss)

   $ 0.30     $ 0.31     $ 0.31     $ (0.55   $ 0.08  

Adjusted net income (1)

   $ 0.31     $ 0.31     $ 0.35     $ 0.13     $ 0.09  

Cash dividends declared

   $ 0.10     $ 0.10     $ 0.00     $ 0.14     $ 0.14  

Book value

   $ 12.30     $ 12.15     $ 11.93     $ 11.72     $ 11.73  

Tangible book value (1)

   $ 9.17     $ 8.99     $ 8.75     $ 8.50     $ 10.47  

Market value:

          

High

   $ 14.40     $ 12.75     $ 13.85     $ 13.65     $ 13.50  

Low

   $ 12.56     $ 11.85     $ 12.31     $ 12.95     $ 12.15  

Closing

   $ 13.60     $ 12.65     $ 12.31     $ 13.15     $ 13.20  

Market capitalization

   $ 123,905     $ 115,052     $ 111,827     $ 119,262     $ 64,576  

Common shares outstanding

     9,110,676       9,094,986       9,084,277       9,069,363       4,892,143  

Selected ratios:

          

Return on average stockholders’ equity

     9.89     10.17     10.59     (17.47 )%      2.77

Adjusted return on average stockholders’ equity (1)

     10.01     10.13     11.88     4.09     3.06

Return on average tangible stockholders’ equity (1)

     13.29     13.78     14.50     (23.87 )%      3.10

Adjusted return on average tangible stockholders’ equity (1)

     13.45     13.73     16.27     5.59     3.43

Return on average assets

     0.96     0.97     0.98     (1.67 )%      0.24

Adjusted return on average assets (1)

     0.97     0.96     1.10     0.39     0.26

Stockholders’ equity to total assets

     9.69     9.59     9.26     9.13     8.42

Efficiency ratio (2)

     69.89     71.46     69.28     100.39     80.85

Nonperforming assets to loans, net, and foreclosed assets

     0.91     0.89     0.90     0.85     1.26

Net charge-offs to average loans, net

     0.07     0.05     0.08     0.04     0.03

Allowance for loan losses to loans, net

     0.71     0.68     0.70     0.66     0.96

Earning assets yield (FTE) (3)

     4.93     4.67     5.05     4.67     4.22

Cost of funds

     0.96     0.89     0.80     0.74     0.76

Net interest spread (FTE) (3)

     3.97     3.78     4.25     3.93     3.46

Net interest margin (FTE) (3)

     4.15     3.94     4.38     4.05     3.57

 

(1)

See Reconciliation of Non-GAAP financial measures.

(2)

Total noninterest expense less amortization of intangible assets divided by tax-equivalent net interest income and noninterest income less net gain (loss) on sale of investment securities available-for-sale.

(3)

Tax-equivalent adjustments were calculated using the prevailing federal statutory tax rate.


Riverview Financial Corporation

Consolidated Statements of Income (Loss)

(In thousands, except per share data)

 

Nine Months Ended

   Sept 30
2018
    Sept 30
2017
 

Interest income:

    

Interest and fees on loans:

    

Taxable

   $ 35,424     $ 14,991  

Tax-exempt

     699       361  

Interest and dividends on investment securities:

    

Taxable

     1,616       1,607  

Tax-exempt

     243       140  

Dividends

       3  

Interest on interest-bearing deposits in other banks

     361       78  

Interest on federal funds sold

     20       12  

Total interest income

     38,363       17,192  

Interest expense:

    

Interest on deposits

     5,162       2,021  

Interest on short-term borrowings

     30       197  

Interest on long-term debt

     562       228  

Total interest expense

     5,754       2,446  

Net interest income

     32,609       14,746  

Provision for loan losses

     615       1,734  

Net interest income after provision for loan losses

     31,994       13,012  

Noninterest income:

    

Service charges, fees and commissions

     4,146       899  

Commissions and fees on fiduciary activities

     671       92  

Wealth management income

     572       631  

Mortgage banking income

     527       434  

Life insurance investment income

     584       254  

Net gain (loss) on sale of investment securities available-for-sale

     40       106  

Total noninterest income

     6,540       2,416  

Noninterest expense:

    

Salaries and employee benefits expense

     15,575       8,521  

Net occupancy and equipment expense

     3,142       1,895  

Amortization of intangible assets

     656       306  

Net cost of operation of other real estate owned

     30       161  

Other expenses

     8,882       4,488  

Total noninterest expense

     28,285       15,371  

Income (loss) before income taxes

     10,249       57  

Income tax expense (benefit)

     1,863       44  

Net income (loss)

   $ 8,386     $ 13  

Other comprehensive income (loss):

    

Unrealized gain (loss) on investment securities available-for-sale

   $ (1,539   $ 1,708  

Reclassification adjustment for (gain) loss included in net income

     (40     (106

Change in pension liability

    

Income tax expense (benefit) related to other comprehensive income (loss)

     (331     544  

Other comprehensive income (loss), net of income taxes

     (1,248     1,058  

Comprehensive income (loss)

   $ 7,138     $ 1,071  

Per common share data:

    

Net income (loss):

    

Basic

   $ 0.92     $ 0.03  

Diluted

   $ 0.92     $ 0.03  

Average common shares outstanding:

    

Basic

     9,089,636       4,002,165  

Diluted

     9,143,041       4,060,813  

Cash dividends declared

   $ 0.20     $ 0.41  


Riverview Financial Corporation

Consolidated Statements of Income (Loss)

(In thousands, except per share data)

 

Three months ended

   Sept 30
2018
    Jun 30
2018
    Mar 31
2018
    Dec 31
2017
    Sept 30
2017
 

Interest income:

          

Interest and fees on loans:

          

Taxable

   $ 11,957     $ 11,226     $ 12,241     $ 11,483     $ 5,717  

Tax-exempt

     230       235       234       239       146  

Interest and dividends on investment securities available-for-sale:

          

Taxable

     551       542       523       548       477  

Tax-exempt

     80       81       82       88       47  

Dividends

          

Interest on interest-bearing deposits in other banks

     181       101       79       43       31  

Interest on federal funds sold

       10       10         2  

Total interest income

     12,999       12,195       13,169       12,401       6,420  

Interest expense:

          

Interest on deposits

     1,885       1,723       1,554       1,468       821  

Interest on short-term borrowings

         30       33       112  

Interest on long-term debt

     194       192       176       173       75  

Total interest expense

     2,079       1,915       1,760       1,674       1,008  

Net interest income

     10,920       10,280       11,409       10,727       5,412  

Provision for loan losses

     225         390       1,000       610  

Net interest income after provision for loan losses

     10,695       10,280       11,019       9,727       4,802  

Noninterest income:

          

Service charges, fees and commissions

     1,267       1,651       1,228       1,138       270  

Commissions and fees on fiduciary activities

     226       235       210       252       31  

Wealth management income

     199       219       154       201       179  

Mortgage banking income

     168       189       170       226       205  

Life insurance investment income

     194       199       191       195       107  

Net gain (loss) on sale of investment securities available-for-sale

       40         (17     43  

Total noninterest income

     2,054       2,533       1,953       1,995       835  

Noninterest expense:

          

Salaries and employee benefits expense

     5,032       5,221       5,322       6,675       2,928  

Net occupancy and equipment expense

     1,008       1,012       1,122       1,376       615  

Amortization of intangible assets

     215       220       221       232       71  

Net cost (benefit) of operation of other real estate owned

     29       2       (1     11       (13

Other expenses

     3,057       2,953       2,872       4,895       1,566  

Total noninterest expense

     9,341       9,408       9,536       13,189       5,167  

Income (loss) before income taxes

     3,408       3,405       3,436       (1,467     470  

Income tax expense (benefit)

     620       618       625       3,457       69  

Net income (loss)

   $ 2,788     $ 2,787     $ 2,811     $ (4,924   $ 401  

Other comprehensive income (loss):

          

Unrealized gain (loss) on investment securities available-for-sale

   $ (576   $ 112     $ (1,075   $ (237   $ (50

Reclassification adjustment for (gain) loss included in net income

       (40       17       (43

Change in pension liability

           (54  

Income tax expense (benefit) related to other comprehensive income (loss)

     (121     15       (225     (93     (32

Other comprehensive income (loss), net of income taxes

     (455     57       (850     (181     (61

Comprehensive income (loss)

   $ 2,333     $ 2,844     $ 1,961     $ (5,105   $ 340  

Per common share data:

          

Net income (loss):

          

Basic

   $ 0.30     $ 0.31     $ 0.31     $ (0.55   $ 0.08  

Diluted

   $ 0.30     $ 0.31     $ 0.31     $ (0.55   $ 0.08  

Average common shares outstanding:

          

Basic

     9,100,616       9,089,011       9,079,043       8,994,617       4,880,676  

Diluted

     9,156,931       9,134,248       9,137,706       8,994,617       4,945,456  

Cash dividends declared

   $ 0.10     $ 0.10     $ 0.00     $ 0.14     $ 0.14  


Riverview Financial Corporation

Details of Net Interest and Net Interest Margin

(In thousands, fully taxable equivalent basis)

 

Three months ended

   Sept 30
2018
    Jun 30
2018
    Mar 31
2018
    Dec 31
2017
    Sept 30
2017
 

Net interest income:

          

Interest income

          

Loans, net:

          

Taxable

   $ 11,957     $ 11,226     $ 12,241     $ 11,483     $ 5,717  

Tax-exempt

     291       298       296       362       221  

Total loans, net

     12,248       11,524       12,537       11,845       5,938  

Investments:

          

Taxable

     551       542       523       548       477  

Tax-exempt

     102       102       104       133       71  

Total investments

     653       644       627       681       548  

Interest on interest-bearing balances in other banks

     181       101       79       43       31  

Federal funds sold

       10       10         2  

Total interest income

     13,082       12,279       13,253       12,569       6,519  

Interest expense:

          

Deposits

     1,885       1,723       1,554       1,468       821  

Short-term borrowings

         30       33       112  

Long-term debt

     194       192       176       173       75  

Total interest expense

     2,079       1,915       1,760       1,674       1,008  

Net interest income

   $ 11,003     $ 10,364     $ 11,493     $ 10,895     $ 5,511  

Yields on earning assets:

          

Loans, net:

          

Taxable

     5.32     5.02     5.46     4.99     4.40

Tax-exempt

     3.25     3.29     3.23     3.91     3.94

Total loans, net

     5.24     4.95     5.38     4.94     4.38

Investments:

          

Taxable

     2.82     2.82     2.76     2.65     3.17

Tax-exempt

     2.83     2.77     2.66     3.04     4.90

Total investments

     2.82     2.81     2.74     2.71     3.33

Interest-bearing balances with banks

     2.14     1.50     1.36     0.97     1.35

Federal funds sold

       1.56     1.55       1.71

Total earning assets

     4.93     4.67     5.05     4.67     4.22

Costs of interest-bearing liabilities:

          

Deposits

     0.88     0.81     0.72     0.67     0.67

Short-term borrowings

         1.67     1.39     1.32

Long-term debt

     5.89     5.87     5.41     5.17     4.16

Total interest-bearing liabilities

     0.96     0.89     0.80     0.74     0.76

Net interest spread

     3.97     3.78     4.25     3.93     3.46

Net interest margin

     4.15     3.94     4.38     4.05     3.57


Riverview Financial Corporation

Consolidated Balance Sheets

(In thousands, except per share data)

 

At period end

   Sept 30
2018
    Jun 30
2018
    Mar 31
2018
    Dec 31
2017
    Sept 30
2017
 

Assets:

          

Cash and due from banks

   $ 13,310     $ 13,139     $ 14,396     $ 9,413     $ 8,425  

Interest-bearing balances in other banks

     43,505       23,481       40,724       16,373       10,741  

Federal funds sold

         4,729      

Investment securities available-for-sale

     97,102       87,908       88,773       93,201       56,874  

Loans held for sale

     598       873       610       254       519  

Loans, net

     915,529       939,887       934,190       955,971       560,187  

Less: allowance for loan losses

     6,472       6,401       6,515       6,306       5,404  

Net loans

     909,057       933,486       927,675       949,665       554,783  

Premises and equipment, net

     18,427       18,542       18,714       18,631       12,163  

Accrued interest receivable

     3,066       2,786       2,865       3,237       1,995  

Goodwill

     24,754       24,754       24,754       24,754       5,079  

Other intangible assets, net

     3,721       3,935       4,155       4,376       1,099  

Other assets

     43,193       42,900       43,771       43,703       29,701  

Total assets

   $ 1,156,733     $ 1,151,804     $ 1,171,166     $ 1,163,607     $ 681,379  

Liabilities:

          

Deposits:

          

Noninterest-bearing

   $ 162,385     $ 170,232     $ 157,011     $ 155,895     $ 76,214  

Interest-bearing

     858,379       847,490       881,594       870,585       498,736  

Total deposits

     1,020,764       1,017,722       1,038,605       1,026,480       574,950  

Short-term borrowings

           6,000       37,250  

Long-term debt

     13,019       13,091       13,160       13,233       6,503  

Accrued interest payable

     503       449       466       468       213  

Other liabilities

     10,416       10,075       10,535       11,170       5,084  

Total liabilities

     1,044,702       1,041,337       1,062,766       1,057,351       624,000  

Stockholders’ equity:

          

Preferred stock

          

Common stock

     100,999       100,790       100,660       100,476       45,427  

Capital surplus

     356       424       422       423       243  

Retained earnings

     13,503       11,625       9,747       6,936       12,848  

Accumulated other comprehensive income (loss)

     (2,827     (2,372     (2,429     (1,579     (1,139

Total stockholders’ equity

     112,031       110,467       108,400       106,256       57,379  

Total liabilities and stockholders’ equity

   $ 1,156,733     $ 1,151,804     $ 1,171,166     $ 1,163,607     $ 681,379  


Riverview Financial Corporation

Consolidated Balance Sheets

(In thousands except per share data)

 

Average quarterly balances

   Sept 30
2018
     Jun 30
2018
     Mar 31
2018
     Dec 31
2017
     Sept 30
2017
 

Assets:

              

Loans, net:

              

Taxable

   $ 891,455      $ 897,085      $ 908,574      $ 913,623      $ 515,494  

Tax-exempt

     35,478        36,374        37,153        36,750        22,246  

Total loans, net

     926,933        933,459        945,727        950,373        537,740  

Investments:

              

Taxable

     77,573        77,061        76,952        82,180        59,612  

Tax-exempt

     14,288        14,784        15,836        17,345        5,746  

Total investments

     91,861        91,845        92,788        99,525        65,358  

Interest-bearing balances with banks

     33,553        27,067        23,607        17,615        9,143  

Federal funds sold

        2,568        2,617        48        465  

Total earning assets

     1,052,347        1,054,939        1,064,739        1,067,561        612,706  

Other assets

     97,377        99,492        98,503        101,120        52,770  

Total assets

   $ 1,149,724      $ 1,154,431      $ 1,163,242      $ 1,168,681      $ 665,476  

Liabilities and stockholders’ equity:

              

Deposits:

              

Interest-bearing

   $ 850,492      $ 853,986      $ 875,985      $ 873,596      $ 483,648  

Noninterest-bearing

     163,142        166,828        149,123        150,515        77,819  

Total deposits

     1,013,634        1,020,814        1,025,108        1,024,111        561,467  

Short-term borrowings

           7,297        9,403        33,707  

Long-term debt

     13,060        13,124        13,205        13,271        7,151  

Other liabilities

     11,208        10,573        9,996        10,053        5,700  

Total liabilities

     1,037,902        1,044,511        1,055,606        1,056,838        608,025  

Stockholders’ equity

     111,822        109,920        107,636        111,843        57,451  

Total liabilities and stockholders’ equity

   $ 1,149,724      $ 1,154,431      $ 1,163,242      $ 1,168,681      $ 665,476  


Riverview Financial Corporation

Asset Quality Data

(In thousands)

 

     Sept 30
2018
     Jun 30
2018
     Mar 31
2018
     Dec 31
2017
     Sept 30
2017
 

At quarter end:

              

Nonperforming assets:

              

Nonaccrual loans

   $ 2,780      $ 2,070      $ 2,629      $ 1,745      $ 1,765  

Accruing restructured loans

     4,663        4,693        5,310        5,478        5,168  

Accruing loans past due 90 days or more

     225        1,536        393        693     

Foreclosed assets

     668        90        92        236        144  

Total nonperforming assets

   $ 8,336      $ 8,389      $ 8,424      $ 8,152      $ 7,077  

Three months ended:

              

Allowance for loan losses:

              

Beginning balance

   $ 6,401      $ 6,515      $ 6,306      $ 5,404      $ 4,834  

Charge-offs

     189        166        226        142        42  

Recoveries

     35        52        45        44        2  

Provision for loan losses

     225           390        1,000        610  

Ending balance

   $ 6,472      $ 6,401      $ 6,515      $ 6,306      $ 5,404  


Riverview Financial Corporation

Reconciliation of Non-GAAP Financial Measures

(In thousands, except per share data)

 

Three months ended:

   Sept 30
2018
    Jun 30
2018
    Mar 31
2018
    Dec 31
2017
    Sept 30
2017
 

Adjusted net income (loss) per common share:

          

Net income (loss)

   $ 2,788     $ 2,787     $ 2,811     $ (4,924   $ 401  

Dividends on preferred stock

          

Net income (loss) available to common stockholders

     2,788       2,787       2,811       (4,924     401  

Undistributed loss (income) allocated to preferred stockholders

          

Income (loss) allocated to common stockholders

     2,788       2,787       2,811       (4,924     401  

Adjustments:

          

Less: Gain (loss) on sale of investment securities, net of tax

       32         (11     28  

Add: Acquisition related expenses, net of tax

     34       22       342       2,177       70  

Add: Tax Cuts and Jobs Act tax expense

           3,888    

Net income (loss) Adjusted

   $ 2,822     $ 2,777     $ 3,153     $ 1,152     $ 443  

Average common shares outstanding

     9,100,616       9,089,011       9,079,043       8,994,617       4,880,676  

Adjusted net income (loss) per common share

   $ 0.31     $ 0.31     $ 0.35     $ 0.13     $ 0.09  

Tangible book value:

          

Total stockholders’ equity

   $ 112,031     $ 110,467     $ 108,400     $ 106,256     $ 57,379  

Less: Goodwill

     24,754       24,754       24,754       24,754       5,079  

Less: Other intangible assets, net

     3,721       3,935       4,155       4,376       1,099  

Total tangible stockholders’ equity

   $ 83,556     $ 81,778     $ 79,491     $ 77,126     $ 51,201  

Common shares outstanding

     9,110,676       9,094,986       9,084,277       9,069,363       4,892,143  

Tangible book value per share

   $ 9.17     $ 8.99     $ 8.75     $ 8.50     $ 10.47  

Adjusted return on average stockholders’ equity:

          

Net income (loss) GAAP

   $ 2,788     $ 2,787     $ 2,811     $ (4,924   $ 401  

Adjustments:

          

Less: Gain (loss) on sale of investment securities, net of tax

       32         (11     28  

Add: Acquisition related expenses, net of tax

     34       22       342       2,177       70  

Add: Tax Cuts and Jobs Act tax expense

           3,888    

Net income (loss) Adjusted

   $ 2,822     $ 2,777     $ 3,153     $ 1,152     $ 443  

Average stockholders’ equity

   $ 111,822     $ 109,920     $ 107,636     $ 111,843     $ 57,451  

Adjusted return on average stockholders’ equity

     10.01     10.13     11.88     4.09     3.06

Return on average tangible equity:

          

Net income (loss) GAAP

   $ 2,788     $ 2,787     $ 2,811     $ (4,924   $ 401  

Average stockholders’ equity

   $ 111,822     $ 109,920     $ 107,636     $ 111,843     $ 57,451  

Less: average intangibles

     28,578       28,800       29,021       30,013       6,213  

Average tangible stockholders’ equity

   $ 83,244     $ 81,120     $ 78,615     $ 81,830     $ 51,238  

Return on average tangible stockholders’ equity

     13.29     13.78     14.50     (23.87 )%      3.10

Adjusted return on average tangible stockholders’ equity:

          

Net income (loss) GAAP

   $ 2,788     $ 2,787     $ 2,811     $ (4,924   $ 401  

Adjustments:

          

Less: Gain (loss) on sale of investment securities, net of tax

       32         (11     28  

Add: Acquisition related expenses, net of tax

     34       22       342       2,177       70  

Add: Tax Cuts and Jobs Act tax expense

           3,888    

Net income (loss) Adjusted

   $ 2,822     $ 2,777     $ 3,153     $ 1,152     $ 443  

Average stockholders’ equity

   $ 111,822     $ 109,920     $ 107,636     $ 111,843     $ 57,451  

Less: average intangibles

     28,578       28,800       29,021       30,013       6,213  

Average tangible stockholders’ equity

   $ 83,244     $ 81,120     $ 78,615     $ 81,830     $ 51,238  

Adjusted return on average tangible stockholders’ equity

     13.45     13.73     16.27     5.59     3.43

Adjusted return on average assets:

          

Net income (loss) GAAP

   $ 2,788     $ 2,787     $ 2,811     $ (4,924   $ 401  

Adjustments:

          

Less: Gain (loss) on sale of investment securities, net of tax

       32         (11     28  

Add: Acquisition related expenses, net of tax

     34       22       342       2,177       70  

Add: Tax Cuts and Jobs Act tax expense

           3,888    

Net income (loss) Adjusted

   $ 2,822     $ 2,777     $ 3,153     $ 1,152     $ 443  

Average assets

   $ 1,149,724     $ 1,154,431     $ 1,163,242     $ 1,168,681     $ 665,476  

Adjusted return on average assets

     0.97     0.96     1.10     0.39     0.26


Riverview Financial Corporation

Reconciliation of Non-GAAP Financial Measures

(In thousands, except per share data)

 

Nine months ended:

   Sept 30
2018
     Sept 30
2017
 

Adjusted net income per common share:

     

Net income (loss)

   $ 8,386      $ 13  

Dividends on preferred stock

        (371

Net income available to common stockholders

     8,386        (358

Undistributed loss allocated to preferred stockholders

        475  

Income allocated to common stockholders

     8,386        117  

Adjustments:

     

Less: Gains on sale of investment securities, net of tax

     31        70  

Add: Acquisition related expenses, net of tax

     398        248  

Add: Tax Cuts and Jobs Act of 2017 tax expense

     

Net income (loss) Adjusted

   $ 8,753      $ 295  

Average common shares outstanding

     9,089,636        4,002,165  

Adjusted net income (loss) per common share

   $ 0.96      $ 0.08  
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