Riverview Bancorp Slashes Dividend Amidst Challenging Interest Rates

Riverview Bancorp, Inc. (RVSB) has announced a significant reduction in its quarterly cash dividend, reflecting the bank's cautious approach to maintaining liquidity and capital strength amidst challenging interest rate environments. The bank declared a quarterly cash dividend of $0.02 per share, a 67% decrease from the previous quarter's $0.06 per share. This reduction comes as the bank navigates a difficult interest rate landscape, which has impacted its net interest income and margin.

The challenging interest rate environment has led to higher interest expense on deposits and borrowings, affecting Riverview's operating performance. In the third fiscal quarter of 2024, net interest income decreased to $9.3 million from $9.9 million in the preceding quarter, primarily due to increased interest expense on deposits and borrowings (Source: Press Release, Number 2). The net interest margin (NIM) also contracted to 2.49% from 2.63% in the preceding quarter, reflecting the impact of higher interest rates on deposit products and borrowings (Source: Press Release, Number 2).

Despite the dividend reduction, Riverview has maintained strong asset quality, with non-performing assets at $186,000, or 0.01% of total assets at December 31, 2023. This low non-performing asset ratio indicates a robust credit portfolio, minimizing potential losses and preserving capital. Additionally, Riverview recorded no provision for credit losses during the current quarter, the preceding quarter, or during the year ago quarter, further demonstrating effective credit risk management. The allowance for credit losses was $15.4 million, or 1.51% of total loans, providing a safety net against potential future losses.



Riverview's dividend policy is a key component of its capital allocation strategy, balancing shareholder returns with capital preservation. By adjusting dividends, Riverview ensures it has sufficient capital to support loan growth and manage risks, while still rewarding shareholders. This balanced approach aligns with Riverview's commitment to protecting its liquidity and capital position, as stated by Dan Cox, Chief Operating Officer, Acting President, and Chief Executive Officer.

The bank's loan portfolio growth has been stable, with total loans remaining at $1.02 billion since the third fiscal quarter of 2022. This consistency has contributed to the company's earnings performance, as loans are a primary source of interest income. However, the challenging interest rate environment has impacted net interest income growth, with higher interest expense on deposits and borrowings affecting operating performance.



In conclusion, Riverview Bancorp's dividend reduction reflects the bank's cautious approach to maintaining liquidity and capital strength amidst challenging interest rate environments. While the bank has experienced a decrease in net interest income and margin, it has maintained strong asset quality and effective credit risk management. Riverview's dividend policy balances shareholder returns with capital preservation, ensuring the bank has sufficient capital to support loan growth and manage risks. As the bank navigates the current interest rate landscape, investors should monitor its financial performance and dividend policy for signs of recovery and stability.