RIVERVIEW BANCORP INC

Previous wording

As a progressive, community-oriented financial services business, the Company emphasizes local, personal service to residents of its primary market area. The Company considers Clark, Klickitat and Skamania counties of Washington, and Multnomah, Washington and Marion counties of Oregon as its primary market area. The Company is engaged predominantly in the business of attracting deposits from the general public and using such funds in its primary market area to originate commercial business, commercial real estate, multi-family real estate, land, real estate construction, residential real estate and other consumer loans. Additionally, the Company, from time to time, will purchase commercial business loans as a way to supplement loan originations and diversify the commercial loan portfolio. These loans are originated by a third-party located outside the Company’s primary market area. The Company also purchases the guaranteed portion of SBA loans to help loan portfolio diversification, supplement loan originations and generate a higher yield than overnight cash investments or short-term investments. These SBA loans are originated through another financial institution located outside the Company’s primary market area and are purchased with servicing retained by the seller. The Company’s loans receivable, net, totaled $1.05 billion at September 30, 2024 compared to $1.01 billion at March 31, 2024.

Current wording

As a progressive, community-oriented financial services business, the Company emphasizes local, personal service to residents of its primary market area. The Company considers Clark, Klickitat and Skamania counties of Washington, and Multnomah, Washington and Marion counties of Oregon as its primary market area. The Company is engaged predominantly in the business of attracting deposits from the general public and using such funds in its primary market area to originate commercial business, commercial real estate, multi-family real estate, land, real estate construction, residential real estate and other consumer loans. Additionally, the Company, from time to time, will purchase commercial business loans as a way to supplement loan originations and diversify the commercial loan portfolio. These loans are originated by a third-party located outside the Company’s primary market area. The Company also purchases the guaranteed portion of SBA loans to help loan portfolio diversification, supplement loan originations and generate a higher yield than overnight cash investments or short-term investments. These SBA loans are originated through another financial institution located outside the Company’s primary market area and are purchased with servicing retained by the seller. The Company’s loans receivable, net, totaled $1.03 billion at December 31, 2024 compared to $1.01 billion at March 31, 2024.

Previous wording

Vancouver is located in Clark County, Washington, which is just north of Portland, Oregon. Many businesses are located in the Vancouver area because of the favorable tax structure and lower energy costs in Washington as compared to Oregon. Companies located in the Vancouver area include: Sharp Microelectronics, Hewlett Packard, Georgia Pacific, Underwriters Laboratory, WaferTech, Barrett Business Services, PeaceHealth and Banfield Pet Hospitals, as well as several support industries. In addition to this industry base, the Columbia River Gorge Scenic Area and the Portland metropolitan area are sources of tourism.

Current wording

Vancouver is located in Clark County, Washington, which is just north of Portland, Oregon. Many businesses are located in the Vancouver area because of the favorable tax structure and lower energy costs in Washington as compared to Oregon. Companies located in the Vancouver area include: Sharp Microelectronics, Hewlett Packard, Georgia Pacific, Underwriters Laboratory, TSMC Washington (formerly WaferTech), Barrett Business Services, PeaceHealth and Banfield Pet Hospitals, as well as several support industries. In addition to this industry base, the Columbia River Gorge Scenic Area and the Portland metropolitan area are sources of tourism.

Previous wording

Fiscal year 2025 marks the 101 st anniversary since the Bank began operations in 1923. The primary business strategy of the Company is to provide comprehensive banking and related financial services within its primary market area focusing on commercial and real estate construction lending. At September 30, 2024, commercial and real estate construction loans represented 89.3% of total loans compared to 90.4% at March 31, 2024. Commercial lending, including commercial real estate loans, typically has higher credit risk, greater interest margins and shorter terms than residential lending which can increase the loan portfolio's profitability.

Current wording

Fiscal year 2025 marks the 101 st anniversary since the Bank began operations in 1923. The primary business strategy of the Company is to provide comprehensive banking and related financial services within its primary market area focusing on commercial and real estate construction lending. At December 31, 2024, commercial and real estate construction loans represented 89.2% of total loans compared to 90.4% at March 31, 2024. Commercial lending, including commercial real estate loans, typically has higher credit risk, greater interest margins and shorter terms than residential lending which can increase the loan portfolio's profitability.

Previous wording

Execution of our Business Plan. The Company is focused on increasing its loan portfolio, especially higher yielding commercial and real estate construction loans, and its core deposits by expanding its customer base throughout its primary market areas. By emphasizing total relationship banking, the Company intends to deepen the relationships with its customers and increase individual customer profitability through cross-marketing programs, which allows the Company to better identify lending opportunities and services for customers. To build its core deposit base, the Company will continue to utilize additional product offerings, technology and a focus on customer service in working toward this goal. The Company will also continue to seek to expand its franchise through de novo branches, the selective acquisition of individual branches, loan purchases and whole bank transactions that meet its investment and market objectives. In fiscal year 2021, the Company ceased originating residential real estate loans; however, it will from time to time purchase these loans consistent with asset/liability objectives.

Current wording

Execution of our Business Plan. The Company is focused on increasing its loan portfolio, especially higher yielding commercial and real estate construction loans, and its core deposits by expanding its customer base throughout its primary market areas. By emphasizing total relationship banking, the Company intends to deepen the relationships with its customers and increase individual customer profitability through cross-marketing programs, which allows the Company to better identify lending opportunities and services for customers. To build its core deposit base, the Company will continue to utilize additional product offerings, technology and a focus on customer service in working toward this goal. The Company will also continue to seek to expand its franchise through de novo branches, the selective acquisition of individual branches, loan purchases and whole bank transactions that meet its investment and market objectives.

Previous wording

Introduction of New Products and Services. The Company continuously reviews new products and services to provide its customers with more financial options. All new technology and services are generally reviewed for business development and cost saving purposes. The Company continues to experience growth in customer use of its online banking services, where the Bank provides a full array of traditional cash management products as well as online banking products including mobile banking, mobile deposit, bill pay, e-statements, and text banking. The products are tailored to meet the needs of small to medium size businesses and households in the markets we serve. The Company intends to selectively add other products to further diversify revenue sources and to capture more of each customer’s banking relationship by cross selling loan and deposit products and additional services, including services provided through the Trust Company to increase its fee income. Assets under management by the Trust Company totaled $871.6 million and $961.8 million at September 30, 2024 and March 31, 2024, respectively.

Current wording

Introduction of New Products and Services. The Company continuously reviews new products and services to provide its customers with more financial options. All new technology and services are generally reviewed for business development and cost saving purposes. The Company continues to experience growth in customer use of its online banking services, where the Bank provides a full array of traditional cash management products as well as online banking products including mobile banking, mobile deposit, bill pay, e-statements, and text banking. The products are tailored to meet the needs of small to medium size businesses and households in the markets we serve. The Company intends to selectively add other products to further diversify revenue sources and to capture more of each customer’s banking relationship by

Previous wording

Cash and cash equivalents, including interest-earning deposits in other banks, totaled $31.0 million at September 30, 2024 compared to $23.6 million at March 31, 2024. The Company’s cash balances typically fluctuate based upon funding needs, deposit activity and investment securities activity. Based on the Company’s asset/liability management program and liquidity objectives, the Company may deploy excess cash to purchase investment securities depending on the rate environment and other considerations. As a part of this strategy, the Company may choose to invest in short-term certificates of deposit held for investment, all of which are fully insured by the Federal Deposit Insurance Corporation (the “FDIC”).

Current wording

Cash and cash equivalents, including interest-earning deposits in other banks, totaled $25.3 million at December 31, 2024 compared to $23.6 million at March 31, 2024. The Company’s cash balances typically fluctuate based upon funding needs, deposit activity and investment securities activity. Based on the Company’s asset/liability management program and liquidity objectives, the Company may deploy excess cash to purchase investment securities depending on the rate environment and other considerations. As a part of this strategy, the Company may choose to invest in short-term certificates of deposit held for investment, all of which are fully insured by the Federal Deposit Insurance Corporation (the “FDIC”).

Previous wording

Investment securities totaled $354.9 million and $372.7 million at September 30, 2024 and March 31, 2024, respectively. The decrease was due to normal pay downs, calls and maturities of investment securities. The Company had no sales of investment securities during the six months ended September 30, 2024. The Company’s investment securities primarily consist of a combination of securities backed by government agencies (FHLMC, FNMA, SBA or GNMA). At September 30, 2024, the Company determined that none of its investment securities required an allowance for credit losses (“ACL”). For additional information on the Company’s investment securities, see Note 5 of the Notes to the Consolidated Financial Statements contained in Item 1 of this Form 10-Q.

Current wording

Investment securities totaled $337.2 million and $372.7 million at December 31, 2024 and March 31, 2024, respectively. The decrease was due to normal pay downs, calls and maturities. The Company had no sales of investment securities during the nine months ended December 31, 2024. The Company’s investment securities primarily consist of a combination of securities backed by government agencies (FHLMC, FNMA, SBA or GNMA). At December 31, 2024, the Company determined that none of its investment securities required an allowance for credit losses (“ACL”). For additional information on the Company’s investment securities, see Note 5 of the Notes to the Consolidated Financial Statements contained in Item 1 of this Form 10-Q.

Previous wording

Loans receivable, net, totaled $1.05 billion at September 30, 2024, compared to $1.01 billion at March 31, 2024, an increase of $36.9 million. The increase was primarily attributable to increases in real estate construction loans of $15.0 million, other installment loans of $14.5 million, multi-family loans of $7.9 million and commercial business loans of $7.5 million. These increases were partially offset by a decrease in commercial real estate loans of $10.0 million.

Current wording

Loans receivable, net, totaled $1.03 billion at December 31, 2024, compared to $1.01 billion at March 31, 2024, an increase of $21.1 million. The increase was primarily attributable to increases in other installment loans of $13.8 million, real estate

Previous wording

The Company no longer originates one-to-four family mortgage loans; however, will from time to time purchase these loans consistent with its asset/liability objectives. Additionally, the Company will purchase commercial business loans and consumer loans to supplement loan originations and diversify the loan portfolio. Purchased loans are originated by a third-party located outside the Company’s primary market area. Commercial business loans purchased at September 30, 2024 totaled $24.7 million compared to $27.2 million at March 31, 2024. Consumer loans purchased at September 30, 2024 totaled $14.6 million compared to none at March 31, 2024. The Company also purchases the guaranteed portion of SBA loans to help loan portfolio diversification, supplement loan originations and generate a higher yield than overnight cash investments or short-term investments. These SBA loans are originated through another financial institution located outside the Company’s primary market area and are purchased with servicing retained by the seller. At September 30, 2024, the Company’s purchased SBA loan portfolio was $50.0 million compared to $51.0 million at March 31, 2024.

Current wording

While the Company no longer originates one-to-four family mortgage loans, it will from time to time, purchase these loans consistent with its asset/liability objectives. Additionally, the Company occasionally purchases commercial business loans and consumer loans to supplement loan originations and diversify the loan portfolio. These purchased loans are originated by third-parties located outside the Company’s primary market area. Purchased commercial business loans at December 31, 2024 totaled $23.8 million compared to $27.2 million at March 31, 2024. Purchased consumer loans at December 31, 2024 totaled $13.9 million compared to none at March 31, 2024. The Company also purchases the guaranteed portion of SBA loans to diversify its loan portfolio, supplement loan originations and generate higher yields than overnight cash investments or short-term investments. These SBA loans are originated through another financial institution located outside the Company’s primary market area and are purchased with servicing retained by the seller. At December 31, 2024, the Company’s purchased SBA loan portfolio was $49.0 million compared to $51.0 million at March 31, 2024.

Previous wording

Deposits increased $5.8 million to $1.24 billion at September 30, 2024, compared to $1.23 billion at March 31, 2024 due to a concentrated effort by the Company to retain and increase deposits in light of the strong competition for deposits in its market area. Certificates of deposit and money market accounts increased $38.2 and $18.3 million, respectively. These increases were partially offset by decreases of $22.6 million in interest bearing accounts, $20.2 million in regular savings accounts and $8.0 million in non-interest-bearing accounts. The Company had no wholesale-brokered deposits at September 30, 2024 and March 31, 2024. Core branch deposits accounted for 98.4% of total deposits at September 30, 2024 compared to 98.0% at March 31, 2024. The Company plans to continue its focus on core deposits and on building customer relationships as opposed to obtaining deposits through the wholesale markets.

Current wording

Deposits decreased $12.7 million to $1.22 billion at December 31, 2024, compared to $1.23 billion at March 31, 2024, attributable to decreases of $36.2 million in non-interest bearing accounts, $31.8 million in interest bearing accounts and $23.5 million in regular savings accounts. These decreases were partially offset by increases in both certificates of deposit and money market accounts of $51.1 and $27.7 million, respectively. The Company had no wholesale-brokered deposits at December 31, 2024 and March 31, 2024. Core branch deposits accounted for 98.6% of total deposits at December 31, 2024 compared to 98.0% at March 31, 2024. The Company plans to continue its focus on core deposits and on building customer relationships as opposed to obtaining deposits through the wholesale markets.

Previous wording

Accrued expenses and other liabilities increased $1.6 million to $17.8 million at September 30, 2024 compared to $16.2 million at March 31, 2024. The increase was primarily due to an outstanding balance in Trust sweep funds of $4.7 million at September 30, 2024 that were subsequently disbursed the following business day. This increase was partially offset by decreases of $1.5 million in other accrued expenses and $845,000 in dividends payable.

Current wording

Accrued expenses and other liabilities increased $1.4 million to $17.6 million at December 31, 2024 compared to $16.2 million at March 31, 2024. The increase was primarily due to an outstanding balance in Trust sweep funds of $5.1 million at December 31, 2024 that were subsequently disbursed the following business day. This increase was partially offset by decreases of $1.7 million in other accrued expenses and $844,000 in dividends payable.

Previous wording

FHLB advances increased $14.0 million to $102.3 million at September 30, 2024 compared to $88.3 million at March 31, 2024. FHLB advances at September 30, 2024 were comprised of overnight advances and short-term borrowings of $77.3 million and $25.0 million, respectively. FHLB advances at March 31, 2024 were comprised of overnight advances. FHLB advances were utilized to fund new loan originations.

Current wording

FHLB advances decreased $4.1 million to $84.2 million at December 31, 2024 compared to $88.3 million at March 31, 2024. FHLB advances at December 31, 2024 were comprised of overnight advances and short term borrowings of $59.2 million and $25.0 million, respectively. FHLB advances at March 31, 2024 were comprised of overnight advances. Funds from FHLB advances were primarily utilized to fund loan activity.

Previous wording

Shareholders' equity increased $5.2 million to $160.8 million at September 30, 2024 compared to $155.6 million at March 31, 2024. The increase was mainly attributable to net income of $2.5 million and a decrease in the accumulated other comprehensive loss related to the change in unrealized holding losses on securities available for sale, net of tax, of $3.5 million for the six months ended September 30, 2024. These increases were partially offset by the payment of cash dividends totaling $843,000.

Current wording

Shareholders' equity increased $2.7 million to $158.3 million at December 31, 2024 compared to $155.6 million at March 31, 2024. The increase was mainly attributable to net income of $3.8 million and a decrease in the accumulated other comprehensive loss related to the change in unrealized holding losses on securities available for sale, net of tax, of $1.0 million for the nine months ended December 31, 2024. These increases were partially offset by the payment of cash dividends totaling $1.3 million and the repurchase of 200,073 shares of common stock totaling $1.1 million.

Previous wording

At periodic intervals, the Company’s banking regulators routinely examine the Company’s financial condition and risk management processes as part of their legally prescribed oversight. Based on their examinations, these regulators can direct that the Company’s consolidated financial statements be adjusted in accordance with their findings. A future examination could include a review of certain transactions or other amounts reported in the Company’s fiscal 2025 consolidated financial statements.

Current wording

At periodic intervals, the Company’s banking regulators routinely examine the Company’s financial condition and risk management processes as part of their legally prescribed oversight. Based on their examinations, these regulators can direct that the Company’s consolidated financial statements be adjusted in accordance with their findings. A future examination could include a review of certain transactions or other amounts reported in the Company’s 2025 consolidated financial statements.

Previous wording

Liquidity is essential to our business. The objectives of the Bank’s liquidity management are to maintain ample cash flows to meet obligations for depositor withdrawals, to fund the borrowing needs of loan customers, and to fund ongoing operations. Core relationship deposits are the primary source of the Bank’s liquidity. As such, the Bank focuses on deposit relationships with local consumer and business clients who maintain multiple accounts and services at the Bank.

Current wording

Liquidity is essential to the operation of our business. The objectives of the Bank’s liquidity management are to maintain ample cash flows to meet obligations for depositor withdrawals, to fund the borrowing needs of loan customers, and to fund ongoing operations. Core relationship deposits are the primary source of the Bank’s liquidity. As such, the Bank focuses on deposit relationships with local consumer and business clients who maintain multiple accounts and services at the Bank.

Previous wording

Liquidity management is both a short and long-term responsibility of the Company's management. The Company adjusts its investments in liquid assets based upon management's assessment of (i) expected loan demand, (ii) projected loan sales, (iii) expected deposit flows, (iv) yields available on interest-bearing deposits and (v) its asset/liability management program objectives. Excess liquidity is invested generally in interest-bearing overnight deposits and other short-term government and agency obligations. If the Company requires funds beyond its ability to generate them internally, it has additional diversified and reliable sources of funds with the FHLB, the FRB and other wholesale facilities. These sources of funds may be used on a long or short-term basis to compensate for a reduction in other sources of funds or on a long-term basis to support lending activities.

Current wording

program objectives. Excess liquidity is generally invested in interest-bearing overnight deposits and other short-term government and agency obligations. If the Company requires funds beyond its ability to generate them internally, it has additional diversified and reliable sources of funds with the FHLB, the FRB and other wholesale facilities. These sources of funds may be used on a long or short-term basis to compensate for a reduction in other sources of funds or on a long-term basis to support lending activities.

Previous wording

The Company must maintain an adequate level of liquidity to ensure the availability of sufficient funds for loan originations, deposit withdrawals, continuing operations, satisfaction other financial commitments, and to take advantage of investment opportunities. During the six months ended September 30, 2024, the Bank used its sources of funds primarily to fund loan commitments. At September 30, 2024, cash and cash equivalents and available for sale investment securities totaled $164.0 million, or 10.6% of total assets. Management believes that the Company’s security portfolio is of high quality and its securities would therefore be marketable. The levels of these assets are dependent on the Company’s operating, financing, lending, and investing activities during any given period. The Bank generally maintains sufficient cash and short-term investments to meet short-term liquidity needs; however, its primary liquidity management practice is to manage short-term borrowings, consistent with its asset/liability objectives. In addition to these primary sources of funds, the Bank has several secondary borrowing sources available to meet potential funding requirements, including FRB borrowings and FHLB advances. At September 30, 2024, the Bank had no advances from the FRB and maintains a credit facility with the FRB with an available borrowing capacity of $299.5 million, subject to sufficient collateral. At September 30, 2024, the Bank had advances totaling $102.3 million from the FHLB and had an additional borrowing capacity of $167.5 million with the FHLB, subject to sufficient collateral and stock investment. At September 30, 2024, the Bank had sufficient unpledged collateral to allow it to utilize its available borrowing capacity from the FRB and the FHLB. Borrowing capacity may, however, fluctuate based on acceptability and risk rating of loan collateral and counterparties could adjust discount rates applied to such collateral at their discretion.

Current wording

The Company must maintain an adequate level of liquidity to ensure the availability of sufficient funds for loan originations, deposit withdrawals, continuing operations, satisfaction other financial commitments, and to take advantage of investment opportunities. During the nine months ended December 31, 2024, the Bank used its sources of funds primarily to fund loan commitments. At December 31, 2024, cash and cash equivalents and available for sale investment securities totaled $150.2 million, or 10.0% of total assets. Management believes that the Company’s security portfolio is of high quality and therefore readily marketable. The levels of these assets are dependent on the Company’s operating, financing, lending, and investing activities during any given period. The Bank generally maintains sufficient cash and short-term investments to meet short-term liquidity needs; however, its primary liquidity management practice is to manage short-term borrowings, consistent with its asset/liability objectives. In addition to these primary sources of funds, the Bank has several secondary borrowing sources available to meet potential funding requirements, including FRB borrowings and FHLB advances. At December 31, 2024, the Bank had no outstanding advances from the FRB and maintains a credit facility with the FRB with an available borrowing capacity of $187.2 million, subject to sufficient collateral. At December 31, 2024, the Bank had advances totaling $84.2 million from the FHLB and had an additional borrowing capacity of $164.4 million with the FHLB, subject to sufficient collateral and stock investment. At December 31, 2024, the Bank had sufficient unpledged collateral to allow it to utilize its available borrowing capacity from the FRB and the FHLB. Borrowing capacity may, however, fluctuate based on acceptability and risk rating of loan collateral and counterparties could adjust discount rates applied to such collateral at their discretion.

Previous wording

An additional source of wholesale funding includes brokered certificates of deposit. While the Company has utilized brokered deposits from time to time, historically it has not extensively relied on brokered deposits to fund its operations. At September 30, 2024 and March 31, 2024, the Bank had no wholesale brokered deposits. The Bank also participates in the Certificate of Deposit Account Registry Services (“CDARS”) and Insured Cash Sweep (“ICS”) deposit products, which allow the Company to accept deposits in excess of the FDIC insurance limit for depositors while obtaining “pass-through” insurance for total deposits. The Bank’s CDARS and ICS balances were $37.4 million, or 3.0% of total deposits, and $39.6 million, or 3.2% of total deposits, at September 30, 2024 and March 31, 2024, respectively. The combination of all the Bank’s funding sources gives the Bank available liquidity of $820.8 million, or 53.0% of total assets at September 30, 2024.

Current wording

An additional source of wholesale funding includes brokered certificates of deposit. While the Company has utilized brokered deposits from time to time, historically it has not extensively relied on brokered deposits to fund its operations. At December 31, 2024 and March 31, 2024, the Bank had no wholesale brokered deposits. The Bank also participates in the Certificate of Deposit Account Registry Services (“CDARS”) and Insured Cash Sweep (“ICS”) deposit products, which allow the Company to accept deposits in excess of the FDIC insurance limit for depositors while obtaining “pass-through” insurance for total deposits. The Bank’s CDARS and ICS balances were $39.6 million, or 3.2% of total deposits at both December 31, 2024 and March 31, 2024. The combination of all the Bank’s funding sources gives the Bank available liquidity of $691.7 million, or 45.9% of total assets at December 31, 2024.

Previous wording

At September 30, 2024, the Company had total commitments of $128.8 million, which includes commitments to extend credit of $14.9 million, unused lines of credit totaling $82.1 million, undisbursed real estate construction loans totaling $30.3 million, and standby letters of credit totaling $1.6 million. The Company anticipates that it will have sufficient funds available to meet current loan commitments. Certificates of deposit that are scheduled to mature in less than one year from September 30, 2024 totaled $220.1 million. Historically, the Bank has been able to retain a significant amount of its deposits as they mature. Offsetting these cash outflows are scheduled loan and investment securities maturities of less than one year totaling $41.4 million and $24.4 million, respectively, at September 30, 2024.

Current wording

At December 31, 2024, the Company had total commitments of $106.6 million, which includes commitments to extend credit of $3.0 million, unused lines of credit totaling $84.7 million, undisbursed real estate construction loans totaling $17.3 million, and standby letters of credit totaling $1.6 million. The Company anticipates that it will have sufficient funds available to meet current loan commitments. Certificates of deposit that are scheduled to mature in less than one year from December 31, 2024 totaled $235.3 million. Historically, the Bank has been able to retain a significant amount of its deposits as they mature. Offsetting these cash outflows are scheduled loan and investment securities maturities of less than one year totaling $45.0 million and $21.1 million, respectively, at December 31, 2024.

Previous wording

The Company incurs capital expenditures on an ongoing basis to expand and improve our product offerings, enhance and modernize our technology infrastructure, and to introduce new technology-based products to compete effectively in our markets. We evaluate capital expenditure projects based on a variety of factors, including expected strategic impacts (such as forecasted impact on revenue growth, productivity, expenses, service levels and customer retention) and our expected return on investment. 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 the remainder of fiscal 2025 we expect cash expenditures of approximately $339,000 for capital investment in premises and equipment.

Current wording

The Company incurs capital expenditures on an ongoing basis to expand and improve our product offerings, enhance and modernize our technology infrastructure, and to introduce new technology-based products to compete effectively in our markets. We evaluate capital expenditure projects based on a variety of factors, including expected strategic impacts (such as forecasted impact on revenue growth, productivity, expenses, service levels and customer retention) and our expected

Previous wording

Riverview Bancorp, Inc., as a separate legal entity from the Bank, must provide for its own liquidity. Sources of capital and liquidity for Riverview Bancorp, Inc. include distributions from the Bank and the issuance of debt or equity securities. Dividends and other capital distributions from the Bank are subject to regulatory notice. Management currently expects to continue the Company’s current practice of paying quarterly cash dividends on its common stock subject to the Board of Directors’ discretion to modify or terminate this practice at any time and for any reason without prior notice. The current quarterly common stock dividend rate is $0.02 per share, as approved by the Board of Directors, which management believes is a dividend rate per share that will enable the Company to balance multiple objectives of managing and investing in the Bank, and returning a substantial portion of the Company’s cash to its shareholders. Assuming continued payment during fiscal 2025 at this rate of $0.02 per share, average total dividends paid each quarter would be approximately $422,000 based on the number of the Company’s outstanding shares as of September 30, 2024. At September 30, 2024, Riverview Bancorp, Inc. had $8.1 million in cash to meet its liquidity needs.

Current wording

Riverview Bancorp, Inc., as a separate legal entity from the Bank, must provide for its own liquidity. Sources of capital and liquidity for Riverview Bancorp, Inc. include distributions from the Bank and the issuance of debt or equity securities. Dividends and other capital distributions from the Bank are subject to regulatory notice. Management currently expects to continue the Company’s current practice of paying quarterly cash dividends on its common stock subject to the Board of Directors’ discretion to modify or terminate this practice at any time and for any reason without prior notice. The current quarterly common stock dividend rate is $0.02 per share, as approved by the Board of Directors, which management believes is a dividend rate per share that will enable the Company to balance multiple objectives of managing and investing in the Bank, and returning a substantial portion of the Company’s cash to its shareholders. Assuming continued payment during fiscal 2025 at this rate of $0.02 per share, average total dividends paid each quarter would be approximately $423,000 based on the number of the Company’s outstanding shares as of December 31, 2024. At December 31, 2024, Riverview Bancorp, Inc. had $6.6 million in cash to meet its liquidity needs.

Previous wording

Nonperforming assets were $450,000 or 0.03% of total assets at September 30, 2024, compared to $178,000 or 0.01% of total assets at March 31, 2024. At September 30, 2024, SBA and United States Department of Agriculture (“USDA”) government guaranteed loans that were 90 days or more past due and still accruing interest included in nonperforming assets totaled $301,000 compared to $5,000 at March 31, 2024. The Company expects to receive all principal and interest since the Company purchased the guaranteed portion of these loans which is backed by government guaranteed interest certificates. The Company had no other real estate owned or foreclosed assets at September 30, 2024 or March 31, 2024.

Current wording

Nonperforming assets were $469,000 or 0.03% of total assets at December 31, 2024, compared to $178,000 or 0.01% of total assets at March 31, 2024. At December 31, 2024, SBA and United States Department of Agriculture (“USDA”) government guaranteed loans that were 90 days or more past due and still accruing interest included in nonperforming assets totaled $301,000 compared to $5,000 at March 31, 2024. The Company expects to receive all principal and interest since the Company purchased the guaranteed portion of these loans which is backed by government guaranteed interest certificates. The Company had no other real estate owned or foreclosed assets at December 31, 2024 or March 31, 2024.

Previous wording

The ACL for loans was $15.5 million or 1.46% of total loans at September 30, 2024 and $15.4 million or 1.50% of total loans at March 31, 2024. For the six months ended September 30, 2024, the Company recorded a provision for credit losses of $100,000 compared to none for the same period in the prior fiscal year. The coverage ratio of the ACL for loans to nonperforming loans was 3436.89% at September 30, 2024 compared to 8631.46% at March 31, 2024. The Company’s general valuation allowance to pooled or “collectively evaluated” loans was 1.46% at September 30, 2024 and 1.50% at March 31, 2024.

Current wording

The ACL for loans was $15.4 million or 1.47% of total loans at December 31, 2024 and $15.4 million or 1.50% of total loans at March 31, 2024. For the nine months ended December 31, 2024, the Company recorded a provision for credit losses of $100,000 compared to none for the same period in the prior fiscal year. The coverage ratio of the ACL for loans to nonperforming loans was 3273.35% at December 31, 2024 compared to 8631.46% at March 31, 2024. The Company’s general valuation allowance to pooled or “collectively evaluated” loans was 1.47% at December 31, 2024 and 1.50% at March 31, 2024.

Previous wording

Management considers the ACL for loans and unfunded loan commitments to be adequate at September 30, 2024 based on an evaluation of various factors affecting the loan portfolio. The Company believes it has established its current ACL in accordance with GAAP, however, a material increase in the ACL may be required if there is a deterioration in national or local economic conditions (including those driven by inflation or recession), results of regulatory examinations, or other relevant factors. Such an increase could negatively impact the Company’s future financial condition and results of operations. In addition, since future events affecting borrowers and collateral values cannot be predicted with certainty, there is no guarantee that the current ACL will remain adequate. Significant increases in the ACL may be necessary if the quality of loans decline or if collateral values decrease, as discussed elsewhere in this document. For further information regarding the Company’s individually evaluated loans and ACL for loans and unfunded loan commitments, see Note 6 of the Notes to Consolidated Financial Statements contained in Item 1 of this Form 10-Q.

Current wording

relevant factors. Such an increase could negatively impact the Company’s future financial condition and results of operations. In addition, since future events affecting borrowers and collateral values cannot be predicted with certainty, there is no guarantee that the current ACL will remain adequate. Significant increases in the ACL may be necessary if the quality of loans decline or if collateral values decrease, as discussed elsewhere in this document. For further information regarding the Company’s individually evaluated loans and ACL for loans and unfunded loan commitments, see Note 6 of the Notes to Consolidated Financial Statements contained in Item 1 of this Form 10-Q.

Previous wording

At September 30, 2024, loans delinquent 30-89 days totaled $6.8 million or 0.65% of total loans, up from $1.8 million or 0.17% of total loans at March 31, 2024. The increase in loans delinquent 30-89 days was primarily attributable to one commercial real estate loan totaling $3.6 million which is due to a circumstance where the loan is in the probate process. A plan is in place to bring the loan current once the probate process is completed, and no loss is expected. At September 30, 2024, CRE loans represented the largest portion of the loan portfolio at 54.05% of total loans and commercial business represented 22.33% of total loans.

Current wording

At December 31, 2024, loans delinquent 30-89 days totaled $5.6 million or 0.53% of total loans, up from $1.8 million or 0.17% of total loans at March 31, 2024. The increase in loans delinquent 30-89 days was primarily attributable to one real estate construction loan totaling $2.1 million and one consumer loan totaling $1.0 million. At December 31, 2024, CRE loans represented the largest portion of the loan portfolio at 54.97% of total loans and commercial business represented 21.48% of total loans.

Previous wording

Comparison of Operating Results for the Three and Six Months Ended September 30, 2024 and 2023

Current wording

Comparison of Operating Results for the Three and Nine Months Ended December 31, 2024 and 2023

Previous wording

Net Income. Net income was $1.6 million, or $0.07 per diluted share, for the three months ended September 30, 2024, compared to $2.5 million, or $0.12 per diluted share for the same period in the prior year. Net income for the six months ended September 30, 2024 and 2023 was $2.5 million, or $0.12 per diluted share, and $5.3 million, or $0.25 per diluted share, respectively. The Company’s net income decreased during both the three and six month periods ended September 30, 2024, compared to the same periods in the prior year, due primarily to increased interest paid on deposits. In addition, net income was also impacted, to a lesser extent, by an increase in non-interest expense of $612,000 and $1.6 million for the three and six months ended September 30, 2024, partially offset by an increase in non-interest income of $434,000 and $516,000 for the same periods, respectively.

Current wording

Net Income. Net income was $1.2 million, or $0.06 per diluted share, for the three months ended December 31, 2024, compared to $1.5 million, or $0.07 per diluted share for the same period in the prior year. Net income for the nine months ended December 31, 2024 and 2023 was $3.8 million, or $0.18 per diluted share, and $6.8 million, or $0.32 per diluted share, respectively. The Company’s net income decreased during both the three and nine month periods ended December 31, 2024, compared to the same periods in the prior year, due primarily to increased interest paid on deposits partially offset by a decrease in interest paid on borrowings. In addition, net income was also impacted by an increase in non-interest expense of $602,000 and $2.2 million for the three and nine months ended December 31, 2024, partially offset by an increase in non-interest income of $285,000 and $801,000 for the same periods, respectively.

Previous wording

Interest and Dividend Income. Interest and dividend income for the three and six months ended September 30, 2024 was $14.9 million and $29.3 million, respectively, compared to $14.0 million and $28.0 million for the same periods in the prior year, respectively. The increase for the three and six months ended September 30, 2024 was primarily due to the increase in interest income on loans receivable of $1.3 million and $2.1 million, respectively, when compared to the three and six months ended September 30, 2023, which resulted from an increase in the average yield earned on loans and, to a lesser extent, the overall increase in the average balance of net loans.

Current wording

Interest and Dividend Income. Interest and dividend income for the three and nine months ended December 31, 2024 was $15.1 million and $44.5 million, respectively, compared to $14.3 million and $42.3 million for the same periods in the prior year, respectively. The increase for the three and nine months ended December 31, 2024 was primarily due to the increase in interest income on loans receivable of $1.6 million and $3.6 million, respectively, when compared to the three and nine months ended December 31, 2023, which resulted from an increase in the average yield earned on loans and, to a lesser extent, the overall increase in the average balance of net loans.

Previous wording

Interest and fees earned on net loans increased by $1.3 million and $2.1 million for the three and six months ended September 30, 2024, compared to the same periods in the prior year primarily due to the overall increases in the average balance and yield earned on mortgage loans. The average yield on loans increased to 4.80% and 4.75% for the three and six months ended September 30, 2024, compared to 4.51% for both the three and six months ended September 30, 2023. The average yield on mortgage related loans increased to 4.78% and 4.75% for the three and six months ended September 30, 2024, respectively, compared to 4.47% and 4.48% for the same periods in the prior year, respectively. The average balance of net loans increased to $1.05 billion and $1.04 billion for the three and six months ended September 30, 2024, respectively, from $1.01 billion and $1.00 billion for the comparable periods in the prior year, respectively. The average balance of mortgage loans increased $34.2 million and $27.7 million to $783.8 million and $778.4 million for the three and six months ended September 30, 2024, respectively, from $749.6 million and $750.7 million for the same periods in the prior year.

Current wording

The average yield on loans increased to 4.97% and 4.83% for the three and nine months ended December 31, 2024, compared to 4.56% and 4.53% for the comparable periods in 2023. The average yield on mortgage related loans increased to 5.00% and 4.83% for the three and nine months ended December 31, 2024, respectively, compared to 4.57% and 4.51% for the same periods in the prior year, respectively. The average balance of net loans increased to $1.05 billion and $1.04 billion for the three and nine months ended December 31, 2024, respectively, from $1.02 billion and $1.01 billion for the comparable periods in the prior year, respectively. The average balance of mortgage loans increased $21.9 million and $25.8 million to $787.4 million and $781.4 million for the three and nine months ended December 31, 2024, respectively, from $765.4 million and $755.6 million for the same periods in the prior year.

Previous wording

Interest earned on investment securities decreased $387,000 and $750,000 for the three and six months ended September 30, 2024, compared to the same periods in the prior year. The decrease was primarily the result of a decrease in the average balance of investment securities of $87.6 million and $86.2 million to $378.4 million and $384.8 million for the three and six months ended September 30, 2024, respectively, compared to $466.0 million and $471.0 million for the same periods in the prior year. During the last quarter of fiscal year 2024, the Company restructured a portion of its balance sheet by selling approximately $46.2 million of its lower-yielding available for sale investment securities. The remaining decrease is attributable to normal paydown activities. The average yield on investment securities was 2.05% and 2.08% for the three and six months ended September 30, 2024, respectively, compared to 2.00% and 2.02 % for the same periods in the prior year. The increase in yield is related to the sales of lower-yielding securities as previously discussed.

Current wording

Interest earned on investment securities decreased $643,000 and $1.4 million for the three and nine months ended December 31, 2024, compared to the same periods in the prior year. The decrease was primarily the result of a decrease in the average balance of investment securities of $93.8 million and $88.8 million to $364.2 million and $377.9 million for the three and nine months ended December 31, 2024, respectively, compared to $458.0 million and $466.7 million for the same periods in the prior year. During the last quarter of fiscal year 2024, the Company restructured a portion of its balance sheet by selling approximately $46.2 million of its lower-yielding available for sale investment securities. The remaining decrease is attributable to normal paydown and maturity activities. The average yield on investment securities was 1.82% and 2.00% for the three and nine months ended December 31, 2024, respectively, compared to 2.01% and 2.02% for the same periods in the prior year.

Previous wording

Interest Expense. Interest expense totaled $6.0 million and $11.6 million for the three and six months ended September 30, 2024, compared to $4.2 million and $7.8 million for the three and six months ended September 30, 2023, respectively. Interest expense on deposits increased $2.0 million and $4.1 million for the three and six months ended September 30, 2024, respectively, compared to the same periods in the prior year primarily due to the increase in the average rates paid on certificates of deposits, interest checking accounts and money market accounts, and to a lesser extent, the average balance of certificates of deposit and interest checking accounts. The average rate paid on certificates of deposit increased 120 basis points and 126 basis points to 3.89% and 3.78% for the three and six months ended September 30, 2024, respectively, compared to the same periods for the prior year. The average balance of certificates of deposit increased $64.4 million and $63.3 million for the three and six months ended September 30, 2024, respectively, compared to the same periods in the prior year. The average rate paid on interest checking accounts increased 107 basis points and 106 basis points for the three and six months ended September 30, 2024, respectively, compared to the same periods in the prior year. The average balance of interest checking accounts increased $23.9 million and $23.0 million for the three and six months ended September 30, 2024, respectively, compared to the same periods in the prior year. The average rate paid on money market accounts increased 62 basis points and 69 basis points for the three and six months ended September 30, 2024, respectively, compared to the same periods in the prior year. These increases were partially offset by a $31.7 million and $27.2 million decrease in the average balance of money market accounts for the three and six months ended September 30, 2024, respectively, compared to the same periods in the prior year.

Current wording

Interest Expense. Interest expense totaled $5.7 million and $17.3 million for the three and nine months ended December 31, 2024, compared to $4.9 million and $12.7 million for the three and nine months ended December 31, 2023, respectively. Interest expense on deposits increased $2.0 million and $6.1 million for the three and nine months ended December 31, 2024, respectively, compared to the same periods in the prior year primarily due to the increase in the average rates paid on certificates of deposits, interest checking accounts and money market accounts, and to a lesser extent, the average balance of interest checking accounts. The average rate paid on certificates of deposit increased 97 basis points and 115 basis points to 3.88% and 3.81% for the three and nine months ended December 31, 2024, respectively, compared to the same periods for the prior year. The average balance of certificates of deposit increased $77.2 million and $68.0 million for the three and nine months ended December 31, 2024, respectively, compared to the same periods in the prior year. The average rate paid on interest checking accounts increased 84 basis points and 99 basis points to 0.94% and 1.04% for the three and nine months ended December 31, 2024, respectively, compared to the same periods in the prior year. The average balance of interest checking accounts increased $33.2 million and $26.4 million for the three and nine months ended December 31, 2024, respectively, compared to the same periods in the prior year. The average rate paid on money market accounts increased 57 basis points and 66 basis points to 1.92% and 1.82% for the three and nine months ended December 31, 2024, respectively, compared to the same periods in the prior year. These increases were partially offset by a $2.9 million and $19.1 million decrease in the average balance of money market accounts for the three and nine months ended December 31, 2024, respectively, compared to the same periods in the prior year.

Previous wording

Interest expense on borrowings decreased $207,000 and $301,000 for the three and six months ended September 30, 2024, respectively, compared to the same periods in the prior year primarily due to a decrease in the average balance of FHLB advances. The average balance of FHLB advances was $114.5 million and $113.1 million for the three and six months ended September 30, 2024, respectively, compared to $131.1 million and $130.5 million for the same periods in the prior year. The average rate paid on FHLB advances was 5.44% and 5.52% for the three and six months ended September 30, 2024, respectively, compared to 5.39% and 5.31% for the same periods in the prior year.

Current wording

Interest expense on borrowings decreased $1.3 million and $1.6 million for the three and nine months ended December 31, 2024, respectively, compared to the same periods in the prior year primarily due to a decrease in the average balance of FHLB advances. The average balance of FHLB advances was $90.4 million and $105.5 million for the three and nine months ended December 31, 2024, respectively, compared to $167.9 million and $143.0 million for the same periods in the prior year. The average rate paid on FHLB advances was 4.83% and 5.32% for the three and nine months ended December 31, 2024, respectively, compared to 5.47% and 5.37% for the same periods in the prior year.

Previous wording

The following table sets forth the effects of changing rates and volumes on net interest income of the Company for the three and six months ended September 30, 2024 compared to the three and six months ended September 30, 2023. 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).

Current wording

The following table sets forth the effects of changing rates and volumes on net interest income of the Company for the three and nine months ended December 31, 2024 compared to the three and nine months ended December 31, 2023. 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).

Previous wording

**Provision for Credit Losses.**The Company recorded a provision for credit losses of $100,000 for the three and six months ended September 30, 2024, compared to no provision for credit losses for the three and six months ended September 30, 2023.The increase in the provision for credit losses was primarily due to the overall increase in the loan portfolio. The lack of provision for credit losses for the three and six months ended September 30, 2023 reflects assumptions related to our forecast concerning the economic environment as a result of local, national and global events. In addition, expected loss estimates consider various factors, including customer-specific information, changes in risk ratings, projected delinquencies, and the impact of economic conditions on borrowers' ability to repay. Net recoveries totaled $2,000 for the three and six months ended September 30, 2024, respectively. This compares to net recoveries of $3,000 and net charge-offs of $5,000 for the three and six months ended September 30, 2023, respectively. Annualized net charge-offs/recoveries were insignificant for both the three and six months ended September 30, 2024 and 2023.

Current wording

**Provision for Credit Losses.**There was no provision for credit losses for the three months ended December 31, 2024 and 2023. The Company recorded a provision for credit losses of $100,000 for the nine months ended December 31, 2024, compared to no provision for credit losses for the nine months ended December 31, 2023. The increase in the provision for credit losses for the nine months ended December 31, 2024 was primarily due to the overall increase in the loan portfolio. The lack of provision for credit losses for the three and nine months ended December 31, 2023 reflects assumptions related to our forecast concerning the economic environment as a result of local, national and global events. In addition, expected loss estimates consider various factors, including customer-specific information, changes in risk ratings, projected delinquencies, and the impact of economic conditions on borrowers' ability to repay. Net charge-offs totaled $114,000 for the three months ended December 31, 2024, compared to net recoveries of $15,000 for the same period in the prior year. Net charge-offs totaled $112,000 for the nine months ended December 31, 2024, compared to net recoveries of $10,000 for the same period in the prior year. Annualized net charge-offs/recoveries were $452,000 and $149,000 for the three and nine months ended December 31, 2024. Annualized net charge-offs/recoveries were insignificant for both the three and nine months ended December 31, 2023.

Previous wording

Nonperforming loans were $450,000 at September 30, 2024, compared to $178,000 at March 31, 2024. Included in the $450,000 of nonperforming loans at September 30, 2024, were $301,000 of SBA and USDA government guaranteed loans. The Company expects to receive all principal and interest on these SBA and USDA loans since the Company purchased the guaranteed portion of the loans which is backed by government guaranteed interest certificates.

Current wording

Nonperforming loans were $469,000 at December 31, 2024, compared to $178,000 at March 31, 2024. Included in the $469,000 of nonperforming loans at December 31, 2024, was a $301,000 of SBA and USDA government guaranteed loan. The Company expects to receive all principal and interest on this SBA and USDA loan since the Company purchased the guaranteed portion of the loan which is backed by government guaranteed interest certificates.

Previous wording

The ratio of the ACL for loans to nonperforming loans was 3436.89% at September 30, 2024 compared to 8631.46% at March 31, 2024. See “Asset Quality” above for additional information related to asset quality that management considers in determining the appropriate level of the ACL.

Current wording

The ratio of the ACL for loans to nonperforming loans was 3273.35% at December 31, 2024 compared to 8631.46% at March 31, 2024. See “Asset Quality” above for additional information related to asset quality that management considers in determining the appropriate level of the ACL.

Previous wording

Non-Interest Income. Non-interest income increased $434,000 and $516,000 to $3.8 million and $7.2 million for the three and six months ended September 30, 2024, respectively, compared to $3.4 million and $6.7 million for the same periods in the prior year. The increase for both periods were primarily due to approximately $500,000 in other non-interest income related to a legal expense recovery related to the settled litigation matter from the prior year. In addition, asset management fees income increased by $160,000 and $337,000 for the three and six months ended September 30, 2024, respectively, compared to the same periods in the prior year due to new client relationships and a strong equity market performance during the three and six months ended September 30, 2024. Other changes in non-interest income for the three and six months ended September 30, 2024 compared to the same periods in the prior year included a decrease of $214,000 and $274,000 in fees and service charges. The decrease in fees and service charges for the three and six months ended September 30, 2024 primarily resulted from a $167,000 decrease in employee retention credit income and a decrease in interchange income of $45,000 and $68,000, respectively.

Current wording

Non-Interest Income. Non-interest income increased $285,000 and $801,000 to $3.3 million and $10.5 million for the three and nine months ended December 31, 2024, respectively, compared to $3.1 million and $9.7 million for the same periods in the prior year. The increase for the nine months ended December 31, 2024 compared to the prior year was primarily due to approximately $583,000 in other non-interest income related to a legal expense recovery from settled litigation in the prior year. In addition, asset management fees income increased by $177,000 and $514,000 for the three and nine months ended December 31, 2024, respectively, compared to the same periods in the prior year due to new client relationships and continued positive equity market performance during the three and nine months ended December 31, 2024. Other changes in non-interest income for the three and nine months ended December 31, 2024 compared to the same periods in the prior year included a decrease of $41,000 and $315,000 in fees and service charges, respectively. The decrease in fees and service charges for the three and nine months ended December 31, 2024 primarily resulted from a decrease in employee retention credit income of $18,000 and $186,000 and a decrease in interchange income of $41,000 and $108,000, respectively.

Previous wording

Non-Interest Expense. Non-interest expense increased $612,000 and $1.6 million to $10.7 million and $21.7 million for the three and six months ended September 30, 2024, respectively, compared to $10.1 million and $20.1 million for the same periods in the prior year, respectively. Salaries and employee benefits increased $632,000 and $977,000 for the three and six months ended September 30, 2024, respectively, compared to the same periods in the prior year due to increases in compensation expense and bonus expense. Occupancy and depreciation expense increased by $272,000 and $584,000 for the three and six months ended September 30, 2024, respectively, compared to the same periods in the prior year due to increases in computer software, depreciation, repair and maintenance expenses as the Company continues to update and modernize branch locations, and a one-time lease termination fee incurred in September 2024 as a result of the Company purchasing the Orchards location. Other changes in non-interest expense was an increase of $186,000 in professional fees for the six months ended September 30, 2024 compared to the same period in the prior year due to increases in consulting expense. Offsetting these fluctuations was a decrease in other non-interest expense of $318,000 and $201,000 for the three and six months ended September 30, 2024, respectively, compared to the same periods in the prior year due to excess accrued expenses related to litigation that was recognized in the prior year and an increase in fraud recoveries, partially offset by additional accruals for business and occupation taxes. For further information regarding the litigation, see “Note 13. Commitments and Contingencies”.

Current wording

Non-Interest Expense. Non-interest expense increased $603,000 and $2.2 million to $11.2 million and $32.8 million for the three and nine months ended December 31, 2024, respectively, compared to $10.6 million and $30.6 million for the same periods in the prior year, respectively. Salaries and employee benefits increased $380,000 and $1.4 million for the three and nine months ended December 31, 2024, respectively, compared to the same periods in the prior year due to increases in compensation expense, bonus expense, and recruiting expense. Occupancy and depreciation expense increased by $173,000 and $757,000 for the three and nine months ended December 31, 2024, respectively, compared to the same periods in the prior year due to increases in computer software, depreciation, repair and maintenance expenses as the Company continues to update and modernize branch locations. Additionally, a one-time lease termination fee was incurred in September 2024 as a result of the Company purchasing its Orchards branch location. Other changes in non-interest expense were increases of $76,000 and $262,000 in professional fees for the three and nine months ended December 31, 2024, respectively, compared to the same periods in the prior year due to increases in consulting expense. Offsetting these fluctuations was a decrease in other non-interest expense of $56,000 and $257,000 for the three and nine months ended December 31, 2024, respectively, compared to the same periods in the prior year due to excess accrued expenses related to litigation recognized in the prior year and an increase in fraud recoveries, partially offset by additional accruals for business and occupation taxes. For further information regarding the litigation, see “Note 13. Commitments and Contingencies.”

Previous wording

Income Taxes. The provision for income taxes was $425,000 and $678,000 for the three and six months ended September 30, 2024, respectively, compared to $697,000 and $1.5 million for the same periods in the prior year. The decrease in the provision for income taxes was due to lower pre-tax income for the three and six months ended September 30, 2024, compared to the same periods in the prior year. The Company’s effective tax rate for the three and six months ended September 30, 2024, was 21.4% and 21.2%, respectively, compared to 22.0% and 22.2% for the three and six months ended September 30, 2023, respectively. The lower effective tax rate for the three and six months ended September 30, 2024 is due to lower pretax income. At September 30, 2024, management deemed that a valuation allowance related to the Company’s deferred tax asset was not necessary. At September 30, 2024, the Company had a net deferred tax asset of $8.7 million compared to $9.8 million at March 31, 2024.

Current wording

Income Taxes. The provision for income taxes was $343,000 and $1.0 million for the three and nine months ended December 31, 2024, respectively, compared to $377,000 and $1.9 million for the same periods in the prior year. The decrease in the provision for income taxes was due to lower pre-tax income for the three and nine months ended December 31, 2024, compared to the same periods in the prior year. The Company’s effective tax rate for the three and nine months ended December 31, 2024, was 21.8% and 21.4%, respectively, compared to 20.6% and 21.9% for the three and nine months ended December 31, 2023, respectively. The lower effective tax rate for the nine months ended December 31, 2024 is due to lower pretax income. At December 31, 2024, management deemed that a valuation allowance related to the Company’s deferred tax asset was not necessary. At December 31, 2024, the Company had a net deferred tax asset of $9.5 million compared to $9.8 million at March 31, 2024.