covid pandemic – Bourg Immobilier http://bourg-immobilier.com/ Sun, 20 Feb 2022 15:36:00 +0000 en-US hourly 1 https://wordpress.org/?v=5.9.3 https://bourg-immobilier.com/wp-content/uploads/2021/03/default.png covid pandemic – Bourg Immobilier http://bourg-immobilier.com/ 32 32 This city bans rent increases for most tenants until 2023. Will others follow? https://bourg-immobilier.com/this-city-bans-rent-increases-for-most-tenants-until-2023-will-others-follow/ Sun, 20 Feb 2022 15:36:00 +0000 https://bourg-immobilier.com/this-city-bans-rent-increases-for-most-tenants-until-2023-will-others-follow/

Manyone who has seen their finances shaken since the start of the COVID-19 pandemic. And while the economy is, thankfully, in much better shape now than it was at the start of the health crisis, many people have yet to recover. This includes tenants and landlords.

For much of the pandemic, there was a federal eviction ban that prohibited landlords from evicting tenants for nonpayment. And while that eviction ban expired in mid-2021, many cities and states have opted to expand their own protections, especially in the wake of extremely slow rollouts of housing assistance funds.

Meanwhile, some cities are taking extra steps to protect tenants at a time when rental prices are soaring nationwide. But those protections could end up hurting homeowners significantly.

Image source: Getty Images.

No rent hike in Los Angeles this year

Los Angeles landlords barred from raising the cost of rent on more than 650,000 rent-stabilized units across the city through 2023. That number represents nearly 75% of rental apartment inventory from the city.

Obviously, this rule is good for tenants. Some tenants are still in catch-up mode after not paying rent during the pandemic, and for them a short-term rent hike could be catastrophic.

But unfortunately, Los Angeles’ decision puts the city’s owners in a very difficult situation. Many landlords have had to go months without collecting rent during the pandemic. Meanwhile, they grapple with their own rising costs.

Just as inflation hits the wallets of everyday consumers, it also makes rental properties more expensive to maintain. This is because utility costs have gone up, as have labor costs, which means homeowners who contract out maintenance can pay more than usual for maintenance.

The problem is compounded by the fact that many states have not accelerated the rollout of housing assistance funds. Although this money is intended to bail out delinquent tenants, it is the landlords who ultimately benefit. But that only works if those funds actually arrive.

Will more cities implement rent freezes?

The percentage of struggling tenants needing help varies from city to city. And so whether more cities will implement rent freezes will largely depend on how many tenants remain delinquent and the extent to which tenants are at risk of becoming homeless – something no city wants to see. to augment.

But a number of cities have opted to implement rent increase limits in recent months. In nearby Santa Ana, California, for example, most buildings can’t raise rents more than 3% a year. We might see similar rules fall on the pike as the ongoing saga unfolds.

An important takeaway for budding owners

Being a landlord is a great way to generate ongoing income as a real estate investor. But it is certainly not without risk.

Owning a rental property can mean dealing with issues such as damage to tenants, vacancies and rising costs that cannot be offset by higher rental prices. And the pandemic has taught many homeowners the hard way that sometimes homeowners have the end of the stick during tough economic times.

Los Angeles officials who support the rent hike ban say putting it in place until 2023 will give tenants more stability so they can focus on being safe and securing their finances. It’s a good idea in theory. But it also overlooks the fact that many owners are not large property management companies, but rather family investors who have tried their luck owning income properties. And it’s those owners who may continue to struggle for at least another year.

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KENTUCKY FIRST FEDERAL BANCORP: MANAGEMENT REPORT AND ANALYSIS OF FINANCIAL POSITION AND RESULTS OF OPERATIONS (Form 10-Q) https://bourg-immobilier.com/kentucky-first-federal-bancorp-management-report-and-analysis-of-financial-position-and-results-of-operations-form-10-q/ Mon, 14 Feb 2022 17:25:04 +0000 https://bourg-immobilier.com/kentucky-first-federal-bancorp-management-report-and-analysis-of-financial-position-and-results-of-operations-form-10-q/

Forward-looking statements




Certain statements contained in this report that are not historical facts are
forward-looking statements that are subject to certain risks and uncertainties.
When used herein, the terms "anticipates," "plans," "expects," "believes," and
similar expressions as they relate to Kentucky First Federal Bancorp or its
management are intended to identify such forward-looking statements. Kentucky
First Federal Bancorp's actual results, performance or achievements may
materially differ from those expressed or implied in the forward-looking
statements. Risks and uncertainties that could cause or contribute to such
material differences include, but are not limited to, general economic
conditions, prices for real estate in the Company's market areas, interest rate
environment, competitive conditions in the financial services industry, changes
in law, governmental policies and regulations, rapidly changing technology
affecting financial services, the potential effects of the COVID-19 pandemic on
the local and national economic environment, on our customers and on our
operations (as well as any changes to federal, state and local government laws,
regulations and orders in connection with the pandemic), and the other matters
mentioned in Item 1A of the Company's Annual Report on Form 10-K for the year
ended June 30, 2021. Except as required by applicable law or regulation, the
Company does not undertake the responsibility, and specifically disclaims any
obligation, to release publicly the result of any revisions that may be made to
any forward-looking statements to reflect events or circumstances after the date
of the statements or to reflect the occurrence of anticipated or unanticipated
events.



                                      27





                         Kentucky First Federal Bancorp
          MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                     AND RESULTS OF OPERATIONS (continued)



Average Balance Sheets



The following table represents the average balance sheets for the six month
periods ended December 31, 2021 and 2020, along with the related calculations of
tax-equivalent net interest income, net interest margin and net interest spread
for the related periods.



                                                             Six Months Ended December 31,
                                                    2021                                       2020
                                                  Interest                                   Interest
                                    Average          And          Yield/       Average          And          Yield/
                                    Balance       Dividends        Cost        Balance       Dividends        Cost
                                                                (Dollars in thousands)
Interest-earning assets:
Loans 1                            $ 293,644     $     5,677         3.87 %   $ 292,778     $     5,936         4.06 %
Mortgage-backed securities               467               6         2.57           604               8         2.65
Other securities                           -               -            -           196               3         3.06
Other interest-earning assets         34,924              72         0.41        21,341              84         0.79
Total interest-earning assets        329,035           5,755         3.50       314,919           6,031         3.83
Less: Allowance for loan losses       (1,611 )                             
     (1,518 )
Non-interest-earning assets           12,254                                     12,555
Total assets                       $ 339,678                                  $ 325,956

Interest-bearing liabilities:
Demand deposits                    $  20,786     $        19         0.18 %   $  17,675     $        15         0.17 %
Savings                               71,762             135         0.38        60,298             125         0.42
Certificates of deposit              126,564             565         0.89       130,479             800         1.23
Total deposits                       219,112             719         0.66       208,452             940         0.90
Borrowings                            52,423             198         0.76        54,261             228         0.84
Total interest-bearing
liabilities                          271,535             917         0.68       262,713           1,168         0.89

Noninterest-bearing demand
deposits                              13,766                                      9,006
Noninterest-bearing liabilities        2,131                               
      2,247
Total liabilities                    287,432                                    273,966

Shareholders' equity                  52,246                                     51,990
Total liabilities and
shareholders' equity               $ 339,678                                  $ 325,956
Net interest spread                              $     4,838         2.82 %                 $     4,863         2.94 %
Net interest margin                                                  2.94 %                                     3.09 %
Average interest-earning assets
to average interest-bearing
liabilities                                                        121.18 %                                   119.87 %



1 Includes loan fees, of an insignificant amount, both in interest income and in

    calculation of yield on loans. Also includes loans on nonaccrual status.




                                      28





                         Kentucky First Federal Bancorp
          MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                     AND RESULTS OF OPERATIONS (continued)



Average Balance Sheets



The following table represents the average balance sheets for the three-month
periods ended December 31, 2021 and 2020, along with the related calculations of
tax-equivalent net interest income, net interest margin and net interest spread
for the related periods.



                                                            Three Months Ended December 31,
                                                    2021                                       2020
                                                  Interest                                   Interest
                                    Average          And          Yield/       Average          And          Yield/
                                    Balance       Dividends        Cost        Balance       Dividends        Cost
                                                                (Dollars in thousands)
Interest-earning assets:
Loans 1                            $ 289,434     $     2,743         3.79 %   $ 296,294     $     2,960         4.00 %
Mortgage-backed securities               453               3         2.65           587               4         2.73
Other securities                           -               -            -             -               -            -
Other interest-earning assets         38,318              35         0.37        20,859              38         0.73
Total interest-earning assets        328,205           2,781         3.39       317,740           3,002         3.78
Less: Allowance for loan losses       (1,607 )                             
     (1,544 )
Non-interest-earning assets           12,549                                     12,579
Total assets                       $ 339,147                                  $ 328,775

Interest-bearing liabilities:
Demand deposits                    $  20,423     $        10         0.20 %   $  18,358     $         8         0.17 %
Savings                               73,086              67         0.37        63,112              66         0.42
Certificates of deposit              127,088             274         0.86       127,215             352         1.11
Total deposits                       220,597             351         0.64       208,685             426         0.82
Borrowings                            49,963              97         0.78        56,730             103         0.73
Total interest-bearing
liabilities                          270,560             448         0.66       265,415             529         0.80

Noninterest-bearing demand
deposits                              14,129                                      9,380
Noninterest-bearing liabilities        2,042                               
      2,158
Total liabilities                    286,731                                    276,953

Shareholders' equity                  52,416                                     51,822
Total liabilities and
shareholders' equity               $ 339,147                                  $ 328,775
Net interest spread                              $     2,333         2.73 %                 $     2,473         2.98 %
Net interest margin                                                  2.84 %                                     3.11 %
Average interest-earning assets
to average interest-bearing
liabilities                                                        121.31 %                                   119.71 %



1 Includes loan fees, of an insignificant amount, both in interest income and in

    calculation of yield on loans. Also includes loans on nonaccrual status.






                                      29





                         Kentucky First Federal Bancorp
          MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                     AND RESULTS OF OPERATIONS (continued)


Discussion of changes in the financial situation of June 30, 2021 at December 31, 2021

Risks and Uncertainties Related to COVID-19- In March 2020 the World Health
Organization determined that the spread of a new coronavirus, COVID-19, had
risen to such a level as to constitute a worldwide pandemic. The spread of this
virus has created a global public health crisis. Uncertainty related to the
effects of the virus have disrupted financial markets, activity in all aspects
of life including governmental, business and consumer routines and the markets
in which the Company operates. In response to the crisis governmental
authorities closed or limited the operations of many non-essential businesses
and required various responses from individuals including stay-at-home
restrictions and social distancing. These governmental restrictions, along with
a fear of contracting the virus, have resulted in severe reduction of commercial
and consumer activity, which is resulting in loss of revenues by businesses, a
dramatic spike in unemployment, material decreases in oil and gas prices and in
business valuations, disrupted global supply chains and market volatility.



Management continues to monitor the general impact of COVID-19, as well as
certain provisions of the Coronavirus Aid, Relief and Economic Security
("CARES") Act, enacted on March 27, 2020, and other more recent legislative and
regulatory relief efforts. Because the impact is contingent upon the duration
and severity of the economic downturn, management cannot determine or estimate
the magnitude of the impact at this time. While the pandemic has affected the
physical operations of the Banks, the business has been mostly unchanged with
consistent levels of consumer transactions and loan originations. The potential
for a deterioration in asset quality remains, but actual asset quality has
improved. Classified assets at December 31, 2021 totaled $8.1 million compared
to $10.5 million at March 31, 2020. Management attributes some of this improved
performance to the overall strengthening in the residential real estate market.
Approximately 95% of the Company's loans are secured by residential real estate.



Business Continuity, Processes and Controls




In response to the COVID-19 pandemic the Banks are considered essential
businesses and have remained open for business. We implemented our pandemic
preparedness plan and generally maintained regular business hours through
drive-thru facilities, automated teller machines, remote deposit capture and
online and mobile banking applications. We offer by-appointment options for
transactions requiring in-person contact while maintaining social distancing
mandates and surface cleaning protocols. Our staff is practicing recommended
personal hygiene protocols and social distancing while working on premises. We
do not face current material resource constraints through the implementation of
our pandemic preparedness plan and do not anticipate incurring any material cost
related to its implementation. We have not identified any material operational
or internal control challenges or risks, nor do we anticipate any significant
challenges to our ability to maintain our systems and controls, related to
operational changes resulting from implementation of the pandemic preparedness
plan.



                                      30





                         Kentucky First Federal Bancorp
          MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                     AND RESULTS OF OPERATIONS (continued)


Discussion of changes in the financial situation of June 30, 2021 at December 31, 2021 (continued)

Financial condition and results of operations

Bank regulators have issued guidance and are encouraging banks to work with
customers affected by COVID-19. Accordingly, we actively worked with borrowers
affected by COVID-19 by offering a payment deferral program providing for either
a three-month interest-only period or a full payment deferral for three months.
While interest and fees continued to accrue to income While interest and fees,
under normal GAAP accounting if eventual credit losses on these deferred
payments emerge, interest and/or fee income accrued may need to be reversed. As
a result, interest income in future periods could be negatively impacted. At
December 31, 2021 all loans had returned to current status. The deferral program
did not have a material impact to the Company's financial condition and results
of operation.



At December 31, 2021 the Company and the Banks were considered well-capitalized
with capital ratios in excess of regulatory requirements. However, an extended
economic recession resulting from the COVID-19 pandemic could adversely impact
the Company's and the Banks' capital position and regulatory capital ratios due
to a potential increase in credit losses.



Lending operations and credit risk




As noted herein the Company is working with its borrowers who are negatively
impacted by COVID-19 by offering a payment deferral program. During the year
ended June 30, 2021, a total of $815,000 in loans were accepted into the
Company's loan payment deferral plan. At June 30, 2021 all of those loans had
reached the end of their three-month deferral periods and returned to regular
payment status.



The CARES Act includes a Paycheck Protection Program ("PPP"), which is
administered by the Small Business Administration ("SBA") and is designed to aid
small- and medium-sized businesses through federally-guaranteed loans disbursed
through banks. These loans are intended to provide eight weeks of payroll and
other costs to assist those businesses to either remain open or to re-open
quickly and allow their workers to pay their bills. First Federal of Kentucky
qualified as an SBA lender to assist the small business community in securing
this important funding. As of December 31, 2021, First Federal of Kentucky had
approved and closed with the SBA 75 PPP loans representing $2.6 million in
funding. Of those loans a total of 50 loans aggregating $2.2 million had been
repaid at the end of the period. It is our understanding that loans funded
through the PPP are fully guaranteed by the United States government. Should
those circumstances change, the bank could be required to increase its allowance
for loan and lease losses related to these loans resulting in an increase in the
provision for loan and lease losses.



The Banks are prepared to continue to offer short-term assistance in accordance
with regulatory guidelines. Management continues to identify and monitor
weaknesses in the loan portfolio resulting from fallout from the pandemic. On a
portfolio level, management continues to monitor aggregate exposures to highly
sensitive segments such as residential rental properties for changes in asset
quality and payment performance. Management also monitors unfunded commitments
such as lines of credit and overdraft protection to determine liquidity and
funding issues that may arise with our customers. If economic conditions worsen,
the Company could need to increase its required allowance for loan losses
through additional provisions for loan losses. It is possible that the Company's
asset quality metrics could be materially and adversely impacted in future
periods, if the effects of COVID-19 are prolonged.



                                      31





                         Kentucky First Federal Bancorp
          MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                     AND RESULTS OF OPERATIONS (continued)


Discussion of changes in the financial situation of June 30, 2021 at December 31, 2021 (continued)

Assets: To December 31, 2021the Company’s assets totaled $339.6 millionan augmentation of $1.5 millioni.e. 0.4%, of total assets at June 30, 2021. This increase is mainly attributable to an increase in cash and cash equivalents.




Cash and cash equivalents: Cash and cash equivalents increased $23.6 million or
109.2% to $45.3 million at December 31, 2021, and was primarily due to increased
deposits and loan repayments.



Investment securities: At December 31, 2021, our securities portfolio consisted
of mortgage-backed securities. Investment securities decreased $54,000 or 10.9%
to $441,000 at December 31, 2021.



Loans: Loans receivable, net, decreased by $21.2 million or 7.1% to $276.7
million at December 31, 2021. There are multiple reasons for the decline in loan
balances.  Some borrowers have decided to take advantage of high prices and sell
all or part of their real estate holdings. Some borrowers have sold their
properties due to age or death and some loans have been lost to competing
financial institutions who offered terms that our Banks did not believe were
prudent to match.


Non-Performing and Classified Loans: At December 31, 2021, the Company had
non-performing loans (loans 90 or more days past due or on nonaccrual status) of
approximately $6.4 million, or 2.3% of total loans (including acquired loans),
compared to $6.7 million or 2.2%, of total loans at June 30, 2021. The Company's
allowance for loan losses totaled $1.6 million at December 31, 2021 and June 30,
2021. The allowance for loan losses at December 31, 2021, represented 24.9% of
nonperforming loans and 0.6% of total loans (including acquired loans), while at
June 30, 2021, the allowance represented 24.4% of nonperforming loans and 0.5%
of total loans.



The Company had $8.1 million in assets classified as substandard for regulatory
purposes at December 31, 2021, including loans ($8.0 million) and real estate
owned ("REO") ($51,000.) Classified loans as a percentage of total loans
(including loans acquired) was 2.9% and 3.0% at December 31, 2021 and June 30,
2021, respectively. Of substandard loans, 100.0% were secured by real estate on
which the Banks have priority lien position.



The table below shows the aggregate amounts of our classified assets for regulatory purposes as of the dates indicated:



                          December 31,       June 30,
(dollars in thousands)        2021             2021
Substandard assets        $       8,097     $    8,925
Doubtful assets                       -              -
Loss assets                           -              -
Total classified assets   $       8,097     $    8,925




At December 31, 2021, the Company's real estate acquired through foreclosure
represented 0.6% of substandard assets compared to 0.9% at June 30, 2021. During
the period presented the Company made one loan totaling $32,000 to facilitate
the purchase of its other real estate owned by qualified buyers. Loans to
facilitate the sale of other real estate owned, which were included in
substandard loans, totaled $43,000 at December 31, 2021 and June 30, 2021.


                                      32





                         Kentucky First Federal Bancorp
          MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                     AND RESULTS OF OPERATIONS (continued)


Discussion of changes in the financial situation of June 30, 2021 at December 31, 2021 (continued)




The following table presents the aggregate carrying value of REO at the dates
indicated:



                             December 31, 2021                   June 30, 2021
                         Number               Net           Number             Net
                           of               Carrying          of             Carrying
                       Properties            Value        Properties          Value
One- to four-family              1         $       51               2       $       82
Building lot                    --                  -               1                -
Total REO                        1         $       51               3       $       82




At December 31, 2021 and June 30, 2021, the Company had $1.5 million and $1.6
million of loans classified as special mention, respectively (including loans
acquired in the CKF Bancorp transaction on December 31, 2012). This category
includes assets which do not currently expose us to a sufficient degree of risk
to warrant classification, but do possess credit deficiencies or potential
weaknesses deserving our close attention.



Liabilities: Total liabilities increased $1.1 million, or 0.4% to $286.9 million
at December 31, 2021, primarily as a result an increase in deposits. Deposits
increased $10.0 million or 4.4% to $236.8 million at December 31, 2021, while
advances decreased $8.1 million or 14.2% to $48.8 million.



Shareholders' Equity: At December 31, 2021, the Company's shareholders' equity
totaled $52.7 million, an increase of $363,000 or 0.7% from the June 30, 2021
total. The change in shareholders' equity was primarily associated with common
shares purchased by the Company to hold as treasury shares, and net profits for
the period less dividends paid on common stock.



The Company paid dividends of $696,000 or 66.3% of net income for the six-month
period just ended. On July 8, 2021, the members of First Federal MHC again
approved a dividend waiver on annual dividends of up to $0.40 per share of
Kentucky First Federal Bancorp common stock. The Board of Directors of First
Federal MHC applied for approval of another waiver. The Federal Reserve Bank of
Cleveland has notified the Company that it did not object to the waiver of
dividends paid by the Company to First Federal MHC, and, as a result, First
Federal MHC will be permitted to waive the receipt of dividends for quarterly
dividends up to $0.10 per common share through the third calendar quarter of
2022. Management believes that the Company has sufficient capital to continue
the current dividend policy without affecting the well-capitalized status of
either subsidiary bank. Management cannot speculate on future dividend levels,
because various factors, including capital levels, income levels, liquidity
levels, regulatory requirements and overall financial condition of the Company
are considered before dividends are declared. However, management continues to
believe that a strong dividend is consistent with the Company's long-term
capital management strategy. See "Risk Factors" in Part II, Item 1A, of the
Company's Annual Report on Form 10-K for the year ended June 30, 2021 for
additional discussion regarding dividends.



                                      33





                         Kentucky First Federal Bancorp
          MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                     AND RESULTS OF OPERATIONS (continued)


Comparison of results of operations for the six-month periods ended December 31, 2021 and 2020



General


Net income totaled $1.1 million or $0.13 diluted earnings per share for the six
months ended December 31, 2021, an increase of $395,000 or 60.3% from net income
of $655,000 or $0.08 diluted earnings per share for the same period in 2020. The
increase in net income on a six-month basis was primarily attributable to lower
non-interest expense, decreased provision for loan losses, and higher
non-interest income, which were partially offset by increased provision for
income tax and decreased net interest income.



Net Interest Income



Net interest income before provision for loan losses decreased $25,000 or 0.5%
to $4.8 million for the six-month period just ended. Interest income decreased
by $276,000, or 4.6%, to $5.8 million, while interest expense decreased $251,000
or 21.5% to $917,000 for the six months ended December 31, 2021.



The decrease in interest income period-to-period was due primarily to a decrease
in the average rate earned on interest-earning assets, which decreased 33 basis
points to 3.50% for the recently-ended six-month period compared to the prior
year period. The average balance of interest-earning assets increased $14.1
million or 4.5% to $329.0 million for the six months ended December 31, 2021.



Interest income on loans decreased $259,000 or 4.4% to $5.7 million, due
primarily to a decrease in the average rate earned on the loan portfolio, which
decreased 19 basis points to 3.87%, while the average balance increased $866,000
or 0.3% to $293.6 million for the six-month period ended December 31, 2021.
Interest income from interest-bearing deposits and other decreased $12,000 or
14.3% to $72,000 for the six months just ended due to a decrease in the average
rate earned, which decreased 38 basis points to 0.41% for the recently-ended
period compared to the period a year ago.



Interest expense decreased $251,000 or 21.5% to $917,000 for the six months
ended December 31, 2021. The decrease in interest expense was due primarily to a
decrease in the average rate paid on funding sources, which decreased 21 basis
points and totaled 0.68% for the recently-ended period. Interest expense on
deposits decreased $221,000 or 23.5% to $719,000 for the six months just ended,
while the average balance of deposits increased $10.7 million or 5.1% to $219.1
million. Interest expense on certificates of deposit decreased $235,000 or 29.4%
to $565,000, for the six months just ended primarily due to a decrease in the
average cost, which decreased by 34 bps to 0.89%. Also contributing to the
overall decrease in interest expense was a decrease in interest expense on
borrowings, which decreased $30,000 or 13.2% to $198,000 for the period. The
decrease in interest expense on borrowings was attributed primarily to a lower
average rate paid on the borrowings, which decreased eight bps to 0.76% for the
recently-ended period. The average balance of borrowings outstanding decreased
$1.8 million or 3.4% to $52.4 million for the recently ended six-month period.



The net interest spread decreased from 2.94% for the semi-annual period of the previous year to 2.82% for the six-month period ended December 31, 2021.

Allowance for loan losses

The Company recorded no provision for loan losses for the six-month period ended
December 31, 2021, compared to a provision of $192,000 recorded for the prior
year period. The lower provision was primarily in response to decreases in total
loans during the period.



                                      34





                         Kentucky First Federal Bancorp
          MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                     AND RESULTS OF OPERATIONS (continued)


Comparison of results of operations for the six-month periods ended December 31, 2021 and 2020 (continued)



Non-interest Income



Non-interest income increased $77,000 or 30.7% to $328,000 for the six months
ended December 31, 2021, compared to the prior year period, primarily because of
an increase in net gains on sales of loans. Net gain on sales of loans increased
$53,000 to $208,000 for the recently-ended six-month period. In the current
interest rate environment, many borrowers are choosing long-term, fixed rate
loans, which the Banks usually sell to the Federal Home Loan Bank of Cincinnati
("FHLB"). An increase in volume of these loans sold was responsible for the
increase in gain on sale of loans.



Non-interest Expense


Non-interest expense decreased $237,000 i.e. 5.8% and total $3.9 million for the six months ended December 31, 2021primarily due to a decrease in compensation and benefits expenses for the Company’s employees.




Employee compensation and benefits decreased $165,000 or 6.3% to $2.4 million
primarily due to a decrease in the required contribution to its defined benefit
("DB") pension plan for the current fiscal year. The Company's DB plan
administrator estimates contributions for the fiscal year ending June 30, 2022,
to be approximately $376,000, compared to $955,000 in contributions for the
fiscal year ended June 30, 2021. FDIC insurance decreased $62,000 or 70.5% to
$26,000 for the six months just ended, as premiums decreased. FDIC insurance
premiums increased in the prior year due primarily to a goodwill impairment
charge recognized at one of the Company's Banks in the three month period ended
June 30, 2020. Franchise and other taxes decreased $39,000 or 30.0% period to
period as the Banks became subject to Kentucky income taxes rather than the
Kentucky Savings & Loan Deposits tax effective January 1, 2021. Occupancy and
equipment expense decreased $20,000 or 6.2% to $301,000 for the six months ended
December 31, 2021, primarily due to lower general computer and software
expenses, depreciation expenses and utilities.



Income Tax Expense



Income tax expense increased $86,000 or 55.5% to $241,000 for the six months
ended December 31, 2021, compared to the prior year period. The effective tax
rates for the six-month periods ended December 31, 2021 and 2020, were 18.7% and
19.1%, respectively.



                                      35





                         Kentucky First Federal Bancorp
          MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                     AND RESULTS OF OPERATIONS (continued)


Comparison of operating results for the three-month periods ended December 31, 2021 and 2020



General



Net income totaled $482,000 or $0.06 diluted earnings per share for the three
months ended December 31, 2021, an increase of $112,000 or 30.3% from net income
of $370,000 or $0.04 diluted earnings per share for the same period in 2020. The
increase in net earnings for the quarter ended December 31, 2021 was primarily
attributable to lower non-interest expense, lower provision for loan losses, and
lower income taxes, which were partially offset by decreased net interest income
and decreased non-interest income.



Net Interest Income


Net interest income before provision for loan losses decreased $140,000 or 5.7%
to $2.3 million for the three-month period just ended, as interest income
decreased at a faster pace than interest expense decreased for the quarter.
Interest income decreased by $221,000, or 7.4%, to $2.8 million, while interest
expense decreased $81,000 or 15.3% to $448,000 for the three months ended
December 31, 2021.



Interest income on loans decreased $217,000 or 7.3% to $2.7 million, due
decreases in the average rate earned on the loan portfolio, as well a decrease
in the average balance. The average rate earned on the loan portfolio decreased
21 basis points to 3.79%, while the average balance decreased $6.8 million or
2.3% to $289.4 million for the three-month period ended December 31, 2021.



Interest expense on deposits decreased $75,000 or 17.6% to $351,000 for the
three months ended December 31, 2021, while interest expense on borrowings
decreased $6,000 or 5.8% to $97,000 for the same period. The decrease in
interest expense on deposits was attributed primarily to a decrease in the
average rate paid on interest-bearing deposits, which decreased 18 basis points
to 0.64% for the recently ended period, while the average balance of
interest-bearing deposits increased $11.9 million or 5.7% to $220.6 million for
the most recent period. The decrease in interest expense on borrowings was
attributed primarily to a lower average balance of borrowings outstanding period
to period, which decreased $6.7 million or 11.9% to $50.0 million for the
recently ended three-month period.



The net interest spread increased by 25 basis points, from 2.98% for the quarter of the previous year to 2.73% for the three-month period ended December 31, 2021.

Allowance for loan losses




The Company recorded no provision for loan losses for the three-month period
ended December 31, 2021, compared to a provision of $108,000 recorded for the
prior year quarter. The lower provision was primarily in response to decreases
in total loans during the period.

                                      36





                         Kentucky First Federal Bancorp
          MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                     AND RESULTS OF OPERATIONS (continued)


Comparison of operating results for the three-month periods ended December 31, 2021 and 2020 (continued)



Non-interest Income


Non-interest income decreased $23,000 i.e. 18.7% to $100,000 for the recently ended quarter primarily due to lower net gains on the sale of loans. The decrease in net gains on loan sales is mainly explained by the lower volume of loans sold during the comparable period. The Company sells most of its long-term, fixed rate mortgages to Cincinnati Federal Home Loan Bankwhile retaining loan servicing rights.



Non-interest Expense



Non-interest expense decreased $135,000 or 6.7% to $1.9 million for the quarter
ended December 31, 2021, due primarily to a decrease to expenses relating to the
Company's employee compensation and benefits, which decreased $184,000 or 14.4%
and totaled $1.1 million for the recently-ended quarter. The decrease in
employee compensation and benefits was primarily due to a decrease in the
required contribution to the Company's defined benefit ("DB") pension plan for
the current fiscal year. The Company's DB plan administrator estimates
contributions for the fiscal year ending June 30, 2022, to be approximately
$376,000, compared to $955,000 in contributions for the fiscal year ended June
30, 2021. Somewhat offsetting the decrease in employee compensation and benefits
were increases in outside service fees and data processing. Outside service fees
increased $42,000 or 127.3% to $75,000 for the quarter just ended, while data
processing expenses increased $41,000 or 28.3% to $186,000.



Income Tax Expense



Income tax expense decreased $32,000 or 36.0% to $57,000 for the three months
ended December 31, 2021, compared to the prior year period. The effective tax
rates for the three-month periods ended December 31, 2021 and 2020 were 10.6%
and 19.4%, respectively.



                                      37





                         Kentucky First Federal Bancorp

© Edgar Online, source Previews

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RIVERVIEW BANCORP INC Management’s Discussion and Analysis of Financial Condition and Results of Operations (Form 10-Q) https://bourg-immobilier.com/riverview-bancorp-inc-managements-discussion-and-analysis-of-financial-condition-and-results-of-operations-form-10-q/ Fri, 11 Feb 2022 19:36:05 +0000 https://bourg-immobilier.com/riverview-bancorp-inc-managements-discussion-and-analysis-of-financial-condition-and-results-of-operations-form-10-q/
This report contains certain financial information determined by methods other
than in accordance with accounting principles generally accepted in the United
States of America ("GAAP"). These measures include net interest income on a
fully tax equivalent basis and net interest margin on a fully tax equivalent
basis. Management uses these non-GAAP measures in its analysis of the Company's
performance. The tax equivalent adjustment to net interest income recognizes the
income tax savings when comparing taxable and tax-exempt assets. Management
believes that it is a standard practice in the banking industry to present net
interest income and net interest margin on a fully tax equivalent basis, and
accordingly believes that providing these measures may be useful for peer
comparison purposes. These disclosures should not be viewed as substitutes for
the results determined to be in accordance with GAAP, nor are they necessarily
comparable to non-GAAP performance measures that may be presented by other
companies.

Critical Accounting Policies



Critical accounting policies and estimates are discussed in our 2021 Form 10-K
under Item 7, "Management's Discussion and Analysis of Financial Condition and
Results of Operations - Critical Accounting Policies." That discussion
highlights estimates that the Company makes that involve uncertainty or
potential for substantial change. There have not been any material changes in
the Company's critical accounting policies and estimates as compared to the
disclosures contained in the Company's 2021 Form 10-K.

Executive Overview


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. The
Company's loans receivable, net, totaled $947.1 million at December 31, 2021
compared to $924.1 million at March 31, 2021.

The Bank's subsidiary, Riverview Trust Company (the "Trust Company"), is a trust
and financial services company with one office located in downtown Vancouver,
Washington and one office in Lake Oswego, Oregon. The Trust Company provides
full-service brokerage activities, trust and asset management services. The
Bank's Business and Professional Banking Division, with two lending offices in
Vancouver and one in Portland, offers commercial and business banking services.

The Company's strategic plan includes targeting the commercial banking customer
base in its primary market area for loan originations and deposit growth,
specifically small and medium size businesses, professionals and wealth building
individuals. In pursuit of these goals, the Company will seek to increase the
loan portfolio consistent with its strategic plan and asset/liability and
regulatory capital objectives, which includes maintaining a significant amount
of commercial business and commercial real estate loans in its loan portfolio.
Significant portions of  recent loan originations, other than SBA PPP loans, are
mainly concentrated in commercial business and commercial real estate loans
which carry adjustable rates, higher yields or shorter terms and higher credit
risk than traditional fixed-rate consumer real estate one-to-four family
mortgages.

The strategic plan also stresses increased emphasis on non-interest income,
including increased fees for asset management services through the Trust Company
and deposit service charges. The strategic plan is designed to enhance earnings,
reduce interest rate risk and provide a more complete range of financial
services to customers and the local communities the Company serves. We believe
we are well positioned to attract new customers and to increase our market share
through our 16 branches, including, among others, nine in Clark County, three in
the Portland metropolitan area and three lending centers.



                                       32

  Table of Contents

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, Nautilus,
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, which has helped to transform the area from its past dependence on
the
timber industry.

Operating Strategy
Fiscal year 2022 marks the 99th 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. The
historical emphasis had been on residential real estate lending. Since 1998,
however, the Company has been diversifying its loan portfolio through the
expansion of its commercial and real estate construction loan portfolios. At
December 31, 2021, commercial and real estate construction loans represented
90.7% of total loans compared to 93.8% at March 31, 2021. 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.

The Company's goal is to deliver returns to shareholders by increasing
higher-yielding assets (in particular, commercial real estate and commercial
business loans), increasing core deposit balances, managing problem assets,
reducing expenses, hiring experienced employees with a commercial lending focus
and exploring expansion opportunities. The Company seeks to achieve these
results by focusing on the following objectives:

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 this regard, the Company previously announced plans for three new
branches located in Clark County, Washington, to complement its existing branch
network. New branches in both downtown Camas and in the Cascade Park
neighborhood of Vancouver opened in fiscal 2021. The third new branch location
in Ridgefield is expected to open in the fourth quarter of fiscal 2022.

Maintaining Strong Asset Quality. The Company believes that strong asset quality
is a key to long-term financial success. The Company has actively managed
delinquent loans and nonperforming assets by aggressively pursuing the
collection of consumer debts, marketing saleable properties upon foreclosure or
repossession, and through work-outs of classified assets and loan charge-offs.
The Company's approach to credit management uses well defined policies and
procedures and disciplined underwriting criteria resulting in our strong asset
quality and credit metrics. Although the Company intends to prudently increase
the percentage of its assets consisting of higher-yielding commercial real
estate, real estate construction and commercial business loans, which offer
higher risk-adjusted returns, shorter maturities and more sensitivity to
interest rate fluctuations, the Company intends to manage credit exposure
through the use of experienced bankers in these areas and a conservative
approach to its lending.









                                       33

  Table of Contents

Introduction of New Products and Services.  The Company continuously reviews new
products and services to provide its customers 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 launched MobiMoney™ in January 2021, which
allows account holders the ability to control their respective Riverview debit
card from a smartphone or tablet. 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
$1.4 billion and $1.3 billion at December 31, 2021 and March 31, 2021,
respectively. The Company also offers a third-party identity theft product to
its customers. The identity theft product assists our customers in monitoring
their credit and includes an identity theft restoration service.

Attracting Core Deposits and Other Deposit Products. The Company offers personal
checking, savings and money-market accounts, which generally are lower-cost
sources of funds than certificates of deposit and are less likely to be
withdrawn when interest rates fluctuate. To build its core deposit base, the
Company has sought to reduce its dependence on traditional higher cost deposits
in favor of stable lower cost core deposits to fund loan growth and decrease its
reliance on other wholesale funding sources, including FHLB and FRB advances.
The Company believes that its continued focus on building customer relationships
will help to increase the level of core deposits and locally-based retail
certificates of deposit. In addition, the Company intends to increase demand
deposits by growing business banking relationships through expanded product
lines tailored to meet its target business customers' needs. The Company
maintains technology-based products to encourage the growth of lower cost
deposits, such as personal financial management, business cash management, and
business remote deposit products, that enable it to meet its customers' cash
management needs and compete effectively with banks of all sizes. Core branch
deposits increased $117.5 million at December 31, 2021 compared to March 31,
2021.

Recruiting and Retaining Highly Competent Personnel with a Focus on Commercial
Lending. The Company's ability to continue to attract and retain banking
professionals with strong community relationships and significant knowledge of
its markets will be a key to its success. The Company believes that it enhances
its market position and adds profitable growth opportunities by focusing on
hiring and retaining experienced bankers focused on owner occupied commercial
real estate and commercial lending, and the deposit balances that accompany
these relationships. The Company emphasizes to its employees the importance of
delivering exemplary customer service and seeking opportunities to build further
relationships with its customers. The goal is to compete with other financial
service providers by relying on the strength of the Company's customer service
and relationship banking approach. The Company believes that one of its
strengths is that its employees are also shareholders through the Company's
employee stock ownership ("ESOP") and 401(k) plans.



                                       34

  Table of Contents

Composition of commercial and construction loans

The following tables set forth the composition of the Company's commercial and
construction loan portfolios based on loan purpose at the dates indicated (in
thousands):




                                                           Other                          Commercial &
                                        Commercial      Real Estate     

Building construction

                                         Business        Mortgage       Construction         Total
December 31, 2021

Commercial business                    $    208,213    $           -    $           -    $      208,213
SBA PPP                                      14,322                -                -            14,322
Commercial construction                           -                -            7,887             7,887
Office buildings                                  -          125,139                -           125,139
Warehouse/industrial                              -           97,414                -            97,414
Retail/shopping centers/strip malls               -           79,860       
        -            79,860
Assisted living facilities                        -              712                -               712
Single purpose facilities                         -          263,531                -           263,531
Land                                              -           11,351                -            11,351
Multi-family                                      -           53,865                -            53,865
One-to-four family construction                   -                -       
   10,478            10,478
Total                                  $    222,535    $     631,872    $      18,365    $      872,772





March 31, 2021

Commercial business                    $ 171,701    $       -    $      -    $ 171,701
SBA PPP                                   93,444            -           -       93,444
Commercial construction                        -            -       9,810        9,810
Office buildings                               -      135,526           -      135,526
Warehouse/industrial                           -       87,880           -       87,880
Retail/shopping centers/strip malls            -       85,414           -  
    85,414
Assisted living facilities                     -          854           -          854
Single purpose facilities                      -      233,793           -      233,793
Land                                           -       14,040           -       14,040
Multi-family                                   -       45,014           -       45,014
One-to-four family construction                -            -       7,180  
     7,180
Total                                  $ 265,145    $ 602,521    $ 16,990    $ 884,656



Comparison of the financial situation at December 31, 2021 and March 31, 2021


Cash and cash equivalents, including interest-earning accounts, totaled $239.9
million at December 31, 2021 compared to $265.4 million at March 31, 2021. The
Company's cash balances fluctuate based upon funding needs and the Company's
utilization of its excess cash to purchase higher yielding investment securities
based on its asset/liability management program and liquidity objectives in
order to maximize earnings. As a part of this strategy, the Company also invests
a portion of its excess cash in short-term certificates of deposit held for
investment. All of the certificates of deposit held for investment are fully
insured by the FDIC. Certificates of deposits held for investment totaled
$249,000 at both December 31, 2021 and March 31, 2021.

Investment securities totaled $395.0 million and $255.9 million at
December 31, 2021 and March 31, 2021, respectively. The increase is due to
investment purchases partially offset by normal pay downs, calls and maturities.
During the nine months ended December 31, 2021 and 2020, purchases of investment
securities totaled $178.7 million and $72.9 million, respectively. The Company
primarily purchases a combination of securities backed by government agencies
(FHLMC, FNMA, SBA or GNMA). At December 31, 2021, the Company determined that
none of its investment securities required an other than temporary impairment
("OTTI") charge. 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.

                                       35

Contents

Loans receivable, net, totaled $947.1 million at December 31, 2021 compared to
$924.1 million at March 31, 2021, an increase of $23.0 million. The increase is
attributed to originations of commercial real estate loans and other commercial
business loans and purchases of other commercial business loans and real estate
one-to-four family loans. The increases were offset by a decrease in SBA PPP
loans related to forgiveness repayments. At December 31, 2021, SBA PPP loans,
net of deferred fees which are included in the commercial business loan
category, totaled $14.3 million as compared to $93.4 million at March 31, 2021.
Commercial business loans, excluding SBA PPP loans, and commercial real estate
loans increased $36.5 million and $23.2 million, respectively, since March 31,
2021. Consumer loans increased $30.9 million for the nine months ended December
31, 2021 due to the purchase of one-to-four family loans totaling $43.4 million.
 The Company no longer originates one-to-four family mortgage loans and used
this purchase as a way to supplement loan originations in this category.
Additionally, the Company began purchasing commercial business loans as a way to
supplement loan originations and diversity in the commercial loan portfolio.
These loans were originated by a third-party located outside the Company's
primary market area and totaled $15.0 million at December 31, 2021. The Company
also purchases the guaranteed portion of SBA loans as a way to supplement loan
originations, further diversifying its loan portfolio and earn a higher yield
than earned on its cash or short-term investments. These SBA loans are
originated through another financial institution located outside the Company's
primary market area and are purchased with servicing retained by the seller. At
December 31, 2021, the Company's purchased SBA loan portfolio was $46.2 million
compared to $47.4 million at March 31, 2021.

Deposits increased $127.4 million to $1.5 billion at December 31, 2021 compared
to $1.3 billion at March 31, 2021. The increase was due to proceeds from SBA PPP
loans deposited directly into customer accounts and also due to a change in
savings and spending habits as a result of COVID-19. The Company had no
wholesale-brokered deposits at December 31, 2021 and March 31, 2021. Core branch
deposits accounted for 97.0% of total deposits at December 31, 2021 compared to
97.4% at March 31, 2021. The Company plans to continue its focus on core
deposits and on building customer relationships as opposed to obtaining deposits
through the wholesale markets.

Shareholders' equity increased $11.5 million to $163.1 million at December 31,
2021 from $151.6 million at March 31, 2021. The increase is mainly attributable
to net income of $17.7 million. The increase is partially offset by payments of
cash dividends totaling $3.6 million and the repurchase of 249,908 shares of
common stock totaling $1.7 million during the nine months ended December 31,
2021.

Capital Resources

The Bank is a state-chartered, federally insured institution subject to various
regulatory capital requirements administered by the FDIC and WDFI. Failure to
meet minimum capital requirements can result in the initiation of certain
mandatory and possibly additional discretionary actions by regulators that, if
undertaken, could have a direct material effect on the Bank's financial
statements. Under capital adequacy guidelines and the regulatory framework for
prompt corrective action, the Bank must meet specific capital guidelines that
involve quantitative measures of the Bank's assets, liabilities and certain
off-balance sheet items as calculated under regulatory accounting practices. The
Bank's capital amounts and classification are also subject to qualitative
judgments by the regulators about components, risk weightings and other factors.

Quantitative measures established by regulation to ensure capital adequacy
require the Bank to maintain minimum amounts and ratios of total and tier I
capital to risk-weighted assets, core capital to total assets and tangible
capital to tangible assets (set forth in the table below). Management believes
the Bank met all capital adequacy requirements to which it was subject as of
December 31, 2021.



                                       36

  Table of Contents

As of December 31, 2021, the Bank was categorized as "well capitalized" under
the FDIC's regulatory framework for prompt corrective action. The Bank's actual
and required minimum capital amounts and ratios were as follows at the dates
indicated (dollars in thousands):




                                                                                       "Well Capitalized"
                                                                  For Capital             Under Prompt
                                              Actual           Adequacy Purposes        Corrective Action
                                         Amount      Ratio      Amount       Ratio       Amount        Ratio
December 31, 2021
Total Capital:
(To Risk-Weighted Assets)               $ 165,700    16.72 %  $    79,285      8.0 %  $     99,106      10.0 %
Tier 1 Capital:
(To Risk-Weighted Assets)                 153,273    15.47         59,463      6.0          79,285       8.0
Common equity tier 1 Capital:
(To Risk-Weighted Assets)                 153,273    15.47         44,598      4.5          64,419       6.5
Tier 1 Capital (Leverage):
(To Average Tangible Assets)              153,273     9.10         67,408  
   4.0          84,260       5.0

March 31, 2021
Total Capital:
(To Risk-Weighted Assets)               $ 151,555    17.35 %  $    69,879      8.0 %  $     87,349      10.0 %
Tier 1 Capital:
(To Risk-Weighted Assets)                 140,529    16.09         52,409      6.0          69,879       8.0
Common equity tier 1 Capital:
(To Risk-Weighted Assets)                 140,529    16.09         39,307      4.5          56,777       6.5
Tier 1 Capital (Leverage):
(To Average Tangible Assets)              140,529     9.63         58,344  
   4.0          72,930       5.0



In addition to the minimum common equity tier 1 ("CET1"), Tier 1 and total
capital ratios, the Bank is required to maintain a capital conservation buffer
consisting of additional CET1 capital in order to avoid limitations on paying
dividends, engaging in share repurchases, and paying discretionary bonuses based
on percentages of eligible retained income that could be utilized for such
actions. The capital conservation buffer is required to be an amount greater
than 2.5% of risk-weighted assets. As of December 31, 2021, the Bank's CET1
capital exceeded the required capital conservation buffer at an amount greater
than 2.5%.

For a bank holding company, such as the Company, the capital guidelines apply on
a bank only basis. The Federal Reserve expects the holding company's subsidiary
banks to be well capitalized under the prompt corrective action regulations. If
the Company was subject to regulatory guidelines for bank holding companies at
December 31, 2021, the Company would have exceeded all regulatory capital
requirements.

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 2022
consolidated financial statements.

Liquidity


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



                                       37

  Table of Contents

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 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.

The Company's primary sources of funds are customer deposits, proceeds from
principal and interest payments on loans, proceeds from the sale of loans,
maturing securities, FHLB advances and FRB borrowings. While maturities and
scheduled amortization of loans and securities are predictable sources of funds,
deposit flows and prepayment of mortgage loans and mortgage-backed securities
are greatly influenced by general interest rates, economic conditions and
competition. Management believes that its focus on core relationship deposits
coupled with access to borrowing through reliable counterparties provides
reasonable and prudent assurance that ample liquidity is available. However,
depositor or counterparty behavior could change in response to competition,
economic or market situations or other unforeseen circumstances, which could
have liquidity implications that may require different strategic or operational
actions.

The Company must maintain an adequate level of liquidity to ensure the
availability of sufficient funds for loan originations, deposit withdrawals and
continuing operations, satisfy other financial commitments and take advantage of
investment opportunities. During the nine months ended December 31, 2021, the
Bank used excess liquidity to fund loan commitments and to purchase investment
securities. At December 31, 2021, cash and cash equivalents, certificates of
deposit held for investment and available for sale investment securities totaled
$422.4 million, or 25.1% of total assets. 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, including FRB borrowings and FHLB advances consistent with its
asset/liability objectives. At December 31, 2021, the Bank, which maintains a
credit facility with the FRB with an available borrowing capacity of $42.8
million, subject to sufficient collateral, had no outstanding advances with the
FRB.  At December 31, 2021, the Bank had an available borrowing capacity of
$285.5 million with the FHLB, subject to sufficient collateral and stock
investment, and had no outstanding advances.  At December 31, 2021, 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.

An additional source of wholesale funding includes brokered certificates of
deposit. While the Company has utilized brokered deposits from time to time, the
Company historically has not extensively relied on brokered deposits to fund its
operations. At December 31, 2021 and March 31, 2021, the Bank had no wholesale
brokered deposits. The Bank also participates in the CDARS and 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 $50.8 million, or 3.4% of
total deposits, and $37.9 million, or 2.8% of total deposits, at
December 31, 2021 and March 31, 2021, respectively. In addition, the Bank is
enrolled in an internet deposit listing service. Under this listing service, the
Bank may post time deposit rates on an internet site where institutional
investors have the ability to deposit funds with the Bank. At December 31, 2021
and March 31, 2021, the Company had no deposits through this listing service.
Although the Company did not originate any internet-based deposits during the
nine months ended December 31, 2021, the Company may do so in the future
consistent with its asset/liability objectives. The combination of all the
Bank's funding sources gives the Bank available liquidity of $981.9 million, or
58.3% of total assets at December 31, 2021.

At December 31, 2021, the Company had total commitments of $155.7 million, which
includes commitments to extend credit of $29.7 million, unused lines of credit
totaling $96.8 million, undisbursed real estate construction loans totaling
$27.4 million, and standby letters of credit totaling $1.8 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, 2021 totaled $79.0 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 maturities of less than one
year totaling $43.6 million at December 31, 2021.

                                       38

Contents


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. At December 31, 2021, Riverview Bancorp, Inc. had $10.4
million in cash to meet its liquidity needs.

Asset quality


Nonperforming assets, consisting of nonperforming loans were $1.8 million or
0.11% of total assets at December 31, 2021 compared with $571,000 or 0.04% of
total assets at March 31, 2021.

The following table presents information regarding the Company’s non-performing loans as of the dates indicated (in thousands of dollars):




                            December 31, 2021          March 31, 2021
                          Number of                Number of
                            Loans      Balance       Loans       Balance

Commercial business               6    $  1,657            3    $     357
Commercial real estate            1         127            1          144
Consumer                          3          56            5           70
Total                            10    $  1,840            9    $     571




The increase of $1.2 million in commercial business nonperforming loans relates
to purchased SBA government guaranteed loans which payments due to the Company
were delayed due to the servicing rights transfer between two outside
third-parties. The Company expects these loans to be removed from the
nonperforming loan totals once the servicing transfer is complete. The allowance
for loan losses was $15.2 million or 1.58% of total loans at December 31, 2021
compared to $19.2 million or 2.03% of total loans at March 31, 2021. The Company
recorded a recapture of loan losses of $4.0 million for the nine months ended
December 31, 2021 compared to a provision for loan losses of $6.3 million for
the nine months ended December 31, 2020. The decrease in the allowance for loan
losses was primarily due to the continued improvement since March 31, 2021 in
the national and local economies associated with the recovery from the COVID-19
pandemic. Our SBA PPP loans were omitted from the calculation of the required
allowance for loan losses at December 31, 2021 and 2020 as these loans are fully
guaranteed by the SBA and management expects that a majority of SBA PPP
borrowers will seek full or partial forgiveness of their loan obligations from
the SBA, which in turn, the SBA will reimburse the Bank for the amount forgiven.

The coverage ratio of allowance for loan losses to nonperforming loans was
824.62% at December 31, 2021 compared to 3358.67% at March 31, 2021. At
December 31, 2021, the Company identified $233,000 or 12.64% of its
nonperforming loans as impaired and performed a specific valuation analysis on
each loan resulting in no specific reserves being required for these impaired
loans.

Management considers the allowance for loan losses to be adequate at
December 31, 2021 to cover probable losses inherent in the loan portfolio based
on the assessment of various factors affecting the loan portfolio, and the
Company believes it has established its existing allowance for loan losses in
accordance with GAAP. However, a decline in national and local economic
conditions (including declines as a result of the COVID-19 pandemic), results of
examinations by the Company's banking regulators, or other factors could result
in a material increase in the allowance for loan losses and may adversely affect
the Company's future financial condition and results of operations. In addition,
because future events affecting borrowers and collateral cannot be predicted
with certainty, there can be no assurance that the existing allowance for loan
losses will be adequate or that substantial increases will not be necessary
should the quality of any loans deteriorate or should collateral values decline
as a result of the factors discussed elsewhere in this document. For further
information regarding the Company's impaired loans and allowance for loan
losses, see Note 7 of the Notes to Consolidated Financial Statements contained
in Item 1 of this Form 10-Q.



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  Table of Contents
Troubled debt restructurings ("TDRs") are loans for which the Company, for
economic or legal reasons related to the borrower's financial condition, has
granted a concession to the borrower that it would otherwise not consider. A TDR
typically involves a modification of terms such as a reduction of the stated
interest rate or face amount of the loan, a reduction of accrued interest,
and/or an extension of the maturity date(s) at a stated interest rate lower than
the current market rate for a new loan with similar risk.

TDRs are considered impaired loans and as such, when a loan is deemed to be
impaired, the amount of the impairment is measured using discounted cash flows
and the original note rate, except when the loan is collateral dependent. In
these cases, the estimated fair value of the collateral (less any selling costs,
if applicable) is used. Impairment is recognized as a specific component within
the allowance for loan losses if the estimated value of the impaired loan is
less than the recorded investment in the loan. When the amount of the impairment
represents a confirmed loss, it is charged off against the allowance for loan
losses. All of the Company's TDRs were paying as agreed at December 31, 2021.

The Company has determined that, in certain circumstances, it is appropriate to
split a loan into multiple notes. This typically includes a nonperforming
charged-off loan that is not supported by the cash flow of the relationship and
a performing loan that is supported by the cash flow. These may also be split
into multiple notes to align portions of the loan balance with the various
sources of repayment when more than one exists. Generally, the new loans are
restructured based on customary underwriting standards. In situations where they
are not, the policy exception qualifies as a concession, and if the borrower is
experiencing financial difficulties, the loans are accounted for as TDRs.

The accrual status of a loan may change after it has been classified as a TDR.
The Company's general policy related to TDRs is to perform a credit evaluation
of the borrower's financial condition and prospects for repayment under the
revised terms. This evaluation includes consideration of the borrower's
sustained historical repayment performance for a reasonable period of time. A
sustained period of repayment performance generally would be a minimum of six
months and may include repayments made prior to the restructuring date. If
repayment of principal and interest appears doubtful, it is placed on
non-accrual status.

The following table presents information regarding the Company’s non-performing assets as of the dates indicated (in thousands of dollars):





                                                 December 31, 2021      March 31, 2021

Loans accounted for on a non-accrual basis:
Commercial business                             $               123    $             182
Other real estate mortgage                                      127                  144
Consumer                                                         56                   69
Total                                                           306                  395
Accruing loans which are contractually past
due 90 days or more                                           1,534                  176
Total nonperforming assets                      $             1,840    $             571
Foregone interest on non-accrual loans (1)      $                21    $   

49

Total nonperforming loans to total loans                       0.19 %               0.06 %
Total nonperforming loans to total assets                      0.11 %               0.04 %
Total nonperforming assets to total assets                     0.11 %      

0.04%

(1) Nine months ended December 31, 2021 and the year ended March 31, 2021.


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The following tables set forth information regarding the Company's nonperforming
assets by loan type and geographical area at the dates indicated (in thousands):




                               Southwest
                              Washington      Other       Total
December 31, 2021

Commercial business           $       105    $  1,552    $  1,657
Commercial real estate                127           -         127
Consumer                               56           -          56
Total nonperforming assets    $       288    $  1,552    $  1,840





March 31, 2021

Commercial business           $  182    $  175    $  357
Commercial real estate           144         -       144
Consumer                          63         7        70
Total nonperforming assets    $  389    $  182    $  571



The composition of speculative and custom/pre-sold land acquisition and development and construction loans by geographic area is as follows at the dates indicated (in thousands):




                                   Northwest        Other        Southwest        Other
                                    Oregon         Oregon       Washington      Washington       Total
December 31, 2021

Land acquisition and
development                       $     2,139    $         -    $     9,212    $          -    $   11,351
Speculative and custom/presold
construction                                -              -         10,085             393        10,478
Total                             $     2,139    $         -    $    19,297    $        393    $   21,829





March 31, 2021

Land acquisition and
development                      $   2,221    $   1,765    $  10,054    $       -    $  14,040
Speculative and
custom/presold construction              -          450        5,382       
    -        5,832
Total                            $   2,221    $   2,215    $  15,436    $       -    $  19,872




Other loans of concern, which are classified as substandard loans and are not
presently included in the non-accrual category, consist of loans where the
borrowers have cash flow problems, or the collateral securing the respective
loans may be inadequate. In either or both of these situations, the borrowers
may be unable to comply with the present loan repayment terms, and the loans may
subsequently be included in the non-accrual category. Management considers the
allowance for loan losses to be adequate to cover the probable losses inherent
in these and other loans.

The following table provides information regarding the Company’s Other Loans of Concern as of the dates indicated (in thousands of dollars):




                            December 31, 2021         March 31, 2021
                          Number of                Number of
                            Loans      Balance       Loans      Balance

Commercial business               2    $    132            -    $      -
Commercial real estate            3       6,120            2       7,268
Multi-family                      1           8            2          24
Total                             6    $  6,260            4    $  7,292






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At December 31, 2021, loans delinquent 30 - 89 days were 0.37% of total loans
compared to 0.03% at March 31, 2021 and were comprised mainly of commercial
business, real estate construction,  and consumer loans. There were no loans 30
- 89 days delinquent in the commercial real estate ("CRE") portfolio. At
December 31, 2021, CRE loans represented the largest portion of the loan
portfolio at 58.89% of total loans and commercial business represented 23.12% of
total loans.

Off-balance sheet arrangements and other contractual obligations


In the normal course of operations, the Company enters into certain contractual
obligations and other commitments. Obligations generally relate to funding of
operations through deposits and borrowings as well as leases for premises.
Commitments generally relate to lending operations.

The Company has obligations under long-term operating leases and capital leases, primarily for building premises and land. Lease terms generally cover periods of five years, with extension options, and are not subject to cancellation.


The Company has commitments to originate fixed and variable rate mortgage loans
to customers. Because some commitments expire without being drawn upon, the
total commitment amounts do not necessarily represent future cash requirements.
Undisbursed loan funds and unused lines of credit include funds not disbursed
but committed to construction projects and home equity and commercial lines of
credit. Standby letters of credit are conditional commitments issued by the
Company to guarantee the performance of a customer to a third party.

For more information regarding the Company’s off-balance sheet arrangements and other contractual obligations, see Notes 13 and 14 of the Notes to the Consolidated Financial Statements contained in Item 1 of this Form 10-Q.

Valuation of goodwill


Goodwill is initially recorded when the purchase price paid for an acquisition
exceeds the estimated fair value of the net identified tangible and intangible
assets acquired. Goodwill is presumed to have an indefinite useful life and is
tested, at least annually, for impairment at the reporting unit level. The
Company has two reporting units, the Bank and the Trust Company, for purposes of
evaluating goodwill for impairment. All of the Company's goodwill has been
allocated to the Bank reporting unit. The Company performs an annual review in
the third quarter of each fiscal year, or more frequently if indications of
potential impairment exist, to determine if the recorded goodwill is impaired.
If the fair value exceeds the carrying value, goodwill at the reporting unit
level is not considered impaired and no additional analysis is necessary. If the
carrying value of the reporting unit is greater than its fair value, there is an
indication that impairment may exist and additional analysis must be performed
to measure the amount of impairment loss, if any. The amount of impairment is
determined by comparing the implied fair value of the reporting unit's goodwill
to the carrying value of the goodwill in the same manner as if the reporting
unit was being acquired in a business combination. Specifically, the Company
would allocate the fair value to all of the assets and liabilities of the
reporting unit, including unrecognized intangible assets, in a hypothetical
analysis that would calculate the implied fair value of goodwill. If the implied
fair value of goodwill is less than the recorded goodwill, the Company would
record an impairment charge for the difference.

A significant amount of judgment is involved in determining if an indicator of
impairment has occurred. Such indicators may include, among others: a
significant decline in our expected future cash flows; a sustained, significant
decline in our stock price and market capitalization; a significant adverse
change in legal factors or in the business climate; adverse action or assessment
by a regulator; and unanticipated competition. Any adverse change in these
factors could have a significant impact on the recoverability of these assets
and could have a material impact on the Company's consolidated financial
statements.







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The Company performed its annual goodwill impairment test as of October 31,
2021. The goodwill impairment test involves a two-step process. Step one of the
goodwill impairment test estimates the fair value of the reporting unit
utilizing the allocation of corporate value approach, the income approach, the
whole bank transaction approach and the market approach in order to derive an
enterprise value of the Company. The allocation of corporate value approach
applies the aggregate market value of the Company and divides it among the
reporting units. A key assumption in this approach is the control premium
applied to the aggregate market value. A control premium is utilized as the
value of a company from the perspective of a controlling interest is generally
higher than the widely quoted market price per share. The Company used an
expected control premium of 30%, which was based on comparable transactional
history. The income approach uses a reporting unit's projection of estimated
operating results and cash flows that are discounted using a rate that reflects
current market conditions. The projection uses management's best estimates of
economic and market conditions over the projected period including growth rates
in loans and deposits, estimates of future expected changes in net interest
margins and cash expenditures. Assumptions used by the Company in its discounted
cash flow model (income approach) included an annual revenue growth rate that
approximated 8.1%, a net interest margin that approximated 3.0% and a return on
assets that ranged from 1.06% to 1.37% (average of 1.20%). In addition to
utilizing the above projections of estimated operating results, key assumptions
used to determine the fair value estimate under the income approach were the
discount rate of 15.71% utilized for our cash flow estimates and a terminal
value estimated at 1.43 times the ending book value of the reporting unit. The
Company used a build-up approach in developing the discount rate that included:
an assessment of the risk-free interest rate, the rate of return expected from
publicly traded stocks, the industry the Company operates in and the size of the
Company. The whole bank transaction approach estimates fair value by applying
key financial variables in transactions involving acquisitions of similar
institutions. In applying the whole bank transaction approach method, the
Company identified transactions that occurred during the first 10 months of
calendar 2021 utilizing a multiple of 1.4 times price to book value. The market
approach estimates fair value by applying tangible book value multiples to the
reporting unit's operating performance. The multiples are derived from
comparable publicly traded companies with similar operating and investment
characteristics of the reporting unit. In applying the market approach method,
the Company selected four publicly traded comparable institutions. After
selecting comparable institutions, the Company derived the fair value of the
reporting unit by completing a comparative analysis of the relationship between
their financial metrics listed above and their market values utilizing a market
multiple of 1.0 times book value, a market multiple of 1.1 times tangible book
value and an earnings multiple of 10 times. The Company calculated a fair value
of its reporting unit of $213.0 million using the corporate value approach,
$204.0 million using the income approach, $249.0 million using the whole bank
transaction approach and $230.0 million using the market approach, with a final
concluded value of $224.0 million, with equal weight given to the income
approach, the whole bank approach, the market approach and  the corporate value
approach. The results of the Company's step one test indicated that the
reporting unit's fair value was greater than its carrying value and therefore no
impairment of goodwill exists.

The Company also completed a qualitative assessment of goodwill as of
December 31, 2021 and concluded that it is more likely than not that the fair
value of the Bank (the reporting unit), exceeds its carrying value at
December 31, 2021. Even though the Company determined that there was no goodwill
impairment, a sustained decline in the value of its stock price as well as
values of other financial institutions, declines in revenue for the Company
beyond our current forecasts, significant adverse changes in the operating
environment for the financial industry or an increase in the value of our assets
without an increase in the value of the reporting unit may result in a future
impairment charge.

It is also possible that changes in circumstances existing at the measurement
date or at other times in the future, or in the numerous estimates associated
with management's judgments, assumptions and estimates made in assessing the
fair value of our goodwill, could result in an impairment charge of a portion or
all of our goodwill. If the Company recorded an impairment charge, its financial
position and results of operations would be adversely affected; however, such an
impairment charge would have no impact on our liquidity, operations or
regulatory capital.



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  Table of Contents

Comparison of operating results for the three and nine months ended
December 31, 2021 and 2020

Net Income. Net income was $5.5 million, or $0.25 per diluted share for the
three months ended December 31, 2021, compared to $4.0 million, or $0.18 per
diluted share for same prior year period. Net income for the nine months ended
December 31, 2021 and 2020 was $17.7 million, or $0.80 per diluted share, and
$7.1 million, or $0.32 per diluted share, respectively. The Company's net income
increased primarily as a result of increased net interest income and the
recapture of loan losses of $1.3 million and $4.0 million for the three and nine
months ended December 31, 2021, respectively, compared to no provision for loan
losses and a provision for loan losses of $6.3 million for the three and nine
months ended December 31, 2020, respectively. The Company recognized in other
non-interest expense a $1.0 million gain on sale of premises and equipment
during the nine months ended December 31, 2021 that was not present during the
nine months ended December 31, 2020. In addition, the Company recognized in
other non-interest income a $500,000 BOLI death benefit during the nine months
ended December 31, 2021 that was not present during the nine months ended
December 31, 2020.

Net Interest Income. The Company's profitability depends primarily on its net
interest income, which is the difference between the income it receives on
interest-earning assets and the interest paid on deposits and borrowings. When
the rate earned on interest-earning assets equals or exceeds the rate paid on
interest-bearing liabilities, this positive interest rate spread will generate
net interest income. The Company's results of operations are also significantly
affected by general economic and competitive conditions, particularly changes in
market interest rates, government legislation and regulation, and monetary and
fiscal policies.

Net interest income for the three and nine months ended December 31, 2021 was
$12.1 million and $35.7 million, representing an increase of $530,000 million
and $2.0 million, respectively, compared to the three and nine months ended
December 31, 2020. The net interest margin for the three and nine months ended
December 31, 2021 was 2.96% and 3.05%, respectively, compared to 3.40% and 3.46%
for the three and nine months ended December 31, 2020. The decrease in the net
interest margin was primarily the result of the continued low interest rate
environment putting downward pressure on adjustable rate instruments and lower
yields on new loan originations and investment purchases as compared to the
yields on the legacy loan and investment securities portfolios. The increase in
low yielding overnight cash balances and the impact of low yielding SBA PPP
loans also caused a decrease in the average yield on interest-earning assets
partially offset by the decrease in the average yield on interest-bearing
liabilities. Finally, the decrease in net interest margin was due to yields
earned on interest-earning assets declining at a faster rate than interest rates
paid on interest-bearing liabilities as changes in the average rate paid on
interest-bearing deposits tend to lag changes in market interest rate changes.

Interest and Dividend Income. Interest and dividend income for the three and
nine months ended December 31, 2021 was $12.6 million and $37.4 million,
respectively, compared to $12.3 million and $36.5 million, respectively, for the
same periods in the prior year. The increase for the three months ended December
31, 2021 was primarily due to the increase in interest on investment securities
of $776,000 when compared to the three months ended December 31, 2020 due to the
overall increase in average balance of investment securities. Partially
offsetting this increase was a decrease in interest income on loans receivable
of $555,000 due to the 36 basis point decrease in the average yield on mortgage
loans to 4.60% for the three months ended December 31, 2021 compared to 4.96%
for the three months ended December 31, 2020. Interest and dividend income for
the nine months ended December 31, 2021 increased primarily due to a $1.8
million increase in interest income on investment securities which offset a $1.0
million decrease in interest income on loans receivable due to the 14 basis
point decrease in the average yield on mortgage loans to 4.89% for the nine
months ended December 31, 2021 compared to 5.03% for the nine months ended
December 31, 2020. The average yield on non-mortgage related loans increased 40
basis points to 4.89% and 73 basis points to 4.61% for the three and nine months
ended December 31, 2021, respectively, predominantly from higher deferred SBA
PPP loan fees recognized from SBA PPP loans that are forgiven. SBA PPP loans
have a favorable impact on our non-mortgage loan yields when SBA PPP loans are
forgiven and the remaining deferred fees are recognized. Loan interest income
was also impacted by the decline in the average balance of net loans between
period, as discussed below. The substantial increase in the average balance of
overnight cash balances as a result of the increase in deposit balances, is also
negatively impacting the average yield on interest earning assets which
decreased 55 basis points for both the three and nine months ended December 31,
2021, to 3.08% and 3.19%, respectively, for the three and nine months ended
December 31, 2021, compared to 3.63% and 3.74%, respectively, for the three and
nine months ended December 31, 2020.  Interest and dividend income for the
three
and nine months ended

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  Table of Contents

December 31, 2021 included $781,000 and $2.6 million, respectively, of interest
income and fees earned related to SBA PPP loans, compared to $1.5 million and
$3.0 million, respectively, for the same periods in the prior year.

The average balance of net loans decreased $17.1 million and $53.1 million to
$938.1 million and $922.1 million for the three and nine months ended December
31, 2021, respectively, from $955.2 million and $975.2 million for the same
periods in the prior year. The average yield on net loans decreased to 4.67% for
the three months ended December 31, 2021 compared to 4.82% for the same period
in the prior year due primarily to lower rates on loan originations. The average
yield on net loans increased to 4.81% for the nine months ended December 31,
2021 compared to 4.69% for the same period in the prior year due primarily to
loan prepayment fees and remaining deferred fees being recognized upon SBA PPP
loan forgiveness. For the three and nine months ended December 31, 2021, the
average balance of SBA PPP loans was $23.8 million and $50.0 million,
respectively, and the average yield on SBA PPP loans was 13.04% and 6.91%,
respectively, which included the recognition of the net deferred fees. The
impact of SBA PPP loans on loan yields will change during any period based on
the volume of prepayments or amounts forgiven by the SBA as certain criteria are
met.

Interest Expense. Interest expense totaled $492,000 and $1.7 million for the
three and nine months ended December 31, 2021, respectively, compared to
$763,000 and $2.8 million for the three and nine months ended December 31, 2020,
respectively. Interest expense on deposits decreased $256,000 and $930,000 for
the three and nine months ended December 31, 2021, respectively, compared to the
same periods in the prior year due to the overall decrease in the weighted
average interest rate on interest-bearing deposits. The weighted average
interest rate on interest-bearing deposits decreased to 0.12% and 0.16% for the
three and nine months ended December 31, 2021, respectively, compared to 0.26%
and 0.34% for the same periods in the prior year. The decrease in the weighted
average interest rate on regular savings accounts and certificates of deposits
contributed primarily to the overall decrease in the expense on deposits which
reflects the market's response to the 150 basis point reduction in the targeted
federal funds rate in March 2020 due to the COVID-19 pandemic. The average
balance of interest-bearing deposits increased $162.3 million and $177.6 million
for the three and nine months ended December 31, 2021, respectively, compared to
the same periods in the prior year. The increase in the average balance of
interest-bearing deposits is due primarily to proceeds from SBA PPP loans
deposited directly into customer accounts, government stimulus checks and an
increase in savings trends and a change in spending habits as a result of
COVID-19.

Interest expense on borrowings decreased $15,000 and $111,000 for the three and
nine months ended December 31, 2021, respectively, compared to the same periods
in the prior year. The average balance of other interest-bearing liabilities
decreased $8.8 million and $19.9 million for the three and nine months ended
December 31, 2021, respectively, compared to the same periods in the prior year.
The weighted average interest rate on other interest-bearing liabilities
increased to 2.62% and 2.63% for the three and nine months ended December 31,
2021, respectively, compared to 2.17% and 1.86% for the same periods in the
prior year due to the higher rate paid on the outstanding junior subordinated
debentures as compared to the outstanding FHLB borrowings. Overall, total
interest expense is lower due to the decrease in the weighted average interest
rate on total interest-bearing liabilities for the three and nine months ended
December 31, 2021 compared to the same periods in the prior year.

                                       45

Contents


The following tables set forth, for the periods indicated, information regarding
average balances of assets and liabilities as well as the total dollar amounts
of interest income earned on average interest-earning assets and interest
expense paid on average interest-bearing liabilities, resultant yields, interest
rate spread, ratio of interest-earning assets to interest-bearing liabilities
and net interest margin (dollars in thousands):


                                                                   Three 

Months ended the 31st of December,

                                                           2021                                       2020
                                                          Interest                                   Interest
                                            Average         and                        Average         and
                                            Balance      Dividends     Yield/Cost      Balance      Dividends     Yield/Cost

Interest-earning assets:
Mortgage loans                            $   708,329    $    8,212          4.60 %  $   669,531    $    8,371          4.96 %
Non-mortgage loans                            229,784         2,834          4.89        285,652         3,230          4.49
Total net loans (1)                           938,113        11,046          4.67        955,183        11,601          4.82

Investment securities (2)                     368,628         1,390          1.50        154,265           607          1.56
Daily interest-earning assets                   2,602             -             -          1,545             -             -
Other earning assets                          310,432           136          0.17        235,331            98          0.17
Total interest-earning assets               1,619,775        12,572         

3.08 1,346 324 12,306 3.63


Non-interest-earning assets:
Office properties and equipment, net           18,305                                     18,970
Other non-interest-earning assets              74,727                      
              78,332
Total assets                              $ 1,712,807                                $ 1,443,626

Interest-bearing liabilities:
Regular savings accounts                  $   327,228            64          0.08    $   258,132            57          0.09
Interest checking accounts                    282,916            22          0.03        235,363            19          0.03
Money market accounts                         279,958            37          0.05        218,490            34          0.06
Certificates of deposit                       112,885           177          0.62        128,677           446          1.38
Total interest-bearing deposits             1,002,987           300          0.12        840,662           556          0.26

Other interest-bearing liabilities             29,102           192          2.62         37,864           207          2.17
Total interest-bearing liabilities          1,032,089           492          0.19        878,526           763          0.34

Non-interest bearing debts:

 Non-interest-bearing deposits                500,749                      
             395,939
 Other liabilities                             17,687                                     17,525
Total liabilities                           1,550,525                                  1,291,990
Shareholders' equity                          162,282                                    151,636
Total liabilities and shareholders'
equity                                    $ 1,712,807                                $ 1,443,626
Net interest income                                      $   12,080                                 $   11,543
Interest rate spread                                                         2.89 %                                     3.29 %
Net interest margin                                                          2.96 %                                     3.40 %

Ratio of average interest-earning
assets to average interest-bearing
liabilities                                                                156.94 %                                   153.25 %

Tax equivalent adjustment (3)                            $       21                                 $       14


(1) Includes outstanding loans.

(2) For the purposes of calculating the average return on investment securities

available for sale, historical cost balances were used; Therefore, the

performance information does not take into account changes in fair value

reflected as a component of equity.

(3) The tax equivalent adjustment relates to non-taxable investment interest income

    and preferred equity securities dividend income.


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                                                                  Nine Months Ended December 31,
                                                          2021                                      2020
                                                        Interest                                   Interest
                                           Average         and                       Average         and
                                           Balance      Dividend     Yield/Cost      Balance      Dividends     Yield/Cost

Interest-earning assets:
Mortgage loans                           $   683,719    $  25,174          4.89 %  $   688,044    $   26,078          5.03 %
Non-mortgage loans                           238,352        8,274          4.61        287,159         8,397          3.88
Total net loans (1)                          922,071       33,448          4.81        975,203        34,475          4.69

Investment securities (2)                    324,755        3,663          1.50        140,985         1,813          1.71
Daily interest-earning assets                  2,690            -             -            575             -             -
Other earning assets                         309,649          379          0.16        179,440           216          0.16
Total interest-earning assets              1,559,165       37,490         

3.19 1,296,203 36,504 3.74


Non-interest-earning assets:
Office properties and equipment, net          19,005                                    18,183
Other non-interest-earning assets             77,385                                    77,881
Total assets                             $ 1,655,555                       

$1,392,267


Interest-bearing liabilities:
Regular savings accounts                 $   314,338          184          0.08    $   250,043           364          0.19
Interest checking accounts                   276,699           66          0.03        219,210            66          0.04
Money market accounts                        265,850          108          0.05        196,929           121          0.08
Certificates of deposit                      119,017          783          0.87        132,128         1,520          1.53
Total interest-bearing deposits              975,904        1,141         

0.16 798 310 2071 0.34

Other interest-bearing liabilities            29,099          576          2.63         49,011           687          1.86

Total interest-bearing liabilities 1,005,003 1,717 0.23 847,321 2,758 0.43

Non-interest bearing debts:

 Non-interest-bearing deposits               473,082                       
           379,516
 Other liabilities                            18,436                                    14,515
Total liabilities                          1,496,521                                 1,241,352
Shareholders' equity                         159,034                                   150,915
Total liabilities and shareholders'
equity                                   $ 1,655,555                               $ 1,392,267
Net interest income                                     $  35,773                                 $   33,746
Interest rate spread                                                       2.96 %                                     3.31 %
Net interest margin                                                        3.05 %                                     3.46 %

Ratio of average interest-earning
assets to average interest-bearing
liabilities                                                              155.14 %                                   152.98 %

Tax equivalent adjustment (3)                           $      54                                 $       25


(1) Includes outstanding loans.

(2) For the purposes of calculating the average return on investment securities

available for sale, historical cost balances were used; Therefore, the

performance information does not take into account changes in fair value

reflected as a component of equity.

(3) The tax equivalent adjustment relates to non-taxable investment interest income

    and preferred equity securities dividend income.


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The following table sets forth the effects of changing rates and volumes on net
interest income of the Company for the periods ended December 31, 2021 compared
to the periods ended December 31, 2020. 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).




                                             Three Months Ended December 31,                    Nine Months Ended December 31,
                                                       2021 vs 2020                                      2021 vs 2020
                                        Increase (Decrease) Due to                         Increase (Decrease) Due to
                                                                            Total                                              Total
                                                                          Increase                                           Increase
                                          Volume            Rate         (Decrease)          Volume              Rate       (Decrease)
Interest Income:
Mortgage loans                        $          469     $     (628)     $     (159)    $          (167)      $    (737)    $     (904)
Non-mortgage loans                             (668)             272           (396)             (1,558)           1,435          (123)
Investment securities (1)                        807            (24)             783               2,098           (248)          1,850
Daily interest-earning                             -               -               -                   -               -              -
Other earning assets                              38               -              38                 163               -            163
Total interest income                            646           (380)             266                 536             450            986

Interest Expense:
Regular savings accounts                          15             (8)               7                  72           (252)          (180)
Interest checking accounts                         3               -               3                  17            (17)              -
Money market accounts                              9             (6)               3                  37            (50)           (13)
Certificates of deposit                         (49)           (220)           (269)               (138)           (599)          (737)
Other interest-bearing liabilities              (53)              38            (15)               (336)             225          (111)
Total interest expense                          (75)           (196)       
   (271)               (348)           (693)        (1,041)
Net interest income                   $          721     $     (184)     $       537    $            884      $    1,143    $     2,027

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



Provision for Loan Losses. The Company maintains an allowance for loan losses to
provide for probable losses inherent in the loan portfolio consistent with GAAP
guidelines. The adequacy of the allowance is evaluated monthly to maintain the
allowance at levels sufficient to provide for inherent losses existing at the
balance sheet date. The key components to the evaluation are the Company's
internal loan review function by its credit administration, which reviews and
monitors the risk and quality of the loan portfolio; as well as the Company's
external loan reviews and its loan classification systems. Credit officers are
expected to monitor their portfolios and make recommendations to change loan
grades whenever changes are warranted. Credit administration approves any
changes to loan grades and monitors loan grades.

In accordance with GAAP, loans acquired from MBank during the fiscal year ended
March 31, 2017 were recorded at their estimated fair value, which resulted in a
net discount to the loans' contractual amounts, of which a portion reflects a
discount for possible credit losses. Credit discounts are included in the
determination of fair value, and, as a result, no allowance for loan losses is
recorded for acquired loans at the acquisition date. The discount recorded on
the acquired loans is not reflected in the allowance for loan losses or related
allowance coverage ratios. However, we believe it should be considered when
comparing certain financial ratios of the Company calculated in periods after
the MBank transaction, compared to the same financial ratios of the Company in
periods prior to the MBank transaction. The net discount on these acquired loans
was $497,000 and $722,000 at December 31, 2021 and March 31, 2021, respectively.









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The Company recorded a recapture of loan losses of $1.3 million and $4.0 million
for the three and nine months ended December 31, 2021, respectively. There was
no provision for loan losses for the three months ended December 31, 2020. The
provision for loan losses was $6.3 million for the nine months ended December
31, 2020. The recapture of loan losses for the three and nine months ended
December 31, 2021 is based primarily upon the improving local and national
economic conditions associated with the COVID-19 pandemic since March 31, 2021.
The provision for loan losses for the nine months ended December 31, 2020 was
primarily due to the uncertain economic conditions resulting from the COVID-19
pandemic and its expected adverse economic effect on the respective industry
exposures within our loan portfolio at that time. Any future decline in national
and local economic conditions, as a result of the COVID-19 pandemic or other
factors, could result in a material increase in the allowance for loan losses
and may adversely affect the Company's financial condition and results of
operations.

Net charge-offs totaled $52,000 and $30,000 for the three and nine months ended
December 31, 2021, respectively, compared to net recoveries of $326,000 and
$268,000 for the three and nine months ended December 31, 2020, respectively.
Annualized net charge-offs were 0.02% for the three months ended December 31,
2021. For the nine months ended December 31, 2021, annualized net charge-offs
were insignificant. For the three and nine months ended December 31, 2020,
annualized net recoveries were (0.14)% and (0.03)%, respectively. Nonperforming
loans were $1.8 million at December 31, 2021, compared to $393,000 at December
31, 2020. The ratio of allowance for loan losses to nonperforming loans was
824.62% at December 31, 2021 compared to 4883.46% at December 31, 2020. See
"Asset Quality" above for additional information related to asset quality that
management considers in determining the provision for loan losses.

Impaired loans are subjected to an impairment analysis to determine an
appropriate reserve amount to be held against each loan. As of December 31,
2021, the Company had identified $738,000 of impaired loans. Because the
significant majority of the impaired loans are collateral dependent, nearly all
of the specific allowances are calculated based on the estimated fair value of
the collateral. Of those impaired loans, $496,000 have no specific valuation
allowance as their estimated collateral value is equal to or exceeds the
carrying costs, which in some cases is the result of previous loan charge-offs.
At December 31, 2021, charge-offs on these impaired loans totaled $85,000 from
their original loan balances. The remaining $242,000 of impaired loans has
specific valuation allowances totaling $11,000 at December 31, 2021.

Non-Interest Income. Non-interest income increased $304,000 and $1.5 million to
$3.1 million and $9.8 million for the three and nine months ended December 31,
2021, respectively, compared to $2.8 million and $8.3 million in the same
periods in the prior year primarily due to increases in fees and service
charges, asset management fees and proceeds received from a BOLI death benefit.
Fees and service charges increased to $1.8 million and $5.4 million,
respectively, for the three and nine months ended December 31, 2021 compared to
$1.7 million and $4.7 million, respectively, in the same period in the prior
year primarily from an increase in customer transactions and continued
improvements in the economies and business activity in our market areas. Asset
management fees grew due to an increase in irrevocable trust fees of $206,000
during the three months ended December 31, 2021 compared to the same prior year
period. Non-interest income also included a BOLI death benefit on a former
employee of $500,000 during the nine months ended December 31, 2021 that was not
present during the nine months ended December 31, 2020.















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Non-Interest Expense. Non-interest expense increased $172,000 to $9.3 million
for the three months ended December 31, 2021, compared to $9.1 million in the
same period in the prior year. Non-interest expense remained constant at $26.6
million for both the nine months ended December 31, 2021 and 2020. For the three
months ended December 31, 2021, non-interest expenses increased due to an
increase in salaries and employee benefits related to employee retention and
hiring due to increased wages in our markets. For the nine months ended December
31, 2021, non-interest expense remained constant, however, salaries and employee
benefits increased $1.0 million mainly due to capitalized loan origination costs
related to SBA PPP loans incurred during the nine months ended December 31,
2020, which are deferred and amortized over the life of the loan. These
increases were offset by a decrease in occupancy and depreciation of $67,000 and
$256,000 for the three and nine months ended December 31, 2021, respectively,
compared to the same periods in the prior year mainly due to the cost savings as
a result of several branch consolidations. For the nine months ended December
31, 2021, non-interest expense included the recognition of a $1.0 million gain
on sale of premises and equipment related to the sale of a building related to a
former branch location. Data processing expense increased $60,000 and $191,000
for the three and nine months ended December 31, 2021, respectively, due to the
increased cost associated with the increase in the volume of customer
transactions being processed related to our core banking platform and continued
investments into enhancing our information technology infrastructure and other
technology expenditures compared to the same prior year period.

Income Taxes. The provision for income taxes was $1.7 million and $5.2 million
for the three and nine months ended December 31, 2021, respectively, compared to
$1.2 million and $2.0 million for the same periods in the prior year. The
increase in the provision for income taxes was due to higher pre-tax income for
the three and nine months ended December 31, 2021 compared to the same periods
in the prior year. Income before income taxes was $7.2 million and $22.9 million
for the three and nine months ended December 31, 2021, respectively, compared to
$5.2 million and $9.0 million for the same periods in the prior year. The
increase was mainly due to the recapture of loan losses for the three and nine
months ended December 31, 2021 compared to the provision for loan losses for the
nine months ended December 31, 2020. The Company's effective tax rate for the
three and nine months ended December 31, 2021 was 23.2% and 22.6%, respectively,
compared to 22.9% and 22.0% for the three and nine months ended December 31,
2020. The lower effective tax rate for the three and nine months ended December
31, 2020 is due to lower pretax income being offset by investments in tax-exempt
bank owned life insurance. At December 31, 2021, management deemed that a
valuation allowance related to the Company's deferred tax asset was not
necessary. At December 31, 2021, the Company had a net deferred tax asset of
$5.8 million compared to $5.4 million at March 31, 2021.





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© Edgar Online, source Previews

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Increased commercial lending has obligated more than $250 million in USDA B&I CARES Act loans, among the largest of any participating lender https://bourg-immobilier.com/increased-commercial-lending-has-obligated-more-than-250-million-in-usda-bi-cares-act-loans-among-the-largest-of-any-participating-lender/ Thu, 03 Feb 2022 20:30:00 +0000 https://bourg-immobilier.com/increased-commercial-lending-has-obligated-more-than-250-million-in-usda-bi-cares-act-loans-among-the-largest-of-any-participating-lender/

RENO, Nev., February 3, 2022 /PRNewswire/ — Greater Commercial Lending (GCL), a subsidiary of Greater Nevada Credit Union (GNCU) that serves rural and underserved communities, obligated on $200 million in government guaranteed loans from the US Department of Agriculture (USDA) Business and Industry CARES Act and assisted with approximately $50 million through September 30, 2021. This is one of the highest amounts of all lenders that participated in the program.

The B&I CARES Act program provided loan guarantees to lenders providing credit to rural businesses and agricultural producers to supplement their working capital to prevent, prepare for, and respond to the impacts of the COVID-19 pandemic.

“The CARES Act program has made a significant difference to businesses in many rural communities that have been hard hit by the effects of COVID-19. I am especially proud of the Greater Commercial Lending team for their work on these loans, d ‘especially since they were working on PPP and SBA 7(a) loans at the same time,’ said Jeremy Gilpin, Executive Vice President of GCL. “Our main goal at GCL is to help organizations in rural and underserved communities and improve the quality of life in these places.”

“Under the leadership of President Biden, Vice President Harris and Secretary of Agriculture Vilsack, the USDA is expanding access to capital to prioritize rural economic development. As we continue to respond to the pandemic of COVID-19 and restoring the economy, the USDA remains committed to helping rural businesses create employment opportunities so that rural Americans can build back better and stronger than ever before,” said Justin MaxsonUSDA Deputy Assistant Secretary for Rural Development.

GCL brings together credit unions and community banks from across the United States to provide government-backed loans to businesses and initiatives in rural and underserved markets. GCL partners with the SBA and USDA, which guarantee the loans, to arrange credit for entities on favorable terms.

The country’s first B&I CARES Act loan, which was granted to Eagle’s Catch, an aquaculture farm in Elsworth, Iowahas been created by GCL.

“About 91% of all seafood in United States is imported. Our goal is to help make fish one of the most water and carbon neutral forms of animal protein. When the pandemic started, it really put us in a tough spot. But there were a lot of great programs from the USDA as well as the CARES Act that got us through this really tough time. Greater Commercial Lending has worked with us on a comprehensive agreement that will allow us to grow over the next few years. It also helped us cover a lot of the losses we were seeing as a result of the ongoing pandemic,” said Joe Sweeneyfounder and CEO of Eagle’s Catch.

“We are really happy to have this relationship [with GCL] as they are one of the best in the country for their partnership with the USDA on the Business and Industrial Loan Guarantee Program,” Sweeney added.

About the expansion of commercial loans
More commercial loans (GCL) is a lending organization that brings together credit unions and community lenders from across the United States to provide government-backed loans to businesses and initiatives in rural and underserved markets across the United States and its territories. It helps fund key infrastructure services, such as electricity, renewable energy, transportation and fiber optics, as well as schools, hospitals, restaurants, agriculture, hotels and manufacturers. GCL partners with the United States Small Business Administration (SBA) and United States Department of Agriculture (USDA), which guarantee the loans, to arrange credit on favorable terms.

About Greater Nevada Credit Union
Bigger Nevada Credit Union (GNCU) is headquartered in Carson City, Nevada and helping the people of Nevada meet their financial needs since 1949. The credit union serves more than 80,000 consumers and small businesses and has more than $1.5 billion in assets. Subsidiaries of GNCU include More commercial loans, Greater Nevada Mortgageand Greater Nevada Insurance. GNCU has consistently been recognized as the best financial institution in many of its service areas, as one of the best employers by the Reno/Tahoe Best Places to Work Awards and is the USDA Lender of the Year. GNCU is also the title sponsor of Greater Nevada Field in Reno. For more information, call (800) 421-6674 or visit www.gncu.org.

SOURCE More Commercial Loans

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European banks urged to wait and see before cutting loan loss reserves https://bourg-immobilier.com/european-banks-urged-to-wait-and-see-before-cutting-loan-loss-reserves/ Wed, 02 Feb 2022 18:33:41 +0000 https://bourg-immobilier.com/european-banks-urged-to-wait-and-see-before-cutting-loan-loss-reserves/

The European Central Bank is warning banks against releasing loan loss provisions early and wants to ensure that the assumptions underlying existing provisions prove to be correct before further releases.

Banks added provisions – funds set aside to cover future non-performing loans – at the start of the COVID-19 pandemic and some have started releasing them. Provisions include post-model adjustments, also known as management overlays, which are applied expected credit loss assumptions when a bank’s modeling is considered insufficient.

Some banks including Based in the Netherlands ABN AMRO Bank NV has started taking back provisions. Lenders should be “extremely careful” and avoid releasing pandemic-related provisions too soon, ECB SSupervisory board chairwoman Andrea Enria told a French newspaper The echoes in January. Regulators want banks to focus not just on individual borrower default risk but also on sector exposures as government support is reduced and inflation rises.

“The regulator is urging banks to consider ending this fiscal support,” said Osman Sattar, analyst at S&P Global Ratings. “Some groups of borrowers may be more stressed than others and may need additional support.”

Post-model adjustments

The ECB closely monitors how banks measure credit risk, including post-model adjustments, or PMAs, and has previously found that a number of banks lack justification for PMA decisions, said a central bank spokesperson told S&P Global Market Intelligence.

“Banks might start to see the need for additional provisions that LDCs don’t cover,” Sattar said.

Some major European banks have made significant additional provisions through PMAs. Spanish bank Banco Bilbao Vizcaya Argentaria SA reported that as of September 30, 2021, it had made management adjustments to its expected losses of 304 million euros. italy UniCredit SpA’s overlays amounted to €450 million for the same period. Based in Denmark Danske Bank A/S reported 6 billion crowns of post-model adjustments as of September 30, 2021, compared to 6.4 billion crowns a year earlier.

Among a selection of major European banks, Banco Comercial Português SA had the highest level of loan loss reserves as a proportion of total assets at the end of the third quarter of 2021, at 2.07%, while the Finnish bank Nordea Bank Abp had the lowest at 0.37%. In the first nine months of last year, Spain’s Banco Santander SA added the most loan loss provisions, while ABN AMRO released provisions worth 0.05% of its assets total. UniCredit, the only bank in the sample that reported results in the fourth quarter of 2021, provisioned 0.09% of total assets in the quarter, or 0.18% for the full year.

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Removal of state support, inflation

The European Banking Authority said at the end of 2021 that banks’ provisions could have been significantly affected by their failure to use the “collective assessment” method included in accounting standards, which allows groups of borrowers to be moved into a higher loan loss category if they are considered at risk by the same factors. However, banks can avoid collective assessments if they can show that they can review all loans individually.

Asset quality is expected to deteriorate with the lifting of government support programs. Inflation is also rising, which could put pressure on borrowers if it rises rapidly.

“We don’t expect a big deterioration, but we do expect a deterioration. So I expect banks to remain cautious,” he said. Olivier Perney, head of Western European banks at Fitch Ratings.

BBVA, UniCredit and Banco Santander have the highest level of non-performing loans among major European banks, while Nordea, Danske and BNP Paribas SA are the least exposed to problem loans.

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Several major European banks have focused on reducing their stock of bad loans in recent months. UniCredit sold €222m of non-performing exposures to KRUK Group in January. Italian bank Intesa Sanpaolo SpA has cut its gross NPLs by around 34 billion euros under its current four-year business plan, which ends this month.

“Massive Overlays”

The European Banking Federation said banks bolstered their provisions with “massive overlays” at the end of 2020 ahead of expectations of a huge NPL rise that failed to materialize, so provisioning levels were very high. EffectivelyThe ECB said the average NPL ratio of supervised banks fell from 8% to 2.3% in the seven years to June 2021, continuing to fall during the pandemic.

“We understand that supervisors tend to be very conservative, but there is also a problem if a bank keeps too large provisions without long-term enforcement, and we are already two years into the hit of COVID-19,” said said Gonzalo Gasos, senior director of prudential policy and supervision at the European Banking Federation. gasos said that the banks were entitled to act according to their judgment of the economic circumstances.

“Therefore, without complacency, it is right for banks to assess with a higher degree of accuracy what future losses can be expected under generally accepted economic scenarios,” he said.

The ECB said moratoriums on state-guaranteed loans had proven effective in getting consumers and businesses through the worst of the crisis. Customers had generally resumed their payments as the moratoriums had ended.

The French government announced a new six-month moratorium on certain types of state-guaranteed loans, but moratoriums in Italy and Spain expired and loan portfolios proved resilient, Fitch said.

“There are grace periods in some countries where borrowers don’t have to pay interest or principal and these are targeted mechanisms that should help some of the worst hit borrowers,” Perney said. “So we’ll see asset deterioration, but it’s going to be very gradual.”

Nonetheless, asset quality risk could remain a key differentiator between banks, according to S&P Global Ratings.

“For some banks the question is whether they can fully release the 2020 peak in provisioning, but that partly depends on whether their economic projections support it; for others the question is how much additional provisioning is still needed,” the rating agency said. in a January 31 report.

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Budget 2022 evokes mixed response from industries and estate agents – The New Indian Express https://bourg-immobilier.com/budget-2022-evokes-mixed-response-from-industries-and-estate-agents-the-new-indian-express/ Wed, 02 Feb 2022 01:56:00 +0000 https://bourg-immobilier.com/budget-2022-evokes-mixed-response-from-industries-and-estate-agents-the-new-indian-express/

Through Express press service

BHUBANESWAR: Despite the difficulties caused by the Covid-19 pandemic, traders and industry bodies as well as real estate agents praised the budget on Tuesday, calling it “comprehensive and growth-oriented”, although some others expressed disappointment with the lack of clarity on support for the MSME sector.

FICCI Senior Vice President and IMFA Managing Director Subhrakant Panda said the substantial increase in government investment spending to accelerate economic recovery and attract private investment is a welcome step. Panda said the extension of the ECLGS and Rs 50,000 crore earmarked for the hospitality sector will bring relief to those most affected by the pandemic.

The Utkal Chamber of Commerce and Industry Ltd (UCCIL) said financial discipline and monetary controls had been given priority in the budget. UCCIL Vice President (Trade), Ashok Sharda, said: “The establishment of a fund with mixed capital under the co-investment model facilitated by SIDBI will focus on financing distressed businesses. and will support booming sectors like pharmaceuticals, agriculture and digitalization.” Sharda, however, pointed out that the loose income tax measures are a disappointment for middle and lower middle class strata.

CREDAI, Odisha, President Swadesh Kumar Routray said a higher allocation for ongoing programs such as PMAY targeting the rural segment would give a boost to rural infrastructure. He said, however, that the GST infusions, the interest subsidy on affordable housing loans and a firm policy of regulating soaring building material prices would be a huge relief for the real estate sector.

Odisha Association of Industries Chairman Abani Kanungo said the positive aspect of the budget is increased capital spending and more interest-free loans to states for capital expenditure. However, there is no clarity on the support to MSMEs for their recovery, although there could be invisible provisions in the allocation.

“No clear announcements have been made for the MSME sector which has been hit hard by the pandemic except for the extension of the tax exemption for another year,” Kanungo said. Many things could have been announced to give a boost to the sector,” he added.

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Do people moving to Tampa Bay have a place to live? https://bourg-immobilier.com/do-people-moving-to-tampa-bay-have-a-place-to-live/ Tue, 01 Feb 2022 17:47:03 +0000 https://bourg-immobilier.com/do-people-moving-to-tampa-bay-have-a-place-to-live/

TAMPA, Fla. (WFLA) — Housing has become a buyer’s market, at least for now. The short-term ramifications of record US housing inventory mean that for families and workers trying to move, places to go are scarce. To meet the demand of movers in relation to the availability of housing, companies build, build and build.

According to data from real estate firm Redfin, more than a third of all US homes sold in December 2021 were new construction. The number of new homes sold rose from 25.4% to 34.1%, which Redfin said is a record high.

Despite the influx of newly built homes and their rapid sales, Redfin said overall U.S. housing inventory has fallen to a record low, with the number of existing homes for sale falling 14.2% from to the previous year. New home inventory rose 34.8%, but overall there was a record high for supply of 1.8 months, the company said.

Part of the problem is lingering concerns about inflation and how it is hurting the ability to bring in building supplies, especially lumber. According to December data from the Bureau of Labor Statistics, the producer price index showed prices rose 24.4% for softwood lumber. This price increase only lasted for one month, from November to December 2021. The last January 2022 price increases will be announced by the BLS on February 15.

While the housing market is a boon for sellers right now, the real victims of the housing market are buyers and renters. Seasonally adjusted, Redfin reported December home sales were down 3.6% month-over-month, but down 11% from a year earlier.

The limited inventory of available homes is unable to meet demand, and construction is a process that normally takes months. Given shortages and supply chain delays, this process could take even longer.

As more companies buy homes to turn them into rental properties, rental prices in the United States have risen. Although not the only cause, the purchase price to turn a property into a rental plays a role in increasing the monthly cost for tenants.

As prices continue to climb and the housing market continues to show dwindling inventory, the US Census and the US Department of Housing and Urban Development reported that the number of new residential constructions at the end of 2021 n only increased by 2% from November to December. Still, that was a 17.2% increase from the previous year as the country adapted to the COVID-19 pandemic. Updated US residential property construction data is expected to be released on February 17.

According to the census, the United States spent $810.3 billion on residential construction in December, with the majority of spending paid for by private, not public companies. Spending in 2021 was also 23.2% higher than in 2020, according to the same data. Overall, the census showed a 0.2% increase in construction activity and total spending in December, and residential sales up 11.9% for single-family homes.

Meanwhile, the US Census will release new statistics on homeownership rates across the country on Feb. 2, showing how many Americans own their homes, what the current national rental vacancy rate is, and how many homes in the national inventory are available, but unclaimed. Currently, only 65.4% of American homes are owned.

The jobs keep coming to Tampa-St. The Petersburg-Clearwater metro area, according to the National Association of Realtors, to the tune of 30.1% net job gains, even with lower home inventory and higher inflation in the area compared to the rest of the states -United

The question remains: where will they live as the housing inventory continues to shrink?

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Itzel Meador takes the lead as director of SBA loans at First Security Bank https://bourg-immobilier.com/itzel-meador-takes-the-lead-as-director-of-sba-loans-at-first-security-bank/ Sun, 23 Jan 2022 15:47:40 +0000 https://bourg-immobilier.com/itzel-meador-takes-the-lead-as-director-of-sba-loans-at-first-security-bank/

The path to Small Business Administration (SBA) loans for First Security Bank’s Itzel Meador has been a long and winding road — and a promising career path, too.

The Dallas native came to Arkansas over 20 years ago for her husband’s job. They are located in Fordyce, a small town of less than 5,000 people and the county seat of Dallas County, in south-central, rural Arkansas. The two Dallases don’t have much in common.

Meador, a graduate of the University of Texas at Dallas, found short-term work for Little Rock-based Arkansas Capital Corp. as a loan assistant. She was quickly elevated to lender status and cut her teeth with a portfolio of SBA-backed loans.

Meador credits Sam Walls, the former longtime ACC executive, as a great role model for his early career.

“Sam Walls was by my side. He really showed me how to be customer-oriented, very good at listening to customers and trying to find ways and opportunities to solve a problem,” she said. got to see for myself how important problem solving really is in banking, especially when it comes to economic development, it helped me a lot to think outside the box and prepared me in this way.

After a 10-year career at ACC, Meador worked for two other banks in the SBA lending space prior to her current role as Director of SBA Lending at First Security Bank.

“We created something out of nothing, so it’s going to take some time to get us to where we need to be. In a very short time we have already seen a lot of momentum,” Meador said.

Searcy-based First Security Bank, which has operations throughout Arkansas and a significant market share in northwest Arkansas, was the largest bank in the state without a dedicated SBA division. The hiring of Meador in April 2021 changed that.

John Rutledge, regional president of First Security Bank, said the bank previously used third parties, such as Arkansas Capital Corp., to use SBA services. With Meador on board, he foresees much shorter lead times for SBA loans, but more importantly, new options to offer community bank customers.

“We’ve always said our customers can choose when they can do business with us and when they can’t. It’s always their time, not ours. This is another example of trying to force this decision on them, hopefully,” Rutledge said. “We hope that over time, with Itzel’s ability to help our communities, our bankers and our markets become more knowledgeable, comfortable and confident with SBA, and what exists and what is possible, that SBA will be an initial option for the customer.”

SBA STATISTICS
According to the federal agency, there are three major programs under SBA-backed loan funding, which grew 64% in 2021 to $208.9 million. Product lines include 7a, 504 and Microloan programs.

The most active program revolves around 7a loans, which provide government-backed loans to small businesses to increase liquidity for working capital and eliminate borrowing costs and other fees. The SBA said the program supported or created 3,834 jobs in Arkansas in the last fiscal year.

The 504 Loan Program provides long-term, fixed-rate financing of up to $5 million for businesses. It is primarily fixed asset related, and the borrower must show opportunities for business growth and job creation for a community.

The Microloan program offers loans up to $50,000, but many are smaller. The average loan was around $23,000 last year. Two huge targets for the Microloan program are small businesses and nonprofit daycares.

A total of 25 lending institutions in the state lend to the SBA, while 51 financial firms outside the state lend through the SBA. SBA loan take-up rates are much higher in underserved communities and businesses owned by women, veterans, or people of color.

Meador said she is currently working with a variety of companies ranging from medical practices and startups to franchise owners and corporate refinancing. She was surprised at how active the environment was.

“SBA does its best in tough markets when the economy is a bit tough. That’s when SBA flourishes and people really appreciate the programs,” she said.

ECONOMIC DEVELOPMENT
One of his most memorable transactions involved a father who eventually wanted to transfer his business to a son. The company was ready for an acquisition to expand even further, and the rural nature of its location meant significant jobs for a small town in western Arkansas.

Although the owner could have put up all of his retirement savings as collateral for a conventional loan, it would have meant years of sleepless nights wondering if his investments were safe. Meador showed the owner, a savvy businessman with a background in finance, how an SBA-structured loan could reduce collateral and secure significant working capital. The deal worked perfectly.

“He said, ‘You’re the first person who told me I could do this for less. How is that possible?’

“I told him the SBA wanted you to have a backup. They don’t want you to use all your chips. You look at it through a conventional lens. I tell you this through an SBA lens because they want to promote economic development. When we finished, he said, “I should have called you much sooner.”

Meador pointed out that the “economic development” aspect of SBA loans is one of the main reasons the programs exist. The SBA wants to create and preserve jobs and offers longer term financing than conventional loans because of this mission.

“It was a very small community that needed this business. People don’t realize that buying a business means as much economic development as starting a business. Because if they leave, that’s the biggest provider of jobs, and that’s a big deal,” Meador said.

Rutledge said the SBA warranty is one of the benefits of adding it as an option for customers to consider. It may not be the best option, but it can be a good option. And ultimately, providing all the opportunities and letting customers decide what they can consider optimal is the goal.

“The great thing about SBA is that he can do a lot, but he can also do the little, mom and pop, one-off where they don’t have family to step in. He’s the store manager; he’s the sales manager. He’s someone who wouldn’t normally have the ability to buy something like this,” Rutledge said.

PANDEMIC “CONFIDENCE BOOSTER”
The SBA has been around since the Eisenhower administration, but the COVID-19 pandemic that broke out in 2020 was a breakthrough for bank usage nationwide. The SBA has been tasked with overseeing two aspects of pandemic financial relief: the Paycheck Protection Program (PPP) and Economic Disaster Loans (EIDL).

Rutledge said First Security Bank was considering launching an in-house SBA program ahead of the pandemic. Still, the lessons learned during the PPP were a “confidence booster” for starting your own SBA program.

At First Security, Rutledge and Meador said all options are on the table when a customer walks in. They are not automatically directed to a conventional loan or the SBA route. The goal is to find a solution that works.

“In our business, there is no greater feeling than knowing that you have helped a client. This is our great reward,” he said.

Meador said, “I never want to impose a program on someone if it’s not meant for them. It takes a commitment to switch to SBA, and there are pros and cons to switching to SBA. I like to let customers know “here are the positives, here are the negatives”.

“There are times when it’s only suitable for SBA because it’s a startup and they don’t have the capital. And that’s the only way to make it work. There are times, because we’re a community bank, we’re flexible. We can get conventional, and that’s okay,” she added.

Meador said she responds to calls and inquiries from seniors looking to sell businesses — business opportunities owned by women, veterans and minorities; young people looking to start something from scratch; and potential mergers or acquisitions as industries consolidate in the post-pandemic economy. Its pipeline is jam-packed at the moment, but it expects more activity over the next two to three years. It may be a generational shift, and it may be the effect of COVID on workers. Anyway, the phones are ringing.

“I really feel that in the next two to three years the economy is going to lead to a huge force of business acquisitions. I see a lot of people from the younger generation who are enterprising,” he said. she said, “And that’s going to keep me pretty busy.”

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24/7 Black Leadership Home Ownership Initiative Will Include Lenders and Realtors | News https://bourg-immobilier.com/24-7-black-leadership-home-ownership-initiative-will-include-lenders-and-realtors-news/ Thu, 20 Jan 2022 23:10:00 +0000 https://bourg-immobilier.com/24-7-black-leadership-home-ownership-initiative-will-include-lenders-and-realtors-news/




 

WATERLOO, Iowa, (KWL)

A new homeownership initiative, Project Home, is underway in the Cedar Valley.

The 24/7 Advancing Black Leadership Consortium (24/BLAC) partners with local realtors and lending institutions to help increase homeownership for African Americans throughout the Cedar Valley .

Here’s How You Can Properly Use a Payday Loans From Legit Lending Companies

The 24/7 Black Leadership Advancement Consortium was created in 2019 to help close the gap in racial disparities highlighted by a Wall Street 24/7 report.

This report, released in late 2018, named Waterloo/Cedar Falls the worst place in the United States for African Americans, based on several social and economic disparities, including income, unemployment, and home ownership.

24/7 BLAC also focuses on inequalities intensified by the Covid-19 pandemic, including a 16% black unemployment rate in Waterloo/Cedar Falls.

Three 24/7 BLAC board members, Joe Briscoe, Dr. Denita Gadson and Gwenne Berry will discuss their progress and ongoing efforts on this week’s edition of The Steele Report on KWWL-TV and kwwl .com

In this new homeownership initiative, which will start in February 2022, local participants will receive credit counseling and pre-homeownership. In addition, participants will also receive support as needed in order to purchase a home.

24/7 BLAC’s Home Initiative is helping participants with a $2,500 grant, after completing comprehensive financial counseling and securing a mortgage.

Home Initiative funds may be used for down payment assistance, closing costs and/or moving needs and purchases (such as the purchase of appliances, etc.).

Participants who complete other approved homeownership programs (such as Habitat for Humanity or Family Management Financial Solutions) are also eligible.

This new program is supported by funding and technical support from Wells Fargo, Community Bank and Trust, Veridian Credit Union and US Bank.

Berkshire Hathaway and Vine Valley Real Estate real estate agents are also involved in this new program.

There is a $25 cost to attend the training which is applied to the cost of the program.

To apply, just visit the 24/4 BLAC website or Facebook page.

According to Bloomberg, African American home ownership was at an all-time high of 40.6% in the second quarter of 2019. Although this figure rose to 47% for the second quarter of 2020, data from the US Census Bureau shows that the Black Americans have the lowest rate. homeownership, compared to other racial groups.

For more information, contact BLAC 24/7 Executive Director Joy Briscoe at: Twentyfoursevenblac@gmail.com or register on the project homepage at: www.twentyfoursevenblac .com.

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Eurozone companies weathered the COVID-19 storm better than expected https://bourg-immobilier.com/eurozone-companies-weathered-the-covid-19-storm-better-than-expected/ Mon, 17 Jan 2022 12:00:17 +0000 https://bourg-immobilier.com/eurozone-companies-weathered-the-covid-19-storm-better-than-expected/

Eurozone companies have weathered the two years of the COVID-19 pandemic better than expected with fewer insolvencies than expected, eurozone finance ministers are expected to conclude on Monday according to a senior eurozone official.

The official, who asked not to be named, said the better result was a testament to the effectiveness of the 2.3 trillion euros ($2.64 trillion) national liquidity support measures taken to prevent businesses from collapsing under repeated government-imposed pandemic lockdowns and the resilience of the economy.

“We were worried about a wave of insolvencies,” said the official, involved in preparing for the monthly meeting of eurozone finance ministers.

Among the measures to avoid bankruptcies, governments have introduced subsidized part-time work programs to prevent mass layoffs and guaranteed loans taken out by companies from banks.

“At this point … business bankruptcies remain surprisingly low relative to the severity of the crisis and the historical average,” the official said.

But he warned that policymakers in the 19 countries sharing the euro must continue to support viable businesses because many ended the pandemic with higher debt and because with new waves of infections every few months , it was not clear how much longer they might need emergency assistance.

“The situation differs between countries and sectors,” the official said.
Source: Reuters (reporting by Jan Strupczewski; editing by Richard Chang)

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