[X] |
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
[ ] |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Washington
|
|
91-1838969
|
(State or other jurisdiction of incorporation or organization)
|
|
(I.R.S. Employer I.D. Number)
|
|
|
|
900 Washington St., Ste. 900, Vancouver, Washington
|
|
98660
|
(Address of principal executive offices)
|
|
(Zip Code)
|
|
|
|
Registrant's telephone number, including area code:
|
|
(360) 693-6650
|
|
|
|
Securities registered pursuant to Section 12(b) of the Act:
|
|
|
Securities registered pursuant to Section 12(g) of the Act: | None |
Table of Contents
|
||
PART I
|
PAGE
|
|
Item 1.
|
Business
|
4
|
Item 1A.
|
Risk Factors
|
31
|
Item 1B.
|
Unresolved Staff Comments
|
43
|
Item 2.
|
Properties
|
43
|
Item 3.
|
Legal Proceedings
|
43
|
Item 4.
|
Mine Safety Disclosures
|
43
|
PART II
|
||
Item 5.
|
Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases
of Equity Securities
|
44
|
Item 6.
|
Selected Financial Data
|
46
|
Item 7.
|
Management's Discussion and Analysis of Financial Condition and Results of Operations
|
48
|
Item 7A.
|
Quantitative and Qualitative Disclosures about Market Risk
|
59
|
Item 8.
|
Financial Statements and Supplementary Data
|
61
|
Item 9.
|
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
|
103
|
Item 9A.
|
Controls and Procedures
|
103
|
Item 9B.
|
Other Information
|
104
|
PART III
|
||
Item 10.
|
Directors, Executive Officers and Corporate Governance
|
105
|
Item 11.
|
Executive Compensation
|
105
|
Item 12.
|
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters
|
106
|
Item 13.
|
Certain Relationships and Related Transactions, and Director Independence
|
106
|
Item 14.
|
Principal Accounting Fees and Services
|
106
|
PART IV
|
||
Item 15.
|
Exhibits and Financial Statement Schedules
|
107
|
Item 16.
|
Form 10-K Summary
|
108
|
Signatures
|
109
|
|
Commercial
Business
|
Other
Real Estate
Mortgage
|
Real Estate
Construction
|
Commercial &
Construction
Total
|
|||||||||||||
March 31, 2019
|
||||||||||||||||
Commercial business
|
$
|
162,796
|
$
|
-
|
$
|
-
|
$
|
162,796
|
||||||||
Commercial construction
|
-
|
-
|
70,533
|
70,533
|
||||||||||||
Office buildings
|
-
|
118,722
|
-
|
118,722
|
||||||||||||
Warehouse/industrial
|
-
|
91,787
|
-
|
91,787
|
||||||||||||
Retail/shopping centers/strip malls
|
-
|
64,934
|
-
|
64,934
|
||||||||||||
Assisted living facilities
|
-
|
2,740
|
-
|
2,740
|
||||||||||||
Single purpose facilities
|
-
|
183,249
|
-
|
183,249
|
||||||||||||
Land acquisition and development
|
-
|
17,027
|
-
|
17,027
|
||||||||||||
Multi-family
|
-
|
51,570
|
-
|
51,570
|
||||||||||||
One-to-four family construction
|
-
|
-
|
20,349
|
20,349
|
||||||||||||
Total
|
$
|
162,796
|
$
|
530,029
|
$
|
90,882
|
$
|
783,707
|
March 31, 2018
|
||||||||||||||||
Commercial business
|
$
|
137,672
|
$
|
-
|
$
|
-
|
$
|
137,672
|
||||||||
Commercial construction
|
-
|
-
|
23,158
|
23,158
|
||||||||||||
Office buildings
|
-
|
124,000
|
-
|
124,000
|
||||||||||||
Warehouse/industrial
|
-
|
89,442
|
-
|
89,442
|
||||||||||||
Retail/shopping centers/strip malls
|
-
|
68,932
|
-
|
68,932
|
||||||||||||
Assisted living facilities
|
-
|
2,934
|
-
|
2,934
|
||||||||||||
Single purpose facilities
|
-
|
165,289
|
-
|
165,289
|
||||||||||||
Land acquisition and development
|
-
|
15,337
|
-
|
15,337
|
||||||||||||
Multi-family
|
-
|
63,080
|
-
|
63,080
|
||||||||||||
One-to-four family construction
|
-
|
-
|
16,426
|
16,426
|
||||||||||||
Total
|
$
|
137,672
|
$
|
529,014
|
$
|
39,584
|
$
|
706,270
|
At March 31,
|
||||||||||||||||
2019
|
2018
|
|||||||||||||||
Amount
(1)
|
Percent
|
Amount
(1)
|
Percent
|
|||||||||||||
Speculative construction
|
$
|
12,315
|
8.01
|
%
|
$
|
7,589
|
6.80
|
%
|
||||||||
Commercial/multi-family construction
|
116,815
|
76.01
|
80,357
|
72.04
|
||||||||||||
Custom/presold construction
|
19,643
|
12.78
|
18,029
|
16.16
|
||||||||||||
Construction/permanent
|
4,923
|
3.20
|
5,573
|
5.00
|
||||||||||||
Total
|
$
|
153,696
|
100.00
|
%
|
$
|
111,548
|
100.00
|
%
|
Northwest
Oregon
|
Other
Oregon
|
Southwest
Washington
|
Total
|
|||||||||||||
March 31, 2019
|
||||||||||||||||
Land acquisition and development
|
$
|
2,184
|
$
|
1,908
|
$
|
12,935
|
$
|
17,027
|
||||||||
Speculative and custom/presold construction
|
1,680
|
104
|
15,284
|
17,068
|
||||||||||||
Total
|
$
|
3,864
|
$
|
2,012
|
$
|
28,219
|
$
|
34,095
|
March 31, 2018
|
||||||||||||||||
Land acquisition and development
|
$
|
482
|
$
|
881
|
$
|
13,974
|
$
|
15,337
|
||||||||
Speculative and custom/presold construction
|
400
|
421
|
12,596
|
13,417
|
||||||||||||
Total
|
$
|
882
|
$
|
1,302
|
$
|
26,570
|
$
|
28,754
|
Within 1
Year
|
1 – 3 Years
|
After 3 – 5
Years
|
After 5 – 10
Years
|
Beyond 10
Years
|
Total
|
|||||||||||||||||||
Commercial and construction:
|
||||||||||||||||||||||||
Commercial business
|
$
|
17,501
|
$
|
19,920
|
$
|
15,369
|
$
|
50,117
|
$
|
59,889
|
$
|
162,796
|
||||||||||||
Other real estate mortgage
|
14,680
|
20,939
|
68,037
|
336,189
|
90,184
|
530,029
|
||||||||||||||||||
Real estate construction
|
15,085
|
1,555
|
-
|
62,567
|
11,675
|
90,882
|
||||||||||||||||||
Total commercial and construction
|
47,266
|
42,414
|
83,406
|
448,873
|
161,748
|
783,707
|
||||||||||||||||||
Consumer:
|
||||||||||||||||||||||||
Real estate one-to-four family
|
326
|
501
|
931
|
4,363
|
77,932
|
84,053
|
||||||||||||||||||
Other installment
|
1,047
|
5,536
|
1,184
|
263
|
326
|
8,356
|
||||||||||||||||||
Total consumer
|
1,373
|
6,037
|
2,115
|
4,626
|
78,258
|
92,409
|
||||||||||||||||||
Total loans
|
$
|
48,639
|
$
|
48,451
|
$
|
85,521
|
$
|
453,499
|
$
|
240,006
|
$
|
876,116
|
Fixed
Rate
|
Adjustable
Rate
|
Total
|
||||||||||
Commercial and construction:
|
||||||||||||
Commercial business
|
$
|
89,199
|
$
|
56,096
|
$
|
145,295
|
||||||
Other real estate mortgage
|
180,845
|
334,504
|
515,349
|
|||||||||
Real estate construction
|
27,701
|
48,096
|
75,797
|
|||||||||
Total commercial and construction
|
297,745
|
438,696
|
736,441
|
|||||||||
Consumer:
|
||||||||||||
Real estate one-to-four family
|
63,082
|
20,645
|
83,727
|
|||||||||
Other installment
|
6,769
|
540
|
7,309
|
|||||||||
Total consumer
|
69,851
|
21,185
|
91,036
|
|||||||||
Total loans
|
$
|
367,596
|
$
|
459,881
|
$
|
827,477
|
March 31, 2019
|
March 31, 2018
|
|||||||||||||||
Number
of Loans
|
Balance
|
Number
of Loans
|
Balance
|
|||||||||||||
Commercial business
|
2
|
$
|
225
|
1
|
$
|
178
|
||||||||||
Commercial real estate
|
2
|
1,081
|
2
|
1,200
|
||||||||||||
Land
|
-
|
-
|
1
|
763
|
||||||||||||
Consumer
|
16
|
213
|
12
|
277
|
||||||||||||
Total
|
20
|
$
|
1,519
|
16
|
$
|
2,418
|
At March 31,
|
||||||||||||||||||||
2019
|
2018
|
2017
|
2016
|
2015
|
||||||||||||||||
Loans accounted for on a non-accrual basis:
|
||||||||||||||||||||
Commercial business
|
$
|
225
|
$
|
178
|
$
|
294
|
$
|
-
|
$
|
-
|
||||||||||
Other real estate mortgage
|
1,081
|
1,963
|
2,143
|
2,360
|
4,092
|
|||||||||||||||
Consumer
|
210
|
277
|
278
|
334
|
1,226
|
|||||||||||||||
Total
|
1,516
|
2,418
|
2,715
|
2,694
|
5,318
|
|||||||||||||||
Accruing loans which are contractually
past due 90 days or more
|
3
|
-
|
34
|
20
|
-
|
|||||||||||||||
Total nonperforming loans
|
1,519
|
2,418
|
2,749
|
2,714
|
5,318
|
|||||||||||||||
Real estate owned ("REO")
|
-
|
298
|
298
|
595
|
1,603
|
|||||||||||||||
Total nonperforming assets
|
$
|
1,519
|
$
|
2,716
|
$
|
3,047
|
$
|
3,309
|
$
|
6,921
|
||||||||||
Foregone interest on non-accrual loans
|
$
|
94
|
$
|
102
|
$
|
81
|
$
|
112
|
$
|
433
|
Northwest
Oregon
|
Other
Oregon
|
Southwest
Washington
|
Other
Washington
|
Other
|
Total
|
|||||||||||||||||||
March 31, 2019
|
||||||||||||||||||||||||
Commercial business
|
$
|
65
|
$
|
-
|
$
|
160
|
$
|
-
|
$
|
-
|
$
|
225
|
||||||||||||
Commercial real estate
|
-
|
896
|
185
|
-
|
-
|
1,081
|
||||||||||||||||||
Land
|
-
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||||||
Consumer
|
-
|
-
|
169
|
-
|
44
|
213
|
||||||||||||||||||
Total nonperforming loans
|
65
|
896
|
514
|
-
|
44
|
1,519
|
||||||||||||||||||
REO
|
-
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||||||
Total nonperforming assets
|
$
|
65
|
$
|
896
|
$
|
514
|
$
|
-
|
$
|
44
|
$
|
1,519
|
March 31, 2018
|
||||||||||||||||||||||||
Commercial business
|
$
|
-
|
$
|
-
|
$
|
178
|
$
|
-
|
$
|
-
|
$
|
178
|
||||||||||||
Commercial real estate
|
-
|
997
|
203
|
-
|
-
|
1,200
|
||||||||||||||||||
Land
|
-
|
763
|
-
|
-
|
-
|
763
|
||||||||||||||||||
Consumer
|
-
|
-
|
206
|
-
|
71
|
277
|
||||||||||||||||||
Total nonperforming loans
|
-
|
1,760
|
587
|
-
|
71
|
2,418
|
||||||||||||||||||
REO
|
-
|
-
|
-
|
298
|
-
|
298
|
||||||||||||||||||
Total nonperforming assets
|
$
|
-
|
$
|
1,760
|
$
|
587
|
$
|
298
|
$
|
71
|
$
|
2,716
|
March 31, 2019
|
March 31, 2018
|
|||||||||||||||
Number
of Loans
|
Balance
|
Number
of Loans
|
Balance
|
|||||||||||||
Commercial business
|
9
|
$
|
1,734
|
11
|
$
|
3,209
|
||||||||||
Commercial real estate
|
3
|
2,308
|
2
|
1,785
|
||||||||||||
Land
|
1
|
728
|
-
|
-
|
||||||||||||
Multi-family
|
2
|
20
|
1
|
11
|
||||||||||||
Total
|
15
|
$
|
4,790
|
14
|
$
|
5,005
|
At or For the Year
|
||||||||
Ended March 31,
|
||||||||
2019
|
2018
|
|||||||
Classified loans
|
$
|
6,306
|
$
|
7,423
|
||||
General loss allowances
|
11,435
|
10,697
|
||||||
Specific loss allowances
|
22
|
69
|
||||||
Net recoveries
|
(641
|
)
|
(238
|
)
|
Year Ended March 31,
|
||||||||||||||||||||
2019
|
2018
|
2017
|
2016
|
2015
|
||||||||||||||||
Balance at beginning of year
|
$
|
10,766
|
$
|
10,528
|
$
|
9,885
|
$
|
10,762
|
$
|
12,551
|
||||||||||
Provision for (recapture of) loan losses
|
50
|
-
|
-
|
(1,150
|
)
|
(1,800
|
)
|
|||||||||||||
Recoveries:
|
||||||||||||||||||||
Commercial and construction
|
||||||||||||||||||||
Commercial business
|
1
|
240
|
492
|
30
|
34
|
|||||||||||||||
Other real estate mortgage
|
824
|
347
|
463
|
331
|
271
|
|||||||||||||||
Real estate construction
|
-
|
-
|
-
|
6
|
-
|
|||||||||||||||
Total commercial and construction
|
825
|
587
|
955
|
367
|
305
|
|||||||||||||||
Consumer
|
||||||||||||||||||||
Real estate one-to-four family
|
80
|
11
|
89
|
153
|
158
|
|||||||||||||||
Other installment
|
27
|
48
|
57
|
27
|
12
|
|||||||||||||||
Total consumer
|
107
|
59
|
146
|
180
|
170
|
|||||||||||||||
Total recoveries
|
932
|
646
|
1,101
|
547
|
475
|
|||||||||||||||
Charge-offs:
|
||||||||||||||||||||
Commercial and construction
|
||||||||||||||||||||
Commercial business
|
-
|
-
|
1
|
-
|
120
|
|||||||||||||||
Other real estate mortgage
|
-
|
68
|
117
|
-
|
233
|
|||||||||||||||
Real estate construction
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||
Total commercial and construction
|
-
|
68
|
118
|
-
|
353
|
|||||||||||||||
Consumer
|
||||||||||||||||||||
Real estate one-to-four family
|
30
|
12
|
-
|
8
|
53
|
|||||||||||||||
Other installment
|
261
|
328
|
340
|
266
|
58
|
|||||||||||||||
Total consumer
|
291
|
340
|
340
|
274
|
111
|
|||||||||||||||
Total charge-offs
|
291
|
408
|
458
|
274
|
464
|
|||||||||||||||
Net recoveries
|
(641
|
)
|
(238
|
)
|
(643
|
)
|
(273
|
)
|
(11
|
)
|
||||||||||
Balance at end of year
|
$
|
11,457
|
$
|
10,766
|
$
|
10,528
|
$
|
9,885
|
$
|
10,762
|
||||||||||
Ratio of allowance to total loans
outstanding at end of year
|
1.31
|
%
|
1.33
|
%
|
1.35
|
%
|
1.58
|
%
|
1.86
|
%
|
||||||||||
Ratio of net (recoveries) charge-offs to average net
loans outstanding during year
|
(0.08
|
)
|
(0.03
|
)
|
(0.10
|
)
|
(0.05
|
)
|
(0.00
|
)
|
||||||||||
Ratio of allowance to total nonperforming loans
|
754.25
|
445.24
|
382.98
|
364.22
|
202.37
|
At March 31,
|
||||||||||||||||||||||||||||||||||||||||
2019
|
2018
|
2017
|
2016
|
2015
|
||||||||||||||||||||||||||||||||||||
Amount
|
Loan
Category
as a
Percent
of Total
Loans
|
Amount
|
Loan
Category
as a
Percent of
Total
Loans
|
Amount
|
Loan
Category
as a
Percent of
Total
Loans
|
Amount
|
Loan
Category
as a
Percent
of Total
Loans
|
Amount
|
Loan
Category
as a
Percent
of Total
Loans
|
|||||||||||||||||||||||||||||||
Commercial and construction:
|
||||||||||||||||||||||||||||||||||||||||
Commercial business
|
$
|
1,808
|
18.58
|
%
|
$
|
1,668
|
16.97
|
%
|
$
|
1,418
|
13.78
|
%
|
$
|
1,048
|
11.11
|
%
|
$
|
1,263
|
13.31
|
%
|
||||||||||||||||||||
Other real estate mortgage
|
6,035
|
60.50
|
5,956
|
65.20
|
5,609
|
65.00
|
5,310
|
63.94
|
5,155
|
59.60
|
||||||||||||||||||||||||||||||
Real estate construction
|
1,457
|
10.37
|
618
|
4.88
|
714
|
5.92
|
416
|
4.28
|
769
|
5.26
|
||||||||||||||||||||||||||||||
Consumer:
|
||||||||||||||||||||||||||||||||||||||||
Real estate one-to-four family
|
1,208
|
9.60
|
1,400
|
11.10
|
1,525
|
11.91
|
1,652
|
14.21
|
1,881
|
15.49
|
||||||||||||||||||||||||||||||
Other installment
|
239
|
0.95
|
409
|
1.85
|
574
|
3.39
|
751
|
6.46
|
667
|
6.34
|
||||||||||||||||||||||||||||||
Unallocated
|
710
|
-
|
715
|
-
|
688
|
-
|
708
|
-
|
1,027
|
-
|
||||||||||||||||||||||||||||||
Total allowance for loan losses
|
$
|
11,457
|
100.00
|
%
|
$
|
10,766
|
100.00
|
%
|
$
|
10,528
|
100.00
|
%
|
$
|
9,885
|
100.00
|
%
|
$
|
10,762
|
100.00
|
%
|
At March 31,
|
||||||||||||||||||||||||
2019
|
2018
|
2017
|
||||||||||||||||||||||
Carrying
Value
|
Percent of
Portfolio
|
Carrying
Value
|
Percent of
Portfolio
|
Carrying
Value
|
Percent of
Portfolio
|
|||||||||||||||||||
Available for sale (at estimated fair value):
|
||||||||||||||||||||||||
Municipal securities
|
$
|
8,881
|
4.98
|
%
|
$
|
8,732
|
4.09
|
%
|
$
|
2,819
|
1.41
|
%
|
||||||||||||
Agency securities
|
12,341
|
6.92
|
22,102
|
10.36
|
16,808
|
8.39
|
||||||||||||||||||
REMICs
|
40,162
|
22.53
|
46,955
|
22.02
|
43,160
|
21.55
|
||||||||||||||||||
Residential MBS
|
75,821
|
42.54
|
89,074
|
41.77
|
96,611
|
48.24
|
||||||||||||||||||
Other MBS
|
41,021
|
23.01
|
46,358
|
21.74
|
40,816
|
20.38
|
||||||||||||||||||
178,226
|
99.98
|
213,221
|
99.98
|
200,214
|
99.97
|
|||||||||||||||||||
Held to maturity (at amortized cost):
|
||||||||||||||||||||||||
Residential MBS
|
35
|
0.02
|
42
|
0.02
|
64
|
0.03
|
||||||||||||||||||
Total investment securities
|
$
|
178,261
|
100.00
|
%
|
$
|
213,263
|
100.00
|
%
|
$
|
200,278
|
100.00
|
%
|
Less Than One Year
|
One to Five Years
|
More Than Five to
Ten Years
|
More Than
Ten Years
|
|||||||||||||||||||||||||||||
Amount
|
Weighted
Average
Yield
(1)
|
Amount
|
Weighted
Average
Yield
(1)
|
Amount
|
Weighted
Average
Yield
(1)
|
Amount
|
Weighted
Average
Yield
(1)
|
|||||||||||||||||||||||||
Municipal securities
|
$
|
-
|
-
|
%
|
$
|
-
|
-
|
%
|
$
|
3,339
|
2.40
|
%
|
$
|
5,542
|
2.46
|
%
|
||||||||||||||||
Agency securities
|
2,994
|
1.30
|
3,018
|
2.76
|
6,329
|
2.22
|
-
|
-
|
||||||||||||||||||||||||
REMICS
|
1,955
|
2.14
|
36
|
4.36
|
11,657
|
2.42
|
26,514
|
2.28
|
||||||||||||||||||||||||
Residential MBS
|
-
|
-
|
1,083
|
1.86
|
17,896
|
2.05
|
56,877
|
2.39
|
||||||||||||||||||||||||
Other MBS
|
-
|
-
|
4,400
|
2.11
|
8,152
|
2.24
|
28,469
|
2.27
|
||||||||||||||||||||||||
Total
|
$
|
4,949
|
1.63
|
%
|
$
|
8,537
|
2.32
|
%
|
$
|
47,373
|
2.22
|
%
|
$
|
117,402
|
2.34
|
%
|
Year Ended March 31,
|
||||||||||||||||||||||||
2019
|
2018
|
2017
|
||||||||||||||||||||||
Average
Balance
|
Average
Rate
|
Average
Balance
|
Average
Rate
|
Average
Balance
|
Average
Rate
|
|||||||||||||||||||
Non-interest-bearing demand
|
$
|
289,707
|
0.00
|
%
|
$
|
264,128
|
0.00
|
%
|
$
|
202,376
|
0.00
|
%
|
||||||||||||
Interest-bearing checking
|
180,256
|
0.06
|
170,124
|
0.06
|
151,801
|
0.06
|
||||||||||||||||||
Savings accounts
|
136,720
|
0.11
|
132,376
|
0.10
|
106,324
|
0.10
|
||||||||||||||||||
Money market accounts
|
252,202
|
0.12
|
275,092
|
0.12
|
252,040
|
0.12
|
||||||||||||||||||
Certificates of deposit
|
105,049
|
0.43
|
136,370
|
0.47
|
118,769
|
0.53
|
||||||||||||||||||
Total
|
$
|
963,934
|
0.10
|
%
|
$
|
978,090
|
0.12
|
%
|
$
|
831,310
|
0.14
|
%
|
Maturity Period
|
Amount
|
Weighted
Average Rate
|
||||||
Three months or less
|
$
|
9,906
|
0.46
|
%
|
||||
Over three through six months
|
7,299
|
0.41
|
||||||
Over six through 12 months
|
12,386
|
0.43
|
||||||
Over 12 months
|
13,466
|
0.95
|
||||||
Total
|
$
|
43,057
|
0.60
|
%
|
Year Ended March 31,
|
||||||||||||
2019
|
2018
|
2017
|
||||||||||
Maximum amounts of FHLB advances outstanding at any month end
|
$
|
62,638
|
$
|
14,050
|
$
|
-
|
||||||
Average FHLB advances outstanding
|
15,400
|
787
|
239
|
|||||||||
Weighted average rate on FHLB advances
|
2.58
|
%
|
1.60
|
%
|
0.80
|
%
|
||||||
Maximum amounts of FRB borrowings outstanding at any month end
|
$
|
-
|
$
|
-
|
$
|
-
|
||||||
Average FRB borrowings outstanding
|
3
|
1
|
-
|
|||||||||
Weighted average rate on FRB borrowings
|
3.00
|
%
|
1.50
|
%
|
-
|
%
|
Name
|
Age
(1
)
|
Position
|
Kevin J. Lycklama
|
41
|
President and Chief Executive Officer
|
David Lam
|
42
|
Executive Vice President and Chief Financial Officer
|
Daniel D. Cox
|
41
|
Executive Vice President and Chief Credit Officer
|
Kim J. Capeloto
|
57
|
Executive Vice President and Chief Banking Officer
|
Steven P. Plambeck
|
59
|
Executive Vice President and Chief Lending Officer
|
Christopher P. Cline
|
58
|
President and Chief Executive Officer of Riverview Trust Company
|
•
|
Total reported loans for construction, land development and other land represent 100% or more of the bank's capital; or
|
•
|
Total commercial real estate loans (as defined in the guidance) represent 300% or more of the bank's total capital or the
outstanding balance of the bank's commercial real estate loan portfolio has increased 50% or more during the prior 36 months.
|
•
|
before any savings and loan holding company or bank holding company could acquire 5% or more of the common stock of the
Company; and
|
•
|
before any other company could acquire 25% or more of the common stock of the Company and may be required for an acquisition
of as little as 10% of such stock.
|
·
|
loan delinquencies, problem assets and foreclosures may increase;
|
·
|
we may increase our allowance for loan losses;
|
·
|
the slowing of sales of foreclosed assets;
|
·
|
demand for our products and services may decline possibly resulting in a decrease in our total loans or assets;
|
·
|
collateral for loans made may decline further in value, exposing us to increased risk loans, reducing customers' borrowing
power, and reducing the value of assets and collateral associated with existing loans;
|
·
|
the net worth and liquidity of loan guarantors may decline, impairing their ability to honor commitments to us; and
|
·
|
the amount of our low-cost or non-interest bearing deposits may decrease.
|
·
|
the cash flow of the borrower and/or the project being financed;
|
·
|
in the case of a collateralized loan, the changes and uncertainties as to the future value of the collateral;
|
·
|
the duration of the loan;
|
·
|
the credit history of a particular borrower; and
|
·
|
changes in economic and industry conditions.
|
·
|
our general reserve, based on our historical default and loss experience and certain macroeconomic factors based on
management's expectations of future events;
|
·
|
our specific reserve, based on our evaluation of impaired loans and their underlying collateral; and
|
·
|
an unallocated reserve to provide for other credit losses inherent in our loan portfolio that may not have been contemplated in
the other loss factors.
|
·
|
We may be exposed to potential asset quality issues or unknown or contingent liabilities of the banks, businesses, assets, and
liabilities we acquire. If these issues or liabilities exceed our estimates, our results of operations and financial condition may be materially negatively affected;
|
·
|
Higher than expected deposit attrition;
|
·
|
Our strategic efforts may divert resources or management's attention from ongoing business operations and may subject us to
additional regulatory scrutiny;
|
·
|
Prices at which acquisitions can be made may not be acceptable to us;
|
·
|
The acquisition of other entities generally requires integration of systems, procedures and personnel of the acquired entity
into our company to make the transaction economically successful. This integration process is complicated and time consuming and can also be disruptive to the customers of the acquired business. If the integration process is not conducted
successfully and with minimal adverse effect on the acquired business and its customers, we may not realize the anticipated economic benefits of particular acquisitions within the expected time frame, and we may lose customers or employees of
the acquired business. We may also experience greater than anticipated customer losses even if the integration process is successful;
|
·
|
To the extent our costs of an acquisition exceed the fair value of the net assets acquired, the acquisition will generate
goodwill. As discussed below, we are required to assess our goodwill for impairment at least annually, and any goodwill impairment charge could have a material adverse effect on our results of operations and financial condition;
|
·
|
To finance an acquisition, we may borrow funds, thereby increasing our leverage and diminishing our liquidity, or raise
additional capital, which could dilute the interests of our existing shareholders; and
|
·
|
We expect our net income will increase following our acquisitions; however, we also expect our general and administrative
expenses and consequently our efficiency rates will also increase. Ultimately, we would expect our efficiency ratio to improve; however, if we are not successful in our integration process, this may not occur, and our acquisitions or
branching activities may not be accretive to earnings in the short or long-term.
|
|
3/31/14*
|
3/31/15
|
3/31/16
|
3/31/17
|
3/31/18
|
3/31/19
|
|
Riverview Bancorp, Inc.
|
100.00
|
131.37
|
124.10
|
214.46
|
283.47
|
225.62
|
|
S & P 500
|
100.00
|
112.73
|
114.74
|
134.45
|
153.26
|
167.81
|
|
NASDAQ Bank
|
100.00
|
101.72
|
102.05
|
145.83
|
161.33
|
142.38
|
At March 31,
|
||||||||||||||||||||
2019
|
2018
|
2017
|
2016
|
2015
|
||||||||||||||||
(In thousands)
|
||||||||||||||||||||
FINANCIAL CONDITION DATA:
|
||||||||||||||||||||
Total assets
|
$
|
1,156,921
|
$
|
1,151,535
|
$
|
1,133,939
|
$
|
921,229
|
$
|
858,750
|
||||||||||
Loans receivable, net
|
864,659
|
800,610
|
768,904
|
614,934
|
569,010
|
|||||||||||||||
Loans held for sale
|
909
|
210
|
478
|
503
|
778
|
|||||||||||||||
Investment securities available for sale
|
178,226
|
213,221
|
200,214
|
150,690
|
112,463
|
|||||||||||||||
Investment securities held to maturity
|
35
|
42
|
64
|
75
|
86
|
|||||||||||||||
Cash and cash equivalents
|
22,950
|
44,767
|
64,613
|
55,400
|
58,659
|
|||||||||||||||
Deposits
|
925,068
|
995,691
|
980,058
|
779,803
|
720,850
|
|||||||||||||||
Shareholders' equity
|
133,122
|
116,901
|
111,264
|
108,273
|
103,801
|
|||||||||||||||
|
||||||||||||||||||||
Years Ended March 31, | ||||||||||||||||||||
2019
|
2018
|
2017
|
2016
|
2015
|
||||||||||||||||
(Dollars in thousands, except per share data)
|
||||||||||||||||||||
OPERATING DATA:
|
||||||||||||||||||||
Interest and dividend income
|
$
|
49,118
|
$
|
44,960
|
$
|
35,627
|
$
|
30,948
|
$
|
28,626
|
||||||||||
Interest expense
|
2,815
|
2,349
|
1,869
|
1,742
|
1,916
|
|||||||||||||||
Net interest income
|
46,303
|
42,611
|
33,758
|
29,206
|
26,710
|
|||||||||||||||
Provision for (recapture of) loan losses
|
50
|
-
|
-
|
(1,150
|
)
|
(1,800
|
)
|
|||||||||||||
Net interest income after provision for (recapture of) loan losses
|
46,253
|
42,611
|
33,758
|
30,356
|
28,510
|
|||||||||||||||
Gains from sales of loans, securities and real estate owned
|
326
|
722
|
493
|
338
|
674
|
|||||||||||||||
Other non-interest income
|
11,532
|
10,282
|
9,521
|
9,037
|
8,201
|
|||||||||||||||
Non-interest expense
|
35,699
|
35,618
|
32,981
|
29,947
|
30,744
|
|||||||||||||||
Income before income taxes
|
22,412
|
17,997
|
10,791
|
9,784
|
6,641
|
|||||||||||||||
Provision for income taxes
|
5,146
|
7,755
|
3,387
|
3,426
|
2,150
|
|||||||||||||||
Net income
|
$
|
17,266
|
$
|
10,242
|
$
|
7,404
|
$
|
6,358
|
$
|
4,491
|
Earnings per share | ||||||||||||||||||||
Basic
|
$
|
0.76
|
$
|
0.45
|
$
|
0.33
|
$
|
0.28
|
$
|
0.20
|
||||||||||
Diluted
|
0.76
|
0.45
|
0.33
|
0.28
|
0.20
|
|||||||||||||||
Dividends per share
|
0.15000
|
0.10500
|
0.08000
|
0.06500
|
0.01125
|
At or For the Years Ended March 31,
|
||||||||||||||||
2019
|
2018
|
2017
|
2016
|
2015
|
||||||||||||
KEY FINANCIAL RATIOS:
|
||||||||||||||||
Performance Ratios:
|
||||||||||||||||
Return on average assets
|
1.51
|
%
|
0.90
|
%
|
0.76
|
%
|
0.72
|
%
|
0.54
|
%
|
||||||
Return on average equity
|
13.86
|
8.78
|
6.66
|
5.93
|
4.42
|
|||||||||||
Dividend payout ratio
(1)
|
19.74
|
23.33
|
24.24
|
23.21
|
5.63
|
|||||||||||
Interest rate spread
|
4.25
|
3.99
|
3.72
|
3.60
|
3.52
|
|||||||||||
Net interest margin
|
4.38
|
4.08
|
3.79
|
3.67
|
3.59
|
|||||||||||
Non-interest expense to average assets
|
3.13
|
3.15
|
3.38
|
3.39
|
3.70
|
|||||||||||
Efficiency ratio
(2)
|
61.38
|
66.43
|
75.35
|
77.62
|
86.40
|
|||||||||||
Average equity to average assets
|
10.92
|
10.30
|
11.39
|
12.14
|
12.23
|
|||||||||||
Asset Quality Ratios:
|
||||||||||||||||
Allowance for loan losses to
total loans at end of period
|
1.31
|
1.33
|
1.35
|
1.58
|
1.86
|
|||||||||||
Allowance for loan losses to
nonperforming loans
|
754.25
|
445.24
|
382.98
|
364.22
|
202.37
|
|||||||||||
Net (recoveries) charge-offs to average outstanding
loans during the period
|
(0.08
|
)
|
(0.03
|
)
|
(0.10
|
)
|
(0.05
|
)
|
-
|
|||||||
Ratio of nonperforming assets
to total assets
|
0.13
|
0.24
|
0.27
|
0.36
|
0.81
|
|||||||||||
Ratio of nonperforming loans
to total loans
|
0.17
|
0.30
|
0.35
|
0.43
|
0.92
|
|||||||||||
Capital Ratios:
|
||||||||||||||||
Total capital to risk-weighted assets
|
16.88
|
15.41
|
14.06
|
16.07
|
15.89
|
|||||||||||
Tier 1 capital to risk-weighted assets
|
15.63
|
14.16
|
12.81
|
14.81
|
14.63
|
|||||||||||
Common equity tier 1 capital to risk-weighted assets
|
15.63
|
14.16
|
12.81
|
14.81
|
14.63
|
|||||||||||
Leverage ratio
|
11.56
|
10.26
|
10.21
|
11.18
|
10.89
|
(1)
|
Dividends per share divided by earnings per share
|
(2)
|
Non-interest expense divided by the sum of net interest income and non-interest income
|
Year Ended March 31,
|
||||||||||||||||||||||||
2019 vs. 2018
|
2018 vs. 2017
|
|||||||||||||||||||||||
Increase (Decrease) Due to
|
Increase (Decrease) Due to
|
|||||||||||||||||||||||
Total
|
||||||||||||||||||||||||
(Dollars in thousands)
|
Volume
|
Rate
|
Increase
(Decrease)
|
Volume
|
Rate
|
Total
Increase
|
||||||||||||||||||
Interest Income:
|
||||||||||||||||||||||||
Mortgage loans
|
$
|
1,760
|
$
|
2,051
|
$
|
3,811
|
$
|
4,112
|
$
|
1,193
|
$
|
5,305
|
||||||||||||
Non-mortgage loans
|
980
|
(263
|
)
|
717
|
2,103
|
642
|
2,745
|
|||||||||||||||||
Investment securities
(1)
|
(349
|
)
|
210
|
(139
|
)
|
842
|
355
|
1,197
|
||||||||||||||||
Daily interest-earning
|
-
|
1
|
1
|
-
|
-
|
-
|
||||||||||||||||||
Other earning assets
|
(451
|
)
|
221
|
(230
|
)
|
(107
|
)
|
222
|
115
|
|||||||||||||||
Total interest income
|
1,940
|
2,220
|
4,160
|
6,950
|
2,412
|
9,362
|
||||||||||||||||||
Interest Expense:
|
||||||||||||||||||||||||
Savings accounts
|
3
|
9
|
12
|
23
|
-
|
23
|
||||||||||||||||||
Interest checking accounts
|
1
|
-
|
1
|
2
|
-
|
2
|
||||||||||||||||||
Money market accounts
|
(33
|
)
|
-
|
(33
|
)
|
26
|
-
|
26
|
||||||||||||||||
Certificates of deposit
|
(140
|
)
|
(52
|
)
|
(192
|
)
|
84
|
(78
|
)
|
6
|
||||||||||||||
Other interest-bearing liabilities
|
600
|
78
|
678
|
112
|
311
|
423
|
||||||||||||||||||
Total interest expense
|
431
|
35
|
466
|
247
|
233
|
480
|
||||||||||||||||||
Net interest income
|
$
|
1,509
|
$
|
2,185
|
$
|
3,694
|
$
|
6,703
|
$
|
2,179
|
$
|
8,882
|
||||||||||||
Within
1 Year
|
Over
1 - 3 Years
|
Over
3 - 5 Years
|
After
5 Years
|
Total
Balance
|
||||||||||||||||
Certificates of deposit
|
$
|
59,487
|
$
|
19,273
|
$
|
4,709
|
$
|
2,537
|
$
|
86,006
|
||||||||||
Operating leases
|
1,492
|
1,582
|
1,062
|
1,453
|
5,589
|
|||||||||||||||
Capital lease
|
34
|
86
|
115
|
2,168
|
2,403
|
|||||||||||||||
Junior subordinates debentures
|
-
|
-
|
-
|
27,836
|
27,836
|
|||||||||||||||
Total other contractual obligations
|
$
|
61,013
|
$
|
20,941
|
$
|
5,886
|
$
|
33,994
|
$
|
121,834
|
Average
Rate
|
Within
1 Year
|
After
1 - 3
Years
|
After
3 - 5
Years
|
After
5 - 10
Years
|
Beyond
10
Years
|
Total
|
||||||||||||||||||||||
Interest-Sensitive Assets:
|
||||||||||||||||||||||||||||
Loans receivable
|
4.94
|
%
|
$
|
48,639
|
$
|
48,451
|
$
|
85,521
|
$
|
453,499
|
$
|
240,006
|
$
|
876,116
|
||||||||||||||
Investment securities and other
|
||||||||||||||||||||||||||||
interest-earning assets
|
2.31
|
27,536
|
21,919
|
58,946
|
76,450
|
-
|
184,851
|
|||||||||||||||||||||
FHLB stock
|
2.46
|
1,458
|
1,093
|
1,093
|
-
|
-
|
3,644
|
|||||||||||||||||||||
Total assets
|
$
|
77,633
|
$
|
71,463
|
$
|
145,560
|
$
|
529,949
|
$
|
240,006
|
$
|
1,064,611
|
||||||||||||||||
Interest-Sensitive Liabilities:
|
||||||||||||||||||||||||||||
Interest checking
|
0.06
|
$
|
73,356
|
$
|
55,016
|
$
|
55,016
|
$
|
-
|
$
|
-
|
$
|
183,388
|
|||||||||||||||
Savings accounts
|
0.10
|
55,001
|
41,251
|
41,251
|
-
|
-
|
137,503
|
|||||||||||||||||||||
Money market accounts
|
0.12
|
93,327
|
69,995
|
69,995
|
-
|
-
|
233,317
|
|||||||||||||||||||||
Certificate accounts
|
0.53
|
59,487
|
19,273
|
4,709
|
2,521
|
16
|
86,006
|
|||||||||||||||||||||
FHLB advances
|
2.62
|
56,586
|
-
|
-
|
-
|
-
|
56,586
|
|||||||||||||||||||||
Subordinated debentures
|
4.22
|
-
|
-
|
-
|
-
|
27,836
|
27,836
|
|||||||||||||||||||||
Obligations under capital lease
|
7.16
|
34
|
86
|
115
|
438
|
1,730
|
2,403
|
|||||||||||||||||||||
Total liabilities
|
337,791
|
185,621
|
171,086
|
2,959
|
29,582
|
727,039
|
||||||||||||||||||||||
Interest sensitivity gap
|
(260,158
|
)
|
(114,158
|
)
|
(25,526
|
)
|
526,990
|
210,424
|
$
|
337,572
|
||||||||||||||||||
Cumulative interest sensitivity gap
|
$
|
(260,158
|
)
|
$
|
(374,316
|
)
|
$
|
(399,842
|
)
|
$
|
127,148
|
$
|
337,572
|
|||||||||||||||
Off-Balance Sheet Items:
|
||||||||||||||||||||||||||||
Commitments to extend credit
|
$
|
40,737
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
40,737
|
||||||||||||||||
Unused lines of credit
|
$
|
139,842
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
139,842
|
TABLE OF CONTENTS
|
|
Page
|
|
Report of Independent Registered Public Accounting Firm
|
62
|
Consolidated Balance Sheets as of March 31, 2019 and 2018
|
64
|
Consolidated Statements of Income for the Years Ended March 31, 2019, 2018 and 2017
|
65
|
Consolidated Statements of Comprehensive Income for the Years Ended March 31, 2019, 2018 and 2017
|
66
|
Consolidated Statements of Shareholders' Equity for the Years Ended March 31, 2019, 2018 and 2017
|
67
|
Consolidated Statements of Cash Flows for the Years Ended March 31, 2019, 2018 and 2017
|
68
|
Notes to Consolidated Financial Statements
|
69
|
Report of Independent Registered Public Accounting Firm
|
(In thousands, except share and per share data)
|
2019
|
2018
|
2017
|
|||||||||
INTEREST AND DIVIDEND INCOME:
|
||||||||||||
Interest and fees on loans receivable
|
$
|
44,187
|
$
|
39,659
|
$
|
31,609
|
||||||
Interest on investment securities – taxable
|
4,456
|
4,648
|
3,550
|
|||||||||
Interest on investment securities – nontaxable
|
146
|
95
|
25
|
|||||||||
Other interest and dividends
|
329
|
558
|
443
|
|||||||||
Total interest and dividend income
|
49,118
|
44,960
|
35,627
|
|||||||||
INTEREST EXPENSE:
|
||||||||||||
Interest on deposits
|
996
|
1,208
|
1,151
|
|||||||||
Interest on borrowings
|
1,819
|
1,141
|
718
|
|||||||||
Total interest expense
|
2,815
|
2,349
|
1,869
|
|||||||||
Net interest income
|
46,303
|
42,611
|
33,758
|
|||||||||
Provision for loan losses
|
50
|
-
|
-
|
|||||||||
Net interest income after provision for loan losses
|
46,253
|
42,611
|
33,758
|
|||||||||
NON-INTEREST INCOME:
|
||||||||||||
Fees and service charges
|
6,699
|
5,779
|
5,177
|
|||||||||
Asset management fees
|
3,791
|
3,448
|
2,988
|
|||||||||
Net gains on sales of loans held for sale
|
317
|
641
|
656
|
|||||||||
BOLI
|
734
|
819
|
760
|
|||||||||
Other, net
|
317
|
317
|
433
|
|||||||||
Total non-interest income, net
|
11,858
|
11,004
|
10,014
|
|||||||||
NON-INTEREST EXPENSE:
|
||||||||||||
Salaries and employee benefits
|
22,320
|
21,743
|
19,356
|
|||||||||
Occupancy and depreciation
|
5,334
|
5,454
|
4,819
|
|||||||||
Data processing
|
2,467
|
2,313
|
2,111
|
|||||||||
Amortization of CDI
|
183
|
232
|
27
|
|||||||||
Advertising and marketing
|
769
|
747
|
754
|
|||||||||
FDIC insurance premium
|
326
|
476
|
356
|
|||||||||
State and local taxes
|
651
|
605
|
609
|
|||||||||
Telecommunications
|
353
|
417
|
317
|
|||||||||
Professional fees
|
1,426
|
1,181
|
1,628
|
|||||||||
Litigation settlement
|
-
|
-
|
500
|
|||||||||
Other
|
1,870
|
2,450
|
2,504
|
|||||||||
Total non-interest expense
|
35,699
|
35,618
|
32,981
|
|||||||||
INCOME BEFORE INCOME TAXES
|
22,412
|
17,997
|
10,791
|
|||||||||
PROVISION FOR INCOME TAXES
|
5,146
|
7,755
|
3,387
|
|||||||||
NET INCOME
|
$
|
17,266
|
$
|
10,242
|
$
|
7,404
|
||||||
Earnings per common share:
|
||||||||||||
Basic
|
$
|
0.76
|
$
|
0.45
|
$
|
0.33
|
||||||
Diluted
|
0.76
|
0.45
|
0.33
|
|||||||||
Weighted average number of common shares outstanding:
|
||||||||||||
Basic
|
22,588,395
|
22,531,480
|
22,478,306
|
|||||||||
Diluted
|
22,659,594
|
22,623,455
|
22,548,340
|
(In thousands)
|
2019
|
2018
|
2017
|
|||||||||
Net income
|
$
|
17,266
|
$
|
10,242
|
$
|
7,404
|
||||||
Other comprehensive income (loss):
|
||||||||||||
Net unrealized holding gain (loss) from available for sale investment securities arising
|
||||||||||||
during the period, net of tax of ($629), $871 and $1,581, respectively
|
2,122
|
(2,719
|
)
|
(2,872
|
)
|
|||||||
Reclassification adjustment for other than temporary impairment ("OTTI") of available for
|
||||||||||||
sale investment security included in income, net of tax of $0, $0 and ($85) respectively
|
-
|
-
|
155
|
|||||||||
Reclassification adjustment of net gain from sale of available for sale investment
|
||||||||||||
securities included in income, net of tax of $0, $0 and $29, respectively
|
-
|
-
|
(53
|
)
|
||||||||
Total other comprehensive income (loss), net
|
2,122
|
(2,719
|
)
|
(2,770
|
)
|
|||||||
Total comprehensive income, net
|
$
|
19,388
|
$
|
7,523
|
$
|
4,634
|
||||||
Common Stock |
Unearned
Shares
Issued to
Employee
Stock
|
Accumulated
|
||||||||||||||||||||||||||
(In thousands, except share data)
|
Shares
|
Amount |
Additional
Paid-In
Capital
|
Retained
Earnings
|
Ownership
Plan
("ESOP")
|
Other
Comprehensive
Income (Loss)
|
Total
|
|||||||||||||||||||||
Balance April 1, 2016
|
22,507,890
|
$
|
225
|
$
|
64,418
|
$
|
42,728
|
$
|
(181
|
)
|
$
|
1,083
|
$
|
108,273
|
||||||||||||||
Net income
|
-
|
-
|
-
|
7,404
|
-
|
-
|
7,404
|
|||||||||||||||||||||
Cash dividend on common stock ($0.08
per share)
|
-
|
-
|
-
|
(1,797
|
)
|
-
|
-
|
(1,797
|
)
|
|||||||||||||||||||
Exercise of stock options
|
3,000
|
-
|
11
|
-
|
-
|
-
|
11
|
|||||||||||||||||||||
Earned ESOP shares
|
-
|
-
|
39
|
-
|
104
|
-
|
143
|
|||||||||||||||||||||
Other comprehensive loss, net
|
-
|
-
|
-
|
-
|
-
|
(2,770
|
)
|
(2,770
|
)
|
|||||||||||||||||||
Balance March 31, 2017
|
22,510,890
|
225
|
64,468
|
48,335
|
(77
|
)
|
(1,687
|
)
|
111,264
|
|||||||||||||||||||
Net income
|
-
|
-
|
-
|
10,242
|
-
|
-
|
10,242
|
|||||||||||||||||||||
Cash dividend on common stock ($0.105
per share)
|
-
|
-
|
-
|
(2,367
|
)
|
-
|
-
|
(2,367
|
)
|
|||||||||||||||||||
Exercise of stock options
|
59,289
|
1
|
244
|
-
|
-
|
-
|
245
|
|||||||||||||||||||||
Stock-based compensation expense
|
-
|
-
|
88
|
-
|
-
|
-
|
88
|
|||||||||||||||||||||
Reclassification of certain stranded income
tax effects as a result of change in federal
corporate income tax rate (see Note 1)
|
-
|
-
|
-
|
342
|
-
|
(342
|
)
|
-
|
||||||||||||||||||||
Earned ESOP shares
|
-
|
-
|
71
|
-
|
77
|
-
|
148
|
|||||||||||||||||||||
Other comprehensive loss, net
|
-
|
-
|
-
|
-
|
-
|
(2,719
|
)
|
(2,719
|
)
|
|||||||||||||||||||
Balance March 31, 2018
|
22,570,179
|
226
|
64,871
|
56,552
|
-
|
(4,748
|
)
|
116,901
|
||||||||||||||||||||
Net income
|
-
|
-
|
-
|
17,266
|
-
|
-
|
17,266
|
|||||||||||||||||||||
Cash dividend on common stock ($0.15
per share)
|
-
|
-
|
-
|
(3,390
|
)
|
-
|
-
|
(3,390
|
)
|
|||||||||||||||||||
Exercise of stock options
|
37,533
|
-
|
179
|
-
|
-
|
-
|
179
|
|||||||||||||||||||||
Stock-based compensation expense
|
-
|
-
|
44
|
-
|
-
|
-
|
44
|
|||||||||||||||||||||
Other comprehensive income, net
|
-
|
-
|
-
|
-
|
-
|
2,122
|
2,122
|
|||||||||||||||||||||
Balance March 31, 2019
|
22,607,712
|
$
|
226
|
$
|
65,094
|
$
|
70,428
|
$
|
-
|
$
|
(2,626
|
)
|
$
|
133,122
|
||||||||||||||
(In thousands)
|
2019
|
2018
|
2017
|
|||||||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
||||||||||||
Net income
|
$
|
17,266
|
$
|
10,242
|
$
|
7,404
|
||||||
Adjustments to reconcile net income to net cash provided by operating activities:
|
||||||||||||
Depreciation and amortization
|
2,718
|
2,917
|
2,746
|
|||||||||
Purchased loans amortization (accretion), net
|
(147
|
)
|
(277
|
)
|
441
|
|||||||
Provisions for loan losses
|
50
|
-
|
-
|
|||||||||
Provision (benefit) for deferred income taxes
|
(11
|
)
|
3,668
|
3,103
|
||||||||
Expense related to ESOP
|
-
|
148
|
143
|
|||||||||
Stock-based compensation expense
|
44
|
88
|
-
|
|||||||||
Increase in deferred loan origination fees, net of amortization
|
498
|
498
|
543
|
|||||||||
Origination of loans held for sale
|
(11,105
|
)
|
(20,502
|
)
|
(21,032
|
)
|
||||||
Proceeds from sales of loans held for sale
|
10,579
|
21,204
|
21,477
|
|||||||||
Writedown of REO
|
-
|
-
|
30
|
|||||||||
Loss on impairment of investment security
|
-
|
-
|
240
|
|||||||||
Net gains on sales of loans held for sale, sales of investment securities and sale of REO
|
(682
|
)
|
(725
|
)
|
(731
|
)
|
||||||
Income from BOLI
|
(734
|
)
|
(819
|
)
|
(760
|
)
|
||||||
BOLI death benefit in excess of cash surrender value
|
-
|
-
|
(423
|
)
|
||||||||
Changes in certain other assets and liabilities:
|
||||||||||||
Prepaid expenses and other assets
|
(868
|
)
|
(212
|
)
|
(369
|
)
|
||||||
Accrued interest receivable
|
(442
|
)
|
(536
|
)
|
(291
|
)
|
||||||
Accrued expenses and other liabilities
|
2,988
|
(3,755
|
)
|
5,538
|
||||||||
Net cash provided by operating activities
|
20,154
|
11,939
|
18,059
|
|||||||||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
||||||||||||
Loan repayments (originations), net
|
(34,427
|
)
|
11,156
|
(37,103
|
)
|
|||||||
Purchases of loans receivable
|
(29,929
|
)
|
(43,016
|
)
|
(5,746
|
)
|
||||||
Principal repayments on investment securities available for sale
|
26,519
|
28,569
|
29,782
|
|||||||||
Purchases of investment securities available for sale
|
-
|
(47,494
|
)
|
(92,418
|
)
|
|||||||
Proceeds from calls, maturities, and sales of investment securities available for sale
|
10,000
|
950
|
7,261
|
|||||||||
Principal repayments on investment securities held to maturity
|
7
|
22
|
11
|
|||||||||
Purchases of premises and equipment and capitalized software
|
(1,046
|
)
|
(753
|
)
|
(598
|
)
|
||||||
Redemption of certificates of deposit held for investment
|
5,220
|
5,075
|
5,727
|
|||||||||
Purchases of FHLB stock, net
|
(2,291
|
)
|
(172
|
)
|
(121
|
)
|
||||||
Cash acquired, net of cash consideration paid in business combination
|
-
|
-
|
15,116
|
|||||||||
Proceeds from death benefit on BOLI
|
-
|
-
|
1,236
|
|||||||||
Proceeds from sales of REO and premises and equipment
|
976
|
81
|
262
|
|||||||||
Net cash used in investing activities
|
(24,971
|
)
|
(45,582
|
)
|
(76,591
|
)
|
||||||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
||||||||||||
Net increase (decrease) in deposits
|
(70,568
|
)
|
15,771
|
69,470
|
||||||||
Dividends paid
|
(3,163
|
)
|
(2,140
|
)
|
(1,799
|
)
|
||||||
Proceeds from borrowings
|
326,956
|
55,980
|
23,200
|
|||||||||
Repayment of borrowings
|
(270,370
|
)
|
(55,980
|
)
|
(23,200
|
)
|
||||||
Net increase (decrease) in advance payments by borrowers for taxes and insurance
|
(6
|
)
|
(56
|
)
|
84
|
|||||||
Principal payments on capital lease obligation
|
(28
|
)
|
(23
|
)
|
(21
|
)
|
||||||
Proceeds from exercise of stock options
|
179
|
245
|
11
|
|||||||||
Net cash provided by (used in) financing activities
|
(17,000
|
)
|
13,797
|
67,745
|
||||||||
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
|
(21,817
|
)
|
(19,846
|
)
|
9,213
|
|||||||
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR
|
44,767
|
64,613
|
55,400
|
|||||||||
CASH AND CASH EQUIVALENTS, END OF YEAR
|
$
|
22,950
|
$
|
44,767
|
$
|
64,613
|
||||||
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
|
||||||||||||
Cash paid during the year for:
|
||||||||||||
Interest
|
$
|
2,686
|
$
|
2,176
|
$
|
1,655
|
||||||
Income taxes
|
6,877
|
3,280
|
285
|
|||||||||
NONCASH INVESTING AND FINANCING ACTIVITIES:
|
||||||||||||
Dividends declared and accrued in other liabilities
|
$
|
904
|
$
|
677
|
$
|
450
|
||||||
Other comprehensive income (loss)
|
2,751
|
(3,590
|
)
|
(4,295
|
)
|
|||||||
Income tax effect related to other comprehensive income (loss)
|
(629
|
)
|
871
|
1,525
|
||||||||
Business combinations (See Note 3)
|
||||||||||||
Fair value of assets acquired
|
-
|
-
|
(145,386
|
)
|
||||||||
Fair value of liabilities assumed
|
-
|
-
|
134,810
|
1.
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
|
2.
|
RESTRICTED ASSETS
|
3.
|
BUSINESS COMBINATIONS
|
At February 17, 2017
|
||||||||||||
Book
Value
|
Fair Value
Adjustment
|
Estimated
Fair Value
|
||||||||||
Cash consideration transferred
|
$
|
12,080
|
||||||||||
Recognized amounts of identifiable assets acquired and liabilities assumed
|
||||||||||||
Identifiable assets acquired
|
||||||||||||
Cash and cash equivalents
|
$
|
27,196
|
$
|
-
|
27,196
|
|||||||
Loans receivable
|
115,283
|
(3,258
|
)
|
112,025
|
||||||||
CDI
|
-
|
1,363
|
1,363
|
|||||||||
Premises and equipment
|
1,769
|
399
|
2,168
|
|||||||||
BOLI
|
2,113
|
-
|
2,113
|
|||||||||
Accrued interest receivable and other assets
|
431
|
90
|
521
|
|||||||||
Total identifiable assets acquired
|
146,792
|
(1,406
|
)
|
145,386
|
||||||||
Liabilities assumed
|
||||||||||||
Deposits
|
130,572
|
235
|
130,807
|
|||||||||
Junior subordinated debentures
|
5,155
|
(1,468
|
)
|
3,687
|
||||||||
Accrued expenses and other liabilities
|
293
|
23
|
316
|
|||||||||
Total liabilities assumed
|
136,020
|
(1,210
|
)
|
134,810
|
||||||||
Total identifiable net assets acquired
|
$
|
10,772
|
$
|
(196
|
)
|
10,576
|
||||||
Goodwill recognized
|
$
|
1,504
|
For the Year Ended March 31,
|
||||||||
Unaudited Pro Forma
|
2017
|
2016
|
||||||
Total revenues (net interest income plus non-interest income)
|
$
|
49,290
|
$
|
45,261
|
||||
Net income
|
9,277
|
8,260
|
Salaries and employee benefits
|
$
|
26
|
||
Occupancy and depreciation
|
6
|
|||
Data processing
|
63
|
|||
Professional fees
|
653
|
|||
Total impact of acquisition related costs to noninterest expense
|
$
|
748
|
||
4.
|
INVESTMENT SECURITIES
|
Amortized
Cost
|
Gross
Unrealized Gains
|
Gross
Unrealized Losses
|
Estimated Fair
Value
|
|||||||||||||
March 31, 2019
|
||||||||||||||||
Available for sale:
|
||||||||||||||||
Municipal securities
|
$
|
8,885
|
$
|
30
|
$
|
(34
|
)
|
$
|
8,881
|
|||||||
Agency securities
|
12,426
|
22
|
(107
|
)
|
12,341
|
|||||||||||
Real estate mortgage investment conduits
(1)
|
40,835
|
-
|
(673
|
)
|
40,162
|
|||||||||||
Residential mortgage-backed securities
(1)
|
77,402
|
7
|
(1,588
|
)
|
75,821
|
|||||||||||
Other mortgage-backed securities
(2)
|
42,133
|
12
|
(1,124
|
)
|
41,021
|
|||||||||||
Total available for sale
|
$
|
181,681
|
$
|
71
|
$
|
(3,526
|
)
|
$
|
178,226
|
|||||||
Held to maturity:
|
||||||||||||||||
Residential mortgage-backed securities
(3)
|
$
|
35
|
$
|
-
|
$
|
-
|
$
|
35
|
||||||||
(1)
Comprised of FHLMC, Federal National Mortgage Association ("FNMA") and Ginnie Mae ("GNMA") issued securities.
|
||||||||||||||||
(2)
Comprised of U.S. Small Business Administration ("SBA") issued securities and commercial real estate ("CRE") secured securities issued
by FNMA.
|
||||||||||||||||
(3)
Comprised of FHLMC and FNMA issued securities.
|
Available for Sale
|
Held to Maturity
|
|||||||||||||||
Amortized
Cost
|
Estimated
Fair Value
|
Amortized
Cost
|
Estimated
Fair Value
|
|||||||||||||
Due in one year or less
|
$
|
4,961
|
$
|
4,949
|
$
|
-
|
$
|
-
|
||||||||
Due after one year through five years
|
8,585
|
8,505
|
32
|
32
|
||||||||||||
Due after five years through ten years
|
48,050
|
47,373
|
-
|
-
|
||||||||||||
Due after ten years
|
120,085
|
117,399
|
3
|
3
|
||||||||||||
Total
|
$
|
181,681
|
$
|
178,226
|
$
|
35
|
$
|
35
|
5.
|
LOANS RECEIVABLE
|
Year Ended March 31,
|
||||||||||||
2019
|
2018
|
2017
|
||||||||||
Beginning balance
|
$
|
981
|
$
|
859
|
$
|
841
|
||||||
Originations
|
359
|
526
|
228
|
|||||||||
Principal repayments
|
(562
|
)
|
(404
|
)
|
(210
|
)
|
||||||
Ending balance
|
$
|
778
|
$
|
981
|
$
|
859
|
6.
|
ALLOWANCE FOR LOAN LOSSES
|
March 31, 2019
|
Commercial
Business
|
Commercial
Real Estate
|
Land
|
Multi-
Family
|
Real Estate Construction
|
Consumer
|
Unallocated
|
Total
|
||||||||||||||||||||||||
Beginning balance
|
$
|
1,668
|
$
|
4,914
|
$
|
220
|
$
|
822
|
$
|
618
|
$
|
1,809
|
$
|
715
|
$
|
10,766
|
||||||||||||||||
Provision for (recapture of)
loan losses
|
139
|
(685
|
)
|
34
|
(94
|
)
|
839
|
(178
|
)
|
(5
|
)
|
50
|
||||||||||||||||||||
Charge-offs
|
-
|
-
|
-
|
-
|
-
|
(291
|
)
|
-
|
(291
|
)
|
||||||||||||||||||||||
Recoveries
|
1
|
824
|
-
|
-
|
-
|
107
|
-
|
932
|
||||||||||||||||||||||||
Ending balance
|
$
|
1,808
|
$
|
5,053
|
$
|
254
|
$
|
728
|
$
|
1,457
|
$
|
1,447
|
$
|
710
|
$
|
11,457
|
March 31, 2018
|
||||||||||||||||||||||||||||||||
Beginning balance
|
$
|
1,418
|
$
|
5,084
|
$
|
228
|
$
|
297
|
$
|
714
|
$
|
2,099
|
$
|
688
|
$
|
10,528
|
||||||||||||||||
Provision for (recapture of)
loan losses
|
10
|
(156
|
)
|
(301
|
)
|
525
|
(96
|
)
|
(9
|
)
|
27
|
-
|
||||||||||||||||||||
Charge-offs
|
-
|
(68
|
)
|
-
|
-
|
-
|
(340
|
)
|
-
|
(408
|
)
|
|||||||||||||||||||||
Recoveries
|
240
|
54
|
293
|
-
|
-
|
59
|
-
|
646
|
||||||||||||||||||||||||
Ending balance
|
$
|
1,668
|
$
|
4,914
|
$
|
220
|
$
|
822
|
$
|
618
|
$
|
1,809
|
$
|
715
|
$
|
10,766
|
March 31, 2017
|
||||||||||||||||||||||||||||||||
Beginning balance
|
$
|
1,048
|
$
|
4,273
|
$
|
325
|
$
|
712
|
$
|
416
|
$
|
2,403
|
$
|
708
|
$
|
9,885
|
||||||||||||||||
Provision for (recapture of)
loan losses
|
(121
|
)
|
926
|
(558
|
)
|
(415
|
)
|
298
|
(110
|
)
|
(20
|
)
|
-
|
|||||||||||||||||||
Charge-offs
|
(1
|
)
|
(117
|
)
|
-
|
-
|
-
|
(340
|
)
|
-
|
(458
|
)
|
||||||||||||||||||||
Recoveries
|
492
|
2
|
461
|
-
|
-
|
146
|
-
|
1,101
|
||||||||||||||||||||||||
Ending balance
|
$
|
1,418
|
$
|
5,084
|
$
|
228
|
$
|
297
|
$
|
714
|
$
|
2,099
|
$
|
688
|
$
|
10,528
|
Allowance for Loan Losses
|
Recorded Investment in Loans
|
|||||||||||||||||||||||
March 31, 2019
|
Individually
Evaluated for
Impairment
|
Collectively
Evaluated for
Impairment
|
Total
|
Individually
Evaluated for
Impairment
|
Collectively
Evaluated for
Impairment
|
Total
|
||||||||||||||||||
Commercial business
|
$
|
-
|
$
|
1,808
|
$
|
1,808
|
$
|
160
|
$
|
162,636
|
$
|
162,796
|
||||||||||||
Commercial real estate
|
-
|
5,053
|
5,053
|
2,482
|
458,950
|
461,432
|
||||||||||||||||||
Land
|
-
|
254
|
254
|
728
|
16,299
|
17,027
|
||||||||||||||||||
Multi-family
|
-
|
728
|
728
|
1,598
|
49,972
|
51,570
|
||||||||||||||||||
Real estate construction
|
-
|
1,457
|
1,457
|
-
|
90,882
|
90,882
|
||||||||||||||||||
Consumer
|
22
|
1,425
|
1,447
|
697
|
91,712
|
92,409
|
||||||||||||||||||
Unallocated
|
-
|
710
|
710
|
-
|
-
|
-
|
||||||||||||||||||
Total
|
$
|
22
|
$
|
11,435
|
$
|
11,457
|
$
|
5,665
|
$
|
870,451
|
$
|
876,116
|
March 31, 2018
|
||||||||||||||||||||||||
Commercial business
|
$
|
-
|
$
|
1,668
|
$
|
1,668
|
$
|
1,004
|
$
|
136,668
|
$
|
137,672
|
||||||||||||
Commercial real estate
|
-
|
4,914
|
4,914
|
2,883
|
447,714
|
450,597
|
||||||||||||||||||
Land
|
-
|
220
|
220
|
763
|
14,574
|
15,337
|
||||||||||||||||||
Multi-family
|
-
|
822
|
822
|
1,644
|
61,436
|
63,080
|
||||||||||||||||||
Real estate construction
|
-
|
618
|
618
|
-
|
39,584
|
39,584
|
||||||||||||||||||
Consumer
|
69
|
1,740
|
1,809
|
1,428
|
103,678
|
105,106
|
||||||||||||||||||
Unallocated
|
-
|
715
|
715
|
-
|
-
|
-
|
||||||||||||||||||
Total
|
$
|
69
|
$
|
10,697
|
$
|
10,766
|
$
|
7,722
|
$
|
803,654
|
$
|
811,376
|
Year Ended March 31,
|
||||||||||||
2019 | 2018 | 2017 | ||||||||||
Beginning balance
|
$
|
480
|
$
|
388
|
$
|
324
|
||||||
Net change in allowance for unfunded loan commitments
|
(11
|
)
|
92
|
64
|
||||||||
Ending balance
|
$
|
469
|
$
|
480
|
$
|
388
|
March 31, 2019
|
30-89 Days
Past Due
|
90 Days
and
Greater
Past Due
|
Non-accrual
|
Total Past
Due and
Non-
accrual
|
Current
|
Total Loans
Receivable
|
||||||||||||||||||
Commercial business
|
$
|
-
|
$
|
-
|
$
|
225
|
$
|
225
|
$
|
162,571
|
$
|
162,796
|
||||||||||||
Commercial real estate
|
-
|
-
|
1,081
|
1,081
|
460,351
|
461,432
|
||||||||||||||||||
Land
|
-
|
-
|
-
|
-
|
17,027
|
17,027
|
||||||||||||||||||
Multi-family
|
-
|
-
|
-
|
-
|
51,570
|
51,570
|
||||||||||||||||||
Real estate construction
|
-
|
-
|
-
|
-
|
90,882
|
90,882
|
||||||||||||||||||
Consumer
|
345
|
3
|
210
|
558
|
91,851
|
92,409
|
||||||||||||||||||
Total
|
$
|
345
|
$
|
3
|
$
|
1,516
|
$
|
1,864
|
$
|
874,252
|
$
|
876,116
|
March 31, 2018
|
||||||||||||||||||||||||
Commercial business
|
$
|
7
|
$
|
-
|
$
|
178
|
$
|
185
|
$
|
137,487
|
$
|
137,672
|
||||||||||||
Commercial real estate
|
-
|
-
|
1,200
|
1,200
|
449,397
|
450,597
|
||||||||||||||||||
Land
|
-
|
-
|
763
|
763
|
14,574
|
15,337
|
||||||||||||||||||
Multi-family
|
-
|
-
|
-
|
-
|
63,080
|
63,080
|
||||||||||||||||||
Real estate construction
|
-
|
-
|
-
|
-
|
39,584
|
39,584
|
||||||||||||||||||
Consumer
|
513
|
-
|
277
|
790
|
104,316
|
105,106
|
||||||||||||||||||
Total
|
$
|
520
|
$
|
-
|
$
|
2,418
|
$
|
2,938
|
$
|
808,438
|
$
|
811,376
|
March 31, 2019
|
Pass
|
Special
Mention
|
Substandard
|
Doubtful
|
Loss
|
Total Loans
Receivable
|
||||||||||||||||||
Commercial business
|
$
|
159,997
|
$
|
840
|
$
|
1,959
|
$
|
-
|
$
|
-
|
$
|
162,796
|
||||||||||||
Commercial real estate
|
454,013
|
4,030
|
3,389
|
-
|
-
|
461,432
|
||||||||||||||||||
Land
|
16,299
|
-
|
728
|
-
|
-
|
17,027
|
||||||||||||||||||
Multi-family
|
51,093
|
457
|
20
|
-
|
-
|
51,570
|
||||||||||||||||||
Real estate construction
|
90,882
|
-
|
-
|
-
|
-
|
90,882
|
||||||||||||||||||
Consumer
|
92,199
|
-
|
210
|
-
|
-
|
92,409
|
||||||||||||||||||
Total
|
$
|
864,483
|
$
|
5,327
|
$
|
6,306
|
$
|
-
|
$
|
-
|
$
|
876,116
|
March 31, 2018
|
||||||||||||||||||||||||
Commercial business
|
$
|
132,309
|
$
|
1,976
|
$
|
3,387
|
$
|
-
|
$
|
-
|
$
|
137,672
|
||||||||||||
Commercial real estate
|
440,123
|
7,489
|
2,985
|
-
|
-
|
450,597
|
||||||||||||||||||
Land
|
14,574
|
-
|
763
|
-
|
-
|
15,337
|
||||||||||||||||||
Multi-family
|
60,879
|
2,190
|
11
|
-
|
-
|
63,080
|
||||||||||||||||||
Real estate construction
|
39,584
|
-
|
-
|
-
|
-
|
39,584
|
||||||||||||||||||
Consumer
|
104,829
|
-
|
277
|
-
|
-
|
105,106
|
||||||||||||||||||
Total
|
$
|
792,298
|
$
|
11,655
|
$
|
7,423
|
$
|
-
|
$
|
-
|
$
|
811,376
|
March 31, 2019
|
Recorded
Investment with
No Specific
Valuation
Allowance
|
Recorded
Investment
with Specific
Valuation
Allowance
|
Total
Recorded
Investment
|
Unpaid
Principal
Balance
|
Related
Specific
Valuation
Allowance
|
|||||||||||||||
Commercial business
|
$
|
160
|
$
|
-
|
$
|
160
|
$
|
182
|
$
|
-
|
||||||||||
Commercial real estate
|
2,482
|
-
|
2,482
|
3,424
|
-
|
|||||||||||||||
Land
|
728
|
-
|
728
|
766
|
-
|
|||||||||||||||
Multi-family
|
1,598
|
-
|
1,598
|
1,709
|
-
|
|||||||||||||||
Consumer
|
281
|
416
|
697
|
807
|
22
|
|||||||||||||||
Total
|
$
|
5,249
|
$
|
416
|
$
|
5,665
|
$
|
6,888
|
$
|
22
|
||||||||||
March 31, 2018
|
||||||||||||||||||||
Commercial business
|
$
|
1,004
|
$
|
-
|
$
|
1,004
|
$
|
1,062
|
$
|
-
|
||||||||||
Commercial real estate
|
2,883
|
-
|
2,883
|
3,816
|
-
|
|||||||||||||||
Land
|
763
|
-
|
763
|
790
|
-
|
|||||||||||||||
Multi-family
|
1,644
|
-
|
1,644
|
1,765
|
-
|
|||||||||||||||
Consumer
|
294
|
1,134
|
1,428
|
1,544
|
69
|
|||||||||||||||
Total
|
$
|
6,588
|
$
|
1,134
|
$
|
7,722
|
$
|
8,977
|
$
|
69
|
Year ended
March 31, 2019
|
Year ended
March 31, 2018
|
Year ended
March 31, 2017
|
||||||||||||||||||||||
Average
Recorded
Investment
|
Interest
Recognized
on Impaired
Loans
|
Average
Recorded
Investment
|
Interest
Recognized
on Impaired
Loans
|
Average
Recorded
Investment
|
Interest
Recognized
on Impaired
Loans
|
|||||||||||||||||||
Commercial business
|
$
|
334
|
$
|
-
|
$
|
930
|
$
|
41
|
$
|
255
|
$
|
10
|
||||||||||||
Commercial real estate
|
2,607
|
64
|
4,185
|
101
|
8,823
|
337
|
||||||||||||||||||
Land
|
742
|
7
|
781
|
-
|
801
|
-
|
||||||||||||||||||
Multi-family
|
1,620
|
88
|
1,668
|
90
|
1,710
|
93
|
||||||||||||||||||
Consumer
|
992
|
45
|
1,452
|
62
|
1,529
|
62
|
||||||||||||||||||
Total
|
$
|
6,295
|
$
|
204
|
$
|
9,016
|
$
|
294
|
$
|
13,118
|
$
|
502
|
March 31, 2019
|
March 31, 2018
|
|||||||||||||||||||||||
Accrual
|
Nonaccrual
|
Total
|
Accrual
|
Nonaccrual
|
Total
|
|||||||||||||||||||
Commercial business
|
$
|
-
|
$
|
160
|
$
|
160
|
$
|
826
|
$
|
178
|
$
|
1,004
|
||||||||||||
Commercial real estate
|
1,401
|
1,081
|
2,482
|
1,683
|
1,200
|
2,883
|
||||||||||||||||||
Land
|
728
|
-
|
728
|
-
|
763
|
763
|
||||||||||||||||||
Multi-family
|
1,598
|
-
|
1,598
|
1,644
|
-
|
1,644
|
||||||||||||||||||
Consumer
|
697
|
-
|
697
|
1,428
|
-
|
1,428
|
||||||||||||||||||
Total
|
$
|
4,424
|
$
|
1,241
|
$
|
5,665
|
$
|
5,581
|
$
|
2,141
|
$
|
7,722
|
7.
|
REAL ESTATE OWNED
|
Year Ended March 31,
|
||||||||||||
2019
|
2018
|
2017
|
||||||||||
Balance at beginning of year, net
|
$
|
298
|
$
|
298
|
$
|
595
|
||||||
Additions
|
-
|
-
|
-
|
|||||||||
Dispositions
|
(298
|
)
|
-
|
(267
|
)
|
|||||||
Writedowns
|
-
|
-
|
(30
|
)
|
||||||||
Balance at end of year, net
|
$
|
-
|
$
|
298
|
$
|
298
|
8.
|
PREMISES AND EQUIPMENT
|
March 31,
|
||||||||
2019
|
2018
|
|||||||
Land
|
$
|
4,531
|
$
|
4,710
|
||||
Buildings and improvements
|
15,349
|
15,281
|
||||||
Leasehold improvements
|
1,666
|
1,666
|
||||||
Furniture and equipment
|
10,694
|
10,783
|
||||||
Building under capitalized lease
|
2,956
|
2,956
|
||||||
Construction in progress
|
733
|
720
|
||||||
Total
|
35,929
|
36,116
|
||||||
Less accumulated depreciation and amortization
|
(20,471
|
)
|
(20,333
|
)
|
||||
Premises and equipment, net
|
$
|
15,458
|
$
|
15,783
|
Year Ending March 31:
|
Operating Leases
|
Capital Lease
|
||||||
2020
|
$
|
1,492
|
$
|
205
|
||||
2021
|
905
|
208
|
||||||
2022
|
677
|
212
|
||||||
2023
|
527
|
215
|
||||||
2024
|
535
|
219
|
||||||
Thereafter
|
1,453
|
3,622
|
||||||
Total minimum lease payments
|
$
|
5,589
|
4,681
|
|||||
Less amount representing interest
|
(2,278
|
)
|
||||||
Present value of net minimum lease payments
|
$
|
2,403
|
9.
|
GOODWILL
|
Year Ended March 31,
|
||||||||||||
2019
|
2018
|
2017
|
||||||||||
Net carrying value at beginning of period
|
$
|
27,076
|
$
|
27,076
|
$
|
25,572
|
||||||
MBank Transaction (see Note 3)
|
-
|
-
|
1,504
|
|||||||||
Net carrying value at the end of period
|
$
|
27,076
|
$
|
27,076
|
$
|
27,076
|
10.
|
DEPOSITS
|
Account Type
|
March 31,
2019
|
March 31,
2018
|
||||||
Non-interest-bearing
|
$
|
284,854
|
$
|
278,966
|
||||
Interest-bearing checking
|
183,388
|
192,989
|
||||||
Money market
|
233,317
|
265,661
|
||||||
Savings accounts
|
137,503
|
134,931
|
||||||
Certificates of deposit
|
86,006
|
123,144
|
||||||
Total
|
$
|
925,068
|
$
|
995,691
|
Year Ending March 31:
|
||||
2020
|
$
|
59,487
|
||
2021
|
14,072
|
|||
2022
|
5,201
|
|||
2023
|
1,552
|
|||
2024
|
3,157
|
|||
Thereafter
|
2,537
|
|||
Total
|
$
|
86,006
|
Year Ended March 31,
|
||||||||||||
2019
|
2018
|
2017
|
||||||||||
Interest-bearing checking
|
$
|
101
|
$
|
100
|
$
|
98
|
||||||
Money market
|
302
|
335
|
309
|
|||||||||
Savings accounts
|
145
|
133
|
110
|
|||||||||
Certificates of deposit
|
448
|
640
|
634
|
|||||||||
Total
|
$
|
996
|
$
|
1,208
|
$
|
1,151
|
11.
|
FEDERAL HOME LOAN BANK ADVANCES
|
March 31, 2019
|
March 31, 2018
|
|||||||
FHLB advances
|
$
|
56,586
|
$
|
-
|
||||
Weighted average interest rate on FHLB advances
(1)
|
2.58
|
%
|
1.60
|
%
|
||||
(1)
Computed based on the borrowing activity for the years ending March 31, 2019 and 2018, respectively.
|
12.
|
JUNIOR SUBORDINATED DEBENTURES
|
Issuance Trust
|
Issuance
Date
|
Amount
Outstanding
|
Rate Type
|
Initial
Rate
|
Current
Rate
|
Maturity
Date
|
|||||||||||||||
Riverview Bancorp Statutory Trust I
|
12/2005
|
$
|
7,217
|
Variable
(1)
|
5.88
|
%
|
3.97
|
%
|
3/2036
|
||||||||||||
Riverview Bancorp Statutory Trust II
|
06/2007
|
15,464
|
Variable
(2)
|
7.03
|
%
|
3.96
|
%
|
9/2037
|
|||||||||||||
Merchants Bancorp Statutory Trust I
(4)
|
06/2003
|
5,155
|
Variable
(3)
|
4.16
|
%
|
5.71
|
%
|
6/2033
|
|||||||||||||
27,836
|
|||||||||||||||||||||
Fair value adjustment
(4)
|
(1,261
|
)
|
|||||||||||||||||||
Total Debentures
|
$
|
26,575
|
(1)
The trust preferred securities reprice quarterly based on
the three-month LIBOR plus 1.36%.
|
|
(2)
The trust preferred securities reprice quarterly
based on the three-month LIBOR plus 1.35%.
|
|
(3)
The trust preferred securities reprice quarterly based on
the three-month LIBOR plus 3.10%.
|
|
(4)
Amount, net of accretion, attributable to the MBank transaction. See Note 3.
|
13.
|
INCOME TAXES
|
Year Ended March 31
|
||||||||||||
|
2019 |
|
2018 |
|
2017 | |||||||
Current
|
$
|
5,157
|
$
|
4,087
|
$
|
284
|
||||||
Deferred
|
(11
|
)
|
3,668
|
3,103
|
||||||||
Total
|
$
|
5,146
|
$
|
7,755
|
$
|
3,387
|
March 31, 2019
|
March 31, 2018
|
|||||||
Deferred tax assets:
|
||||||||
Deferred compensation
|
$
|
45
|
$
|
77
|
||||
Allowance for loan losses
|
2,862
|
2,643
|
||||||
Accrued expenses
|
131
|
127
|
||||||
Accumulated depreciation and amortization
|
797
|
753
|
||||||
Deferred gain on sale
|
167
|
201
|
||||||
Purchase accounting
|
141
|
150
|
||||||
Net unrealized loss on investment securities available for sale
|
829
|
1,458
|
||||||
Other
|
242
|
236
|
||||||
Total deferred tax assets
|
5,214
|
5,645
|
Deferred tax liabilities:
|
||||||||
FHLB stock dividend
|
(97
|
)
|
(95
|
)
|
||||
Prepaid expenses
|
(148
|
)
|
(109
|
)
|
||||
Loan fees/costs
|
(774
|
)
|
(628
|
)
|
||||
Total deferred tax liabilities
|
(1,019
|
)
|
(832
|
)
|
||||
Deferred tax assets, net
|
$
|
4,195
|
$
|
4,813
|
Year Ended March 31,
|
|||||||||
2019
|
2018
|
2017
|
|||||||
Statutory federal income tax rate
|
21.0
|
%
|
30.8
|
%
|
34.0
|
%
|
|||
State and local income tax rate
|
3.0
|
2.5
|
1.5
|
||||||
Revaluation of net deferred tax assets due to Tax Act
|
-
|
11.4
|
-
|
||||||
ESOP market value adjustment
|
(0.1)
|
-
|
(0.1
|
)
|
|||||
BOLI
|
(0.8)
|
(1.5
|
)
|
(3.8
|
)
|
||||
Other, net
|
(0.1)
|
(0.1
|
)
|
(0.2
|
)
|
||||
Effective federal income tax rate
|
23.0
|
%
|
43.1
|
%
|
31.4
|
%
|
14.
|
EMPLOYEE BENEFIT PLANS
|
Year Ended March 31,
|
||||||||||||||||||||||||
2019
|
2018
|
2017
|
||||||||||||||||||||||
Number of
Shares
|
Weighted
Average
Exercise
Price
|
Number of
Shares
|
Weighted
Average
Exercise
Price
|
Number of
Shares
|
Weighted
Average
Exercise
Price
|
|||||||||||||||||||
Balance, beginning of year
|
141,365
|
$
|
3.77
|
220,654
|
$
|
4.74
|
223,654
|
$
|
4.73
|
|||||||||||||||
Options exercised
|
(37,533
|
)
|
4.84
|
(59,289
|
)
|
4.13
|
(3,000
|
)
|
3.84
|
|||||||||||||||
Options expired
|
(2,500
|
)
|
8.12
|
(20,000
|
)
|
13.42
|
-
|
-
|
||||||||||||||||
Balance, end of year
|
101,332
|
$
|
3.26
|
141,365
|
$
|
3.77
|
220,654
|
$
|
4.74
|
Options Outstanding
|
Options Exercisable
|
|||||||||||||||||||||
Weighted Avg
|
Weighted
|
Weighted
|
||||||||||||||||||||
Remaining
|
Average
|
Average
|
||||||||||||||||||||
Range of
|
Contractual
|
Exercise
|
Exercise
|
|||||||||||||||||||
Exercise Price
|
Life (years)
|
Number
|
Price
|
Number
|
Price
|
|||||||||||||||||
$
|
1.00 - $3.00
|
3.88
|
51,332
|
$
|
2.70
|
51,332
|
$
|
2.70
|
||||||||||||||
$
|
3.01 - $5.00
|
0.48
|
50,000
|
3.84
|
50,000
|
3.84
|
||||||||||||||||
2.20
|
101,332
|
$
|
3.26
|
101,332
|
$
|
3.26
|
Estimated Fair
Value of
Unreleased
Shares
|
Unreleased
ESOP
Shares
|
Allocated
and Released
Shares
|
Total
|
|||||||||||||
Balance, March 31, 2016
|
$
|
207,000
|
49,266
|
913,318
|
962,584
|
|||||||||||
Allocation December 31, 2016
|
(24,633
|
)
|
24,633
|
-
|
||||||||||||
Balance, March 31, 2017
|
$
|
176,000
|
24,633
|
937,951
|
962,584
|
|||||||||||
Allocation December 31, 2017
|
(24,633
|
)
|
24,633
|
-
|
||||||||||||
Balance, March 31, 2018
|
$
|
-
|
-
|
962,584
|
962,584
|
15.
|
SHAREHOLDERS' EQUITY AND REGULATORY CAPITAL REQUIREMENTS
|
Actual
|
For Capital
Adequacy Purposes
|
"Well Capitalized"
Under Prompt
Corrective Action
|
||||||||||||||||||||||
Amount
|
Ratio
|
Amount
|
Ratio
|
Amount
|
Ratio
|
|||||||||||||||||||
March 31, 2019
|
||||||||||||||||||||||||
Total Capital:
|
||||||||||||||||||||||||
(To Risk-Weighted Assets)
|
$
|
140,062
|
16.88
|
%
|
$
|
66,379
|
8.0
|
%
|
$
|
82,974
|
10.0
|
%
|
||||||||||||
Tier 1 Capital:
|
||||||||||||||||||||||||
(To Risk-Weighted Assets)
|
129,671
|
15.63
|
49,784
|
6.0
|
66,379
|
8.0
|
||||||||||||||||||
Common equity tier 1 Capital:
|
||||||||||||||||||||||||
(To Risk-Weighted Assets)
|
129,671
|
15.63
|
37,338
|
4.5
|
53,933
|
6.5
|
||||||||||||||||||
Tier 1 Capital (Leverage):
|
||||||||||||||||||||||||
(To Average Tangible Assets)
|
129,671
|
11.56
|
44,874
|
4.0
|
56,092
|
5.0
|
Actual
|
For Capital
Adequacy Purposes
|
"Well Capitalized"
Under Prompt
Corrective Action
|
||||||||||||||||||||||
March 31, 2018
|
Amount
|
Ratio
|
Amount
|
Ratio
|
Amount
|
Ratio
|
||||||||||||||||||
Total Capital:
|
||||||||||||||||||||||||
(To Risk-Weighted Assets)
|
$
|
123,061
|
15.41
|
%
|
$
|
63,868
|
8.0
|
%
|
$
|
79,835
|
10.0
|
%
|
||||||||||||
Tier 1 Capital:
|
||||||||||||||||||||||||
(To Risk-Weighted Assets)
|
113,066
|
14.16
|
47,901
|
6.0
|
63,868
|
8.0
|
||||||||||||||||||
Common equity tier 1 Capital:
|
||||||||||||||||||||||||
(To Risk-Weighted Assets)
|
113,066
|
14.16
|
35,926
|
4.5
|
51,893
|
6.5
|
||||||||||||||||||
Tier 1 Capital (Leverage):
|
||||||||||||||||||||||||
(To Average Tangible Assets)
|
113,066
|
10.26
|
44,093
|
4.0
|
55,116
|
5.0
|
16.
|
EARNINGS PER SHARE
|
Year Ended March 31,
|
||||||||||||||
(Dollars and share data in thousands, except per share data)
|
2019
|
2018
|
2017
|
|||||||||||
P
|
||||||||||||||
Basic EPS computation:
|
||||||||||||||
Numerator-net income
|
$
|
17,266
|
$
|
10,242
|
$
|
7,404
|
||||||||
Denominator-weighted average common shares outstanding
|
22,588
|
22,531
|
22,478
|
|||||||||||
Basic EPS
|
$
|
0.76
|
$
|
0.45
|
$
|
0.33
|
||||||||
Diluted EPS computation:
|
||||||||||||||
Numerator-net income
|
$
|
17,266
|
$
|
10,242
|
$
|
7,404
|
||||||||
Denominator-weighted average common shares outstanding
|
22,588
|
22,531
|
22,478
|
|||||||||||
Effect of dilutive stock options
|
72
|
92
|
70
|
|||||||||||
Weighted average common shares and common stock
|
||||||||||||||
equivalents
|
22,660
|
22,623
|
22,548
|
|||||||||||
Diluted EPS
|
$
|
0.76
|
$
|
0.45
|
$
|
0.33
|
17.
|
FAIR VALUE MEASUREMENTS
|
Estimated Fair Value Measurements Using
|
||||||||||||||||
March 31, 2019
|
Total Estimated
Fair Value
|
Level 1
|
Level 2
|
Level 3
|
||||||||||||
Investment securities available for sale:
|
||||||||||||||||
Municipal securities
|
$
|
8,881
|
$
|
-
|
$
|
8,881
|
$
|
-
|
||||||||
Agency securities
|
12,341
|
-
|
12,341
|
-
|
||||||||||||
Real estate mortgage investment conduits
|
40,162
|
-
|
40,162
|
-
|
||||||||||||
Residential mortgage-backed securities
|
75,821
|
-
|
75,821
|
-
|
||||||||||||
Other mortgage-backed securities
|
41,021
|
-
|
41,021
|
-
|
||||||||||||
Total assets measured at fair value on a recurring basis
|
$
|
178,226
|
$
|
-
|
$
|
178,226
|
$
|
-
|
Estimated Fair Value Measurements Using
|
||||||||||||||||
March 31, 2018
|
Total Estimated
Fair Value
|
Level 1
|
Level 2
|
Level 3
|
||||||||||||
Investment securities available for sale:
|
||||||||||||||||
Municipal securities
|
$
|
8,732
|
$
|
-
|
$
|
8,732
|
$
|
-
|
||||||||
Agency securities
|
22,102
|
-
|
22,102
|
-
|
||||||||||||
Real estate mortgage investment conduits
|
46,955
|
-
|
46,955
|
-
|
||||||||||||
Residential mortgage-backed securities
|
89,074
|
-
|
89,074
|
-
|
||||||||||||
Other mortgage-backed securities
|
46,358
|
-
|
46,358
|
-
|
||||||||||||
Total assets measured at fair value on a recurring basis
|
$
|
213,221
|
$
|
-
|
$
|
213,221
|
$
|
-
|
Estimated fair value measurements using
|
||||||||||||||||
Total estimated
fair value
|
Level 1
|
Level 2
|
Level 3
|
|||||||||||||
March 31, 2019
|
||||||||||||||||
Impaired loans
|
$
|
394
|
$
|
-
|
$
|
-
|
$
|
394
|
March 31, 2018
|
||||||||||||||||
Impaired loans
|
$
|
2,143
|
$
|
-
|
$
|
-
|
$
|
2,143
|
March 31, 2019
|
Carrying
Amount
|
Level 1
|
Level 2
|
Level 3
|
Estimated
Fair Value
|
|||||||||||||||
Assets:
|
||||||||||||||||||||
Cash and cash equivalents
|
$
|
22,950
|
$
|
22,950
|
$
|
-
|
$
|
-
|
$
|
22,950
|
||||||||||
Certificates of deposit held for investment
|
747
|
-
|
746
|
-
|
746
|
|||||||||||||||
Loans held for sale
|
909
|
-
|
909
|
-
|
909
|
|||||||||||||||
Investment securities available for sale
|
178,226
|
-
|
178,226
|
-
|
178,226
|
|||||||||||||||
Investment securities held to maturity
|
35
|
-
|
35
|
-
|
35
|
|||||||||||||||
Loans receivable, net
|
864,659
|
-
|
-
|
862,429
|
862,429
|
|||||||||||||||
FHLB stock
|
3,644
|
-
|
3,644
|
-
|
3,644
|
|||||||||||||||
Liabilities:
|
||||||||||||||||||||
Certificates of deposit
|
86,006
|
-
|
84,455
|
-
|
84,455
|
|||||||||||||||
FHLB advances
|
56,586
|
-
|
56,586
|
-
|
56,586
|
|||||||||||||||
Junior subordinated debentures
|
26,575
|
-
|
-
|
15,468
|
15,468
|
|||||||||||||||
Capital lease obligation
|
2,403
|
-
|
2,403
|
-
|
2,403
|
March 31, 2018
|
Carrying
Amount
|
Level 1
|
Level 2
|
Level 3
|
Estimated
Fair Value
|
|||||||||||||||
Assets:
|
||||||||||||||||||||
Cash and cash equivalents
|
$
|
44,767
|
$
|
44,767
|
$
|
-
|
$
|
-
|
$
|
44,767
|
||||||||||
Certificates of deposit held for investment
|
5,967
|
-
|
5,959
|
-
|
5,959
|
|||||||||||||||
Loans held for sale
|
210
|
-
|
210
|
-
|
210
|
|||||||||||||||
Investment securities available for sale
|
213,221
|
-
|
213,221
|
-
|
213,221
|
|||||||||||||||
Investment securities held to maturity
|
42
|
-
|
43
|
-
|
43
|
|||||||||||||||
Loans receivable, net
|
800,610
|
-
|
-
|
792,916
|
792,916
|
|||||||||||||||
FHLB stock
|
1,353
|
-
|
1,353
|
-
|
1,353
|
|||||||||||||||
Liabilities:
|
||||||||||||||||||||
Certificates of deposit
|
123,144
|
-
|
120,940
|
-
|
120,940
|
|||||||||||||||
Junior subordinated debentures
|
26,484
|
-
|
-
|
15,274
|
15,274
|
|||||||||||||||
Capital lease obligation
|
2,431
|
-
|
2,431
|
-
|
2,431
|
18.
|
REVENUE FROM CONTRACTS WITH CUSTOMERS
|
Year Ended March 31
|
||||||||||||
2019
|
2018
|
2017
|
||||||||||
Asset management fees
|
$
|
3,791
|
$
|
3,448
|
$
|
2,988
|
||||||
Debit card and ATM fees
|
3,104
|
2,961
|
2,535
|
|||||||||
Deposit related fees
|
1,721
|
1,628
|
1,486
|
|||||||||
Loan related fees
|
1,258
|
671
|
725
|
|||||||||
BOLI
(1)
|
734
|
819
|
760
|
|||||||||
Net gains on sales of loans held for sale
(1)
|
317
|
641
|
656
|
|||||||||
FHLMC loan servicing fees
(1)
|
141
|
122
|
114
|
|||||||||
Other, net
|
792
|
714
|
750
|
|||||||||
Total non-interest income
|
$
|
11,858
|
$
|
11,004
|
$
|
10,014
|
||||||
(1)
Not within the scope of ASC 606
|
19.
|
COMMITMENTS AND CONTINGENCIES
|
Contract or Notional Amount
|
||||||||
March 31, 2019
|
March 31, 2018
|
|||||||
Commitments to originate loans:
|
||||||||
Adjustable-rate
|
$
|
30,579
|
$
|
20,065
|
||||
Fixed-rate
|
10,158
|
14,989
|
||||||
Standby letters of credit
|
2,410
|
2,432
|
||||||
Undisbursed loan funds and unused lines of credit
|
139,842
|
152,982
|
||||||
Total
|
$
|
182,989
|
$
|
190,468
|
20.
|
RIVERVIEW BANCORP, INC. (PARENT COMPANY ONLY)
|
BALANCE SHEETS
|
||||||||
AS OF MARCH 31, 2019 AND 2018
|
||||||||
(In thousands)
|
2019
|
2018
|
||||||
ASSETS
|
||||||||
Cash and cash equivalents
|
$
|
4,178
|
$
|
6,479
|
||||
Investment in the Bank
|
155,041
|
136,497
|
||||||
Other assets
|
1,445
|
1,166
|
||||||
TOTAL ASSETS
|
$
|
160,664
|
$
|
144,142
|
||||
LIABILITIES AND SHAREHOLDERS' EQUITY
|
||||||||
Accrued expenses and other liabilities
|
$
|
63
|
$
|
80
|
||||
Dividend payable
|
904
|
677
|
||||||
Borrowings
|
26,575
|
26,484
|
||||||
Shareholders' equity
|
133,122
|
116,901
|
||||||
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
|
$
|
160,664
|
$
|
144,142
|
STATEMENTS OF INCOME
|
||||||||||||
FOR THE YEARS ENDED MARCH 31, 2019, 2018 AND 2017
|
||||||||||||
(In thousands)
|
2019
|
2018
|
2017
|
|||||||||
INCOME:
|
||||||||||||
Interest on investment securities and other short-term investments
|
$
|
35
|
$
|
26
|
$
|
21
|
||||||
Interest on loan receivable from the Bank
|
-
|
6
|
15
|
|||||||||
Total income
|
35
|
32
|
36
|
|||||||||
EXPENSE:
|
||||||||||||
Management service fees paid to the Bank
|
143
|
143
|
143
|
|||||||||
Other expenses
|
1,298
|
1,020
|
587
|
|||||||||
Total expense
|
1,441
|
1,163
|
730
|
|||||||||
LOSS BEFORE INCOME TAXES AND EQUITY
|
||||||||||||
IN UNDISTRIBUTED INCOME OF THE BANK
|
(1,406
|
)
|
(1,131
|
)
|
(694
|
)
|
||||||
BENEFIT FOR INCOME TAXES
|
(294
|
)
|
(513
|
)
|
(235
|
)
|
||||||
LOSS OF PARENT COMPANY
|
(1,112
|
)
|
(618
|
)
|
(459
|
)
|
||||||
EQUITY IN UNDISTRIBUTED INCOME OF THE BANK
|
18,378
|
10,860
|
7,863
|
|||||||||
NET INCOME
|
$
|
17,266
|
$
|
10,242
|
$
|
7,404
|
(In thousands)
|
2019
|
2018
|
2017
|
|||||||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
||||||||||||
Net income
|
$
|
17,266
|
$
|
10,242
|
$
|
7,404
|
||||||
Adjustments to reconcile net income to net cash provided by (used in) operating
activities:
|
||||||||||||
Equity in undistributed income of the Bank
|
(18,378
|
)
|
(10,860
|
)
|
(7,863
|
)
|
||||||
Amortization
|
91
|
94
|
22
|
|||||||||
Provision for deferred income taxes
|
10
|
174
|
666
|
|||||||||
Earned ESOP shares
|
-
|
148
|
143
|
|||||||||
Changes in assets and liabilities:
|
||||||||||||
Other assets
|
(447
|
)
|
1,770
|
(1,031
|
)
|
|||||||
Accrued expenses and other liabilities
|
141
|
(132
|
)
|
(19
|
)
|
|||||||
Net cash provided by (used in) operating activities
|
(1,317
|
)
|
1,436
|
(678
|
)
|
|||||||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
||||||||||||
Proceeds from assumption of junior subordinated debt (see Note 3)
|
-
|
-
|
3,687
|
|||||||||
Dividend from the Bank
|
2,000
|
1,750
|
2,500
|
|||||||||
Net cash provided by investing activities
|
2,000
|
1,750
|
6,187
|
|||||||||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
||||||||||||
Dividends paid
|
(3,163
|
)
|
(2,140
|
)
|
(1,799
|
)
|
||||||
Proceeds from exercise of stock options
|
179
|
245
|
11
|
|||||||||
Net cash used in financing activities
|
(2,984
|
)
|
(1,895
|
)
|
(1,788
|
)
|
||||||
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
|
(2,301
|
)
|
1,291
|
3,721
|
||||||||
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR
|
6,479
|
5,188
|
1,467
|
|||||||||
CASH AND CASH EQUIVALENTS, END OF YEAR
|
$
|
4,178
|
$
|
6,479
|
$
|
5,188
|
(Dollars in thousands, except per share data)
|
Three Months Ended
|
|||||||||||||||
March 31
|
December 31
|
September 30
|
June 30
|
|||||||||||||
Fiscal 2019:
|
||||||||||||||||
Interest and dividend income
|
$
|
12,464
|
$
|
12,336
|
$
|
12,213
|
$
|
12,105
|
||||||||
Interest expense
|
930
|
656
|
611
|
618
|
||||||||||||
Net interest income
|
11,534
|
11,680
|
11,602
|
11,487
|
||||||||||||
Provision for (recapture of) loan losses
|
-
|
-
|
250
|
(200
|
)
|
|||||||||||
Non-interest income, net
|
3,008
|
2,782
|
3,016
|
3,052
|
||||||||||||
Non-interest expense
|
8,962
|
8,803
|
8,915
|
9,019
|
||||||||||||
Income before income taxes
|
5,580
|
5,659
|
5,453
|
5,720
|
||||||||||||
Provision for income taxes
|
1,373
|
1,271
|
1,224
|
1,278
|
||||||||||||
Net income
|
$
|
4,207
|
$
|
4,388
|
$
|
4,229
|
$
|
4,442
|
||||||||
Basic earnings per common share
(1)
|
$
|
0.19
|
$
|
0.19
|
$
|
0.19
|
$
|
0.20
|
||||||||
Diluted earnings per common share
(1)
|
$
|
0.19
|
$
|
0.19
|
$
|
0.19
|
$
|
0.20
|
||||||||
Fiscal 2018:
|
||||||||||||||||
Interest and dividend income
|
$
|
11,244
|
$
|
11,378
|
$
|
11,315
|
$
|
11,023
|
||||||||
Interest expense
|
587
|
582
|
590
|
590
|
||||||||||||
Net interest income
|
10,657
|
10,796
|
10,725
|
10,433
|
||||||||||||
Provision for loan losses
|
-
|
-
|
-
|
-
|
||||||||||||
Non-interest income, net
|
2,663
|
2,890
|
2,713
|
2,738
|
||||||||||||
Non-interest expense
|
9,127
|
8,558
|
8,759
|
9,174
|
||||||||||||
Income before income taxes
|
4,193
|
5,128
|
4,679
|
3,997
|
||||||||||||
Provision for income taxes
|
1,184
|
3,608
|
1,620
|
1,343
|
||||||||||||
Net income
|
$
|
3,009
|
$
|
1,520
|
$
|
3,059
|
$
|
2,654
|
||||||||
Basic earnings per common share
(1)
|
$
|
0.13
|
$
|
0.07
|
$
|
0.14
|
$
|
0.12
|
||||||||
Diluted earnings per common share
(1)
|
$
|
0.13
|
$
|
0.07
|
$
|
0.14
|
$
|
0.12
|
Plan category
|
Number of
securities to be
issued upon
exercise of
outstanding
options
|
Weighted-
average
price of
outstanding
options
|
Number of
securities
remaining
available for future
issuance under
equity
compensation
plans excluding
securities reflected
in column (A)
|
||||||
Equity compensation plans approved by security holders:
|
(A)
|
(B)
|
(C)
|
||||||
2017 Equity Incentive Plan
|
-
|
-
|
1,800,000
|
||||||
2003 Stock Option Plan
|
101,332
|
3.26
|
-
|
||||||
Equity compensation plans not approved by security holders:
|
-
|
-
|
-
|
||||||
Total
|
101,332
|
3.26
|
1,800,000
|
(a)
|
1. |
Financial Statements
See "Part II –Item 8. Financial Statements and Supplementary Data."
|
|
2. |
Financial Statement Schedules
All schedules are omitted because they are not required or applicable, or the required information is shown in the
consolidated financial statements or the notes thereto.
|
(1) |
Filed as an exhibit to the Registrant’s Current Report on Form 8-K filed with the SEC on September 29, 2016 and incorporated herein by reference.
|
(2) |
Filed as an exhibit to the Registrant's Registration Statement on Form S-1 (Registration No. 333-30203), and incorporated herein by reference.
|
(3) |
Filed as an exhibit to the Registrant’s Current Report on Form 8-K filed with the SEC on May 3, 2019 and incorporated herein by reference.
|
(4) |
Filed as an exhibit to the Registrant’s Annual Report on Form 10-K for the year ended March 31, 2019, and incorporated herein by reference.
|
(5) |
Filed as an exhibit to the Registrant's Annual Report on Form 10-K for the year ended March 31, 2017 and incorporated herein by reference.
|
(6) |
Filed as an exhibit to the Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 1997, and incorporated herein by reference.
|
(7) |
Filed as an exhibit to the Registrant's Annual Report on Form 10-K for the year ended March 31, 1998, and incorporated herein by reference.
|
(8) |
Filed as an exhibit to the Registrant’s Definitive Annual Meeting Proxy Statement (000-22957), filed with the Commission on June 5, 2003, and incorporated
herein by reference.
|
(9) |
Filed as an exhibit to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended December 31, 2005, and incorporated herein by reference.
|
(10) |
Filed as an exhibit to the Registrant’s Annual Report on Form 10-K for the year ended March 31, 2009 and incorporated herein by reference.
|
(11) |
Filed as Appendix A to the Registrant’s Definitive Annual Meeting Proxy Statement (000-22957), filed with the Commission on June 16, 2017, and incorporated
herein by reference.
|
(12) |
Filed as an exhibit to the Registrant’s Registration Statement on Form S-8 (Registration No. 333-228099), and incorporated herein by reference.
|
(13) |
Filed as an exhibit to the Registrant’s Annual Report on Form 10-K for the year ended March 31, 2017, and incorporated herein by reference.
|
* |
Filed herewith
|
RIVERVIEW BANCORP, INC. | |||
Date:
|
June 14, 2019
|
By:
|
/s/ Kevin J. Lycklama
|
|
|
|
Kevin J. Lycklama
|
|
|
|
President and Chief Executive Officer
Director
(Duly Authorized Representative)
|
By:
|
/s/ Patrick Sheaffer
|
By:
|
/s/ Kevin J. Lycklama
|
|
Patrick Sheaffer
|
|
Kevin J. Lycklama
|
|
Chairman of the Board
|
|
President and Chief Executive Officer
Director
(Principal Executive Officer)
|
|
|
|
|
Date:
|
June 14, 2019
|
Date:
|
June 14, 2019
|
|
|
|
|
|
|
|
|
By:
|
/s/ David Lam
|
By:
|
/s/ Bess R. Wills
|
|
David Lam
|
|
Bess R. Wills
|
|
Executive Vice President and
|
|
Director
|
|
Chief Financial Officer
(Principal Financial and Accounting Officer)
|
|
|
|
|
|
|
Date:
|
June 14, 2019 |
Date:
|
June 14, 2019
|
|
|
|
|
|
|
|
|
By:
|
/s/ David Nierenberg
|
By:
|
/s/ Bradley J. Carlson
|
|
David Nierenberg
|
|
Bradley J. Carlson
|
|
Director
|
|
Director |
|
|
|
|
Date:
|
June 14, 2019
|
Date:
|
June 14, 2019
|
|
|
|
|
|
|
|
|
By:
|
/s/ John A. Karas
|
By:
|
/s/ Jerry C. Olson
|
|
John A. Karas
|
|
Jerry C. Olson
|
Director | Director | ||
Date: | June 14, 2019 | Date: | June 14, 2019 |
By: | /s/ Gerald L. Nies | By: | /s/ Patricia W. Eby |
|
Gerald L. Nies
|
|
Patricia W. Eby
|
|
Director
|
|
Director
|
Date:
|
June 14, 2019
|
Date:
|
June 14, 2019
|
1. |
At-Will
Employment
.
The Bank will commence or continue to employ Executive, subject to the terms and conditions set forth in this Agreement. The
employment is “at will.” Notwithstanding the Employment Term set forth in this Agreement, the Company may terminate Executive’s employment at any time for any lawful reason or for no reason at all, subject to the provisions of this
Agreement.
|
2. |
Term; Extension
.
|
|
(a) |
Employment Term.
The term of this Agreement begins on
the Effective Date and shall continue until the one (1) year anniversary thereof, unless Executive’s employment is terminated earlier pursuant to Section 6 of this Agreement. The period during which Executive is employed by the Bank
hereunder is hereinafter referred to as the “
Employment Term
.” The last day of Executive’s employment with the Bank is hereinafter referred to
as the “
Termination Date
.”
|
|
(b) |
Extensions.
At any time during the Employment Term,
Company’s Board of Directors (the “
Board
”) may elect in writing to extend the Employment Term of this Agreement on the same terms and conditions
for one (1) additional year beyond the current Employment Term. This Agreement may be extended by the Board in writing up to five (5) times in the same manner.
|
3. |
Position
.
Executive will serve as the Bank’s ____________ or such other position as the Company may designate from time to time. Executive also
agrees to serve, if elected, as an officer and/or director of the Company or any of its affiliates. Executive will faithfully and diligently perform the duties that are normal and customary to the position, as well as those duties
assigned from time to time by the Company’s Board and/or the Bank’s Chief Executive Officer (the “
CEO
”). Executive’s duties and responsibilities
shall be subject to change from time to time in the Board’s or the CEO’s discretion; provided, however, that the foregoing shall not vitiate or modify the application of the termination for Cause provision of Section 6(b) hereof, or
Executive’s rights upon any resignation for Good Reason in Section 6(c).
|
4. |
Obligations;
|
|
(a) |
Executive shall devote Executive’s best efforts, energies, and skills to the position and shall not engage in any business, professional, or employment
activity that is not on the Company’s behalf (whether or not pursued for gain or profit), except for:
|
|
(1) |
Activities approved in writing in advance by the Board; and
|
|
(2) |
Passive investments that do not involve Executive providing any advice or services to the businesses in which the investments are made.
|
|
(b) |
The principal place of Executive’s
employment shall be Company’s headquarters in
the greater Vancouver, Washington metropolitan area, provided that Executive may be required to travel on Company business during the Employment Term. Executive agrees to maintain a full-time residence in close proximity to
Vancouver, Washington during the Employment Term.
|
|
(c) |
Executive’s employment shall be governed by any employment policies, procedures
or handbooks as may be adopted by Company and are applicable to employees (the “
Company’s Employment Policies
”), as they may be modified from time to time, except to the extent those Employment Policies are inconsistent with the terms of this Agreement, in which case this Agreement shall
control. The Company’s Employment Policies include, but are not limited to, the Personnel Policy Manual, the Code of Conduct, the Conflict of Interest and Whistleblower Policy, and the Technology Use Policy. In performing Executive’s
duties,
Executive also agrees to act in accordance with applicable state and federal laws.
|
|
(d) |
The Company anticipates that Executive will be active in community associations in the Company’s market area.
|
|
(a) |
Base Salary.
For services performed under this
Agreement, Executive’s annual base salary as of the Effective Date is $
______
(the “
Base Salary
”). The Base Salary will be paid in periodic installments in accordance with the Company’s regular payroll schedule and subject to all lawful and authorized deductions and withholdings. Executive’s
Base Salary shall be reviewed at least annually by the Board after taking into consideration the Executive’s performance individually and as part of the Company, and the Board may, but shall not be required to, increase the Base Salary
during the Employment Term.
|
|
(b) |
Incentive Compensation.
In addition to the Base
Salary, Executive will participate in the Company’s Annual Incentive Plan and any successor incentive compensation plans, to be paid in compliance with the terms and conditions of applicable incentive compensation plans (the “
Incentive Compensation
”).
|
|
(c) |
Other Benefits.
During the term of this Agreement,
Executive shall be entitled to participate in the Company’s health and welfare, retirement and all other employee benefit plans, practices, and programs maintained by the Company, as in effect from time to time (collectively, “
Employee Benefit Plans
”), and which other employees of the Company are generally eligible, subject to the terms of the applicable Employee Benefit
|
|
|
Plans. The Company reserves the right to amend or terminate any Employee Benefit Plans at any time in its sole discretion, subject to the terms of such
Employee Benefit Plans and applicable law.
|
|
(d) |
Reimbursable Expenses.
Executive is authorized to
receive reimbursement for reasonable expenses incurred in performing Executive’s duties and in promoting the business of the Company, provided that such expenses are incurred and accounted for in accordance with the policies and
procedures established from time to time by the Company, and further provided that all such reimbursements shall comply with Section 409A of the Internal Revenue Code of 1986, as it may be amended from time to time (the “
Code
”).
|
|
(e) |
Vacation.
Executive shall be entitled to paid vacation
and sick leave according to the Company’s Employment Policies.
|
|
(f) |
Insurance and Indemnification.
The Company shall
provide Executive (including Executive’s heirs, executors and administrators) with coverage under a standard directors’ and officers’ liability insurance policy at Company’s expense, and, with respect to any claims not covered by that
policy, shall indemnify Executive (and Executive’s heirs, executors and administrators) to the fullest extent permitted under law against all expenses and liabilities reasonably incurred by Executive in connection with or arising out of
any action, suit or proceeding brought by a third party against the Company in which Executive may be involved by reason of having been a director or officer of the Company or any of its affiliates (whether or not Executive continues to
be a director or officer at the time of incurring those expenses or liabilities). Those expenses and liabilities include, but are not limited to, court costs, attorneys’ fees and expenses, judgments and reasonable settlement costs;
provided, however, Company shall not be required to reimburse Executive for any expenses and liabilities caused by Executive’s intentional or reckless violation of the Company’s Employment Policies or the law.
|
|
(g) |
Withholding Taxes.
All amounts payable to Executive as
compensation hereunder, including any bonuses or other monetary incentives, shall be subject to such federal, state and local taxes as may be required to be withheld pursuant to any applicable law or regulation.
|
6. |
Termination of Employment
.
Executive’s employment and this Agreement may be terminated by Company with or without cause (as defined below), by Executive with or
without Good Reason (as defined below), or upon the expiration of the Employment Term in accordance with Section 2 of this Agreement. The Party seeking to terminate employment must provide written notice of its intent to terminate,
citing the specific Section of this Agreement upon which the Party is relying and the Termination Date. Executive’s employment may also terminate due to death or disability, as defined below in Subsection 6(a).
|
|
(a) |
Death or Disability.
Upon death, this Agreement automatically terminates. Company may terminate this Agreement because of disability by delivering written notice to Executive stating the Termination Date.
Company’s decision to terminate because of disability shall be based on its good faith determination that Executive is unable as result of physical or mental illness to perform the essential functions of Executive’s position, despite
reasonable accommodation, for an aggregate of ninety (90) days during any period of one hundred eighty (180) consecutive days (unless a longer period is required
|
|
|
by law, in which case the longer period would apply). Company’s disability
determination should be based on evidence from a competent health care provider obtained with the cooperation of Executive, and should consider any reasonable accommodation that the Company may provide without undue hardship, and
any other considerations required by law.
|
|
(b) |
“
Cause.”
|
|
(1) |
Definition.
Cause for termination of employment means the occurrence of any one or more of the following:
|
|
(A) |
Conviction of any felony, a misdemeanor involving moral turpitude, or of any crime in connection with Executive’s duties;
|
|
(B) |
Removal of Executive from office or permanent prohibition of Executive from participating in the conduct of the Company’s affairs by an order issued by a bank
regulatory authority;
|
|
(C) |
Conduct involving dishonesty, embezzlement, misappropriation, fraud, or a material breach of a fiduciary duty in the performance of Executive’s duties;
|
|
(D) |
Participation in any incident compromising Executive’s reputation and as a consequence materially diminishing Executive’s ability to represent Company with
the public;
|
|
(E) |
Conduct significantly harmful to the Company, including but not limited to public disparagement of the Company or any affiliate of the Company, intentional or
reckless violation of law or of any significant policy or procedure of the Company;
|
|
(F) |
Willful misfeasance, gross negligence, or refusal or failure to act in accordance with any lawful and reasonable stipulation, requirement or directive of the
Board or CEO. As used in this Subsection 6(b)(1)(F), the term “reasonable” means any stipulation, requirement, or directive that falls under the Board’s or CEO’s authority;
|
|
(G) |
Material breach of any material obligations under this Agreement or any other written policies or rules of Company;
|
|
(H) |
Sexual harassment, as defined by the Company’s Employment Policies.
|
|
(I) |
Willful unauthorized disclosure of trade secrets and Confidential Information (as defined below); or
|
|
(J) |
Chronic drug or alcohol abuse to an extent that materially impairs Executive’s performance of Executive’s duties.
|
|
(2) |
Procedure for Termination for Cause.
Termination for Cause will be automatic upon the occurrence of an incident under Subsections (6)(b)(1)(A) or (B) above.
|
|
(i) |
Executive is given reasonable written notice (in no event less than five (5) business days’ notice) of the Board meeting called to make that determination;
and
|
|
(ii) |
Executive and Executive’s legal counsel are given the opportunity to address the incident(s) at that meeting.
|
|
(B) |
In addition, with respect to incidents under Subsections (1)(F) or (G) only, Executive is first given:
|
|
(i) |
Written notice by the Board or CEO specifying in detail the performance issues; and
|
|
(ii) |
A reasonable opportunity to cure the issues specified in the notice; provided, however, if Company reasonably expects irreparable injury from a delay in
termination, Company may terminate Executive without an opportunity to cure.
|
|
(iii) |
If an opportunity to cure is provided, Company’s Board shall also determine, in its sole discretion, whether Executive has in fact cured the cause and done so
in a timely manner.
|
|
(3) |
Procedure for Termination Without Cause.
Company may terminate Executive’s employment and this
Agreement during the Employment Term without Cause by delivering at least thirty (30) days’ prior written notice stating the Termination Date. During the period between the delivery of the notice of termination and the Termination
Date, the Executive’s employment shall continue and Executive shall continue to perform Executive’s duties and cooperate in the orderly transition of Executive’s duties. At Company’s discretion, it may pay the Executive’s
then-current Base Salary for the notice period and excuse Executive from any further duties during such period.
|
|
(c) |
“
Good Reason.”
|
|
(1) |
Definition
.
Subject to Subsection 6(c)(2) below, Good Reason for Executive’s resignation means any one or more of the following occurring without
Executive’s consent:
|
|
(A) |
A material reduction of Executive’s Base Salary;
|
|
(B) |
A relocation or transfer of Executive’s principal place of employment that would require Executive to commute on a regular basis more than twenty-five (25)
miles each way from the main business office of the Company as of the Effective Date; or
|
|
(2) |
Procedure for Resignation for Good Reason
.
To resign for Good Reason, Executive must give the Company:
|
|
(A) |
Written notice of the intended resignation and a detailed description of the Good Reason not more than thirty (30) days after Executive becomes aware of the
initial existence of the Good Reason; and
|
|
(B) |
A reasonable opportunity of at least thirty (30) days in which to cure those circumstances.
|
|
(C) |
Good Reason shall not exist if Executive (a) fails to provide such notice within
the thirty (30) day notice period, or (b) the Company cures the specified condition within the thirty (30) day cure period.
|
|
(d) |
Resignation of All Other Positions.
Upon termination
of Executive’s employment hereunder for any reason, Executive agrees to resign from all positions that Executive holds as an officer or member of a board (or a committee thereof) of Company or any of its affiliates.
|
7. |
Separation Benefits
.
|
|
(a) |
Payment of Accrued Salary and Benefits.
Upon
termination of Executive’s employment for any reason, Executive will receive payments for all Base Salary and benefits accrued and payable as of the date of Executive’s Termination Date, which shall be paid in accordance with applicable
law. All further compensation and benefits shall terminate as of the Termination Date, except as otherwise required by law (e.g., COBRA coverage) or as provided in Subsections 7(c), (d), or (e) below.
|
|
(b) |
Termination for Cause or Without Good Reason.
If
Executive’s employment is terminated upon death, the expiration of the Employment Term, by the Company for Cause, or by Executive without Good Reason, Executive will have no right to receive additional compensation past the Termination
Date and will have no right to any unpaid Incentive Compensation.
|
|
(c) |
Termination Without Cause or for Good Reason
.
|
|
(1) |
Subject to the limitations in Subsection 7(c)(3) below, if Executive’s employment is terminated by the Company without Cause or by Executive with Good Reason,
the Company will pay Executive (or in the event of Executive’s subsequent death, Executive’s beneficiaries or estate) a severance benefit (the “
Severance
Benefit
”) in an aggregate amount equal to:
|
|
(A) |
Twelve (12) months of Executive’s monthly Base Salary (based on the Executive’s Base Salary as of the Termination Date), to be paid for a period of twelve
months beginning on the commencement date as determined under Subsection 7(c)(3)(B) below, subject to all applicable payroll tax withholding and other deductions required by law;
|
|
(B) |
Any unpaid Incentive Compensation based on the fiscal year that ended immediately before the Termination Date, to be paid on the same date and in the same
manner Executive would be paid if Executive remained employed with Company, subject to all applicable payroll tax withholding and other deductions required by law; and
|
|
(C) |
If Executive timely and properly elects health continuation coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985 or any applicable state
health insurance continuation law (“
COBRA
”), the Company shall directly pay or reimburse Executive for the monthly COBRA premium paid by
Executive for Executive and Executive’s dependents (at the same percentage as paid by the Company as of the Termination Date). Executive shall be eligible to receive such reimbursement until the earliest of: (i) the twelve (12) month
anniversary of the Termination Date; (ii) the date the Executive is no longer eligible to receive COBRA continuation coverage; or (iii) the date on which Executive becomes eligible to receive substantially similar coverage from another
employer or other source. Notwithstanding the foregoing, if the Company’s payments under this Section 7(c)(1)(C) would violate the nondiscrimination rules applicable to non-grandfathered plans under the Affordable Care Act (the “
ACA
”), or result in the imposition of penalties under the ACA and the related regulations and guidance promulgated thereunder, the Parties agree to
reform this Section 7(c)(1)(C) in a manner as is necessary to comply with the ACA.
|
|
(2) |
The Parties intend the Severance Payments under this Section 7 to qualify for the
exemption from Section 409A of the Code, for separation pay, pursuant to Treasury Regulations 1.409A-1(b)(9)(iii).
|
|
(3) |
Severance Benefits Limitations.
Payment of the
Severance Benefit will be subject to the following limitations:
|
|
(A) |
Release of Claims.
Executive’s receipt of the
Severance Benefit is conditioned on Executive having executed a separation agreement in substantially the same form attached hereto as Exhibit A (the “
Separation
Agreement
”) and the revocation period having expired without Executive having revoked the Separation Agreement. Executive must execute the Separation Agreement and the revocation period must expire within sixty (60) days
of the Termination Date.
|
|
(B) |
Commencement of Payment.
The first payment of
Severance Benefits is payable after the Separation Agreement is effective, but no later than sixty (60) days following the Termination Date;
notwithstanding
the foregoing to the contrary, where Executive’s Termination Date occurs after November 1 of a calendar year, assuming Company receives a fully executed Separation Agreement within sixty (60) days following the Termination Date, the
first payment shall be made as soon as practicable after the beginning of the next following calendar year but in no event later than March 15 of such calendar year.
|
|
(C) |
Conclusion of Payment.
Company’s obligation to pay
Executive’s Severance Benefit under this Agreement shall end immediately upon Executive engaging in Prohibited Activity (as defined under Subsection 9(b)), or upon the conclusion of the twelve (12) month period, whichever occurs first.
Executive agrees to notify Company in writing immediately upon Executive’s commencement of Prohibited Activity (as defined under Subsection 9(b)). Executive understands and agrees that Executive must immediately return or repay to
Company any Severance Benefit or portion thereof that was made to Executive after the time Executive engages in Prohibited Activity. The conclusion of payment for engaging in Prohibited Activity shall apply even if Executive’s
noncompetition restriction does not extend beyond Executive’s Employment Term.
|
|
(D) |
Compliance with Material Terms.
Receipt of the
Severance Benefit is further conditioned on Executive not being in violation of any material term of this Agreement, including without limitation the restricted covenants in Section 9, or in violation of any material term of the
Separation Agreement.
If Executive violates any material term of this Agreement or the Separation Agreement, the Company may immediately stop paying
Severance Benefits and will have no further payment obligations.
|
|
(E) |
Regulatory Limitation.
The Company shall make no
payment for Severance Benefits provided for under this Agreement to the extent that the payment would be prohibited by applicable banking regulations or any regulatory order. If the payment is prohibited, the Company shall use
reasonable efforts to secure the consent of the banking regulator to make the payment in the highest amount permissible, up to the amount provided for in this Agreement.
|
|
(d) |
Change in Control Benefits.
|
(1)
|
If Executive’s employment terminates under circumstances that qualify as a payment event under the Change In
Control Agreement between the Company and Executive, as amended (the “
CIC Agreement
”), Executive will receive:
|
(A)
|
Only those payments under this Agreement that are payable under Subsection 7(a) above; and
|
(B)
|
The benefits payable in accordance with the terms and conditions of the CIC Agreement in lieu of any
Severance Benefits payable under Subsection 7(c) above.
|
(2)
|
If Executive’s employment terminates under circumstances that do not qualify as a payment event under the
CIC Agreement, the compensation and benefits payable to Executive upon termination of employment will be determined solely under this Section 7.
|
(e)
|
Disability.
|
(1)
|
Transition
Payment.
If Executive becomes disabled as defined in Subsection 6(a) above, Executive’s employment will terminate and the Company will pay Executive, as transition pay and in lieu of the Severance Benefits, a lump sum payment
equal to four (4) months of Executive’s Base salary (based on the Executive’s Base Salary as of the Termination Date) (the “
Transition Payment
”).
The Transition Payment is subject to the limitations in Subsections 7(c)(3)(A), 7(c)(3)(D), and 7(c)(3)(E) above.
|
(2)
|
Commencement
of Payment.
The Transition Payment is payable after the Separation Agreement is effective, but no later than sixty (60) days following the Termination date;
notwithstanding the foregoing to the contrary, where Executive’s Termination Date occurs after November 1 of a calendar year, assuming Company receives a fully executed Separation Agreement within sixty (60) days following the
Termination Date, the Transition Payment shall be made as soon as practicable after the beginning of the next following calendar year but in no event later than March 15 of such calendar year.
|
(3)
|
Transition
Benefits.
If Executive becomes disabled as defined in Subsection 6(a) above, Executive’s employment will terminate and the Company will, if reasonably possible, continue Executive’s life, medical, dental, and disability
coverage on the policies in existence before Executive’s termination for disability until the earliest of the
|
(A)
|
Executive’s full-time employment with another employer;
|
(B)
|
Executive’s death; or
|
(C)
|
The 12 month anniversary of the Termination Date.
|
8. |
Cooperation Following Termination
.
Executive agrees that when Executive’s employment ends, whether voluntarily or involuntarily, Executive will cooperate fully with Company in all matters relating
to the completion of pending work, the orderly transfer of any such pending work to other employees, the return of all property, and in any business or legal matters in which participation is requested.
Executive further agrees to preserve the attorney-client
privilege regarding any legal matters to which Executive was privy during Executive’s employment with Company. If Company asks Executive to assist in any litigation after employment ends, Executive agrees to cooperate by assisting
Company’s counsel in the preparation and execution of sworn declarations, appearing voluntarily without subpoena, and testifying truthfully in declarations, depositions, and at any arbitrations, administrative hearings or trials. If
requested by Company to provide such assistance, Executive shall be reimbursed for any reasonable out-of-pocket expenses.
|
9. |
Restrictive Covenants
.
|
|
(a) |
Confidential Information.
|
|
(1) |
Executive’s Obligations.
For an indefinite period, Executive shall protect and preserve as confidential all of Company’s Confidential Information (defined below in Subsection 9(a)(2)) at any time known to
Executive or in Executive’s
|
|
|
possession or control with not less than the diligence, care and effort which a
prudent owner would use to protect his or her own most sensitive information. Executive shall neither disclose to third parties, use, nor allow others to use any Confidential Information for any purpose other than for the sole
benefit of Company and as specifically approved in writing in advance by Company’s Board in each instance. Executive acknowledges and agrees that the covenants contained in this Subsection 9(a) shall supplement, rather than replace
or contradict, any other rights or remedies that Company may have under applicable law. If a dispute arises, Executive has the burden to show that information is not Company’s Confidential Information. If anyone tries to compel
Executive to disclose any of Company’s Confidential Information by subpoena or otherwise, Executive will promptly notify the Board or the CEO so that Company may take any actions it deems necessary to protect its interests.
This
Subsection 9(a) shall survive the termination of this Agreement.
|
|
(2) |
Definition of Confidential Information.
“Confidential Information” means information which (a) derive independent economic value, actual or potential, from not being generally known to, and not being
readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use; and (b) are the subject of efforts that are reasonable under the circumstances to maintain their secrecy. Confidential
Information also includes proprietary or secret information belonging to Company that was disclosed to or known by Executive as a consequence of Executive’s employment with Company and not otherwise publicly known, whether or not
received prior to the Effective Date, whether or not marked confidential or labeled as Confidential Information, and whether or not considered a trade secret under applicable law. Confidential Information may consist of verbal,
written, or electronically stored information, and may be tangible or merely remembered.
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(A) |
Examples of Confidential Information.
Company provides the following list of Confidential Information by way of example, but this list is not intended to be exhaustive: inventions; technical
information; algorithms, designs, concepts, systems, techniques, methods, models, procedures, or processes; know-how or methodologies; manuals, contracts, or reports; purchasing or accounting information; regulatory information and
communications related thereto; financial history or projections; legal affairs; formulae; compositions; software or computer programs; research projects; business modes and information; the identity of all vendors, vendor lists, and
vendor contact information; the identity of customers, customer lists, and customer contact information; pricing data; financial data; sources of supply; marketing plans and/or strategies, including price strategies, marketing, sales,
technology, research and development, production, or merchandising systems or plans; and information pertaining to any aspect of any activity or business of Company or its vendors, suppliers, distributors or customers, including
information entrusted to Company by third parties (including vendors, customers and prospective vendors or customers), or any trade secrets, proprietary or confidential matter of Company or of such third parties.
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(B) |
Excluded Confidential Information.
Confidential Information does not include information that Executive can prove (a) was known by or in the possession of Executive prior to employment with Company
through means other than as a result of past relationships or business dealings between Executive and Company or its vendors, suppliers or customers; (b) consists in whole or in part of any Prior Intellectual Property (defined below
in Section 10); or (c) is known to or readily discoverable by others not under an obligation of confidentiality.
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(C) |
DTSA Disclosure.
Pursuant to the Defend Trade Secrets
Act of 2016, Executive will not have criminal or civil liability under any federal or state trade secret law for the disclosure of a trade secret that (A) is made (i) in confidence to a federal, state, or local government official,
either directly or indirectly, or to an attorney and (ii) solely for the purpose of reporting or investigating a suspected violation of law; or (B) is made in a complaint or other document filed in a lawsuit or other proceeding, if such
filing is made under seal. In addition, if Executive files a lawsuit for retaliation against the Company for reporting a suspected violation of law, Executive may disclose the trade secret to Executive’s attorney and may use the trade
secret information in the court proceeding, if Executive files any document containing the trade secret under seal and does not disclose the trade secret, except pursuant to court order.
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(b) |
Noncompetition.
Executive acknowledges and agrees that
due to Executive’s position and responsibilities with the Company, Executive will have access to trade secrets and Confidential Information. Because of the Company’s protectable interest, and the good and valuable consideration offered
to Executive during the Employment Term, for the Employment Term, and for a period of one (1) year following the Termination Date (unless Company terminates Executive without Cause (as defined in Subsection 6(b)
(1)
), Executive resigns for Good Reason (as defined in Subsection 6(c)(1)), or Company terminates Executive because of disability (as defined under Subsection 6(a)),
Executive agrees and covenants not to, directly or indirectly, engage in any “
Prohibited Activity
” in any city, town, or county in which the
Company or Company’s affiliates have an office or branch or has filed an application for regulatory approval to establish an office or branch. For the sake of clarity, this noncompetition restriction shall not extend beyond Executive’s
Employment Term if Executive’s employment is terminated by Company without Cause (as defined under Subsection 6(b)(1), Executive Resigns for Good Reason (as defined under Subsection 6(c)(1), or Company terminates Executive because of
disability (as defined under Subsection 6(a)). Prohibited Activity is defined as an activity Executive engages in or which Executive contributes Executive’s knowledge, directly or indirectly, in whole or in part, as an employee,
employer, operator, manager, advisor, consultant, contractor, agent, partner, director, stockholder, officer, volunteer, intern, or any other similar capacity, in the same or similar business of Company, including, without limitation,
the business of providing depository or lending services. Prohibited Activity also includes activity that may require or inevitably require disclosure of trade secrets, proprietary information, or Confidential Information. Nothing
herein shall prohibit Executive from purchasing or owning less than five percent (5%) of the publicly traded securities of any corporation, provided that such ownership represents a passive investment and that Executive is not a
controlling person of, or a member of a group that controls, such corporation. Provided Executive’s Termination Date occurs during the
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(1) |
During the Employment Term and for a twelve (12) month period following the Termination Date, whether terminated for any reason whatsoever, by Executive or
Company, Executive will not, directly or indirectly,
solicit, call on, induce or encourage Customers or Business Partners (defined below) to terminate or limit
their relationship with Company or to send their business elsewhere
or assist any person, group or entity in doing so or attempting to do so. This Subsection 9(c) shall survive the termination of this Agreement.
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(2) |
“
Customers
” are:
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(A) |
All customers serviced by the Company or any of the Company’s affiliates at any time within 12 months before the Termination Date;
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(B) |
All customers and potential customers whom the Company or the Company’s affiliates, with the knowledge or participation of Executive, actively solicited at
any time during the 12 months before the Termination Date; and
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(C) |
All successors, owners, directors, partners and management personnel of the Customers described in Subsection (A) or (B) above.
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(3) |
“
Business Partners
” are suppliers, vendors, investors, financial
institutions, and other persons and entities with whom Company currently conducts or has conducted business during the 12 months before the Termination Date.
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(d) |
Nonraiding of Employees.
Executive recognizes that the
workforce of the Company and its affiliates are a vital part of the Company’s business. Therefore, Executive agrees that during the Employment Term and for a twelve (12) month period following the Termination Date, whether terminated
for any reason whatsoever, by Executive or Company, Executive will not directly or indirectly recruit or solicit any Company Employee to: (i) breach or modify any provision of such employee’s employment agreement with Company; (ii)
reduce or change the quality or quantity or availability of such employee’s services to Company; or (iii) terminate such employee’s employment with Company or any Company Party. Executive also agrees not to disclose or identify any
Company employee as a potential candidate to a third party;
however, this does not restrict general solicitations, such as help-wanted ads or job postings, so
long as those solicitations are not specifically directed to individuals who are known to be currently employed by Company. For purposes of this Subsection, “
Company Employees
” means all employees working for the Company as of the Termination date.
This Subsection 9(d) shall survive
the termination of this Agreement.
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(e) |
Injunctive Relief.
Executive acknowledges that it is
impossible to measure in money the damages that the Company will incur if Executive fails to observe the covenants in this Section 9 (the “
Restrictive
Covenants
”) and, therefore, Executive agrees that:
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(2) |
If the Company is required to post a bond in order to secure an injunction or other equitable remedy, that bond shall be no more than a nominal amount;
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(3) |
Executive waives any claim or defense that an adequate remedy at law is available to the Company; and
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(4) |
These injunctive remedies are cumulative and are in addition to any other rights and remedies the Company may have at law or in equity.
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(f) |
Reasonableness.
The parties agree that:
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(1) |
This Agreement in its entirety, and in particular the Restrictive Covenants, is reasonable both as to time and scope;
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(2) |
The Restrictive Covenants are necessary for the protection of the Company’s business and goodwill;
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(3) |
The Restrictive Covenants are not any greater than are reasonably necessary to secure the Company’s business and goodwill;
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(4) |
The degree of injury to the public due to the loss of the service and skill of Executive or the restrictions placed upon Executive’s opportunity to make a
living with Executive’s skills upon enforcement of those covenants, does not and will not warrant non-enforcement of those restraints; and
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(5) |
If the scope of the Restrictive Covenants is adjudged too broad to be capable of
enforcement, then the parties authorize that court or arbitrator to narrow the Restrictive Covenants so as to make them capable of enforcement, given all relevant circumstances, and to enforce them to the fullest extent allowed.
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10. |
Protection of Intellectual
Property
.
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(a) |
Company’s Ownership.
Company owns all Inventions and Works (as defined below in Subsection 10(b)) that Executive makes, conceives, develops, discovers, reduces to practice or fixes in a tangible medium of
expression, alone or with others, either (a) during Executive’s employment by Company (including the Employment Term and past employment, and whether or not during working hours), or (b) within one (1) year after the Termination Date
in each case, if the Invention or Works results from any work Executive performed for Company or involves the use or assistance of Company’s facilities, equipment, materials, personnel or Confidential Information. If Executive has
any pre-existing Invention or Work that Executive requests to exclude from Company ownership (“
Prior Intellectual Property
”), Executive shall make full written disclosure to Company by submitting an attachment to this Agreement listing the Prior Intellectual Property (the “
Prior Intellectual Property Disclosure
”). If Executive does not attach
a Prior Intellectual Property Disclosure to this Agreement, Executive represents and warrants that Executive owns no Prior Intellectual Property that Executive requests to exclude from Company ownership.
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(b) |
Definitions of Invention and Works.
“Inventions” means discoveries, developments, concepts, ideas, improvements to existing technology, processes, procedures, machines, products, compositions of
matter, trade secrets, formulas, algorithms, computer programs and techniques, custom software, and all other matters ordinarily intended by the word “invention,” whether or not patentable or copyrightable. “Inventions” also includes
all records and expressions of those matters. “Works” means original works of authorship, including interim work product, modifications and derivative works, and all similar matters, whether or not copyrightable.
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(c) |
Disclosure and Assignment.
Executive will promptly disclose to Company, will hold in trust for Company’s sole benefit, will assign to Company, and hereby does assign to Company all Inventions and Works described
in Subsections 10(a) and 10(b), including all copyrights, patent rights, and trade secret rights, vested and contingent, except those pre-existing Inventions identified on the Prior Intellectual Property Disclosure. To the extent
that such Inventions and Works may be considered “works made for hire” under the copyright act, they are hereby agreed to be works made for hire; otherwise, Executive hereby irrevocably assigns and conveys all such rights, title and
interest to Company, subject to no liens, claims or reserved rights. Executive will waive and hereby does waive any moral rights Executive has or may have in the Inventions and Works described in Subsections
10(a) and 10(b). Executive further agrees that if the
foregoing waiver is not effective, Executive agrees not to assert any such moral rights. To the extent that Executive cannot assign the rights contemplated in Subsections 10(a) and 10(b), including moral rights, Executive hereby
grants to Company a fully-paid, royalty free, worldwide, perpetual, exclusive license to use, create and own derivative works of and otherwise exploit such rights. At Company’s direction and expense, Executive will execute all
documents and take all actions necessary or convenient for Company to document, obtain, maintain or assign its rights to these Inventions and Works. Company shall have full control over all applications for patents or other legal
protection of these Inventions and Works.
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(d) |
Disclaimer Regarding Inventions Developed Entirely on
Executive’s Own Time.
Pursuant to RCW 49.44.140(3), Subsection 10(c) of this Agreement regarding the assignment of certain inventions to Company does
not apply to an Invention for which no equipment, supplies, facilities, or trade secret information of Company was used and which was developed entirely on Executive's own time, unless (a) the Invention relates (i) directly to
Company’s business, or (ii) to Company’s actual or demonstrably anticipated research or development, or (b) the Invention results from any work performed by Executive for Company.
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11. |
Non-Disparagement
.
Executive agrees and covenants that Executive will not at any time make, publish or communicate to any person or entity or in any public forum any defamatory or
disparaging remarks, comments, or statements concerning the Company or its affiliates, or any of its employees, officers, investors, known customers, or other associated third parties.
Provided, however, that nothing in this
Agreement shall preclude Executive from making truthful statements that are required by applicable law, regulation, or legal process.
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12. |
Return of Company Property
.
Executive will safeguard and return to Company when
Executive’s employment ends, or sooner if Company requests, all documents and property in Executive’s care, custody or control relating to Executive’s employment or Company’s business and customers (including but not limited to
Confidential Information (defined above), keys, pass
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cards, identification cards ), or any reproductions thereof, whether such
information is reduced to writing, existing in hard copies or electronic form, and whether residing on Company’s computers, Executive’s own personal computer, laptop, tablet, or mobile device, or other electronic media used for
Company business. After employment ends, or sooner if Company requests, Executive must disclose all computer user identifications and passwords used by Executive in the course of employment or necessary for accessing information on
the Company’s computer system, and Executive will not retain copies of any Confidential Information or other materials belonging to Company unless expressly authorized in writing by Company.
The obligations in this Section
include the return of documents and other materials that may be in Executive’s desk at work, Executive’s car or place of residence, or in any other location under Executive’s control.
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13. |
Dispute Resolution
.
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(a) |
Arbitration
.
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(1) |
The parties agree to submit any dispute arising under this Agreement or Executive’s employment with Company, regardless of the nature of the dispute or the
legal concepts involved, to final, binding, and private arbitration. Disputes subject to arbitration include not only disputes involving the negotiation, meaning, or performance of this Agreement, but also claims Executive may have
against Company, Company’s affiliates, or against any of their officers, directors, supervisors, managers, employees or agents for violation of any federal, state, or local statute arising out of Executive’s employment relationship with
Company. Executive and Company intend and agree that class action and representative action procedures are hereby waived and shall not be asserted, nor will they apply, in any arbitration pursuant to this Agreement. The Parties also
agree that the following claims are not subject to arbitration:
(a) claims that cannot be subject to arbitration as a matter of law; (b) claims for workers’
compensation or unemployment compensation; and (c) claims under an Employee Benefit Plan that specifies a different procedure.
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(2) |
All claims subject to arbitration shall be settled by final and binding arbitration in accordance with the employment dispute resolution rules of the American
Arbitration Association (“
AAA
”) in effect at the time the demand for arbitration is made (“
Rules and Procedures
”), which are available online at https://www.adr.org/sites/default/files/Employment%20Rules.pdf. Accordingly, the Parties are not permitted to pursue court action regarding
claims that are subject to arbitration. Such arbitration shall be filed with the AAA and shall be heard before a single neutral arbitrator who is experienced in employment law, who shall be selected as provided in AAA’s Rules and
Procedures. The aggrieved Party must file the arbitration complaint with AAA and provide all other parties against whom or which a claim is brought written notice no later than the expiration of the statute of limitations that the law
prescribes for the claim. Otherwise, the claim shall be deemed waived. The arbitration complaint and written notice must identify and describe all claims, the facts upon which such claims are based, and the relief or remedy sought.
Any arbitration shall be heard in Vancouver, Washington; provided, however, if arbitration in Vancouver, Washington is impractical because Executive’s employment for Company is located more than 100 miles from Vancouver, Washington, the
arbitration may
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be held in the county and state where Executive last worked during Executive’s employment for Company.
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(3) |
Company shall be responsible for the arbitrator’s fees and expenses in excess of any reasonable filing fee with the AAA; provided, however, each party shall
pay its own costs and attorneys’ fees, if any. The arbitrator shall issue a written decision that contains the essential findings and conclusions on which the decision is based.
The arbitrator’s decision shall be final, binding and conclusive upon the Parties. Suit may be brought to compel arbitration or to enforce any arbitration award in a court of competent jurisdiction.
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(4) |
Neither this agreement to arbitrate nor any demand for arbitration shall waive or otherwise affect Company’s right to obtain any provisional remedy,
including, without limitation, injunctive relief for unfair competition, the use or unauthorized disclosure or misappropriation of trade secrets, the disclosure of any other Confidential Information or the violation of the
confidentiality or other provisions of Section 9 of this Agreement. This Agreement also does not prohibit Executive from filing an administrative charge or complaint with any governmental agency.
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14. |
Miscellaneous
.
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(a) |
Notices.
Any notice to be delivered under this
Agreement shall be given in writing and shall be deemed delivered three days after mailing by certified mail, postage prepaid, addressed to the Company’s Chair of the Board or to Executive at Executive’s last known address on the record
of the Company. Either party may designate an address for notices by written notice to the other.
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(b) |
Governing Law; Venue & Jurisdiction.
Executive acknowledges that Company maintains its headquarters in Vancouver, Washington. The Parties therefore agree that this Agreement shall be governed by and
construed in accordance with the laws of the State of Washington, without giving effect to the rules governing the conflicts of laws, and without the aid of any canon, custom, or rule of law requiring construction against the drafter,
and regardless of whether a party changes domicile or residence. Executive hereby waives the right to argue to the contrary. In the event such election is invalid, then the court shall apply the law of the state or states in which
Executive performs services for Company. Executive consents to the exercise of personal jurisdiction by a court of competent jurisdiction in the State of Washington and agrees that venue for any action not subject to arbitration
shall be in Clark County, Washington, and hereby waives the right to argue to the contrary.
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(c) |
Amendment/Waiver.
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(1) |
This Agreement may not be amended, released, discharged, abandoned, changed or modified in any manner, except by an instrument in writing signed by each of
the Parties hereto; provided, however, the Board may extend the Employment Term of this Agreement in writing without the signature of Executive as provided under Section 2.
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(2) |
The failure of any Party to enforce at any time any of the provisions of this Agreement shall in no way be construed to be a waiver of any such provision, nor
in any way to affect the validity of this Agreement or any part of it or the right of any Party to enforce each and every such provision. No waiver or any breach of this Agreement shall be held to be a waiver of any other or subsequent
breach.
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(d) |
Severability.
If any provision of this Agreement is
held by a court or arbitrator to be invalid or unenforceable, the remaining provisions shall continue to be fully effective. If any part of this Agreement is held to be unenforceable as written, it shall be enforced to the maximum
extent allowed by applicable law. The unenforceability of any provision in this Agreement in any jurisdiction shall not affect the enforceability of any provision of this Agreement in any other jurisdiction.
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(e) |
Entire Agreement.
This Agreement represents the entire
agreement between the Parties regarding the matters addressed in this Agreement and together with the Company’s Employment Policies governs the terms of Executive’s employment. Where there is a conflict between this Agreement and the
Company’s Employment Policies, the terms of this Agreement shall govern. This Agreement supersedes any other prior oral or written employment agreements between the Parties. This Agreement does not supersede any incentive compensation
agreement (including stock option or other equity incentive agreement agreements) and/or the Change in Control Agreement entered into separately by the parties to this Agreement.
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(f) |
Code Section 409A Compliance.
For purposes of this Agreement, a termination of employment will be determined consistent with the rules relating to a “separation from service” as defined in Section 409A of the
Code and the regulations thereunder (“Section 409A”). The Parties intend that this Agreement, to the extent possible, will be administered in accordance with Section 409A and the Treasury Regulations and other applicable regulatory
guidance issued thereunder, and will be interpreted in a manner so that no payments made to Executive under this Agreement constitute a deferral of compensation or, if so, will constitute a deferral for which the payment and other
terms are compliant with Section 409A so as to avoid imposition of any additional tax to Executive under Section 409A. Company makes no representation or warranty as to compliance with Section 409A and shall have no liability to the
Executive or any other person for any adverse consequences arising under Section 409A. Notwithstanding anything else provided herein, to the extent any payments provided under this Agreement in connection with Executive’s termination
of employment constitute deferred compensation subject to Section 409A, and Executive is deemed at the time of such termination of employment to be a “specified Executive” under Section 409A, then such payment shall not be made or
commence until the earlier of (i) the expiration of the 6-month period measured from Executive’s separation from service from Company or (ii) the date of Executive’s death following such a separation from service; provided, however,
that such deferral shall only be effected to the extent required to avoid adverse tax treatment to Executive including, without limitation, the additional tax for which Executive would otherwise be liable under Section 409A(a)(1)(B)
in the absence of such a deferral. The first payment thereof will include a catch-up payment covering the amount that would have otherwise been paid during the period between Executive’s termination of employment and the first
payment date but for the application of this provision, and the balance of the installments (if any) will be payable in accordance with their original schedule. Except as otherwise expressly provided herein, to the extent any
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expense reimbursement or the provision of any in-kind benefit under this
Agreement is determined to be subject to Section 409A of the Code, the amount of any such expenses eligible for reimbursement, or the provision of any in-kind benefit, in one calendar year shall not affect the expenses eligible for
reimbursement in any other taxable year (except for any lifetime or other aggregate limitation applicable to medical expenses), in no event shall any expenses be reimbursed after the last day of the calendar year following the
calendar year in which the Executive incurred such expenses, and in no event shall any right to reimbursement or the provision of any in-kind benefit be subject to liquidation or exchange for another benefit.
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(g) |
Assignment; Death; Binding Effect.
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(1) |
Executive shall not assign or transfer any of Executive’s rights under this Agreement, wholly or partially, to any other person or to delegate the performance
of the Executive’s duties under the terms of this Agreement.
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(2) |
Upon Executive’s death, no death benefit is payable under this Agreement other than benefits that were already in pay status at the date of death.
Executive’s rights under this Agreement with respect to any benefits earned before the date of death shall inure to Executive’s heirs, executors, administrators or personal representatives.
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(3) |
The rights and obligations of the Company under this Agreement shall inure to the benefit of and be binding in each and every respect upon the direct and
indirect successors and assigns of the Company, regardless of the manner in which the successors or assigns succeed to the interests or assets of the Company. This Agreement shall not be terminated by the voluntary or involuntary
dissolution of the Company, by any merger, consolidation or acquisition where the Company is not the surviving corporation, by any transfer of all or substantially all of the Company’s assets, or by any other change in the Company’s
structure or the manner in which the Company’s business or assets are held. Executive’s employment shall not be deemed terminated upon the occurrence of one of the foregoing events. In the event of any merger, consolidation or transfer
of assets, this Agreement shall be binding upon and shall inure to the benefit of the surviving entity or the entity to which the assets are transferred.
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(h) |
Survival
. If any benefits provided to Executive under
this Agreement are still owed, or claims under the Agreement are still pending at the time of the Termination Date, this Agreement shall continue in force with respect to those obligations or claims, until those benefits are paid in
full or those claims are resolved in full. The covenants in Section 8, Section 9, and Section 10, and the dispute resolution provisions in Section 13 of this Agreement shall survive the termination of this Agreement and shall be
enforceable regardless of any claim the Parties may have against one another; provided, however, Subsection 9(b) shall not survive this Agreement if Executive’s Termination Date occurs after the term of this Agreement, including any
extension, expires.
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(1) |
The Board has the authority to interpret and construe the provisions of this Agreement, including the attached Separation Agreement. However, with respect to
any decision of the Board regarding Executive’s benefits under this Agreement or the attached Separation Agreement (including eligibility for benefits, the calculation of benefits or the forfeiture of benefits), the burden of proof
shall be on the Board and that decision shall be:
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(A) | Subject to the duty of good faith and fair dealing; |
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(B) | Supported by a preponderance of the evidence; and |
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(C) |
Made by the affirmative vote of at least three fourths of the Board.
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(2) |
An arbitrator or a court reviewing such a decision by the Board shall make its own independent decision and not grant deference to the Board’s decision.
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(j) |
Actions by Banking Regulatory Authorities
.
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(1) |
If Executive is suspended and/or temporarily prohibited from participating in the conduct of the Company’s affairs by a notice served under Section 8(e)(3) or
(g)(1) of the Federal Deposit Insurance Act (the “
FDIA
”), 12 U.S.C. § 1818(e)(3) and (g)(1), the Company’s obligations under this Agreement shall
be suspended as of the date of service, unless stayed by appropriate proceedings. If the charges in the notice are dismissed, the Company may in its discretion:
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(A) |
Pay Executive all or part of the payments under this Agreement that were withheld while its obligations under this Agreement were suspended; and/or
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(B) |
Reinstate in whole or in part any of its obligations which were suspended.
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(2) |
If Executive is removed and/or permanently prohibited from participating in the conduct of the Company’s affairs by an order issued under Section 8(e)(4) or
(g)(1) of the FDIA, 12 U.S.C. § 1818(e)(4) and (g)(1), Executive shall be terminated for Cause as of the effective date of the order.
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(3) |
If the Company is in default (as defined in Section 3(x)(1) of the FDIA, 12 U.S.C. § 1813(x)(1)), all further obligations under this Agreement shall terminate
as of the date of default.
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(4) |
This Agreement may be terminated entirely or suspended for a period of time by the applicable banking regulatory authority, or as otherwise required by law,
if:
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(A) |
The Federal Deposit Insurance Corporation (“
FDIC
”) enters into an
agreement to provide assistance to or on behalf of the Company under the authority contained in Section 13(c) of the FDIA, 12 U.S.C. § 1823(c);
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(C) |
The applicable banking regulatory authority determines the Company is in an unsafe or unsound condition.
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(5) |
The Severance Benefit and the indemnification rights granted under Section 5(f) are subject to and conditioned upon their compliance with 12 U.S.C. § 1828(k)
and FDIC regulation 12 C.F.R. Part 359, “Golden Parachute and Indemnification Payments.”
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(k) |
Attorneys’ Fees and Costs.
In any dispute arising out of or relating to this Agreement, including in compelling arbitration, or enforcing or collecting an arbitration award, the prevailing party shall be entitled
to recover from the non-prevailing party its own reasonable attorneys’ fees, filing and services fees, witness fees, arbitrator’s fees, and any other reasonably incurred expenses and costs, to the extent not expressly prohibited by
applicable law.
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(l) |
Headings, Captions.
The headings and captions used in this Agreement are for convenience only and shall not affect the meaning or interpretation of the Agreement.
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(m) |
Counterparts.
For the convenience of the Parties, this Agreement may be executed by facsimile and in any number of counterparts, all of which when taken together shall constitute one and the same
Agreement.
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15. |
Advice of Counsel
.
Executive acknowledges that Executive has had adequate
time to consult legal counsel and financial advisors before signing this Agreement. Executive understands that Company makes no representations as to the tax consequences of any payments under this Agreement. Both Parties have
participated and had an equal opportunity to participate in the drafting of this Agreement. No ambiguity shall be construed against any Party upon a claim that such party drafted the ambiguous language.
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___________________________________________________
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_______________
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Date:_______________________________________________
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RIVERVIEW COMMUNITY BANK
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RIVERVIEW BANCORP, INC. |
By: ________________________________________________ | By: ________________________________________________ | |
Title: _______________________________________________
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Title: _______________________________________________ | |
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Date:_______________________________________________ |
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Date:_______________________________________________ |
1. |
Termination of Employment.
Your employment terminates
(or was terminated) on
____________
, 20
____
(the “
Separation Date
”).
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2. |
Payments.
In exchange for your agreeing to the release
of claims and other terms in this Separation Agreement, we will pay you the Severance Benefit specified in Section 7 of the Employment Agreement between you and Riverview dated
____________
(the “
Employment Agreement
”), which is incorporated herein by reference. You acknowledge that we
are not obligated to make these payments to you unless you enter this Separation Agreement, comply with the Restrictive Covenants in Section 9 of the Employment Agreement, and otherwise comply and continue to comply with the material
terms of the Employment Agreement and of this Separation Agreement.
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3. |
COBRA Continuation Coverage.
Your normal employee
participation in Riverview’s group health coverage will terminate on the Separation Date or, if provided under the group health plan, the last day of the month in which the Separation Date occurs. Continuation of group health coverage
thereafter will be made available to you and your dependents pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985 or any applicable state health insurance continuation law (collectively, “
COBRA
”). You understand and agree that your right to benefits under Riverview’s health and welfare benefit program, if any, shall be limited to those set forth under COBRA
and continuation of group health coverage after the Separation Date is entirely at your expense, as provided under COBRA, unless Section 7 of the Employment Agreement provides otherwise.
|
4. |
Full Payment and Entitlement to Leave.
You acknowledge
having received full payment of all compensation of any kind (including but not limited to wages, salary, bonuses, paid time off, sick leave, reimbursable expenses, and incentive compensation) that you earned as a result of your
employment by us and that was owing to you as of the Separation Date. Any and all agreements to pay you bonuses or other incentive compensation are terminated. You understand and agree that you have no right to receive any further
payments for bonuses or other incentive compensation, except the payments as described in Section 2 of this Agreement (above). You also acknowledge you have taken and have not been deprived of any leave to which you were legally
entitled prior to the Separation date.
|
5. |
Release of Claims.
|
|
(a) |
You hereby release:
|
|
(1) |
Riverview and its parent companies, divisions, subsidiaries, and affiliates, and each of their benefit plans (each, including Riverview, a “
Riverview Affiliate
”);
|
|
(3) |
The predecessors, successors, transferees and assigns of each of such persons and entities, from any and all claims of any kind, known or unknown, that arose
on or before the date you signed this Separation Agreement.
|
|
(b) |
The claims you are releasing include, without limitation, wrongful termination, constructive discharge, breach of contract, violations arising under federal,
state or local laws or ordinances prohibiting discrimination or harassment on the basis of age, race, color, national origin, religion, sex, gender, disability, marital status, sexual orientation or any other protected status, failure
to accommodate a disability or religious practice, violation of public policy, retaliation, failure to hire, wage and hour violations, including overtime claims, tortious interference with contract or expectancy, fraud or negligent
misrepresentation, breach of privacy, defamation, intentional or negligent infliction of emotional distress, unfair labor practices, breach of a right to stock or stock options or other equity interests, attorneys’ fees or costs, and
any other claims that are based on any legal obligations that arise out of or are related to your Employment Agreement and your employment relationship with us.
|
|
(c) |
You specifically waive any rights or claims that you may have under Title 49 of the Revised Code of Washington, the Civil Rights Act of 1964 (including
Title VII of that Act), the Civil Rights Act of 1991, the Rehabiliation Act of 1973, the Age Discrimination in Employment Act of 1967 (ADEA), the Older Workers Benefit Protection Act (OWBPA), the Americans with Disabilities Act of 1990
(ADA), the Equal Pay Act of 1963 (EPA), the Genetic Information Nondiscrimination Act of 2008 (GINA), the Fair Labor Standards Act of 1938 (FLSA), the Family and Medical Leave Act of 1993 (FMLA), the Occupational Safety and Health Act
(OSHA), the Sarbanes-Oxley Act of 2002, the Fair Credit Reporting Act (FCRA), the Uniformed Services Employment and Reemployment Rights Act of 1994, the Worker Adjustment and Retraining Notification Act (WARN), the Employee Retirement
Income Security Act of 1974 (ERISA), the National Labor Relations Act (NLRA), the Washington Law Against Discrimination (WLAD), the Washington Industrial Welfare Act, the Washington Family Leave Act, the Washington Minimum Wage Act, the
Washington Wage Payment Act, the Washington Rebate Act and all similar federal, state and local laws.
The aforementioned claims are
examples, not a complete list, of the released claims. It is the Parties’ intent that you release any and all claims arising from or related to your employment, your contract of employment, and separation of employment, of whatever
kind or nature, known or unknown, to the greatest degree allowed by law, against us, which arose or occurred on or before the date you sign this Separation Agreement
.
|
|
(d) |
You agree not to seek any personal recovery (of money damages, injunctive relief or otherwise) for the claims you are releasing in this Separation Agreement,
either through any complaint to any governmental agency or otherwise, whether individually or through a class action. You agree never to start or participate as a plaintiff in any lawsuit or arbitration asserting any of the claims you
are releasing in this Separation Agreement. You represent and warrant that you have not initiated any complaint, charge, lawsuit or arbitration involving any of the claims you are releasing in this Separation Agreement.
|
|
(f) |
You represent and warrant that you have all necessary authority to enter into this Separation Agreement (including, if you are married, on behalf of your
marital community) and that you have not transferred any interest in any claims to your spouse or to any third party.
|
|
(g) |
This Separation Agreement does not affect your rights arising under any of Riverview’s benefit plans through the Separation Date or afterwards under the terms
of those plans to receive pension plan benefits, medical plan benefits, unemployment compensation benefits or workers’ compensation benefits.
|
|
(h) |
This Separation Agreement also does not affect your rights under agreements, bylaw provisions, insurance or otherwise, to be indemnified, defended or held
harmless in connection with claims that may be asserted against you by third parties.
|
|
(i) |
This Separation Agreement also does not affect your rights to file a charge or complaint with or participate in an investigation by the Equal Employment
Opportunity Commission or other government agency. But, you give up any right to recover or receive any personal relief or benefit from any such charge, complaint, or investigation, or from any lawsuit or administrative action filed by
any government agency which is the result of any such charge, complaint, or participation by you. Personal relief or benefit includes attorneys’ fees, monetary damages, and reinstatement. Nothing in this Agreement is intended to
prevent you from reporting potential violations of the law, cooperating or participating in any investigation by the Equal Employment Opportunity Commission, SEC, or other government agency concerning any Riverview Affiliate, or from
testifying truthfully in any legal proceeding resulting from any government agency’s enforcement actions.
|
|
(j) |
You understand that you are releasing potentially unknown claims, and that you have limited knowledge with respect to some of the claims being released. You
acknowledge that there is a risk that, after signing this Separation Agreement, you may learn information that might have affected your decision to enter into this Separation Agreement. You assume this risk and all other risks of any
mistake in entering into this Separation Agreement.
|
|
(k) |
You agree that this release is fairly and knowingly made.
|
6. |
No Admission of Liability.
Neither this Separation
Agreement nor the payments made under this Separation Agreement are an admission of liability or wrongdoing by any Riverview Affiliate.
|
7. |
Riverview Materials.
You represent and warrant that
you have, or no later than the Separation Date will have, returned all keys, credit cards, documents, Confidential Information (as defined in Section 9 of the Employment Agreement), and other materials that belong to us, and disclosed
all computer user identifications and passwords used by you in the course of your employment or necessary for accessing information on our computer system, in accordance with Section 12 of the Employment Agreement, which is incorporated
herein by reference.
|
8. |
Nondisclosure.
You will comply with the covenant
regarding confidential information in Section 9(a) of the Employment Agreement, which covenant is incorporated herein by reference. You also agree to keep the terms of this Separation Agreement in strict confidence and not to disclose
the same to any other person or entity except as may be required by law. Except for litigation arising out of the breach of or attempt to enforce this Separation Agreement, this Separation Agreement shall not be admissible as evidence
in any legal proceeding.
|
9. |
Non-Disparagement and Non-Incitement.
You agree not to
make, publish, or communicate (or causing others to make, publish, or communicate) any public or private disparaging statements concerning any Riverview Affiliate or their current or former officers, directors, members, shareholders,
employees, agents, customers, suppliers, or investors, including without limitation statements made to employees of any Riverview Affiliate or statements made on internet blogs, social media sites, and review sites; provided, however,
that nothing in this Separation Agreement shall preclude you from making truthful statements that are required by applicable law, regulation, or legal process. You may not disparage any Riverview Affiliate or its business or products,
and may not encourage any third parties to sue a Riverview Affiliate.
|
10. |
Cooperation Regarding Other Claims.
If any claim is
asserted by or against a Riverview Affiliate as to which you have relevant knowledge, you will reasonably cooperate with us in the prosecution or defense of that claim, including by providing truthful information and testimony as
reasonably requested by us.
|
11. |
Noncompetition; Nonsolicitation; No Interference.
You
will comply with Section 9(b), 9(c) and 9(d) of the Employment Agreement, incorporated herein by reference, and Riverview will have the right to enforce those provisions under the terms of Section 9(e) of the Employment Agreement,
incorporated herein by reference. Following the expiration of the covenants referenced in the preceding sentence, you will not, apart from good faith competition, interfere with any Riverview Affiliate’s relationships with customers,
employees, vendors, or others.
|
12. |
Liquidated Damages.
Any breach by you of provisions
set out in Sections 7 through 11 above shall be a material breach of this Separation Agreement for which we agree that Riverview or one of its affiliates would suffer irreparable harm and damage to its reputation, and for which
liquidated damages in the amount of the Severance Benefit specified in Section 7 of the Employment Agreement or actual damages, whichever is greater, shall be assessed. The foregoing shall not be interpreted to preclude any additional
remedy available to Riverview at law or in equity, including but not limited to injunctive relief.
|
13. |
Independent Legal Counsel.
You are advised and
encouraged to consult with an attorney before signing this Separation Agreement. You acknowledge that you have had an adequate opportunity to do so.
|
14. |
Consideration Period.
You have 21 days from the date
this Separation Agreement is given to you to consider this Separation Agreement before signing it. You may use as much or as little of this 21-day period as you wish before signing. If you do not sign and return this Separation
Agreement within this 21-day period, you will not be eligible to receive the benefits described in this Separation Agreement.
|
15. |
Revocation Period and Effective Date.
You have 7
calendar days after signing this Separation Agreement to revoke it. To revoke this Separation Agreement after signing it, you must deliver a written notice of revocation to Riverview’s Chief Executive Officer or the Chairman of the
Board before the 7-day period expires. This Separation Agreement shall not become effective until the
|
|
8th calendar day after you sign it (the “
Effective Date
”). If
you revoke this Separation Agreement, it will not become effective or enforceable, and you will not be entitled to the benefits described in this Separation Agreement.
|
16. |
Knowing and Voluntary Waivers under the ADEA.
You
acknowledges that you understand this is a full release of all existing claims whether currently known or unknown including, but not limited to, claims for age discrimination under the Age Discrimination in Employment Act. You agree
and acknowledges that you have read and understood this Separation Agreement, and that you have consulted with an attorney regarding the meaning and application of this Separation Agreement, or, if you have not consulted with an
attorney, you have been advised to do so and have had ample opportunity to do so. You enter into this Separation Agreement knowingly, voluntarily, free from duress, and as a result of your own free will and with the intention to waive,
settle, and release all claims you have or may have against each Riverview Affiliate.
|
17. |
Governing Law.
This Separation Agreement is governed
by the laws of the State of Washington that apply to contracts executed and to be performed entirely within the State of Washington.
|
18. |
Dispute Resolution.
Any dispute arising under this
Agreement shall be subject to arbitration in accordance with Section 13 of the Employment Agreement, which Sections are specifically incorporated by reference, in their entirety, in this Agreement.
|
19. |
Saving Provision.
If any part of this Separation
Agreement is held to be unenforceable, it shall not affect any other part, except if the release in Section 5 is determined to be invalid or unenforceable, this Separation Agreement shall be voidable by Riverview for a period of sixty
(60) days following receipt of written notice of the invalidity or unenforceability.
|
20. |
Final and Complete Agreement.
Except for the
Employment Agreement and/or the Change in Control Agreement, which are expressly incorporated herein by reference, this Separation Agreement is the final and complete expression of all agreements between us on all subjects related to
your employment or its termination and supersedes and replaces all prior discussions, representations, agreements, policies and practices. You acknowledge you are not signing this Separation Agreement relying on anything not set out
herein.
|
21. |
Miscellaneous.
This Separation Agreement may be signed
in counterparts, both of which shall be deemed an original, but both of which, taken together shall constitute the same instrument. A signature made on a faxed or electronically mailed copy of the Separation Agreement or a signature
transmitted by facsimile or electronic shall have the same effect as the original signature. The Section headings used in this Separation Agreement are intended solely for convenience of reference and shall not in any manner amplify,
limit, modify or otherwise be used in the interpretation of any of the provisions hereof. This Separation Agreement was the result of the negotiations between the parties. In the event of vagueness, ambiguity or uncertainty, the
Separation Agreement shall not be construed against the party preparing it, but shall be construed as if both parties prepared it jointly. If you or Riverview fails to enforce this Separation Agreement or to insist on performance of
any term, that failure does not mean a waiver of that term or of the Separation Agreement. This Separation Agreement remains in full force and effect anyway.
|
|
(a) |
Term.
The term of this Agreement begins on the
Effective Date and shall continue until the one (1) year anniversary thereof, unless Executive’s employment is terminated earlier (the “
Term
”).
|
|
(b) |
Extensions.
At any time during the Term of this
Agreement, the Company’s Board of Directors (the “
Board
”) may elect in writing to extend the Term of this Agreement on the same terms and
conditions for one (1) additional year beyond the current Term. This Agreement may be extended in writing any number of times in the same manner.
|
|
(c) |
At-Will Employment
. Notwithstanding the Term of this
Agreement or anything else contained herein, the Bank employs Executive on an “at will” basis, which means the Company may terminate Executive’s employment at any time for any lawful reason or for no reason at all, subject to the
provisions of this Agreement.
|
2. |
Definitions
.
|
|
(a) |
“
Cause
.”
|
|
(1) |
Definition.
Cause for termination
of employment means the occurrence of any one or more of the following:
|
|
(A) |
Conviction of any felony, a misdemeanor involving moral turpitude, or of any crime in connection with Executive’s duties;
|
|
(B) |
Removal of Executive from office or permanent prohibition of Executive from participating in the conduct of the Company’s affairs by an order issued by a bank
regulatory authority;
|
|
(C) |
Conduct involving dishonesty, embezzlement, misappropriation, fraud, or a material breach of a fiduciary duty in the performance of Executive’s duties;
|
|
(E) |
Conduct significantly harmful to the Company, including but not limited to public disparagement of the Company or any affiliate of the Company, intentional or
reckless violation of law or of any significant policy or procedure of the Company;
|
|
(F) |
Willful misfeasance, gross negligence, or refusal or failure to act in accordance with any lawful stipulation, requirement or directive of the Board or the
Company’s Chief Executive Officer (the “
CEO
”);
|
|
(G) |
Material breach of any material obligations under this Agreement or any other written policies or rules of the Company;
|
|
(H) |
Sexual harassment, as defined by the Company’s internal written policies;
|
|
(I) |
Willful unauthorized disclosure of trade secrets and Confidential Information (as defined below in Section 5); or
|
|
(J) |
Chronic drug or alcohol abuse to an extent that materially impairs Executive’s performance of Executive’s duties.
|
|
(2) |
Procedure for Termination for Cause.
Termination for Cause will be automatic upon the occurrence of an incident under Subsections (2)(a)(1)(A) or (B) above. Otherwise,
the Board may not terminate Executive’s employment for Cause unless:
|
|
(A) |
With respect to incidents under Subsections (2)(a)(1)(C), (D), (E), (F), (G), (H), (I), or (J):
|
|
(i) |
Executive is given reasonable written notice (in no event less than five (5) business days’ notice) of the Board meeting called to make that determination;
and
|
|
(ii) |
Executive and Executive’s legal counsel are given the opportunity to address the incident(s) at that meeting.
|
|
(B) |
In addition, with respect to incidents under Subsections 2(a)(1)(F) or (G) only, Executive is first given:
|
|
(i) |
Written notice by the Board or CEO specifying in detail the performance issues; and
|
|
(ii) |
A reasonable opportunity to cure the issues specified in the notice; provided, however, if Company reasonably expects irreparable injury from a delay in
termination, Company may terminate Executive without an opportunity to cure.
|
|
(iii) |
If an opportunity to cure is provided, Company’s Board shall also determine, in its sole discretion, whether Executive has in fact cured
|
|
|
the cause and done so in a timely manner.
|
|
(b) |
“
Good Reason
."
|
|
(1) |
Definition.
Subject to Subsection
(2) below, Good Reason for Executive’s resignation means any one or more of the following occurring without Executive’s consent:
|
|
(A) |
A material reduction of Executive’s base salary as in effect immediately prior to the Change in Control (as defined in Subsection 2(c) below);
|
|
(B) |
A relocation or transfer of Executive’s principal place of employment that would require Executive to commute on a regular basis more than twenty-five (25)
miles each way from the main business office of the Company as of the Effective Date of this Agreement or outside the State of Washington;
|
|
(C) |
A change in Executive’s position of employment such that Executive’s authority, duties or responsibilities are materially changed; or
|
|
(D) |
Any other action or inaction that constitutes a material breach of this Agreement by Company.
|
|
(2) |
Procedure for Resignation for Good Cause
.
To resign for “Good Reason,” Executive must give the Company:
|
|
(A) |
Written notice of the intended resignation and a detailed description of the Good Reason not more than thirty (30) days after Executive becomes aware of the
initial existence of the Good Reason; and
|
|
(B) |
A reasonable opportunity of at least thirty (30) days in which to cure those circumstances.
|
|
(C) |
Good Reason shall not exist if Executive (a) fails to provide such notice within
the thirty (30) day notice period, or (b) the Company cures the specified condition within the thirty (30) day cure period.
|
|
(c) |
“
Change in Control
”
means the occurrence of any of the following:
|
|
(1) |
Bank or Bancorp merges or consolidates with another entity and, as a result, less than 51% of the combined voting power of the resulting entity immediately
after the merger or consolidation is held by persons who were the holders of Bank or Bancorp’s voting securities immediately before the merger or consolidation. A Change of Control will be deemed to occur on the date the applicable
transaction closes;
|
|
(2) |
Any person, entity, or group of persons or entities, other than through merger or consolidation, acquires a majority of the Bank or Bancorp’s outstanding
common stock or substantially all of the Bank’s or Bancorp’s assets; provided, that, a Change in Control shall not occur if any person, entity, or group already owns more than a majority of the Bank or Bancorp’s outstanding common stock
and acquires additional stock. A Change of Control will be deemed to occur on the date that any person, entity, or group first becomes the majority owner of the Bank or Bancorp’s
|
|
(3) |
A majority of the members of the Board are replaced during any twelve-month period by directors whose appointment or election is not endorsed by a majority of
the Board before the date of appointment or election. A Change in Control will be deemed to occur on the date members of the incumbent board first cease to constitute at least a majority of the Board; or
|
|
(4) |
Approval by Bancorp’s or the Bank’s shareholders of the Bank’s complete liquidation, dissolution or sale to another entity. A Change of Control will be
deemed to occur on the date the applicable transaction closes.
|
3 . |
Change in Control Benefits
.
|
|
(a) |
Benefit Entitlement and Amount.
|
|
(1) |
Double Trigger.
Subject to the limitations under
Subsection 3(a)(2) below, if Executive’s employment with the Bank is: (i) terminated by the Company without Cause or is terminated by Executive with Good Reason; and (ii) the Executive’s employment termination takes place within the
time period of six (6) months prior to a Change in Control and twenty-four (24) months after a Change in Control (the “
Change in Control Window
”),
the Company shall pay Executive a severance benefit (the “
Change in Control Benefit
”) equal to:
|
|
(A) |
_______________ years of Executive’s annual base salary (based on the higher of Executive’s base salary as of the Change in Control or as of the date of
termination of employment);
|
|
(B) |
________________ years of Executive’s target annual incentive compensation (based on the higher of the Executive’s target annual incentive compensation for
the year in which the Change in Control occurs or as of the date of the termination of employment);
|
|
(C) |
Any unpaid incentive compensation earned from the Company’s Annual Incentive Plan and/or any successor incentive compensation plans (“
Incentive Compensation
”) based upon the fiscal year that ended immediately before the date of the termination;
|
|
(D) |
Prorated Incentive Compensation for the fiscal year in which the termination occurs based on the Executive’s target annual Incentive Compensation through the
month ended before the date of termination; and
|
|
(E) |
If Executive timely and properly elects health continuation coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985 or any applicable state
health insurance continuation law (“
COBRA
”), the Company shall directly pay or reimburse Executive for the monthly COBRA premium paid by
Executive for Executive and Executive’s dependents. Executive shall be eligible to receive such reimbursement until the earliest of: (i) the eighteen (18) month anniversary of the date Executive’s employment is terminated; (ii) the
date the Executive is no longer eligible to receive COBRA continuation coverage; or (iii) the date on which Executive becomes eligible to receive substantially similar coverage
|
|
|
from another employer or other source. Notwithstanding the foregoing, if the Company’s payments under this Section 3(a)(1)(E) would violate the
nondiscrimination rules applicable to non-grandfathered plans under the Affordable Care Act (the “
ACA
”), or result in the imposition of penalties
under the ACA and the related regulations and guidance promulgated thereunder, the Parties agree to reform this Section 3(a)(1)(E) in a manner as is necessary to comply with the ACA.
|
|
(2) |
Code Section 280G
.
|
|
(A) |
Reduction.
Notwithstanding any
other provision of this Agreement or any other plan, arrangement or agreement to the contrary, if any of the payments or benefits provided or to be provided by the Company or its affiliates to the Executive or for the Executive's
benefit pursuant to the terms of this Agreement or otherwise ("
Covered Payments
") constitute parachute payments ("
Parachute Payments
") within the meaning of Section 280G of Internal Revenue Code of 1986, as amended (the “
Code
”), but for this Subsection 3(a)(2), be subject to the excise tax imposed under Section 4999 of the Code (or any successor provision thereto) or any similar tax imposed by state or local law or any
interest or penalties with respect to such taxes (collectively, the "
Excise Tax
"), then the Covered Payments shall be reduced to the minimum
extent necessary to ensure that no portion of the Covered Payments is subject to the Excise Tax.
|
|
(B) |
Order of Reduction.
Any such
reduction shall be made in accordance with Section 409A of the Code and the following:
|
|
(i) |
The Covered Payments which do not constitute nonqualified deferred compensation subject to Section 409A of the Code shall be reduced first; and
|
|
(ii) |
All other Covered Payments shall then be reduced as follows: (i) cash payments shall be reduced before non-cash payments; and (ii) payments to be made on a
later payment date shall be reduced before payments to be made on an earlier payment date.
|
|
(C) |
Determinations.
Any determination
required under this Subsection, including whether any payments or benefits are Parachute Payments, shall be made by the Company in its sole discretion. The Executive shall provide the Company with such information and documents as the
Company may reasonably request in order to make a determination under this Subsection. The Company's determination shall be final and binding on the Executive.
|
|
(3) |
The Change in Control Benefit shall be subject to any withholding and payroll deduction requirements.
|
|
(b) | Payment of Benefit. |
|
(1) |
Payment Timing.
Subject to Subsection 3(b)(2) below,
the Change in Control Benefit under Subsection 3(a)(1)(A), (B), (C), and (D) will be paid in a lump sum within thirty (30) days of termination of Executive’s employment during the Change in Control Window or, if later, within seven (7)
days after the expiration of the Separation Agreement’s revocation period as described in Section 4(a) below. If the combined consideration and revocation periods (as defined in Sections 14 and 15 of the Separation Agreement) overlap
two calendar years, the payment will be made in the later of the two years (irrespective of the year in which the Separation Agreement is effective and irrevocable) resulting in taxation to Executive in the second calendar year. The
COBRA benefit will be paid as described under Subsection 3(a)(1)(E).
|
|
(2) |
Section 409A Compliance.
If the Change in Control
Benefit is subject to § 409A of the Code and Executive is deemed to be a “specified employee” within the meaning of Code Section 409A(a)(2)(B)(i), the lump-sum payment will not be made until the seventh month following termination of
employment.
|
4. |
Limitations on Change in Control Benefits
.
|
|
(a) |
Release of Claims.
Executive’s receipt of the Change
in Control Benefit and the additional benefits under Section 3 is conditioned on Executive having executed a separation agreement in substantially the form attached hereto as Exhibit A (the “
Separation Agreement
”) and the revocation period having expired without revocation. Executive must execute the Separation Agreement and the revocation period must expire within sixty
(60) days of the date of Executive’s termination of employment with Company.
|
|
(b) |
Compliance with Material Terms.
Receipt of the Change
in Control Benefit is further conditioned on Executive not being in violation of any material term of this Agreement, including without limitation the restricted covenants in Section 5, or in violation of any material term of the
Separation Agreement.
|
|
(c) |
Regulatory Limitation.
Notwithstanding the foregoing,
the Company shall make no payment of any benefit provided for under this Agreement to the extent that the payment would be prohibited by applicable banking regulations or any regulatory order. If such payment is so prohibited, the
Company shall use its best efforts to secure the consent of the banking regulator to make the payments in the highest amount permissible, up to the amount provided for in this Agreement.
|
5. |
Restrictive Covenants
.
|
|
(a) |
Confidential Information.
|
|
(1) |
Executive’s Obligations
.
For an indefinite period, Executive shall protect and preserve as confidential all of Company’s Confidential Information (defined below in Subsection 5(a)(2)) at any time known to
Executive or in Executive’s possession or control with not less than the diligence, care and effort which a prudent owner would use to protect his or her own most sensitive information. Executive shall neither disclose to third
parties, use, nor allow others to use any Confidential Information for any purpose other than for the sole benefit of Company and as specifically approved in writing in advance by Company’s Board in each instance.
|
|
|
Executive acknowledges and agrees that the covenants contained in this
Subsection 5(a) shall supplement, rather than replace or contradict, any other rights or remedies that Company may have under applicable law. If a dispute arises, Executive has the burden to show that information is not Company’s
Confidential Information. If anyone tries to compel Executive to disclose any of Company’s Confidential Information by subpoena or otherwise, Executive will promptly notify the Board or the CEO so that Company may take any actions
it deems necessary to protect its interests.
|
|
(2) |
Definition of Confidential Information.
“Confidential
Information” means information which (a) derive independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from
its disclosure or use; and (b) are the subject of efforts that are reasonable under the circumstances to maintain their secrecy. Confidential Information also includes proprietary or secret information belonging to Company that was
disclosed to or known by Executive as a consequence of Executive’s employment with Company and not otherwise publicly known, whether or not received prior to the Effective Date, whether or not marked confidential or labeled as
Confidential Information, and whether or not considered a trade secret under applicable law. Confidential Information may consist of verbal, written, or electronically stored information, and may be tangible or merely remembered.
|
|
(A) |
Examples of Confidential Information.
Company provides the following list of Confidential Information by way of example, but this list is not intended to be exhaustive: inventions; technical
information; algorithms, designs, concepts, systems, techniques, methods, models, procedures, or processes; know-how or methodologies; manuals, contracts, or reports; purchasing or accounting information; regulatory information and
communications related thereto; financial history or projections; legal affairs; formulae; compositions; software or computer programs; research projects; business modes and information; the identity of all vendors, vendor lists, and
vendor contact information; the identity of customers, customer lists, and customer contact information; pricing data; financial data; sources of supply; marketing plans and/or strategies, including price strategies, marketing, sales,
technology, research and development, production, or merchandising systems or plans; and information pertaining to any aspect of any activity or business of Company or its vendors, suppliers, distributors or customers, including
information entrusted to Company by third parties (including vendors, customers and prospective vendors or customers), or any trade secrets, proprietary or confidential matter of Company or of such third parties.
|
|
(B) |
Excluded Confidential Information
.
Confidential Information does not include information that Executive can
prove (a) was known by or in the possession of Executive prior to employment with Company through means other than as a result of past relationships or business dealings between Executive and Company or its vendors, suppliers or
customers; (b) consists in whole or in part of any Prior Intellectual Property (defined below in Section 6); or (c) is known to or readily discoverable by others not under an obligation of confidentiality.
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(C) |
DTSA Disclosure.
Pursuant to the Defend Trade Secrets
Act of 2016, Executive will not have criminal or civil liability under any federal or state trade secret law for the disclosure of a trade secret that (A) is made (i) in confidence to a federal, state, or local government official,
either directly or indirectly, or to an attorney and (ii) solely for the purpose of reporting or investigating a suspected violation of law; or (B) is made in a complaint or other document filed in a lawsuit or other proceeding, if such
filing is made under seal. In addition, if Executive files a lawsuit for retaliation against the Company for reporting a suspected violation of law, Executive may disclose the trade secret to Executive’s attorney and may use the trade
secret information in the court proceeding, if Executive files any document containing the trade secret under seal and does not disclose the trade secret, except pursuant to court order.
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(b) |
Nonsolicitation.
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(1) |
During employment and for a one-year period following termination of Executive’s employment for any reason whatsoever, Executive will not, directly or
indirectly,
solicit, call on, induce or encourage Customers or Business Partners (defined below) to terminate or limit their relationship with Company or to
send their business elsewhere
or assist any person, group or entity in doing so or attempting to do so.
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(2) |
“
Customers
” are:
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(A) |
All customers serviced by the Company or any of the Company’s affiliates at any time within 12 months before the date of termination of Executive’s
employment;
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(B) |
All customers and potential customers whom the Company or the Company’s affiliates, with the knowledge or participation of Executive, actively solicited at
any time during the 12 months before the termination of Executive’s employment; and
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(C) |
All successors, owners, directors, partners and management personnel of the Customers described in Subsection (A) or (B) above.
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(3) |
“
Business Partners
” are suppliers, vendors, investors, financial
institutions, and other persons and entities with whom Company currently conducts or has conducted business during the 12 months prior to Executive’s termination of employment.
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(c) |
Nonraiding of Employees.
|
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(1) |
Executive recognizes that the workforce of the Company and its affiliates are a vital part of the Company’s business. Therefore, Executive agrees that, for
12 months following termination of Executive’s employment for any reason whatsoever, Executive will not directly or indirectly recruit or solicit any Company Employee to: (i) breach or modify any provision of such employee’s employment
agreement with Company; (ii) reduce or change the quality or quantity or availability of such employee’s services to Company; or (iii) terminate such employee’s employment with Company or any Company Party. Executive also agrees not to
disclose or identify any Company employee as a potential candidate to a third party;
however, this does not restrict general solicitations, such as
help-wanted ads or job postings,
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so long as those solicitations are not specifically directed to individuals who
are known to be currently employed by Company. For purposes of this Subsection, “
Company Employees
” means all employees working for the Company as of the date of Executive’s termination from Company.
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(d) |
Injunctive Relief.
Executive acknowledges that it is
impossible to measure in money the damages that the Company will incur if Executive fails to observe the covenants in this Section 5 (the “Restrictive Covenants”) and, therefore, the Executive agrees that:
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(1) |
The Company shall be entitled to an injunction, restraining order or such other equitable relief (without the requirement to post bond) restraining Executive
from committing any breach or threatened breach of the Restrictive Covenants;
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(2) |
If the Company is required to post a bond in order to secure an injunction or other equitable remedy, that bond shall be no more than a nominal amount;
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(3) |
Executive waives any claim or defense that an adequate remedy at law is available to the Company; and
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(4) |
These injunctive remedies are cumulative and are in addition to any other rights and remedies the Company may have at law or in equity.
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(e) |
Reasonableness
. The parties agree that:
|
|
(1) |
This Agreement in its entirety, and in particular the Restrictive Covenants, is reasonable both as to time and scope;
|
|
(2) |
The Restrictive Covenants are necessary for the protection of the Company’s business and goodwill;
|
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(3) |
The Restrictive Covenants are not any greater than are reasonably necessary to secure the Company’s business and goodwill;
|
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(4) |
The degree of injury to the public due to the loss of the service and skill of Executive or the restrictions placed upon Executive’s opportunity to make a
living with Executive’s skills upon enforcement of those covenants, does not and will not warrant non-enforcement of those restraints; and
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(5) |
If the scope of the Restrictive Covenants is adjudged too broad to be capable of enforcement, then the parties authorize that court or arbitrator to narrow
the Restrictive Covenants so as to make them capable of enforcement, given all relevant circumstances, and to enforce them to the fullest extent allowed.
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(f) |
Survival.
This Section shall survive the termination
of this Agreement.
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6. |
Protection of Intellectual
Property
.
|
|
(a) |
Company’s Ownership.
Company owns all Inventions and Works (as defined below in Subsection 6(b)) that Executive makes, conceives, develops, discovers, reduces to practice or fixes in a tangible medium of
expression, alone or with others, either (a) during Executive’s employment by Company (including past and future employment, and whether or not during working hours), or (b) within one (1) year after the
termination of
Executive’s employment
in each case, if the Invention or Works results from any work Executive
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performed for Company or involves the use or assistance of Company’s
facilities, equipment, materials, personnel or Confidential Information. If Executive has any pre-existing Invention or Work
that Executive
requests to exclude from Company ownership
(“
Prior
Intellectual Property
”), Executive shall make full written disclosure to Company by submitting an attachment to this Agreement listing the
Prior Intellectual Property (the “
Prior Intellectual Property Disclosure
”). If Executive does not attach a Prior Intellectual Property Disclosure to this Agreement, Executive represents and warrants that Executive owns no Prior Intellectual Property that Executive requests to exclude
from Company ownership.
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(b) |
Definitions of Invention and Works.
“Inventions” means discoveries, developments, concepts, ideas, improvements to existing technology, processes, procedures, machines, products, compositions of
matter, trade secrets, formulas, algorithms, computer programs and techniques, custom software, and all other matters ordinarily intended by the word “invention,” whether or not patentable or copyrightable. “Inventions” also includes
all records and expressions of those matters. “Works” means original works of authorship, including interim work product, modifications and derivative works, and all similar matters, whether or not copyrightable.
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(c) |
Disclosure and Assignment.
Executive will promptly
disclose to Company, will hold in trust for Company’s sole benefit, will assign to Company, and hereby does assign to Company all Inventions and Works described in Subsections 6(a) and 6(b), including all copyrights, patent rights, and
trade secret rights, vested and contingent, except those pre-existing Inventions identified on the Prior Intellectual Property Disclosure. To the extent that such Inventions and Works may be considered “works made for hire” under the
copyright act, they are hereby agreed to be works made for hire; otherwise, Executive hereby irrevocably assigns and conveys all such rights, title and interest to Company, subject to no liens, claims or reserved rights. Executive will
waive and hereby does waive any moral rights Executive has or may have in the Inventions and Works described in Subsections
6(a) and
6(b). Executive further agrees that if the foregoing waiver is not effective, Executive agrees not to assert any such moral rights. To the extent that Executive cannot assign the rights contemplated in Subsections 6(a) and 6(b),
including moral rights, Executive hereby grants to Company a fully-paid, royalty free, worldwide, perpetual, exclusive license to use, create and own derivative works of and otherwise exploit such rights. At Company’s direction and
expense, Executive will execute all documents and take all actions necessary or convenient for Company to document, obtain, maintain or assign its rights to these Inventions and Works. Company shall have full control over all
applications for patents or other legal protection of these Inventions and Works.
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(d) |
Disclaimer Regarding Inventions Developed Entirely on
Executive’s Own Time.
Pursuant to RCW 49.44.140(3), Subsection 6(c) of this Agreement regarding the assignment of certain inventions to Company does not apply to an Invention for which no equipment, supplies, facilities, or
trade secret information of Company was used and which was developed entirely on Executive's own time, unless (a) the Invention relates (i) directly to Company’s business, or (ii) to Company’s actual or demonstrably anticipated research
or development, or (b) the Invention results from any work performed by Executive for Company.
|
7. |
Return of Company Property
.
Executive will safeguard and return to Company when
Executive’s employment ends, or sooner if Company requests, all documents and property in Executive’s care, custody or control relating to Executive’s employment or Company’s business and customers (including but not limited to
Confidential Information (defined above), keys, pass cards, identification cards ), or any reproductions thereof, whether such information is reduced to writing, existing in hard copies or electronic form, and whether residing on
Company’s computers, Executive’s own personal computer, laptop, tablet, or mobile device, or other electronic media used for Company business. After employment ends, or sooner if Company requests, Executive must disclose all computer
user identifications and passwords used by Executive in the course of employment or necessary for accessing information on the Company’s computer system, and Executive will not retain copies of any Confidential Information or other
materials belonging to Company unless expressly authorized in writing by Company.
The obligations in this Section include the return of documents and other materials that may be in Executive’s desk at work, Executive’s car or
place of residence, or in any other location under Executive’s control.
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8. |
Dispute Resolution
.
|
|
(a) |
Arbitration.
|
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(1) |
The parties agree to submit any dispute arising under this Agreement or Executive’s employment with Company, regardless of the nature of the dispute or the
legal concepts involved, to final, binding, and private arbitration. Disputes subject to arbitration include not only disputes involving the negotiation, meaning, or performance of this Agreement, but also claims Executive may have
against Company, Company’s affiliates, or against any of their officers, directors, supervisors, managers, employees or agents for violation of any federal, state, or local statute arising out of Executive’s employment relationship with
Company. Executive and Company intend and agree that class action and representative action procedures are hereby waived and shall not be asserted, nor will they apply, in any arbitration pursuant to this Agreement. The Parties also
agree that the following claims are not subject to arbitration:
(a) claims that cannot be subject to arbitration as a matter of law; (b) claims for workers’
compensation or unemployment compensation; and (c) claims under an employee benefit or pension plan that specifies a different procedure.
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(2) |
All claims subject to arbitration shall be settled by final and binding arbitration in accordance with the employment dispute resolution rules of the American
Arbitration Association (“
AAA
”) in effect at the time the demand for arbitration is made (“
Rules and Procedures
”), which are available online at https://www.adr.org/sites/default/files/Employment%20Rules.pdf. Accordingly, the Parties are not permitted to pursue court action regarding
claims that are subject to arbitration. Such arbitration shall be filed with the AAA and shall be heard before a single neutral arbitrator who is experienced in employment law, who shall be selected as provided in AAA’s Rules and
Procedures. The aggrieved Party must file the arbitration complaint with AAA and provide all other parties against whom or which a claim is brought written notice no later than the expiration of the statute of limitations that the law
prescribes for the claim. Otherwise, the claim shall be deemed waived. The arbitration complaint and written notice must identify and describe all claims, the facts upon which such claims are based, and the relief or remedy sought.
Any arbitration shall be heard in Vancouver, Washington; provided, however, if arbitration in Vancouver, Washington is impractical because Executive’s employment for Company is located more than 100 miles from
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Vancouver, Washington, the arbitration may be held in the county and state where Executive last worked during Executive’s employment for Company.
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(3) |
Company shall be responsible for the arbitrator’s fees and expenses in excess of any reasonable filing fee with the AAA; provided, however, each party shall
pay its own costs and attorneys’ fees, if any. The arbitrator shall issue a written decision that contains the essential findings and conclusions on which the decision is based.
The arbitrator’s decision shall be final, binding and conclusive upon the Parties. Suit may be brought to compel arbitration or to enforce any arbitration award in a court of competent jurisdiction.
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(4) |
Neither this agreement to arbitrate nor any demand for arbitration shall waive or otherwise affect Company’s right to obtain any provisional remedy,
including, without limitation, injunctive relief for unfair competition, the use or unauthorized disclosure or misappropriation of trade secrets, the disclosure of any other Confidential Information or the violation of the
confidentiality or other provisions of Section 5 of this Agreement. This Agreement also does not prohibit Executive from filing an administrative charge or complaint with any governmental agency.
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9. |
Miscellaneous
.
|
(a)
|
Notices
.
Any notice to be delivered under this Agreement shall be given in writing and shall be deemed delivered three days after mailing by certified mail, postage prepaid, addressed to the Company’s Chair of the Board or to Executive at
Executive’s last known address on the record of the Company. Either party may designate an address for notices by written notice to the other.
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(b) |
Governing Law; Venue & Jurisdiction
.
Executive acknowledges that Company maintains its headquarters in Vancouver, Washington. The Parties therefore agree that this Agreement shall be governed by and
construed in accordance with the laws of the State of Washington, without giving effect to the rules governing the conflicts of laws, and without the aid of any canon, custom, or rule of law requiring construction against the drafter,
and regardless of whether a party changes domicile or residence. Executive hereby waives the right to argue to the contrary. In the event such election is invalid, then the court shall apply the law of the state or states in which
Executive performs services for Company. Executive consents to the exercise of personal jurisdiction by a court of competent jurisdiction in the State of Washington and agrees that venue for any action not subject to arbitration
shall be in Clark County, Washington, and hereby waives the right to argue to the contrary.
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(c) |
Amendment/Waiver.
|
|
(1) |
This Agreement may not be amended, released, discharged, abandoned, changed, or modified in any manner, except by an instrument in writing signed by each of
the Parties hereto.
|
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(2) |
The failure of any Party to enforce at any time any of the provisions of this Agreement shall in no way be construed to be a waiver of any such provision, nor
in any way to affect the validity of this Agreement or any part of it or the right of any Party to enforce each and every such provision. No waiver or any breach of this Agreement shall be held to be a waiver of any other or subsequent
breach.
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(d) |
Severability.
If any provision of this Agreement is
held by a court or arbitrator to be invalid or unenforceable, the remaining provisions shall continue to be fully effective. If any part of this Agreement is held to be unenforceable as written, it shall be enforced to the maximum
extent allowed by applicable law. The unenforceability of any provision in this Agreement in any jurisdiction shall not affect the enforceability of any provision of this Agreement in any other jurisdiction.
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(e) |
Entire Agreement
. This Agreement represents the entire
agreement between the Parties regarding the matters addressed in this Agreement. This Agreement supersedes any other prior oral or written employment agreements between the Parties. Provided, however, this Agreement does not supersede
any incentive compensation agreement (including stock option or other equity incentive agreements)
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(f) |
Code Section 409A Compliance.
For purposes of this
Agreement, a termination of employment will be determined consistent with the rules relating to a “separation from service” as defined in Section 409A of the Code and the regulations thereunder (“Section 409A”). The Parties intend that
this Agreement, to the extent possible, will be administered in accordance with Section 409A and the Treasury Regulations and other applicable regulatory guidance issued thereunder, and will be interpreted in a manner so that no
payments made to Executive under this Agreement constitute a deferral of compensation or, if so, will constitute a deferral for which the payment and other terms are compliant with Section 409A so as to avoid imposition of any
additional tax to Executive under Section 409A. Company makes no representation or warranty as to compliance with Section 409A and shall have no liability to the Executive or any other person for any adverse consequences arising under
Section 409A. Notwithstanding anything else provided herein, to the extent any payments provided under this Agreement in connection with Executive’s termination of employment constitute deferred compensation subject to Section 409A,
and Executive is deemed at the time of such termination of employment to be a “specified Executive” under Section 409A, then such payment shall not be made or commence until the earlier of (i) the expiration of the 6-month period
measured from Executive’s separation from service from Company or (ii) the date of Executive’s death following such a separation from service; provided, however, that such deferral shall only be effected to the extent required to avoid
adverse tax treatment to Executive including, without limitation, the additional tax for which Executive would otherwise be liable under Section 409A(a)(1)(B) in the absence of such a deferral. The first payment thereof will include a
catch-up payment covering the amount that would have otherwise been paid during the period between Executive’s termination of employment and the first payment date but for the application of this provision, and the balance of the
installments (if any) will be payable in accordance with their original schedule.
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(1) |
Executive shall not assign or transfer any of Executive’s rights under this Agreement, wholly or partially, to any other person or to delegate the performance
of the Executive’s duties under the terms of this Agreement.
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(2) |
Upon Executive’s death, no death benefit is payable under this Agreement other than benefits that were already in pay status at the date of death.
Executive’s rights under this Agreement with respect to any benefits earned before the date of death shall inure to Executive’s heirs, executors, administrators or personal representatives.
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(3) |
The rights and obligations of the Company under this Agreement shall inure to the benefit of and be binding in each and every respect upon the direct and
indirect successors and assigns of the Company, regardless of the manner in which the successors or assigns succeed to the interests or assets of the Company. This Agreement shall not be terminated by the voluntary or involuntary
dissolution of the Company, by any merger, consolidation or acquisition where the Company is not the surviving corporation, by any transfer of all or substantially all of the Company’s assets, or by any other change in the Company’s
structure or the manner in which the Company’s business or assets are held. Executive’s employment shall not be deemed terminated upon the occurrence of one of the foregoing events. In the event of any merger, consolidation or sale or
transfer of assets, this Agreement shall be binding upon and shall inure to the benefit of the surviving business or the business entity to which the assets are transferred.
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(h) |
Survival.
If any benefits provided to Executive under
this Agreement are still owed, or claims under the Agreement are still pending at the time of termination of this Agreement, this Agreement shall continue in force with respect to those obligations or claims, until those benefits are
paid in full or those claims are resolved in full. The covenants in Section 5 and Section 6, and the dispute resolution provisions in Section 8 of this Agreement shall survive the termination of this Agreement and shall be enforceable
regardless of any claim Executive may have against the Company.
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(i) |
Board of Director’s Authority.
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(1) |
Bancorp’s Board of Directors has the authority to interpret and construe the provisions of this Agreement, including the attached Separation Agreement.
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(2) |
Bancorp’s Board of Directors has the authority to decide matters relating to termination for Cause or Good Reason, the violation of the Restrictive Covenants
and the calculation of benefits.
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(3) |
In a decision under Subsection (1) or (2) above, the burden of proof shall be on that Board of Directors and that decision shall be:
|
|
(A) |
Subject to the duty of good faith and fair dealing;
|
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(B) |
Supported by clear and convincing evidence; and
|
|
(C) |
Made by the affirmative vote of at least three fourths of that Board of Directors.
|
|
(4) |
An arbitrator or a court reviewing such a decision by that Board of Directors shall make its own independent decision and not grant deference to the that
Board of Director’s decision.
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(j) |
Joint and Several Obligation.
Bancorp and the Bank will
be jointly and severally liable for the payment obligations under this Agreement.
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(k) |
Actions by Banking Regulatory Authorities.
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(1) |
If Executive is suspended and/or temporarily prohibited from participating in the conduct of the Company’s affairs by a notice served under Section 8(e)(3) or
(g)(1)
|
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of the FDIA, 12 U.S.C. § 1818(e)(3) and (g)(1), the Company’s obligations under this Agreement shall be suspended as of the date of service, unless stayed
by appropriate proceedings. If the charges in the notice are dismissed, the Company may in its discretion:
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(A) |
Pay Executive all or part of the payments under this Agreement that were withheld while its obligations under this Agreement were suspended; and/or
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(B) |
Reinstate in whole or in part any of its obligations which were suspended.
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(2) |
If Executive is removed and/or permanently prohibited from participating in the conduct of the Company’s affairs by an order issued under Section 8(e)(4) or
(g)(1) of the FDIA, 12 U.S.C. § 1818(e)(4) and (g)(1), Executive shall be terminated for Cause as of the effective date of the order.
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(3) |
If the Company is in default (as defined in Section 3(x)(1) of the FDIA, 12 U.S.C. § 1813(x)(1)), all further obligations under this Agreement shall terminate
as of the date of default.
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(4) |
This Agreement may be terminated entirely or suspended for a period of time by the applicable banking regulatory authority, or as otherwise required by law,
if:
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(A) |
The Federal Deposit Insurance Corporation (“
FDIC
”) enters into an
agreement to provide assistance to or on behalf of the Company under the authority contained in Section 13(c) of the FDIA, 12 U.S.C. § 1823(c);
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(B) |
The applicable banking regulatory authority approves a supervisory merger to resolve problems related to the operation of the Company; or
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(C) |
The applicable banking regulatory authority determines the Company is in an unsafe or unsound condition.
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(5) |
The Change in Control Benefit is subject to and conditioned upon its compliance with 12 U.S.C. § 1828(k) and FDIC regulation 12 C.F.R. Part 359, “Golden
Parachute and Indemnification Payments.”
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(l) |
Attorneys’ Fees and Costs.
In any dispute arising out of or relating to this Agreement, including in compelling arbitration, or enforcing or collecting an arbitration award, the prevailing party shall be entitled
to recover from the non-prevailing party its own reasonable attorneys’ fees, filing and services fees, witness fees, arbitrator’s fees, and any other reasonably incurred expenses and costs, to the extent not expressly prohibited by
applicable law.
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(m) |
Headings, Captions.
The headings and captions used in
this Agreement are for convenience only and shall not affect the meaning or interpretation of the Agreement.
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(n) |
Counterparts.
For the convenience of the Parties, this Agreement may be executed by facsimile and in any number of counterparts, all of which when taken together shall constitute one and the same
Agreement.
|
10. |
Advice of Counsel
.
Executive acknowledges that Executive has had adequate
time to consult legal counsel and financial advisors before signing this Agreement. Executive understands that Company makes no representations as to the tax consequences of any payments under this Agreement. Both Parties have
participated and had an equal opportunity to participate in the drafting of this Agreement. No ambiguity shall be construed against any Party upon a claim that such party drafted the ambiguous language.
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___________________________________________________
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_______________
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Date:_______________________________________________
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|
RIVERVIEW COMMUNITY BANK
|
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RIVERVIEW BANCORP, INC. |
By: ________________________________________________ | By: ________________________________________________ | |
Title: _______________________________________________
|
Title: _______________________________________________ | |
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Date:_______________________________________________ |
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Date:_______________________________________________ |
1. |
Termination of Employment.
Your employment terminates
(or was terminated) on ____________, 20____ (the “
Separation Date
”), which was within the number of months of a Change in Control as specified in
Section 3(a)(1) in the Change in Control Agreement between you and Riverview dated ____________, 20____ (the “
CIC Agreement
”), which is
incorporated herein by reference.
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2. |
Payments.
In exchange for your agreeing to the release
of claims and other terms in this Separation Agreement, we will pay you the Change in Control Benefit and other payments in Section 3 of the CIC Agreement. You acknowledge that we are not obligated to make these payments to you unless
you enter this Separation Agreement, comply with the Restrictive Covenants in Section 5 of the CIC Agreement, and otherwise comply and continue to comply with the material terms of the CIC Agreement and of this Separation Agreement.
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3. |
COBRA Continuation Coverage
. Your normal employee
participation in Riverview’s group health coverage will terminate on the Separation Date or, if provided under the group health plan, the last day of the month in which the Separation Date occurs. Continuation of group health coverage
thereafter will be made available to you and your dependents pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985 or any applicable state health insurance continuation law (collectively, “
COBRA
”). You understand and agree that your right to benefits under Riverview’s health and welfare benefit program, if any, shall be limited to those set forth under COBRA
and continuation of group health coverage after the Separation Date is entirely at your expense, as provided under COBRA, unless Section 3 of the CIC provides otherwise.
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4. |
Full Payment and Entitlement to Leave.
You acknowledge
having received full payment of all compensation of any kind (including but not limited to wages, salary, bonuses, paid time off, sick leave, reimbursable expenses, and incentive compensation) that you earned as a result of your
employment by us and that was owing to you as of the Separation Date. Any and all agreements to pay you bonuses or other incentive compensation are terminated. You understand and agree that you have no right to receive any further
payments for bonuses or other incentive compensation, except the payments as described in Section 2 of this Agreement (above). You also acknowledge you have taken and have not been deprived of any leave to which you were legally
entitled prior to the Separation date.
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(a) |
You hereby release:
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(1) |
Riverview and its parent companies, divisions, subsidiaries, and affiliates, and each of their benefit plans (each, including Riverview, a “
Riverview Affiliate
”);
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(2) |
Each of the Riverview Affiliates’ past and present shareholders, executives, directors, members, officers, agents, employees, representatives, administrators,
fiduciaries and attorneys; and
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(b) |
The claims you are releasing include, without limitation, wrongful termination, constructive discharge, breach of contract, violations arising under federal,
state or local laws or ordinances prohibiting discrimination or harassment on the basis of age, race, color, national origin, religion, sex, gender, disability, marital status, sexual orientation or any other protected status, failure
to accommodate a disability or religious practice, violation of public policy, retaliation, failure to hire, wage and hour violations, including overtime claims, tortious interference with contract or expectancy, fraud or negligent
misrepresentation, breach of privacy, defamation, intentional or negligent infliction of emotional distress, unfair labor practices, breach of a right to stock or stock options or other equity interests, attorneys’ fees or costs, and
any other claims that are based on any legal obligations that arise out of or are related to your employment relationship with us.
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(c) |
You specifically waive any rights or claims that you may have under Title 49 of the Revised Code of Washington, the Civil Rights Act of 1964 (including
Title VII of that Act), the Civil Rights Act of 1991, the Rehabiliation Act of 1973, the Age Discrimination in Employment Act of 1967 (ADEA), the Older Workers Benefit Protection Act (OWBPA), the Americans with Disabilities Act of 1990
(ADA), the Equal Pay Act of 1963 (EPA), the Genetic Information Nondiscrimination Act of 2008 (GINA), the Fair Labor Standards Act of 1938 (FLSA), the Family and Medical Leave Act of 1993 (FMLA), the Occupational Safety and Health Act
(OSHA), the Sarbanes-Oxley Act of 2002, the Fair Credit Reporting Act (FCRA), the Uniformed Services Employment and Reemployment Rights Act of 1994, the Worker Adjustment and Retraining Notification Act (WARN), the Employee Retirement
Income Security Act of 1974 (ERISA), the National Labor Relations Act (NLRA), the Washington Law Against Discrimination (WLAD), the Washington Industrial Welfare Act, the Washington Family Leave Act, the Washington Minimum Wage Act, the
Washington Wage Payment Act, the Washington Rebate Act and all similar federal, state and local laws.
The aforementioned claims are
examples, not a complete list, of the released claims. It is the Parties’ intent that you release any and all claims arising from or related to your employment, your contract of employment, and separation of employment, of whatever
kind or nature, known or unknown, to the greatest degree allowed by law, against us, which arose or occurred on or before the date you sign this Separation Agreement
.
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(d) |
You agree not to seek any personal recovery (of money damages, injunctive relief or otherwise) for the claims you are releasing in this Separation Agreement,
either through any complaint to any governmental agency or otherwise, whether individually or through a class action. You agree never to start or participate as a plaintiff in any lawsuit or arbitration asserting any of the claims you
are releasing in this Separation Agreement. You represent and warrant that you have not initiated any complaint, charge, lawsuit or arbitration involving any of the claims you are releasing in this Separation Agreement.
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(e) |
Should you apply for future employment with a Riverview Affiliate, the Riverview Affiliate has no obligation to consider you for future employment.
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(f) |
You represent and warrant that you have all necessary authority to enter into this Separation Agreement (including, if you are married, on behalf of your
marital community) and that you have not transferred any interest in any claims to your spouse or to any third party.
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(g) |
This Separation Agreement does not affect your rights arising under any of Riverview’s benefit plans through the Separation Date or afterwards under the terms
of those plans to receive pension plan benefits, medical plan benefits, unemployment compensation benefits or workers’ compensation benefits.
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(h) |
This Separation Agreement also does not affect your rights under agreements, bylaw provisions, insurance or otherwise, to be indemnified, defended or held
harmless in connection with claims that may be asserted against you by third parties.
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(i) |
This Separation Agreement also does not affect your rights to file a charge or complaint with or participate in an investigation by the Equal Employment
Opportunity Commission or other government agency. But, you give up any right to recover or receive any personal relief or benefit from any such charge, complaint, or investigation, or from any lawsuit or administrative action filed by
any government agency which is the result of any such charge, complaint, or participation by you. Personal relief or benefit includes attorneys’ fees, monetary damages, and reinstatement. Nothing in this Agreement is intended to
prevent you from reporting potential violations of the law, cooperating or participating in any investigation by the Equal Employment Opportunity Commission, SEC, or other government agency concerning any Riverview Affiliate, or from
testifying truthfully in any legal proceeding resulting from any government agency’s enforcement actions.
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(j) |
You understand that you are releasing potentially unknown claims, and that you have limited knowledge with respect to some of the claims being released. You
acknowledge that there is a risk that, after signing this Separation Agreement, you may learn information that might have affected your decision to enter into this Separation Agreement. You assume this risk and all other risks of any
mistake in entering into this Separation Agreement.
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(k) |
You agree that this release is fairly and knowingly made.
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6. |
No Admission of Liability.
Neither this Separation
Agreement nor the payments made under this Separation Agreement are an admission of liability or wrongdoing by any Riverview Affiliate.
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7. |
Riverview Materials.
You represent and warrant that
you have, or no later than the Separation Date will have, returned all keys, credit cards, documents, Confidential Information (as defined in Section 5 of the CIC Agreement), and other materials that belong to us, and disclosed all
computer user identifications and passwords used by you in the course of your employment or necessary for accessing information on our computer system, in accordance with Section 7 of the CIC Agreement, which is incorporated herein by
reference.
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8. |
Nondisclosure Agreement.
You will comply with the
covenant regarding confidential information in Section 5(a) of the CIC Agreement, which covenant is incorporated herein by reference. You also agree to keep the terms of this Separation Agreement in strict confidence and not to
disclose the same to any other person or entity except as may be required by law. Except for litigation arising out of the breach of or attempt to enforce this Separation Agreement, this Separation Agreement shall not be admissible as
evidence in any legal proceeding.
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9. |
Non-Disparagement and Non-Incitement
. You agree not to
make, publish, or communicate (or causing others to make, publish, or communicate) any public or private disparaging statements concerning any Riverview Affiliate or their current or former officers, directors, members, shareholders,
employees, agents, customers, suppliers, or investors, including without limitation statements made to employees of any Riverview Affiliate or statements made on internet blogs, social media sites, and review sites; provided, however,
that nothing in this Separation Agreement
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shall preclude you from making truthful statements that are required by applicable law, regulation, or legal process. You may not disparage any Riverview
Affiliate or its business or products, and may not encourage any third parties to sue a Riverview Affiliate.
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10. |
Cooperation Regarding Other Claims.
If any claim is
asserted by or against a Riverview Affiliate as to which you have relevant knowledge, you will reasonably cooperate with us in the prosecution or defense of that claim, including by providing truthful information and testimony as
reasonably requested by us.
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11. |
Nonsolicitation; No Interference.
You will comply with
Sections 5(b) and 5(c) of the CIC Agreement, incorporated herein by reference, and Riverview will have the right to enforce those provisions under the terms of Section 5(d) of the CIC Agreement, incorporated herein by reference.
Following the expiration of the covenants referenced in the preceding sentence, you will not, apart from good faith competition, interfere with any Riverview Affiliate’s relationships with customers, employees, vendors, or others.
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12. |
Liquidated Damages.
Any breach by you of provisions
set out in Sections 7 through 11 above shall be a material breach of this Separation Agreement for which we agree that Riverview or one of its affiliates would suffer irreparable harm and damage to its reputation, and for which
liquidated damages in the amount of the Change in Control Benefit specified in Section 3 of the CIC Agreement or actual damages, whichever is greater, shall be assessed. The foregoing shall not be interpreted to preclude any additional
remedy available to Riverview at law or in equity, including but not limited to injunctive relief.
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13. |
Independent Legal Counsel.
You are advised and
encouraged to consult with an attorney before signing this Separation Agreement. You acknowledge that you have had an adequate opportunity to do so.
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14. |
Consideration Period.
You have 21 days from the date
this Separation Agreement is given to you to consider this Separation Agreement before signing it. You may use as much or as little of this 21‑day period as you wish before signing. If you do not sign and return this Separation
Agreement within this 21-day period, you will not be eligible to receive the benefits described in this Separation Agreement.
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15. |
Revocation Period and Effective Date.
You have 7
calendar days after signing this Separation Agreement to revoke it. To revoke this Separation Agreement after signing it, you must deliver a written notice of revocation to Riverview’s Chief Executive Officer or the Chairman of the
Board before the 7-day period expires. This Separation Agreement shall not become effective until the 8th calendar day after you sign it (the “
Effective
Date
”). If you revoke this Separation Agreement, it will not become effective or enforceable, and you will not be entitled to the benefits described in this Separation Agreement.
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16. |
Knowing and Voluntary Waivers under the ADEA.
You
acknowledges that you understand this is a full release of all existing claims whether currently known or unknown including, but not limited to, claims for age discrimination under the Age Discrimination in Employment Act. You agree
and acknowledges that you have read and understood this Separation Agreement, and that you have consulted with an attorney regarding the meaning and application of this Separation Agreement, or, if you have not consulted with an
attorney, you have been advised to do so and have had ample opportunity to do so. You enter into this Separation Agreement knowingly, voluntarily, free from duress, and as a result of your own free will and with the intention to waive,
settle, and release all claims you have or may have against each Riverview Affiliate.
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18. |
Dispute Resolution.
Any dispute arising under this
Agreement shall be subject to arbitration in accordance with Section 8 of the CIC Agreement, which Sections are specifically incorporated by reference, in their entirety, in this Agreement.
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19. |
Saving Provision.
If any part of this Separation
Agreement is held to be unenforceable, it shall not affect any other part, except if the release in Section 5 is determined to be invalid or unenforceable, this Separation Agreement shall be voidable by Riverview for a period of sixty
(60) days following receipt of written notice of the invalidity or unenforceability.
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20. |
Final and Complete Agreement.
Except for the CIC
Agreement and/or the Employment Agreement, which are expressly incorporated herein by reference, this Separation Agreement is the final and complete expression of all agreements between us on all subjects relating to your employment or
its termination and supersedes and replaces all prior discussions, representations, agreements, policies and practices. You acknowledge you are not signing this Separation Agreement relying on anything not set out herein.
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21. |
Miscellaneous.
This Separation Agreement may be signed in counterparts, both of which shall be deemed an original, but both of which, taken together shall constitute the same instrument. A
signature made on a faxed or electronically mailed copy of the Separation Agreement or a signature transmitted by facsimile or electronic shall have the same effect as the original signature. The section headings used in this
Separation Agreement are intended solely for convenience of reference and shall not in any manner amplify, limit, modify or otherwise be used in the interpretation of any of the provisions hereof. This Separation Agreement was the
result of the negotiations between the parties. In the event of vagueness, ambiguity or uncertainty, the Separation Agreement shall not be construed against the party preparing it, but shall be construed as if both parties prepared it
jointly. If you or Riverview fails to enforce this Separation Agreement or to insist on performance of any term, that failure does not mean a waiver of that term or of the Separation Agreement. This Separation Agreement remains in
full force and effect anyway.
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1.
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I have reviewed this Annual Report on Form 10-K of Riverview Bancorp, Inc.;
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2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
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The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
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a)
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Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;
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b)
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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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c)
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Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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d)
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Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fiscal fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
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5.
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The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):
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a)
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All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting, which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
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b)
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
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Date: June 14, 2019
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/S/ Kevin J. Lycklama
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Kevin J. Lycklama
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Chief Executive Officer
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1. |
I have reviewed this Annual Report on Form 10-K of Riverview Bancorp, Inc.;
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2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4. |
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
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a) |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;
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b)
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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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d) |
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fiscal fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
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5. |
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function):
|
a) |
All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting, which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
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b) |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
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Date: June 14, 2019
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/S/ David Lam
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|
David Lam
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|
Chief Financial Officer
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1.
|
the report fully complies with the requirements of Sections 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, and
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2.
|
the information contained in the report fairly presents, in all material respects, the Company's financial condition and results of operations as of the dates and for the periods presented in the financial statements included in such report.
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/S/ Kevin J. Lycklama
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/S/ David Lam
|
Kevin J. Lycklama
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David Lam
|
Chief Executive Officer | Chief Financial Officer |
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|
Dated: June 14, 2019
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Dated: June 14, 2019
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