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On Monday, Raymond (NSE:RYMD) James maintained an Outperform rating on Riverview Bancorp (NASDAQ:RVSB) and increased the price target to $6.25, up from the previous $5.25. Currently trading at $5.64, with a market capitalization of $119.2 million, the stock has shown strong momentum with a 24% return over the past six months. The revised target reflects the firm’s positive view on the bank’s recent financial results and its potential for future growth. According to InvestingPro, the company has maintained dividend payments for 11 consecutive years, demonstrating consistent shareholder returns.
Riverview Bancorp’s third fiscal quarter of 2025 results demonstrated early signs of the progress management has made in accelerating growth, according to Raymond James. The bank’s expanding loan production and an improving pipeline, bolstered by both new and existing clients, were highlighted without compromising underwriting standards.
The bank has also enhanced its back office processes and treasury management offerings, which are expected to boost productivity and client acquisition. Despite elevated payoffs impacting the quarter, growth is anticipated to re-accelerate to a mid-single digit pace, potentially augmented by pool purchases. InvestingPro analysis reveals that while the company currently trades at a high earnings multiple, analysts predict profitability for the current fiscal year.
Raymond James noted that Riverview Bancorp has been optimizing its funding base, with funding costs decreasing by 10 basis points during the quarter, even amid lower noninterest-bearing (NIB) balances in a seasonally weaker quarter. The combination of strong loan growth and significant asset and liability management (AEA) remixing/repricing is expected to lead to solid core net interest margin (NIM) expansion and net interest income (NII)/earnings per share (EPS) growth.
The bank’s robust capital base, with a Common Equity Tier 1 (CET1) ratio of 15.2%, provides flexibility. With the stock trading below tangible book value (TBV), Riverview Bancorp is likely to continue its share repurchase program, with an estimated $750,000 of buybacks per quarter through fiscal year 2026.
While acknowledging that it will take time for the bank to return to more normalized profitability and modestly reducing estimates, Raymond James expressed confidence in the bank’s ability to execute its strategic initiatives. Trading at 0.75 times book value and offering a 1.42% dividend yield, the firm views the risk-reward as favorable, considering Riverview Bancorp’s attractive valuation, accelerating loan growth, positive operating leverage, strong asset quality, and capital deployment potential. InvestingPro subscribers can access additional insights, including 6 more ProTips and comprehensive financial health metrics to make informed investment decisions.
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