This bank just posted earnings per share of $0.09, a penny more than analysts expected. Revenue was $11.3 million for the quarter.
Riverview Bancorp, Inc. (RVSB)
From Top Stocks under $10
This is a hot economy. Plus, interest rates are going to rise only steadily from very low levels, something that will benefit key sectors like financials.
As for corporate profits, earnings in financials are expected to increase by 12% this year. Similar growth is expected for materials and technology. Even energy earnings are expected to grow three-fold from badly beaten up levels. That kind of growth will give our market valuations some relief, taking them down from near nosebleed levels.
Meanwhile, that also doesn’t factor in a potential lowering of the effective tax rate from 27% for the average corporation down to 20%. That would provide an additional boost to earnings.
Bottom line: It’s easy to see why money is heading into stocks even on slight pullbacks. That’s we’ve been doing as well, with our recent additions in the banks and energy space, and will continue to do so unless and until the fundamentals change.
Riverview Bancorp, Inc. (RVSB, rated “A-”), of Vancouver, Washington, has been riding the Trump-driven surge in financial stocks to substantial gains. Shares of the small bank have jumped more than 60% in the last year. But I believe it has more upside to come.
RVSB operates 17 branches and three lending centers just north of Portland, Oregon. It recently agreed to buy MBank to expand in that metropolitan market, and the deal is expected to give a nice boost to earnings per share in 2017.
Meanwhile, sales in the most recent quarter grew 6%, while return on common equity came in at 5.9%. Net loans rose more than 3%, and the bank’s Tier 1 capital to common equity ratio—a measure of fundamental bank strength—came in at a hefty 14.8%.
RVSB appears to be doing nicely—holding support on down days and moving up with the market and regional financials on up days. With the economy heating up, be prepared for multiple catch up rate increases from Federal Reserve Chairman Janet Yellen in the coming year--something that augers for an upward sloping yield curve and increased interest margins for banks. The stock has taken a breather recently, but looks poised to break out above $7.77. My price target is $9.50, and I recommend you get on board with a new 2.5% position at a limit price of $7.65 or better.
Mandeep Rai, Top Stocks under $10, www.moneyandmarkets.com/services/trading-services/top- stocks-under-10, issues@e.moneyandmarkets.com, published by Money and Markets, a Division of Weiss Research, Inc., 1-800-291-8545, January 13 and 19, 2017