Riverview Bancorp Reports Fiscal Fourth Quarter and Year-End Results; Increases Total Risk-Based Capital to 11.46%


VANCOUVER, Wash., May 4, 2009 (GLOBE NEWSWIRE) -- Riverview Bancorp, Inc. (Nasdaq:RVSB) today reported a net loss of $720,000, or $0.07 per diluted share, for the fourth quarter ended March 31, 2009 compared to net income of $1.2 million, or $0.11 per diluted share, in the fourth quarter of fiscal 2008.

For fiscal year 2009, Riverview reported a net loss of $2.7 million, or $0.25 per diluted share, compared to earnings of $8.6 million, or $0.79 per diluted share, for fiscal 2008. Fiscal 2009 results include a $16.2 million provision for loan losses, compared to a $2.9 million provision for loan losses in fiscal 2008. Financial results for fiscal 2009 also include a $3.4 million non-cash other than temporary impairment (OTTI) charge on an investment security in the second fiscal quarter ended September 30, 2008.

"We are pleased that despite the tough current economic conditions we have been able to make steady progress in strengthening the Company. Our fiscal 2009 operating results remained solid with pre-tax, pre-provision earnings increasing to $4.1 million for the quarter, compared to $3.4 million in the prior quarter and $3.6 million for the fourth quarter a year ago," said Pat Sheaffer, Chairman and CEO. "During the quarter, we further strengthened our already 'well capitalized' capital position and we were able to increase our core customer deposits. We believe this reflects strongly on our core business model and our ability to continue to generate future profits. However, we have not been immune to the current economic slowdown in our markets and as such, we increased our provision for loan losses to higher levels than normal."

"Management constantly monitors and manages our liquidity position, considering, among other things our present and anticipated liquidity needs and available sources of liquidity," stated Sheaffer. "In addition to our solid customer base, we have available to us further sources of liquidity, including additional borrowings from the Federal Home Loan Bank and the Federal Reserve Bank, the sale of certain securities that we have classified as available for sale, borrowings at correspondent banks and wholesale markets, including brokered deposits."

"We also continue to closely monitor our level of capital with the goal of increasing total capital," said Sheaffer. "We continue to maintain capital levels in excess of the 'well-capitalized' regulatory threshold. At March 31, 2009, our total risk-based capital and Tier 1 leverage capital ratios increased to 11.46% and 9.50%, respectively, compared to 10.73% and 8.82% at December 31, 2008. With our growing capital and current liquidity position, we are confident that Riverview remains well positioned to work through the challenges presented by this difficult economic period."

Riverview's actual and required minimum capital amounts and ratios are presented in the following table:



                                        Adequately          Well
 March 31, 2009            Actual       Capitalized      Capitalized
 -------------------  ---------------  --------------  ---------------
                       Amount  Ratio    Amount  Ratio  Amount   Ratio
 Total Capital (To
  Risk-Weighted
  Assets)             $94,654  11.46%  $66,080  8.00%  $82,599  10.00%
 Tier 1 Capital (To
  Risk-Weighted
  Assets)              84,300  10.21    33,040  4.00    49,560   6.00
 Tier 1 Capital (To
  Adjusted Tangible
  Assets)              84,300   9.50    35,502  4.00    44,377   5.00

Credit Quality

"The housing market remained weak in our primary service area during the fourth quarter, resulting in increased delinquencies and non-performing assets," said Dave Dahlstrom, EVP and Chief Credit Officer. "However, we continue to allocate a considerable amount of resources to monitor credit quality."

Non-performing loans decreased slightly to $27.6 million, or 3.44% of total loans, at March 31, 2009, compared to $28.4 million, or 3.46% of total loans, three months earlier. Total non-performing loans consist of thirty-four loans and twenty-nine lending relationships. Land acquisition and development loans and speculative construction loans continue to be the primary driver in our non-performing loans, representing $18.7 million, or 68%, of the total non-performing loan balance at March 31, 2009. The remaining balance includes seven commercial loans totaling $6.0 million, eight residential real estate loans totaling $1.3 million and two multi-family mortgage loans totaling $1.5 million. All of the loans are to borrowers located in Oregon and Washington, with the exception of one land acquisition and development loan totaling $1.4 million to a long-time Washington-based customer who has property located in Southern California.

Riverview had $14.2 million in other real estate owned (OREO) at March 31, 2009, compared to $3.0 million at December 31, 2008. Included in OREO are thirty-two properties limited to sixteen lending relationships. These properties consist primarily of eleven single-family homes totaling $2.4 million (all of which were former speculative construction properties), seventeen residential building lots totaling $1.9 million, three finished subdivision properties totaling $4.6 million, one land development property totaling $5.0 million and one multi-family property totaling $269,000. All properties are located in Oregon and Washington.

The provision for loan losses was $5.0 million for the fourth quarter, compared to $1.2 million during the prior linked quarter and $1.8 million in the fourth quarter a year ago. For fiscal 2009 the provision for loan losses totaled $16.2 million, compared to $2.9 million in fiscal 2008. This elevated provision for loan losses reflects the continued deterioration of the local economy and the resulting impact on our construction and land development loan portfolios. We anticipate that credit costs will remain elevated in 2009.

The allowance for loan losses, including unfunded loan commitments of $296,000, was $17.3 million, or 2.15% of total loans at March 31, 2009 compared to $16.5 million, or 2.01% of total loans at December 31, 2008 and $11.0 million, or 1.44% of total loans, at March 31, 2008. Net loan charge-offs were $4.3 million for the quarter ended March 31, 2009, compared to $1.1 million for the previous linked quarter and $618,000 for the fiscal fourth quarter a year ago. During the quarter, the Company recorded charge-offs of $3.3 million in land development and speculative construction loan balances.

Balance Sheet Review

Net loans increased 4% to $784 million at March 31, 2009, compared to $757 million a year ago. At December 31, 2008 net loans were $805 million. Commercial and commercial real estate loans account for 72% of the total loan portfolio and construction loans account for only 17% of the total loan portfolio at March 31, 2009.

The Company's commercial real estate portfolio continues to perform extremely well. As of March 31, 2009, there were no loans in this portfolio that were more than 30 days past due. In addition, the Company has had no charge-offs in this portfolio in fiscal 2008 or 2009.

During the past year, Riverview has remained focused on reducing its level of residential construction loans. Speculative construction loans represent $57.8 million of the residential construction portfolio at March 31, 2009 compared to $80.7 milliona year ago, representing a decrease of 28.4% during the past year.

Total deposits were $670 million at March 31, 2009, compared to $690 million at December 31, 2008, and $667 million at March 31, 2008. The decrease in total deposits in the fourth quarter was a result of the reduction in the Company's portfolio of brokered deposits by $16.0 million. As of March 31, 2009, the Company had $19.9 million in wholesale-brokered deposits, representing less than 3% of total deposits. Non-interest checking balances represented 13% of total deposits and interest bearing checking balances represented 14% of total deposits.

"We continue to rely on our long standing customer base to grow core deposits," said Sheaffer. "Core deposits (comprised of checking, savings and money market accounts) increased $10.8 million during the quarter and currently accounts for 58.6% of total deposits, up from 55.3% at December 31, 2008. Retail certificates of deposits totaled $257.8 million, or 38.5% of total deposits." In total, customer relationships comprised 97% of total deposits at March 31, 2009.

Shareholders' Equity

Shareholders' equity was $88.7 million at March 31, 2009, compared to $89.6 million in the prior linked quarter and $92.6 million a year ago. Book value per share was $8.12 at March 31, 2009, compared to $8.21 at December 31, 2008 and $8.48 a year earlier and tangible book value per share was $5.69 at quarter-end, compared to $5.80 in the prior linked quarter and $6.06 a year earlier. Tangible shareholder equity was 6.8% of its total assets at March 31, 2009, compared to 6.8% in the prior linked quarter and 7.5% a year earlier.

The preservation of capital remains a top priority for management. As previously reported, the Board of Directors elected to suspend the dividend during the previous linked quarter. During the quarter the holding company invested $3.8 million in the bank resulting in an increase of approximately 45 basis points to total risk-based capital. The holding company has approximately $1.1 million of available cash, and the Company continues to analyze all capital management options, including evaluating the Bank's balance sheet structure.

OTTI Charge during 2Q09

During the second quarter of fiscal 2009 Riverview recorded a $3.4 million non-cash OTTI charge on an investment security. The investment is a trust preferred pooled security, which was issued by other bank holding companies. It is classified as available for sale and has a par value of $5.0 million. Although management believes it is possible that all principal and interest will be received, and Riverview has the ability and intention to continue to hold the security until there is a recovery in its value, general market concerns over these and similar types of securities, as well as a lowering of the investment rating for this specific security, caused the fair value to decline severely enough to warrant an OTTI charge. Consequently, management chose to recognize a $3.4 million OTTI charge. Management does not believe that the recognition of this impairment charge has any other implications for the company's business fundamentals or its outlook.

On April 9, 2009, the Financial Accounting Standards Board issued revised guidance to several accounting standards related to the valuation, recognition and reporting of OTTI for certain securities such as the Bank's trust preferred pooled security. The Company adopted these new standards as of January 1, 2009, resulting in a cumulative effect adjustment of $1.6 million (net of tax) that increased the Company's balances for both the retained earnings and accumulated other comprehensive loss components of shareholder's equity.

Riverview does not have sub-prime residential real estate loans in its loan portfolio and does not believe that it has any direct exposure to sub-prime lending in its Mortgage Backed Securities portfolio. Other than the trust preferred pooled security discussed above, Riverview does not have any other investment securities of concern. Mortgage backed securities totaled $4.6 million, or 0.51% of total assets at March 31, 2009. Riverview does not have any exposure to Government Sponsored Enterprise (GSE) securities in its investment portfolio.

Operating Results

Net interest income in the fourth quarter of fiscal 2009 was $8.3 million compared to $8.4 million for the three months ended December 31, 2008 and $8.6 million in the fourth quarter a year ago. For fiscal 2009, net interest income was $33.7 million, compared to $35.0 million in fiscal 2008.

For the fourth quarter of fiscal 2009, the net interest margin was 3.98% compared to 3.95% in the preceding linked quarter and 4.41% in the fourth quarter a year ago. "The increase in net interest margin over the preceding quarter was primarily due to the continued progress we have made to reduce our deposit and borrowing costs," said Ron Wysaske, President and COO. "We expect our margin to continue to improve as we benefit from reduced deposit and borrowing costs. However, our net interest margin was negatively impacted by interest reversals on non-accrual loans." The reversal of interest on loans placed on non-accrual status during the quarter accounted for an 8 basis point decrease in the quarterly net interest margin.

Non-interest income increased to $2.8 million for the quarter, compared to $2.2 million in the fourth fiscal quarter a year ago. "The increase in fourth quarter non-interest income was largely due to a $401,000 increase in gain on loans held for sale, as well as the reversal of $489,000 for a contingent liability previously reserved for a property which was disposed of during the quarter," said Wysaske. "However, these increases were partially offset by a $138,000 decrease in mortgage broker fees, as well as a $101,000 decrease in asset management fees." Non-interest income, excluding the $3.4 million OTTI charge during 2Q09, was $8.9 million for fiscal 2009, the same as in fiscal 2008.

Non-interest expense improved to $7.0 million in the fourth quarter of fiscal 2009, compared to $7.2 million in the fourth quarter of fiscal 2008. The decrease in salaries and employee benefits was partially offset by a $207,000 increase in FDIC insurance premiums as well as an increase in OREO related expenses. For fiscal 2009, non-interest expense improved to $27.3 million, compared to $27.8 million for fiscal 2008. "We continue to focus on reducing controllable expenses and stabilizing our net interest margin," said Wysaske.

Riverview's efficiency ratio improved to 63.2% for the fourth quarter of fiscal 2009, compared to 66.5% for the fourth quarter of fiscal 2008. For fiscal 2009, the efficiency ratio, excluding the 2Q09 OTTI charge, was 64.0% compared to 63.4% for fiscal 2008. Despite our success in managing expenses, our efficiency ratio continues to remain under pressure as a result of lower net interest and non-interest income.

Conference Call

The management team of Riverview Bancorp will host a conference call on Tuesday, May 5, at 10:30 a.m. PDT, to discuss fiscal 2009 results. The conference call can be accessed live by telephone at 480-629-9770. To listen to the call online go to the "About Riverview" page of Riverview's website at www.riverviewbank.com.

About Riverview

Riverview Bancorp, Inc. (www.riverviewbank.com) is headquartered in Vancouver, Washington -- just north of Portland, Oregon on the I-5 corridor. With assets of $914 million, it is the parent company of the 86 year-old Riverview Community Bank, as well as Riverview Mortgage and Riverview Asset Management Corp. There are 18 branches, including ten in Clark County, three in the Portland metropolitan area and four lending centers. The Bank offers true community banking services, focusing on providing the highest quality service and financial products to commercial and retail customers.

Financial measures that exclude OTTI charges, taxes and loan loss provisions are non-GAAP measures. To provide investors with a broader understanding of earnings, the Company provided non-GAAP financial measures for total income, non-interest income and the efficiency ratio, along with the GAAP measure of net income (loss), non-interest income and the efficiency ratio, in an effort to isolate the Company's core business operations and in particular because OTTI charges are not likely to occur in normal operations. Management believes that these non-GAAP financial measures are useful to investors because they allow for greater transparency, facilitate comparisons to prior periods and competitor's results and assist in forecasting performance for future periods because they exclude items we believe to be outside the normal operating results.

Statements concerning future performance, developments or events, concerning expectations for growth and market forecasts, and any other guidance on future periods, constitute forward-looking statements, which are subject to a number of risks and uncertainties that might cause actual results to differ materially from stated objectives. These factors include but are not limited to: RVSB's ability to acquire shares according to internal repurchase guidelines, regional economic conditions and the company's ability to efficiently manage expenses. Additional factors that could cause actual results to differ materially are disclosed in Riverview Bancorp's recent filings with the SEC, including but not limited to Annual Reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K.



 RIVERVIEW BANCORP, INC. AND SUBSIDIARY

 Consolidated Balance Sheets

 (In thousands, except share data)     March 31,   Dec. 31,  March 31,
  (Unaudited)                            2009        2008      2008
 ---------------------------------------------------------------------
 ASSETS

 Cash (including interest-earning
  accounts of $6,405, $6,901 and
  $14,238)                             $  19,199  $  23,857  $  36,439
 Loans held for sale                       1,332        834         --
 Investment securities held to
  maturity, at amortized cost (fair
  value of $552, $530 and none)              529        528         --
 Investment securities available for
  sale, at fair value (amortized cost
  of $11,244, $8,853 and $7,825)           8,490      8,981      7,487
 Mortgage-backed securities held to
  maturity, at amortized cost (fair
  value of $572, $633 and $892)              570        635        885
 Mortgage-backed securities available
  for sale, at fair value (amortized
  cost of $3,991, $4,306 and $5,331)       4,066      4,339      5,338
 Loans receivable (net of allowance for
  loan losses of $16,974, $16,236 and
  $10,687)                               784,117    805,488    756,538
 Real estate and other pers. property
  owned                                   14,171      2,967        494
 Prepaid expenses and other assets         2,518      5,260      2,679
 Accrued interest receivable               3,054      3,494      3,436
 Federal Home Loan Bank stock, at cost     7,350      7,350      7,350
 Premises and equipment, net              19,514     19,906     21,026
 Deferred income taxes, net                8,209      4,404      4,571
 Mortgage servicing rights, net              468        282        302
 Goodwill                                 25,572     25,572     25,572
 Core deposit intangible, net                425        457        556
 Bank owned life insurance                14,749     14,614     14,176
                                       ---------  ---------  ---------

 TOTAL ASSETS                          $ 914,333  $ 928,968  $ 886,849
                                       =========  =========  =========

 LIABILITIES AND SHAREHOLDERS' EQUITY

 LIABILITIES:
 Deposit accounts                      $ 670,066  $ 689,827  $ 667,000
 Accrued expenses and other
  liabilities                              7,064      6,906      8,654
 Advance payments by borrowers for
  taxes and insurance                        360        153        393
 Federal Home Loan Bank advances          37,850    117,100     92,850
 Federal Reserve Bank advances            85,000         --         --
 Junior subordinated debentures           22,681     22,681     22,681
 Capital lease obligation                  2,649      2,659      2,686
                                       ---------  ---------  ---------
 Total liabilities                       825,670    839,326    794,264

 SHAREHOLDERS' EQUITY:
 Serial preferred stock, $.01 par
  value; 250,000 authorized, issued and
  outstanding, none                           --         --         --
 Common stock, $.01 par value;
  50,000,000 authorized, March 31, 2009
  - 10,923,773 issued and outstanding;       
  December 31, 2008 - 10,923,773 issued
  and outstanding; March 31, 2008 -
  10,913,773 issued and outstanding;         109        109        109
 Additional paid-in capital               46,866     46,856     46,799
 Retained earnings                        44,322     43,499     46,871
 Unearned shares issued to employee
  stock ownership trust                     (902)      (928)      (976)
 Accumulated other comprehensive
  income (loss)                           (1,732)       106       (218)
                                       ---------  ---------  ---------
 Total shareholders' equity               88,663     89,642     92,585
                                       ---------  ---------  ---------

 TOTAL LIABILITIES AND SHAREHOLDERS'
  EQUITY                               $ 914,333  $ 928,968  $ 886,849
                                       =========  =========  =========


 RIVERVIEW BANCORP, INC. AND SUBSIDIARY
 Consolidated Statements of Operations
 (In thousands, except share data) (Unaudited)

                    Three Months Ended            Twelve Months Ended
             March 31,   Dec. 31,    March 31,         March 31,
               2009        2008        2008        2009        2008
 ---------------------------------------------------------------------
 INTEREST
  INCOME:
 Interest
  and fees
  on loans
  receiva-
  ble       $   12,195  $   12,939  $   14,286  $   51,883  $   58,747
 Interest on
  investment
  securities
  -taxable         100         130          85         407         488
 Interest on
  investment
  securities
  -non
  taxable           32          36          31         137         142
 Interest on
  mortgage-
  backed
  securities        44          51          69         211         323
 Other
  interest
  and
  dividends         12          16         137         212         982
            ----------------------------------  ----------------------
   Total
    interest
    income      12,383      13,172      14,608      52,850      60,682

 INTEREST
  EXPENSE:
 Interest on
  deposits       3,431       3,942       4,580      15,279      22,143
 Interest on
  borrowings       665         859       1,456       3,904       3,587
            ----------------------------------  ----------------------
   Total
    interest
    expense      4,096       4,801       6,036      19,183      25,730
            ----------------------------------  ----------------------
   Net
    interest
    income       8,287       8,371       8,572      33,667      34,952
   Less
    provision
    for loan
    losses       5,000       1,200       1,800      16,150       2,900
            ----------------------------------  ----------------------

  Net
   interest
   income
   after
   provision
   for loan
   losses        3,287       7,171       6,772      17,517      32,052

 NON-INTEREST
  INCOME:
  Fees and
   service
   charges       1,136       1,104       1,268       4,669       5,346
  Asset
   management
   fees            438         468         539       2,077       2,145
  Gain on
   sale of
   loans
   held for
   sale            493         103          92         729         368
  Impairment
   of
   investment
   security         --          --          --      (3,414)         --
  Loan
   servicing
   income            6          38          16         105         126
  Bank owned
   life
   insurance
   income          134         144         143         572         562
  Other            552          45         156         792         335
            ----------------------------------  ----------------------
   Total
    non-
    interest
    income       2,759       1,902       2,214       5,530       8,882

 NON-INTEREST
  EXPENSE:
 Salaries
  and
  employee
  benefits       3,468       3,988       4,128      15,080      16,249
 Occupancy
  and
  depreciation   1,339       1,241       1,296       5,064       5,146
 Data
  processing       219         215         186         841         786
 Amortization
  of core
  deposit
  intangible        32          31          37         131         155
 Advertising
  and
  marketing
  expense          117         174         185         727       1,054
 FDIC
  insurance
  premium          359         130         152         760         210
 State and
  local
  taxes            160         164         210         668         741
 Telecommuni-
  cations          115         113         114         466         406
 Professional
  fees             380         280         215       1,110         826
 Other             788         571         645       2,412       2,218
            ----------------------------------  ----------------------
 Total non-
  interest
  expense        6,977       6,907       7,168      27,259      27,791
            ----------------------------------  ----------------------

 INCOME
  (LOSS)
  BEFORE
  INCOME
  TAXES           (931)      2,166       1,818      (4,212)     13,143
 PROVISION
  (CREDIT)
  FOR INCOME
  TAXES           (211)        691         656      (1,562)      4,499
            ----------------------------------  ----------------------
 NET INCOME
  (LOSS)    $     (720) $    1,475  $    1,162  $   (2,650) $    8,644
            ==================================  ======================

 Earnings
  (loss) per
  common
  share:
 Basic      $   (0.07)  $     0.14  $     0.11  $    (0.25) $     0.79
 Diluted    $   (0.07)  $     0.14  $     0.11  $    (0.25) $     0.79
 Weighted
  average
  number of
  shares
  outstan-
  ding:
 Basic      10,705,155  10,699,263  10,669,554  10,693,795  10,915,271
 Diluted    10,705,155  10,699,263  10,714,453  10,693,795  11,006,673


 (Dollars in              At or for the three       At or for the year
  thousands)                  months ended                ended
                      March 31, Dec. 31,  March 31, March 31, March 31,
                        2009      2008      2008      2009      2008
                      --------  --------  --------  --------  --------
 AVERAGE BALANCES
 ----------------
 Average interest-
  earning assets      $846,670  $841,638  $790,216  $827,740  $751,023
 Average interest-
  bearing liabilities  741,882   730,974   689,064   720,713   643,265
 Net average earning
  assets               104,788   110,664   101,152   107,027   107,758
 Average loans         816,355   809,447   755,019   794,221   705,856
 Average deposits      678,989   654,867   631,555   651,598   656,308
 Average equity         91,691    90,477    94,764    92,872    96,930
 Average tangible
  equity                65,336    64,153    68,291    66,509    70,388


                                          March 31, Dec. 31,  March 31,
 ASSET QUALITY                              2009      2008      2008
 -------------                            --------  --------  --------

 Non-performing loans                       27,570    28,426     7,677
 Non-performing loans to total loans          3.44%     3.46%     1.00%
 Real estate/repossessed assets owned       14,171     2,967       494
 Non-performing assets                      41,741    31,393     8,171
 Non-performing assets to total assets        4.57%     3.38%     0.92%
 Net loan charge-offs in the quarter         4,262     1,088       618
 Net charge-offs in the quarter/average
  net loans                                   2.12%     0.53%     0.33%
 Net loan charge-offs year to date           9,863     5,601       866
 Net charge-offs/average net loans
  (annualized)                                1.24%     0.94%     0.12%

 Allowance for loan losses                  16,974    16,236    10,687
 Allowance for loan losses and unfunded
  loan commitments                          17,270    16,496    11,024
 Average interest-earning assets to
  average interest-bearing liabilities      114.85%   115.14%   116.75%
 Allowance for loan losses to
  non-performing loans                       61.57%    57.12%   139.21%
 Allowance for loan losses to total
  loans                                       2.12%     1.97%     1.39%
 Allowance for loan losses and unfunded
  loan commitments to total loans             2.15%     2.01%     1.44%
 Shareholders' equity to assets               9.70%     9.65%    10.44%


                                          March 31, Dec. 31,  March 31,
 LOAN MIX                                   2009      2008      2008
 --------                                 --------  --------  --------
 Commercial and construction
  Commercial                              $127,150  $133,616  $109,585
  Commercial real estate mortgage          447,652   465,413   429,422
  Real estate construction                 139,476   133,637   148,631
                                          ----------------------------
   Total commercial and construction       714,278   732,666   687,638
 Consumer
  Real estate one-to-four family            83,762    85,579    75,922
  Other installment                          3,051     3,479     3,665
                                          ----------------------------
   Total consumer                           86,813    89,058    79,587

                                          ----------------------------
 Total loans                               801,091   821,724   767,225

 Less:
  Allowance for loan losses                 16,974    16,236    10,687
                                          ----------------------------
  Loans receivable, net                   $784,117  $805,488  $756,538
                                          ============================


    COMPOSITION OF COMMERCIAL AND CONSTRUCTION LOAN TYPES BASED ON
                             LOAN PURPOSE
    --------------------------------------------------------------

                                Commercial                Commercial &
                                Real Estate  Real Estate  Construction
                    Commercial   Mortgage   Construction     Total
                    ----------   --------   ------------     -----
   March 31, 2009                (Dollars in thousands)
   --------------
 Commercial         $  127,150  $       --  $         --  $    127,150
 Commercial
  construction              --          --        65,459        65,459
 Office buildings           --      90,621            --        90,621
 Warehouse/
  industrial                --      40,214            --        40,214
 Retail/shopping
  centers/strip
  malls                     --      81,233            --        81,233
 Assisted living
  facilities                --      26,743            --        26,743
 Single purpose
  facilities                --      88,574            --        88,574
 Land                       --      91,873            --        91,873
 Multi-family               --      28,394            --        28,394
 One-to-four family         --          --        74,017        74,017
                    --------------------------------------------------
  Total             $  127,150  $  447,652  $    139,476  $    714,278
                    ==================================================

   March 31, 2008
   --------------
 Commercial         $  109,585  $       --  $        --   $    109,585
 Commercial
  construction              --          --        55,277        55,277
 Office buildings           --      88,106            --        88,106
 Warehouse/
  industrial                --      39,903            --        39,903
 Retail/shopping
  centers/strip
  malls                     --      70,510            --        70,510
 Assisted living
  facilities                --      28,072            --        28,072
 Single purpose
  facilities                --      65,756            --        65,756
 Land                       --     108,030            --       108,030
 Multi-family               --      29,045            --        29,045
 One-to-four family         --          --        93,354        93,354
                    --------------------------------------------------
   Total            $  109,585  $  429,422  $    148,631  $    687,638
                    ==================================================


 (Dollars in thousands)                March 31,   Dec. 31,  March 31,
 DEPOSIT MIX                             2009        2008      2008
 -----------                           ---------  ---------  ---------

 Interest checking                     $  96,629  $ 100,969  $ 102,489
 Regular savings                          28,753     26,014     27,401
 Money market deposit accounts           178,479    169,261    189,309
 Non-interest checking                    88,528     85,320     82,121
 Certificates of deposit                 277,677    308,263    265,680
                                       -------------------------------
Total deposits                         $ 670,066  $ 689,827  $ 667,000
                                       ===============================


 DETAIL OF NON-PERFORMING ASSETS
 -------------------------------

                North-
                 west   Other   Southwest      Other
                Oregon  Oregon  Washington  Washington   Other   Total
                ------  ------  ----------  ----------  ------  -------
 March 31, 2009               (dollars in thousands)
 --------------
 Non-performing
  assets

  Commercial    $   50  $ 3,813  $  2,155    $     --   $   --  $ 6,018
  Commercial
   real estate      --       --        --          --       --       --
  Land              --       --     4,300         115    1,400    5,815
  Multi-family   1,341       --       160          --       --    1,501
  Commercial
   construction     --       --        --          75       --       75
  One-to-four
   family
   construction    425   11,428       740         239       --   12,832
  Real estate
   one-to-four
   family           --      152     1,104          73       --    1,329
  Consumer          --       --        --          --       --       --
                ------  -------  --------    --------   ------  -------
  Total non-
   performing
   loans         1,816   15,393     8,459         502    1,400   27,570

  REO              422    2,267     6,321       5,161       --   14,171
                ------  -------  --------    --------   ------  -------

 Total non-
  performing
  assets        $2,238  $17,660  $ 14,780    $  5,663   $1,400  $41,741
                ======  =======  ========    ========   ======  =======


 DETAIL OF SPEC CONSTRUCTION AND LAND DEVELOPMENT LOANS
 ------------------------------------------------------

                North-
                 west   Other   Southwest      Other
                Oregon  Oregon  Washington  Washington  Other    Total
                ------  ------  ----------  ----------  ------  -------
 March 31, 2009                 (dollars in thousands)
 --------------
 Land and Spec
  Construction
  Loans

  Land
   Development
   Loans       $ 6,659  $ 9,130  $ 66,776    $  3,540  $5,768  $ 91,873
  Spec
   Construction
   Loans        14,706   15,730    24,974       2,343      --    57,753
               -------  -------  --------    --------  ------  --------

 Total Land 
  and Spec
  Construction $21,365  $24,860  $ 91,750    $  5,883  $5,768  $149,626
               =======  =======  ========    ========  ======  ========


                   At or for the three months      At or for the year
                              ended                      ended
 SELECTED        March 31,   Dec. 31,  March 31,  March 31,  March 31,
  OPERATING DATA   2009        2008      2008       2009       2008
 --------------- ---------  ---------  ---------  ---------  ---------
                       (Dollars in thousands, except share data)
 Efficiency
  ratio(4)           63.16%     67.23%     66.46%     69.54%     63.40%
 Coverage
  ratio(6)          118.78%    121.20%    119.59%    123.51%    125.77%
 Return on
  average
  assets(1)          -0.32%      0.64%      0.54%     -0.29%      1.04%
 Return on
  average
  equity(1)          -3.18%      6.47%      4.92%     -2.85%      8.92%
 Average rate
  earned on
  interest-earned
  assets              5.94%      6.22%      7.51%      6.39%      8.09%
 Average rate
  paid on
  interest-
  bearing
  liabilities         2.24%      2.61%      3.55%      2.66%      4.00%
 Spread(7)            3.70%      3.61%      3.96%      3.73%      4.09%
 Net interest
  margin              3.98%      3.95%      4.41%      4.08%      4.66%

 PER SHARE DATA
 --------------
 Basic earnings
  per share(2)   $   (0.07) $    0.14  $    0.11  $   (0.25) $    0.79
 Diluted earnings
  per share(3)   $   (0.07) $    0.14  $    0.11  $   (0.25) $    0.79
 Book value per
  share(5)            8.12       8.21       8.48       8.12       8.48
 Tangible book
  value per
  share(5)            5.69       5.80       6.06       5.69       6.06
 Market price per
  share:
  High for the
   period        $    4.35  $    6.10  $   12.84  $    9.79  $   16.28
  Low for the
   period             1.60       2.25       9.93       1.60       9.93
  Close for
   period end         3.87       2.25       9.98       3.87       9.98
 Cash dividends
  declared per
  share                 --         --       0.09     0.1350       0.42

 Average number
  of shares
  outstanding:
  Basic(2)      10,705,155 10,699,263 10,669,554 10,693,795 10,915,271
  Diluted(3)    10,705,155 10,699,263 10,714,453 10,693,795 11,006,673


 (1) Amounts are annualized.
 (2) Amounts calculated exclude ESOP shares not committed to be
     released.
 (3) Amounts calculated exclude ESOP shares not committed to be
     released and include common stock equivalents.
 (4) Non-interest expense divided by net interest income and
     non-interest income.
 (5) Amounts calculated include ESOP shares not committed to be
     released.
 (6) Net interest income divided by non-interest expense.
 (7) Yield on interest-earning assets less cost of funds on interest
     bearing liabilities.


            

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