RVSB Riverview Bancorp Inc

Riverview Bancorp, Inc. (Nasdaq:RVSB) (“Riverview” or the “Company”) today reported a net loss of $12.8 million, or $0.57 per share, in its fourth fiscal quarter ended March 31, 2012, compared to a net loss of $16.6 million, or $0.74 per share in the preceding quarter and net income of $854,000, or $0.04 per share, in its fourth fiscal quarter a year ago. The Company’s financial results were impacted by the previously announced increase in the provision for loan losses of $14.3 million during the fourth fiscal quarter of 2012.

For the fiscal year, Riverview reported a net loss of $28.5 million, or $1.28 per share, compared to net income of $4.3 million, or $0.24 per share, for fiscal year 2011. Riverview’s fiscal year 2012 results include a deferred tax asset valuation allowance of $15.7 million. The valuation allowance represents a non-cash accounting entry that may be reversed in future periods if, among other considerations, the Company returns to sustained profitability. Reversals of this allowance would increase Riverview’s net income in these future periods.

“For the second consecutive quarter we have significantly increased our loan loss provision in an effort to position Riverview for recovery in an economy that remains sluggish,” said Pat Sheaffer, Chairman and CEO. “We continue to focus on strengthening the Bank and working diligently, side by side with our clients on problem assets. Riverview remains an important economic participant as one of the few community banks in the region and the only community bank headquartered in Clark County.”

Credit Quality

Riverview recorded a $14.3 million provision for loan losses in the fourth quarter of fiscal year 2012, compared to $8.1 million in the preceding quarter and $500,000 in the fourth quarter of fiscal year 2011. The increase in the provision for loan losses was the result of recently updated appraisals received on several properties as well as the Company’s ongoing internal loan reviews. The allowance for loan losses was $18.6 million at March 31, 2012, representing 2.71% of total loans and 41.27% of non-performing loans (NPLs). NPLs increased to $45.0 million, or 6.56% of total loans at March 31, 2012, compared to $32.0 million, or 4.61% of total loans at December 31, 2011 and $12.3 million, or 1.79% of total loans, a year ago.

“Maintaining our capital levels for safety and growth as well as identifying problem credits remain our top priorities,” said Ron Wysaske, President and COO. “We continue to aggressively make progress in these areas and our REO balances are steadily being reduced.”

Riverview’s real estate owned (REO) decreased $1.9 million during the quarter to $18.7 million at March 31, 2012 compared to $20.7 million three months earlier and $27.6 million a year ago. REO sales during the quarter totaled $4.9 million, with write-downs of $934,000 and additions of $3.9 million. Riverview currently has several additional properties under sales contracts, including a $2.2 million land development property that was sold in April 2012 after the close of the fiscal year for a $144,000 loss.

The Company has seen an increase in sales activity for building lots in recent months. Since the end of the last quarter, the Company has sold a total of $5.0 million in building lots, including the recent sale in April 2012. The Company also has an additional $5.5 million in building lots under contract with expected sales dates in the first fiscal quarter ended June 30, 2012.

Home builders in the area have also noted this increased demand for single-family homes. Data through April 2012 showed that the number of building permits for single-family homes in Vancouver has tripled compared to the same four month period in the prior year. In March 2012, the number of closed home sales also increased 25 percent compared to February 2012 and 5.6 percent compared to March 2011. “We are encouraged by this increase in sales activity,” said Wysaske. “This increased activity has allowed us to continue to reduce our land development and speculative construction portfolios.”

The Company currently has identified 37% of the land development portfolio as impaired and has charged down these loans to their estimated fair value, less selling costs, based on updated appraisals. Additionally, the Company currently has a $3.8 million allowance on its outstanding land development portfolio. The Company has identified 71% of the speculative construction portfolio as impaired and has charged down these loans to their estimated fair value, less selling costs, based on updated appraisals.

Net charge-offs in the fourth quarter of fiscal 2012 totaled $11.6 million, compared to $6.8 million in the third quarter of fiscal 2012 and $3.0 million in the fourth quarter a year ago. The increase was due partially to the charge-off of specific valuation allowances established by the Company in prior quarters. During the fourth quarter of fiscal 2012, the Company charged-off an additional $5.0 million of loans that the Company had reserved for at December 31, 2011. For the year, net charge-offs were $22.5 million compared to $11.7 million for fiscal 2011.

During the fourth quarter of fiscal 2012, the Company received updated appraisals on over 40% of its impaired loans (41% of its nonaccrual loans). The Company has received appraisals on all of its nonaccrual loans that are supported by real estate in the last twelve months.

Non-performing assets were $63.8 million at March 31, 2012 compared to $52.7 million in the preceding quarter and $39.9 million a year ago. At March 31, 2012, Riverview’s non-performing assets were 7.42% of total assets, compared to 6.11% at the end of the preceding quarter and 4.65% a year ago.

Balance Sheet Review

“As expected, loan balances declined further in the fourth fiscal quarter as we continued planned reduction in land loans, as well as other nonperforming loans,” said Wysaske. “In addition, demand for new loans continued to be modest in this challenging lending environment.” Net loans totaled $668.1 million at March 31, 2012 compared to $678.6 million at December 31, 2011 and $672.6 million a year ago. New loan production during the past year was concentrated primarily in single-family residential mortgages and small-business commercial loans.

As with the preceding quarter, Riverview continued reducing its exposure to land development and speculative construction loans. The balance of these portfolios was $49.6 million at March 31, 2012 compared to $58.5 million at December 31, 2011 and $75.1 million a year ago. Speculative construction loans totaled $10.8 million, and land development loans $38.9 million, representing a combined total of 7.2% of the total loan portfolio at March 31, 2012.

The commercial real estate (“CRE”) loan portfolio totaled $354.9 million as of March 31, 2012, of which 29.2% was owner-occupied and 70.8% was investor-owned. At March 31, 2012, the CRE portfolio contained nine loans totaling $14.8 million that were nonperforming, representing 4.2% of the total CRE portfolio and 32.9% of total nonperforming loans.

“We are encouraged by the success we are having in adding interest bearing and non-interest bearing checking accounts, which is allowing us to reduce our percentage of higher cost certificates of deposit,” said Wysaske. “As a result, interest bearing checking deposits and non-interest bearing checking deposits increased 38% and 14%, respectively, compared to a year ago, and 100% of this organic growth was generated from our existing seventeen branch network.”

Total deposits increased $9.4 million during the quarter and $27.9 million during the year to $744.5 million at March 31, 2012. Total deposits were $735.0 million at December 31, 2011 and $716.5 million a year ago. Core deposits, which include checking accounts, savings accounts, money market deposit accounts and retail CDs, increased $36.1 million to $688.6 million at March 31, 2012 compared to $652.5 million a year ago, and comprised 92.5% of total deposits.

Net Interest Margin

Riverview’s net interest margin was 4.12% for the fourth fiscal quarter compared to 4.21% for the preceding quarter and 4.71% for the fourth fiscal quarter a year ago. The decrease was primarily due to the reversal of interest income on loans that were placed on non-accrual status during the quarter. The reversal of interest on non-accrual loans decreased the net interest margin by 18 basis points during the fourth quarter. The cost of interest bearing deposits was 0.59% during the current quarter, a decrease of eight basis points from the preceding quarter and a decrease of 29 basis points from the fourth quarter a year ago. For the year, the net interest margin was 4.33% compared to 4.64% for fiscal 2011.

Income Statement

Net interest income was $8.0 million in the fourth fiscal quarter, compared to $8.4 million in the preceding quarter and $8.7 million in the fourth quarter a year ago. The decline in net interest income was due to the reversal of approximately $334,000 of interest income on non-accrual loans and the continued pressure on loan yields as a result of the low interest rate environment. Total net interest income plus non-interest income was $9.6 million in the fourth fiscal quarter compared to $9.9 million in the preceding quarter and $10.4 million in the fourth quarter a year ago. Non-interest income was $1.6 million in the fourth fiscal quarter compared to $1.5 million in the preceding quarter and $1.7 million in the fourth fiscal quarter a year ago.

Fee income for Riverview Asset Management Corp. (“RAMCorp”), a trust company subsidiary of the Bank, increased to $604,000 during the fourth quarter compared to $568,000 in the preceding quarter and $546,000 in the fourth quarter a year ago. For fiscal year 2012, RAMCorp’s fee income increased 13.9% to $2.4 million compared to $2.1 million a year ago, while assets under management increased 9.6% to $359.6 million at March 31, 2012 compared to $328.1 million a year earlier.

Non-interest expense decreased to $8.2 million in the fourth fiscal quarter compared to $10.2 million in the preceding quarter. The improvement was due to a reduction in write-downs of REO properties compared to the December quarter. Non-interest expense was $8.6 million in the fourth quarter a year ago. In fiscal 2012, non-interest expense was $34.4 million compared to $31.5 million in fiscal 2011.

During the third quarter of fiscal 2012 the Company established a valuation allowance against its deferred tax asset. During the quarter ended March 31, 2012, the Company increased its valuation allowance $4.7 million to $15.7 million as a result of the Company’s quarterly net loss. Management will review the deferred tax asset on a quarterly basis to determine the appropriate valuation allowance, if needed. Any future reversals of the deferred tax asset valuation allowance would decrease the Company’s income tax expense and increase its after tax net income in the period of reversal.

Capital and Liquidity

The Bank continues to maintain capital levels in excess of the regulatory requirements to be categorized as “well capitalized” with a total risk-based capital ratio of 12.53% and a Tier 1 leverage ratio of 9.11% at March 31, 2012. To be considered “well capitalized” a bank has to have a total risk-based capital ratio of 10%.

The Company recently completed a capital plan that outlined the Company’s various strategies for maintaining and increasing the Bank’s capital.

At March 31, 2012, the Bank had available total and contingent liquidity of over $500 million, including over $300 million of borrowing capacity from the Federal Home Loan Bank of Seattle and the Federal Reserve Bank of San Francisco, and more than $80 million from cash and short-term investments. At March 31, 2012, the Bank had no outstanding borrowings.

Non-GAAP Financial Measures

In addition to results presented in accordance with generally accepted accounting principles in the United States of America (GAAP), this press release contains certain non-GAAP financial measures. Riverview believes that certain non-GAAP financial measures provide investors with information useful in understanding the company’s financial performance; however, readers of this report are urged to review these non-GAAP financial measures in conjunction with GAAP results as reported.

Financial measures that exclude intangible assets are non-GAAP measures. To provide investors with a broader understanding of capital adequacy, Riverview provides non-GAAP financial measures for tangible common equity, along with the GAAP measure. Tangible common equity is calculated as shareholders’ equity less goodwill and other intangible assets. In addition, tangible assets are total assets less goodwill and other intangible assets.

The following table provides a reconciliation of ending shareholders’ equity (GAAP) to ending tangible shareholders’ equity (non-GAAP), and ending assets (GAAP) to ending tangible assets (non-GAAP).

      March 31, December 31, March 31, (Dollars in thousands)   2012     2011 2011   Shareholders’ equity $ 78,807 $ 91,567 $ 106,944 Goodwill 25,572 25,572 25,572 Other intangible assets, net 415 456 615   Tangible shareholders’ equity $ 52,820 $ 65,539 $ 80,757   Total assets $ 859,198 $ 862,330 $ 859,263 Goodwill 25,572 25,572 25,572 Other intangible assets, net 415 456 615   Tangible assets $ 833,211 $ 836,302 $ 833,076  

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 $859 million, it is the parent company of the 88 year-old Riverview Community Bank, as well as Riverview Asset Management Corp. The Bank offers true community banking services, focusing on providing the highest quality service and financial products to commercial and retail customers. There are 17 branches, including twelve in the Portland-Vancouver area and three lending centers, with a new branch scheduled to open in the rapidly growing metropolitan area of Gresham, Oregon in the summer of 2012.

“Safe Harbor” statement under the Private Securities Litigation Reform Act of 1995: This press release contains forward-looking statements that are subject to risks and uncertainties, including, but not limited to: the Company’s ability to raise common capital, the amount of capital it intends to raise and its intended use of that capital. The credit risks of lending activities, including changes in the level and trend of loan delinquencies and write-offs and changes in the Company’s allowance for loan losses and provision for loan losses that may be impacted by deterioration in the housing and commercial real estate markets; changes in general economic conditions, either nationally or in the Company’s market areas; changes in the levels of general interest rates, and the relative differences between short and long term interest rates, deposit interest rates, the Company’s net interest margin and funding sources; fluctuations in the demand for loans, the number of unsold homes, land and other properties and fluctuations in real estate values in the Company’s market areas; secondary market conditions for loans and the Company’s ability to sell loans in the secondary market; results of examinations of us by the Office of Comptroller of the Currency or other regulatory authorities, including the possibility that any such regulatory authority may, among other things, require us to increase the Company’s reserve for loan losses, write-down assets, change Riverview Community Bank’s regulatory capital position or affect the Company’s ability to borrow funds or maintain or increase deposits, which could adversely affect its liquidity and earnings; the Company’s compliance with regulatory enforcement actions we have entered into with the OCC as successor to the OTS and the possibility that our noncompliance could result in the imposition of additional enforcement actions and additional requirements or restrictions on our operations; legislative or regulatory changes that adversely affect the Company’s business including changes in regulatory policies and principles, or the interpretation of regulatory capital or other rules; the Company’s ability to attract and retain deposits; further increases in premiums for deposit insurance; the Company’s ability to control operating costs and expenses; the use of estimates in determining fair value of certain of the Company’s assets, which estimates may prove to be incorrect and result in significant declines in valuation; difficulties in reducing risks associated with the loans on the Company’s balance sheet; staffing fluctuations in response to product demand or the implementation of corporate strategies that affect the Company’s workforce and potential associated charges; computer systems on which the Company depends could fail or experience a security breach; the Company’s ability to retain key members of its senior management team; costs and effects of litigation, including settlements and judgments; the Company’s ability to successfully integrate any assets, liabilities, customers, systems, and management personnel it may in the future acquire into its operations and the Company’s ability to realize related revenue synergies and cost savings within expected time frames and any goodwill charges related thereto; increased competitive pressures among financial services companies; changes in consumer spending, borrowing and savings habits; the availability of resources to address changes in laws, rules, or regulations or to respond to regulatory actions; the Company’s ability to pay dividends on its common stock; and interest or principal payments on its junior subordinated debentures; adverse changes in the securities markets; inability of key third-party providers to perform their obligations to us; changes in accounting policies and practices, as may be adopted by the financial institution regulatory agencies or the Financial Accounting Standards Board, including additional guidance and interpretation on accounting issues and details of the implementation of new accounting methods; other economic, competitive, governmental, regulatory, and technological factors affecting the Company’s operations, pricing, products and services and the other risks described from time to time in our filings with the Securities and Exchange Commission.

Such forward-looking statements may include projections. Any such projections were not prepared in accordance with published guidelines of the American Institute of Certified Public Accountants or the Securities Exchange Commission regarding projections and forecasts nor have such projections been audited, examined or otherwise reviewed by independent auditors of the Company. In addition, such projections are based upon many estimates and inherently subject to significant economic and competitive uncertainties and contingencies, many of which are beyond the control of management of the Company. Accordingly, actual results may be materially higher or lower than those projected. The inclusion of such projections herein should not be regarded as a representation by the Company that the projections will prove to be correct.

The Company cautions readers not to place undue reliance on any forward-looking statements. Moreover, you should treat these statements as speaking only as of the date they are made and based only on information then actually known to the Company. The Company does not undertake and specifically disclaims any obligation to revise any forward-looking statements to reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such statements. These risks could cause our actual results for fiscal 2012 and beyond to differ materially from those expressed in any forward-looking statements by, or on behalf of, us, and could negatively affect the Company’s operating and stock price performance.

      RIVERVIEW BANCORP, INC. AND SUBSIDIARY Consolidated Balance Sheets (In thousands, except share data) (Unaudited)    

March 31, 2012

     

Dec. 31, 2011

     

March 31, 2011

  ASSETS  

Cash (including interest-earning accounts of $33,437, $23,146 and $37,349)

$ 46,393 $ 36,313 $ 51,752 Certificate of deposits 41,473 42,718 14,900 Loans held for sale 480 659 173 Investment securities held to maturity, at amortized cost 493 493 506 Investment securities available for sale, at fair value 6,314 6,337 6,320 Mortgage-backed securities held to maturity, at amortized 171 177 190 Mortgage-backed securities available for sale, at fair value 974 1,146 1,777 Loans receivable (net of allowance for loan losses of $18,584, $15,926 and $14,968) 668,088 678,626 672,609 Real estate owned 18,731 20,667 27,590 Prepaid expenses and other assets 6,362 6,087 5,887 Accrued interest receivable 2,158 2,378 2,523 Federal Home Loan Bank stock, at cost 7,350 7,350 7,350 Premises and equipment, net 17,068 16,351 16,100 Deferred income taxes, net 603 594 9,447 Mortgage servicing rights, net 278 299 396 Goodwill 25,572 25,572 25,572 Core deposit intangible, net 137 157 219 Bank owned life insurance   16,553     16,406     15,952     TOTAL ASSETS $ 859,198   $ 862,330   $ 859,263     LIABILITIES AND EQUITY   LIABILITIES: Deposit accounts $ 744,455 $ 735,046 $ 716,530 Accrued expenses and other liabilities 9,398 9,574 9,396 Advance payments by borrowers for taxes and insurance 800 409 680 Junior subordinated debentures 22,681 22,681 22,681 Capital lease obligation   2,513     2,531     2,567   Total liabilities 779,847 770,241 751,854   EQUITY: 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, 2012 – 22,471,890 issued and outstanding; 225 225 225 December 31, 2011 - 22,471,890 issued and outstanding; March 31, 2011 – 22,471,890 issued and outstanding; Additional paid-in capital 65,610 65,621 65,639 Retained earnings 14,736 27,493 43,193 Unearned shares issued to employee stock ownership trust (593 ) (619 ) (696 ) Accumulated other comprehensive loss   (1,171 )   (1,153 )   (1,417 ) Total shareholders’ equity 78,807 91,567 106,944   Noncontrolling interest   544     522     465   Total equity   79,351     92,089     107,409     TOTAL LIABILITIES AND EQUITY $ 859,198   $ 862,330   $ 859,263                     RIVERVIEW BANCORP, INC. AND SUBSIDIARY Consolidated Statements of Operations     Three Months Ended Twelve Months Ended (In thousands, except share data) (Unaudited)  

March 31, 2012

   

Dec. 31, 2011

   

March 31, 2011

    March 31, 2012     March 31, 2011 INTEREST INCOME: Interest and fees on loans receivable $ 9,130 $ 9,669 $ 10,239 $ 38,894 $ 42,697 Interest on investment securities-taxable 36 28 49 145 164 Interest on investment securities-non taxable 7 11 12 42 55 Interest on mortgage-backed securities 10 12 18 51 88 Other interest and dividends   127         109         70   400         210 Total interest income 9,310 9,829 10,388 39,532 43,214   INTEREST EXPENSE: Interest on deposits 908 1,061 1,337 4,357 6,569 Interest on borrowings   387         381         364   1,508         1,483 Total interest expense   1,295         1,442         1,701   5,865         8,052 Net interest income 8,015 8,387 8,687 33,667 35,162 Less provision for loan losses   14,300         8,100         500   26,150         5,075   Net interest income (loss) after provision for loan losses (6,285 ) 287 8,187 7,517 30,087   NON-INTEREST INCOME: Fees and service charges 914 962 916 3,996 4,047 Asset management fees 604 568 546 2,367 2,079 Gain on sale of loans held for sale 87 29 54 160 393 Bank owned life insurance income 146 151 150 601 601 Other   (190 )       (180 )       73   (297 )       769 Total non-interest income 1,561 1,530 1,739 6,827 7,889   NON-INTEREST EXPENSE: Salaries and employee benefits 3,850 4,014 4,601 15,889 16,716 Occupancy and depreciation 1,253 1,211 1,180 4,793 4,677 Data processing 285 306 293 1,421 1,067 Amortization of core deposit intangible 20 20 24 82 96 Advertising and marketing expense 184 286 172 998 749 FDIC insurance premium 288 289 400 1,136 1,640 State and local taxes 139 150 136 549 638 Telecommunications 110 109 111 434 428 Professional fees 283 334 352 1,254 1,310 Real estate owned expenses 1,130 2,781 634 5,097 1,817 Other   687         692         663   2,770         2,358 Total non-interest expense   8,229         10,192         8,566   34,423         31,496   INCOME (LOSS) BEFORE INCOME TAXES (12,953 ) (8,375 ) 1,360 (20,079 ) 6,480 PROVISION (BENEFIT) FOR INCOME TAXES   (196 )       8,220         506   8,378         2,165 NET INCOME (LOSS) $ (12,757 )     $ (16,595 )     $ 854 $ (28,457 )     $ 4,315   Earnings (loss) per common share: Basic $ (0.57 ) $ (0.74 ) $ 0.04 $ (1.28 ) $ 0.24 Diluted $ (0.57 ) $ (0.74 ) $ 0.04 $ (1.28 ) $ 0.24 Weighted average number of shares outstanding: Basic 22,327,171 22,321,011 22,302,538 22,317,933 18,341,191 Diluted 22,327,171 22,321,011 22,302,538 22,317,933 18,341,308             (Dollars in thousands) At or for the three months ended At or for the twelve months ended March 31, 2012 Dec. 31, 2011 March 31, 2011 March 31, 2012 March 31, 2011

AVERAGE BALANCES

Average interest–earning assets $ 788,509 $ 790,922 $ 748,907 $ 777,869 $ 758,847 Average interest-bearing liabilities 652,607 651,368 639,503 645,369 649,342 Net average earning assets 135,902 139,554 109,404 132,500 109,505 Average loans 695,994 694,205 685,507 694,387 703,861 Average deposits 741,320 742,899 705,456 731,089 708,169 Average equity 91,207 109,301 108,114 104,878 100,643 Average tangible equity 65,192 83,238 81,896 78,788 74,337    

ASSET QUALITY

March 31, 2012 Dec. 31, 2011 March 31, 2011   Non-performing loans 45,033 32,037 12,323 Non-performing loans to total loans 6.56 % 4.61 % 1.79 % Real estate/repossessed assets owned 18,731 20,667 27,590 Non-performing assets 63,764 52,704 39,913 Non-performing assets to total assets 7.42 % 6.11 % 4.65 % Net loan charge-offs in the quarter 11,642 6,846 2,995 Net charge-offs in the quarter/average net loans 6.73 % 3.91 % 1.77 %   Allowance for loan losses 18,584 15,926 14,968 Average interest-earning assets to average interest-bearing liabilities 120.82 % 121.42 % 117.11 % Allowance for loan losses to non-performing loans 41.27 % 49.71 % 121.46 % Allowance for loan losses to total loans 2.71 % 2.29 % 2.18 % Shareholders’ equity to assets 9.17 % 10.62 % 12.45 %    

CAPITAL RATIOS

Total capital (to risk weighted assets) 12.53 % 13.14 % 14.61 % Tier 1 capital (to risk weighted assets) 11.26 % 11.89 % 13.35 % Tier 1 capital (to leverage assets) 9.11 % 9.74 % 11.24 % Tangible common equity (to tangible assets) 6.34 % 7.84 % 9.69 %    

DEPOSIT MIX

March 31, 2012 Dec. 31, 2011 March 31, 2011   Interest checking $ 106,904 $ 96,757 $ 77,399 Regular savings 45,741 42,453 37,231 Money market deposit accounts 244,919 235,902 236,321 Non-interest checking 116,882 116,854 102,429 Certificates of deposit   230,009     243,080     263,150   Total deposits $ 744,455   $ 735,046   $ 716,530          

COMPOSITION OF COMMERCIAL AND CONSTRUCTION LOANS

  Commercial Commercial Real Estate Real Estate & Construction Commercial Mortgage Construction Total

March 31, 2012

(Dollars in thousands) Commercial $ 87,238 $ - $ - $ 87,238 Commercial construction - - 13,496 13,496 Office buildings - 96,404 - 96,404 Warehouse/industrial - 48,605 - 48,605 Retail/shopping centers/strip malls - 80,595 - 80,595 Assisted living facilities - 35,866 - 35,866 Single purpose facilities - 93,473 - 93,473 Land - 38,888 - 38,888 Multi-family - 42,795 - 42,795 One-to-four family   -   -   12,295   12,295 Total $ 87,238 $ 436,626 $ 25,791 $ 549,655  

March 31, 2011

(Dollars in thousands) Commercial $ 85,511 $ - $ - $ 85,511 Commercial construction - - 8,608 8,608 Office buildings - 95,529 - 95,529 Warehouse/industrial - 49,627 - 49,627 Retail/shopping centers/strip malls - 85,719 - 85,719 Assisted living facilities - 35,162 - 35,162 Single purpose facilities - 98,651 - 98,651 Land - 55,258 - 55,258 Multi-family - 42,009 - 42,009 One-to-four family   -   -   18,777   18,777 Total $ 85,511 $ 461,955 $ 27,385 $ 574,851        

LOAN MIX

March 31, 2012 Dec. 31, 2011 March 31, 2011 Commercial and construction Commercial $ 87,238 $ 86,759 $ 85,511 Other real estate mortgage 436,626 448,288 461,955 Real estate construction   25,791   27,544   27,385 Total commercial and construction 549,655 562,591 574,851 Consumer Real estate one-to-four family 134,975 129,780 110,437 Other installment   2,042   2,181   2,289 Total consumer 137,017 131,961 112,726       Total loans 686,672 694,552 687,577   Less: Allowance for loan losses   18,584   15,926   14,968 Loans receivable, net $ 668,088 $ 678,626 $ 672,609                  

DETAIL OF NON-PERFORMING ASSETS

  Northwest Other Southwest Other Oregon Oregon Washington Washington Other Total

March 31, 2012

(Dollars in thousands) Non-performing assets   Commercial $ 194 $ 746 $ 2,990 $ - $ - $ 3,930 Commercial real estate 2,737 - 9,735 - 2,348 14,820 Land - 1,902 6,383 - 4,700 12,985 Multi-family 627 1,000 - - - 1,627 Commercial construction - - - - - - One-to-four family construction 1,246 6,117 393 - - 7,756 Real estate one-to-four family 678 189 3,048 - - 3,915 Consumer   -   -   -   -   -   - Total non-performing loans 5,482 9,954 22,549 - 7,048 45,033   REO   2,477   5,863   6,825   3,566   -   18,731   Total non-performing assets $ 7,959 $ 15,817 $ 29,374 $ 3,566 $ 7,048 $ 63,764      

DETAIL OF SPEC CONSTRUCTION AND LAND DEVELOPMENT LOANS

  Northwest Other Southwest Other Oregon Oregon Washington Washington Other Total

March 31, 2012

(Dollars in thousands) Land and spec construction loans   Land development loans $ 6,044 $ 3,672 $ 24,472 $ - $ 4,700 $ 38,888 Spec construction loans   1,246   6,117   3,006   392   -   10,761   Total land and spec construction $ 7,290 $ 9,789 $ 27,478 $ 392 $ 4,700 $ 49,649             At or for the three months ended At or for the twelve months ended

SELECTED OPERATING DATA

March 31, 2012

Dec. 31, 2011

March 31, 2011

March 31, 2012

March 31, 2011

  Efficiency ratio (4) 85.93 % 102.77 % 82.16 % 85.01 % 73.16 % Coverage ratio (6) 97.40 % 82.29 % 101.41 % 97.80 % 111.64 % Return on average assets (1) -5.92 % -7.42 % 0.41 % -3.27 % 0.51 % Return on average equity (1) -56.25 % -60.24 % 3.20 % -27.13 % 4.29 %  

NET INTEREST SPREAD

Yield on loans 5.32 % 5.53 % 6.06 % 5.60 % 6.07 % Yield on investment securities 2.36 % 2.66 % 3.12 % 2.63 % 2.96 % Total yield on interest earning assets 4.79 % 4.93 % 5.63 % 5.08 % 5.70 %   Cost of interest bearing deposits 0.59 % 0.67 % 0.88 % 0.70 % 1.06 % Cost of FHLB advances and other borrowings 6.23 % 5.99 % 5.83 % 5.97 % 4.59 % Total cost of interest bearing liabilities 0.80 % 0.88 % 1.08 % 0.91 % 1.24 %   Spread (7) 3.99 % 4.05 % 4.55 % 4.17 % 4.46 % Net interest margin 4.12 % 4.21 % 4.71 % 4.33 % 4.64 %  

PER SHARE DATA

Basic earnings per share (2) $ (0.57 ) $ (0.74 ) $ 0.04 $ (1.28 ) $ 0.24 Diluted earnings per share (3) (0.57 ) (0.74 ) 0.04 (1.28 ) 0.24 Book value per share (5) 3.51 4.07 4.76 3.51 4.76 Tangible book value per share (5) 2.35 2.92 3.59 2.35 3.59 Market price per share: High for the period $ 2.46 $ 2.50 $ 3.21 $ 3.18 $ 3.81 Low for the period 2.03 2.11 2.69 2.03 1.73 Close for period end 2.26 2.37 3.04 2.26 3.04 Cash dividends declared per share - - - - -   Average number of shares outstanding: Basic (2) 22,327,171 22,321,011 22,302,538 22,317,933 18,341,191 Diluted (3) 22,327,171 22,321,011 22,302,538 22,317,933 18,341,308  

(1) Amounts for the quarterly periods are annualized.(2) Amounts exclude ESOP shares not committed to be released.(3) Amounts 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 based on shareholders’ equity and 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.