RVSB Riverview Bancorp Inc

Riverview Bancorp, Inc. (Nasdaq GSM: RVSB). (“Riverview” or the “Company”) today reported a net loss of $16.6 million, or $0.74 per share, in its third fiscal quarter ended December 31, 2011, compared to net income of $579,000, or $0.03 per share, in its third fiscal quarter a year ago. The Company’s financial results were impacted by the previously announced increase in the provision for loan losses of $8.1 million as well as the establishment of an $8.7 million deferred tax asset valuation allowance.

Highlights (at or for the period ended December 31, 2011)

• Credit Quality: Nonperforming loans (NPLs) increased to $32.0 million, or 4.61% of total loans. Real estate owned (REO) decreased to $20.7 million from $25.6 million at September 30, 2011.
• Capital and Liquidity: The Company remains very well capitalized with total risk-based capital ratio of 13.14% and a tangible common equity ratio of 7.84%. Liquidity remains strong with no outstanding borrowings and increased on-balance sheet liquidity.
• Balance Sheet Review: Branch deposit growth remained strong during the quarter. Branch deposits increased $9.6 million and total deposits increased $5.8 million during the quarter. Average deposits increased $18.4 million during the quarter and $31.6 million from the same quarter as the prior year. Loan balances decreased $2.2 million as loan growth has continued to be challenging. Average loan balances decreased $1.7 million during the quarter.
• Net Interest Margin: The net interest margin during the third fiscal quarter was 4.21%.
• Income Statement: Net loss was $16.6 million, or $0.74 per diluted share, as a result of the increase in the provision for loan losses and the deferred tax asset valuation.
• Deferred Tax Asset Valuation: The Company established a deferred tax asset valuation allowance of $8.7 million. This 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 the Company’s net income in these future periods.

“The decision to significantly adjust our loan loss provision will help position Riverview not only for recovery and financial growth, but continued long-term success in an economy that remains frustratingly sluggish,” said Pat Sheaffer, Chairman and CEO. “The good news is that we will be strengthened by this move and our liquidity and capital levels remain strong. We are fortunate to have a solid net interest margin, a growing customer base and successful core operations. It was because of these strong capital levels that we were able to establish this valuation allowance and remain well-capitalized with no impact on our customers or our core business operations.”

Credit Quality

“The real estate market remains challenging,” said Ron Wysaske, President and COO. “Our focus will remain on preserving capital while aggressively identifying problem credits and reducing our exposure on these properties. We have already made significant progress in reducing our exposure to these types of loans, primarily land development and building lot loans, and selling acquired properties as quickly as possible.”

NPLs totaled $32.0 million, or 4.61% of total loans at December 31, 2011, compared to $29.7 million, or 4.27% of total loans at September 30, 2011.

REO balances decreased $4.9 million during the quarter to $20.7 million at December 31, 2011 compared to $25.6 million in the preceding quarter. REO sales during the quarter totaled $4.0 million, with write-downs of $2.5 million and additions of $1.6 million. Riverview currently has several additional properties under contract, including $1.0 million in REO that sold in January 2012.

The allowance for loan losses was $15.9 million at December 31, 2011, representing 2.29% of total loans and 49.71% of NPLs. The provision for loan losses was $8.1 million in the third quarter compared to $2.2 million in the preceding quarter and $1.6 million in the third quarter a year ago.

Balance Sheet Review

Deposit growth was highlighted by continued strong branch deposit growth. Total deposits increased $5.8 million during the quarter to $735.0 million at December 31, 2011 compared to $729.3 million at September 30, 2011 and $696.7 million a year ago. Average deposit balances, which eliminate fluctuations in daily balances, increased $18.4 million during the quarter and $31.6 million a year ago. Core deposits increased $37.8 million to $681.1 million at December 31, 2011 compared to $643.4 million a year ago. Core deposits comprise 92.7% of total deposits at December 31, 2011.

Net loans were $678.6 million at December 31, 2011 compared to $680.8 million at September 30, 2011 and $660.1 million a year ago. The decrease in net loans during the quarter is due to the continued difficult lending environment. Average loan balances decreased $1.7 million during the quarter. New loan production during the past year was concentrated in single-family residential mortgages and small-business commercial loans.

As with the previous quarter, Riverview continues to reduce its exposure to land development and speculative construction loans. The balance of these portfolios was $58.5 million at December 31, 2011 compared to $66.6 million at September 30, 2011 and $75.1 million a year ago. Speculative construction loans were $13.0 million, and land development loans were $45.5 million, representing a combined total of less than 9% of the total loan portfolio at December 31, 2011.

The commercial real estate (“CRE”) loan portfolio continues to perform well with only isolated credit issues. The CRE loan portfolio totaled $358.5 million as of December 31, 2011, of which 29% was owner-occupied and 71% was investor-owned. At December 31, 2011, the CRE portfolio contained nine loans totaling $8.9 million that were nonperforming, representing 2.49% of the total CRE portfolio.

Net Interest Margin

Riverview’s net interest margin was 4.21% for the third quarter compared to 4.35% for the preceding quarter. The decrease was due to a higher balance of cash and liquid assets being held by the Bank, as well as the reversal of interest from non-accrual loans. The increase in cash and liquids assets resulted in a 13 basis point decrease in the net interest margin while the reversal of interest on non-accrual loans decreased the net interest margin by nine basis points. The cost of interest bearing deposits was 0.67% during the current quarter, a decrease of eight basis points from the preceding quarter and a decrease of 33 basis points from the third quarter a year ago.

Income Statement

Net interest income was $8.4 million in the third quarter, which was the same as the preceding quarter. Net interest income was $8.8 million in the third quarter a year ago. The decline in net interest income was due to the reversal of interest on non-accrual loans and the continued pressure on loan yields as a result of the low interest rate environment. Operating revenue, which consists of net interest income plus non-interest income, was $9.9 million during the third quarter compared to $10.3 million in the preceding quarter and $10.7 million in the third quarter a year ago.

Non-interest income was $1.5 million in the third quarter compared to $1.8 million in the preceding quarter and $1.9 million in the third quarter a year ago. In the first nine months of fiscal year 2012, non-interest income was $5.3 million compared to $6.2 million in the first nine months of fiscal year 2011. The decline from the prior year was primarily due to a decline in both gains on the sale of REO properties and gains on sale of loans held for sale.

Fee income for Riverview Asset Management Corp. (“RAMCorp”), a trust company subsidiary of the Bank, totaled $568,000 during the third quarter compared to $570,000 in the preceding quarter and $520,000 in the third quarter a year ago. Fiscal year-to-date, RAMCorp’s fee income totaled $1.8 million compared to $1.5 million in the same period a year ago. Assets under management increased 9.8% to $337.7 million at December 31, 2011 compared to $307.5 million at December 31, 2010.

Non-interest expense was $10.2 million in the third quarter compared to $7.8 million in the preceding quarter and $8.3 million in the third quarter a year ago. Non-Interest expense increased due to an increase in REO expenses of $2.0 million from the prior linked quarter and $1.9 million from the same quarter a year ago. The increase in REO expenses was a result of write-downs on several properties due to updated valuations.

The Company established an $8.7 million valuation allowance against the deferred tax asset balance as of December 31, 2011, which reduced its deferred tax asset to $594,000. Looking forward, management will review the deferred tax asset valuation allowance on a quarterly basis. 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.

The Company initiated its annual goodwill impairment test during the quarter. Any potential goodwill impairment could be material but would be a non‐cash charge and have no effect on the Company’s cash balances, liquidity or tangible equity. In addition, because goodwill is not included in the calculation of regulatory capital, the Company’s well‐capitalized regulatory ratios would not be affected by this potential non‐cash expense. We expect to finalize our goodwill impairment analysis during the fourth quarter of fiscal year 2012 and the results thereof will be disclosed in the fourth quarter financial statements.

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 13.14% and a Tier 1 leverage ratio of 9.74% at December 31, 2011. The Company also has an additional $11.0 million in assets that could be used in the future to boost the Bank’s capital levels or support future growth.

At December 31, 2011, the Bank had available total and contingent liquidity of over $490 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 $70 million from cash and short-term investments. At December 31, 2011, the Bank had no outstanding borrowings.

Company Growth

Riverview recently began construction on its new branch in Gresham, Oregon, with the branch expected to open in the Summer 2012. The 5,000 square-foot full-service branch will fill a long-standing need for community banking in a rapidly growing metropolitan area and will be one of four Riverview branches in Oregon.

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 reconciliations of ending shareholders’ equity (GAAP) to ending tangible shareholders’ equity (non-GAAP), and ending assets (GAAP) to ending tangible assets (non-GAAP).

  (Dollars in thousands)   December 31,2011   September 30,2011   December 31,2010   March 31,2011   Shareholders’ equity $ 91,567 $ 108,149 $ 106,030 $ 106,944 Goodwill 25,572 25,572 25,572 25,572 Other intangible assets, net 456 511 665 615   Tangible shareholders’ equity $ 65,539 $ 82,066 $ 79,793 $ 80,757   Total assets $ 862,330 $ 873,396 $ 838,417 $ 859,263 Goodwill 25,572 25,572 25,572 25,572 Other intangible assets, net 456 511 665 615   Tangible assets $ 836,302 $ 847,313 $ 812,180 $ 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 $862 million, it is the parent company of the 88 year-old Riverview Community Bank, as well as Riverview Asset Management Corp. There are 17 branches, including twelve in the Portland-Vancouver area and three lending centers. The Bank offers true community banking services, focusing on providing the highest quality service and financial products to commercial and retail customers.

“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 Thrift Supervision 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)   December 31, 2011   September 30, 2011   December 31, 2010   March 31, 2011 ASSETS          

Cash (including interest-earning accounts of $23,146, $32,955, $27,548 and $37,349)

$ 36,313 $ 50,148 $ 35,900 $ 51,752 Certificate of deposits 42,718 23,847 17,141 14,900 Loans held for sale 659 264 581 173 Investment securities held to maturity, at amortized cost 493 499 505 506 Investment securities available for sale, at fair value 6,337 6,707 6,255 6,320 Mortgage-backed securities held to maturity, at amortized 177 181 194 190 Mortgage-backed securities available for sale, at fair value 1,146 1,341 2,007 1,777

Loans receivable (net of allowance for loan losses of $15,926, $14,672, $17,463, and $14,968)

678,626 680,838 660,075 672,609 Real estate and other pers. property owned 20,667 25,585 30,704 27,590 Prepaid expenses and other assets 6,087 6,020 6,206 5,887 Accrued interest receivable 2,378 2,402 2,498 2,523 Federal Home Loan Bank stock, at cost 7,350 7,350 7,350 7,350 Premises and equipment, net 16,351 16,568 15,655 16,100 Deferred income taxes, net 594 9,307 11,307 9,447 Mortgage servicing rights, net 299 334 423 396 Goodwill 25,572 25,572 25,572 25,572 Core deposit intangible, net 157 177 242 219 Bank owned life insurance   16,406     16,256     15,802     15,952     TOTAL ASSETS $ 862,330   $ 873,396   $ 838,417   $ 859,263     LIABILITIES AND EQUITY   LIABILITIES: Deposit accounts $ 735,046 $ 729,259 $ 696,749 $ 716,530 Accrued expenses and other liabilities 9,574 9,459 9,697 9,396 Advance payments by borrowers for taxes and insurance 409 797 227 680 Junior subordinated debentures 22,681 22,681 22,681 22,681 Capital lease obligation   2,531     2,544     2,578     2,567   Total liabilities 770,241 764,740 731,932 751,854   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, December 31, 2011 - 22,471,890 issued and outstanding; September 30, 2011 - 22,471,890 issued and outstanding; 225 225 225 225 December 31, 2010 – 22,471,890 issued and outstanding; March 31, 2011 – 22,471,890 issued and outstanding; Additional paid-in capital 65,621 65,626 65,642 65,639 Retained earnings 27,493 44,088 42,339 43,193 Unearned shares issued to employee stock ownership trust (619 ) (644 ) (722 ) (696 ) Accumulated other comprehensive loss   (1,153 )   (1,146 )   (1,454 )   (1,417 ) Total shareholders’ equity 91,567 108,149 106,030 106,944   Noncontrolling interest   522     507     455     465   Total equity   92,089     108,656     106,485     107,409     TOTAL LIABILITIES AND EQUITY $ 862,330   $ 873,396   $ 838,417   $ 859,263       RIVERVIEW BANCORP, INC. AND SUBSIDIARY Consolidated Statements of Income   Three Months Ended   Nine Months Ended (In thousands, except share data) (Unaudited)   Dec. 31, 2011   Sept. 30, 2011   Dec. 31, 2010   Dec. 31, 2011   Dec. 31, 2010 INTEREST INCOME:       Interest and fees on loans receivable $ 9,669 $ 9,815 $ 10,593 $ 29,764 $ 32,458 Interest on investment securities-taxable 28 36 28 109 115 Interest on investment securities-non taxable 11 12 14 35 43 Interest on mortgage-backed securities 12 13 21 41 70 Other interest and dividends   109       89     77   273       140 Total interest income 9,829 9,965 10,733 30,222 32,826   INTEREST EXPENSE: Interest on deposits 1,061 1,158 1,567 3,449 5,232 Interest on borrowings   381       372     359   1,121       1,119 Total interest expense   1,442       1,530     1,926   4,570       6,351 Net interest income 8,387 8,435 8,807 25,652 26,475 Less provision for loan losses   8,100       2,200     1,600   11,850       4,575   Net interest income after provision for loan losses 287 6,235 7,207 13,802 21,900   NON-INTEREST INCOME: Fees and service charges 962 1,078 955 3,082 3,131 Asset management fees 568 570 520 1,763 1,533 Gain on sale of loans held for sale 29 21 96 73 339 Bank owned life insurance income 151 153 151 455 451 Other   (180 )     10     142   (107 )     696 Total non-interest income 1,530 1,832 1,864 5,266 6,150   NON-INTEREST EXPENSE: Salaries and employee benefits 4,014 3,514 4,090 12,039 12,115 Occupancy and depreciation 1,211 1,166 1,208 3,540 3,497 Data processing 306 542 274 1,136 774 Amortization of core deposit intangible 20 20 23 62 72 Advertising and marketing expense 286 283 187 814 577 FDIC insurance premium 289 286 402 848 1,240 State and local taxes 150 81 184 410 502 Telecommunications 109 108 105 324 317 Professional fees 334 298 311 971 958 Real estate owned expenses 2,781 756 897 3,967 1,183 Other   692       791     572   2,083       1,695 Total non-interest expense   10,192       7,845     8,253   26,194       22,930   INCOME (LOSS) BEFORE INCOME TAXES (8,375 ) 222 818 (7,126 ) 5,120 PROVISION FOR INCOME TAXES   8,220       41     239   8,574       1,659 NET INCOME (LOSS) $ (16,595 )   $ 181   $ 579 $ (15,700 )   $ 3,461   Earnings (loss) per common share: Basic $ (0.74 ) $ 0.01 $ 0.03 $ (0.70 ) $ 0.20 Diluted $ (0.74 ) $ 0.01 $ 0.03 $ (0.70 ) $ 0.20 Weighted average number of shares outstanding: Basic 22,321,011 22,314,854 22,296,378 22,314,876 17,044,751 Diluted 22,321,011 22,314,854 22,297,043 22,314,876 17,044,751     (Dollars in thousands)   At or for the three months ended   At or for the nine months ended Dec. 31, 2011   Sept. 30, 2011   Dec. 31, 2010 Dec. 31, 2011   Dec. 31, 2010

AVERAGE BALANCES

Average interest–earning assets $ 790,922 $ 770,719 $ 760,826 $ 774,326 $ 761,816 Average interest-bearing liabilities 651,368 640,605 645,014 642,974 653,352 Net average earning assets 139,554 130,114 115,812 131,352 108,464 Average loans 694,205 695,941 692,025 693,856 709,868 Average deposits 742,899 724,473 711,305 727,704 709,057 Average equity 109,301 109,729 107,728 109,402 98,198 Average tangible equity 83,238 83,614 81,443 83,287 71,864    

ASSET QUALITY

Dec. 31, 2011 Sept. 30, 2011 Dec. 31, 2010   Non-performing loans 32,037 29,680 16,879 Non-performing loans to total loans 4.61 % 4.27 % 2.49 % Real estate/repossessed assets owned 20,667 25,585 30,704 Non-performing assets 52,704 55,265 47,583 Non-performing assets to total assets 6.11 % 6.33 % 5.68 % Net loan charge-offs in the quarter 6,846 3,587 3,166 Net charge-offs in the quarter/average net loans 3.91 % 2.04 % 1.82 %   Allowance for loan losses 15,926 14,672 17,463

Average interest-earning assets to average interest-bearing liabilities

121.42 % 120.31 % 117.95 %

Allowance for loan losses to non-performing loans

49.71 % 49.43 % 103.46 % Allowance for loan losses to total loans 2.29 % 2.11 % 2.58 % Shareholders’ equity to assets 10.62 % 12.38 % 12.65 %    

CAPITAL RATIOS

Total capital (to risk weighted assets) 13.14 % 14.29 % 14.72 % Tier 1 capital (to risk weighted assets) 11.89 % 13.03 % 13.46 % Tier 1 capital (to leverage assets) 9.74 % 10.79 % 11.02 % Tangible common equity (to tangible assets) 7.84 % 9.69 % 9.82 %    

DEPOSIT MIX

Dec. 31, 2011 Sept. 30, 2011 Dec. 31, 2010 March 31, 2011   Interest checking $ 96,757 $ 92,006 $ 78,327 $ 77,399 Regular savings 42,453 40,871 34,913 37,231 Money market deposit accounts 235,902 227,095 216,155 236,321 Non-interest checking 116,854 116,645 94,269 102,429 Certificates of deposit   243,080     252,642     273,085     263,150 Total deposits $ 735,046   $ 729,259   $ 696,749   $ 716,530    

COMPOSITION OF COMMERCIAL AND CONSTRUCTION LOANS

    Commercial   CommercialReal EstateMortgage   Real EstateConstruction   Commercial& ConstructionTotal

December 31, 2011

(Dollars in thousands) Commercial $ 86,759 $ - $ - $ 86,759 Commercial construction - - 10,772 10,772 Office buildings - 99,880 - 99,880 Warehouse/industrial - 43,868 - 43,868 Retail/shopping centers/strip malls - 83,207 - 83,207 Assisted living facilities - 37,160 - 37,160 Single purpose facilities - 94,385 - 94,385 Land - 45,502 - 45,502 Multi-family - 44,286 - 44,286 One-to-four family   -     -     16,772     16,772 Total $ 86,759   $ 448,288   $ 27,544   $ 562,591  

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

Dec. 31, 2011 Sept. 30, 2011 Dec. 31, 2010 March 31, 2011 Commercial and construction Commercial $ 86,759 $ 88,017 $ 85,768 $ 85,511 Other real estate mortgage 448,288 455,153 454,058 461,955 Real estate construction   27,544   30,221   32,870   27,385 Total commercial and construction 562,591 573,391 572,696 574,851 Consumer Real estate one-to-four family 129,780 119,805 102,488 110,437 Other installment   2,181   2,314   2,354   2,289 Total consumer 131,961 122,119 104,842 112,726         Total loans 694,552 695,510 677,538 687,577   Less: Allowance for loan losses   15,926   14,672   17,463   14,968 Loans receivable, net $ 678,626 $ 680,838 $ 660,075 $ 672,609    

DETAIL OF NON-PERFORMING ASSETS

            NorthwestOregon OtherOregon SouthwestWashington OtherWashington Other Total

December 31, 2011

(dollars in thousands) Non-performing assets   Commercial $ 957 $ 601 $ 1,440 $ - $ - $ 2,998 Commercial real estate 2,756 4 3,760 - 2,411 8,931 Land - 533 8,970 - 5,000 14,503 Multi-family - 598 - - - 598 Commercial construction - - - - - - One-to-four family construction 1,579 1,707 143 - - 3,429 Real estate one-to-four family 903 433 242 - - 1,578 Consumer   -   -   -   -   -   - Total non-performing loans 6,195 3,876 14,555 - 7,411 32,037   REO   3,815   6,676   6,764   3,412   -   20,667   Total non-performing assets $ 10,010 $ 10,552 $ 21,319 $ 3,412 $ 7,411 $ 52,704      

DETAIL OF SPEC CONSTRUCTION AND LAND DEVELOPMENT LOANS

  NorthwestOregon OtherOregon SouthwestWashington OtherWashington Other Total

December 31, 2011

(dollars in thousands) Land and Spec Construction Loans   Land Development Loans $ 6,054 $ 4,216 $ 30,232 $ - $ 5,000 $ 45,502 Spec Construction Loans   1,579   8,191   3,184   71   -   13,025   Total Land and Spec Construction $ 7,633 $ 12,407 $ 33,416 $ 71 $ 5,000 $ 58,527       At or for the three months ended   At or for the nine months ended

SELECTED OPERATING DATA

Dec. 31, 2011

 

Sept. 30, 2011

 

Dec. 31, 2010

Dec. 31, 2011

 

Dec. 31, 2010

  Efficiency ratio (4) 102.77 % 76.41 % 77.34 % 84.72 % 70.28 % Coverage ratio (6) 82.29 % 107.52 % 106.71 % 97.93 % 115.46 % Return on average assets (1) -7.42 % 0.08 % 0.27 % -2.39 % 0.54 % Return on average equity (1) -60.24 % 0.65 % 2.13 % -19.05 % 4.68 %  

NET INTEREST SPREAD

Yield on loans 5.53 % 5.59 % 6.07 % 5.69 % 6.07 % Yield on investment securities 2.66 % 2.59 % 2.74 % 2.72 % 2.91 % Total yield on interest earning assets 4.93 % 5.13 % 5.60 % 5.18 % 5.72 %   Cost of interest bearing deposits 0.67 % 0.75 % 1.00 % 0.74 % 1.12 % Cost of FHLB advances and other borrowings 5.99 % 5.86 % 5.64 % 5.89 % 4.29 % Total cost of interest bearing liabilities 0.88 % 0.95 % 1.18 % 0.94 % 1.29 %   Spread (7) 4.05 % 4.18 % 4.42 % 4.24 % 4.43 % Net interest margin 4.21 % 4.35 % 4.60 % 4.40 % 4.62 %  

PER SHARE DATA

Basic earnings per share (2) $ (0.74 ) $ 0.01 $ 0.03 $ (0.70 ) $ 0.20 Diluted earnings per share (3) (0.74 ) 0.01 0.03 (0.70 ) 0.20 Book value per share (5) 4.07 4.81 4.72 4.07 4.72 Tangible book value per share (5) 2.92 3.65 3.55 2.92 3.55 Market price per share: High for the period $ 2.50 $ 3.12 $ 2.80 $ 3.18 $ 3.81 Low for the period 2.11 2.20 2.00 2.11 1.73 Close for period end 2.37 2.40 2.72 2.37 2.72 Cash dividends declared per share - - - - -   Average number of shares outstanding: Basic (2) 22,321,011 22,314,854 22,296,378 22,314,876 17,044,751 Diluted (3) 22,321,011 22,314,854 22,297,043 22,314,876 17,044,751   (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.