UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): October 24, 2019

RIVERVIEW BANCORP, INC.

(Exact name of registrant as specified in its charter)

Registrant’s telephone number, including area code:  (360) 693-6650

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company [ ]

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]

Item 2.02    Results of Operations and Financial Condition.

On October 24, 2019, Riverview Bancorp, Inc. issued its earnings release for the quarter ended September 30, 2019.  A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

Item 9.01    Financial Statements and Exhibits.

(d) Exhibits

The following exhibit is being furnished herewith and this list shall constitute the exhibit index:

99.1 News Release of Riverview Bancorp, Inc. dated October 24, 2019.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	RIVERVIEW BANCORP, INC.
Date:  October 24, 2019	/s/ David Lam
	David Lam
	Chief Financial Officer (Principal Financial Officer)

---

 

Riverview Bancorp Reports Record Earnings of $4.5 Million in Second Quarter of Fiscal Year 2020;

Results Driven by Solid Deposit Growth, Increased Revenue Generation and Improved Operating Efficiencies

Vancouver, WA – October 24, 2019 - Riverview Bancorp, Inc. (Nasdaq GSM: RVSB) (“Riverview” or the “Company”) today reported earnings for the second fiscal quarter ended September 30, 2019 increased to $4.5 million, or $0.20 per diluted share, compared to $4.2 million, or $0.18 per diluted share, in the preceding quarter, and $4.2 million, or $0.19 per diluted share, in the second fiscal quarter a year ago.

“Riverview’s second quarter financial results continue to demonstrate the strength of our franchise, generating record earnings for both the second quarter and for the first six months of fiscal year 2020,” said Kevin Lycklama, president and chief executive officer. “I am extremely proud of the outstanding job by our entire team. Growing our deposits by more than $60 million and producing record quarterly earnings is a truly remarkable accomplishment.”

Second Quarter Highlights (at or for the period ended September 30, 2019)

•	Record quarterly net income of $4.5 million, or $0.20 per diluted share.

•	Net interest margin (NIM) increased to 4.36% for the quarter.

•	Return on average assets improved to 1.55% for the second quarter.

•	Total deposits increased $60.0 million during the quarter to $982.3 million.

•	FHLB Advances paid down to zero during the quarter.

•	Total loans were $881.3 million at September 30, 2019.

•	Asset quality remains strong, with non-performing assets at 0.13% of total assets.

•	Total risk-based capital ratio was 17.27% and Tier 1 leverage ratio was 11.79%.

•	Paid a quarterly cash dividend of $0.045 per share, generating a current dividend yield of 2.49% based on the share price at close of market on October 15, 2019.

Return on average assets improved to 1.55% in the second quarter of fiscal year 2020 compared to 1.46% in the second quarter of fiscal 2019. Return on average equity and average tangible equity (non-GAAP) remained healthy at 12.68% and 15.79%, respectively, compared to 13.68% and 17.75% for the second fiscal quarter a year ago.

“Riverview’s operating performance during the quarter was outstanding, generating strong core earnings, while maintaining excellent asset quality,” stated Lycklama. “We continue to monitor and manage our overhead expenses, as we grow our franchise.”

Total net revenues increased during the quarter to $14.9 million compared to $14.6 million in both the prior quarter and the year ago quarter.  Year-to-date, total net revenues increased to $29.5 million from $29.2 million in the same period a year ago. The increase was primarily driven by an increase in average loans and non-interest income.

Net interest income for the quarter was $11.7 million compared to $11.5 million in the preceding quarter and $11.8 million in the second fiscal quarter a year ago. In the first six months of fiscal 2020, net interest income was $23.2 million, compared to $23.4 million in the first six months of fiscal 2019. The decrease in net interest income for the six months ended September 30, 2019 was primarily attributable to an increase in funding costs compared to the same

RVSB Reports Second Quarter Fiscal 2020 Results

October 24, 2019

Page 2

prior year period in addition to $585,000 of non-accrual interest from a prior charged off loan that was collected during the six months ended September 30, 2018.

Riverview’s second fiscal quarter NIM was 4.36% compared to 4.33% in the prior quarter and 4.39% in the second fiscal quarter a year ago. The accretion on purchased loans totaled $78,000 during the current quarter compared to $108,000 during the preceding quarter and $152,000 in the same period a year ago, resulting in a two basis point increase in the NIM for the current period compared to a four basis point increase for the preceding quarter and a seven basis point increase for the same period a year ago. Net fees on loan prepayments were $112,000 for the second fiscal quarter of 2020 which added four basis points to the NIM compared to $31,000 adding one basis point to the NIM in the preceding quarter and $172,000 adding six basis points to the NIM in the second fiscal quarter a year ago. In the first six months of fiscal 2020, Riverview’s NIM was 4.35% compared to 4.43% in the same period a year earlier. Net fees on loan prepayments were $144,000 for the six month ended September 30, 2019 which added three basis points to the NIM compared to $282,000 adding five basis points to the NIM in the same six month period a year ago.

“Our net interest margin remains strong, however, funding costs increased during the quarter due to deposit pricing pressures as we increased rates on certain deposit products,” said David Lam, executive vice president and chief financial officer. “We anticipate the increased competition in our market areas will continue to place pressure on both loan and deposit pricing.”

The weighted average rate on loans originated during the quarter ended September 30, 2019, was 5.21% compared to 5.73% for the quarter ended June 30, 2019, and 5.63% for the quarter ended September 30, 2018. The decrease in the weighted average rate on loans was attributed to the recent fed rate decreases along with pricing competition in our market area.

Non-interest income increased to $3.2 million in the second fiscal quarter compared to $3.1 million in the preceding quarter and $2.8 million in the second fiscal quarter a year ago. The improvement in non-interest income was primarily driven by an increase in fees and service charges.  In the first six months of fiscal 2020, non-interest income increased 10.4% to $6.3 million compared to $5.7 million in the same period a year ago.

Asset management fees increased 15.6% compared to the same quarter a year ago. Asset management fees were $1.1 million during the second fiscal quarter compared to $943,000 in the second fiscal quarter a year ago. In the first six months of fiscal 2020, asset management fees increased 19.5% to $2.2 million compared to $1.9 million in the first six months of fiscal 2019. Riverview Trust Company’s assets under management decreased slightly to $690.5 million at September 30, 2019 compared to $694.8 million three months earlier and increased $76.5 million, or 12.5%, compared to $614.0 million one year earlier.

Non-interest expense decreased to $9.0 million during the second fiscal quarter of 2020 compared to $9.2 million in the preceding quarter. The decrease during the current quarter was, in part, related to an $81,000 gain on the disposal of equipment in addition to the utilization of the Federal Deposit Insurance Corporation (FDIC) credits of $76,000 to offset current quarter FDIC insurance assessments as a result of the FDIC deposit insurance fund exceeding the statutorily required minimum reserve ratio of 1.35% and assessment credits being issued when the reserve ratio is at or above 1.38%. Year-to-date, non-interest expense was $18.2 million compared to $17.9 million in the first six months of fiscal 2019. The increase in non-interest expense is attributable to strategic growth initiatives and improved digital product offerings which increased our technology related expenses as well as the addition of several experienced bankers.

The efficiency ratio improved to 60.47% for the second fiscal quarter compared to 62.95% in the preceding quarter and 60.99% in the second fiscal quarter a year ago.

For the second fiscal quarter of 2020, income tax expense totaled $1.4 million, for an effective tax rate of 23.0%, compared to 22.5% in the first fiscal quarter of 2020 and 22.4% in the second fiscal quarter of 2019.

Total deposits increased $60.0 million during the quarter to $982.3 million compared to $922.3 million three months earlier. Deposit costs increased from 0.15% in the previous quarter to 0.28%, reflecting the continued deposit pricing pressures in our local markets.

“We made significant progress in growing our deposits during the quarter,” said Lycklama. “With the increase in deposits, we were able to repay our outstanding FHLB borrowings and reduce our loan to deposit ratio to 89.7% compared to 96.3% in the previous quarter.”

Federal Home Loan Bank (FHLB) advances were paid down to zero during the second fiscal quarter of 2020 compared to $56.9 million in outstanding FHLB advances at June 30, 2019.

Riverview’s total loans decreased modestly during the quarter to $881.3 million compared to $888.0 million three months earlier and increased $31.5 million, or 3.7%, when compared to $849.8 million a year ago. Total loans continue to be impacted by an increase in paydowns on existing loans, however, the loan pipeline remained healthy at $43.8 million at September 30, 2019 compared to $47.7 million at the end of the prior quarter. Undisbursed construction loans totaled $53.3 million at September 30, 2019, compared to $69.0 million three months earlier, with the majority of the undisbursed construction loans expected to fund over the next several quarters.

Shareholders’ equity increased to $143.1 million at September 30, 2019 compared to $138.7 million three months earlier and $122.4 million a year earlier. Tangible book value per share (non-GAAP) increased to $5.06 at September 30, 2019 compared to $4.88 at June 30, 2019, and $4.17 at September 30, 2018. Riverview will pay a quarterly cash dividend of $0.045 per share on October 25, 2019, to shareholders of record on October 14, 2019.

Riverview’s asset quality continues to improve, with non-performing loans, non-performing assets and classified assets all decreasing compared to a year ago. Riverview recorded no provision for loan losses during the second fiscal quarter of 2020 or in the linked quarter. In the second fiscal quarter a year ago, Riverview recorded a provision for loan losses of $250,000.

Non-performing loans totaled $1.5 million, or 0.17% of total loans, at September 30, 2019 compared to $1.5 million, or 0.16% of total loans, at June 30, 2019 and $2.3 million, or 0.27% of total loans, at September 30, 2018. Riverview has had no real estate owned balances for the last 4 quarters.

Net loan charge offs were $6,000 during the second fiscal quarter of 2020 compared to $15,000 in the preceding quarter and $86,000 in the second fiscal quarter a year ago.

Classified assets decreased to $4.3 million at September 30, 2019 compared to $6.0 million at June 30, 2019 and $6.2 million at September 30, 2018. The classified asset to total capital ratio was 3.0% at September 30, 2019 compared to 4.1% three months earlier and 4.7% a year earlier.

At September 30, 2019, the allowance for loan losses totaled $11.4 million, which was unchanged compared to three months earlier. The allowance for loan losses represented 1.30% of total loans at September 30, 2019 compared to 1.29% of total loans at the end of the prior quarter. Included in the carrying value of loans are net discounts on the MBank purchased loans, which may reduce the need for an allowance for loan losses on these loans because they are carried at an amount below the outstanding principal balance. The remaining net discount on these purchased loans was $1.3 million at September 30, 2019 compared to $1.4 million at the end of the prior quarter and $1.9 million at September 30, 2018.

Riverview continues to maintain capital levels well in excess of the regulatory requirements to be categorized as “well capitalized” with a total risk-based capital ratio of 17.27% and a Tier 1 leverage ratio of 11.79% at September 30, 2019. The Company’s tangible common equity to average tangible assets ratio (non-GAAP) increased to 10.06% at September 30, 2019.

In addition to results presented in accordance with generally accepted accounting principles (“GAAP”), this press release contains certain non-GAAP financial measures. We believe 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 shareholders’ 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. We calculate tangible book value per share by dividing tangible shareholders’ equity by the number of common shares outstanding. This non-GAAP financial measure has inherent limitations, is not required to be uniformly applied and is not audited. Further, the non-GAAP financial measure should not be considered in isolation or as a substitute for book value per share or total shareholders' equity determined in accordance with GAAP and may not be comparable to similarly titled measures reported by other companies. Reconciliations of the GAAP and non-GAAP financial measures are presented below.

(Dollars in thousands)		September 30, 2019				June 30, 2019				September 30, 2018				March 31, 2019
Shareholders' equity		$	143,119			$	138,663			$	122,410			$	133,122
Goodwill			27,076				27,076				27,076				27,076
Core deposit intangible, net			839				880				1,011				920
Tangible shareholders' equity		$	115,204			$	110,707			$	94,323			$	105,126
Total assets		$	1,173,019			$	1,165,234			$	1,148,447			$	1,156,921
Goodwill			27,076				27,076				27,076				27,076
Core deposit intangible, net			839				880				1,011				920
Tangible assets		$	1,145,104			$	1,137,278			$	1,120,360			$	1,128,925

Riverview Bancorp, Inc. (www.riverviewbank.com) is headquartered in Vancouver, Washington – just north of Portland, Oregon, on the I-5 corridor. With assets of $1.17 billion at September 30, 2019, it is the parent company of the 96-year-old Riverview Community Bank, as well as Riverview Trust Company. The Bank offers true community banking services, focusing on providing the highest quality service and financial products to commercial and retail clients. There are 18 branches, including 14 in the Portland-Vancouver area and three lending centers. For the past 6 years, Riverview has been named Best Bank by the readers of The Vancouver Business Journal, The Columbian and The Gresham Outlook.

“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 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; 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 SEC.

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 2020 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.

(In thousands, except share data)  (Unaudited)		September 30, 2019				June 30, 2019				September 30, 2018				March 31, 2019
ASSETS
Cash (including interest-earning accounts of $32,632, $6,852,		$	48,888			$	24,112			$	27,080			$	22,950
$12,537 and $5,844)
Certificate of deposits held for investment			249				747				3,984				747
Loans held for sale			310				-				-				909
Investment securities:
Available for sale, at estimated fair value			163,682				170,762				190,792				178,226
Held to maturity, at amortized cost			31				33				38				35
Loans receivable (net of allowance for loan losses of $11,436,
$11,442, $11,513, and $11,457)			869,880				876,535				838,329				864,659
Prepaid expenses and other assets			8,136				8,705				5,104				4,596
Accrued interest receivable			3,827				3,989				3,671				3,919
Federal Home Loan Bank stock, at cost			1,380				3,658				1,353				3,644
Premises and equipment, net			15,490				15,453				15,403				15,458
Deferred income taxes, net			3,296				3,520				5,352				4,195
Mortgage servicing rights, net			247				280				344				296
Goodwill			27,076				27,076				27,076				27,076
Core deposit intangible, net			839				880				1,011				920
Bank owned life insurance			29,688				29,484				28,910				29,291
TOTAL ASSETS		$	1,173,019			$	1,165,234			$	1,148,447			$	1,156,921
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES:
Deposits		$	982,275			$	922,274			$	982,272			$	925,068
Accrued expenses and other liabilities			17,502				17,675				13,767				12,536
Advance payments by borrowers for taxes and insurance			1,117				689				1,050				631
Federal Home Loan Bank advances			-				56,941				-				56,586
Junior subordinated debentures			26,619				26,597				26,530				26,575
Capital lease obligations			2,387				2,395				2,418				2,403
Total liabilities			1,029,900				1,026,571				1,026,037				1,023,799
SHAREHOLDERS' EQUITY:
Serial preferred stock, $.01 par value; 250,000 authorized,
issued and outstanding, none			-				-				-				-
Common stock, $.01 par value; 50,000,000 authorized,
September 30, 2019 - 22,748,385 issued and outstanding;
June 30, 2019 – 22,705,385 issued and outstanding;			227				226				226				226
September 30, 2018 - 22,598,712 issued and outstanding;
March 31, 2019 – 22,607,712 issued and outstanding;
Additional paid-in capital			65,559				65,326				65,044				65,094
Retained earnings			77,112				73,602				63,642				70,428
Accumulated other comprehensive income (loss)			221				(491	)			(6,502	)			(2,626	)
Total shareholders’ equity			143,119				138,663				122,410				133,122
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY		$	1,173,019			$	1,165,234			$	1,148,447			$	1,156,921

Page 7

RIVERVIEW BANCORP, INC. AND SUBSIDIARY
Consolidated Statements of Income
		Three Months Ended												Six Months Ended
(In thousands, except share data)   (Unaudited)		Sept. 30, 2019				June 30, 2019				Sept. 30, 2018				Sept. 30, 2019				Sept. 30, 2018
INTEREST INCOME:
Interest and fees on loans receivable		$	11,893			$	11,554			$	11,119			$	23,447			$	22,079
Interest on investment securities - taxable			860				878				1,116				1,738				2,314
Interest on investment securities - nontaxable			36				37				36				73				73
Other interest and dividends			93				87				118				180				211
Total interest and dividend income			12,882				12,556				12,389				25,438				24,677
INTEREST EXPENSE:
Interest on deposits			660				351				259				1,011				519
Interest on borrowings			503				735				352				1,238				710
Total interest expense			1,163				1,086				611				2,249				1,229
Net interest income			11,719				11,470				11,778				23,189				23,448
Provision for loan losses			-				-				250				-				50
Net interest income after provision for loan losses			11,719				11,470				11,528				23,189				23,398
NON-INTEREST INCOME:
Fees and service charges			1,752				1,637				1,514				3,389				3,086
Asset management fees			1,090				1,143				943				2,233				1,869
Net gain on sale of loans held for sale			46				96				44				142				196
Bank owned life insurance			204				193				174				397				353
Other, net			77				67				165				144				205
Total non-interest income, net			3,169				3,136				2,840				6,305				5,709
NON-INTEREST EXPENSE:
Salaries and employee benefits			5,697				5,715				5,283				11,412				10,861
Occupancy and depreciation			1,277				1,320				1,351				2,597				2,710
Data processing			669				680				622				1,349				1,253
Amortization of core deposit intangible			41				40				46				81				92
Advertising and marketing			298				210				266				508				458
FDIC insurance premium			-				80				85				80				161
State and local taxes			174				195				182				369				350
Telecommunications			76				86				88				162				181
Professional fees			263				325				387				588				671
Other			508				543				605				1,051				1,197
Total non-interest expense			9,003				9,194				8,915				18,197				17,934
INCOME BEFORE INCOME TAXES			5,885				5,412				5,453				11,297				11,173
PROVISION FOR INCOME TAXES			1,351				1,220				1,224				2,571				2,502
NET INCOME		$	4,534			$	4,192			$	4,229			$	8,726			$	8,671
Earnings per common share:
Basic		$	0.20			$	0.19			$	0.19			$	0.39			$	0.38
Diluted		$	0.20			$	0.18			$	0.19			$	0.38			$	0.38
Weighted average number of common shares outstanding:
Basic			22,643,103				22,619,580				22,579,839				22,631,406				22,575,009
Diluted			22,702,696				22,685,343				22,658,737				22,694,067				22,655,297

Page 8

(Dollars in thousands)		At or for the three months ended												At or for the six months ended
		Sept. 30, 2019				June 30, 2019				Sept. 30, 2018				Sept. 30, 2019				Sept. 30, 2018
AVERAGE BALANCES
Average interest–earning assets		$	1,069,209			$	1,066,247			$	1,064,386			$	1,067,737			$	1,056,522
Average interest-bearing liabilities			708,846				728,976				717,085				718,856				721,550
Net average earning assets			360,363				337,271				347,301				348,881				334,972
Average loans			889,208				877,427				839,497				883,350				826,309
Average deposits			952,283				920,558				986,948				936,507				979,341
Average equity			142,195				136,592				122,630				139,409				120,813
Average tangible equity (non-GAAP)			114,256				108,614				94,515				111,450				92,675

ASSET QUALITY		Sept. 30, 2019		June 30, 2019		Sept. 30, 2018
Non-performing loans		$            1,485		$            1,457		$            2,283
Non-performing loans to total loans		0.17%		0.16%		0.27%
Real estate/repossessed assets owned		$                    -		$                    -		$                    -
Non-performing assets		$            1,485		$            1,457		$            2,283
Non-performing assets to total assets		0.13%		0.13%		0.20%
Net loan charge-offs in the quarter		$                   6		$                 15		$                 86
Net charge-offs in the quarter/average net loans		0.00%		0.01%		0.04%
Allowance for loan losses		$          11,436		$          11,442		$          11,513
Average interest-earning assets to average
interest-bearing liabilities		150.84%		146.27%		148.43%
Allowance for loan losses to
non-performing loans		770.10%		785.31%		504.29%
Allowance for loan losses to total loans		1.30%		1.29%		1.35%
Shareholders’ equity to assets		12.20%		11.90%		10.66%
CAPITAL RATIOS
Total capital (to risk weighted assets)		17.27%		17.18%		15.82%
Tier 1 capital (to risk weighted assets)		16.02%		15.93%		14.57%
Common equity tier 1 (to risk weighted assets)		16.02%		15.93%		14.57%
Tier 1 capital (to average tangible assets)		11.79%		11.94%		10.72%
Tangible common equity (to average tangible assets) (non-GAAP)		10.06%		9.73%		8.42%

DEPOSIT MIX		Sept. 30, 2019				June 30, 2019				Sept. 30, 2018				March 31, 2019
Interest checking		$	178,854			$	184,658			$	182,947			$	183,388
Regular savings			196,340				160,937				138,082				137,503
Money market deposit accounts			186,842				205,881				252,738				233,317
Non-interest checking			299,062				280,336				300,659				284,854
Certificates of deposit			121,177				90,462				107,846				86,006
Total deposits		$	982,275			$	922,274			$	982,272			$	925,068

Page 9

COMPOSITION OF COMMERCIAL AND CONSTRUCTION LOANS
						Other								Commercial
		Commercial				Real Estate				Real Estate				& Construction
		Business				Mortgage				Construction				Total
September 30, 2019		(Dollars in thousands)
Commercial business		$	167,782			$	-			$	-			$	167,782
Commercial construction			-				-				67,437				67,437
Office buildings			-				113,713				-				113,713
Warehouse/industrial			-				102,285				-				102,285
Retail/shopping centers/strip malls			-				65,381				-				65,381
Assisted living facilities			-				1,117				-				1,117
Single purpose facilities			-				189,075				-				189,075
Land			-				14,166				-				14,166
Multi-family			-				55,978				-				55,978
One-to-four family construction			-				-				15,737				15,737
Total		$	167,782			$	541,715			$	83,174			$	792,671
March 31, 2019
Commercial business		$	162,796			$	-			$	-			$	162,796
Commercial construction			-				-				70,533				70,533
Office buildings			-				118,722				-				118,722
Warehouse/industrial			-				91,787				-				91,787
Retail/shopping centers/strip malls			-				64,934				-				64,934
Assisted living facilities			-				2,740				-				2,740
Single purpose facilities			-				183,249				-				183,249
Land			-				17,027				-				17,027
Multi-family			-				51,570				-				51,570
One-to-four family construction			-				-				20,349				20,349
Total		$	162,796			$	530,029			$	90,882			$	783,707

LOAN MIX		Sept. 30, 2019				June 30, 2019				Sept. 30, 2018				March 31, 2019
Commercial and construction
Commercial business		$	167,782			$	164,400			$	155,487			$	162,796
Other real estate mortgage			541,715				539,409				533,258				530,029
Real estate construction			83,174				93,716				62,795				90,882
Total commercial and construction			792,671				797,525				751,540				783,707
Consumer
Real estate one-to-four family			82,578				83,256				86,950				84,053
Other installment			6,067				7,196				11,352				8,356
Total consumer			88,645				90,452				98,302				92,409
Total loans			881,316				887,977				849,842				876,116
Less:
Allowance for loan losses			11,436				11,442				11,513				11,457
Loans receivable, net		$	869,880			$	876,535			$	838,329			$	864,659

Page 10

DETAIL OF NON-PERFORMING ASSETS
		Other				Southwest
		Oregon				Washington				Other				Total
September 30, 2019
Commercial business		$	-			$	243			$	-			$	243
Commercial real estate			851				175				-				1,026
Consumer			-				184				32				216
Total non-performing assets		$	851			$	602			$	32			$	1,485

DETAIL OF LAND DEVELOPMENT AND SPECULATIVE CONSTRUCTION LOANS
		Northwest				Other				Southwest
		Oregon				Oregon				Washington				Total
September 30, 2019		(dollars in thousands)
Land development		$	2,178			$	1,871			$	10,117			$	14,166
Speculative construction			1,158				160				12,782				14,100
Total land development and speculative construction		$	3,336			$	2,031			$	22,899			$	28,266

Page 11

		At or for the three months ended												At or for the six months ended
SELECTED OPERATING DATA		Sept. 30, 2019				June 30, 2019				Sept. 30, 2018				Sept. 30, 2019				Sept. 30, 2018
Efficiency ratio (4)			60.47	%			62.95	%			60.99	%			61.70	%			61.51	%
Coverage ratio (6)			130.17	%			124.76	%			132.11	%			127.43	%			130.75	%
Return on average assets (1)			1.55	%			1.46	%			1.46	%			1.51	%			1.52	%
Return on average equity (1)			12.68	%			12.34	%			13.68	%			12.52	%			14.32	%
Return on average tangible equity (1) (non-GAAP)			15.79	%			15.52	%			17.75	%			15.66	%			18.66	%
NET INTEREST SPREAD
Yield on loans			5.32	%			5.30	%			5.25	%			5.31	%			5.33	%
Yield on investment securities			2.15	%			2.10	%			2.27	%			2.12	%			2.29	%
Total yield on interest-earning assets			4.80	%			4.74	%			4.62	%			4.77	%			4.66	%
Cost of interest-bearing deposits			0.40	%			0.22	%			0.15	%			0.31	%			0.15	%
Cost of FHLB advances and other borrowings			3.72	%			3.42	%			4.82	%			3.53	%			4.58	%
Total cost of interest-bearing liabilities			0.65	%			0.60	%			0.34	%			0.63	%			0.34	%
Spread (7)			4.15	%			4.14	%			4.28	%			4.14	%			4.32	%
Net interest margin			4.36	%			4.33	%			4.39	%			4.35	%			4.43	%
PER SHARE DATA
Basic earnings per share (2)		$	0.20			$	0.19			$	0.19			$	0.39			$	0.38
Diluted earnings per share (3)			0.20				0.18				0.19				0.38				0.38
Book value per share (5)			6.29				6.11				5.42				6.29				5.42
Tangible book value per share (5) (non-GAAP)			5.06				4.88				4.17				5.06				4.17
Market price per share:
High for the period		$	8.55			$	8.54			$	9.91			$	8.55			$	9.91
Low for the period			6.87				7.07				8.47				6.87				8.39
Close for period end			7.38				8.54				8.84				7.38				8.84
Cash dividends declared per share			0.0450				0.0450				0.0350				0.0900				0.0700
Average number of shares outstanding:
Basic (2)			22,643,103				22,619,580				22,579,839				22,631,406				22,575,009
Diluted (3)			22,702,696				22,685,343				22,658,737				22,694,067				22,655,297

(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.

---