UNITED STATES



FORM 10-K

[X]        ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
              
 1934

For the Fiscal Year Ended March 31, 2005

OR

[  ]          TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
              
 OF 1934

Commission File Number: 0-22957

RIVERVIEW BANCORP, INC.

---

Washington                                                                                                                       91-1838969(State or other jurisdiction of incorporation                                                                                (I.R.S. Employer
or organization)                                                                                                                                 I.D. Number)

900 Washington St., Ste. 900,Vancouver, Washington                                                               

98660    (Address of principal executive offices)                                                                                                      (Zip Code)

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

Securities registered pursuant to Section 12(b) of the Act:                                                                None

Securities registered pursuant to Section 12(g) of the Act:                 Common Stock, par value $.01 per share                                                                                                                                             (Title of Class)

Indicate by check mark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No___

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and disclosure will not be contained, to the best of the registrant's knowledge, in any definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendments to this Form 10-K. X

Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2). 
YesX  No___

The aggregate market value of the voting stock held by nonaffiliates of the Registrant, based on the closing sales price of the registrant's Common Stock as quoted on the Nasdaq National Market System under the symbol "RVSB" on September 30, 2004 was approximately $106,742,243 (4,997,296 shares at $21.36 per share).  It is assumed for purposes of this calculation that none of the registrant's officers, directors and 5% stockholders (including the Riverview Bancorp, Inc. Employee Stock Ownership Plan) are affiliates.  As of May 16, 2005, there were issued and outstanding 5,015,749 shares of the registrant's common stock.



DOCUMENTS INCORPORATED BY REFERENCE



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PART I

Item 1.  Business

General

Riverview Bancorp, Inc. ("the Company"), a Washington corporation, was organized on June 23, 1997 for the purpose of becoming the holding company for Riverview Savings Bank FSB, upon its reorganization as a wholly-owned subsidiary of the Company resulting from the conversion of Riverview, M.H.C., Camas, Washington, from a federal mutual holding company to a stock holding company ("Conversion and Reorganization").  The Conversion and Reorganization was completed on September 30, 1997. Riverview Savings Bank, FSB changed its name to Riverview Community Bank (the "Bank") effective June 29, 1998. On July 18, 2003, the Company completed the acquisition of Today's Bancorp, Inc. ("Today's Bancorp").  The acquisition of Today's Bancorp's $122.3 million of assets and $105.1 million of deposits were accounted for using the purchase method of accounting.  At March 31, 2005, the Company had total assets of $572.6 million, total deposits of $456.9 million and shareholders' equity of $69.5 million.  All references to the Company herein include the Bank where applicable.



The Bank is regulated by the Office of Thrift Supervision ("OTS"), its primary regulator, and by the Federal Deposit Insurance Corporation ("FDIC"), the insurer of its deposits.  The Bank's deposits are insured by the FDIC up to applicable legal limits under the Savings Association Insurance Fund ("SAIF").  The Bank has been a member of the Federal Home Loan Bank ("FHLB") of Seattle since 1937.



The Company is a progressive community-oriented, financial institution, which emphasizes local, personal service to residents of its primary market area.  The Company considers Clark, Cowlitz, Klickitat and Skamania counties of Washington as its primary market area. The Company is engaged primarily in the business of attracting deposits from the general public and using such funds in its primary market area to originate mortgage loans secured by commercial real estate, one- to four- family residential real estate, multi-family, commercial construction, and non-mortgage loans providing financing for business commercial ("commercial") and consumer purposes. Commercial real estate loans and commercial loans have grown from 18.70% and 7.64% of the loan portfolio, respectively, in fiscal 2001 to 51.37% and 13.35%, respectively, in fiscal 2005.   The Company continues to change the composition of its loan portfolio and the deposit base as part of its transition to commercial banking. The Company's strategic plan includes targeting the commercial banking customer base in its primary market area, specifically small and medium size businesses, professionals and wealth building individuals.  In pursuit of these goals, the Company emphasizes controlled growth and the diversification of its loan portfolio to include a higher portion of commercial and commercial real estate loans.  A related goal is to increase the proportion of personal and business checking account deposits used to fund these new loans.  Significant portions of these new loan products carry adjustable rates, higher yields or shorter terms and higher credit risk than traditional fixed-rate mortgages.  The strategic plan stresses increased emphasis on non-interest income, including increased fees for asset management and deposit service charges.  The strategic plan is designed to enhance earnings, reduce interest rate risk and provide a more complete range of financial services to customers and the local communities the Company serves. The Company is well positioned to attract new customers and to increase its market share given that the administrative headquarters and nine of its 13 branches are located in Clark County, the second fastest growing county in the State of Washington according to the U.S. Census Bureau.



In order to support its strategy of growth without compromising its local, personal service to its customers and a commitment to asset quality, the Company has made significant investments in experienced branch, lending, asset management and support personnel and has incurred significant costs in facility expansion. The Company's efficiency ratios reflect this investment and will remain relatively high by industry standards for the foreseeable future due to the emphasis on growth and local, personal service.  Control of non-interest expenses remains a high priority for the Company's management.

The Company continuously reviews new products and services to give its customers more financial options. With an emphasis on growth of non-interest income and control of non-interest expense, all new technology and services are

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reviewed for business development and cost saving purposes.  The in-house processing of checks and production of images has supported the Bank's increased service to customers and at the same time has increased efficiency. The Company continues to experience growth in customer use of the online banking services.  Customers are able to conduct a full range of services on a real-time basis, including balance inquiries, transfers and electronic bill-paying.  This online service has also enhanced the delivery of cash management services to commercial customers.  The internet banking branch web site is www.riverviewbank.com.



Market Area



The Company conducts operations from its home office in Vancouver and 13 branch offices in Camas, Washougal, Stevenson, White Salmon, Battle Ground, Goldendale, Vancouver (six branch offices) and Longview, Washington.  The Company's market area for lending and deposit taking activities encompasses Clark, Cowlitz, Skamania and Klickitat counties, throughout the Columbia River Gorge area.  The Company operates a trust and financial services company, Riverview Asset Management Corp., located in downtown Vancouver, Washington.  Riverview Mortgage, a mortgage broker division of the Company, originates mortgage loans (including construction loans) for various mortgage companies predominantly in the Portland, Oregon metropolitan areas, as well as for the Company.  The Business and Professional Banking Division located at the downtown Vancouver main branch and the Cascade Park lending office offers commercial and business banking services.



Vancouver is located in Clark County, Washington, which is just north of Portland, Oregon.  Several businesses are located in the Vancouver area because of the favorable tax structure and lower energy costs in Washington as compared to Oregon.  Washington has no state income tax and Clark County operates a public electric utility that provides relatively lower cost electricity.  Located in the Vancouver area are Sharp Microelectronics, Hewlett Packard, Georgia Pacific, Underwriters Laboratory and Wafer Tech, as well as several support industries.  In addition to this industrial base, the Columbia River Gorge Scenic Area has been a source of tourism, which has transformed the area from its past dependence on the timber industry.



Lending Activities



General.  At March 31, 2005, the Company's total net loans receivable, including loans held for sale, amounted to $429.9 million, or 75.1% of total assets at that date.  The principal lending activity of the Company is the origination of mortgage loans through its mortgage banking activities, including loans collateralized by commercial properties, residential and residential construction loans.  While the Company has historically emphasized real estate mortgage loans secured by one-to-four residential real estate, it has been diversifying its loan portfolio by focusing on increasing the number of originations of commercial, commercial real estate and consumer loans. A substantial portion of the Company's loan portfolio is secured by real estate, either as primary or secondary collateral, located in its primary market area.



Loan Portfolio Analysis.  The following table sets forth the composition of the Company's loan portfolio by type of loan at the dates indicated.



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At March 31,2005
2004
2003
2002
2001
Amount
Percent
Amount
Percent
Amount
Percent
Amount
Percent
Amount
Percent


(Dollars in thousands)Real estate loans:One- to four- family (1)
$  36,569
8.42%
$  43,785
11.34%
$  59,021
19.38%
$ 72,406
24.87%
$115,608
38.69%Multi-family
2,537
0.58
5,008
1.30
6,236
2.05
9,809
3.37
10,947
3.66Construction one- to
  four-family
43,633
10.05
47,589
12.33
45,579
14.97
44,156
15.17
40,579
13.58Construction multi-  
   family
-
-
-
-
935
0.31
4,000
1.37
561
0.19Construction commercial
10,982
2.53
1,453
0.38
4,239
1.39
3,742
1.29
4,231
1.42Land
28,889
6.65
25,321
6.56
28,543
9.37
23,686
8.14
23,428
7.84Commercial real estate
223,143
51.37
176,521
45.73
100,886
33.13
83,547
28.70
55,885
18.70Total real estate loans
345,753
79.60
299,677
77.64
245,439
80.60
241,346
82.91
251,239
84.08Commercial
57,981
13.35
57,578
14.91
34,145
11.21
23,216
7.98
22,837
7.64Consumer loans:Automobile loans
1,197
0.28
1,631
0.42
1,468
0.48
2,142
0.74
3,182
1.07Savings account
    
 loans
268
0.06
335
0.09
321
0.11
518
0.18
434
0.15Home equity loans
26,556
6.11
23,914
6.20
21,236
6.97
21,701
7.46
18,522
6.20Other consumer loans
2,599
0.60
2,880
0.74
1,941
0.63
2,144
0.73
2,563
0.86Total consumer loans
30,620
7.05
28,760
7.45
24,966
8.19
26,505
9.11
24,701
8.28Total loans and loans
  
 held
for sale
434,354
100.00%
386,015
100.00%
304,550
100.00%
291,067
100.00%
298,777
100.00%Less:Allowance for loan
    
 losses
4,395

4,481


2,739

2,537
1,916Total loans receivable,
   
 net (1)
$429,959

$381,534


$301,811

$288,530

$296,861(1) Includes loans held for sale of $510,000, $407,000, $1.5 million, $1.8 million and $569,000 at March 31, 2005, 2004, 2003, 2002 and 2001, respectively.




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Commercial Real Estate Lending. As of March 31, 2005, $223.1 million, or
51.37% of the total loan portfolio was secured by commercial real estate
property. The Company originates commercial real estate loans including land
development, retail shopping centers, office and medical buildings, warehouses,
mini-storage facilities, industrial use buildings, multi-family and assisted
living facilities primarily located in our market area. loans including land
development, retail shopping centers, office and medical buildings, warehouses,
mini-storage facilities, industrial use buildings, multi-family and assisted
living facilities primarily located in our market area.



The Company actively pursues commercial real estate loans.  These loans generally are priced at a higher rate of interest than one- to four-family residential loans.  Typically, these loans have higher loan balances, are more difficult to evaluate and monitor, and involve a higher degree of risk than one- to four-family residential loans.  Often payments on loans secured by  commercial properties are dependent on the successful operation and management of the property; therefore, repayment of these loans may be affected by adverse conditions in the real estate market or the economy.  Generally loan guarantees are required and obtained from financially capable parties based upon the review of personal financial statements.  If the borrower is a corporation, personal guarantees are required and obtained from the corporate principals based upon a review of their personal financial statements and individual credit reports.   A portio of the commercial real estate loan portfolio is relatively unseasoned and contains a higher risk of default and loss than single-family residential loans.



The average size loan in the commercial real estate loan portfolios was approximately $800,000 as of March 31, 2005.  The Company targets individual commercial real estate loans between $500,000 and $5.0 million; however, the loan policy allows origination of loans to one borrower up to 15% of the Bank's capital.  The largest commercial real estate loan as of March 31, 2005 was an office building with an outstanding principal balance at March 31, 2005 of $7.2 million located in Vancouver, Washington.  This loan is performing according to the loan terms, as were all commercial real estate loans as of March 31, 2005, except for one loan on non-accrual with a balance of $198,000.



Both fixed- and adjustable-rate loans are offered on commercial real estate loans.  Loans originated on a fixed-rate basis generally are originated at fixed terms up to five years, with amortization terms up to 25 years.  Interest rates on fixed-rate loans are generally established utilizing the Federal Home Loan Bank of Seattle's fixed advance rate for an equivalent period plus a margin ranging from 2.5% to 3.50%.  Some of the loans have established floor rates and most have some form of prepayment penalty.



Adjustable-rate commercial real estate loans are originated with variable rates that generally adjust after an initial period ranging from one to five years.  Adjustable-rate commercial real estate loans are generally priced utilizing the Federal Home Loan Bank of Seattle's fixed advance rate for an equivalent period plus a margin ranging from 2.5% to 3.50%, with principal and interest payments fully amortizing over terms up to 25 years.  These loans generally have a prepayment penalty.  Both adjustable-rate mortgages and fixed-rate mortgages generally allow provisions for assumption of a loan by another borrower subject to lender approval and a 1% assumption fee.



The maximum loan-to-value ratio for commercial real estate loans is generally 75% for both purchases and refinances.  Appraisals are required on all properties securing commercial real estate loans.  Independent appraisers designated by us perform appraisals.  Commercial real estate loan borrowers with outstanding balances in excess of $500,000 are required to submit annual financial statements and tax returns.  The subject property is inspected at least every two years if the loan balance exceeds $500,000.  A minimum pro forma debt coverage ratio of 1.20 times is required for loans secured by commercial properties.

One- to Four- Family Real Estate Lending. The majority of the residential loans are secured by one- to four- family residences located in the Company's primary market area.  Underwriting standards require that one- to four- family portfolio loans generally be owner occupied and that loan amounts not exceed 80% or (95% with private mortgage insurance) of the lesser of current appraised value or cost of the underlying collateral.   Terms typically range from 15 to 30 years, and the Company also offers balloon mortgage loans with terms of either five or seven years.  The Company originates both fixed rate mortgages and adjustable rate mortgages ("ARMs") with repricing based on Treasury Bill or other index. The ability to generate volume in ARMs, however, is largely a function of consumer preference and the interest rate environment.

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In addition to originating one- to four- family loans for its portfolio, the Company is an active mortgage broker for several third party mortgage lenders.  In recent periods, these mortgage brokerage activities have reduced the volume of fixed rate one- to- four family loans that are originated and sold by the Company. See "-Loan Originations, Sales and Purchases" and "-Mortgage Brokerage."



The Company generally sells fixed-rate mortgage loans with maturities of 15 years or more and balloon mortgages to the Federal Home Loan Mortgage Corporation ("FHLMC"), servicing retained.  See "-Loan Originations, Sales and Purchases" and "-Mortgage Loan Servicing."



The retention of ARM loans in the portfolio helps reduce the Company's exposure to changes in interest rates.  There are, however, unquantifiable credit risks resulting from the potential of increased costs arising from changed rates to be paid by the customer.  It is possible that during periods of rising interest rates the risk of default on ARM loans may increase as a result of repricing and the increased costs to the borrower.  Another consideration is that although ARM loans allow the Company to increase the sensitivity of its asset base to changes in interest rates, the extent of this interest sensitivity is limited by the periodic and lifetime interest rate adjustment limits.  Because of these considerations, the Company has no assurance that yields on ARM loans will be sufficient to offset increases in its cost of funds.



While one- to four- family residential real estate loans typically are originated with 30-year terms and the Company permits its ARM loans to be assumed by qualified borrowers, these loans generally remain outstanding for substantially shorter periods because borrowers often prepay their loans in full upon sale of the property pledged as security or upon refinancing the original loan.  In addition, substantially all of the fixed interest rate loans in the Company's loan portfolio contain due-on-sale clauses providing that the Company may declare the unpaid amount due and payable upon the sale of the property securing the loan.  Thus, average loan maturity is a function of, among other factors, the level of purchase and sale activity in the real estate market, prevailing interest rates and the interest rates payable on outstanding loans.



The Company requires title insurance insuring the status of its lien on all of the real estate secured loans and also requires that fire and extended coverage casualty insurance (and, if appropriate, flood insurance) be maintained in an amount at least equal to the lesser of the loan balance and the replacement cost of the improvements.  Where the value of the unimproved real estate exceeds the amount of the loan on the real estate, the Company may make exceptions to its property insurance requirements.



Construction Lending. The Company actively originates three types of residential construction loans: (i) speculative construction loans, (ii) custom/presold construction loans and (iii) construction/permanent loans.  Subject to market conditions, the Company intends to increase its residential construction lending activities.  The Company also originates construction loans for the development of multi-family and commercial properties.

At March 31, 2005 and 2004, the composition of the Company's construction loan portfolio was as follows:

|                                     | At March 31,          
|------------------------------------ | ----------------------
|                                     | Amount(1)             
|                                     | (Dollars in thousands)
|Speculative construction             | $  43,749             
|Commercial/multi-family construction | 18,912                
|Custom/presold construction          | 13,300                
|Construction/permanent               | 18,322                
|Construction/land                    | 13,453                
|Total                                | $107,736              

(1)Includes loans in process.

Speculative construction loans are made to home builders and
are termed "speculative" because the home builder does not have, at the time of
loan origination, a signed contract with a home buyer who has a commitment for
permanent financing

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with either the Company or another lender for the
finished home. The home buyer may be identified either during or after the
construction period, with the risk that the builder will have to debt service
the speculative construction loan and finance real estate taxes and other
carrying costs of the completed home for a significant time after the completion
of construction until the home buyer is identified. At March 31, 2005, the
Company had 14 borrowers with aggregate outstanding speculative loan balances of
more than $1.0 million, which totaled $21.5 million and were performing
according to original terms.



Unlike speculative construction loans, presold construction loans are made for homes that have buyers. Presold construction loans are made to home builders who, at the time of construction, have a signed contract with a home buyer who has a commitment for permanent financing for the finished home from the Company or another lender. Custom construction loans are made to the homeowner. Custom/presold construction loans are generally originated for a term of 12 months.  At March 31, 2005, the largest custom construction loan and presold construction loan had outstanding balances of $707,000 and $472,000, respectively, and were performing according to original terms.



Construction/permanent loans are originated to the homeowner rather than the home builder along with a commitment by the Company to originate a permanent loan to the homeowner to repay the construction loan at the completion of construction.  The construction phase of a construction/permanent loan generally lasts six to nine months.  At the completion of construction, the Company may either originate a fixed rate mortgage loan or an ARM loan or use its mortgage brokerage capabilities to obtain permanent financing for the customer with another lender. At completion of construction, the Company-originated fixed rate permanent loan's interest rate is set at a market rate and for adjustable rate loans, the interest rates adjust on their first adjustment date.  See "-Mortgage Brokerage,"  "-Loan Originations, Sales and Purchases" and "-Mortgage Loan Servicing."  At March 31, 2005, the largest outstanding construction/permanent loan had an outstanding balance of $528,000 and was performing according to its original terms.



The Company also provides construction financing for non-residential properties such as multi-family and commercial properties.  The Company has increased its commercial lending resources with the intent of increasing the amount of commercial real estate loan balances such as construction commercial and construction multi-family loans.  Construction lending affords the Company the opportunity to achieve higher interest rates and fees with shorter terms to maturity than does its single-family permanent mortgage lending.  Construction lending, however, generally involves a higher degree of risk than single-family permanent mortgage lending because of the inherent difficulty in estimating both a property's value at completion of the project and the estimated cost of the project. The nature of these loans is such that they are generally more difficult to evaluate and monitor.  If the estimate of construction cost proves to be inaccurate, the Company may be required to advance funds beyond the amount originally committed to permit completion of the project.  Projects may also be jeopardized by disagreements between borrowers and builders and by the failure of builders to pay subcontractors.  The Company addresses these risks by adhering to strict underwriting policies, disbursement procedures and monitoring practices.  In addition, because the Company's construction lending is in its primary market area, changes in the local economy and real estate market could adversely affect the Company's construction loan portfolio. Of the $14.9 million commercial construction loans outstanding at March 31, 2005, the loan commitment amount was $19.2 million. At March 31, 2005, the largest construction commercial loan had an outstanding balance of $3.9 million and was performing according to its original terms.



Multi-Family Lending.Multi-family mortgage loans generally have terms up to 25 years with a loan-to-value ratio of up to 75%.  Both fixed and adjustable rate loans are offered with a variety of terms to meet the multi-family residential financing needs. At March 31, 2005, the largest multi-family mortgage loan had an outstanding loan balance of $3.9 million and was performing according to its original terms.



Multi-family mortgage lending affords the Company an
opportunity to receive interest at rates higher than those generally available
from one- to four- family residential lending. However, loans secured by these
properties usually are greater in amount, are more difficult to evaluate and
monitor and, therefore, involve a greater degree of risk than one- to four-
family residential mortgage loans. Because payments on loans secured by
multi-family properties are often dependent on the successful operation and
management of the properties, repayment of such loans may be affected by adverse
conditions in the real estate market or the economy. The Company attempts to
minimize these risks by strictly scrutinizing the financial condition of the
borrower, the quality of the collateral and the management of the property
securing the loan. The

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Company also generally obtains personal guarantees from
financially capable parties based on a review of personal financial statements.



Land Lending. The Company originates loans to local real estate developers with whom it has established relationships for the purpose of developing residential subdivisions (i.e., installing roads, sewers, water and other utilities), as well as loans to individuals to purchase building lots.  Land development loans are secured by a lien on the property and made for a period not to exceed five years with an interest rate that adjusts with the prime rate, and are made with loan-to-value ratios not exceeding 75%.  Monthly interest payments are required during the term of the loan.  Subdivision loans are structured so that the Company is repaid in full upon the sale by the borrower of approximately 90% of the subdivision lots.  All of the Company's land loans are secured by property located in its primary market area. In addition, the Company also generally obtains personal guarantees from financially capable parties based on a review of personal financial statements.   At March 31, 2005, the largest outstanding land loan was $7.1 million and was performing according to its original terms.



Loans secured by undeveloped land or improved lots involve greater risks than one- to four- family residential mortgage loans because these loans are advanced upon the predicted future value of the developed property.  If the estimate of these future values proves to be inaccurate, in the event of default and foreclosure, the Company may be confronted with a property the value of which is insufficient to assure full repayment.  The Company attempts to minimize this risk by limiting the maximum loan-to-value ratio on land loans to 65% of the estimated developed value of the secured property. Loans on raw land may run the risk of adverse zoning changes, environmental or other restrictions on future use.



Commercial Lending



Commercial loans are generally made to customers who are well known to the Company and are typically secured by all business assets or other property. The Company's commercial loans may be structured as term loans or as lines of credit.  Commercial term loans are generally made to finance the purchase of assets and have maturities of five years or less.  Commercial lines of credit are typically made for the purpose of providing working capital and usually have a term of one year or less.  Lines of credit are made at variable rates of interest equal to a negotiated margin above an index rate and term loans are at a fixed rate.  The Company also generally obtains personal guarantees from financially capable parties based on a review of personal financial statements.



Commercial lending involves greater risk than residential mortgage lending and involves risks that are different from those associated with residential and commercial real estate lending.  Real estate lending is generally considered to be collateral based lending with loan amounts based on predetermined loan to collateral values and liquidation of the underlying real estate collateral is viewed as the primary source of repayment in the event of borrower default.  Although commercial loans are often collateralized by equipment, inventory, accounts receivable or other business assets including real estate, the liquidation of collateral in the event of a borrower default is often an insufficient source of repayment because accounts receivable may be uncollectible and inventories and equipment may be obsolete or of limited use, among other things.  Accordingly, the repayment of a commercial loan depends primarily on the cash flow of the borrower (and any guarantors), while liquidation of collateral is a secondary and often insufficient source of repayment.   At March 31, 2005, the Company had three commercial loans on nonaccrual status totaling $97,000.



Consumer Lending.



Home equity lines of credit and home equity term loans are
typically secured by a second mortgage on the borrower's primary residence. Home
equity lines of credit are made at loan-to-value ratios of 90% or less, taking
into consideration the outstanding balance on the first mortgage on the
property. Home equity lines of credit have a variable interest rate while home
equity term loans have a fixed rate of interest. The Company's procedures for
underwriting consumer loans include an assessment of the applicant's payment
history on other debts and ability to meet existing obligations and payments on

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the proposed loans. Although the applicant's creditworthiness
is a primary consideration, the underwriting process also includes a comparison
of the value of the security, if any, to the proposed loan amount.



Consumer loans generally entail greater risk than do residential mortgage loans, particularly in the case of consumer loans that are unsecured or secured by assets that depreciate rapidly, such as mobile homes, automobiles, boats and recreational vehicles.  In such cases, repossessed collateral for a defaulted consumer loan may not provide an adequate source of repayment for the outstanding loan and the remaining deficiency often does not warrant further substantial collection efforts against the borrower.  In addition, consumer loan collections are dependent on the borrower's continuing financial stability, and thus are more likely to be adversely affected by job loss, divorce, illness or personal bankruptcy.  Furthermore, the application of various federal and state laws, including federal and state bankruptcy and insolvency laws, may limit the amount which can be recovered on such loans.  These loans may also give rise to claims and defenses by the borrower against the Company as the holder of the loan, and a borrower may be able to assert claims and defenses, which it has against the seller of the underlying collateral.  At March 31, 2005, one consumer loan for $161,000 was on nonaccrual status.



Loan Maturity.  The following table sets forth certain information at March 31, 2005 regarding the dollar amount of loans maturing in the Company's portfolio based on their contractual terms to maturity, but does not include potential prepayments.  Demand loans, loans having no stated schedule of repayments and no stated maturity and overdrafts are reported as due in one year or less.  Loan balances do not include unearned discounts, unearned income and allowance for loan losses.

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WithinOne Year
AfterOneYear to3 Years
After 3Years to5 Years
After 5Years to10 Years
Beyond10 Years
Total(In thousands)Residential one- to four-family:Adjustable rate
$      -
$    21
$    521
$    812
$  21,013
$  22,367Fixed rate
1,928
4,419
1,307
1,336
5,212
14,202Construction:Adjustable rate
36,065
7,068
-
-
-
43,133Fixed rate
11,838
198
-
-
-
12,036Other real estate:Adjustable rate
41,336
22,790
14,954
112,893
7,115
199,088Fixed rate
7,777
18,167
21,594
6,485
896
54,919Commercial:Adjustable rate
36,676
3,383
3,664
2,177
-
45,900Fixed rate
4,097
4,163
3,596
233
-
12,089Consumer:Adjustable rate
470
341
771
1,180
21,759
24,521Fixed rate
531
1,777
1,512
761
1,518
6,099Total net loans
$140,718
$62,327
$47,919
$125,877
$57,513
$434,354


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<PAGE>The following table sets forth the dollar amount of all loans due one year after March 31, 2005, which have fixed interest rates or have floating or adjustable interest rates.
Fixed-Rates
Floating or 
Adjustable Rates(In thousands)Residential one- to four- family
$     12,274
$        22,367Construction loans
198
7,068Other real estate loans
47,142
157,752Commercial
7,992
9,224Consumer
5,568
24,051Total
$     
73,174
$      
220,462Scheduled contractual principal repayments of loans do not reflect the actual life of such assets.  The average life of a loan is substantially less than its contractual terms because of prepayments.  In addition, due-on-sale clauses on loans generally give the Company the right to declare loans immediately due and payable in the event, among other things, that the borrower sells the real property.  The average life of mortgage loans tends to increase, however, when current mortgage loan market rates are substantially higher than rates on existing mortgage loans and, conversely, decrease when rates on existing mortgage loans are substantially higher than current mortgage loan market rates.  Furthermore, management believes that a significant number of the Company's residential mortgage loans are outstanding for a period less than their contractual terms because of the transitory nature of many of the borrowers who reside in its primary market area.

Loan Solicitation and Processing. The Company's lending activities are subject to the written, non-discriminatory, underwriting standards and loan origination procedures established by the Board of Directors and management.  The customary sources of loan originations are realtors, walk-in customers, referrals and existing customers.  The Company also uses commissioned loan brokers and print advertising to market its products and services.

The Company's loan approval process is intended to assess the borrower's ability to repay the loan, the viability of the loan, the adequacy of the value of the property that will secure the loan, if any and, in the case of commercial and multi-family real estate loans, the cash flow of the project and the quality of management involved with the project. The Company's lending policy requires borrowers to obtain certain types of insurance to protect the Company's interest in any collateral securing the loan.  Loans are approved at various levels of management, depending upon the amount of the loan.

Loan Commitments. The Company issues commitments to originate residential mortgage loans, commercial real estate mortgage loans, consumer loans and commercial loans conditioned upon the occurrence of certain events.  The Company uses the same credit policies in making commitments as it does for on-balance sheet instruments.  Commitments to extend credit are conditional, and are honored for up to 45 days subject to the Company's usual terms and conditions.  Collateral is not required to support commitments.  At March 31, 2005, the Company had outstanding commitments to originate loans in the amount of $19.5 million.

Loan Originations, Sales and Purchases. While the Company originates adjustable-rate and fixed-rate loans, its ability to generate each type of loan depends upon relative customer demand for loans in its primary market area.  During the years ended March 31, 2005 and 2004, the Company's total loan originations, including mortgage loans originated for sale, were $434.4 million and $375.8 million, respectively, of which 83.8% and 70.4%, respectively, were subject to periodic interest rate adjustment and 15.1% and 29.6%, respectively, were fixed-rate loans.

The Company customarily sells the fixed-rate residential one- to four- family mortgage loans that it originates with maturities of 15 years or more to the FHLMC as part of its asset liability strategy.  The sale of these loans allows the Company to continue to make loans during periods when savings flows decline or funds are not otherwise available for lending purposes; however, the Company assumes an increased risk if these loans cannot be sold in a rising interest rate environment.  Changes in the level of interest rates and the condition of the local and national economies affect the amount of loans originated by the Company and demanded by investors to whom the loans are sold.  Generally, the Company's residential one- to- four family mortgage loan origination and sale activity and, therefore, its results of operations, may be
13
<PAGE>
adversely affected by an increasing interest rate environment to the extent such environment results in decreased loan demand by borrowers and/or investors.  Accordingly, the volume of loan originations and the profitability of this activity can vary significantly from period to period.  Mortgage loans are sold to the FHLMC on a non-recourse basis whereby foreclosure losses are generally the responsibility of the FHLMC and not the Company. Servicing is retained on loans sold to FHLMC.

Interest rates on residential one- to four- family mortgage loan applications are typically locked with customers and the FHLMC during the application stage for periods ranging from 30 to 90 days, the most typical period being 45 days.  These loans are locked with the FHLMC under a best-efforts delivery program.  The Company makes every effort to deliver these loans before their rate locks expire.  This arrangement requires the Company to deliver the loans to the FHLMC within ten days of funding.  Delays in funding the loans can require a lock extension.  The cost of a lock extension at times is borne by the borrower and at times by the Company.  These lock extension costs paid by the Company are not expected to have a material impact to operations.This activity is managed daily.



There can be no assurance that the Company will be successful in its efforts to reduce the risk of interest rate fluctuation between the time of origination of a mortgage loan and the time of the ultimate sale of the loan.  To the extent that the Company does not adequately manage its interest rate risk, the Company may incur significant mark-to-market losses or losses relating to the sale of such loans, adversely affecting its financial condition and results of operations.

The Company purchased $5.7 million of loan participations in fiscal year 2005.



14

<PAGE>

The following table shows total loans originated, sold and repaid during the periods indicated.

|                                                                               | For the Years Ended March 31,
|------------------------------------------------------------------------------ | -----------------------------
|                                                                               | 2005                         
|                                                                               | (In thousands)               
|Total net loans receivable and loans held for sale
   
 at beginning of period | $381,534                     
|Loans originated:                                                              |                              
|Mortgage loans:                                                                |                              
|One- to four- family                                                           | 61,621                       
|Multi-family                                                                   | 6,826                        
|Construction one- to four- family                                              | 100,522                      
|Construction commercial real estate                                            | -                            
|Construction multi-family                                                      | -                            
|Land and commercial real estate                                                | 120,201                      
|Commercial                                                                     | 136,726                      
|Consumer                                                                       | 2,859                        
|Total loans originated                                                         | 428,755                      
|                                                                               |                              
|Loans purchased:                                                               |                              
|One- to four- family                                                           | -                            
|Multi-family                                                                   | 127                          
|Land and commercial real estate                                                | 5,537                        
|Total loans originated                                                         | 5,664                        
|                                                                               |                              
|Residential one- to four- family loans sold                                    | (22,840)                     
|Repayment of principal                                                         | (363,607)                    
|Today's Bank acquisition                                                       | -                            
|Increase (decrease) in other items, net                                        | 453                          
|Net increase in loans                                                          | 48,425                       
|Total net loans receivable and loans held for 
  
sale at end of period        | $429,959                     



Mortgage Brokerage.  In addition to originating mortgage loans for retention in its portfolio, the Company employs ten commissioned brokers who originate mortgage loans (including construction loans) for various mortgage companies predominately in the Portland metropolitan area, as well as for the Company.  The loans brokered to mortgage companies are closed in the name of and funded by the purchasing mortgage company and are not originated as an asset of the Company.  In return, the Company receives a fee ranging from 1% to 1.5% of the loan amount that it shares with the commissioned broker. Loans brokered to the Company are closed on the Company's books as if the Company had originated them and the commissioned broker receives a fee of approximately 0.50% of the loan amount.  During the year ended March 31, 2005, brokered loans totaled $194.4 million (including $59.1 million brokered to the Company).  Gross fees of $1.5 million (excluding the portion of fees shared with the commissioned brokers) were recognized for the year ended March 31, 2005.  The interest rate environment has a strong influence on the loan volume and amount of fees generated from the mortgage broker activity.  In general, during periods of rising interest rates such as we are currently experiencing, the volume of loans and amount of loan fees generally decreases as a result of slower mortgage loan demand.



Mortgage Loan Servicing.  The Company is a qualified servicer for the FHLMC.  The Company's general policy is to close its residential loans on the FHLMC modified loan documents to facilitate future sales to the FHLMC.
Upon sale, the

15

<PAGE>

Company continues to collect payments on the loans, to
supervise foreclosure proceedings, if necessary, and otherwise to service the
loans.



The Company generally retains the servicing rights on the fixed-rate mortgage loans that it sells to the FHLMC.  At March 31, 2005, total loans serviced for others were $129.4 million.



The value of loans serviced for others is significantly affected by interest rates.  In general, during periods of falling interest rates, mortgage loans repay at faster rates and the value of the mortgage servicing declines.  Conversely, during periods of rising interest rates, the value of the mortgage servicing rights generally increases as a result of slower rates of prepayments.  The Company may be required to recognize this decrease in value by taking a charge against its earnings, which would cause its net income to decrease.  The Company has experienced a decrease and an increase in prepayments of mortgages as interest rates have dramatically changed during the past two years, which has impacted the value of the servicing asset.  Accordingly, the Company recognized a decrease of $22,000 and $307,000 for fiscal years 2005 and 2004, respectively in its valuation allowance for mortgage servicing rights reflecting the increase in mortgage interest rates and slowing of prepayments.  We believe, based on historical experience, that the amount of prepayments and the related impairment charges should decrease as interest rates increase.



Loan Origination and Other Fees.  The Company generally receives loan origination fees and discount "points."   Loan fees and points are a percentage of the principal amount of the loan that is charged to the borrower for funding the loan.  The Company usually charges origination fees of 1.5% to 2.0% on one- to four- family residential real estate loans, long-term commercial real estate loans and residential construction loans.  Commercial loan fees are based on terms of the individual loan.  Current accounting standards require fees received for originating loans to be deferred and amortized into interest income over the contractual life of the loan. Deferred fees associated with loans that are sold are recognized as gain on sale of loans.  The Company had $3.1 million of net deferred loan fees at March 31, 2005.  The Company also receives loan servicing fees on the loans it sells and on which it retains the servicing rights.  See Note 9 of the Notes to the Consolidated Financial Statements contained in Item 8 of this Form 10-K.



Delinquencies.  The Company's collection procedures for all loans except consumer loans provide for a series of contacts with delinquent borrowers.  A late charge delinquency notice is first sent to the borrower when the loan secured by real estate becomes 17 days past due.  A follow-up telephone call, or letter if the borrower cannot be contacted by telephone, is made when the loan becomes 22 days past due.  A delinquency notice is sent to the borrower when the loan becomes 30 days past due.  When payment becomes 60 days past due, a notice of default letter is sent to the borrower stating that foreclosure proceedings will commence unless the delinquency is cured.  If a loan continues in a delinquent status for 90 days or more, the Company generally initiates foreclosure proceedings.  In certain instances, however, the Company may decide to modify the loan or grant a limited moratorium on loan payments to enable borrowers to reorganize their financial affairs.



A delinquent consumer loan borrower is contacted when the loan is 15 days past due.  A letter of intent to repossess collateral is mailed to the borrower after the loan becomes 45 days past due and repossession proceedings are initiated after the loan becomes 90 days delinquent.



Delinquencies in commercial loans are handled on a case-by-case basis.  Generally, notices are sent and personal contact is made with the borrower when the loan is 15 days past due.  Loan officers are responsible for collecting loans they originate or that are assigned to them.  Depending on the nature of the loan or type of collateral securing the loan, negotiations, or other actions, are undertaken depending upon the circumstances.



Nonperforming Assets.  Loans are reviewed regularly and it is the Company's general policy that when a loan is 90 days delinquent or when collection of interest appears doubtful, it is placed on nonaccrual status, at which time the accrual of interest ceases and the reserve for any unrecoverable accrued interest is established and charged against operations.  Typically, payments received on a nonaccrual loan are applied to the outstanding principal and interest as determined at the time of collection of the loan.

16

<PAGE>



Real estate owned is real estate acquired in settlement of loans and consists of real estate acquired through foreclosure or deeds in lieu of foreclosure.  The acquired real estate is recorded at net realizable value.  The Company periodically reviews the property's net realizable value and a charge to operations is taken if the property's recorded value exceeds the property's net realizable value.



The following table sets forth information with respect to the Company's nonperforming assets.  At the dates indicated, the Company had no restructured loans within the meaning of Statement of Financial Accounting Standards ("SFAS") No. 15 (as amended by SFAS No. 114), Accounting by Debtors and Creditors for Troubled Debt Restructuring.



|                                                                     | At March 31,          
|-------------------------------------------------------------------- | ----------------------
|                                                                     | 2005                  
|                                                                     | (Dollars in thousands)
|Loans accounted for on a nonaccrual basis:                           |                       
|Residential real estate                                              | $            -        
|Commercial real estate                                               | 198                   
|Land                                                                 | -                     
|Commercial                                                           | 97                    
|Consumer                                                             | 161                   
|Total                                                                | 456                   
|Accruing loans which are contractually 
   
past due 90 days or more | -                     
|Total of nonaccrual and
       
    90 days past due loans           | 456                   
|Real estate owned (net)                                              | 270                   
|Total nonperforming assets                                           | $  726                
|Total loans delinquent 90 days
    
or more to net loans             | 0.10%                 
|Total loans delinquent 90 days or 
    
more to total assets         | 0.08                  
|Total nonperforming assets to total assets                           | 0.13                  

The gross amount of interest income on the nonaccrual loans that would have been recorded during the year ended March 31, 2005 if the nonaccrual loans had been current in accordance with their original terms was approximately $34,000.  For the year ended March 31, 2005, $9,000 was earned on the nonaccrual loans and included in interest and fees on loans receivable interest income.



Loans not included in nonperforming or past due categories, but where information about possible credit problems causes management to be uncertain about the borrower's ability to comply with existing repayment terms, totaled $5.8 million at March 31, 2005 and $4.9 million at March 31, 2004.



Asset Classification.  The OTS has adopted various regulations regarding problem assets of savings institutions.  The regulations require that each insured institution review and classify its assets on a regular basis.  In addition, in connection with examinations of insured institutions, OTS examiners have authority to identify problem assets and, if appropriate, require them to be classified.  There are three classifications for problem assets:  substandard, doubtful and loss.  Substandard assets have one or more defined weaknesses and are characterized by the distinct possibility that the insured institution will sustain some loss if the deficiencies are not corrected.  Doubtful assets have the weaknesses of substandard assets with the additional characteristic that the weaknesses make collection or liquidation in full on the basis of currently existing facts, conditions and values questionable, and there is a high possibility of loss. An asset classified as loss is considered uncollectible
and of such little value that continuance as an asset of the institution is not
warranted. If an asset

17

<PAGE>

or portion thereof is classified as loss, the insured
institution establishes specific allowances for loan losses for the full amount
of the portion of the asset classified as loss. All or a portion of general loan
loss allowances established to cover possible losses related to assets
classified substandard or doubtful can be included in determining an
institution's regulatory capital, while specific valuation allowances for loan
losses generally do not qualify as regulatory capital. Assets that do not
currently expose the insured institution to sufficient risk to warrant
classification in one of the aforementioned categories but possess weaknesses
are designated "special mention" and monitored by the Company.



The aggregate amount of the Company's classified assets, general loss allowances, specific loss allowances and charge-offs were as follows at the dates indicated:

|                         | At or For the Year
|------------------------ | ------------------
|                         | Ended March 31,   
|                         | 2005              
|                         | (In thousands)    
|                         |                   
|Substandard assets       | $ 6,209           
|Doubtful assets          | -                 
|Loss assets              | -                 
|                         |                   
|General loss allowances  | 4,395             
|Specific loss allowances | -                 
|Charge-offs              | 669               

The loans classified as substandard assets at March 31, 2005 are comprised of one home equity loan totaling $161,000, eight real estate secured commercial loans totaling $1.2 million and 33 commercial loans totaling $4.9 million.



Real Estate Owned.  Real estate properties acquired through foreclosure or by deed-in-lieu of foreclosure are recorded at the lower of cost or fair value less estimated costs of disposal.  Management periodically performs valuations and an allowance for loan losses is established by a charge to operations if the carrying value exceeds the estimated net realizable value.  At March 31, 2005, the Company owned two properties with a recorded value of $270,000 compared to $742,000 at March 31, 2004.  The $270,000 recorded value consists of one non-residential and one residential real estate loans in the amounts of $115,000 and $155,000.



Allowance for Loan Losses.  The Company maintains an allowance for loan losses to provide for losses inherent in the loan portfolio.  The adequacy of the allowance is evaluated monthly to maintain the allowance at levels sufficient to provide for inherent losses.  A key component to the evaluation is the Company's internal loan review and loan classification system.  The internal loan review system provides for at least an annual review by the internal audit department of all loans that meet selected criteria. The Problem Loan Committee reviews and monitors the risk and quality of the Company's loan portfolio.  The Problem Loan Committee members include the Executive Vice President Chief Credit Officer, Chairman and Chief Executive Officer, President and Chief Operating Officer, Vice President Credit , Chief Financial Officer and Senior Vice President Business & Professional Banking.  Credit officers are expected to monitor their portfolios and make recommendations to change loan grades whenever changes are warranted.  At least annually, loans that are delinquent 60 days or more and with specified outstanding loan balances are subject to review by the internal audit department.  The Problem Loan Committee meets quarterly to approve any changes to loan grades, monitor loan grades and to recommend any changes to the loan grades.



The Company uses the OTS loan classifications of special mention, substandard, doubtful and loss plus the additional loan classifications of pass and watch in order to assign a loan grade to be used in the determination of the proper amount of allowance for loan losses.  The definition of a pass classification represents a level of credit quality, which contains no well-defined deficiency or weakness.  The definition of watch classification is used to identify a loan that currently contains no well-defined deficiency or weakness, but management has deemed it desirable to closely monitor the loan.



18

<PAGE>



The Company uses the loan classifications from the internal loan review and Internal Loan Classification Committee in the following manner to determine the amount of the allowance for loan losses.  The calculation of the allowance for loan losses must consider loan classification in order to determine the amount of the allowance for loan losses for the required three separate elements of the allowance for losses: general allowances, allocated allowances and unallocated allowances.



The general allowance element relates to assets with no well-defined deficiency or weakness such as assets classified pass or watch, and takes into consideration loss that is embedded within the portfolio but has not been realized.  Borrowers are impacted by events that may ultimately result in a loan default and eventual loss well in advance of a lender's knowledge.  Examples of such loss-causing events in the case of consumer or one- to four- family residential loans would be a borrower job loss, divorce or medical crisis.  Examples in commercial or construction loans may be loss of customers as a result of competition or changes in the economy.  General allowances for each major loan type are determined by applying loss factors that take into consideration past loss experience, asset duration, economic conditions and overall portfolio quality to the associated loan balance.



The allocated allowance element relates to assets with well-defined deficiencies or weaknesses such as assets classified special mention, substandard, doubtful or loss.  The OTS loss factors are applied against current classified asset balances to determine the amount of allocated allowances.  Included in these allowances are those amounts associated with loans where it is probable that the value of the loan has been impaired and the loss can be reasonably estimated.



The unallocated allowance element is more subjective and is reviewed quarterly to take into consideration estimation errors and economic trends that are not necessarily captured in determining the general and allocated allowance.



The change in the balance of the allowance for loan losses at March 31, 2005 reflects the proportionate increase in loan balances, the change in mix of loan balances, the increase in substandard assets and a change in loss rate when compared to March 31, 2004.  The mix of the loan portfolio showed an increase in the balances of commercial real estate loans, and construction, and consumer loans at March 31, 2005 as compared to balances at March 31, 2004.  Substandard assets and assets classified as doubtful increased by $500,000 to $6.2 million at March 31, 2005 compared to $5.7 million at March 31, 2004.



At March 31, 2005, the Company had an allowance for loan losses of $4.4 million, or 1.01% of total outstanding net loans at that date.  Based on past experience and probable losses inherent in the loan portfolio, management believes that loan loss reserves are adequate.



While the Company believes it has established its existing allowance for loan losses in accordance with accounting principles generally accepted in the United States of America ("generally accepted accounting principles" or "GAAP"), there can be no assurance that regulators, in reviewing the Company's loan portfolio, will not request the Company to increase significantly its allowance for loan losses, thereby negatively affecting the Company's financial condition and results of operations.  The following table sets forth an analysis of the Company's allowance for loan losses for the periods indicated.



19

<PAGE>

|                                                                                        | Year Ended March 31,  
|--------------------------------------------------------------------------------------- | ----------------------
|                                                                                        | 2005                  
|                                                                                        | (Dollars in thousands)
|Balance at beginning of period                                                          | $   4,481             
|Provision for loan losses                                                               | 410                   
|Recoveries:                                                                             |                       
|Residential real estate                                                                 | -                     
|Land                                                                                    | -                     
|Commercial                                                                              | 156                   
|Consumer                                                                                | 17                    
|Total recoveries                                                                        | 173                   
|Charge-offs:                                                                            |                       
|Residential real estate                                                                 | 84                    
|Land                                                                                    | -                     
|Commercial                                                                              | 490                   
|Consumer                                                                                | 95                    
|Total charge-offs                                                                       | 669                   
|Net charge-offs                                                                         | 496                   
|Dispositions (1)                                                                        | -                     
|Allowance acquired from Today's Bank                                                    | -                     
|Net change in allowance for unfunded loan   
         
 commitments and lines of credit | -                     
|Balance at end of period                                                                | $   4,395             
|Ratio of allowance to total net loans
  
outstanding during period                      | 1.01%                 
|Ratio of net charge-offs to average net loans
   
 outstanding during period            | 0.13                  
|Ratio of allowance to total of nonaccrual and   
90 
 days past due loans               | 963.82                

20

<PAGE>

Changes in the allowance for unfunded loan commitments and lines of credit:

|                                                                          | Year Ended March 31,
|------------------------------------------------------------------------- | --------------------
|                                                                          | 2005                
|                                                                          | (In thousands)      
|Balance at beginning of period                                            | $        191        
|Net change in allowance for unfunded loan commitments and lines of credit | 62                  
|Balance at end of period                                                  | $        253        

The following table sets forth the breakdown of the allowance for loan losses by loan category and is based on applying a specific loan loss factor to the related loan category outstanding loan balances as of the date of the allocation for the periods indicated.



|                                 | At March 31,
|-------------------------------- | ------------
|                                 | 2005        
|                                 | Amount      
|(Dollars in thousands )         
|Real estate loans                |             
|One -to four- family             | $        74 
|Multi-family                     | 14          
|Construction one-to four- family | 176         
|Construction multi-family        | -           
|Construction commercial          | 84          
|Land                             | 219         
|Commercial real estate           | 1,935       
|Commercial loans                 | 1,556       
|Consumer loans:                  |             
|Secured                          | 197         
|Unsecured                        | 44          
|Unallocated                      | 96          
|Total allowance for loan losses  | $4,395      

21

<PAGE>

Investment Activities

OTS regulated institutions have authority to invest in various types of liquid assets, including U.S. Treasury obligations, securities of various federal agencies and of state and municipal governments, deposits at the applicable FHLB, certificates of deposit of federally insured institutions, certain bankers' acceptances and federal funds.  Subject to various restrictions, OTS regulated institutions may also invest a portion of their assets in commercial paper, corporate debt securities and mutual funds, the assets of which conform to the investments that federally chartered savings institutions are otherwise authorized to make directly.



Federal regulations require the Bank to maintain a minimum sufficient liquidity to ensure its safe and sound operation. Liquid assets include cash, cash equivalents consisting of short-term interest-earning deposits, certain other time deposits, and other obligations generally having remaining maturities of less than five years.  It is management's intention to hold securities with short maturities in the investment portfolio in order to match more closely the interest rate sensitivities of the Company's assets and liabilities.  At March 31, 2005, the Bank's liquidity ratio, the ratio of cash and eligible investments to the sum of withdrawable savings and borrowings due within one year, was 15.68%.



The Investment Committee, composed of the Company's Chairman, President, Chief Financial Officer and Controller, makes investment decisions.  The Company's investment objectives are:  (i) to provide and maintain liquidity within regulatory guidelines; (ii) to maintain a balance of high quality, diversified investments to minimize risk; (iii) to provide collateral for pledging requirements; (iv) to serve as a balance to earnings; and (v) to optimize returns.  At March 31, 2005, the Company's investment and mortgage-backed securities portfolio totaled $36.9 million and consisted primarily of obligations of federal agencies, and Federal National Mortgage Association ("FNMA") and FHLMC mortgage-backed securities.



At March 31, 2005, the Company's investment securities portfolio did not contain any tax-exempt securities of any issuer with an aggregate book value in excess of 10% of the Company's consolidated shareholders' equity, excluding those securities issued by the U.S. Government or its agencies.



The Board of Directors sets the investment policy of the Company which dictates that investments be made based on the safety of the principal amount, liquidity requirements of the Company and the return on the investments.  At March 31, 2005, no investment securities were held for trading.  The policy does not permit investment in non-investment grade bonds and permits investment in various types of liquid assets permissible under OTS regulation, which includes U.S. Treasury obligations, securities of various federal agencies, "bank qualified" municipal bonds, certain certificates of deposits of insured banks, repurchase agreements and federal funds.



The Company has adopted SFAS



22

<PAGE>

The following table sets forth the investment securities portfolio and carrying values at the dates indicated.  The fair value of the investment and mortgage-backed securities portfolio was $37.0 million, $46.1 million and $36.9 million at March 31, 2005, 2004 and 2003, respectively.

|                                                      | At March 31,          
|----------------------------------------------------- | ----------------------
|                                                      | 2005                  
|                                                      | CarryingValue         
|                                                      | (Dollars in thousands)
|Held to maturity (at amortized cost):                 |                       
|Real estate mortgage investment
 
conduits ("REMICs") | $   1,802             
|FHLMC mortgage-backed securities                      | 218                   
|FNMA mortgage-backed securities                       | 323                   
|                                                      | 2,343                 
|Available for sale (at fair value):                   |                       
|Agency securities                                     | 13,842                
|REMICs                                                | 1,873                 
|FHLMC mortgage-backed securities                      | 9,507                 
|FNMA mortgage-backed securities                       | 239                   
|Municipal securities                                  | 4,072                 
|Trust preferred securities                            | 5,031                 
|Equity securities                                     | -                     
|                                                      | 34,564                
|Total investment securities                           | $36,907               

The following table sets forth the maturities and weighted average yields in the securities portfolio at March 31, 2005.

|                                       | Less Than 
One Year    |                          | One to
Five Years |                           | More Than Five to Ten Years |                           | More Than
Ten Years
|-------------------------------------- | ---------------------- | ------------------------ | ----------------- | ------------------------- | --------------------------- | ------------------------- | -------------------
|                                       |                        | Weighted
AverageYield(1) |                   | Weighted
Average
Yield(1) |                             | Weighted
Average
Yield(1) |                    
|                                       |                        |                          |                   |                          
|                                       | Amount                 | Amount                   | Amount            | Amount                   
|                                       | (Dollars in thousands)
|                                       |                        |                          |                   |                           |                             |                           |                    
|Municipal securities                   | $                -     | - %                      | $     2,016       | 4.17%                     | $                 -         | -%                        | $  2,056           
|Agency securities                      | -                      | -                        | 13,842            | 3.21                      | -                           | -                         | -                  
|REMICs                                 | -                      | -                        | 127               | 3.74                      | -                           | -                         | 3,548              
|FHLMC mortgage-
   
 backed securities | -                      | -                        | 1,299             | 6.16                      | 8,209                       | 4.02                      | 217                
|FNMA mortgage-backed
   
 securities   | -                      | -                        | 67                | 6.85                      | 172                         | 5.91                      | 323                
|Trust preferred
   
 securities        | -                      | -                        | -                 | -                         | -                           | -                         | 5,031              
|Total                                  | $                -     | -%                       | $17,351           | 3.56%                     | $ 8,381                     | 4.06%                     | $11,175            







23

<PAGE>

In addition to U.S. Government treasury obligations, the Company invests in mortgage-backed securities and REMIC's.  Mortgage-backed securities ("MBS"), which are also known as mortgage participation certificates or pass-through certificates, represent a participation interest in a pool of single-family or multi-family mortgages. Principal and interest payments on mortgage-backed securities are passed from the mortgage originators, through intermediaries such as FNMA, FHLMC, the Government National Mortgage Association ("GNMA") or private issuers that pool and repackage the participation interests in the form of securities, to investors such as the Company.  Mortgage-backed securities generally increase the quality of the Company's assets by virtue of the guarantees that back them, are more liquid than individual mortgage loans and may be used to collateralize borrowings or other obligations of the Company.  See Note 5 of the Notes to the Consolidated Financial Statements contained in Item 8 of this Form 10-K for additional information.



REMICs are created by redirecting the cash flows from the pool of mortgages or mortgage-backed securities underlying these securities to create two or more classes, or tranches, with different maturity or risk characteristics designed to meet a variety of investor needs and preferences.  Management believes these securities may represent attractive alternatives relative to other investments because of the wide variety of maturity, repayment and interest rate options available.  Current investment practices of the Company prohibit the purchase of high risk REMICs.  At March 31, 2005, the Company held REMICs with a net carrying value of $3.7 million, of which $1.8 million were classified as held-to-maturity and $1.9 million of which were available-for-sale.  REMICs may be sponsored by private issuers, such as mortgage bankers or money center banks, or by U.S. Government agencies and government sponsored entities.  At March 31, 2005, the Company owned no privately issued REMICs.



Investments in mortgage-backed securities, including REMICs, involve a risk that actual prepayments will be greater than estimated prepayments over the life of the security, which may require adjustments to the amortization of any premium or accretion of any discount relating to such instruments thereby reducing the net yield on such securities. There is also reinvestment risk associated with the cash flows from such securities.  In addition, the market value of such securities may be adversely affected by changes in interest rates.

The investment in municipal securities was $4.1 million at March 31, 2005 compared to $4.3 million at March 31, 2004.  Total equity securities investment was none at March 31, 2005, compared to $12.4 million at March 31, 2004.  The equity securities were sold in the fourth quarter of fiscal year 2005.



In the third quarter of fiscal 2005, the Company recognized a $1.3 million non-cash pre-tax charge to operations for investments in FHLMC preferred stock and FNMA preferred stock.  Under SFAS No. 115, if the decline in fair market value below cost is determined to be other-than-temporary, the unrealized loss will be realized as expense on the income statement.  Based on a number of factors, including the magnitude of the drop in the market value below the Company's cost and the length of time the market value had been below cost, management concluded that the decline in value was other-than-temporary at the end of the third quarter of fiscal year 2005. Accordingly, the other-than-temporary impairment was realized in the income statement, in the amount of $699,000 for FNMA preferred stock and $650,000 FHLMC preferred stock. A corresponding reduction in unrealized losses in the accumulated other comprehensive income (loss) category in shareholders' equity was realized in the amount of $461,000 for FNMA preferred stock and $429,000 for FHLMC preferred stock.  In the fourth quarter of fiscal 2005, these preferred stocks were sold at a pre-tax gain of $164,000.



Deposit Activities and Other Sources of Funds



General.  Deposits, loan repayments and loan sales are the major sources of the Company's funds for lending and other investment purposes.  Loan repayments are a relatively stable source of funds, while deposit inflows and outflows and loan prepayments are significantly influenced by general interest rates and money market conditions.  Borrowings may be used on a short-term basis to compensate for reductions in the availability of funds from other sources.  They may also be used on a longer term basis for general business purposes.



Deposit Accounts. The Company's attracts deposits from
within its primary market area by offering a broad selection of deposit
instruments, including demand deposits, negotiable order of withdrawal ("NOW")
accounts, money market accounts, regular savings accounts, certificates of
deposit and retirement savings plans. Historically, the Company has focused on
retail deposits. Expansion in commercial lending has led to growth in business
deposits including demand

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<PAGE>

deposit accounts. Deposit account terms vary according to the
minimum balance required, the time periods the funds must remain on deposit and
the interest rate, among other factors. In determining the terms of its deposit
accounts, the Company considers the rates offered by its competition,
profitability to the Company, matching deposit and loan products and its
customer preferences and concerns. The Company generally reviews its deposit mix and pricing weekly.



Deposit Balances

The following table sets forth information concerning the Company's certificates of deposit, other interest-bearing and non-interest bearing deposits at March 31, 2005.

|InterestRate | Term                          | Category                                                               | Minimum        Amount | Balance        | Percent  
of TotalDeposits
|------------ | ----------------------------- | ---------------------------------------------------------------------- | --------------------- | -------------- | --------------------------
|             |                               |                                                                        |                       | (In thousands) |                           
|0.200%       | None                          | NOW accounts                                                           | $     100             | $  65,667      | 14.37%                    
|2.551        | None                          | High yield checking                                                    | 25,000                | 50,562         | 11.07                     
|0.550        | None                          | Regular savings                                                        | 500                   | 35,513         | 7.77                      
|1.437        | None                          | Money market                                                           | 2,500                 | 76,331         | 16.71                     
|None         | None                          | Non-interest checking                                                  | 100                   | 79,499         | 17.40                     
|             | Total transaction accounts    |                                                                        | 307,572               | 67.32         
|             |                               | Certificates of Deposit                                                |                       |                |                           
|2.719        | 91 Days                       | Fixed-term, Fixed-rate                                                 | 2,500                 | 7,345          | 1.61                      
|2.135        | 182-364 Days                  | Fixed-term, Fixed-rate                                                 | 2,500                 | 20,517         | 4.49                      
|2.106        | 12-17 Months                  | Fixed-term, Fixed-rate                                                 | 2,500                 | 31,070         | 6.80                      
|1.900        | 18 Months                     | Fixed-term, Variable
 
rate, Individual
 
Retirement account
 
("IRA") | 100                   | 1,329          | 0.29                      
|1.478        | 18-23 Months                  | Fixed-term, Fixed-rate                                                 | 2,500                 | 1,899          | 0.42                      
|2.703        | 24-35 Months                  | Fixed-term, Fixed-rate                                                 | 2,500                 | 28,384         | 6.21                      
|4.252        | 36-59 Months                  | Fixed-term, Fixed-rate                                                 | 2,500                 | 36,674         | 8.03                      
|4.491        | 60-83 Months                  | Fixed-term, Fixed-rate                                                 | 2,500                 | 14,984         | 3.28                      
|4.721        | 84-120 Months                 | Fixed-term, Fixed-rate                                                 | 2,500                 | 7,104          | 1.55                      
|             | Total certificates of deposit |                                                                        | 149,306               | 32.68%        
|             | Total deposits                |                                                                        | $456,878              | 100.00%       

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<PAGE>



Deposit Flow

The following table sets forth the balances of deposit accounts in the various types offered by the Company at the dates indicated.

|                                           |                       
|------------------------------------------ | ----------------------
|                                           | At March 31,          
|                                           | 2005                  
|                                           | Balance               
|                                           | (Dollars in thousands)
|                                           |                       
|Non-interest-bearing demand                | $79,499               
|NOW accounts                               | 65,667                
|High-yield checking                        | 50,562                
|Regular savings accounts                   | 35,513                
|Money market deposit accounts              | 76,331                
|Certificates of deposits which mature (1): |                       
|Within 12  months                          | 77,058                
|Within 12-36 months                        | 39,106                
|Beyond 36 months                           | 33,142                
|Total                                      | $456,878              

(1)    IRAs of $15.4 million, $13.9 million and $12.9 million at March 31, 2005, 2004 and 2003, respectively, are included
        
 in certificate of deposit balances.



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<PAGE>

Certificates of Deposit by Rates and Maturities

The following table sets forth the certificates of deposit in the Company classified by rates as of the dates indicated.

|             | At March 31,  
|------------ | --------------
|             | 2005          
|             | (In thousands)
|Below 2.00%  | $      34,136 
|2.00 - 2.99% | 37,157        
|3.00-
3.99%  | 36,216        
|4.00 - 4.99% | 30,277        
|5.00 - 5.99% | 9,670         
|6.00 - 7.99% | 1,850         
|Total        | $ 149,306     

The following table sets forth the amount and maturities of certificates of deposit at March 31, 2005.

|               | Amount Due         
|-------------- | -------------------
|               | Less Than  One Year
|(In thousands)
|Below 2.00%    | $   31,370         
|2.00 - 2.99%   | 29,327             
|3.00 - 3.99%   | 10,020             
|4.00 - 4.99%   | 963                
|5.00 - 5.99%   | 3,804              
|6.00 - 7.99%   | 1,574              
|Total          | $  77,058          

The following table presents the amount and weighted average rate of time deposits equal to or greater than  $100,000 at March 31, 2005.

|Maturity Period               | Amount                 | WeightedAverage Rate
|----------------------------- | ---------------------- | --------------------
|                              | (Dollars in thousands)
|                              |                       
|Three months or less          | $   13,814             | 2.55%               
|Over three through six months | 8,719                  | 3.23                
|Over six through 12 months    | 11,587                 | 2.82                
|Over 12 Months                | 34,489                 | 4.11                
|Total                         | $  68,609              | 3.46%               



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<PAGE>



Deposit Activities

The following table sets forth the deposit activities of the Company for the periods indicated.

Year Ended March 31,2005
2004
2003(In thousands)Beginning balance
$409,115
$320,742
$259,690Net increase before interest credited
42,342
83,618
55,535Interest credited
5,421
4,755
5,517Net increase in savings deposits
47,763
88,373
61,052Ending balance
$456,878
$409,115
$320,742




In the unlikely event the Bank is liquidated, depositors are entitled to full payment of their deposit accounts prior to any payment being made to the shareholders of the Company.  Substantially all of the Bank's depositors are residents of the States of Washington or Oregon.



Borrowings.  Savings deposits are the primary source of funds for the Company's lending and investment activities and for its general business purposes.  The Company relies upon advances from the FHLB of Seattle to supplement its supply of lendable funds and to meet deposit withdrawal requirements.  Advances from the FHLB of Seattle are typically secured by the Bank's first mortgage loans and investment securities.



The FHLB functions as a central reserve bank providing credit for savings and loan associations and certain other member financial institutions.  As a member, the Bank is required to own capital stock in the FHLB and is authorized to apply for advances on the security of such stock and certain of its mortgage loans and other assets (principally securities which are obligations of, or guaranteed by, the United States) provided certain standards related to creditworthiness have been met.  Advances are made pursuant to several different programs.  Each credit program has its own interest rate and range of maturities.  Depending on the program, limitations on the amount of advances are based either on a fixed percentage of an institution's assets or on the FHLB's assessment of the institution's creditworthiness. The FHLB determines specific lines of credit for each member institution and the Bank has a 30% of total assets line of credit with the FHLB of Seattle to the extent the Bank provides qualifying collateral and holds sufficient FHLB stock. At March 31, 2005, the Bank had $40.0 million of outstanding advances from the FHLB of Seattle under an available credit facility of $169.5 million, which is limited to available collateral.

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The following tables set forth certain information concerning the Company's borrowings at the dates and for the periods indicated.

|                                             | At March 31,
|-------------------------------------------- | ------------
|                                             | 2005        
|                                             |             
|Weighted average rate onFHLB
     
 advances | 5.05%       









|                                                                              |                       
|----------------------------------------------------------------------------- | ----------------------
|                                                                              | Year Ended March 31,  
|                                                                              | 2005                  
|                                                                              | (Dollars in thousands)
|Maximum
amounts of FHLB
     
  advances outstanding
     
  at any month end | $43,000               
|Average FHLB
      
   advances outstanding                                   | 40,274                
|Weighted
  average rate on FHLB
     
  advances                              | 5.00%                 

In addition, the Bank has a Fed Funds borrowing facility with Pacific Coast Bankers' Bank with a guideline limit of $10 million through June 30, 2005.  The facility may be reduced or withdrawn at any time.  As of March 31, 2005, the Bank did not have any outstanding advances on this facility.

REGULATION

The following is a brief description of certain laws and regulations which are applicable to the Company and the Bank.  The description of these laws and regulations, as well as descriptions of laws and regulations contained elsewhere herein, does not purport to be complete and is qualified in its entirety by reference to the applicable laws and regulations.



Legislation is introduced from time to time in the United States Congress that may affect our operations.  In addition, the regulations governing us may be amended from time to time by the OTS.  Any such legislation or regulatory changes in the future could adversely affect us.  We cannot predict whether any such changes may occur.

General

The Bank, as a federally-chartered savings institution, is subject to federal regulation and oversight by the OTS extending to all aspects of its operations.  The Bank also is subject to regulation and examination by the FDIC, which insures the deposits of the Bank to the maximum extent permitted by law, and requirements established by the Federal Reserve Board.  Federally-chartered savings institutions are required to file periodic reports with the OTS and are subject to periodic examinations by the OTS and the FDIC.  The investment and lending authority of savings institutions are prescribed by federal laws and regulations, and these institutions are prohibited from engaging in any activities not permitted by the laws and regulations.  This regulation and supervision primarily is intended for the protection of depositors and not for the purpose of protecting shareholders.



The OTS regularly examines the Bank and prepares reports for the consideration of the Bank's Board of Directors on any deficiencies that it may find in the Bank's operations.  The FDIC also has the authority to examine the Bank in its roles as the administrator of the SAIF.  The Bank's relationship with its depositors and borrowers also is regulated to a great extent by both federal and state laws, especially in matters such as the ownership of savings accounts and the form and content of the Bank's mortgage requirements.  Any change in these regulations, whether by the

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<PAGE>



Federal Regulation of Savings Institutions



Office of Thrift Supervision.  The OTS has extensive authority over the operations of savings institutions.  As part of this authority, the Bank is required to file periodic reports with the OTS and is subject to periodic examinations by the OTS and the FDIC.  When these examinations are conducted by the OTS and the FDIC, the examiners may require the Bank to provide for higher general or specific loan loss reserves.  All savings institutions are subject to a semi-annual assessment, based upon the institution's total assets, to fund the operations of the OTS.  The OTS also has extensive enforcement authority over all savings institutions and their holding companies, including the Bank and the Company.  This enforcement authority includes, among other things, the ability to assess civil money penalties, issue cease-and-desist or removal orders and initiate injunctive actions.  In general, these enforcement actions may be initiated for violations of laws and regulations and unsafe or unsound practices.  Other actions or inactions may provide the basis for enforcement action, including misleading or untimely reports filed with the OTS.  Except under certain circumstances, public disclosure of final enforcement actions by the OTS is required.



In addition, the investment,hority of the Bank is prescribed by federal laws and it is prohibited from engaging in any activities not permitted by these laws.  For example, no savings institution may invest in non-investment grade corporate debt securities.  In addition, the permissible level of investment by federal institutions in loans secured by non-residential real property may not exceed 400% of total capital, except with approval of the OTS.  Federal savings institutions are also generally authorized to branch nationwide.  The Bank is in compliance with the noted restrictions.



All savings institutions are required to pay assessments to the OTS to fund the agency's operations.  The general assessments, paid on a semi-annual basis, are determined based on the savings institution's total assets, including consolidated subsidiaries.  The Bank's OTS assessment for the fiscal year ended March 31, 2005 was $114,557.



Federal law provides that savings institutions are generally subject to the national bank limit on loans to one borrower.  A savings institution may not make a loan or extend credit to a single or related group of borrowers in excess of 15% of its unimpaired capital and surplus.  An additional amount may be lent, equal to 10% of unimpaired capital and surplus, if secured by specified readily-marketable collateral.  At March 31, 2005, the Bank's regulatory limit on loans to one borrower is $8.6 million.  At March 31, 2005, the Bank's largest single loan to one borrower was $8.3 million, which was performing according to its original terms.



The OTS, as well as the other federal banking agencies, has adopted guidelines establishing safety and soundness standards on such matters as loan underwriting and documentation, asset quality, earnings standards, internal controls and audit systems, interest rate risk exposure and compensation and other employee benefits.  Any institution that fails to comply with these standards must submit a compliance plan.



Federal Home Loan Bank System.  The Bank is a member of the FHLB of Seattle, which is one of 12 regional FHLBs that administer the home financing credit function of savings institutions.  Each FHLB serves as a reserve or central bank for its members within its assigned region.  It is funded primarily from proceeds derived from the sale of consolidated obligations of the FHLB System.  It makes loans or advances to members in accordance with policies and procedures, established by the Board of Directors of the FHLB, which are subject to the oversight of the Federal Housing Finance Board.  All advances from the FHLB are required to be fully secured by sufficient collateral as determined by the FHLB.  In addition, all long-term advances are required to provide funds for residential home financing.  At March 31, 2005, the Bank had $40.0 million of outstanding advances from the FHLB of Seattle under an available credit facility of $169.5 million, which is limited to available collateral.  See Business - Deposit Activities and Other Sources of Funds - Borrowings.



As a member, the Bank is required to purchase and maintain stock in the FHLB of Seattle.  At March 31, 2005, the Bank had $6.1 million in FHLB stock, which was in compliance with this requirement.  In past years, the Bank has received substantial dividends on its FHLB stock.  Over the past two fiscal years such dividends have averaged 1.81% and 3.93% for the fiscal years ended March 31, 2005 and 2004, respectively.  As a result of the FHLB of Seattle recapitalization plans, the Bank recognized FHLB dividends on the cash basis for fiscal year 2005.  For the

30

<PAGE>

year ended March 31, 2005, the Bank received $110,000 in dividends from the FHLB of Seattle.  As of May 18, 2005, the FHLB-Seattle has suspended dividends on all classes of stock.  For additional information see 'News' under 'Our Company' on the FHLB of Seattle's website at fhlbsea.com.



Under federal law, the FHLBs are required to provide funds for the resolution of troubled savings institutions and to contribute to low- and moderately-priced housing programs through direct loans or interest subsidies on advances targeted for community investment and low- and moderate-income housing projects.  These contributions have affected adversely the level of FHLB dividends paid and could continue to do so in the future.  These contributions could also have an adverse effect on the value of FHLB stock in the future.  A reduction in value of the Bank's FHLB stock may result in a corresponding reduction in the Bank's capital

Deposit Insurance.  The Bank is a member of the SAIF, which is administered by the FDIC.  Deposits are insured up to the applicable limits by the FDIC and this insurance is backed by the full faith and credit of the United States.



As insurer, the FDIC imposes deposit insurance premiums and is authorized to conduct examinations of and to require reporting by FDIC-insured institutions.  It also may prohibit any FDIC-insured institution from engaging in any activity the FDIC determines by regulation or order to pose a serious risk to the SAIF.  The FDIC also has the authority to initiate enforcement actions against savings institutions, after giving the OTS an opportunity to take such action, and may terminate the deposit insurance if it determines that the institution has engaged in unsafe or unsound practices or is in an unsafe or unsound condition.



The FDIC's deposit insurance premiums are assessed through a risk-based system under which all insured depository institutions are placed into one of nine categories and assessed insurance premiums based upon their level of capital and supervisory evaluation.  Under the system, institutions classified as well capitalized (i.e., a core capital ratio of at least 5%, a ratio of Tier 1 or core capital, to risk-weighted assets ("Tier 1 risk-based capital") of at least 6% and a risk-based capital ratio of at least 10%) and considered healthy pay the lowest premium while institutions that are less than adequately capitalized (i.e., core or Tier 1 risk-based capital ratios of less than 4% or a risk-based capital ratio of less than 8%) and considered of substantial supervisory concern pay the highest premium. Risk classification of all insured institutions is made by the FDIC for each semi-annual assessment period.



The FDIC is authorized to increase assessment rates, on a semi-annual basis, if it determines that the reserve ratio of the SAIF will be less than the designated reserve ratio of 1.25% of SAIF insured deposits.  In setting these increased assessments, the FDIC must seek to restore the reserve ratio to that designated reserve level, or such higher reserve ratio as established by the FDIC.  The FDIC may also impose special assessments on SAIF members to repay amounts borrowed from the United States Treasury or for any other reason deemed necessary by the FDIC.



Since January 1, 1997, the premium schedule for Bank Insurance Fund ("BIF") and SAIF insured institutions has ranged from 0 to 27 basis points.  However, SAIF and BIF insured institutions are required to pay a Financing Corporation assessment in order to fund the interest on bonds issued to resolve thrift failures in the 1980s equal to approximately 1.5 points for each $100 in domestic deposits annually.  These assessments, which may be revised based upon the level of BIF and SAIF deposits, will continue until the bonds mature in the year 2017.



Prompt Corrective Action.  The OTS is required to take certain supervisory actions against undercapitalized savings institutions, the severity of which depends upon the institution's degree of undercapitalization.  Generally, an institution that has a ratio of total capital to risk-weighted assets of less than 8%, a ratio of Tier I (core) capital to risk-weighted assets of less than 4%, or a ratio of core capital to total assets of less than 4% (3% or less for institutions with the highest examination rating) is considered to be "undercapitalized."  An institution that has a total risk-based capital ratio less than 6%, a Tier I capital ratio of less than 3% or a leverage ratio that is less than 3% is considered to be "significantly undercapitalized" and an institution that has a tangible capital to assets ratio equal to or less than 2% is deemed to be "critically undercapitalized."  Subject to a narrow exception, the OTS is required to appoint a receiver or conservator for a savings institution that is "critically undercapitalized."  OTS regulations also require that a capital restoration plan be filed with the OTS within 45 days of the date a savings institution receives notice that it is "undercapitalized," "significantly undercapitalized" or "critically undercapitalized."

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<PAGE>

Compliance with the plan must be guaranteed by any parent holding company in an amount of up to the lesser of 5% of the institution's assets or the amount which would bring the institution into compliance with all capital standards.  In addition, numerous mandatory supervisory actions become immediately applicable to an undercapitalized institution, including, but not limited to, increased monitoring by regulators and restrictions on growth, capital distributions and expansion.  The OTS also could take any one of a number of discretionary supervisory actions, including the issuance of a capital directive and the replacement of senior executive officers and directors.



At March 31, 2005, the Bank was categorized as "well capitalized" under the prompt corrective action regulations of the OTS.



Qualified Thrift Lender Test.  All savings institutions, including the Bank, are required to meet a qualified thrift lender ("QTL") test to avoid certain restrictions on their operations.  This test requires a savings institution to have at least 65% of its total assets, as defined by regulation, in qualified thrift investments on a monthly average for nine out of every 12 months on a rolling basis.  As an alternative, the savings institution may maintain 60% of its assets in those assets specified in Section 7701(a)(19) of the Internal Revenue Code ("Code").  Under either test, such assets primarily consist of residential housing related loans and investments.  At March 31, 2005, the Bank met the test and its QTL percentage was 69.43%.



Any savings institution that fails to meet the QTL test must convert to a national bank charter, unless it requalifies as a QTL and thereafter remains a QTL. If such an association has not yet requalified or converted to a national bank, its new investments and activities are limited to those permissible for both a savings institution and a national bank, and it is limited to national bank branching rights in its home state.  In addition, the association is immediately ineligible to receive any new FHLB borrowings and is subject to national bank limits for payment of dividends.  If such association has not requalified or converted to a national bank within three years after the failure, it must divest of all investments and cease all activities not permissible for a national bank. If any association that fails the QTL test is controlled by a holding company, then within one year after the failure, the holding company must register as a bank holding company and become subject to all restrictions on bank holding companies.  See "- Savings and Loan Holding Company Regulations."



Capital Requirements.  Federally-insured savings institutions, such as the Bank, are required to maintain a minimum level of regulatory capital. The OTS has established capital standards, including a tangible capital requirement, a leverage ratio (or core capital) requirement and a risk-based capital requirement applicable to such savings institutions.  These capital requirements must be generally as stringent as the comparable capital requirements for national banks.  The OTS is also authorized to impose capital requirements in excess of these standards on individual institutions on a case-by-case basis.



The OTS capital regulations require tangible capital of at least 1.5% of adjusted total assets, as defined by regulation.  Tangible capital generally includes common stockholders' equity and retained income, and certain noncumulative perpetual preferred stock and related income.  In addition, all intangible assets, other than a limited amount of purchased mortgage servicing rights, must be deducted from tangible capital for calculating compliance with the requirement.  At March 31, 2005, the Bank had intangible assets in the form of mortgage servicing rights, goodwill and core deposit intangibles.



At March 31, 2005, the Bank had tangible capital of $53.0 million, or 9.54% of tangible assets, which is approximately $44.7 million above the minimum requirement of 1.5% of tangible assets as of that date.



The capital standards also require core capital equal to at least 4.0% of adjusted total assets unless an institution's supervisory condition is such to allow it to maintain a 3.0% ratio.  Core capital generally consists of tangible capital plus certain intangible assets, including a limited amount of purchased credit card relationships.  At March 31, 2005, the Bank's mortgage service rights were subject to these tests.  At March 31, 2005, the Bank had core capital equal to $53.0 million, or 9.54% of adjusted total assets, which is $36.3 million above the minimum requirement of 4.0% in effect on that date.



32

<PAGE>



The OTS also requires savings institutions to have core capital equal to 4.0% of risk-weighted assets ("Tier 1 risk-based").  At March 31, 2005, the Bank had Tier 1 risk-based capital of $53.0 million or 11.42% of risk-weighted assets, which is approximately $34.4 million above the minimum on that date.  The OTS also requires savings institutions to have total capital of at least 8.0% of risk-weighted assets.  Total capital consists of core capital, as defined above, and supplementary capital.  Supplementary capital consists of certain permanent and maturing capital instruments that do not qualify as core capital and general valuation loan and lease loss allowances up to a maximum of 1.25% of risk-weighted assets.  Supplementary capital may be used to satisfy the risk-based requirement only to the extent of core capital.  The OTS is also authorized to require a savings institution to maintain an additional amount of total capital to account for concentration of credit risk and the risk of non-traditional activities.



In determining the amount of risk-weighted assets, all assets, including certain off-balance sheet items, are multiplied by a risk weight, ranging from 0% to 100%, based on the risk inherent in the type of asset.  For example, the OTS has assigned a risk weight of 50% for prudently underwritten permanent one- to four-family first lien mortgage loans not more than 90 days delinquent and having a loan-to-value ratio of not more than 80% at origination unless insured to such ratio by an insurer approved by Fannie Mae or Freddie Mac.



On March 31, 2005, the Bank had total risk-based capital of approximately $57.4 million, including $53.0 million in core capital and $4.4 million in qualifying supplementary capital, and risk-weighted assets of $464.0 million, or total capital of 12.37% of risk-weighted assets.  This amount was $20.3 million above the 8.0% requirement in effect on that date.



The OTS and the FDIC are authorized and, under certain circumstances, required to take certain actions against savings institutions that fail to meet their capital requirements.  The OTS is generally required to take action to restrict the activities of an "undercapitalized institution," which is an institution with less than either a 4.0% core capital ratio, a 4.0% Tier 1 risked-based capital ratio or an 8.0% risk-based capital ratio.  Any such institution must submit a capital restoration plan and until the plan is approved by the OTS, may not increase its assets, acquire another institution, establish a branch or engage in any new activities, and generally may not make capital distributions.  The OTS is authorized to impose the additional restrictions that are applicable to significantly undercapitalized institutions.  As a condition to the approval of the capital restoration plan, any company controlling an undercapitalized institution must agree that it will enter into a limited capital maintenance guarantee with respect to the institution's achievement of its capital requirements.



Any savings institution that fails to comply with its capital plan or has Tier 1 risk-based or core capital ratios of less than 3.0% or a risk-based capital ratio of less than 6.0% and is considered "significantly undercapitalized" will be made subject to one or more additional specified actions and operating restrictions which may cover all aspects of its operations and may include a forced merger or acquisition of the institution.  An institution that becomes "critically undercapitalized" because it has a tangible capital ratio of 2.0% or less is subject to further mandatory restrictions on its activities in addition to those applicable to significantly undercapitalized institutions.  In addition, the OTS must appoint a receiver, or conservator with the concurrence of the FDIC, for a savings institution, with certain limited exceptions, within 90 days after it becomes critically undercapitalized.  Any undercapitalized institution is also subject to the general enforcement authority of the OTS and the FDIC, including the appointment of a conservator or a receiver.



The OTS is also generally authorized to reclassify an institution into a lower capital category and impose the restrictions applicable to such category if the institution is engaged in unsafe or unsound practices or is in an unsafe or unsound condition.  The imposition by the OTS or the FDIC of any of these measures on the Bank may have a substantial adverse effect on its operations and profitability.



Limitations on Capital Distributions.  OTS regulations impose various restrictions on savings institutions with respect to their ability to make distributions of capital, which include dividends, stock redemptions or repurchases, cash-out mergers and other transactions charged to the capital account.



Generally, savings institutions, such as the Bank, that before and after the proposed distribution are well-capitalized, may make capital distributions during any calendar year equal to up to 100% of net income for the year-to-date plus

33

<PAGE>

retained net income for the two preceding years.  However, an institution deemed to be in need of more than normal supervision by the OTS may have its dividend authority restricted by the OTS.  The Bank may pay dividends to the Company in accordance with this general authority.



Savings institutions proposing to make any capital distribution need not submit written notice to the OTS prior to such distribution unless they are a subsidiary of a holding company or would not remain well-capitalized following the distribution.  Savings institutions that do not, or would not meet their current minimum capital requirements following a proposed capital distribution or propose to exceed these net income limitations, must obtain OTS approval prior to making such distribution.  The OTS may object to the distribution during that 30-day period based on safety and soundness concerns.  See "- Capital Requirements."



Activities of Associations and their Subsidiaries.  When a savings institution establishes or acquires a subsidiary or elects to conduct any new activity through a subsidiary that the association controls, the savings institution must notify the FDIC and the OTS 30 days in advance and provide the information each agency may, by regulation, require.  Savings institutions also must conduct the activities of subsidiaries in accordance with existing regulations and orders.



The OTS may determine that the continuation by a savings institution of its ownership control of, or its relationship to, the subsidiary constitutes a serious risk to the safety, soundness or stability of the association or is inconsistent with sound banking practices or with the purposes of the FDIA.  Based upon that determination, the FDIC or the OTS has the authority to order the savings institution to divest itself of control of the subsidiary.  The FDIC also may determine by regulation or order that any specific activity poses a serious threat to the SAIF.  If so, it may require that no SAIF member engage in that activity directly.



Transactions with Affiliates.  Savings institutions must comply with Sections 23A and 23B of the Federal Reserve Act relative to transactions with affiliates in the same manner and to the same extent as if the savings institution were a Federal Reserve member bank.  Generally, transactions between a savings institution or its subsidiaries and its affiliates are required to be on terms as favorable to the association as transactions with non-affiliates.  In addition, certain of these transactions, such as loans to an affiliate, are restricted to a percentage of the institution's capital.  Affiliates of the Bank include the Company and any company which is under common control with the Bank.  In addition, a savings institution may not lend to any affiliate engaged in activities not permissible for a bank holding company or acquire the securities of most affiliates.  The OTS has the discretion to treat subsidiaries of savings institutions as affiliates on a case by case basis.



On April 1, 2003, the Federal Reserve's Regulation W, which comprehensively amends sections 23A and 23B of the Federal Reserve Act, became effective.  The Federal Reserve Act and Regulation W are applicable to savings institutions such as the Bank.  The Regulation unifies and updates staff interpretations issued over the years, incorporates several new interpretative proposals (such as to clarify when transactions with an unrelated third party will be attributed to an affiliate) and addresses new issues arising as a result of the expanded scope of nonbanking activities engaged in by banks and bank holding companies in recent years and authorized for financial holding companies under the Gramm-Leach-Bliley Financial Services Modernization Act of 1999.



In addition, OTS regulations prohibit a savings institution from lending to any of its affiliates that is engaged in activities that are not permissible for bank holding companies and from purchasing the securities of any affiliate, other than a subsidiary.



Certain transactions with directors, officers or controlling persons are also subject to conflict of interest regulations enforced by the OTS.  These conflict of interest regulations and other statutes also impose restrictions on loans to such persons and their related interests.  Among other things, such loans must be made on terms substantially the same as for loans to unaffiliated individuals.



Community Reinvestment Act.

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<PAGE>

of its entire community, including low and moderate income neighborhoods.  The Community Reinvestment Act does not establish specific lending requirements or programs for financial institutions nor does it limit an institution's discretion to develop the types of products and services that it believes are best suited to its particular community, consistent with the Community Reinvestment Act.  The Community Reinvestment Act requires the OTS, in connection with the examination of the Bank, to assess the institution's record of meeting the credit needs of its community and to take such record into account in its evaluation of certain applications, such as a merger or the establishment of a branch, by the Bank.  An unsatisfactory rating may be used as the basis for the denial of an application by the OTS.  Due to the heightened attention being given to the Community Reinvestment Act in the past few years, the Bank may be required to devote additional funds for investment and lending in its local community.  The Bank was examined for Community Reinvestment Act compliance and received a rating of satisfactory in its latest examination.

Affiliate Transactions.  The Company and the Bank are separate and distinct legal entities.  Various legal limitations restrict the Bank from lending or otherwise supplying funds to the Company, generally limiting any single transaction to 10% of the Bank's capital and surplus and limiting all such transactions to 20% of the Bank's capital and surplus.  These transactions also must be on terms and conditions consistent with safe and sound banking practices that are substantially the same as those prevailing at the time for transactions with unaffiliated companies.



Federally insured savings institutions are subject, with certain exceptions, to certain restrictions on extensions of credit to their parent holding companies or other affiliates, on investments in the stock or other securities of affiliates and on the taking of such stock or securities as collateral from any borrower.  In addition, these institutions are prohibited from engaging in certain tie-in arrangements in connection with any extension of credit or the providing of any property or service.

Regulatory and Criminal Enforcement Provisions.

Environmental Issues Associated with Real Estate Lending.



To the extent that legal uncertainty exists in this area, all creditors, including the Bank, that have made loans secured by properties with potential hazardous waste contamination (such as petroleum contamination) could be subject to liability for cleanup costs, which costs often substantially exceed the value of the collateral property.



Privacy Standards. On November 12, 1999, the Gramm-Leach-Bliley Financial Services Modernization Act of 1999 ("GLBA") was signed into law.  The purpose of this legislation is to modernize the financial services industry by establishing a comprehensive framework to permit affiliations among commercial banks, insurance companies, securities firms and other financial service providers.



The Bank is subject to OTS regulations implementing the privacy protection provisions of the GLBA. These regulations require the Bank to disclose its privacy policy, including identifying with whom it shares "non-public personal information," to customers at the time of establishing the customer relationship and annually thereafter.



35

<PAGE>



The regulations also require the Bank to provide its customers with initial and annual notices that accurately reflect its privacy policies and practices. In addition, the Bank is required to provide its customers with the ability to "opt-out" of having the Bank share their non-public personal information with unaffiliated third parties before they can disclose such information, subject to certain exceptions.



The Bank is subject to regulatory guidelines establishing standards for safeguarding customer information. These regulations implement certain provisions of the GLBA. The guidelines describe the agencies' expectations for the creation, implementation and maintenance of an information security program, which would include administrative, technical and physical safeguards appropriate to the size and complexity of the institution and the nature and scope of its activities. The standards set forth in the guidelines are intended to insure the security and confidentiality of customer records and information, protect against any anticipated threats or hazards to the security or integrity of such records and protect against unauthorized access to or use of such records or information that could result in substantial harm or inconvenience to any customer.



Anti-Money Laundering and Customer Identification. In response to the terrorist events of September 11, 2001, the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (the "USA Patriot Act") was signed into law on October 26, 2001.  The USA Patriot Act gives the federal government new powers to address terrorist threats through enhanced domestic security measures, expanded surveillance powers, increased information sharing, and broadened anti-money laundering requirements. The Bank Secrecy Act, Title III of the USA Patriot Act takes measures intended to encourage information sharing among bank regulatory agencies and law enforcement bodies. Further, certain provisions of Title III impose affirmative obligations on a broad range of financial institutions. Title III of the USA Patriot Act and the related OTS regulations impose the following requirements with respect to financial institutions:

- establishment of anti-money laundering programs;
- establishment of a program specifying procedures for obtaining identifying information from customers seeking to open new accounts, including verifying the identity of customers within a reasonable period of time;
- establishment of enhanced due diligence policies, procedures and controls designed to detect and report money laundering;
- prohibitions on correspondent accounts for foreign shelled banks and compliance with record keeping obligations with respect to correspondent accounts of foreign banks.



Bank regulators are directed to consider a holding company's effectiveness in combating money laundering when ruling on Federal Reserve Act and Bank Merger Act applications. The Bank's policies and procedures have been updated to reflect the requirements of the USA Patriot Act, which had a minimal impact on business and customers.



Savings and Loan Holding Company Regulations

General.

Mergers and Acquisitions. The Company must obtain approval from the OTS before acquiring more than 5% of the voting stock of another savings institution or savings and loan holding company or acquiring such an institution or holding company by merger, consolidation or purchase of its assets.  In evaluating an application for the Company to acquire control of a savings institution, the OTS would consider the financial and managerial resources and future prospects of the Company and the target institution, the effect of the acquisition on the risk to the insurance funds, the convenience and the needs of the community and competitive factors.



36

<PAGE>



Activities Restrictions.  As a unitary savings and loan holding company, the Company generally is not subject to activity restrictions. The Company and its non-savings institution subsidiaries

If the Bank fails the QTL test, the Company must, within one year of that failure, register as, and will become subject to, the restrictions applicable to bank holding companies.  See "- Federal Regulation of Savings Institutions - Qualified Thrift Lender Test."



Sarbanes-Oxley Act of 2002.  The Sarbanes-Oxley Act of 2002 ("Sarbanes-Oxley Act") was signed into law on July 30, 2002 in response to public concerns regarding corporate accountability in connection with recent accounting scandals.  The stated goals of the Sarbanes-Oxley Act are to increase corporate responsibility, to provide for enhanced penalties for accounting and auditing improprieties at publicly traded companies and to protect investors by improving the accuracy and reliability of corporate disclosures pursuant to the securities laws.  The Sarbanes-Oxley Act generally applies to all companies, both U.S. and non-U.S., that file or are required to file periodic reports with the Securities and Exchange Commission ("SEC") under the Securities Exchange Act of 1934, including the Company.



The Sarbanes-Oxley Act includes very specific additional disclosure requirements and new corporate governance rules, requires the SEC and securities exchanges to adopt extensive additional disclosure, corporate governance and related rules.  The Sarbanes-Oxley Act represents significant federal involvement in matters traditionally left to state regulatory systems, such as the regulation of the accounting profession, and to state corporate law, such as the relationship between a board of directors and management and between a board of directors and its committees.

Taxation

For details regarding the Company's Federal taxes, see Note 13 of the Notes to the Consolidated Financial Statements contained in Item 8 of this Form 10-K.



Personnel



As of March 31, 2005, the Company had 197 full-time equivalent employees, none of whom are represented by a collective bargaining unit.  The Company believes its relationship with its employees is good.



Executive Officers.  The following table sets forth certain information regarding the executive officers of the Company.



|Name               | Age (1) | Position                                         
|------------------ | ------- | -------------------------------------------------
|Patrick Sheaffer   | 65      | Chairman of the Board and Chief Executive Officer
|Ron Wysaske        | 52      | President and Chief Operating Officer            
|David A. Dahlstrom | 54      | Executive Vice President and Chief Credit Officer
|Ron Dobyns         | 56      | Senior Vice President and Chief Financial Officer
|John A. Karas      | 56      | Senior Vice President                            
|James D. Baldovin  | 46      | Senior Vice President                            
|Terry Long         | 46      | Senior Vice President                            

(1)At March 31, 2005.



Patrick Sheaffer isChairman of the Board and Chief Executive Officerof the Company and Chief Executive Officer of the Bank. Prior to February 2004, Mr. Sheaffer served as Chairman of the Board, President and Chief Executive Officer of the Company since inception in 1997. He became Chairman of the Board of the Bank in 1993. Mr. Sheaffer joined the Bank in 1965. He is responsible for leadership and management of the Company. Mr. Sheaffer is active in numerous professional and civic organizations.



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Ron Wysaske is President and Chief Operating Officer of the Bank. Prior to February 2004, Mr. Wysaske served as Executive Vice President, Treasurer and Chief Financial Officer of the Bank from 1981 to 2004 and of the Company at inception in 1997. He joined the Bank in 1976. Mr. Wysaske is responsible for daily operations and management of the Bank. He holds an M.B.A. from Washington State University and is active in numerous professional and civic organizations.

David A. Dahlstrom, Executive Vice President and Chief Credit Officer, was hired in May 2002.  He is responsible for all Riverview lending divisions related to its commercial, mortgage and consumer loan activities.  Prior to joining Riverview, Mr. Dahlstrom spent 14 years with First Interstate and progressed through a number of management positions, including serving as Senior Vice President of the Business Banking Group in Portland.  In 1999, Mr. Dahlstrom joined a regional bank as Executive Vice President/Community Banking, responsible for all branch operations and small business banking.



Ron Dobyns is Senior Vice President and Chief Financial Officer of the Company.  Prior to February 2004, Mr. Dobyns served as Controller since 1996.  He is responsible for accounting, SEC reporting as well as treasury functions for the Bank and the Company.  He is a State of Oregon certified public accountant, holds an M.B.A. from the University of Minnesota and is a graduate of Pacific Coast Banking School.

John A. Karas, Senior Vice President of the Bank, also serves as Chairman of the Board, President and CEO of our subsidiary, Riverview Asset Management Corp.  Mr. Karas came to Riverview in 1999 with over 20 years of trust experience.  He is familiar with all phases of the trust business and his experience includes trust administration, trust legal council, investments and real estate.  Mr. Karas received his B.A. from Willamette University and his Juris Doctor degree from Lewis & Clark Law School's Northwestern School of Law.  He is a member of the Oregon, Multnomah County and American Bar Associations and a Certified Trust and Financial Advisor.  Mr. Karas is also active in numerous civic organizations.

James D. Baldovin, Senior Vice President, was hired in January 2003 to head Riverview's Retail Banking Division.  Mr. Baldovin is responsible for Riverview's retail banking presence which includes the branch banking network, customer service, marketing, and community involvement.  During his 24 year banking career, he has directed sales team efforts in retail banking, small business and commercial lending.  Mr. Baldovin holds a B.A. from Linfield College, is a graduate of the Pacific Coast Banking School and is active in civic organizations.

Terry Long, Senior Vice President, was hired in June 1996 and heads our Operations and IT departments.  Mr. Long has more than 20 years of diversified financial institution experience.  An M.B.A. graduate of Fairfield University and Linfield College alum, Mr. Long serves on the Banking Advisory Council of the America's Community Bankers National School of Banking and works with groups benefiting several high schools in Portland.



Item 2.  Properties



The following table sets forth certain information relating to the Company's offices as of March 31, 2005.



|Location                                            | Year Opened | ApproximateSquare Footage | Deposits     
|--------------------------------------------------- | ----------- | ------------------------- | -------------
|Main Office:                                        |             |                           | (In millions)
|                                                    |             |                           |              
|900 Washington, Suite 900
Vancouver, Washington (1) | 2000        | 16,000                    | $ 36.8       
|                                                    |             |                           |              
|Branch Offices:                                     |             |                           |              
|700 N.E. Fourth Avenue
Camas, Washington (1)(2)     | 1975        | 25,000                    | 54.9         
|                                                   

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|                                                                                           |      |       |     
|------------------------------------------------------------------------------------------ | ---- | ----- | ----
|3307 Evergreen Way
Washougal, Washington (1)(2)(3)                                         | 1963 | 3,200 | 29.9
|                                                                                           |      |       |     
|225 S.W. 2nd Street
Stevenson, Washington (2)                                              | 1971 | 1,700 | 30.5
|                                                                                           |      |       |     
|330 E. Jewett Boulevard
White Salmon, Washington (2)(4)                                    | 1977 | 3,200 | 28.8
|                                                                                           |      |       |     
|15 N.W. 13th Avenue
Battle Ground, Washington (2)(5)                                       | 1979 | 2,900 | 33.6
|                                                                                           |      |       |     
|412 South Columbus
Goldendale, Washington (2)                                              | 1983 | 2,500 | 15.4
|                                                                                           |      |       |     
|11505-K N.E. Fourth Plain Boulevard
Vancouver, Washington (2)                              | 1994 | 3,500 | 23.7
|                                                                                           |      |       |     
|7735 N.E. Highway 99
Vancouver, Washington (1)(6)(2)                                       | 1994 | 4,800 | 26.2
|                                                                                           |      |       |     
|1011 Washington Way
Longview, Washington (6)(2)                                            | 1994 | 2,000 | 18.4
|                                                                                           |      |       |     
|900 Washington St., Suite 100
Vancouver, Washington (1)(2)                                 | 1998 | 5,300 | 94.0
|                                                                                           |      |       |     
|1901-E N.E. 162nd Avenue
Vancouver, Washington (1)(2)                                      | 1999 | 3,200 | 14.6
|                                                                                           |      |       |     
|800 N.E. Tenney Road, Suite D
Vancouver, Washington (2)                                    | 2000 | 3,200 | 19.4
|                                                                                           |      |       |     
|915 MacArthur Blvd.
Vancouver, Washington (1)(2)(7)                                        | 2003 | 3,000 | 30.7
|                                                                                           |      |       |     
|204 S.E. Park Plaza Dr., #109
Vancouver, Washington (1)(2)(7)
Cascade Park Mortgage Center | 2003 | 2565  | -   

(1)    Leased.
(2)    Location of an automated teller machine.
(3)    New facility in 2001.
(4)    New facility in 2000.
(5)    New facility in 1994.
(6)    Former branches of Great American Federal Savings Association, San Diego, California, that were acquired
        
 from the Resolution Trust Corporation on May 13, 1994.  In the acquisition, the Company assumed all
        
 insured deposit liabilities of both branch offices totaling approximately $42.0 million.
(7)   Former location of Today's Bank, Vancouver, Washington, acquired on July 18, 2003.

During second quarter of fiscal year 2001, the Company's main office for administration was relocated from Camas to the downtown Vancouver address of 900 Washington Street.   The Washougal branch office was relocated during the first quarter of the fiscal year 2001.

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<PAGE>



The Company uses an outside data processing system to process customer records and monetary transactions, post deposit and general ledger entries and record activity in installment lending, loan servicing and loan originations. At March 31, 2005, the net book value of the Company's office properties, furniture, fixtures and equipment was $8.4 million.



Management believes that the facilities are of sound construction and good operating condition, and are appropriately insured and adequately equipped for carrying on the business of the Company.



Item 3.  Legal Proceedings



Periodically, there have been various claims and lawsuits involving the Company, such as claims to enforce liens, condemnation proceedings on properties in which the Company holds security interests, claims involving the making and servicing of real property loans and other issues incident to the Company's business.  The Company is not a party to any pending legal proceedings that it believes would have a material adverse effect on the financial condition, results of operations or liquidity of the Company.



Item 4.  Submission of Matters to a Vote of Security Holders



No matters were submitted to a vote of security holders during the fourth quarter of the fiscal year ended March 31, 2005.



PART II

Item 5.   Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

At March 31, 2005, there were 5,015,753 shares Company Common Stock issued and 5,015,749 outstanding, 821 stockholders of record and an estimated 1,500 holders in nominee or "street name."

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The common stock of the Company has traded on the Nasdaq National Market System under the symbol "RVSB" since October 2, 1997.  From October 22, 1993 until October 2, 1997, the common stock of the Company traded on The Nasdaq SmallCap Market under the same symbol.  The following table sets forth the high and low trading prices, as reported by Nasdaq, and cash dividends paid for each quarter during 2005 and 2004 fiscal years.  At March 31, 2005, there were ten market makers in the Company's common stock as reported by the Nasdaq Stock Market.

|Fiscal Year Ended March 31, 2005 | High   | Low    | Cash DividendsDeclared
|-------------------------------- | ------ | ------ | ----------------------
|                                 |        |        |                       
|Quarter Ended March 31, 2005     | $22.48 | $21.00 | $0.155                
|Quarter Ended December 31, 2004  | 22.50  | 20.95  | 0.155                 
|Quarter Ended September 30, 2004 | 21.65  | 19.85  | 0.155                 
|Quarter Ended June 30, 2004      | 21.00  | 19.49  | 0.155                 

|Fiscal Year Ended March 31, 2004 | High   | Low    | Cash DividendsDeclared
|-------------------------------- | ------ | ------ | ----------------------
|                                 |        |        |                       
|Quarter Ended March 31, 2004     | $21.43 | $19.35 | $0.140                
|Quarter Ended December 31, 2003  | 21.74  | 19.09  | 0.140                 
|Quarter Ended September 30, 2003 | 20.50  | 18.08  | 0.140                 
|Quarter Ended June 30, 2003      | 18.30  | 16.30  | 0.140                 

Stock Repurchase



The shares are being repurchased from time-to-time in open market transactions.  The timing, volume and price of purchases will be made at our discretion, and will also be contingent upon our overall financial condition, as well, as market conditions in general.  The following table reflects activity for the three months ended March 31, 2005.

Common Stock Repurchased

|                                     | Total Number ofShares Purchased 
(1) | Average Price Paid per
 Share | Maximum Number of shares that May Yet Be Purchased Under the Program (2)
|------------------------------------ | ------------------------------------ | ----------------------------- | ------------------------------------------------------------------------
|December 31, 2004 - January 1, 2005  |                                      |                               |                                                                         
|February 1, 2005 - February 28, 2005 | -                                    | -                             | -                                                                       
|March 1, 2005 - March 31, 2005       |                                      |                               |                                                                         
|Balance at March 31, 2005            | -                                    | -                             | 133,204                                                                 
|                                     |                                      |                               |                                                                         

Securities for Equity Compensation Plans

Please refer to item 12 for a listing of securities authorized for issuance under equity compensation plans.

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Item 6.   Selected Financial Data

The following tables set forth certain information concerning the consolidated financial position and results of operations of the Company at the dates and for the periods indicated.

|                                                                    | At March 31,  
|------------------------------------------------------------------- | --------------
|                                                                    | 2005          
|                                                                    | (In thousands)
|FINANCIAL CONDITION DATA:                                           |               
|Total assets                                                        | $572,571      
|Loans receivable, net (1)                                           | 429,959       
|Mortgage-backed securities held
    
to maturity, at amortized cost | 2,343         
|Mortgage-backed securities available
    
for sale, at fair value   | 11,619        
|Cash and interest-bearing deposits                                  | 61,719        
|Investment securities held to
    maturity, at amortized cost       | -             
|Investment securities available for
   
sale, at fair value         | 22,945        
|Deposit accounts                                                    | 456,878       
|FHLB advances                                                       | 40,000        
|Shareholders' equity                                                | 69,522        



|                                                                    | Year Ended March 31,
|------------------------------------------------------------------- | --------------------
|                                                                    | 2005                
|
|                                                                    | (In thousands)      
|OPERATING DATA:                                                     |                     
|Interest income                                                     | $29,968             
|Interest expense                                                    | 7,395               
|Net interest income                                                 | 22,573              
|Provision for loan losses                                           | 410                 
|Net interest income after provision
for loan losses                 | 22,163              
|Gains (losses) from sale of loans,
securities and real estate owned | (672)               
|Gain on sale of land and fixed assets                               | 830                 
|Other non-interest income                                           | 6,348               
|Non-interest expenses                                               | 19,104              
|Income before federal income taxes                                  | 9,565               
|Provision for federal income taxes                                  | 3,036               
|Net income                                                          | $6,529              

(1)  Includes loans held for sale



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|                              | At March 31,
|----------------------------- | ------------
|                              | 2005        
|OTHER DATA:                   |             
|Number of:                    |             
|Real estate loans outstanding | 3,037       
|Deposit accounts              | 29,341      
|Full service offices          | 13          

|                                                                     |                                   
|-------------------------------------------------------------------- | ----------------------------------
|                                                                     | At or For the Year Ended March 31,
|                                                                     | 2005                              
|KEY FINANCIAL RATIOS:                                                |                                   
|Performance Ratios:                                                  |                                   
|Return on average assets                                             | 1.24%                             
|Return on average equity                                             | 9.56                              
|Dividend payout ratio (1)                                            | 45.59                             
|Interest rate spread                                                 | 4.38                              
|Net interest margin                                                  | 4.74                              
|Non-interest expense to
 
average assets                             | 3.62                              
|Efficiency ratio (2)                                                 | 65.70                             
|Asset Quality Ratios:                                                |                                   
|Average interest-earning assets
  
to interest-bearing liabilities   | 123.45                            
|Allowance for loan losses to
  
total net loans at end of period     | 1.01                              
|Net charge-offs to
  
average outstanding loans during
  
the period | 0.13                              
|Ratio of nonperforming assets
  
to total assets                     | 0.13                              
|Capital Ratios:                                                      |                                   
|Average equity to average assets                                     | 12.92                             
|Equity to assets at end of fiscal year                               | 12.14                             

(1)Dividends per share divided by net income per share
(2)Non-interest expense divided by the sum of net interest income and non-interest income

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Item 7.   Management's Discussion and Analysis of Financial Condition and Results of Operations

General

Management's Discussion and Analysis of Financial Condition and Results of Operations is intended to assist in understanding the financial condition and results of operations of the Company.  The information contained in this section should be read in conjunction with the Consolidated Financial Statements and accompanying Notes thereto contained in Item 8 of this Form 10-K and the other sections contained in this Form 10-K.



Special Note Regarding Forward-Looking Statements



Management's Discussion and Analysis and other portions of this Form 10-K contain certain "forward-looking statements" concerning the future operations of the Company.  Management desires to take advantage of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995 and is including this statement for the express purpose of availing the Company of the protections of such safe harbor with respect to all "forward-looking statements" contained in our Annual Report.  The Company has used "forward-looking statements" to describe future plans and strategies, including its expectations of the Company's future financial results.  Management's ability to predict results or the effect of future plans or strategies is inherently uncertain.  Factors which could affect actual results include interest rate trends, the general economic climate in the Company's market area and the country as a whole, the ability of the Company to control costs and expenses, deposit flows, demand for mortgages and other loans, real estate value and vacancy rates, the ability of the Company to efficiently incorporate acquisitions into its operations, competition, loan delinquency rates, and changes in federal and state regulation.  These factors should be considered in evaluating the "forward-looking statements," and undue reliance should not be placed on such statements.  The Company does not undertake to update any forward-looking statement that may be made on behalf of the Company.



Critical Accounting Policies



The Company has established various accounting policies that govern the application of accounting principles generally accepted in the United States of America ("GAAP") in the preparation of the Company's Consolidated Financial Statements.  The Company has identified three policies, that due to judgments, estimates and assumptions inherent in those policies, are critical to an understanding of the Company's Consolidated Financial Statements.  These policies relate to the methodology for the determination of the allowance for loan losses, the valuation of the mortgage servicing rights ("MSR's") and the impairment of investments.  These policies and the judgments, estimates and assumptions are described in greater detail in subsequent sections of Management's Discussions and Analysis contained herein and in the Notes to the Consolidated Financial Statements contained in Item 8 of this Form 10-K.  In particular, Note 1 of the Notes to Consolidated Financial Statements, "Summary of Significant Accounting Policies," describes generally the Company's accounting policies and Note 9, "Mortgage Servicing Rights" provides details used in valuing the Company's MSR's and the effect of changes to certain assumptions.  Management believes that the judgments, estimates and assumptions used in the preparation of the Company's Consolidated Financial Statements are appropriate given the factual circumstances at the time.  However, given the sensitivity of the Company's Consolidated Financial Statements to these critical accounting policies, the use of other judgments, estimates and assumptions could result in material differences in the Company's results of operations or financial condition.



Allowance for Loan LossesThe allowance for loan losses is maintained at a level sufficient to provide for probable loan losses based on evaluating known and inherent risks in the loan portfolio. The allowance is provided based upon management's continuing analysis of the pertinent factors underlying the quality of the loan portfolio. These factors include changes in the size and composition of the loan portfolio, actual loan loss experience, current economic conditions, and detailed analysis of individual loans for which full collectibility
may not be assured. The detailed analysis includes techniques to estimate the
fair value of loan collateral and the existence of potential alternative sources
of

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repayment. The appropriate allowance level is estimated based
upon factors and trends identified by management at the time the consolidated
financial statements are prepared.



Mortgage Servicing RightsThe Company stratifies its MSR's based on the predominant characteristics of the underlying financial assets including coupon interest rate and contractual maturity of the mortgage. An estimated fair value of MSR's is determined quarterly using a discounted cash flow model.  The model estimates the present value of the future net cash flows of the servicing portfolio based on various factors, such as servicing costs, servicing income, expected prepayments speeds, discount rate, loan maturity and interest rate. The effect of changes in market interest rates on estimated rates of loan prepayments represents the predominant risk characteristic underlying the MSR's portfolio.



The Company's methodology for estimating the fair value of MSR's is highly sensitive to changes in assumptions. For example, the determination of fair value uses anticipated prepayment speeds. Actual prepayment experience may differ and any difference may have a material effect on the fair value. Thus, any measurement of MSR's fair value is limited by the conditions existing and assumptions made as of the date made. Those assumptions may not be appropriate if they are applied to a different time.



Future expected net cash flows from servicing a loan in the servicing portfolio would not be realized if the loan is paid off earlier than anticipated. Moreover, since most loans within the servicing portfolio do not contain penalty provisions for early payoff, the Company will not receive a corresponding economic benefit if the loan pays off earlier than expected. MSR's are the discounted present value of the future net cash flows projected from the servicing portfolio. Accordingly, prepayment risk subjects the Company's MSR's to impairment. MSR's impairment is recorded in the amount that the estimated fair value is less than the MSR's carrying value on a strata by strata basis.

Investment ValuationThe Company's determination of impairment for various types of investments accounted for in accordance with SFAS No. 115 is predicated on the notion of other-than-temporary. The key indicator that an investment may be impaired is that the fair value of the investment is less than its carrying value.  Each reporting period, the Company reviews those investments the fair value is less than carrying value.  The review includes determining whether certain indicators indicated the fair value of the investment has been negatively impacted.  These indicators include deteriorating financial condition, regulatory, economic or technological changes, downgrade by a rating agency and length of time the fair value has been less than carrying value.  If any indicators of impairment are present, management determines the fair value of the investment and compares this to its carrying value.  If the fair value of the investment is less than the carrying value of the investment, the investment is considered impaired and a determination must be made as to whether the impairment is other-than-temporary.



Securities held to maturity are carried at cost, adjusted for amortization of premiums and accretion of discounts which are recognized in interest income using the interest method.  If the cost basis of these securities is determined to be other-than-temporary impaired, the amount of the impairment is charged to operations.



Securities available for sale are carried at fair value.  Premiums and discounts are amortized using the interest method over the remaining period to contractual maturity.  Unrealized holding gains and losses, or valuation allowances established for net unrealized losses, are excluded from earnings and reported as a separate component of shareholders' equity as accumulated other comprehensive income (loss), net of income taxes, unless the security is deemed other-than-temporary impaired.  If the security is determined to be other-than-temporary impaired, the amount of the impairment is charged to operations.



The Company's underlying principle in determining whether
impairment is other-than-temporary is an impairment shall be deemed
other-than-temporary unless positive evidence indicating that an investment's
carrying value is recoverable within a reasonable period of time outweighs
negative evidence to the contrary. Evidence that is objectively determinable and
verifiable is given greater weight than evidence that is subjective and or not
verifiable. Evidence based on future events will generally be less objective as
it is based on future expectations and therefore is

45

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generally less verifiable or not verifiable at all. Factors
considered in evaluating whether a decline in value is other-than-temporary
include, (a) the length of time and the extent to which the fair value has been
less than amortized cost, (b) the financial condition and near-term prospects of
the issuer and (c) the Company's intent and ability to retain the investment for
a period of time. In situations in which the security's fair value is below
amortized cost but it continues to be probable that all contractual terms of the
security will be satisfied, and that the decline is solely attributable to
changes in interest rates (not because of increased credit risk), and the
Company asserts that it has positive intent and ability to hold that security to
maturity, no other-than-temporary impairment is recognized.



Operating Strategy



In the fiscal year ended March 31, 1998, the Company began to implement a growth strategy to broaden its products and services from those of a traditional thrift to those more closely related to commercial banking.  The growth strategy included four elements: geographic and product expansion, loan portfolio diversification, development of relationship banking and maintenance of asset quality.



Since the end of fiscal 1998, the Company has added three branches including the branch in downtown Vancouver. In addition, the July 2003 acquisition of Today's Bancorp, Inc. added one branch and a lending center.  The Washougal branch was relocated to a new facility, and the Stevenson, White Salmon and Goldendale branches were remodeled.  The number of automated teller machines increased from six to 17 so that each branch location now is serviced by at least one automated teller machine.



The Company's growing commercial customer base has enjoyed new products and the improvements in existing products.  These new products include business checking, internet banking and new loan products.  Retail customers have benefited from expanded choices ranging from additional automated teller machines, consumer lending products, checking accounts, debit cards, 24 hour account information service and internet banking.



Fiscal 2005 marked the 82nd anniversary since the Bank opened its doors in 1923.  The historical emphasis has been on residential real estate lending, however, the Company began diversifying its loan portfolio through the expansion of commercial loans in 1998. In fiscal 2000, the Company had four experienced commercial lenders and currently there are seven commercial lenders who are expanding the commercial lending services available to the Company's customers.   In fiscal 2000, commercial loans including commercial real estate as a percentage of the loan portfolio were 21.59%, which has increased to 64.72% of total loans at the end of fiscal year 2005.  Commercial lending including commercial real estate has higher credit risk, wider interest margins and shorter loan terms than residential lending which can increase the loan portfolio profitability.



The Company's relationship banking has been enhanced by the 1998 addition of Riverview Asset Management Corp, a trust company directed by experienced trust officers, through expanded loan products serviced by experienced commercial and consumer lending officers, and an expanded branch network led by experienced branch managers.  Development of relationship banking has been the key to the Company's growth.   The fair market value of assets under management has increased from $134.7 million at March 31, 2004, to $174.8 million at March 31, 2005.

Net Interest Income



The Company's profitability depends primarily on its net
interest income, which is the difference between the income it receives on
interest-earning assets and its cost of funds, which consists of interest paid
on deposits and borrowings. Net interest income is also affected by the relative
amounts of interest-earning assets and interest-bearing liabilities. When
interest-earning assets equal or exceed interest-bearing liabilities, any
positive interest rate spread will generate net interest income. The level of
non-interest income and expenses also affects the Company's profitability.
Non-interest income includes deposit service fees, income associated with the
origination and sale of mortgage loans, brokering loans, loan servicing fees,
income from real estate owned, net gains and losses on sales of interest-earning
assets, bank owned life insurance income and asset management fee income.
Non-interest expenses include compensation and benefits, occupancy and equipment
expenses, deposit insurance premiums, data servicing expenses and other
operating costs. The Company's results of operations are also significantly
affected by general

46

<PAGE>

economic and competitive conditions, particularly
changes in market interest rates, government legislation and regulation, and
monetary and fiscal policies.



Comparison of Financial Condition at March 31, 2005 and 2004



At March 31, 2005, the Company had total assets of $572.6 million compared with $520.5 million at March 31, 2004.  The increase in total assets was primarily as a result of the increase in loans outstanding. Cash, including interest-earning accounts, totaled $61.7 million at March 31, 2005, compared to $47.9 million at March 31, 2004, as a result of the Company's increase in total deposits.

Loans receivable, net, were $429.4 million at March 31, 2005, compared to $381.1 million at March 31, 2004, a 12.7% increase. The increases in commercial real estate, commercial construction, land, and consumer loans were partially offset by decreases in one- to four- family residential, multi-family, construction one- to four- family, and multi-family construction loans.    Decreases in one- to four- family residential loans reflect managements decision to sell fixed interest rate mortgages and retain adjustable rate interest rate mortgages in the loan portfolio.   As interest rates fall, loan volume shifts to fixed rate production. Conversely, in a rising interest rate environment, loan volume will shift to adjustable rate production. Selling fixed interest rate mortgage loans allows the Company to reduce the interest rate risk associated with long term fixed interest rate products.  It also provides additional funds for new loans and provides a means for the diversification of the loan portfolio. The Company continues to service the loans it sells, maintaining the customer relationship and generating ongoing non-interest income.  A substantial portion of the Company's loan portfolio is secured by real estate, either as primary or secondary collateral located in its primary market areas.



Investment securities available-for-sale was $22.9 million at March 31, 2005, compared to $32.9 million at March 31, 2004.   The decrease reflects pay downs of $3.7 million and the fiscal year 2005 third quarter impairment write down on Freddie Mac and Fannie Mae of $1.3 million and the subsequent sale of these securities during the fourth quarter with outstanding balances of $11.4 million.  During the first and fourth quarter of fiscal year 2005 $6.4 million of agencies bonds were purchased by the Company.



Mortgage-backed securities held-to-maturity was $2.3 million at March 31, 2005, compared to $2.5 million at March 31, 2004.  The $200,000 decrease was a result of pay downs.



Mortgage-backed securities available-for-sale was $11.6 million at March 31, 2005, compared to $10.6 million at March 31, 2004.  The $1.0 million decrease was a result of pay downs.



Deposit accounts totaled $456.9 million at March 31, 2005 compared to $409.1 million at March 31, 2004.  The increase in deposits is primarily a result of the increases in certificates of deposit and non-interest bearing account balances. Checking accounts and money market accounts ("transaction accounts") total average outstanding balance increased 10.3% to $243.2 million at March 31, 2005, compared to $220.1 million at March 31, 2004.  Transaction accounts represented 58.8% and 57.9% of average total outstanding balance of deposits at March 31, 2005 and March 31, 2004, respectively.



FHLB advances were $40.0 million at March 31, 2005 and 2004.  During the current year the Company borrowed and repaid overnight borrowings that totaled $15.1 million.



Shareholders' equity increased $4.3 million to $69.5 million at March 31, 2005 from $65.2 million at March 31, 2004. The increase was primarily the result of $6.2 million total comprehensive income, $520,000 earned ESOP shares and $595,000 exercise of stock options, offset by $3.0 million of cash dividends paid to shareholders.



47

<PAGE>

Comparison of Operating Results for the Years Ended March 31, 2005 and 2004



Net Income.  Net income was $6.5 million, or $1.33 per diluted share for the year ended March 31, 2005, compared to $6.6 million, or $1.39 per diluted share for the year ended March 31, 2004.



Net Interest Income. Net interest income for fiscal year 2005 was $22.6 million, representing a $1.6 million, or a 7.7% increase, from $21.0 million in fiscal year 2004.   This improvement reflected an 8.11% increase in the average balance of interest earning assets (primarily as a result of increases in the average balance of mortgage and non mortgage loans, mortgage-backed securities and investment securities, partially offset by a decrease in the average balance of daily interest bearing assets) to $479.5 million, which was offset by a 7.3% increase in the average balance of interest-bearing liabilities (an increase in all deposit categories and a $274,000 increase in FHLB borrowings) to $388.4 million.  The ratio of average interest earning assets to average interest bearing liabilities increased to 123.45% in fiscal 2005 from 122.5% in fiscal 2004 which indicates that the interest-earning asset growth is being funded less by interest-bearing liabilities as compared to capital and non-interest-bearing demand deposits.



Interest Income. Interest income was $30.0 million for the fiscal year ended March 31, 2005 compared to $27.6 million, for the fiscal year ended 2004.  Average interest-bearing assets increased $36.0 million to $479.5 million for fiscal 2005 from $443.5 million for fiscal 2004.  The yield on interest-earning assets was 6.28% for fiscal year 2005 compared to 6.25% for fiscal 2004.  The increased yield is the primarily the result of the higher yields on investment securities and daily interest earning assets that reflect the increases in interest rates that occurred during fiscal year 2005.  The increased interest income is the result of the increase in the average balance of interest earning assets and the increase in the yield on interest earning assets.



Interest Expense. Interest expense for the year ended March 31, 2005 totaled $7.4 million, an $800,000 increase from $6.6 million for the year ended March 31, 2004.  The increase in interest expense is the result of higher rates of interest that occurred during fiscal years 2004 and 2005. The weighted average interest rate of total deposits increased from 1.44% for the year ended March 31, 2004 to 1.55% for the year ended March 31, 2005.  The weighted average interest rate of FHLB borrowings increased from 4.96% for the year ended March 31, 2004 to 5.00% for the year ended March 31, 2005.  The level of liquidity in fiscal year 2005 allowed the runoff of high interest rate deposits acquired in the acquisition of Today's Bancorp and held FHLB borrowings at $40.0 million.



Provision for Loan Losses.  The provision for loan losses for the year ended March 31, 2005 was $410,000 compared to $210,000 for the year ended March 31, 2004.  The provision for loan losses increased during the year ended March 31, 2005 as net charge-offs decreased to $496,000 from $1.1 million in fiscal year 2004.  Net charge-offs to average net loans was 0.13% for fiscal year 2005 as compared to 0.31% for prior year.   Non-accrual loans continued to decrease from $1.3 million at March 31, 2004 to $456,000 at March 31, 2005.  The allowance for loan losses was $4.4 million at March 31, 2005 compared to $4.5 million at March 31, 2004. The ratio of allowance for loan losses to total net loans was 1.01% at March 31, 2005 compared to 1.16% at March 31, 2004. The quality of the loan portfolio continues to increase as the criticized classified loan balances have decreased by $1.7 million and non-accrual loans decreased by $845,000 at March 31, 2005 compared to March 31, 2004.  The mix of the loan portfolio reflected an increase in the balances of commercial real estate loans, and construction, and consumer loans at March 31, 2005 as compared to balances at March 31, 2004.  The loan loss rates for consumer and construction-other loans were increased by 0.25 basis points, speculative construction and multi-family loans were increased by 0.125 basis points, land and lots loans were increased by 0.50 basis points and commercial real estate loans were decreased by 0.25 basis points during fiscal year 2005 in order to reflect the risk of loss.  Management considered the allowance for loan losses at March 31, 2005 to be adequate to cover probable losses inherent in the loan portfolio based on the assessment of various factors affecting the loan portfolio.

The Company establishes a general reserve for loan losses through a periodic provision for loan losses based on management's evaluation of the loan portfolio and current economic conditions. The provisions for loan losses are based on management's estimate of net realizable value or fair value of the collateral, as applicable, and the Company's actual loss experience, and standards applied by the OTS and the FDIC.  The Company regularly reviews its loan portfolio, including non-performing loans, to determine whether any loans require classification or



48

<PAGE>

the establishment of appropriate reserves. In addition, various regulatory agencies, as an integral part of their examination process, periodically review the Company's allowance for loan losses. These agencies may require the Company to provide additions to the allowance for loan losses based upon judgments different from those of management. The allowance for loan losses is provided based upon management's continuing analysis of the pertinent factors underlying the quality of the loan portfolio. These factors include changes in the size and composition of the loan portfolio, actual loan loss experience, current economic conditions, and detailed analysis of individual loans for which full collectibility may not be assured. This detailed analysis includes techniques to estimate the fair value of the loan collateral and the existence of potential alternative sources of repayment. Assessment of the adequacy of the allowance for loan losses involves subjective judgments regarding future events, and thus there can be no assurance those additional provisions for credit losses will not be required in future periods. Although management uses the best information available, future adjustments to the allowance may be necessary as a result of economic, operating, regulatory and other conditions that may be beyond the Company's control. Any increase or decrease in the provision for loan losses may have a corresponding negative or positive effect on the Company's net income.



Non-Interest Income.   Non-interest income decreased $83,000, or 1.3%, to $6.5 million for the year ended March 31, 2005 from $6.6 million for the same period in 2004. Excluding the $1.2 million net impairment charge of investment securities and subsequent gain on sale, non-interest income increased $1.1 million or 16.7% for the year ended March 31, 2005 when compared to the prior year. The decrease in loan servicing income for fiscal year 2005 reflects the $177,000 decrease in servicing amortization as the servicing portfolio has decreased.  It also reflects a $22,000 increase in market valuation of mortgage servicing right compared to the $307,000 increase in market valuation of mortgage servicing rights in fiscal 2004. For the year ended March 31, 2005, fees and service charges increased $264,000, or 6.1%, when compared to the year ended March 31, 2004.  The $264,000 increase in fees and service charges is primarily a result of the $240,000, or 18.1%, growth in mortgage broker fees and a $46,000 increase in fees from deposit services in fiscal year 2005 as compared to fiscal year 2004.  The increase in the number of mortgage brokers from nine to ten in fiscal year 2005 combined with the mortgage interest rates experienced in fiscal 2005 increased the volume of mortgage refinance activity as compared to the mortgage refinance activity in fiscal 2004.  The increased mortgage refinance activity resulted in increased mortgage broker activity.  The reduced gains on sale of loans held for sale reflected the mortgage broker activity having a higher proportion of brokered loans versus portfolio loans.  Mortgage brokered loan production increased from $183.0 million in 2004 to $194.4 million in 2005.  Mortgage broker fees (included in fees and service charges) totaled $1.6 million for the year ended March 31, 2005 compared to $1.3 million for the previous year.  Mortgage broker commission compensation expense was $1.0 million for the fiscal ended March 31, 2005 compared to $976,000 for the fiscal ended March 31, 2004.  Asset management services income was $1.1 million for the fiscal year 2005 compared to $906,000 for the fiscal year 2004.  Riverview Asset Management Corp. had $174.8 million in total assets under management at March 31, 2005 compared to $134.7 million at March 31, 2004. In first quarter of fiscal year 2005 the Camas branch and operations center was sold and leased back resulting in a gain of $828,000.



Non-Interest Expense. Non-interest expense increased $1.5 million, or 8.7%, to $19.1 million for fiscal year 2005 compared to $17.6 million for fiscal year 2004. One measure of a bank's ability to contain non-interest expense is the efficiency ratio, which is calculated by dividing total non-interest expense (less intangible asset amortization) by the sum of net interest income plus non-interest income (less intangible asset amortization, lower of cost or market adjustments and securities impairment charge). The Company's efficiency ratio excluding intangible asset amortization, lower cost or market adjustments and securities impairment charge was 64.46% in fiscal 2005 compared to 61.84% in fiscal 2004.



The principle component of the Company's non-interest expense is salaries and employee benefits.  For the year ended March 31, 2005, salaries and employee benefits, which includes mortgage broker commission compensation, was $10.8 million, an 8.71% increase over the prior year total of $9.9 million. Salaries also increased as the number of full-time equivalent employees increased to 197 at March 31, 2005 from 186 at March 31, 2004, which was primarily the result of the expansion related to increased staffing in branches and operations.



The acquisition of Today's Bancorp and the related acquisition of $105.1 million in deposit accounts created an $820,000 core deposit intangibles ("CDI"), representing the excess of cost over fair market of the acquired deposits.

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<PAGE>

The CDI is being amortized over a ten-year life using an accelerated amortization method. The amortization expense was $138,000 for fiscal 2005, compared to $103,000 for fiscal 2004.



The acquisition of the Hazel Dell and Longview branches from the Resolution Trust Corporation in fiscal 1995 (see Item 2. Properties), and the related acquisition of $42.0 million in customer deposits created a $3.2 million core deposit intangible asset, representing the excess of fair value of deposits over the acquired cost.  CDI was $42,000 at March 31, 2005 and was fully amortized during the fiscal year 2005.  The amortization expense of CDI was $327,000 for the fiscal year 2004.



Provision for Federal Income Taxes. The provision for federal income taxes was $3.0 million for the year ended March 31, 2005 compared to $3.2 million for the year ended March 31, 2004.  The primary reason the tax provision is lower in the current year compared to the prior year is a result of the tax treatment of an increase in the cash surrender value of bank owned life insurance. The effective tax rate for fiscal year 2005 was 31.7% compared to 32.8% for fiscal 2004.  Reference is made to Note 13 of the Notes to the Consolidated Financial Statements contained in Item 8 of this Form 10-K, for further discussion of the Company's federal income taxes.



Comparison of Operating Results for the Years Ended March 31, 2004 and 2003



Net Income.  Net income was $6.6 million, or $1.39 per diluted share for the year ended March 31, 2004, compared to $4.4 million, or $0.99 per diluted share for the year ended March 31, 2003.  Earnings were lower for the year ended March 31, 2003, primarily as a result of the pre-tax other-than-temporary non-cash charges of $1.6 million for FHLMC preferred stock and $700,000 for FNMA preferred stock.



Net Interest Income. Net interest income for fiscal year 2004 was $21.0 million, representing a $3.0 million, or a 16.7% increase, from $18.0 million in fiscal year 2003.   This improvement reflected a 16.7% increase in the average balance of interest earning assets (primarily as a result of increases in the average balance of non mortgage loans, investment securities and daily interest bearing assets, partially offset by a decrease in the average balance of mortgage loans and mortgage-backed securities) to $443.5 million, which was offset by a 18.7% increase in the average balance of interest-bearing liabilities (a increase in all deposit categories and a decrease in FHLB borrowings) to $362.0 million.  The ratio of average interest earning assets to average interest bearing liabilities decreased to 122.5% in fiscal 2004 from 124.6% in fiscal 2003 which indicates that the interest-earning asset growth is being funded more by interest-bearing liabilities as compared to capital and non-interest-bearing demand deposits.



Interest Income. Interest income was $27.6 million for the fiscal year ended March 31, 2004 compared to $26.5 million for the fiscal year ended March 31, 2003.  Average interest-bearing assets increased $63.6 million to $443.5 million for fiscal 2004 from $379.9 million for fiscal 2003.  The yield on interest-earning assets was 6.25% for fiscal year 2004 compared to 7.04% for fiscal 2003.  The decreased yield is the primarily the result of the lower yields on loans that reflect decreases in the Federal Reserve Board discount rates that occurred during fiscal years 2003 and 2004.



Interest Expense. Interest expense for the year ended March 31, 2004 totaled $6.6 million, a $1.8 million decrease from $8.4 million for the year ended March 31, 2003.  The decrease in interest expense is the result of lower rates of interest paid on deposits and FHLB borrowings as a result of decreases in the Federal Reserve Board discount rates that occurred during fiscal years 2003 and 2004. The weighted average interest rate of total deposits decreased from 2.18% for the year ended March 31, 2003 to 1.44% for the year ended March 31, 2004.  The weighted average interest rate of FHLB borrowings decreased from 5.53% for the year ended March 31, 2003 to 4.96% for the year ended March 31, 2004.  The level of liquidity in fiscal year 2004 allowed the runoff of high interest rate deposits acquired in the acquisition of Today's Bancorp and held FHLB borrowings at $40.0 million.



Provision for Loan Losses. The provision for loan
losses for the year ended March 31, 2004 was $210,000 compared to $727,000 for
the year ended March 31, 2003. The provision for loan losses for the year ended
March 31, 2004 was less than the $1.1 million net charge-offs for the year. The
allowance for loan losses increased $1.7 million to $4.5 million at March 31,
2004 from $2.7 million at March 31, 2003. The ratio of allowance for loan losses
to total net loans increased to 1.16% compared to 0.90% at March 31, 2003. Net
charge-offs to average net

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loans for fiscal 2004 increased to 0.31% from 0.12% for
fiscal 2003. The increase in the balance of the allowance for loan losses at
March 31, 2004 reflects the acquisition of Today's Bancorp, the proportionate
increase in loan balances, the change in mix of loan balances, the increase in
substandard assets and a change in loss rate when compared to March 31, 2003.
The acquisition of Today's Bancorp added $2.6 million to the allowance for loan
losses and approximately $900,000 of the charge-offs was related to loans
acquired in the acquisition. The mix of the loan portfolio showed an increase in
the balances of commercial, commercial real estate loans, and construction, and
consumer loans at March 31, 2004 as compared to balances at March 31, 2003.
Substandard assets increased by $3.0 million to $5.7 million at March 31, 2004
compared to $2.7 million at March 31, 2003. The balance of substandard asset of
$5.7 million at March 31, 2004 is a decrease of $5.2 million from the $10.9
million balance of substandard assets after the acquisition of Today's Bancorp.
The loss rate for other mention loans was increased from 1.5% at March 31, 2003
to 4.0% at March 31, 2004 in order to reflect the risk of loss. Management
considered the allowance for loan losses at March 31, 2004 to be adequate to
cover probable losses inherent in the loan portfolio based on the assessment of
various factors affecting the loan portfolio

Non-Interest Income.   Non-interest income increased $2.7 million, or 67.3%, to $6.6 million for the year ended March 31, 2004 compared to $3.9 million for the same period in 2003. Excluding the fiscal 2003 $2.1 million pretax loss on sale of securities and other-than-temporary impairment on equity investments, non-interest income increased $513,000, or 8.4%, for the year ended March 31, 2004 when compared to the prior year.  The increase was primarily attributable to the loan servicing income of $158,000 for fiscal year 2004 compared to a loss of $619,000 for fiscal year 2003.  The increase in loan servicing income for fiscal year 2004 reflects the $307,000 increase in market valuation of mortgage servicing rights in fiscal 2004 as compared to the $320,000 write-down of mortgage servicing rights in fiscal 2003. For the year ended March 31, 2004, fees and service charges increased $61,000 or 1.4% when compared to the year ended March 31, 2003.  The $61,000 increase in fees and service charges is primarily a result of the $275,000, or 10.1%, growth in fee income from deposit services that was offset by the $214,000 decrease in mortgage broker fees in fiscal year 2004 as compared to fiscal year 2003.  The rise in mortgage rates experienced in fiscal 2004 reduced the volume of mortgage refinance activity as compared to the mortgage finance activity in fiscal 2003.  The reduced mortgage refinance activity resulted in reduced mortgage broker activity and reduced gains on sale of loans held for sale.  Mortgage brokered loan production decreased from $200.3 million in 2003 to $183.0 million in 2004.  Mortgage broker fees (included in fees and service charges) totaled $1.3 million for the year ended March 31, 2004 compared to $1.5 million for the previous year.  Mortgage broker commission compensation expense was $976,000 for the fiscal ended March 31, 2004 compared to $1.1 million for the fiscal ended March 31, 2003.  Asset management services income was $906,000 for the fiscal year 2004 compared to $742,000 for the fiscal year 2003.  Riverview Asset Management Corp. had $134.7 million in total assets under management at March 31, 2004 compared to $114.8 million at March 31, 2003.  In fiscal year 2004, the Bank purchased $12.0 million of bank owned life insurance that increased non-interest income by $121,000.



Non-Interest Expense. Non-interest expense increased $2.7 million, or 17.9%, to $17.6 million for fiscal year 2004 compared to $14.9 million for fiscal year 2003. One measure of a bank's ability to contain non-interest expense is the efficiency ratio, which is calculated by dividing total non-interest expense (less intangible asset amortization) by the sum of net interest income plus non-interest income (less intangible asset amortization and lower of cost or market adjustments). The Company's efficiency ratio excluding intangible asset amortization and lower cost or market adjustments was 61.84% in fiscal 2004 compared to 63.57% in fiscal 2003.



Merger related expenses that were non-capitalizable were not material to the Company in fiscal year 2004.  The principal component of the Company's non-interest expense is salaries and employee benefits.  For the year ended March 31, 2004, salaries and employee benefits, which includes mortgage broker commission compensation, was $9.9 million, or an 18.0% increase over the prior year total of $8.4 million. Full-time equivalent employees increased to 186 at March 31, 2004 from 157 at March 31, 2003.  The primary reason for the increase was the expansion of lending and branch locations and the related staffing resulting from the acquisition of Today's Bancorp.  This expansion also contributed to increase expense in occupancy, depreciation, data processing, telecommunication and other expense.



Provision for Federal Income Taxes. The provision for
federal income taxes increase to $3.2 million for the year ended March 31, 2004
from $2.0 million for the year ended March 31, 2003 as a result of higher income
before taxes in 2004. The effective tax rate for fiscal year 2004
was 32.8% compared to 31.3% for fiscal 2003. Reference is made to Note 13 of the
Notes to the Consolidated Financial Statements contained in Item 8 of this Form
10-K, for a further discussion of the Company's federal income taxes.



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Year Ended March 31,2005
2004
2003AverageBalance
InterestandDividends
Yield/Cost
AverageBalance
InterestandDividends
Yield/Cost
AverageBalance
InterestandDividends
Yield/Cost(Dollars in thousands)Interest-earning assets:Mortgage loans
$307,750
$22,345
7.26%
$274,763
$20,471
7.45%
$245,231
$19,397
7.91%Non-mortgage loans
89,050
5,419
6.09
82,126
5,163
6.29
57,509
4,273
7.43Total net loans (1)
396,800
27,764
7.00
356,889
25,634
7.18
302,740
23,670
7.82Mortgage-backed    securities (2)
15,616
634
4.06
13,170
613
4.65
28,615
1,241
4.34Investment securities (2)
30,021
1,055
3.51
28,283
889
3.14
20,914
1,204
5.76Daily interest-bearing    assets
30,987
565
1.82
39,334
372
0.95
22,190
319
1.44Other earning assets
6,088
110
1.81
5,849
231
3.95
5,440
329
6.05Total interest-earning    assets
479,512
30,128
6.28
443,525
27,739
6.25
379,899
26,763
7.04Non-interest-earning assets:Office properties and   equipment, net
8,778


10,165


10,060Other non-interest-   earning assets
40,038


32,400


17,809Total assets
$528,328


$486,090


$407,768Interest-bearing liabilities:Regular savings   accounts
$  32,420
178
0.55
$  27,534
163
0.59
$  22,861
182
0.80NOW accounts
102,736
923
0.90
97,017
836
0.86
64,916
960
1.48Money market accounts
75,063
901
1.20
65,176
582
0.89
54,514
692
1.27Certificates of deposit
137,933
3,378
2.45
132,257
3,062
2.32
109,380
3,642
3.33Total deposits
348,152
5,380
1.55
321,984
4,643
1.44
251,671
5,476
2.18Other interest- bearing liabilities
40,274
2,015
5.00
40,000
1,984
4.96
53,174
2,941
5.53Total interest-    bearing liabilities
388,426
7,395
1.90
361,984
6,627
1.83
304,845
8,417
2.76Non-interest-bearing liabilities:Non-interest-   bearing deposits
65,415


57,899


45,109Other liabilities
6,202


4,390


3,246Total liabilities
460,043


424,273


353,200Shareholders' equity
68,285


61,817


54,568Total liabilities and    shareholders' equity
$528,328


$486,090


$407,768Net interest income

$22,733


$21,112


$18,346Interest rate spread


4.38%


4.42%


4.28%Net interest margin


4.74%


4.76%


4.83%Ratio of average interest- earning assets to  average interest-bearing liabilities


123.45%


122.53%


124.62%Tax Equivalent Adjustment (3)
$161


$155


$302


|    |                                                                                                                                                                                                                                                                     
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Includes non-accrual loans.  Includes amortized loan fees of $2.5 million, $2.3 million and $2.1 million for fiscal year 2005, 2004 and 2003, respectively.                                                                                                         
|    |                                                                                                                                                                                                                                                                     
|(2) | For purposes of the computation of average yield on investments available for sale, historical cost balances were utilized, therefore, the yield information does not give effect to change in fair value that are reflected as a component of shareholders' equity.
|    |                                                                                                                                                                                                                                                                     
|(3) | Tax-equivalent adjustment relates to non-taxable investment interest income and preferred equity securities dividend income.  The federal statutory tax rate was 34% for all years presented.                                                                       

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<PAGE>

Yields Earned and Rates Paid



The following table sets forth for the periods and at the date indicated the weighted average yields earned on the Company's assets, the weighted average interest rates paid on the Company's liabilities, together with the net yield on interest-earning assets on a tax equivalent basis.



|                                                                                                                | At March 31, | Year Ended March 31,
|--------------------------------------------------------------------------------------------------------------- | ------------ | --------------------
|                                                                                                                | 2005         | 2005                
|Weighted average yield earned on:                                                                               |              |                     
|Total net loans (1)                                                                                             | 6.63%        |                     
|Mortgage-backed securities                                                                                      | 4.27         |                     
|Investment securities                                                                                           | 4.03         |                     
|All interest-earning assets (1)                                                                                 | 6.04         |                     
|                                                                                                                |              |                     
|Weighted average rate paid on:                                                                                  |              |                     
|Deposits                                                                                                        | 1.69         |                     
|FHLB advances and other borrowings                                                                              | 5.05         |                     
|All interest-bearing liabilities                                                                                | 1.96         |                     
|                                                                                                                |              |                     
|Interest rate spread (spread between weighted
  
average rate on all interest-earning                           |              |                     
|assets and all interest-bearing liabilities)(1)                                                                 | 4.08         |                     
|                                                                                                                |              |                     
|Net interest margin (net interest income
  
(expense) as a percentage of average
  
interest-earning assets)(1) | 4.57         |                     

(1)Weighted average yield on total net loans excludes deferred loan fees.



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<PAGE>

Rate/Volume Analysis



The following table sets forth the effects of changing rates and volumes on net interest income of the Company. Information is provided with respect to: (i) effects on interest income attributable to changes in volume (changes in volume multiplied by prior rate); (ii) effects on interest income attributable to changes in rate (changes in rate multiplied by prior volume); and (iii) changes in rate/volume (change in rate multiplied by change in volume). Rate/volume variance is allocated based on the percentage relationship of changes in volume and changes in rate to the total net change.



|                                   | Year Ended March 31,     
|---------------------------------- | -------------------------
|                                   | 2005 vs 2004             
|                                   | Increase (Decrease)Due to
|                                   | Volume                   
|                                   | (In thousands)           
|Interest Income:                   |                          
|Mortgage loans                     | $ 2,406                  
|Non-mortgage loans                 | 425                      
|Mortgage-backed securities         | 105                      
|Investment securities (1)          | 57                       
|Daily interest-bearing             | (93)                     
|Other earning assets               | 9                        
|Total interest income              | 2,909                    
|                                   |                          
|Interest Expense:                  |                          
|Regular savings accounts           | 28                       
|NOW accounts                       | 50                       
|Money market accounts              | 97                       
|Certificates of deposit            | 134                      
|Other interest-bearing liabilities | 15                       
|Total interest expense             | 324                      
|Net interest income (1)            | $ 2,585                  



(1) Taxable equivalent



Asset and Liability Management



The Company's principle financial objective is to achieve long-term profitability while reducing its exposure to fluctuating market interest rates.  The Company has sought to reduce the exposure of its earnings to changes in market interest rates by attempting to manage the mismatch between asset and liability maturities and interest rates.  The principal element in achieving this objective is to increase the interest rate sensitivity of the Company's interest-earning assets.  Interest rate sensitivity will increase by retaining portfolio loans with interest rates subject to periodic adjustment to market conditions and selling fixed-rate one- to four- family mortgage loans with terms of more than 15 years.  However, the Company may originate fixed rate loans for investment when funded with long-term funds to mitigate interest rate risk.  The Company relies on retail deposits as its primary source of funds.  Management believes retail deposits reduce the effects of interest rate fluctuations because they generally represent a stable source of funds. As part of its interest rate risk management strategy, the Company promotes transaction accounts and certificates of deposit with terms up to ten years.



The Company has adopted a strategy that is designed to maintain or improve the interest rate sensitivity of assets relative to its liabilities.  The primary elements of this strategy involve: the origination of adjustable rate loans or purchase of adjustable rate mortgage-backed securities for its portfolio; increasing commercial, consumer and residential construction loans as a portion of total net loans receivable because of their generally shorter terms and higher yields than other one- to four- family residential mortgage loans; matching asset and liability maturities; investing in short term mortgage-backed and other securities; and the origination of fixed-rate loans for sale in the

54

<PAGE>

secondary market and the retention of the related loan servicing rights.  This approach has remained consistent throughout the past year as the Company has experienced a change in the mix of loans, deposits and FHLB advances.



Deposit accounts typically react more quickly to changes in market interest rates than mortgage loans because of the shorter maturities of deposits.  As a result, sharp increases in interest rates may adversely affect the Company's earnings while decreases in interest rates may beneficially affect the Company's earnings.  To reduce the potential volatility of the Company's earnings, management has sought to improve the match between asset and liability maturities and rates, while maintaining an acceptable interest rate spread.  Pursuant to this strategy, the Company actively originates ARM loans for retention in its loan portfolio.  Fixed-rate mortgage loans with terms of more than 15 years generally are originated for the intended purpose of resale in the secondary mortgage market.  The Company has also invested in adjustable rate mortgage-backed securities to increase the level of short-term adjustable assets.  At March 31, 2005, ARM loans and adjustable rate mortgage-backed securities constituted $268.0 million, or 74.5%, of the Company's total combined mortgage loan and mortgage-backed securities portfolio.  This compares to ARM loans and adjustable rate mortgage-backed securities at March 31, 2004 that totaled $217.9 million, or 62.8%, of the Company's total combined mortgage loan and mortgage-backed securities portfolio.  Although the Company has sought to originate ARM loans, the ability to originate and purchase such loans depends to a great extent on market interest rates and borrowers' preferences.  Particularly in lower interest rate environments, borrowers often prefer to obtain fixed rate loans.



The Company's mortgage servicing activities provide additional protection from interest rate risk.  The Company retains servicing rights on all mortgage loans sold.  As market interest rates rise, the fixed rate loans held in portfolio diminish in value.  However, the value of the servicing portfolio tends to rise as market interest rates increase because borrowers tend not to prepay the underlying mortgages, thus providing an interest rate risk hedge versus the fixed rate loan portfolio.  The loan servicing portfolio totaled $122.9 million at March 31, 2005, including $2.3 million of purchased mortgage servicing.  The purchase of loan servicing replaced loan servicing balances extinguished through prepayment of the underlying loans.  The average balance of the servicing portfolio was $127.9 million and produced loan servicing income of  $47,000 for the year ended March 31, 2005.  See "Item 1.  Business -- Lending Activities -- Mortgage Loan Servicing."



Consumer loans, commercial loans and construction loans typically have shorter terms and higher yields than permanent residential mortgage loans, and accordingly reduce the Company's exposure to fluctuations in interest rates.   Adjustable interest rate consumer, commercial, construction and other loans totaled $335.0 million or 77.1% of total gross loans at March 31, 2005 as compared to $276.7 million, or 65.8%, at March 31, 2004.  At March 31, 2005, the construction, commercial, consumer and other loan portfolios amounted to $54.6 million, $58.0 million, $30.6 million and $291.2 million, or 12.6%, 13.4%, 7.1% and 66.9% of total loans, net of deferred fees, respectively.  See "Item 1.  Business -- Lending Activities -- Construction Lending" and " -- Lending Activities -- Consumer Lending."



The Company also invests in short-term to medium-term U.S. Government securities as well as mortgage-backed securities issued or guaranteed by U.S. Government agencies.  At March 31, 2005, the combined portfolio carried at $36.9 million had an average term to repricing or maturity of 3.08 years.  See "Item 1.  Business -- Investment Activities."



A measure of the Company's exposure to differential changes in interest rates between assets and liabilities is provided by the test required by OTS Thrift Bulletin No. 13a, "Interest Rate Risk Management."  This test measures the impact on net interest income and on net portfolio value of an immediate change in interest rates in 100 basis point increments. Using data compiled by the OTS, the Company receives a report which measures interest rate risk by modeling the change in net portfolio value ("NPV") over a variety of interest rate scenarios.  This procedure for measuring interest rate risk was developed by the OTS to replace the "gap" analysis (the difference between interest-earning assets and interest-bearing liabilities that mature or reprice within a specific time period). NPV is the present value of expected cash flows from assets, liabilities and off-balance sheet contracts. The following table provides the estimated impacts of immediate changes in interest rates at the specified levels based on the latest OTS report dated December 31, 2004.



55

<PAGE>



|         |       | At December 31, 2004  
|-------- | ----- | ----------------------
|         |       | Net Portfolio Value   
|Change   |       | DollarAmount          
|In Rates |       |                       
|         |       | (Dollars in thousands)
|300      | bp    | $85,533               
|200      | bp    | 84,456                
|100      | bp    | 82,466                
|0        | bp    | 79,410                
|(100)    | bp    | 75,564                
|(200)    | bp(1) | -                     
|(300)    | bp(1) | -                     



(1) No information is provided because the three-month treasury bill was 2.18% at December 31, 2004.



For example, the above table illustrates that an instantaneous 100 basis point increase in market interest rates at December 31, 2004 would increasillion, or 4%, at that date.  At December 31, 2003, an instantaneous 100 basis point increase in market interest rates would have increased the Company's NPV by approximately $749,000, or 1%, at that date.  The $4.7 million increase in the NPV to $82,466 at December 31, 2004 is the result of the impact of more adjustable loan balances in the loan portfolio at December 31, 2004 as compared to December 31, 2003.



Certain assumptions used by the OTS in assessing the interest rate risk of savings associations within its region were used in preparing the preceding table.  These assumptions relate to interest rates, loan prepayment rates, deposit decay rates and the market values of certain assets under differing interest rate scenarios, among others.



As with any method of measuring interest rate risk, certain shortcomings are inherent in the method of analysis presented in the foregoing table.  For example, although certain assets and liabilities may have similar maturities or periods of repricing, they may react in different degrees to changes in market interest rates.  Also, the interest rates on certain types of assets and liabilities may fluctuate in advance of changes in market interest rates, while interest rates on other types may lag behind changes in market rates.  Additionally, certain assets, such as ARM loans, have features which restrict changes in interest rates on a short-term basis and over the life of the asset.  Furthermore, in the event of a change in interest rates, expected rates of prepayments on loans and early withdrawals from certificates could deviate significantly from those assumed in calculating the table.



Liquidity and Capital Resources



The Company's primary source of cash flows is its operations as a lender, which generate interest income on loans.  This is supplemented by fee income, service charges, and interest on investment securities, and reduced by payment of interest expense and non-interest expenses.  After payment of expenses, the Company has significant positive cash flow from operating activities.  The Company's investing activities typically use cash, primarily for loan originations.  For the year ended March 31, 2005, additional cash flows were provided by the Company's financing activities as a result of a significant increase in deposit accounts.



The Company's primary source of funds are customer deposits, proceeds from principal and interest payments on loans, the sale of loans, maturing securities and FHLB advances.  While maturities and scheduled amortization of loans are a predictable source of funds, deposit flows and mortgage prepayments are greatly influenced by general interest rates, economic conditions and competition.



The Company must maintain an adequate level of liquidity to ensure the availability of sufficient funds to fund loan originations and deposit withdrawals, satisfy other financial commitments and to take advantage of investment opportunities.  The Company generally maintains sufficient cash and short-term investments to meet short-term liquidity needs.  At March 31, 2005, cash totaled $61.7 million, or 10.8%, of total assets.  The Bank has a 30% of total assets line of credit with the FHLB of Seattle to the extent the Bank provides qualifying collateral and holds sufficient FHLB stock. At March 31, 2005, the Bank had $40.0 million of outstanding advances from the FHLB of Seattle under an available credit facility of $169.5 million, limited to available collateral.

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<PAGE>



Liquidity management is both a short- and long-term responsibility of the Company's management.  The Company adjusts its investments in liquid assets based upon management's assessment of (i) expected loan demand, (ii) projected loan sales, (iii) expected deposit flows, (iv) yields available on interest-bearing deposits and (v) liquidity of its asset/liability management program.  Excess liquidity is invested generally in interest-bearing overnight deposits and other short-term government and agency obligations.  If the Company requires funds beyond its ability to generate them internally, it has additional borrowing capacity with the FHLB and collateral for borrowing at the Federal Reserve Bank discount window.  At March 31, 2005, the Bank's ratio of cash and eligible investments to the sum of withdrawable savings and borrowings due within one year was 15.84%.



The Company's primary investing activity is the origination of loans.  During the years ended March 31, 2005, 2004 and 2003, the Company originated $434.4 million, $375.8 million and $298.4 million of loans held for investment and loans held for sale, respectively.  At March 31, 2005, the Company had outstanding mortgage loan commitments of $7.0 million and undisbursed balance of mortgage loans closed of $37.4 million. Consumer loan commitments totaled $814,000 and unused lines of consumer credit totaled $20.2 million at March 31, 2005.  Commercial real estate loan commitments totaled $11.4 million and undisbursed balance of commercial real estate loans closed was $21.5 million at March 31, 2005.  Commercial loan commitments totaled $200,000 and unused commercial lines of credit totaled $36.0 million at March 31, 2005.  The Company anticipates that it will have sufficient funds available to meet current loan commitments.  Certificates of deposit that are scheduled to mature in less than one year from March 31, 2005 totaled $77.1 million.  Historically, the Company has been able to retain a significant amount of its deposits as they mature.



At March 31, 2005, scheduled maturities of certificates of deposit, FHLB advances, commitments to originate loans, undisbursed loan funds, unused lines of credit, standby letters of credit and future operating minimum lease commitments were as follows:



|                                                                             | Within1 year | 1-3Years | 4-5 Years | Over5 Years | TotalBalance
|---------------------------------------------------------------------------- | ------------ | -------- | --------- | ----------- | ------------
|(In thousands)                                                              
|Certificates of deposit                                                      | $ 77,058     | $39,106  | $28,233   | $ 4,909     | $149,306    
|FHLB advances                                                                | 15,000       | 25,000   | -         | -           | 40,000      
|Commitments to originate loans                                               |              |          |           |             |             
|Adjustable                                                                   | 16,603       | -        | -         | -           | 16,603      
|Fixed                                                                        | 2,929        | -        | -         | -           | 2,929       
|Undisbursed loan funds, unused lines of credit and standby letters of credit | 108,964      | 6,555    | -         | -           | 115,519     
|Operating leases                                                             | 990          | 1,772    | 1,664     | 1,737       | 6,163       
|Total other contractual obligations                                          | $221,544     | $72,433  | $29,897   | $ 6,646     | $330,520    



The Bank's primary sources of funds are deposits, FHLB borrowings, proceeds from the principal and interest payments on loans and securities.  While maturities and scheduled amortization of loans and securities are predictable sources of funds, deposit flows, prepayment of mortgage loans and mortgage-backed securities are greatly influenced by general interest rates, economic conditions and competition.



The increase in interest rates during the fiscal year 2005 has created an interest rate environment that caused the demand for fixed rate single family loans and repayment of existing single family mortgage loans and mortgage-backed securities to be less than in the prior year. The Company's business plan emphasizes the sale of fixed rate mortgages as part of its interest rate risk strategy.  The decrease in the cash flows from operating activities of loans sold to $22.9 million for the fiscal 2005 compared to $51.7 million for fiscal 2004 reflects this strategy under the changing interest rate environment.

The Bank has experienced growth in deposit accounts that is attributable to organic growth.  The information contained in "Item 1, Business - Deposit Activities and Other Sources of Funds -- Deposit Flow" reflects this net increase in cash flows from deposits of $47.8 million for fiscal 2005 as compared to an $88.4 million increase in net cash flows for the same period in the prior year.  The higher interest rate certificates of deposit have been allowed to runoff.



57

<PAGE>



Should the Bank require funds beyond its ability to generate them internally, additional funds are available through the use of FHLB and Pacific Coast Banker's Bank borrowings.  At March 31, 2005 advances from FHLB totaled $40.0 million and the Bank had additional borrowing capacity available of $129.5 million from the FHLB, subject to collateral limitations.  At March 31, 2005 the Bank's available borrowing line subject to collateral limitations was $21.3 million.  The Bank has a $10.0 million fed funds line with Pacific Coast Banker's Bank at March 31, 2005.



Sources of capital and liquidity for the Company on a stand-alone basis include distributions from the Bank and the issuance of debt or equity.  Dividends and other capital distributions from the Bank are subject to regulatory restrictions.



OTS regulations require the Bank to maintain specific amounts of regulatory capital.  As of March 31, 2005, the Bank complied with all regulatory capital requirements as of that date with tangible, core and risk-based capital ratios of 9.54%, 9.54% and 12.37%, respectively.  For a detailed discussion of regulatory capital requirements, see "REGULATION -- Federal Regulation of Savings Associations -- Capital Requirements."



Effect of Inflation and Changing Prices



The Consolidated Financial Statements and related financial data presented herein have been prepared in accordance with GAAP, which require the measurement of financial position and operating results in terms of historical dollars without considering the change in the relative purchasing power of money over time due to inflation.  The primary impact of inflation is reflected in the increased cost of the Company's operations.  Unlike most industrial companies, virtually all the assets and liabilities of a financial institution are monetary in nature.  As a result, interest rates generally have a more significant impact on a financial institution's performance than do general levels of inflation.  Interest rates do not necessarily move in the same direction or to the same extent as the prices of goods and services.



New Accounting Pronouncements

For a discussion of new accounting pronouncement and their impact on the Company, see Note 1 of the Notes to the Consolidated Financial Statement included in Item 8 of this Form 10-K.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk



Quantitative Aspects of Market Risk.  The Company does not maintain a trading account for any class of financial instrument nor does it engage in hedging activities or purchase high-risk derivative instruments.  Furthermore, the Company is not subject to foreign currency exchange rate risk or commodity price risk.  For information regarding the sensitivity to interest rate risk of the Company's interest-earning assets and interest-bearing liabilities, see the tables under "Item 1.  Business -- Lending Activities -- Loan  Portfolio Analysis,"  "-- Investment Activities" and "-- Deposit Activities and Other Sources of Funds -- Certificates of Deposit by Rates and Maturities" contained herein.



Qualitative Aspects of Market Risk



Consumer and commercial loans are originated and held in portfolio as the short term nature of these portfolio loans match durations more closely with the short term nature of retail deposits such as NOW accounts, money market

58

<PAGE>

accounts and savings accounts. The Company relies on retail deposits as its primary source of funds.  Management believes retail deposits reduce the effects of interest rate fluctuations because they generally represent a more stable source of funds.  As part of its interest rate risk management strategy, the Company promotes transaction accounts and certificates of deposit with longer terms to maturity.  Except for immediate short-term cash needs, and depending on the current interest rate environment, FHLB advances will usually be of longer term.  For additional information, see "Item 7.  Management's Discussion and Analysis of Financial Condition and Results of Operations" contained herein.



The following table shows the Company's financial instruments that are sensitive to changes in interest rates, categorized by expected maturity, and the instruments' fair values at March 31, 2005.  Market risk sensitive instruments are generally defined as on- and off-balance sheet derivatives and other financial instruments.



|                                         | AverageRate            | Within
OneYear | One
Year
to 3Years | After
3 Years
to 5Years | After
5 Years
to 10Years | Beyond
10Years | Total    | FairValue
|---------------------------------------- | ---------------------- | -------------- | ------------------ | ----------------------- | ------------------------ | -------------- | -------- | ---------
|                                         | (Dollars in thousands)
|Interest-Sensitive Assets:               |                        |                |                    |                         |                          |                |          |          
|                                         |                        |                |                    |                         |                          |                |          |          
|Loans receivable (1)                     | 6.63%                  | $234,077       | $125,400           | $50,997                 | $16,254                  | $7,626         | $434,354 | $428,878 
|Mortgage-backed                          |                        |                |                    |                         |                          |                |          |          
|securities                               | 4.27                   | 4,660          | 1,086              | 8,216                   | -                        | -              | 13,962   | 14,021   
|Investments and other                    |                        |                |                    |                         |                          |                |          |          
|interest-earning assets                  | 3.05                   | 55,500         | 9,810              | 1,721                   | -                        | 1,415          | 68,446   | 68,446   
|FHLB stock                               | 1.81                   | 1,229          | 2,457              | 2,457                   | -                        | -              | 6,143    | 6,143    
|                                         |                        |                |                    |                         |                          |                |          |          
|Interest-Sensitive Liabilities:          |                        |                |                    |                         |                          |                |          |          
|                                         |                        |                |                    |                         |                          |                |          |          
|NOW accounts                             | 0.20                   | 13,133         | 26,267             | 26,267                  | -                        | -              | 65,667   | 65,667   
|High-yield checking                      | 2.55                   | 10,112         | 20,225             | 20,225                  | -                        | -              | 50,562   | 50,562   
|Non-interest checking   
     
 accounts | -                      | 15,900         | 31,800             | 31,800                  | -                        | -              | 79,500   | 79,500   
|Savings accounts                         | 0.55                   | 7,103          | 14,205             | 14,205                  | -                        | -              | 35,513   | 35,513   
|Money market accounts                    | 1.44                   | 15,266         | 30,532             | 30,532                  | -                        | -              | 76,330   | 76,330   
|Certificate accounts                     | 3.13                   | 77,058         | 39,106             | 28,233                  | 4,840                    | 69             | 149,306  | 148,941  
|FHLB advances                            | 5.05                   | 35,000         | 5,000              | -                       | -                        | -              | 40,000   | 40,120   
|                                         |                        |                |                    |                         |                          |                |          |          
|Off-Balance Sheet Items:                 |                        |                |                    |                         |                          |                |          |          
|                                         |                        |                |                    |                         |                          |                |          |          
|Commitment to extend 
     credit        | -                      | 19,533         | -                  | -                       | -                        | -              | 19,533   | 19,533   
|Unused lines of credit                   | -                      | 115,174        | -                  | -                       | -                        | -              | 115,174  | 115,174  



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Item 8.   Financial Statements and Supplementary Data





RIVERVIEW BANCORP, INC. AND SUBSIDIARY

Consolidated Financial Statements for Years Ended March 31, 2005, 2004 and 2003 
Independent  Auditor's Reports

|TABLE OF CONTENTS                                                                                
|-------------------------------------------------------------------------------------------------
|                                                                                                 
|                                                                                                 
|Report of Independent Registered Public Accounting Firm - McGladrey & Pullen, LLP                
|                                                                                                 
|Report of Independent Registered Public Accounting Firm - Deloitte & Touche  LLP                 
|                                                                                                 
|Report of Independent Registered Public Accounting Firm - McGladrey & Pullen, LLP                
|                                                                                                 
|Management's Report on Internal Control Over Financial Reporting                                 
|                                                                                                 
|Consolidated Balance Sheets as of March 31, 2005 and 2004                                        
|                                                                                                 
|Consolidated Statements of Income for the Years Ended March 31, 2005, 2004 and 
2003             
|                                                                                                 
|Consolidated Statements of Shareholders' Equity for the Years Ended March 31, 2005, 2004 and 2003
|                                                                                                 
|Consolidated Statements of Cash Flows for the Years Ended March 31, 2005, 2004 and 2003          
|                                                                                                 
|Notes to Consolidated Financial Statements                                                       





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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors 
Riverview Bancorp, Inc.

We have audited the consolidated balance sheets of Riverview Bancorp, Inc. and Subsidiary as of March 31, 2005 and 2004, and the related consolidated statements of income, shareholders' equity and cash flows for each of the two years in the period ended March 31, 2005. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Riverview Bancorp, Inc. and Subsidiary as of March 31, 2005 and 2004, and the results of their operations and their cash flows for each of the two years in the period ended March 31, 2005, in conformity with U.S. generally accepted accounting principles.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the effectiveness of Riverview Bancorp, Inc. and Subsidiary's internal control over financial reporting as of March 31, 2005, based on the criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) and our report dated June 10, 2005 expressed an unqualified opinion on management's assessment of the effectiveness of Riverview Bancorp, Inc.'s internal control over financial reporting and an unqualified opinion on the effectiveness of Riverview Bancorp, Inc.'s internal control over financial reporting.



/s/McGladrey & Pullen, LLP

Tacoma, Washington
June 10, 2005



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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of
Riverview Bancorp, Inc. and Subsidiary

We have audited the accompanying consolidated statements of income, shareholders' equity, and cash flows of Riverview Bancorp, Inc. and Subsidiary (the "Company") for the year ended March 31, 2003. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the financial statements based on our audit.



We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.  Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting.  Accordingly, we express no such opinion.  An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.



In our opinion, such consolidated financial statements present fairly, in all material respects, Riverview Bancorp, Inc. and Subsidiary's results of operations and their cash flows for the year ended March 31, 2003, in conformity with accounting principles generally accepted in the United States of America.

/s/Deloitte & Touche  LLP

Portland, Oregon
May 2, 2003

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<PAGE>



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM



To the Board of Directors 
Riverview Bancorp, Inc.
Vancouver, Washington

We have audited management's assessment, included in the accompanying Management's Report on Internal Controls over Financial Reporting, that Riverview Bancorp, Inc. maintained effective internal control over financial reporting as of March 31, 2005, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).  Riverview Bancorp, Inc.'s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting.  Our responsibility is to express an opinion on management's assessment and an opinion on the effectiveness of the company's internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, evaluating management's assessment, testing and evaluating the design and operating effectiveness of internal control, and performing such other procedures as we considered necessary in the circumstances.  We believe that our audit provides a reasonable basis for our opinion.

A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.  A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.  Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, management's assessment that Riverview Bancorp, Inc. maintained effective internal control over financial reporting as of March 31, 2005, is fairly stated, in all material respects, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).  Also in our opinion, Riverview Bancorp, Inc. maintained, in all material respects, effective internal control over financial reporting as of March 31, 2005, based oncriteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated financial statements of Riverview Bancorp, Inc. and our report dated June 10, 2005 expressed an unqualified opinion.

/s/McGladrey & Pullen, LLP

Tacoma, Washington
June 10, 2005

63

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RIVERVIEW BANCORP, INC.

Sarbanes-Oxley 404

FY 04-05 Management's Report on Internal Controls over Financial Reporting

The management of Riverview Bancorp, Inc. is responsible for establishing and maintaining adequate internal control over financial reporting.  This internal control system has been designed to provide reasonable assurance to the Company's management and board of directors regarding the preparation and fair presentation of the company's published financial statements.

All internal control systems, no matter how well designed, have inherent limitations.  Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.

The management of Riverview Bancorp, Inc. has assessed the effectiveness of the Company's internal control over financial reporting as of March 31, 2005.  To make the assessment, we used the criteria for effective internal control over financial reporting described in Internal Control - Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission.  Based on our assessment, we believe that, as of March 31, 2005, the Company's internal control over financial reporting met those criteria.



64

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RIVERVIEW BANCORP, INC. AND SUBSIDIARYCONSOLIDATED BALANCE SHEETS
MARCH 31, 2005 AND 2004

|(In thousands, except share data)                                                                      | 2005         | 2004        
|------------------------------------------------------------------------------------------------------ | ------------ | ------------
|                                                                                                      
|ASSETS                                                                                                 |              |             
|Cash (including interest-earning accounts of $45,501   and $32,334)                                    | $     61,719 | $     47,907
|Loans held for sale                                                                                    | 510          | 407         
|Investment securities available for sale, at fair value   (amortized cost of $22,993 and $32,751)      | 22,945       | 32,883      
|Mortgage-backed securities held to maturity, at amortized   cost (fair value of $2,402 and $2,591)     | 2,343        | 2,517       
|Mortgage-backed securities available for sale, at fair value   (amortized cost of $11,756 and $10,417) | 11,619       | 10,607      
|Loans receivable (net of allowance for loan losses of $4,395   and $4,481)                             | 429,449      | 381,127     
|Real estate owned                                                                                      | 270          | 742         
|Prepaid expenses and other assets                                                                      | 1,538        | 1,289       
|Accrued interest receivable                                                                            | 2,151        | 1,786       
|Federal Home Loan Bank stock, at cost                                                                  | 6,143        | 6,034       
|Premises and equipment, net                                                                            | 8,391        | 9,735       
|Deferred income taxes, net                                                                             | 2,624        | 2,736       
|Mortgage servicing rights, net                                                                         | 470          | 624         
|Goodwill                                                                                               | 9,214        | 9,214       
|Core deposit intangible, net                                                                           | 578          | 758         
|Bank owned life insurance                                                                              | 12,607       | 12,121      
|TOTAL ASSETS                                                                                           | $   572,571  | $   520,487 
|LIABILITIES AND SHAREHOLDERS' EQUITY                                                                   |              |             
|LIABILITIES:                                                                                           |              |             
|Deposit accounts                                                                                       | $   456,878  | $   409,115 
|Accrued expenses and other liabilities                                                                 | 5,858        | 5,862       
|Advance payments by borrowers for taxes and insurance                                                  | 313          | 328         
|Federal Home Loan Bank advances                                                                        | 40,000       | 40,000      
|Total liabilities                                                                                      | 503,049      | 455,305     
|COMMITMENTS AND CONTINGENCIES                                                                          | -            | -           
|SHAREHOLDERS' EQUITY:                                                                                  |              |             
|Serial preferred stock, $.01 par value; 250,000 authorized,   issued and outstanding, none             | -            | -           
|Common stock, $.01 par value; 50,000,000 authorized,   issued and outstanding:                         |              |             
|2005 - 5,015,753 issued, 5,015,749 outstanding                                                         | 50           | 50          
|2004 - 4,974,979 issued, 4,974,975 outstanding                                                         |              |             
|Additional paid-in capital                                                                             | 41,112       | 40,187      
|Retained earnings                                                                                      | 29,874       | 26,330      
|Unearned shares issued to employee stock ownership trust                                               | (1,392)      | (1,598)     
|Accumulated other comprehensive income (loss)                                                          | (122)        | 213         
|Total shareholders' equity                                                                             | 69,522       | 65,182      
|TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                                                             | $  572,571   | $  520,487  

See notes to consolidated financial statements

65

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RIVERVIEW BANCORP, INC. AND SUBSIDIARYCONSOLIDATED STATEMENTS OF INCOME
YEARS ENDED MARCH 31, 2005, 2004 AND 2003

|(In thousands, except share data)                   | 2005         | 2004         | 2003        
|--------------------------------------------------- | ------------ | ------------ | ------------
|                                                   
|INTEREST AND DIVIDEND INCOME:                       |              |              |             
|Interest and fees on loans receivable               | $    27,764  | $    25,634  | $    23,670 
|Interest on investment securities - taxable         | 521          | 357          | 89          
|Interest on investment securities - non taxable     | 174          | 121          | 111         
|Interest on mortgage-backed securities              | 634          | 613          | 1,241       
|Other interest and dividends                        | 875          | 859          | 1,350       
|Total interest and dividend income                  | 29,968       | 27,584       | 26,461      
|INTEREST EXPENSE:                                   |              |              |             
|Interest on deposits                                | 5,380        | 4,643        | 5,475       
|Interest on borrowings                              | 2,015        | 1,984        | 2,942       
|Total interest expense                              | 7,395        | 6,627        | 8,417       
|Net interest income                                 | 22,573       | 20,957       | 18,044      
|Less provision for loan losses                      | 410          | 210          | 727         
|Net interest income after provision for loan losses | 22,163       | 20,747       | 17,317      
|NON-INTEREST INCOME:                                |              |              |             
|Fees and service charges                            | 4,588        | 4,324        | 4,263       
|Asset management fees                               | 1,120        | 906          | 742         
|Net gain on sale of loans held for sale             | 513          | 954          | 1,552       
|Net loss sale/impairment of securities              | (1,185)      | -            | (2,138)     
|Gain on sale of other real estate owned             | -            | 49           | 55          
|Loan servicing income (expense)                     | 47           | 158          | (619)       
|Gain on sale of land and fixed assets               | 830          | 3            | -           
|Bank owned life insurance                           | 486          | 121          | -           
|Other                                               | 107          | 74           | 83          
|Total non-interest income                           | 6,506        | 6,589        | 3,938       
|NON-INTEREST EXPENSE:                               |              |              |             
|Salaries and employee benefits                      | 10,773       | 9,910        | 8,395       
|Occupancy and depreciation                          | 2,991        | 2,900        | 2,481       
|Data processing                                     | 991          | 917          | 834         
|Amortization of core deposit intangible             | 180          | 430          | 327         
|Advertising and marketing expense                   | 766          | 772          | 605         
|FDIC insurance premium                              | 58           | 64           | 47          
|State and local taxes                               | 519          | 426          | 383         
|Telecommunications                                  | 288          | 269          | 225         
|Professional fees                                   | 842          | 501          | 399         
|Other                                               | 1,696        | 1,383        | 1,212       
|Total non-interest expense                          | 19,104       | 17,572       | 14,908      
|INCOME BEFORE FEDERAL INCOME TAXES                  | 9,565        | 9,764        | 6,347       
|PROVISION FOR FEDERAL INCOME TAXES                  | 3,036        | 3,210        | 1,988       
|NET INCOME                                          | $    6,529   | $    6,554   | $    4,359  
|                                                    |              |              |             
|Earnings per common share:                          |              |              |             
|Basic                                               | $       1.36 | $       1.41 | $       1.00
|Diluted                                             | 1.33         | 1.39         | 0.99        
|Weighted average number of shares outstanding:      |              |              |             
|Basic                                               | 4,816,745    | 4,640,485    | 4,365,855   
|Diluted                                             | 4,891,173    | 4,714,329    | 4,424,733   

See notes to consolidated financial statements.

66

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RIVERVIEW BANCORP, INC. AND SUBSIDIARYCONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
YEARS ENDED MARCH 31, 2005, 2004 AND 2003

|(In thousands, except share data)                                                                                                                                                                                         | Common Stock | Additional Paid-In Capital | RetainedEarnings | UnearnedSharesIssued toEmployeeStockOwnershipTrust | UnearnedSharesIssued toMRDP | AccumulatedOtherComprehensiveIncome (Loss) | Total                
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------ | -------------------------- | ---------------- | -------------------------------------------------- | --------------------------- | ------------------------------------------ | ---------------------
|Shares                                                                                                                                                                                                                    | Amount      
|                                                                                                                                                                                                                         
|Balance March 31, 2002                                                                                                                                                                                                    | 4,704,786    | $          47              | $     35,725     | $   20,208                                         | $       (2,010)             | $        (218)                             | $                (75)
|                                                                                                                                                                                                                          |              |                            |                  |                                                    |                             |                                            |                      
|Cash dividends ($0.50 per share)                                                                                                                                                                                          | -            | -                          | -                | (2,178)                                            | -                           | -                                          | -                    
|Exercise of stock options                                                                                                                                                                                                 | 46,577       | -                          | 417              | -                                                  | -                           | -                                          | -                    
|Stock repurchased and retired                                                                                                                                                                                             | (196,100)    | (1)                        | (2,881)          | -                                                  | -                           | -                                          | -                    
|Earned ESOP shares                                                                                                                                                                                                        | -            | -                          | 166              | -                                                  | 206                         | -                                          | -                    
|Tax benefit, stock option    and MDRP                                                                                                                                                                                     | -            | -                          | 98               | -                                                  | -                           | -                                          | -                    
|Earned MRDP shares                                                                                                                                                                                                        | 25,138       | -                          | -                | -                                                  | -                           | 203                                        | -                    
|                                                                                                                                                                                                                          | 4,580,401    | 46                         | 33,525           | 18,030                                             | (1,804)                     | (15)                                       | (75)                 
|Comprehensive income:                                                                                                                                                                                                     |              |                            |                  |                                                    |                             |                                            |                      
|Net income                                                                                                                                                                                                                | -            | -                          | -                | 4,359                                              | -                           | -                                          | -                    
|Other comprehensive income:   Unrealized holding loss on   securities of $966 (net of $498   tax effect) less reclassification   adjustment for net losses   included in net income of    $1,411 (net of $727 tax effect) | -            | -                          | -                | -                                                  | -                           | -                                          | 445                  
|                                                                                                                                                                                                                          |              |                            |                  |                                                    |                             |                                            |                      
|Total comprehensive income                                                                                                                                                                                                | -            | -                          | -                | -                                                  | -                           | -                                          | -                    
|Balance March 31, 2003                                                                                                                                                                                                    | 4,580,401    | 46                         | 33,525           | 22,389                                             | (1,804)                     | (15)                                       | 370                  
|                                                                                                                                                                                                                          |              |                            |                  |                                                    |                             |                                            |                      
|Cash dividends ($0.56 per share)                                                                                                                                                                                          | -            | -                          | -                | (2,613)                                            | -                           | -                                          | -                    
|Exercise of stock options                                                                                                                                                                                                 | 40,281       | 1                          | 484              | -                                                  | -                           | -                                          | -                    
|Stock repurchased and retired                                                                                                                                                                                             | (81,500)     | (1)                        | (1,509)          | -                                                  | -                           | -                                          | -                    
|Stock issued in connection    with acquisition                                                                                                                                                                            | 430,655      | 4                          | 7,343            |                                                    |                             |                                            |                      
|Earned ESOP shares                                                                                                                                                                                                        | -            | -                          | 271              | -                                                  | 206                         | -                                          | -                    
|Tax benefit, stock option    and MDRP                                                                                                                                                                                     | -            | -                          | 73               | -                                                  | -                           | -                                          | -                    
|Earned MRDP shares                                                                                                                                                                                                        | 5,138        | -                          | -                | -                                                  | -                           | 15                                         | -                    
|                                                                                                                                                                                                                          | 4,974,975    | 50                         | 40,187           | 19,776                                             | (1,598)                     | -                                          | 370                  
|Comprehensive income:                                                                                                                                                                                                     |              |                            |                  |                                                    |                             |                                            |                      
|Net income                                                                                                                                                                                                                | -            | -                          | -                | 6,554                                              | -                           | -                                          | -                    
|Other comprehensive income:   Unrealized holding loss on   securities of $157 (net of $81   tax effect)                                                                                                                   | -            | -                          | -                | -                                                  | -                           | -                                          | (157)                
|                                                                                                                                                                                                                          |              |                            |                  |                                                    |                             |                                            |                      
|Total comprehensive income                                                                                                                                                                                                | -            | -                          | -                | -                                                  | -                           | -                                          | -                    
|Balance March 31, 2004                                                                                                                                                                                                    | 4,974,975    | 50                         | 40,187           | 26,330                                             | (1,598)                     | -                                          | 213                  
|                                                                                                                                                                                                                          |              |                            |                  |                                                    |                             |                                            |                      
|Cash dividends ($0.62 per share)                                                                                                                                                                                          | -            | -                          | -                | (2,985)                                            | -                           | -                                          | -                    
|Exercise of stock options                                                                                                                                                                                                 | 40,774       | -                          | 536              | -                                                  | -                           | -                                          | -                    
|Earned ESOP shares                                                                                                                                                                                                        | -            | -                          | 314              | -                                                  | 206                         | -                                          | -                    
|Tax benefit, stock option                                                                                                                                                                                                 | -            | -                          | 75               | -                                                  | -                           | -                                          | -                    
|                                                                                                                                                                                                                          | 5,015,749    | 50                         | 41,112           | 23,345                                             | (1,392)                     | -                                          | 213                  
|Comprehensive income:                                                                                                                                                                                                     |              |                            |                  |                                                    |                             |                                            |                      
|Net income                                                                                                                                                                                                                | -            | -                          | -                | 6,529                                              | -                           | -                                          | -                    
|Other comprehensive income:   Unrealized holding gain on   securities of $1,120 (net of $577   tax effect) less classification   adjustment for net losses   included in net income of $785   (net of $404 tax effect)    | -            | -                          | -                | -                                                  | -                           | -                                          | (335)                
|                                                                                                                                                                                                                          |              |                            |                  |                                                    |                             |                                            |                      
|Total comprehensive income                                                                                                                                                                                                | -            | -                          | -                | -                                                  | -                           | -                                          | -                    
|Balance March 31, 2005                                                                                                                                                                                                    | 5,015,749    | $          50              | $   41,112       | $   29,874                                         | $     (1,392)               | $        -                                 | $       (122)        

See notes to consolidated financial statements.

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RIVERVIEW BANCORP, INC. AND SUBSIDIARYCONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED MARCH 31, 2005, 2004 AND 2003

|(In thousands)                                                                                                                               | 2005         | 2004         | 2003        
|-------------------------------------------------------------------------------------------------------------------------------------------- | ------------ | ------------ | ------------
|                                                                                                                                            
|CASH FLOWS FROM OPERATING ACTIVITIES:                                                                                                        |              |              |             
|Net income                                                                                                                                   | $      6,529 | $      6,554 | $      4,359
|Adjustments to reconcile net income to cash provided by operating activities:                                                                |              |              |             
|Depreciation and amortization                                                                                                                | 1,492        | 2,157        | 2,108       
|Mortgage servicing rights valuation adjustment                                                                                               | (22)         | (307)        | 320         
|Provision for loan losses                                                                                                                    | 410          | 210          | 727         
|Provision (benefit) for deferred income taxes                                                                                                | 285          | 421          | (942)       
|Noncash expense related to ESOP                                                                                                              | 520          | 477          | 372         
|Noncash expense related to MRDP                                                                                                              | -            | 15           | 203         
|Noncash expense related to REO donation                                                                                                      | -            | 61           | -           
|Noncash loss on impairment of securities                                                                                                     | 1,349        | -            | 2,300       
|Increase (decrease) in deferred loan origination fees, net of amortization                                                                   | 382          | 759          | 728         
|Federal Home Loan Bank stock dividend                                                                                                        | (110)        | (229)        | (329)       
|Origination of loans held for sale                                                                                                           | (22,943)     | (50,472)     | (55,771)    
|Proceeds from sales of loans held for sale                                                                                                   | 22,919       | 51,700       | 56,311      
|Net gain on loans held for sale, sale of real estate owned,     mortgage-backed securities, investment securities and premises and equipment | (1,310)      | (852)        | (1,718)     
|Income from bank owned life insurance                                                                                                        | (486)        | (121)        | -           
|Changes in assets and liabilities:                                                                                                           |              |              |             
|(Increase) decrease in prepaid expenses and other assets, net of acquisition                                                                 | (484)        | 190          | (463)       
|(Increase) decrease in accrued interest receivable                                                                                           | (364)        | (294)        | 280         
|(Decrease) increase in accrued expenses and other liabilities, net of acquisition                                                            | (602)        | 521          | 173         
|Net cash provided by operating activities                                                                                                    | 7,565        | 10,790       | 8,658       
|                                                                                                                                             |              |              |             
|CASH FLOWS FROM INVESTING ACTIVITIES:                                                                                                        |              |              |             
|Loan originations                                                                                                                            | (411,476)    | (325,366)    | (242,620)   
|Principal repayments/refinance on loans                                                                                                      | 363,607      | 329,443      | 227,101     
|Proceeds from call, maturity, or sale of investment securities available for sale                                                            | 13,515       | 6,250        | 1,518       
|Principal repayments on investment securities available for sale                                                                             | 75           | -            | -           
|Purchase of investment securities available for sale                                                                                         | (5,014)      | (12,490)     | (5,000)     
|Purchase of mortgage-backed securities available for sale                                                                                    | (5,000)      | (4,937)      | -           
|Principal repayments on mortgage-backed securities available for sale                                                                        | 3,657        | 7,690        | 23,728      
|Principal repayments on mortgage-backed securities held to maturity                                                                          | 173          | 782          | 1,084       
|Purchase of premises and equipment                                                                                                           | (561)        | (307)        | (33)        
|Acquisition, net of cash received                                                                                                            | -            | 7,206        | -           
|Additions to real estate owned                                                                                                               | (621)        | (546)        | -           
|Purchase of bank owned life insurance                                                                                                        | -            | (12,000)     | -           
|Proceeds from sale of real estate owned and premises and equipment                                                                           | 2,513        | 749          | 1,915       
|Net cash provided by (used in) investing activities                                                                                          | (39,132)     | (3,526)      | 7,693       
|                                                                                                                                             |              |              |             
|CASH FLOWS FROM FINANCING ACTIVITIES:                                                                                                        |              |              |             
|Net increase (decrease) in deposit accounts                                                                                                  | 47,763       | (16,740)     | 61,052      
|Dividends paid                                                                                                                               | (2,904)      | (2,490)      | (2,126)     
|Repurchase of common stock                                                                                                                   | -            | (1,510)      | (2,882)     
|Proceeds from Federal Home Loan Bank advances                                                                                                | -            | -            | 5,000       
|Repayment of Federal Home Loan Bank advances                                                                                                 | -            | -            | (39,500)    
|Net (decrease) increase in advance payments by borrowers                                                                                     | (16)         | 40           | 54          
|Proceeds from exercise of stock options                                                                                                      | 536          | 485          | 417         
|Net cash provided by  (used in) by financing activities                                                                                      | 45,379       | (20,215)     | 22,015      
|                                                                                                                                             |              |              |             
|NET INCREASE (DECREASE)  IN CASH                                                                                                             | 13,812       | (12,951)     | 38,366      
|CASH, BEGINNING OF YEAR                                                                                                                      | 47,907       | 60,858       | 22,492      
|CASH, END OF YEAR                                                                                                                            | $    61,719  | $    47,907  | $    60,858 
|SUPPLEMENTAL DISCLOSURES:                                                                                                                    |              |              |             
|Cash paid during the year for:                                                                                                               |              |              |             
|Interest                                                                                                                                     | $     7,418  | $     6,741  | $     8,666 
|Income taxes                                                                                                                                 | 2,675        | 3,070        | 2,912       
|                                                                                                                                             |              |              |             
|NONCASH INVESTING AND FINANCING ACTIVITIES:                                                                                                  |              |              |             
|Transfer of loans to real estate owned                                                                                                       | $      304   | $      340   | $     1,527 
|Loans to finance the sale of real estate owned                                                                                               | 578          | -            | -           
|Receivable due to sale & leaseback of branch                                                                                                 | 2,391        |              |             
|Dividends declared and accrued in other liabilities                                                                                          | 749          | 668          | 545         
|Fair value adjustment to securities available for sale                                                                                       | (507)        | (238)        | 674         
|Income tax effect related to fair value adjustment                                                                                           | 172          | 81           | (229)       
|Common stock issued upon business combination                                                                                                | -            | 7,347        | -           

See notes to consolidated financial statements.

68

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RIVERVIEW BANCORP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

---

Principles of Consolidation

69

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beyond the Company's control or because of changes in the Company's strategy for the sale of the property. Allowance for Loan Losses - The allowance for loan losses is maintained at a level sufficient to provide for probable loan losses based on evaluating known and inherent risks in the loan portfolio. The allowance is provided based upon management's continuing analysis of the pertinent factors underlying the quality of the loan portfolio. These factors include changes in the size and composition of the loan portfolio, delinquency levels, actual loan loss experience, current economic conditions, and detailed analysis of individual loans for which full collectibility may not be assured. The detailed analysis includes techniques to estimate the fair value of loan collateral and the existence of potential alternative sources of repayment. The allowance consists of specific, general and unallocated components. The specific component relates to loans that are classified as either doubtful, substandard or special mention. For such loans that are also classified as impaired, an allowance is established when the discounted cash flows (or collateral value or observable market price) of the impaired loan is lower than the carrying value of that loan. The general component covers non-classified loans and is based on historical loss experience adjusted for qualitative factors. An unallocated component is maintained to cover uncertainties that could affect management's estimate of probable losses. The unallocated component of the allowance reflects the margin of imprecision inherent in the underlying assumptions used in the methodologies for estimating specific and general losses in the portfolio. The appropriate allowance level is estimated based upon factors and trends identified by management at the time the consolidated financial statements are prepared.

When available information confirms that specific loans or portions thereof are uncollectible, identified amounts are charged against the allowance for loan losses. The existence of some or all of the following criteria will generally confirm that a loss has been incurred: the loan is significantly delinquent and the borrower has not demonstrated the ability or intent to bring the loan current; the Bank has no recourse to the borrower, or if it does, the borrower has insufficient assets to pay the debt; the estimated fair value of the loan collateral is significantly below the current loan balance, and there is little or no near-term prospect for improvement.

In accordance with SFAS No. 114, Accounting by Creditors for Impairment of a Loan, and SFAS No. 118, An amendment of SFAS No. 114, a loan is considered impaired when it is probable that a creditor will be unable to collect all amounts (principal and interest) due according to the contractual terms of the loan agreement. Large groups of smaller balance homogenous loans such as consumer secured loans, residential mortgage loans and consumer unsecured loans are collectively evaluated for potential loss. When a loan has been identified as being impaired, the amount of the impairment is measured by using discounted cash flows, except when, as a practical expedient, the current fair value of the collateral, reduced by costs to sell, is used. When the measurement of the impaired loan is less than the recorded investment in the loan (including accrued interest, net deferred loan fees or costs, and unamortized premium or discount), an impairment is recognized by creating or adjusting an allocation of the allowance for loan losses. 

A provision for loan losses is charged against income and is added to the allowance for loan losses based on regular assessments of the loan portfolio. The allowance for loan losses is allocated to certain loan categories based on the relative risk characteristics, asset classifications and actual loss experience of the loan portfolio. While management has allocated the allowance for loan losses to various loan portfolio segments, the allowance is general in nature and is available for the loan portfolio in its entirety.

The ultimate recovery of all loans is susceptible to future market factors beyond the Bank's control. These factors may result in losses or recoveries differing significantly from those provided in the consolidated financial statements. In addition, regulatory agencies, as an integral part of their examination process, periodically review the Bank's allowance for loan loses, and may require the Bank to make additions to the allowance based on their judgment about information available to them at the time of their examinations.Federal Home Bank Loan Bank Stock - The Bank, as a member of Federal Home Loan Bank ("FHLB"), is required to maintain an investment in capital stock of the FHLB in an amount equal to the greater of 1% of its outstanding home loans or 5% of advances from the FHLB.  The recorded amount of FHLB stock equals its fair value because the shares can only be redeemed by the FHLB at the  $100 per share value. Allowance for Unfunded Loan Commitments -The allowance for unfunded loan commitments is maintained at a level believed by management to be sufficient to absorb estimated probable losses related to these unfunded credit facilities. The determination of the adequacy of the allowance is based on periodic evaluations of the unfunded credit facilities including an assessment of the probability of commitment usage, credit risk factors for loans outstanding to these same customers, and the terms and expiration dates of the unfunded credit facilities. The allowance for unfunded loan commitments is included in other liabilities on the consolidated balance sheets, with changes to the balance charged against non-interest expense. Premises and Equipment - Premises and equipment are stated at cost less accumulated depreciation. Leasehold improvements are amortized over the term of the lease or the estimated useful life of the improvements, whichever is less. Gains or losses on dispositions are reflected in earnings. Depreciation is generally computed on the straight-line method over the estimated useful lives as follows:

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|Buildings and improvements | 3 to 40 years 
|-------------------------- | --------------
|Furniture and equipment    | 3 to 20 years 
|Leasehold improvements     | 15 to 25 years

The assets are reviewed for impairment when events indicate their carrying value may not be recoverable.  If management determines impairment exists the asset is reduced by an offsetting charge to expense.Loans Held for Sale - The Company identifies loans held for sale at the time of origination and they are carried at the lower of aggregate cost or net realizable value. Market values are derived from available market quotations for comparable pools of mortgage loans. Adjustments for unrealized losses, if any, are charged to income.

Gains or losses on sales of loans held for sale are recognized at the time of the sale and are determined by the difference between the net sales proceeds and the allocated basis of the loans sold. The Company capitalizes mortgage servicing rights ("MSR's") acquired through either the purchase of MSR's, the sale of originated mortgage loans or the securitization of mortgage loans with servicing rights retained. Upon sale of mortgage loans held for sale the total cost of the mortgage loans designated for sale is allocated to mortgage loans with and without MSR's based on their relative fair values. The MSR's are included as a component of gain on sale of loans. The MSR's are amortized in proportion to and over the estimated period of the net servicing life. This amortization is reflected as a component of loan servicing income (expense).Mortgage Servicing - Fees earned for servicing loans for the Federal Home Loan Mortgage Corporation ("FHLMC") are reported as income when the related mortgage loan payments are collected. Loan servicing costs are charged to expense as incurred.

MSR's are the rights to service loans. Loan servicing includes collecting payments, remitting funds to investors, insurance companies and tax authorities, collecting delinquent payments, and foreclosing on properties when necessary.

The Company records its originated mortgage servicing rights at fair values in accordance with SFAS No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishment of Liabilities, which requires the Company to allocate the total cost of all mortgage loans sold to the MSR's and the loans (without the MSR's) based on their relative fair values if it is practicable to estimate those fair values. The Company stratifies its MSR's based on the predominant characteristics of the underlying financial assets including coupon interest rate and contractual maturity of the mortgage. An estimated fair value of MSR's is determined quarterly using a discounted cash flow model.  The model estimates the present value of the future net cash flows of the servicing portfolio based on various factors, such as servicing costs, servicing income, expected prepayment speeds, discount rate, loan maturity and interest rate. The effect of changes in market interest rates on estimated rates of loan prepayments represents the predominant risk characteristic underlying the MSR's portfolio. The Company is amortizing the MSR's assets, which totaled $470,000 and $624,000 at March 31, 2005 and 2004, respectively, over the period of estimated net servicing income.

The MSR's are periodically reviewed for impairment based on their fair value.  The fair value of the MSR's, for the purposes of impairment, is measured using a discounted cash flow analysis based on market adjusted discount rates, anticipated prepayment speeds, mortgage loan term and coupon rate.  Market sources are used to determine prepayment speeds, ancillary income, servicing cost and pre-tax required yield.  Impairment losses are recognized through a valuation allowance for each impaired stratum, with any associated provision recorded as a component of loan servicing income (expense).Goodwill - Goodwill is initially recorded when the purchase price paid for an acquisition exceeds the estimated fair value of the net identified tangible and intangible assets acquired.  Goodwill is presumed to have an indefinite useful life and is tested, at least annually, for impairment at the reporting unit level.  We perform an annual review in the third quarter of each year, or more frequently if indicators of potential impairment exist, to determine if the recorded goodwill is impaired.  If the fair value exceeds the carrying value, goodwill at the subsidiary is not considered impaired and no additional analysis is necessary.  As of March 31, 2005, there have been no events or changes in circumstances that would indicate a potential impairment.Core Deposit Intangible - The core deposit intangible is being amortized to non-interest expense using a straight line method and an accelerated method (based on expected attrition and cash flows of core deposit accounts purchased) over ten years.  The straight line method of amortization is used for a 1995 acquisition and the accelerated method of amortization is being used for subsequent acquisitions.Advertising and Marketing Expense - Costs incurred for advertising, merchandising, market research, community investment, travel and business development are classified as marketing expense and are expensed as incurred.Income Taxes- Income taxes are accounted for using the asset and liability method. Under this method, a deferred tax asset or liability is determined based on the enacted tax rates which will be in effect when the differences between the financial statement carrying amounts and tax basis of existing assets and liabilities are expected to be reported in the Company's

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income tax returns. The effect on deferred taxes of a change in tax rates is recognized in income in the period that includes the enactment date. Valuation allowances are established to reduce the net carrying amount of deferred tax assets if it is determined to be more likely than not, that all or some portion of the potential deferred tax asset will not be realized. The Company files a consolidated federal income tax return. The Bank provides for income taxes separately and remits to the Company amounts currently due.Trust Assets - Assets held by Riverview Asset Management Corp. in a fiduciary or agency capacity for Trust customers are not included in the consolidated financial statements because such items are not assets of the Company. Assets totaling $174.8 million and $134.7 million were held in trust as of March 31, 2005 and 2004, respectively.Earnings Per Share - The Company accounts for earnings per share in accordance with SFAS No. 128, Earnings Per Share, whichrequires allcompanies whose capital structure includes dilutive potential common shares to make a dual presentation of basic and diluted earnings per share for all periods presented.  Basic earnings per share is computed by dividing income available to common shareholders by the weighted average number of common shares outstanding for the period, excluding restricted stock.  Diluted earnings per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised and has been computed after giving consideration to the weighted average diluted effect of the Company's stock options and the shares issued under the Company's Management Recognition and Development Plan ("MRDP"). Cash and Cash Flows- Cash includes amounts on hand, due from banks and interest-earning deposits in other banks. Cash flows from interest-earning deposits in other banks and deposits are reported net.Stock-Based Compensation - At March 31, 2005, the Company had two stock option plans, which are described further in Note 14.  The Company accounts for these plans under the recognition and measurement principles of Accounting Principles Board No. 25, Accounting for Stock Issued to Employees, and related interpretations.  Accordingly, no stock-based compensation cost is reflected in net income as all options granted under these plans had an exercise price equal to the market value of the underlying common stock on the date of grant.

SFAS No. 123 requires the disclosure of pro forma net income and earnings per share had the Company adopted the fair value method as of the beginning of fiscal 1996. Under SFAS No. 123, the fair value of stock-based awards to employees is calculated through the use of option pricing models, even though such models were developed to estimate the fair value of freely tradable, fully transferable options without vesting restrictions, which significantly differ from the Company's stock option awards. These models also require subjective assumptions, including future stock price volatility and expected time to exercise, which greatly affect the calculated values. The Company's calculations were made using the Black-Scholes option pricing model with the following weighted average assumptions:

|            | Risk FreeInterest Rate | ExpectedLife (yrs) | ExpectedVolatility | ExpectedDividends
|----------- | ---------------------- | ------------------ | ------------------ | -----------------
|Fiscal 2005 | 4.00%                  | 10.00              | 29.25%             | 3.01%            
|Fiscal 2004 | 4.00%                  | 10.00              | 31.02%             | 3.07%            
|Fiscal 2003 | 4.01%                  | 5.42               | 31.59%             | 3.23%            

The weighted average grant-date fair value of 2005, 2004 and 2003 awards was $5.93, $5.47 and $3.54, respectively. Only stock options are considered in this calculation and not MRDP shares. If the accounting provisions of the SFAS No. 123 had been adopted, the effect on 2005, 2004 and 2003 net income would have been reduced to the following pro forma amounts (dollars in thousands, except per share amounts):

|                                                                                                                                          | Year ended March 31,
|----------------------------------------------------------------------------------------------------------------------------------------- | --------------------
|                                                                                                                                          | 2005                
|Net income:                                                                                                                               |                     
|As reported                                                                                                                               | $6,529              
|Deduct: Total stock based compensation   expense determined under fair value   based method for all options, net   of related tax benefit | 96                  
|Pro forma                                                                                                                                 | 6,433               
|Earnings per common share - basic:                                                                                                        |                     
|As reported                                                                                                                               | $1.36               
|Pro forma                                                                                                                                 | 1.34                
|Earnings per common share - fully diluted:                                                                                                |                     
|As reported                                                                                                                               | $1.33               
|Pro forma                                                                                                                                 | 1.32                

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Employee Stock Ownership Plan ("ESOP") - The Company sponsors a leveraged ESOP. The ESOP is accounted for in accordance with the AICPA Statement of Position ("SOP") 93-6, Employer's Accounting for Employee Stock Ownership Plans.  Stock and cash dividends on allocated shares are recorded as a reduction of additional paid in capital and paid directly to plan participants or distributed directly to participants' accounts. As shares are released, compensation expense is recorded equal to the then current market price of the shares and the shares become available for earnings per share calculations. The Company records cash dividends on unallocated shares as a reduction of debt and accrued interest.  Reclassification - Certain 2004 and 2003 amounts have been reclassified in order to conform to the 2005 presentation, with no impact on net income or shareholders' equity as previously reported.  Business segments - The Company operates a single business segment.  The financial information that is used by the chief operating decision maker in allocating resources and assessing performance is only provided for one reportable segment as of March 31, 2005, 2004 and 2003.Acquisitions -Acquisitionsare accounted for under the purchase method of accounting, which allocates costs to assets purchased and liabilities assumed at their estimated fair market values.  The results of operations subsequent to the date of acquisition are included in the consolidated financial statements of the Company.Recently Issued Accounting PronouncementsInterest Rate Lock Derivatives

In accordance with SFAS No. 149, Amendment of Statement 133 on Derivative Instruments and Hedging Activities, expected interest rate lock commitments on mortgage loans that will be held for sale must be accounted for as derivatives and marked to market in accordance with SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities. All other interest rate lock commitments are excluded from SFAS 133, pursuant to SFAS 149.


In October 2003, the FASB decided to add a project to its agenda that would clarify how fair value should be measured for interest rate lock derivatives. No timetable has been established yet for the completion of this project. In the meantime, the Securities and Exchange Commission ("SEC") issued guidance in Staff Accounting Bulletin No. 105 ("SAB 105"). SAB 105 requires that fair-value measurement include only differences between the guaranteed interest rate in the loan commitment and a market interest rate, excluding any expected future cash flows related to the customer relationship or loan servicing. Servicing assets are to be recognized only once the servicing asset has been contractually separated from the underlying loan by sale or securitization of the loan with servicing retained. The guidance in SAB 105 must be applied to interest rate locks initiated after March 31, 2004 and is to be applied prospectively. SAB 105 is not expected to have a material financial impact on the Company.Statement of Financial Accounting Standards No. 123R

On December 16, 2004, the FASB issued SFAS No. 123R, Share-Based Payment, which is an Amendment of FASB Statement Nos. 123 and 95. SFAS No. 123R changes, among other things, the manner in which shared-based compensation, such as stock options, will be accounted for by both public and non-public companies, and will be effective as of the beginning of the first annual reporting period that begins after June 15, 2005. For public companies, the cost of employee services received in exchange for equity instruments including options and restricted stock awards generally will be measured at fair value at the grant date. The grant date fair value will be estimated using option-pricing models adjusted for the unique characteristics of those options and instruments, unless observable market prices for the same or similar options are available. The cost will be recognized over the requisite service period, often the vesting period, and will be remeasured subsequently at each reporting date through settlement date.  Management is evaluating the impact of SFAS No. 123R on the Company's financial statements.  The financial effect would be an expense related to the unvested options at the date of implementation.

The changes in accounting will replace existing requirements under SFAS No. 123, Accounting for Stock-Based Compensation, and will eliminate the ability to account for share-based compensation transactions using APB Opinion No. 25, Accounting for Stock Issued to Employees, which does not require companies to expense options if the exercise price is equal to the trading price at the date of grant. The accounting for similar transactions involving parties other than employees or the accounting for employee stock ownership plans that are subject to AICPA SOP 93-6, Employers' Accounting for Employee Stock Ownership Plans, would remain unchanged.

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Statement of Financial Accounting Standards No. 153

SFAS No. 153, Exchanges of Nonmonetary Assets, an amendment of APB Opinion No. 29, required exchanges of nonmonetary assets be measured based on the fair value of the assets exchanged. The amendment eliminates the narrow exception for nonmonetary exchanges of similar productive assets and replaces it with a broader exception for exchanges of nonmonetary assets that do not have commercial substance. A nonmonetary exchange has a commercial substance if the future cash flows of the entity are expected to change significantly as a result of the exchange. Previously, APB Opinion No. 29, "Accounting for Nonmonetary Transactions," required that the accounting for an exchange of a productive asset for a similar productive asset should be based on the recorded amount of the asset relinquished with no gain recognition. SFAS 153 is effective for nonmonetary asset exchanges occurring in fiscal periods beginnings after June 15, 2005 and is to be applied prospectively. SFAS 153 is not expected to have a material financial impact on the Company.Emerging Issues Task Force Issue No. 03-1

In March of 2004, the Emerging Issues Task Force ("EITF") reached consensus on the guidance provided in EITF Issue No. 03-1, The Meaning of Other-Than-Temporary Impairment and its Application to Certain Investments. Among other investments, this guidance is applicable to debt and equity securities that are within the scope of SFAS No. 114, Accounting for Certain Investments in Debt and Equity Securities. Paragraph 10 of EITF 03-1 specifies that an impairment would be considered other-than-temporary unless (a) the investor has the ability and intent to hold an investment for a reasonable period of time sufficient for the recovery of the fair value up to (or beyond) the cost of the investment and (b) evidence indicating that the cost of the investment is recoverable within a reasonable period of time outweighs the evidence to the contrary. A company's liquidity and capital requirements should be considered when assessing its intent and ability to hold an investment for a reasonable period of time that would allow the fair value of the investment to recover up to or beyond its cost. A pattern of selling investments prior to the forecasted fair value recovery may call into question a company's intent. In addition, the severity and duration of the impairment should also be considered when determining whether the impairment is other-than-temporary. This guidance was effective for reporting periods beginning after June 14, 2004 with the exception of paragraphs 10-20 of EITF 03-1, which will be deliberated further. This delay does not suspend the requirement to recognize other-than-temporary impairments as required by existing authoritative literature. The outcome of this deliberation may accelerate the recognition of losses from declines in value on debt securities due to interest rates; however, it is not anticipated to have a significant impact on shareholders' equity as changes in market value of available-for-sale securities are already included in Accumulated Other Comprehensive Income (Loss).Statement of Position 03-3

SOP 03-3, Accounting for Certain Loans or Debt Securities Acquired in a Transfer, addresses accounting for differences between contractual cash flows and cash flows expected to be collected from an investor's initial investment in loans or debt securities (loans) acquired in a transfer if those differences are attributable, at least in part, to credit quality. It includes such as loans acquired in purchase business combinations and applies to all nongovernmental entities, including not-for-profit organizations. SOP 03-3 does not apply to loans originated by the entity. SOP 03-3 limits the yield that may be accreted (accretable yield) to the excess of the investor's estimate of undiscounted expected principal, interest, and other cash flows (cash flows expected at acquisition to be collected) over the investor's initial investment in the loan. SOP 03-3 requires that the excess of contractual cash flows over cash flows expected to be collected (nonaccretable difference) not be recognized as an adjustment of yield loss accrual, or valuation allowance. SOP 03-3 prohibits investors from displaying accretable yield and nonaccretable difference in the balance sheet. Subsequent increases in cash flows expected to be collected generally should be recognized prospectively through adjustment of the loan's yield over its remaining life. Decreases in cash flows expected to be collected should be recognized as impairment. SOP 03-3 prohibits "carrying over" or creation of valuation allowances in the initial accounting of all loans acquired in a transfer that are within the scope of SOP 03-3. The prohibition of the valuation allowance carryover applies to the purchase of an individual loan, a pool of loans, a group of loans, and loans acquired in a purchase business combination. SOP 03-3 is effective for fiscal years beginning after December 15, 2004 and is to be applied prospectively. SOP 03-3 is not expected to have a material financial impact on the Company.

2.     RESTRICTED ASSETS

Federal Reserve Board regulations require that the Bank maintain minimum reserve balances either on hand or on deposit with the Federal Reserve Bank, based on a percentage of deposits. The amounts of such balances for the years ended March 31, 2005 and 2004 were approximately $145,000 and $832,000, respectively.

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3.     INTEREST RATE RISK MANAGEMENT

The Company is engaged principally in gathering deposits supplemented with Federal Home Loan Bank ("FHLB") advances and providing first mortgage loans to individuals and commercial enterprises, commercial loans to businesses, and consumer loans to individuals. At March 31, 2005 and 2004, the asset portfolio consisted of fixed and variable rate interest-earning assets. Those assets were funded primarily with short-term deposits and advances from the FHLB that have market interest rates that vary over time. The shorter maturity of the interest-sensitive liabilities indicates that the Company could be exposed to interest rate risk because, generally in an increasing rate environment, interest-bearing liabilities will be repricing faster at higher interest rates than interest-earning assets, thereby reducing net interest income, as well as the market value of long-term assets. Management is aware of this interest rate risk and actively monitors such risk and manages it to the extent practicable.





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4.     INVESTMENT SECURITIES

The amortized cost and approximate fair value of investment securities available for sale consisted of the following (in thousands):

|                  | AmortizedCost | GrossUnrealizedGains | GrossUnrealizedLosses | EstimatedFairValue
|----------------- | ------------- | -------------------- | --------------------- | ------------------
|March 31, 2005    |               |                      |                       |                   
|Trust Preferred   | $      5,000  | $          31        | $            -        | $      5,031      
|Agency securities | 14,021        | -                    | (179)                 | 13,842            
|Municipal bonds   | 3,972         | 100                  | -                     | 4,072             
|Total             | $    22,993   | $        131         | $     (179)           | $    22,945       
|                  |               |                      |                       |                   
|March 31, 2004    |               |                      |                       |                   
|Trust Preferred   | $      5,000  | $          19        | $            -        | $      5,019      
|Agency securities | 11,000        | 194                  | -                     | 11,194            
|Equity securities | 12,700        | -                    | (300)                 | 12,400            
|Municipal bonds   | 4,051         | 219                  | -                     | 4,270             
|Total             | $    32,751   | $        432         | $      (300)          | $    32,883       

The fair value of temporarily impaired securities, the amount of unrealized losses and the length of time these unrealized losses existed as of March 31, 2005 are as follows (in thousands):

|                                          | Less than 12 months | 12 months or longer | Total     
|----------------------------------------- | ------------------- | ------------------- | ----------
|                                          |                    
|Description of Securities                 | FairValue           | UnrealizedLosses    | FairValue 
|                                          |                     |                     |           
|Agency securities                         | $   11,890          | $    (131)          | $    1,952
|Total temporarily     impaired securities | $   11,890          | $    (131)          | $    1,952

The Company has evaluated these securities and has determined that the decline in the value is temporary. The decline in value is not related to any company or industry specific event. The Company anticipates full recovery of amortized cost with respect to these securities at maturity or sooner in the event of a more favorable market interest rate environment.

The fair value of temporarily impaired securities, the amount of unrealized losses and the length of time these unrealized losses existed as of March 31, 2004 are as follows (in thousands):

|                                          | Less than 12 months | 12 months or longer | Total       
|----------------------------------------- | ------------------- | ------------------- | ------------
|                                          |                    
|Description of Securities                 | FairValue           | UnrealizedLosses    | FairValue   
|                                          |                     |                     |             
|Equity securities                         | $  12,400           | $    (300)          | $          -
|Total temporarily     impaired securities | $  12,400           | $    (300)          | $          -

The Company has evaluated these securities and has determined that the decline in the value is temporary. The decline in value is not related to any company or industry specific event. The Company anticipates full recovery of amortized cost with respect to these securities at maturity or sooner in the event of a more favorable market interest rate environment.





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The contractual maturities of investment securities available for sale are as follows (in thousands):

|                                      | AmortizedCost | EstimatedFair Value
|------------------------------------- | ------------- | -------------------
|March 31, 2005                        |               |                    
|Due after one year through five years | $   15,960    | $   15,858         
|                                      |               |                    
|Due after ten years                   | 7,033         | 7,087              
|Total                                 | $    22,993   | $    22,945        

Investment securities with an amortized cost of $9.0 million and $16.5 million and a fair value of $8.9 million and $16.3 million at March 31, 2005 and March 31, 2004, respectively, were pledged as collateral for advances at the FHLB. Investment securities with an amortized cost of $1.1 million and $500,000 and a fair value of $1.2 million and $504,000 at March 31, 2005 and March 31, 2004, respectively, were pledged as collateral for treasury tax and loan funds held by the Bank.  At March 31, 2005 investment securities with an amortized cost of $5.0 million and a fair value of $5.0 million were pledged as collateral for the discount window at the Federal Reserve Bank.

In the third quarter of fiscal 2005, the Company recognized a pre-tax other-than-temporary impairment for investments in Federal Home Loan Mortgage Corporation ("FHLMC") preferred stock and Federal National Mortgage Association ("FNMA") preferred stock that totaled $1.3 million. The Company accounts for these securities in accordance with SFAS No. 115.  Under SFAS No. 115, if the decline in fair market value below cost is determined to be other-than-temporary, the unrealized loss will be realized as expense on the consolidated income statement.  Based on a number of factors, including the magnitude of the drop in the market value below the Company's cost and the length of time the market value had been below cost, management concluded that the decline in value was other-than-temporary at the end of the third quarter of fiscal 2005. Accordingly, the pre-tax other-than-temporary impairment was realized in the income statement, in the amount of $699,000 for FNMA preferred stock and $650,000 FHLMC preferred stock. A corresponding reduction in unrealized losses in shareholders' equity was realized in fiscal 2005 in the amount of $461,000 for FNMA preferred stock and $429,000 for FHLMC preferred stock.

The Company realized before tax $164,000 and $162,000 in net gains on sales of investment securities available for sale in fiscal 2005 and 2003, respectively. The Company realized no gains or losses on sales of investment securities available for sale in fiscal 2004. 

In the fourth quarter of fiscal 2003, the Company recognized a pre-tax other-than-temporary impairment for investments in Federal Home Loan Mortgage Corporation ("FHLMC") preferred stock and Federal National Mortgage Association ("FNMA") preferred stock that totaled $2.3 million. The Company accounts for these securities in accordance with SFAS No. 115.  Under SFAS No. 115, if the decline in fair market value below cost is determined to be other than temporary, the unrealized loss will be realized as expense on the consolidated income statement.  Based on a number of factors, including the magnitude of the drop in the market value below the Company's cost and the length of time the market value had been below cost, management concluded that the decline in value was other than temporary at the end of the fourth quarter of fiscal 2003. Accordingly, the pre-tax other-than-temporary impairment was realized in the income statement, in the amount of $700,000 for FNMA preferred stock and $1.6 million FHLMC preferred stock. A corresponding reduction in unrealized losses in shareholders' equity was realized in fiscal 2003 in the amount of $462,000 for FNMA preferred stock and $1.1 million for FHLMC preferred stock.

5.     MORTGAGE-BACKED SECURITIES

Mortgage-backed securities held to maturity consisted of the following (in thousands):

|March 31, 2005                           | AmortizedCost | GrossUnrealizedGains | GrossUnrealizedLosses | EstimatedFairValue
|---------------------------------------- | ------------- | -------------------- | --------------------- | ------------------
|Real estate mortgage investment conduits | $  1,802      | $      43            | $          -          | $  1,845          
|FHLMC mortgage-backed securities         | 218           | 6                    | -                     | 224               
|FNMA mortgage-backed securities          | 323           | 10                   | -                     | 333               
|Total                                    | $  2,343      | $      59            | $        -            | $  2,402          
|March 31, 2004                           |               |                      |                       |                   
|Real estate mortgage investment conduits | $  1,802      | $      55            | $          -          | $  1,857          
|FHLMC mortgage-backed securities         | 332           | 8                    | -                     | 340               
|FNMA mortgage-backed securities          | 383           | 11                   | -                     | 394               
|Total                                    | $  2,517      | $      74            | $          -          | $  2,591          

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Mortgage-backed securities held to maturity with an amortized cost of $1.8 million and $1.8 million and a fair value of $1.9 million and $1.9 million at March 31, 2005 and 2004, respectively, were pledged as collateral for governmental public funds held by the Bank. Mortgage-backed securities held to maturity with an amortized cost of $248,000 and $332,000 and a fair value of $255,000 and $341,000 at March 31, 2005 and March 31, 2004, respectively, were pledged as collateral for treasury tax and loan funds held by the Bank. The real estate mortgage investment conduits consist of FHLMC and FNMA securities.

The contractual maturities of mortgage-backed securities classified as held to maturity are as follows (in thousands):

|March 31, 2005                         | AmortizedCost | EstimatedFair Value
|-------------------------------------- | ------------- | -------------------
|Due after one year through five years  | $          20 | $          21      
|Due after five years through ten years | 26            | 27                 
|Due after ten years                    | 2,297         | 2,354              
|Total                                  | $    2,343    | $    2,402         
|                                       |               |                    

Mortgage-backed securities available for sale consisted of the following (in thousands):

|March 31, 2005                           | AmortizedCost | GrossUnrealizedGains | GrossUnrealizedLosses | EstimatedFairValue
|---------------------------------------- | ------------- | -------------------- | --------------------- | ------------------
|Real estate mortgage investment conduits | $      1,846  | $          27        | $            -        | $      1,873      
|FHLMC mortgage-backed securities         | 9,677         | 12                   | (182)                 | 9,507             
|FNMA mortgage-backed securities          | 233           | 6                    | -                     | 239               
|Total                                    | $   11,756    | $        45          | $       (182)         | $   11,619        
|March 31, 2004                           |               |                      |                       |                   
|Real estate mortgage investment conduits | $    2,943    | $        72          | $           -         | $    3,015        
|FHLMC mortgage-backed securities         | 7,086         | 104                  | -                     | 7,190             
|FNMA mortgage-backed securities          | 388           | 14                   | -                     | 402               
|Total                                    | $   10,417    | $       190          | $          -          | $   10,607        

The fair value of temporarily impaired mortgage backed securities, the amount of unrealized losses and the length of time these unrealized losses existed as of March 31, 2005 are as follows (in thousands):

|                                           | Less than 12 months | 12 months or longer | Total    
|------------------------------------------ | ------------------- | ------------------- | ---------
|                                           |                    
|Description of Securities                  | FairValue           | UnrealizedLosses    | FairValue
|                                           |                     |                     |          
|FHLMC mortgage-backedsecurities            | $8,209              | $    (182)          | -        
|Total temporarily impaired      securities | $  8,209            | $    (182)          | -        

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The contractual maturities of mortgage-backed securities available for sale are as follows (in thousands):

|March 31, 2005                         | AmortizedCost | EstimatedFair Value
|-------------------------------------- | ------------- | -------------------
|Due after one year through five years  | $     1,458   | $     1,472        
|Due after five years through ten years | 8,534         | 8,355              
|Due after ten years                    | 1,764         | 1,792              
|Total                                  | $    11,756   | $    11,619        

Expected maturities of mortgage-backed securities held to maturity and available for sale will differ from contractual maturities because borrowers may have the right to prepay obligations with or without prepayment penalties.

Mortgage-backed securities available for sale with an amortized cost of $11.5 million and $9.9 million and a fair value of $11.4 million and $10.1 million at March 31, 2005 and March 31, 2004, respectively, were pledged as collateral for advances at the FHLB.  Mortgage-backed securities available for sale with an amortized cost of $45,000 and $105,000 and a fair value of $47,000 and $111,000 at March 31, 2005 and March 31, 2004, respectively, were pledged as collateral for treasury tax and loan funds held by the Bank.

The Company realized no gains or losses on sale of mortgage-backed securities available for sale in fiscal 2005, 2004 and 2003.

6.     LOANS RECEIVABLE

A summary of the major categories of loans outstanding is shown in the following table.  Outstanding loan balances at March 31, 2005 and 2004, are net of unearned income, including net deferred loan fees of  $3.2 million and $3.1 million , respectively. 

Loans receivable excluding loans held for sale consisted of the following (in thousands):

|                          | March 31,
|------------------------- | ---------
|                          | 2005     
|Residential:              |          
|One- to- four family      | $  36,059
|Multi-family              | 2,537    
|Construction:             |          
|One- to- four family      | 43,633   
|                          | -        
|Commercial real estate    | 10,982   
|Commercial                | 57,981   
|Consumer                  |          
|Secured                   | 28,951   
|Unsecured                 | 1,668    
|Land                      | 28,889   
|Commercial real estate    | 223,144  
|                          | 433,844  
|Less:                     |          
|Allowance for loan losses | 4,395    
|Loans receivable, net     | $429,449 

The Company originates residential real estate loans, commercial real estate, multi-family real estate, commercial and consumer loans.  Substantially all of the mortgage loans in the Company's portfolio are secured by properties located in Washington and Oregon.  A further economic downturn in these areas would likely have a negative impact on the Company's results of operations depending on the severity of such downturn.

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Loans receivable including loans held for sale, by maturity or repricing date, were as follows (in thousands):

|                                  | March 31,
|--------------------------------- | ---------
|                                  | 2005     
|Adjustable rate loans:            |          
|Within one year                   | $207,906 
|After one but within three years  | 96,676   
|After three but within five years | 22,988   
|After five but within ten years   | 7,439    
|                                  | 335,009  
|Fixed rate loans:                 |          
|Within one year                   | 26,171   
|After one but within three        | 28,724   
|After three but within five years | 28,009   
|After five but within ten years   | 8,815    
|After ten years                   | 7,626    
|                                  | 99,345   
|                                  | $434,354 

Mortgage loans receivable with adjustable rates primarily reprice based on the one year U.S. Treasury index and reprice a maximum of 2% per year and up to 6% over the life of the loan. The remaining adjustable rate loans reprice based on the prime lending rate or the FHLB cost of funds index.  Commercial loans with adjustable rates primarily reprice based on the prime rate. 

Aggregate loans to officers and directors, all of which are current, consist of the following (in thousands):

|                     | Year Ended March 31,
|-------------------- | --------------------
|                     | 2005                
|                     |                     
|Beginning balance    | $       732         
|Originations         | 10                  
|Principal repayments | (334)               
|Ending balance       | $       408         

7.     ALLOWANCE FOR LOAN LOSSES

A reconciliation of the allowance for loan losses is as follows (in thousands):

|                                                                             | Year Ended March 31,
|---------------------------------------------------------------------------- | --------------------
|                                                                             | 2005                
|                                                                             |                     
|Beginning balance                                                            | $  4,481            
|Provision for losses                                                         | 410                 
|Charge-offs                                                                  | (669)               
|Recoveries                                                                   | 173                 
|Allowance transferred from Today's    Bancorp acquisition                    | -                   
|Net change in allowance for unfunded loan    commitments and lines of credit | -                   
|Ending balance                                                               | $  4,395            

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Changes in the allowance for unfunded loan commitments and lines of credit were as follows (in thousands):

|                                                                          | Year Ended March 31,
|------------------------------------------------------------------------- | --------------------
|                                                                          | 2005                
|Beginning balance                                                         | $    191            
|Net change in allowance for unfunded loan commitments and lines of credit | 62                  
|Ending balance                                                            | $    253            

The allowance for unfunded loan commitments is included in other liabilities on the consolidated balance sheets.

At March 31, 2005, 2004 and 2003, the Company's recorded investment in impaired loans was $456,000, $1.3 million, and $323,000 respectively. None of the impaired loans for March 31, 2005, 2004 or 2003 had a specific valuation allowance.  The allowance for loan losses in excess of specific reserves is available to absorb losses from all loans, although allocations have been made for certain loans and loan categories as part of management's analysis of the allowance. The average investment in impaired loans was approximately $1.0 million, $1.2 million and $1.1 million during the years ended March 31, 2005, 2004 and 2003, respectively. Interest income recognized on impaired loans was $9,000, $44,000 and $56,000 during the years ended March 31, 2005, 2004 and 2003, respectively. There were no loans past due 90 days or more and still accruing interest at March 31, 2005, 2004 and 2003, respectively.

8.     PREMISES AND EQUIPMENT, NET

Premises and equipment consisted of the following (in thousands):

|                                               | March 31, 
|---------------------------------------------- | ----------
|                                               | 2005      
|                                               |           
|Land                                           | $    1,879
|Buildings and improvements                     | 5,476     
|Leasehold improvements                         | 1,310     
|Furniture and equipment                        | 6,681     
|Construction in progress                       | 101       
|Subtotal                                       | 15,447    
|Less accumulated depreciation and amortization | (7,056)   
|Total                                          | $  8,391  

During fiscal year 2005, the Company sold to a private investor  and leased back the Camas branch and operations center.  The net gain on the sale of the building, $1.6 million, of which $828,000 was recognized in the first quarter of fiscal year 2005 and the remainder is being amortized over the six year life of the lease.  Deferred gain of $180,000 was recognized in fiscal year 2005.  The lease of the building is being accounted for as an operating lease and is included in the future minimum rental payments schedule shown below.

Depreciation expense was $1.0 million, $1.1 million and $1.0 million for years ended March 31, 2005, 2004 and 2003, respectively. The Company is obligated under various noncancelable lease agreements for land and buildings that require future minimum rental payments, exclusive of taxes and other charges, as follows (in thousands):

|Year ending March 31,
|---------------------
|2006                 
|2007                 
|2008                 
|2009                 
|2010                 
|After 2010           
|Total                

Rent expense was $1.2 million, $857,000 and $634,000 for the years ended March 31, 2005, 2004 and 2003, respectively.

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9.     MORTGAGE SERVICING RIGHTS

The following table is a summary of the activity in MSR's and the related allowance for the periods indicated and other related financial data (in thousands):

|                                           | March 31,
|------------------------------------------ | ---------
|                                           | 2005     
|Balance at beginning of year, net          | $    624 
|Additions                                  | 126      
|Amortization                               | (302)    
|Change in valuation allowance              | 22       
|Balance end of year, net                   | $    470 
|Valuation allowance at beginning of year   | $    106 
|Change in valuation allowance              | (22)     
|Valuation allowance balance at end of year | $      84

The Company evaluates MSR's for impairment by stratifying MSR's based on the predominant risk characteristics of the underlying financial assets.  At March 31, 2005 and 2004, the MSR's fair value totaled $1.1 million and $669,000, respectively. The 2005 fair value was estimated using discount rate and a range of PSA values (The Bond Market Association's standard prepayment values) that ranged from 120 to 940.

Amortization expense for the net carrying amount of MSR's at March 31, 2005 is estimated as follows (in thousands):

|Year ending March 31,
|---------------------
|2006                 
|2007                 
|2008                 
|2009                 
|2010                 
|After 2010           
|Total                

Mortgage loans serviced for others (in millions):

|      | March 31,
|----- | ---------
|      | 2005     
|Total | $ 129.3  

The estimated sensitivity of the fair value of the mortgage servicing rights portfolio to changes in interest rates at March 31, 2005 was as follows (dollars in thousands):

|           | Down Scenario |          | Up Scenario
|---------- | ------------- | -------- | -----------
|           | 300 bp        | 200 bp   | 100 bp     
|Fair Value | $  (626)      | $  (595) | $  (378)   

The fair value of mortgage servicing rights and its sensitivity to changes in interest rates is influenced by the mix of the servicing portfolio and characteristics of each segment of the portfolio.  The Bank's servicing portfolio is comprised of conventional fixed rate mortgages that meet FHLMC guidelines.

10.    CORE DEPOSIT INTANGIBLE

Net unamortized core deposit intangible totaled $578,000 and $758,000 at March 31, 2005 and 2004, respectively. Amortization expense related to the core deposit intangible during the year ended March 31, 2005, 2004 and 2003 totaled $180,000, $430,000 and $327,000, respectively. During the year ended March 31, 2004, the Company had additions to

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core deposit intangibles totaling $820,000 in connection with the acquisition of Today's Bancorp. (See Note 2).

Amortization expense for the net core deposit intangible at March 31, 2005 is estimated to be as follows (in thousands):

|Year Ending March 31,
|---------------------
|2006                 
|2007                 
|2008                 
|2009                 
|2010                 
|After 2010           
|Total                

11.    DEPOSIT ACCOUNTS

Deposit accounts consisted of the following (dollars in thousands):

|Account Type            | WeightedAverageRate | March 31,2005 | WeightedAverageRate | March 31,2004
|----------------------- | ------------------- | ------------- | ------------------- | -------------
|NOW Accounts:           |                     |               |                     |              
|Non-interest-bearing    | 0.00%               | $     79,499  | 0.00%               | $     61,902 
|Regular                 | 0.20                | 65,667        | 0.20                | 65,718       
|High yield checking     | 2.55                | 50,562        | 1.30                | 49,668       
|Money market            | 1.44                | 76,331        | 0.95                | 69,984       
|Savings accounts        | 0.55                | 35,513        | 0.55                | 29,334       
|Certificates of deposit | 3.13                | 149,306       | 2.49                | 132,509      
|Total                   | 1.62%               | $   456,878   | 1.20%               | $   409,115  

The weighted average rate is based on interest rates at the end of the period.

Certificates of deposit as of March 31, 2005, mature as follows (in thousands):

|                          | Amount   
|------------------------- | ---------
|Less than one year        | $  77,058
|One year to two years     | 23,048   
|Two years to three years  | 16,058   
|Three years to four years | 25,046   
|Four years to five years  | 3,187    
|After five years          | 4,909    
|Total                     | $149,306 

Deposit accounts in excess of $100,000 are not insured by the Federal Deposit Insurance Corporation ("FDIC"). Deposits with balances in excess of $100,000 totaled $227.9 million and $186.2 million at March 31, 2005 and 2004, respectively.

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Interest expense by deposit type was as follows (in thousands):

|                        | Year Ended March 31,
|----------------------- | --------------------
|                        | 2005                
|NOW Accounts:           |                     
|Regular                 | $     108           
|High yield checking     | 815                 
|Money market            | 901                 
|Savings accounts        | 178                 
|Certificates of deposit | 3,378               
|Total                   | $  5,380            







12.   FEDERAL HOME LOAN BANK ADVANCES

At March 31, 2005, advances from FHLB, totaled $40.0 million with a weighted average interest rate of 5.05%. The fixed rate borrowings of $35.0 million had fixed interest rates ranging from 4.65% to 6.38%. The remaining $5.0 million adjustable rate advance had a weighted average interest rate of 2.67%, which is based on three month London Interbank Offered Rate Index ("LIBOR") plus 11 basis points as quoted by the FHLB. The weighted average interest rate for fixed and adjustable rate advances was 5.00%, 4.96% and 5.53% for the years ended March 31, 2005, 2004 and 2003, respectively.

The Bank has a credit line with the FHLB equal to 30% of total assets, limited by available collateral. At March 31, 2005, based on collateral values, the Bank had additional borrowing commitments available of $21.3 million from the FHLB.

FHLB advances are collateralized as provided for in the Advance, Pledge and Security Agreements with the FHLB by certain investment and mortgage-backed securities, FHLB stock owned by the Bank, deposits with the FHLB, and certain mortgages on deeds of trust securing such properties as provided in the agreements with the FHLB. At March 31, 2005, loans carried at $50.8 million and investments and mortgage-backed securities carried at $20.3 million were pledged as collateral to the FHLB.

Payments required to service the Bank's FHLB advances during the next five years ended March 31 are as follows: 
2006 - $15.0 million; 2007 - $20.0 million; and 2008 - $5.0 million.

In addition, the Bank has a Fed Funds borrowing facility with Pacific Coast Bankers' Bank with a guideline limit of $10 million through June 30, 2005.  The facility may be reduced or withdrawn at any time.  As of March 31, 2005 the Bank did not have any outstanding advances on this facility.

13.    FEDERAL INCOME TAXES

Federal income tax provision for the years ended March 31 consisted of the following (in thousands):





| |          | 2005    |  | 2004    |  | 2003   
| | -------- | ------- |  | ------- |  | -------
| |          |         |  |         |  |        
| | Current  | $ 2,751 |  | $ 2,789 |  | $ 2,930
| | Deferred | 285     |  | 421     |  | (942)  
| | Total    | $ 3,036 |  | $ 3,210 |  | $ 1,988

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A reconciliation between federal income taxes computed at the statutory rate and the effective tax rate for the years ended March 31 is as follows:

|                                        | 2005  | 2004  | 2003 
|--------------------------------------- | ----- | ----- | -----
|                                        |       |       |      
|Statutory federal income tax rate       | 34.0% | 34.0% | 34.0%
|ESOP market value adjustment            | 1.1   | 0.9   | 0.9  
|Interest income on municipal securities | (0.6) | (0.4) | (0.6)
|Dividend received deduction             | (0.5) | (0.6) | (2.6)
|Bank owned life insurance               | (1.7) | -     | -    
|Other, net                              | (0.6) | (1.1) | (0.4)
|Effective federal income tax rate       | 31.7% | 32.8% | 31.3%

Taxes related to gains on sales of securities were $56,000, none and $55,000 for the years ended March 31, 2005, 2004 and 2003, respectively.

The tax effect of temporary differences that give rise to significant portions of deferred tax assets and deferred tax liabilities at March 31, 2005 and 2004 are as follows (in thousands):

|                                                     | 2005       | 2004      
|---------------------------------------------------- | ---------- | ----------
|Deferred tax assets:                                 |            |           
|Deferred compensation                                | $      555 | $      491
|Loan loss reserve                                    | 1,581      | 1,589     
|Core deposit intangible                              | 306        | 365       
|Accrued expenses                                     | 235        | 208       
|Accumulated depreciation                             | 206        | 54        
|Net operating loss carryforward                      | 821        | 1,171     
|Net realized loss on securities available for sale   | 63         | 782       
|Capital loss carryforward                            | 733        | -         
|Other                                                | 218        | 83        
|Total deferred tax asset                             | 4,718      | 4,743     
|Deferred tax liabilities:                            |            |           
|FHLB stock dividend                                  | (971)      | (934)     
|Tax qualified loan loss reserve                      | (280)      | (360)     
|Purchase accounting                                  | (249)      | (247)     
|Net unrealized gain on securities available for sale | -          | (109)     
|Prepaid expense                                      | (146)      | -         
|Loan fees/costs                                      | (449)      | (218)     
|Other                                                | -          | (139)     
|Total deferred tax liability                         | (2,095)    | (2,007)   
|Deferred tax asset, net                              | $   2,623  | $   2,736 

The Bank's retained earnings at March 31, 2005 and 2004 include base year bad debt reserves which amounted to approximately $2.2 million, for which no federal income tax liability has been recognized.  The amount of unrecognized deferred tax liability at March 31, 2005 and 2004 is approximately $760,000.  This represents the balance of bad debt reserves created for tax purposes as of December 31, 1987.  These amounts are subject to recapture in the unlikely event that the Company's banking subsidiaries (1) make distributions in excess of current and accumulated earnings and profits, as calculated for federal tax purposes, (2) redeem their stock, or (3) liquidate.  Management does not expect this temporary difference to reverse in the foreseeable future.

The Company also has net operating loss carry forwards of approximately $2.3 million for federal tax purposes in connection with the acquisition of Today's Bancorp, Inc.  Utilization of the net operating losses, which begin to expire at various times starting in 2019, is subject to certain limitations under Section 382 of the Internal Revenue Code.

The tax effects of certain tax benefits related to stock options are recorded directly to shareholders' equity.

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No valuation allowance for deferred tax assets was deemed necessary at March 31, 2005 or 2004 based upon the Company's anticipated future ability to generate taxable income from operations.



14.    EMPLOYEE BENEFITS PLANS

Retirement Plan - The Riverview Bancorp, Inc. Employees' Savings and Profit Sharing Plan (the "Plan") is a defined contribution profit-sharing plan incorporating the provisions of Section 401(k) of the Internal Revenue Code.  The plan covers all employees with at least six months and 500 hours of service who are over the age of 18. The Company matches the employee's elective contribution up to 4% of the employee's compensation. Company expenses related to the Plan for the years ended March 31, 2005, 2004 and 2003 were $154,000, $93,000 and  $88,000, respectively.Directors Deferred Compensation Plan - Directors may elect to defer their monthly directors' fees until retirement with no income tax payable by the director until retirement benefits are received.   Executive and Senior Vice Presidents of the Company may also defer salary into this plan.  This alternative is made available to them through a nonqualified deferred compensation plan. The Company accrues annual interest on the unfunded liability under the Directors Deferred Compensation Plan based upon a formula relating to gross revenues, which amounted to 6.04%, 7.12%, and 7.82% for the years ended March 31, 2005, 2004 and 2003, respectively. The estimated liability under the plan is accrued as earned by the participant. At March 31, 2005 and 2004, the Company's aggregate liability under the plan was $1.6 million and $1.4 million, respectively.Bonus Programs - The Company maintains a bonus program for senior management and certain key individuals. The senior management bonus represents approximately 5% of fiscal year profits, assuming profit goals are attained, and is divided among senior management members in proportion to their salaries. The Company has an incentive program for branch managers that is paid to the managers based on the attainment of certain goals. The Company expensed $564,000, $482,000, $414,000 in bonuses during the years ended March 31, 2005, 2004 and 2003, respectively.Management Recognition and Development Plan- On July 23, 1998, shareholders of the Company approved the adoption of the MRDP for the benefit of officers, employees and non-employee directors of the Company. 

The objective of the MRDP is to retain personnel of experience and ability in key positions by providing them with a proprietary interest in the Company. The Company reserved 142,830 shares of common stock to be issued under the MRDP which are authorized but unissued shares.  Awards under the MRDP were made in the form of restricted shares of common stock that are subject to restrictions on transfer of ownership. Compensation expense in the amount of the fair value of the common stock at the date of the grant to the plan participant was recognized over a five-year vesting period, with 20% vesting immediately upon grant. At March 31, 2005, all shares have been issued and fully vested. Compensation expense of none, $15,000 and $203,000 was recognized for the years ended March 31, 2005, 2004 and 2003, respectively. Stock Option Plans - In July 1998, shareholders of the Company approved the adoption of the 1998 Stock Option Plan ("1998 Plan").  The 1998 Plan was effective October 1, 1998 and will expire on the tenth anniversary of the effective date, unless terminated sooner by the Board.  Under the 1998 Plan, the Company may grant both incentive and non-qualified stock options up to 357,075 shares of its common stock to officers, directors and employees.  The exercise price of each option granted under the 1998 Plan equals the fair market value of the Company's stock on the date of grant with a maximum term of ten years and options vest over five years.  At March 31, 2005, there were options for 15,483 shares available for grant under the 1998 plan.

In July 2003, shareholders of the Company approved the adoption of the 2003 Stock Option Plan ("2003 Plan").  The 2003 Plan was effective July 2003 and will expire on the tenth anniversary of the effective date, unless terminated sooner by the Board.  Under the 2003 Plan, the Company may grant both incentive and non-qualified stock options up to 229,277 shares of its common stock to officers, directors and employees.  The exercise price of each option granted under the 2003 Plan equals the fair market value of the Company's stock on the date of grant with a maximum term of ten years from date of grant and options vest over five years.  At March 31, 2005, no options had been granted under the 2003 plan.



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Stock option activity is summarized in the following table:

|                           | Number ofShares | WeightedAverageExercisePrice
|-------------------------- | --------------- | ----------------------------
|Outstanding March 31, 2002 | 344,493         | $    12.46                  
|Grants                     | 15,000          | 14.00                       
|Forfeited                  | (50,366)        | 13.75                       
|Options exercised          | (46,577)        | 8.96                        
|Outstanding March 31, 2003 | 262,550         | 12.92                       
|Grants                     | 23,000          | 18.30                       
|Options exercised          | (40,281)        | 12.02                       
|Outstanding March 31, 2004 | 245,269         | 13.57                       
|Grants                     | 23,000          | 20.62                       
|Options exercised          | (40,774)        | 13.14                       
|Outstanding March 31, 2005 | 227,495         | $14.36                      











Additional information regarding options outstanding as of March 31, 2005 is as follows:

|                    |              | Options Outstanding |            | Options Exercisable
|------------------- | ------------ | ------------------- | ---------- | -------------------
|                    | Weighted Avg |                     | Weighted   |                    
|                    | Remaining    |                     | Average    |                    
|Range of            | Contractual  | Number              | Exercise   | Number             
|Exercise Price      | Life (years) | Outstanding         | Price      | Exercisable        
|                    |              |                     |            |                    
|$    8.06  - $12.31 | 4.72         | 44,498              | $    10.89 | 43,498             
|13.51  -  13.75     | 3.78         | 131,997             | 13.73      | 129,997            
|14.97  -  19.02     | 8.16         | 28,000              | 17.71      | 12,200             
|20.20  -  21.65     | 9.29         | 23,000              | 20.62      | 3,000              
|                    |              | 227,495             |            | 188,695            

15.    EMPLOYEE STOCK OWNERSHIP PLAN

The Company ESOP covers all employees with at least one year and 1000 hours of service who are over the age of 21.  Shares are released for allocation at the discretion of the Board of Directors and allocated to participant accounts on December 31 of each year until 2011. ESOP compensation expense included in salaries and benefits was $520,000, $477,000 and $372,000 for years ended March 31, 2005, 2004 and 2003, respectively.

ESOP share activity is summarized in the following table:

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|                             | Fair ValueofUnreleasedShares | UnreleasedESOPShares |  | Allocatedand ReleasedShares |  | Total  
|---------------------------- | ---------------------------- | -------------------- |  | --------------------------- |  | -------
|Balance, March 31, 2002      | $3,077,000                   | 246,330              |  | 234,962                     |  | 481,292
|Allocation December 31, 2002 |                              | (24,633)             |  | 24,633                      |  | -      
|Balance, March 31, 2003      | $3,490,000                   | 221,697              |  | 259,595                     |  | 481,292
|Allocation December 31, 2003 |                              | (24,633)             |  | 24,633                      |  | -      
|Balance, March 31, 2004      | $4,083,000                   | 197,064              |  | 284,228                     |  | 481,292
|Allocation December 31, 2004 |                              | (24,633)             |  | 24,633                      |  | -      
|Balance, March 31, 2005      | $3,664,000                   | 172,431              |  | 308,861                     |  | 481,292

16.    SHAREHOLDERS' EQUITY AND REGULATORY CAPITAL REQUIREMENTS

The Company's Board of Directors authorized 250,000 shares of serial preferred stock as part of the Conversion and Reorganization completed on September 30, 1997.  No preferred shares were issued or outstanding at March 31, 2005 or 2004.

The Bank is subject to various regulatory capital requirements administered by the Office of Thrift Supervision ("OTS").  Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Bank's financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank must meet specific capital guidelines that involve quantitative measures of the Bank's assets, liabilities and certain off-balance sheet items as calculated under regulatory accounting practices.  The Bank's capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk, weightings and other factors.

Quantitative measures established by regulation to ensure capital adequacy require the Bank to maintain minimum amounts and ratios of total and Tier I capital to risk-weighted assets, of core capital to total assets and tangible capital to tangible assets (set forth in the table below). Management believes the Bank meets all capital adequacy requirements to which it is subject as of March 31, 2005.

As of March 31, 2005, the most recent notification from the OTS categorized the Bank as "well capitalized" under the regulatory framework for prompt corrective action. To be categorized as "well capitalized," the Bank must maintain minimum total capital and Tier I capital to risk weighted assets, core capital to total assets and tangible capital to tangible assets (set forth in the table below). There are no conditions or events since that notification that management believes have changed the Company's category.

The Bank's actual and required minimum capital amounts and ratios are presented in the following table (dollars in thousands):

|                              | Actual    | For CapitalAdequacy Purposes | Categorized as "WellCapitalized" UnderPrompt CorrectiveAction Provision
|----------------------------- | --------- | ---------------------------- | -----------------------------------------------------------------------
|                              |          
|                              | Amount    | Ratio                        | Amount                                                                 
|March 31, 2005                |           |                              |                                                                        
|Total Capital:                |           |                              |                                                                        
|(To Risk Weighted Assets)     | $  57,397 | 12.37%                       | $  37,116                                                              
|Tier I Capital:               |           |                              |                                                                        
|(To Risk Weighted Assets)     | 53,002    | 11.42                        | 18,558                                                                 
|Tier I Capital:               |           |                              |                                                                        
|(To Adjusted Tangible Assets) | 53,002    | 9.54                         | 16,664                                                                 
|Tangible Capital:             |           |                              |                                                                        
|(To Tangible Assets)          | 53,002    | 9.54                         | 8,332                                                                  

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|                              | Actual    | For CapitalAdequacy Purposes | Categorized as "WellCapitalized" UnderPrompt CorrectiveAction Provision
|----------------------------- | --------- | ---------------------------- | -----------------------------------------------------------------------
|                              |          
|                              | Amount    | Ratio                        | Amount                                                                 
|March 31, 2004                |           |                              |                                                                        
|Total Capital:                |           |                              |                                                                        
|(To Risk Weighted Assets)     | $  53,952 | 12.78%                       | $  33,760                                                              
|Tier I Capital:               |           |                              |                                                                        
|(To Risk Weighted Assets)     | 49,471    | 11.72                        | 16,880                                                                 
|Tier I Capital:               |           |                              |                                                                        
|(To Adjusted Tangible Assets) | 49,471    | 9.81                         | 15,125                                                                 
|Tangible Capital:             |           |                              |                                                                        
|(To Tangible Assets)          | 49,471    | 9.81                         | 7,563                                                                  

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The following table is a reconciliation of the Bank's capital, calculated according to GAAP to regulatory tangible and risk-based capital at March 31, 2005 (in thousands):

|Equity                                         | $  62,832
|---------------------------------------------- | ---------
|Net unrealized securities loss                 | 122      
|Core deposit intangible, goodwill and software | (9,905)  
|Servicing asset                                | (47)     
|Tangible capital                               | 53,002   
|General valuation allowance                    | 4,395    
|Total capital                                  | $  57,397

At periodic intervals, the OTS and the FDIC routinely examine the Company's financial statements as part of their legally prescribed oversight of the savings and loan industry. Based on their examinations, these regulators can direct that the Company's financial statements be adjusted in accordance with their findings. A future examination by the OTS or the FDIC could include a review of certain transactions or other amounts reported in the Company's 2005 financial statements. In view of the uncertain regulatory environment in which the Company operates, the extent, if any, to which a forthcoming regulatory examination may ultimately result in adjustments to the 2005 financial statements cannot presently be determined.

The following table summarizes the Company's common stock repurchased in each of the last three fiscal years (dollars in thousands):

|     | Shares  | Value     
|---- | ------- | ----------
|2005 | -       | $        -
|2004 | 81,500  | $1,510    
|2003 | 196,100 | $2,882    

17.    EARNINGS PER SHARE

Basic earning per share ("EPS") is computed by dividing net income applicable to common stock by the weighted average number of common shares outstanding during the period, without considering any dilutive items.  Diluted EPS is computed by dividing net income applicable to common stock by the weighted average number of common shares and common stock equivalents for items that are dilutive, net of shares assumed to be repurchased using the treasury stock method at the average share price for the Company's common stock during the period. Common stock equivalents arise from assumed conversion of outstanding stock options and from assumed vesting of shares awarded but not released under the Company's MRDP plan.ESOP shares are not considered outstanding for earnings per share purposes until they are committed to be released.



|                                                            | Years Ended March 31,
|----------------------------------------------------------- | ---------------------
|                                                            | 2005                 
|Basic EPS computation:                                      |                      
|Numerator-Net income                                        | $   6,529,000        
|Denominator-Weighted average      common shares outstanding | 4,816,745            
|Basic EPS                                                   | $          1.36      
|Diluted EPS computation:                                    |                      
|Numerator-Net Income                                        | $   6,529,000        
|Denominator-Weighted average                                |                      
|common shares outstanding                                   | 4,816,745            
|Effect of dilutive stock options                            | 74,428               
|Effect of dilutive MRDP                                     | -                    
|Weighted average common shares                              |                      
|and common stock equivalents                                | 4,891,173            
|Diluted EPS                                                 | $          1.33      

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18.    FAIR VALUE OF FINANCIAL INSTRUMENTS

The following disclosure of the estimated fair value of financial instruments is made in accordance with the requirements of SFAS No. 107, Disclosures About Fair Value of Financial Instruments. The Company, using available market information and appropriate valuation methodologies, has determined the estimated fair value amounts. However, considerable judgment is necessary to interpret market data in the development of the estimates of fair value. Accordingly, the estimates presented herein are not necessarily indicative of the amounts the Company could realize in a current market exchange. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts.


The estimated fair value of financial instruments is as follows (in thousands):

|                                              | March 31,    
|--------------------------------------------- | -------------
|                                              | 2005         
|                                              | CarryingValue
|Assets:                                       |              
|Cash                                          | $   61,719   
|Investment securities available for sale      | 22,945       
|Mortgage-backed securities held to maturity   | 2,343        
|Mortgage-backed securities available for sale | 11,619       
|Loans receivable, net                         | 429,449      
|Loans held for sale                           | 510          
|Mortgage servicing rights                     | 470          
|FHLB stock                                    | 6,143        
|                                              |              
|Liabilities:                                  |              
|Demand - Savings deposits                     | 307,572      
|Time deposits                                 | 149,306      
|                                              |              
|FHLB advances - long-term                     | 40,000       

Fair value estimates, methods and assumptions are set forth below.Investments and Mortgage-Backed Securities- Fair values were based on quoted market rates and dealer quotes.Loans Receivable and Loans Held for Sale- Loans were priced using a discounted cash flow method. The discount rate used was the rate currently offered on similar products, risk adjusted for credit concerns or dissimilar characteristics.  For variable rate loans that reprice frequently and have no significant change in credit, fair values are based on carrying values.Mortgage Servicing Rights- The fair value of mortgage servicing rights was determined using the Company's model, which incorporates the expected life of the loans, estimated cost to service the loans, servicing fees received and other factors. The Company calculates MSR's fair value by stratifying MSR's based on the predominant risk characteristics that include the underlying loan's interest rate, cash flows of the loan, origination date and term. Key economic assumptions that vary due to changes in market interest rates are used to determine the fair value of the MSR's and include expected prepayment speeds, which impact the average life of the portfolio, annual service cost, annual ancillary income and the discount rate used in valuing the cash flows. At March 31, 2005, the MSR's fair value totaled $1.1 million, which was estimated using a range of prepayment speed assumptions (The Bond Market Association's standard prepayment) values that ranged from 120 to 940.Deposits- The fair value of time deposits with no stated maturity such as non-interest-bearing demand deposits, savings, NOW accounts, and money market and checking accounts was equal to the amount payable on demand. The fair value of time deposits with stated maturity was based on the discounted value of contractual cash flows. The discount rate was estimated using rates currently available in the local market.Federal Home Loan Bank Advances- The fair value for FHLB advances was based on the discounted cash flow method. The discount rate was estimated using rates currently available from the FHLB.

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Off-Balance Sheet Financial Instruments- The estimated fair value of loan commitments approximates fees recorded associated with such commitments as of March 31, 2005 and 2004. Since the majority of the Bank's off-balance-sheet instruments consist of non-fee producing, variable rate commitments, the Bank has determined they do not have a distinguishable fair value.Other- The carrying value of other financial instruments was determined to be a reasonable estimate of their fair value.Limitations- The fair value estimates presented herein were based on pertinent information available to management as of March 31, 2005 and 2004. Although management was not aware of any factors that would significantly affect the estimated fair value amounts, such amounts have not been comprehensively revalued for purposes of these financial statements on those dates and, therefore, current estimates of fair value may differ significantly from the amounts presented herein.


Fair value estimates were based on existing financial instruments without attempting to estimate the value of anticipated future business. The fair value has not been estimated for assets and liabilities that were not considered financial instruments.

19.    COMMITMENTS AND CONTINGENCIES

The Company is a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers.  These financial instruments generally include commitments to originate mortgage, commercial and consumer loans.  Those instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the balance sheet.  The Company's maximum exposure to credit loss in the event of nonperformance by the borrower is represented by the contractual amount of those instruments.  The Company uses the same credit policies in making commitments as it does for on-balance sheet instruments. Commitments to extend credit are conditional, and are honored for up to 45 days subject to the Company's usual terms and conditions.  Collateral is not required to support commitments.


At March 31, 2005, the Company had commitments to originate fixed rate mortgage loans of $439,000 at interest rates ranging from 5.4% to 7.9%.  At March 31, 2005, commitments to originate adjustable rate mortgage loans were $6.6 million at an average interest rate of 6.99%.  Undisbursed balance of mortgage loans closed was $37.4 million at March 31, 2005. Commitments to originate consumer loans totaled $814,000 and unused lines of consumer credit totaled $20.2 million at March 31, 2005.  Commercial real estate loan commitments to originate loans totaled $11.4 million. Undisbursed balance of commercial real estate mortgage loans closed was $21.5 million at March 31, 2005. Commercial loan commitments totaled $200,000 and unused commercial lines of credit totaled $36.0 million.


The allowance for unfunded loan commitments was $253,000 at March 31, 2005.


Standby letters of credit are conditional commitments issued by the Bank to guarantee the performance of a customer to a third party. Those guarantees are primarily used to support public and private borrowing arrangements. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers. Collateral held varies as specified above, and is required in instances where the Bank deems necessary. At March 31, 2005 and 2004, standby letters of credit totaled $346,000 and $173,000, respectively.


Most of the Bank's business activity is with customers located in the states of Washington and Oregon. Investments in state and municipal securities involve government entities primarily within the state of Washington. Loans are generally limited, by federal and state banking regulation, to 10% of the Bank's shareholder's equity, excluding accumulated other comprehensive income (loss). As of March 31, 2005 and 2004, the Bank had no individual industry concentrations.


At March 31, 2005, the Company had firm commitments to sell $510,000 of residential loans to FHLMC. These agreements are short term fixed rate commitments and no material gain or loss is likely.


In connection with certain asset sales, the Bank typically makes representation and warranties about the underlying assets conforming to specified guidelines.  If the underlying assets do not conform to the specifications, the Bank may have an obligation to repurchase the assets or indemnify the purchaser against loss.  As of March 31, 2005, loans under warranty totaled $119.7 million, which substantially represents the unpaid principal balance of the Company's loans serviced for other portfolio.  The Bank believes that the potential for loss under these arrangements is remote.  Accordingly, no contingent liability is recorded in the financial statements.

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At March 31, 2005, scheduled maturities of certificates of deposit, FHLB advances and future operating minimum lease commitments were as follows (in thousands):

|                                    | Within1 year | 1-3Years | 4-5 Years | Over5 Years | TotalBalance
|----------------------------------- | ------------ | -------- | --------- | ----------- | ------------
|Certificates of deposit             | $77,058      | $39,106  | $28,233   | $ 4,909     | $149,306    
|FHLB advances                       | 15,000       | 25,000   | -         | -           | 40,000      
|Operating leases                    | 990          | 1,772    | 1,664     | 1,737       | 6,163       
|Total other contractual obligations | $93,048      | $65,878  | $29,897   | $ 6,646     | $195,469    

The Company is party to litigation arising in the ordinary course of business.  In the opinion of management, these actions will not have a material adverse effect, if any, on the Company's financial position, results of operations, or liquidity.

The Bank has entered into employment contracts with certain key employees which provide for contingent payment subject to future events.

20.    PROPOSED ACQUISITION

On November 9, 2004,the Company announced the signing of a definitive agreement for the acquisition of American Pacific Bank by merger with the Bank. Upon completion of the merger, shareholders of American Pacific Bank will be entitled to receive either cash or shares of the Company's common stock in exchange for each share of American Pacific Bank common stock. The aggregate consideration payable to stockholders of American Pacific Bank will be composed of approximately $17.6 million in cash (including cash paid to stock option holders) and 788,593 shares of the Company's common stock. These amounts are subject to adjustment for any American Pacific Bank stock options that are exercised prior to the closing of the merger. The transaction is intended to qualify as a tax-free exchange for federal income tax purposes. As a result, the shares of the Company's common stock issued in exchange for American Pacific Bank common stock, will be received by shareholders on a tax-free basis. The transaction will increase the Company's assets from $573 million as of March 31, 2005, to approximately $700 million, and will increase its number of banking offices from 14 to 17. 

The merger has been unanimously approved by the directors of both companies, and the shareholders of American Pacific Bank. The merger was completed in the second calendar quarter of 2005.

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21.    RIVERVIEW BANCORP, INC. (PARENT COMPANY)

|BALANCE SHEETSMarch 31, 2005 AND 2004                           |              |              
|--------------------------------------------------------------- | ------------ | -------------
|(In thousands)                                                  | 2005         | 2004         
|                                                               
|ASSETS                                                          |              |              
|Cash (including interest earning accounts of $6,623 and $5,268) | $     6,921  | $     5,400  
|Investment in the Bank                                          | 62,832       | 59,960       
|Other assets                                                    | 726          | 423          
|Deferred income taxes                                           | 31           | 109          
|TOTAL ASSETS                                                    | $   70,510   | $   65,892   
|LIABILITIES AND SHAREHOLDERS' EQUITY                            |              |              
|Accrued expenses and other liabilities                          | $        237 | $          41
|Dividend payable                                                | 751          | 669          
|Shareholders' equity                                            | 69,522       | 65,182       
|TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                      | $   70,510   | $   65,892   

|STATEMENTS OF INCOMEYEARS ENDED MARCH 31, 2005, 2004 AND 2003                       
|------------------------------------------------------------------------------------
|(In thousands)                                                                      
|                                                                                    
|INCOME:                                                                             
|Dividend income from Bank                                                           
|Interest on investment securities and other short-term investments                  
|Interest on loan receivable from the Bank                                           
|Gain on sale of securities                                                          
|Other income                                                                        
|Total income                                                                        
|EXPENSE:                                                                            
|Management service fees paid to the Bank                                            
|Other expenses                                                                      
|Total expense                                                                       
|INCOME BEFORE FEDERAL INCOME TAXES AND EQUITY    IN UNDISTRIBUTED INCOME OF THE BANK
|(BENEFIT) PROVISION FOR FEDERAL INCOME TAXES                                        
|INCOME OF PARENT COMPANY                                                            
|EQUITY IN UNDISTRIBUTED INCOME (LOSS) OF THE BANK                                   
|NET INCOME                                                                          

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RIVERVIEW BANCORP, INC. (PARENT COMPANY)

STATEMENTS OF CASH FLOWS
YEARS ENDED MARCH 31, 2005, 2004 AND 2003

|(In thousands)                                                                        | 2005       | 2004       | 2003      
|------------------------------------------------------------------------------------- | ---------- | ---------- | ----------
|                                                                                      |            |            |           
|CASH FLOWS FROM OPERATING ACTIVITIES:                                                 |            |            |           
|Net income                                                                            | $   6,529  | $   6,554  | $  4,359  
|Adjustments to reconcile net income to cash provided by operating activities:         |            |            |           
|Equity in undistributed earnings of the Bank                                          | (2,778)    | 6,414      | 1,865     
|Provision for deferred income taxes                                                   | 78         | 2          | -         
|Earned ESOP shares                                                                    | 520        | 477        | 372       
|Earned MRDP shares                                                                    | -          | 15         | 203       
|Net gain on sale of investment securities                                             | -          | -          | (162)     
|Changes in assets and liabilities:                                                    |            |            |           
|(Increase) in other assets, net of acquisition                                        | (301)      | (536)      | (156)     
|(Decrease) increase accrued expenses and other liabilities                            | (159)      | (246)      | 84        
|Net cash provided by operating activities                                             | 3,889      | 12,680     | 6,565     
|                                                                                      |            |            |           
|CASH FLOWS FROM INVESTING ACTIVITIES:                                                 |            |            |           
|Proceeds from call, maturity, or sale of investment securities     available for sale | -          | -          | 1,518     
|Acquisition                                                                           | -          | (9,482)    | -         
|Net cash (used) provided by investing activities                                      | -          | (9,482)    | 1,518     
|                                                                                      |            |            |           
|CASH FLOWS FROM FINANCING ACTIVITIES:                                                 |            |            |           
|Dividends paid                                                                        | (2,904)    | (2,490)    | (2,127)   
|Repurchase of common stock                                                            | -          | (1,510)    | (2,882)   
|Proceeds from exercise of stock options                                               | 536        | 485        | 417       
|Net cash used by financing activities                                                 | (2,368)    | (3,515)    | (4,592)   
|                                                                                      |            |            |           
|NET (DECREASE) INCREASE IN CASH                                                       | 1,521      | (317)      | 3,491     
|                                                                                      |            |            |           
|CASH, BEGINNING OF YEAR                                                               | 5,400      | 5,717      | 2,226     
|                                                                                      |            |            |           
|CASH, END OF YEAR                                                                     | $    6,921 | $    5,400 | $    5,717

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RIVERVIEW BANCORP, INC.
SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED):

|(In thousands, except share data) | Three Months Ended
|--------------------------------- | ------------------
|                                 
|                                  | March 31          
|Fiscal 2005:                      |                   
|Interest income                   | $      7,849      
|Interest expense                  | 2,145             
|Net interest income               | 5,704             
|Provision for loan losses         | 150               
|Non-interest income               | 1,845             
|Non-interest expense              | 4,915             
|Income before income taxes        | 2,484             
|Provision for income taxes        | 816               
|Net income                        | $    1,668        
|Basic earnings per share (1)      | $      0.34       
|Diluted earnings per share (1)    | $      0.34       
|Fiscal 2004:                      |                   
|Interest income                   | $      7,035      
|Interest expense                  | 1,572             
|Net interest income               | 5,463             
|Provision for loan losses         | 140               
|Non-interest income               | 1,505             
|Non-interest expense              | 4,489             
|Income before income taxes        | 2,339             
|Provision for income taxes        | 742               
|Net income                        | $    1,597        
|Basic earnings per share (1)      | $      0.33       
|Diluted earnings per share (1)    | $      0.33       

(1)   Quarterly earnings per share varies from annual earnings per share due to rounding.

Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure


Not ApplicableItem 9A. Controls and Procedures

(a) Evaluation of Disclosure Controls and Procedures:  An evaluation of the Company's disclosure controls and procedures (as defined in Section 13(a)- 15(e) of the Securities Exchange Act of 1934) was carried out under the supervision and with the participation of the Company's Chief Executive Officer, Chief Financial Officer and several other members of the Company's senior management as of the end of the period covered by this report.  The Company's Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures as currently in effect are effective in ensuring that the information required to be disclosed by the Company in the reports it files or submits under the Securities and Exchange Act of 1934 is (i) accumulated and communicated to the Company's management (including the Chief Executive Officer and Chief Financial Officer) in a timely manner, and (ii) recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms as of the end of the period covered by this report.



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(b) Changes in Internal Controls:  There was no change in the Company's internal control over financial reporting during the Company's most recently completed fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.

        (c) Management's Annual Report on Internal Control Over Financial Reporting:  The Company's management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) of the Act).  As required by Rule 13a-15(c) of the Act, management has evaluated the effectiveness of the Company's internal control over financial reporting.  Management's Annual Report on Internal Control Over Financial Reporting appears in Item 8 of this Form 10-K.

Item 9B. Other Information

There was no information to be disclosed by the Company in a report on Form 8-K during the fourth quarter of fiscal 2005 that was not so disclosed.

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PART III



Item 10.  Directors and Executive Officers of the Registrant



The information contained under the section captioned "Proposal I - Election of Directors" contained in the Company's Proxy Statement for the 2005 Annual Meeting of Stockholders, and "Part I -- Business -- Personnel -- Executive Officers" of this Form 10-K, is incorporated herein by reference.  Reference is made to the cover page of this Form 10-K for information regarding compliance with Section 16(a) of the Exchange Act.



In December 2003, the Board of Directors adopted the Officer and Director Code of Ethics.  The code is applicable to each of the Company's officers, including the principal executive officer and senior financial officers, and requires individuals to maintain the highest standards of professional conduct.  A copy of the Code of Ethics is available on the Company's website at www.riverviewbank.com.



Item 11.  Executive Compensation



The information contained under the sections captioned "Executive Compensation" and "Directors' Compensation"  under "Proposal I - Election of Directors" in the Proxy Statement for the 2005 Annual Meeting of Stockholders is incorporated herein by reference.



Item 12.  Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters



The information required by this item is incorporated herein by reference to the sections captioned  "Security Ownership of Certain Beneficial Owners and Management" and "Executive Compensation" in the Proxy Statement for the 2005 Annual Meeting of Stockholders.



Equity Compensation Plan Information.  The following table summarizes share and exercise price information about the Company's equity compensation plan as of March 31, 2005.



|Plan category                                               | Number of securities to be issued upon exercise of outstanding options | Weighted-average price of outstanding options | Number of securities remaining available for future issuance under equity compensation plans excluding securities reflected in column (A)
|----------------------------------------------------------- | ---------------------------------------------------------------------- | --------------------------------------------- | -----------------------------------------------------------------------------------------------------------------------------------------
|Equity compensation plans approved by security holders:     | (A)                                                                    | (B)                                           | (C)                                                                                                                                      
|2003 Stock Option Plan(1)                                   | -                                                                      | -                                             | 229,277                                                                                                                                  
|1998 Stock Option Plan                                      | 227,495                                                                | $14.36                                        | 15,483                                                                                                                                   
|                                                            |                                                                        |                                               |                                                                                                                                          
|Equity compensation plans not approved by security holders: | -                                                                      | -                                             | -                                                                                                                                        
|                                                            | ______                                                                 |                                               | ______                                                                                                                                   
|Total                                                       | 227,495                                                                |                                               | 244,760                                                                                                                                  

(1) At March 31, 2005, no options had been granted under the 2003 Plan.

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Item 13.  Certain Relationships and Related Transactions



The information set forth under the section captioned "Proposal I - Election of Directors - Transactions with Management" in the Proxy Statement for the 2005 Annual Meeting of Stockholders is incorporated herein by reference.



Item 14.  Principal Accounting Fees and Services



This information set forth under the section captioned "Independent Auditors" in the Proxy statement for the 2005 Annual Meeting of Stockholders is incorporated herein by reference.

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PART IV



Item 15.  Exhibits and Financial Statement Schedules



|        |                                                                                                                                                                                                         |                                                                                           
|------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------
|(a)  1. | Financial StatementsSee "Part II -Item 8. Financial Statements and Supplementary Data."                                                                                                                
|        |                                                                                                                                                                                                         |                                                                                           
|2.      | Financial Statement SchedulesAll schedules are omitted because they are not required or applicable, or the required information is shown in the consolidated financial statements or the notes thereto.
|        |                                                                                                                                                                                                         |                                                                                           
|3.      | Exhibits                                                                                                                                                                                                |                                                                                           
|        | 3.1                                                                                                                                                                                                     | Articles of Incorporation of the Registrant(1)                                            
|        | 3.2                                                                                                                                                                                                     | Bylaws of the Registrant(2)                                                               
|        | 4                                                                                                                                                                                                       | Form of Certificate of Common Stock of the Registrant(1)                                  
|        | 10.1                                                                                                                                                                                                    | Employment Agreement with Patrick Sheaffer(3)                                             
|        | 10.2                                                                                                                                                                                                    | Employment Agreement with Ronald A. Wysaske(3)                                            
|        | 10.3                                                                                                                                                                                                    | Severance Agreement with Karen Nelson(3)                                                  
|        | 10.4                                                                                                                                                                                                    | Severance Agreement with John A. Karas(4)                                                 
|        | 10.5                                                                                                                                                                                                    | Employee Severance Compensation Plan(3)                                                   
|        | 10.6                                                                                                                                                                                                    | Employee Stock Ownership Plan(5)                                                          
|        | 10.7                                                                                                                                                                                                    | Management Recognition and Development Plan(6)                                            
|        | 10.8                                                                                                                                                                                                    | 1998 Stock Option Plan(6)                                                                 
|        | 10.9                                                                                                                                                                                                    | 1993 Stock Option and Incentive Plan(6)                                                   
|        | 10.10                                                                                                                                                                                                   | Form of Severance Agreement Entered into by Officers(7)                                   
|        | 10.11                                                                                                                                                                                                   | 2003 Stock Option Plan(8)                                                                 
|        | 21                                                                                                                                                                                                      | Subsidiaries of Registrant                                                                
|        | 23                                                                                                                                                                                                      | Consent of Independent Registered Public Accounting Firm                                  
|        | 23.1                                                                                                                                                                                                    | Consent of Independent Registered Public Accounting Firm                                  
|        | 31.1                                                                                                                                                                                                    | Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act
|        | 31.2                                                                                                                                                                                                    | Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act
|        | 32                                                                                                                                                                                                      | Certification Pursuant to Section 906 of the Sarbanes-Oxley Act                           

|    |                                                                                                                                               
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Filed as an exhibit to the Registrant's Registration Statement on Form S-1 (Registration No. 333-30203), and incorporated herein by reference.
|(2) | Filed as an exhibit to the Registrant's Current Report on Form 8-K dated April 20, 2005, and incorporated herein by reference.                
|(3) | Filed as an exhibit to the Registrant's Form 10-Q for the quarter ended September 30, 1997, and incorporated herein by reference.             
|(4) | Filed as an exhibit to the Registrant's Form 10-K for the year ended March 31, 2002, and incorporated herein by reference.                    
|(5) | Filed as an exhibit to the Registrant's Form 10-K for the year ended March 31, 1998, and incorporated herein by reference.                    
|(6) | Filed on October 23, 1998, as an exhibit to the Registrant's Registration Statement on Form S-8, and incorporated herein by reference.        
|(7) | Filed as an exhibit to the Registrant's Form 10-K for the year ended March 31, 2004, and incorporated herein by reference.                    
|(8) | Filed as an exhibit to the Registrant's Annual Meeting Proxy Statement dated June 5, 2003 and incorporated herein by reference.               



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SIGNATURES



Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

|                     |                                                                                                                                                      
|-------------------- | -----------------------------------------------------------------------------------------------------------------------------------------------------
|                     | RIVERVIEW BANCORP, INC.                                                                                                                              
|                     |                                                                                                                                                      
|                     |                                                                                                                                                      
|Date:  June 13, 2005 | By:  /s/ Patrick Sheaffer       Patrick Sheaffer       Chairman of the Board and       Chief Executive Officer       (Duly Authorized Representative)

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.



|                                                                                                                                                      |                                                                                                              
|----------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------
|By:  /s/ Patrick Sheaffer       Patrick Sheaffer       Chairman of the Board and       Chief Executive Officer       (Principal Executive Officer)    | By:  /s/ Ronald A. Wysaske       Ronald A. Wysaske       President and Chief Operating Officer       Director
|                                                                                                                                                      |                                                                                                              
|Date:  June13, 2005                                                                                                                                   | Date:  June13, 2005                                                                                          
|                                                                                                                                                      |                                                                                                              
|By:  /s/ Ron Dobyns       Ron Dobyns       Senior Vice President and       Chief Financial Officer       (Principal Financial and Accounting Officer) | By:  /s/ Paul L. Runyan       Paul L. Runyan       Director                                                  
|                                                                                                                                                      |                                                                                                              
|Date:  June13, 2005                                                                                                                                   | Date:  June13, 2005                                                                                          
|                                                                                                                                                      |                                                                                                              
|By:  /s/ Robert K. Leick       Robert K. Leick       Director                                                                                         | By:  /s/ Gary R. Douglass       Gary R. Douglass       Director                                              
|                                                                                                                                                      |                                                                                                              
|Date:  June13, 2005                                                                                                                                   | Date:  June13, 2005                                                                                          
|                                                                                                                                                      |                                                                                                              
|By:  /s/ Edward R. Geiger       Edward R. Geiger       Director                                                                                       | By:  /s/ Michael D. Allen       Michael D. Allen       Vice Chairman of the Board and       Director         
|                                                                                                                                                      |                                                                                                              
|Date:  June13, 2005                                                                                                                                   | Date:  June13, 2005                                                                                          

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|Exhibit 21                          
|------------------------------------
|Subsidiaries of the Registrant      
|                                    
|Parent                              
|                                    
|Riverview Bancorp, Inc.             
|                                    
|Subsidiaries (a)                    
|Riverview Community Bank            
|Riverview Services, Inc. (b)        
|Riverview Asset Management Corp. (b)

|    |                                                                                                                                                                      
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) | The operation of the Registrant's wholly and majority owned subsidiaries are included in the Registrant's Financial Statements contained in Item 8 of this Form 10-K.
|    |                                                                                                                                                                      
|(b) | This corporation is a subsidiary of Riverview Community Bank.                                                                                                        

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Exhibit 23



Consent of Independent Registered Public Accounting Firm





We consent to the incorporation by reference in Registration Statement Nos.
333-66049, 333-38887 and 333-109894 on Form S-8 of Riverview Bancorp, Inc., of
our reports dated June 10, 2005 relating to our audits of the consolidated
financial statements and internal control over financial reporting, which appear in this Annual Report on Form 10-K of Riverview Bancorp, Inc. for the year ended March 31, 2005.

/s/McGladrey & Pullen, LLP

McGladrey & Pullen, LLP
June 10, 2005

103

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Exhibit 23.1



Consent of Independent Registered Public Accounting Firm



We consent to the incorporation by reference in Registration Statement Nos. 333-66049, 333-38887, and 333-116062 on Form S-8,  of our report dated
May 2, 2003, relating to the consolidated statements of income, shareholders' equity, and cash flows of Riverview Bancorp, Inc., appearing in this Annual Report on Form 10-K of Riverview Bancorp, Inc. for the year ended March 31, 2005.

/s/ Deloitte & Touche LLP

DELOITTE & TOUCHE LLP

Portland, Oregon
June 10, 2005

104

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Exhibit 31.1

Certification Required
By Rules 13a-14 and 15d-14 under the Securities Exchange Act of 1934

I, Patrick Sheaffer, certify that:

|   |                                                                                                                                                                                                                                                                                                                                             
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|1. | I have reviewed this Annual Report on Form 10-K of Riverview Bancorp, Inc.;                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                             
|2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;                                  
|   |                                                                                                                                                                                                                                                                                                                                             
|3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;                                                     
|   |                                                                                                                                                                                                                                                                                                                                             
|4. | The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) 4 and 15d-15(e) 4) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have:

|   |                                                                                                                                                                                                                                                                                                                                                                                        
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|a) | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;  
|   |                                                                                                                                                                                                                                                                                                                                                                                        
|b) | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;                
|   |                                                                                                                                                                                                                                                                                                                                                                                        
|c) | evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation;                                                                                                        
|   |                                                                                                                                                                                                                                                                                                                                                                                        
|d) | disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fiscal fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

|   |                                                                                                                                                                                                                                                                                             
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|5. | The registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):

|   |                                                                                                                                                                                                                                                                             
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|a) | all significant deficiencies and material weakness in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial data information; and
|   |                                                                                                                                                                                                                                                                             
|b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.                                                                                                  

|                     |                                                                                     
|-------------------- | ------------------------------------------------------------------------------------
|Date:  June 13, 2005 | /S/ Patrick Sheaffer      Patrick Sheaffer      Chairman and Chief Executive Officer

105

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Exhibit 31.2

Certification Required
By Rules 13a-14 and 15d-14 under the Securities Exchange Act of 1934I, Ron Dobyns, certify that:

|   |                                                                                                                                                                                                                                                                                                                                             
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|1. | I have reviewed this Annual Report on Form 10-K of Riverview Bancorp, Inc.;                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                             
|2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;                                  
|   |                                                                                                                                                                                                                                                                                                                                             
|3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;                                                     
|   |                                                                                                                                                                                                                                                                                                                                             
|4. | The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) 4 and 15d-15(e) 4) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have:

|   |                                                                                                                                                                                                                                                                                                                                                                                        
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|a) | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;  
|   |                                                                                                                                                                                                                                                                                                                                                                                        
|b) | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;                
|   |                                                                                                                                                                                                                                                                                                                                                                                        
|c) | evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation;                                                                                                        
|   |                                                                                                                                                                                                                                                                                                                                                                                        
|d) | disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fiscal fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

|   |                                                                                                                                                                                                                                                                                             
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|5. | The registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):

|   |                                                                                                                                                                                                                                                                             
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|a) | all significant deficiencies and material weakness in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial data information; and
|   |                                                                                                                                                                                                                                                                             
|b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.                                                                                                  

|                     |                                                            
|-------------------- | -----------------------------------------------------------
|Date:  June 13, 2005 | /S/ Ron Dobyns      Ron Dobyns      Chief Financial Officer

106

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Exhibit 32



CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER OF RIVERVIEW BANCORP, INC.
PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

The undersigned herby certify, pursuant to Section 906 of the Sarbanes-Oxley act of 2002 and in connection with this Annual Report on Form 10-K that:

|   |                                                                                                                                                
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------
|1. | the report fully complies with the requirements of sections 13(a) and 15(d) of the Securities Exchange Act of 1934, as amended, and            
|   |                                                                                                                                                
|2. | the information contained in the report fairly presents, in all material respects, the company's financial condition and results of operations.

|                                                            |                                                
|----------------------------------------------------------- | -----------------------------------------------
|/S/ Patrick SheafferPatrick SheafferChief Executive Officer | /S/ Ron DobynsRon DobynsChief Financial Officer
|                                                            |                                                
|Dated: June 13, 2005                                        |                                                



107

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