SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    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, 2001

                                       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.
 ------------------------------------------------------------------------------
      (Exact name of small business registrant as specified in its charter)


                     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)

     Check 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 past 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  [  ]

     Check if there is no disclosure of delinquent filers pursuant to Item
405 of Regulation S-K contained herein, and no disclosure will 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]

     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
May 18, 2001, was approximately $47,714,160 (4,655,040 shares at $10.25 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 Employee Stock Ownership Plan) are affiliates.

                       DOCUMENTS INCORPORATED BY REFERENCE

  1.  Portions of Registrant's Definitive Proxy Statement for the 2001 Annual
       Meeting of Shareholders (Part III).


<PAGE>

<PAGE>
                                     Part I

ITEM 1.  BUSINESS
-----------------
GENERAL

Riverview Bancorp, Inc. ("Company"), a Washington corporation, was organized on
June 23, 1997 for the purpose of becoming the holding company for Riverview
Community Bank (the "Bank"), upon the Bank's reorganization as a wholly owned
subsidiary of the Company resulting from the conversion of Riverview, M.H.C.,
Camas, Washington ("MHC"), from a federal mutual holding company to a stock
holding company ("Conversion and Reorganization"). The Conversion and
Reorganization was completed on September 30, 1997. At March 31, 2001, the
Company had total assets of $432.0 million, total deposits of $295.5 million
and shareholders' equity of $52.7 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") System since
1937.

The Bank is a community oriented financial institution offering traditional
financial services to the 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 to originate
fixed-rate mortgage loans and adjustable rate mortgage ("ARM") loans secured by
one- to- four family residential real estate located in its primary market area.
The Company is also an active originator of residential construction loans,
business commercial ("commercial") loans, commercial real estate loans and
consumer loans.

MARKET AREA

The Company conducts operations from its home office in Vancouver and twelve
branch offices in Camas, Washougal, Stevenson, White Salmon, Battle Ground,
Goldendale, Vancouver (five 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 Corporation, 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 and Seattle metropolitan areas, as well
as for the Company. The Business and Professional Banking Division located at
the downtown Vancouver main branch offers commercial and business banking
services. Vancouver is located in Clark County which is just north of Portland,
Oregon.

Several businesses are located in the Vancouver area because of the favorable
tax structure and relatively lower energy costs as compared to Oregon.
Washington has no state income tax and Clark County operates a public electric
utility which provides relatively lower cost electricity. Located in the
Vancouver area are Sharp Electronics, Hewlett Packard, James River, 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.

The Company faces strong competition from many financial institutions for
deposits and loan originations.

LENDING ACTIVITIES

GENERAL. At March 31, 2001, the Company's total net loans receivable, including
loans held for sale, amounted to $296.9 million, or 68.7% of total assets at
that date. The principal lending activity of the Company is the
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origination of residential mortgage loans through its mortgage banking
activities, including residential construction loans and loans collateralized
by commercial properties. 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.

<PAGE>
LOAN PORTFOLIO ANALYSIS.  The following table sets forth the composition of the
Company's loan portfolio by type of loan at the dates indicated.
<TABLE>
                                                                         At March 31,
                              -------------------------------------------------------------------------------
                                2001             2000             1999             1998             1997
                           --------------   --------------   --------------   --------------   --------------
                           Amount Percent   Amount Percent   Amount Percent   Amount Percent   Amount Percent
                           ------ -------   ------ -------   ------ -------   ------ -------   ------ -------
                                                                    (Dollars in thousands)
<S>                         <C>    <C>     <C>      <C>      <C>     <C>      <C>     <C>      <C>     <C>
Real estate loans:
 One- to- four family(1) $117,152  35.67% $102,542  37.61%  $83,275  39.03%  $96,225  51.93%  $94,536  57.07%
 Multi-family              11,073   3.37    10,921   4.01     7,558   3.54     4,790   2.58     5,439   3.28
 Construction one-to-
  four family              60,041  18.28    49,338  18.10    45,524  21.34    35,003  18.89    32,529  19.64
 Construction multi-family  4,514   1.37     4,669   1.71     4,209   1.97     5,352   2.89       547   0.33
 Construction commercial    6,806   2.07     3,597   1.32     6,184   2.90         -      -       634   0.38
 Land                      24,230   7.38    25,475   9.34    24,932  11.68    16,431   8.87     7,900   4.77
 Commercial real estate    56,540  17.21    42,871  15.72    22,181  10.40     9,667   5.22     8,997   5.43
                           ------ -------   ------ -------   ------ -------   ------ -------   ------ -------
 Total real estate loans  280,356  85.35   239,413  87.81   193,863  90.86   167,468  90.38   150,582  90.90

Commercial                 23,099   7.03    15,976   5.87     4,049   1.90     1,732   0.93       794   0.48

Consumer loans:
 Automobile loans           3,223   0.98     2,875   1.05     3,146   1.47     2,829   1.53     2,889   1.74
 Savings account loans        440   0.13       356   0.13       490   0.23       653   0.35       734   0.44
 Home equity loans         18,761   5.71    11,148   4.09     9,096   4.26     9,885   5.33     8,254   4.98
 Other consumer loans       2,596   0.80     2,864   1.05     2,728   1.28     2,741   1.48     2,416   1.46
                           ------ -------   ------ -------   ------ -------   ------ -------   ------ -------
 Total consumer loans      25,020   7.62    17,243   6.32    15,460   7.24    16,108   8.69    14,293   8.62

Total loans and loans
 held for sale            328,475 100.00%  272,632 100.00%  213,372 100.00%  185,308 100.00%  165,669 100.00%
                                  ======           ======           ======           ======           ======
Less:
 Undisbursed loans in
  process                  26,223           18,880           22,278           19,354           11,087
 Unamortized loan
  origination fees, net
  of direct costs           3,475            3,355            2,770            2,340            1,967
 Unearned discounts             -                1                1                2               10
 Allowance for possible
  loan losses               1,916            1,362            1,146              984              831
Total loans receivable,  --------         --------         --------         --------         --------
  net(1)                 $296,861         $249,034         $187,177         $162,628         $151,774
                         ========         ========         ========         ========         ========
</TABLE>
(1)...Includes loans held for sale of $569,000, none, $341,000, $1.4 million,
      and $80,000 at March 31, 2001, 2000, 1999, 1998 and 1997, respectively.


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 (90%
with private mortgage


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<PAGE>
insurance) of the current appraised value or cost, whichever is lower, of the
underlying collateral. Terms typically range from 15 to 30 years as well as
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.

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, such mortgage brokerage activities have reduced the volume of
fixed rate one- to- four family loans that are originated and sold by the
Company. See "-- Lending Activities -- Loan Originations, Sales and Purchases"
and "-- Lending Activities -- Mortgage Brokerage."

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

As a marketing incentive, the Company offers ARM loans with a discounted or
"teaser" rate of up to 1.25% below the normal rate offered. The borrower,
however, is qualified at the fully indexed rate. Annual and lifetime interest
rate caps are based on the initial discounted rate. "Teaser" rate loans are
subject to a prepayment penalty during the first three years of the loan term if
the borrower repays more than 20% of the outstanding principal balance per year.
During the first year, the penalty is 3% of the outstanding principal balance;
during year two, the penalty is 2% of the outstanding principal balance; and
during year three, the penalty is 1% of the outstanding principal balance. The
Company does not originate negative amortization loans.

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. Furthermore, because "teaser" rate loans
originated by the Company generally provide for initial rates of interest below
the rates which would apply were the adjustment index used for pricing initially
(discounting), these loans are subject to increased risks of default or
delinquency. 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, such 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. The Company enforces these due-on-sale clauses to the extent
permitted by law. 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 the 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 construction
loans and (iii) construction/permanent loans. Subject to market conditions, the
Company intends to increase its residential construction lending activities. To
a substantially lesser extent, the



                                        4

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<PAGE>
Company also originates construction loans for the development of multi-family
and commercial properties.

The composition of the Company's construction loan portfolio was as follows:

                                               At March 31,
                            --------------------------------------------------
                                   2001                        2000
                            ---------------------       ----------------------
                            Amount(1)     Percent        Amount(1)     Percent
                            ---------     -------        ---------     -------
                                            (Dollars in thousands)

Speculative construction      $27,925      33.26%          $24,855       33.88%
Commercial construction         9,131      10.88             3,597        4.90
Custom/presold construction    10,064      11.99             9,732       13.26
Construction/permanent         22,754      27.11            17,754       24.19
Construction/land              14,068      16.76            17,443       23.77
                             --------    -------          --------     --------
  Total                       $83,942     100.00%          $73,381      100.00%
                              =======     ======           =======      ======

(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 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, 2001, the Company had two borrowers
with aggregate outstanding speculative loan balances of more than $1.0 million.
All of the loans to these two borrowers were performing according to their terms
and these loans totaled amounted to $2.8 million at March 31, 2001.

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 with 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, 2001, the largest short-term custom construction loan and
presold construction loan had outstanding balances of $514,000 and $189,000,
respectively, and were performing according to the 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 months. At the completion of construction, the Company may either
originate a fixed-rate mortgage loan or an ARM loan for retention in its
portfolio or use its mortgage brokerage capabilities to obtain permanent
financing for the customer with another lender. When the Company issues a
commitment to provide permanent financing upon completion of construction, the
loan fee charged on the construction loan is 0.75% higher as a protection
against the risk of an increase in interest rates before the permanent loan is
funded. This additional loan fee may not completely protect the Company from
rapidly rising interest rates. See "-- Lending Activities -- Mortgage
Brokerage." See "-- Lending Activities -- Loan Originations, Sales and
Purchases" and "-- Lending Activities -- Mortgage Loan Servicing." At March 31,
2001, the largest outstanding construction/permanent loan had an outstanding
balance of $560,000 and was performing according to its terms.

The Company also provides construction financing for non-residential properties
(i.e., construction multi-family and construction 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, is generally considered to
involve a higher degree of risk than single-family permanent mortgage lending
because of the



                                         5



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<PAGE>
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. If the estimate of value upon completion proves to be inaccurate, the
Company may be confronted with a project whose value is insufficient to assure
full repayment. Projects may also be jeopardized by disagreements between
borrowers and builders and by the failure of builders to pay subcontractors. The
Company has sought to address 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 $9.1 million commercial
construction loans outstanding at March 31, 2001, the loan commitment amount
ranges between $220,000 and $4.0 million. At March 31, 2001, the largest
outstanding construction commercial loan had an outstanding balance of $2.0
million and was performing according to its terms.

MULTI-FAMILY LENDING. Multi-family mortgage loans generally have terms which
range up to 25 years with maximum loan-to-value ratio 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, 2001, the largest
outstanding multi-family mortgage had an outstanding loan balance of $1.2
million and was performing according to 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 such properties usually
are greater in amount, 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 seeks 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 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, 2001, the largest outstanding
land loan was $2.0 million and was performing according to original terms.

Loans secured by undeveloped land or improved lots involve greater risks than
one- to- four family residential mortgage loans because such loans are advanced
upon the predicted future value of the developed property. If the estimate of
such future value 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 REAL ESTATE LENDING. The Company originates commercial real estate
loans at both variable and fixed interest rates and secured by properties, such
as office buildings, retail/wholesale facilities and industrial buildings,
located in its primary market area. The principal balance of an average
commercial real estate loan generally ranges between $50,000 and $600,000. At
March 31, 2001, the largest commercial real estate loan had an outstanding
balance of $3.5 million and is secured by an office building located in the
Company's primary market area. At March 31, 2001, the loan was performing
according to its original terms.


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Commercial real estate 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 such properties usually
are greater in amount, 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 commercial properties often depend
upon 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 seeks to minimize these risks by limiting the maximum
loan-to-value ratio to 75% and strictly scrutinizing the financial condition of
the borrower, the quality of the collateral and the management of the property
securing the loan.

COMMERCIAL LENDING. The Company has been able to increase the balance of
outstanding commercial loans and commitments due to the strong local economy,
and the consolidation of some local competitors offering commercial loans. The
Company has also hired several experienced commercial bankers from competitors
in the local market.

Commercial loans are generally made to customers who are well known to the
Company and are generally secured by business equipment or other property. Lines
of credit are made at variable rates of interest equal to a negotiated margin
above the prime 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.

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 approved
with a term of one year or less.

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 creditworthiness of the borrower (and any guarantors), while
liquidation of collateral is a secondary and often insufficient source of
repayment. At March 31, 2001, the Company had one commercial loan accounted for
on a nonaccrual basis in the amount of $50,000.

CONSUMER LENDING. The Company originates a variety of consumer loans, including
home equity lines of credit, home equity term loans, home improvement loans,
loans for debt consolidation and other purposes, automobile, boat loans and
savings account loans.

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 the 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
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. The outstanding principal
balance of home equity loans increased by $7.6 million to $24.2 million at March
31, 2001, reflecting the increased marketing effort during the year ended March
31, 2001.

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


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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. Such
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.

LOAN MATURITY. The following table sets forth certain information at March 31,
2001 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.

                               After One  After 3   After 5
                      Within    Year to  Years to   Years to  Beyond
                     One Year   3 Years   5 Years   10 Years  10 Years   Total
                     --------  --------  --------   --------  --------  -------
                                    (In thousands)
Residential one- to- four family:
 Adjustable rate         $  2    $  142     $  23     $  403   $20,011  $20,581
 Fixed rate             1,115     6,186    23,711     23,485    42,072   96,569
Construction:
 Adjustable rate       36,301    15,836         -          -         -   52,137
 Fixed rate            29,673     2,183         -          -         -   31,856
Other real estate:
 Adjustable rate        7,925     3,248       575        915     4,485   17,148
 Fixed rate             4,450     5,299    19,601     21,236    11,479   62,065
Commercial:
 Adjustable rate       10,449     1,092       161        971         -   12,673
 Fixed rate             2,438     1,789     3,325      2,873         -   10,425
Consumer:
 Adjustable rate          301        85       980        347    15,422   17,135
 Fixed rate             1,218     1,451     2,492      1,055     1,670    7,886
                      -------   -------   -------    -------   ------- --------
  Total gross loans   $93,872   $37,311   $50,868    $51,285   $95,139 $328,475
                      =======   =======   =======    =======   ======= ========

The following table sets forth the dollar amount of all loans due one year after
March 31, 2001 which have fixed interest rates and have floating or adjustable
interest rates.

                                            Fixed-         Floating- or
                                            Rates      Adjustable-Rates
                                            -----      ----------------
                                                (In thousands)

Residential one- to- four family         $ 95,454          $ 20,579
Construction loans                          2,183            15,836
Other real estate loans                    57,615             9,223
Commercial                                  7,987             2,224
Consumer                                    6,668            16,834
                                         --------           -------
  Total                                  $169,907           $64,696
                                         ========           =======

Scheduled 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

                                       8

<PAGE>

<PAGE>
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, 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 the 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 loan commitments 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,
generally 14-day agreements for both real estate and for commercial loans to
lend to a customer subject to the Company's usual terms and conditions.
Collateral is not required to support commitments. At March 31, 2001, the
Company had outstanding commitments to originate loans in the amount of $7.6
million.

LOAN ORIGINATIONS, SALES AND PURCHASES. While the Company originates both
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, 2001 and 2000, the Company's total loan
originations were $206.5 million and $156.8 million, respectively, of which
43.6% and 47.6%, respectively, were subject to periodic interest rate adjustment
and 56.4% and 52.4% were fixed-rate loans, respectively.

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 such 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 such 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 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
nonrecourse basis whereby foreclosure losses are generally the responsibility of
the FHLMC and not the Company. The Company may originate fixed rate loans for
investment when funded with long-term funds to mitigate interest rate risk.

Between the time that residential one- to- four family mortgage loan origination
commitments are issued and the time the loans are sold, the Company is exposed
to movements in the price (due to changes in interest rates) of such loans (or
of securities into which such loans are sometimes converted). Differences
between the volume or timing of actual loan originations and in management's
estimates or in actual sales of the loans can expose the Company to significant
losses. 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

                                      9


<PAGE>


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 financial condition and
results of operations.

The Company is not an active purchaser of loans and has not purchased loans in
the past three years.

The following table shows total loans originated, sold and repaid during the
periods indicated.
                                              For the Years Ended March 31,
                                           ----------------------------------
                                            2001          2000          1999
                                           ------        ------        ------
                                                    (In thousands)
Total net loans receivable at
  beginning of period                    $249,034      $187,177      $162,628
                                         --------      --------      --------
Loans originated:
 Mortgage loans:
  Residential one- to- four family         23,978        20,609        43,947
  Multi-family                              1,087           490             -
  Construction one- to- four family        71,602        67,955        68,649
  Land and commercial real estate          31,957        48,057        36,355
  Construction Non-residential              9,345             -             -
 Commercial                                47,426        14,717         4,290
 Consumer                                  21,062         5,004         5,410
                                         --------      --------      --------
   Total loans originated                 206,457       156,832       158,651

Residential one-to-four family loans sold  (7,563)       (4,224)      (25,809)
Repayment of principal                   (147,415)      (88,179)     (106,036)
 (Increase) decrease in other items, net   (3,652)       (2,572)       (2,257)
                                         --------      --------      --------
Net increase in loans                      47,827        61,857        24,549
                                         --------      --------      --------
Total net loans receivable at end
 of period                               $296,861      $249,034      $187,177
                                         ========      ========      ========

MORTGAGE BROKERAGE. In addition to originating mortgage loans for retention in
its portfolio, the Company employs seven commissioned brokers who originate
mortgage loans (including construction loans) for various mortgage companies
predominately in the Portland and Seattle metropolitan areas, as well as for the
Company. The loans brokered to such 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, 2001, brokered loans totaled $109.4
million (including $66.9 million brokered to the Company). Gross fees of $1.1
million (excluding the portion of fees shared with the commissioned brokers)
were recognized for the year ended March 31, 2001.

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 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, 2001, total loans serviced for
others were $78.6 million.

In 1994, the Company purchased the servicing rights to an underlying portfolio
of residential mortgage loans secured by properties predominately located in the
Seattle Metropolitan Area. At March 31, 2001, the carrying value of these
purchased servicing rights was $138,000 and was being amortized over the life of
the underlying loan servicing.
                                       10
<PAGE>


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 are charged to the borrower for funding the
loan. The Company usually charges origination fees of 1.5% to 2.5% on one- to-
four family residential real estate loans, long-term commercial real estate
loans and residential construction loans. 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
$3.5 million of net deferred loan fees at March 31, 2001. The Company also
receives loan servicing fees on the loans it sells and on which it retains the
servicing rights.

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 on the fifteenth day of
delinquency. 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 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 what the circumstances warrant.

NONPERFORMING ASSETS. Loans are reviewed regularly and when a loan is 90 days
delinquent, 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.

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 Accounting Standards ("SFAS") No. 15.




                                      11

<PAGE>


                                                 At March 31,
                                   ------------------------------------------
                                    2001     2000     1999     1998     1997
                                   ------   ------   ------   ------   ------
                                             (Dollars in thousands)
Loans accounted for on a nonaccrual basis:

 Residential real estate           $  153   $1,153   $1,052    $ 401    $  76
 Commercial                            50       99      208      105        -
 Consumer                             116       26       33        -       11
                                 --------   ------   ------   ------    -----
   Total                              319    1,278    1,293      506       87
                                 --------   ------   ------   ------    -----

Accruing loans which are contractually
 past due 90 days or more             226        -        5       11        -
                                  -------   ------   ------   ------   ------

Total of nonaccrual and
  90 days past due loans              545    1,278    1,298      517       87
                                  -------   ------   ------   ------   ------

Real estate owned (net)               473       65       30        -      135
                                  -------   ------   ------   ------   ------
     Total nonperforming assets    $1,018   $1,343   $1,328     $517     $222
                                  =======   ======   ======   ======   ======

Total loans delinquent 90 days
  or more to net loans              0.18%    0.51%    0.69%    0.32%    0.06%

Total loans delinquent 90 days
 or more to total assets            0.13     0.37     0.43     0.19     0.04

Total nonperforming assets to
  total assets                      0.24     0.39     0.44     0.19     0.10

The $319,000 nonaccrual balance of real estate loans at March 31, 2001,
consisted of $153,000 one- to- four family residential loans, $50,000 commercial
and $116,000 consumer loans. The gross amount of interest income on the
nonaccrual loans that would have been recorded during the year ended March 31,
2001 if the nonaccrual loans had been current in accordance with their original
terms was approximately $15,000. For the year ended March 31, 2001, no interest
was earned on the nonaccrual loans and included in interest and fees on loan
receivable interest income.

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 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
                                      12
<PAGE>

<PAGE>
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,
                                                --------------------
                                                 2001           2000
                                                 ----           ----
                                                    (In thousands)

Substandard assets                               $863         $1,472
Doubtful assets                                     5              -
Loss assets                                         -              -

General loss allowances                         1,916          1,362
Specific loss allowances                            -              -
Charge-offs                                       413            488

The substandard assets at March 31, 2001 are made up of one residential
construction loan totaling $210,000, one one- to- four residential loan totaling
$150,000, a land and development loan totaling $225,000 and commercial and other
loans totaling $278,000 being classified as substandard.

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. Valuations are periodically performed by management
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, 2001,
the Company owned three properties with a recorded value of $473,000 compared to
$65,000 at March 31, 2000. The $473,000 recorded value is made up of five
properties consisting of three land loans totaling $422,000 and one single
family of $51,000.

ALLOWANCE FOR LOAN LOSSES. The Company's management evaluates the need to
establish reserves against losses on loans and other assets each year based on
estimated losses on specific loans and on any real estate held for sale or
investment when a finding is made that a significant and permanent decline in
value has occurred. Such evaluation includes a review of all loans for which
full collectibility may not be reasonably assured and considers, among other
matters, the estimated market value of the underlying collateral of problem
loans, prior loss experience, economic conditions and overall portfolio quality.
These provisions for losses are charged against earnings in the year they are
established. At March 31, 2001, the Company had an allowance for loan losses of
$1.9 million, or 0.58% of total outstanding loans at that date. Based on past
experience and future expectations, 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.



                                     13

<PAGE>



The following table sets forth an analysis of the Company's allowance for loan
losses for the periods indicated.

                                             Year Ended March 31,
                                   ------------------------------------------
                                    2001     2000     1999     1998     1997
                                   ------   ------   ------   ------   ------
                                             (Dollars in thousands)
Balance at beginning of period     $1,362  $ 1,146     $984     $831     $653
                                   ------   ------   ------   ------   ------

Provision for loan losses             949      675      240      180      180
Recoveries:
 Residential real estate                -        -        -        -        1
 Commercial                             -        1        -        -        -
 Consumer                              18       28        7       11        8
                                   ------   ------   ------   ------   ------
   Total recoveries                    18       29        7       11        9
                                   ------   ------   ------   ------   ------

Charge-offs:
 Residential real estate              226       48       28        -        -
 Commercial                            27      282        -        -        -
 Consumer                             160      158       57       38       11
                                   ------   ------   ------   ------   ------
   Total charge-offs                  413      488       85       38       11
                                   ------   ------   ------   ------   ------
     Net charge-offs                  395      459       78       27        2
                                   ------   ------   ------   ------   ------
Balance at end of period.          $1,916   $1,362   $1,146     $984     $831
                                   ======   ======   ======   ======   ======

Ratio of allowance to total loans
 outstanding at end of period       0.58%    0.50%    0.54%    0.53%    0.50%

Ratio of net charge-offs to average
 loans outstanding during period.   0.14     0.21     0.04     0.02     0.00

Ratio of allowance to total of
  nonaccrual and 90 days past
  due loans.                      351.56   106.58    88.30   190.32   955.17










                                     14







<PAGE>



The following table sets forth the breakdown of the allowance for loan losses by
loan category for the periods indicated.
<TABLE>
                                                            At March 31,
                          ----------------------------------------------------------------------------------
                                2001             2000             1999             1998             1997
                          --------------   --------------   --------------   --------------   --------------
                                    Loan             Loan             Loan             Loan             Loan
                                Category         Category         Category         Category         Category
                            as a Percent     as a Percent     as a Percent     as a Percent     as a Percent
                                of Total         of Total         of Total         of Total         of Total
                          Amount   Loans   Amount   Loans   Amount   Loans   Amount   Loans   Amount   Loans
                          ------   -----   ------   -----   ------   -----   ------   -----   ------   -----
                                                              (Dollars in thousands)
<S>                        <C>    <C>       <C>    <C>       <C>    <C>       <C>    <C>       <C>    <C>
Real estate - mortgage
  One- to- four family    $  263  35.67%   $  259  37.62%    $ 218  39.03%    $ 192  51.93%   $  282  57.06%
  Multi-family                42   3.37        41   4.01        10   3.54        10   2.58        16   3.28
  Construction one-
   to- four family           224  18.28       304  18.10       292  21.34       154  18.89        99  19.64
  Construction multi-family   21   1.37        10   1.71        10   1.97        23   2.89         2   0.33
  Construction commercial     34   2.07        17   1.32        44   2.90         -      -         2   0.38
   Land                      206   7.38       223   9.34        32  11.68        33   8.87        27   4.77
   Commercial real estate    580  17.21       224  15.72       180  10.40        19   5.22        24   5.43
Commercial loans             354   7.03       160   5.86       198   1.90       100   0.93        40   0.48
Consumer loans:
    Secured                  154   7.05        90   5.31        89   5.96       142   7.21       128   7.17
    Unsecured                 34   0.57        29   1.01        37   1.28        27   1.48        24   1.46
Unallocated                    4      -         5      -        36      -       284      -       187      -
                          ------  ------  -------  ------   ------  ------   ------  ------   ------  ------
Total allowance for loan
  losses                  $1,916 100.00%   $1,362 100.00%   $1,146 100.00%    $ 984 100.00%    $ 831 100.00%
                          ====== ======    ====== ======    ====== ======    ====== ======    ====== ======

</TABLE>

                                           15




<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, such 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. Savings institutions are also required to
maintain minimum levels of liquid assets which vary from time to time.
See "REGULATION -- Federal Regulation of Savings Associations --
Federal Home Loan Bank System." The Company may decide to increase its
liquidity above the required levels depending upon the availability of
funds and comparative yields on investments in relation to return on loans.

Federal regulations require the Company to maintain a minimum amount of
liquid assets. See "REGULATION." The balance of the Company's
investments in short-term securities in excess of regulatory
requirements reflects management's response to the significantly
increasing percentage of deposits with short maturities. The Company is
required under applicable federal regulations to maintain specified
levels of liquid investments in qualifying types of U.S. governments,
federal agency, qualifying mortgage related securities and other
investments. At March 31, 2001, the Bank's regulatory liquidity ratio
was 28.2%, which exceeded regulatory requirements. It is the intention
of management to hold securities with short maturities in the Bank's
and Company's investment portfolio in order to match more closely the
interest-rate sensitivities of its assets and liabilities.

Investment decisions are made by the Investment Committee composed of
the Company's Chief Executive Officer and Chief Financial Officer. 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, 2001,
the Company's investment and mortgage-backed securities portfolio
totaled approximately $76.0 million and consisted primarily of
obligations of federal agencies, and Federal National Mortgage
Association ("FNMA") and FHLMC mortgage-backed securities.

At March 31, 2001, the Company's investment securities portfolio did not contain
any tax-exempt securities or 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,
2001, 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 No. 115, "Accounting for Certain Investments in
Debt and Equity Securities," which requires the classification  of securities
at acquisition into one of three categories:  held to maturity, available for
sale, or trading.  See Note 1 of Notes to Consolidated Financial Statements.

                                      16

<PAGE>

<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 $76.1 million, $61.7 million, and $84.6
million at March 31, 2001, 2000 and 1999, respectively.

                                         At March 31,
                     ----------------------------------------------------------
                            2001                2000                1999
                     ------------------- ------------------- ------------------
                     Carrying Percent of Carrying Percent of Carrying Percent of
                      Value   Portfolio   Value   Portfolio   Value   Portfolio
                      -----   ---------   -----   ---------   -----   ---------
                              (Dollars in thousands)
Held to maturity (at amortized cost):
FHLB debentures       $   -        - %    $   -        - %   $4,000      4.74%
Real estate mortgage investment
  conduits ("REMICs") 1,805     2.38      1,985     3.21      3,162      3.75
FHLMC mortgage-backed
  securities          1,680     2.21      2,377     3.84      3,370      4.00
FNMA mortgage-backed
  securities          2,920     3.84      4,295     6.95      6,183      7.33
Municipal securities    861     1.13        903     1.46        943      1.12
                     ------    -----     ------   ------   --------   -------
                      7,266     9.56      9,560    15.46     17,658     20.94
                     ------    -----     ------   ------   --------   -------
Available for sale (at fair value):
FHLB debentures       6,937     9.13      9,709    15.70     11,440     13.57
REMICs               40,943    53.90     36,561    59.14     49,502     58.71
FHLMC mortgage-backed
  securities            451     0.59        612     0.99        701      0.84
FNMA mortgage-backed
  securities          1,745     2.30      2,205     3.57      3,169      3.76
Municipal securities  2,625     3.46      2,435     3.94        906      1.07
Equity securities    15,999    21.06        739     1.20        934      1.11
                    -------   ------     ------   ------    -------    ------
                     68,700    90.44     52,261    84.54     66,652     79.06
                    -------   ------     ------   ------    -------    ------
Total investment
  securities        $75,966   100.00%   $61,821   100.00%   $84,310    100.00%
                    =======   ======    =======   ======    =======    ======

The following table sets forth the maturities and weighted average yields in the
securities portfolio at March 31, 2001.

                    Less Than       One to       More Than Five    More Than
                    One Year        Five Years    to Ten Years     Ten Years
                 --------------- --------------- --------------- --------------
                        Weighted        Weighted        Weighted       Weighted
                         Average         Average         Average        Average
                 Amount Yield(1) Amount Yield(1) Amount Yield(1) Amount Yield(1)
                 ------ -------- ------ -------- ------ -------- ------ -------
                                       (Dollars in thousands)
Municipal securities $-      -%     $ -      -%  $2,000   4.17%  $1,486   5.20%
FHLB debentures       -      -        -      -    2,505   6.53    4,432   6.26
REMICs                -      -      574   6.50    1,023   6.20   41,151   6.60
FHLMC mortgage-backed
 securities           -      -      889   6.01      453   6.99      789   7.72
FNMA mortgage-backed
 securities           -      -    3,176   6.72      296   6.66    1,193   8.32
Equity securities     -      -        -      -        -      -   15,999      -
                 ------ -------- ------ -------- ------ -------- ------ -------
Total               $ -      -%  $4,639   6.56% $ 6,277   5.76% $65,050   6.59%
                 ====== ======== ====== ======== ====== ======== ====== =======

(1)          For available-for-sale securities carried at fair value, the
             weighted average yield is computed using amortized cost. Average
             yield calculations exclude equity securities that have no stated
             yield or maturity.

                                        17
<PAGE>
In addition to U.S. Government treasury obligations, the Company invests in
mortgage-backed securities and real estate mortgage investment conduits
("REMICs"). Mortgage-backed securities (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 (i.e., FNMA, FHLMC, the
Government National Mortgage Association ("GNMA") or private issues) 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 4 of Notes to
Consolidated Financial Statements 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, 2001, the Company held REMICs with a net carrying
value of $42.7 million, of which $1.8 million were classified as
held-to-maturity and $40.9 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,
2001, the Company owned $7.7 million of 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 school district bonds was $2.6 million at March 31, 2001
compared to $2.4 million at March 31, 2000.

Equity securities increased to $16.0 million at March 31. 2001 from $739,000 at
March 31, 2000 reflecting investments in FNMA and FHLMC variable rate
non-cumulative preferred stock.

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. Deposits are attracted from within the Company's primary
market area through the offering of 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 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.
                                       18
<PAGE>

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, 2001.

                                                                      Percent
Interest                                        Minimum               of Total
Rate      Term          Category                Amount     Balance    Deposits
-----     ----          --------                -------    -------    --------
                               (In thousands)
1.500%    None          NOW Accounts             $  100   $ 32,143      10.88%
2.750     None          Regular Savings             100     18,827       6.37
3.994     None          Money Market              2,500     45,724      15.47
None      None          Non-interest Checking       100     27,935       9.45

                        Certificates of Deposit
                        -----------------------
5.746     91 Days       Fixed-Term, Fixed-Rate    1,000     12,105       4.10
6.327     182-364 Days  Fixed-Term, Fixed-Rate    1,000     39,809      13.47
6.375     12-17 Months  Fixed-Term, Fixed-Rate    1,000     71,725      24.27
5.198     18 Months     Fixed-Term, Variable
                          Rate, Individual
                          Retirement Account
                           ("IRA")                1,000      1,137       0.38
6.049     18-23 Months  Fixed-Term, Fixed-Rate    1,000      5,351       1.81
6.038     24-35 Months  Fixed-Term, Fixed-Rate    1,000     24,576       8.32
5.786     36-59 Months  Fixed-Term, Fixed-Rate    1,000      5,413       1.83
5.969     60-83 Months  Fixed-Term, Fixed-Rate    1,000      9,775       3.31
5.835     84-120 Months Fixed-Term, Fixed-Rate    1,000      1,003       0.34
                                                          --------     ------
                Total                                     $295,523     100.00%
                                                          ========     ======
















                                      19

<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.
<TABLE>
                                                              At March 31,
                             --------------------------------------------------------------------------------
                                       2001                       2000                       1999
                             -------------------------- -------------------------- --------------------------
                                              Increase/                  Increase/                  Increase/
                             Balance Percent (Decrease) Balance Percent (Decrease) Balance Percent (Decrease)
                             ------- ------- ---------- ------- ------- ---------- ------- ------- ----------
                                                          (Dollars in thousands)
<S>                           <C>     <C>       <C>      <C>     <C>       <C>      <C>     <C>       <C>
Non-interest-bearing demand  $27,935   9.45%   $ 3,194  $24,741  10.65%  $ 14,322  $10,419   5.20%   $   986
NOW checking                  32,143  10.88     11,167   20,976   9.03        191   20,785  10.38      1,489
Regular savings accounts      18,827   6.37     (1,013)  19,840   8.54     (1,461)  21,301  10.63      1,372
Money market deposit accounts 45,724  15.47      1,104   44,620  19.20     16,889   27,731  13.84      7,491
Fixed-rate certificates which
  mature(1):

    Within 12 months          51,913  17.57     27,612   24,301  10.46      7,569   16,732   8.35      6,543
    Within 12-36 months      102,789  34.78     22,162   80,627  34.70     (6,114)  86,741  43.31      1,056
    Beyond 36 months          16,192   5.48     (1,058)  17,250   7.42        648   16,602   8.29      1,549
                           --------- -------   -------  -------  -----    -------  ------- ------   --------
     Total                  $295,523 100.00%   $63,168 $232,355 100.00%   $32,044 $200,311 100.00%   $20,486
                            ======== ======    ======= ======== ======    ======= ======== ======    =======
</TABLE>
     ------------------

(1)   IRAs of $12.8 million, $11.6 million and $12.0 million at
      March 31, 2001, 2000 and 1999, respectively, are included
      in certificate balances.




                                           20


<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,
                                   ----------------------------------------
                                    2001              2000           1999
                                    ----              ----           ----
                                               (In thousands)
 Below 4.00%                       $  40              $  -         $  102
 4.00 -  4.99%                     5,772            25,070         37,303
 5.00 -  5.99%                    45,544            82,319         73,315
 6.00 -  7.99%                   119,538            14,789          9,344
 8.00 -  9.99%                         -                 -             11
                                 -------          --------       --------
   Total                        $170,894          $122,178       $120,075
                                 =======          ========       ========

The following table sets forth the amount and maturities of certificates of
deposit at March 31, 2001.

                                      Amount Due
                   ---------------------------------------------------------
                   Less Than     1-2       After         After
                   One Year     Years      2-3 Years     3 Years      Total
                   ---------    -----      ---------     -------      ------
                                      (In thousands)
 Below 4.00%          $ 27      $ 13           $ -          $ -         $ 40
 4.00 -  4.99%       4,793       815           100           64        5,772
 5.00 -  5.99%      36,673     5,136         2,053        1,682       45,544
 6.00 -  7.99%     100,529    12,877         2,678        3,454      119,538
                   -------    ------       -------      -------      -------
   Total          $142,022   $18,841        $4,831      $ 5,200     $170,894
                   =======    ======       =======      =======      =======

The following table presents the amount and weighted average rate of time
deposits equal to or greater than $100,000 at March 31, 2001.

                                                                  Weighted
Maturity Period                                     Amount      Average Rate
---------------                               ------------      ------------
                                                  (Dollars in thousands)
Three months or less                            $   30,477           6.42%
Over three through six months                       20,829           6.52
Over six through 12 months                          17,436           6.29
Over 12 months                                       6,259           6.38
                                                ----------           ----
Total                                           $   75,001           6.41%
                                                ==========           ====







                                       21



<PAGE>


DEPOSIT ACTIVITIES

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

                                                  Year Ended March 31,
                                      ---------------------------------------
                                        2001          2000             1999
                                       ------        ------           ------
                                                 (In thousands)

Beginning balance                    $232,355      $200,311         $179,825
Net increase before
 interest credited                     51,821        23,454           12,382
Interest credited                      11,347         8,590            8,104
                                     --------      --------         --------
Net increase in
 savings deposits                      63,168        32,044           20,486
                                     --------      --------         --------
Ending balance                       $295,523      $232,355         $200,311
                                     ========      ========         ========


In the unlikely event the Company 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-Seattle to supplement its supply of
lendable funds and to meet deposit withdrawal requirements. Advances from the
FHLB-Seattle are typically secured by the Company's first mortgage loans.

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 35% of total assets line of credit
with the FHLB-Seattle. At March 31, 2001, the Bank had $79.5 million of
outstanding advances from the FHLB-Seattle under an available credit facility of
$149.9 million.

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

                                                        At March 31,
                                       ----------------------------------
                                       2001           2000         1999
                                       ----           ----         ----

Weighted average rate paid on
  FHLB advances                        6.62%         6.24%        4.87%





                                       22

<PAGE>

                                              Year Ended March 31,

                                         2001        2000        1999
                                        ------      ------      ------
                                               (Dollars in thousands)
Maximum amounts of FHLB
 advances outstanding
 at any month end.                     $80,000     $60,550     $49,550

Average FHLB
 advances outstanding                   72,825      45,406      34,008

Weighted average rate paid on
 FHLB advances                           6.79%       5.47%       5.36%


                                   REGULATION

GENERAL

The Bank is subject to extensive regulation, examination and supervision by the
OTS as its chartering agency, and the FDIC, as the insurer of its deposits. The
activities of federal savings institutions are governed by the Home Owners Loan
Act and, in certain respects, the Federal Deposit Insurance Act, and the
regulations issued by the OTS and the FDIC to implement these statutes. These
laws and regulations delineate the nature and extent of the activities in which
federal savings associations may engage. Lending activities and other
investments must comply with various statutory and regulatory capital
requirements. In addition, the Bank's relationship with its depositors and
borrowers is also regulated to a great extent, especially in such matters as the
ownership of deposit accounts and the form and content of the Bank's mortgage
documents. The Bank is required to file reports with the OTS and the FDIC
concerning its activities and financial condition in addition to obtaining
regulatory approvals prior to entering into certain transactions such as mergers
with, or acquisitions of, other financial institutions. There are periodic
examinations by the OTS and the FDIC to review the Bank's compliance with
various regulatory requirements. The regulatory structure also gives the
regulatory authorities extensive discretion in connection with their supervisory
and enforcement activities and examination policies, including policies with
respect to the classification of assets and the establishment of adequate loan
loss reserves for regulatory purposes. Any change in such policies, whether by
the OTS, the FDIC or Congress, could have a material adverse impact on the
Company, the Bank and their operations.

FEDERAL REGULATION OF SAVINGS ASSOCIATIONS

OFFICE OF THRIFT SUPERVISION. The OTS is an office in the Department of the
Treasury subject to the general oversight of the Secretary of the Treasury. The
OTS has extensive authority over the operations of savings associations. Among
other functions, the OTS issues and enforces regulations affecting federally
insured savings associations and regularly examines these institutions.

All savings associations 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 association's total assets, including
consolidated subsidiaries. The Bank's OTS assessment for the fiscal year ended
March 31, 2001 was $71,907.

FEDERAL HOME LOAN BANK SYSTEM. The FHLB System, consisting of 12 FHLBs, is under
the jurisdiction of the Federal Housing Finance Board ("FHFB"). The designated
duties of the FHFB are to supervise the FHLBs, to ensure that the FHLBs carry
out their housing finance mission, to ensure that the FHLBs remain adequately
capitalized and able to raise funds in the capital markets, and to ensure that
the FHLBs operate in a safe and sound manner.

                                      23
<PAGE>


The Bank, as a member of the FHLB-Seattle, is required to acquire and hold
shares of capital stock in the FHLB-Seattle in an amount equal to the greater of
(i) 1.0% of the aggregate outstanding principal amount of residential mortgage
loans, home purchase contracts and similar obligations at the beginning of each
year, or (ii) 1/20 of its advances (i.e., borrowings) from the FHLB-Seattle. The
Bank is in compliance with this requirement with an investment in FHLB-Seattle
stock of $4.4 million at March 31, 2001.

Among other benefits, the FHLB provides a central credit facility primarily for
member institutions. It is funded primarily from proceeds derived from the sale
of consolidated obligations of the FHLB System. It makes advances to members in
accordance with policies and procedures established by the FHFB and the Board of
Directors of the FHLB-Seattle.

FEDERAL DEPOSIT INSURANCE CORPORATION. The FDIC is an independent federal agency
established originally to insure the deposits, up to prescribed statutory
limits, of federally insured banks and to preserve the safety and soundness of
the banking industry. The FDIC maintains two separate insurance funds: the Bank
Insurance Fund ("BIF") and the SAIF. The Bank's deposit accounts are insured by
the FDIC under the SAIF to the maximum extent permitted by law. As insurer of
the Bank's deposits, the FDIC has examination, supervisory and enforcement
authority over all savings associations.

Under applicable regulations, the FDIC assigns an institution to one of three
capital categories based on the institution's financial information, as of the
reporting period ending seven months before the assessment period. The capital
categories are: (i) well-capitalized, (ii) adequately capitalized, or (iii)
undercapitalized. An institution is also placed in one of three supervisory
subcategories within each capital group. The supervisory subgroup to which an
institution is assigned is based on a supervisory evaluation provided to the
FDIC by the institution's primary federal regulator and information that the
FDIC determines to be relevant to the institution's financial condition and the
risk posed to the deposit insurance funds. An institution's assessment rate
depends on the capital category and supervisory category to which it is assigned
with the most well-capitalized, healthy institutions receiving the lowest rates.

Effective January 1, 1997, the premium schedule for BIF and SAIF insured
institutions ranged from 0 to 27 basis points. However, SAIF insured
institutions 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. This amount is currently equal to about 2.1 basis
points for each $100 in domestic deposits for both BIF and SAIF members. These
assessments, which are revised quarterly based upon the level of BIF and SAIF
deposits, will continue until the bonds mature in the year 2015.

The FDIC is authorized to raise the assessment rates in certain circumstances.
The FDIC has exercised this authority several times in the past and may raise
insurance premiums in the future. If such action is taken by the FDIC, it could
have an adverse effect on the earnings of the Company.

Under the Federal Insurance Act ("FDIA"), insurance of deposits may be
terminated by the FDIC upon a finding that the institution has engaged in unsafe
or unsound practices, is in an unsafe or unsound condition to continue
operations or has violated any applicable law, regulation, rule, order or
condition imposed by the FDIC or the OTS. Management of the Bank does not know
of any practice, condition or violation that might lead to termination of
deposit insurance.

LIQUIDITY REQUIREMENTS. Under OTS regulations, each savings institution is
required to maintain an average daily balance of specified liquid assets equal
to a monthly average of not less than a specified percentage of its net
withdrawable deposit accounts plus short-term borrowings. This liquidity
requirement is currently 4%, but may be changed from time to time by the OTS to
any amount within the range of 4% to 10%. Monetary penalties may be imposed for
failure to meet liquidity requirements. The Bank has never been subject to
monetary penalties for failure to meet its liquidity requirements.

                                        24
<PAGE>

PROMPT CORRECTIVE ACTION. The OTS is required to take certain supervisory
actions against undercapitalized savings associations, 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. 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, 2001, the Bank was categorized as "well capitalized" under the
prompt corrective action regulations of the OTS.

STANDARDS FOR SAFETY AND SOUNDNESS. The federal banking regulatory agencies have
prescribed, by regulation, standards for all insured depository institutions
relating to: (i) internal controls, information systems and internal audit
systems; (ii) loan documentation; (iii) credit underwriting; (iv) interest rate
risk exposure; (v) asset growth; (vi) asset quality; (vii) earnings; and (viii)
compensation, fees and benefits ("Guidelines"). The Guidelines set forth the
safety and soundness standards that the federal banking agencies use to identify
and address problems at insured depository institutions before capital becomes
impaired. If the OTS determines that the Bank fails to meet any standard
prescribed by the Guidelines, the agency may require the Bank to submit to the
agency an acceptable plan to achieve compliance with the standard. Management is
aware of no conditions relating to these safety and soundness standards which
would require submission of a plan of compliance.

QUALIFIED THRIFT LENDER TEST. All savings associations, 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 association to
have at least 65% of its portfolio 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 association 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, 2001,
the Bank met the test and its QTL percentage was 85.40%.

Any savings association 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 an association does not requalify and converts to a national bank
charter, it must remain SAIF-insured until the FDIC permits it to transfer to
the BIF. 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 association 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. In addition, it must repay promptly any
outstanding FHLB borrowings, which may result in prepayment penalties. 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.


                                       25

<PAGE>


CAPITAL REQUIREMENTS. Federally insured savings associations, 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 associations.

The capital regulations require tangible capital of at least 1.5% of adjusted
total assets (as defined by regulation). At March 31, 2001, the Bank had
tangible capital of $46.5 million, or 10.9% of adjusted total assets, which is
approximately $40.1 million above the minimum requirement of 1.5% of adjusted
total assets in effect on that date. At March 31, 2001, the Bank had $1.0
million in core deposit intangible and $1.2 million in deferred taxes and
servicing asset.

The capital standards also require core capital equal to at least 3% to 4% of
adjusted total assets, depending on an institution's supervisory rating. Core
capital generally consists of tangible capital. At March 31, 2001, the Bank had
core capital equal to $46.5 million, or 10.9% of adjusted total assets, which is
$33.7 million above the minimum leverage ratio requirement of 3% as in effect on
that date.

The OTS risk-based requirement requires savings associations to have total
capital of at least 8% 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.

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 FNMA or FHLMC.

On March 31, 2001, the Bank had total risk-based capital of approximately $48.4
million, including $46.5 million in core capital and $1.9 million in qualifying
supplementary capital, and risk-weighted assets of $282.7 million, or total
capital of 17.1% of risk-weighted assets. This amount was $25.8 million above
the 8% requirement in effect on that date.

The OTS is authorized to impose capital requirements in excess of these
standards on individual associations on a case-by-case basis. The OTS and the
FDIC are authorized and, under certain circumstances required, to take certain
actions against savings associations that fail to meet their capital
requirements. The OTS is generally required to take action to restrict the
activities of an "undercapitalized association" (generally defined to be one
with less than either a 4% core capital ratio, a 4% Tier 1 risked-based capital
ratio or an 8% risk-based capital ratio). Any such association must submit a
capital restoration plan and until such 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 associations.

The OTS is also generally authorized to reclassify an association 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 or
the Company may have a substantial adverse effect on their operations and
profitability.

LIMITATIONS ON CAPITAL DISTRIBUTIONS. The OTS imposes various restrictions on
savings associations 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. The OTS also
prohibits a savings association from
                                       26

<PAGE>

declaring or paying any dividends or from repurchasing any of its stock if, as a
result of such action, the regulatory capital of the association would be
reduced below the amount required to be maintained for the liquidation account
established in connection with the association's mutual to stock conversion.

The Bank may make a capital distribution without OTS approval provided that the
Bank notify the OTS 30 days before it declares the capital distribution and that
the following requirements are met: (i) the Bank has a regulatory rating in one
of the two top examination categories, (ii) the Bank is not of supervisory
concern, and will remain adequately or well capitalized, as defined in the OTS
prompt corrective action regulations, following the proposed distribution, and
(iii) the distribution does not exceed the Bank's net income for the calendar
year-to-date plus retained net income for the previous two calendar years (less
any dividends previously paid). If the Bank does not meet these stated
requirements, it must obtain the prior approval of the OTS before declaring any
proposed distributions.

In the event the Bank's capital falls below its regulatory requirements or the
OTS notifies it that it is in need of more than normal supervision, the Bank's
ability to make capital distributions will be restricted. In addition, no
distribution will be made if the Bank is notified by the OTS that a proposed
capital distribution would constitute an unsafe and unsound practice, which
would otherwise be permitted by the regulation.

LOANS TO ONE BORROWER. 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, 2001, the Bank's limit
on loans to one borrower was $7.3 million. At March 31, 2001, the Bank's largest
single loan to one borrower was $3.5 million, which was performing according to
its original terms.

ACTIVITIES OF ASSOCIATIONS AND THEIR SUBSIDIARIES. When a savings association
establishes or acquires a subsidiary or elects to conduct any new activity
through a subsidiary that the association controls, the savings association must
notify the FDIC and the OTS 30 days in advance and provide the information each
agency may, by regulation, require. Savings associations also must conduct the
activities of subsidiaries in accordance with existing regulations and orders.

The OTS may determine that the continuation by a savings association 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 association 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 associations 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 association were a
Federal Reserve member bank. Generally, transactions between a savings
association 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 association's capital. Affiliates of the Bank
include the Company and any company which is under common control with the Bank.
In addition, a savings association 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
associations as affiliates on a case by case basis.

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.
                                        27


<PAGE>


<PAGE>
COMMUNITY REINVESTMENT ACT. Under the federal Community Reinvestment Act
("CRA"), all federally-insured financial institutions have a continuing and
affirmative obligation consistent with safe and sound operations to help meet
all the credit needs of their delineated communities. The CRA does not establish
specific lending requirements or programs nor does it limit an institution's
discretion to develop the types of products and services that it believes are
best suited to meet all the credit needs of its delineated community. The CRA
requires the federal banking agencies, in connection with regulatory
examinations, to assess an institution's record of meeting the credit needs of
its delineated community and to take such record into account in evaluating
regulatory applications to establish a new branch office that will accept
deposits, relocate an existing office, or merge or consolidate with, or acquire
the assets or assume the liabilities of, a federally regulated financial
institution, among others. The CRA requires public disclosure of an
institution's CRA rating. The Bank received a "satisfactory" rating as a result
of its latest evaluation.

REGULATORY AND CRIMINAL ENFORCEMENT PROVISIONS. The OTS has primary enforcement
responsibility over savings institutions and has the authority to bring action
against all "institution-affiliated parties," including stockholders, and any
attorneys, appraisers and accountants who knowingly or recklessly participate in
wrongful action likely to have an adverse effect on an insured institution.
Formal enforcement action may range from the issuance of a capital directive or
cease and desist order to removal of officers or directors, receivership,
conservatorship or termination of deposit insurance. Civil penalties cover a
wide range of violations and can amount to $27,500 per day, or $1.1 million per
day in especially egregious cases. Under the FDIA, the FDIC has the authority to
recommend to the Director of the OTS that enforcement action be taken with
respect to a particular savings institution. If action is not taken by the
Director, the FDIC has authority to take such action under certain
circumstances. Federal law also establishes criminal penalties for certain
violations.

SAVINGS AND LOAN HOLDING COMPANY REGULATIONS

GENERAL. The Company is a unitary savings and loan company subject to regulatory
oversight of the OTS. Accordingly, the Company is required to register and file
reports with the OTS and is subject to regulation and examination by the OTS. In
addition, the OTS has enforcement authority over the Company and its non-savings
association subsidiaries which also permits the OTS to restrict or prohibit
activities that are determined to be a serious risk to the subsidiary savings
association.

NEW LEGISLATION. On November 12, 1999, the Gramm-Leach-Bliley Financial Services
Modernization Act of 1999 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. Generally, the Act:

        (a)    repeals the historical restrictions and eliminates many
               federal and state law barriers to affiliations among banks,
               securities firms, insurance companies and other financial
               service providers;

        (b)    provides a uniform framework for the functional regulation of
               the activities of banks, savings institutions and their holding
               companies;

        (c)    broadens the activities that may be conducted by national banks,
               banking subsidiaries of bank holding companies and their
               financial subsidiaries;

        (d)    provides an enhanced framework for protecting the privacy of
               consumer information;

        (e)    adopts a number of provisions  related to the  capitalization,
               membership, corporate governance and other measures designed to
               modernize the FHLB system;

        (f)    modifies the laws governing the implementation of the CRA; and
                                      28


<PAGE>

<PAGE>
        (g)    addresses a variety of other legal and regulatory issues
               affecting day-to-day operations and long-term activities of
               financial institutions.

ACQUISITIONS. Federal law and OTS regulations issued thereunder generally
prohibit a savings and loan holding company, without prior OTS approval, from
acquiring more than 5% of the voting stock of any other savings association or
savings and loan holding company or controlling the assets thereof. They also
prohibit, among other things, any director or officer of a savings and loan
holding company, or any individual who owns or controls more than 25% of the
voting shares of such holding company, from acquiring control of any savings
association not a subsidiary of such savings and loan holding company, unless
the acquisition is approved by the OTS.

ACTIVITIES. As a unitary savings and loan holding company, the Company generally
is not subject to activity restrictions. If the Company acquires control of
another savings association as a separate subsidiary other than in a supervisory
acquisition, it would become a multiple savings and loan holding company and the
activities of the Company and any other subsidiaries (other than the Company or
any other SAIF insured savings association) would generally become subject to
additional restrictions. There generally are more restrictions on the activities
of a multiple savings and loan holding company than on those of a unitary
savings and loan holding company. Federal law provides that, among other things,
no multiple savings and loan holding company or subsidiary thereof which is not
an insured association shall commence or continue for more than two years after
becoming a multiple savings and loan association holding company or subsidiary
thereof, any business activity other than: (i) furnishing or performing
management services for a subsidiary insured institution, (ii) conducting an
insurance agency or escrow business, (iii) holding, managing, or liquidating
assets owned by or acquired from a subsidiary insured institution, (iv) holding
or managing properties used or occupied by a subsidiary insured institution, (v)
acting as trustee under deeds of trust, (vi) those activities previously
directly authorized by regulation as of March 5, 1987 to be engaged in by
multiple holding companies or (vii) those activities authorized by the Federal
Reserve Board as permissible for bank holding companies, unless the OTS by
regulation, prohibits or limits such activities for savings and loan holding
companies. Those activities described in (vii) above also must be approved by
the OTS prior to being engaged in by a multiple savings and loan holding
company.

QUALIFIED THRIFT LENDER TEST. If the Bank fails the qualified thrift lender
test, within one year the Bank must register as, and will become subject to, the
significant activity restrictions applicable to bank holding companies. See
"Federal Regulation of Savings Associations --Qualified Thrift Lender Test" for
information regarding the Company's qualified thrift lender test.

                               TAXATION
FEDERAL TAXATION

GENERAL. The Company and the Bank report their income on a fiscal year basis
using the accrual method of accounting and are subject to federal income
taxation in the same manner as other corporations with some exceptions,
including particularly the Bank's reserve for bad debts discussed below. The
following discussion of tax matters is intended only as a summary and does not
purport to be a comprehensive description of the tax rules applicable to the
Company or the Bank.

BAD DEBT RESERVE. Historically, savings institutions, such as the Bank, which
met certain definitional tests primarily related to their assets and the nature
of their business ("qualifying thrift"), were permitted to establish a reserve
for bad debts and to make annual additions thereto, which may have been deducted
in arriving at their taxable income. The Bank's deductions with respect to
"qualifying real property loans," which are generally loans secured by certain
interest in real property, were computed using an amount based on the Bank's
actual loss experience, or a percentage equal to 8% of the Bank's taxable
income, computed with certain modifications and reduced by the amount of any
permitted additions to the non-qualifying reserve. Due to the Bank's loss
experience, the Bank generally recognized a bad debt deduction equal to 8% of
taxable income.
                                     29
<PAGE>
<PAGE>
The thrift bad debt rules were revised by Congress in 1996. The new rules
eliminated the 8% of taxable income method for deducting additions to the tax
bad debt reserves for all thrifts for tax years beginning after December 31,
1995. These rules also required that all institutions recapture all or a portion
of their bad debt reserves added since the base year (last taxable year
beginning before January 1, 1988). At March 31, 2001, the Bank had a taxable
temporary difference of approximately $1.1 million that arose before 1987
(base-year amount). For taxable years beginning after December 31, 1995, the
Bank's bad debt deduction will be determined under the experience method using a
formula based on actual bad debt experience over a period of years. The
unrecaptured base year reserves will not be subject to recapture as long as the
institution continues to carry on the business of banking. In addition, the
balance of the pre-1987 bad debt reserves continues to be subject to provisions
of present law referred to below that require recapture in the case of certain
excess distributions to shareholders.

DISTRIBUTIONS. To the extent that the Bank makes "nondividend distributions" to
the Company, such distributions will be considered to result in distributions
from the balance of its bad debt reserve as of December 31, 1987 (or a lesser
amount if the Bank's loan portfolio decreased since December 31, 1987) and then
from the supplemental reserve for losses on loans ("Excess Distributions"), and
an amount based on the Excess Distributions will be included in the Bank's
taxable income. Nondividend distributions include distributions in excess of the
Bank's current and accumulated earnings and profits, distributions in redemption
of stock and distributions in partial or complete liquidation. However,
dividends paid out of the Bank's current or accumulated earnings and profits, as
calculated for federal income tax purposes, will not be considered to result in
a distribution from the Bank's bad debt reserve. The amount of additional
taxable income created from an Excess Distribution is an amount that, when
reduced by the tax attributable to the income, is equal to the amount of the
distribution. Thus, if, after the Conversion, the Bank makes a "nondividend
distribution," then approximately one and one-half times the Excess Distribution
would be includable in gross income for federal income tax purposes, assuming a
34% corporate income tax rate (exclusive of state and local taxes). See
"Regulation" for limits on the payment of dividends by the Bank. The Bank does
not intend to pay dividends that would result in a recapture of any portion of
its tax bad debt reserve.

CORPORATE ALTERNATIVE MINIMUM TAX. The Code imposes a tax on alternative minimum
taxable income ("AMTI") at a rate of 20%. The excess of the tax bad debt reserve
deduction using the percentage of taxable income method over the deduction that
would have been allowable under the experience method is treated as a preference
item for purposes of computing the AMTI. In addition, only 90% of AMTI can be
offset by net operating loss carryovers. AMTI is increased by an amount equal to
75% of the amount by which the Company's adjusted current earnings exceeds its
AMTI (determined without regard to this preference and prior to reduction for
net operating losses). For taxable years beginning after December 31, 1986, and
before January 1, 1996, an environmental tax of 0.12% of the excess of AMTI
(with certain modification) over $2.0 million is imposed on corporations,
including the Company, whether or not an Alternative Minimum Tax is paid.

DIVIDENDS-RECEIVED DEDUCTION. The Company may exclude from its income 100% of
dividends received from the Company as a member of the same affiliated group of
corporations. The corporate dividends-received deduction is generally 70% in the
case of dividends received from unaffiliated corporations with which the Bank
and the Company will not file a consolidated tax return, except that if the Bank
or the Company owns more than 20% of the stock of a corporation distributing a
dividend, then 80% of any dividends received may be deducted.

AUDITS.  The Company's federal income tax returns have not been audited within
the past seven years.

STATE TAXATION

GENERAl. The Company is subject to a business and occupation tax imposed under
Washington law at the rate of 1.50% of gross receipts; however, interest
received on loans secured by mortgages or deeds of trust on residential
properties is exempt from such tax.

AUDITS.  The Company's business and occupation tax returns have not been audited
within the past five years.
                                       30

<PAGE>

<PAGE>
COMPETITION

There are several financial institutions in the Company's primary market area
from which the Company faces strong competition in the attraction of savings
deposits (its primary source of lendable funds) and in the origination of loans.
Its most direct competition for savings deposits and loans has historically come
from other thrift institutions, credit unions and commercial banks located in
its market area. Particularly in times of high interest rates, the Company has
faced additional significant competition for investors' funds from money market
mutual funds, other short-term money market securities, corporate and government
securities. The Company's competition for loans comes principally from other
thrift institutions, credit unions, commercial banks, mortgage banking companies
and mortgage brokers.

SUBSIDIARY ACTIVITIES

Under OTS regulations, the Bank is authorized to invest up to 3% of its assets
in subsidiary corporations, with amounts in excess of 2% only if primarily for
community purposes. At March 31, 2001, the Company's investments of $606,000 in
Riverview Services, Inc. ("Riverview Services") its wholly owned subsidiary, and
the investment of $687,000 in Riverview Asset Management Corp. ("RAM Corp"), a
90% owned subsidiary, were within these limitations.

Riverview Services, a wholly-owned subsidiary, acts as trustee for deeds of
trust on mortgage loans granted by the Bank, and receives a reconveyance fee of
approximately $60 for each deed of trust. Riverview Services had net income of
$31,000 for the fiscal year ended March 31, 2001 and total assets of $608,000 at
that date. Riverview Services' operations are included in the Consolidated
Financial Statements of the Company.

RAM Corp is an asset management company providing trust, estate planning and
investment management services. RAM Corp commenced business December 1998 and
had a net loss of $156,000 for the fiscal year ended March 31, 2001 and total
assets of $890,000 at that date. RAM Corp earns fees on the management of assets
held in fiduciary or agency capacity. At March 31, 2001, total assets under
management approximated $92.2 million. RAM Corp's operations are included in the
Consolidated Financial Statements of the Company.

PERSONNEL

As of March 31, 2001, the Company had 147 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         61         President and Chief Executive Officer
Ron Wysaske              48         Executive Vice President, Treasurer and
                                     Chief Financial Officer

(1)  At March 31, 2001.

PATRICK SHEAFFER joined the Bank in 1965 and has served as President and Chief
Executive Officer since 1976. He became Chairman of the Board in March 1993. He
is responsible for the daily operations and the management of the Company. Mr.
Sheaffer is active in numerous professional and civic organizations.

RON WYSASKE joined the Bank in 1976. Before joining the Company, he was an audit
and tax accountant at Price Waterhouse & Co. He became Executive Vice President,
Treasurer and Chief Financial Officer in 1981. He is responsible for
administering all finance, accounting and treasury functions at the Company. He
is a member of several professional organizations, including the American
Institute of Certified Public Accountants, the Financial Managers Society and
the Financial Executive Institute. Mr. Wysaske is a licensed certified public
accountant in the State of Washington.
                                       31
<PAGE>

ITEM 2.  PROPERTIES
-------------------

The following table sets forth certain information relating to the Company's
offices as of March 31, 2001.

                                                    Approximate
Location                            Year Opened     Square Footage   Deposits
                                                                   (In millions)
Main Office:

900 Washington, Suite 900
Vancouver, Washington(1)(3)             2000            16,000         $ 9.3

Branch Offices:

700 N.E. Fourth Avenue                  1975            25,000         $46.7
Camas, Washington(3)

3307 Evergreen Way                      1963             3,200         $26.2
Washougal, Washington(1)(3)(4)

225 S.W. 2nd Street                     1971             1,700         $32.6
Stevenson, Washington(3)

330 E. Jewett Boulevard                 1977             3,200         $24.4
White Salmon, Washington(3)(5)

15 N.W. 13th Avenue                     1979             2,900         $22.6
Battle Ground, Washington(3)(6)

412 South Columbus                      1983             2,500         $25.6
Goldendale, Washington(3)

11505-K N.E. Fourth Plain Boulevard     1994             3,500         $15.3
Vancouver, Washington(3)
"Orchards" Office

7735 N.E. Highway 99                    1994             4,800         $31.7
Vancouver, Washington9(1)(2)(3)
"Hazel Dell" Office

1011 Washington Way                     1994             2,000         $16.8
Longview, Washington(2)(3)

900 Washington St., Suite 100           1998             5,300         $32.8
Vancouver, Washington (1)(3)

1901-E N.E. 162nd Avenue
Vancouver, Washington(1)(3)             1999             3,200         $ 7.0

800 N.E. Tenny Road, Suite D
Vancouver, Washington(3)                2000             3,200         $ 6.0





                                       32



<PAGE>

(1)      Leased.
(2)      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.
(3)      Location of an automated teller machine.
(4)      New facility in 2001.
(5)      New facility in 2000.
(6)      New facility in 1994.

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.

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, 2001, the net book value of the Company's office properties, furniture,
fixtures and equipment was $10.1 million.

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, 2001.

                                    PART II

ITEM 5.   MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
          MATTERS
---------------------------------------------------------------------------

At March 31, 2001, the Company had 4,981,421 shares of Common Stock issued and
outstanding, 844 stockholders of record and an estimated 1,000 holders in
nominee or "street name."

Under Washington law, the Company is prohibited from paying a dividend if, as a
result of its payment, the Company would be unable to pay its debts as they
become due in the normal course of business, or if the Company's total
liabilities would exceed its total assets. The principal source of funds for the
Company are dividend payments from the Bank. OTS regulations require the Bank to
give the OTS 30 days advance notice of any proposed declaration of dividends to
the Company, and the OTS has the authority under its supervisory powers to
prohibit the payment of dividends to the Company. The OTS imposes certain
limitations on the payment of dividends from the Bank to the Holding Company
which utilize a three-tiered approach that permits various levels of
distributions based primarily upon a savings association's capital level. See
"REGULATION -- Federal Regulation of Savings Associations -- Limitations on
Capital Distributions." In addition, the Company may not declare or pay a cash
dividend on its capital stock if the effect thereof would be to reduce the
regulatory capital of the Company below the amount required for the liquidation
account to be established pursuant to the Company's Plan of Conversion adopted
in connection with the Conversion and

                                         33
<PAGE>

Reorganization. See Note 13 of Notes to the Consolidated Financial Statements
included elsewhere herein.

The common stock of the Company has traded on the Nasdaq National Market System
under the symbol "RVSB" since October 2, 1997. Prior to that time and since
October 22, 1993, 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 2001 and 2000 fiscal years. At March 31, 2001, there were ten market
makers in the Company's common stock as reported by the Nasdaq Stock Market.


Cash Dividends

Fiscal Year Ended March 31, 2001         High           Low          Declared
--------------------------------         ----           ---          --------

Quarter Ended March 31, 2001            $9.75          $8.25          $0.100
Quarter Ended December 31, 2000          8.88           8.03           0.100
Quarter Ended September 30, 2000         8.88           8.00           0.100
Quarter Ended June 30, 2000              9.38           8.00           0.100


Cash Dividends

Fiscal Year Ended March 31, 2000         High           Low          Declare
--------------------------------         ----           ---         ---------

Quarter Ended March 31, 2000            $10.50         $8.00          $0.090
Quarter Ended December 31, 1999          12.50          9.50           0.090
Quarter Ended September 30, 1999         13.00         11.00           0.090
Quarter Ended June 30, 1999              12.31         11.13           0.090






                                        34


<PAGE>




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,
                                 ----------------------------------------------
                                  2001      2000      1999      1998      1997
                                 ------    ------    ------    ------    ------
FINANCIAL CONDITION DATA:                         (In thousands)

Total assets                   $431,996  $344,680  $302,601  $273,174  $224,385
Loans receivable, net(1)        296,861   249,034   187,177   162,628   151,774
Mortgage-backed securities held
 to maturity, at amortized cost   6,405     8,657    12,715    20,341    26,402
Mortgage-backed securities
 available for sale,
 at fair value                   43,139    39,378    53,372    32,690     2,990
Cash and interest-bearing
 deposits                        38,935    15,786    17,207    27,482     6,951
Investment securities held to
 maturity, at amortized cost        861       903     4,943     8,336    20,456
Investment securities available
 for sale, at fair value         25,561    12,883    13,280     9,977     3,899
Deposit accounts                295,523   232,355   200,311   179,825   169,416
FHLB advances                    79,500    60,550    42,550    29,550    27,180
Shareholders' equity             52,721    48,489    56,867    61,082    25,022


                                              Year Ended March 31,
                                 ----------------------------------------------
                                  2001      2000      1999      1998      1997
                                 ------    ------    ------    ------    ------
OPERATING DATA:                                   (In thousands)

Interest income                 $31,343   $25,438   $23,114   $20,302   $17,476
Interest expense                 16,288    11,073     9,925     9,389     8,923
                                -------   -------   -------   -------   -------
Net interest income              15,055    14,365    13,189    10,913     8,553
Provision for loan losses           949       675       240       180       180
                                -------   -------   -------   -------   -------
Net interest income after
 provision for loan losses       14,106    13,690    12,949    10,733     8,373
Gains from sale of loans,
 securities and real estate owned    94       151       283       269       106
Gain on sale of land and
 fixed assets                       540         -         -         -         -
Other non-interest income         3,328     2,746     2,591     2,211     1,768
Non-interest expenses(2)         12,867    10,832     9,055     7,218     7,204
                                -------   -------   -------   -------   -------
Income before federal income tax
 provision and extraordinary item 5,201     5,755     6,768     5,995     3,043
Provision for federal income
 taxes                            1,644     1,878     2,305     2,071     1,035
                                -------   -------   -------   -------   -------
Net income                      $ 3,557   $ 3,877   $ 4,463   $ 3,924   $ 2,008
                                =======   =======   =======   =======   =======



                                           35

<PAGE>


                                                    At March 31,
                                 ----------------------------------------------
                                  2001      2000      1999      1998      1997
                                 ------    ------    ------    ------    ------
OTHER DATA:
Number of:
 Real estate loans outstanding    3,423     3,151     2,956     3,155     3,260
 Deposit accounts                26,068    23,653    21,639    20,395    19,300
 Full service offices                12        12        10         9         9

                                      At or For the Year Ended March 31,
                                 ----------------------------------------------
                                  2001      2000      1999      1998      1997
                                 ------     -----    ------    ------    ------
KEY FINANCIAL RATIOS:

Performance Ratios:
Return on average assets          0.94%     1.22%     1.55%     1.56%     0.92%
Return on average equity          7.04      7.15      7.33      9.15      8.38
Dividend payout ratio(3)(4)(7)   52.29     47.13     30.38     11.77     10.56
Interest rate spread              3.37      3.88      3.83      3.72      3.72
Net interest margin               4.27      4.78      4.81      4.61      4.19
Non-interest expense to
 average assets(5)                3.41      3.41      3.14      2.87      3.30
Efficiency ratio (non-
 interest expense divided by the
 sum of net interest income and
 non-interest  income)(6)        67.66     62.75     56.37     53.89     69.09

Asset Quality Ratios:
Average interest-earning assets to
 interest-bearing liabilities   119.75    124.51    127.02    122.21    110.80
Allowance for loan losses to
 total loans at end of period     0.58      0.50      0.54      0.53      0.50
Net charge-offs to
 average outstanding loans
 during the period                0.14      0.21      0.04      0.02        -
Ratio of nonperforming assets
 to total assets                  0.24      0.39      0.44      0.19      0.10

Capital Ratios:
Average equity to average assets 13.41     17.05     21.08     17.02     10.98
Equity to assets at end of
  fiscal year                    12.20     14.07     18.79     22.36     11.15

(1)  Includes loans held for sale.
(2)  Includes $947,000 special SAIF assessment in the year ended March 31, 1997.
(3)  Prior to the  consummation  of the  Conversion and  Reorganization  on
     September 30, 1997, all cash dividends paid by the Bank had been waived by
      the MHC.
(4)  Excludes cash dividends waived by the MHC.
(5)  Non-interest expense to average assets was 2.87% at March 31, 1997 without
      special SAIF assessment.
(6)  Efficiency ratio was 60.0% for the year ended March 31, 1997 without
      special SAIF assessment.
(7)  Dividends paid divided by net income.


                                         36

<PAGE>


<PAGE>
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 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 report contain
certain "forward-looking statements" concerning the future operations of
Riverview Bancorp, Inc. 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,
the ability of the Company to efficiently incorporate acquisitions into its
operations, competitive products and pricing, 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.

OPERATING STRATEGY

In the fiscal year ended March 31, 1998, the Company began to implement a growth
strategy to broaden the products and services from traditional thrift offerings
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 at the main office for administration in downtown Vancouver. The
Washougal branch was relocated to a new facility, the Stevenson, White Salmon
and Goldendale branches were remodeled. The number of automated teller machines
was doubled from six to twelve so that each branch location now is serviced by
an 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.

The fiscal year 1998 marked the 75th year anniversary since Riverview Community
Bank opened its doors in 1923. The historical emphasis has been on residential
real estate lending. The portfolio diversification is focused toward the
expansion of commercial loans. Four experienced commercial lenders were hired to
implement the expansion in commercial lending. In the fiscal year 1998
commercial loans as a percentage of the loan portfolio were 0.93%. The
commercial loan portfolio stands at 7.03% at the end of fiscal year 2001.
Commercial lending has wider interest margins and shorter loan terms than
residential lending which can increase the loan portfolio profitability.

The 1998 addition of RAM Corp a trust company directed by experienced trust
officers, expanded loan products serviced by experienced commercial and consumer
lending officers, expanded branch network lead by experienced branch managers,
enhances the Company's relationship banking. Development of relationship banking
has been the key
                                         37
<PAGE>

to the Company's growth in assets and profitability. Total assets of the Company
has increased 58% since the end of fiscal year 1998.

The Company has a strong tradition of safety and soundness and balance sheet
growth reflects this tradition. The ratio of nonperforming assets to total
assets continues this strong tradition and is 0.24% at March 31, 2001.

NET INTEREST INCOME

The Company's profitability depends primarily on its net interest income, which
is the difference between the income it receives on its loan and investment
portfolio 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 Company's profitability is also
affected by the level of non-interest income and expenses. 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 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 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, 2001 AND 2000

The Company's total assets were $432.0 million at March 31, 2001, compared to
$344.7 million at March 31, 2000. This increase resulted primarily from the
growth in the loan portfolio, cash and investment securities. The growth was
funded primarily by deposit growth and an increase in FHLB advances.

Loans receivable, net, were $296.3 million at March 31, 2001, compared to $249.0
million at March 31, 2000, a 19.0% increase. Increases primarily in residential,
residential construction, commercial construction, commercial, commercial real
estate and consumer loans contributed to the increase in loans receivable, net.
The growth in commercial and commercial real estate loan balances reflects the
Company's increased emphasis on originating such loans. The Company has been
able to increase the balance of outstanding commercial loans, commercial real
estate loans and commitments due to the strong local economy, and the
consolidation of some local competitors offering these products. The Company has
also hired several experienced commercial bankers from competitors in the local
market. The growth in one- to- four family residential mortgages reflects the
impact of decreasing interest rates and management's decision to retain
mortgages in the loan portfolio. 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.

There were $569,000 in loans held-for-sale at March 31, 2001, compared to zero
at March 31, 2000.

Cash and cash equivalents increased to $38.9 million at March 31, 2001, from
$15.8 million at March 31, 2000 as a result of deposit growth.

Investment securities held-to-maturity were $861,000 at March 31, 2001, compared
to $903,000 at March 31, 2000. The $42,000 decrease was a result of investment
paydowns.

Investment securities available-for-sale were $25.6 million at March 31, 2001,
compared to $12.9 million at March 31, 2000. The $12.7 million increase reflects
the $15.0 million purchase of FNMA and FHLMC preferred stock, the $3.0 million
of callable agencies and $300,000 of paydowns.

Mortgage-backed securities held-to-maturity were $6.4 million at March 31, 2001,
compared to $8.7 million at March 31, 2000. The $2.3 million net decrease is a
result of paydowns.
                                      38
<PAGE>

<PAGE>
Mortgage-backed securities available-for-sale were $43.1 million at March 31,
2001, compared to $39.4 million at March 31, 2000. The $3.7 million net decrease
reflects paydowns.

Total deposits were $295.5 million at March 31, 2001, compared to $232.4 million
at March 31, 2000. Management attributes this $63.1 million increase primarily
to the growth in the Company's market area, particularly the increase in
commercial loans and to increased public deposits.

FHLB advances increased to $79.5 million at March 31, 2001 from $60.6 million at
March 31, 2000. The $18.9 million increase in the outstanding advances at March
31, 2001 were used to fund the growth in the loan and investment portfolio.

Shareholders' equity increased $4.2 million to $52.7 million at March 31, 2001
from $48.5 million at March 31, 2000 primarily as a result of the $5.2 million
of total comprehensive income and issuance of stock under various incentive
plans offset by cash dividends of $1.9 million paid to the shareholders.

COMPARISON OF OPERATING RESULTS FOR THE YEARS ENDED MARCH 31, 2001 AND 2000

NET INCOME. Net income was $3.6 million, or $0.78 per share for the year ended
March 31, 2001, compared to $3.9 million, or $0.76 per share for the year ended
March 31, 2000. Earnings were lower for the year ended March 31, 2001 primarily
as a result of reduced net interest margin, increased non-interest expenses and
higher provision for loan losses.

NET INTEREST INCOME. Net interest income for fiscal year 2001 was $15.1 million,
representing a $690,000, or a 4.8% increase, from fiscal year 2000. This
improvement reflected a 17.9% increase in average earning assets (primarily
increases in average loan balances due to a 11.7% increase for mortgage loans
and 97.6% increase in non-mortgage loans) to $277.3 million, which offset a 51
basis point reduction in the net interest margin to 4.27%. The ratio of average
interest earning assets to average interest bearing liabilities decreased to
1.20% in 2001 from 1.25% in 2000 which indicates that the interest earning asset
growth is being funded more by interest bearing liabilities as compared to
capital, which is non-interest bearing.

INTEREST INCOME. Interest income totaled $31.3 million and $25.4 million, for
fiscal years 2001 and 2000, respectively. Average interest-bearing assets
increased $54.2 million to $356.5 million for fiscal year ended 2001 from $302.3
million for fiscal year ended 2000. The yield on interest-earning assets was
8.84% for fiscal year 2001 compared to 8.44% for fiscal year ended 2000. The
increased yield reflects the higher yield on net loans and investments in 2001
compared to 2000.

INTEREST EXPENSE. Interest expense for the year ended March 31, 2001 totaled
$16.3 million, a $5.2 million increase from $11.1 million for the year ended
March 31, 2000. The increase in interest expense was the result of the 22.6%
growth in average interest-bearing liabilities to $297.7 million at March 31,
2001 from $242.8 million at March 31, 2000. The increase was due primarily to
the $7.9 million growth in the average balance of money market accounts to $44.9
million and the $20.5 million growth in average balance certificates of deposit
to $138.5 million at year end March 31, 2001. Other interest bearing liabilities
increased $27.4 million to $72.8 million at March 31, 2001 due to increased FHLB
borrowings.

PROVISION FOR LOAN LOSSES. The provision for loan losses for the year ended
March 31, 2001 was $949,000 compared to $675,000 for the year ended March 31,
2000. The fiscal year 2001 provision for loan losses exceeded net loan
charge-offs by $554,000 resulting in an increase in the allowance for loan
losses to $1.9 million. While the loan portfolio has grown substantially in
fiscal year 2001 the asset quality has remained solid as demonstrated by the
nonperforming asset to total assets ratio of 0.24% at March 31, 2001 and 0.39%
at March 31, 2000.

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
                                       39
<PAGE>

<PAGE>
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 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. Such
agencies may require the Company to provide additions to the allowance for loan
losses based upon judgments different from 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 and anticipated 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 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 that
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 due to economic, operating, regulatory and other
conditions that may be beyond the Company's control. Any increase or decrease in
the provision for loan losses has a corresponding negative or positive effect on
net income. The allowance for loan losses at March 31, 2001 was $1.9 million, or
0.58% of period end loans compared to $1.4 million, or 0.50% of period end loans
at March 31, 2000. Management considered the allowance for loan losses at March
31, 2001 to be adequate to cover foreseeable loan losses based on the assessment
of various factors affecting the loan portfolio.

NON-INTEREST INCOME. Non-interest income increased $1.1 million or 36.8% for the
twelve months ended March 31, 2001 compared to the same period in 2000.
Excluding the $540,000 pretax gain on sale of land and fixed assets,
non-interest income increased $525,000 or 18.1% for the year ended March 31,
2001 when compared to the prior year. For the twelve months ended March 31,
2001, fees and service charges increased $430,000 when compared to the twelve
months ended March 31, 2000. The $430,000 increase in service charges is
primarily due to the growth in checking accounts, ATM and debit cards and
mortgage broker fees. Mortgage broker fees (included in fees and service
charges) totaled $579,000 for the year ended March 31, 2001 compared to $448,000
for the previous year. Mortgage broker commission compensation expense was
$581,000 for the fiscal year ended March 31, 2001 compared to $499,000 for the
fiscal year ended March 31, 2000. Increases in mortgage broker fees and
commission compensation expense are a result of the increase in brokered loan
production from $107.1 million in 2000 to $109.4 million in 2001. Asset
management services income increased $205,000 or 67.4% for the year 2001
compared to year 2000. RAM Corp had $92.2 million or a 47.0% increase in total
assets under management at March 31, 2001 when compared to March 31, 2000. The
$61,000 decrease in loan servicing income is the result of the decrease in the
balance of loans serviced for others caused by paydowns.

NON-INTEREST EXPENSE. Non-interest expense increased $2.1 million, or 19.4% to
$12.9 million for fiscal year 2001 compared to $10.8 million for fiscal year
2000. The principal component of the Company's non-interest expense was salaries
and employee benefits. For the year ended March 31, 2001, salaries and employee
benefits, which includes mortgage broker commission compensation, was $7.0
million, or a 20.7% increase over the prior year total of $5.8 million.
Full-time equivalent employees have increased to 147 at March 31, 2001 from 132
at March 31, 2000. Expansion of the branch system by adding the 800 Tenney Road
branch in the first quarter of fiscal year 2001 and expansion in lending areas,
trust and administration are reflected in the increase in FTE. Other components
of non-interest expense include building, furniture, and equipment depreciation
and expense, data processing expense, and advertising expense reflecting the
Company's expansion in branches and continuing investment in computer
technology. In second quarter of fiscal year 2001, the Company's main office for
administration relocated from Camas to the Vancouver address of 900 Washington,
Suite 900, a 16,000 square foot leased facility.

The acquisition of the Hazel Dell and Longview branches from the Resolution
Trust Corporation ("RTC") in fiscal 1995 (see Item 1. Business--Properties), and
the related acquisition of $42 million in customer deposits created a $3.2
million core deposit intangible asset ("CDI"), representing the excess of cost
over fair value of deposits acquired. The CDI ($1.0 million at March 31, 2001)
is being amortized over the remaining life of the underlying customer
relationships currently estimated at four years. The amortization expense of CDI
was $327,000 for both fiscal years 2001 and 2000.

                                       40

<PAGE>

<PAGE>
PROVISION FOR FEDERAL INCOME TAXES. Provision for federal income taxes was $1.6
million for the year ended March 31, 2001 compared to $1.9 million for the year
ended March 31, 2000 as a result of lower income before taxes. The effective tax
rate for fiscal year 2001 was 31.6% compared to 32.6% for fiscal 2000. Reference
is made to Note 10 of the Notes to Consolidated Financial Statements, in Item 8,
Financial Statements and Supplementary Data, herein for further discussion of
the Company's federal income taxes.

COMPARISON OF FINANCIAL CONDITION AT MARCH 31, 2000 AND 1999

The Company's total assets were $344.7 million at March 31, 2000, compared to
$302.6 million at March 31, 1999. This increase resulted primarily from the
growth in the loan portfolio. The growth in the loan portfolio was funded
primarily by deposit growth and an increase in FHLB advances.

Loans receivable, net, were $249.0 million at March 31, 2000, compared to $186.8
million at March 31, 1999, a 33.3% increase. Increases primarily in residential,
commercial and commercial real estate loans contributed to the increase in loans
receivable, net. The growth in commercial and commercial real estate loan
balances reflects the increased emphasis the Company has placed on originating
such loans. The Company has been able to increase the balance of outstanding
commercial loans, commercial real estate loans and commitments due to the strong
local economy, and the consolidation of some local competitors offering these
products. The Company has also hired several experienced commercial bankers from
competitors in the local market. The growth in one- to- four family residential
mortgages reflects the impact of increasing interest rates and managements
decision to retain mortgages in the loan portfolio. 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.

There were no loans held-for-sale at March 31, 2000, compared to $341,000 at
March 31, 1999.

Cash and cash equivalents decreased to $15.8 million at March 31, 2000, from
$17.2 million at March 31, 1999 as a result of loan growth.

Investment securities held-to-maturity were $903,000 at March 31, 2000, compared
to $4.9 million at March 31, 1999. The $4.0 million decrease was a result of
investment maturities.

Investment securities available-for-sale were $12.9 million at March 31, 2000,
compared to $13.3 million at March 31, 1999. The $400,000 decrease was a result
of investment maturities.

Mortgage-backed securities held-to-maturity were $8.7 million at March 31, 2000,
compared to $12.7 million at March 31, 1999. The $4.0 million net decrease is a
result of prepayments.

Mortgage-backed securities available-for-sale were $39.4 million at March 31,
2000, compared to $53.4 million at March 31, 1999. The $14.0 million net
decrease is a result of prepayments.

Total deposits were $232.4 million at March 31, 2000, compared to $200.3 million
at March 31, 1999. Management attributes this increase primarily to the growth
in the Company's market area particularly the increase in commercial loans and
to promotions of checking and money market deposit accounts. Checking deposits
are a part of the relationship in servicing commercial loan customers.

FHLB advances increased to $60.6 million at March 31, 2000 from $42.6 million at
March 31, 1999. The $18.0 million increase in the outstanding advances at March
31, 2000 were used to fund the growth in the loan portfolio.

Shareholders' equity decreased $8.4 million to $48.5 million at March 31, 2000
from $56.9 million at March 31, 1999 primarily as a result of common share
repurchases of $9.8 million, offset by share activity in Management Recognition
Development Plan ("MRDP"), Employee Stock Ownership Plan ("ESOP") and exercise
of options of $876,000, and
                                    41
<PAGE>

<PAGE>
growth in retained earnings, less cash dividends of $1.8 million paid to the
shareholders.

COMPARISON OF OPERATING RESULTS FOR THE YEARS ENDED MARCH 31, 2000 AND 1999

NET INCOME. Net income was $3.9 million, or $0.76 per share for the year ended
March 31, 2000, compared to $4.5 million, or $0.78 per share for the year ended
March 31, 1999. Earnings were lower for the year ended March 31, 2000 primarily
as a result of increased non-interest expenses and higher provision for loan
losses.

NET INTEREST INCOME. Net interest income for fiscal year 2000 was $14.4 million,
representing a $1.2 million, or a 8.9% increase, from fiscal year 1999. This
improvement reflected a 10% increase in average earning assets (primarily
increases in average loan balances due to a 19% increase for mortgage loans and
78% increase in non-mortgage loans) to $220.5 million, which more than offset a
3 basis point reduction in the net interest margin to 4.78%.

INTEREST INCOME. Interest income totaled $25.4 million and $23.1 million, for
fiscal years 2000 and 1999, respectively. Average interest-bearing assets
increased $28.1 million to $302.3 million for fiscal year ended 2000 from $274.2
million for fiscal year ended 1999. The yield on interest-earning assets was
8.44% for fiscal year 2000 compared to 8.43% for fiscal year ended 1999.

INTEREST EXPENSE. Interest expense for the year ended March 31, 2000 totaled
$11.1 million, a $1.2 million increase from $9.9 million for the year ended
March 31, 1999. The increase in interest expense was the result of the 12%
growth in average interest-bearing liabilities to $242.8 million at March 31,
2000 from $215.9 million at March 31, 1999. The increase was due primarily to
the $15.6 million growth in the average balance of money market accounts to
$37.0 million at year end March 31, 2000 compared to $21.5 million at March 31,
1999. Other interest-bearing liabilities increased $11.4 million to $45.4
million at March 31, 2000 due to increased FHLB borrowings.

PROVISION FOR LOAN LOSSES. The provision for loan losses for the year ended
March 31, 2000 was $675,000 compared to $240,000 for the year ended March 31,
1999. The fiscal year 2000 provision for loan losses exceeded net loan
charge-offs by $216,000, resulting in an increase in the allowance for loan
losses to $1.4 million. While the loan portfolio has grown substantially in
fiscal year 2000 the asset quality has remained solid as demonstrated by the
nonperforming asset to total assets ratio of 0.39% at March 31, 2000 and 0.44%
at March 31, 1999. The $282,000 commercial loan charge-offs was composed of four
commercial loans and the largest charge-off was $104,000. The allowance for loan
losses at March 31, 2000 was $1.4 million, or 0.50% of period end loans compared
to $1.1 million, or 0.54% of period end loans at March 31, 1999. Management
considered the allowance for loan losses at March 31, 2000 to be adequate to
cover foreseeable loan losses based on the assessment of various factors
affecting the loan portfolio.

NON-INTEREST INCOME. Non-interest income increased $23,000 or 1.0% for the
twelve months ended March 31, 2000 compared to the same period in 1999. For the
twelve months ended March 31, 2000, fees and service charges increased $125,000
when compared to the same period for the prior year. The $125,000 increase in
service charges reflects the growth in checking service charges and asset
management services income that was partially offset by the reduction in
mortgage broker loan fees caused by the reduction in residential mortgage
refinance activity. Mortgage broker fees (included in fees and service charges)
totaled $448,000 for the year ended March 31, 2000 compared to $944,000 for the
previous year. Mortgage broker commission compensation expense was $499,000 for
the fiscal year ended March 31, 2000 compared to $740,000 for the fiscal year
ended March 31, 1999. Decreases in mortgage broker fees and commission
compensation expense are a result of the decrease in brokered loan production
from $141.1 million in 1999 to $107.1 million in 2000 reflecting the higher
interest rate environment. Gains on sale of loans held for resale decreased
$222,000 for the twelve months ended March 31, 2000 compared to the same period
in the prior year reflecting management's decision to retain the majority of the
originated residential one- to four- loan mortgage loans in the loan portfolio.

NON-INTEREST EXPENSE. Non-interest expense increased $1.8 million, or 19.6% to
$10.8 million for fiscal year 2000 compared to $9.1 million for fiscal year
1999. The principal component of the Company's non-interest expense was salaries
and employee benefits. For the year ended March 31, 2000, salaries and employee
benefits, which includes
                                      42
<PAGE>

<PAGE>
mortgage broker commission compensation, was $5.8 million, or a 16% increase
over the prior year total of $5.0 million. As mentioned previously, commission
compensation expense was $499,000 for the fiscal year ended March 31, 2000
compared to $740,000 for the fiscal year ended March 31, 1999. Full-time
equivalent employees increased to 132 at March 31, 2000 from 111 at March 31,
1999. Other components of non-interest expense include building, furniture, and
equipment depreciation and expense, data processing expense, and advertising
expense reflect the Company's expansion in branches and continuing investment in
computer technology.

The amortization cost of the CDI was $327,000 for both fiscal years 2000 and
1999.

PROVISION FOR FEDERAL INCOME TAXES. Provision for federal income taxes was $1.9
million for the year ended March 31, 2000 compared to $2.3 million for the year
ended March 31, 1999 as a result of higher income before taxes. The effective
tax rate for fiscal year 2000 was 32.6% compared to 34.1% for fiscal 1999.
Reference is made to Note 10 of the Notes to Consolidated Financial Statements,
in Item 8, Financial Statements and Supplementary Data, herein for further
discussion of the Company's federal income taxes.

AVERAGE BALANCE SHEET

The following table sets forth, for the periods indicated, information regarding
average balances of assets and liabilities as well as the total dollar amounts
of interest income from average interest-earning assets and interest expense on
average interest-bearing liabilities, resultant yields, interest rate spread,
ratio of interest-earning assets to interest-bearing liabilities and net
interest margin. Average balances for a period have been calculated using the
monthly average balances during such period. Interest income on tax exempt
securities has been adjusted to a taxable-equivalent basis using the statutory
Federal income tax rate of 34%.

                                      43



<PAGE>


<PAGE>
<TABLE>
                                                          Year Ended March 31,
                              ------------------------------------------------------------------------------
                                        2001                      2000                        1999
                              ------------------------   ------------------------   ---------- -------------
                                      Interest                   Interest                   Interest
                              Average    and    Yield/   Average   and     Yield/   Average   and     Yield/
                              Balance Dividends   Cost   Balance Dividends   Cost   Balance Dividends   Cost
                              ------- --------- ------   ------- --------- ------   ------- --------- ------
                                                                    (Dollars in thousands)
Interest-earning assets:
<S>                           <C>        <C>     <C>     <C>        <C>     <C>     <C>        <C>     <C>
 Mortgage loans              $205,895   $19,286  9.37%  $184,343   $16,889  9.16%  $154,450   $15,117  9.79%
 Non-mortgage loans            71,392     6,985  9.78     36,116     3,541  9.80     20,288     1,998  9.85
                             --------   -------  -----  --------   -------  -----  --------   -------  -----
   Total net loans            277,287    26,271  9.47    220,459    20,430  9.27    174,738    17,115  9.79
Mortgage-backed securities     46,151     3,144  6.81     56,735     3,585  6.32     61,041     3,755  6.15
Investment securities          20,200     1,318  6.52     16,168       971  6.01     20,031     1,215  6.07
Daily interest-bearing assets   8,827       530  6.00      6,217       312  5.02     16,131       838  5.19
Other earning assets            4,056       262  6.48      2,715       219  8.07      2,275       191  8.40
                             --------   -------  -----  --------   -------  -----  --------   -------  -----
Total interest-earning assets 356,521    31,525  8.84    302,294    25,517  8.44    274,216    23,114  8.43

Non-interest-earning assets:
 Office properties and
   equipment, net              10,295                      7,277                      5,412
 Real estate, net                 134                        471                        471
 Other non-interest-
   earning assets              10,189                      7,968                      8,488
                             --------                   --------                   --------
 Total assets                $377,139                   $318,010                   $288,587
                             ========                   ========                   ========

Interest-earning liabilities:
 Regular savings accounts    $ 19,586       536  2.74   $ 20,654       569  2.75   $ 20,374       560  2.75
 NOW accounts                  21,897       315  1.44     21,757       303  1.39     23,875       309  1.29
 Money market accounts         44,911     2,182  4.86     37,029     1,588  4.29     21,470       790  3.68
 Certificates of deposit      138,492     8,314  6.00    117,948     6,131  5.20    116,165     6,445  5.55
                             --------   -------  -----  --------   -------  -----  --------   -------  -----
Total deposits                224,886    11,347  5.05    197,388     8,591  4.35    181,884     8,104  4.46
Other interest-bearing
  liabilities                  72,825     4,941  6.78     45,406     2,483  5.47     34,008     1,821  5.35
                             --------   -------  -----  --------   -------  -----  --------   -------  -----
Total interest-bearing
  liabilities                 297,711    16,288  5.47    242,794    11,074  4.56    215,892     9,925  4.60

Non-interest-bearing liabilities:
 Non-interest-bearing
  deposits                     26,635                     19,982                      9,636
 Other liabilities              2,232                      1,004                      2,212
                             --------                   --------                   --------
  Total liabilities           326,578                    263,780                    227,740
 Shareholders' equity          50,561                     54,230                     60,847
                             --------                   --------                   --------
Total liabilities and
  shareholders' equity       $377,139                   $318,010                   $288,587
                             ========                   ========                   ========
Net interest income                     $15,237                    $14,443                    $13,189
                                        =======                    =======                    =======
Interest rate spread                             3.37%                      3.88%                      3.83%
                                                 =====                      =====                      =====
Net interest margin                              4.27%                      4.78%                      4.81%
                                                 =====                      =====                      =====
Ratio of average interest-earning assets
 to average interest-bearing liabilities       119.75%                    124.51%                    127.02%
                                                ======                    ======                     ======

</TABLE>
                                            44
<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.

                                      At March 31,      Year Ended March 31,
                                      ------------   --------------------------
                                            2001      2001      2000      1999
                                           ------    ------    ------    ------
Weighted average yield earned on:

 Total net loans(1)                         8.53%     8.89%     8.54%     8.59%
 Mortgage-backed securities                 6.65      6.81      6.32      6.15
 Investment securities                      6.88      6.52      6.01      6.07
 All interest-earning assets                7.98      8.39      7.90      7.66

Weighted average rate paid on:

 Deposits                                   4.53      5.05      4.35      4.46
 FHLB advances and other borrowings         6.62      6.78      5.47      5.35
 All interest-bearing liabilities           4.97      5.47      4.56      4.60

Interest rate spread (spread between weighted
 average rate on all interest-earning assets
 and all interest-bearing liabilities)(1)   3.01      2.92      3.34      3.06

Net interest margin (net interest income
 (expense) as a percentage of average
 interest-earning assets)(1)                3.13      3.82      4.24      4.04


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





                                        45

<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).

                                  Year Ended March 31,
                   ------------------------------------------------------------
                      2001 vs. 2000                 2000 vs. 1999
                   Increase (Decrease)            Increase (Decrease)
                           Due to                          Due to
                   -------------------- Total     -------------------- Total
                                Rate/   Increase               Rate/   Increase
                   Volume  Rate Volume (Decrease) Volume  Rate Volume (Decrease)
                   ------  ---- ------  --------- ------  ---- ------  --------
                                          (In Thousands)
Interest Income:
Mortgage loans     $1,975  $377   $ 43     $2,395 $2,926 $(967) $(189)   $1,770
Non-mortgage loans  3,459    (7)    (7)     3,445  1,559    (8)    (7)    1,544
Mortgage-backed
  securities         (669)  280    (52)      (441)  (265)  102     (7)     (170)
Investment
  securities          242    84     21        347   (234)  (12)     2      (244)
Daily interest-
 bearing              131    61     26        218   (515)  (28)    17      (526)
Other earning
 assets               108   (43)   (21)        44     37    (7)    (1)       29
Total interest     ------  ---- ------  --------- ------  ---- ------  --------
  income(taxable
  equivalent)       5,246   752     10      6,008  3,508  (920)  (185)    2,403
                   ------  ---- ------  --------- ------  ---- ------  --------
Interest Expense:
Regular savings
 accounts             (29)   (4)     -        (33)     8     1      -         9
NOW accounts            2    10      -         12    (27)   24     (2)       (5)
Money market accounts 338   211     45        594    573   131     95       799
Certificates of
 deposit            1,068   949    165      2,182     99  (407)    (6)     (314)
Other interest-
bearing liabilities 1,499   598    362      2,459    610    39     11       660

Total interest
 expense            2,878 1,764    572      5,214  1,263  (212)    98     1,149
                   ------  ---- ------  --------- ------  ---- ------  --------
Net interest income
 (taxable
  equivalent)      $2,368(1,012) $(562)     $ 794 $2,245 $(708) $(283)   $1,254
                   ====== =====    ===        ===  =====   ===    ===     =====

ASSET AND LIABILITY MANAGEMENT

The Company's principal 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 ARM loans or purchase of
adjustable rate mortgage-backed securities for its portfolio; growing
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


                                        46

<PAGE>


<PAGE>
other securities; and the origination of fixed-rate loans for sale in the
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 growth in assets, 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, 2001, ARM loans and adjustable rate mortgage-backed
securities constituted $140.0 million, or 37.4%, 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 $78.6 million at
March 31, 2001, including $17.5 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 $81.1 million and produced service fees of $67,000 for the year
ended March 31, 2001. 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.
Commercial loans are adjustable interest rate loans. At March 31, 2001, the
construction, commercial and consumer loan portfolios amounted to $83.9 million,
$23.1 million and $25.0 million, or 28.3%, 7.8% and 8.4% of total loans
receivable, 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, 2001, the combined portfolio of $76.0 million had an
average term to repricing or maturity of 11.4 years, excluding equity
securities. 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. Following are the estimated impacts
of immediate changes in interest rates at the specified levels based on the
latest OTS report dated December 31, 2000.
                                        47
<PAGE>

<PAGE>
                                At December 31, 2000
              ----------------------------------------------------------------
                Net Portfolio Value
              --------------------------      Net Portfolio Value as a
                                            Percent of Present Value of Assets
 Change       Dollar    Dollar    Percent   ----------------------------------
 In Rates     Amount    Change    Change    NPV Ratio    Change
 --------     ------    ------    ------    ---------    ------
                             (Dollars in thousands)
  300  bp    $42,815  $(16,276)    (28)%      11.17%     (342) bp
  200  bp     47,542   (11,549)    (20)       12.19      (239) bp
  100  bp     52,815    (6,276)    (11)       13.30      (128) bp
    0  bp     59,091         -       -        14.59         -
 (100) bp     62,185     3,094       5        15.17        58 bp
 (200) bp     64,444     5,352       9        15.56        97 bp
 (300) bp     67,700     8,609      15        16.14       155 bp

For example, the above table illustrates that an instantaneous 200 basis point
increase in market interest rates at December 31, 2000 would reduce the
Company's NPV by approximately $11.5 million, or 20%, at that date. At December
31, 1999 an instantaneous 200 basis point increase in market interest rates
would have reduced the Company's NPV by approximately $12.7 million, or 22%, at
that date. The $1.2 million decrease in the reduction of NPV to $11.5 million at
December 31, 2000 is the result of several factors. The primary factors for
fiscal year 2001 are the impact of the decreased FHLB borrowings that reprice
within one year and the larger percentage of the total loans receivable that
reprice within one year. In fiscal year 2001, the refinancing activity of one-
to- four residential mortgage loans from adjustable rate loans to fixed rate
loans did not outpace the increased balance of adjustable rate loans in the loan
portfolio.

Certain assumptions utilized by the OTS in assessing the interest rate risk of
savings associations within its region were utilized 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 to 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.
Further more, 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 sources of funds are customer deposits, proceeds from
principal and interest payments on loans and 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, 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, 2001, cash and cash
equivalents totaled $38.9 million, or 9.0% of total assets. At March 31, 2001,
the Company also maintained an uncommitted credit facility with the FHLB-Seattle
that provided for immediately available advances up to an aggregate amount of
$149.9 million, under which $79.5 million was outstanding.

OTS regulations require savings institutions to maintain an average daily
balance of liquid assets (cash and eligible investments) equal to at least 4.0%
of the average daily balance of its net withdrawable deposits and short-term
borrowings. The Bank's liquidity ratio at March 31, 2001 was 28.22%.

                                       48

<PAGE>


<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.

The Company's primary investing activity is the origination of one- to- four
family mortgage loans. During the years ended March 31, 2001, 2000 and 1999, the
Company originated $95.6 million, $88.6 million and $112.6 million of such
loans, respectively. At March 31, 2001, the Company had outstanding mortgage
loan commitments of $4.3 million and undisbursed balance of mortgage loans
closed of $26.2 million. Consumer loan commitments totaled $2.6 million and
unused lines of consumer credit totaled $11.4 million at March 31, 2001.
Commercial and commercial real estate loan commitments totaled $710,000 and
unused lines of commercial and commercial real estate credit totaled $14.4
million at March 31, 2001. 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, 2001 totaled $142.0
million. Historically, the Company has been able to retain a significant amount
of its deposits as they mature.

OTS regulations require the Bank to maintain specific amounts of regulatory
capital. As of March 31, 2001, the Bank complied with all regulatory capital
requirements as of that date with tangible, core and risk-based capital ratios
of 10.88%, 10.88% and 17.13%, respectively. For a detailed discussion of
regulatory capital requirements, see "REGULATION -- Federal Regulation of
Savings Associations -- Capital Requirements."

IMPACT OF ACCOUNTING PRONOUNCEMENTS AND REGULATORY POLICIES

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS.

In June 1998, the Financial Accounting Standards Board ("FASB") issued SFAS No.
133, Accounting for Derivative Instruments and Hedging Activities.  SFAS No.133
establishes accounting and reporting standards for derivative instruments,
including certain derivative instruments embedded in other contracts and for
hedging activities.  The effective date of this Statement was deferred by
the issuance of SFAS No. 137, Accounting for Derivative Instruments and Hedging
Activities-Deferral of the Effective Date of FASB Statement No. 133.  SFAS
No.133 was amended by SFAS No. 138, Accounting for Certain Derivative
Instruments and Certain Hedging Activities.  This statement becomes effective
for fiscal year 2002, and will not be applied retroactively to financial
statements of prior periods.  Upon adoption of provisions of SFAS No. 133 at
April 1, 2001, the Company did not have derivate instruments and there
was no impact on the financial statements of the Company.

In September 2000, the Financial Accounting Standards Board ("FASB") issued SFAS
No. 140, Accounting for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities, and replaced SFAS No. 125 of the same title.
This statement revises the standards for accounting for securitizations and
other transfers of financial assets and collateral and requires certain
disclosures, but carries over most of SFAS No. 125's provisions without
reconsideration. This statement is effective for transfers and servicing of
financial assets and extinguishments of liabilities occurring after March 31,
2001 and is effective for recognition and reclassification of collateral and for
disclosures relating to securitization transactions and collateral for fiscal
years ending after December 15, 2000. The adoption of provisions of SFAS No. 140
is not expected to have a material impact on the financial statements of the
Company.

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.

                                       49

<PAGE>


<PAGE>
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--Investment Securities Portfolio and Carrying
Values" and " Deposit Activities and Other Sources of Funds -- Certificates of
Deposit by Rates and Maturities" contained herein.

QUALITATIVE ASPECTS OF MARKET RISK. The Company's principal financial objective
is to achieve long-term profitability while limiting its exposure to fluctuating
market interest rates. The Company intends to reduce risk where appropriate but
accept a degree of risk when warranted by economic circumstances. 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. 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
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, 2001. Market risk sensitive instruments
are generally defined as on- and off-balance sheet derivatives and other
financial instruments.


                                       50


<PAGE>


<PAGE>
<TABLE>
                                                One       After     After
                                       Within   Year      3 Years   5 Years    Beyond
                           Average     One      to 3      to 5      to 10       10                   Fair
                              Rate     Year     Years     Years     Years      Years      Total      Value
                              ----     ----     -----     -----     -----      -----      -----      -----
                                             (Dollars in thousands)
Interest-Sensitive Assets:
<S>                          <C>    <C>        <C>       <C>       <C>        <C>       <C>        <C>
Loans receivable             8.53% $155,919   $19,557   $49,129   $48,649    $55,221   $328,475   $332,656
Mortgage-backed securities   6.65    20,230       218     4,421       749     23,926     49,544     49,625
Investments and other
 interest-earning assets     6.08         -         -         -     4,505     21,917     26,422     26,428
FHLB stock                   6.49       886     1,773     1,773         -          -      4,432      4,432

Interest-Sensitive Liabilities:

NOW accounts                 1.50     6,429    12,857    12,857         -          -     32,143     32,143
Non-interest checking accounts  -     5,587    11,174    11,174         -          -     27,935     27,935
Savings accounts             2.75     3,765     7,531     7,531         -          -     18,827     18,827
Money market                 3.99     9,145    18,290    18,289         -          -     45,724     45,724
Certificate accounts         6.21   142,022    23,672     4,659       541          -    170,894    172,057
FHLB advances                6.62    25,000    39,500    15,000         -          -     79,500     81,208

Off-Balance Sheet Items:
Commitments to extend Credit    -     7,663         -         -         -          -      7,663      7,663
Unused lines of credit          -    52,097         -         -         -          -     52,097     52,097

</TABLE>


                                       51



<PAGE>



ITEM 8.   FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
-----------------------------------------------------

RIVERVIEW BANCORP, INC. AND SUBSIDIARY

Consolidated Financial Statements for Years Ended March 31, 2001, 2000, 1999 and
Independent  Auditors' Report

TABLE OF CONTENTS

--------------------------------------------------------------------------------

                                                                          PAGE

Independent Auditors' Report                                                53


Consolidated Balance Sheets as of March 31, 2001 and 2000                   54

Consolidated Statements of Income for the Years Ended March 31, 2001,
  2000 and 1999                                                             55

Consolidated Statements of Shareholders' Equity for the Years Ended
  March 31, 2001, 2000 and 1999                                             56

Consolidated Statements of Cash Flows for the Years Ended March 31, 2001,
  2000 and 1999                                                             57

Notes to Consolidated Financial Statements                                  58









                                       52

<PAGE>



INDEPENDENT AUDITORS' REPORT

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

We have audited the accompanying consolidated balance sheets of Riverview
Bancorp, Inc. and Subsidiary as of March 31, 2001 and 2000, and the related
consolidated statements of income, shareholders' equity and cash flows for each
of the three years in the period ended March 31, 2001. 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 auditing standards generally accepted
in the United States of America. 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, such consolidated financial statements present fairly, in all
material respects, the financial position of Riverview Bancorp, Inc. and
Subsidiary as of March 31, 2001 and 2000, and the results of their operations
and their cash flows for each of the three years in the period ended March 31,
2001, in conformity with accounting principles generally accepted in the United
States of America.

/s/ Deloitte & Touche LLP

Portland, Oregon
May 11, 2001









                                       53


<PAGE>


RIVERVIEW BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS
MARCH 31, 2001 AND 2000

(IN THOUSANDS, EXCEPT SHARE DATA)                               2001      2000
--------------------------------------------------------------------------------
ASSETS

Cash (including interest-earning accounts of $26,460
  and $5,378)                                                $ 38,935  $ 15,786
Loans held for sale                                               569         -
Investment securities held to maturity, at amortized cost
  (fair value of $867 and $854)                                   861       903
Investment securities available for sale, at fair value
  (amortized cost of $26,060 and $14,421)                      25,561    12,883
Mortgage-backed securities held to maturity, at amortized
  cost (fair value of $6,486 and $8,595)                        6,405     8,657
Mortgage-backed securities available for sale, at fair value
  (amortized cost of $43,224 and $40,974)                      43,139    39,378
Loans receivable (net of allowance for loan losses of $1,916
  and $1,362)                                                 296,292   249,034
Real estate owned                                                 473        65
Prepaid expenses and other assets                               1,002       875
Accrued interest receivable                                     2,394     1,881
Federal Home Loan Bank stock, at cost                           4,432     3,074
Premises and equipment, net                                    10,055     9,088
Land held for development                                           -       471
Deferred income taxes, net                                        856     1,236
Core deposit intangible, net                                    1,022     1,349
                                                             --------  --------
TOTAL ASSETS                                                 $431,996  $344,680
                                                             ========  ========

LIABILITIES AND SHAREHOLDERS' EQUITY

LIABILITIES:

   Deposit accounts                                          $295,523  $232,355
   Accrued expenses and other liabilities                       4,034     3,147
   Advance payments by borrowers for taxes and insurance          218       139
   Federal Home Loan Bank advances                             79,500    60,550
                                                             --------  --------
Total liabilities                                             379,275   296,191

COMMITMENTS AND CONTINGENCIES (NOTE 16)

SHAREHOLDERS' EQUITY:
   Serial preferred stock, $.01 par value; 250,000 authorized,
    issued and outstanding, none                                    -         -
   Common stock, $.01 par value; 50,000,000 authorized,
     2001 - 4,981,421 issued, 4,655,040 outstanding;
     2000 - 4,902,503 issued, 4,521,209 outstanding                50        49
   Additional paid-in capital                                  38,687    38,457
   Retained earnings                                           17,349    15,652
   Unearned shares issued to employee stock ownership trust    (2,217)   (2,422)
   Unearned shares held by the management recognition
     and development plan                                        (762)   (1,178)
   Accumulated other comprehensive loss                          (386)   (2,069)
                                                            ---------  --------
         Total shareholders' equity                            52,721    48,489
                                                            ---------  --------

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                  $ 431,996  $344,680
                                                            =========  ========
See notes to consolidated financial statements.

                                         54
<PAGE>

<PAGE>
RIVERVIEW BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF INCOME
YEARS ENDED MARCH 31, 2001, 2000 AND 1999

(IN THOUSANDS, EXCEPT SHARE DATA)                     2001      2000      1999
--------------------------------------------------------------------------------
INTEREST INCOME:
 Interest and fees on loans receivable             $ 26,271  $ 20,430  $ 17,115
 Interest on investment securities                      820       893     1,215
 Interest on mortgage-backed securities               3,144     3,585     3,755
 Other interest and dividends                         1,108       530     1,029
                                                   --------  --------  --------
   Total interest income                             31,343    25,438    23,114
                                                   --------  --------  --------
INTEREST EXPENSE:
 Interest on deposits                                11,347     8,590     8,104
 Interest on borrowings                               4,941     2,483     1,821
                                                   --------  --------  --------
   Total interest expense                            16,288    11,073     9,925
                                                   --------  --------  --------
Net interest income                                  15,055    14,365    13,189
 Less provision for loan losses                         949       675       240
                                                   --------  --------  --------
Net interest income after provision for loan losses  14,106    13,690    12,949
                                                   --------  --------  --------
NON-INTEREST INCOME:
 Fees and service charges                             2,631     2,201     2,362
 Asset management fee                                   509       304        18
 Gain on sale of loans held for sale                     94        24       246
 Gain on sale of securities                               -         -        37
 Gain on sale of other real estate owned                 35       127         1
 Loan servicing income                                   67       128       116
 Gain on sale of land and fixed assets                  540         -         -
 Other                                                   86       113        94
                                                   --------  --------  --------
   Total non-interest income                          3,962     2,897     2,874
                                                   --------  --------  --------
NON-INTEREST EXPENSE:
 Salaries and employee benefits                       6,989     5,761     5,029
 Occupancy and depreciation                           1,947     1,362     1,117
 Data processing                                        926       781       581
 Amortization of core deposit intangible                327       327       327
 Marketing expense                                      601       579       336
 FDIC insurance premium                                  46        99       109
 State and local taxes                                  319       250       188
 Telecommunications                                     256       263       216
 Professional fees                                      247       360       242
 Other                                                1,209     1,050       910
                                                   --------  --------  --------
   Total non-interest expense                        12,867    10,832     9,055
                                                   --------  --------  --------
INCOME BEFORE FEDERAL INCOME TAXES                    5,201     5,755     6,768
PROVISION FOR FEDERAL INCOME TAXES                    1,644     1,878     2,305
                                                   --------  --------  --------
NET INCOME                                         $  3,557  $  3,877  $  4,463
                                                   ========  ========  ========
Earnings per common share:
     Basic                                            $0.78     $0.76     $0.78
     Diluted                                           0.77      0.74      0.76
Weighted average number of shares outstanding:

     Basic                                        4,579,091  5,108,725 5,705,697
     Diluted                                      4,640,249  5,205,977 5,837,000

See notes to consolidated financial statements.

                                       55
<PAGE>


<PAGE>
RIVERVIEW BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
YEARS ENDED MARCH 31, 2001, 2000 AND 1999
<TABLE>
                                                                     UNEARNED
                                                                     SHARES
                                                                     ISSUED TO
                                                                     EMPLOYEE   UNEARNED  ACCUMULATED
                                 COMMON STOCK   ADDITIONAL           STOCK      SHARES    OTHER COMPRE-
(IN THOUSANDS,                                   PAID-IN   RETAINED  OWNERSHIP  ISSUED TO HENSIVE
 EXCEPT SHARE DATA)             SHARES   AMOUNT  CAPITAL   EARNINGS  TRUST      MRDP      INCOME(LOSS) TOTAL
------------------------------------------------------------------------------------------------------------
<S>                          <C>           <C>    <C>        <C>      <C>       <C>         <C>       <C>
Balance, April 1, 1998       5,809,456    $  62  $53,399    $10,495  $(2,993)   $  -       $ 119     $61,082
Cash dividends                       -        -        -     (1,356)       -       -                  (1,356)
Exercise of stock options       39,777        -      141          -        -       -           -         141
Stock repurchased and retired (413,279)      (4)  (5,457)         -        -       -           -      (5,461)
Earned ESOP shares              24,632        -       52          -      250       -           -         302
Shares acquired by MRDP       (142,830)       -      (15)         -        -  (1,964)          -      (1,979)
Earned MRDP shares              28,566        -        -          -        -     393           -         393
                             ---------     ----   -------    ------    -----   -----        ----     -------
                             5,346,322       58   48,120      9,139   (2,743) (1,571)        119      53,122
Comprehensive income:
 Net income                          -        -        -      4,463        -       -           -       4,463
 Other comprehensive loss:
 Unrealized holding loss on
 securities of $694 (net of
 $357 tax effect) less
 reclassification adjustment
 for gains included in net
 income of $24 (net of
 $13 tax expense)                    -        -        -          -        -       -        (718)       (718)
                                                                                                       -----
Total comprehensive income           -        -        -          -        -       -           -       3,745
                             ---------     ----   -------    ------    -----   -----        ----     -------
Balance March 31, 1999       5,346,322       58   48,120     13,602   (2,743) (1,571)       (599)     56,867
Cash dividends                       -        -        -     (1,827)       -       -           -      (1,827)
Exercise of stock options       34,096        -      137          -        -       -           -         137
Stock repurchased and retired (912,404)      (9)  (9,825)         -        -       -           -      (9,834)
Earned ESOP shares              24,629        -       25          -      321       -           -         346
Earned MRDP shares              28,566        -        -          -        -     393           -         393
                             ---------     ----   -------    ------    -----   -----        ----     -------
                             4,521,209       49   38,457     11,775   (2,422) (1,178)       (599)     46,082
Comprehensive income:
Net income                           -        -        -      3,877        -       -           -       3,877
Other comprehensive loss:
 Unrealized holding loss on
 securities of $1,454 (net of
 $749 tax effect) less
 reclassification adjustment
 for net gains included in net
 income of $16 (net of $8 tax
 expense)                            -        -        -          -        -       -      (1,470)     (1,470)
                                                                                                       -----
Total comprehensive income           -        -        -          -        -       -           -       2,407
                             ---------     ----   -------    ------    -----   -----        ----     -------
Balance March 31, 2000       4,521,209       49    38,457    15,652   (2,422) (1,178)     (2,069)     48,489
Cash Dividends                       -        -        -     (1,860)       -       -           -      (1,860)
Exercise of stock options       78,918        1      221          -        -       -           -         222
Earned ESOP shares              24,633        -        9          -      205       -           -         214
Earned MRDP shares              30,280        -        -          -        -     416           -         416
                             ---------     ----   -------    ------    -----   -----        ----     -------
                             4,655,040       50   38,687     13,792   (2,217)   (762)     (2,069)     47,481
Comprehensive income:
Net income                           -        -        -      3,557        -       -           -       3,557
Other comprehensive income:
 Unrealized holding gain on
 securities of $1,683 (net of $867
 tax effect)                         -        -        -          -        -       -       1,683       1,683
                                                                                                       -----
Total comprehensive income           -        -        -          -        -       -           -       5,240
                             ---------     ----   -------    ------    -----   -----        ----     -------
Balance March 31, 2001       4,655,040      $50   $38,687   $17,349  $(2,217)  $(762)      $(386)    $52,721
                             =========     ====   =======   =======  =======   ======      =====     =======
</TABLE>
See notes to consolidated financial statements.

                                          56

<PAGE>

<PAGE>
RIVERVIEW BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED MARCH 31, 2001, 2000 AND 1999

(IN THOUSANDS)                                        2001      2000      1999
-------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net income                                        $3,557    $3,877    $4,463
Adjustments to reconcile net income to cash
 provided by operating activities:
  Depreciation and amortization                       1,501     1,289     1,196
  Provision for losses on loans                         949       675       240
  (Provision) benefit for deferred income taxes, net   (487)       15      (266)
  Noncash expense related to ESOP                       214       268       302
  Noncash expense related to MRDP                       393       393       589
  Increase in deferred loan origination fees,
   net of amortization                                  120       585       430
  Federal Home Loan Bank stock dividend                (263)     (192)     (173)
  Net gain on sale of real estate owned, mortgage-
   backed securities, investment securities and
   premises and equipment                              (456)      (30)      (37)
  Changes in assets and liabilities:
   Decrease (increase) in loans held for sale          (569)      341     1,089
   (Increase) decrease in prepaid expenses and
     other assets                                       127       (59)      (13)
   Decrease (increase) in accrued interest receivable  (513)     (338)       53
   Increase in accrued expenses and other liabilities   722       440       115
                                                     ------    ------    ------
Net cash provided by operating activities             5,295     7,264     7,988
                                                     ------    ------    ------
CASH FLOWS FROM INVESTING ACTIVITIES:
 Loan originations                                 (205,890) (156,832) (158,651)
 Principal repayments on loans                      147,415    88,179   106,036
 Loans sold                                           7,563     4,224    25,809
 Proceeds from call, maturity, or sale of investment
  securities available for sale                       3,000     1,000    19,057
 Purchase of investment securities available for sale     -    (1,673)  (21,452)
 Purchase of equity securities                      (15,000)        -    (1,356)
 Purchase of mortgage-backed securities available
  for sale                                           (8,055)        -   (33,377)
 Principal repayments on mortgage-backed securities
  held to maturity                                    2,255     4,123     7,721
 Principal repayments on mortgage-backed securities
  available for sale                                  5,745    12,690    11,795
 Principal repayments on investment securities held
  to maturity                                            42        40         -
 Principal repayment on investment securities
  available for sale                                    359         -         -
 Purchase of investment securities held to maturity       -         -      (982)
 Proceeds from call or maturity of investment
  securities held to maturity                             -     4,000     4,368
 Purchase of premises and equipment                  (2,507)   (3,724)   (2,058)
 Purchase of Federal Home Loan Bank stock            (1,095)     (268)     (475)
 Proceeds from sale of real estate owned,
  premises and equipment                              3,463       936       404
                                                     ------    ------    ------
Net cash used in investing activities               (62,705)  (47,305)  (43,161)
                                                     ------    ------    ------

CASH FLOWS FROM FINANCING ACTIVITIES:
 Net increase in deposit accounts                    63,168    32,044    20,486
 Dividends paid                                      (1,860)   (1,827)   (1,244)
 Repurchase of common stock                               -    (9,834)   (5,461)
 Stock acquired for MRDP                                  -         -    (1,979)
 Proceeds from Federal Home Loan Bank advances      164,686   220,864    30,000
 Repayment of Federal Home Loan Bank advances      (145,736) (202,864)  (17,000)
 Net increase (decrease) in advance payments
  by borrowers                                           79       100       (45)
 Proceeds from exercise of stock options                222       137       141
                                                     ------    ------    ------
Net cash provided by financing activities            80,559    38,620    24,898
                                                     ------    ------    ------
NET INCREASE (DECREASE) IN CASH                      23,149    (1,421)  (10,275)
CASH, BEGINNING OF YEAR                              15,786    17,207    27,482
                                                     ------    ------    ------
CASH, END OF YEAR                                   $38,935   $15,786   $17,207
                                                    =======   =======   =======

SUPPLEMENTAL DISCLOSURES:
  Cash paid during the year for:
  Interest                                          $15,906   $10,952    $9,841
  Income taxes                                        2,222     1,815     2,774
NONCASH INVESTING AND FINANCING ACTIVITIES:
 Transfer of loans to real estate owned             $ 2,585     $ 971     $ 498
 Dividends declared and accrued in other liabilities    471       415       327
 Fair value adjustment to securities available
   for sale                                           2,550    (2,227)   (1,088)
 Income tax effect related to fair value adjustment    (867)      757       370



See notes to consolidated financial statements.

                                          57
<PAGE>



<PAGE>
RIVERVIEW BANCORP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
-------------------------------------------------------------------------------

1.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     PRINCIPLES OF CONSOLIDATION - The consolidated financial statements of
     Riverview Bancorp, Inc. and Subsidiary (the "Company") include all the
     accounts of Riverview Bancorp, Inc. and the consolidated accounts of its
     wholly-owned subsidiary, Riverview Community Bank (the "Bank"), the Bank's
     wholly-owned subsidiary, Riverview Services, Inc. and the Bank's majority
     owned subsidiary, Riverview Asset Management Corp. All significant
     inter-company transactions and balances have been eliminated in
     consolidation.

     NATURE OF OPERATIONS - The Bank is a twelve branch community-oriented
     financial institution operating in rural and suburban communities in
     southwest Washington state. The Bank is engaged primarily in the business
     of attracting deposits from the general public and using such funds,
     together with other borrowings, to invest in various consumer-based real
     estate loans, other consumer and commercial loans, investment securities,
     and mortgage-backed securities.

     USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS - The
     preparation of financial statements in conformity with accounting
     principles generally accepted in the United States of America ("generally
     accepted accounting principles" or "GAAP"),

     requires management to make estimates and assumptions that affect the
     reported amounts of certain assets and liabilities and disclosure of
     contingent assets and liabilities at the date of the financial statements
     and the reported amounts of related revenue and expense during the
     reporting period. Actual results could differ from those estimates.

     CONVERSION AND REORGANIZATION - Riverview Bancorp, Inc. ("Bancorp") is a
     Washington corporation which is the holding company for the Bank. Bancorp
     was organized by the Bank for the purpose of acquiring all of the capital
     stock of the Bank in connection with the conversion of Riverview M.H.C.
     ("MHC"), the former parent mutual holding company of the Bank, to stock
     form, and the reorganization of the Bank as a wholly-owned subsidiary of
     Bancorp, which was completed on September 30, 1997 ("Conversion and
     Reorganization").

     In the Conversion and Reorganization 3,570,270 shares previously held by
     MHC were retired and simultaneously 3,570,750 shares of common stock were
     sold at a subscription price of $10.00 per share resulting in net proceeds
     of approximately $31.8 million after taking into consideration $2.9 million
     for the establishment of an Employee Stock Ownership Plan (ESOP) and $1.1
     million in expenses. In addition to the shares sold in the offering,
     2,562,576 shares of Bancorp's stock were issued in exchange for shares of
     the Bank's stock previously held by public shareholders at an exchange
     ratio of 2.5359 shares for each share of the Bank's common stock, resulting
     in 6,133,326 total shares of Bancorp's stock issued as of September 30,
     1997.

     INTEREST INCOME - Interest on loans is credited to income as earned. When
     the collectibility of the interest is in doubt, the accrual of interest
     ceases and a reserve for any nonrecoverable accrued interest is established
     and charged against operations and the loan is placed on nonaccrual status.
     If ultimate collection of principal is in doubt, all cash receipts on
     nonaccrual loans are applied to reduce the principal balance.

     LOAN FEES - Loan fee income, net of the direct origination costs, is
     deferred and accreted to interest income by the level yield method over the
     contractual life of the loan.

     SECURITIES-In accordance with Statement of Financial Accounting Standards
     ("SFAS") No. 115, investment securities are classified as held to maturity
     where the Company has the ability and positive intent to hold them to
     maturity. Investment securities held to maturity are carried at cost,
     adjusted for amortization of premiums and accretion of discounts to
     maturity. Unrealized losses on securities held to maturity due to
     fluctuations in fair value are recognized when it is determined that an
     other than temporary decline in value has occurred. Investment securities
     bought and held principally for the purpose of sale in the near term are
     classified as trading securities. Investment securities not classified as
     trading securities, or as held to maturity securities, are classified as
     securities available for sale. For purposes of computing gains and losses,
     cost of securities sold is determined using the specific identification
     method. Unrealized holding gains and losses on securities available for
     sale are excluded from earnings and reported net of tax as a separate
     component of shareholders' equity until realized.

     REAL ESTATE OWNED ("REO") - REO consists of properties acquired through
     foreclosure. Specific charge-offs are taken based upon detailed analysis of
     the fair value of collateral underlying loans on which the Company is in
     the process of foreclosing. Such collateral is transferred into REO at the
     lower of recorded cost or fair value less estimated costs of disposal.
     Subsequently, properties are evaluated and for any additional declines in
     value the Company writes down the REO directly and charges operations for
     the diminution in value. The amounts the Company will ultimately recover
     from REO may differ from the amounts



                                       58

<PAGE>

<PAGE>
     used in arriving at the net carrying value of these assets because of
     future market factors 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 estimated 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 and anticipated 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 appropriate allowance level is estimated based upon
     factors and trends identified by management at the time the consolidated
     financial statements are prepared.

     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. Uncollected accrued interest
     is reversed against interest income. If ultimate collection of principal is
     in doubt, all cash receipts on impaired loans are applied to reduce the
     principal balance.

     PREMISES AND EQUIPMENT - Premises and equipment are stated at cost less
     accumulated depreciation. Depreciation is generally computed on the
     straight-line method over the estimated useful lives as follows:

     Buildings and improvements                               3 to 60 years
     Furniture and equipment                                  3 to 20 years
     Leasehold Improvements                                   15 to 25 years

     LOANS HELD FOR SALE - Under the terms of the Company's investment policy,
     the Company is authorized to sell certain loans when such sales result in
     higher net yields. Accordingly, such loans are classified as held for sale
     in the accompanying consolidated financial statements and are carried at
     the lower of aggregate cost or net realizable value.

     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.

     The Company records its mortgage servicing rights at fair values in
     accordance with SFAS No. 125, 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, whether
     originated or purchased, to the mortgage servicing rights and the loans
     (without the mortgage servicing rights) based on their relative fair values
     if it is practicable to estimate those fair values. The Company is
     amortizing the mortgage servicing assets, which totaled $310,000, $319,000
     and $335,000 at March 31, 2001, 2000 and 1999, respectively, over the
     period of estimated net servicing income.

     CORE DEPOSIT INTANGIBLE - The deposit base premium of $3.2 million is
     reflected on the consolidated balance sheets as core deposit intangible and
     is being amortized to non-interest expense on a straight-line basis over
     ten years.

     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 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.

     LAND HELD FOR DEVELOPMENT - Land held for development, which is carried at
     the lower of cost or net realizable value, consists of a parcel of land
     that the Company originally intended to develop either for Company
     operation or for ultimate sale. The property was sold during the second
     quarter of fiscal year 2001 at a gain of $182,000.

     EMPLOYEE STOCK OWNERSHIP PLAN - The Company sponsors a leveraged ESOP. The
     ESOP is accounted for in accordance with the American Institute of
     Certified Public Accountants Statement of Position ("SOP") 93-6, Employer's
     Accounting for Employee



                                       59


<PAGE>

<PAGE>
     Stock Ownership Plans. Stock and cash dividends on allocated shares are
     recorded as a reduction of retained earnings and paid directly to plan
     participants or distributed directly to participants' accounts. Cash
     dividends on unallocated shares are recorded as a reduction of debt and
     accrued interest by the Company.

     EARNINGS PER SHARE - The Company accounts for earnings per share in
     accordance with SFAS No. 128, Earnings Per Share, which requires all
     companies whose capital structure include dilutive potential common shares
     to make a dual presentation of basic and diluted earnings per share for all
     periods presented.

     CASH - Includes amounts on hand, due from banks, and interest-earning
     deposits in other banks with original maturities of 90 days or less.

     STOCK-BASED COMPENSATION - Effective April 1, 1996, the Company adopted
     SFAS No. 123, Accounting for Stock Based Compensation, which permits
     entities to recognize as expense over the expected life the fair value of
     all stock-based awards on the date of grant. Alternatively, entities may
     continue to apply the provisions of Accounting Principles Board ("APB")
     Opinion No. 25, Accounting for Stock Issued to Employees, and related
     interpretations. The Company elected to continue the accounting methods
     prescribed by APB Opinion No. 25 and related interpretations which measure
     compensation cost using the intrinsic value method. Under the intrinsic
     value method, compensation cost for stock options is measured as the
     excess, if any, of the quoted market price of the stock at grant date over
     the amount an employee must pay to acquire the stock.

     RECLASSIFICATION - Certain 2000 and 1999 amounts have been reclassified in
     order to conform to the 2001 presentation.

     RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS - In June 1998, the Financial
     Accounting Standards Board ("FASB") issued SFAS No. 133, Accounting for
     Derivative Instruments and Hedging Activities. SFAS No. 133 establishes
     accounting and reporting standards for derivative instruments, including
     certain derivative instruments embedded in other contracts and for hedging
     activities. The effective date of this Statement was deferred by the
     issuance of SFAS No. 137, Accounting for Derivative Instruments and Hedging
     Activities-Deferral of the Effective Date of FASB Statement No. 133. SFAS
     No.133 was amended by SFAS No. 138, Accounting for Certain Derivative
     Instruments and Certain Hedging Activities. This statement becomes
     effective for fiscal year 2002, and will not be applied retroactively to
     financial statements of prior periods. Upon adoption of provisions of SFAS
     No. 133 at April 1, 2001, the Company did not have derivative instruments
     and there was no impact on the financial statements of the Company.

     In September 2000, the Financial Accounting Standards Board ("FASB") issued
     SFAS No. 140, Accounting for Transfers and Servicing of Financial Assets
     and Extinguishments of Liabilities, and replaced SFAS No. 125 of the same
     title. This statement revises the standards for accounting for
     securitizations and other transfers of financial assets and collateral and
     requires certain disclosures, but carries over most of SFAS No. 125's
     provisions without reconsideration. This statement is effective for
     transfers and servicing of financial assets and extinguishments of
     liabilities occurring after March 31, 2001 and is effective for recognition
     and reclassification of collateral and for disclosures relating to
     securitization transactions and collateral for fiscal years ending after
     December 15, 2000. The adoption of provisions of SFAS No. 140 is not
     expected to have a material impact on the financial statements of the
     Company.

2.   INTEREST RATE RISK MANAGEMENT

     The Company is engaged principally in gathering deposits supplemented with
     Federal Home Loan Bank ("FHLB") borrowings and providing first mortgage
     loans to individuals and commercial enterprises, commercial loans to
     businesses, and consumer loans to individuals. At March 31, 2001 and 2000,
     the asset portfolio consisted of fixed and variable rate interest-earning
     assets. Those assets were funded primarily with short-term deposits and
     borrowings 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 in its
     opinion actively monitors such risk and manages it to the extent
     practicable.
                                      60

<PAGE>

3.   INVESTMENT SECURITIES

     The amortized cost and approximate fair value of investment securities held
      to maturity consisted of the following (in thousands):

                                              GROSS        GROSS      ESTIMATED
                               AMORTIZED    UNREALIZED   UNREALIZED     FAIR
MARCH 31, 2001                   COST         GAINS        LOSSES       VALUE
                               ----------   ----------   ----------   ---------
Municipal securities           $      861   $        6   $        -   $     867
                               ==========   ==========   ==========   =========


MARCH 31, 2000

Municipal securities           $      903   $        -   $      (49)  $     854
                               ==========   ==========   ==========   =========


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

                                          AMORTIZED          ESTIMATED
MARCH 31, 2001                              COST             FAIR VALUE
                                       --------------       ------------
      Due after ten years              $          861       $        867
                                       ==============       ============

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

                                              GROSS        GROSS      ESTIMATED
                               AMORTIZED    UNREALIZED   UNREALIZED     FAIR
MARCH 31, 2001                   COST         GAINS        LOSSES       VALUE
                               ----------   ----------   ----------   ---------

Agency securities              $   7,132    $        4   $    (199)   $   6,937
Equity securities                 16,356            21        (378)      15,999
School district bonds              2,572            53           -        2,625
                               ---------    ----------   ----------   ---------
                               $  26,060    $       78   $    (577)   $  25,561
                               =========    ==========   ==========   =========

MARCH 31, 2000

Agency securities              $  10,489    $        -   $    (780)   $   9,709
Equity securities                  1,356             -        (617)         739
School district bonds              2,576             -        (141)       2,435
                               ---------    ----------   ---------    ---------
                               $  14,421    $        -   $  (1,538)   $  12,883
                               =========    ==========   ==========   =========


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

                                              AMORTIZED         ESTIMATED
MARCH 31, 2001                                     COST         FAIR VALUE
                                              ---------         ----------
Due after five years through ten years       $     4,456        $    4,505
Due after ten years                               21,604            21,056
                                             -----------        ----------
                                             $    26,060        $   25,561
                                             ===========        ==========


                                        61
<PAGE>

<PAGE>
4.   MORTGAGE-BACKED SECURITIES

     Mortgage-backed securities held to maturity consisted of the following
      (in thousands):
                                              GROSS        GROSS      ESTIMATED
                               AMORTIZED    UNREALIZED   UNREALIZED     FAIR
MARCH 31, 2001                   COST         GAINS        LOSSES       VALUE
                               ----------   ----------   ----------   ---------
Real estate mortgage
  investment conduits           $   1,805   $       15   $        -   $   1,820
FHLMC mortgage-backed securities    1,680           13           (1)      1,692
FNMA mortgage-backed securities     2,920           54            -       2,974
                                ---------   ----------   ----------   ---------
                                $   6,405   $       82   $       (1)  $   6,486
                                =========   ==========   ==========   =========
MARCH 31, 2000

Real estate mortgage investment
  conduits                      $   1,985   $        2   $      (14)  $   1,973
FHLMC mortgage-backed securities    2,377           20          (46)      2,351
FNMA mortgage-backed securities     4,295           28          (52)      4,271
                                ---------   ----------   ----------   ---------
                                $   8,657   $       50   $     (112)  $   8,595
                                =========   ==========   ===========  =========

     Mortgage-backed securities held to maturity with an amortized cost of $3.9
     million and $322,000 and a fair value of $3.9 million and $314,000 at March
     31, 2001 and 2000, respectively, were pledged as collateral for public
     funds held by the Company. The real estate mortgage investment conduits
     consist of FHLMC and Federal National Mortgage Association ("FNMA") and
     privately issued securities.

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

                                            AMORTIZED            ESTIMATED
MARCH 31, 2001                                   COST            FAIR VALUE
                                            ---------            ----------
Due after one year through five years       $    2,510           $    2,531
Due after five years through ten years             298                  303
Due after ten years                              3,597                3,652
                                            ----------           ----------
                                            $    6,405           $    6,486
                                            ==========           ==========

     Mortgage-backed securities available for sale consisted of the following
     (in thousands):
                                              GROSS        GROSS      ESTIMATED
                               AMORTIZED    UNREALIZED   UNREALIZED     FAIR
MARCH 31, 2001                   COST         GAINS        LOSSES       VALUE
                               ----------   ----------   ----------   ---------
Real estate mortgage
  investment conduits           $  41,067   $      144   $     (268)  $  40,943
FHLMC mortgage-backed securities      441           10            -         451
FNMA mortgage-backed securities     1,716           29            -       1,745
                               ----------   ----------   ----------   ---------
                                $  43,224   $      183   $     (268)  $  43,139
                               ==========   ==========   ==========   =========
MARCH 31, 2000

Real estate mortgage
  investment conduits           $  38,137   $        -   $   (1,576)  $  36,561
FHLMC mortgage-backed securities      619            -           (7)        612
FNMA mortgage-backed securities     2,218            9          (22)      2,205
                               ----------   ----------   ----------   ---------
                               $   40,974   $        9   $   (1,605)  $  39,378
                               ==========   ==========   ==========   =========

                                       62
<PAGE>

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

                                                 AMORTIZED       ESTIMATED
MARCH 31, 2001                                        COST       FAIR VALUE
                                                 ---------       ----------
Due after one year through five years            $   2,102         $  2,129
Due after five years through ten years               1,444            1,474
Due after ten years                                 39,678           39,536
                                                 ---------       ----------
                                                 $  43,224        $  43,139
                                                 =========        =========


     Expected maturities of mortgage-backed securities held to maturity 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
     $16.2 million and $20.9 million and a fair value of $16.0 million and $19.6
     million at March 31, 2001 and March 31, 2000, respectively, were pledged as
     collateral for the discount window at the Federal Reserve Bank.
     Mortgage-backed securities with an amortized cost of $5.1 million and $5.1
     million and a fair value of $5.1 million and $5.0 million at March 31, 2001
     and 2000, respectively, were pledged as collateral for treasury tax and
     loan funds held by the Company.

5.   LOANS RECEIVABLE

     Loans receivable consisted of the following (in thousands):

                                                            MARCH 31,
                                                     2001               2000
                                                   --------           --------
      Residential:
        One- to- four family                      $ 116,583         $  102,542
        Multi-family                                 11,073             10,921
      Construction:
        One- to- four family                         60,041             49,338
        Multi-family                                  4,514              4,669
        Commercial real estate                        6,806              3,597
      Commercial                                     23,099             15,976
      Consumer:
        Secured                                      23,148             14,488
        Unsecured                                     1,872              2,755
      Land                                           24,230             25,475
      Commercial real estate                         56,540             42,871
                                                  ---------         ----------
                                                    327,906            272,632
      Less:
        Undisbursed portion of loans                 26,223             18,880
        Deferred loan fees                            3,475              3,355
        Allowance for loan losses                     1,916              1,362
        Unearned discounts                                -                  1
                                                  ---------         ----------
              Loans receivable, net               $ 296,292         $  249,034
                                                  =========         ==========

      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. An 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.
                                         63

<PAGE>

<PAGE>
      Loans, by maturity or repricing date, were as follows (in thousands):

                                                            MARCH 31,
                                                    2001               2000
                                                  ---------         ----------
      Adjustable rate loans:
       Within one year                            $ 117,025         $   99,169
       After one but within three years               2,649                  -
                                                  ---------         ----------
                                                    119,674             99,169
                                                  ---------         ----------
      Fixed rate loans:
       Within one year                               38,894             27,602
       After one but within three                    16,908             10,904
       After three but within five years             49,129             32,049
       After five but within ten years               48,649             55,563
       After ten years                               55,221             47,345
                                                  ---------         ----------
                                                    208,801            173,463
                                                  ---------         ----------
                                                  $ 328,475         $  272,632
                                                  =========         ==========

      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.

      The Company services loans for others totaling $78.6 million and $82.4
      million as of March 31, 2001 and 2000. These loan balances are not
      included in the consolidated balance sheets as they are not assets of the
      Company.

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

                                                 YEAR ENDED MARCH 31,
                                         2001             2000         1999
                                       ---------       ----------    ---------
      Beginning balance                $     442        $     422    $     538
      Originations                           486              135          297
      Principal repayments                  (115)            (115)        (413)
                                       ---------         --------    ---------
      Ending balance                   $     813         $    442    $     422
                                       =========         =========   =========

6.    ALLOWANCE FOR LOAN LOSSES

      A reconciliation of the allowances for loan losses is as follows (in
      thousands):
                                                       YEAR ENDED MARCH 31,
                                             2001           2000        1999
                                           -------       --------     -------
      Beginning balance                    $ 1,362       $  1,146   $     984
      Provision for losses                     949            675         240
      Charge-offs                             (413)          (488)        (85)
      Recoveries                                18             29           7
                                           -------       ---------  ---------
      Ending balance                       $ 1,916       $  1,362    $  1,146
                                           =======       ========    ========

      At March 31, 2001, 2000 and 1999, the Company's recorded investment in
      loans for which an impairment has been recognized under the guidance of
      SFAS No. 114 and SFAS No. 118 was $319,000, $1.3 million and $1.3 million,
      respectively. 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 $836,000, $668,000 and $953,000 during the years ended March
      31, 2001, 2000 and 1999, respectively.

                                       64

<PAGE>


7.    PREMISES AND EQUIPMENT

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

                                                             MARCH 31,
                                                      2001               2000
                                                    --------           --------
      Land                                          $  2,026           $  2,160
      Buildings and improvements                       6,948              5,825
      Leasehold improvements                             420                177
      Furniture and equipment                          4,961              4,035
      Construction in progress                            32              1,080
                                                    --------           --------
             Subtotal                                 14,387             13,277
      Less accumulated depreciation                   (4,332)            (4,189)
                                                    --------           --------
             Total                                  $ 10,055           $  9,088
                                                    ========           ========


      Depreciation expense was $970,000, $773,000 and $656,000 for years ended
      March 31, 2001, 2000, and 1999, respectively.

      The Company is obligated under various noncancellable lease agreements for
      land and buildings which require future minimum rental payments, exclusive
      of taxes and other charges, as follows (in thousands):

                                                    YEAR ENDING MARCH 31,
                                                    ---------------------
                                                     2002       $   587
                                                     2003           598
                                                     2004           552
                                                     2005           487
                                                     2006           506
                                                Thereafter        3,789
                                                                 ------
                                                     Total      $ 6,519
                                                                =======

      Rent expense was $375,000, $87,000 and $49,000 for the years ended March
      31, 2001, 2000 and 1999, respectively.

8.       DEPOSIT ACCOUNTS

      Deposit accounts consisted of the following (dollars in thousands)


                          WEIGHTED                  WEIGHTED
                          AVERAGE      MARCH 31,    AVERAGE     MARCH 31,
ACCOUNT TYPE               RATE          2001         RATE         2000
------------              -------      ---------    --------    ----------

NOW Accounts:
  Non-interest-bearing      0.00%      $ 27,935       0.00%      $ 24,741
  Regular                   1.50         32,143       1.50         20,976
Money market                3.99         45,724       4.69         44,620
Savings accounts            2.75         18,827       2.75         19,840
Certificates of deposit     6.21        170,894       5.41        122,178
                           -----       --------      -----       ---------
Total                       4.55       $295,523       4.12       $232,355
                                       ========                  ========

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


                                        65
<PAGE>

      Certificates of deposit as of March 31, 2001, mature as follows (in
      thousands):

                                                                   AMOUNT
                                                                   ------
      Less than one year                                        $ 142,023
      One year to two years                                        18,840
      Two years to three years                                      4,831
      Three years to four years                                     2,540
      Four years to five years                                      2,120
      After five years                                                540
                                                                  -------
               Total                                            $ 170,894
                                                                  =======

      Deposit accounts in excess of $100,000 are not insured by the Federal
      Deposit Insurance Corporation ("FDIC").

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

                                             YEAR ENDED MARCH 31,
                                  2001               2000               1999
                               ---------           --------           --------
      NOW Accounts:
       Regular                 $     315           $    302           $    281
       Maxi                            -                  1                 28
      Money market accounts        2,182              1,588                790
      Savings accounts               536                569                560
      Certificates of deposit      8,314              6,130              6,445
                               ---------           --------           --------
             Total             $  11,347           $  8,590           $  8,104
                               =========           ========           ========



9.    FEDERAL HOME LOAN BANK ADVANCES

      At March 31, 2001, advances from FHLB totaled $79.5 million, which had
      fixed interest rates ranging from 5.38% to 7.22% with a weighted average
      interest rate at March 31, 2001 of 6.62%. At March 31, 2001, the Company
      had additional borrowing capacity available of $70.4 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, stock owned by the Company, deposits with the
      FHLB, and certain mortgages on deeds of trust securing such properties as
      provided in the agreements with the FHLB.

      Payments required to service the Company's FHLB advances during the next
      five years ended March 31 are as follows: 2002 - $25.0 million, 2003-$39.5
      million; and 2006-$15.0 million.



                                           66

<PAGE>


<PAGE>
10.   FEDERAL INCOME TAXES

      Federal income tax provisions for the years ended March 31 consisted of
      the following (in thousands):
                                         2001            2000            1999
                                     ----------        --------        --------
      Current                        $    2,131        $  1,863       $   2,571
      Deferred                             (487)             15           (266)
                                     ----------        --------       --------
              Total                  $    1,644        $  1,878       $   2,305
                                     ==========        ========       =========

     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:

                                              2001           2000        1999
                                             ------         ------      ------
 Statutory federal income tax rate            34.0%          34.0%       34.0%
 ESOP market value adjustment                  0.1            0.4         0.3
 Interest income on municipal  securities     (1.1)          (0.9)       (0.2)
 Other, net                                   (1.4)          (0.9)         -
                                             ------         ------      ------
     Effective federal income tax rate        31.6%          32.6%       34.1%
                                             ======         ======      ======

      Taxes related to gains on sales of securities were zero, zero, and $13,000
      for the years ended March 31, 2001, 2000, and 1999, respectively.

      The tax effect of temporary differences that give rise to significant
      portions of deferred tax assets and deferred tax liabilities at March 31,
      2001 and 2000 are as follows (in thousands):

                                                         2001          2000
                                                       --------      --------
  Deferred tax assets:
    Deferred compensation                               $  399        $  345
    Loan loss reserve                                      595           463
    Core deposit intangible                                254           217
    Accrued expenses                                       114            77
    Accumulated depreciation                                60            97
    Net unrealized loss on securities available for sale   199         1,066
    Other                                                  224            69
                                                       --------      -------
          Total deferred tax asset                       1,845         2,334
                                                       --------      -------
   Deferred tax liabilities:
     FHLB stock dividend                                  (642)         (550)
     Tax qualified loan loss reserve                      (141)         (188)
     Other                                                (206)         (360)
                                                       --------      -------
          Total deferred tax liability                    (989)       (1,098)
                                                       --------      -------
     Deferred tax asset, net                            $  856       $ 1,236
                                                       ========      =======

      For the fiscal year ended March 31, 1996 and years prior, the Company
      determined bad debt expense to be deducted from taxable income based on 8%
      of taxable income before such deduction as provided by a provision in the
      Internal Revenue Code ("IRC"). In August 1996, the provision in the IRC
      allowing the 8% of taxable income deduction was repealed. Accordingly, the
      Company is required to use the write-off method to record bad debt in the
      current period and must recapture the excess reserve accumulated from
      April 1, 1987 to March 31, 1996 from use of the 8% method ratably over a
      six-taxable year period. The income tax provision from 1987 to 1996
      included an amount of $282,000 for the tax effect on such excess reserves.
      The IRC regulation allowed the Company the opportunity to defer the
      recapture of the excess reserve for a period of up to two years if the
      Company meets a residential loan requirement. The Company met the
      requirement to delay recapture for the 1998 and 1997 taxable years and
      recaptured $47,000 in each of the 2001 and 2000 taxable years.



                                     67

<PAGE>

<PAGE>
      The Company has qualified under provisions of the IRC to compute federal
      income taxes after deductions of additions to the bad debt reserves. At
      March 31, 2001, the Company had a taxable temporary difference of
      approximately $1.1 million that arose before 1987 (base-year amount). In
      accordance with SFAS No. 109, a deferred tax liability has not been
      recognized for the temporary difference. Management does not expect this
      temporary difference to reverse in the foreseeable future. No valuation
      allowance for deferred tax assets was deemed necessary at March 31, 2001
      or 2000 based on the Company's anticipated future ability to generate
      taxable income from operations.

11.   EMPLOYEE BENEFITS PLANS

      RETIREMENT PLAN - The Riverview Retirement and Savings Plan (the "Plan")
      is a defined contribution profit-sharing plan incorporating the provisions
      of Section 401(k) of the IRC. The plan covers all employees with at least
      one year of service who are over the age of 21. The Company matches 50% of
      the employee's elective contribution up to 3% of the employee's
      compensation. Company expenses related to the Plan for the years ended
      March 31, 2001, 2000, and 1999 were $66,000, $46,000, and $41,000,
      respectively.

      DIRECTOR 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. This alternative is made
      available to them through a nonqualified deferred compensation plan. The
      Company accrues annual interest on assets under the plan based upon a
      formula relating to gross revenues, which amounted to 8.06%, 8.20%, and
      8.30% for the years ended March 31, 2001, 2000, and 1999, respectively.
      The estimated liability under the plan is accrued as earned by the
      participant. At March 31, 2001 and 2000, the Company's aggregate liability
      under the plan was $1.1 million and $1.0 million, respectively.

      BONUS PROGRAMS - The Company maintains a bonus program for senior
      management. 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. Under
      these programs, the Company paid $262,000, $183,000, and $149,000 in
      bonuses during the years ended March 31, 2001, 2000, and 1999,
      respectively. Accrued bonuses were $270,000 and $174,000 at March 31, 2001
      and 2000, respectively.

      MANAGEMENT RECOGNITION AND DEVELOPMENT PLAN ("MRDP") - 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 will be recognized over a five year vesting
      period, with 20% vesting immediately upon grant. On October 1, 1998 the
      number of restricted shares granted under the MRDP were 99,980 shares to
      executive officers and 42,850 shares to non-employee directors.
      Compensation expense of $393,000, $393,000 and $589,000 was recognized for
      the years ended March 31, 2001, 2000 and 1999, respectively.

      STOCK OPTION PLANS - In October 1993, the Board of Directors approved a
      Stock Option and Incentive Plan ("1993 Plan") for officers, directors, and
      key employees, which authorizes the grant of stock options. The maximum
      number of shares of common stock of the Company which may be issued under
      the 1993 Plan is 244,539 shares. All options granted under this plan are
      immediately exercisable and expire October 22, 2003.

      In July 1998, shareholders of the Company approved the adoption of the
      1998 Stock Option Plan ("1998 Plan") which authorizes the grant of stock
      options. The 1998 Plan was effective October 1, 1998 and the plan will
      expire on the tenth anniversary of the effective date, unless terminated
      sooner by the Board. The maximum number of shares of common stock of the
      Company which may be issued under the 1998 plan is 357,075 shares. Options
      granted under the 1998 plan are exercisable at the discretion of the
      Board. On October 1, 1998, under the 1998 Plan, 257,962 shares were
      granted to executive officers, non-employee directors and employees.


                                        68

<PAGE>


<PAGE>
      Stock option activity, which includes the impact of stock dividends, is
      summarized in the following table:

                                                      WEIGHTED
                                                      AVERAGE
                                       NUMBER OF      EXERCISE
                                       SHARES         PRICE
                                    -----------     ----------
      OUTSTANDING APRIL 1, 1998        199,669     $     3.54
        Grants                         278,962          13.64
        Forfeited                       (3,000)         13.75
        Options exercised              (39,777)          3.56
                                   -----------     ----------
      OUTSTANDING MARCH 31, 1999       435,854           9.93
        Grants                          29,998          10.63
        Forfeited                       (6,000)         13.75
        Options exercised              (34,096)          4.06
                                   -----------     ----------
      OUTSTANDING MARCH 31, 2000       425,756          10.40
        Grants                          15,000           8.83
        Options exercised              (78,918)          2.82
                                   -----------     ----------
      OUTSTANDING MARCH 31, 2001       361,838     $    11.99
                                   ===========     ==========

      Additional information regarding options outstanding as of March 31, 2001
      is as follows:

                               OPTIONS OUTSTANDING     OPTIONS EXERCISABLE
                WEIGHTED AVG.               WEIGHTED               WEIGHTED
                REMAINING                   AVERAGE                AVERAGE
                CONTRACTUAL    NUMBER       EXERCISE    NUMBER     EXERCISE
EXERCISE PRICE  LIFE (YEARS)  OUTSTANDING    PRICE    EXERCISABLE    PRICE
--------------  ------------  -----------  ---------  -----------  --------
$2.82              2.56          33,033      $ 2.82      33,033    $  2.82
 6.32 to 9.22      5.48          33,845        8.51      18,846       8.23
10.13 to 13.75     7.51         294,960       13.41     171,976      13.48
                   ----         -------     -------    --------    -------
                   6.87         361,838      $11.99     223,855    $ 11.47
                   ====         =======      ======    ========    =======


      ADDITIONAL STOCK PLAN INFORMATION - As discussed in Note 1, the Company
      continues to account for its stock-based awards using the intrinsic value
      method in accordance with APB Opinion No. 25 and its related
      interpretations. Accordingly, no compensation expense has been recognized
      in the financial statements for the 1993 Plan and 1998 Plan.

      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 FREE       EXPECTED      EXPECTED       EXPECTED
                INTEREST RATE     LIFE (YRS)    VOLATILITY     DIVIDENDS
                -------------     ---------     ----------     ---------
  Fiscal 2001        5.33%          6.90          35.85 %         2.65 %
  Fiscal 2000        6.26 %         7.00          39.07 %         2.17 %
  Fiscal 1999        4.68 %         6.00          40.75 %         1.29 %

                                       69
<PAGE>

      The Company's calculations are based on a multiple option valuation
      approach and forfeitures are recognized as they occur. The weighted
      average grant-date fair value of 2001, 2000 and 1999 awards was $3.09,
      $4.39 and $5.61, respectively. If the accounting provisions of the SFAS
      No. 123 had been adopted as of the beginning of fiscal 1996, the effect on
      2001, 2000 and 1999 net income would have been reduced to the following
      pro forma amounts:

                                              YEAR ENDED MARCH 31,
                                    2001             2000              1999
                                 ----------       ----------        ----------
 Net income:
   As reported                   $3,557,000       $3,877,000        $4,463,000
   Pro forma                      3,551,000        3,877,000         4,267,000

 Earnings per common share - basic:

   As reported                        $0.78             $0.76            $0.78
   Pro forma                           0.78              0.76             0.75

 Earnings per common share - fully diluted:

  As reported                         $0.77             $0.74            $0.76
  Pro forma                            0.77              0.74             0.73


12.   EMPLOYEE STOCK OWNERSHIP PLAN

      In 1993, the Company established an ESOP that covers all employees with at
      least one year of service who are over the age of 21. Shares are released
      for allocation and allocated to participant accounts on December 31 of
      each year until 2011. ESOP compensation expense included in salaries and
      benefits was $215,000, $268,000 and $302,000 for years ended March 31,
      2001, 2000 and 1999, respectively.

      In conjunction with the Conversion and Reorganization, the Company
      purchased an additional 285,660 shares equal to eight percent of the total
      number of shares issued in the offering, for future allocation to eligible
      participants.

      ESOP share activity is summarized in the following table:

                                    UNRELEASED      ALLOCATED
                                          ESOP      AND RELEASED
                                        SHARES      SHARES             TOTAL
                                    ----------      ------------      -------
      BALANCE, APRIL 1, 1998           344,857           136,435      481,292
      Allocation December 31, 1998     (24,632)           24,632            -
                                       -------        ----------      -------
      BALANCE, MARCH 31, 1999          320,225           161,067      481,292
      Allocation December 31, 1999     (24,629)           24,629            -
                                     ---------        ----------      -------
      BALANCE, MARCH 31, 2000          295,596           185,696      481,292
      Allocation December 31, 2000     (24,633)           24,633            -
                                     ---------         ---------      -------
      BALANCE, MARCH 31, 2001          270,963           210,329      481,292
                                      ========          ========      =======

13.   SHAREHOLDERS' EQUITY AND REGULATORY CAPITAL REQUIREMENTS

      Bancorp'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, 2001
      or 2000.

      The Bank's Board of Directors authorized 1,000,000 shares of serial
      preferred stock as part of the stock offering and reorganization completed
      on October 22, 1993. No preferred shares were issued or outstanding at
      March 31, 2001 or 2000.

      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.



                                       70

<PAGE>

<PAGE>
        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, 2001.

        As of March 31, 2001, 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 Company 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):

                                                           CATEGORIZED AS "WELL
                                                             CAPITALIZED" UNDER
                                              FOR CAPITAL     PROMPT CORRECTIVE
                                ACTUAL     ADEQUACY PURPOSES   ACTION PROVISION
                                ------     -----------------   ----------------
                            AMOUNT   RATIO    AMOUNT   RATIO    AMOUNT   RATIO
                            ------   -----    ------   -----    ------   -----
MARCH 31, 2001
Total Capital:
(To Risk Weighted Assets)  $48,407  17.13%   $22,613    8.0%   $28,266   10.0%
Tier I Capital:
(To Risk Weighted Assets)   46,491  16.45      N/A      N/A     16,960    6.0
Core Capital:
(To Total Assets)           46,491  10.88     12,820    3.0     21,366    5.0
Tangible Capital:
(To Tangible Assets)        46,491  10.88      6,410    1.5       N/A     N/A

                                                           CATEGORIZED AS "WELL
                                                             CAPITALIZED" UNDER
                                              FOR CAPITAL     PROMPT CORRECTIVE
                                ACTUAL     ADEQUACY PURPOSES   ACTION PROVISION
                                ------     -----------------   ----------------
                            AMOUNT   RATIO    AMOUNT   RATIO    AMOUNT   RATIO
                            ------   -----    ------   -----    ------   -----
MARCH 31, 2000
Total Capital:
(To Risk Weighted Assets)  $42,543   19.9%   $17,079    8.0%   $21,349   10.0%
Tier I Capital:
(To Risk Weighted Assets)   41,652   19.5       N/A     N/A     12,809    6.0
Core Capital:
(To Total Assets)           41,652   12.3     10,185    3.0     16,976    5.0
Tangible Capital:
(To Tangible Assets)        41,652   12.3      5,093    1.5       N/A     N/A


      The following table is a reconciliation of the Bank's capital, calculated
      according to generally accepted accounting principles to regulatory
      tangible and risk-based capital at March 31, 2001 (in thousands):

      Equity                                               $    47,402
      Net unrealized securities loss                               156
      Core deposit intangible                                   (1,022)
      Deferred tax and servicing asset                             (45)
                                                           ------------
              Tangible capital                                  46,491
      General valuation allowance                                1,916
                                                           -----------
              Total capital                                $    48,407
                                                           ===========
                                         71
<PAGE>

<PAGE>
      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 2001 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 2001 financial statements cannot
      presently be determined.

14.    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. ESOP shares
      are not considered outstanding for earnings per share purposes until they
      are committed to be released. For the year ended March 31, 2001, options
      to purchase 309,960 shares of common stock were not included in the
      computation of diluted EPS because to do so would have been antidilutive.

                                                  YEARS ENDED MARCH 31,
                                            2001          2000          1999
                                          --------      --------      --------
  Basic EPS computation:
    Numerator-Net Income                $3,557,000    $3,877,000    $4,463,000
    Denominator-Weighted average
       common shares outstanding         4,579,091     5,108,725     5,705,697
  Basic EPS                             $     0.78    $     0.76    $     0.78
                                        ==========    ==========    ==========

  Diluted EPS computation:
    Numerator-Net Income                $3,557,000    $3,877,000    $4,463,000
    Denominator-Weighted average
       common shares outstanding         4,579,091     5,108,725     5,705,697
       Effect of dilutive stock options     61,158        97,252       128,045
       Effect of dilutive MRDP                   -             -         3,258
                                        ----------    ----------    ----------
       Weighted average common shares
        and common stock equivalents     4,640,249     5,205,977     5,837,000
  Diluted EPS                           $     0.77    $     0.74    $     0.76
                                        ==========    ==========    ==========


15.     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 estimated fair
      value amounts have been determined by the Company using available market
      information and appropriate valuation methodologies. 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.

                                       72

<PAGE>

<PAGE>
      The estimated fair value of financial instruments is as follows at March
      31, 2001 and 2000 (in thousands):
                                                   2001              2000
                                            ----------------  ----------------
                                            CARRYING   FAIR   CARRYING   FAIR
                                              VALUE    VALUE    VALUE    VALUE
                                              -----    -----    -----    -----
 Assets:
 Cash                                       $38,935  $38,935  $15,786  $15,786
 Investment securities held to maturity         861      867      903      854
 Investment securities available for sale    25,561   25,561   12,883   12,883
 Mortgage-backed securities held to maturity  6,405    6,486    8,657    8,595
 Mortgage-backed securities available
   for sale                                  43,139   43,139   39,378   39,378
 Loans receivable, net                      296,292  300,473  249,034  245,896
 Loans held for sale                            569      569        -        -
 FHLB stock                                   4,432    4,432    3,074    3,074

 Liabilities:
 Demand deposits                            124,629  124,629  110,177  110,177
 Time deposits                              170,894  172,057  122,178  121,788
 FHLB advances - short-term                  25,000   25,500   60,550   60,570
 FHLB advances - long-term                   54,500   55,708        -        -


      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 - 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.

      No adjustment was made to the entry-value interest rates for changes in
      credit of performing loans for which there are no known credit concerns.
      Management believes that the risk factor embedded in the entry-value
      interest rates, along with the general reserves applicable to the loan
      portfolio for which there are no known credit concerns, result in a fair
      valuation of such loans on an entry-value basis.

      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.

      OFF-BALANCE SHEET FINANCIAL INSTRUMENTS - The estimated fair value of loan
      commitments approximates fees recorded associated with such commitments as
      of March 31, 2001 and 2000.

      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, 2001 and
      2000. 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.


                                       73

<PAGE>


<PAGE>
16.   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
      generally conditional 14-day agreements to lend to a customer subject to
      the Company's usual terms and conditions. Collateral is not required to
      support commitments.

      At March 31, 2001, the Company had commitments to originate fixed rate
      mortgage loans of $2.7 million at interest rates ranging from 6.38% to
      9.75%. At March 31, 2001, commitments to originate adjustable rate
      mortgage loans were $1.6 million at an average interest rate of 9.71%.
      Undisbursed balance of mortgage loans closed was $26.2 million at March
      31, 2001. Commitments to originate consumer loans totaled $2.6 million and
      unused lines of consumer credit totaled $11.4 million at March 31, 2001.
      Commercial and commercial real estate loan commitments to originate loans
      totaled $710,000 and unused lines of commercial and commercial real estate
      credit totaled $14.4 million at March 31, 2001.

      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.

17.   RIVERVIEW BANCORP, INC. (PARENT COMPANY)

BALANCE SHEETS
MARCH 31, 2001 AND 2000
(IN THOUSANDS)                                           2001            2000
-------------------------------------------------------------------------------
ASSETS
 Cash (including interest earning accounts of
  $2,670 and $1,448)                                $    2,764       $   1,588
 Investment securities available for sale, at
  fair value (amortized cost of $1,356 and $3,356)       1,009           2,699
 Investment in the Bank                                 47,402          42,436
 Other assets                                            1,906           2,022
 Deferred income taxes                                     114             219
                                                    ----------       ---------
TOTAL ASSETS                                        $   53,195       $  48,964
                                                    ==========       =========

LIABILITIES AND SHAREHOLDERS' EQUITY
 Accrued expenses and other liabilities             $        3       $      60
 Dividend payable                                          471             415
 Shareholders' equity                                   52,721          48,489
                                                    ----------       ---------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY          $   53,195       $  48,964
                                                    ==========       =========



                                       74

<PAGE>



RIVERVIEW BANCORP, INC. (PARENT COMPANY)

STATEMENTS OF INCOME
YEARS ENDED MARCH 31, 2001 AND 2000

(IN THOUSANDS)                                          2001            2000
-------------------------------------------------------------------------------
INCOME:
 Interest on investment securities and other
  short-term investments                            $      202       $     279
 Interest on loan receivable from the Bank                 217             586
                                                      --------       ---------
      Total income                                         419             865
                                                      --------       ---------

EXPENSE:
   Management service fees paid to the Bank                 28              40
   Other expenses                                          113             104
                                                      --------       ---------
        Total expense                                      141             144
                                                      --------       ---------
INCOME BEFORE FEDERAL INCOME TAXES AND EQUITY
         IN UNDISTRIBUTED INCOME OF THE BANK               278             721
PROVISION FOR FEDERAL INCOME TAXES                          87             239
                                                      --------       ---------
INCOME OF PARENT COMPANY                                   191             482
EQUITY IN UNDISTRIBUTED INCOME OF THE BANK               3,366           3,395
                                                      --------       ---------
NET INCOME                                            $  3,557       $    3,877
                                                      ========       ==========





                                      75

<PAGE>



RIVERVIEW BANCORP, INC. (PARENT COMPANY)

STATEMENTS OF CASH FLOWS
YEARS ENDED MARCH 31, 2001 AND 2000

(IN THOUSANDS)                                         2001            2000
-------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income                                       $   3,557      $    3,877
  Adjustments to reconcile net income to cash
   provided by operating activities:
    Equity in undistributed earnings of the Bank      (3,366)         (3,395)
    Provision for deferred taxes                           -               4
    Earned ESOP shares                                   215             268
    Earned MRDP shares                                   416             393
  Changes in assets and liabilities:
    Decrease in prepaid expenses and other assets        115             537
    Decrease (increase) in accrued expenses and
      other liabilities                                   (1)             68
                                                   ---------       ---------
    Net cash provided by operating activities            936           1,752
                                                   ---------       ---------

CASH FLOWS FROM INVESTING ACTIVITIES:
    Dividend received from the Bank                        -           6,367
    Proceeds from call, maturity, or sale of
     investment securities available for sale          2,000               -
    Principal repayment on loan receivable from
     the Bank                                              -           2,710
                                                   ---------       ---------
    Net cash provided by investing activities          2,000           9,077
                                                   ---------       ---------

CASH FLOWS FROM FINANCING ACTIVITIES:
    Dividends paid                                    (1,860)         (1,827)
    Repurchase of common stock                             -          (9,834)
    Investment in majority owned subsidiary             (122)           (509)
    Proceeds from exercise of stock options              222             137
                                                   ---------       ---------
    Net cash used in financing activities             (1,760)        (12,033)
                                                   ----------      ---------

NET INCREASE (DECREASE) IN CASH                         1,176         (1,204)

CASH, BEGINNING OF YEAR                                 1,588          2,792
                                                   ----------      ---------
CASH, END OF YEAR                                  $    2,764      $   1,588
                                                   ==========      =========



                                       76

<PAGE>



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

(IN THOUSANDS, EXCEPT SHARE DATA)                    THREE MONTHS ENDED
------------------------------------------------------------------------------
                              MARCH 31   DECEMBER 31   SEPTEMBER 30    JUNE 30
                              --------   -----------   ------------    -------
2001:
 Interest income               $ 8,389      $ 7,986        $ 7,723     $ 7,245
 Interest expense                4,546        4,217          4,022       3,503
 Net interest income             3,843        3,769          3,701       3,742
 Provision for loan losses         215          140              -         594
 Non-interest income             1,131          905          1,160         766
 Non-interest expense            3,587        3,231          3,126       2,923
 Income before income taxes      1,172        1,303          1,735         991
 Provision for income taxes        375          400            556         313
                            ----------   ----------     ----------   ---------
 Net income                     $  797      $   903        $ 1,179     $   678
                            ==========   ==========     ==========   =========

 Basic earnings per share       $ 0.17      $  0.20        $  0.26     $  0.15
                            ==========   ==========     ==========   =========

 Diluted earnings per share     $ 0.17      $  0.19        $  0.26     $  0.15
                            ==========   ==========     ==========   =========

2000:

 Interest income               $ 6,931      $ 6,382        $ 6,153     $ 5,972
 Interest expense                3,076        2,827          2,625       2,545
 Net interest income             3,855        3,555          3,528       3,427
 Provision for loan losses         253          242             90          90
 Non-interest income               747          659            728         763
 Non-interest expense            2,850        2,742          2,612       2,628
 Income before income taxes      1,499        1,230          1,554       1,472
 Provision for income taxes        484          362            523         509
                            ----------   ----------      ---------   ---------
 Net income                    $ 1,015      $   868        $ 1,031     $   963
                            ==========   ==========      =========   =========

 Basic earnings per share      $  0.21      $  0.17        $  0.20     $  0.18
                            ==========   ==========      =========   =========

 Diluted earnings per share (1) $ 0.21      $  0.17        $  0.19     $  0.18
                            ==========   ==========     ==========   =========



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

                                       77

<PAGE>


ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE
------------------------------------------------------------------------

         Not applicable.

                              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, and "Part I -- Business
-- Personnel -- Executive Officers" of this report, is incorporated herein by
reference. Reference is made to the cover page of this report for information
regarding compliance with Section 16(a) of the Exchange Act.


ITEM 11.  EXECUTIVE COMPENSATION
--------------------------------

The information contained under the sections captioned "Executive Compensation,"
"Directors' Compensation" and "Benefits" under "Proposal I - Election of
Directors" in the Proxy Statement is incorporated herein by reference.


ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
------------------------------------------------------------------------

         (a)      Security Ownership of Certain Beneficial Owners

                  Information required by this item is incorporated herein by
                  reference to the section captioned "Security Ownership of
                  Certain Beneficial Owners and Management" in the Proxy
                  Statement.

         (b)      Security Ownership of Management

                  The information required by this item is incorporated herein
                  by reference to the sections captioned "Proposal I - Election
                  of Directors" and "Security Ownership of Certain Beneficial
                  owners and Management" in the Proxy Statement.

         (c)      Changes in Control

                  The Company is not aware of any arrangements, including any
                  pledge by any person of securities of the Company, the
                  operation of which may at a subsequent date result in a change
                  in control of the Company.

The information required by this item is incorporated herein by reference to the
sections captioned "Proposal I - Election of Directors" and "Security Ownership
of Certain Beneficial Owners and Management" in the Proxy Statement.


ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
--------------------------------------------------------

The information set forth under the section captioned "Proposal I - Election of
Directors - Certain Transactions with the Company" in the Proxy Statement is
incorporated herein by reference.

                                      78

<PAGE>


                                  PART IV

ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
--------------------------------------------------------------------------
         (a)      Exhibits

                  3.1        Articles of Incorporation of the Registrant*
                  3.2        Bylaws of the Registrant*
                  10.1       Employment Agreement with Patrick Sheaffer**
                  10.2       Employment Agreement with Ron Wysaske**
                  10.3       Employment Agreement with Michael C. Yount**
                  10.4       Employment Agreement with Karen Nelson**
                  10.5       Severance Compensation Agreement**
                  10.6       Employee Stock Ownership Plan***
                  21         Subsidiaries of Registrant
                  23         Consent of Independent Auditors
                  27         Financial Data Schedule

         (b)      Reports on Form 8-K:  No Forms 8-K were filed during the
                  quarter ended March 31, 2001.


*        Filed as an exhibit to the Registrant's Registration Statement on Form
         S-1, as amended (333-30203), and incorporated herein by reference.

**       Filed as an exhibit to the Registrant's Form 10-Q for the quarter ended
         September 30, 1997, and incorporated herein by reference.

***      Filed as an exhibit to the Registrant's Form 10-K for the year ended
         March 31, 1998, and incorporated herein by reference.



                                        78

<PAGE>






                                  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:  May 25, 2001
                                   By:   /s/ Patrick Sheaffer
                                         --------------------
                                         Patrick Sheaffer
                                         President 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          By:   /s/ Ron Wysaske
     --------------------                ---------------
     Patrick Sheaffer                    Ron Wysaske
     President and Chief Executive       Executive Vice President and Chief
      Officer                             Financial Officer
     (Principal Executive Officer)       (Principal Financial and Accounting
                                           Officer)

Date:  May 25, 2001                Date:   May 25, 2001



By:   /s/ Robert K. Leick          By:   /s/ Paul L. Runyan
      --------------------              -------------------
      Robert K. Leick                   Paul L. Runyan
      Director                          Director

Date:   May 25, 2001               Date:   May 25, 2001



By:   /s/ Edward R. Geiger         By:   /s/ Gary R. Douglass
      --------------------               --------------------
      Edward R. Geiger                   Gary R. Douglas
      Director                           Director

Date:   May 25, 2001               Date:   May 25, 2001



By:   /s/ Michael D. Allen
      ---------------------
      Michael D. Allen
      Director

Date:  May 25, 2001




<PAGE>


                                  EXHIBIT 21

                          SUBSIDIARIES OF THE REGISTRANT

Parent
------

Riverview Bancorp, Inc.



Subsidiaries (a)                 Percentage Owned      State of Incorporation
----------------                 ----------------      ----------------------
Riverview Community Bank                 100%                Federal

Riverview Services, Inc.                 100%                Washington

Riverview Asset Management Corp.          90%                Washington


(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.








<PAGE>





                                   EXHIBIT 23

                         CONSENT OF INDEPENDENT AUDITORS














<PAGE>



Deloitte & Touche LLP
Suite 3900
111 S.W. Fifth Avenue
Portland, Oregon 97204-3642

Tel: (503) 222-1341
Fax: (503) 224-2172
www.us.deloitte.com
                                                              DELOITTE
                                                              & TOUCHE



INDEPENDENT AUDITORS' CONSENT

We consent to the incorporation by reference in Registration Statements Nos.
333-66049 and 333-38887 of Riverview Bancorp, Inc., on the Form S-8, of our
report dated May 11, 2001, appearing in the Annual Report on Form 10-K of
Riverview Bancorp, Inc. for the year ended March 31, 2001.


/s/Deloitte & Touche LLP

DELOITTE & TOUCHE LLP

Portland, Oregon
May 29, 2001














---------
Deloitte
Touche
Tohmatsu
---------



<PAGE>