UNITED STATES
                      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, 2006          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 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
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(Address of principal executive offices)                        (Zip Code)

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

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

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

Indicate by check mark if the registrant is a well-known seasoned issuer, as
defined in Rule 405 of the Securities Act. Yes      No  X
                                               ----    ----

Indicate by check mark if the registrant is not required to file reports
pursuant to Section 13 or Section 15(d) of the Act.   Yes      No  X
                                                          ----    ----

Indicate by check mark whether the registrant (1) filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the Registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes  X    No
                                       ----     ----

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

Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer.  See definition of "accelerated
filer and large accelerated filer" in Rule 12b-2 of the Exchange Act (Check
One):

Large accelerated filer      Accelerated filer  X   Non-accelerated filer
                       ----                    ----                      ----

Indicate by check mark whether the registrant is a shell company (as defined
in Rule 12b-2 of the Act) Yes        No 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 September 30, 2005 was approximately $120,946,388 (5,811,936 shares at
$20.81 per share).  It is assumed for purposes of this calculation that none
of the registrant's officers, directors and 5% stockholders (including the
Riverview Bancorp, Inc. Employee Stock Ownership Plan) are affiliates.  As of
June 7, 2006, there were issued and outstanding 5,778,686 shares of the
registrant's common stock.

                     DOCUMENTS INCORPORATED BY REFERENCE
    1. Portions of registrant's Definitive Proxy Statement for the 2006 Annual
       Meeting of Shareholders (Part III).

                                        1

<PAGE>




                                  PART I

Item 1.  Business
-----------------

General

Riverview Bancorp, Inc. ("the Company"), a Washington corporation, is the
holding company of Riverview Community Bank (the "Bank"). On July 18, 2003,
the Company completed the acquisition of Today's Bancorp, Inc. ("Today's
Bancorp").  The acquisition of Today's Bancorp's $122.3 million of assets and
$105.1 million of deposits were accounted for using the purchase method of
accounting. On April 22, 2005, the Company completed the acquisition of
American Pacific Bank ("APB"). The acquisition of APB's $128.5 million of
assets and $80.0 million of deposits were accounted for using the purchase
method of accounting. At March 31, 2006, the Company had total assets of
$763.8 million, total deposits of $607.0 million and shareholders' equity of
$91.7 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") of Seattle
since 1937.

The Company is a progressive community-oriented, financial institution, which
emphasizes local, personal service to residents of its primary market area.
The Company considers Clark, Cowlitz, Klickitat and Skamania counties of
Washington and Multnomah, Clackamas and Marion counties of Oregon as its
primary market area. The Company is engaged primarily in the business of
attracting deposits from the general public and using such funds in its
primary market area to originate primarily commercial real estate, one- to
four- family residential real estate, construction, and commercial and
consumer loans. Commercial real estate loans and commercial loans have grown
from 30.0% and 7.98% of the loan portfolio, respectively, in fiscal 2002 to
59.42% and 9.48%, respectively, in fiscal 2006.  The Company's strategic plan
includes targeting the commercial banking customer base in its primary market
area, specifically small and medium size businesses, professionals and wealth
building individuals.  In pursuit of these goals, the Company emphasizes
controlled growth and the diversification of its loan portfolio to include a
higher portion of commercial and commercial real estate loans.  A related goal
is to increase the proportion of personal and business checking account
deposits used to fund these new loans.  Significant portions of these new loan
products carry adjustable rates, higher yields or shorter terms and higher
credit risk than traditional fixed-rate mortgages.  The strategic plan
stresses increased emphasis on non-interest income, including increased fees
for asset management and deposit service charges.  The strategic plan is
designed to enhance earnings, reduce interest rate risk and provide a more
complete range of financial services to customers and the local communities
the Company serves. The Company is well positioned to attract new customers
and to increase its market share given that the administrative headquarters
and ten of its 17 branches are located in the fast growing Clark County.

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

The Company continuously reviews new products and services to give its
customers more financial options. With an emphasis on growth of non-interest
income and control of non-interest expense, all new technology and services
are reviewed for business development and cost saving purposes.  The in-house
processing of checks and production of images has supported the Bank's
increased service to customers and at the same time has increased efficiency.
The Company continues to experience growth in customer use of its online
banking services.  Customers are able to conduct a full range of services on a
real-time basis, including balance inquiries, transfers and electronic bill
paying.

                                         2

<PAGE>



This online service has also enhanced the delivery of cash management services
to commercial customers.  The internet banking branch web site is
www.riverviewbank.com.

Market Area

The Company conducts operations from its home office in Vancouver and 17
branch offices in Camas, Washougal, Stevenson, White Salmon, Battle Ground,
Goldendale, Vancouver (seven branch offices) and Longview, Washington and
Portland, Wood Village and Aumsville, Oregon.  The Company's market area for
lending and deposit taking activities encompasses Clark, Cowlitz, Skamania and
Klickitat counties in Washington, as well as Multnomah, Clackamas and Marion
counties in Oregon, and throughout the Columbia River Gorge area.  The Company
operates a trust and financial services company, Riverview Asset Management
Corp., located in downtown Vancouver, Washington.  Riverview Mortgage, a
mortgage broker division of the Company, originates mortgage loans for various
mortgage companies predominantly in the Vancouver/Portland, metropolitan
areas, as well as for the Company.  The Business and Professional Banking
Division located at the downtown Vancouver headquarters and the downtown
Portland lending office offers commercial and business banking services.

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

Lending Activities

General.  At March 31, 2006, the Company's total net loans receivable,
including loans held for sale, amounted to $623.1 million, or 81.6% of total
assets at that date.  The principal lending activity of the Company is the
origination of mortgage loans through its mortgage banking activities,
including loans collateralized by commercial properties, land for development,
and residential construction loans.  While the Company has historically
emphasized real estate mortgage loans secured by one-to-four residential real
estate, it has diversified its loan portfolio by focusing on increasing the
amount of commercial real estate and commercial loans held in its 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 area.

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

                                        3


<PAGE>


<PAGE>
<TABLE>
                                                      At March 31,
                  -----------------------------------------------------------------------------------------
                        2006               2005               2004               2003            2002
                  ----------------   ----------------   ----------------   --------------   ---------------
                  Amount   Percent   Amount   Percent   Amount   Percent   Amount  Percent  Amount  Percent
                  ------   -------   ------   -------   ------   -------   ------  -------  ------  -------
                                                 (Dollars in thousands)

              <c>       <c>      <c>       <c>      <c>       <c>     <c>      <c>      <c>     <c>
Real estate loans:
 Commercial real
  estate         $328,379   52.10%  $223,143   51.37%  $176,521   45.73% $100,886   33.13%   83,547  28.70%
 One- to four-
  family (1)       32,194    5.11     36,569    8.42     43,785   11.34    59,021   19.38   $72,406  24.87
 Multi-family       2,127    0.34      2,537    0.58      5,008    1.30     6,236    2.05     9,809   3.37
 Construction
  one- to four-
  family           81,167   12.88     43,633   10.05     47,589   12.33    45,579   14.97    44,156  15.17
 Construction
  multi-family          -       -          -       -          -       -       935    0.31     4,000   1.37
 Construction
  commercial       46,135     7.32    10,982     2.53     1,453    0.38     4,239    1.39     3,742   1.29
 Land              49,174     7.80    28,889     6.65    25,321    6.56    28,543    9.37    23,686   8.14
                 --------   ------  --------   ------  --------  ------  --------  ------  -------- ------
   Total real
   estate loans   539,176    85.55   345,753    79.60   299,677   77.64   245,439   80.60   241,346  82.91

 Commercial        59,769     9.48    57,981    13.35    57,578   14.91    34,145   11.21    23,216   7.98

Consumer loans:
 Automobile loans   1,054     0.17     1,197     0.28     1,631    0.42     1,468    0.48     2,142   0.74
 Savings account
  loans               449     0.07       268     0.06       335    0.09       321    0.11       518   0.18
 Home equity
  loans            27,810     4.41    26,556     6.11    23,914    6.20    21,236    6.97    21,701   7.46
 Other consumer
  loans             2,044     0.32     2,599     0.60     2,880    0.74     1,941    0.63     2,144   0.73
                 --------   ------  --------   ------  --------  ------  --------  ------  -------- ------
   Total consumer
   loans           31,357     4.97    30,620     7.05    28,760    7.45    24,966    8.19    26,505   9.11
                 --------   ------  --------   ------  --------  ------  --------  ------  -------- ------
Total loans and
 loans held
 for sale         630,302   100.00%  434,354   100.00%  386,015  100.00%  304,550  100.00%  291,067 100.00%
                            ======             ======            ======            ======           ======
Less:
 Allowance for
  loan losses       7,221              4,395              4,481             2,739             2,537
                 --------           --------           --------          --------          --------
Total loans
 receivable,
 net (1)         $623,081           $429,959           $381,534          $301,811          $288,530
                 ========           ========           ========          ========          ========


(1) Includes loans held for sale of $65,000, $510,000, $407,000, $1.5 million and $1.8 million at March 31,
2006, 2005, 2004, 2003 and 2002, respectively.

</TABLE>

                                                           4

<PAGE>



Commercial Real Estate Lending.  As of March 31, 2006, $374.5 million, or
59.4% of the total loan portfolio was secured by commercial real estate
property. The Company originates commercial real estate loans including land
development, retail shopping centers, office and medical buildings,
warehouses, mini-storage facilities, industrial use buildings, multi-family
and assisted living facilities primarily located in our market area.

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

The average size loan in the commercial real estate loan portfolios was
approximately $730,000 as of March 31, 2006.  The Company targets individual
commercial real estate loans between $500,000 and $5.0 million; however, the
loan policy allows origination of loans to one borrower up to 15% of the
Bank's capital.  The largest commercial real estate loan as of March 31, 2006
was an office building with an outstanding principal balance at March 31, 2006
of $7.0 million located in Vancouver, Washington.  This loan is performing
according to the loan payment terms, as were all commercial real estate loans
as of March 31, 2006, except for one non-accrual loan with a balance of
$415,000.

Both fixed- and adjustable-rate loans are offered on commercial real estate
loans.  Loans originated on a fixed-rate basis generally are originated at
fixed terms up to five years, with amortization terms up to 25 years.
Interest rates on fixed-rate loans are generally established utilizing the
Federal Home Loan Bank of Seattle's fixed advance rate for an equivalent
period plus a margin ranging from 2.5% to 3.50%.  Depending on the market
conditions at the time the loan was originated, certain loan agreements may
include prepayment penalties.

Approximately 80.1% of our commercial real estate loan portfolio was comprised
of adjustable rate loans at March 31, 2006. Adjustable-rate commercial real
estate loans are originated with variable rates that generally adjust after an
initial period ranging from one to five years.  Adjustable-rate commercial
real estate loans are generally priced utilizing the Federal Home Loan Bank of
Seattle's fixed advance rate for an equivalent period plus a margin ranging
from 2.5% to 3.50%, with principal and interest payments fully amortizing over
terms up to 25 years.  These loans generally have a prepayment penalty.  Both
adjustable-rate mortgages and fixed-rate mortgages generally allow provisions
for assumption of a loan by another borrower subject to lender approval and a
1% assumption fee.

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

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

One- to- Four Family Real Estate Lending. The majority of the residential
loans are secured by one- to- four family residences located in the Company's
primary market area.  Underwriting standards require that one- to- four family
portfolio loans generally be owner occupied and that loan amounts not exceed
80% or (95% with private mortgage

                                        5

<PAGE>



insurance) of the lesser of current appraised value or cost of the underlying
collateral.  Terms typically range from 15 to 30 years, and the Company also
offers balloon mortgage loans with terms of either five or seven years.  The
Company originates both fixed rate mortgages and adjustable rate mortgages
("ARMs") with repricing based on one-year constant maturity U.S. Treasury
index 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, these mortgage brokerage activities have reduced the volume
of fixed rate one- to- four family loans that are originated and sold by the
Company. See " Loan Originations, Sales and Purchases" and " Mortgage
Brokerage."

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

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

While one- to four- family residential real estate loans typically are
originated with 30-year terms and the Company permits its ARM loans to be
assumed by qualified borrowers, these loans generally remain outstanding for
substantially shorter periods because borrowers often prepay their loans in
full upon sale of the property pledged as security or upon refinancing the
original loan.  In addition, substantially all of the fixed interest rate
loans in the Company's loan portfolio contain due-on-sale clauses providing
that the Company may declare the unpaid amount due and payable upon the sale
of the property securing the loan.  Thus, average loan maturity is a function
of, among other factors, the level of purchase and sale activity in the real
estate market, prevailing interest rates and the interest rates payable on
outstanding loans. At March 31, 2006, the Company had no one- to- four family
residential real estate loans on non-accrual status.

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

At March 31, 2006 and 2005, the composition of the Company's construction loan
portfolio commitments was as follows:

                                                  At March 31,
                                      --------------------------------------
                                            2006                  2005
                                      -----------------    -----------------
                                      Amount(1) Percent    Amount(1) Percent
                                      --------- -------    --------  -------
                                               (Dollars in thousands)

Speculative construction               $111,699   44.16%    $ 43,749   40.61%
Commercial/multi-family construction     73,436   29.03       18,912   17.55

Custom/presold construction               3,752    1.48       13,300   12.34
Construction/permanent                   21,631    8.55       18,322   17.01
Construction/land                        42,444   16.78       13,453   12.49
                                       --------  ------     --------  ------
  Total                                $252,962  100.00%    $107,736  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

                                       6

<PAGE>



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, 2006, the Company had 10
borrowers with aggregate outstanding speculative loan balances of more than
$1.0 million, which totaled $17.1 million and were performing according to
original terms.

Unlike speculative construction loans, presold construction loans are made for
homes that have buyers. Presold construction loans are made to home builders
who, at the time of construction, have a signed contract with a home buyer who
has a commitment for permanent financing for the finished home from the
Company or another lender. Custom construction loans are made to the
homeowner. Custom/presold construction loans are generally originated for a
term of 12 months.  At March 31, 2006, the largest custom construction loan
and presold construction loan had outstanding balances of $236,000 and
$560,000, respectively, and were performing according to original terms.

Construction/permanent loans are originated to the homeowner rather than the
home builder along with a commitment by the Company to originate a permanent
loan to the homeowner to repay the construction loan at the completion of
construction.  The construction phase of a construction/permanent loan
generally lasts six to nine months.  At the completion of construction, the
Company may either originate a fixed rate mortgage loan or an ARM loan or use
its mortgage brokerage capabilities to obtain permanent financing for the
customer with another lender. At completion of construction, the
Company-originated fixed rate permanent loan's interest rate is set at a
market rate and for adjustable rate loans, the interest rates adjust on their
first adjustment date.  See " Mortgage Brokerage,"  " Loan Originations, Sales
and Purchases" and " Mortgage Loan Servicing."  At March 31, 2006, the largest
outstanding construction/permanent loan had an outstanding balance of $513,000
and was performing according to its original terms.

The Company also provides construction financing for non-residential
properties such as multi-family and commercial properties.  The Company has
increased its commercial lending resources with the intent of increasing the
amount of commercial real estate loan balances such as construction commercial
and construction multi-family loans.  The commercial construction loans
outstanding at March 31, 2006 were $47.1 million and the loan commitment
amount was $73.4 million. At March 31, 2006, the largest construction
commercial loan had an outstanding balance of $4.9 million and was performing
according to its original repayment terms.

The loan-to-value ratio, maturity and other provisions of the loans made by us
generally have reflected the Bank's policy of making less than the maximum
loan permissible under applicable regulations, in accordance with sound
lending practices, market conditions and the Bank's underwriting standards.
The Bank's current lending policy on residential real estate construction
loans generally limits the maximum loan-to-value ratio to 80% of the appraised
value of the property for loans to individuals and 75% of the appraised market
value of the project for loans to developers, provided that the loan does not
exceed 85% of total costs to complete the project. The minimum cash equity
required for an individual construction loan is 15%. The minimum cash equity
required for a developer loan is 15% of total costs, with up to 50% of
appreciated land equity being considered as cash equity provided certain
conditions are met. In addition, for loans to tract developers, the loan to
discounted cash flow or bulk sale value generally may not exceed 85%.
Development plans are required from both individuals and developers prior to
making the loan. The Bank's loan officers are required to personally visit the
proposed site of the development and the sites of competing developments. The
Bank requires that developers maintain adequate insurance coverage. While
maturity dates for residential construction loans are largely a function of
the estimated construction period of the project, loans to an individual
generally do not exceed one year while loans to developers generally do not
exceed 18 months. Substantially all of the Bank's residential construction
loans have adjustable rates of interest based on the Wall Street Journal Prime
Rate and during the term of construction, the accumulated interest is added to
the principal of the loan through an interest reserve.

Construction lending affords the Company the opportunity to achieve higher
interest rates and fees with shorter terms to maturity than does its
single-family permanent mortgage lending.  Construction lending, however,
generally involves a higher degree of risk than single-family permanent
mortgage lending because of the inherent difficulty in estimating both a
property's value at completion of the project and the estimated cost of the
project. The nature of these loans is such that they are generally more
difficult to evaluate and monitor.  If the estimate of construction cost
proves to be inaccurate, the Company may be required to advance funds beyond
the amount originally committed to permit completion of the project.

                                       7

<PAGE>



Projects may also be jeopardized by disagreements between borrowers and
builders and by the failure of builders to pay subcontractors.  The Company
addresses these risks by adhering to strict underwriting policies,
disbursement procedures and monitoring practices.  In addition, because the
Company's construction lending is in its primary market area, changes in the
local economy and real estate market could adversely affect the Company's
construction loan portfolio and our ability to continue to originate a
significant amount of construction loans. At March 31, 2006, the Company had
no construction loans on non-accrual status.

Multi-Family Lending.  Multi-family mortgage loans generally have terms up to
25 years with a loan-to-value ratio of up to 75%.  Both fixed and adjustable
rate loans are offered with a variety of terms to meet the multi-family
residential financing needs.  At March 31, 2006, the largest multi-family
mortgage loan had an outstanding loan balance of $2.0 million and was
performing according to its original repayment terms.

Multi-family mortgage lending affords the Company an opportunity to receive
interest at rates higher than those generally available from one- to four-
family residential lending.  However, loans secured by these properties
usually are greater in amount, are more difficult to evaluate and monitor and,
therefore, involve a greater degree of risk than one- to four- family
residential mortgage loans.  Because payments on loans secured by multi-family
properties are often dependent on the successful operation and management of
the properties, repayment of such loans may be affected by adverse conditions
in the real estate market or the economy.  The Company attempts to minimize
these risks by strictly scrutinizing the financial condition of the borrower,
the quality of the collateral and the management of the property securing the
loan.  The Company also generally obtains personal guarantees from financially
capable parties based on a review of personal financial statements. At March
31, 2006, the Company had no multi-family loans on non-accrual status.

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, 2006, the largest outstanding land loan was $7.9
million and was performing according to its original repayment terms. At that
date the Company had no land loans on non-accrual status.

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

Commercial Lending.  The Company's commercial loan portfolio has increased to
9.48% of the total loan portfolio at March 31, 2006 from 7.98% at March 31,
2002.  The Company has been able to increase the balance of outstanding
commercial loans and commitments as a result of the local economy, the
consolidation of some local competitors offering commercial loans and the
hiring of 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 typically secured by all business assets or other property.
The Company's commercial loans may be structured as term loans or as lines of
credit.  Commercial term loans are generally made to finance the purchase of
assets and have maturities of five years or less.  Commercial lines of credit
are typically made for the purpose of providing working capital and usually
have a term of one year or less.  Lines of credit are made at variable rates
of interest equal to a negotiated margin above an index rate and term loans
are at a fixed rate.  The Company also generally obtains personal guarantees
from financially capable parties based on a review of personal financial
statements.

                                        8

<PAGE>



Commercial lending involves greater risk than residential mortgage lending and
involves risks that are different from those associated with residential and
commercial real estate lending.  Real estate lending is generally considered
to be collateral based lending with loan amounts based on predetermined loan
to collateral values and liquidation of the underlying real estate
collateral is viewed as the primary source of repayment in the event of
borrower default.  Although commercial loans are often collateralized by
equipment, inventory, accounts receivable or other business assets including
real estate, the liquidation of collateral in the event of a borrower default
is often an insufficient source of repayment because accounts receivable may
be uncollectible and inventories and equipment may be obsolete or of limited
use, among other things.  Accordingly, the repayment of a commercial loan
depends primarily on the cash flow of the borrower (and any guarantors), while
liquidation of collateral is a secondary and often insufficient source of
repayment.   At March 31, 2006, the Company had no commercial loans on non-
accrual status.

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
loans, 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 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.

Consumer loans generally entail greater risk than do residential mortgage
loans, particularly in the case of consumer loans that are unsecured or
secured by assets that depreciate rapidly, such as mobile homes, automobiles,
boats and recreational vehicles.  In such cases, repossessed collateral for a
defaulted consumer loan may not provide an adequate source of repayment for
the outstanding loan and the remaining deficiency often does not warrant
further substantial collection efforts against the borrower.  In addition,
consumer loan collections are dependent on the borrower's continuing financial
stability, and thus are more likely to be adversely affected by job loss,
divorce, illness or personal bankruptcy.  Furthermore, the application of
various federal and state laws, including federal and state bankruptcy and
insolvency laws, may limit the amount which can be recovered on such loans.
These loans may also give rise to claims and defenses by the borrower against
the Company as the holder of the loan, and a borrower may be able to assert
claims and defenses, which it has against the seller of the underlying
collateral.  At March 31, 2006, no consumer loans were on non-accrual status.

Loan Maturity.  The following table sets forth certain information at March
31, 2006 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.

                                       9

<PAGE>


                     Within    1 to 3    3 to 5   5 to 10    Beyond
                    One Year   Years     Years     Years    10 Years    Total
                    --------   -----     -----     -----    --------    -----
                                    (In thousands)
Residential one- to
four- family:
 Adjustable rate   $      -   $   256   $   278   $    597   $16,693  $ 17,824

 Fixed rate           1,275     4,478     2,455      1,175     4,986    14,369
Construction:
 Adjustable rate     35,137     4,254         -          -         -    39,391
 Fixed rate           5,805         4         -          -         -     5,809

Other real estate:
 Adjustable rate         61       824     1,802        351     2,258     5,296
 Adjustable rate
  (Comm RE)\        121,991    55,980    11,283    178,748    19,295   387,297
 Fixed rate
  (Comm RE)          14,170    11,522     8,703     15,191       544    50,130
 Fixed rate           2,575     7,456     7,553      1,038       448    19,070
Commercial:
 Adjustable rate     29,232     2,239    12,778      4,007         -    48,256
 Fixed rate           1,741     4,008     4,240      1,513         -    11,502
Consumer:
 Adjustable rate        671         -       534        817    21,768    23,790
 Fixed rate           1,216     1,377       880        616     3,479     7,568
                   --------   -------   -------   --------   -------  --------
   Total loans     $213,874   $92,398   $50,506   $204,053   $69,471  $630,302
                   ========   =======   =======   ========   =======  ========


                                         10

<PAGE>




The following table sets forth the dollar amount of all loans due one year
after March 31, 2006, which have fixed interest rates or have floating or
adjustable interest rates.

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

Residential one- to four- family       $  13,094         $ 17,824
Construction loans                             4            4,254
Other real estate loans                   52,455          270,541
Commercial                                 9,761           19,024
Consumer                                   6,352           23,119
                                       ---------         --------
 Total                                 $  81,666         $334,762
                                       =========         ========

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 generally give the Company the right to declare loans
immediately due and payable in the event, among other things, that the
borrower sells the real property.  The average life of mortgage loans tends to
increase, however, when current mortgage loan market rates are substantially
higher than rates on existing mortgage loans and, conversely, decrease when
rates on existing mortgage loans are substantially higher than current
mortgage loan market rates.  Furthermore, management believes that a
significant number of the Company's residential mortgage loans are outstanding
for a period less than their contractual terms because of the transitory
nature of many of the borrowers who reside in its primary market area.

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

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

Loan Commitments. The Company issues commitments to originate residential
mortgage loans, commercial real estate mortgage loans, consumer loans and
commercial loans conditioned upon the occurrence of certain events.  The
Company uses the same credit policies in making commitments as it does for
on-balance sheet instruments.  Commitments to extend credit are conditional,
and are honored for up to 45 days subject to the Company's usual terms and
conditions.  Collateral is not required to support commitments.  At March 31,
2006, the Company had outstanding commitments to originate loans in the amount
of $18.0 million.

Loan Originations, Sales and Purchases. While the Company originates
adjustable-rate and fixed-rate loans, its ability to generate each type of
loan depends upon relative customer demand for loans in its primary market
area.  During the years ended March 31, 2006 and 2005, the Company's total
loan originations, including mortgage loans originated for sale and
participations purchased, were $677.8 million and $434.4 million,
respectively, of which 82.84% and 83.8%, respectively, were subject to
periodic interest rate adjustment and 17.16% and 15.1%, respectively, were
fixed-rate loans.

The Company customarily sells the fixed-rate residential one- to four- family
mortgage loans that it originates with maturities of 15 years or more to the
FHLMC as part of its asset liability strategy. Mortgage loans are sold to
FHLMC on a non-recourse basis where by foreclosure losses are generally the
responsibility of the FHLMC and not the Company. Servicing is retained on
loans sold to FHLMC. The sale of these loans allows the Company to continue to
make loans during periods when savings flows decline or funds are not
otherwise available for lending purposes; however, the Company assumes an
increased risk if these loans cannot be sold in a rising interest rate
environment.  Changes in the level of interest rates and the condition of the
local and national economies affect the amount of loans originated by the
Company

                                       11

<PAGE>



and demanded by investors to whom the loans are sold.  Generally, the
Company's residential one-to-four family mortgage loan origination, and sale
and mortgage brokerage activity (described below) 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  related to the sale or brokerage of one- to- four family
mortgage loans can vary significantly from period to period. During periods of
reduced loan demand, our profitability may be adversely affected to the extent
that we are unable to reduce expenses commensurate with the decline in loan
originations. Mortgage loans are sold to the FHLMC on a non-recourse basis
whereby foreclosure losses are generally the responsibility of the FHLMC and
not the Company. Servicing is retained on loans sold to FHLMC.

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

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

The Company purchased $12.5 million of land and commercial real estate loan
participations in fiscal year 2006.

                                      12

<PAGE>




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

                                               For the Years Ended March 31,
                                             --------------------------------
                                               2006        2005        2004
                                             --------    --------    --------
                                                     (In thousands)

Total net loans receivable and loans
 held for sale at beginning of period        $429,959    $381,534    $301,811
                                             --------    --------    --------
Loans originated:
 Mortgage loans:
   One- to four- family                        59,581      61,621      35,963
   Multi-family                                13,427       6,826       2,065
   Construction one- to four- family          147,643     100,522     104,913
   Construction commercial real estate            524           -         482
   Construction multi-family                    4,308           -         341
   Land and commercial real estate            263,507     120,201      93,241
 Commercial                                   173,657     136,726     101,432
 Consumer                                       2,638       2,859      31,135
                                             --------    --------    --------
   Total loans originated                     665,285     428,755     369,572

Loans purchased:
 Multi-family                                      40         127           -
 Land and commercial real estate               12,486       5,537       6,267
                                             --------    --------    --------
   Total loans purchased                       12,526       5,664       6,267

Loans sold:
 One-to-four family                           (23,402)    (22,840)    (51,567)
 Multi-family                                    (688)          -           -
 Land and commercial real estate               (4,243)          -           -
                                             --------    --------    --------
   Total loans sold                           (28,333)    (22,840)    (51,567)

Repayment of principal                       (573,707)   (363,607)   (329,443)
American Pacific Bank acquisition             120,077           -           -
Today's Bank acquisition                            -           -      85,610
(Decrease) increase in other items, net        (2,726)        453        (716)
                                             --------    --------    --------
Net increase in loans                         193,122      48,425      79,723
                                             --------    --------    --------
Total net loans receivable and loans held
  for sale at end of period                  $623,081    $429,959    $381,534
                                             ========    ========    ========

Mortgage Brokerage.  In addition to originating mortgage loans for retention
in its portfolio, the Company employs ten commissioned brokers who originate
mortgage loans (including construction loans) for various mortgage companies
predominately in the Portland metropolitan area, as well as for the Company.
The loans brokered to mortgage companies are closed in the name of and funded
by the purchasing mortgage company and are not originated as an asset of the
Company.  In return, the Company receives a fee ranging from 1% to 1.5% of the
loan amount that it shares with the commissioned broker. Loans brokered to the
Company are closed on the Company's books as if the Company had originated
them and the commissioned broker receives a fee of approximately 0.50% of the
loan amount.  During the year ended March 31, 2006, brokered loans totaled
$276.6 million (including $77.8 million brokered to the Company).  Gross fees
of $1.9 million (excluding the portion of fees shared with the commissioned
brokers) were recognized for the year ended March 31, 2006.  The interest rate
environment has a strong influence on the loan volume and amount of fees
generated from the mortgage broker activity.  In general, during periods of
rising interest rates such as we are currently experiencing, the volume of
loans and amount of loan fees generally decreases as a result of slower
mortgage loan demand. Conversely, during periods of falling interest rates,
the volume of loans and amount of loan fees generally increase as a result of
the increased mortgage loan demand.

                                       13




<PAGE>



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, 2006, total loans serviced for
others were $139.2 million.

The value of loans serviced for others is significantly affected by interest
rates.  In general, during periods of falling interest rates, mortgage loans
repay at faster rates and the value of the mortgage servicing declines.
Conversely, during periods of rising interest rates, the value of the mortgage
servicing rights generally increases as a result of slower rates of
prepayments.  The Company may be required to recognize this decrease in value
by taking a charge against its earnings, which would cause its net income to
decrease.  The Company has experienced a decrease in prepayments of mortgages
as interest rates have changed during the past two years, which has impacted
the value of the servicing asset.  Accordingly, the Company recognized a
decrease of $24,000 and $22,000 for fiscal years 2006 and 2005, respectively
in its valuation allowance for mortgage servicing rights reflecting the
increase in mortgage interest rates and slowing of prepayments.  We believe,
based on historical experience that the amount of prepayments and the related
impairment charges should decrease as interest rates increase.

Loan Origination and Other Fees.  The Company generally receives loan
origination fees and discount "points."   Loan fees and points are a
percentage of the principal amount of the loan that is charged to the borrower
for funding the loan.  The Company usually charges origination fees of 1.5% to
2.0% on one- to four- family residential real estate loans, long-term
commercial real estate loans and residential construction loans.  Commercial
loan fees are based on terms of the individual loan.  Current accounting
standards require fees received for originating loans to be deferred and
amortized into interest income over the contractual life of the loan. Deferred
fees associated with loans that are sold are recognized as gain on sale of
loans.  The Company had $4.4 million of net deferred loan fees at March 31,
2006.  The Company also receives loan servicing fees on the loans it sells and
on which it retains the servicing rights.  See Note 9 of the Notes to the
Consolidated Financial Statements contained in Item 8 of this Form 10-K.

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

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

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

Nonperforming Assets.  Loans are reviewed regularly and it is the Company's
general policy that when a loan is 90 days delinquent or when collection of
interest appears doubtful, it is placed on non-accrual 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 non-accrual loan are applied to the outstanding principal and
interest as determined at the time of collection of the loan.


                                          14

<PAGE>



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

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

                                                  At March 31,
                                   ----------------------------------------
                                    2006    2005     2004    2003     2002
                                   ----------------------------------------
                                             (Dollars in thousands)
Loans accounted for on a non-
accrual basis:
 Residential real estate            $   -   $   -    $  24   $ 301   $ 830
 Commercial real estate               415     198      309       -     297
 Land                                   -       -       31       -     180
 Commercial                             -      97      872       -      54
 Consumer                               -     161       65      22      39
                                    -----   -----   ------   -----  ------
   Total                              415     456    1,301     323   1,400
                                    -----   -----   ------   -----  ------
 Accruing loans which are
  contractually past due
  90 days or more                       -       -        -       -     122
                                    -----   -----   ------   -----  ------

 Total of non-accrual and
  90 days past due loans              415     456    1,301     323   1,522
                                    -----   -----   ------   -----  ------

 Real estate owned (net)                -     270      742     425     853
                                    -----   -----   ------   -----  ------
  Total nonperforming assets        $ 415   $ 726   $2,043   $ 748  $2,375
                                    =====   =====   ======   =====  ======
 Total loans delinquent 90
  days or more to net loans          0.07%   0.10%    0.34%   0.11%   0.53%

 Total loans delinquent 90 days
  or more to total assets            0.05    0.08     0.25    0.08    0.39

 Total nonperforming assets to
  total assets                       0.05    0.13     0.39    0.18    0.61

The gross amount of interest income on the non-accrual loans that would have
been recorded during the year ended March 31, 2006 if the non-accrual loans
had been current in accordance with their original terms was approximately
$21,000.  For the year ended March 31, 2006, $100,000 was earned on the
non-accrual loans and included in interest and fees on loans receivable
interest income.

Loans not included in nonperforming or past due categories, but where
information about possible credit problems causes management to be uncertain
about the borrower's ability to comply with existing repayment terms, totaled
$3.7 million at March 31, 2006 and $5.8 million at March 31, 2005.

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

                                          15

<PAGE>



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 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,
                                               ------------------
                                               2006          2005
                                               ----         -----
                                                 (In thousands)
   Substandard assets                         $4,066       $6,209
   Doubtful assets                                 -            -
   Loss assets                                     -            -

   General loss allowances                     7,221        4,395
   Specific loss allowances                        -            -
   Charge-offs                                   711          669

The loans classified as substandard assets at March 31, 2006 are made up of
thirteen real estate secured commercial loans totaling $2.9 million, and
eleven commercial loans totaling $1.1 million.

Real Estate Owned.  Real estate properties acquired through foreclosure or by
deed-in-lieu of foreclosure is recorded at the lower of cost or fair value
less estimated costs of disposal.  Management periodically performs valuations
and an allowance for loan losses is established by a charge to operations if
the carrying value exceeds the estimated net realizable value.  At March 31,
2006, the Company owned no real estate properties acquired through foreclosure
as compared to $270,000 at March 31, 2005.

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

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

The Company uses the loan classifications from the internal loan review and
Credit Administration in the following manner to determine the amount of the
allowance for loan losses.  The calculation of the allowance for loan losses
must consider


                                     16

<PAGE>



loan classification in order to determine the amount of the allowance for loan
losses for the required three separate elements of the allowance for losses:
general allowances, allocated allowances and unallocated allowances.

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

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

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

The change in the balance of the allowance for loan losses at March 31, 2006
reflects the proportionate increase in loan balances, the change in mix of
loan balances, the decrease in substandard assets and a change in loss rate
when compared to March 31, 2005.  The mix of the loan portfolio showed an
increase in the balances of commercial, construction and consumer loans at
March 31, 2006 as compared to balances at March 31, 2005.  Substandard assets
and assets classified as doubtful decreased by $2.1 million to $4.1 million at
March 31, 2006 compared to $6.2 million at March 31, 2005.

At March 31, 2006, the Company had an allowance for loan losses of $7.2
million, or 1.15% of total outstanding net loans at that date.  Based on past
experience and probable losses inherent in the loan portfolio, management
believes that loan loss reserves are adequate.

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

                                    17

<PAGE>



                                             Year Ended March 31,
                               ----------------------------------------------
                               2006       2005      2004      2003      2002
                               ----       ----      ----      ----      ----
                                             (Dollars in thousands)
Balance at beginning
 of period                    $4,395     $4,481    $2,739    $2,537    $1,916
Provision for loan losses      1,500        410       210       727     1,116
Recoveries:
 Residential real estate           -          -         -         2         -
 Land                              -          -         -        63         -
 Commercial                       87        156        74         -         -
 Consumer                         62         17        17        13        25
                              ------     ------    ------    ------    ------
 Total recoveries                149        173        91        78        25
                              ------     ------    ------    ------    ------
Charge-offs:
 Residential real estate           -         84        21       140        88
 Land                              -          -        15        17         -
 Commercial                      577        490       882       119       185
 Consumer                        134         95       264       152       166
                              ------     ------    ------    ------    ------
 Total charge-offs               711        669     1,182       428       439
                              ------     ------    ------    ------    ------
   Net charge-offs               562        496     1,091       350       414
                              ------     ------    ------    ------    ------
Dispositions (1)                   -          -         -         -        81
Allowance acquired from
 Today's Bank                      -          -     2,639
Allowance acquired from
 American Pacific Bank         1,888          -         -         -         -
Net change in allowance for
 unfunded loan commitments
 and lines of credit               -          -       (16)     (175)        -
                              ------     ------    ------    ------    ------
Balance at end of period      $7,221     $4,395    $4,481    $2,739    $2,537
                              ======     ======    ======    ======    ======
Ratio of allowance to total
 loans outstanding at end
 of period                      1.15%      1.01%     1.16%     0.90%     0.87%

Ratio of net charge-offs to
 average net loans out-
 standing during period         0.10       0.13      0.31      0.12      0.14
Ratio of allowance to total
 of non-accrual and 90 days
 past due loans             1,740.00     963.82    344.43    847.99    166.69


(1)  Allowance reclassified with securitization of one-to four-family loans to
mortgage-backed securities.

                                        18

<PAGE>


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

                                            Year Ended March 31,
                               ----------------------------------------------
                               2006       2005      2004      2003      2002
                               ----       ----      ----      ----      ----
                                               (In thousands)
Balance at beginning of
 period                      $   253    $   191   $   175   $    -    $     -
Net change in allowance
 for unfunded loan
 commitments and lines
 of credit                       109         62        16       175         -
                             -------    -------   -------   -------   -------
Balance at end of period     $   362    $   253   $   191   $   175   $     -
                             =======    =======   =======   =======   =======


<PAGE>
<TABLE>

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

                                                       At March 31,
                    ---------------------------------------------------------------------------------------
                          2006             2005             2004              2003              2002
                    ---------------- ----------------  ---------------   ----------------  ----------------
                              Loan            Loan              Loan              Loan              Loan
                            Category         Category         Category           Category         Category
                             as a             as a              as a              as a             as a
                            Percent          Percent          Percent            Percent          Percent
                            of Total         of Total          of Total          of Total          of Total
                    Amount   Loans   Amount   Loans    Amount   Loans    Amount   Loans    Amount   Loans
                    ------   -----   ------   -----    ------   -----    ------   -----    ------   -----
                                                   (Dollars in thousands)

                 <c>      <c>     <c>      <c>      <c>      <c>      <c>      <c>      <c>      <c>
Real estate loans
 One  to four-
  family           $   65    5.10%   $   74    8.42%    $   89   11.34%   $   122   19.38%  $   191   24.87%
 Multi-family          19    0.34        14    0.58         19    1.30         24    2.05        37    3.37
 Construction one-
  to four- family     820   12.88       176   10.05        148   12.33        194   14.97       319   15.17
 Construction multi-
  family                -       -         -       -          -       -          5    0.31        20    1.37
 Construction
  commercial          462    7.32        84    2.53          7    0.38         20    1.39        26    1.29
 Land                 496    7.80       219    6.65        148    6.56        196    9.37       192    8.14
 Commercial real
  estate            3,433   52.11     1,935   51.37      2,259   45.73      1,046   33.13       869   28.70
Commercial loans    1,088    9.48     1,556   13.35      1,589   14.91        796   11.21       668    7.98
Consumer loans:
 Secured              175    4.75       197    6.67        175    7.01        141    7.75       180    8.61
 Unsecured             41    0.22        44    0.38         37    0.44         33    0.44        27    0.50
Unallocated           622       -        96       -         10       -        162       -         8       -
                   ------  ------    ------  ------     ------  ------     ------  ------    ------  ------
 Total allowance
  for loan losses  $7,221  100.00%   $4,395  100.00%    $4,481  100.00%    $2,739  100.00%   $2,537  100.00%
                   ======  ======    ======  ======     ======  ======     ======  ======    ======  ======
</TABLE>
                                                           19
<PAGE>


Investment Activities

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

Federal regulations require the Bank to maintain a minimum sufficient
liquidity to ensure its safe and sound operation. Liquid assets include cash,
cash equivalents consisting of short-term interest-earning deposits, certain
other time deposits, and other obligations generally having remaining
maturities of less than five years.  It is management's intention to hold
securities with short maturities in the investment portfolio in order to match
more closely the interest rate sensitivities of the Company's assets and
liabilities.  At March 31, 2006, the Bank's liquidity ratio, the ratio of cash
and eligible investments to the sum of withdrawable savings and borrowings due
within one year, was 6.71%.

The Investment Committee, composed of the Company's Chairman, President, Chief
Financial Officer and Controller, makes investment decisions.  The Company's
investment objectives are:  (i) to provide and maintain liquidity within
regulatory guidelines; (ii) to maintain a balance of high quality, diversified
investments to minimize risk; (iii) to provide collateral for pledging
requirements; (iv) to serve as a balance to earnings; and (v) to optimize
returns.  At March 31, 2006, the Company's investment and mortgage-backed
securities portfolio totaled $34.0 million and consisted primarily of
obligations of federal agencies, and Federal National Mortgage Association
("FNMA") and FHLMC mortgage-backed securities.

At March 31, 2006, the Company's investment securities portfolio did not
contain any tax-exempt securities of any issuer with an aggregate book value
in excess of 10% of the Company's consolidated shareholders' equity, excluding
those securities issued by the U.S. Government or its agencies.

The Board of Directors sets the investment policy of the Company which
dictates that investments be made based on the safety of the principal amount,
liquidity requirements of the Company and the return on the investments.  At
March 31, 2006, 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 the Notes to the Consolidated Financial
Statements contained in Item 8 of this Form 10-K.

                                    20
<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 $34.0 million, $37.0 million and
$46.1 million at March 31, 2006, 2005 and 2004, respectively.

                                             At March 31,
                     ---------------------------------------------------------
                            2006                2005             2004
                     ------------------ ------------------- ------------------
                               Percent             Percent           Percent
                     Carrying    of     Carrying      of    Carrying   of
                      Value   Portfolio  Value    Portfolio  Value   Portfolio
                      -----   ---------  -----    ---------  -----   ---------
                                       (Dollars in thousands)
Held to maturity
(at amortized cost):
Real estate mortgage
 investment conduits
 ("REMICs")          $ 1,402    4.13%   $ 1,802      4.88%   $ 1,802   3.92%
FHLMC mortgage-backed
 securities              138    0.41        218      0.59        332   0.72
FNMA mortgage-backed
 securities              265    0.78        323      0.88        383   0.83
                     -------  ------    -------    ------    ------- ------
                       1,805    5.32      2,343      6.35      2,517   5.47
                     -------  ------    -------    ------    ------- ------
Available for sale
(at fair value):
 Agency securities    15,028   44.25     13,842     37.51     11,194  24.33
REMICs                 1,338    3.94      1,873      5.07      3,015   6.55
FHLMC mortgage-backed
 securities            6,635   19.54      9,507     25.76      7,190  15.63
FNMA mortgage-backed
 securities              161    0.47        239      0.65        402   0.88
Municipal securities   3,950   11.63      4,072     11.03      4,270   9.28
Trust preferred
 securities            5,044   14.85      5,031     13.63      5,019  10.91
Equity securities          -       -          -         -     12,400  26.95
                     -------  ------    -------    ------    ------- ------
                      32,156   94.68     34,564     93.65     43,490  94.53
                     -------  ------    -------    ------    ------- ------
Total investment
 securities          $33,961  100.00%   $36,907    100.00%   $46,007 100.00%
                     =======  ======    =======    ======    ======= ======


<PAGE>
<TABLE>

The following table sets forth the maturities and weighted average yields in the securities portfolio at
March 31, 2006.
                                                                      More Than
                            Less Than             One to               Five to            More Than
                             One Year           Five Years            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)

                     <c>       <c>       <c>        <c>        <c>        <c>        <c>       <c>
Municipal securities    $   341     4.00%    $ 1,623      4.20%    $   286     4.80%    $ 1,700    4.48%
Agency securities         4,441     3.28      10,587      3.78           -        -           -       -
REMICs                        -        -          88      5.75           -        -       2,651    5.61
FHLMC mortgage-
 backed securities           92     6.00           -         -       6,543     4.02         138    5.03
FNMA mortgage-
 backed securities           23     6.89           -         -         133     6.14         270    6.22
Trust preferred
 securities                   -        -           -         -           -        -       5,044    6.32
                        -------     ----     -------      ----     -------     ----     -------    ----
Total                   $ 4,897     3.40%    $12,298      3.85%    $ 6,962     4.09%    $ 9,803    5.79%
                        =======     ====     =======      ====     =======     ====     =======    ====

(1)    For available for sale securities carried at fair value, the weighted average yield is computed using
amortized cost without a tax equivalent adjustment for tax exempt obligations.

</TABLE>

                                                      21
<PAGE>




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

REMICs are created by redirecting the cash flows from the pool of mortgages or
mortgage-backed securities underlying these securities to create two or more
classes, or tranches, with different maturity or risk characteristics designed
to meet a variety of investor needs and preferences.  Management believes
these securities may represent attractive alternatives relative to other
investments because of the wide variety of maturity, repayment and interest
rate options available.  Current investment practices of the Company prohibit
the purchase of high risk REMICs.  At March 31, 2006, the Company held REMICs
with a net carrying value of $2.7 million, of which $1.4 million were
classified as held-to-maturity and $1.3 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, 2006, the Company owned no
privately issued REMICs.

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

The investment in municipal securities was $4.0 million at March 31, 2006
compared to $4.1 million at March 31, 2005.

Deposit Activities and Other Sources of Funds

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

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


                                          22

<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, 2006.

                                                                      Percent
Interest                                         Minimum              of Total
Rate     Term          Category                   Amount    Balance   Deposits
----     ----          --------                   ------    -------   --------
                                                        (In thousands)

0.210%   None          NOW accounts               $   100  $ 62,941     10.37%
4.273    None          High yield checking         25,000    66,516     10.96
0.550    None          Regular savings                500    38,344      6.32
3.450    None          Money market                 2,500   137,451     22.65
None     None          Non-interest checking          100    94,592     15.58
                                                           --------    ------
          Total transaction accounts                        399,844     65.88

                       Certificates of Deposit
                       -----------------------

4.303   91 Days        Fixed-term, Fixed-rate       2,500    23,338      3.85
3.596   182-364 Days   Fixed-term, Fixed-rate       2,500    27,647      4.54
3.575   12-17 Months   Fixed-term, Fixed-rate       2,500    54,746      9.02
3.612   18 Months      Fixed-term, Variable rate,     100     1,429      0.24
                        Individual Retirement
                        account ("IRA")
2.862   18-23 Months   Fixed-term, Fixed-rate       2,500     1,810      0.30
3.529   24-35 Months   Fixed-term, Fixed-rate       2,500    46,037      7.58
4.369   36-59 Months   Fixed-term, Fixed-rate       2,500    29,046      4.79
4.294   60-83 Months   Fixed-term, Fixed-rate       2,500    14,858      2.45
4.671   84-120 Months  Fixed-term, Fixed-rate       2,500     8,209      1.35
                                                           --------    ------
          Total certificates of deposit                     207,120     34.12%
                                                           --------    ------
              Total deposits                               $606,964    100.00%
                                                           ========    ======

                                     23

<PAGE>



<PAGE>
<TABLE>

Deposit Flow

The following table sets forth the balances of deposit accounts in the various types offered by the Company
at the dates indicated.
                                                      At March 31,
                 -------------------------------------------------------------------------------------------
                              2006                          2005                           2004
                 -----------------------------   ----------------------------   ----------------------------
                                    (Increase                      (Increase                      (Increase
                 Balance(2) Percent  Decrease)   Balance   Percent  Decrease)   Balance   Percent  Decrease)
                 ---------- -------  ---------   -------   -------  ---------   -------   -------  ---------
                                                    (Dollars in thousands)

              <c>        <c>      <c>        <c>        <c>      <c>        <c>        <c>     <c>
Non-interest-
 bearing demand  $ 94,592    15.58%  $ 15,093   $ 79,499    17.40%  $ 17,597   $ 61,902    15.13% $ (16,562)
NOW accounts       62,941    10.37     (2,726)    65,667    14.37        (51)    65,718    16.06     38,605
High-yield
 checking          66,516    10.96     15,954     50,562    11.07        894     49,668    12.14     14,131
Regular savings
 accounts          38,344     6.32      2,831     35,513     7.77      6,179     29,334     7.17      4,479
Money market
 deposit accounts 137,451    22.65     61,120     76,331    16.71      6,347     69,984    17.11     16,267
Certificates of
deposits which
 mature (1):
  Within 12
   months         130,159    21.44     53,101     77,058    16.87     (9,214)    86,272    21.09     15,117
  Within 12-36
   months          65,679    10.82     26,573     39,106     8.56      6,684     32,422     7.92      9,803
  Beyond 36
   months          11,282     1.86    (21,860)    33,142     7.25     19,327     13,815     3.38      6,533
                 --------   ------   --------   --------   ------   --------   --------   ------   --------
      Total      $606,964   100.00%  $150,086   $456,878   100.00%  $ 47,763   $409,115   100.00%  $ 88,373
                 ========   ======   ========   ========   ======   ========   ========   ======   ========

(1) IRAs of $16.6 million, $15.4 million and $13.9 million at March 31, 2006, 2005 and 2004, respectively,
    are included in certificate of deposit balances.
(2) The April 22, 2005 acquisition of APB deposits included $38.1 million in transaction accounts and $42.0
    million in certificates of deposits.

</TABLE>
                                                               24
<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,
                                                  ----------------------------
                                                     2006     2005       2004
                                                   ------   ------     ------
                                                         (In thousands)
Below 2.00%                                      $  2,257  $ 34,136  $ 63,241
2.00   2.99%                                       22,012    37,157    23,307
3.00   3.99%                                       90,763    36,216    14,221
4.00   4.99%                                       85,746    30,277    17,224
5.00   5.99%                                        6,063     9,670    10,230
6.00   7.99%                                          279     1,850     4,286
                                                 --------  --------  --------
  Total                                          $207,120  $149,306  $132,509
                                                 ========  ========  ========


The following table sets forth the amount and maturities of certificates of
deposit at March 31, 2006.

                                             Amount Due
                          --------------------------------------------------
                                            After
                          Less Than   1 to 2     2 to 3     After
                          One Year     Years     Years     3 Years     Total
                          --------    -------   --------  ---------  -------
                                             (In thousands)

Below 2.00%              $  2,063    $   173   $     -     $    21 $   2,257
2.00   2.99%               20,552      1,345        78          37    22,012
3.00   3.99%               64,847     19,782     3,076       3,058    90,763
4.00   4.99%               40,640     13,973    24,185       6,948    85,746
5.00   5.99%                1,920      1,654     1,271       1,218     6,063
6.00   7.99%                  137         34       108           -       279
                         --------    -------   -------     ------- ---------
  Total                  $130,159    $36,961   $28,718     $11,282 $ 207,120
                         ========    =======   =======     ======= =========

The following table presents the amount and weighted average rate of time
deposits equal to or greater than $100,000 at March 31, 2006.

                                                                  Weighted
Maturity Period                                      Amount     Average Rate
---------------                                     --------    ------------
                                                     (Dollars in thousands)

Three months or less                               $  24,477         3.81%
Over three through six months                         27,210         4.01
Over six through 12 months                            17,135         3.91
Over 12 Months                                        33,164         4.36
                                                    --------
Total                                               $101,986         4.06%
                                                    ========

                                   25
<PAGE>




Deposit Activities

The following table sets forth the deposit activities of the Company for the
periods indicated.
                                                 Year Ended March 31,
                                           -------------------------------
                                             2006        2005       2004
                                           --------   ---------  ---------
                                                    (In thousands)

Beginning balance                          $456,878    $409,115   $320,742

Net increase before interest credited       137,743      42,342     83,618
Interest credited                            12,343       5,421      4,755
Net increase in savings deposits            150,086      47,763     88,373
                                           --------    --------   --------
Ending balance                             $606,964    $456,878   $409,115
                                           ========    ========   ========

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

The FHLB functions as a central reserve bank providing credit for savings and
loan associations and certain other member financial institutions.  As a
member, the Bank is required to own capital stock in the FHLB and is
authorized to apply for advances on the security of such stock and certain of
its mortgage loans and other assets (principally securities which are
obligations of, or guaranteed by, the United States) provided certain
standards related to creditworthiness have been met.  Advances are made
pursuant to several different programs.  Each credit program has its own
interest rate and range of maturities.  Depending on the program, limitations
on the amount of advances are based either on a fixed percentage of an
institution's assets or on the FHLB's assessment of the institution's
creditworthiness. The FHLB determines specific lines of credit for each member
institution and the Bank has a 30% of total assets line of credit with the
FHLB of Seattle to the extent the Bank provides qualifying collateral and
holds sufficient FHLB stock. At March 31, 2006, the Bank had $46.1 million of
outstanding advances from the FHLB of Seattle under an available credit
facility of $228.5 million, which is limited to available collateral.

                                         26


<PAGE>


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

                                                     At March 31,
                                            ------------------------------
                                              2006        2005       2004
                                            -------    --------   --------
          Weighted average rate on FHLB
           advances                           4.65%       5.05%      4.88%

                                                 Year Ended March 31,
                                            ------------------------------
                                              2006        2005       2004
                                            -------    --------   --------
                                                 (Dollars In thousands)
          Maximum amounts of FHLB
           advances outstanding
           at any month end                 $66,400     $43,000    $40,000
          Average FHLB
           advances outstanding              51,091      40,274     40,000
          Weighted average rate on FHLB
           advances                            4.44%       5.00%      4.96%

In addition, the Bank has a Fed Funds borrowing facility with Pacific Coast
Bankers' Bank with a guideline limit of $10 million through June 30, 2007.
The facility may be reduced or withdrawn at any time.  As of March 31, 2006,
the Bank did not have any outstanding advances on this facility.

At December 31, 2005, a wholly owned subsidiary grantor trust established by
the Company had issued $7.0 million of pooled Trust Preferred Securities
("trust preferred securities"). Trust preferred securities accrue and pay
distributions periodically at specified rates as provided in the amended and
restated declaration of trust. The trust used the net proceeds from the
offering to purchase a like amount of Junior Subordinated Debentures (the
"Debentures") of the Company which pays interest at the same rate as
distribution on the trust preferred securities. The Debentures are the sole
assets of the trusts. The Company's obligations under the Debentures and
related documents, taken together, constitute a full and unconditional
guarantee by the Company of the obligations of the trusts.  The trust
preferred securities are mandatory redeemable upon the maturity of the
Debentures, or upon earlier redemption as provided in the indenture. The
Company has the right to redeem the Debentures in whole or in part five years
after issuance on any coupon date, at a redemption price specified in the
indentures plus any accrued but unpaid interest to the redemption date.

The following table is a summary of junior subordinated debentures securities
at March 31, 2006:

                        Preferred
              Issuance   security                Initial   Rate at   Maturing
                  date     amount  Rate Type (1)    Rate   12/31/05      Date
                  ----     ------  ------------     ----   --------      ----
                                  (Dollars in thousands)
Issuance trust
--------------
Riverview
 Bancorp, Inc.
 Statutory
 Trust 1       12/2005     $ 7,000   Variable      5.88%    6.27%     12/2035

(1) The variable rate preferred securities reprice quarterly.

The total amount of trust preferred securities outstanding at December 31,
2005 was $7.0 million. The interest rates on the trust preferred securities
issued in December 2005 resets quarterly and is tied to the London Interbank
Offered Rate ("LIBOR"). The Company has the right to redeem the Debentures in
December 2010.

The Debentures issued by the Company to the grantor trusts, totaling $7.0
million, are reflected in our consolidated balance sheet in the liabilities
section at December 31, 2005, under the caption "Junior subordinated
debentures." The Company records interest expense on the Debentures in the
consolidated statements of income. The Company recorded $217,000 in other
assets in the consolidated balance sheet at March 31, 2006, for the common
capital

                                      27
<PAGE>



securities issued by the issuer trusts.   The Company invested $5.0 million of
the trust preferred securities proceeds in the Bank and retained the remaining
$2.0 million for general corporate purposes.

                              REGULATION

The following is a brief description of certain laws and regulations which are
applicable to the Company and the Bank.  The description of these laws and
regulations, as well as descriptions of laws and regulations contained
elsewhere herein, does not purport to be complete and is qualified in its
entirety by reference to the applicable laws and regulations.  Legislation is
introduced from time to time in the United States Congress that may affect our
operations.  In addition, the regulations governing us may be amended from
time to time by the OTS.  Any such legislation or regulatory changes in the
future could adversely affect us.  We cannot predict whether any such changes
may occur.

General

The Bank, as a federally chartered savings institution, is subject to
extensive regulation, examination and supervision by the OTS, as its primary
federal regulator, and the FDIC, as its deposits insurer. The Bank is a member
of the FHLB System and its deposit accounts are insured up to applicable
limits by the SAIF managed by the FDIC. The Bank must 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, under certain circumstances, the
FDIC to evaluate the Bank's safety and soundness and compliance with various
regulatory requirements. This regulatory structure is intended primarily for
the protection of the insurance fund and depositors. 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 and the Bank and their operations.
The Company, as a savings and loan holding company, is required to file
certain reports with, are subject to examination by, and otherwise must comply
with the rules and regulations of the OTS.  The Company is also subject to the
rules and regulations of the SEC under the federal securities laws.  See "--
Savings and Loan Holding Company Regulations."

Federal Regulation of Savings Institutions

Office of Thrift Supervision.  The OTS has extensive authority over the
operations of savings institutions.  As part of this authority, the Bank is
required to file periodic reports with the OTS and is subject to periodic
examinations by the OTS and the FDIC. The OTS also has extensive enforcement
authority over all savings institutions and their holding companies, including
the Bank and the Company.  This enforcement authority includes, among other
things, the ability to assess civil money penalties, issue cease-and-desist or
removal orders and initiate injunctive actions.  In general, these enforcement
actions may be initiated for violations of laws and regulations and unsafe or
unsound practices.  Other actions or inactions may provide the basis for
enforcement action, including misleading or untimely reports filed with the
OTS.  Except under certain circumstances, public disclosure of final
enforcement actions by the OTS is required.

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

                                   28

<PAGE>



All savings institutions are required to pay assessments to the OTS to fund
the agency's operations.  The general assessments, paid on a semi-annual
basis, are determined based on the savings institution's total assets,
including consolidated subsidiaries.  The Bank's OTS assessment for the fiscal
year ended March 31, 2006 was $131,000.

The Bank's general permissible lending limit for loans-to-one-borrower is
equal to the greater of $500,000 or 15% of unimpaired capital and surplus
(except for loans fully secured by certain readily marketable collateral, in
which case this limit is increased to 25% of unimpaired capital and surplus).
At March 31, 2006, the Bank's lending limit under this restriction was $11.8
million and, at that date, the Bank's largest single loan to one borrower was
$7.7 million, which was performing according to its original terms.

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

Federal Home Loan Bank System.  The Bank is a member of the FHLB of Seattle,
which is one of 12 regional FHLBs that administer the home financing credit
function of savings institutions.  Each FHLB serves as a reserve or central
bank for its members within its assigned region.  It is funded primarily from
proceeds derived from the sale of consolidated obligations of the FHLB System.
It makes loans or advances to members in accordance with policies and
procedures, established by the Board of Directors of the FHLB, which are
subject to the oversight of the Federal Housing Finance Board.  All advances
from the FHLB are required to be fully secured by sufficient collateral as
determined by the FHLB.  In addition, all long-term advances are required to
provide funds for residential home financing.  At March 31, 2006, the Bank had
$46.1 million of outstanding advances from the FHLB of Seattle under an
available credit facility of $228.5 million, which is limited to available
collateral.  See Business   Deposit Activities and Other Sources of Funds
Borrowings.

As a member, the Bank is required to purchase and maintain stock in the FHLB
of Seattle.  At March 31, 2006, the Bank had $7.4 million in FHLB stock, which
was in compliance with this requirement.  In past years, the Bank has received
substantial dividends on its FHLB stock until such dividends were suspended on
May 18, 2005. For the year ended March 31, 2006, the Bank received no
dividends from the FHLB of Seattle compared to $110,000 in dividends from the
FHLB of Seattle for the year ended March 31, 2005.

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

Deposit Insurance.  The Bank is a member of the SAIF, which is administered by
the FDIC.  Deposits are insured up to the applicable limits by the FDIC and
this insurance is backed by the full faith and credit of the United States.
As insurer, the FDIC imposes deposit insurance premiums and is authorized to
conduct examinations of and to require reporting by FDIC-insured institutions.
It also may prohibit any FDIC-insured institution from engaging in any
activity the FDIC determines by regulation or order to pose a serious risk to
the SAIF.  The FDIC also has the authority to initiate enforcement actions
against savings institutions, after giving the OTS an opportunity to take such
action, and may terminate the deposit insurance if it determines that the
institution has engaged in unsafe or unsound practices or is in an unsafe or
unsound condition.

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

                                      29

<PAGE>



risk-based capital ratio of less than 8%) and considered of substantial
supervisory concern pay the highest premium. Risk classification of all
insured institutions is made by the FDIC for each semi-annual assessment
period.

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

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

The Federal Deposit Insurance Reform Act of 2005 ("The Reform Act"), which was
enacted in 2006, revised the laws governing the federal deposit insurance
system. The Reform Act provides for the consolidation of the Bank Insurance
Fund and the Savings Association Insurance Fund into a combined "Deposit
Insurance Fund" and gives the FDIC the authority to determine insurance
premiums based on a number of factors, primarily the risk of loss that insured
institutions pose to the Deposit Insurance Fund. The legislation eliminates
the current minimum 1.25% reserve ratio for the insurance funds, the mandatory
assessments when the ratio fall below 1.25% and the prohibition on assessing
the highest quality banks when the ratio is above 1.25%. The Reform Act
provides the FDIC with flexibility to adjust the new insurance fund's reserve
ratio between 1.15% and 1.5%, depending on projected losses, economic changes
and assessment rates at the end of a calendar year.

The Reform Act increased deposit insurance coverage limits from $100,000 to
$250,000 for certain types of Individual Retirement Accounts, 401(k) plans and
other retirement savings accounts. While it preserved the $100,000 coverage
limit for individual accounts and municipal deposits, the FDIC was furnished
with the discretion to adjust all coverage levels to keep pace with inflation
beginning in 2010. Also, institutions that become undercapitalized will be
prohibited from accepting certain employee benefit plan deposits.

At this time, management cannot predict the effect, if any, that the Reform
Act will have on insurance premiums paid by the Bank.

Prompt Corrective Action.  The OTS is required to take certain supervisory
actions against undercapitalized savings institutions, the severity of which
depends upon the institution's degree of undercapitalization.  Generally, an
institution that has a ratio of total capital to risk-weighted assets of less
than 8%, a ratio of Tier I (core) capital to risk-weighted assets of less than
4%, or a ratio of core capital to total assets of less than 4% (3% or less for
institutions with the highest examination rating) is considered to be
"undercapitalized."  An institution that has a total risk-based capital ratio
less than 6%, a Tier I capital ratio of less than 3% or a leverage ratio that
is less than 3% is considered to be "significantly undercapitalized" and an
institution that has a tangible capital to assets ratio equal to or less than
2% is deemed to be "critically undercapitalized."  Subject to a narrow
exception, the OTS is required to appoint a receiver or conservator for a
savings institution that is "critically undercapitalized."  OTS regulations
also require that a capital restoration plan be filed with the OTS within 45
days of the date a savings institution receives notice that it is
"undercapitalized," "significantly undercapitalized" or "critically
undercapitalized." 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.  "Significantly undercapitalized" and
"critically undercapitalized" institutions are subject to more extensive
mandatory regulatory actions.  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, 2006, the Bank was categorized as "well capitalized" under the
prompt corrective action regulations of the OTS.

                                   30

<PAGE>



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

A savings institution that fails to meet the QTL is subject to certain
operating restrictions and may be required to convert to a national bank
charter.  Recent legislation has expanded the extent to which education loans,
credit card loans and small business loans may be considered "qualified thrift
investments." As of March 31, 2006, the Bank maintained 70.45% of its
portfolio assets in qualified thrift investments and, therefore, met the
qualified thrift lender test.

Capital Requirements. The OTS's capital regulations require federal savings
institutions to meet three minimum capital standards: a 1.5% tangible capital
to total assets ratio, a 4% leverage ratio (3% for institutions receiving the
highest rating on the CAMELS examination rating system) and an 8% risk-based
capital ratio. In addition, the prompt corrective action standards discussed
below also establish, in effect, a minimum 2% tangible capital standard, a 4%
leverage ratio (3% for institutions receiving the highest rating on the CAMELS
system) and, together with the risk-based capital standard itself, a 4% Tier I
risk-based capital standard. The OTS regulations also require that, in meeting
the tangible, leverage and risk-based capital standards, institutions must
generally deduct investments in and loans to subsidiaries engaged in
activities as principal that are not permissible for a national bank.

The risk-based capital standard requires federal savings institutions to
maintain Tier I (core) and total capital (which is defined as core capital and
supplementary capital) to risk-weighted assets of at least 4% and 8%,
respectively. In determining the amount of risk-weighted assets, all assets,
including certain off-balance sheet assets, recourse obligations, residual
interests and direct credit substitutes, are multiplied by a risk-weight
factor of 0% to 100%, assigned by the OTS capital regulation based on the
risks believed inherent in the type of asset. Core (Tier I) capital is defined
as common stockholders' equity (including retained earnings), certain
noncumulative perpetual preferred stock and related surplus and minority
interests in equity accounts of consolidated subsidiaries, less intangibles
other than certain mortgage servicing rights and credit card relationships.
The components of supplementary capital currently include cumulative preferred
stock, long-term perpetual preferred stock, mandatory convertible securities,
subordinated debt and intermediate preferred stock, the allowance for loan and
lease losses limited to a maximum of 1.25% of risk-weighted assets and up to
45% of unrealized gains on available-for-sale equity securities with readily
determinable fair market values. Overall, the amount of supplementary capital
included as part of total capital cannot exceed 100% of core capital.

The OTS also has authority to establish individual minimum capital
requirements in appropriate cases upon a determination that an institution's
capital level is or may become inadequate in light of the particular
circumstances. At March 31, 2006, the Bank met each of these capital
requirements.  For additional information, see Note 17 of the Notes to
Consolidated Financial Statements included in Item 8 of this Annual Report on
Form 10-K.

Limitations on Capital Distributions.  OTS regulations impose various
restrictions on savings institutions with respect to their ability to make
distributions of capital, which include dividends, stock redemptions or
repurchases, cash-out mergers and other transactions charged to the capital
account.  Generally, savings institutions, such as the Bank, that before and
after the proposed distribution are well-capitalized, may make capital
distributions during any calendar year equal to up to 100% of net income for
the year-to-date plus retained net income for the two preceding years.
However, an institution deemed to be in need of more than normal supervision
by the OTS may have its dividend authority restricted by the OTS.  The Bank
may pay dividends to the Company in accordance with this general authority.

Savings institutions proposing to make any capital distribution need not
submit written notice to the OTS prior to such distribution unless they are a
subsidiary of a holding company or would not remain well capitalized following

                                     31

<PAGE>



the distribution.  Savings institutions that do not, or would not meet their
current minimum capital requirements following a proposed capital distribution
or propose to exceed these net income limitations, must obtain OTS approval
prior to making such distribution.  The OTS may object to the distribution
during that 30-day period based on safety and soundness concerns.  See "-
Capital Requirements."

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

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

Transactions with Affiliates. The Bank's authority to engage in transactions
with "affiliates" is limited by OTS regulations and by Sections 23A and 23B of
the Federal Reserve Act as implemented by the Federal Reserve Board's
Regulation W. The term "affiliates" for these purposes generally means any
company that controls or is under common control with an institution. The
Company and its non-savings institution subsidiaries would be affiliates of
the Bank. In general, transactions with affiliates must be on terms that are
as favorable to the institution as comparable transactions with
non-affiliates. In addition, certain types of transactions are restricted to
an aggregate percentage of the institution's capital. Collateral in specified
amounts must usually be provided by affiliates in order to receive loans from
an institution. In addition, savings institutions are prohibited from lending
to any affiliate that is engaged in activities that are not permissible for
bank holding companies and no savings institution may purchase the securities
of any affiliate other than a subsidiary.

The Sarbanes-Oxley Act of 2002 generally prohibits a company from making loans
to its executive officers and directors. However, that act contains a specific
exception for loans by a depository institution to its executive officers and
directors in compliance with federal banking laws. Under such laws, the Bank's
authority to extend credit to executive officers, directors and 10%
stockholders ("insiders"), as well as entities such person's control is
limited. The law restricts both the individual and aggregate amount of loans
the Bank may make to insiders based, in part, on the Bank's capital position
and requires certain Board approval procedures to be followed. Such loans must
be made on terms substantially the same as those offered to unaffiliated
individuals and not involve more than the normal risk of repayment. There is
an exception for loans made pursuant to a benefit or compensation program that
is widely available to all employees of the institution and does not give
preference to insiders over other employees. There are additional restrictions
applicable to loans to executive officers.

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

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<PAGE>



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

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

Enforcement.  The OTS has primary enforcement responsibility over savings
institutions and has the authority to bring action against all
"institution-affiliated parties," including shareholders, 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 $25,000 per day, or $1.1 million
per day in especially egregious cases.  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.

Standards for Safety and Soundness.  As required by statute, the federal
banking agencies have adopted Interagency Guidelines prescribing Standards for
Safety and Soundness. 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 a savings institution fails to meet any standard
prescribed by the guidelines, the OTS may require the institution to submit an
acceptable plan to achieve compliance with the standard.

Environmental Issues Associated with Real Estate Lending.  The Comprehensive
Environmental Response, Compensation and Liability Act ("CERCLA"), a federal
statute, generally imposes strict liability on all prior and present "owners
and operators" of sites containing hazardous waste.  However, Congress asked
to protect secured creditors by providing that the term "owner and operator"
excludes a person whose ownership is limited to protecting its security
interest in the site.  Since the enactment of the CERCLA, this "secured
creditor exemption" has been the subject of judicial interpretations which
have left open the possibility that lenders could be liable for cleanup costs
on contaminated property that they hold as collateral for a loan.

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

Privacy Standards.  The Gramm-Leach-Bliley Financial Services Modernization
Act of 1999 ("GLBA"), which was enacted in 1999, modernized the financial
services industry by establishing a comprehensive framework to permit
affiliations among commercial banks, insurance companies, securities firms and
other financial service providers.   The Bank is subject to OTS regulations
implementing the privacy protection provisions of the GLBA. These regulations
require the Bank to disclose its privacy policy, including identifying with
whom it shares "non-public personal information," to customers at the time of
establishing the customer relationship and annually thereafter.

Anti-Money Laundering and Customer Identification.  Congress enacted the
Uniting and Strengthening America by Providing Appropriate Tools Required to
Intercept and Obstruct Terrorism Act of 2001 (the "USA Patriot Act") on
October 26, 2001 in response to the terrorist events of September 11, 2001.
The USA Patriot Act gives the federal government new powers to address
terrorist threats through enhanced domestic security measures, expanded

                                     33

<PAGE>



surveillance powers, increased information sharing, and broadened anti-money
laundering requirements. In March 2006, Congress re-enacted certain expiring
provisions of the USA Patriot Act.

Savings and Loan Holding Company Regulations

General.  The Company is a unitary savings and loan holding 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 institution subsidiaries which also permits
the OTS to restrict or prohibit activities that are determined to present a
serious risk to the subsidiary savings institution.

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

Activities Restrictions.  As a unitary savings and loan holding company, the
Company generally is not subject to activity restrictions. The Company and its
non-savings institution subsidiaries are subject to statutory and regulatory
restrictions on their business activities specified by federal regulations,
which include performing services and holding properties used by a savings
institution subsidiary, activities authorized for savings and loan holding
companies as of March 5, 1987, and non-banking activities permissible for bank
holding companies pursuant to the Bank Holding Company Act of 1956 or
authorized for financial holding companies pursuant to the GLBA.

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

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

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

Taxation

For details regarding the Company's taxes, see Note 14 of the Notes to the
Consolidated Financial Statements contained in Item 8 of this Form 10-K.

Personnel

As of March 31, 2006, the Company had 239 full-time equivalent employees, none
of whom are represented by a collective bargaining unit.  The Company believes
its relationship with its employees is good.

                                    34

<PAGE>



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


Name                 Age (1)      Position
----                -------       --------
Patrick Sheaffer      66          Chairman of the Board and Chief Executive
                                   Officer
Ron Wysaske           53          President and Chief Operating Officer
David A. Dahlstrom    55          Executive Vice President and Chief Credit
                                   Officer
Ron Dobyns            57          Senior Vice President and Chief Financial
                                   Officer
John A. Karas         57          Senior Vice President

(1)  At March 31, 2006.

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

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

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

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

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

Item1A.  Risk Factors

An investment in our common stock is subject to risks inherent in our
business.  Before making an investment decision, you should carefully consider
the risks and uncertainties described below together with all of the other
information included in this report.  In addition to the risks and
uncertainties described below, other risks and uncertainties not currently
known to us or that we currently deem to be immaterial also may materially and
adversely affect our business, financial condition and results of operations.
The value or market price of our common stock could decline due to any of
these identified or other risks, and you could lose all or part of your
investment.

                                   35

<PAGE>



Fluctuations in interest rates could reduce our profitability and affect the
value of our assets.

Like other financial institutions, we are subject to interest rate risk.  Our
primary source of income is net interest income, which is the difference
between interest earned on loans and investments and the interest paid on
deposits and borrowings.  We expect that we will periodically experience
imbalances in the interest rate sensitivities of our assets and liabilities
and the relationships of various interest rates to each other.  Over any
period of time, our interest-earning assets may be more sensitive to changes
in market interest rates than our interest-bearing liabilities, or vice versa.
In addition, the individual market interest rates underlying our loan and
deposit products may not change to the same degree over a given time period.
In any event, if market interest rates should move contrary to our position,
our earnings may be negatively affected.  In addition, loan volume and quality
and deposit volume and mix can be affected by market interest rates.  Changes
in levels of market interest rates could materially adversely affect our net
interest spread, asset quality, origination volume and overall profitability.

Interest rates have recently been at historically low levels.  However, since
June 30, 2004, the U.S. Federal Reserve has increased its target for the
federal funds rate fifteen times, from 1.00% to 4.75%.  While these short-term
market interest rates (which we use as a guide to price our deposits) have
increased the pricing of our loans have more than offset the rise in funding
cost. In a sustained rising interest rate environment the asset yields are
expected to closely match rising funding costs. A sustained falling interest
rate environment would negatively impact margins. Opportunities to reduce
non-maturity deposit rates become more difficult to realize in a protracted
decline in rates, while asset yields come under constant pressure.

We principally manage interest rate risk by managing our volume and mix of our
earning assets and funding liabilities.  In a changing interest rate
environment, we may not be able to manage this risk effectively.  If we are
unable to manage interest rate risk effectively, our business, financial
condition and results of operations could be materially harmed.

Changes in the level of interest rates also may negatively affect our ability
to originate real estate loans, the value of our assets and our ability to
realize gains from the sale of our assets, all of which ultimately affect our
earnings.

Our business is subject to various lending risks which could adversely impact
our results of operations and financial condition.

Our commercial real estate loans involve higher principal amounts than other
loans, and repayment of these loans may be dependent on factors outside our
control or the control of our borrowers. At March 31, 2006, we had $328.4
million of loans secured by commercial real estate loans, representing 52.1 %
of our total loans and loans held for sale portfolio.  The income generated
from the operation of the property securing the loan is generally considered
by us to be the principal source of repayment on this type of loan.  The
commercial real estate lending in which we engage typically involves larger
loans to a single borrower and is generally viewed as exposing the lender to a
greater risk of loss than one-four family residential lending because these
loans generally are not fully amortizing over the loan period, but have a
balloon payment due at maturity.  A borrower's ability to make a balloon
payment typically will depend on being able to either refinance the loan or
timely sell the underlying property.

Repayment of our commercial loans is often dependent on the cash flows of the
borrower, which may be unpredictable, and the collateral securing these loans
may fluctuate in value. At March  31, 2006, commercial loans totaled $59.8
million, or 9.5%, of our total loan and loans held for sale portfolio. Our
commercial loans are primarily made based on the identified cash flow of the
borrower and secondarily on the underlying collateral provided by the
borrower. Most often, this collateral consists of accounts receivable,
inventory or equipment. Credit support provided by the borrower for most of
these loans and the probability of repayment is based on the liquidation of
the pledged collateral and enforcement of a personal guarantee, if any exists.
As a result, in the case of loans secured by accounts receivable, the
availability of funds for the repayment of these loans may be substantially
dependent on the ability of the borrower to collect amounts due from its
customers. The collateral securing other loans may depreciate over time, may
be difficult to appraise and may fluctuate in value based on the success of
the business.

Our construction and land loans are based upon estimates of costs and value
associated with the complete project. These estimates may be inaccurate. We
originate construction loans for commercial properties, as well as for single

                                  36

<PAGE>



family home construction.   At March 31, 2006, construction loans totaled
$127.3 million, or 20.2% of total loans and loans held for sale while land
loans totaled $49.2 million or 7.8% of total loans and loans held for sale.
Construction and land acquisition and development lending involves additional
risks because funds are advanced upon the security of the project, which is of
uncertain value prior to its completion.  There are also risks associated with
the timely completion of the construction activities for their allotted costs,
as a number of factors can result in delays and cost overruns, and the time
needed to stabilize income producing properties or to sell residential tract
developments.  Because of the uncertainties inherent in estimating
construction costs, as well as the market value of the completed project and
the effects of governmental regulation of real property, it is relatively
difficult to evaluate accurately the total funds required to complete a
project and the related loan-to-value ratio. As a result, construction loans
and land acquisition and development loans often involve the disbursement of
substantial funds with repayment dependent, in part, on the success of the
ultimate project and the ability of the borrower to sell or lease the property
or refinance the indebtedness, rather than the ability of the borrower or
guarantor to repay principal and interest.  If our appraisal of the value of
the completed project proves to be overstated, we may have inadequate security
for the repayment of the loan upon completion of construction of the project
and may incur a loss.

Our consumer loans generally have a higher risk of default than our other
loans. At March 31, 2006, consumer loans totaled $31.4 million, or 5.0%, of
our total loan and loans held for sale portfolio. Consumer loans typically
have shorter terms and lower balances with higher yields as compared to one-
to four-family residential mortgage loans, but generally carry higher risks of
default. Consumer loan collections are dependent on the borrower's continuing
financial stability, and thus are more likely to be affected by adverse
personal circumstances. Furthermore, the application of various federal and
state laws, including bankruptcy and insolvency laws, may limit the amount
which can be recovered on these loans.

An inadequate allowance for loan losses would reduce our earnings.

We are exposed to the risk that our borrowers will be unable to repay their
loans according to their terms and that any collateral securing the payment of
their loans will not be sufficient to assure full repayment. Credit losses are
inherent in the lending business and could have a material adverse effect on
our operating results. Volatility and deterioration in the economy may also
increase our risk for credit losses. We evaluate the collectibility of our
loan portfolio and provide an allowance for loan losses that we believe is
adequate based upon such factors as:

    *   Cash flow of the borrower and/or the project being financed;

    *   in the case of a collateralized loan, the changes and uncertainties as
        to the future value of the collateral;

    *   the credit history of a particular borrower;

    *   changes in economic and industry conditions; and

    *   the duration of the loan.

If our evaluation is incorrect and borrower defaults cause losses exceeding
our allowance for loan losses, our earnings could be materially and adversely
affected. We cannot assure you that our allowance will be adequate to cover
loan losses inherent in our portfolio. We may experience losses in our loan
portfolio or perceive adverse trends that require us to significantly increase
our allowance for loan losses in the future, which would also reduce our
earnings. In addition, the Bank's regulators, as an integral part of their
examination process, may require us to make additional provisions for loan
losses.

The unseasoned nature of many of the commercial real estate loans we
originated may lead to additional provisions for loan losses or charge-offs,
which would hurt our profits.

The diversification of our real estate loan portfolio has led to a significant
increase in the number of commercial real estate loans in our portfolio. Many
of these loans are unseasoned and have not been subjected to unfavorable
economic conditions.  We have limited experience in originating these types of
loans and as a result do not have a

                                     37

<PAGE>



significant payment history pattern with which to judge future collectibility.
As a result, it is difficult to predict the future performance of this part of
our real estate loan portfolio.  These loans may have delinquency or
charge-off levels above our historical experience, which could adversely
affect our profitability.

Our real estate lending also exposes us to the risk of environmental
liabilities.

In the course of our business, we may foreclose and take title to real estate,
and could be subject to environmental liabilities with respect to these
properties. We may be held liable to a governmental entity or to third persons
for property damage, personal injury, investigation and clean-up costs
incurred by these parties in connection with environmental contamination, or
may be required to investigate or clean up hazardous or toxic substances, or
chemical releases at a property. The costs associated with investigation or
remediation activities could be substantial. In addition, as the owner or
former owner of a contaminated site, we may be subject to common law claims by
third parties based on damages and costs resulting from environmental
contamination emanating from the property. If we ever become subject to
significant environmental liabilities, our business, financial condition and
results of operations could be materially and adversely affected.

Our profitability depends significantly on economic conditions in the States
of Washington and Oregon.

Our success depends primarily on the general economic conditions of the States
of Washington and Oregon and the specific local markets in which we operate.
Unlike larger national or other regional banks that are more geographically
diversified, we provide banking and financial services to customers located
primarily in  seven counties of Washington and Oregon.  The local economic
conditions in our market areas have a significant impact on the demand for our
products and services as well as the ability of our customers to repay loans,
the value of the collateral securing loans and the stability of our deposit
funding sources.  Adverse economic conditions unique to these Northwest
markets could have a material adverse effect on our financial condition and
results of operations.  Further, a significant decline in general economic
conditions, caused by inflation, recession, acts of terrorism, outbreak of
hostilities or other international or domestic occurrences, unemployment,
changes in securities markets or other factors could impact these state and
local markets and, in turn, also have a material adverse effect on our
financial condition and results of operations.

Our funding sources may prove insufficient to replace deposits and support our
future growth.

We rely on customer deposits and advances from the FHLB-Seattle and other
borrowings to fund our operations.  Although we have historically been able to
replace maturing deposits and advances if desired, no assurance can be given
that we would be able to replace such funds in the future if our financial
condition or the financial condition of the FHLB or market conditions were to
change. Our financial flexibility will be severely constrained if we are
unable to maintain our access to funding or if adequate financing is not
available to accommodate future growth at acceptable interest rates.  Finally,
if we are required to rely more heavily on more expensive funding sources to
support future growth, our revenues may not increase proportionately to cover
our costs.  In this case, our profitability would be adversely affected.

Although we consider such sources of funds adequate for our liquidity needs,
we may seek additional debt in the future to achieve our long-term business
objectives.  There can be no assurance additional borrowings, if sought, would
be available to us or, if available, would be on favorable terms.  If
additional financing sources are unavailable or are not available on
reasonable terms, our growth and future prospects could be adversely affected.

Competition with other financial institutions could adversely affect our
profitability.

The banking and financial services industry is very competitive. Legal and
regulatory developments have made it easier for new and sometimes unregulated
competitors to compete with us. Consolidation among financial service
providers has resulted in fewer very large national and regional banking and
financial institutions holding a large accumulation of assets. These
institutions generally have significantly greater resources, a wider
geographic presence or greater accessibility. Our competitors sometimes are
also able to offer more services, more favorable pricing or greater customer
convenience than we do. In addition, our competition has grown from new banks
and

                                     38

<PAGE>



other financial services providers that target our existing or potential
customers. As consolidation continues among large banks, we expect additional
institutions to try to exploit our market.

Technological developments have allowed competitors including some
non-depository institutions, to compete more effectively in local markets and
have expanded the range of financial products, services and capital available
to our target customers. If we are unable to implement, maintain and use such
technologies effectively, we may not be able to offer products or achieve
cost-efficiencies necessary to compete in our industry. In addition, some of
these competitors have fewer regulatory constraints and lower cost structures.

We rely heavily on the proper functioning of our technology.

We rely heavily on communications and information systems to conduct our
business.  Any failure, interruption or breach in security of these systems
could result in failures or disruptions in our customer relationship
management, general ledger, deposit, loan and other systems.  While we have
policies and procedures designed to prevent or limit the effect of the
failure, interruption or security breach of our information systems, there can
be no assurance that any such failures, interruptions or security breaches
will not occur or, if they do occur, that they will be adequately addressed.
The occurrence of any failures, interruptions or security breaches of our
information systems could damage our reputation, result in a loss of customer
business, subject us to additional regulatory scrutiny, or expose us to civil
litigation and possible financial liability, any of which could have a
material adverse effect on our financial condition and results of operations.

We rely on third-party service providers for much of our communications,
information, operating and financial control systems technology.. If any of
our third-party service providers experience financial, operational or
technological difficulties, or if there is any other disruption in our
relationships with them, we may be required to locate alternative sources of
such services, and we cannot assure that we could negotiate terms that are as
favorable to us, or could obtain services with similar functionality, as found
in our existing systems, without the need to expend substantial resources, if
at all. Any of these circumstances could have an adverse effect on our
business.

We are dependent upon the services of our management team.

We are dependent upon the ability and experience of a number of our key
management personnel who have substantial experience with our operations, the
financial services industry and the markets in which we offer our services. It
is possible that the loss of the services of one or more of our senior
executives or key managers would have an adverse effect on our operations. Our
success also depends on our ability to continue to attract, manage and retain
other qualified personnel as we grow. We cannot assure you that we will
continue to attract or retain such personnel.

We may be unable to successfully integrate any acquisition we may make.

We regularly explore opportunities to acquire financial services businesses or
assets and may also consider opportunities to acquire other banks or financial
institutions. We cannot predict the number, size or timing of acquisitions.
Difficulties in integrating an acquired business or company may cause us not
to realize expected revenue increases, cost savings, increases in geographic
or product presence, and/or other projected benefits from the acquisition. The
process of integrating operations could cause an interruption of, or loss of
momentum in, the activities of our business and the loss of deposits,
customers and key personnel. The diversion of management's attention and any
delays or difficulties encountered in connection with any merger could have an
adverse effect on our business and results of operations following the
acquisition or otherwise adversely affect our ability to achieve the
anticipated benefits of the acquisition.

An increase in interest rates may reduce our mortgage revenues, which would
negatively impact our non-interest income, which would negatively impact our
net interest income.

Our mortgage banking operations provide a significant portion of our
non-interest income. We generate mortgage revenues primarily from broker loan
fees on the sale of loans to investors on a servicing released basis. In a
rising or

                                      39

<PAGE>



higher interest rate environment, our originations of mortgage loans may
decrease, resulting in fewer loans that are available to be sold to investors.
This would result in a decrease in mortgage revenues and a corresponding
decrease in non-interest income. In addition, our results of operations are
affected by the amount of non-interest expenses associated with mortgage
banking activities, such as salaries and employee benefits, occupancy,
equipment and data processing expense and other operating costs. During
periods of reduced loan demand, our results of operations may be adversely
affected to the extent that we are unable to reduce expenses commensurate with
the decline in loan originations.

Terrorist activities could cause reductions in investor confidence and
substantial volatility in real estate and securities markets.

It is impossible to predict the extent to which terrorist activities may occur
in the United States or other regions, or their effect on a particular
security issue. It is also uncertain what effects any past or future terrorist
activities and/or any consequent actions on the part of the United States
government and others will have on the United States and world financial
markets, local, regional and national economics, and real estate markets
across the United States. Among other things, reduced investor confidence
could result in substantial volatility in securities markets, a decline in
general economic conditions and real estate related investments and an
increase in loan defaults. Such unexpected losses and events could materially
affect our results of operations.

We are subject to extensive regulation that could restrict our activities and
impose financial requirements or limitations on the conduct of our business.

We are subject to extensive federal and state regulation and supervision,
primarily through the Bank.  Banking regulations are primarily intended to
protect depositors' funds, federal deposit insurance funds and the banking
system as a whole, not shareholders.  These regulations affect our lending
practices, capital structure, investment practices, dividend policy and
growth, among other things.  Congress and federal regulatory agencies
continually review banking laws, regulations and policies for possible
changes.  Changes to statutes, regulations or regulatory policies, including
changes in interpretation or implementation of statutes, regulations or
policies, could affect us in substantial and unpredictable ways.  Such changes
could subject us to additional costs, limit the types of financial services
and products we may offer and/or increase the ability of non-banks to offer
competing financial services and products, among other things.  Failure to
comply with laws, regulations or policies could result in sanctions by
regulatory agencies, civil money penalties and/or reputation damage, which
could have a material adverse effect on our business, financial condition and
results of operations.  While we have policies and procedures designed to
prevent any such violations, there can be no assurance that such violations
will not occur.

We rely on dividends from subsidiaries for most of our revenue.

Riverview Bancorp, Inc is a separate and distinct legal entity from its
subsidiaries.  We receive substantially all of our revenue from dividends from
our subsidiaries.  These dividends are the principal source of funds to pay
dividends on our common stock and interest and principal on our debt.  Various
federal and/or state laws and regulations limit the amount of dividends that
the Bank may pay us.  Also, our right to participate in a distribution of
assets upon a subsidiary's liquidation or reorganization is subject to the
prior claims of the subsidiary's creditors.  In the event the Bank is unable
to pay dividends to us, we may not be able to service our debt, pay
obligations or pay dividends on our common stock.  The inability to receive
dividends from the Bank could have a material adverse effect on our business,
financial condition and results of operations

If we fail to maintain an effective system of internal control over financial
reporting, we may not be able to accurately report our financial results or
prevent fraud, and, as a result, investors and depositors could lose
confidence in our financial reporting, which could adversely affect our
business, the trading price of our stock and our ability to attract additional
deposits.

In connection with the enactment of the Sarbanes-Oxley Act of 2002 ("Act") and
the implementation of the rules and regulations promulgated by the SEC, we
document and evaluate our internal control over financial reporting in order
to satisfy the requirements of Section 404 of the Act.  This requires us to
prepare an annual management report

                                        40

<PAGE>


on our internal control over financial reporting, including among other
matters, management's assessment of the effectiveness of internal control over
financial reporting and an attestation report by our independent auditors
addressing these assessments.  If we fail to identify and correct any
significant deficiencies in the design or operating effectiveness of our
internal control over financial reporting or fail to prevent fraud, current
and potential shareholders and depositors could lose confidence in our
internal controls and financial reporting, which could adversely affect our
business, financial condition and results of operations, the trading price of
our stock and our ability to attract additional deposits.

Changes in accounting standards may affect our performance.

Our accounting policies and methods are fundamental to how we record and
report our financial condition and results of operations.  From time to time
there are changes in the financial accounting and reporting standards that
govern the preparation of our financial statements.  These changes can be
difficult to predict and can materially impact how we report and record our
financial condition and results of operations.  In some cases, we could be
required to apply a new or revised standard retroactively, resulting in
restating prior period financial statements.

Item 1B. Unresolved Staff Comments

None.

Item 2.  Properties
-------------------

The following table sets forth certain information relating to the Company's
offices as of March 31, 2006.

                                             Approximate
Location                   Year Opened      Square Footage        Deposits
--------                   -----------      --------------        --------
                                                                (In millions)
Main Office:
900 Washington, Suite 900
Vancouver, Washington (1)     2000             16,000              $ 84.5

Riverview Center:

17205 SE Mill Plain
Boulevard Vancouver,
Washington (1)(2)(8)          2006             50,000

Branch Offices:

700 N.E. Fourth Avenue
Camas, Washington (1)(2)      1975             25,000                52.1

3307 Evergreen Way
Washougal, Washington
(1)(2)(3)                     1963              3,200                39.0

225 S.W. 2nd Street
Stevenson, Washington (2)     1971              1,700                33.4

330 E. Jewett Boulevard
White Salmon, Washington
(2)(4)                        1977              3,200                32.9
15 N.W. 13th Avenue
Battle Ground, Washington
(2)(5)                        1979              2,900               39.0

                                          41
<PAGE>



412 South Columbus
Goldendale, Washington (2)    1983              2,500               16.8

11505-K N.E. Fourth Plain
Boulevard Vancouver,
Washington (2)                1994              3,500               29.7

7735 N.E. Highway 99
Vancouver, Washington
(1)(6)(2)                     1994              4,800               28.1

1011 Washington Way
Longview, Washington (6)(2)   1994              2,000               26.4

900 Washington St., Suite
100 Vancouver,
Washington (1)(2)             1998              5,300               76.0

1901-E N.E. 162nd Avenue
Vancouver, Washington
(1)(2)                        1999              3,200               16.8

800 N.E. Tenney Road,
Suite D Vancouver,
Washington (2)                2000              3,200               49.3

915 MacArthur Boulevard
Vancouver, Washington
(1)(2)(7)                     2003              3,000               24.0

320 S.E. 192nd Avenue
Vancouver, Washington
(1)(2)(8)                     2006              3,200                1.0

315 SW Fifth Avenue
Portland, Oregon (1)(2)(9)    2005              9,304               21.9

23500 NE Sandy Boulevard
Wood Village, Oregon (1)
(2)(9)                        2005                900                8.8

112 Main Street
Aumsville, Oregon (2)(9)      2005              2,500               27.3

(1)    Leased.
(2)    Location of an automated teller machine.
(3)    New facility in 2001.
(4)    New facility in 2000.
(5)    New facility in 1994.
(6)    Former branches of Great American Federal Savings Association, San
       Diego, California, that were acquired from the Resolution Trust
       Corporation on May 13, 1994.  In the acquisition, the Company assumed
       all insured deposit liabilities of both branch offices totaling
       approximately $42.0 million.
(7)    Former location of Today's Bank, Vancouver, Washington, acquired on
       July 18, 2003.
(8)    New facility in 2006
(9)    Former location of American Pacific Bank, Aumsville, Oregon, acquired
       on April 22, 2005.

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.

                                         42
<PAGE>



The Company uses an outside data processing system to process customer records
and monetary transactions, post deposit and general ledger entries and record
activity in installment lending, loan servicing and loan originations. At
March 31, 2006, the net book value of the Company's office properties,
furniture, fixtures and equipment was $19.1 million.

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

Item 3.  Legal Proceedings
--------------------------

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

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

No matters were submitted to a vote of security holders during the fourth
quarter of the fiscal year ended March 31, 2006.

                                  PART II

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

At March 31, 2006, there were 5,772,690 shares Company Common Stock issued and
5,772,686 outstanding, 837 stockholders of record and an estimated 1,500
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 is 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 established pursuant to the
Company's Plan of Conversion adopted in connection with the Conversion and
Reorganization.  See Note 1 of the Notes to the Consolidated Financial
Statements contained in Item 8 of this Form 10-K.

                                        43

<PAGE>



The common stock of the Company has traded on the Nasdaq National Market
System under the symbol "RVSB" since October 2, 1997.  From October 22, 1993
until October 2, 1997, the common stock of the Company traded on The Nasdaq
SmallCap Market under the same symbol.  The following table sets forth the
high and low trading prices, as reported by Nasdaq, and cash dividends paid
for each quarter during 2006 and 2005 fiscal years.  At March 31, 2006, there
were 18 market makers in the Company's common stock as reported by the Nasdaq
Stock Market.

                                                                Cash Dividends
Fiscal Year Ended March 31, 2006               High      Low       Declared
--------------------------------               ----       ---     ----------

Quarter Ended March 31, 2006                  $27.50    $23.12      $0.170
Quarter Ended December 31, 2005                23.93     20.92       0.170
Quarter Ended September 30, 2005               22.10     20.75       0.170
Quarter Ended June 30, 2005                    21.80     20.33       0.170

                                                                Cash Dividends
Fiscal Year Ended March 31, 2005               High      Low       Declared
--------------------------------               ----       ---     ----------

Quarter Ended March 31, 2005                 $22.48    $21.00      $0.155
Quarter Ended December 31, 2004               22.50     20.95       0.155
Quarter Ended September 30, 2004              21.65     19.85       0.155
Quarter Ended June 30, 2004                   21.00     19.49       0.155

Stock Repurchase

The shares are being repurchased from time-to-time in open market
transactions.  The timing, volume and price of purchases will be made at our
discretion, and will also be contingent upon our overall financial condition,
as well, as market conditions in general.  The following table reflects
activity for the three months ended March 31, 2006.

                           Common Stock Repurchased

                                                           Maximum
                                               Total Number      Number of
                                      Average   of Shares      shares that May
                                       Price   Purchased as       Yet Be
                       Total Number    Paid   Part of Publicly   Purchased
                        of Shares       per    Announced         Under the
                       Purchased (1)   Share     Plan            Program

January 1, 2006-
 January 31, 2006        50,000       $24.55     50,000          240,248
February 1, 2006-
 February 28, 2006            -            -          -                -
March 1, 2006-
 March 31, 2006               -            -          -                -
                         ------       ------     ------          -------
Balance at March 31,
 2006                    50,000       $24.55     50,000          240,248
                         ======       ======     ======          =======

(1)  In July 2005, the Company announced a stock repurchase of up to 5%, or
290,248 shares, of its outstanding common stock.  This program expires when
all shares under the plan have been repurchased.

Securities for Equity Compensation Plans

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

                                       44
<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,
                                  --------------------------------------------
                                      2006    2005     2004     2003     2002
                                  -------  -------  -------   -------  -------
                                                   (In thousands)

FINANCIAL CONDITION DATA:

Total assets                      $763,847 $572,571 $520,487 $419,904 $392,101
Loans receivable, net (1)          623,081  429,959  381,534  301,811  288,530
Mortgage-backed securities held
 to maturity, at amortized cost      1,805    2,343    2,517    3,301    4,386
Mortgage-backed securities available
 for sale, at fair value             8,134   11,619   10,607   13,069   36,999
Cash and interest-bearing deposits  31,346   61,719   47,907   60,858   22,492
Investment securities available for
 sale, at fair value                24,022   22,945   32,883   20,426   18,275
Deposit accounts                   606,964  456,878  409,115  320,742  259,690
FHLB advances                       46,100   40,000   40,000   40,000   74,500
Shareholders' equity                91,687   69,522   65,182   54,511   53,677

                                                Year Ended March 31,
                                  --------------------------------------------
                                      2006    2005     2004     2003     2002
                                  -------  -------  -------   -------  -------
                                                   (In thousands)
OPERATING DATA:
Interest income                   $47,229  $29,968  $27,584   $26,461  $29,840
Interest expense                   14,877    7,395    6,627     8,417   14,318
                                  -------  -------  -------   -------  -------
Net interest income                32,352   22,573   20,957    18,044   15,522
Provision for loan losses           1,500      410      210       727    1,116
                                  -------  -------  -------   -------  -------
Net interest income after
 provision for loan losses         30,852   22,163   20,747    17,317   14,406
Gains (losses) from sale of
 loans, securities and real
 estate owned                         382     (672)   1,003      (531)   1,964
Gain on sale of land and
 fixed assets                           2      830        3         -        4
Other non-interest income           8,453    6,348    5,583     4,469    4,583
Non-interest expenses              25,374   19,104   17,572    14,908   13,953
                                  -------  -------  -------   -------  -------
 Income before income taxes        14,315    9,565    9,764     6,347    7,004
Provision for income taxes          4,577    3,036    3,210     1,988    2,136
                                  -------  -------  -------   -------  -------
Net income                        $ 9,738  $ 6,529  $ 6,554   $ 4,359  $ 4,868
                                  =======  =======  =======   =======  =======
(1)  Includes loans held for sale

                                          45
<PAGE>



                                                    At March 31,
                                  --------------------------------------------
                                     2006     2005     2004     2003      2002
                                  -------  -------  -------   -------  -------
OTHER DATA:

Number of:
Real estate loans outstanding        3,084    3,037   3,141    2,904    2,176
Deposit accounts                    39,095   29,341  27,209   25,752   26,625
Full service offices                    17       13      13       12       12

                                         At or For the Year Ended March 31,
                                  --------------------------------------------
                                     2006     2005     2004      2003     2002
                                  -------  -------  -------   -------  -------

KEY FINANCIAL RATIOS:
Performance Ratios:
Return on average assets            1.36%    1.24%    1.35%     1.07%   1.16%
Return on average equity           10.95     9.56    10.60      7.99    9.01
Dividend payout ratio (1)          39.08    45.59    39.72     50.00   41.51
Interest rate spread                4.55     4.38     4.42      4.28    3.29
Net interest margin                 5.03     4.74     4.76      4.83    4.04
Non-interest expense to
 average assets                     3.54     3.62     3.61      3.66    3.34
Efficiency ratio (2)               61.60    65.70    63.79     67.82   63.21

Asset Quality Ratios:
Average interest-earning
 assets to interest-bearing
 liabilities                      121.14   123.45   122.53    124.62  120.49
Allowance for loan losses to
 total net loans at end of
 period                             1.15     1.01     1.16      0.90    0.87
Net charge-offs to
 average outstanding loans
 during the period                  0.10     0.13     0.31      0.12    0.14
Ratio of nonperforming assets
 to total assets                    0.05     0.13     0.39      0.18    0.61

Capital Ratios:
Average equity to average
 assets                            12.39    12.92    12.72     13.39   12.93
Equity to assets at end of
 fiscal year                       12.00    12.14    12.52     12.98   13.69

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

                                        46

<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 contained in Item 8 of this Form
10-K and the other sections contained in this Form 10-K.

Special Note Regarding Forward-Looking Statements

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

Critical Accounting Policies

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

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

                                        47

<PAGE>



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

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

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

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

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

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

The Company's underlying principle in determining whether impairment is
other-than-temporary is an impairment shall be deemed other-than-temporary
unless positive evidence indicating that an investment's carrying value is
recoverable within a reasonable period of time outweighs negative evidence to
the contrary.  Evidence that is objectively determinable and verifiable is
given greater weight than evidence that is subjective and or not verifiable.
Evidence based on future events will generally be less objective as it is
based on future expectations and therefore is generally less verifiable or not
verifiable at all.  Factors considered in evaluating whether a decline in
value is other-than-temporary include, (a) the length of time and the extent
to which the fair value has been less than amortized cost, (b) the financial
condition and near-term prospects of the issuer and (c) the Company's intent
and ability to retain the investment for a period of time. In situations in
which the security's fair value is below amortized cost but

                                      48

<PAGE>



it continues to be probable that all contractual terms of the security will be
satisfied, and that the decline is solely attributable to changes in interest
rates (not because of increased credit risk), and the Company asserts that it
has positive intent and ability to hold that security to maturity, no
other-than-temporary impairment is recognized.

Operating Strategy

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

The April 2005 acquisition of APB added 3 branches in Oregon:  Portland,
Aumsville and Wood Village. Fiscal year 2005 expansion included opening in
Vancouver the Riverview Center, an operations center and the 192nd Branch.
Riverview Center is a 50,000 square foot office building; over 80 employees
from accounting, audit, data processing, human resources, information
technology, loan origination, loan servicing, marketing and operations are
located here. The 192nd Branch is a full service branch with the convenience
of two drive-up teller windows, drive-up ATM and safe deposit boxes. The July
2003 acquisition of Today's Bancorp, Inc. added one branch and a lending
center.  The number of automated teller machines increased from six to 19 so
that each branch location now is serviced by at least one automated teller
machine.

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

Fiscal 2006 marked the 83rd anniversary since the Bank opened its doors in
1923.  The historical emphasis has been on residential real estate lending,
however, the Company began diversifying its loan portfolio through the
expansion of commercial loans in 1998.  In fiscal 2002, commercial loans
including commercial real estate as a percentage of the loan portfolio were
37.97%, which has increased to 68.9% of total loans at the end of fiscal year
2006.  Commercial lending including commercial real estate has higher credit
risk, wider interest margins and shorter loan terms than residential lending
which can increase the loan portfolio's profitability.

The Company's relationship banking has been enhanced by the 1998 addition of
Riverview Asset Management Corp, a trust company directed by experienced trust
officers, through expanded loan products serviced by experienced commercial
and consumer lending officers, and an expanded branch network led by
experienced branch managers.  Development of relationship banking has been the
key to the Company's growth.   The fair market value of assets under
management in Riverview Asset Management Corp. has increased from $174.8
million at March 31, 2005, to $232.8 million at March 31, 2006.

Net Interest Income

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

                                       49

<PAGE>



Comparison of Financial Condition at March 31, 2006 and 2005

At March 31, 2006, the Company had total assets of $763.8 million compared
with $572.6 million at March 31, 2005.  The increase in total assets was
primarily as a result of the increase in loans outstanding. Cash, including
interest-earning accounts, totaled $31.3 million at March 31, 2006, compared
to $61.7 million at March 31, 2005, as a result of the Company's increase in
total loans.

Loans receivable, net, were $623.0 million at March 31, 2006, compared to
$429.4 million at March 31, 2005, a 45.1% increase. The increases in
commercial real estate, commercial construction, land, construction,
commercial and consumer loans were partially offset by decreases in
one-to-four- family residential and multi-family, loans.  Decreases in
one-to-four family residential loans reflect management's decision to sell
fixed interest rate mortgages and retain adjustable rate interest rate
mortgages in the loan portfolio. The APB acquisition at April 22, 2005, added
$119.5 million in loans. As interest rates fall, loan volume shifts to fixed
rate production. Conversely, in a rising interest rate environment, loan
volume will shift to adjustable rate production. Selling fixed interest rate
mortgage loans allows the Company to reduce the interest rate risk associated
with long term fixed interest rate products.  It also provides additional
funds for new loans and provides a means for the diversification of the loan
portfolio. The Company continues to service the loans it sells, maintaining
the customer relationship and generating ongoing non-interest income.  A
substantial portion of the Company's loan portfolio is secured by real estate,
either as primary or secondary collateral located in its primary market areas.

Investment securities available-for-sale was $24.0 million at March 31, 2006,
compared to $22.9 million at March 31, 2005.  The increase reflects the $1.4
million of APB investment securities acquired in the acquisition, the $5.0
million of investments securities purchased in second quarter of fiscal your
2006, the $5.0 million of called investment securities in the second quarter
of fiscal year 2006 and the $300,000 of pay downs.

Mortgage-backed securities held-to-maturity was $1.8 million at March 31,
2006, compared to $2.3 million at March 31, 2005.  The $500,000 decrease was a
result of pay downs.

Mortgage-backed securities available-for-sale was $8.1 million at March 31,
2006, compared to $11.6 million at March 31, 2005.  The $3.5 million decrease
was a result of pay downs.

Deposit accounts totaled $607.0 million at March 31, 2006 compared to $456.9
million at March 31, 2005.  The increase in deposits is a result of increases
in all deposit balances except for NOW accounts. The APB acquisition at April
22, 2005, added $79.8 million in deposits. Checking accounts and money market
accounts ("transaction accounts") total average outstanding balance increased
37.2% to $333.7 million at March 31, 2006, compared to $243.2 million at March
31, 2005.  Transaction accounts represented 58.9% and 58.8% of average total
outstanding balance of deposits at March 31, 2006 and March 31, 2005,
respectively.

FHLB advances increased to $46.1 million at March 31, 2006 as compared to
$40.0 million at March 31, 2005 as the increased FHLB advances were utilized
to fund the Bank's operations.

Shareholders' equity increased $22.2 million to $91.7 million at March 31,
2006 from $69.5 million at March 31, 2005. The increase was primarily the
result of $16.7 million stock issued in connection with the APB acquisition,
$9.6 million total comprehensive income, $558,000 earned ESOP shares and
$314,000 received from the exercise of stock options, partially offset by $3.8
million cash dividends paid to shareholders and $1.2 million of common stock
repurchased and retired.

                                        50

<PAGE>




Comparison of Operating Results for the Years Ended March 31, 2006 and 2005

Net Income.  Net income was $9.7 million, or $1.72 per diluted earning share
for the year ended March 31, 2006, compared to $6.5 million, or $1.33 per
diluted share for the year ended March 31, 2005.

Net Interest Income.  Net interest income for fiscal year 2006 was $32.4
million, representing a $9.8 million, or a 43.3% increase, from $22.6 million
in fiscal year 2005.   This improvement reflected a 34.5% increase in the
average balance of interest earning assets (primarily as a result of increases
in the average balance of mortgage and non-mortgage loans due primarily to the
APB acquisition, partially offset by a decrease in the average balance of
mortgage-backed and investment securities and daily interest bearing assets)
to $645.1 million, which was offset by a 37.1% increase in the average balance
of interest-bearing liabilities (an increase in all deposit categories
reflecting deposits assumed as part of the APB acquisition and a $13.0 million
increase in average FHLB borrowings) to $532.5 million.  The ratio of average
interest earning assets to average interest bearing liabilities decreased to
121.14% in fiscal 2006 from 123.45% in fiscal 2005 which indicates that the
interest-earning asset growth is being funded more by interest-bearing
liabilities as compared to capital and non-interest-bearing demand deposits.

Interest Income.  Interest income was $47.2 million for the fiscal year ended
March 31, 2006 compared to $30.0 million, for the fiscal year ended 2005.
Increased interest income is the result of the increase in the average balance
of interest earning assets and the increased yield on interest earning assets.
Average interest-bearing assets increased $165.6 million to $645.1 million for
fiscal 2006 from $479.5 million for fiscal 2005.  The yield on
interest-earning assets was 7.34% for fiscal year 2006 compared to 6.28% for
fiscal 2005.  The increased yield is primarily the result of the higher yields
on loans, investment securities and other interest earning assets reflecting
the increasing interest rate environment. The increased interest income is the
result of the increase in the average balance of interest earning assets and
the increase in the yield on interest earning assets.

Interest Expense.  Interest expense for the year ended March 31, 2006 totaled
$14.9 million, a $7.5 million increase from $7.4 million for the year ended
March 31, 2005.  The increase in interest expense is the result of higher
rates of interest that occurred during fiscal years 2005 and 2006. The
weighted average interest rate of total deposits increased from 1.55% for the
year ended March 31, 2005 to 2.58% for the year ended March 31, 2006.  The
weighted average interest rate of FHLB borrowings decreased from 5.00% for the
year ended March 31, 2005 to 4.44% for the year ended March 31, 2006.

Provision for Loan Losses.  The provision for loan losses for fiscal year 2006
was $1.5 million, compared to $410,000 for the same period in the prior year.
For this time period the loan receivable balance increased $196.4 million to
$630.2 million at March 31, 2006 from $433.8 million at March 31, 2005.
Excluding the impact of the American Pacific Bank acquisition, organic loan
growth during the fiscal year 2006 was $77.4 million, consisting primarily of
commercial and construction loans.  Management analyzes the probable loss
factors that drive the loan loss reserve on a quarterly basis.  These probable
loss factors contemplate historical loss rates, adjusted for qualitative
factors that are included in our analysis.   Such factors include the relative
strength of the local economy, concentrations in certain categories, such as
commercial real estate and construction loans, the impact of an increasing
interest rate environment, as well as the overall impact of integrating APB's
lending business with ours, along with other factors.   As part of that
ongoing process, we have continued to refine our reserving methodologies with
regard to larger and/or high-risk loans that we consider to be
"nonhomogeneous", such as commercial, speculative, and commercial construction
loans.  Such loans have continued to be an increasing part of our loan
portfolio in recent quarters, which tends to result in an increased loan loss
requirement.  For example, as a percentage of total loans, our commercial real
estate loans increased from 53.97% to 59.41% and construction loans from
10.05% to 12.88% at March 31, 2006 as compared to March 31, 2005. Based on our
continuing analysis of these loans, we increased certain loss factors assigned
to some of these loan categories during the current fiscal year.  For example,
the estimated loan loss rate for land and lots for development was increased
by 0.25% to 1.0%, commercial real estate loans was increased by 0.125% to
0.875%, commercial construction loans was increased by 0.125% to 0.875%,
speculative construction loans was increased by 0.50% to 1.00%, multi-family
loans was increased by 0.375% to 0.875% and raw land and lots was increased by
0.25% to 1.00% to cover the probable losses inherent in the loan portfolio.
Such changes resulted in approximately $900,000 of increased provision for the
fiscal year of 2006.  The increased loan loss provision during the fiscal year
2006 was due to this combination of loan

                                        51

<PAGE>



growth, as well as the higher percentage of loans falling into higher risk
categories.   Net charge-offs to average net loans was 0.10% for fiscal year
2006 as compared to 0.13% for prior year.   Non-accrual loans continued to
decrease from $456,000 at March 31, 2005 to $415,000 at March 31, 2006.  The
allowance for loan losses was $7.2 million at March 31, 2006 compared to $4.4
million at March 31, 2005. The quality of the loan portfolio continues to be
very good, as the criticized classified loan balances have increased just
$872,000 and non-accrual loans decreased by $41,000 at March 31, 2006 compared
to March 31, 2005.  Net charge-offs for the twelve months ended March 31, 2006
were $562,000, compared to $496,000 for the same period of last year. The
ratio of allowance for credit losses and loan commitments to total net loans
at March 31, 2006 increased to 1.20% from 1.07% at March 31, 2005 with such
increase reflecting the changing mix of our loan portfolio and the additional
risk of these loans as described above. Management believes that our allowance
for loan losses as of March 31, 2006 was adequate to absorb the known and
inherent risks of loss in the loan portfolio at that date. While management
believes the estimates and assumptions used in its determination of the
adequacy of the allowance are reasonable, there can be no assurance that such
estimates and assumptions will not be proven incorrect in the future, or that
the actual amount of future provisions will not exceed the amount of past
provisions or that any increased provisions that may be required will not
adversely impact our financial condition and results of operations. In
addition, the determination of the amount of the Bank's allowance for loan
losses is subject to review by bank regulators, as part of the routine
examination process, which may result in the establishment of additional
reserves based upon their judgment of information available to them at the
time of their examination.

Non-Interest Income.  Non-interest income increased $2.3 million, or 35.8%, to
$8.8 million for the year ended March 31, 2006 from $6.5 million for the same
period in 2005 primarily as a result of a $1.3 million increase in fees and
service charges, an increase of $361,000 in asset management fees and the
non-recurring $311,000 gain on sale of the credit card portfolio acquired in
the APB acquisition. The $1.3 million increase in fees and service charges was
primarily a result of the $544,000 or 34.6% growth in mortgage broker fees and
the acquisition of APB in fiscal year 2006 as compared to fiscal year 2005.
The increase in loan servicing income for fiscal year 2006 reflects the
$68,000 decrease in servicing amortization as the servicing portfolio has
decreased.  For the year ended March 31, 2006, fees and service charges
increased $1.3 million, or 22.4%, when compared to the year ended March 31,
2005.  The $1.3 million increase in fees and service charges is primarily a
result of the $544,000, or 34.6%, growth in mortgage broker fees and the
acquisition of APB in fiscal year 2006 as compared to fiscal year 2005.  The
increase in the number of mortgage brokers from 12 to 13 in fiscal year 2005
combined with the increasing mortgage interest rates experienced in fiscal
2006 increased the volume of mortgage refinance activity as compared to fiscal
2005.  The increased mortgage refinance activity resulted in increased
mortgage broker activity.  The reduced gains on sale of loans held for sale
reflected the mortgage broker activity having a higher proportion of brokered
loans versus portfolio loans.  Mortgage brokered loan production increased
from $194.4 million in 2005 to $276.6 million in 2006.  Mortgage broker fees
(included in fees and service charges) totaled $2.1 million for the year ended
March 31, 2006 compared to $1.6 million for the previous year.  Mortgage
broker commission compensation expense was $1.3 million for the fiscal ended
March 31, 2006 compared to $1.0 million for the fiscal ended March 31, 2005.
Asset management services income increased $1.5 million reflecting the
increase in assets under management for the fiscal year 2006 compared to $1.1
million for the fiscal year 2005.  Riverview Asset Management Corp. had $232.8
million in total assets under management at March 31, 2006 compared to $174.8
million at March 31, 2005

Non-Interest Expense.  Non-interest expense increased $6.3 million, or 33.0%,
to $25.4 million for fiscal year 2006 compared to $19.1 million for fiscal
year 2005. One measure of a bank's ability to contain non-interest expense is
the efficiency ratio, which is calculated by dividing total non-interest
expense (less intangible asset amortization) by the sum of net interest income
plus non-interest income (less intangible asset amortization, lower of cost or
market adjustments and securities impairment charge). The Company's efficiency
ratio excluding intangible asset amortization, lower of cost or market
adjustments and securities impairment charge was 60.79% in fiscal 2006
compared to 61.63% in fiscal 2005.

The principle component of the increase in the Company's non-interest expense
is salaries and employee benefits.  For the year ended March 31, 2006,
salaries and employee benefits, which includes mortgage broker commission
compensation, was $14.5 million, a 34.9% increase over the prior year total of
$10.8 million. Salaries increased as the number of full-time equivalent
employees increased to 239 at March 31, 2006 from 197 at March 31, 2005, which
was primarily the result of the expansion related to increased staffing in
branches and operations.

                                      52

<PAGE>



The acquisition of APB and the related acquisition of $80.0 million in deposit
accounts created a $526,000 core deposit intangible ("CDI") representing the
excess of cost over fair market value of the acquired deposits. The CDI is
being amortized over a ten-year life using an accelerated method. The
amortization expense was $93,000 for fiscal 2006, compared to none in fiscal
2005.

The acquisition of Today's Bancorp and the related acquisition of $105.1
million in deposit accounts created an $820,000 CDI. The CDI is being
amortized over a ten-year life using an accelerated amortization method. The
amortization expense was $116,000 for fiscal 2006, compared to $138,000 for
fiscal 2005.

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

Provision for Income Taxes.  The provision for income taxes was $4.6 million
for the year ended March 31, 2006 compared to $3.0 million for the year ended
March 31, 2004.  The primary reason the tax provision is higher in the current
year compared to the prior year is a result of the higher income in the
current year. The effective tax rate for fiscal year 2006 was 32.7% compared
to 31.7% for fiscal 2005. The primary reason for the increase in the effective
tax rate was the entry into a new tax jurisdiction including the state of
Oregon and Multnomah County. Reference is made to Note 13 of the Notes to the
Consolidated Financial Statements contained in Item 8 of this Form 10-K, for
further discussion of the Company's income taxes.

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

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

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

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

Interest Expense.  Interest expense for the year ended March 31, 2005 totaled
$7.4 million, an $800,000 increase from $6.6 million for the year ended March
31, 2004.  The increase in interest expense is the result of higher rates of
interest that occurred during fiscal years 2004 and 2005. The weighted average
interest rate of total deposits increased from 1.44% for the year ended March
31, 2004 to 1.55% for the year ended March 31, 2005.  The weighted average
interest rate of FHLB borrowings increased from 4.96% for the year ended March
31, 2004 to

                                       53

<PAGE>



5.00% for the year ended March 31, 2005.  The level of liquidity in fiscal
year 2005 allowed the runoff of high interest rate deposits acquired in the
acquisition of Today's Bancorp and held FHLB borrowings at $40.0 million.

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

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

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

The principle component of the Company's non-interest expense is salaries and
employee benefits.  For the year ended March 31, 2005, salaries and employee
benefits, which includes mortgage broker commission compensation, was $10.8
million, an 8.71% increase over the prior year total of $9.9 million. Salaries
also increased as the number

                                       54

<PAGE>



of full-time equivalent employees increased to 197 at March 31, 2005 from 186
at March 31, 2004, which was primarily the result of the expansion related to
increased staffing in branches and operations.

The acquisition of Today's Bancorp and the related acquisition of $105.1
million in deposit accounts created an $820,000 core deposit intangibles
("CDI"), representing the excess of cost over fair market of the acquired
deposits. The CDI is being amortized over a ten-year life using an accelerated
amortization method. The amortization expense was $138,000 for fiscal 2005,
compared to $103,000 for fiscal 2004.

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

Provision for Income Taxes.  The provision for income taxes was $3.0 million
for the year ended March 31, 2005 compared to $3.2 million for the year ended
March 31, 2004.  The primary reason the tax provision is lower in the current
year compared to the prior year is a result of the tax treatment of an
increase in the cash surrender value of bank owned life insurance. The
effective tax rate for fiscal year 2005 was 31.7% compared to 32.8% for fiscal
2004.  Reference is made to Note 14 of the Notes to the Consolidated Financial
Statements contained in Item 8 of this Form 10-K, for further discussion of
the Company's 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 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%. Non-accruing loans were included in the average loan amounts outstanding.
Loan fees of $3.1 million, $2.5 million and $2.3 million are included in
interest income for the twelve months ended March 31, 2006, 2005 and 2004,
respectively.

                                      55

<PAGE>


<PAGE>
<TABLE>

                                                          Year Ended March 31,
                            -------------------------------------------------------------------------------
                                      2006                       2005                       2004
                            -------------------------  ------------------------  --------------------------
                                      Interest                   Interest                   Interest
                            Average        and  Yield/ Average        and Yield/  Average        and  Yield/
                            Balance  Dividends   Cost  Balance  Dividends  Cost   Balance  Dividends   Cost
                            -------  ---------   ----  -------  ---------  ----   -------  ---------  -----
                                                          (Dollars in thousands)


                        <c>       <c>        <c>   <c>        <c>      <c>     <c>       <c>      <c>
 Interest-earning assets:
 Real estate loans         $485,554    $37,916   7.81% $307,750   $22,345  7.26%  $274,763  $20,471   7.45%
 Non-real estate loans       96,472      7,123   7.38    89,050     5,419  6.09     82,126    5,163   6.29
                          ---------   -------- ------  --------   ------- -----   --------  ------- ------
  Total net loans (1)       582,026     45,039   7.74   396,800    27,764  7.00    356,889   25,634   7.18

Mortgage-backed
 securities(2)               12,144        530   4.36    15,616       634  4.06     13,170      613   4.65
Investment
 securities(2)               24,101      1,106   4.59    30,021     1,055  3.51     28,283      889   3.14
Daily interest-bearing
 assets                      19,480        649   3.33    30,987       565  1.82     39,334      372   0.95
Other earning
 assets                       7,333          3   0.04     6,088       110  1.81      5,849      231   3.95
                           --------   -------- ------  --------   ------- -----   --------  ------- ------
Total interest-earning
 assets                     645,084     47,327   7.34   479,512    30,128  6.28    443,525   27,739   6.25
Non-interest-earning
 assets:
Office properties and
 equipment, net              12,358                       8,778                     10,165
Other non-interest-earning
 assets                      60,294                      40,038                     32,400
                           --------                    --------                   --------
   Total assets            $717,736                    $528,328                   $486,090
                           ========                    ========                   ========
Interest-bearing
 liabilities:
 Regular savings accounts  $ 38,818    $   213   0.55  $ 32,420   $   178  0.55   $ 27,534  $   163   0.59
 NOW accounts               126,045      2,248   1.78   102,736       923  0.90     97,017      836   0.86
 Money market accounts      120,188      3,276   2.73    75,063       901  1.20     65,176      582   0.89
 Certificates of deposit    194,253      6,646   3.42   137,933     3,378  2.45    132,257    3,062   2.32
                           --------   -------- ------  --------   ------- -----   --------  ------- ------
   Total interest-bearing
    deposits                479,304     12,383   2.58   348,152     5,380  1.55    321,984    4,643   1.44


  Other interest-bearing
   liabilities               53,217      2,494   4.69    40,274     2,015  5.00     40,000    1,984   4.96
                           --------    ------- ------  --------   ------- -----   --------  ------- ------
   Total interest-bearing
    liabilities             532,521     14,877   2.79   388,426     7,395  1.90    361,984    6,627   1.83

Non-interest-bearing
 liabilities:
 Non-interest-bearing
  deposits                 $ 87,490                    $ 65,415                   $ 57,899
Other liabilities             8,777                       6,202                      4,390
                           --------                    --------                   --------
 Total liabilities          628,788                     460,043                    424,273
Shareholders' equity         88,948                      68,285                     61,817
                           --------                    --------                   --------
    Total liabilities and
     shareholders' equity  $717,736                    $528,328                   $486,090
                           ========                    ========                   ========
Net interest income                    $32,450                    $22,733                   $21,112
                                       =======                    =======                   =======
Interest rate spread                             4.55%                     4.38%                      4.42%
                                               ======                    ======                     ======

Net interest margin                              5.03%                     4.74%                      4.76%
                                               ======                    ======                     ======
Ratio of average interest-
 earning assets to average
 interest-bearing liabilities                  121.14%                   123.45%                    122.53%
                                               ======                    ======                     ======
Tax Equivalent Adjustment
 (3)                                   $    98                    $   161                   $   155
                                       =======                    =======                   =======


(1) Includes non-accrual loans.  Includes amortized loan fees of $3.1 million, $2.5 million and $2.3 million
    for fiscal year 2006, 2005 and 2004, respectively.

(2) For purposes of the computation of average yield on investments available for sale, historical cost
    balances were utilized, therefore, the yield information does not give effect to change in fair value
    that are reflected as a component of shareholders' equity.

(3) Tax-equivalent adjustment relates to non-taxable investment interest income and preferred equity
    securities dividend income.  The federal statutory tax rate was 34% for all years presented.
</TABLE>
                                                      56
<PAGE>


Yields Earned and Rates Paid

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

                                 At March 31,          Year Ended March 31,
                                 -----------        -------------------------
                                     2006           2006      2005       2004
                                    -----           ----     -----       ----
Weighted average yield
 earned on:
 Total net loans (1)                 7.74%           7.20%    6.36%      6.53%
 Mortgage-backed securities          4.57            4.36     4.06       4.65
 Investment securities               4.66            4.59     3.51       3.14
 All interest-earning assets (1)     7.47            6.85     5.76       5.73

Weighted average rate paid on:
 Deposits                            2.62            2.58     1.55       1.44
 FHLB advances and other
  borrowings                         4.65            4.69     5.00       4.96
 All interest-bearing liabilities    2.80            2.79     1.90       1.83

Interest rate spread (spread
 between weighted average rate
 on all interest-earning assets
 and all interest-bearing
 liabilities)(1)                     4.67            4.06     3.86       3.90

Net interest margin (net interest
 income (expense) as a percentage
 of average interest-earning assets)
 (1)                                 5.03            4.55     4.22       4.23


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

                                        57

<PAGE>



Rate/Volume Analysis

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

<TABLE>

                                                    Year Ended March 31,
                                 -------------------------------------------------------------------
                                       2006 vs 2005                             2005 vs 2004
                                 ----------------------------             --------------------------
                                    Increase                                 Increase
                                   (Decrease)                               (Decrease)
                                     Due to          Total                    Due To         Total
                                 --------------     Increase              --------------    Increase
                                 Volume    Rate    (Decrease)             Volume    Rate   (Decrease)
                                 ------    ----    ---------              ------    ----    --------
                                                            (In thousands)

                             <c>       <c>       <c>                  <c>      <c>       <c>
Interest Income:
  Real estate loans             $13,769   $1,802     $15,571              $2,406   $(532)    $1,874
  Non-real estate loans             481    1,223       1,704                 425    (169)       256
  Mortgage-backed securities       (149)      45        (104)                105     (84)        21
Investment securities (1)          (233)     284          51                  57     109        166
Daily interest-bearing             (263)     347          84                 (93)    286        193
Other earning assets                 19     (126)       (107)                  9    (130)      (121)
                                -------   ------     -------             -------  ------    -------
Total interest income            13,624    3,575      17,199               2,909    (520)     2,389
                                -------   ------     -------             -------  ------    -------
Interest Expense:
Regular savings accounts             35        0          35                  28     (13)        15
NOW accounts                        250    1,075       1,325                  50      37         87
Money market accounts               762    1,613       2,375                  97     222        319
Certificates of deposit           1,659    1,609       3,268                 134     182        316
Other interest-bearing
 liabilities                        611     (132)        479                  15      16         31
                                -------   ------     -------             -------  ------    -------
  Total interest expense          3,317    4,165       7,482                 324     444        768
                                -------   ------     -------             -------  ------    -------
  Net interest income (1)       $10,307   $ (590)    $ 9,717             $ 2,585  $ (964)   $ 1,621
                                =======   ======     =======             =======  ======    =======
(1) Taxable equivalent

</TABLE>

Asset and Liability Management

The Company's principle financial objective is to achieve long-term
profitability while reducing its exposure to fluctuating market interest
rates.  The Company has sought to reduce the exposure of its earnings to
changes in market interest rates by attempting to manage the difference
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 and interest-bearing
liabilities.  Interest rate sensitivity increases 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.  The Company relies on retail deposits as its primary source of
funds.  Management believes retail deposits reduce the effects of interest
rate fluctuations because they generally represent a stable source of funds.
As part of its interest rate risk management strategy, the Company promotes
transaction accounts and certificates of deposit with terms up to ten years.

The Company has adopted a strategy that is designed to maintain or improve the
interest rate sensitivity of assets relative to its liabilities.  The primary
elements of this strategy involve: the origination of adjustable rate loans or
purchase of adjustable rate mortgage-backed securities for its portfolio;
increasing commercial, consumer and

                                   58

<PAGE>



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 securities; and the origination of
fixed-rate loans for sale in the secondary market and the retention of the
related loan servicing rights. The strategy for liabilities has been to
shorten the maturities for both deposits and borrowings. This approach has
remained consistent throughout the past year as the Company has experienced a
change in the mix of loans, deposits and FHLB advances.

At March 31, 2006, loans and adjustable rate mortgage-backed securities
constituted $524.5 million, or 81.9%, of the Company's total combined loans
and securities portfolio.  This compares to loans and adjustable rate
securities at March 31, 2005 that totaled $268.0 million, or 74.5%, of the
Company's total combined loan and securities portfolio.  Although the Company
has sought to originate adjustable rate 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
$116.0 million at March 31, 2006, including $1.6 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 $118.5 million and produced loan servicing
income of  $91,000 for the year ended March 31, 2006.  See "Item 1.  Business
-- Lending Activities -- Mortgage Loan Servicing."

Consumer loans, commercial loans and construction loans typically have shorter
terms and higher yields than permanent residential mortgage loans, and
accordingly reduce the Company's exposure to fluctuations in interest rates.
Adjustable interest rate consumer, commercial, construction and other loans
totaled $521.9 million or 82.8% of total gross loans at March 31, 2006 as
compared to $335.0 million, or 77.1%, at March 31, 2005.  At March 31, 2006,
the construction, commercial, consumer and other loan portfolios amounted to
$127.3 million, $59.8 million, $31.4 million and $411.9 million, or 20.2%,
9.5%, 5.0% and 65.3% of total loans, net of deferred fees, respectively.  See
"Item 1.  Business -- Lending Activities -- Construction Lending" and " --
Lending Activities -- Consumer Lending."

The Company also invests in short-term to medium-term U.S. Government
securities as well as mortgage-backed securities issued or guaranteed by U.S.
Government agencies.  At March 31, 2006, the combined portfolio carried at
$34.0 million had an average term to repricing or maturity of 2.69 years.  See
"Item 1. Business -- Investment Activities."

A measure of the Company's exposure to differential changes in interest rates
between assets and liabilities is provided by the test required by OTS Thrift
Bulletin No. 13a, "Interest Rate Risk Management."  This test measures the
impact on net interest income and on net portfolio value of an immediate
change in interest rates in 100 basis point increments. Using data compiled by
the OTS, the Company receives a report which measures interest rate risk by
modeling the change in net portfolio value ("NPV") over a variety of interest
rate scenarios.  This procedure for measuring interest rate risk was developed
by the OTS to replace the "gap" analysis (the difference between
interest-earning assets and interest-bearing liabilities that mature or
reprice within a specific time period). NPV is the present value of expected
cash flows from assets, liabilities and off-balance sheet contracts. The
following table provides the estimated impacts of immediate changes in
interest rates at the specified levels based on the latest OTS report dated
December 31, 2005.


                                     59

<PAGE>




                                 At December 31, 2005
               ---------------------------------------------------
                        Net                Net Portfolio Value as a
                  Portfolio Value            Percent of Present
               -------------------------       Value of Assets
Change         Dollar   Dollar   Percent    ---------------------
In Rates       Amount   Change   Change     NPV Ratio     Change
--------       ------   ------   -------    ---------    --------
                 (Dollars in thousands)

300      bp   $114,715  $3,768     +3%       15.20%        +44 bp
200      bp    113,974   3,027     +3        15.12         +36 bp
100      bp    112,537   1,590     +1        14.96         +19 bp
0        bp    110,947       -      -        14.76              -
(100)    bp    108,379  (2,568)    (2)       14.45         (32)bp
(200)    bp    104,863  (6,084)    (5)       14.01         (75)bp


For example, the above table illustrates that an instantaneous 100 basis point
increase in market interest rates at December 31, 2005 would increase the
Company's NPV by approximately $1.6 million, or 1%, at that date.  At December
31, 2004, an instantaneous 100 basis point increase in market interest rates
would have increased the Company's NPV by approximately $3.1 million, or 4%,
at that date.  The $31.5 million increase in the NPV to $110,947 at December
31, 2005 is the result of the impact of more adjustable loan balances in the
loan portfolio at December 31, 2005 as compared to December 31, 2004.

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

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

Liquidity and Capital Resources

The Company's primary source of cash flows is its operations as a lender,
which generate interest income on loans.  This is supplemented by fee income,
service charges, and interest on investment securities, and reduced by payment
of interest expense and non-interest expenses.  After payment of expenses, the
Company has significant positive cash flow from operating activities.  The
Company's investing activities typically use cash, primarily for loan
originations.  For the year ended March 31, 2006, additional cash flows were
provided by the Company's financing activities as a result of a significant
increase in deposit accounts.

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

The Company must maintain an adequate level of liquidity to ensure the
availability of sufficient funds to fund loan originations and deposit
withdrawals, satisfy other financial commitments and to take advantage of
investment opportunities.  The Company generally maintains sufficient cash and
short-term investments to meet short-term liquidity needs.  At March 31, 2006,
cash totaled $31.3 million, or 4.1%, of total assets.  The Bank has a 30% of
total assets line of credit with the FHLB of Seattle to the extent the Bank
provides qualifying collateral and holds sufficient

                                        60

<PAGE>



FHLB stock. At March 31, 2006, the Bank had $46.1 million of outstanding
advances from the FHLB of Seattle under an available credit facility of $228.5
million, limited to available collateral.

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) its asset/liability management program
objectives.  Excess liquidity is invested generally in interest-bearing
overnight deposits and other short-term government and agency obligations.  If
the Company requires funds beyond its ability to generate them internally, it
has additional borrowing capacity with the FHLB and collateral for borrowing
at the Federal Reserve Bank discount window.  At March 31, 2006, the Bank's
ratio of cash and eligible investments to the sum of withdrawable savings and
borrowings due within one year was 6.71%.

The Company's primary investing activity is the origination of loans.  During
the years ended March 31, 2006, 2005 and 2004, the Company originated $655.3
million, $434.4 million and $375.8 million of loans held for investment and
loans held for sale, respectively.  At March 31, 2006, the Company had
outstanding mortgage loan commitments of $2.3 million and undisbursed balance
of mortgage loans closed of $94.6 million. Consumer loan commitments totaled
$2.4 million and unused lines of consumer credit totaled $24.7 million at
March 31, 2006.  Commercial real estate loan commitments totaled $12.4 million
and undisbursed balance of commercial real estate loans closed was $8.4
million at March 31, 2006.  Commercial loan commitments totaled $850,000 and
unused commercial lines of credit totaled $42.6 million at March 31, 2006.
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, 2006 totaled $130.2 million.
Historically, the Company has been able to retain a significant amount of its
deposits as they mature.

At March 31, 2006, scheduled maturities of certificates of deposit, FHLB
advances, Debentures, commitments to originate loans, undisbursed loan funds,
unused lines of credit, standby letters of credit and future operating minimum
lease commitments were as follows:

                                   Within      1-3     4-5     Over     Total
                                   1 year    Years   Years  5 Years   Balance
                                 --------   ------  ------  -------  --------
                                                (In thousands)
Certificates of deposit          $130,159  $65,679  $ 6,354  $4,928  $207,120
FHLB advances                      41,100    5,000        -       -    46,100
Debentures                              -        -        -   7,000     7,000
Commitments to originate loans
 Adjustable                        13,452        -        -       -    13,452
 Fixed                              4,540        -        -       -     4,540
Undisbursed loan funds, unused
 lines of credit and standby
 letters of credit                127,675   38,232      209   5,911   172,027
Operating leases                    1,616    3,218    2,376   5,027    12,237
                                 -------- --------   ------ ------- ---------
 Total other contractual
  obligations                    $318,542 $112,129   $8,939 $22,866  $462,476
                                 ======== ========   ====== ======= =========

The table above does not include interest payments on borrowings, deposit
liabilities or increases in common area charges on operating leases.

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

The increase in interest rates during the fiscal year 2006 has created an
interest rate environment that caused the demand for fixed rate single family
loans and repayment of existing single family mortgage loans and mortgage-
backed securities to be less than in the prior year. The Company's business
plan emphasizes the sale of fixed rate mortgages as part of its interest rate
risk strategy.  The decrease in the cash flows from operating activities of
loans

                                      61

<PAGE>



sold to $17.8 million for the fiscal 2006 compared to $22.9 million for fiscal
2005 reflects this strategy under the changing interest rate environment.

The Bank has experienced growth in deposit accounts that is attributable to
organic growth.  The information contained in "Item 1, Business   Deposit
Activities and Other Sources of Funds -- Deposit Flow" reflects this net
increase in cash flows from deposits of $150.1 million for fiscal 2006 as
compared to an $47.8 million increase in net cash flows for the same period in
the prior year.  The higher interest rate certificates of deposit have been
allowed to runoff.

Should the Bank require funds beyond its ability to generate them internally,
additional funds are available through the use of FHLB and Pacific Coast
Banker's Bank borrowings.  At March 31, 2006 advances from FHLB totaled $46.1
million and the Bank had additional borrowing capacity available of $182.4
million from the FHLB, subject to collateral limitations.  At March 31, 2006
the Bank's available borrowing line subject to collateral limitations was
$91.7 million.  The Bank has a $10.0 million fed funds line with Pacific Coast
Banker's Bank at March 31, 2006.

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

OTS regulations require the Bank to maintain specific amounts of regulatory
capital.  As of March 31, 2006, the Bank complied with all regulatory capital
requirements as of that date with tangible, core and risk-based capital ratios
of 9.70%, 9.70% and 11.48%, respectively.  For a detailed discussion of
regulatory capital requirements, see "REGULATION -- Federal Regulation of
Savings Associations -- Capital Requirements."

Effect of Inflation and Changing Prices

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

New Accounting Pronouncements

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

Contractual Obligations

The following table shows the contractual obligations by expected period, as
of March 31, 2006. Further discussion of these commitments is included in Note
20 to the consolidated financial statements included in Item 8 of this report.

At March 31, 2006, scheduled maturities of certificates of deposit, FHLB
advances, future operating minimum lease commitments and subordinated
Debentures were as follows (in thousands):

                                   Within      1-3     4-5     Over     Total
                                   1 year    Years   Years  5 Years   Balance
                                 --------   ------  ------  -------  --------

Certificates of deposit          $130,159  $65,679  $ 6,354 $  4,928 $207,120
FHLB advances                      41,100    5,000        -        -   46,100
Operating leases                    1,616    3,218    2,376    5,027   12,237
Junior subordinates
 Debentures                             -        -        -    7,217    7,217
                                 --------  -------  ------- -------- --------
 Total other contractual
  obligations                    $172,875  $73,897  $ 8,730  $17,172 $272,674
                                 ========  =======  ======= ======== ========

                                      63

<PAGE>



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

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

Off-Balance Sheet Arrangements

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

At March 31, 2006, the Company had commitments to extend credit of $188.3
million, up 40.0% compared to $134.5 million at March 31, 2005. The increase
reflects the expansion in residential and commercial construction business.
For additional information regarding future financial commitments, this
discussion and analysis should be read in conjunction with the consolidated
financial statements and related notes included elsewhere in this report
including Footnote 20, "Commitments and Contingencies."

Item 7A. Quantitative and Qualitative Disclosures About Market Risk
-------------------------------------------------------------------

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

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

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

                                      63

<PAGE>



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.


                                     64

<PAGE>


<PAGE>
<TABLE>

    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, 2006.  Market risk
sensitive instruments are generally defined as on- and off-balance sheet derivatives and other financial
instruments.

                                 Within               After     After    Beyond
                       Average      One     1 to 3   3 to 5    5 to 10       10               Fair
                         Rate      Year     Years     Years     Years     Years     Total     Value
                         ----      ----     -----     -----     -----     -----     -----     -----
                                                       (Dollars in thousands)

                    <c>     <c>       <c>       <c>        <c>        <c>      <c>       <c>
Interest-Sensitive
Assets:

Loans receivable (1)    7.74%   $213,873  $ 92,400  $ 50,506   $204,052   $69,471  $630,302  $620,172
Mortgage-backed
 securities             4.57       2,757       639     6,543          -         -     9,939     9,964
Investments and other
 interest-earning
 assets                 4.62      22,556     6,722     1,189          -     1,341    31,808    31,808
FHLB stock                 -       1,470     2,940     2,940          -         -     7,350     7,350
                                --------  --------  --------   --------  --------  --------  --------
 Total assets                    240,656   102,701    61,178    204,052    70,812   679,399   669,294
                                ========  ========  ========   ========  ========  ========  ========
Interest-Sensitive
 Liabilities:

NOW accounts            0.21      12,588    25,176    25,177          -         -    62,941    62,941
High-yield checking     4.27      13,303    26,607    26,606          -         -    66,516    66,516
Non-interest checking
 accounts                  -      18,918    37,837    37,837          -         -    94,592    94,592
Savings accounts        0.55       7,668    15,338    15,338          -         -    38,344    38,344
Money market accounts   3.45      27,491    54,980    54,980          -         -   137,451   137,451
Certificate accounts    3.85     130,159    65,679     6,354      4,722       206   207,120   205,718
FHLB advances           4.65      41,100     5,000         -          -         -    46,100    45,846
Subordinated debentures 6.27           -         -         -          -     7,217     7,217     7,236
Obligations under
 capital lease          7.16          29        74        83        374     2,193     2,753     2,753
                                --------  -------- ---------   --------  --------  --------  --------
 Total liabilities               251,256   230,691   166,375      5,096     9,616   663,034   661,397
                                --------  -------- ---------   --------  --------  --------  --------
Interest sensitivity gap         (10,600) (127,990) (105,197)   198,956    61,196    16,635     7,125
                                -------- --------- ---------   --------  --------  --------  --------
Cumulative interest
 sensitivity gap                $(10,600)$(138,590)$(243,787)  $(44,831) $ 16,365
                                ======== ========= =========   ========  ========
Off-Balance Sheet Items:

Commitments to extend
   credit                  -      17,993         -         -          -         -    17,993         -

Unused lines of credit     -     170,270         -         -          -         -   170,270         -

(1) Includes loans held for sale

</TABLE>

                                                     65

<PAGE>




Item 8.   Financial Statements and Supplementary Data
-----------------------------------------------------

RIVERVIEW BANCORP, INC. AND SUBSIDIARY

Consolidated Financial Statements for Years Ended March 31, 2006, 2005 and
2004

Independent Auditor's Reports


TABLE OF CONTENTS
---------------------------------------------------------------------------

                                                                       Page
Report of Independent Registered Public Accounting Firm -
  Deloitte & Touche LLP                                                 67

Report of Independent Registered Public Accounting Firm -
  McGladrey & Pullen, LLP                                               68

Consolidated Balance Sheets as of March 31, 2006 and 2005               69

Consolidated Statements of Income for the Years Ended
  March 31, 2006, 2005 and 2004                                         70

Consolidated Statements of Shareholders' Equity for the
  Years Ended March 31, 2006, 2005 and 2004                             71

Consolidated Statements of Cash Flows for the Years
  Ended March 31, 2006, 2005 and 2004                                   72

Notes to Consolidated Financial Statements                              73

                                     66

<PAGE>




REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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


We have audited the accompanying consolidated balance sheets of Riverview
Bancorp, Inc. & Subsidiary (the "Company") as of March 31, 2006, and the
related consolidated statements of income, cash flows, and changes in
stockholders' equity for the year then ended. 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 audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audit provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of the Company as of March 31, 2006,
and the results of its operations and its cash flows for the year then ended,
in conformity with accounting principles generally accepted in the United
States of America.

We have also audited, in accordance with the standards of the Public Company
Accounting Oversight Board (United States), the effectiveness of the Company's
internal control over financial reporting as of March 31, 2006, based on the
criteria established in Internal Control Integrated Framework issued by the
Committee of Sponsoring Organizations of the Treadway Commission and our
report dated June 13, 2006, expressed an unqualified opinion on management's
assessment of the effectiveness of the Company's internal control over
financial reporting and an unqualified opinion on the effectiveness of the
Company's internal control over financial reporting.


/s/Deloitte & Touche LLP

Portland, Oregon
June 13, 2006

                                    67
<PAGE>




McGladrey& Pullen
Certified Public Accountants

               Report of Independent Registered Public Accounting Firm

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


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

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

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

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


/s/McGladrey & Pullen, LLP

Tacoma, Washington
June 10, 2005

                                      68

<PAGE>



RIVERVIEW BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS
MARCH 31, 2006 AND 2005

(In thousands, except share data)                            2006      2005
-----------------------------------------------------------------------------
ASSETS
Cash (including interest-earning accounts of $7,786
  and $45,501)                                            $ 31,346  $ 61,719
Loans held for sale                                             65       510
Investment securities available for sale, at fair value
  (amortized cost of $24,139 and $22,993)                   24,022    22,945
Mortgage-backed securities held to maturity, at
  amortized cost (fair value of $1,830 and $2,402)           1,805     2,343
Mortgage-backed securities available for sale, at
  fair value (cost of $8,436 and $11,756)                    8,134    11,619
Loans receivable (net of allowance for loan losses of
  $7,221 and $4,395)                                       623,016   429,449
Real estate owned                                                -       270
Prepaid expenses and other assets                            2,210     1,538
Accrued interest receivable                                  3,058     2,151
Federal Home Loan Bank stock, at cost                        7,350     6,143
Premises and equipment, net                                 19,127     8,391
Deferred income taxes, net                                   3,771     2,624
Mortgage servicing rights, net                                 384       470
Goodwill                                                    25,572     9,214
Core deposit intangible, net                                   895       578
Bank owned life insurance                                   13,092    12,607
                                                           -------   -------
TOTAL ASSETS                                              $763,847  $572,571
                                                           =======   =======
LIABILITIES AND SHAREHOLDERS' EQUITY

LIABILITIES:
Deposit accounts                                          $606,964  $456,878
Accrued expenses and other liabilities                       8,768     5,858
Advance payments by borrowers for taxes and insurance          358       313
Federal Home Loan Bank advances                             46,100    40,000
Junior subordinated debentures                               7,217         -
Capital lease obligation                                     2,753         -
                                                           -------   -------
Total liabilities                                          672,160   503,049

COMMITMENTS AND CONTINGENCIES (See Note 19)                      -         -

SHAREHOLDERS' EQUITY:
Serial preferred stock, $.01 par value; 250,000
  authorized, issued and outstanding, none                       -         -
Common stock, $.01 par value; 50,000,000 authorized,
  issued and outstanding:
    2006   5,772,690 issued, 5,772,686 outstanding              57        50
    2005   5,015,753 issued, 5,015,749 outstanding
Additional paid-in capital                                  57,316    41,112
Retained earnings                                           35,776    29,874
Unearned shares issued to employee stock ownership trust    (1,186)   (1,392)
Accumulated other comprehensive loss                          (276)     (122)
                                                           -------   -------
       Total shareholders' equity                           91,687    69,522
                                                           -------   -------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                $763,847  $572,571
                                                           =======   =======
See notes to consolidated financial statements.

                                     69
<PAGE>



RIVERVIEW BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF INCOME
YEARS ENDED MARCH 31, 2006, 2005 AND 2004

(In thousands, except share data)                     2006     2005     2004
-----------------------------------------------------------------------------
INTEREST AND DIVIDEND INCOME:
 Interest and fees on loans receivable             $ 45,039 $ 27,764 $ 25,634
 Interest on investment securities - taxable            809      521      357
 Interest on investment securities - non taxable        170      174      121
 Interest on mortgage-backed securities                 530      634      613
 Other interest and dividends                           681      875      859
                                                   -------- -------- --------
   Total interest and dividend income                47,229   29,968   27,584
                                                   -------- -------- --------
INTEREST EXPENSE:
 Interest on deposits                                12,383    5,380    4,643
 Interest on borrowings                               2,494    2,015    1,984
                                                   -------- -------- --------
   Total interest expense                            14,877    7,395    6,627
                                                   -------- -------- --------
Net interest income                                  32,352   22,573   20,957
Less provision for loan losses                        1,500      410      210
                                                   -------- -------- --------
Net interest income after provision for loan losses  30,852   22,163   20,747
                                                   -------- -------- --------
NON-INTEREST INCOME:
 Fees and service charges                             5,913    4,588    4,324
 Asset management fees                                1,481    1,120      906
 Net gain on sale of loans held for sale                361      513      954
 Impairment of securities, net of gain on sale            -   (1,185)       -
 Gain on sale of other real estate owned                 21        -       49
 Loan servicing income                                   91       47      158
 Gain on sale of land and fixed assets                    2      830        3
 Gain of sale of credit card portfolio                  311        -        -
 Bank owned life insurance                              485      486      121
 Other                                                  172      107       74
                                                   -------- -------- --------
   Total non-interest income                          8,837    6,506    6,589
                                                   -------- -------- --------
NON-INTEREST EXPENSE:
 Salaries and employee benefits                      14,536   10,773    9,910
 Occupancy and depreciation                           3,798    2,991    2,900
 Data processing                                      1,414      991      917
 Amortization of core deposit intangible                210      180      430
 Advertising and marketing expense                      853      766      772
 FDIC insurance premium                                  70       58       64
 State and local taxes                                  580      519      426
 Telecommunications                                     395      288      269
 Professional fees                                    1,328      842      501
 Other                                                2,190    1,696    1,383
                                                   -------- -------- --------
   Total non-interest expense                        25,374   19,104   17,572
                                                   -------- -------- --------

INCOME BEFORE INCOME TAXES                           14,315    9,565    9,764
PROVISION FOR INCOME TAXES                            4,577    3,036    3,210
                                                   -------- -------- --------
NET INCOME                                         $  9,738 $  6,529 $  6,554
                                                   ======== ======== ========
 Earnings per common share:
    Basic                                          $   1.74 $  1.36  $   1.41
    Diluted                                            1.72    1.33      1.39
 Weighted average number of shares outstanding:
    Basic                                        5,602,240 4,816,745 4,640,485
    Diluted                                      5,675,168 4,891,173 4,714,329

See notes to consolidated financial statements.
                                     70
<PAGE>



RIVERVIEW BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
YEARS ENDED MARCH 31, 2006, 2005 AND 2004
<TABLE>
                                                                 Unearned
                                                                   Shares
                                                                Issued to
                                                                 Employee  Unearned    Accumulated
                          Common Stock    Additional                Stock    Shares          Other
(In thousands,          -----------------    Paid-In   Retained Ownership Issued to  Comprehensive
except share data)       Shares    Amount    Capital   Earnings     Trust      MRDP   Income(Loss)   Total
-----------------------------------------------------------------------------------------------------------


                     <c>        <c>       <c>        <c>         <c>     <c>       <c>           <c>
Balance April 1, 2003   4,580,401    $ 46   $ 33,525    $ 22,389  $(1,804)   $ (15)         $ 370   $54,511

 Cash dividends ($0.56
  per share)                    -       -          -      (2,613)       -        -              -    (2,613)
 Exercise of stock
  options                  40,281       1        484           -        -        -              -       485
 Stock repurchased and
  retired                 (81,500)     (1)    (1,509)          -        -        -              -    (1,510)
 Stock issued in
  connection with
  acquisition             430,655       4      7,343           -        -        -              -     7,347
 Earned ESOP shares             -       -        271           -      206        -              -       477
 Tax benefit, stock
  option and MRDP               -       -         73           -        -        -              -        73
 Earned MRDP shares         5,138       -          -           -        -       15              -        15
                        ---------  ------    -------    --------    -----   ------    -----------   -------
                        4,974,975      50     40,187      19,776   (1,598)       -            370    58,785
Comprehensive income:
 Net income                     -       -          -       6,554        -        -              -     6,554
 Other comprehensive
 income:
  Unrealized holding
   loss on securities
   of $157 (net of $81
   tax effect)                  -       -          -           -        -        -           (157)     (157)
                                                                                                    -------
Total comprehensive
income                          -       -          -           -        -        -              -     6,397
                        ---------  ------    -------    --------    -----   ------    -----------   -------
Balance March 31, 2004  4,974,975      50     40,187      26,330   (1,598)       -            213    65,182

 Cash dividends
  ($0.62 per share)             -       -          -      (2,985)       -        -              -    (2,985)
 Exercise of stock
  options                  40,774       -        536           -        -        -              -       536
 Earned ESOP shares             -       -        314           -      206        -              -       520
 Tax benefit, stock option      -       -         75           -        -        -              -        75
                        ---------  ------    -------    --------    -----   ------    -----------   -------
                        5,015,749      50     41,112      23,345   (1,392)       -            213    63,328

Comprehensive income:
 Net income                     -       -          -       6,529        -        -              -     6,529
 Other comprehensive
  income:
   Unrealized holding
    gain on securities
    of $1,120 (net of
    $577 tax effect)
    less classification
    adjustment for net
    losses included in
    net income of $785
    (net of $404 tax
    effect)                     -       -          -           -        -        -           (335)     (335)
                                                                                                    -------
Total comprehensive
income                          -       -          -           -        -        -              -     6,194
                        ---------  ------    -------    --------    -----   ------    -----------   -------

Balance March 31, 2005  5,015,749  $   50    $41,112    $ 29,874  $(1,392)  $    -     $     (122) $ 69,522

 Cash dividends ($0.68
  per share)                    -       -          -      (3,836)       -        -              -    (3,836)
 Exercise of stock
  options                  18,572       -        314           -        -        -              -       314
 Stock repurchased and
  retired                 (50,000)      -     (1,227)          -        -        -              -    (1,227)
 Stock issued in
  connection with
  acquisition             788,365       7     16,706           -        -        -              -    16,713
 Earned ESOP shares             -       -        352           -      206        -              -       558
 Tax benefit, stock option      -       -         59           -        -        -              -        59
                        ---------  ------    -------    --------    -----   ------    -----------   -------
                        5,772,686      57     57,316      26,038   (1,186)       -           (122)   82,103
Comprehensive income:
 Net income                     -       -          -       9,738        -        -              -     9,738
 Other comprehensive
 income:
  Unrealized holding
   loss on securities
   of $154  (net of
   $79 tax effect)              -       -          -           -        -        -           (154)     (154)
                                                                                                    -------
Total comprehensive income      -       -          -           -        -        -              -     9,584
                       ----------  ------    -------    --------    -----   ------    -----------   -------
Balance March 31, 2006  5,772,686  $   57    $57,316    $ 35,776  $(1,186)  $    -     $     (276) $ 91,687
                        =========  ======    =======    ========    =====   ======    ===========   =======

See notes to consolidated financial statements.

                                   71
</TABLE>
<PAGE>



RIVERVIEW BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED MARCH 31, 2006, 2005 AND 2004

(In thousands)                                     2006      2005      2004
----------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income                                    $  9,738  $  6,529  $  6,554
Adjustments to reconcile net income to cash
  provided by operating activities:
  Depreciation and amortization                    1,907     1,492     2,157
  Mortgage servicing rights valuation adjustment     (24)      (22)     (307)
  Provision for loan losses                        1,500       410       210
 (Benefits) provision for deferred income taxes     (704)      285       421
  Noncash expense related to ESOP                    558       520       477
  Noncash expense related to MRDP                      -         -        15
  Noncash expense related to REO donation              -         -        61
  Noncash loss on impairment of securities             -     1,349         -
  Noncash interest expense on capital lease
   obligation                                         49         -         -
  Increase in deferred loan origination fees, net
   of amortization                                   933       382       759
  Federal Home Loan Bank stock dividend                -      (110)     (229)
  Origination of loans held for sale             (17,308)  (22,943)  (50,472)
  Proceeds from sales of loans held for sale      17,786    22,919    51,700
  Net gain on loans held for sale, sale of real
   estate owned, mortgage-backed securities,
   investment securities and premises and
   equipment                                        (363)   (1,310)     (852)
  Income from bank owned life insurance             (485)     (486)     (121)
  Changes in assets and liabilities, net of
    acquisition:
      Prepaid expenses and other assets             (455)     (484)      190
      Accrued interest receivable                   (371)     (364)     (294)
      Accrued expenses and other liabilities       2,488      (602)      521
                                                  ------    ------    ------
      Net cash provided by operating activities   15,249     7,565    10,790
                                                  ------    ------    ------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Loan originations                             (647,978) (411,476) (325,366)
  Principal repayments/refinance on loans        571,762   363,607   329,443
  Proceeds from call, maturity, or sale of
    investment securities available for sale       5,250    13,515     6,250
  Principal repayments on investment securities
    available for sale                                37        75         -
  Purchase of investment securities available
    for sale                                      (4,996)   (5,014)  (12,490)
  Purchase of mortgage-backed securities
    available for sale                                 -    (5,000)   (4,937)
  Principal repayments on mortgage-backed
    securities available for sale                  3,320     3,657     7,690
  Principal repayments on mortgage-backed
    securities held to maturity                      538       173       782
  Purchase of premises and equipment              (8,087)     (561)     (307)
  Acquisition, net of cash received              (14,663)        -     7,206
  Additions to real estate owned                       -      (621)     (546)
  Purchase of bank owned life insurance                -         -   (12,000)
  Proceeds from sale of real estate owned and
    premises and equipment                           275     2,513       749
                                                  ------    ------    ------
      Net cash used by investing activities      (94,542)  (39,132)   (3,526)
                                                  ------    ------    ------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Net change in deposit accounts, net of
    deposits acquired                             70,331    47,763   (16,740)
  Dividends paid                                  (3,631)   (2,904)   (2,490)
  Repurchase of common stock                      (1,228)        -    (1,510)
  Proceeds from borrowings                       157,100         -         -
  Repayment of borrowings                       (174,000)        -         -
  Principal payments under capital lease
    obligation                                       (10)        -         -
  Net increase (decrease) in advance payments
    by borrowers                                      44       (16)       40
  Proceeds from exercise of stock options            314       536       485
                                                  ------    ------    ------
      Net cash provided(used) by financing
        activities                                48,920    45,379   (20,215)
                                                  ------    ------    ------
NET (DECREASE) INCREASE IN CASH                  (30,373)   13,812   (12,951)
CASH, BEGINNING OF YEAR                           61,719    47,907    60,858
                                                  ------    ------    ------
CASH, END OF YEAR                               $ 31,346  $ 61,719  $ 47,907
                                                  ======    ======    ======
SUPPLEMENTAL DISCLOSURES:
  Cash paid during the year for:
  Interest                                      $ 14,663  $  7,418  $  6,741
  Income taxes                                     5,206     2,675     3,070
NONCASH INVESTING AND FINANCING ACTIVITIES:
  Transfer of loans to real estate owned        $      -  $    304  $    340
  Loans to finance the sale of real estate owned       -       578         -
  Receivable due to sale & leaseback of branch         -     2,391         -
  Dividends declared and accrued in other
    liabilities                                      955       749       668
  Fair value adjustment to securities available
    for sale                                        (234)     (507)     (238)
  Income tax effect related to fair value
    adjustment                                        79       172        81
  Common stock issued upon business combination   16,713         -     7,347
  Borrowings under capital lease obligation        2,715         -         -

See notes to consolidated financial statements.

                                      72
<PAGE>


RIVERVIEW BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED MARCH 31, 2006 AND 2005
-----------------------------------------------------------------------------

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 inter-company
transactions and balances have been eliminated in consolidation.

Nature of Operations - The Bank is a seventeen branch community-oriented
financial institution operating in rural and suburban communities in southwest
Washington State and Multnomah, Clackamas and Marion counties of Oregon. 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. Material
estimates that are particularly susceptible to significant change in the near
term relate to the determination of the allowance for loan losses and the
valuation of mortgage servicing rights, goodwill, core deposit intangibles and
deferred tax assets.

Loans - Loans are stated at the amount of unpaid principal, reduced by
deferred loan origination fees and an allowance for loan losses. Interest on
loans is accrued daily based on the principal amount outstanding.

Generally the accrual of interest on loans is discontinued when, in
management's opinion, the borrower may be unable to meet payments as they
become due or when they are past due 90 days as to either principal or
interest, unless they are well secured and in the process of collection. When
interest accrual is discontinued, all unpaid accrued interest is reversed
against current income. If management determines that the ultimate
collectibility of principal is in doubt, cash receipts on non-accrual loans
are applied to reduce the principal balance on a cash-basis method, until the
loans qualify for return to accrual status. Loans are returned to accrual
status when all principal and interest amounts contractually due are brought
current and future payments are reasonably assured.

Loan origination and commitment fees and certain direct loan origination costs
are deferred and amortized as an adjustment of the yield of the related loan.

Securities - In accordance with Statement of Financial Accounting Standards
("SFAS") No. 115, Accounting for Certain Investments in Debt and Equity
Securities, 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 or available for sale 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. Securities that the Company intends to hold
for an indefinite period, but not necessarily to maturity are classified as
available for sale.  Such securities may be sold to implement the Bank's
asset/liability management strategies and in response to changes in interest
rates and similar factors.  Securities available for sale are reported at fair
value.  Unrealized gains and losses, net of related deferred tax effect, are
reported as net amount in a separate component of shareholders' equity
entitled "accumulated other comprehensive income (loss)."  Realized gains and
losses on securities available for sale, determined using the specific
identification method, are included in earnings.  Amortization of premiums and
accretion of discounts are recognized in interest income over the period to
maturity.

The Company analyzes investment securities for other than temporary impairment
on a periodic basis. Declines in

                                   73
<PAGE>



value that are deemed other than temporary, if any are reported in
non-interest income.

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

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

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

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

The ultimate recovery of all loans is susceptible to future market factors
beyond the Bank's control. These factors may result in losses or recoveries
differing significantly from those provided in the consolidated financial

                                      74

<PAGE>


statements. In addition, regulatory agencies, as an integral part of their
examination process, periodically review the Bank's allowance for loan loses,
and may require the Bank to make additions to the allowance based on their
judgment about information available to them at the time of their
examinations.

Federal Home Bank Loan Bank Stock   The Bank, as a member of Federal Home Loan
Bank ("FHLB"), is required to maintain an investment in capital stock of the
FHLB in an amount equal to the greater of 1% of its outstanding home loans or
5% of advances from the FHLB.  The recorded amount of FHLB stock equals its
fair value because the shares can only be redeemed by the FHLB at the $100 per
share value.

Allowance for Unfunded Loan Commitments - The allowance for unfunded loan
commitments is maintained at a level believed by management to be sufficient
to absorb estimated probable losses related to these unfunded credit
facilities. The determination of the adequacy of the allowance is based on
periodic evaluations of the unfunded credit facilities including an assessment
of the probability of commitment usage, credit risk factors for loans
outstanding to these same customers, and the terms and expiration dates of the
unfunded credit facilities. The allowance for unfunded loan commitments is
included in other liabilities on the consolidated balance sheets, with changes
to the balance charged against non-interest expense.

Premises and Equipment - Premises and equipment are stated at cost less
accumulated depreciation. Leasehold improvements are amortized over the term
of the lease or the estimated useful life of the improvements, whichever is
less. Gains or losses on dispositions are reflected in earnings. Depreciation
is generally computed on the straight-line method over the estimated useful
lives as follows:

       Buildings and improvements        3 to 45 years
       Furniture and equipment           3 to 20 years
       Leasehold improvements           15 to 25 years

The assets are reviewed for impairment when events indicate their carrying
value may not be recoverable.  If management determines impairment exists the
asset is reduced by an offsetting charge to expense.

The capitalized lease, less accumulated amortization is included in premises
and equipment. The capitalized lease is amortized on a straight-line basis
over the lease term and the amortization is included in depreciation expense.

Loans Held for Sale - The Company identifies loans held for sale at the time
of origination and they are carried at the lower of aggregate cost or net
realizable value. Market values are derived from available market quotations
for comparable pools of mortgage loans. Adjustments for unrealized losses, if
any, are charged to income.

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

Mortgage Servicing - Fees earned for servicing loans for the Federal Home Loan
Mortgage Corporation ("FHLMC") are reported as income when the related
mortgage loan payments are collected. Loan servicing costs are charged to
expense as incurred.

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

The Company records its originated mortgage servicing rights at fair values in
accordance with SFAS No. 140, Accounting for Transfers and Servicing of
Financial Assets and Extinguishment of Liabilities, which requires the

                                     75
<PAGE>




Company to allocate the total cost of all mortgage loans sold to the MSR's and
the loans (without the MSR's) based on their relative fair values if it is
practicable to estimate those fair values. The Company stratifies its MSR's
based on the predominant characteristics of the underlying financial assets
including coupon interest rate and contractual maturity of the mortgage. An
estimated fair value of MSR's is determined quarterly using a discounted cash
flow model.  The model estimates the present value of the future net cash
flows of the servicing portfolio based on various factors, such as servicing
costs, servicing income, expected prepayment speeds, discount rate, loan
maturity and interest rate. The effect of changes in market interest rates on
estimated rates of loan prepayments represents the predominant risk
characteristic underlying the MSR's portfolio. The Company is amortizing the
MSR, which totaled $384,000 and $470,000 at March 31, 2006 and 2005,
respectively, in proportion to and over the period of estimated net servicing
income.

The MSR's are periodically reviewed for impairment based on their fair value.
The fair value of the MSR's, for the purposes of impairment, is measured using
a discounted cash flow analysis based on market adjusted discount rates,
anticipated prepayment speeds, mortgage loan term and coupon rate.  Market
sources are used to determine prepayment speeds, ancillary income, servicing
cost and pre-tax required yield.  Impairment losses are recognized through a
valuation allowance for each impaired stratum, with any associated provision
recorded as a component of loan servicing income (expense).

Goodwill - Goodwill is initially recorded when the purchase price paid for an
acquisition exceeds the estimated fair value of the net identified tangible
and intangible assets acquired.  Goodwill is presumed to have an indefinite
useful life and is tested, at least annually, for impairment at the reporting
unit level.  We perform an annual review in the third quarter of each year, or
more frequently if indicators of potential impairment exist, to determine if
the recorded goodwill is impaired.  If the fair value exceeds the carrying
value, goodwill at the subsidiary is not considered impaired and no additional
analysis is necessary.  As of March 31, 2006, there have been no events or
changes in circumstances that would indicate a potential impairment.

Core Deposit Intangible - The core deposit intangible is being amortized to
non-interest expense using an accelerated method (based on expected attrition
and cash flows of core deposit accounts purchased) over ten years.

Advertising and Marketing Expense - Costs incurred for advertising,
merchandising, market research, community investment, travel and business
development are classified as marketing expense and are expensed as incurred.

Income Taxes - Income taxes are accounted for using the asset and liability
method. Under this method, a deferred tax asset or liability is determined
based on the enacted tax rates which will be in effect when the differences
between the financial statement carrying amounts and tax basis of existing
assets and liabilities are expected to be reported in the Company's income tax
returns. The effect on deferred taxes of a change in tax rates is recognized
in income in the period that includes the enactment date. Valuation allowances
are established to reduce the net carrying amount of deferred tax assets if it
is determined to be more likely than not, that all or some portion of the
potential deferred tax asset will not be realized. The Company files a
consolidated federal income tax return. The Bank provides for income taxes
separately and remits to the Company amounts currently due.

Trust Assets - Assets held by Riverview Asset Management Corp. in a fiduciary
or agency capacity for Trust customers are not included in the consolidated
financial statements because such items are not assets of the Company.  Assets
totaling $232.8 million and $174.8 million were held in trust as of March 31,
2006 and 2005, respectively.

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 includes dilutive potential common shares to make a dual
presentation of basic and diluted earnings per share for all periods
presented.  Basic earnings per share is computed by dividing income available
to common shareholders by the weighted average number of common shares
outstanding for the period, excluding restricted stock.  Diluted earnings per
share reflects the potential dilution that could occur if securities or other
contracts to issue common stock were exercised and has

                                     76

<PAGE>



been computed after giving consideration to the weighted average diluted
effect of the Company's stock options and the shares issued under the
Company's Management Recognition and Development Plan ("MRDP").

Cash and Cash Flows   Cash includes amounts on hand, due from banks and
interest-earning deposits in other banks.

Cash flows from interest-earning deposits in other banks and deposits are
reported net.

Stock-Based Compensation   At March 31, 2006, the Company had two stock option
plans, which are described further in Note 14.  The Company accounts for these
plans under the recognition and measurement principles of Accounting
Principles Board No. 25, Accounting for Stock Issued to Employees, and related
interpretations.  Accordingly, no stock-based compensation cost is reflected
in net income as all options granted under these plans had an exercise price
equal to the market value of the underlying common stock on the date of grant.

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

                         Risk Free      Expected       Expected     Expected
                     Interest Rate     Life (yrs)    Volatility    Dividends
                     -------------     ---------     ----------    ---------
     Fiscal 2006          4.67%          10.00          26.32%       3.07%
     Fiscal 2005          4.00%          10.00          29.25%       3.01%
     Fiscal 2004          4.00%          10.00          31.02%       3.07%

The weighted average grant-date fair value of fiscal 2006, 2005 and 2004
awards was $7.59, $5.93 and $5.47, respectively. Only stock options are
considered in this calculation and not MRDP shares. If the accounting
provisions of SFAS No. 123 had been adopted, the effect on fiscal 2006, 2005
and 2004 net income would have been reduced to the following pro forma amounts
(dollars in thousands, except per share amounts):

                                                  Year ended March 31,
                                              ----------------------------
                                               2006       2005       2004
                                              ------     ------     ------
Net income:
   As reported                                $9,738     $6,529     $6,554
   Deduct: Total stock based compensation
   expense determined under fair value based
   method for all options, net of related tax
   benefit                                    (1,345)       (96)      (109)
                                              ------     ------     ------
   Pro forma                                  $8,393     $6,433     $6,445
                                              ======     ======     ======
Earnings per common share   basic:
   As reported                                $ 1.74     $ 1.36     $ 1.41
   Pro forma                                    1.50       1.34       1.39
Earnings per common share   fully diluted:
   As reported                                $ 1.72     $ 1.33     $ 1.39
   Pro forma                                    1.48       1.32       1.37

Employee Stock Ownership Plan ("ESOP") - The Company sponsors a leveraged
ESOP. The ESOP is accounted for in accordance with the AICPA Statement of
Position ("SOP") 93-6, Employer's Accounting for Employee Stock Ownership
Plans.  Stock and cash dividends on allocated shares are recorded as a
reduction of additional paid in capital and paid directly to plan participants
or distributed directly to participants' accounts. As shares are released,
compensation expense is recorded equal to the then current market price of the
shares and the shares become available for earnings per share calculations.
The Company records cash dividends on unallocated shares

                                      77

<PAGE>


as a reduction of debt and accrued interest.

Business segments - The Company operates a single business segment.  The
financial information that is used by the chief operating decision maker in
allocating resources and assessing performance is only provided for one
reportable segment as of March 31, 2006, 2005 and 2004.

Acquisitions - Acquisitions are accounted for in accordance with SFAS 41,
Business Combinations under the purchase method of accounting, which allocates
costs to assets purchased and liabilities assumed at their estimated fair
market values.  The results of operations subsequent to the date of
acquisition are included in the consolidated financial statements of the
Company.

New Accounting Pronouncements - In December 2004, the Financial Accounting
Standards Board ("FASB") issued a SFAS No. 123 (Revised), Share-Based Payment.
This statement establishes standards for the accounting for transactions in
which an entity exchanges its equity instruments for goods or services. This
statement requires that the cost resulting from all share-based payment
transactions be recognized in the financial statements. In addition, this
statement establishes fair value as the measurement objective in accounting
for share-based payment arrangements and requires all entities to apply a
fair-value based measurement method in accounting for share-based payment
transactions. This statement replaces SFAS No. 123, Accounting for Stock-Based
Compensation, and supersedes Accounting Principles Board ("APB") Opinion No.
25, Accounting for Stock Issued to Employees. In addition, this statement
amends SFAS No. 95, Statement of Cash Flows, to require that excess tax
benefits be reported as a financing cash inflow rather than as a reduction of
taxes paid. This statement is effective for the Company as of April 1, 2006.
Management is currently evaluating the impact on the Company's financial
position, results of operation and cash flows upon adoption of SFAS No.123
(Revised).

Estimated future levels of compensation expense recognized related to stock
based awards would be impacted by new awards, modifications to awards, or
cancellation of awards after the adoption of SFAS No. 123 (Revised).

At its November 12-13, 2003 meeting, the Emerging Issues Task Force ("EITF")
reached a consensus on Issue 03-01, "The Meaning of Other-Than-Temporary
Impairment and Its Application to Certain Investments," that certain
quantitative and qualitative disclosures should be required for debt and
marketable equity securities classified as available-for-sale or
held-to-maturity under SFAS No. 115 and 124 that are impaired at the balance
sheet date but for which an other-than-temporary impairment has not been
recognized. The Company adopted the disclosure requirements in fiscal year
2004. At the March 17-18, 2004 meeting, the EITF reached a consensus, which
approved an impairment model for debt and equity securities. In FASB Staff
Position ("FSP") 03-01-01, issued in September 2004, the effective date for
the measurement and recognition guidance contained in paragraphs 10-20 of
Issue 03-01 was delayed.

On November 3, 2005, FSP FAS Nos. 115-1 and FAS 124-1 "The Meaning of
Other-Than-Temporary Impairment and Its Application to Certain Investments,"
was issued. This FSP nullifies certain requirements of Issue 03-1 and
supersedes EITF Topic No. D-44, "Recognition of Other-Than-Temporary
Impairment upon the Planned Sale of a Security Whose Cost Exceeds Fair Value."
This FSP nullified the requirements of paragraphs 10-18 of Issue 03-1,
carried forward the requirements of paragraph 8 and 9 of Issue 03-1 with
respect to cost-method investments and carries forward the disclosure
requirements included in paragraphs 21 and 22 of Issue 03-1 and related
examples. The guidance in this FSP is applied to reporting periods beginning
after December 15, 2005.  The Company believes the adoption of this FSP in
fiscal 2006 will not materially impact our results of operations, financial
condition, or related disclosures.

In March 2006, the FASB issued SFAS No. 156, "Accounting for Servicing of
Financial Assets", that amends accounting and reporting standards for
servicing assets and liabilities under SFAS No. 140, "Accounting for Transfers
and Servicing of Financial Assets and Extinguishments of Liabilities".
Specifically, SFAS 156 requires that all separately recognized servicing
assets and servicing liabilities be initially measured at fair value, if
practicable. For subsequent measurement purposes, SFAS 156 permits an entity
to choose to measure servicing assets and liabilities either based on fair
value or lower of cost or market ("LOCOM"). This statement is effective for
the Company as of April 1, 2007. The Company is currently evaluating whether
to elect to measure servicing

                                     78

<PAGE>



assets and liabilities based on fair value or lower of cost or market
("LOCOM"). Additional information regarding mortgage servicing rights is
disclosed in Note 9 in the Notes to Consolidated Financial Statements.

2.  RESTRICTED ASSETS

Federal Reserve Board regulations require that the Bank maintain minimum
reserve balances either on hand or on deposit with the Federal Reserve Bank,
based on a percentage of deposits. The amounts of such balances for the years
ended March 31, 2006 and 2005 were approximately $627,000 and $145,000,
respectively.

3.  ACQUISITION

On April 22, 2005, the Company completed the acquisition of American Pacific
Bank ("APB"), a commercial bank located in Portland, Oregon.  The cost to
acquire APB's 2,804,618 shares of common stock was a payment in cash for
1,404,000 shares at a transaction value of $11.94 per share and the issuance
of 788,365 shares of the Company's common stock at a price of $21.20 per share
for the remaining 1,400,618 shares.  All APB stock options were cashed out at
a cost of $873,240, the difference between the transaction value of $11.94 per
share and the options' respective exercise prices prior to completion of the
merger.  The acquisition was accounted for using the purchase method of
accounting and, accordingly, the assets and liabilities of APB were recorded
at their respective fair values. The resulting core deposit intangible is
being amortized using an accelerated method over ten years.  The excess of the
purchase price over net fair value of the assets and liabilities acquired was
recorded as goodwill in the amount of $17.1 million.  Goodwill is not tax
deductible because the transaction is nontaxable for Internal Revenue Service
purposes.  The purchased assets and assumed liabilities were recorded as
follows (dollars in thousands):

     Assets
     ------
       Cash                         $  3,433
       Investments                     1,417
       Building and equipment          1,080
       Loans                         119,536
       Core deposit intangible           526
       Goodwill                       16,359
       Other, net                      2,547
                                     -------
     Total assets                    144,898

     Liabilities
     -----------
       Deposits                      (79,755)
       Borrowings                    (29,882)
       Other liabilities                (452)
                                     -------
     Total liabilities              (110,089)

     Net assets                     $ 34,809

     Less:

     Stock issued in acquisition     (16,713)

     Cash acquired                    (3,433)
     Cash used in acquisition, net   -------
       of cash acquired             $ 14,663
                                     =======

Subsequent to the acquisition, tax amounts were adjusted as part of the
allocation of the purchase price. At March 31, 2006, the goodwill asset
recorded in connection with the APB acquisition was $16.4 million.

The following unaudited pro forma financial information for the twelve months
ended March 31, 2006 and 2005 assumes that the APB acquisition occurred as of
April 1, 2004, after giving effect to certain adjustments.  The pro forma
results have been prepared for comparative purposes only and are not
necessarily indicative of the results of operations which may occur in the
future or that would have occurred had the APB acquisition been consummated
on the date indicated.

                                     79

<PAGE>



                                                    Pro Forma Financial
                                                      Information for
                                                    Twelve Months Ended
     (In thousands, except per share data)               March 31,
                                                    -------------------
                                                      2006       2005
                                                     ------     ------
     Net interest income                           $ 31,999   $ 28,474
     Non-interest income                              8,824      7,015
     Non-interest expense                            26,021     24,985
     Net income                                    $  9,081   $  5,897
       Earnings per common share:
          Basic                                    $   1.62   $   1.05
          Diluted                                      1.60       1.04

4.  INVESTMENT SECURITIES

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
                                 Cost       Gains      Losses      Value
                            ---------  ----------  ----------  ---------
March 31, 2006
--------------
Trust Preferred             $   5,000  $       44  $        -  $   5,044
Agency securities              15,246           -        (218)    15,028
Municipal bonds                 3,893          57           -      3,950
                               ------      ------      ------     ------
     Total                  $  24,139  $      101  $     (218) $  24,022
                               ======      ======      ======     ======

March 31, 2005
--------------
Trust Preferred             $   5,000  $       31  $        -  $   5,031
Agency securities              14,021           -        (179)    13,842
Municipal bonds                 3,972         100           -      4,072
                               ------      ------      ------     ------
     Total                  $  22,993  $      131  $     (179) $  22,945
                               ======      ======      ======     ======

The fair value of temporarily impaired securities, the amount of unrealized
losses and the length of time these unrealized losses existed as of March 31,
2006 are as follows (in thousands):

                          Less than         12 months
                          12 months         or longer           Total
                       ------------------------------------------------------
Description of         Fair  Unrealized   Fair  Unrealized   Fair  Unrealized
  Securities           Value   Losses     Value   Losses     Value   Losses
                       -----   ------     -----   ------     -----   ------

Agency securities     $6,124    $ (61)  $ 8,904   $ (157)  $15,028   $ (218)
 Total temporarily     -----    -----     -----    -----    ------    -----
  impaired securities $6,124    $(61)   $ 8,904   $(157)   $15,028   $(218)
                       =====    =====     =====    =====    ======    =====

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

                          Less than         12 months
                          12 months         or longer           Total
                     --------------------------------------------------------
Description of         Fair  Unrealized   Fair  Unrealized   Fair  Unrealized
  Securities           Value   Losses     Value   Losses     Value   Losses
                       -----   ------     -----   ------     -----   ------

Agency securities    $11,890   $ (131)   $1,952   $  (48)  $13,842   $ (179)
 Total temporarily    ------   ------     -----   ------    ------   ------
  impaired securities 11,890   $ (131)   $1,952   $  (48)  $13,842   $ (179)
                      ======   ======     =====   ======    ======   ======

The Company has evaluated these securities and has determined that the decline
in the value is temporary. The

                                    80

<PAGE>



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

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

                                       Amortized    Estimated
                                            Cost    Fair Value
                                       ---------    ----------
March 31, 2006
--------------
Due in one year or less                 $  4,833      $  4,782
Due after one year through five years     12,347        12,210
Due after five years through ten years       274           286
Due after ten years                        6,685         6,744
                                          ------        ------
Total                                  $  24,139     $  24,022
                                          ======        ======

Investment securities with an amortized cost of $10.2 million and $9.0 million
and a fair value of $10.1 million and $8.9 million at March 31, 2006 and March
31, 2005, respectively, were pledged as collateral for advances at the FHLB.
Investment securities with an amortized cost of $1.1 million and $1.1 million
and a fair value of $1.2 million and $1.2 million at March 31, 2006 and March
31, 2005, respectively, were pledged as collateral for treasury tax and loan
funds held by the Bank.  At March 31, 2006 investment securities with an
amortized cost of $5.0 million and a fair value of $5.0 million were pledged
as collateral for borrowings from the discount window at the Federal Reserve
Bank.

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

The Company realized before tax $0 and $164,000 in net gains on sales of
investment securities available for sale in fiscal 2006 and 2005,
respectively. The Company realized no gains or losses on sales of investment
securities available for sale in fiscal 2004.

5.  MORTGAGE-BACKED SECURITIES

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

                                                Gross       Gross  Estimated
                                Amortized  Unrealized  Unrealized       Fair
                                     Cost       Gains      Losses      Value
                                ---------  ----------  ----------  ---------
March 31, 2006
--------------
Real estate mortgage investment
  conduits                      $   1,402  $       18   $       -   $  1,420
FHLMC mortgage-backed securities      138           2           -        140
FNMA mortgage-backed securities       265           5           -        270
                                   ------      ------      ------     ------
     Total                      $   1,805  $       25   $       -   $  1,830
                                   ======      ======      ======     ======
March 31, 2005
--------------
Real estate mortgage investment
  conduits                      $   1,802  $       43   $       -   $  1,845
FHLMC mortgage-backed securities      218           6           -        224
FNMA mortgage-backed securities       323          10           -        333
                                   ------      ------      ------     ------
     Total                      $   2,343  $       59   $       -   $  2,402
                                   ======      ======      ======     ======

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<PAGE>



Mortgage-backed securities held to maturity with an amortized cost of $1.4
million and $1.8 million and a fair value of $1.4 million and $1.9 million at
March 31, 2006 and 2005, respectively, were pledged as collateral for
governmental public funds held by the Bank. Mortgage-backed securities held to
maturity with an amortized cost of $199,000 and $248,000 and a fair value of
$203,000 and $255,000 at March 31, 2006 and March 31, 2005, respectively, were
pledged as collateral for treasury tax and loan funds held by the Bank. The
real estate mortgage investment conduits consist of FHLMC and FNMA securities.

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


                                       Amortized    Estimated
                                            Cost    Fair Value
                                       ---------    ----------
March 31, 2006
--------------
Due in one year or less                  $     5       $     5
Due after one year through five years          -             -
Due after five years through ten years        24            24
Due after ten years                        1,776         1,801
                                          ------        ------
     Total                               $ 1,805       $ 1,830
                                          ======        ======

Mortgage-backed securities available for sale consisted of the following (in
thousands):
                                                Gross       Gross  Estimated
                                Amortized  Unrealized  Unrealized       Fair
                                     Cost       Gains      Losses      Value
                                ---------  ----------  ----------  ---------
March 31, 2006
--------------
Real estate mortgage investment
  conduits                       $  1,326   $      19   $      (7)  $  1,338
FHLMC mortgage-backed securities    6,951           -        (316)     6,635
FNMA mortgage-backed securities       159           2           -        161
                                   ------      ------      ------     ------
     Total                       $  8,436   $      21   $    (323)  $  8,134
                                   ======      ======      ======     ======
March 31, 2005
--------------
Real estate mortgage investment
  conduits                       $  1,846   $      27   $       -   $  1,873
FHLMC mortgage-backed securities    9,677          12        (182)     9,507
FNMA mortgage-backed securities       233           6           -        239
                                   ------      ------      ------     ------
     Total                       $ 11,756   $      45   $    (182)  $ 11,619
                                   ======      ======      ======     ======

The fair value of temporarily impaired mortgage-backed securities, the amount
of unrealized losses and the length of time these unrealized losses existed as
of March 31, 2006 are as follows (in thousands):

                          Less than         12 months
                          12 months         or longer           Total
                       ------------------------------------------------------
Description of         Fair  Unrealized   Fair  Unrealized   Fair  Unrealized
  Securities           Value   Losses     Value   Losses     Value   Losses
                       -----   ------     -----   ------     -----   ------

Real estate mortgage   $ 523   $   (6)    $   -   $    -     $ 523   $   (6)
FHLMC mortgage-backed
  securities              66       (1)    6,543     (315)    6,609     (316)
FNMA mortgage-backed
  securities              17       (1)        -        -        17       (1)
 Total temporarily     -----   ------     -----   ------     -----    ------
  impaired securities  $ 606   $   (8)   $6,543   $ (315)   $7,149   $ (323)
                       =====   ======     =====   ======     =====    ======
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<PAGE>



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

                          Less than         12 months
                          12 months         or longer           Total
                       ------------------------------------------------------
Description of         Fair  Unrealized   Fair  Unrealized   Fair  Unrealized
  Securities           Value   Losses     Value   Losses     Value   Losses
                       -----   ------     -----   ------     -----   ------

FHLMC mortgage-backed
  securities          $8,209    $(182)        -        -    $8,209    $(182)
                      ------    ------    ------   ------   ------   ------
 Total temporarily
  impaired securities $8,209    $(182)        -        -    $8,209    $(182)
                      ======    =====     ======   ======   ======   ======

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

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

                                             Amortized       Estimated
March 31, 2006                                    Cost      Fair Value
--------------                               ---------      ----------
Due in one year or less                      $     109      $      110
Due after one year through five years               87              88
Due after five years through ten years           6,968           6,652
Due after ten years                              1,272           1,284
                                             ---------      ----------
     Total                                   $   8,436      $    8,134
                                             =========      ==========

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

Mortgage-backed securities available for sale with an amortized cost of $8.3
million and $11.5 million and a fair value of $8.0 million and $11.4 million
at March 31, 2006 and March 31, 2005, respectively, were pledged as collateral
for advances at the FHLB.  Mortgage-backed securities available for sale with
an amortized cost of $17,000 and $45,000 and a fair value of $18,000 and
$47,000 at March 31, 2006 and March 31, 2005, respectively, were pledged as
collateral for treasury tax and loan funds held by the Bank.

The Company realized no gains or losses on sale of mortgage-backed securities
available for sale in fiscal 2006, 2005 and 2004.

6.  LOANS RECEIVABLE

A summary of the major categories of loans outstanding is shown in the
following table.  Outstanding loan balances at March 31, 2006 and 2005, are
net of unearned income, including net deferred loan fees of $4.4 million and
$3.2 million, respectively.

                                       83
<PAGE>



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

                                                           March 31,
                                                      -------------------
                                                       2006         2005
                                                      ------       ------
Residential:
  One- to- four family                             $  32,129    $  36,059
  Multi-family                                         2,127        2,537
Construction:
  One- to- four family                                81,167       43,633
  Commercial real estate                              46,135       10,982
Commercial                                            59,769       57,981
Consumer
  Secured                                             29,942       28,951
  Unsecured                                            1,415        1,668
Land                                                  49,174       28,889
Commercial real estate                               328,378      223,144
                                                     -------      -------
                                                     630,237      433,844
Less:
  Allowance for loan losses                            7,221        4,395
                                                     -------      -------
     Loans receivable, net                         $ 623,016    $ 429,449
                                                     =======      =======

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

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

                                                           March 31,
                                                      -------------------
                                                       2006         2005
                                                      ------       ------
Adjustable rate loans:
   Within one year                                  $187,093     $207,906
   After one but within three years                   63,555       96,676
   After three but within five years                  26,675       22,988
   After five but within ten years                   184,519        7,439
   After ten years                                    60,014            -
                                                     -------      -------
                                                     521,856      335,009
Fixed rate loans:
   Within one year                                    26,780       26,171
   After one but within three                         28,845       28,724
   After three but within five years                  23,831       28,009
   After five but within ten years                    19,533        8,815
   After ten years                                     9,457        7,626
                                                     -------      -------
                                                     108,446       99,345
                                                     -------      -------
                                                    $630,302     $434,354
                                                     =======      =======

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

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<PAGE>



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

                                                     Year Ended March 31,
                                                     --------------------
                                                     2006    2005    2004
                                                    ------  ------  ------

Beginning balance                                   $  408  $  732  $  315
Originations                                             5      10     753
Principal repayments                                  (405)   (334)   (336)
                                                    ------  ------  ------
Ending balance                                      $    7  $  408  $  732
                                                    ======  ======  ======

7.  ALLOWANCE FOR LOAN LOSSES

A reconciliation of the allowance for loan losses is as follows (in
thousands):
                                                     Year Ended March 31,
                                                     --------------------
                                                     2006    2005    2004
                                                    ------  ------  ------

Beginning balance                                  $ 4,395 $ 4,481 $ 2,739
Provision for losses                                 1,500     410     210
Charge-offs                                           (711)   (669) (1,182)
Recoveries                                             149     173      91
Allowance transferred from Today's Bancorp
  acquisition                                            -       -   2,639
Allowance transferred from American Pacific
  Bank ("APB") acquisition                           1,888       -       -
Net change in allowance for unfunded loan
  commitments and lines of credit                        -       -     (16)
                                                    ------  ------  ------
Ending balance                                     $ 7,221 $ 4,395 $ 4,481
                                                    ======  ======  ======

Changes in the allowance for unfunded loan commitments and lines of credit
were as follows (in thousands):
                                                     Year Ended March 31,
                                                     --------------------
                                                     2006    2005    2004
                                                    ------  ------  ------

Beginning balance                                   $  253  $  191  $  175

Net change in allowance for unfunded loan
  commitments and lines of credit                      109      62      16
                                                    ------  ------  ------
Ending balance                                      $  362  $  253  $  191
                                                    ======  ======  ======

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

At March 31, 2006, 2005 and 2004, the Company's recorded investment in
non-acrual loans was $415,000, $456,000, and $1.3 million respectively. None
of the impaired loans as of March 31, 2006, 2005 or 2004 had a specific
valuation allowance.  The allowance for loan losses in excess of specific
reserves is available to absorb losses from all loans, although allocations
have been made for certain loans and loan categories as part of management's
analysis of the allowance. The average investment in impaired loans was
approximately $889,000, $1.0 million and $1.2 million during the years ended
March 31, 2006, 2005 and 2004, respectively. Interest income recognized on
impaired loans was $100,000, $9,000 and $44,000 during the years ended March
31, 2006, 2005 and 2004, respectively. There were no loans past due 90 days or
more and still accruing interest at March 31, 2006, 2005 and 2004,
respectively.
                                      85

<PAGE>



8.  PREMISES AND EQUIPMENT, NET

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

                                                         March 31,
                                                    -------------------
                                                     2006         2005
                                                    ------       ------
Land                                               $ 1,988      $ 1,879
Buildings and improvements                           7,802        5,476
Leasehold improvements                               1,887        1,310
Furniture and equipment                              8,938        6,681
Buildings under capitalized leases                   2,715            -
Construction in progress                             4,436          101
                                                    ------       ------
     Total                                          27,766       15,447
Less accumulated depreciation and amortization      (8,639)      (7,056)
                                                    ------       ------
     Premises and equipment, net                   $19,127      $ 8,391
                                                    ======       ======

During fiscal year 2005, the Company sold to a private investor and leased
back the Camas branch and operations center.  The net gain on the sale of the
building was $1.6 million, of which $828,000 was recognized in the first
quarter of fiscal year 2005 and the remainder is being amortized over the
six-year life of the lease.  Deferred gains of $141,000 and $180,000 were
recognized in fiscal years 2006 and 2005, respectively. The lease of the
building is being accounted for as an operating lease and is included in the
future minimum rental payments schedule shown below.

Depreciation expense was $1.2 million, $1.0 million and $1.1 million for years
ended March 31, 2006, 2005 and 2004, respectively. The Company is obligated
under various noncancellable lease agreements for land and buildings that
require future minimum rental payments, exclusive of taxes and other charges.
As of and for year ended March 31, 2006 the Company has recorded $37,600 in
accumulated amortization and amortization expense related to the capital
lease.

The Company entered into a capital lease during fiscal year 2006. The capital
lease was for the shell of the building constructed for the new operations
center. The lease period is for twelve years with two six-year lease renewal
options.

The following is a schedule by years of future minimum lease payments under
capital leases together with the present value of net minimum lease payments
as of March 31, 2006 and the future minimum rental payments required under
operating leases that have initial or noncancellable lease terms in excess of
one year as of March 31, 2006 (in thousands):

                                            Operating       Capital
           Year Ending March 31:               Leases        Leases
                                               ------        ------
           2007                               $ 1,616       $   228
           2008                                 1,626           228
           2009                                 1,592           228
           2010                                 1,467           228
           2011                                   909           228
           After 2011                           5,027         4,672
                                               ------        ------
           Total minimum lease payments       $12,237         5,812
           Less amount representing interest   ======        (3,059)
           Present value of net minimum lease                 =====
             payments                                        $2,753
                                                              =====

Rent expense was $1.6 million, $1.2 million and $857,000 for the years ended
March 31, 2006, 2005 and 2004, respectively.

                                      86

<PAGE>



9.  MORTGAGE SERVICING RIGHTS

The following table is a summary of the activity in MSR's and the related
valuation allowance for the periods indicated and other related financial data
(in thousands):
                                                           March 31,
                                                     --------------------
                                                     2006    2005    2004
                                                    ------  ------  ------
     Balance at beginning of year, net             $   470 $   624 $   629
        Additions                                      123     126     167
        Amortization                                  (233)   (302)   (479)
        Change in valuation allowance                   24      22     307
                                                      ----    ----    ----
     Balance end of year, net                      $   384 $   470 $   624
                                                      ====    ====    ====
     Valuation allowance at beginning of year      $    84 $   106 $   413
        Change in valuation allowance                  (24)    (22)   (307)
                                                      ----    ----    ----
     Valuation allowance balance at end of year    $    60 $    84 $   106
                                                      ====    ====    ====

The Company evaluates MSR's for impairment by stratifying MSR's based on the
predominant risk characteristics of the underlying financial assets.  At March
31, 2006 and 2005, the MSR's fair value totaled $1.1 million. The 2006 fair
value was estimated using discount rate and a range of PSA values (The Bond
Market Association's standard prepayment values) that ranged from 133 to 560.

Amortization expense for the net carrying amount of MSR's at March 31, 2006 is
estimated as follows (in thousands):

                               Year ending March 31,
                               ---------------------
                                 2007        $135
                                 2008          98
                                 2009          78
                                 2010          39
                                 2011          22
                              After 2011       12
                                             ----
                                 Total       $384
                                             ====

     Mortgage loans serviced for others (in millions):
                                                           March 31,
                                                    ----------------------
                                                     2006    2005    2004
                                                    ------  ------  ------

                Total                              $ 139.2 $ 129.3 $ 133.5
                                                    ======  ======  ======

The estimated sensitivity of the fair value of the mortgage servicing rights
portfolio to changes in interest rates at March 31, 2006 was as follows
(dollars in thousands):

                        Down Scenario                 Up Scenario
                        -------------                 -----------
                   300 bp   200 bp   100 bp     100 bp   200 bp   300 bp
                   ------   ------   ------     ------   ------   ------
     Fair Value    $ (729)  $ (552)  $ (191)    $   38   $   62   $   90

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

10. CORE DEPOSIT INTANGIBLE


Net unamortized core deposit intangible totaled $895,000 and $578,000 at March
31, 2006 and 2005, respectively.  Amortization expense related to the core
deposit intangible during the year ended March 31, 2006, 2005 and 2004 totaled
$210,000, $180,000 and $430,000, respectively. During the year ended March 31,
2006,

                                    87

<PAGE>



the Company had additions to core deposit intangibles totaling $526,000 in
connection with the acquisition of American Pacific Bank.

Amortization expense for the net core deposit intangible at March 31, 2006 is
estimated to be as follows (in thousands):

                             Year Ending
                              March 31,
                       ----------------------
                       2007            $  184
                       2008               155
                       2009               131
                       2010               111
                       2011                95
                   After 2011             219
                                       ------
                      Total            $  895
                                       ======

11. DEPOSIT ACCOUNTS

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

                         Weighted             Weighted
                          Average   March 31,  Average   March 31,
Account Type                 Rate       2006      Rate       2005
                             ----       ----      ----       ----
NOW Accounts:
  Non-interest-bearing       0.00%  $ 94,592      0.00%  $ 79,499
  Regular                    0.21     62,941      0.20     65,667
  High yield checking        4.27     66,516      2.55     50,562
Money market                 3.45    137,451      1.44     76,331
Savings accounts             0.55     38,344      0.55     35,513
Certificates of deposit      3.85    207,120      3.13    149,306
                             ----    -------      ----    -------
     Total                   2.62%  $606,964      1.62%  $456,878
                             ====    =======      ====    =======

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

Certificates of deposit (which include $18.7 million of broker certificates of
deposit) as of March 31, 2006, mature as follows (in thousands):

                                                           Amount
                                                           ------
Less than one year                                      $ 130,159
One year to two years                                      36,961
Two years to three years                                   28,718
Three years to four years                                   3,225
Four years to five years                                    3,129
After five years                                            4,928
                                                          -------
          Total                                         $ 207,120
                                                          =======

Deposit accounts in excess of $100,000 are not insured by the Federal Deposit
Insurance Corporation ("FDIC").  Deposits with balances in excess of $100,000
totaled $329.3 million and $227.9 million at March 31, 2006 and 2005,
respectively.

                                     88

<PAGE>




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


                                                     Year Ended March 31,
                                                    ----------------------
                                                     2006    2005    2004
                                                    ------  ------  ------
NOW Accounts:
   Regular                                         $   321  $  108  $  122
   High yield checking                               1,927     815     713
Money market                                         3,276     901     583
Savings accounts                                       213     178     163
Certificates of deposit                              6,646   3,378   3,062
                                                    ------   -----   -----
Total                                              $12,383  $5,380  $4,643
                                                    ======   =====   =====

12. FEDERAL HOME LOAN BANK ADVANCES

At March 31, 2006 and 2005, advances from FHLB, totaled $46.1 million and
$40.0 million with a weighted average interest rate of 4.65% and 5.05%. The
fixed rate borrowings of $8.0 million had fixed interest rates ranging from
2.57% to 3.61%. The March 31, 2005 fixed rate borrowings of $35.0 million had
fixed interest rates ranging from 4.65% to 6.38%. The remaining adjustable
rate advance at March 31, 2006 and 2005 had a weighted average interest rate
of 5.02% and 2.67%, which is based on three-month London Interbank Offered
Rate Index ("LIBOR") plus 11 basis points as quited by the FHLB.The weighted
average interest rate for fixed and adjustable rate advances was 4.44%, 5.00%,
and 4.96% for the years ended March 31, 2006, 2005 and 2004, respectively.

The Bank has a credit line with the FHLB equal to 30% of total assets, limited
by available collateral. At March 31, 2006, based on collateral values, the
Bank had additional borrowing commitments available of $91.7 million from the
FHLB.

FHLB advances are collateralized as provided for in the Advance, Pledge and
Security Agreements with the FHLB by certain investment and mortgage-backed
securities, FHLB stock owned by the Bank, deposits with the FHLB, and certain
mortgages on deeds of trust securing such properties as provided in the
agreements with the FHLB. At March 31, 2006, loans carried at $210.4 million
and investments and mortgage-backed securities carried at $18.0 million were
pledged as collateral to the FHLB.

Payments required to service the Bank's FHLB advances during the next five
years ended March 31 are as follows (in millions):

          2007          $41.1
          2008            5.0
          Thereafter        -
                        -----
                        $46.1
                        =====

In addition, the Bank has a Fed Funds borrowing facility with Pacific Coast
Bankers' Bank with a guideline limit of $10 million through June 30, 2006.
The facility may be reduced or withdrawn at any time.  As of March 31, 2006
the Bank did not have any outstanding advances on this facility.

13. JUNIOR SUBORDINATED DEBENTURES

At December 31, 2005, a wholly-owned subsidiary grantor trusts established by
the Company issued $7.0 million of pooled Trust Preferred Securities ("trust
preferred securities"). Trust preferred securities accrue and pay
distributions periodically at specified annual rates as provided in the
indentures. The trust used the net proceeds from the offering to purchase a
like amount of junior subordinated Debentures (the "Debentures") of the
Company. The Debentures are the sole assets of the trust. The Company's
obligations under the Debentures and related documents, taken together,
constitute a full and unconditional guarantee by the Company of the
obligations of the trust. The trust preferred securities are mandatory
redeemable upon the maturity of the Debentures, or upon earlier redemption as
provided in the indentures. The Company has the right to redeem the

                                    89
<PAGE>



Debentures in whole or in part after year 5 on any coupon date, at a
redemption price specified in the indentures plus any accrued but unpaid
interest to the redemption date.

The following table is a summary of current Debentures at March 31, 2006:

                               Preferred
                      Issuance  security   Rate    Initial  Rate at  Maturing
                          date    amount   Type(1)  Rate   12/31/05  Date
                          ----    ------  --------  ----   --------  ----
Issuance trust                        (Dollars in thousands)
---------------
Riverview Bancorp, Inc.
Statutory Trust 1      12/2005   $7,000   Variable  5.88%    6.27%   12/2035

(1) The variable rate preferred securities reprice quarterly.

The total amount of trust preferred securities outstanding at March 31, 2006
was $7.0 million. The interest rates on the trust preferred securities issued
in December 2005 resets quarterly and is tied to the London Interbank Offered
Rate ("LIBOR"). The Company has the right to redeem the debentures in December
2010.

The Debentures issued by the Company to the grantor trusts, totaling $7.0
million, are reflected in our consolidated balance sheet in the liabilities
section at March 31, 2006, under the caption "junior subordinated debentures."
The Company records interest expense on the Debentures in the consolidated
statements of income. The Company recorded $217,000 in other assets in the
consolidated balance sheet at March 31, 2006, for the common capital
securities issued by the issuer trusts.   The Company invested $5.0 million of
the trust preferred securities proceeds in the Bank and retained the remaining
$2.0 million to be used for general corporate purposes.

On July 2, 2003, the Federal Reserve Bank ("Federal Reserve") issued
Supervisory Letter SR 03-13 clarifying that Bank Holding Companies should
continue to report trust preferred securities in accordance with current
Federal Reserve Bank instructions which allows trust preferred securities to
be counted in Tier 1 capital subject to certain limitations. The Federal
Reserve has indicated it will review the implications of any accounting
treatment changes and, if necessary or warranted, will provide appropriate
guidance.

14. INCOME TAXES

Income tax provision for the years ended March 31 consisted of the following
(in thousands):
                                                2006      2005      2004
                                               ------    ------    ------
                        Current               $ 5,281   $ 2,751   $ 2,789
                       Deferred                  (704)      285       421
                                                -----     -----     -----
                               Total          $ 4,577   $ 3,036   $ 3,210
                                                =====     =====     =====

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

                                                2006      2005      2004
                                               ------    ------    ------

Statutory federal income tax rate               35.0%     34.0%     34.0%
State and local income tax rate                  1.0         -         -
ESOP market value adjustment                     0.9       1.1       0.9
Interest income on municipal securities         (0.4)     (0.6)     (0.4)
Dividend received deduction                      0.0      (0.5)     (0.6)
Bank owned life insurance                       (1.2)     (1.7)        -
Other, net                                      (3.4)     (0.6)     (1.1)
                                                ----      ----      ----
     Effective federal income tax rate          31.9%     31.7%     32.8%
                                                ====      ====      ====

                                     90
<PAGE>



Taxes related to gains on sales of securities were none, $56,000 and none for
the years ended March 31, 2006, 2005 and 2004, respectively.

The tax effect of temporary differences that give rise to significant portions
of deferred tax assets and deferred tax liabilities at March 31, 2006 and 2005
are as follows (in thousands):
                                                       2006      2005
                                                     ------    ------
Deferred tax assets:
  Deferred compensation                             $   629   $   555
  Loan loss reserve                                   2,720     1,581
  Core deposit intangible                               245       306
  Accrued expenses                                      376       235
  Accumulated depreciation                              508       206
  Net operating loss carryforward                       493       821
  Net realized loss on securities available for sale    143        63
  Capital loss carryforward                             715       733
  REO expense                                           184         -
  Non-compete                                            79         -
  Other                                                  42       219
                                                     ------    ------
       Total deferred tax asset                       6,134     4,719
                                                     ------    ------
Deferred tax liabilities:
  FHLB stock dividend                                (1,078)     (971)
    Deferred gain on sale                              (116)        -
  Tax qualified loan loss reserve                      (243)     (280)
  Purchase accounting                                  (376)     (249)
  Prepaid expense                                       (82)     (146)
  Loan fees/costs                                      (468)     (449)
                                                     ------    ------
       Total deferred tax liability                  (2,363)   (2,095)
                                                     ------    ------
Deferred tax asset, net                             $ 3,771   $ 2,624
                                                     ======    ======

The Bank's retained earnings at March 31, 2006 and 2005 include base year bad
debt reserves which amounted to approximately $2.2 million, for which no
federal income tax liability has been recognized.  The amount of unrecognized
deferred tax liability at March 31, 2006 and 2005 is approximately $760,000.
This represents the balance of bad debt reserves created for tax purposes as
of December 31, 1987.  These amounts are subject to recapture in the unlikely
event that the Company's banking subsidiaries (1) make distributions in excess
of current and accumulated earnings and profits, as calculated for federal tax
purposes, (2) redeem their stock, or (3) liquidate.  Management does not
expect this temporary difference to reverse in the foreseeable future.

The Company also has net operating loss carry forwards of approximately $1.3
million for federal tax purposes in connection with the acquisition of Today's
Bancorp, Inc.  Utilization of the net operating losses, which begin to expire
at various times starting in 2019, is subject to certain limitations under
Section 382 of the Internal Revenue Code.

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

No valuation allowance for deferred tax assets was deemed necessary at March
31, 2006 or 2005 based upon the Company's anticipated future ability to
generate taxable income from operations.

15. EMPLOYEE BENEFITS PLANS

Retirement Plan - The Riverview Bancorp, Inc. Employees' Savings and Profit
Sharing Plan (the "Plan") is a defined contribution profit-sharing plan
incorporating the provisions of Section 401(k) of the Internal Revenue Code.
The plan covers all employees with at least six months and 500 hours of
service who are over the age of 18. The Company matches the employee's
elective contribution up to 4% of the employee's compensation. Company
expenses related to the Plan for the years ended March 31, 2006, 2005 and 2004
were $359,000, $154,000 and $93,000, respectively.

                                     91
<PAGE>



Directors Deferred Compensation Plan - Directors may elect to defer their
monthly directors' fees until retirement with no income tax payable by the
director until retirement benefits are received.  Chairman, President,
Executive and Senior Vice Presidents of the Company may also defer salary
into this plan.  This alternative is made available to them through a
nonqualified deferred compensation plan. The Company accrues annual interest
on the unfunded liability under the Directors Deferred Compensation Plan based
upon a formula relating to gross revenues, which amounted to 6.66%, 6.04%, and
7.12% for the years ended March 31, 2006, 2005 and 2004, respectively. The
estimated liability under the plan is accrued as earned by the participant. At
March 31, 2006 and 2005, the Company's aggregate liability under the plan was
$1.7 million and $1.6 million, respectively.

Bonus Programs - The Company maintains a bonus program for senior management
and certain key individuals. The senior management bonus represents
approximately 5% of fiscal year profits, assuming profit goals are attained,
and is divided among senior management members in proportion to their
salaries. The Company has an incentive program for branch managers that are
paid to the managers based on the attainment of certain goals. The Company
expensed $1.3 million, $564,000, $482,000 in bonuses during the years ended
March 31, 2006, 2005 and 2004, respectively.

Management Recognition and Development Plan - On July 23, 1998, shareholders
of the Company approved the adoption of the MRDP for the benefit of officers,
employees and non-employee directors of the Company.

The objective of the MRDP is to retain personnel of experience and ability in
key positions by providing them with a proprietary interest in the Company.
The Company reserved 142,830 shares of common stock to be issued under the
MRDP, which are authorized but unissued shares.  Awards under the MRDP were
made in the form of restricted shares of common stock that are subject to
restrictions on transfer of ownership. Compensation expense in the amount of
the fair value of the common stock at the date of the grant to the plan
participants was recognized over a five-year vesting period, with 20% vesting
immediately upon grant. At March 31, 2006, all shares have been issued and
fully vested. Compensation expense of $0, $0 and $15,000 was recognized for
the years ended March 31, 2006, 2005 and 2004, respectively.

Stock Option Plans - In July 1998, shareholders of the Company approved the
adoption of the 1998 Stock Option Plan ("1998 Plan").  The 1998 Plan was
effective October 1, 1998 and will expire on the tenth anniversary of the
effective date, unless terminated sooner by the Board.  Under the 1998 Plan,
the Company may grant both incentive and non-qualified stock options up to
357,075 shares of its common stock to officers, directors and employees.  The
exercise price of each option granted under the 1998 Plan equals the fair
market value of the Company's stock on the date of grant with a maximum term
of ten years and options vest over five years.  At March 31, 2006, there were
options for 14,481 shares available for grant under the 1998 Plan.

In July 2003, shareholders of the Company approved the adoption of the 2003
Stock Option Plan ("2003 Plan").  The 2003 Plan was effective July 2003 and
will expire on the tenth anniversary of the effective date, unless terminated
sooner by the Board.  Under the 2003 Plan, the Company may grant both
incentive and non-qualified stock options up to 229,277 shares of its common
stock to officers, directors and employees.  The exercise price of each option
granted under the 2003 Plan equals the fair market value of the Company's
stock on the date of grant with a maximum term of ten years from date of grant
and options vest over 0 to 5 years.

On March 15, 2006, 157,000 stock options from the 2003 Plan were granted to
officers and directors. Each option was granted at the fair market value of
the Company's stock on the date of grant with a maximum term of 10 years from
date of grant and were fully vested at grant date.

                                    92
<PAGE>



Stock option activity is summarized in the following table:

                                                 Weighted
                                                  Average
                                     Number of   Exercise
                                        Shares      Price
                                     ---------   --------

     Outstanding April 1, 2003         262,550   $  12.92
        Grants                          23,000      18.30
        Options exercised              (40,281)     12.02
                                     ---------   --------
     Outstanding March 31, 2004        245,269      13.57
                                     ---------   --------
        Grants                          23,000      20.62
        Options exercised              (40,774)     13.14
                                     ---------   --------
     Outstanding March 31, 2005        227,495      14.36
                                     ---------   --------
        Grants                         177,000      25.40
        Options exercised              (26,572)     16.95
                                     ---------   --------
     Outstanding March 31, 2006        377,923   $  19.35
                                     =========   ========

Additional information regarding options outstanding as of March 31, 2006 is
as follows:

                               Options Outstanding     Options Exercisable
                              ---------------------   ---------------------
               Weighted Avg                Weighted                Weighted
                  Remaining                 Average                 Average
Range of        Contractual        Number  Exercise        Number  Exercise
Exercise Price   Life(years)  Outstanding     Price   Exercisable     Price
--------------   ----------   -----------     -----   -----------     -----
$ 8.06 - $12.31        3.71        43,498   $ 10.94        43,498   $ 10.94
 13.51 -  13.75        2.80       120,625     13.73       120,625     13.73
 14.97 -  19.02        7.13        23,000     17.42        14,800     17.26
 20.20 -  21.65        8.86        33,800     20.88         9,520     20.81
 25.95                 9.96       157,000     25.95       157,000     25.95
                                  -------                 -------
                                  377,923                 345,443
                                  =======                 =======

16. EMPLOYEE STOCK OWNERSHIP PLAN

The Company ESOP covers all employees with at least one year and 1000 hours of
service who are over the age of 21.  Shares are released for allocation at the
discretion of the Board of Directors and allocated to participant accounts
on December 31 of each year until 2011. ESOP compensation expense included in
salaries and benefits was $558,000, $520,000 and $477,000 for years ended
March 31, 2006, 2005 and 2004, respectively.

ESOP share activity is summarized in the following table:

                              Fair Value                Allocated
                                      of   Unreleased         and
                              Unreleased         ESOP    Released
                                  Shares       Shares      Shares      Total
                              ----------   ----------   ---------   --------
Balance, April 1, 2003        $3,490,000      221,697     259,595    481,292
Allocation December 31, 2003                  (24,633)     24,633          -
                                              -------     -------    -------
Balance, March 31, 2004       $4,083,000      197,064     284,228    481,292
Allocation December 31, 2004                  (24,633)     24,633          -
                                              -------     -------    -------
Balance, March 31, 2005       $3,664,000      172,431     308,861    481,292
Allocation December 31, 2005                  (24,633)     24,633          -
                                              -------     -------    -------
Balance, March 31, 2006       $3,955,000      147,798     333,494    481,292
                                              =======     =======    =======

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<PAGE>



17. SHAREHOLDERS' EQUITY AND REGULATORY CAPITAL REQUIREMENTS

The Company's Board of Directors authorized 250,000 shares of serial preferred
stock as part of the Conversion and Reorganization completed on September 30,
1997.  No preferred shares were issued or outstanding at March 31, 2006 or
2005.

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

Quantitative measures established by regulation to ensure capital adequacy
require the Bank to maintain minimum amounts and ratios of total and Tier I
capital to risk-weighted assets, of core capital to total assets and tangible
capital to tangible assets (set forth in the table below). Management believes
the Bank meets all capital adequacy requirements to which it is subject as of
March 31, 2006.

As of March 31, 2006, the most recent notification from the OTS categorized
the Bank as "well capitalized" under the regulatory framework for prompt
corrective action. To be categorized as "well capitalized," the Bank must
maintain minimum total capital and Tier I capital to risk weighted assets,
core capital to total assets and tangible capital to tangible assets (set
forth in the table below). There are no conditions or events since that
notification that management believes have changed the Company's category.

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

                                                         Categorized as "Well
                                                           Capitalized" Under
                                               For Capital  Prompt Corrective
                               Actual     Adequacy Purposes  Action Provision
                             ------------------------------------------------
                             Amount  Ratio    Amount  Ratio    Amount  Ratio
                             ------  -----    ------  -----    ------  -----
March 31, 2006
Total Capital:
 (To Risk Weighted Assets)  $78,469  11.48%  $54,688    8.0%  $68,361   10.0%
Tier I Capital:
 (To Risk Weighted Assets)   71,248  10.42    27,344    4.0    41,016    6.0
Tier I Capital:
 (To Adjusted Tangible
  Assets)                    71,248   9.70    22,038    3.0    36,730    5.0
Tangible Capital:
 (To Tangible Assets)        71,248   9.70    11,019    1.5      N/A     N/A


                                     94

<PAGE>



                                                         Categorized as "Well
                                                           Capitalized" Under
                                               For Capital  Prompt Corrective
                               Actual     Adequacy Purposes  Action Provision
                             ------------------------------------------------
                             Amount  Ratio    Amount  Ratio    Amount  Ratio
                             ------  -----    ------  -----    ------  -----
March 31, 2005
Total Capital:
 (To Risk Weighted Assets)  $57,397  12.37%  $37,116    8.0%  $46,396   10.0%
Tier I Capital:
 (To Risk Weighted Assets)   53,002  11.42    18,558    4.0    27,837    6.0
Tier I Capital:
 (To Adjusted Tangible
  Assets)                    53,002   9.54    16,664    3.0    27,773    5.0
Tangible Capital:
 (To Tangible Assets)        53,002   9.54     8,332    1.5      N/A     N/A


The following table is a reconciliation of the Bank's capital, calculated
according to GAAP to regulatory tangible and risk-based capital at March 31,
2006 (in thousands):

   Equity                                            $  97,595
   Net unrealized securities loss                          276
   Core deposit intangible, goodwill and software      (26,585)
   Servicing asset                                         (38)
                                                      --------
      Tangible capital                                  71,248
   General valuation allowance                           7,221
                                                      --------
      Total capital                                  $  78,469
                                                      ========

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 2006
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 2006 financial
statements cannot presently be determined.

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

                                          Shares             Value
                                          ------            -------
               2006                       50,000             $1,228
               2005                            -                  -
               2004                       81,500             $1,510

18. EARNINGS PER SHARE

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

                                   95

<PAGE>



                                                 Years Ended March 31,
                                            ------------------------------
                                             2006        2005        2004
                                            ------      ------      ------
Basic EPS computation:
  Numerator-Net income                  $9,738,000  $6,529,000  $6,554,000
  Denominator-Weighted average common
   shares outstanding                    5,602,240   4,816,745   4,640,485
Basic EPS                               $     1.74  $     1.36  $     1.41
Diluted EPS computation:                 =========   =========   =========
  Numerator-Net Income                  $9,738,000  $6,529,000  $6,554,000
  Denominator-Weighted average
   common shares outstanding             5,602,240   4,816,745   4,640,485
   Effect of dilutive stock options         72,928      74,428      72,149
   Effect of dilutive MRDP                       -           -       1,695
   Weighted average common shares        ---------   ---------   ---------
    and common stock equivalents         5,675,168   4,891,173   4,714,329
Diluted EPS                             $     1.72  $     1.33  $     1.39
                                         =========   =========   =========

19. FAIR VALUE OF FINANCIAL INSTRUMENTS

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

The estimated fair value of financial instruments is as follows (in
thousands):
                                                     March 31,
                                      --------------------------------------
                                              2006                 2005
                                      -----------------    -----------------
                                      Carrying     Fair    Carrying     Fair
                                         Value    Value       Value    Value
                                      --------    -----    --------    -----
Assets:
Cash                                  $ 31,346  $31,346    $ 61,719  $61,719
Investment securities available for
  sale                                  24,022   24,022      22,945   22,945
Mortgage-backed securities held to
  maturity                               1,805    1,830       2,343    2,402
Mortgage-backed securities available
  for sale                               8,134    8,134      11,619   11,619
Loans receivable, net                  623,016  620,107     429,449  428,368
Loans held for sale                         65       65         510      510
Mortgage servicing rights                  384    1,080         470    1,100
FHLB stock                               7,350    7,350       6,143    6,143

Liabilities:
Demand - Savings deposits              399,844  399,844     307,572  307,572
Time deposits                          207,120  205,718     149,306  148,941

FHLB advances - long-term               46,100   45,846      40,000   40,120
Junior subordinated debentures           7,217    7,236           -        -

Fair value estimates, methods and assumptions are set forth below.

Cash - Fair value approximates the carrying amount.

Investments and Mortgage-Backed Securities - Fair values were based on quoted
market rates and dealer quotes.

                                     96
<PAGE>



Loans Receivable and Loans Held for Sale - Loans were priced using a
discounted cash flow method.  The discount rate used was the rate currently
offered on similar products, risk adjusted for credit concerns or dissimilar
characteristics.  For variable rate loans that reprice frequently and have no
significant change in credit, fair values are based on carrying values.

Mortgage Servicing Rights - The fair value of mortgage servicing rights was
determined using the Company's model, which incorporates the expected life of
the loans, estimated cost to service the loans, servicing fees received and
other factors. The Company calculates MSR's fair value by stratifying MSR's
based on the predominant risk characteristics that include the underlying
loan's interest rate, cash flows of the loan, origination date and term. Key
economic assumptions that vary due to changes in market interest rates are
used to determine the fair value of the MSR's and include expected prepayment
speeds, which impact the average life of the portfolio, annual service cost,
annual ancillary income and the discount rate used in valuing the cash flows.
At March 31, 2006, the MSR's fair value totaled $1.1 million, which was
estimated using a range of prepayment speed assumptions (The Bond Market
Association's standard prepayment) values that ranged from 133 to 560.

Federal Home Loan Bank Stock - Fair value approximates the carrying amounts.

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.

Junior Subordinated Debentures - The fair value of junior subordinated
debentures was based on the discounted cash flow method. The discount rate was
estimated using rates currently available for the junior subordinated
debentures.

Off-Balance Sheet Financial Instruments - The estimated fair value of loan
commitments approximates fees recorded associated with such commitments as of
March 31, 2006 and 2005. Since the majority of the Bank's off-balance-sheet
instruments consist of non-fee producing, variable rate commitments, the Bank
has determined they do not have a distinguishable fair value.

Other - The carrying value of other financial instruments was determined to be
a reasonable estimate of their fair value.

Limitations - The fair value estimates presented herein were based on
pertinent information available to management as of March 31, 2006 and 2005.
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.

20. 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

                                   97
<PAGE>



of those instruments.  The Company uses the same credit policies in making
commitments as it does for on-balance sheet instruments. Commitments to extend
credit are conditional, and are honored for up to 45 days subject to the
Company's usual terms and conditions.  Collateral is not required to support
commitments.

At March 31, 2006, the Company had commitments to originate fixed rate
mortgage loans of $1.9 million at interest rates ranging from 6.0% to 8.25%.
At March 31, 2006, commitments to originate adjustable rate mortgage loans
were $420,000 at an average interest rate of 6.10%.  Undisbursed balance of
mortgage loans closed was $94.6 million at March 31, 2006. Commitments to
originate consumer loans totaled $2.4 million and unused lines of consumer
credit totaled $24.7 million at March 31, 2006.  Commercial real estate loan
commitments to originate loans totaled $12.4 million. Undisbursed balance of
commercial real estate mortgage loans closed was $8.4 million at March 31,
2006. Commercial loan commitments totaled $850,000 and unused commercial lines
of credit totaled $42.6 million.

The allowance for unfunded loan commitments was $362,000 at March 31, 2006.

Standby letters of credit are conditional commitments issued by the Bank to
guarantee the performance of a customer to a third party. Those guarantees are
primarily used to support public and private borrowing arrangements. The
credit risk involved in issuing letters of credit is essentially the same as
that involved in extending loan facilities to customers. Collateral held
varies as specified above, and is required in instances where the Bank deems
necessary.  At March 31, 2006 and 2005, standby letters of credit totaled $1.8
million and $346,000, respectively.

Most of the Bank's business activity is with customers located in the states
of Washington and Oregon. Investments in state and municipal securities
involve government entities primarily within the state of Washington. Loans
are generally limited, by federal and state banking regulation, to 10% of the
Bank's shareholder's equity, excluding accumulated other comprehensive income
(loss). As of March 31, 2006 and 2005, the Bank had no individual industry
concentrations.

At March 31, 2006, the Company had firm commitments to sell $65,000 of
residential loans to FHLMC. These agreements are short term fixed rate
commitments and no material gain or loss is likely.

In connection with certain asset sales, the Bank typically makes
representation and warranties about the underlying assets conforming to
specified guidelines.  If the underlying assets do not conform to the
specifications, the Bank may have an obligation to repurchase the assets or
indemnify the purchaser against loss.  As of March 31, 2006 loans under
warranty totaled $112.8 million, which substantially represents the unpaid
principal balance of the Company's loans serviced for others.  The Bank
believes that the potential for loss under these arrangements is remote.
Accordingly, no contingent liability is recorded in the financial statements.

At March 31, 2006, scheduled maturities of certificates of deposit, FHLB
advances, junior subordinated debentures and future operating minimum lease
commitments were as follows (in thousands):

                              Within     1-3      4-5       Over       Total
                              1 year    Years    Years    5 Years    Balance
                              ------    -----    -----    -------    -------
Certificates of deposit     $130,159  $65,679   $6,354    $ 4,928   $207,120
FHLB advances                 41,100    5,000        -          -     46,100
Operating leases               1,616    3,218    2,376      5,027     12,237
Junior subordinated debentures     -        -        -      7,217      7,217
Total other contractual      -------   ------   ------     ------    -------
  obligations               $172,875  $73,897  $ 8,730    $17,172   $242,674
                             =======   ======   ======     ======    =======

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

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

                                   98

<PAGE>



21.  RIVERVIEW BANCORP, INC. (PARENT COMPANY)

BALANCE SHEETS
MARCH 31, 2006 AND 2005

(In thousands)                                                 2006     2005
----------------------------------------------------------------------------
ASSETS
  Cash (including interest earning accounts of $1,572
     and $6,623)                                           $  1,651 $  6,921
  Investment in the Bank                                     97,595   62,832
  Other assets                                                  629      726
  Deferred income taxes                                          35       31
                                                             ------   ------
TOTAL ASSETS                                               $ 99,910 $ 70,510
                                                             ======   ======
LIABILITIES AND SHAREHOLDERS' EQUITY

  Accrued expenses and other liabilities                   $     50 $    237
  Borrowings                                                  7,217        -
  Dividend payable                                              956      751
  Shareholders' equity                                       91,687   69,522
                                                             ------   ------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                 $ 99,910 $ 70,510
                                                             ======   ======


STATEMENTS OF INCOME
YEARS ENDED MARCH 31, 2006, 2005 AND 2004



(In thousands)                                        2006     2005     2004
----------------------------------------------------------------------------
INCOME:
  Dividend income from Bank                       $ 15,000 $  3,813 $ 12,952
  Interest on investment securities and other
    short-term investments                              73       98       28
  Interest on loan receivable from the Bank            149      165      180
  Other income                                           -        -        2
                                                    ------   ------   ------
    Total income                                    15,222    4,076   13,162
                                                    ------   ------   ------
EXPENSE:
  Management service fees paid to the Bank             143      143      122
  Other expenses                                       360      213      189
                                                    ------   ------   ------
    Total expense                                      503      356      311
                                                    ------   ------   ------
INCOME BEFORE INCOME TAXES AND EQUITY
  IN UNDISTRIBUTED INCOME OF THE BANK               14,719    3,720   12,851
BENEFIT FOR INCOME TAXES                              (363)     (31)    (117)
                                                    ------   ------   ------
INCOME OF PARENT COMPANY                            15,082    3,751   12,968
EQUITY IN UNDISTRIBUTED (LOSS) INCOME OF THE BANK   (5,344)   2,778   (6,414)
                                                    ------   ------   ------
NET INCOME                                         $ 9,738  $ 6,529  $ 6,554
                                                    ======   ======   ======

                                    99

<PAGE>




RIVERVIEW BANCORP, INC. (PARENT COMPANY)

STATEMENTS OF CASH FLOWS
YEARS ENDED MARCH 31, 2006, 2005 AND 2004

(In thousands)                                        2006     2005     2004
----------------------------------------------------------------------------

CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income                                       $ 9,738  $ 6,529  $ 6,554
  Adjustments to reconcile net income cash provided
    by operating activities:
    Equity in undistributed earnings(loss) of the
      Bank                                           5,344   (2,778)   6,414
    Provision for deferred income taxes                 (4)      78        2
    Earned ESOP shares                                 558      520      477
    Earned MRDP shares                                   -        -       15
  Changes in assets and liabilities, net of acquisition
    Other assets                                       323     (301)    (536)
    Accrued expenses and other liabilities            (588)    (159)    (246)
                                                    ------   ------   ------
      Net cash provided by operating activities     15,371    3,889   12,680
                                                    ------   ------   ------
CASH FLOWS FROM INVESTING ACTIVITIES:
    Additional investment in subsidiary             (5,000)       -        -
    Acquisition, net of cash acquired              (18,096)       -   (9,482)
                                                    ------   ------   ------
      Net cash used by investing activities        (23,096)       -   (9,482)
                                                    ------   ------   ------
CASH FLOWS FROM FINANCING ACTIVITIES:
    Dividends paid                                  (3,631)  (2,904)  (2,490)
    Proceeds from borrowings                         7,000        -        -
    Repurchase of common stock                      (1,228)       -   (1,510)
    Proceeds from exercise of stock options            314      536      485
                                                    ------   ------   ------
       Net cash used by financing activities         2,455   (2,368)  (3,515)
                                                    ------   ------   ------
NET (DECREASE) INCREASE IN CASH                     (5,270)   1,521     (317)

CASH, BEGINNING OF YEAR                              6,921    5,400    5,717
                                                    ------   ------   ------
CASH, END OF YEAR                                  $ 1,651  $ 6,921  $ 5,400
                                                    ======   ======   ======

                                   100

<PAGE>




Riverview Bancorp, Inc.
Selected Quarterly Financial Data (Unaudited):

<TABLE>
(In thousands, except share data)                                  Three Months Ended
------------------------------------------------------------------------------------------------------------
                                              March 31       December 31         September 30       June 30
                                              --------       -----------         ------------       --------

                                         <c>             <c>                   <c>             <c>
Fiscal 2006:
  Interest income                            $  13,076       $   12,290            $  11,636       $  10,225
  Interest expense                               4,462            3,747                3,541           3,127
  Net interest income                            8,616            8,543                8,095           7,098
  Provision for loan losses                        200              400                  450             450
  Non-interest income                            2,025            2,143                2,482           2,187
  Non-interest expense                           6,869            6,148                6,261           6,096
  Income before income taxes                     3,572            4,138                3,866           2,739
  Provision for income taxes                       965            1,390                1,304             918
                                             ---------       ----------            ---------       ---------
  Net income                                 $   2,607       $    2,748            $   2,562       $   1,821
                                             =========       ==========            =========       =========

Basic earnings per share (1)                 $    0.46       $     0.49            $    0.45       $    0.33
                                             =========       ==========            =========       =========

Diluted earnings per share                   $    0.46       $     0.48            $    0.45       $    0.33
                                             =========       ==========            =========       =========

Fiscal 2005:
  Interest income                            $   7,849       $    7,496            $   7,530       $   7,093
  Interest expense                               2,145            1,947                1,764           1,539
  Net interest income                            5,704            5,549                5,766           5,554
  Provision for loan losses                        150               70                   50             140
  Non-interest income                            1,845              323                1,698           2,640
  Non-interest expense                           4,915            4,743                4,614           4,832
  Income before income taxes                     2,484            1,059                2,800           3,222
  Provision for income taxes                       816              299                  898           1,023
                                             ---------       ----------            ---------       ---------
  Net income                                 $   1,668       $      760            $   1,902       $   2,199
                                             =========       ==========            =========       =========
  Basic earnings per share (1)               $    0.34       $     0.16            $    0.40       $    0.46
                                             =========       ==========            =========       =========
  Diluted earnings per share (1)             $    0.34       $     0.16            $    0.39       $    0.45
                                             =========       ==========            =========       =========
 (1)  Quarterly earnings per share varies from annual earnings per share due to rounding.

</TABLE>



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

Not Applicable

Item 9A. Controls and Procedures
--------------------------------

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

The Company does not expect that its disclosure controls and procedures and
internal control over financial reporting will prevent all error and all
fraud. A control procedure, no matter how well conceived and operated, can
provide only reasonable, not absolute, assurance that the objectives of the
control procedure are met. Because of the inherent

                                   101

<PAGE>



limitations in all control procedures, no evaluation of controls can provide
absolute assurance that all control issues and instances of fraud, if any,
within the Company have been detected. These inherent limitations include the
realities that judgments in decision-making can be faulty, and that breakdowns
can occur because of simple error or mistake. Additionally, controls can be
circumvented by the individual acts of some persons, by collusion of two or
more people, or by management override of the control. The design of any
control procedure also is based in part upon certain assumptions about the
likelihood of future events, and there can be no assurance that any design
will succeed in achieving its stated goals under all potential future
conditions; over time, controls may become inadequate because of changes in
conditions, or the degree of compliance with the policies or procedures may
deteriorate. Because of the inherent limitations in a cost-effective control
procedure, misstatements due to error or fraud may occur and not be detected.

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

    (c)   Management's Annual Report on Internal Control Over Financial
Reporting:  The Company's management is responsible for establishing and
maintaining adequate internal control over financial reporting (as defined in
Rule 13a-15(f) of the Act).  As required by Rule 13a-15(c) of the Act,
management has evaluated the effectiveness of the Company's internal control
over financial reporting.  Management's Annual Report on Internal Control Over
Financial Reporting appears in Item 9 of this Form 10-K.


                                     102

<PAGE>



RIVERVIEW BANCORP, INC

Sarbanes-Oxley 404
FY 04-05 Management's Report on Internal Controls over Financial Reporting

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

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

The management of Riverview Bancorp, Inc. has assessed the effectiveness of
the Company's internal control over financial reporting as of March 31, 2006.
To make the assessment, we used the criteria for effective internal control
over financial reporting described in Internal Control   Integrated Framework,
issued by the Committee of Sponsoring Organizations of the Treadway
Commission.  Based on our assessment, we believe that, as of March 31, 2006,
the Company's internal control over financial reporting met those criteria.
The Company's independent registered public accounting firm that audits the
Company's consolidated financial statements has issued an audit report on our
assessment of the Company's internal control over financial reporting.


                                      103

<PAGE>



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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

We have audited management's assessment, included in the accompanying
Management's Report on Internal Control Over Financial Reporting, that
Riverview Bancorp, Inc. & Subsidiary (the "Company") maintained effective
internal control over financial reporting as of March 31, 2006, based on
criteria established in Internal Control Integrated Framework issued by the
Committee of Sponsoring Organizations of the Treadway Commission. The
Company's management is responsible for maintaining effective internal control
over financial reporting and for its assessment of the effectiveness
of internal control over financial reporting. Our responsibility is to express
an opinion on management's assessment and an opinion on the effectiveness of
the Company's internal control over financial reporting based on our audit.

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

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

Because of the inherent limitations of internal control over financial
reporting, including the possibility of collusion or improper management
override of controls, material misstatements due to error or fraud may not be
prevented or detected on a timely basis. Also, projections of any evaluation
of the effectiveness of the internal control over financial reporting to
future periods are subject to the risk that the controls may become inadequate
because of changes in conditions, or that the degree of compliance with the
policies or procedures may deteriorate.

In our opinion, management's assessment that the Company maintained effective
internal control over financial reporting as of March 31, 2006, is fairly
stated, in all material respects, based on the criteria established in
Internal Control Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission. Also, in our opinion, the Company
maintained, in all material respects, effective internal control over
financial reporting as of March 31, 2006, based on the criteria established in
Internal Control Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission.

We have also audited, in accordance with the standards of the Public Company
Accounting Oversight Board (United States), the consolidated financial
statements as of and for the year ended March 31, 2006, of the Company and our
report dated June 13, 2006, expressed an unqualified opinion on those
financial statements.

/s/Deloitte & Touche LLP

Portland, Oregon
June 13, 2006

                                      104

<PAGE>



Item 9B. Other Information
--------------------------

There was no information to be disclosed by the Company in a report on Form
8-K during the fourth quarter of fiscal 2006 that was not so disclosed.

                                    105

<PAGE>




                                 PART III

Item 10.  Directors and Executive Officers of the Registrant
------------------------------------------------------------

The information contained under the section captioned "Proposal I - Election
of Directors" contained in the Company's Proxy Statement for the 2006 Annual
Meeting of Stockholders, and "Part I -- Business -- Personnel -- Executive
Officers" of this Form 10-K, is incorporated herein by reference.  Reference
is made to the cover page of this Form 10-K for information regarding
compliance with Section 16(a) of the Exchange Act.

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

Item 11.  Executive Compensation
--------------------------------

The information contained under the sections captioned "Executive
Compensation" and "Directors' Compensation"  under "Proposal I - Election of
Directors" in the Proxy Statement for the 2006 Annual Meeting of Stockholders
is incorporated herein by reference.

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

The information required by this item is incorporated herein by reference to
the sections captioned  "Security Ownership of Certain Beneficial Owners and
Management" and "Executive Compensation" in the Proxy Statement for the 2006
Annual Meeting of Stockholders.

Equity Compensation Plan Information.  The following table summarizes share
and exercise price information about the Company's equity compensation plan as
of March 31, 2006.


                                                          Number of securities
                                                          remaining available
                                                          for future issuance
                             Number of                      under equity com-
                            securities        Weighted-       pensation plans
                          to be issued    average price  excluding securities
                       upon exercise of  of outstanding   reflected in column
 Plan category      outstanding options         options  (A)

Equity compensation
 plans approved by
 security holders:              (A)              (B)              (C)
2003 Stock Option Plan        157,000          $25.95            72,277
1998 Stock Option Plan        227,495           14.36            14,481
Equity compensation
 plans not approved
 by security holders:               -               -                 -
                              -------                           -------
Total                         381,495                            86,758
                              =======                           =======

Item 13.  Certain Relationships and Related Transactions
--------------------------------------------------------

The information set forth under the section captioned "Proposal I - Election
of Directors - Transactions with Management" in the Proxy Statement for the
2006 Annual Meeting of Stockholders is incorporated herein by reference.

                                     106

<PAGE>



Item  14.  Principal Accounting Fees and Services
-------------------------------------------------

This information set forth under the section captioned "Independent Auditors"
in the Proxy statement for the 2006 Annual Meeting of Stockholders is
incorporated herein by reference.

                                      107

<PAGE>



                              PART IV

Item 15.  Exhibits, Financial Statement Schedules
-------------------------------------------------

       (a) 1.   Financial Statements
                See "Part II  Item 8. Financial Statements and Supplementary
                Data."

           2.   Financial Statement Schedules
                All schedules are omitted because they are not required or
                applicable, or the required information is shown in the
                consolidated financial statements or the notes thereto.

           3.   Exhibits
                3.1      Articles of Incorporation of the Registrant (1)
                3.2      Bylaws of the Registrant (2)
                4        Form of Certificate of Common Stock of the Registrant
                        (1)
               10.1      Employment Agreement with Patrick Sheaffer (3)
               10.2      Employment Agreement with Ronald A. Wysaske (3)
               10.3      Severance Agreement with Karen Nelson (3)
               10.4      Severance Agreement with John A. Karas (4)
               10.5      Employee Severance Compensation Plan (3)
               10.6      Employee Stock Ownership Plan (5)
               10.7      Management Recognition and Development Plan (6)
               10.8      1998 Stock Option Plan (6)
               10.9      1993 Stock Option and Incentive Plan (6)
               10.10     2003 Stock Option Plan (7)
               10.11     Form of Incentive Stock Option Award Pursuant to 2003
                         Stock Option Plan (8)
               10.12     Form of Non-qualified Stock Option Award Pursuant to
                         2003 Stock Option Plan (8)
               21        Subsidiaries of Registrant
               23        Consent of Independent Registered Public Accounting
                         Firm
               23.1      Consent of Independent Registered Public Accounting
                         Firm
               31.1      Certification of Chief Executive Officer Pursuant to
                           Section 302 of the Sarbanes-Oxley Act
               31.2      Certification of Chief Financial Officer Pursuant to
                           Section 302 of the Sarbanes-Oxley Act
               32        Certification Pursuant to Section 906 of the
                           Sarbanes-Oxley Act

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

                                       108
<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:  June 8, 2006
                                  By:  /s/ Patrick Sheaffer
                                       --------------------
                                       Patrick Sheaffer
                                       Chairman of the Board and
                                       Chief Executive Officer
                                      (Duly Authorized Representative)

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

By: /s/ Patrick Sheaffer          By:  /s/ Ronald A. Wysaske
    --------------------               ---------------------
    Patrick Sheaffer                   Ronald A. Wysaske
    Chairman of the Board and          President and Chief Operating Officer
    Chief Executive Officer            Director
   (Principal Executive Officer)


Date:  June 8, 2006              Date:  June 8, 2006



By: /s/ Ron Dobyns               By:  /s/ Paul L. Runyan
    --------------                    ------------------
    Ron Dobyns                        Paul L. Runyan
    Senior Vice President and         Director
    Chief Financial Officer
   (Principal Financial and
    Accounting Officer)

Date:  June 8, 2006              Date:  June 8, 2006

By: /s/ Robert K. Leick          By: /s/ Gary R. Douglass
    -------------------              --------------------
    Robert K. Leick                  Gary R. Douglass
    Director                         Director

Date:  June 8, 2006              Date:  June 8, 2006

By: /s/ Edward R. Geiger         By: /s/ Michael D. Allen
    --------------------             --------------------
    Edward R. Geiger                 Michael D. Allen
    Director                         Vice Chairman of the Board and
                                     Director

Date:  June 8, 2006              Date:  June 8, 2006

                                     109


<PAGE>



                                Exhibit 21

                       Subsidiaries of the Registrant

Parent
------

Riverview Bancorp, Inc.

Subsidiaries (a)                    Percentage       State of Incorporation
----------------                      Owned          ----------------------
                                      -----

Riverview Community Bank              100%                  Federal

Riverview Services, Inc. (b)          100%                 Washington

Riverview Asset Management Corp. (b)   85%                 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.

(b)   This corporation is a subsidiary of Riverview Community Bank.


                                       110

<PAGE>



                                   Exhibit 23

            Consent of Independent Registered Public Accounting Firm

                                       111

<PAGE>


                                                            Exhibit 23

Consent of Independent Registered Public Accounting Firm

We consent to the incorporation by reference in Registration Statement Nos.
333-66049, 333-38887 and 333-109894 on Form S-8 of our reports dated June 13,
2006, relating to the consolidated financial statements of Riverview Bancorp,
Inc. & Subsidiary and management's report on the effectiveness of internal
control over financial reporting, appearing in this Annual Report on Form 10-K
of Riverview Bancorp, Inc. For the year ended March 31, 2006.

/s/Deloitte & Touche LLP

June 13, 2006


                                    112

<PAGE>



                                  Exhibit 23.1

          Consent of Independent Registered Public Accounting Firm

                                      113

<PAGE>



        Consent of Independent Registered Public Accounting Firm

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

/s/McGladrey & Pullen, LLP

McGladrey & Pullen, LLP
June 13, 2006

                                   114

<PAGE>





                                 Exhibit 31.1
                                 ------------
Certification Required
By Rules 13a-14 and 15d-14 under the Securities Exchange Act of 1934

I, Patrick Sheaffer, certify that:

    1.   I have reviewed this Annual Report on Form 10-K of Riverview Bancorp,
         Inc.;

    2.   Based on my knowledge, this report does not contain any untrue
         statement of a material fact or omit to state a material fact
         necessary to make the statements made, in light of the circumstances
         under which such statements were made, not misleading with respect to
         the period covered by this report;

    3.   Based on my knowledge, the financial statements, and other financial
         information included in this report, fairly present in all material
         respects the financial condition, results of operations and cash
         flows of the registrant as of, and for, the periods presented in this
         report;

    4.   The registrant's other certifying officers and I are responsible for
         establishing and maintaining disclosure controls and procedures (as
         defined in Exchange Act Rules 13a-15(e) 4 and 15d-15(e) 4) and
         internal control over financial reporting (as defined in Exchange Act
         Rules 13a-15(f) and 15d-15(f)) for the registrant and we have:

         a)     designed such disclosure controls and procedures, or caused
                such disclosure controls and procedures to be designed under
                our supervision, to ensure that material information relating
                to the registrant, including its consolidated subsidiaries, is
                made known to us by others within those entities, particularly
                during the period in which this annual report is being
                prepared;

         b)     designed such internal control over financial reporting, or
                caused such internal control over financial reporting to be
                designed under our supervision, to provide reasonable
                assurance regarding the reliability of financial reporting and
                the preparation of financial statements for external purposes
                in accordance with generally accepted accounting principles;

         c)     evaluated the effectiveness of the registrant's disclosure
                controls and procedures and presented in this report our
                conclusions about the effectiveness of the disclosure controls
                and procedures, as of the end of the period covered by this
                report based on such evaluation;

         d)     disclosed in this report any change in the registrant's
                internal control over financial reporting that occurred during
                the registrant's most recent fiscal quarter (the registrant's
                fiscal fourth quarter in the case of an annual report) that
                has materially affected, or is reasonably likely to materially
                affect, the registrant's internal control over financial
                reporting; and

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

         a)     all significant deficiencies and material weakness in the
                design or operation of internal control over financial
                reporting which are reasonably likely to adversely affect the
                registrant's ability to record, process, summarize and report
                financial data information; and

         b)     any fraud, whether or not material, that involves management
                or other employees who have a significant role in the
                registrant's internal control over financial reporting.

Date:  June 8, 2006           /S/ Patrick Sheaffer
                              --------------------
                              Patrick Sheaffer
                              Chairman and Chief Executive Officer

                                      115

<PAGE>



Exhibit 31.2
-------------
Certification Required
By Rules 13a-14 and 15d-14 under the Securities Exchange Act of 1934

I, Ron Dobyns, certify that:

    1.   I have reviewed this Annual Report on Form 10-K of Riverview Bancorp,
         Inc.;

    2.   Based on my knowledge, this report does not contain any untrue
         statement of a material fact or omit to state a material fact
         necessary to make the statements made, in light of the circumstances
         under which such statements were made, not misleading with respect to
         the period covered by this report;

    3.   Based on my knowledge, the financial statements, and other financial
         information included in this report, fairly present in all material
         respects the financial condition, results of operations and cash
         flows of the registrant as of, and for, the periods presented in this
         report;

    4.   The registrant's other certifying officers and I are responsible for
         establishing and maintaining disclosure controls and procedures (as
         defined in Exchange Act Rules 13a-15(e) 4 and 15d-15(e) 4) and
         internal control over financial reporting (as defined in Exchange Act
         Rules 13a-15(f) and 15d-15(f)) for the registrant and we have:

         a)     designed such disclosure controls and procedures, or caused
                such disclosure controls and procedures to be designed under
                our supervision, to ensure that material information relating
                to the registrant, including its consolidated subsidiaries, is
                made known to us by others within those entities, particularly
                during the period in which this annual report is being
                prepared;

         b)     designed such internal control over financial reporting, or
                caused such internal control over financial reporting to be
                designed under our supervision, to provide reasonable
                assurance regarding the reliability of financial reporting and
                the preparation of financial statements for external purposes
                in accordance with generally accepted accounting principles;

         c)     evaluated the effectiveness of the registrant's disclosure
                controls and procedures and presented in this report our
                conclusions about the effectiveness of the disclosure controls
                and procedures, as of the end of the period covered by this
                report based on such evaluation;

         d)     disclosed in this report any change in the registrant's
                internal control over financial reporting that occurred during
                the registrant's most recent fiscal quarter (the registrant's
                fiscal fourth quarter in the case of an annual report) that
                has materially affected, or is reasonably likely to materially
                affect, the registrant's internal control over financial
                reporting; and

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

         a)     all significant deficiencies and material weakness in the
                design or operation of internal control over financial
                reporting which are reasonably likely to adversely affect the
                registrant's ability to record, process, summarize and report
                financial data information; and

         b)     any fraud, whether or not material, that involves management
                or other employees who have a significant role in the
                registrant's internal control over financial reporting.

Date:  June 8, 2006           /S/ Ron Dobyns
                              ---------------
                              Ron Dobyns
                              Chief Financial Officer


                                      116

<PAGE>



                                 Exhibit 32

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

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

      1.   the report fully complies with the requirements of sections 13(a)
           and 15(d) of the Securities Exchange Act of 1934, as amended, and

      2.   the information contained in the report fairly presents, in all
           material respects, the company's financial condition and results of
           operations as of the dates and for the periods presented in the
           financial statements included in such report.

      /S/ Patrick Sheaffer                /S/ Ron Dobyns
      --------------------                --------------
      Patrick Sheaffer                    Ron Dobyns
      Chief Executive Officer             Chief Financial Officer


      Dated: June 8, 2006

      This certification accompanies this periodic report pursuant to Section
      906 of the Sarbanes-Oxley Act of 2002 and shall not be deemed filed for
      purposes of Section 18 of the Securities Exchange Act of 1934, as
      amended.


                                       117

<PAGE>