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 four policies that, as a result of 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 impairment of goodwill, the valuation of mortgage servicing rights and the impairment of investments. These policies and the judgments, estimates and assumptions are described in greater detail in subsequent sections of Management's Discussion and Analysis and in the notes to the Consolidated Financial Statements included in the Company's Annual Report on Form 10-K for the year ended March 31, 2005. 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.

The Company's methodology for estimating the fair value of MSRs 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 fair value of MSRs is limited by the existing conditions and assumptions made as of the date of analysis. 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 were paid off earlier than anticipated. Moreover, because 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. MSRs are the discounted present value of the future net cash flows projected from the servicing portfolio. Accordingly, prepayment risk subjects the Company's MSRs to impairment. Impairment of MSRs is recorded in the amount that the estimated fair value is less than the carrying value of the MSRs on a strata by strata basis.

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 an impairment is other-than-temporary is that an impairment shall be deemed other-than-temporary unless positive evidence indicating that the 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: (1) the length of time and the extent to which the fair value has been less than amortized cost; (2) the financial

condition and near-term prospects of the issuer; and (3) the Company's intent and ability to retain the investment for a period of time. In situations in which the security's fair value is below amortized cost but it continues to be probable that all contractual terms of the security will be satisfied, and that the decline is due solely 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.

General

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 along with Multnomah 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 these funds in its primary market area to originate mortgage loans secured by commercial real estate, one- to four- family residential real estate, multi-family, commercial construction, and non-mortgage loans providing financing for business commercial ("commercial") and consumer purposes. Commercial real estate loans (including commercial real estate construction loans) and commercial loans have grown from 18.70% and 7.64% of the loan portfolio, respectively, at March 31, 2001 to 62.5% and 11.8%, respectively, at September 30, 2005. Significant increase in loans came from the April 2005 APB acquisition. The Company continues to change the composition of its loan portfolio and the deposit base as part of its transition to commercial banking. The Company's strategic plan includes targeting the commercial banking customer base in its primary market area, specifically small and medium size businesses, professionals and wealth building individuals. In pursuit of these goals, the Company emphasizes controlled growth and the diversification of its loan portfolio to include a higher portion of commercial and commercial real estate loans. A related goal is to increase the proportion of personal and business checking account deposits used to fund these new loans. Significant portions of these new loan products carry adjustable rates, higher yields or shorter terms and higher credit risk than traditional fixed-rate mortgages. The strategic plan stresses increased emphasis on non-interest income, including asset management fees and deposit service charges. The strategic plan is designed to enhance earnings, reduce interest rate risk and provide a more complete range of financial services to customers and the local communities the Company serves. The Company is well positioned to attract new customers and to increase its market share given that the administrative headquarters and nine of its 16 branches are located in Clark County, the fastest growing county in the State of Washington according to the U.S. Census Bureau. The Company's acquisition of APB positions it for growth in the vibrant Portland, Oregon market as well.

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

With its home office and six branches in Vancouver, Washington and branch offices in Camas, Washougal, Stevenson, White Salmon, Battle Ground, Goldendale and Longview, the Company continues to provide local, personal service to its customers in Southwest Washington. The acquisition of APB in April 2005 resulted in three offices in Oregon, two in the Portland metropolitan area and one in Aumsville. The market area for lending and deposit taking activities encompasses Clark, Cowlitz, Skamania and Klickitat Counties throughout the Columbia River Gorge area of Washington, and Multnomah and Marion Counties in Oregon.

The Company operates a trust and financial services company, RAM Corp., located in downtown Vancouver. Riverview Mortgage, a mortgage broker division of the Company, originates mortgage (including construction) loans for various mortgage companies in the Portland metropolitan area, as well as for the Company. Commercial and business banking services are offered by the Business and Professional Banking Division located at both the downtown Vancouver and Portland branches.

Vancouver, located in Clark County, is north of Portland, Oregon. Several large employers including Sharp Microelectronics, Hewlett Packard, Georgia Pacific, Underwriters Laboratory and Wafer Tech are located in Northern

Oregon and Southwestern Washington. Major employers in Portland include Intel Corp., Providence Health System, Fred Meyer, Legacy Health System and Kaiser Permanente. In addition to the expanding industry base, the Columbia River Gorge is a popular tourist destination, generating revenue for all the communities within the area. As a result, the area's economy has become less dependent on the timber industry.

Comparison of Financial Condition at September 30, 2005 and March 31, 2005

At September 30, 2005, the Company had total assets of $739.0 million, compared with $572.6 million at March 31, 2005. The $166,438 increase in total assets was primarily attributable to the $128 million in assets acquired in the APB transaction. The balance of the increase was due to organic growth in the loan portfolio and to goodwill recorded in the APB acquisition.

Cash, including interest-earning accounts, totaled $56.5 million at September 30, 2005, compared to $61.7 million at March 31, 2005. The decrease reflects the cash used net of cash acquired in the April 2005 acquisition of APBAmerican Pacific Bank of $14.7 million.

No loans were held for sale at September 30, 2005, compared to $510,000 at March 31, 2005. The balance of loans held for sale can vary significantly from period to period reflecting the interest rate environment, loan demand by borrowers, and loan origination for sale by mortgage brokers versus loan origination for the Company's loan portfolio. The Company originates fixed-rate residential loans for sale in the secondary market and retains the related loan servicing rights. Selling fixed interest rate mortgage loans allows the Company to reduce the interest rate risk associated with long term, fixed interest rate products. The sale of loans also makes additional funds available to make new loans and diversify the loan portfolio. The Company continues to service the loans it sells, maintaining the customer relationship and generating ongoing non-interest income.

Loans receivable, net, totaled $579.4 million at September 30, 2005, compared to $429.4 million at March 31, 2005, an increase of $150.0 million. This increase was largely attributable to the acquisition of $119.5 million in loans in the APB transaction. Commercial real estate loans increased $90.1 million, which was primarily attributable to APB loans. A substantial portion of the loan portfolio is secured by real estate, either as primary or secondary collateral, located in the Company's primary market areas.

Investment securities available-for-sale totaled $24.1 million at September 30, 2005, compared to $22.9 million at March 31, 2005. Investments securities of $1.4 million were acquired as a result of the APB acquisition, which contributed to the increase.

Mortgage-backed securities available-for-sale totaled $9.9 million at September 30, 2005, compared to $11.6 million at March 31, 2005. The decrease is attributable to pay downs.

Prepaid expenses and other assets were $1.8 million at September 30, 2005, compared to $1.5 million at March 31, 2005. The $286,000 increase is primarily a result of two-year non-compete agreements entered into with executives of APB.

FHLB stock totaled $7.4 million at September 30, 2005, compared to $6.1 million at March 31, 2005. This reflects an increase of $1.3 million as a result of the APB acquisition.

Premises and equipment, net totaled $11.9 million at September 30, 2005 compared to $8.4 million at March 31, 2005. The increase includes fixed assets of $1.1 million that were acquired from APB and construction costs for the Bank's new operations center and a branch office. Construction in progress at September 30, 2005 was $2.7 million which primarily represents the costs of constructing the new operations center and the new 192nd Avenue branch in Vancouver, Washington that are scheduled to be completed in the third quarter of fiscal year 2006.

Goodwill increased $17.2 million to $26.4 million at September 30, 2005 from $9.2 million at March 31, 2005 as a result of the APB acquisition. As of September 30, 2005, there have been no events or changes in circumstances that would indicate a potential impairment.

Core deposit intangible increased $526,000 as result of the APB acquisition, which was offset by the amortization of $104,000, for a balance of $1.0 million at September 30, 2005.

Bank owned life insurance increased to $12.8 million at September 30, 2005, from $12.6 million at March 31, 2005, reflecting an increase in the cash surrender value of the policies.

Deposits totaled $599.7 million at September 30, 2005, compared to $456.9 million at March 31, 2005. The increase is attributed to a combination of $79.7 million in deposits acquired in the APB transaction, and organic growth. The average outstanding balance of checking accounts and money market accounts ("transaction accounts") increased to $384.3 million

for quarter ended September 30, 2005, compared to $289.1 million for the quarter ended March 31, 2005. Transaction accounts represented 66.1% and 66.9% of average total outstanding balance of deposits for the quarters ended September 30, 2005 and March 31, 2005, respectively. The average outstanding balance of certificates of deposit increased $53.7 million to $196.8 million, compared to $143.1 million for the quarter ended March 31, 2005. All categories of deposits reflect increases as a result of the APB acquisition.

FHLB advances totaled $40.9 million at September 30, 2005 and $40.0 million at March 31, 2005. The $936,000 increase was the net effect of $29.9 million in advances acquired in the APB transaction, which was offset by repayments of $29.0 million.

Shareholders' Equity and Capital Resources

Shareholders' equity increased $19.6 million to $89.1 million at September 30, 2005 from $69.5 million at March 31, 2005. The increase was primarily a result of the $16.7 million of common stock issued in the APB acquisition. An increase in equity of $4.4 million due to earnings for the six months was partially offset by cash dividends paid to shareholders of $1.9 million. Exercise of stock options, earned ESOP shares and the tax effect of SFAS No. 115 adjustment to securities comprised the remaining $424,000 increase

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 in accordance with 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 capital to risk-weighted assets, Tier I capital to risk-weighted assets, 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 September 30, 2005.

As of September 30, 2005, the most recent notification from the OTS categorized the Bank as "well capitalized" under the regulatory framework for prompt corrective action. To be categorized as "well capitalized," the Bank must maintain minimum total capital and Tier I capital to risk-weighted assets, core capital to total assets and tangible capital to tangible assets (set forth in the table below). There are no conditions or events since that notification that management believes have changed the Bank'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
                              ------  -----   ------   -----    ------    -----
September 30, 2005
Total Capital:
(To Risk-Weighted Assets)    $66,600  10.52% $50,608     8.0%  $63,310    10.0%
Tier I Capital:
(To Risk-Weighted Assets)     59,848   9.45   25,324     4.0    37,986     6.0

                                                           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

           Equity                              $  87,300
           Net unrealized securities loss            101
           Goodwill and other intangibles        (27,512)
           Servicing asset                           (41)
                                                --------
                Tangible capital                  59,848
           General valuation allowance             6,752
                                                --------
                Total capital                  $  66,600
                                                ========
Liquidity

The Bank's primary sources of funds are customer deposits, proceeds from principal and interest payments on loans, proceeds from 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 Bank 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 take advantage of investment opportunities. The Bank generally maintains sufficient cash and short-term investments to meet short-term liquidity needs. At September 30, 2005, cash totaled $56.5 million, or 7.6%, of total assets. The Bank has a line of credit with the FHLB of Seattle in the amount of 30% of total assets to the extent the Bank provides qualifying collateral and holds sufficient FHLB stock. At September 30, 2005, the Bank had $40.9 million in outstanding advances from the FHLB of Seattle under an available credit facility of $220.3 million, limited to available collateral. The Bank also had a $10.0 million line of credit available from Pacific Coast Bankers Bank and a $5.0 million borrowing capability at the Federal Reserve discount window at September 30, 2005. The Bank had no borrowings outstanding under either of these credit arrangements at September 30, 2005.

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

Off-Balance Sheet Arrangements and Other Contractual Obligations

Through the normal course of operations, the Company enters into certain contractual obligations and other commitments. Obligations generally relate to funding of operations through deposits and borrowings as well as leases for premises. Commitments generally relate to lending operations.

The Company has obligations under long-term operating leases, principally for building space and land. Lease terms generally cover a five-year period, with options to extend, and are not subject to cancellation.

The Company has commitments to originate fixed and variable rate mortgage loans to customers. Because some commitments expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. Undisbursed loan funds and unused lines of credit include funds not disbursed, but committed to construction projects and home equity and commercial lines of credit. Standby letters of credit are conditional commitments issued by the Company to guarantee the performance of a customer to a third party.

For further information regarding the Company's off-balance sheet arrangements and other contractual obligations, see Note 15 of the Notes to Consolidated Financial Statements contained herein.

Asset Quality

The allowance for loan losses was $6.8 million at September 30, 2005 and $4.4 million at March 31, 2005. Management believes the allowance for loan losses at September 30, 2005 is adequate to cover probable credit losses existing in the loan portfolio at that date. No assurances, however, can be given that future additions to the allowance for loan losses will not be necessary. The allowance for loan losses is maintained at a level sufficient to provide for estimated loan losses based on evaluating known and inherent risks in the loan portfolio. Pertinent factors considered include size and composition of the portfolio, actual loss experience, industry trends and data, current economic conditions, and detailed analysis of individual loans. The appropriate allowance level is estimated based upon factors and trends identified by management at the time the consolidated financial statements are prepared. Commercial loans are considered to involve a higher degree of credit risk than one to four-family residential loans, and tend to be more vulnerable to adverse conditions in the real estate market and deteriorating economic conditions.

Non-performing assets were $1.0 million, or 0.14% of total assets at September 30, 2005, compared with $726,000 or 0.13% of total assets at March 31, 2005. The $871,000 balance of non-accrual loans is composed of three commercial real estate loans, one consumer loans, and four commercial loans. The following table sets forth information regarding the Company's non-performing assets.

                                                September 30,       March 31,
                                                   2005               2005
                                                  ------             ------
                                                   (Dollars in thousands)
Loans accounted for on a nonaccrual basis:
  Commercial real estate                         $   631            $   198
  Commercial                                         226                 97
  Consumer                                            14                161
                                                   -----              -----
     Total                                           871                456
                                                   -----              -----
  Accruing loans which are contractually
    past due 90 days or more                         172                  -
                                                   -----              -----
  Total of nonaccrual and 90 days past due loans   1,043                456
                                                   -----              -----
  Real estate owned (net)                              -                270
                                                   -----              -----
     Total non-performing assets                 $ 1,043            $   726
                                                   =====              =====
  Total loans delinquent 90 days or more
    to net loans                                    0.18%              0.10%
  Total loans delinquent 90 days or more
    to total assets                                 0.14               0.08

     Total non-performing assets to total assets    0.14               0.13

Comparison of Operating Results for the Three Months Ended September 30, 2005 and 2004

Financial Highlights. Net income for the three months ended September 30, 2005 was $2.6 million, or $0.45 per basic share ($0.45 per diluted share), compared to net income of $1.9 million, or $0.40 per basic share ($0.39 per diluted share) for the three months ended September 30, 2004. Net interest income after provision for loan losses increased $1.9 million compared to the same quarter last year. Non-interest income increased in the categories of fees and service charges, asset management fees, gain on sale of credit card portfolio and other. The current quarter included an $304,000 pre-tax gain on the sale of the $2.6 million dollar credit card portfolio acquired in the APB acquisition. The Company's operating results also reflect a $1.6 million increase in other non-interest expenses, which are primarily attributable to the APB acquisition. Excluding the $304,000 pre-tax gain on the sale of the credit card portfolio, net income for the three months ended September 30, 2004 was $2.4 million, or $0.42 per basic share and $0.41 million per diluted share.

The annualized return on average assets was 1.40% for the three months ended September 30, 2005, compared to 1.45% for the three months ended September 30, 2004. For the same periods, the annualized return on average common equity was 11.36% compared to 11.14%. The efficiency ratio (excluding intangible asset amortization), which is defined as the percentage of non-interest expenses to total revenue, was 58.28% for the second quarter of fiscal 2006 as compared to 60.81% for the three months ended September 30, 2004.

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 on sales of 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.

Net interest income for the three months ended September 30, 2005 was $8.1 million, representing a $2.3 million, or 40.4% increase, compared to the same prior year period. Average interest earning assets increased 38.6% as a result of organic growth and in connection with the APB acquisition. The increase in interest-earning assets was accompanied by a 41.5% increase in average balances of interest-bearing liabilities to $538.5 million for the three months ended September 30, 2005 from $380.5 million for the comparable period in 2004. Growth in interest bearing deposits came from natural growth and deposits acquired from APB. Average interest-earning assets to average interest-bearing liabilities totaled 121.3% for the three-month period ended September 30, 2005 compared to 123.8% in the same prior year period.

Interest Income. Interest income increased $4.1 million, or 54%, to $11.6 million for the three months ended September 30, 2005 compared to $7.5 million, for the three months ended September 30, 2004. The close of the APB acquisition in April 2005 resulted in an increase of $121.0 million in interest-earning assets (see Note 3 of the Notes to Consolidated Financial Statements). The yield on interest-earning assets was 7.08% for the three months ended September 30, 2005 compared to 6.38% for the same three months ended September 30, 2004. During the past year, the Federal Reserve Board has increased federal funds interest rates eight times, resulting in improved yields on both loans and investments.

Riverview did not receive a dividend on FHLB of Seattle stock during the quarter ended September 30, 2005 compared to dividends of $41,200 during the same quarter a year ago. The FHLB of Seattle has been operating under a regulatory directive since May 2005 and has announced that all future dividends will be suspended until its financial position and performance improves.

Interest Expense. Interest expense increased to $3.5 million for the three months ended September 30, 2005, compared to $1.8 million for the same period in 2004. Average interest-bearing liabilities increased $157.9 million to $538.5 million for the three months ended September 30, 2005 compared to $380.5 million for the same prior year period. This increase includes the effect of $72.3 million in interest bearing deposits acquired from APB. The change in interest expense reflects the higher rates of interest paid on deposits and FHLB borrowings attributable to Federal Reserve Board federal funds rate increases during the last year. The weighted average interest rate on total deposits increased to 2.46% for the three months ended September 30, 2005 from 1.47% for the same period in the prior year. The weighted average cost of FHLB borrowings decreased to 4.16% for the three months September 30, 2005 from 5.00% for same period in the prior year. Also attributable to the increase was an additional $29.9 million in FHLB borrowings that was acquired from APB.

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.

                                           Quarter Ended September 30,
                               ------------------------------------------------
                                         2005                     2004
                               -----------------------  -----------------------
                                       Interest                 Interest
                               Average    and    Yield/ Average    and   Yield/
                               Balance Dividends  Cost  Balance Dividends  Cost
                               ------- --------- ------ ------- --------- -----
                                             (Dollars in thousands)
Interest-earning assets:
  Mortgage loans              $479,397   $ 9,294 7.69% $298,205   $ 5,623 7.48%
  Non-mortgage loans           100,700     1,716 6.76    90,789     1,374 6.00
                               -------    ------ ----   -------     ----- ----
     Total net loans (1)       580,097    11,010 7.53   388,994     6,997 7.14

  Mortgage-backed securities(2) 12,668       138 4.32    16,347       164 3.98
  Investment securities (2)(3)  24,250       260 4.25    32,060       279 3.45
  Daily interest-bearing assets 29,034       248 3.39    27,795        95 1.36
  Other earning assets           7,350         -(4) -     6,078        41 2.68
     Total interest-earning    -------    ------ ----   -------     ----- ----
       assets                  653,399    11,656 7.08   471,274     7,576 6.38

Non-interest-earning assets:
  Office properties and
    equipment, net              10,029                    8,541
  Other non-interest-earning
  assets                        62,076                   40,079
                               -------                  -------
     Total assets             $725,504                 $519,894
                               =======                  =======
Interest-bearing liabilities:
  Regular savings accounts    $ 38,507        53 0.55% $ 31,665        44 0.55%
  NOW accounts                 131,771       505 1.52    97,043       189 0.77
  Money market accounts        125,407       824 2.61    73,550       189 1.02
  Certificates of deposit      196,782     1,677 3.38   138,281       838 2.40
                               -------     ----- ----   -------     ----- ----
     Total deposits            492,467     3,059 2.46   340,539     1,260 1.47

  Other interest-bearing
    liabilities                 46,003       482 4.16    40,000       504 5.00
     Total interest-bearing    -------     ----- ----   -------     ----- ----
    liabilities                538,470     3,541 2.61   380,539     1,764 1.84

Non-interest-bearing liabilities:
 Non-interest-bearing deposits  88,650                   65,166
Other liabilities                8,926                    6,428
                               -------                  -------
     Total liabilities         636,046                  452,133
  Shareholders' equity          89,458                   67,761
     Total liabilities and
       shareholders' equity   $725,504                $519,894
                               =======                 =======
Net interest income                      $ 8,115                  $ 5,812
                                           =====                    =====
Interest rate spread                             4.47%                    4.54%
                                                 ====                     ====
Net interest margin                              4.93%                    4.89%
                                                 ====                     ====
Ratio of average interest-earning
  assets to average interest-
  bearing liabilities                          121.34%                  123.84%
                                               ======                   ======
Tax equivalent adjustment (3)            $    22                  $    46
                                              ==                       ==

(1) Includes non-accrual loans.

(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 changes 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 statutory tax rate was 35% and 34% for the three months ended September 30, 2005 and 2004, respectively.

(4) The FHLB of Seattle has been operating under a regulatory directive since May 2005 and has announced that all future dividends will be suspended until its financial position and performance improves.

The following table sets forth the effects of changing rates and volumes on net interest income of the Company for the quarter ended September 30, 2005 compared to the quarter ended September 30, 2004. Variances that were immaterial have been allocated based upon the percentage relationship of changes in volume and changes in rate to the total net change.

                                               Three Months Ended September 30,
                                                        2005 vs. 2004
                                               Increase (Decrease)
                                                Due to                  Total
                                               ------------------     Increase
                                                Volume      Rate     (Decrease)
                                               --------    ------     --------
                                                       (In thousands)
Interest Income:
  Mortgage loans                               $  3,509   $   162     $  3,671
  Non-mortgage loans                                158       184          342
  Mortgage-backed securities                        (39)       13          (26)
Investment securities (1)                           (76)       57          (19)
Daily interest-bearing                                4       149          153
Other earning assets                                  7       (48)         (41)
                                                 ------    ------       ------
     Total interest income                        3,563       517        4,080
                                                 ------    ------       ------
Interest Expense:
Regular savings accounts                              9         -            9
NOW accounts                                         85       231          316
Money market accounts                               197       438          635
Certificates of deposit                             427       412          839
Other interest-bearing liabilities                   70       (92)         (22)
                                                 ------    ------       ------
     Total interest expense                         788       989        1,777
                                                 ------    ------       ------
     Net interest income (1)                   $  2,775   $  (472)    $  2,303
                                                 ======    ======       ======
 (1) Taxable equivalent

Provision for Loan Losses. The provision for loan losses for the three months ended September 30, 2005 was $450,000, compared to $50,000 for the same period in the prior year. Net charge-offs for the current period were $224,000, compared to $115,000 for the same period last year. The ratio of allowance for credit losses to total net loans was 1.22% at September 30, 2005, compared to 1.18% at September 30, 2004. Annualized net charge-offs to average net loans for the three-month period ended September 30, 2005 increased to 0.15% compared to 0.12% for the same period in the prior year. During the quarter ended September 30, 2005, management evaluated known and inherent risks in the loan portfolio and concluded there was increased credit risk in the commercial real estate loan, commercial construction, speculative construction, and multifamily loan portfolio. Based on the analysis, changes were made in the estimation, assumptions and allocation of the allowance for loan losses. The estimated loan loss rate for commercial real estate loans was increased by 0.062% to 0.875%, commercial construction loans was increased by 0.125% to 0.875%, speculative construction loans was increased by 0.25% to 0.75% and multifamily loans was increased by 0.375% to 0.875% to cover the probable losses inherent in the loan portfolio. Management considered the allowance for loan losses at September 30, 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 increased $784,000 or 46.2%, to $2.5 million for the quarter ended September 30, 2005 compared to $1.7 million for the quarter ended September 30, 2004. The current quarter included a $304,000 pre-tax gain on the sale of the $2.6 million dollar credit card portfolio acquired from APB. The gain was the result of selling $2.6 million of credit card loans to US Bank National Association, ND doing business as Elan Financial Services ("Elan"). Elan has recourse on certain delinquent loans for one year from the date of the sale, August 16, 2005. In the quarter ended September 30, 2005, the Bank recorded an estimated recourse liability in the amount of $76,000 to recognize this recourse provision. As part of the sale, the Bank entered into an agency agreement with Elan, allowing customers to continue carrying Riverview Community Bank's branded cards with a broader array of product offerings. This agreement will also provide a continuing revenue stream tied to application volume through Riverview' branch system. The increase from the same period in prior year also reflects organic growth and the APB acquisition impact on deposit related fees and service charges. Asset management fees from fiduciary services increased by $85,000. Asset management services income was $342,000 for the quarter ended September 30, 2005, compared to $257,000 for the quarter ended September 30, 2004. RAM Corp. had $212.3 million in total assets under management at September 30, 2005, compared to $155.6 million at September 30, 2004.

In the current quarter a greater portion of the mortgage refinance activity was in brokered mortgage loans which resulted in gains on the sale of loans decreasing $60,000 for the quarter ended September 30, 2005 to $77,000 compared to $137,000 for the quarter ended September 30, 2004. Loan servicing income for the quarter ended September 30, 2005 includes a $1,000 write-up to the market value of mortgage servicing rights as compared to a $2,000 write-up in market value of mortgage servicing rights for the same prior year period. For the same periods, loan-servicing income also included amortization of mortgage servicing rights of $71,000 and $70,000, respectively.

Non-Interest Expense. Non-interest expense increased $1.6 million, or 35.7%, to $6.3 million for the three-month period ended September 30, 2005, compared to $4.6 million for the three months ended September 30, 2004. The increase in non-interest expense reflects the April 2005 acquisition of APB. One measure of a bank's ability to contain non-interest expense is the efficiency ratio, which is calculated by dividing total non-interest expense (less intangible asset amortization) by the sum of net interest income plus non-interest income (less intangible asset amortization and lower of cost or market adjustments). The Company's efficiency ratio excluding intangible asset amortization and lower cost or market adjustments was, 58.28% for the three months ended September 30, 2005, compared to 60.81% for the same period in the prior year. The Company's efficiency ratio (non-interest expense divided by net interest income plus non-interest income) was 59.19% for the three months ended September 30, 2005 as compared to 61.82% compared to the same period in the prior year. Excluding the gain on the of the credit card portfolio, the efficiency ratio for the three months ended September 30, 2005 was 60.95%.

The principal component of the Company's non-interest expense is salaries and employee benefits. For the three months ended September 30, 2005, salaries and employee benefits, which include mortgage broker commission compensation, was $3.4 million, a 33.0% increase over $2.6 million for the three months ended September 30, 2004. The majority of the increase is a result of the acquisition of APB, which added several commercial lenders and branch personnel. This acquisition also contributed to increases in occupancy and depreciation, data processing, telecommunication and other expense.

The amortization expense of core deposits ("CDI") was $55,000 for the three months ended September 30, 2005 compared to $34,000 for the prior year period. The acquisition of APB and its $79.7 million in deposits created a $526,000 core deposit intangible CDI, representing the excess of cost over fair market value of acquired deposits. The acquisition of Today's Bank in July 2003 created CDI of $820,000. CDI is amortized over a ten-year life using an accelerated amortization method.

Other non-interest expense for the three months ended September 30, 2005 was $551,000, a 20.0% increase over the $459,000 for the three months ended September 30, 2004. The majority of the increase over the prior period was attributable to the APB, including amortization expense related to non-compete agreements of $70,000. Increases in printing costs, office supplies, demand account supplies, postage and courier and bank service charges were also attributable to the acquisition.

Provision for Income Taxes. Provision for income taxes was $1.3 million for the three months ended September 30, 2005, compared to $898,000 for the three months ended September 30, 2004. The effective tax rate for three months ended June 30, 2005 was 33.7% compared to 32.1% for the three months ended September 30, 2004. The effective tax rate increased from the prior quarter primarily as a result of state income taxes related to Oregon operations. The Bank has three branches in Oregon as a result of acquiring APB. The Company's overall effective tax rate at September 30, 2005 takes into account Oregon apportionment factors for property, payroll and sales.

Comparison of Operating Results for the Six Months Ended September 30, 2005 and 2004

Financial Highlights. Net income for the six months ended September 30, 2005 was $4.4 million, or $0.79 per basic share ($0.78 per diluted share), compared to net income of $4.1 million, or $0.85 per basic share ($0.84 per diluted share) for the six months ended September 30, 2004. The Company's improved operating results reflect growth in average interest earning-assets and interest-bearing liabilities, combined with a $304,000 gain on the sale of the bank card loan portfolio acquired from APB.

The annualized return on average assets was 1.25% for the six months ended September 30, 2005, compared to 1.59% for the six months ended September 30, 2004. For the same periods, the annualized return on average common equity was 10.19% compared to 12.21%. The Company's efficiency ratio (non-interest expense divided by net interest income plus non-interest income) was 62.21% for the six months ended September 30, 2005 as compared to 60.33% compared to the same period in the prior year. In addition, the efficiency ratio (excluding intangible asset amortization and lower cost or market adjustments) for the six months ended September 30, 2005 was 61.32% compared to 59.10% for the six months ended September 30, 2004.

Net Interest Income. Net interest income for the six months ended September 30, 2005 was $15.2 million, representing a $3.9 million, or a 34.2% increase, compared to $11.3 million for the same prior year period. This improvement reflected a 35.8% increase in the average balance of interest-earning assets (primarily increases in the average balance of commercial loans and daily interest-bearing assets, partially offset by a decrease in the average balance of residential mortgage loans and mortgage-backed securities) to $631.31 million. The increase in interest-earning assets was offset by a 38.1% increase in average balance of interest-bearing liabilities (an increase in all deposit categories) to $522.1 million. The ratio of average interest-earning assets to average interest-bearing liabilities decreased to 120.91% in the six-month period ended September 30, 2005 from 122.95% in the same prior year period. The ratio 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 totaled $21.9 million and $14.6 million, for the six months ended September 30, 2005 and 2004, respectively. The increased interest income of $7.3 million reflects the 35.8% increase in interest earning assets for the current six month period compared to the same period in the prior year, which is attributable to organic growth and the APB acquisition. The yield on interest-earning assets was 6.92% for the six months ended September 30, 2005 compared to 6.31% for the six months ended September 30, 2004. The increased yield in all loan categories reflects the mixture of interest rate changes during this period in the prime rate and other indexes used to price loans.

Interest Expense. Interest expense was $6.7 million for the six months ended September 30, 2005 an increase of 102% from $3.3 million for the same period in the prior year. Average interest-bearing liabilities increased $144.0 million to $522.1million for the six months ended September 30, 2005 from $378.1 million for the same prior year period. The change in interest expense reflects the higher rates of interest paid on deposits and FHLB borrowings and the increased balance of interest-bearing liabilities when comparing average balances at September 30, 2005 and September 30, 2004. The weighted average interest rate on total deposits increased to 2.34% for the six months ended September 30, 2005 from 1.36% for the same period in the prior year. The weighted average interest rate of FHLB borrowings decreased to 4.41% for the six months ended September 30, 2005 from 4.92% for same period in the prior year. The level of liquidity in the first six months of fiscal year 2005 allowed the runoff of high interest rate deposits acquired in the acquisition of Today's Bancorp and APB and allowed the pay down of FHLB borrowings.

                                         Six Months Ended September 30,
                               ------------------------------------------------
                                         2005                     2004
                               -----------------------  -----------------------
                                       Interest                 Interest
                               Average    and    Yield/ Average    and   Yield/
                               Balance Dividends  Cost  Balance Dividends  Cost
                               ------- --------- ------ ------- --------- -----
                                             (Dollars in thousands)
Interest-earning assets:
  Mortgage loans              $457,198  $ 17,303  7.55%$299,388  $ 10,967 7.31%
  Non-mortgage loans            99,490     3,304  6.62   89,970     2,656 5.89
                               -------   ------- ------ -------   ------- -----
     Total net loans (1)       556,688    20,607  7.38  389,358    13,623 6.98

  Mortgage-backed securities(2) 13,146       283  4.29   16,266       324 3.97
  Investment securities(2)(3)   24,068       550  4.56   32,398       557 3.43
  Daily interest-bearing assets 30,200       475  3.14   20,783       126 1.21
  Other earning assets           7,205         -(4)  -    6,056        85 2.80
     Total interest-earning    -------   ------- ------ -------   ------- -----
       assets                  631,307    21,915  6.92  464,861    14,715 6.31

Non-interest-earning assets:
  Office properties and
    equipment, net               9,364                    9,093
  Other non-interest-earning
    assets                      58,309                   39,933
                               -------                  -------
     Total assets             $698,980                 $513,887
                               =======                  =======
Interest-bearing liabilities:
  Regular savings accounts    $ 38,112       105  0.55% $30,771        85 0.55%
  NOW accounts                 128,090       907  1.41  101,065       386 0.76
  Money market accounts        113,339     1,371  2.41   71,294       353 0.99
  Certificates of deposit      191,076     3,147  3.28  134,404     1,479 2.19
                               -------   ------- ------ -------   ------- -----
     Total deposits            470,617     5,530  2.34  337,534     2,303 1.36

  Other interest-bearing
    liabilities                 51,497     1,138  4.41   40,547     1,000 4.92
     Total interest-bearing    -------   ------- ------ -------   ------- -----
       liabilities             522,114     6,668  2.55  378,081     3,303 1.74

Non-interest-bearing liabilities:
  Non-interest-bearing deposits 83,149                   62,924
  Other liabilities              7,904                    5,888
                               -------                  -------
     Total liabilities         613,167                  446,893
  Shareholders' equity          85,813                   66,994
     Total liabilities and     -------                  -------
       shareholders' equity   $698,980                 $513,887
                               =======                  =======
  Net interest income                    $15,247                  $11,412
                                          ======                   ======
  Interest rate spread                            4.37%                   4.57%
                                                  ====                    ====
  Net interest margin                             4.82%                   4.90%
  Ratio of average interest-earning               ====                    ====
    assets to average interest-bearing
    liabilities                                 120.91%                 122.95%
                                                ======                  ======
  Tax Equivalent Adjustment (3)          $    54                  $    91
                                          ======                   ======
(1) Includes non-accrual loans.

(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) Includes tax equivalent adjustment in interest income. The statutory tax rate was 35% and 34% for the three months ended September 30, 2005 and 2004, respectively.

(4) The FHLB of Seattle has been operating under a regulatory directive since May 2005 and has announced that all future dividends will be suspended until its financial position and performance improves.

The following table sets forth the effects of changing rates and volumes on net interest income of the Company for the six months ended September 30, 2005 compared to the six months ended September 30, 2004. Variances that were immaterial have been allocated based upon the percentage relationship of changes in volume and changes in rate to the total net change

                                                Six Months Ended September 30,
                                               -------------------------------
                                                        2005 vs. 2004
                                               -------------------------------
                                               Increase (Decrease)
                                                Due to                  Total
                                               ------------------     Increase
                                                Volume      Rate     (Decrease)
                                               --------    ------     --------
                                                       (In thousands)
Interest Income:
Mortgage loans                                 $  5,965   $   371     $  6,336
Non-mortgage loans                                  298       350          648
Mortgage-backed securities                          (66)       25          (41)
Investment securities (1)                          (164)      157           (7)
Daily interest-bearing                               77       272          349
Other earning assets                                 13       (98)         (85)
                                               --------    ------     --------
Total interest income                             6,123     1,077        7,200
                                               --------    ------     --------
Interest Expense:
Regular savings accounts                             20         -           20
NOW accounts                                        124       397          521
Money market accounts                               296       722        1,018
Certificates of deposit                             765       903        1,668
Other interest-bearing liabilities                  250      (112)         138
                                               --------    ------     --------
Total interest expense                            1,455     1,910        3,365
                                               --------    ------     --------
Net interest income (1)                        $  4,668   $  (833)    $  3,835
                                               ========    ======     ========
(1) Taxable equivalent

Provision for Loan Losses. The provision for loan losses for the six-month period ended September 30, 2005 was $900,000, compared to $190,000 for the same period in the prior year. Net charge-offs for the six months ended September 30, 2005 were $431,000, compared to $247,000 for the same period of last year. The ratio of allowance for credit losses to total net loans increased to 1.22% from 1.18% at September 30, 2004. The acquisition of APB in April 2005 added $1.9 million to the allowance for loan losses. Net charge-offs to average net loans for the six-month period ended September 30, 2005 increased to 0.16% from 0.13% for the same period in the prior year. During the six months ended September 30, 2005, management evaluated known and inherent risks in the loan portfolio. Based on the analysis, changes were made in the estimation, assumptions and allocation of the allowance for loan losses. The estimated loan loss rate for 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 0.25% to 0.75% and multi-family loans was increased by 0.375% to 0.875% to cover the probable losses inherent in the loan portfolio. Management considered the allowance for loan losses at September 30, 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 increased $331,000 or 7.6%, to $4.7 million for the six months ended September 30, 2005 from $4.3 million for the six months ended September 30, 2004. The increase reflected the impact of the APB acquisition, increased asset management fees, increased mortgage broker fee income and sale of the APB credit card portfolio. For the six months ended September 30, 2005, mortgage broker fee income, which is included in fees and service charges, increased $442,000 to $1.1 million compared to $658,000 for the same period in the prior year. The prior year non-interest income reflects the gain on the sale and leaseback of the Camas branch and operations center of $828,000 during the first fiscal quarter of 2005.

In the six month period ended September 30, 2005, a greater portion of the mortgage refinance activity was in brokered mortgage loans which resulted in gains on the sale of loans decreasing $109,000 to $203,000 compared to $312,000 for the six months ended September 30, 2004. Loan servicing income for the six months ended September 30, 2005 includes an $11,000 write-up to the market value of mortgage servicing rights as compared to an $18,000 write-up in market value of mortgage servicing rights for the same prior year period. For the same six month periods in 2005 and 2004, loan-servicing income also included amortization of mortgage servicing rights of $132,000 and $149,000, respectively

Asset management services income was $706,000 for the six months ended September 30, 2005, compared to $529,000 for the six months ended September 30, 2004. RAMCorp. had $212.3 million in total assets under management at September 30, 2005, compared to $155.6 million at September 30, 2004.

Non-Interest Expense. Non-interest expense increased $2.9 million, or 30.8%, to $12.4 million for the six month period ended September 30, 2005, compared to $9.4 million for the six months ended September 30, 2004. The primary reason for the increase was the April 22, 2005 acquisition of APB.

The principal component of the Company's non-interest expense is salaries and employee benefits. For the six months ended September 30, 2004, salaries and employee benefits, which include mortgage broker commission compensation, was $6.8 million, an increase of 30.7% from $5.2 million for the six months ended September 30, 2004. Full-time equivalent employees increased to 237 at September 30, 2005 from 193 at September 30, 2004 which is principally attributable to the APB acquisition. The APB acquisition also contributed to increases in occupancy, depreciation, data processing, telecommunication and other expense.

The amortization of CDI was $104,000 for the six months ended September 30, 2005 compared to $115,000 for the same period in the prior year. The April 2005 acquisition of APB and its $79.7 million in deposits created a $526,000 CDI, representing the excess of cost over fair market value of acquired deposits. The acquisition of Today's Bank in July 2003 created CDI of $820,000. CDI resulting from a 1995 acquisition was fully amortized during the three months ended June 30, 2004. CDI is amortized over a ten-year life using an accelerated amortization method.

Other non-interest expense was $1.2 million for the six months ended September 30, 2005, or a 30.7% increase over $936,000 for the six months ended September 30, 2004. The majority of the increase over the prior period resulted from the acquisition of APB, including amortization expense related to non-compete agreements of $117,000. Increases in printing costs, office supplies, demand account supplies, postage and courier and bank service charges were also attributable to the APB acquisition.

Provision for Federal Income Taxes. Provision for federal income taxes was $2.2 million for the six months ended September 30, 2005, compared to $1.9 million for the six months ended September 30, 2004 as a result of higher income before taxes. The effective tax rate for six months ended September 30, 2004 was 33.6% compared to 31.9% for the six months ended September 30, 2004. The Company's overall effective tax rate at September 30, 2005 takes into account Oregon apportionment factors for property, payroll and sales.