RVSB 10-K Fiscal year ended March 31, 2018

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, 2018 OR

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

Commission File Number: 000-22957

RIVERVIEW BANCORP, INC.

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(Exact name of registrant as specified in its charter)

Washington		91-1838969
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer I.D. Number)
900 Washington St., Ste. 900, Vancouver, Washington		98660
(Address of principal executive offices)		(Zip Code)
Registrant's telephone number, including area code:		(360) 693-6650
Securities registered pursuant to Section 12(b) of the Act:
Common Stock, Par Value $.01 per share		Nasdaq Stock Market LLC
(Title of Each Class)		(Name of Each Exchange on Which Registered)
Securities registered pursuant to Section 12(g) of the Act:		None

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 whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). 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, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definition of "large accelerated filer," "accelerated filer", "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer [   ] Accelerated filer   [X] Non-accelerated filer [   ]

Smaller reporting company [   ] Emerging growth company [   ]

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

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 non-affiliates of the registrant, based on the closing sales price of the registrant's Common Stock as quoted on the Nasdaq Global Select Market System under the symbol "RVSB" on September 30, 2017 was $189,284,861 (22,533,912 shares at $8.40 per share). As of June 13, 2018, there were issued and outstanding 22,570,179 shares of the registrant's common stock.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of registrant's Definitive Proxy Statement for the 2018 Annual Meeting of Stockholders (Part III).

Table of Contents
PART I		PAGE
Item 1.	Business	4
Item 1A.	Risk Factors	33
Item 1B.	Unresolved Staff Comments	46
Item 2.	Properties	46
Item 3.	Legal Proceedings	46
Item 4.	Mine Safety Disclosures	46
PART II
Item 5.	Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	47
Item 6.	Selected Financial Data	49
Item 7.	Management's Discussion and Analysis of Financial Condition and Results of Operations	51
Item 7A.	Quantitative and Qualitative Disclosures about Market Risk	65
Item 8.	Financial Statements and Supplementary Data	67
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	109
Item 9A.	Controls and Procedures	109
Item 9B.	Other Information	111
PART III
Item 10.	Directors, Executive Officers and Corporate Governance	111
Item 11.	Executive Compensation	111
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	112
Item 13.	Certain Relationships and Related Transactions, and Director Independence	112
Item 14.	Principal Accounting Fees and Services	112
PART IV
Item 15.	Exhibits and Financial Statement Schedules	113
Item 16.	Form 10-K Summary	114
Signatures		115
Exhibit Index		116

Forward-Looking Statements

As used in this Form 10-K, the terms "we," "our," "us," "Riverview" and "Company" refer to Riverview Bancorp, Inc. and its consolidated subsidiaries, including its wholly-owned subsidiary, Riverview Community Bank, unless the context indicates otherwise.

"Safe Harbor" statement under the Private Securities Litigation Reform Act of 1995: When used in this Form 10-K, the words "believes," "expects," "anticipates," "estimates," "forecasts," "intends," "plans," "targets," "potentially," "probably," "projects," "outlook," or similar expressions or future or conditional verbs such as "may," "will," "should," "would," and "could," or similar expressions are intended to identify "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements with respect to our beliefs, plans, objectives, goals, expectations, assumptions and statements about future performance. These forward-looking statements are subject to known and unknown risks, uncertainties and other factors that could cause actual results to differ materially from the results anticipated, including, but not limited to: the credit risks of lending activities, including changes in the level and trend of loan delinquencies and write-offs and changes in the Company's allowance for loan losses and provision for loan losses that may be impacted by deterioration in the housing and commercial real estate markets; changes in general economic conditions, either nationally or in the Company's market areas; changes in the levels of general interest rates, and the relative differences between short and long-term interest rates, deposit interest rates, the Company's net interest margin and funding sources; fluctuations in the demand for loans, the number of unsold homes, land and other properties and fluctuations in real estate values in the Company's market areas; secondary market conditions for loans and the Company's ability to sell loans in the secondary market; results of examinations of our bank subsidiary, Riverview Community Bank, by the Office of the Comptroller of the Currency and of the Company by the Board of Governors of the Federal Reserve System, or other regulatory authorities, including the possibility that any such regulatory authority may, among other things, require the Company to increase its allowance for loan losses, write-down assets, reclassify its assets, change Riverview Community Bank's regulatory capital position or affect the Company's ability to borrow funds or maintain or increase deposits, which could adversely affect its liquidity and earnings; legislative or regulatory changes that adversely affect the Company's business including changes in regulatory policies and principles, or the interpretation of regulatory capital or other rules, including as a result of Basel III; the Company's ability to attract and retain deposits; increases in premiums for deposit insurance; the Company's ability to control operating costs and expenses; the use of estimates in determining fair value of certain of the Company's assets, which estimates may prove to be incorrect and result in significant declines in valuation; difficulties in reducing risks associated with the loans on the Company's consolidated balance sheet; staffing fluctuations in response to product demand or the implementation of corporate strategies that affect the Company's workforce and potential associated charges; disruptions, security breaches, or other adverse events, failures or interruptions in, or attacks on, our information technology systems or on the third-party vendors who perform several of our critical processing functions; the Company's ability to retain key members of its senior management team; costs and effects of litigation, including settlements and judgments; the Company's ability to implement its business strategies; the Company's ability to successfully integrate any assets, liabilities, customers, systems, and management personnel it may acquire into its operations and the Company's ability to realize related revenue synergies and cost savings within expected time frames and any goodwill charges related thereto; increased competitive pressures among financial services companies; changes in consumer spending, borrowing and savings habits; the availability of resources to address changes in laws, rules, or regulations or to respond to regulatory actions; the Company's ability to pay dividends on its common stock and interest or principal payments on its junior subordinated debentures; adverse changes in the securities markets; inability of key third-party providers to perform their obligations to us; changes in accounting policies and practices, as may be adopted by the financial institution regulatory agencies or the Financial Accounting Standards Board, including additional guidance and interpretation on accounting issues and details of the implementation of new accounting standards; other economic, competitive, governmental, regulatory, and technological factors affecting the Company's operations, pricing, products and services; and the other risks described from time to time in our filings with the Securities and Exchange Commission.

The Company cautions readers not to place undue reliance on any forward-looking statements. Moreover, you should treat these statements as speaking only as of the date they are made and based only on information then actually known to the Company. The Company does not undertake and specifically disclaims any obligation to revise any forward-looking statements included in this report or the reasons why actual results could differ from those contained in such statements, whether as a result of new information or to reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such statements. These risks could cause our actual results for fiscal 2019 and beyond to differ materially from those expressed in any forward-looking statements by, or on behalf of, us and could negatively affect the Company's consolidated financial condition and consolidated results of operations as well as its stock price performance.

PART I

Item 1.  Business

General

Riverview Bancorp, Inc., a Washington corporation, is the savings and loan holding company of Riverview Community Bank (the "Bank"). At March 31, 2018, the Company had total assets of $1.2 billion, total deposits of $995.7 million and shareholders' equity of $116.9 million. The Company's executive offices are located in Vancouver, Washington.

The Company is subject to regulation by the Board of Governors of the Federal Reserve Systems ("Federal Reserve"). Substantially all of the Company's business is conducted through the Bank which is regulated by the Office of the Comptroller of the Currency ("OCC"), 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 Deposit Insurance Fund ("DIF"). The Bank is a member of the Federal Home Loan Bank System of Des Moines ("FHLB") which is one of the 11 regional banks in the Federal Home Loan Bank System ("FHLB System").

As a progressive, community-oriented financial services company, the Company emphasizes local, personal service to residents of its primary market area. The Company considers Clark, Cowlitz, Klickitat and Skamania counties of Washington, and Multnomah, Washington and Marion counties of Oregon as its primary market area. The Company is engaged predominantly in the business of attracting deposits from the general public and using such funds in its primary market area to originate commercial business, commercial real estate, multi-family real estate, land, real estate construction, residential real estate and other consumer loans. The Company's loans receivable, net, totaled $800.6 million at March 31, 2018 compared to $768.9 million a year ago.

The Bank's subsidiary, Riverview Trust Company (the "Trust Company"), is a trust and financial services company located in downtown Vancouver, Washington, and provides full-service brokerage activities, trust and asset management services. In April 2017, the Trust Company opened a second office in Lake Oswego, Oregon.

The Company's strategic plan includes targeting the commercial banking customer base in its primary market area for loan originations and deposit growth, specifically small and medium size businesses, professionals and wealth building individuals. In pursuit of these goals, the Company will seek to increase the loan portfolio consistent with its strategic plan and asset/liability and regulatory capital objectives, which includes maintaining a significant amount of commercial business and commercial real estate loans in its loan portfolio. Significant portions of our new loan originations – which are mainly concentrated in commercial business and commercial real estate loans – carry adjustable rates, higher yields or shorter terms and higher credit risk than traditional fixed-rate consumer real estate one-to-four family mortgages.

Our strategic plan also stresses increased emphasis on non-interest income, including increased fees for asset management through the Trust Company 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. We believe we are well positioned to attract new customers and to increase our market share through our 19 branches, including, among others, ten in Clark County, four in the Portland metropolitan area and three lending centers.

On February 17, 2017, the Company completed the purchase and assumption transaction in which the Company purchased certain assets and assumed certain liabilities of MBank, the wholly-owned subsidiary of Merchants Bancorp, including $115.3 million in loans and $130.6 million of deposits (the "MBank transaction"). In addition, as part of the MBank transaction, Riverview Bancorp, Inc. assumed the obligations of Merchant Bancorp's trust preferred securities.

Market Area

The Company conducts operations from its home office in Vancouver, Washington and 19 branch offices located in Camas, Washougal, Stevenson, White Salmon, Battle Ground, Goldendale, Vancouver (seven branch offices) and Longview, Washington and Portland (two branch offices), Gresham, Tualatin and Aumsville, Oregon. We believe we are well positioned to attract new customers and to increase our market share through our branch network. The Trust Company has two locations, one in downtown Vancouver, Washington and one in Lake Oswego, Oregon, and provides full-service brokerage activities, trust and asset management services. Riverview Mortgage, a mortgage broker division of the Bank, originates mortgage loans for various mortgage companies predominantly in the Vancouver/Portland metropolitan areas, as well as for the Bank. The Bank's Business and Professional Banking Division, with two lending offices located in Vancouver and one in Portland, offers commercial and business banking services. The Bank also operates a lending office for mortgage banking activities in Vancouver.

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. Companies located in the Vancouver area include: Sharp Microelectronics, Hewlett Packard, Georgia Pacific, Underwriters Laboratory, WaferTech, Nautilus, Barrett Business Services, PeaceHealth, Fisher Investments and Banfield Pet Hospitals, as well as several support industries. In addition to this industry base, the Columbia River Gorge Scenic Area and the Portland metropolitan area are sources of tourism, which has helped to transform the area from its past dependence on the timber industry.

Economic conditions in the Company's market areas have generally been positive compared to the past recessionary downturn. According to the Washington State Employment Security Department, unemployment in Clark County decreased to 5.4% at March 31, 2018 compared to 5.5% at March 31, 2017. According to the Oregon Employment Department, unemployment in Portland increased to 3.7% at March 31, 2018 compared to 3.2% at March 31, 2017. According to the Regional Multiple Listing Services ("RMLS"), residential home inventory levels in Portland, Oregon have increased to 1.6 months at March 31, 2018 compared to 1.3 months at March 31, 2017. Residential home inventory levels in Clark County were 1.6 months at both March 31, 2018 and 2017. According to the RMLS, closed home sales in March 2018 in Clark County increased 4.5% compared to March 2017. Closed home sales during March 2018 in Portland decreased 4.9% compared to March 2017.

Lending Activities

General .  At March 31, 2018, the Company's net loans receivable totaled $800.6 million, or 69.5% of total assets at that date. The principal lending activity of the Company is the origination of loans collateralized by commercial properties and commercial business loans. A substantial portion of the Company's loan portfolio is secured by real estate, either as primary or secondary collateral, located in its primary market area. The Company's lending activities are subject to the written, non-discriminatory, underwriting standards and loan origination procedures established by the Bank's Board of Directors ("Board") and management. The customary sources of loan originations are realtors, walk-in customers, referrals and existing customers. The Bank also uses commissioned loan brokers and print advertising to market its products and services. Loans are approved at various levels of management, depending upon the amount of the loan.

Loan Portfolio Analysis .  The following table sets forth the composition of the Company's loan portfolio, excluding loans held for sale, by type of loan at the dates indicated (dollars in thousands):

		At March 31,
		2018								2017								2016								2015								2014
		Amount				Percent				Amount				Percent				Amount				Percent				Amount				Percent				Amount				Percent
Commercial and construction:
Commercial business		$	137,672				16.97	%		$	107,371				13.78	%		$	69,397				11.11	%		$	77,186				13.31	%		$	71,632				13.43	%
Other real estate mortgage (1)			529,014				65.20				506,661				65.00				399,527				63.94				345,506				59.60				324,881				60.90
Real estate construction			39,584				4.88				46,157				5.92				26,731				4.28				30,498				5.26				19,482				3.65
Total commercial and construction			706,270				87.05				660,189				84.70				495,655				79.33				453,190				78.17				415,995				77.98
Consumer:
Real estate one-to-four family			90,109				11.10				92,865				11.91				88,780				14.21				89,801				15.49				93,007				17.43
Other installment			14,997				1.85				26,378				3.39				40,384				6.46				36,781				6.34				24,486				4.59
Total consumer			105,106				12.95				119,243				15.30				129,164				20.67				126,582				21.83				117,493				22.02
Total loans			811,376				100.00	%			779,432				100.00	%			624,819				100.00	%			579,772				100.00	%			533,488				100.00	%
Less:
Allowance for loan losses			10,766								10,528								9,885								10,762								12,551
Total loans receivable, net		$	800,610							$	768,904							$	614,934							$	569,010							$	520,937
(1) Other real estate mortgage consists of commercial real estate, land and multi-family loans.

Loan Portfolio Composition. The following tables set forth the composition of the Company's commercial and construction loan portfolio based on loan purpose at the dates indicated (in thousands):

		Commercial Business				Other Real Estate Mortgage				Real Estate Construction				Commercial & Construction Total
March 31, 2018
Commercial business		$	137,672			$	-			$	-			$	137,672
Commercial construction			-				-				23,158				23,158
Office buildings			-				124,000				-				124,000
Warehouse/industrial			-				89,442				-				89,442
Retail/shopping centers/strip malls			-				68,932				-				68,932
Assisted living facilities			-				2,934				-				2,934
Single purpose facilities			-				165,289				-				165,289
Land			-				15,337				-				15,337
Multi-family			-				63,080				-				63,080
One-to-four family construction			-				-				16,426				16,426
Total		$	137,672			$	529,014			$	39,584			$	706,270

March 31, 2017
Commercial business		$	107,371			$	-			$	-			$	107,371
Commercial construction			-				-				27,050				27,050
Office buildings			-				121,983				-				121,983
Warehouse/industrial			-				74,671				-				74,671
Retail/shopping centers/strip malls			-				78,757				-				78,757
Assisted living facilities			-				3,686				-				3,686
Single purpose facilities			-				167,974				-				167,974
Land			-				15,875				-				15,875
Multi-family			-				43,715				-				43,715
One-to-four family construction			-				-				19,107				19,107
Total		$	107,371			$	506,661			$	46,157			$	660,189

Commercial Business Lending. At March 31, 2018, the commercial business loan portfolio totaled $137.7 million, or 17.0% of total loans. Commercial business loans are typically secured by business equipment, accounts receivable, inventory or other property. The Company's commercial business 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 usually 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 either a variable or fixed-rate. The Company also generally obtains personal guarantees from financially capable parties based on a review of personal financial statements.

Commercial lending involves risks that are different from those associated with residential and commercial real estate lending. Although commercial business loans are often collateralized by equipment, inventory, accounts receivable or other business assets, the liquidation of collateral in the event of default is often an insufficient source of repayment because accounts receivable may be uncollectible and inventories may be obsolete or of limited use, among other things. Accordingly, the repayment of commercial business loans depends primarily on the cash flow and credit-worthiness of the borrower and secondarily on the underlying collateral provided by the borrower. Additionally, the borrower's cash flow may be unpredictable and collateral securing these loans may fluctuate in value.

Other Real Estate Mortgage Lending. At March 31, 2018, the other real estate mortgage loan portfolio totaled $529.0 million, or 65.2% of total loans. The Company originates other real estate loans including office buildings, warehouse/industrial, retail, assisted living facilities and single-purpose facilities (collectively "commercial real estate loans"); as well as land and multi-family loans primarily located in its market area. At March 31, 2018, owner occupied properties accounted for 36.2% and non-owner occupied properties accounted for 63.8% of the Company's commercial real estate loan portfolio.

Commercial real estate and multi-family loans typically 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. As a result, commercial real estate and multi-family loans are generally priced at a higher rate of interest than residential one-to-four family 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. 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 being viewed as the primary source of repayment in the event of borrower default. The Company seeks to minimize these risks by generally limiting the maximum loan-to-value ratio to 80% and strictly scrutinizing the financial condition of the borrower, the quality of the collateral and the management of the property securing the loan. Loans are secured by first mortgages and often require specified debt service coverage ("DSC") ratios depending on the characteristics of the collateral. The Company generally imposes a minimum DSC ratio of 1.20 for loans secured by income producing properties. Rates and other terms on such loans generally depend on our assessment of credit risk after considering such factors as the borrower's financial condition and credit history, loan-to-value ratio, DSC ratio and other factors.

The Company actively pursues commercial real estate loans. Loan demand within the Company's market area was competitive in fiscal year 2018 as economic conditions and competition for strong credit-worthy borrowers remained high. At March 31, 2018, the Company had two commercial real estate loans totaling $1.2 million on non-accrual status compared to two commercial real estate loans totaling $1.3 million on non-accrual status at March 31, 2017. For more information concerning risks related to commercial real estate loans, see Item 1A. "Risk Factors – Our emphasis on commercial real estate lending may expose us to increased lending risks."

Land acquisition and development loans are included in the other real estate mortgage loan portfolio balance and represent loans made to developers for the purpose of acquiring raw land and/or for the subsequent development and sale of residential lots. Such loans typically finance land purchases and infrastructure development of properties (e.g. roads, utilities, etc.) with the aim of making improved lots ready for subsequent sales to consumers or builders for ultimate construction of residential units. The primary source of repayment is generally the cash flow from developer sale of lots or improved parcels of land, secondary sources and personal guarantees, which may provide an additional measure of security for such loans. At March 31, 2018, land acquisition and development loans totaled $15.3 million, or 1.89% of total loans compared to $15.9 million, or 2.04% of total loans at March 31, 2017. The largest land acquisition and development loan had an outstanding balance at March 31, 2018 of $3.4 million and was performing according to its original payment terms. At March 31, 2018, all of the land acquisition and development loans were secured by properties located in Washington and Oregon. At March 31, 2018 and 2017, the Company had one land acquisition and development loan totaling $763,000 and $801,000, respectively, on non-accrual status.

Real Estate Construction. The Company originates three types of residential construction loans: (i) speculative construction loans, (ii) custom/presold construction loans and (iii) construction/permanent loans. The Company also originates construction loans for the development of business properties and multi-family dwellings. All of the Company's real estate construction loans were made on properties located in Washington and Oregon.

The composition of the Company's construction loan portfolio, including undisbursed funds, was as follows at the dates indicated (dollars in thousands):

		At March 31,
		2018								2017
		Amount (1)				Percent				Amount (1)				Percent
Speculative construction		$	7,589				6.80	%		$	7,915				8.47	%
Commercial/multi-family construction			80,357				72.04				59,599				63.80
Custom/presold construction			18,029				16.16				20,697				22.16
Construction/permanent			5,573				5.00				5,202				5.57
Total		$	111,548				100.00	%		$	93,413				100.00	%

⁽¹⁾ Includes undisbursed funds of $72.0 million and $47.3 million at March 31, 2018 and 2017, respectively.

At March 31, 2018, the balance of the Company's construction loan portfolio, including undisbursed funds, was $111.5 million compared to $93.4 million at March 31, 2017. The $18.1 million increase was primarily due to a $20.8 million increase in commercial/multi-family construction loans partially offset by a $2.7 million decrease in custom/presold construction loans. The Company plans to continue to proactively manage and control the growth in its construction loan portfolio in fiscal year 2019 but will continue to originate new construction loans to selected customers.

Speculative construction loans are made to home builders and are termed "speculative" because the home builder does not have, at the time of loan origination, a signed contract with a home buyer who has a commitment for permanent financing with either the Company or another lender for the finished home. The home buyer may be identified either during or after the construction period, with the risk that the builder will have to 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 a home buyer is identified. The largest speculative construction loan at March 31, 2018 was a loan to finance the construction of a single family home totaling $425,000. This loan is to a single borrower that is secured by a property located in the Company's market area. The average balance of loans in the speculative construction loan portfolio at March 31, 2018 was $208,000. At March 31, 2018 and 2017, the Company had no speculative construction loans on non-accrual status.

The composition of speculative construction and land acquisition and development loans by geographical area is as follows at the dates indicated (in thousands):

		Northwest Oregon				Other Oregon				Southwest Washington				Total
March 31, 2018
Land development		$	482			$	881			$	13,974			$	15,337
Speculative construction			400				421				12,596				13,417
Total land development and speculative construction		$	882			$	1,302			$	26,570			$	28,754

March 31, 2017
Land development		$	223			$	2,523			$	13,129			$	15,875
Speculative construction			945				3				14,492				15,440
Total land development and speculative construction		$	1,168			$	2,526			$	27,621			$	31,315

Unlike speculative construction loans, presold construction loans are made for homes that have buyers. Presold construction loans are made to homebuilders 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. Presold construction loans are generally originated for a term of 12 months. At March 31, 2018 and 2017, presold construction loans totaled $9.0 million and $11.4 million, respectively.

Unlike speculative and presold construction loans, custom construction loans are made directly to the homeowner. At March 31, 2018 and 2017, the Company had no custom construction loans. Construction/permanent loans are originated to the homeowner rather than the homebuilder 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 adjustable rate mortgage ("ARM") loan or use its mortgage brokerage capabilities to obtain permanent financing for the customer with another lender. At completion of construction, the interest rate of the Company-originated fixed-rate permanent loan is set at a market rate. For adjustable rate loans, the interest rates adjust on their first adjustment date. See "—Mortgage Brokerage" and "—Mortgage Loan Servicing." At March 31, 2018, construction/permanent loans totaled $3.0 million, the largest of which had an outstanding balance of $525,000 and was performing according to its original repayment terms. The average balance of loans in the construction/permanent loan portfolio at March 31, 2018 was $274,000.

The Company provides construction financing for non-residential business properties and multi-family dwellings. At March 31, 2018, such loans totaled $ 23.2 million, or 58.5 % of total real estate construction loans and 2.85% of total loans. Borrowers may be the business owner/occupier of the building who intends to operate their business from the property upon construction, or non-owner developers. The expected source of repayment of these loans is typically the sale or refinancing of the project upon completion of the construction phase. In certain circumstances, the Company may provide or commit to take-out financing upon construction. Take-out financing is subject to the project meeting specific underwriting guidelines. No assurance can be given that such take-out financing will be available upon project completion. These loans are secured by office buildings, retail rental space, mini storage facilities, assisted living facilities and multi-family dwellings located in the Company's market area. At March 31, 2018, the largest commercial construction loan had a balance of $ 7.0 million and was performing according to its original repayment terms. The average balance of loans in the commercial construction loan portfolio at March 31, 2018 was $1.7 million . At March 31, 2018 and 2017, the Company had no commercial construction loans on non-accrual status.

The Company has originated construction and land acquisition and development loans where a component of the cost of the project was the interest required to service the debt during the construction period of the loan, sometimes known as interest reserves. The Company allows disbursements of this interest component as long as the project is progressing as originally projected and if there has been no deterioration in the financial standing of the borrower or the underlying project. If the Company makes a determination that there is such deterioration, or if the loan becomes nonperforming, the Company halts

any disbursement of those funds identified for use in paying interest. In some cases, additional interest reserves may be taken by use of deposited funds or through credit lines secured by separate and additional collateral. For additional information concerning the risks related to construction lending, see Item 1A. "Risk Factors – Our real estate construction and land acquisition or development loans expose us to risk."

Consumer Lending. Consumer loans totaled $ 105.1 million at March 31, 2018, and were comprised of $ 67.2 million of one-to-four family mortgage loans, $ 20.5 million of home equity lines of credit, $ 2.4 million of land loans to consumers for the future construction of one-to-four family homes and $ 15.0 million of other secured and unsecured consumer loans, which primarily consisted of $12.9 million of purchased automobile loans.

One-to-four family residences located in the Company's primary market area secure the majority of the residential loans. Underwriting standards require that one-to-four family portfolio loans generally be owner occupied and that loan amounts not exceed 80% (95% with private mortgage insurance) of the lesser of current appraised value or cost of the underlying collateral. Terms typically range from 15 to 30 years. The Company also offers balloon mortgage loans with terms of either five or seven years and originates both fixed-rate mortgages and ARMs with repricing based on the one-year constant maturity U.S. Treasury index or other index. At March 31, 2018, the Company had four residential real estate loans totaling $ 206,000 on non-accrual status compared to three loans totaling $170,000 at March 31, 2017. All of these loans were secured by properties located in Oregon and Washington.

The Company also purchases, from time to time, pools of automobile loans from another financial institution as a way to further diversify its loan portfolio and to earn a higher yield than on its cash or short-term investments. These indirect automobile loans are originated through a single dealership group located outside the Company's primary market area. The collateral for these loans is comprised of a mix of used automobiles. These loans are purchased with servicing retained by the seller. The Company did not purchase any automobile loans during fiscal year 2018 and 2017. At March 31, 2018, eight of the purchased automobile loans were on non-accrual status totaling $71,000. At March 31, 2017, thirteen of the purchased automobile loans were on non-accrual status totaling $108,000. For more information concerning risks related to automobile loans, see Item 1A. "Risk Factors – Our consumer loan portfolio has increased risk due to the substantial amount of indirect automobile loans."

The Company originates a variety of installment loans, including loans for debt consolidation and other purposes, automobile loans, boat loans and savings account loans. These 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. At March 31, 2018 and 2017, excluding the purchased automobile loans noted above, the Company had no installment loans on non-accrual status.

Loan Maturity. The following table sets forth certain information at March 31, 2018 regarding the dollar amount of loans maturing in the Company's total loan portfolio based on their contractual terms to maturity but does not include potential prepayments. Demand loans, loans having no stated schedule of repayments or stated maturity and overdrafts are reported as due in one year or less. Loan balances are reported net of deferred fees (in thousands):

		Within 1 Year				1 – 3 Years				After 3 – 5 Years				After 5 – 10 Years				Beyond 10 Years				Total
Commercial and construction:
Commercial business		$	16,939			$	15,981			$	10,376			$	53,110			$	41,266			$	137,672
Other real estate mortgage			37,563				14,544				42,486				354,433				79,988				529,014
Real estate construction			12,251				987				-				21,651				4,695				39,584
Total commercial and construction			66,753				31,512				52,862				429,194				125,949				706,270
Consumer:
Real estate one-to-four family			292				1,562				2,003				5,158				81,094				90,109
Other installment			526				9,841				4,511				119				-				14,997
Total consumer			818				11,403				6,514				5,277				81,094				105,106
Total loans		$	67,571			$	42,915			$	59,376			$	434,471			$	207,043			$	811,376

The following table sets forth the dollar amount of loans due after one year from March 31, 2018, which have fixed and adjustable interest rates (in thousands) :

		Fixed Rate				Adjustable Rate				Total
Commercial and construction:
Commercial business		$	63,022			$	57,711			$	120,733
Other real estate mortgage			170,899				320,552				491,451
Real estate construction			8,630				18,703				27,333
Total commercial and construction			242,551				396,966				639,517
Consumer:
Real estate one-to-four family			64,510				25,307				89,817
Other installment			13,967				504				14,471
Total consumer			78,477				25,811				104,288
Total loans		$	321,028			$	422,777			$	743,805

Loan Commitments . The Company issues commitments to originate commercial loans, other real estate mortgage loans, construction loans, residential mortgage loans and other installment 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 originate loans 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, 2018, the Company had outstanding commitments to originate loans of $35.1 million compared to $45.3 million at March 31, 2017.

Mortgage Brokerage. In addition to originating mortgage loans for retention in its loan portfolio, the Company employs commissioned brokers who originate mortgage loans (including construction loans) for various mortgage companies, 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 1.5% to 2.0% of the loan amount that it shares with the commissioned broker. Loans brokered to the Company are closed on the Company's books and the commissioned broker receives a portion of the origination fee. During the year ended March 31, 2018, brokered loans totaled $43.4 million (including $11.9 million brokered to the Company) compared to $47.3 million (including $42.3 million brokered to the Company) of brokered loans in fiscal year 2017. Gross fees of $746,000 and $757,000, which includes brokered loan fees and fees for loans sold to the Federal Home Loan Mortgage Company ("FHLMC"), were earned for the years ended March 31, 2018 and 2017, respectively. 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, the volume of loans and the amount of loan fees generally decrease as a result of slower mortgage loan demand. Conversely, during periods of falling interest rates, the volume of loans and the amount of loan fees generally increase as a result of the increased mortgage loan demand.

Mortgage Loan Servicing. The Company is a qualified servicer for the FHLMC. The Company generally sells fixed-rate residential one-to-four family mortgage loans that it originates with maturities of 15 years or more and balloon mortgages to the FHLMC as part of its asset/liability strategy. Mortgage loans are sold to the FHLMC on a non-recourse basis whereby foreclosure losses are the responsibility of the FHLMC and not the Company. The Company's general policy is to close its residential loans on FHLMC modified loan documents to facilitate future sales to the FHLMC. Upon sale, the Company continues to collect payments on the loans, supervise foreclosure proceedings, and otherwise service the loans. At March 31, 2018, total loans serviced for others were $142.1 million, of which $117.9 million were serviced for the FHLMC.

Nonperforming Assets. Nonperforming assets were $2.7 million or 0.24% of total assets at March 31, 2018 compared with $3.0 million or 0.27% of total assets at March 31, 2017. The Company also had net loan recoveries totaling $238,000 during fiscal 2018 compared to $643,000 during fiscal 2017. Credit quality challenges continued to lessen in the past fiscal year and the real estate market in our primary market area has improved steadily. Although it appears the economic conditions have stabilized, a prolonged weak economy in our market area could result in increases in nonperforming assets, increases in the provision for loan losses and charge-offs in the future.

Loans are reviewed regularly and it is the Company's general policy that when a loan is 90 days delinquent or when collection of principal or interest appears doubtful, it is placed on non-accrual status, at which time the accrual of interest ceases and a reserve for any unrecoverable accrued interest is established and charged against operations. In general, payments received on non-accrual loans are applied to reduce the outstanding principal balance on a cash-basis method.

The Company continues to focus on managing the residential construction and land acquisition and development loan portfolios. At March 31, 2018, the Company's residential construction and land acquisition and development loan portfolios were $16.4 million and $15.3 million, respectively as compared to $19.1 million and $15.9 million, respectively, at March 31, 2017. At March 31, 2018 and 2017, there were no nonperforming loans in the residential construction loan portfolio. At March 31, 2018 and 2017, the percentage of nonperforming loans in the land acquisition and development loan portfolios was 4.97% and 5.05%, respectively. For the year ended March 31, 2018, the charge-off (recovery) ratio for the residential construction and land development loan portfolios was 0.00% and (1.87)%, respectively, compared to 0.00% and (3.29)%, respectively, for the year ended March 31, 2017.

The following table sets forth information regarding the Company's nonperforming loans at the dates indicated (dollars in thousands):

		March 31, 2018								March 31, 2017
		Number of Loans				Balance				Number of Loans				Balance
Commercial business			1			$	178				2			$	294
Commercial real estate			2				1,200				2				1,342
Land			1				763				1				801
Consumer			12				277				19				312
Total			16			$	2,418				24			$	2,749

Nonperforming loans decreased compared to the prior year. The Company continues its efforts to work out problem loans, seek full repayment or pursue foreclosure proceedings. All of these loans are to borrowers with properties located in Oregon and Washington, with the exception of eight automobile loans totaling $71,000 all of which were on non-accrual status. At March 31, 2018, 88.54% of the Company's nonperforming loans, totaling $2.1 million, were measured for impairment. These loans have been charged down to the estimated fair market value of the collateral less selling costs or carry a specific reserve to reduce the net carrying value. There were no reserves associated with these nonperforming loans that were measured for impairment at March 31, 2018. At March 31, 2018, the largest single nonperforming loan was a commercial real estate loan totaling $997,000. This loan was measured for impairment during fiscal year 2018 and management determined that a specific reserve was not required.

The balance of nonperforming assets included $298,000 in real estate owned ("REO") at March 31, 2018. The $298,000 balance of REO is comprised of a one-to-four family real estate property located in Washington and the sale of this REO property closed in May 2018. For the fiscal year ended March 31, 2018, the Company sold three land development lots that were carried at a zero cost basis for total gain on sale of $81,000. During fiscal year 2018, there were no write-downs on existing REO properties and maintenance and operating expenses for REO properties totaled $12,000. The orderly resolution of nonperforming loans and REO properties remains a priority for management. Because of the uncertain nature of the real estate market, no assurance can be given as to the timing of ultimate disposition of such assets or that the selling price will be at or above the carrying value. Declines in real estate values in our area could lead to additional valuation adjustments, which would have an adverse effect on our results of operations.

The following table sets forth information regarding the Company's nonperforming assets at the dates indicated (in thousands):

		At March 31,
		2018				2017				2016				2015				2014
Loans accounted for on a non-accrual basis:
Commercial business		$	178			$	294			$	-			$	-			$	452
Other real estate mortgage			1,963				2,143				2,360				4,092				10,881
Consumer			277				278				334				1,226				2,729
Total			2,418				2,715				2,694				5,318				14,062
Accruing loans which are contractually past due 90 days or more			-				34				20				-				-
Total nonperforming loans			2,418				2,749				2,714				5,318				14,062
REO			298				298				595				1,603				7,703
Total nonperforming assets		$	2,716			$	3,047			$	3,309			$	6,921			$	21,765
Foregone interest on non-accrual loans		$	102			$	81			$	112			$	433			$	949

The following tables set forth information regarding the Company's nonperforming assets by loan type and geographical area at the dates indicated (in thousands):

		Other Oregon				Southwest Washington				Other Washington				Other				Total
March 31, 2018
Commercial business		$	-			$	178			$	-			$	-			$	178
Commercial real estate			997				203				-				-				1,200
Land			763				-				-				-				763
Consumer			-				206				-				71				277
Total nonperforming loans			1,760				587				-				71				2,418
REO			-				-				298				-				298
Total nonperforming assets		$	1,760			$	587			$	298			$	71			$	2,716

March 31, 2017
Commercial business		$	-			$	294			$	-			$	-			$	294
Commercial real estate			1,128				214				-				-				1,342
Land			801				-				-				-				801
Consumer			-				170				-				142				312
Total nonperforming loans			1,929				678				-				142				2,749
REO			-				-				298				-				298
Total nonperforming assets		$	1,929			$	678			$	298			$	142			$	3,047

Other loans of concern, which are classified as substandard loans and are not presently included in the non-accrual category, consist of loans where the borrowers have cash flow problems, or the collateral securing the respective loans may be inadequate. In either or both of these situations, the borrowers may be unable to comply with the present loan repayment terms, and the loans may subsequently be included in the non-accrual category. Management considers the allowance for loan losses to be adequate to cover the probable losses inherent in these and other loans.

The following table sets forth information regarding the Company's other loans of concern at the dates indicated (dollars in thousands):

		March 31, 2018								March 31, 2017
		Number of Loans				Balance				Number of Loans				Balance
Commercial business			11			$	3,209				6			$	2,901
Commercial real estate			2				1,785				3				4,380
Multi-family			1				11				1				12
Total			14			$	5,005				10			$	7,293

At March 31, 2018, loans delinquent 30 – 89 days were 0.06% of total loans compared to 0.03% at March 31, 2017. There were no delinquent loans 30 – 89 days past due in our commercial real estate ("CRE") loan portfolio at March 31, 2018 or 2017. At both March 31, 2018 and 2017, the 30 – 89 days delinquency rate in our commercial business loan portfolio was 0.01% of commercial business loans. CRE loans represent the largest portion of our loan portfolio at 55.54% of total loans and commercial business loans represent 16.97% of total loans.

Troubled debt restructurings ("TDRs") are loans for which the Company, for economic or legal reasons related to the borrower's financial condition, has granted a concession to the borrower that it would otherwise not consider. A TDR typically involves a modification of terms such as a reduction of the stated interest rate or face amount of the loan, a reduction of accrued interest, or an extension of the maturity date(s) at a stated interest rate lower than the current market rate for a new loan with similar risk.

TDRs are considered impaired loans and as such, when a loan is deemed to be impaired, the amount of the impairment is measured using discounted cash flows using the original note rate, except when the loan is collateral dependent. In these cases, the estimated fair value of the collateral (less any selling costs, if applicable) is used. Impairment is recognized as a specific component within the allowance for loan losses if the estimated value of the impaired loan is less than the recorded investment in the loan. When the amount of the impairment represents a confirmed loss, it is charged off against the allowance for loan losses. At March 31, 2018, the Company had TDRs totaling $7.7 million of which $5.6 million were on accrual status. The $2.1 million of TDRs accounted for on a non-accrual basis at March 31, 2018, are included as nonperforming loans in the nonperforming asset table above. However, all of the Company's TDRs were paying as agreed at March 31, 2018 except for one TDR commercial business loan totaling $178,000 and two TDR CRE loans totaling $1.2 million that have defaulted since the loans were modified. The related amount of interest income recognized on these TDR loans was $294,000 for the year ended March 31, 2018.

The Company has determined that, in certain circumstances, it is appropriate to split a loan into multiple notes. This typically includes a nonperforming charged-off loan that is not supported by the cash flow of the relationship and a performing loan that is supported by the cash flow. These may also be split into multiple notes to align portions of the loan balance with the various sources of repayment when more than one exists. Generally the new loans are restructured based on customary underwriting standards. In situations where they are not, the policy exception qualifies as a concession, and if the borrower is experiencing financial difficulties, the loans are accounted for as TDRs.

The accrual status of a loan may change after it has been classified as a TDR. The Company's general policy related to TDRs is to perform a credit evaluation of the borrower's financial condition and prospects for repayment under the revised terms. This evaluation includes consideration of the borrower's sustained historical repayment performance for a reasonable period of time. A sustained period of repayment performance generally would be a minimum of six months and may include repayments made prior to the restructuring date. If repayment of principal and interest appears doubtful, it is placed on non-accrual status.

In accordance with the Company's policy guidelines, unsecured loans are generally charged-off when no payments have been received for three consecutive months unless an alternative action plan is in effect. Consumer installment loans delinquent six months or more that have not received at least 75% of their required monthly payment in the last 90 days are charged-off. In addition, loans discharged in bankruptcy proceedings are charged-off. Loans under bankruptcy protection with no payments received for four consecutive months are charged-off. The outstanding balance of a secured loan that is in excess of the net realizable value is generally charged-off if no payments are received for four to five consecutive months. However, charge-offs are postponed if alternative proposals to restructure, obtain additional guarantors, obtain additional assets as collateral or a potential sale of the underlying collateral would result in full repayment of the outstanding loan balance. Once any other potential sources of repayment are exhausted, the impaired portion of the loan is charged-off. Regardless of whether a loan is unsecured or collateralized, once an amount is determined to be a confirmed loan loss it is promptly charged off.

Asset Classification. The OCC 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, OCC examiners have authority to identify problem assets and, if appropriate, require them to be classified as such. There are three classifications for problem assets:  substandard, doubtful and loss (collectively "classified loans"). Substandard assets have one or more defined weaknesses and are characterized by the distinct possibility that the insured institution will sustain some loss if the deficiencies are not corrected. Doubtful assets have the weaknesses of substandard assets with the additional characteristic that the weaknesses make collection or liquidation in full on the basis of currently existing facts, conditions and values questionable, and there is a high possibility

of loss. An asset classified as loss is considered uncollectible and of such little value that continuance as an asset of the institution is not warranted.

When the Company classifies problem assets as either substandard or doubtful, we may determine that the loan is impaired and establish a specific allowance in an amount we deem prudent to address the risk specifically or we may allow the loss to be addressed in the general allowance. General allowances represent loss allowances which have been established to recognize the inherent risk associated with lending activities, but which, unlike specific allowances, have not been specifically allocated to particular problem assets. When a problem asset is classified by us as a loss, we are required to charge off the asset in the period in which it is deemed uncollectible.

The aggregate amount of the Company's classified loans (comprised entirely of substandard loans), general loss allowances, specific loss allowances and net recoveries were as follows at the dates indicated (in thousands):

		At or For the Year
		Ended March 31,
		2018				2017
Classified loans		$	7,423			$	10,008
General loss allowances			10,697				10,440
Specific loss allowances			69				88
Net recoveries			(238	)			(643	)

All of the loans on non-accrual status as of March 31, 2018 were categorized as classified loans. Classified loans at March 31, 2018 were comprised of twelve commercial business loans totaling $3.4 million, four commercial real estate loans totaling $3.0 million (the largest of which was $1.6 million), one multi-family loan totaling $11,000, one land development loan totaling $763,000, four one-to-four family real estate loans totaling $206,000 and eight purchased automobile loans totaling $71,000.

Allowance for Loan Losses. The Company maintains an allowance for loan losses to provide for probable losses inherent in the loan portfolio consistent with U.S. generally accepted accounting principles ("GAAP") guidelines. The adequacy of the allowance is evaluated monthly to maintain the allowance at levels sufficient to provide for inherent losses existing at the balance sheet date. The key components to the evaluation are the Company's internal loan review function by its credit administration, which reviews and monitors the risk and quality of the loan portfolio; as well as the Company's external loan reviews and its loan classification systems. Credit officers are expected to monitor their loan portfolios and make recommendations to change loan grades whenever changes are warranted. Credit administration approves any changes to loan grades and monitors loan grades. For additional discussion of the Company's methodology for assessing the appropriate level of the allowance for loan losses see Item 7 "Management's Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Policies."

In accordance with GAAP, loans acquired from MBank were recorded at their estimated fair value, which resulted in a net discount to the loans' contractual amounts, of which a portion reflects a discount for possible credit losses. Credit discounts are included in the determination of fair value and as a result no allowance for loan losses is recorded for acquired loans at the acquisition date. The discount recorded on the acquired loans is not reflected in the allowance for loan losses or related allowance coverage ratios. However, we believe it should be considered when comparing certain financial ratios of the Company calculated in periods after the MBank transaction, compared to the same financial ratios of the Company in periods prior to the MBank transaction. The net discount on these acquired loans was $2.2 million and $3.0 million at March 31, 2018 and 2017, respectively.

The Company did not record a provision for loan losses for the years ended March 31, 2018 and 2017. At March 31, 2018, the Company had an allowance for loan losses of $10.8 million, or 1.33% of total loans, compared to $10.5 million, or 1.35% at March 31, 2017. The increase in the balance of the allowance for loan losses at March 31, 2018 reflects the $31.9 million increase in loan balances from March 31, 2017 compared to March 31, 2018. The Company is continuing to experience stabilizing real estate values in our market areas as reflected by net recoveries of $238,000 for the fiscal year ended March 31, 2018. Nonperforming loans decreased $331,000 and 30-89 day delinquent loans increased $279,000 during the fiscal year ended March 31, 2018. Classified loans were $7.4 million at March 31, 2018 compared to $10.0 million at March 31, 2017. The $2.6 million decrease is primarily attributed to one commercial real estate loan with an unpaid principal balance of $3.2 million and $3.3 million as of March 31, 2018 and 2017, respectively, which improved from a substandard to a special mention credit quality indicator during the fiscal year ended March 31, 2018. The coverage ratio of allowance for loan losses to nonperforming loans was 445.24% at March 31, 2018 compared to 382.98% at March 31, 2017. The

Company's general valuation allowance to non-impaired loans was 1.33% and 1.36% at March 31, 2018 and 2017, respectively.

Management considers the allowance for loan losses to be adequate at March 31, 2018 to cover probable losses inherent in the loan portfolio based on the assessment of various factors affecting the loan portfolio, and the Company believes it has established its existing allowance for loan losses in accordance with GAAP. However, a decline in local economic conditions, results of examinations by the Company's regulators, or other factors could result in a material increase in the allowance for loan losses and may adversely affect the Company's future financial condition and results of operations. In addition, because future events affecting borrowers and collateral cannot be predicted with certainty, there can be no assurance that the existing allowance for loan losses will be adequate or that substantial increases will not be necessary should the quality of any loans deteriorate or should collateral values decline as a result of the factors discussed elsewhere in this document.

The following table sets forth an analysis of the Company's allowance for loan losses for the periods indicated (dollars in thousands):

		Year Ended March 31,
		2018				2017				2016				2015				2014
Balance at beginning of year		$	10,528			$	9,885			$	10,762			$	12,551			$	15,643
Provision for (recapture of) loan losses			-				-				(1,150	)			(1,800	)			(3,700	)
Recoveries:
Commercial and construction
Commercial business			240				492				30				34				526
Other real estate mortgage			347				463				331				271				873
Real estate construction			-				-				6				-				4
Total commercial and construction			587				955				367				305				1,403
Consumer
Real estate one-to-four family			11				89				153				158				304
Other installment			48				57				27				12				7
Total consumer			59				146				180				170				311
Total recoveries			646				1,101				547				475				1,714
Charge-offs:
Commercial and construction
Commercial business			-				1				-				120				340
Other real estate mortgage			68				117				-				233				406
Real estate construction			-				-				-				-				11
Total commercial and construction			68				118				-				353				757
Consumer
Real estate one-to-four family			12				-				8				53				346
Other installment			328				340				266				58				3
Total consumer			340				340				274				111				349
Total charge-offs			408				458				274				464				1,106
Net recoveries			(238	)			(643	)			(273	)			(11	)			(608	)
Balance at end of year		$	10,766			$	10,528			$	9,885			$	10,762			$	12,551
Ratio of allowance to total loans outstanding at end of year			1.33	%			1.35	%			1.58	%			1.86	%			2.35	%
Ratio of net (recoveries) charge-offs to average net loans outstanding during year			(0.03	)			(0.10	)			(0.05	)			0.00				(0.12	)
Ratio of allowance to total nonperforming loans			445.24				382.98				364.22				202.37				89.25

The following table sets forth the breakdown of the allowance for loan losses by loan category as of the dates indicated (dollars in thousands):

		At March 31,
		2018								2017								2016								2015								2014
		Amount				Loan Category as a Percent of Total Loans				Amount				Loan Category as a Percent of Total Loans				Amount				Loan Category as a Percent of Total Loans				Amount				Loan Category as a Percent of Total Loans				Amount				Loan Category as a Percent of Total Loans
Commercial and construction:
Commercial business		$	1,668				16.97	%		$	1,418				13.78	%		$	1,048				11.11	%		$	1,263				13.31	%		$	2,409				13.43	%
Other real estate mortgage			5,956				65.20				5,609				65.00				5,310				63.94				5,155				59.60				5,812				60.90
Real estate construction			618				4.88				714				5.92				416				4.28				769				5.26				387				3.65
Consumer:
Real estate one-to-four family			1,400				11.10				1,525				11.91				1,652				14.21				1,881				15.49				2,190				17.43
Other installment			409				1.85				574				3.39				751				6.46				667				6.34				463				4.59
Unallocated			715				-				688				-				708				-				1,027				-				1,290				-
Total allowance for loan losses		$	10,766				100.00	%		$	10,528				100.00	%		$	9,885				100.00	%		$	10,762				100.00	%		$	12,551				100.00	%

Investment Activities

The Board sets the investment policy of the Company. The Company's investment objectives are: to provide and maintain liquidity within regulatory guidelines; to maintain a balance of high quality, diversified investments to minimize risk; to provide collateral for pledging requirements; to serve as a balance to earnings; and to optimize returns. The policy permits investment in various types of liquid assets permissible under OCC regulation, which includes U.S. Treasury obligations, securities of various federal agencies, "bank qualified" municipal bonds, certain certificates of deposit of insured banks, repurchase agreements, federal funds, real estate mortgage investment conduits ("REMICS") and mortgage-backed securities ("MBS"), but does not permit investment in non-investment grade bonds. The policy also dictates the criteria for classifying securities into one of three categories:  held to maturity, available for sale or trading. At March 31, 2018, no investment securities were held for trading purposes. See Item 7.  "Management's Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Policies."

The Company primarily purchases agency securities with maturities of five years or less and purchases a combination of MBS backed by government agencies (FHLMC, Fannie Mae ("FNMA"), U.S. Small Business Administration ("SBA") or Ginnie Mae ("GNMA")). FHLMC and FNMA securities are not backed by the full faith and credit of the U.S. government while SBA and GNMA securities are backed by the full faith and credit of the U.S. government. At March 31, 2018, the Company owned no privately issued MBS. Our REMICS are MBS and consist of FHLMC and FNMA securities and our CRE MBS consist of FNMA securities. The Company does not believe that it has any exposure to sub-prime lending in its investment securities portfolio. See Note 4 of the Notes to the Consolidated Financial Statements contained in Item 8 of this Form 10-K for additional information.

The following table sets forth the investment securities portfolio and carrying values at the dates indicated (dollars in thousands):

		At March 31,
		2018								2017								2016
		Carrying Value				Percent of Portfolio				Carrying Value				Percent of Portfolio				Carrying Value				Percent of Portfolio
Available for sale (at estimated fair value):
Municipal securities		$	8,732				4.09	%		$	2,819				1.41	%		$	-				-	%
Trust preferred securities			-				-				-				-				1,808				1.20
Agency securities			22,102				10.36				16,808				8.39				19,569				12.98
REMICs			46,955				22.02				43,160				21.55				43,924				29.14
Residential MBS			89,074				41.77				96,611				48.24				76,353				50.64
Other MBS			46,358				21.74				40,816				20.38				9,036				5.99
			213,221				99.98				200,214				99.97				150,690				99.95
Held to maturity (at amortized cost):
Residential MBS			42				0.02				64				0.03				75				0.05
Total investment securities		$	213,263				100.00	%		$	200,278				100.00	%		$	150,765				100.00	%

The following table sets forth the maturities and weighted average yields in the securities portfolio at March 31, 2018 (dollars in thousands):

		Less Than One Year								One to Five Years								More Than Five to Ten Years								More Than Ten Years
		Amount				Weighted Average Yield (1)				Amount				Weighted Average Yield (1)				Amount				Weighted Average Yield (1)				Amount				Weighted Average Yield (1)
Municipal securities		$	-				-	%		$	-				-	%		$	2,155				1.72	%		$	6,577				2.67	%
Agency securities			9,964				1.04				5,976				1.69				6,162				2.22				-				-
REMICS			-				-				2,390				2.14				4,316				2.33				40,249				2.32
Residential MBS			-				-				6				6.16				16,435				1.93				72,675				2.41
Other MBS			-				-				-				-				13,489				2.19				32,869				2.16
Total		$	9,964				1.04	%		$	8,372				1.82	%		$	42,557				2.09	%		$	152,370				2.34	%

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

adjustment for tax-exempt obligations.

Management reviews investment securities quarterly for the presence of other than temporary impairment ("OTTI"), taking into consideration current market conditions, the extent and nature of changes in estimated fair value, issuer rating changes and trends, financial condition of the underlying issuers, current analysts' evaluations, the Company's ability and intent to hold investments until a recovery of estimated fair value, which may be maturity, as well as other factors. The Company's trust preferred securities investment consisted of a single collateralized debt obligation ("CDO") secured by a pool of trust preferred securities issued by other bank holding companies which was liquidated during the year ended March 31, 2017, and the Company received $1.8 million in proceeds from the liquidation. During the year ended March 31, 2017, the Company recognized a $240,000 OTTI charge related to this CDO. For additional information related to this security, see Note 4 of the Notes to the Consolidated Financial Statements contained in Item 8 of this Form 10-K. There was no OTTI charge for investment securities for the years ended March 31, 2018 or 2016.

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, savings accounts, certificates of deposit and retirement savings plans. The Company has focused on building customer relationship deposits which include both business and consumer depositors. Deposit account terms vary according to, among other factors, the minimum balance required, the time periods the funds must remain on deposit and the interest rate. 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 customer preferences and concerns.

The following table sets forth the average balances of deposit accounts held by the Company at the dates indicated (dollars in thousands):

		Year Ended March 31,
		2018								2017								2016
		Average Balance				Average Rate				Average Balance				Average Rate				Average Balance				Average Rate
Non-interest-bearing demand		$	264,128				0.00	%		$	202,376				0.00	%		$	170,612				0.00	%
Interest-bearing checking			170,124				0.06				151,801				0.06				127,161				0.08
Savings accounts			132,376				0.10				106,324				0.10				84,485				0.10
Money market accounts			275,092				0.12				252,040				0.12				231,873				0.12
Certificates of deposit			136,370				0.47				118,769				0.53				129,427				0.55
Total		$	978,090				0.12	%		$	831,310				0.14	%		$	743,558				0.16	%

Deposit accounts totaled $995.7 million at March 31, 2018 compared to $980.1 million at March 31, 2017. The Company did not have any wholesale-brokered deposits at March 31, 2018 and 2017. The Company continues to focus on core deposits and growth generated by customer relationships as opposed to obtaining deposits through the wholesale markets. The Company has continued to experience increased competition for customer deposits within its market area. Core branch deposits (comprised of all demand, savings, interest checking accounts and all time deposits excluding wholesale-brokered deposits, trust account deposits, Interest on Lawyer Trust Accounts ("IOLTA"), public funds, and Internet based deposits) increased $22.7 million since March 31, 2017. At March 31, 2018, the Company had $23.6 million, or 2.4% of total deposits, in Certificate of Deposit Account Registry Service ("CDARS") and Insured Cash Sweep ("ICS") deposits, which were gathered from customers within the Company's primary market-area. CDARS and ICS deposits allow customers access to FDIC insurance on deposits exceeding the $250,000 FDIC insurance limit.

At March 31, 2018 and 2017, the Company also had $3.1 million and $3.5 million, respectively, in deposits from public entities located in the States of Washington and Oregon, all of which were fully covered by FDIC insurance or secured by pledged collateral.

The Company is enrolled in an internet deposit listing service. Under this listing service, the Company may post certificates of deposit rates on an internet site where institutional investors have the ability to deposit funds with the Company. At March 31, 2018, the Company did not have any deposits through this listing service as the Company chose not to utilize these internet based deposits. At March 31, 2017, the Company had $7.0 million of deposits through this listing service which were assumed in the MBank transaction. Although the Company did not originate any internet based deposits during the year ended March 31, 2018, the Company may do so in the future consistent with its asset/liability objectives.

Deposit growth remains a key strategic focus for the Company and our ability to achieve deposit growth, particularly growth in core deposits, is subject to many risk factors including the effects of competitive pricing pressures, changing customer deposit behavior, and increasing or decreasing interest rate environments. Adverse developments with respect to any of these risk factors could limit the Company's ability to attract and retain deposits and could have a material negative impact on the Company's future financial condition, results of operations and cash flows.

The following table presents the amount and weighted average rate of certificates of deposit equal to or greater than $100,000 at March 31, 2018 (dollars in thousands):

Maturity Period		Amount				Weighted Average Rate
Three months or less		$	14,879				0.44	%
Over three through six months			10,821				0.55
Over six through 12 months			23,139				0.54
Over 12 months			16,399				0.90
Total		$	65,238				0.61	%

Borrowings. The Company relies upon advances from the FHLB and borrowings from the Federal Reserve Bank of San Francisco ("FRB") to supplement its supply of lendable funds and to meet deposit withdrawal requirements. Advances from the FHLB and borrowings from the FRB are typically secured by the Bank's commercial loans, commercial real estate loans, first mortgage loans and investment securities. At March 31, 2018, 2017 and 2016, the Bank did not have any FHLB advances or FRB borrowings.

The FHLB functions as a central reserve bank providing credit for 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 (primarily securities which are obligations of, or guaranteed by, the U.S.) provided certain standards related to credit-worthiness have been met. The FHLB determines specific lines of credit for each member institution and the Bank has a line of credit with the FHLB equal to 35% of its total assets to the extent the Bank provides qualifying collateral and holds sufficient FHLB stock. At March 31, 2018, the Bank had an available credit capacity of $394.6 million, subject to sufficient collateral and stock investment.

The Bank also has a borrowing arrangement with the FRB with an available credit facility of $57.4 million, subject to pledged collateral, as of March 31, 2018. The following table sets forth certain information concerning the Company's borrowings for the periods indicated (dollars in thousands):

		Year Ended March 31,
		2018				2017				2016
Maximum amounts of FHLB advances outstanding at any month end		$	14,050			$	-			$	-
Average FHLB advances outstanding			787				239				5
Weighted average rate on FHLB advances			1.60	%			0.80	%			0.31	%
Maximum amounts of FRB borrowings outstanding at any month end		$	-			$	-			$	-
Average FRB borrowings outstanding			1				-				5
Weighted average rate on FRB borrowings			1.50	%			-	%			0.88	%

At March 31, 2018, the Company had three wholly-owned subsidiary grantor trusts totaling $26.5 million that were established for the purpose of issuing trust preferred securities and common securities including a $5.2 million trust acquired in the MBank transaction. The trust preferred securities accrue and pay distributions periodically at specified annual rates as provided in each trust agreement. The trusts used the net proceeds from each of the offerings to purchase a like amount of junior subordinated debentures (the "Debentures") of the Company. 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 mandatorily redeemable upon maturity of the Debentures or upon earlier redemption as provided in the indentures. The Company has the right to redeem the Debentures in whole or in part on or after specific dates, at a redemption price specified in the indentures governing the Debentures plus any accrued but unpaid interest to the redemption date. The Company also has the right to defer the payment of interest on each of the Debentures for a period not to exceed 20 consecutive quarters, provided that the deferral period does not extend beyond the stated maturity. During such deferral period, distributions on the corresponding trust preferred securities will also be deferred and the Company may not pay cash dividends to the holders of shares of the Company's common stock. The common securities issued by the grantor trusts are held by the Company, and the Company's investment in the common securities of $836,000 at both March 31, 2018 and 2017, is included in prepaid expenses and other assets in the Consolidated Balance Sheets included in the Consolidated Financial Statements contained in Item 8 of this Form 10-K. For more information, see also Note 11 of the Notes to the Consolidated Financial Statements contained in Item 8 of this Form 10-K.

Taxation

For details regarding the Company's taxes, see Note 12 of the Notes the Consolidated Financial Statements contained in Item 8 of this Form 10-K.

Personnel

As of March 31, 2018, the Company had 258 full‑time equivalent employees, none of whom are represented by a collective bargaining unit. The Company believes its relationship with its employees is good.

Corporate Information

The Company's principal executive offices are located at 900 Washington Street, Vancouver, Washington 98660. Its telephone number is (360) 693-6650. The Company maintains a website with the address www.riverviewbank.com . The information contained on the Company's website is not included as a part of, or incorporated by reference into, this Annual Report on Form 10-K. Other than an investor's own internet access charges, the Company makes available free of charge through its website the Annual Report on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K, and amendments to these reports, as soon as reasonably practicable after it has electronically filed such material with, or furnished such material to, the Securities and Exchange Commission ("SEC").

Subsidiary Activities

Under OCC regulations, the Bank is authorized to invest up to 3% of its assets in subsidiary corporations classified as service corporations, with amounts in excess of 2% only if primarily for community purposes, and unlimited amounts in operating subsidiaries. At March 31, 2018, the Bank's investments in its wholly-owned subsidiaries of $1.2 million in Riverview Services, Inc. ("Riverview Services") and $4.8 million in the Trust Company were within these limitations.

Riverview Services acts as a trustee for deeds of trust on mortgage loans granted by the Bank and receives a reconveyance fee for each deed of trust. Riverview Services had net income of $26,000 for the fiscal year ended March 31, 2018 and total assets of $1.2 million at March 31, 2018. Riverview Services' operations are included in the Consolidated Financial Statements of the Company contained in Item 8 of this Form 10-K.

The Trust Company is an asset management company providing trust, estate planning and investment management services. The Trust Company had net income of $314,000 for the fiscal year ended March 31, 2018 and total assets of $5.1 million at that date. The Trust Company earns fees on the management of assets held in fiduciary or agency capacity. At March 31, 2018, total assets under management were $484.3 million. The Trust Company's operations are included in the Consolidated Financial Statements of the Company contained in Item 8 of this Form 10-K.

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

Name	Age (1 )	Position
Patrick Sheaffer	78	Chairman of the Board
Kevin J. Lycklama	40	President and Chief Executive Officer
David Lam	41	Executive Vice President and Chief Financial Officer
Daniel D. Cox	40	Executive Vice President and Chief Credit Officer
Kim J. Capeloto	56	Executive Vice President and Chief Banking Officer
Steven P. Plambeck	58	Executive Vice President and Chief Lending Officer
Christopher P. Cline	57	President and Chief Executive Officer of Riverview Trust Company