In the three months ending June 30, the share of non-performing assets, or unpaid loans, on Riverview’s books grew more than tenfold from a year earlier, to $23.6 million, or 2.67 percent of the bank’s total assets, the company reported.

Executives set aside $2.75 million to cover loans they don’t expect will be repaid. The move reduced net income for the quarter to $793,000. In the same three months in 2007, the bank reported net income of $2.8 million, and set aside $50,000 for loan losses.

Recent loan losses can be traced to 20 loans to 16 borrowers, the bank said. Those loans were for land acquisition and development, construction, commercial projects and real estate, with 15 loans funding projects in Oregon and Washington and one for a project in California.

Riverview is still working to obtain payment on those loans, Ron Wysaske, president and chief operating officer, said in a prepared statement.

Bank management believes that the money it has set aside to cover loan losses is adequate, according to Riverview’s earnings report.

“During the quarter we reduced our exposure to real estate construction and shrunk that portfolio to $142 million at quarter-end” from $159 million at the end of June 2007, Wysaske said.
Riverview is not exposed to subprime mortgage losses, Chairman and Chief Executive Pat Sheaffer said in a bank statement.

“During the past several months, changes in the national economy affected our local markets in Southwest Washington and metropolitan Portland,” Sheaffer said, but he predicted that this region will compare favorably to the U.S.

“Although we started our fiscal year at double-digit growth, we expect our loan growth for the remainder of the year to be moderate compared to the record-setting pace of the past few years,” Sheaffer said. “Our focus remains on keeping a well-diversified, high-quality loan portfolio despite the current challenging economic environment.”

Riverview, which trades as RVSP, closed down 97 cents at $5.11 on Tuesday.

COURTNEY SHERWOOD covers banking at The Columbian. Reach her at 360-735-4553 or courtney.sherwood@columbian.com.