Northwest Bancorporation Inc., the Spokane-based parent of Inland Northwest Bank, has reported net income of $267,000, or 10 cents a diluted share, for all of last year, compared with a net loss of $3.9 million, or $1.63 a share, for all of 2009.

For the fourth quarter, however, the bank-holding company reported a net loss of $608,000, or 20 cents a share, compared with a loss of $1.7 million, or 72 cents a share, for the year-earlier quarter.

Randall L. Fewel, president and CEO of the bank-holding company and INB, says he was pleased with the company's progress in 2010.

"Any time you turn a profit after a big loss in the previous year, you have to be happy with that improvement," he says, adding, however, "We still have a long way to go before it could be characterized as a great year."

The results include provisions for loan losses of $900,000 in the fourth quarter and $3 million for the entire year, compared with 2009 loan-loss provisions of $2 million and $7.3 million for the fourth quarter and full year, respectively.

Fewel says much of the fourth-quarter loss was due to a steep decline in value of a North Idaho real estate holding the bank foreclosed upon in 2009. The property had an appraised value of $2.5 million in February of that year, but in November of 2010, it appraised for $950,000, he says.

"That wiped out our fourth-quarter profit," Fewel says. "We had to write that down to $725,000. Banks aren't in the business of holding onto property, and we want to get rid of it."

The company says loan losses are expected to decline, which in turn should reduce the need to set aside large amounts in the loan-loss reserve.

Northwest Bancorporation's total assets edged upward to $394.6 million as of Dec. 31, up $873,000 from total assets of $393.7 million a year earlier.

INB's total loans as fell to $274.5 million as of Dec.31, from $314.2 million a year earlier. Deposits grew to $386.8 million at year-end, from $338.2 million a year earlier.

"For 2010, we did want to shrink loans somewhat, for liquidity and balance-sheet purposes," he says. "We would like them to grow in 2011."

The bank's nonperforming assets, or loans that are no longer accruing interest, real estate acquired through foreclosure or forfeiture, and other assets in process of liquidation, ended 2010 at $16.7 million, up from $15.4 million at year-end 2009.

Fewel says INB added two employees its special assets department in the second half of 2010 and expects to accelerate the process of eliminating nonperforming assets from its books.