Spokane Valley-based State Bank Northwest has reported second-quarter net income of $210,000, up from a net loss of $383,000 in the second quarter of 2009, according to documents filed with the Federal Deposit Insurance Corp.

The institution's loans, deposits, and assets all fell, though, compared with the year-earlier quarter, the filings show. The bank ended the quarter with loans of $80.6 million, down 12 percent from a year earlier, while deposits declined 8 percent to $90.3 million. State Bank's assets at the end of the last quarter were $103.7 million, down 6 percent a year earlier.

Greg Deckard, State Bank's chairman, president, and CEO, says the bank was carrying a lot of short-term debt last year that contributed to the drop in loans as those loans were repaid, and notes that the bank has seen 4 percent loan growth since the beginning of this year.

"We're ahead of budget," he says. "Right now, the struggle is just weaker loan demand and tougher economic times."

One of the main reasons for the profitable quarter, despite declines in some areas, was that the bank had fewer charge-offs and didn't need to fund its loan-loss reserves as aggressively as it did in 2009, Deckard says.

"Last year we would have had a record year in the bank if we hadn't had the extraordinary loan-quality issues," he says. "The core earnings of the bank remain healthy. Liquidity is still very strong—well above peer (institutions)—and our capital ratios are strong and improving."

State Bank offers business, consumer, and agricultural banking services, as well as residential and commercial mortgages. The bank's headquarters is located at 12902 E. Sprague, and it also has branches at 9729 N. Nevada on Spokane's North Side and in Garfield, Wash.