Northwest Bancorporation Inc., parent company of Inland Northwest Bank, announced a fourth quarter net loss of $608,000 compared with a net loss of $1.7 million for the fourth quarter of 2009.

President and Chief Executive Office Randall L. Fewel reported net income of $267,000 for the 12 months ending Dec. 31, compared with a loss of $3.9 million for the year earlier.

"As credit quality continues to improve, loan losses are expected to decline, which should in turn reduce the need to set aside large amounts in the loan-loss reserve," Fewel said.

The fourth quarter results include a provision for loan losses of $900,000, and $3 million for the year. That compares with loan-loss provisions of $2 million and $7.3 million for the year-earlier periods.

Total assets for the company were $394.6 million as of Dec. 31, an increase of $873,000, or 0.2 percent, compared with $393.7 million a year earlier.

The bank reported net income for 2010 of $1.4 million compared with a loss of $2.8 million for 2009.

"During the year (Inland Northwest Bank) was highly successful in continuing to de-leverage overall risk in the balance sheet, reducing net loan balances by $39.7 million, or 12.6 percent, compared to the prior year end, and increasing core deposits by $48.6 million, or 29.5 percent," Fewel said.

He said the bank is disappointed by the fourth-quarter loss, but pleased by the $1.1 million improvement compared with the year-earlier quarter. More importantly, he said, was the bank's 2010 profit, an improvement of $4.1 million from the 2009 loss.

Loan losses, or net charge-offs, for the bank were $3.1 million in 2010, compared with $5 million in 2009.