SOURCE: Rainier Pacific Financial Group

October 17, 2007 09:00 ET

Rainier Pacific Financial Group, Inc. Reports Third Quarter Earnings

TACOMA, WA--(Marketwire - October 17, 2007) - Rainier Pacific Financial Group, Inc. (the "Company") (NASDAQ: RPFG) announced today its third quarter results. Net income for the quarter ended September 30, 2007 increased 42.7% to $1.1 million, or $0.18 per diluted share, compared to net income of $751,000, or $0.13 per diluted share, for the same period in 2006. For the nine months ended September 30, 2007, the Company's net income was $2.9 million, or $0.49 per diluted share, compared to net income of $2.1 million, or $0.35 per diluted share, for the same nine month period in 2006.

The Company's revenue (i.e., net interest income before provision for loan losses plus non-interest income) for the quarter ended September 30, 2007 was $9.1 million, compared to $8.6 million for the same period a year ago. Net interest income before the provision for loan losses for the quarter was $6.7 million, or 6.3% higher than the $6.3 million during the same period a year ago. For the quarter ended September 30, 2007, the Company's net interest margin improved to 3.20%, compared to 3.01% for the quarter ended June 30, 2007, and 2.96% for the quarter ended September 30, 2006. The yield on the Company's interest-earning assets was 6.94% for the quarter ended September 30, 2007, compared to 6.71% and 6.60% for the quarters ended June 30, 2007 and September 30, 2006, respectively. For the quarter ended September 30, 2007, the Company's cost of interest-bearing liabilities was 4.15%, compared to 4.11% and 4.01% for the quarters ended June 30, 2007 and September 30, 2006, respectively.

Non-interest income increased 4.3% to $2.4 million for the quarter ended September 30, 2007, compared to $2.3 million for the same quarter in 2006, as the Company continued to benefit from increased revenue derived from loan servicing fees and its property and casualty insurance agency. "We continue to seek ways to diversify and grow the Company's recurring non-interest income sources. This is particularly evident in the insurance service fees generated by Rainier Pacific Insurance Services during 2007, for which we remain focused on growing through both organic means and by acquiring smaller independent agencies," said John A. Hall, President and CEO.

Non-interest expenses were $7.3 million for the quarter ended September 30, 2007, unchanged compared to $7.3 million for the quarter ended September 30, 2006 and slightly higher compared to the $7.1 million for the quarter ended June 30, 2007.

High prepayments of multi-family and commercial real estate loans, reductions from the investment securities portfolio, sales of single-family mortgage loans, and slower loan originations contributed to a decline in the Company's total assets to $882.3 million at September 30, 2007, or $20.4 million less than the $902.7 million at December 31, 2006. Total shareholders' equity at September 30, 2007 was $89.6 million, compared to $87.8 million at December 31, 2006.

Total loans were $633.3 million at September 30, 2007, compared to $647.4 million at June 30, 2007 and $639.4 million at December 31, 2006, respectively. The decline in loan balances was primarily attributable to a high level of multi-family and commercial real estate loan prepayments, sales of single-family mortgage loans, and slower loan originations, as the Company focused on originating higher credit quality loans during the quarter ended September 30, 2007. For the quarter and nine months ended September 30, 2007, the Company experienced $26.3 million and $36.4 million in multi-family and commercial real estate loan prepayments, respectively.

Total loan originations were $46.1 million during the quarter ended September 30, 2007, compared to $61.1 million and $70.8 million for the quarters ended June 30, 2007 and September 30, 2006, respectively. For the nine months ended September 30, 2007, total loan originations were $147.5 million, compared to $174.9 million for the same period in 2006.

For the quarter ended September 30, 2007, the yield on loans was 7.53%, compared to 7.27% and 7.22% for the quarters ended June 30, 2007 and September 30, 2006, respectively. The third quarter improvement in the yield on loans was partially attributable to the income the Company received from prepayments of multi-family and commercial real estate loans during the quarter. At September 30, 2007, the loan portfolio consisted of 33.8% commercial real estate loans, 23.6% multi-family real estate loans, 12.4% single-family real estate loans, 11.8% real estate construction loans, 8.5% consumer loans (excluding home equity loans), 7.0% home equity loans, and 2.9% commercial business loans.

The Company sold $5.1 million of single-family fixed-rate real estate loans which generated $60,000 in net gains during the quarter ended September 30, 2007, compared to $5.0 million in loan sales and $23,000 in net gains during the same period in 2006. The portfolio of loans serviced for others increased to $113.3 million at September 30, 2007, compared to $107.1 million at September 30, 2006.

The credit quality of the loan portfolio remained very good during the third quarter. Net charge-offs were $242,000 for the quarter ended September 30, 2007, compared to $191,000 for the quarter ended June 30, 2007, and $145,000 for the quarter ended September 30, 2006. Loans more than 30 days delinquent as a percentage of total loans were 0.28% at September 30, 2007, compared to 0.26% at June 30, 2007, and 0.28% at December 31, 2006. Non-performing loans (i.e., loans 90 days or more past due or non-accrual loans) were $197,000, or 0.03% of total loans, at September 30, 2007, compared to $217,000, or 0.03% of total loans, at June 30, 2007, and $241,000, or 0.04% of total loans, at December 31, 2006. Non-performing assets were $220,000, or 0.02% of total assets, at September 30, 2007, compared to $233,000, or 0.03% of total assets, at June 30, 2007, and $274,000, or 0.03% of total assets, at December 31, 2006. The Company's provision for loan losses was $150,000 for the quarter ended September 30, 2007, unchanged from the provision made for the previous quarters ended June 30, 2007 and September 30, 2006. The allowance for loan losses of $8.1 million at September 30, 2007, representing an allowance to total loans ratio of 1.29%, was modestly lower compared to the $8.2 million at June 30, 2007 and the $8.3 million at December 31, 2006.

The investment securities portfolio at September 30, 2007 of $185.7 million (excluding $13.7 million in Federal Home Loan Bank of Seattle stock holdings) was less than the $190.7 million at June 30, 2007, and the $197.8 million at December 31, 2006.

Total deposits were $460.9 million at September 30, 2007, compared to $460.3 million at June 30, 2007 and $457.4 million at December 31, 2006. Core deposits (comprised of checking, savings, money market, and individual retirement accounts) increased $16.0 million to $236.4 million, or 51.3% of total deposits, as of September 30, 2007, compared to $220.4 million as of December 31, 2006. Brokered deposit balances were $51.0 million at September 30, 2007, compared to $50.6 million at June 30, 2007 and $50.9 million at December 31, 2006. For the quarter ended September 30, 2007, the average cost of interest-bearing deposits was 3.81%, compared to 3.83% for the quarter ended June 30, 2007 and 3.67% for the quarter ended September 30, 2006.

During the quarter ended September 30, 2007, the Company purchased and retired 50,000 shares of its outstanding shares of common stock at an average price of $17.07 per share. At September 30, 2007, the Company had the authority to purchase an additional 163,920 shares of common stock under its currently approved stock repurchase program.

The Company's book value and tangible book value per share as of September 30, 2007 were $14.67 and $14.15 per share, respectively, based upon 6,109,633 outstanding shares of common stock. The number of outstanding shares includes 115,108 restricted shares granted to participants under the Company's 2004 Management Recognition Plan that have not yet vested or were not ratably earned, and excludes 407,237 of unallocated shares held by the Rainier Pacific 401(k) Employee Stock Ownership Plan.

"We are pleased with our continued improvement in earnings during the first nine months of the year and the strong credit quality of our loan portfolio. However, we anticipate economic conditions will be less favorable in our primary market area, and we will continue to be selective in our loan pricing and underwriting. Going forward, we will remain focused on achieving better operating profitability and efficiency during the fourth quarter of 2007," said John A. Hall, President and CEO.

Rainier Pacific Financial Group, Inc. is the bank holding company for Rainier Pacific Bank, a Tacoma, Washington-based state-chartered savings bank operating 14 full-service locations in the Tacoma-Pierce County and City of Federal Way market areas.

For additional information, visit Rainier Pacific's website at www.rainierpac.com.

Forward-looking statements:

Certain matters discussed in this press release may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements relate to, among other things, expectations of the business environment in which the Company operates, projections of future performance, perceived opportunities in the market, potential future credit experience, and statements regarding the Company's mission and vision. These forward-looking statements are based upon current management expectations and may, therefore, involve risks and uncertainties. The Company's actual results, performance, or achievements may differ materially from those suggested, expressed, or implied by forward-looking statements as a result of a wide variety or range of factors including, but not limited to, interest rate fluctuations; economic conditions in the Company's primary market area; demand for residential, commercial real estate, consumer, and other types of loans; success of new products; competitive conditions between banks and non-bank financial service providers; regulatory and accounting changes; technological factors affecting operations; pricing of products and services; and other risks detailed in the Company's reports filed with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the fiscal year ended December 31, 2006. Accordingly, these factors should be considered in evaluating forward-looking statements, and undue reliance should not be placed on such statements. The Company undertakes no responsibility to update or revise any forward-looking statement.

            Rainier Pacific Financial Group, Inc. & Subsidiary
                   Consolidated Statements of Condition
                          (Dollars in Thousands)


                                  ASSETS
                                              At                    At
                                           September   At June   December
                                              30,        30,        31,
                                             2007       2007       2006
                                           ---------  ---------  ---------

  Cash and cash equivalents                $   9,192  $  12,626  $  11,847
  Interest-bearing deposits with banks           732        625         57
  Securities available-for-sale              138,345    141,543    145,110
  Securities held-to-maturity (fair value
   of $46,337 at September 30, 2007;
   $47,453 at June 30, 2007; and $51,589
   at December 31, 2006)                      47,346     49,110     52,652
  Federal Home Loan Bank of Seattle
   ("FHLB") stock, at cost                    13,712     13,712     13,712
                                           ---------  ---------  ---------

  Loans                                      633,319    647,385    639,378
    Less: allowance for loan losses           (8,142)    (8,235)    (8,283)
                                           ---------  ---------  ---------
      Loans, net                             625,177    639,150    631,095

  Premises and equipment, net                 33,731     33,858     34,383
  Accrued interest receivable                  4,075      4,035      4,177
  Other assets                                 9,951     10,184      9,664
                                           ---------  ---------  ---------

      TOTAL ASSETS                         $ 882,261  $ 904,843  $ 902,697
                                           =========  =========  =========


                    LIABILITIES AND SHAREHOLDERS’ EQUITY
LIABILITIES:
  Deposits
  Non-interest bearing                     $  34,603  $  36,941  $  33,722
  Interest-bearing                           426,314    423,375    423,703
                                           ---------  ---------  ---------
      Total deposits                         460,917    460,316    457,425

  Borrowed funds                             321,574    343,615    345,395
  Corporate drafts payable                     2,992      4,200      3,537
  Accrued compensation and benefits            1,759      1,415      2,111
  Other liabilities                            5,381      5,387      6,399
                                           ---------  ---------  ---------

      TOTAL LIABILITIES                      792,623    814,933    814,867
                                           ---------  ---------  ---------

SHAREHOLDERS’ EQUITY:
  Common stock, no par value: 49,000,000
   shares authorized; 6,516,870 shares
   issued and 5,994,525 shares outstanding
   at September 30, 2007; 6,568,470 shares
   issued and 6,011,777 shares outstanding
   at June 30, 2007; and 6,587,670 shares
   issued and 5,971,913 shares outstanding
   at December 31, 2006                       49,972     50,434     50,038
  Unearned Employee Stock Ownership Plan
   ("ESOP") shares                            (4,072)    (4,242)    (4,582)
  Accumulated other comprehensive loss,
   net of tax                                 (1,108)      (480)      (806)
  Retained earnings                           44,846     44,198     43,180
                                           ---------  ---------  ---------

      TOTAL SHAREHOLDERS’ EQUITY              89,638     89,910     87,830
                                           ---------  ---------  ---------

      TOTAL LIABILITIES AND SHAREHOLDERS’
       EQUITY                              $ 882,261  $ 904,843  $ 902,697
                                           =========  =========  =========




            Rainier Pacific Financial Group, Inc. & Subsidiary
                    Consolidated Statements of Income
              (Dollars in Thousands, except per share data)


                           Three Months Ended         Nine Months Ended
                              September 30,             September 30,
                        ------------------------  ------------------------
                            2007         2006         2007         2006
                        -----------  -----------  -----------  -----------
INTEREST INCOME
  Loans                 $    12,127  $    11,206  $    35,371  $    31,613
  Securities available-
   for-sale                   2,015        2,187        6,099        6,117
  Securities held-to-
   maturity                     527          617        1,638        2,082
  Interest-bearing
   deposits                      28          168          108          284
  FHLB dividends                 21            -           55            -
                        -----------  -----------  -----------  -----------
    Total interest income    14,718       14,178       43,271       40,096
                        -----------  -----------  -----------  -----------
INTEREST EXPENSE
  Deposits                    4,104        3,879       12,268       10,155
  Borrowed funds              3,881        3,986       11,465       11,132
                        -----------  -----------  -----------  -----------
    Total interest
     expense                  7,985        7,865       23,733       21,287
                        -----------  -----------  -----------  -----------
    Net interest income       6,733        6,313       19,538       18,809
PROVISION FOR LOAN
 LOSSES                         150          150          450          450
                        -----------  -----------  -----------  -----------
      Net interest income
       after provision
       for loan losses        6,583        6,163       19,088       18,359
                        -----------  -----------  -----------  -----------
NON-INTEREST INCOME
  Deposit service fees          906          932        2,611        2,633
  Loan service fees             381          308        1,019          858
  Insurance service fees        552          545        1,717        1,579
  Investment service fees       189          179          446          463
  Real estate lease income      298          277          863          841
  Gain on sale of
   securities, net                -            3            -            3
  Gain on sale of loans,
   net                           60           23          262           75
  Gain on sale of
   premises and equipment,
   net                            1            7           11            7
  Other operating income         25           29           69           86
                        -----------  -----------  -----------  -----------
    Total non-interest
     income                   2,412        2,303        6,998        6,545
                        -----------  -----------  -----------  -----------
NON-INTEREST EXPENSE
  Compensation and
   benefits                   4,237        3,935       12,298       11,999
  Office operations           1,006        1,385        2,948        3,991
  Occupancy                     649          666        1,908        1,941
  Loan servicing                130          125          369          386
  Outside and professional
   services                     250          291          940          947
  Marketing                     278          276          810          727
  Other operating
   expenses                     799          633        2,287        1,704
                        -----------  -----------  -----------  -----------
    Total non-interest
     expense                  7,349        7,311       21,560       21,695
                        -----------  -----------  -----------  -----------

INCOME BEFORE PROVISION
 FOR FEDERAL INCOME TAX       1,646        1,155        4,526        3,209

PROVISION FOR FEDERAL
 INCOME TAX                     574          404        1,582        1,123
                        -----------  -----------  -----------  -----------

NET INCOME              $     1,072  $       751  $     2,944  $     2,086
                        ===========  ===========  ===========  ===========

EARNINGS PER COMMON
 SHARE
  Basic                 $      0.18  $      0.13  $      0.49  $      0.35
  Diluted               $      0.18  $      0.13  $      0.49  $      0.35
  Weighted average
   shares outstanding -
   Basic                5,983,586(1) 5,951,363(2) 5,985,043(1) 5,935,680(2)
  Weighted average
   shares outstanding -
   Diluted                5,983,586    5,993,987    6,027,478    5,941,717


 (1) Weighted average shares outstanding - Basic includes 212,593 vested
     and ratably earned shares of the 327,700 restricted shares granted and
     issued under the 2004 Management Recognition Plan ("MRP"), net of
     forfeited shares.
(2)  Weighted average shares outstanding - Basic includes 149,313 vested
     and ratably earned shares of the 322,800 restricted shares granted and
     issued under the MRP, net of forfeited shares.




            Rainier Pacific Financial Group, Inc. & Subsidiary
                    Consolidated Statements of Income
              (Dollars in Thousands, except per share data)


                                        Three Months Ended
                        --------------------------------------------------
                         September     June 30,    March 31,     December
                          30, 2007       2007         2007       31, 2006
                        -----------  -----------  -----------  -----------
INTEREST INCOME
  Loans                 $    12,127  $    11,645  $    11,599  $    11,427
  Securities available-
   for-sale                   2,015        2,032        2,052        2,095
  Securities held-to-
   maturity                     527          546          565          581
  Interest-bearing
   deposits                      28           70           10           11
  FHLB dividends                 21           20           14           14
                        -----------  -----------  -----------  -----------
    Total interest
     income                  14,718       14,313       14,240       14,128
                        -----------  -----------  -----------  -----------
INTEREST EXPENSE
  Deposits                    4,104        4,053        4,111        4,065
  Borrowed funds              3,881        3,841        3,743        3,888
                        -----------  -----------  -----------  -----------
    Total interest
     expense                  7,985        7,894        7,854        7,953
                        -----------  -----------  -----------  -----------
    Net interest income       6,733        6,419        6,386        6,175
PROVISION FOR LOAN
 LOSSES                         150          150          150          150
                        -----------  -----------  -----------  -----------
        Net interest
         income after
         provision for
         loan loss            6,583        6,269        6,236        6,025
                        -----------  -----------  -----------  -----------
NON-INTEREST INCOME
  Deposit service fees          906          879          826          887
  Loan service fees             381          346          292          330
  Insurance service fees        552          622          543          499
  Investment service
   fees                         189          144          113           94
  Real estate lease
   income                       298          271          294          298
  Gain on sale of
   securities, net                -            -            -            -
  Gain on sale of loans,
   net                           60           66          136          203
  Gain on sale of
   premises and
   equipment, net                 1            -           10            -
  Other operating income         25           16           28           24
                        -----------  -----------  -----------  -----------
    Total non-interest
     income                   2,412        2,344        2,242        2,335
                        -----------  -----------  -----------  -----------
NON-INTEREST EXPENSE
  Compensation and
   benefits                   4,237        4,068        3,993        3,785
  Office operations           1,006          956          986        1,164
  Occupancy                     649          624          635          687
  Loan servicing                130          129          110          143
  Outside and
   professional services        250          258          432          354
  Marketing                     278          289          243          219
  Other operating
   expenses                     799          778          710          663
                        -----------  -----------  -----------  -----------
    Total non-interest
     expense                  7,349        7,102        7,109        7,015
                        -----------  -----------  -----------  -----------

INCOME BEFORE PROVISION
 FOR FEDERAL INCOME TAX       1,646        1,511        1,369        1,345

PROVISION FOR FEDERAL
 INCOME TAX                     574          529          479          471
                        -----------  -----------  -----------  -----------

NET INCOME              $     1,072  $       982  $       890  $       874
                        ===========  ===========  ===========  ===========

EARNINGS PER COMMON
 SHARE
  Basic                 $      0.18  $      0.16  $      0.15  $      0.15
  Diluted               $      0.18  $      0.16  $      0.15  $      0.15
  Weighted average
   shares outstanding -
   Basic                5,983,586(1) 5,995,114(2) 5,976,430(3) 5,958,304(4)
  Weighted average
   shares outstanding -
   Diluted                5,983,586    6,073,991    6,094,582    6,022,936


(1) Weighted average shares outstanding - Basic includes 212,593 vested and
    ratably earned shares of the 327,700 restricted shares granted and
    issued under the MRP, net of forfeited shares.
(2) Weighted average shares outstanding - Basic includes 196,818 vested and
    ratably earned shares of the 329,300 restricted shares granted and
    issued under the MRP, net of forfeited shares.
(3) Weighted average shares outstanding - Basic includes 180,708 vested and
    ratably earned shares of the 321,300 restricted shares granted and
    issued under the MRP, net of forfeited shares.
(4) Weighted average shares outstanding - Basic includes 165,203 vested and
    ratably earned shares of the 322,800 restricted shares granted and
    issued under the MRP, net of forfeited shares.




            Rainier Pacific Financial Group, Inc. & Subsidiary
                      Selected Information and Ratios
                          (Dollars in Thousands)



                                               As of
                         -------------------------------------------------
                         September                     December  September
                            30,    June 30,  March 31,    31,       30,
                           2007      2007      2007      2006      2006
                         --------- --------- --------- --------- ---------
Loan portfolio composition:
  Real estate:
    One- to four-family
     residential         $  78,621 $  79,018 $  80,324 $  81,542 $  85,387
    Five or more family
     residential           149,474   159,137   161,273   163,060   162,741
    Commercial             214,130   215,442   203,732   195,854   190,563
                         --------- --------- --------- --------- ---------
      Total real estate    442,225   453,597   445,329   440,456   438,691
  Real estate construction:
    One- to four-family
     residential            70,867    72,838    75,060    75,508    67,115
    Five or more family
     residential             2,019     3,187     3,640     4,180     4,875
    Commercial               1,834         -         -         -         -
                         --------- --------- --------- --------- ---------
      Total real estate
       construction         74,720    76,025    78,700    79,688    71,990
  Consumer:
    Automobile              23,711    26,623    29,298    31,888    33,656
    Home equity             44,537    44,610    42,738    42,718    41,571
    Credit cards            22,601    22,018    21,936    23,327    21,965
    Other                    7,383     7,310     7,494     8,179     8,593
                         --------- --------- --------- --------- ---------
      Total consumer        98,232   100,561   101,466   106,112   105,785

  Commercial/business       18,142    17,202    13,005    13,122    12,241
                         --------- --------- --------- --------- ---------
      Subtotal             633,319   647,385   638,500   639,378   628,707
Less: Allowance for loan
 losses                     (8,142)   (8,235)   (8,276)   (8,283)   (8,414)
                         --------- --------- --------- --------- ---------
  Total loans, net       $ 625,177 $ 639,150 $ 630,224 $ 631,095 $ 620,293
                         ========= ========= ========= ========= =========

Sold loans, serviced for
 others                  $ 113,306 $ 113,434 $ 112,669 $ 110,297 $ 107,100
                         ========= ========= ========= ========= =========

Non-performing assets:
  Loans 90 days or more
   past due              $     197 $     217 $     224 $     241 $     194
  Repossessed assets            23        16        21        33         8
  Other real estate owned        -         -         -         -         -
                         --------- --------- --------- --------- ---------
    Total non-performing
     assets              $     220 $     233 $     245 $     274 $     202
                         ========= ========= ========= ========= =========

Loans greater than 30
 days delinquent         $   1,762 $   1,651 $   1,684 $   1,776 $   1,516
Loans greater than 30
 days delinquent as a
 percentage of loans          0.28%     0.26%     0.26%     0.28%     0.24%
Non-performing loans as a
 percentage of loans          0.03%     0.03%     0.04%     0.04%     0.03%
Non-performing assets as
 a percentage of assets       0.02%     0.03%     0.03%     0.03%     0.02%
Allowance for loan loss
 as a percentage of
 non-performing loans     4,132.99% 3,794.93% 3,694.64% 3,436.93% 4,337.11%
Allowance for loan loss
 as a percentage of
 non-performing assets    3,700.91% 3,534.33% 3,377.96% 3,022.99% 4,165.35%
Allowance for loan loss
 as a percentage of total
 loans                        1.29%     1.27%     1.30%     1.30%     1.34%

Core deposits (all
 deposits, excluding CDs)$ 236,411 $ 242,446 $ 242,442 $ 220,352 $ 224,267
Non-core deposits (CDs)    224,506   217,870   224,293   237,073   234,227
                         --------- --------- --------- --------- ---------
  Total deposits         $ 460,917 $ 460,316 $ 466,735 $ 457,425 $ 458,494

                         ========= ========= ========= ========= =========

Loans/Deposits              137.40%   140.64%   136.80%   139.78%   137.12%
Equity/Assets                10.16%     9.94%     9.79%     9.73%     9.63%




            Rainier Pacific Financial Group, Inc. & Subsidiary
                      Selected Information and Ratios
                          (Dollars in Thousands)


                                 Three Months Ended     Nine Months Ended
                                    September 30,         September 30,
                                --------------------  --------------------
                                  2007       2006       2007       2006
                                ---------  ---------  ---------  ---------

Loan growth (decline)             (2.17%)     3.34%     (0.95%)       7.86%
Deposit growth                     0.13%      2.02%      0.76%        4.67%
Equity growth (decline)           (0.30%)     1.73%      2.06%        2.40%
Asset growth (decline)            (2.50%)    (1.97%)    (2.26%)       3.47%

Loans originated                $  46,053  $  70,829  $ 147,490  $ 174,869
Loans sold                      $   5,127  $   4,970  $  17,504  $  11,987
Loans charged-off, net          $     242  $     145  $     590  $     632

Increase in non-interest income    4.73%     25.57%      6.92%       19.11%
Increase (decrease) in
 non-interest expense              0.52%      8.68%     (0.62%)       7.57%
Net charge-offs to average
 loans                             0.15%      0.09%      0.12%        0.14%
Efficiency ratio                  80.36%     84.85%     81.25%       85.57%
Return on assets                   0.48%      0.33%      0.44%        0.31%
Return on equity                   4.78%      3.49%      4.40%        3.26%

Interest-earning assets:
  Yield on loans                   7.53%      7.22%      7.35%        6.99%
  Yield on investments             5.41%      5.28%      5.36%        4.88%
  Yield on FHLB stock              0.60%      0.00%      0.53%        0.00%
                                ---------  ---------  ---------  ---------
    Yield on interest-earning
     assets                        6.94%      6.60%      6.78%        6.30%
                                ---------  ---------  ---------  ---------

Interest-bearing liabilities:
  Cost of deposits                 3.81%      3.67%      3.84%        3.29%
  Cost of borrowed funds           4.58%      4.41%      4.49%        4.15%
                                ---------  ---------  ---------  ---------
    Cost of interest-bearing
     liabilities                   4.15%      4.01%      4.13%        3.69%
                                ---------  ---------  ---------  ---------
      Net interest rate spread     2.79%      2.59%      2.65%        2.61%
                                =========  =========  =========  =========

Net interest margin                3.20%      2.96%      3.06%        2.95%

Net interest margin-quarter
 ended 09/30/2007                  3.20%
Net interest margin-quarter
 ended 06/30/2007                  3.01%
Net interest margin-quarter
 ended 03/31/2007                  2.96%
Net interest margin-quarter
 ended 12/31/2006                  2.92%
Net interest margin-quarter
 ended 09/30/2006                  2.96%


                                          As of
               -----------------------------------------------------------
                September                            December   September
                   30,       June 30,   March 31,      31,         30,
                   2007        2007        2007        2006        2006
               ----------- ----------- ----------- ----------- -----------
Shares outstanding
 at end of
 period          6,109,633   6,144,259   6,128,485   6,129,511   6,142,537
                        (1)         (2)         (3)         (4)         (5)
Book value per
 share         $     14.67 $     14.63 $     14.49 $     14.33 $     14.12
Tangible book
 value per
 share         $     14.15 $     14.11 $     13.96 $     13.79 $     13.57


(1) Shares outstanding represent 6,516,870 shares issued (including 115,108
    unvested restricted shares granted under the MRP), less 407,237
    unallocated shares under the ESOP.
(2) Shares outstanding represent 6,568,470 shares issued (including 132,482
    unvested restricted shares granted under the MRP), less 424,211
    unallocated shares under the ESOP.
(3) Shares outstanding represent 6,569,670 shares issued (including 140,592
    unvested restricted shares granted under the MRP), less 441,185
    unallocated shares under the ESOP.
(4) Shares outstanding represent 6,587,670 shares issued (including 157,597
    unvested restricted shares granted under the MRP), less 458,159
    unallocated shares under the ESOP.
(5) Shares outstanding represent 6,617,670 shares issued (including 173,488
    unvested restricted shares granted under the MRP), less 475,133
    unallocated shares under the ESOP.

Contact Information