SOURCE: Rainier Pacific Financial Group

January 31, 2008 09:00 ET

Rainier Pacific Financial Group, Inc. Reports Fourth Quarter and Annual Earnings

TACOMA, WA--(Marketwire - January 31, 2008) - Rainier Pacific Financial Group, Inc. (the "Company") (NASDAQ: RPFG) announced today its fourth quarter and annual results for the periods ended December 31, 2007. Net income for the quarter ended December 31, 2007 increased 10.7% to $910,000, or $0.15 per diluted share, compared to net income of $822,000, or $0.14 per diluted share, for the same period in 2006. For the year ended December 31, 2007, the Company's net income was $3.9 million, or $0.64 per diluted share, compared to net income of $2.8 million, or $0.47 per diluted share, for the same period in 2006.

The Company's operating results for the fourth quarter of 2007 were impacted by three non-recurring items: (1) a pre-tax gain of $325,000 relating to the resolution of a claim against one of the Company's software vendors; (2) a pre-tax charge of $173,000 to establish a reserve for the Company's share of litigation settlements between VISA U.S.A. Inc. and its member banks, and American Express and Discover Financial Services; and (3) a federal income tax provision of $250,000 to provide a valuation allowance against the Company's deferred tax asset relating to the loss of future charitable contribution deductions associated with the establishment of the Rainier Pacific Foundation in 2003. Excluding these three items, the Company's pro forma net income for the quarter ended December 31, 2007 was $1.1 million, or $0.18 per diluted share, representing an increase of 29.1% from the same quarter in 2006; and $4.0 million, or $0.67 per diluted share for the fiscal year ended December 31, 2007 compared to $2.8 million, or $0.47 per diluted share for the same period in 2006.

The following table reconciles the Company's reported net income to pro forma net income, exclusive of the three aforementioned unusual items.

                                       Three Months Ended    Year Ended
                                          December 31,      December 31,
                                        ----------------  ----------------
Pro Forma Disclosure(1):                  2007     2006     2007     2006
                                        -------  -------- -------  --------

  Net income, as reported               $   910  $    822 $ 3,854  $  2,785
  Software dispute settlement, net of
   tax                                     (211)        -    (211)        -
  VISA litigation settlement, net of
   tax                                      112         -     112         -
  Valuation allowance for charitable
   contribution deductions                  250         -     250         -
                                        -------  -------- -------  --------
    Pro Forma Net Income                $ 1,061  $    822 $ 4,005  $  2,785
                                        =======  ======== =======  ========
Earnings per share:
  Basic and diluted, as reported        $  0.15  $   0.14 $  0.64  $   0.47
                                        =======  ======== =======  ========
  Pro forma basic and diluted           $  0.18  $   0.14 $  0.67  $   0.47
                                        =======  ======== =======  ========
_____________________________

(1)  Earnings information, excluding the software dispute settlement, VISA
     litigation settlement, and valuation allowance for charitable
     contribution deductions, represent non-GAAP (Generally Accepted
     Accounting Principles) financial measures. Management has presented
     these non-GAAP financial measures in this earnings release because it
     believes that they provide more useful and comparative information to
     assess the Company's core operations reflected in the current quarter
     and year end results. The Company has also presented comparable
     earnings information using GAAP financial measures.

The Company anticipates it will fully recover the $173,000 pre-tax charge related to its proportional share of the VISA U.S.A. Inc.'s settlement with American Express and Discover Financial Services when VISA U.S.A. Inc. completes its securities offering. The Company currently owns 0.00638% of VISA U.S.A. Inc. which has filed a registration statement with the Securities and Exchange Commission in the fourth quarter of 2007 to go public through an initial public offering. The $250,000 increased federal income tax provision was deemed necessary as a result of management's determination that the Company will not be able to fully realize the income tax deductibility of the charitable contribution made to the Rainier Pacific Foundation in 2003.

The Company's revenue, excluding the non-recurring software settlement, (i.e., net interest income before provision for loan losses plus non-interest income for the quarter and year ended December 31, 2007) was $9.1 million and $35.6 million, respectively, compared to $8.5 million and $33.9 million for the respective periods ended December 31, 2006. Net interest income before the provision for loan losses for the quarter ended December 31, 2007 was $6.8 million, or 9.7% higher than the $6.2 million during the same period a year ago. For the year ended December 31, 2007, net interest income was $26.3 million, compared to $25.0 million in the previous fiscal year.

For the quarter ended December 31, 2007, the Company's net interest margin was 3.23%, compared to 3.20% and 2.92% for the quarters ended September 30, 2007 and December 31, 2006, respectively. The yield on the Company's interest-earning assets was 6.88% for the quarter ended December 31, 2007, compared to 6.94% and 6.63% for the quarters ended September 30, 2007 and December 31, 2006, respectively. For the quarter ended December 31, 2007, the Company's cost of interest-bearing liabilities was 4.04%, compared to 4.15% and 4.10% for the quarters ended September 30, 2007 and December 31, 2006, respectively.

Non-interest income, exclusive of the software dispute settlement, was essentially unchanged at $2.3 million for the quarter ended December 31, 2007, compared to $2.3 million for the same quarter in 2006. Non-interest income, exclusive of the software dispute settlement, was $9.3 million for the year ended December 31, 2007, a $421,000 increase from the year ended December 31, 2006.

Non-interest expenses were $7.5 million for the quarter ended December 31, 2007, compared to $7.3 million and $7.0 million for the quarters ended September 30, 2007 and December 31, 2006, respectively. For the year ended December 31, 2007, non-interest expense was $29.0 million, a modest increase of 1.0% from $28.7 million for the year ended December 31, 2006.

The Company's total assets declined $23.8 million to $878.9 million at December 31, 2007, from $902.7 million at December 31, 2006. The decrease resulted primarily from an increase in the high prepayment of multi-family and commercial real estate loans throughout the year, maturities in the investment securities portfolio, sales of single-family mortgage loans, and slower loan originations.

Total loans were $637.0 million at December 31, 2007, compared to $633.3 million at September 30, 2007 and $639.4 million at December 31, 2006, respectively. Total loan originations were $67.2 million during the quarter ended December 31, 2007, compared to $46.1 million and $52.4 million for the quarters ended September 30, 2007 and December 31, 2006, respectively. For the year ended December 31, 2007, total loan originations were $214.7 million, compared to $227.3 million for the same period in 2006.

For the quarter ended December 31, 2007, the yield on loans was 7.36%, compared to 7.53% and 7.19% for the quarters ended September 30, 2007 and December 31, 2006, respectively. At December 31, 2007, the loan portfolio consisted of 33.4% commercial real estate loans, 23.4% multi-family real estate loans, 12.4% real estate construction loans, 12.1% single-family real estate loans, 8.1% consumer loans (excluding home equity loans), 7.1% home equity loans, and 3.5% commercial business loans.

The Company sold $6.2 million of single-family fixed-rate real estate loans which generated $117,000 in net gains during the quarter ended December 31, 2007, compared to $7.6 million in loan sales and $203,000 in net gains during the same period in 2006. For the year, the Company sold $23.7 million of single-family loans, compared to $19.6 million during the same period in 2006. The portfolio of loans serviced for others increased to $114.6 million at December 31, 2007, compared to $110.3 million at December 31, 2006.

Despite slower local economic activity, the credit quality of the loan portfolio remained good during the fourth quarter. Net charge-offs were $214,000 for the quarter ended December 31, 2007, compared to $242,000 for the quarter ended September 30, 2007, and $282,000 for the quarter ended December 31, 2006. Net charge-offs for the year ended December 31, 2007 were $804,000, compared to $914,000 for the year ended December 31, 2006. Loans more than 30 days delinquent as a percentage of total loans were 0.33% at December 31, 2007, compared to 0.28% at both September 30, 2007 and December 31, 2006. Non-performing loans (i.e., loans 90 days or more past due or non-accrual loans) were $497,000, or 0.08% of total loans, at December 31, 2007, compared to $197,000, or 0.03% of total loans, at September 30, 2007, and $241,000, or 0.04% of total loans, at December 31, 2006. Non-performing assets were $546,000, or 0.06% of total assets, at December 31, 2007, compared to $220,000, or 0.02% of total assets, at September 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 December 31, 2007, unchanged from the provision made for the previous quarters ended September 30, 2007 and December 31, 2006. The allowance for loan losses at December 31, 2007 was $8.1 million, representing an allowance to total loans ratio of 1.27%, compared to $8.1 million at September 30, 2007 and $8.3 million at December 31, 2006.

The investment securities portfolio at December 31, 2007 was $177.0 million (excluding $13.7 million in Federal Home Loan Bank of Seattle stock holdings), a decrease from $185.7 million at September 30, 2007, and the $197.8 million at December 31, 2006. The declines in the investment securities portfolio were primarily attributed to $14.4 million in securities that matured during the year ended December 31, 2007, and a market value decline in the Company's $109.0 million portfolio of pooled trust preferred securities of bank and insurance company issuers.

Total deposits were $461.5 million at December 31, 2007, compared to $460.9 million at September 30, 2007 and $457.4 million at December 31, 2006. Core deposits (comprised of checking, savings, money market, and individual retirement accounts) increased $6.3 million to $226.7 million, or 49.1% of total deposits, as of December 31, 2007, compared to $220.4 million as of December 31, 2006. Brokered deposit balances were $60.9 million at December 31, 2007, compared to $51.0 million at September 30, 2007 and $50.9 million at December 31, 2006. For the quarter ended December 31, 2007, the average cost of interest-bearing deposits was 3.72%, compared to 3.81% for the quarter ended September 30, 2007 and 3.80% for the quarter ended December 31, 2006.

Total shareholders' equity at December 31, 2007 was $86.8 million, compared to $87.8 million at December 31, 2006. During the quarter ended December 31, 2007, the Company purchased and retired 49,437 shares of its outstanding shares of common stock at an average price of $16.25 per share. On January 30, 2008, the Company's Board of Directors authorized a 12-month extension of its existing stock repurchase plan, which allows it to purchase an additional 114,483 shares of common stock through February 21, 2009.

The Company's book value and tangible book value per share as of December 31, 2007 were $14.29 and $13.77 per share, respectively, based upon 6,076,370 outstanding shares of common stock. The number of outstanding shares includes 98,725 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 390,263 of unallocated shares held by the Rainier Pacific 401(k) Employee Stock Ownership Plan.

"During 2007, we made good progress to improve Rainier Pacific's trend in core earnings and in maintaining very good asset quality, despite a challenging operating environment. With heightened competition and a more difficult operating environment expected throughout 2008, we will continue to focus on improved earnings by maintaining our focus on appropriately pursuing and pricing loan and deposit volumes, while managing our operations more efficiently for improved profitability," 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.

Restatement and Reclassification

Operating results and financial statements for the quarter and year ended December 31, 2006 have been restated to reflect non-material adjustments to our provision for income taxes, common stock, and retained earnings related to the tax treatment of our Employee Stock Ownership Plan. The effects of these adjustments were increases of $52,000 and $175,000 in the provision for income taxes for the quarter and year ended December 31, 2006, respectively; as well as a reclassification of $493,000 within shareholder's equity from retained earnings to common stock.

In addition, certain classifications have been made to the prior periods' consolidated financial statements and/or schedules to conform to the current period's presentation. These reclassifications may slightly affect certain ratios for the prior periods. These reclassifications, however, had no effect on retained earnings or net income as previously presented. The effect of these reclassifications is considered immaterial.

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

   Cash and cash equivalents       $   8,724      $   9,192      $  11,847
   Interest-bearing deposits
    with banks                            90            732             57
   Securities available-for-sale     131,287        138,345        145,110
   Securities held-to-maturity
    (fair value of $45,541 at
    December 31, 2007; $46,337 at
    September 30, 2007; and $51,589
    at December 31, 2006)             45,756         47,346         52,652
   Federal Home Loan Bank of
    Seattle ("FHLB") stock,
    at cost                           13,712         13,712         13,712

   Loans                             637,000        633,319        639,378
     Less: allowance for
      loan losses                     (8,079)        (8,142)        (8,283)
                                   ---------      ---------      ---------
       Loans, net                    628,921        625,177        631,095

   Premises and equipment, net        33,813         33,731         34,383
   Accrued interest receivable         3,980          4,075          4,177
   Other assets                       12,581          9,951          9,664
                                   ---------      ---------      ---------

       TOTAL ASSETS                $ 878,864      $ 882,261      $ 902,697
                                   =========      =========      =========


                      LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES:
   Deposits
     Non-interest bearing          $  33,924      $  34,603      $  33,722
     Interest-bearing                427,563        426,314        423,703
                                   ---------      ---------      ---------
       Total deposits                461,487        460,917        457,425

   Borrowed funds                    320,454        321,574        345,395
   Corporate drafts payable            2,510          2,992          3,537
   Accrued compensation
    and benefits                       1,758          1,759          2,111
   Other liabilities                   5,835          5,381          6,399
                                   ---------      ---------      ---------

       TOTAL LIABILITIES             792,044        792,623        814,867
                                   ---------      ---------      ---------

SHAREHOLDERS' EQUITY:
   Common stock, no par value:
    49,000,000 shares authorized;
    6,466,633 shares issued and
    5,977,645 shares outstanding
    at December 31, 2007; 6,516,870
    shares issued and 5,994,525
    shares outstanding at
    September 30, 2007; and
    6,587,670 shares issued and
    5,971,913 shares outstanding at
    December 31, 2006                 50,458         50,465         50,531
   Unearned Employee Stock
    Ownership Plan ("ESOP") shares    (3,903)        (4,072)        (4,582)
   Accumulated other compre-
    hensive loss, net of tax          (4,575)        (1,108)          (806)
   Retained earnings                  44,840         44,353         42,687
                                   ---------      ---------      ---------

       TOTAL SHAREHOLDERS' EQUITY     86,820         89,638         87,830
                                   ---------      ---------      ---------

       TOTAL LIABILITIES AND
        SHAREHOLDERS' EQUITY       $ 878,864      $ 882,261      $ 902,697
                                   =========      =========      =========


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

                           Three Months Ended            Year Ended
                              December 31,              December 31,
                        ------------------------  ------------------------
                            2007         2006         2007         2006
                        -----------  -----------  -----------  -----------
INTEREST INCOME
   Loans                $    11,808  $    11,427  $    47,179  $    43,040
   Securities
    available-for-sale        2,102        2,095        8,201        8,212
   Securities
    held-to-maturity            512          581        2,150        2,663
   Interest-bearing
    deposits                     23           11          131          295
   FHLB dividends                27           14           82           14
                        -----------  -----------  -----------  -----------
     Total interest
      income                 14,472       14,128       57,743       54,224
                        -----------  -----------  -----------  -----------
INTEREST EXPENSE
   Deposits                   3,960        4,065       16,228       14,220
   Borrowed funds             3,751        3,888       15,216       15,020
                        -----------  -----------  -----------  -----------
     Total interest
      expense                 7,711        7,953       31,444       29,240
                        -----------  -----------  -----------  -----------
     Net interest income      6,761        6,175       26,299       24,984
PROVISION FOR LOAN LOSSES       150          150          600          600
                        -----------  -----------  -----------  -----------
      Net interest
       income after
       provision for
       loan losses            6,611        6,025       25,699       24,384
                        -----------  -----------  -----------  -----------
NON-INTEREST INCOME
   Deposit service fees         885          887        3,496        3,520
   Loan service fees            295          330        1,314        1,188
   Insurance service fees       595          499        2,312        2,078
   Investment service fees      134           94          580          557
   Real estate lease
    income                      249          298        1,112        1,139
   Gain on sale of
    securities, net               -            -            -            3
   Gain on sale of loans,
    net                         117          203          379          278
   Gain (loss) on sale of
    premises and
    equipment, net               (1)           -           10            7
   Other operating income       354           24          423          110
                        -----------  -----------  -----------  -----------
     Total non-interest
      income                  2,628        2,335        9,626        8,880
                        -----------  -----------  -----------  -----------
NON-INTEREST EXPENSE
   Compensation and
    benefits                  4,043        3,785       16,341       15,784
   Office operations          1,014        1,164        3,962        5,155
   Occupancy                    672          687        2,580        2,628
   Loan servicing               129          143          498          529
   Outside and
    professional services       426          354        1,366        1,301
   Marketing                    226          219        1,036          946
   Other operating
    expenses                    943          663        3,230        2,367
                        -----------  -----------  -----------  -----------
     Total non-interest
      expense                 7,453        7,015       29,013       28,710
                        -----------  -----------  -----------  -----------

INCOME BEFORE PROVISION
 FOR FEDERAL INCOME TAX       1,786        1,345        6,312        4,554

PROVISION FOR FEDERAL
 INCOME TAX                     876          523        2,458        1,769
                        -----------  -----------  -----------  -----------

NET INCOME              $       910  $       822  $     3,854  $     2,785
                        ===========  ===========  ===========  ===========

EARNINGS PER COMMON SHARE
   Basic                $      0.15  $      0.14  $      0.64  $      0.47
   Diluted              $      0.15  $      0.14  $      0.64  $      0.47
   Weighted average
    shares out-
    standing - Basic    5,979,580(1) 5,958,304(2) 5,983,677(1) 5,941,336(2)
   Weighted average
    shares out-
    standing - Diluted    5,979,580    6,022,936    6,010,971    5,961,603

(1)  Weighted average shares outstanding - Basic includes 228,175 vested
     and ratably earned shares of the 326,900 restricted shares granted and
     issued under the 2004 Management Recognition Plan ("MRP"), net of
     forfeited shares.

(2)  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
                  Consolidated Statements of Income
             (Dollars in Thousands, except per share data)

                                        Three Months Ended
                        --------------------------------------------------
                        December 31, September 30,  June 30,     March 31,
                            2007         2007         2007         2007
                        -----------  -----------  -----------  -----------
INTEREST INCOME
   Loans                $    11,808  $    12,127  $    11,645  $    11,599
   Securities
    available-for-sale        2,102        2,015        2,032        2,052
   Securities
    held-to-maturity            512          527          546          565
   Interest-bearing
    deposits                     23           28           70           10
   FHLB dividends                27           21           20           14
                        -----------  -----------  -----------  -----------
     Total interest
      income                 14,472       14,718       14,313       14,240
                        -----------  -----------  -----------  -----------
INTEREST EXPENSE
   Deposits                   3,960        4,104        4,053        4,111
   Borrowed funds             3,751        3,881        3,841        3,743
                        -----------  -----------  -----------  -----------
     Total interest
      expense                 7,711        7,985        7,894        7,854
                        -----------  -----------  -----------  -----------
     Net interest
      income                  6,761        6,733        6,419        6,386
PROVISION FOR LOAN LOSSES       150          150          150          150
                        -----------  -----------  -----------  -----------
       Net interest
        income after
        provision for
        loan loss             6,611        6,583        6,269        6,236
                        -----------  -----------  -----------  -----------
NON-INTEREST INCOME
   Deposit service fees         885          906          879          826
   Loan service fees            295          381          346          292
   Insurance service fees       595          552          622          543
   Investment service fees      134          189          144          113
   Real estate lease
    income                      249          298          271          294
   Gain on sale of
    securities, net               -            -            -            -
   Gain on sale of loans,
    net                         117           60           66          136
   Gain (loss) on sale of
    premises and
    equipment, net               (1)           1            -           10
   Other operating income       354           25           16           28
                        -----------  -----------  -----------  -----------
     Total non-interest
      income                  2,628        2,412        2,344        2,242
                        -----------  -----------  -----------  -----------
NON-INTEREST EXPENSE
   Compensation and
    benefits                  4,043        4,237        4,068        3,993
   Office operations          1,014        1,006          956          986
   Occupancy                    672          649          624          635
   Loan servicing               129          130          129          110
   Outside and
    professional services       426          250          258          432
   Marketing                    226          278          289          243
   Other operating
    expenses                    943          799          778          710
                        -----------  -----------  -----------  -----------
     Total non-interest
      expense                 7,453        7,349        7,102        7,109
                        -----------  -----------  -----------  -----------

INCOME BEFORE PROVISION
 FOR FEDERAL INCOME TAX       1,786        1,646        1,511        1,369

PROVISION FOR FEDERAL
 INCOME TAX                     876          574          529          479
                        -----------  -----------  -----------  -----------

NET INCOME              $       910  $     1,072  $       982  $       890
                        ===========  ===========  ===========  ===========

EARNINGS PER COMMON SHARE
   Basic                $      0.15  $      0.18  $      0.16  $      0.15
   Diluted              $      0.15  $      0.18  $      0.16  $      0.15
   Weighted average
    shares out-
    standing - Basic    5,979,580(1) 5,983,586(2) 5,995,114(3) 5,976,430(4)
   Weighted average
    shares out-
    standing - Diluted    5,979,580    5,983,586    6,073,991    6,094,582
(1)  Weighted average shares outstanding - Basic includes 228,175 vested
     and ratably earned shares of the 326,900 restricted shares granted and
     issued under the MRP, net of forfeited shares.

(2)  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.

(3)  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.

(4)  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.



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

                                            As of
                    -----------------------------------------------------
                 December 31, September 30, June 30, March 31, December 31,
                      2007       2007       2007       2007       2006
                    ---------  ---------  ---------  ---------  ---------
Loan portfolio
 composition:
  Real estate:
    One- to four-
     family
     residential    $  76,882  $  78,621  $  79,018  $  80,324  $  81,542
    Five or more
     family
     residential      149,080    149,474    159,137    161,273    163,060
    Commercial        212,901    214,130    215,442    203,732    195,854
                    ---------  ---------  ---------  ---------  ---------
      Total real
       estate         438,863    442,225    453,597    445,329    440,456
  Real estate
   construction:
    One- to four-
     family
     residential        73,114     70,867     72,838     75,060     75,508
    Five or more
     family
     residential         1,839      2,019      3,187      3,640      4,180
    Commercial           3,827      1,834          -          -          -
                     ---------  ---------  ---------  ---------  ---------
      Total real
       estate
       construction     78,780     74,720     76,025     78,700     79,688
  Consumer:
    Automobile          20,798     23,711     26,623     29,298     31,888
    Home equity         45,293     44,537     44,610     42,738     42,718
    Credit cards        23,172     22,601     22,018     21,936     23,327
    Other                7,411      7,383      7,310      7,494      8,179
                     ---------  ---------  ---------  ---------  ---------
      Total consumer    96,674     98,232    100,561    101,466    106,112
  Commercial/business   22,683     18,142     17,202     13,005     13,122
                     ---------  ---------  ---------  ---------  ---------
      Subtotal         637,000    633,319    647,385    638,500    639,378
Less: Allowance for
 loan losses            (8,079)    (8,142)    (8,235)    (8,276)    (8,283)
                     ---------  ---------  ---------  ---------  ---------
  Total loans, net   $ 628,921  $ 625,177  $ 639,150  $ 630,224  $ 631,095
                     =========  =========  =========  =========  =========
Sold loans, serviced
 for others          $ 114,629  $ 113,306  $ 113,434  $ 112,669  $ 110,297
                     =========  =========  =========  =========  =========

Non-performing assets:
  Loans 90 days or
   more past due     $     497  $     197  $     217  $     224  $     241
  Repossessed assets        49         23         16         21         33
  Other real estate
   owned                     -          -          -          -          -
                     ---------  ---------  ---------  ---------  ---------
    Total non-
     performing
     assets          $     546  $     220  $     233  $     245  $     274
                     =========  =========  =========  =========  =========

Loans greater than
 30 days delinquent  $   2,125  $   1,762  $   1,651  $   1,684  $   1,776
Loans greater than
 30 days delinquent
 as a percentage of
 loans                    0.33%      0.28%      0.26%      0.26%      0.28%

Non-performing loans
 as a percentage of
 loans                    0.08%      0.03%      0.03%      0.04%      0.04%
Non-performing
 assets as a
 percentage of
 assets                   0.06%      0.02%      0.03%      0.03%      0.03%

Allowance for loan
 loss as a
 percentage of
 non-performing
 loans                1,625.55%  4,132.99%  3,794.93%  3,694.64%  3,436.93%
Allowance for loan
 loss as a
 percentage of
 non-performing
 assets               1,479.67%  3,700.91%  3,534.33%  3,377.96%  3,022.99%
Allowance for loan
 loss as a
 percentage of total
 loans                    1.27%      1.29%      1.27%      1.30%      1.30%

Core deposits (all
 deposits, excluding
 CDs)                $ 226,743  $ 236,411  $ 242,446  $ 242,442  $ 220,352
Non-core deposits
 (CDs)                 234,744    224,506    217,870    224,293    237,073
                     ---------  ---------  ---------  ---------  ---------
  Total deposits     $ 461,487  $ 460,917  $ 460,316  $ 466,735  $ 457,425
                     =========  =========  =========  =========  =========

Loans/Deposits          138.03%    137.40%    140.64%    136.80%    139.78%
Equity/Assets             9.88%     10.16%      9.94%      9.79%      9.73%



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

                                  Three Months Ended        Year Ended
                                     December 31,          December 31,
                                --------------------  --------------------
                                   2007       2006       2007       2006
                                ---------  ---------  ---------  ---------

Loan growth (decline)                0.58%      1.70%     (0.37%)     9.69%
Deposit growth (decline)             0.12%     (0.23%)     0.89%      4.43%
Equity growth (decline)             (3.14%)     1.25%     (1.15%)     3.68%
Asset growth (decline)              (0.39%)     0.18%     (2.64%)     3.66%

Loans originated                $  67,223  $  52,415  $ 214,713  $ 227,284
Loans sold                      $   6,194  $   7,576  $  23,698  $  19,563
Loans charged-off, net          $     214  $     282  $     804  $     914

Increase in non-interest income     12.55%     27.53%      8.40%     21.21%
Increase in non-interest expense     6.24%      4.13%      1.06%      6.70%
Net charge-offs to average loans     0.13%      0.18%      0.13%      0.15%
Efficiency ratio                    79.38%     82.43%     80.76%     84.78%
Return on assets                     0.41%      0.36%      0.43%      0.31%
Return on equity                     4.08%      3.78%      4.32%      3.25%

Interest-earning assets:
  Yield on loans                     7.36%      7.19%      7.35%      7.03%
  Yield on investments               5.68%      5.30%      5.43%      4.98%
  Yield on FHLB stock                0.80%      0.40%      0.60%      0.10%
                                ---------  ---------  ---------  ---------
    Yield on interest-earning
     assets                          6.88%      6.63%      6.80%      6.38%
                                ---------  ---------  ---------  ---------

Interest-bearing liabilities:
  Cost of deposits                   3.72%      3.80%      3.82%      3.43%
  Cost of borrowed funds             4.45%      4.46%      4.48%      4.22%
                                ---------  ---------  ---------  ---------
    Cost of interest-bearing
     liabilities                     4.04%      4.10%      4.11%      3.80%
                                ---------  ---------  ---------  ---------
      Net interest rate spread       2.84%      2.53%      2.69%      2.58%
                                =========  =========  =========  =========

Net interest margin                  3.23%      2.92%      3.09%      2.94%

Net interest margin-quarter
 ended 12/31/2007                    3.23%
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%

                                        As of
           ---------------------------------------------------------------
           December 31, September 30,  June 30,     March 31,  December 31,
               2007         2007         2007         2007         2006
           -----------  -----------  -----------  -----------  -----------
Shares
 outstand-
 ing at
 end of
 period    6,076,370(1) 6,109,633(2) 6,144,259(3) 6,128,485(4) 6,129,511(5)
Book value
 per share $     14.29  $     14.67  $     14.63  $     14.49  $     14.33
Tangible
 book
 value per
 share     $     13.77  $     14.15  $     14.11  $     13.96  $     13.79

(1)  Shares outstanding represent 6,466,633 shares issued (including
     98,725 unvested restricted shares granted under the MRP), less
     390,263 unallocated shares under the ESOP.

(2)  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.

(3)  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.

(4)  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.

(5)  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.

Contact Information