SOURCE: Rainier Pacific Financial Group

April 16, 2008 09:00 ET

Rainier Pacific Financial Group, Inc. Reports Improved First Quarter Earnings

TACOMA, WA--(Marketwire - April 16, 2008) - Rainier Pacific Financial Group, Inc. (the "Company") (NASDAQ: RPFG) announced today its first quarter results for the period ended March 31, 2008. Net income for the quarter ended March 31, 2008 increased 62.2% to $1.4 million, or $0.24 per diluted share, compared to net income of $890,000, or $0.15 per diluted share, for the same period in 2007.

The Company's operating results for the first quarter of 2008 were affected by a $422,000 pre-tax gain from the redemption of VISA U.S.A., Inc. Class B common stock in connection with its initial public offering in March 2008, and the reversal of a pre-tax charge of $173,000 recognized in the fourth quarter of 2007 related to a reserve established for the Company's share of the VISA U.S.A., Inc. litigation settlements. We reversed the litigation settlement reserve as a result of VISA U.S.A., Inc. establishing an escrow account to satisfy this obligation as part of its initial public offering. The net after-tax effect of these two VISA U.S.A., Inc. items increased net income for the first quarter of 2008 by $381,000. Excluding the effect of these two items, first quarter earnings were $1.1 million, or $0.18 per diluted share, representing a 19.4% increase from the same quarter in 2007.

The Company's revenue, (i.e., net interest income before provision for loan losses plus non-interest income) for the quarter ended March 31, 2008 was $9.4 million, compared to $8.6 million for the same period a year ago. Excluding the non-recurring gain from the redemption of VISA U.S.A., Inc.'s stock from the initial public offering, revenue was $8.9 million, or 3.5% more than the same quarter in 2007. Net interest income before the provision for loan losses for the quarter ended March 31, 2008 was $6.5 million, slightly higher than the $6.4 million during the same period a year ago. For the quarter ended March 31, 2008, the Company's net interest margin was 3.20%, compared to 3.23% and 2.96% for the quarters ended December 31, 2007 and March 31, 2007, respectively. The yield on the Company's interest-earning assets was 6.71% for the quarter ended March 31, 2008, compared to 6.88% and 6.69% for the quarters ended December 31, 2007 and March 31, 2007, respectively. For the quarter ended March 31, 2008, the Company's cost of interest-bearing liabilities was 3.89%, compared to 4.04% and 4.13% for the quarters ended December 31, 2007 and March 31, 2007, respectively.

Non-interest income for the quarter ended March 31, 2008 was $2.8 million, or $579,000 more than the $2.2 million for the same quarter in 2007. Excluding the $422,000 gain from the redemption of common stock in VISA U.S.A., Inc. in connection with its initial public offering, non-interest income was $2.4 million, or 9.1% more than the same quarter in 2007.

Non-interest expenses were $7.0 million for the quarter ended March 31, 2008, or $151,000 less than the $7.1 million during the same period in 2007. Excluding the $173,000 reversal of the reserve established for VISA U.S.A., Inc. litigation settlements, non-interest expense was essentially unchanged compared to the first quarter of 2007.

The Company's total assets were relatively unchanged from December 31, 2007, with total assets of $878.9 million at March 31, 2008. During the first quarter, the Company generated growth of $18.6 million in its loan portfolio and sold $18.0 million of investment securities.

Total loans were $655.6 million at March 31, 2008, compared to $637.0 million at December 31, 2007 and $638.5 million at March 31, 2007, respectively. Total loan originations were $80.3 million during the quarter ended March 31, 2008, compared to $67.2 million and $40.4 million for the quarters ended December 31, 2007 and March 31, 2007, respectively. Increased refinance activity of one- to four-family mortgages and improved demand for multi-family and commercial real estate loan originations were primary contributors to the significant increase in first quarter loan originations.

For the quarter ended March 31, 2008, the yield on loans was 7.12%, compared to 7.36% and 7.24% for the quarters ended December 31, 2007 and March 31, 2007, respectively. At March 31, 2008, the loan portfolio consisted of 34.0% commercial real estate loans, 22.7% multi-family real estate loans, 12.8% one- to four-family real estate loans, 12.6% land development and real estate construction loans, 7.4% consumer loans (excluding home equity loans), 6.7% home equity loans, and 3.8% commercial business loans.

The Company sold $13.6 million of one- to four-family fixed-rate real estate loans during the quarter ended March 31, 2008, which generated $235,000 in net gains, compared to $6.8 million in loan sales and $136,000 in net gains during the same period in 2007. The portfolio of loans serviced for others increased to $115.2 million at March 31, 2008, compared to $114.6 million and $112.7 million at December 31, 2007 and March 31, 2007, respectively.

Slower local residential housing sales, increasing stress on consumer credit, and slowing economic activity caused the credit quality of the loan portfolio to deteriorate modestly during the quarter. Net charge-offs were $250,000 for the quarter ended March 31, 2008, compared to $214,000 for the quarter ended December 31, 2007 and $157,000 for the quarter ended March 31, 2007. However, loans more than 30 days delinquent as a percentage of total loans remained low and were 0.26% at March 31, 2008, compared to 0.33% at December 31, 2007 and 0.26% at March 31, 2007. Non-performing loans (i.e., loans 90 days or more past due or non-accrual loans) were $426,000, or 0.06% of total loans at March 31, 2008, compared to $497,000, or 0.08% of total loans, at December 31, 2007, and $224,000, or 0.04% of total loans, at March 31, 2007.

During the first quarter of 2008, the Company received deeds in lieu of foreclosure on three completed homes and one lot. As a result, non-performing assets increased to $1.7 million, or 0.19% of total assets at March 31, 2008, compared to $546,000, or 0.06% of total assets, at December 31, 2007, and $245,000, or 0.03% of total assets, at March 31, 2007. The sale of two of the three homes was completed on April 4, 2008 and generated a net gain of $15,000. Excluding the effect of these two sold homes, non-performing assets would have been $774,000, or 0.09% of total assets as of March 31, 2008.

The Company's provision for loan losses was $150,000 for the quarter ended March 31, 2008, unchanged from the provisions made for the quarters ended December 31, 2007 and March 31, 2007. The allowance for loan losses at March 31, 2008 was $8.0 million, representing an allowance to total loans ratio of 1.22%, compared to $8.1 million at December 31, 2007 and $8.3 million at March 31, 2007.

The investment securities portfolio at March 31, 2008 was $150.1 million (excluding $13.7 million in Federal Home Loan Bank of Seattle stock holdings), compared to $177.0 million at December 31, 2007 and $194.5 million at March 31, 2007. The decline in the investment securities portfolio was primarily attributed to $18.0 million of investment sales during the quarter ended March 31, 2008, a $6.6 million market value decline in the Company's portfolio of pooled trust preferred securities issued by FDIC-insured financial institutions and insurance companies, as well as $2.4 million in principal payments received on our mortgage-backed securities held in the portfolio.

Total deposits were $471.4 million at March 31, 2008, compared to $461.5 million at December 31, 2007 and $466.7 million at March 31, 2007. Core deposits (comprised of checking, savings, money market, and individual retirement accounts) were $229.4 million, or 48.7% of total deposits at March 31, 2008, compared to $242.4 million, or 51.9% of total deposits at March 31, 2007. Brokered deposit balances were $61.3 million at March 31, 2008, compared to $60.9 million at December 31, 2007 and $49.9 million at March 31, 2007. For the quarter ended March 31, 2008, the average cost of interest-bearing deposits was 3.48%, compared to 3.72% for the quarter ended December 31, 2007 and 3.89% for the quarter ended March 31, 2007.

Total shareholders' equity at March 31, 2008 was $84.0 million, compared to $86.8 million at December 31, 2007 and $88.8 million at March 31, 2007. During the quarter ended March 31, 2008, the Company purchased and retired 14,300 shares of its outstanding shares of common stock at an average price of $14.75 per share. On January 31, 2008, the Company's Board of Directors authorized a 12-month extension of its existing stock repurchase plan, and at March 31, 2008, there were 100,183 shares remaining to be purchased under this repurchase plan.

The Company's book value and tangible book value per share as of March 31, 2008 were $13.83 and $13.27 per share, respectively, based upon 6,078,444 outstanding shares of common stock. The number of outstanding shares includes 80,328 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 373,289 unallocated shares held by the Rainier Pacific 401(k) Employee Stock Ownership Plan.

"During the first quarter, we continued to generate improvements in Rainier Pacific's core profitability, while actively managing the credit quality of the loan portfolio in a challenging operating environment. With increasing stress in the local residential housing sector, and deterioration in the credit markets, we will continue to prudently underwrite new loans and closely monitor existing loan relationships. Our focus on effectively managing operating expenses and generating improved profitability remains a top priority in our efforts to increase the value of our franchise during the balance of the year," 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, 2007. 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 March 31,    At December 31,
                                               2008             2007
                                          ---------------  ---------------

  Cash and cash equivalents               $         8,462  $         8,724
  Interest-bearing deposits with banks              7,003               90
  Securities available-for-sale                   109,545          131,287
  Securities held-to-maturity (fair value
   of $40,744 at March 31, 2008; $45,541
   at December 31, 2007)                           40,557           45,756
  Federal Home Loan Bank of Seattle
   ("FHLB") stock, at cost                         13,712           13,712

  Loans                                           655,624          637,000
    Less: allowance for loan losses                (7,979)          (8,079)
                                          ---------------  ---------------
      Loans, net                                  647,645          628,921

  Premises and equipment, net                      33,602           33,813
  Accrued interest receivable                       3,635            3,980
  Other assets                                     14,761           12,581
                                          ---------------  ---------------

      TOTAL ASSETS                        $       878,922  $       878,864
                                          ===============  ===============


                   LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES:
  Deposits
    Non-interest bearing                  $        37,145  $        33,924
    Interest-bearing                              434,227          427,563
                                          ---------------  ---------------
      Total deposits                              471,372          461,487

  Borrowed funds                                  314,353          320,454
  Corporate drafts payable                          4,121            2,510
  Accrued compensation and benefits                   948            1,758
  Other liabilities                                 4,085            5,835
                                          ---------------  ---------------

      TOTAL LIABILITIES                           794,879          792,044
                                          ---------------  ---------------

SHAREHOLDERS' EQUITY:
  Common stock, no par value: 49,000,000
   shares authorized; 6,451,733 shares
   issued and 5,998,116 shares
   outstanding at March 31, 2008;
   6,466,633 shares issued and 5,977,645
   shares outstanding at December 31,
   2007                                            50,668           50,458

  Unearned Employee Stock Ownership Plan
   ("ESOP") shares                                 (3,733)          (3,903)
  Accumulated other comprehensive loss,
   net of tax                                      (8,723)          (4,575)
  Retained earnings                                45,831           44,840
                                          ---------------  ---------------

      TOTAL SHAREHOLDERS' EQUITY                   84,043           86,820
                                          ---------------  ---------------

      TOTAL LIABILITIES AND SHAREHOLDERS'
       EQUITY                             $       878,922  $       878,864
                                          ===============  ===============






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

                                                    Three Months Ended
                                                         March 31,
                                                  ----------------------
                                                      2008         2007
                                                  ---------    ---------
INTEREST INCOME
  Loans                                           $  11,277    $  11,599
  Securities available-for-sale                       1,857        2,052
  Securities held-to-maturity                           451          565
  Interest-bearing deposits                              27           10
  FHLB dividends                                         34           14
                                                  ---------    ---------
    Total interest income                            13,646       14,240
                                                  ---------    ---------
INTEREST EXPENSE
  Deposits                                            3,587        4,111
  Borrowed funds                                      3,516        3,743
                                                  ---------    ---------
    Total interest expense                            7,103        7,854
                                                  ---------    ---------
    Net interest income                               6,543        6,386
PROVISION FOR LOAN LOSSES                               150          150
                                                  ---------    ---------
      Net interest income after provision for
       loan losses                                    6,393        6,236
                                                  ---------    ---------
NON-INTEREST INCOME
  Deposit service fees                                  839          826
  Loan service fees                                     315          292
  Insurance service fees                                550          543
  Investment service fees                               164          113
  Real estate lease income                              246          294
  Gain on sale of securities, net                        11            -
  Gain on sale of loans, net                            235          136
  Gain on sale of premises and equipment, net             -           10
  Other operating income                                461           28
                                                  ---------    ---------
    Total non-interest income                         2,821        2,242
                                                  ---------    ---------
NON-INTEREST EXPENSE
  Compensation and benefits                           4,060        3,993
  Office operations                                     955          986
  Occupancy                                             614          635
  Loan servicing                                        109          110
  Outside and professional services                     448          432
  Marketing                                             284          243
  Other operating expenses                              488          710
                                                  ---------    ---------
    Total non-interest expense                        6,958        7,109
                                                  ---------    ---------

INCOME BEFORE PROVISION FOR FEDERAL INCOME TAX        2,256        1,369

PROVISION FOR FEDERAL INCOME TAX                        812          479
                                                  ---------    ---------

NET INCOME                                        $   1,444    $     890
                                                  =========    =========

EARNINGS PER COMMON SHARE
  Basic                                           $    0.24    $    0.15
  Diluted                                         $    0.24    $    0.15
  Weighted average shares outstanding - Basic     5,983,393(1) 5,976,430(2)
  Weighted average shares outstanding - Diluted   5,983,393    6,094,582


(1) Weighted average shares outstanding - Basic includes 245,972 vested and
    ratably earned shares of the 326,300 restricted shares granted and
    issued under the 2004 Management Recognition Plan ("MRP"), net of
    forfeited shares.
(2) 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
                    Consolidated Statements of Income
              (Dollars in Thousands, except per share data)

                                       Three Months Ended
                        ------------------------------------------------
                        March 31,   December 31, September 30,  June 30,
                           2008         2007         2007         2007
                        ---------    ---------    ---------    ---------
INTEREST INCOME
  Loans                 $  11,277    $  11,808    $  12,127    $  11,645
  Securities
   available-for-sale       1,857        2,102        2,015        2,032
  Securities
   held-to-maturity           451          512          527          546
  Interest-bearing
   deposits                    27           23           28           70
  FHLB dividends               34           27           21           20
                        ---------    ---------    ---------    ---------
    Total interest
     income                13,646       14,472       14,718       14,313
                        ---------    ---------    ---------    ---------
INTEREST EXPENSE
  Deposits                  3,587        3,960        4,104        4,053
  Borrowed funds            3,516        3,751        3,881        3,841
                        ---------    ---------    ---------    ---------
    Total interest
     expense                7,103        7,711        7,985        7,894
                        ---------    ---------    ---------    ---------
    Net interest income     6,543        6,761        6,733        6,419
PROVISION FOR LOAN
 LOSSES                       150          150          150          150
                        ---------    ---------    ---------    ---------
      Net interest
       income after
       provision for
       loan loss            6,393        6,611        6,583        6,269
                        ---------    ---------    ---------    ---------
NON-INTEREST INCOME
  Deposit service fees        839          885          906          879
  Loan service fees           315          295          381          346
  Insurance service
   fees                       550          595          552          622
  Investment service
   fees                       164          134          189          144
  Real estate lease
   income                     246          249          298          271
  Gain on sale of
   securities, net             11            -            -            -
  Gain on sale of
   loans, net                 235          117           60           66
  Gain (loss) on sale
   of premises and
   equipment, net               -           (1)           1            -
  Other operating
   income                     461          354           25           16
                        ---------    ---------    ---------    ---------
    Total non-interest
     income                 2,821        2,628        2,412        2,344
                        ---------    ---------    ---------    ---------
NON-INTEREST EXPENSE
  Compensation and
   benefits                 4,060        4,043        4,237        4,068
  Office operations           955        1,014        1,006          956
  Occupancy                   614          672          649          624
  Loan servicing              109          129          130          129
  Outside and
   professional
   services                   448          426          250          258
  Marketing                   284          226          278          289
  Other operating
   expenses                   488          943          799          778
                        ---------    ---------    ---------    ---------
    Total non-interest
     expense                6,958        7,453        7,349        7,102
                        ---------    ---------    ---------    ---------

INCOME BEFORE PROVISION
 FOR FEDERAL INCOME TAX     2,256        1,786        1,646        1,511

PROVISION FOR FEDERAL
 INCOME TAX                   812          876          574          529
                        ---------    ---------    ---------    ---------

NET INCOME              $   1,444    $     910    $   1,072    $     982
                        =========    =========    =========    =========

EARNINGS PER COMMON
 SHARE
  Basic                 $    0.24    $    0.15    $    0.18    $    0.16
  Diluted               $    0.24    $    0.15    $    0.18    $    0.16
  Weighted average
   shares outstanding -
   Basic                5,983,393(1) 5,979,580(2) 5,983,586(3) 5,995,114(4)
  Weighted average
   shares outstanding -
   Diluted              5,983,393    5,979,580    5,983,586    6,073,991


(1) Weighted average shares outstanding - Basic includes 245,972 vested and
    ratably earned shares of the 326,300 restricted shares granted and
    issued under the MRP, net of forfeited shares.
(2) 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.
(3) 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.
(4) 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.





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

                                             As of
                     -----------------------------------------------------
                                December   September
                     March 31,     31,        30,      June 30,  March 31,
                       2008       2007       2007       2007       2007
                     ---------  ---------  ---------  ---------  ---------
Loan portfolio
 composition:
  Real estate:
    One- to
     four-family
     residential     $  84,211  $  76,882  $  78,621  $  79,018  $  80,324
    Five or more
     family
     residential       148,991    149,080    149,474    159,137    161,273
    Commercial         223,076    212,901    214,130    215,442    203,732
                     ---------  ---------  ---------  ---------  ---------
      Total real
       estate          456,278    438,863    442,225    453,597    445,329
  Real estate
   construction:
    One- to
     four-family
     residential        77,098     73,114     70,867     72,838     75,060
    Five or more
     family
     residential         1,839      1,839      2,019      3,187      3,640
    Commercial           3,827      3,827      1,834          -          -
                     ---------  ---------  ---------  ---------  ---------
      Total real
       estate
       construction     82,764     78,780     74,720     76,025     78,700
  Consumer:
    Automobile          18,027     20,798     23,711     26,623     29,298
    Home equity         43,980     45,293     44,537     44,610     42,738
    Credit cards        22,120     23,172     22,601     22,018     21,936
    Other                7,812      7,411      7,383      7,310      7,494
                     ---------  ---------  ---------  ---------  ---------
      Total consumer    91,939     96,674     98,232    100,561    101,466
  Commercial
   business             24,643     22,683     18,142     17,202     13,005
                     ---------  ---------  ---------  ---------  ---------
      Subtotal         655,624    637,000    633,319    647,385    638,500
Less: Allowance for
 loan losses            (7,979)    (8,079)    (8,142)    (8,235)    (8,276)
                     ---------  ---------  ---------  ---------  ---------
  Total loans, net   $ 647,645  $ 628,921  $ 625,177  $ 639,150  $ 630,224
                     =========  =========  =========  =========  =========
Sold loans, serviced
 for others          $ 115,214  $ 114,629  $ 113,306  $ 113,434  $ 112,669
                     =========  =========  =========  =========  =========

Non-performing
 assets:
  Loans 90 days or
   more past due     $     426  $     497  $     197  $     217  $     224
  Repossessed assets         6         49         23         16         21
  Other real estate
   owned                 1,222          -          -          -          -
                     ---------  ---------  ---------  ---------  ---------
    Total
     non-performing
     assets          $   1,654  $     546  $     220  $     233  $     245
                     =========  =========  =========  =========  =========

Loans greater than
 30 days delinquent  $   1,678  $   2,125  $   1,762  $   1,651  $   1,684
Loans greater than
 30 days delinquent
 as a percentage of
 loans                    0.26%      0.33%      0.28%      0.26%      0.26%
Non-performing loans
 as a percentage of
 loans                    0.06%      0.08%      0.03%      0.03%      0.04%
Non-performing
 assets as a
 percentage of
 assets                   0.19%      0.06%      0.02%      0.03%      0.03%
Allowance for loan
 loss as a
 percentage of
 non-performing
 loans                1,873.00%  1,625.55%  4,132.99%  3,794.93%  3,694.64%
Allowance for loan
 loss as a
 percentage of
 non-performing
 assets                 482.41%  1,479.67%  3,700.91%  3,534.33%  3,377.96%
Allowance for loan
 loss as a
 percentage of total
 loans                    1.22%      1.27%      1.29%      1.27%      1.30%

Core deposits (all
 deposits, excluding
 CDs)                $ 229,401  $ 226,743  $ 236,411  $ 242,446  $ 242,442
Non-core deposits
 (CDs)                 241,971    234,744    224,506    217,870    224,293
                     ---------  ---------  ---------  ---------  ---------
  Total deposits     $ 471,372  $ 461,487  $ 460,917  $ 460,316  $ 466,735
                     =========  =========  =========  =========  =========

Loans/Deposits          139.09%    138.03%    137.40%    140.64%    136.80%
Equity/Assets             9.56%      9.88%     10.16%      9.94%      9.79%





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

                                                Three Months
                          Three Months Ended        Ended      Year Ended
                               March 31,         December 31, December 31,
                       ------------------------  -----------  -----------
                           2008         2007         2007         2007
                       -----------  -----------  -----------  -----------

Loan growth (decline)         2.92%       (0.14%)       0.58%       (0.37%)
Deposit growth
 (decline)                    2.14%        2.04%        0.12%       (0.89%)
Equity growth (decline)      (3.20%)       1.10%       (3.14%)      (1.15%)
Asset growth (decline)        0.01%        0.43%       (0.39%)      (2.64%)

Loans originated       $    80,254  $    40,365  $    67,223  $   214,713
Loans sold             $    13,578  $     6,819  $     6,194  $    23,698
Loans charged-off, net $       250  $       157  $       214  $       804

Increase in
 non-interest income          7.34%       10.99%       12.55%        8.40%
Increase (decrease) in
 non-interest expense        (6.64%)      (2.36%)       6.24%        1.06%
Net charge-offs to
 average loans                0.16%        0.10%        0.13%        0.13%
Efficiency ratio             74.31%       82.39%       79.38%       80.76%
Return on assets              0.66%        0.39%        0.41%        0.43%
Return on equity              6.69%        4.02%        4.08%        4.32%

Interest-earning
 assets:
  Yield on loans              7.12%        7.24%        7.36%        7.35%
  Yield on investments        5.68%        5.32%        5.68%        5.43%
  Yield on FHLB stock         1.00%        0.40%        0.80%        0.60%
                       -----------  -----------  -----------  -----------
    Yield on
     interest-earning
     assets                   6.71%        6.69%        6.88%        6.80%
                       -----------  -----------  -----------  -----------

Interest-bearing
 liabilities:
  Cost of deposits            3.48%        3.89%        3.72%        3.82%
  Cost of borrowed
   funds                      4.41%        4.44%        4.45%        4.48%
                       -----------  -----------  -----------  -----------
    Cost of
     interest-bearing
     liabilities              3.89%        4.13%        4.04%        4.11%
                       -----------  -----------  -----------  -----------
      Net interest rate
       spread                 2.82%        2.56%        2.84%        2.69%
                       ===========  ===========  ===========  ===========

Net interest margin           3.20%        2.96%        3.23%        3.09%

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%

                                        As of
           -------------------------------------------------------------
                         December     September
            March 31,       31,          30,       June 30,     March 31,
              2008         2007         2007         2007         2007
           ---------    ---------    ---------    ---------    ---------
Shares
 outstanding
 at end of
 period    6,078,444(1) 6,076,370(2) 6,109,633(3) 6,144,259(4) 6,128,485(5)
Book value
 per share $   13.83    $   14.29    $   14.67    $   14.63    $   14.49
Tangible
 book
 value per
 share     $   13.27    $   13.77    $   14.15    $   14.11    $   13.96

(1) Shares outstanding represent 6,451,733 shares issued (including 80,328
    unvested restricted shares granted under the MRP), less 373,289
    unallocated shares under the ESOP.
(2) 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.
(3) 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.
(4) 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.
(5) 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.

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