SOURCE: Rainier Pacific Financial Group

July 16, 2008 09:00 ET

Rainier Pacific Financial Group, Inc. Reports Second Quarter Earnings

TACOMA, WA--(Marketwire - July 16, 2008) - Rainier Pacific Financial Group, Inc. (the "Company") (NASDAQ: RPFG) announced today its second quarter results for the period ended June 30, 2008. Net income for the quarter ended June 30, 2008 increased 3.6% to $1.0 million, or $0.17 per diluted share, compared to net income of $982,000, or $0.16 per diluted share, for the same period in 2007. For the six months ended June 30, 2008, the Company's net income increased 31.6% to $2.5 million, or $0.41 per diluted share, compared to net income of $1.9 million, or $0.31 per diluted share, for the same six month period in 2007.

The Company's revenue, (i.e., net interest income before provision for loan losses plus non-interest income) for the quarter ended June 30, 2008 was $9.0 million, compared to $8.8 million for the same period a year ago. Net interest income before the provision for loan losses for the quarter ended June 30, 2008 was $6.4 million, relatively unchanged compared to the same period a year ago. For the quarter ended June 30, 2008, the Company's net interest margin was 3.13%, compared to 3.20% and 3.01% for the quarters ended March 31, 2008 and June 30, 2007, respectively. The yield on the Company's interest-earning assets was 6.32% for the quarter ended June 30, 2008, compared to 6.71% for both quarters ended March 31, 2008 and June 30, 2007. For the quarter ended June 30, 2008, the Company's cost of interest-bearing liabilities was 3.51%, compared to 3.89% and 4.11% for the quarters ended March 31, 2008 and June 30, 2007, respectively.

Non-interest income for the quarter ended June 30, 2008 was $2.6 million, or $257,000 more than the $2.3 million for the same quarter in 2007. The increase in non-interest income was primarily due to the result of a higher level of one- to four-family residential loan sales in 2008 that resulted in a $384,000 increase in the net gains generated on the loan sales.

Non-interest expenses were $6.9 million for the quarter ended June 30, 2008, or $202,000 less than the $7.1 million during the same period in 2007, as the Company continued to effectively manage its operating expenses.

During the second quarter, the Company was less aggressive in the pricing of its customer deposits. For the quarter ended June 30, 2008, the average cost of interest-bearing deposits declined to 2.84%, compared to 3.48% for the quarter ended March 31, 2008 and 3.83% for the quarter ended June 30, 2007. Consequently, total deposits declined by $7.7 million to $463.7 million at June 30, 2008, compared to $471.4 million at March 31, 2008 and $460.3 million at June 30, 2007. Core deposits (comprised of checking, savings, money market, and individual retirement accounts) were $238.3 million, or 51.4% of total deposits at June 30, 2008, compared to $242.4 million, or 52.7% of total deposits at June 30, 2007. Brokered deposit balances were $61.2 million at June 30, 2008, compared to $61.3 million at March 31, 2008 and $50.6 million at June 30, 2007.

Total loans were $664.0 million at June 30, 2008, compared to $655.6 million at March 31, 2008 and $637.0 million at December 31, 2007. Multi-family and commercial real estate loans of $36.6 million, one- to four-family mortgage loans of $17.4 million, and land development and real estate construction loans of $9.6 million were the primary contributors to second quarter loan originations. Total loan originations were $66.3 million during the quarter ended June 30, 2008, compared to $80.3 million and $61.1 million for the quarters ended March 31, 2008 and June 30, 2007, respectively.

For the quarter ended June 30, 2008, the yield on loans was 6.80%, compared to 7.12% and 7.27% for the quarters ended March 31, 2008 and June 30, 2007, respectively.

At June 30, 2008, the loan portfolio consisted of 37.0% commercial real estate loans, 22.0% multi-family real estate loans, 12.6% land development and real estate construction loans, 11.4% one- to four-family real estate loans, 6.8% consumer loans (excluding home equity loans), 6.4% home equity loans, and 3.8% commercial business loans.

The Company sold $22.9 million of fixed-rate one- to four-family residential loans during the quarter ended June 30, 2008, which generated $450,000 in net gains, compared to $5.6 million in loan sales and $66,000 in net gains during the same period in 2007. The portfolio of loans serviced for others increased to $127.8 million at June 30, 2008, compared to $115.2 million and $113.4 million at March 31, 2008 and June 30, 2007, respectively.

During the second quarter, the Company classified $13.5 million of real estate construction loans as non-performing and placed the loans on non-accrual status. These loans were classified as a result of cash flow problems experienced by two local residential builders during the quarter resulting in their inability to fully meet the debt service requirements of the loans. The $13.5 million in loans classified as non-performing relating to these two builders consist of $6.6 million in land for future development, $5.5 million in one- to four-family residential construction loans with houses in varying states of completion, and $1.3 million in developed one- to four-family residential lots. Other non-performing loans, comprised exclusively of consumer and home equity loans totaling $415,000, were relatively unchanged compared to the $426,000 at March 31, 2008. As a result of these classifications, total non-performing loans (i.e., loans 90 days or more past due or non-accrual loans) increased to $13.9 million, or 2.09% of total loans at June 30, 2008, compared to $426,000, or 0.06% of total loans, at March 31, 2008, and $217,000, or 0.03% of total loans, at June 30, 2007.

Non-performing assets, which include the previously mentioned non-performing loans, along with repossessed assets and other real estate owned, increased to $14.3 million, or 1.65% of total assets at June 30, 2008, compared to $1.7 million, or 0.19% of total assets, at March 31, 2008, and $233,000, or 0.03% of total assets, at June 30, 2007.

The ratio of loans more than 30 days delinquent as a percentage of total loans increased to 1.07% at June 30, 2008, compared to 0.26% at both March 31, 2008 and June 30, 2007. The increase in delinquent loans was the result of increased delinquencies with land development and construction loans. Net charge-offs increased only modestly to $258,000 for the quarter ended June 30, 2008, compared to $250,000 for the quarter ended March 31, 2008 and $191,000 for the quarter ended June 30, 2007.

While the Company has not incurred any specific losses associated with the $13.5 million in recently classified loans, it did increase its provision for loan losses to $550,000 for the quarter ended June 30, 2008, compared to $150,000 for the quarters ended March 31, 2008 and June 30, 2007. Based upon the Company's quarterly analysis of the allowance for loan losses, this increased provision was made to ensure the adequacy of the allowance as of June 30, 2008. The allowance for loan losses at June 30, 2008 was $8.3 million, representing an allowance to total loans ratio of 1.25%, compared to $8.0 million at March 31, 2008, or 1.22% of total loans, and $8.2 million at June 30, 2007, or 1.27% of total loans.

The investment securities portfolio at June 30, 2008 was $132.0 million (excluding $13.7 million in Federal Home Loan Bank of Seattle stock holdings), compared to $150.1 million at March 31, 2008 and $190.7 million at June 30, 2007. The decline in the investment securities portfolio during the second quarter was primarily attributable to a mark-to-market valuation adjustment of $13.7 million ($9.0 million net of federal income taxes) relating to the Company's $108.5 million portfolio of pooled trust preferred securities issued by FDIC-insured financial institutions and insurance companies, as well as $2.6 million in principal payments received on our mortgage-backed securities held in the portfolio. The Company has evaluated the decline in the market value of the trust preferred securities, which is directly related to the credit and liquidity crises being experienced in the financial services industry over the past three calendar quarters, and believes the impairment in value to be temporary. Under U.S. generally accepted accounted principles, the Company has reflected this temporary market value decline in a valuation allowance component of shareholders' equity.

Total shareholders' equity at June 30, 2008 was $75.5 million, compared to $84.0 million at March 31, 2008 and $89.9 million at June 30, 2007. The decline in shareholders' equity was due primarily to the mark-to-market value adjustment to the Company's portfolio of investment securities. During the quarter ended June 30, 2008, the Company purchased and retired 29,793 shares of its outstanding shares of common stock at an average price of $13.58 per share. At June 30, 2008, the Company had the authority to purchase an additional 70,390 shares of common stock under its currently approved stock repurchase program.

The Company's capital ratio (i.e., equity divided by assets) was 8.68% at June 30, 2008, compared to 9.56% and 9.88% at March 31, 2008 and December 31, 2007, respectively. Tangible equity to assets was 8.30% at June 30, 2008, compared to 9.18% and 9.48% at March 31, 2008 and December 31, 2007, respectively. As of June 30, 2008, the Bank remained categorized "well capitalized" under regulatory standards.

The Company's book value and tangible book value per share as of June 30, 2008 were $12.46 and $11.91 per share, respectively, based upon 6,065,625 outstanding shares of common stock. The number of outstanding shares includes 63,423 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 356,315 unallocated shares held by the Rainier Pacific 401(k) Employee Stock Ownership Plan.

"The current operating environment remains very difficult, and we expect the economic slowdown and lower consumer confidence to continue to place pressure on the financial services industry over the near term. These conditions, along with a weaker local housing market exhibited by slowing sales and lower prices, are expected to persist at least through the balance of the year. As a result, we will continue to closely monitor and proactively manage our construction lending relationships in particular, and will continue to underwrite new loans prudently. We do, however, remain optimistic regarding our ability to navigate through these current market challenges and will continue to focus on preserving and enhancing the value of the Rainier Pacific franchise," 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, the credit risk of lending activities, including changes in the level and trend of loan delinquencies and write-offs; results of examinations by our banking regulators; 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 June 30,     At March 31,    At December 31,
                              2008             2008             2007
                         ---------------  ---------------  ---------------

 Cash and cash
  equivalents            $        11,832  $         8,462  $         8,724
 Interest-bearing
  deposits with banks                539            7,003               90
 Securities
  available-for-sale              94,056          109,545          131,287
 Securities
  held-to-maturity (fair
  value at June 30, 2008:
  $37,226; at March 31,
  2008: $40,744; and at
  December 31, 2007:
  $45,541)                        37,946           40,557           45,756
 Federal Home Loan Bank
  of Seattle ("FHLB")
  stock, at cost                  13,712           13,712           13,712

 Loans                           663,974          655,624          637,000
   Less: allowance for
    loan losses                   (8,271)          (7,979)          (8,079)
                         ---------------  ---------------  ---------------
     Loans, net                  655,703          647,645          628,921

 Premises and equipment,
  net                             34,286           33,602           33,813
 Accrued interest
  receivable                       3,400            3,635            3,980
 Other assets                     19,139           14,761           12,581
                         ---------------  ---------------  ---------------

     TOTAL ASSETS        $       870,613  $       878,922  $       878,864
                         ===============  ===============  ===============


   LIABILITIES AND SHAREHOLDERS’ EQUITY

LIABILITIES:
 Deposits
   Non-interest bearing  $        40,736  $        37,145  $        33,924
   Interest-bearing              422,989          434,227          427,563
                         ---------------  ---------------  ---------------
     Total deposits              463,725          471,372          461,487

 Borrowed funds                  324,238          314,353          320,454
 Corporate drafts payable          2,110            4,121            2,510
 Accrued compensation
  and benefits                       969              948            1,758
 Other liabilities                 4,022            4,085            5,835
                         ---------------  ---------------  ---------------

     TOTAL LIABILITIES            95,064          794,879          792,044
                         ---------------  ---------------  ---------------

SHAREHOLDERS’ EQUITY:
  Common stock, no par
   value: 49,000,000
   shares authorized;
   6,421,940 shares
   issued and 6,002,202
   shares outstanding at
   June 30, 2008;
   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              50,636           50,668           50,458

  Unearned Employee Stock
   Ownership Plan
   ("ESOP") shares                (3,563)          (3,733)          (3,903)
  Accumulated other
   comprehensive loss,
   net of tax                    (17,921)          (8,723)          (4,575)
  Retained earnings               46,397           45,831           44,840
                         ---------------  ---------------  ---------------

    TOTAL SHAREHOLDERS’
     EQUITY                       75,549           84,043           86,820
                         ---------------  ---------------  ---------------

    TOTAL LIABILITIES
     AND SHAREHOLDERS’
     EQUITY              $       870,613  $       878,922  $       878,864
                         ===============  ===============  ===============





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

                          Three Months Ended        Six Months Ended
                              June 30,                  June 30,
                        ----------------------    ----------------------
                          2008         2007         2008         2007
                        ---------    ---------    ---------    ---------
INTEREST INCOME
  Loans                 $  11,191    $  11,645    $  22,468    $  23,244
  Securities
   available-for-sale       1,276        2,032        3,133        4,084
  Securities
   held-to-maturity           420          546          871        1,111
  Interest-bearing
   deposits                     6           70           33           80
  FHLB dividends               48           20           82           34
                        ---------    ---------    ---------    ---------
    Total interest
     income                12,941       14,313       26,587       28,553
                        ---------    ---------    ---------    ---------
INTEREST EXPENSE
  Deposits                  2,979        4,053        6,566        8,164
  Borrowed funds            3,524        3,841        7,040        7,584
                        ---------    ---------    ---------    ---------
    Total interest
     expense                6,503        7,894       13,606       15,748
                        ---------    ---------    ---------    ---------
    Net interest income     6,438        6,419       12,981       12,805
PROVISION FOR LOAN
 LOSSES                       550          150          700          300
                        ---------    ---------    ---------    ---------
  Net interest income
   after provision for
   loan losses              5,888        6,269       12,281       12,505
                        ---------    ---------    ---------    ---------
NON-INTEREST INCOME
  Deposit service fees        908          879        1,747        1,705
  Loan service fees           287          346          602          638
  Insurance service fees      529          622        1,079        1,165
  Investment service fees     121          144          285          257
  Real estate lease
   income                     262          271          508          565
  Gain on sale of
   securities, net              -            -           11            -
  Gain on sale of loans,
   net                        450           66          685          202
  Gain on sale of
   premises and
   equipment, net               6            -            6           10
  Other operating
   income                      38           16          499           44
                        ---------    ---------    ---------    ---------
    Total non-interest
     income                 2,601        2,344        5,422        4,586
                        ---------    ---------    ---------    ---------
NON-INTEREST EXPENSE
  Compensation and
   benefits                 4,042        4,068        8,102        8,061
  Office operations           937          956        1,892        1,942
  Occupancy                   616          624        1,230        1,259
  Loan servicing              123          129          232          239
  Outside and
   professional services      248          258          696          690
  Marketing                   218          289          502          532
  Other operating
   expenses                   716          778        1,204        1,488
                        ---------    ---------    ---------    ---------
    Total non-interest
     expense                6,900        7,102       13,858       14,211
                        ---------    ---------    ---------    ---------

INCOME BEFORE PROVISION
 FOR FEDERAL INCOME TAX     1,589        1,511        3,845        2,880

PROVISION FOR FEDERAL
 INCOME TAX                   572          529        1,384        1,008
                        ---------    ---------    ---------    ---------

NET INCOME              $   1,017    $     982    $   2,461    $   1,872
                        =========    =========    =========    =========

EARNINGS PER COMMON
 SHARE
  Basic                 $    0.17    $    0.16    $    0.41    $    0.31
  Diluted               $    0.17    $    0.16    $    0.41    $    0.31
  Weighted average
   shares outstanding
   - Basic              5,987,866(1) 5,995,114(2) 5,985,629(1) 5,985,772(2)
  Weighted average
   shares outstanding
   - Diluted            5,987,866    6,073,991    5,985,629    6,072,146


(1) Weighted average shares outstanding - Basic includes 262,877 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 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, except per share data)

                                    Three Months Ended
                   -----------------------------------------------------
                    June 30,      March 31,   December 31,  September 30,
                      2008          2008          2007          2007
                   -----------   -----------   ----------    -----------
INTEREST INCOME
  Loans            $    11,191   $    11,277   $   11,808    $    12,127
  Securities
   available-for-
   sale                  1,276         1,857        2,102          2,015
  Securities
   held-to-maturity        420           451          512            527
  Interest-bearing
   deposits                  6            27           23             28
  FHLB dividends            48            34           27             21
                   -----------   -----------   ----------    -----------
    Total interest
     income             12,941        13,646       14,472         14,718
                   -----------   -----------   ----------    -----------
INTEREST EXPENSE
  Deposits               2,979         3,587        3,960          4,104
  Borrowed funds         3,524         3,516        3,751          3,881
                   -----------   -----------   ----------    -----------
    Total interest
     expense             6,503         7,103        7,711          7,985
                   -----------   -----------   ----------    -----------
    Net interest
     income              6,438         6,543        6,761          6,733
PROVISION FOR LOAN
 LOSSES                    550           150          150            150
                   -----------   -----------   ----------    -----------
      Net interest
       income
       after
       provision
       for loan
       loss              5,888         6,393        6,611          6,583
                   -----------   -----------   ----------    -----------
NON-INTEREST
 INCOME
  Deposit service
   fees                    908           839          885            906
  Loan service
   fees                    287           315          295            381
  Insurance
   service fees            529           550          595            552
  Investment
   service fees            121           164          134            189
  Real estate
   lease income            262           246          249            298
  Gain on sale of
   securities, net           -            11            -              -
  Gain on sale of
   loans, net              450           235          117             60
  Gain (loss) on
   sale of
   premises and
   equipment, net            6             -           (1)             1
  Other operating
   income                   38           461          354             25
                   -----------   -----------   ----------    -----------
    Total
     non-interest
     income              2,601         2,821        2,628          2,412
                   -----------   -----------   ----------    -----------
NON-INTEREST
 EXPENSE
  Compensation and
   benefits              4,042         4,060        4,043          4,237
  Office
   operations              937           955        1,014          1,006
  Occupancy                616           614          672            649
  Loan servicing           123           109          129            130
  Outside and
   professional
   services                248           448          426            250
  Marketing                218           284          226            278
  Other operating
   expenses                716           488          943            799
                   -----------   -----------   ----------    -----------
    Total
     non-interest
     expense             6,900         6,958        7,453          7,349
                   -----------   -----------   ----------    -----------

INCOME BEFORE
 PROVISION FOR
 FEDERAL INCOME
 TAX                     1,589         2,256        1,786          1,646

PROVISION FOR
 FEDERAL INCOME
 TAX                       572           812          876            574
                   -----------   -----------   ----------    -----------

NET INCOME         $     1,017   $     1,444   $      910    $     1,072
                   ===========   ===========   ==========    ===========

EARNINGS PER
 COMMON SHARE
  Basic            $      0.17   $      0.24   $     0.15    $      0.18
  Diluted          $      0.17   $      0.24   $     0.15    $      0.18
  Weighted average
   shares
   outstanding -
   Basic             5,987,866(1)  5,983,393(2) 5,979,580(3)   5,983,586(4)
  Weighted average
   shares
   outstanding -
   Diluted           5,987,866     5,983,393    5,979,580      5,983,586


(1) Weighted average shares outstanding – Basic includes 262,877 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 245,972 vested and
    ratably earned shares of the 326,300 restricted shares granted and
    issued under the MRP, net of forfeited shares.
(3) 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.
(4) 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.





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

                                             As of
                     -----------------------------------------------------
                                           December   September
                     June 30,   March 31,     31,        30,     June 30,
                       2008       2008       2007       2007       2007
                     ---------  ---------  ---------  ---------  ---------
Loan portfolio
 composition:
  Real estate:
    One- to
     four-family
     residential     $  75,879  $  84,211  $  76,882  $  78,621  $  79,018
    Five or more
     family
     residential       146,050    148,991    149,080    149,474    159,137
    Commercial         245,522    223,076    212,901    214,130    215,442
                     ---------  ---------  ---------  ---------  ---------
      Total real
       estate          467,451    456,278    438,863    442,225    453,597
  Real estate
   construction:
    One- to
     four-family
     residential        79,581     78,607     73,114     70,867     72,838
    Five or more
     family
     residential             -          -      1,839      2,019      3,187
    Commercial           4,032      4,157      3,827      1,834          -
                     ---------  ---------  ---------  ---------  ---------
      Total real
       estate
       construction     83,613     82,764     78,780     74,720     76,025
  Consumer:
    Automobile          15,621     18,027     20,798     23,711     26,623
    Home equity         42,344     43,980     45,293     44,537     44,610
    Credit cards        22,063     22,120     23,172     22,601     22,018
    Other                7,962      7,812      7,411      7,383      7,310
                     ---------  ---------  ---------  ---------  ---------
      Total consumer    87,990     91,939     96,674     98,232    100,561
  Commercial
   business             24,920     24,643     22,683     18,142     17,202
                     ---------  ---------  ---------  ---------  ---------
      Subtotal         663,974    655,624    637,000    633,319    647,385
Less: Allowance for
 loan losses            (8,271)    (7,979)    (8,079)    (8,142)    (8,235)
                     ---------  ---------  ---------  ---------  ---------
  Total loans, net   $ 655,703  $ 647,645  $ 628,921  $ 625,177  $ 639,150
                     =========  =========  =========  =========  =========
Sold loans, serviced
 for others          $ 127,824  $ 115,214  $ 114,629  $ 113,306  $ 113,434
                     =========  =========  =========  =========  =========
Non-performing
 assets:
  Loans 90 days or
   more past due or
   non-accrual loans
   (1):
    Real estate      $       -  $       -  $       -  $       -  $       -
    Real estate
     construction       13,461          -          -          -          -
    Consumer               415        426        497        197        217
    Commercial
     business                -          -          -          -          -
  Repossessed assets         -          6         49         23         16
  Other real estate
   owned                   446      1,222          -          -          -
                     ---------  ---------  ---------  ---------  ---------
    Total
     non-performing
     assets          $  14,322  $   1,654  $     546  $     220  $     233
                     =========  =========  =========  =========  =========
Loans greater than
 30 days delinquent
 (1)                 $   7,091  $   1,678  $   2,125  $   1,762  $   1,651
Loans greater than
 30 days delinquent
 as a percentage of
 loans                    1.07%      0.26%      0.33%      0.28%      0.26%
Non-performing loans
 as a percentage of
 loans                    2.09%      0.06%      0.08%      0.03%      0.03%
Non-performing
 assets as a
 percentage of
 assets                   1.65%      0.19%      0.06%      0.02%      0.03%
Allowance for loan
 loss as a
 percentage of
 non-performing
 loans                   59.61%  1,873.00%  1,625.55%  4,132.99%  3,794.93%
Allowance for loan
 loss as a
 percentage of
 non-performing
 assets                  57.75%    482.41%  1,479.67%  3,700.91%  3,534.33%
Allowance for loan
 loss as a
 percentage of total
 loans                    1.25%      1.22%      1.27%      1.29%      1.27%

Core deposits (all
 deposits, excluding
 CDs)                $ 238,271  $ 229,401  $ 226,743  $ 236,411  $ 242,446
Non-core deposits
 (CDs)                 225,454    241,971    234,744    224,506    217,870
                     ---------  ---------  ---------  ---------  ---------
  Total deposits     $ 463,725  $ 471,372  $ 461,487  $ 460,917  $ 460,316
                     =========  =========  =========  =========  =========
Loans/Deposits          143.18%    139.09%    138.03%    137.40%    140.64%
Equity/Assets             8.68%      9.56%      9.88%     10.16%      9.94%
Tangible
 Equity/Assets            8.30%      9.18%      9.48%      9.80%      9.58%

(1) The Company may classify selected loans as non-accrual eventhough the
    contractual payments on the loans are not past due, based upon other
    factors or characteristics known to the Company relating to the loan or
    the borrower.  Therefore, the amount of loans reported as "90 days or
    more past due or non-accrual loans" may exceed the amount of loans
    reported as "greater than 30 days delinquent."





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


                                Three Months Ended     Six Months Ended
                                     June 30,              June 30,
                                 2008       2007       2008       2007
                               ---------  ---------  ---------  ---------

Loan growth                         1.27%      1.39%      4.23%      1.25%
Deposit growth (decline)           (1.62%)    (1.38%)     0.48%      0.63%
Equity growth (decline)           (10.11%)     1.26%    (12.98%)     2.37%
Asset growth (decline)             (0.95%)    (0.19%)    (0.95%)     0.24%

Loans originated               $  66,267  $  61,072  $ 146,521  $ 101,437
Loans sold                     $  22,878  $   5,558  $  36,456  $  12,377
Loans charged-off, net         $     258  $     191  $     508  $     348

Increase in non-interest income    10.96%      5.49%     18.23%      8.11%
Decrease in non-interest
 expense                           (2.84%)    (0.01%)    (2.48%)    (1.20%)
Net charge-offs to average
 loans                              0.16%      0.12%      0.16%      0.11%
Efficiency ratio                   76.34%     81.05%     75.30%     81.71%
Return on assets                    0.46%      0.43%      0.56%      0.41%
Return on equity                    5.00%      4.39%      5.87%      4.21%

Interest-earning assets:
  Yield on loans                    6.80%      7.27%      6.96%      7.26%
  Yield on investments              4.63%      5.34%      5.19%      5.34%
  Yield on FHLB stock               1.40%      0.60%      1.20%      0.50%
                               ---------  ---------  ---------  ---------
    Yield on interest-earning
     assets                         6.32%      6.71%      6.52%      6.70%
                               ---------  ---------  ---------  ---------

Interest-bearing liabilities:
  Cost of deposits                  2.84%      3.83%      3.16%      3.86%
  Cost of borrowed funds            4.38%      4.45%      4.39%      4.45%
                               ---------  ---------  ---------  ---------
    Cost of interest-bearing
     liabilities                    3.51%      4.11%      3.69%      4.12%
                               ---------  ---------  ---------  ---------
      Net interest rate spread      2.81%      2.60%      2.83%      2.58%
                               =========  =========  =========  =========

Net interest margin                 3.13%      3.01%      3.17%      2.98%

Net interest margin-quarter
 ended 06/30/2008                   3.13%
Net interest margin-quarter
 ended 03/31/2008                   3.20%
Net interest margin-quarter
 ended 12/31/2007                   3.23%
Net interest margin-quarter
 ended 09/30/2007                   3.20%


                                               As of
                         --------------------------------------------------
                           June 30,         March 31,      December 31,
                             2008             2008             2007
                         -------------    -------------    -------------
Shares outstanding at
 end of period               6,065,625(1)     6,078,444(2)     6,076,370(3)
Book value per share     $       12.46    $       13.83    $       14.29
Tangible book value per
 share                   $       11.91    $       13.27    $       13.77

                                       As of
                         ---------------------------------
                         September 30,      June 30,
                             2007             2007
                         -------------    -------------
Shares outstanding at
 end of period               6,109,633(4)     6,144,259(5)
Book value per share     $       14.67    $       14.63
Tangible book value per
 share                   $       14.15    $       14.11


(1) Shares outstanding represent 6,421,940 shares issued (including 63,423
    unvested restricted shares granted under the MRP), less 356,315
    unallocated shares under the ESOP.
(2) 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.
(3) 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.
(4) 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.
(5) 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.

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