UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):July 20, 2005
RAINIER PACIFIC FINANCIAL GROUP, INC.
(Exact name of registrant as specified in its charter)
Washington | 000-50362 | 87-0700148 |
(State or other jurisdiction | (Commission | (I.R.S. Employer |
1498 Pacific Avenue, Tacoma, Washington | 98402 |
(Address of principal executive offices) | (Zip Code) |
Registrant's telephone number, including area code:(253) 926-4000
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions. |
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act |
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act |
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Item 2.02 Results of Operations and Financial Condition
On July 20, 2005, Rainier Pacific Financial Group, Inc. issued its earnings release for the quarter ended June 30, 2005. A copy of the press release is attached as Exhibit 99.1 and incorporated by reference herein.
Item 9.01 Financial Statements and Exhibits
(c) Exhibits
99.1 Press Release of Rainier Pacific Financial Group, Inc. dated July 20, 2005.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
RAINIER PACIFIC FINANCIAL GROUP, INC.
Date: July 20, 2005 /s/John A. Hall
John A. Hall
President and Chief Executive Officer
(Principal Executive Officer)
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EXHIBIT 99.1
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For more information, contact:
John Hall: (253) 926-4007
jhall@rainierpac.com
**For Immediate Release** or
Vic Toy: (253) 926-4038
vtoy@rainierpac.com
Rainier Pacific Financial Group, Inc. Reports Second Quarter Earnings
Tacoma, Washington - July 20, 2005 - Rainier Pacific Financial Group, Inc. (the "Company") (NASDAQ: RPFG) today announced earnings for its second fiscal quarter ended June 30, 2005. Net income was $635,000, or $0.10 per diluted share, compared to net income of $972,000, or $0.12 per diluted share, for the same period in 2004. For the six months ended June 30, 2005, the Company's net income was $1.4 million, or $0.22 per diluted share, compared to net income of $1.7 million, or $0.22 per diluted share, for the same period in 2004.
At June 30, 2005, the Company's total assets were $769.4 million, up 2.3% from $751.8 million at December 31, 2004.
The Company's revenue (net interest income before provisions for loan losses plus non-interest income) for the quarter ended June 30, 2005 was $7.7 million, compared to $9.2 million for the same period a year ago. Net interest income before the provision for loan losses for the quarter ended June 30, 2005 was $6.0 million, compared to $7.5 million for the quarter ended June 30, 2004. The
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Company's net interest margin was 3.33% for the quarter ended June 30, 2005, compared to 4.23% for the same quarter in fiscal 2004 and 3.59% for the quarter ended March 31, 2005. The net interest margin continued to contract primarily as a result of the effects of a flattening yield curve and higher costs of deposits and borrowed funds. For the quarter ended June 30, 2005, the yield on loans was 6.63%, compared to 6.55% for the quarter ended March 31, 2005 and 6.83% for the quarter ended June 30, 2004. Average cost of deposits and borrowed funds were 1.92% and 3.62% for the quarter ended June 30, 2005, compared to 1.59% and 3.36% for the quarter ended March 31, 2005 and 1.23% and 2.62% for the quarter ended June 30, 2004, respectively.
Non-interest income was $1.7 million for the second quarter ended June 30, 2005, relatively unchanged compared to the same quarter in 2004. The Company's non-interest expenses were $6.6 million for the quarter ended June 30, 2005, or 8.0% less than the $7.1 million of non-interest expenses during the same quarter in 2004.
Total shareholders' equity at June 30, 2005 was $88.5 million, compared to $98.8 million at December 31, 2004. The reduction in shareholder's equity was primarily the result of the Company's purchase and retirement of 678,494 shares of its outstanding common stock during the first six months of 2005, at an aggregate cost of $11.8 million. During the second quarter ended June 30, 2005, the Company purchased 12,600 of those shares at an average price per share of $15.31 for an aggregate amount of $193,000. At June 30, 2005, the Company had the authority to purchase an additional 8,216 shares of common stock under its currently approved stock repurchase program.
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At June 30, 2005, the Company's book value per share was $13.76 per share based upon 6,428,762 outstanding shares. The number of outstanding shares includes 262,240 restricted shares granted under the Company's "2004 Management Recognition Plan" that have not yet vested and excludes 560,004 shares held by the "Rainier Pacific 401(k) Employee Stock Ownership Plan" that have not yet been allocated to the plan's participants.
Total loans increased to $516.0 million at June 30, 2005, compared to $498.2 million and $502.7 million at March 31, 2005 and December 31, 2004, respectively. At June 30, 2005, the loan portfolio consisted of 29.6% commercial real estate loans, 24.7% multi-family real estate loans, 17.2% one- to four-family real estate loans, 14.8% consumer loans, 6.6% real estate construction loans, 5.9% home equity loans, and 1.2% commercial business loans.
Total loan originations during the quarter ended June 30, 2005 were $57.8 million, compared to $81.9 million for the same period last year. The Company continued to focus on generating commercial, multi-family, and residential real estate construction loans, which represented $38.1 million, or 66.0% of total loan originations during the second quarter of 2005.
The Company sold $3.4 million of single-family loans during the second quarter of 2005, compared to $10.6 million during the same period in 2004. During the six months ended June 30, 2005, the Company sold $19.6 million of single-family loans, compared to $15.2 million during the same period in 2004. The portfolio of loans serviced for others was $103.9 million at June 30, 2005, compared to $99.4 million at December 31, 2004.
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The credit quality of the Company's loan portfolio remained good, with net charge-offs of $378,000 for the quarter ended June 30, 2005, compared to $255,000 for the quarter ended March 31, 2005 and $512,000 for the quarter ended June 30, 2004. Loans more than 30 days delinquent as a percentage of total loans were 0.25% at June 30, 2005, compared to 0.30% at March 31, 2005 and 0.40% at December 31, 2004. Non-performing loans (non-accrual loans and loans 90 days or more past due) were $156,000, or 0.03% of total loans at June 30, 2005, compared to $92,000, or 0.02% of total loans at March 31, 2005, and $303,000, or 0.06% of total loans at December 31, 2004. Non-performing assets were $207,000, or 0.03% of total assets at June 30, 2005, compared to $101,000, or 0.01% of total assets at March 31, 2005, and $357,000, or 0.05% of total assets at December 31, 2004. The allowance for loan losses totaled $8.8 million at June 30, 2005, representing an allowance to total loans ratio of 1.71%, slightly lower than the $9.0 million allowance at both March 31, 2005 and December 31, 2004.
The continued improvement in credit quality of the Company's loan portfolio, demonstrated by relatively low delinquencies and charge-offs, enabled the Company to reduce its provision for loan losses to $150,000 for the quarter ended June 30, 2005, compared to the $300,000 provision made for the quarter ended March 31, 2005, and the $600,000 provision for the same period one year ago.
The Company's investment securities portfolio at June 30, 2005, excluding Federal Home Loan Bank stock, was $197.0 million, or 12.0% less than the $223.9 million portfolio at June 30, 2004; however, it was 3.1% greater than the $191.0 million portfolio at December 31, 2004.
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Total deposits increased $12.0 million, or 3.3%, to $373.8 million during the quarter, compared to $361.8 million at March 31, 2005 and $344.9 million at December 31, 2004. Core deposits (comprised of checking, savings, money market, and individual retirement accounts) totaled $182.5 million, or 48.8% of total deposits at June 30, 2005. The average cost of deposits was 1.92% and 1.59% for the quarters ended June 30, 2005 and March 31, 2005, respectively. Borrowed funds were $299.6 million at June 30, 2005, unchanged from March 31, 2005 and slightly greater than $295.7 million at December 31, 2004. The average cost of borrowed funds was 3.62% and 3.36% for the quarters ended June 30, 2005 and March 31, 2005, respectively.
"The further flattening of the yield curve and rising short-term rates caused the Company's interest rate margin to further compress during the second quarter. We anticipate that the pressure on the Company's interest margin will moderate as increases in short-term interest rates slow. With improving loan demand, we expect to continue growing our residential construction, commercial, and multi-family real estate loan portfolios during the balance of the year, while keeping loan quality favorable. Our thirteenth full-service branch in the Proctor district of Tacoma is expected to open on August 29, 2005, and our fourteenth branch office in Federal Way is projected to open in the second quarter of 2006, as we continue our focus on growing retail deposits in the markets we serve," said John Hall, President/CEO.
Rainier Pacific Financial Group, Inc. is the bank holding company for Rainier Pacific Savings Bank, a Tacoma-based state chartered savings bank operating 12 branch offices in the Tacoma-Pierce County and Federal Way areas of Western Washington.
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For additional information, visit Rainier Pacific's website atwww.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, 2004. 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.
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Rainier Pacific Financial Group, Inc. & Subsidiary |
At June 30,
At March 31,
At December 31,
2005
2005
2004
ASSETS
(unaudited)
(unaudited)
(audited)
ASSETS:
Cash and cash equivalents
$ 7,499
$ 8,502
$ 8,927
Interest-bearing deposits with banks
416
443
1,271
Securities available-for-sale
109,682
111,100
97,436
Securities held-to-maturity (fair value of $86,624 at June 30,
2005, $88,735 at March 31, 2005, and $92,779 at December
31, 2004)
87,285
90,637
93,540
Federal Home Loan Bank ("FHLB") stock, at cost
13,712
13,579
13,374
Loans
515,995
498,154
502,719
Less: allowance for loan losses
(8,799)
(9,027)
(8,981)
Loans, net
507,196
489,127
493,738
Premises and equipment, net
34,654
34,436
34,684
Accrued interest receivable
3,412
3,177
3,354
Other assets
5,562
5,121
5,452
TOTAL ASSETS
$ 769,418
$ 756,122
$ 751,776
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES:
Deposits
Non-interest bearing
$ 28,028
$ 31,567
$ 29,654
Interest-bearing
345,777
330,191
315,262
Total Deposits
373,805
361,758
344,916
Borrowed funds
299,559
299,639
295,722
Corporate drafts payable
3,433
3,012
3,839
Accrued compensation and benefits
1,972
1,122
1,828
Other liabilities
2,176
3,055
6,665
TOTAL LIABILITIES
680,945
668,58
652,970
SHAREHOLDERS' EQUITY:
Common stock, no par value: 49,000,000 shares authorized;
6,988,766 shares issued and 6,167,797 shares outstanding
at June 30, 2005; 7,003,366 shares issued and 6,146,918
shares outstanding at March 31, 2005; and 7,672,260
shares issued and 6,779,634 shares outstanding at
December 31, 2004
53,532
53,397
64,672
Unearned Employee Stock Ownership Plan ("ESOP") shares
(5,600)
(5,770)
(5,940)
(802)
(1,216)
(725)
Retained earnings
41,343
41,125
40,799
TOTAL SHAREHOLDERS' EQUITY
88,473
87,536
98,806
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY
$ 769,418
$ 756,122
$ 751,776
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Rainier Pacific Financial Group, Inc. & Subsidiary |
Three Months Ended
Six Months Ended
June 30,
2005
2004
2005
2004
INTEREST INCOME
Loans
$ 8,364
$ 8,030
$ 16,537
$ 15,863
Securities available-for-sale
1,129
1,105
2,145
1,949
Securities held-to-maturity
812
1,019
1,654
1,987
Interest-bearing deposits
5
1
9
2
Federal Home Loan Bank stock dividends
-
124
54
238
Total interest income
10,310
10,279
20,399
20,039
INTEREST EXPENSE
Deposits
1,599
966
2,856
1,795
Borrowed funds
2,723
1,820
5,193
3,574
Total interest expense
4,322
2,786
8,049
5,369
Net interest income
5,988
7,493
12,350
14,670
PROVISION FOR LOAN LOSSES
150
600
450
1,500
Net interest income after provision for
loan loss
5,838
6,893
11,900
13,170
NON-INTEREST INCOME
Deposit service fees
971
1,069
1,845
1,923
Loan service fees
238
203
456
477
Insurance service fees
133
135
300
294
Investment service fees
124
70
256
155
Gain (loss) on sale of securities, net
(2)
-
(2)
179
Gain on sale of loans, net
109
144
316
282
Gain (loss) on sale of premises and
equipment, net
(2)
43
286
82
Other operating income
120
17
204
20
Total non-interest income
1,691
1,681
3,661
3,412
NON-INTEREST EXPENSE
Compensation and benefits
3,604
3,588
7,171
6,888
Office operations
1,312
1,240
2,752
2,498
Occupancy, net
472
357
960
701
Loan servicing
132
114
236
193
Outside and professional services
403
744
705
1,757
Marketing
238
314
563
723
Other operating expenses
408
776
1,055
1,260
Total non-interest expense
6,569
7,133
13,442
14,020
INCOME BEFORE PROVISION FOR FEDERAL
INCOME TAX
960
1,441
2,119
2,562
PROVISION FOR FEDERAL INCOME TAX
325
469
719
836
NET INCOME
$ 635
$ 972
$ 1,400
$ 1,726
EARNINGS PER COMMON SHARE
Basic
$ 0.10
$ 0.12
$ 0.22
$ 0.22
Diluted
$ 0.10
$ 0.12
$ 0.22
$ 0.22
Weighted average shares outstanding -
Basic
6,148,455(1)
7,708,216(2)
6,294,499(1)
7,747,433(2)
Weighted average shares outstanding -
Diluted
6,150,112(1)
7,708,216(2)
6,316,767(1)
7,747,433(2)
(1)Weighted average shares outstanding (both Basic and Diluted) include 67,335 shares of the 328,300 restricted shares granted and issued under the "2004 Management Recognition Plan" ("MRP").
(2)Weighted average shares outstanding (both Basic and Diluted) include 1,310 shares of the 336,800 restricted shares granted and issued under the MRP. Diluted weighted average shares outstanding exclude the impact of 680,000 options (with an exercise price of $16.26 per share) granted under the 2004 Stock Option Plan and 335,490 of restricted shares granted under the MRP, as a result of such options and restricted shares not being dilutive at June 30, 2004.
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Rainier Pacific Financial Group, Inc. & Subsidiary |
Three Months Ended
June 30,
Six Months Ended
June 30,
2005
2004
2005
2004
Loan growth
3.58%
6.17%
2.64%
7.11%
Deposit growth
3.33%
2.12%
8.38%
9.37%
Equity growth (decline)
1.07%
(5.71)%
(10.46%)
(4.78%)
Asset growth
1.76%
4.24%
2.35%
10.99%
Net interest margin
3.33%
4.23%
3.47%
4.28%
Increase (decrease) in non-interest income
0.59%
(13.53%)
7.30%
(11.93%)
Increase (decrease) in non-interest expense
(7.91%)
10.55%
(4.12%)
15.90%
Net charge-offs to average loans
0.30%
0.44%
0.25%
0.46%
Efficiency ratio
85.54%
77.75%
83.95%
77.54%
Return on assets (ROA)
0.33%
0.52%
0.37%
0.48%
Return on equity (ROE)
2.88%
3.44%
3.08%
(4.20%)
Yield on loans
6.63%
6.83%
6.59%
6.91%
Yield on investments
3.92%
3.81%
3.89%
3.74%
Yield on FHLB stock
0.00%
4.01%
0.80%
3.97%
Cost of deposits
1.92%
1.23%
1.76%
1.19%
Cost of borrowed funds
3.62%
2.62%
3.49%
2.74%
Yield on interest-earning assets
5.75%
5.82%
5.74%
5.87%
Cost of interest-bearing liabilities
2.73%
1.89%
2.59%
1.91%
Net interest spread
3.02%
3.93%
3.15%
3.96%
Loans originated
$ 57,830
$ 81,866
$ 100,496
$ 124,124
Loans sold
$ 3,411
$ 10,633
$ 19,582
$ 15,191
Loans charged-off, net
$ 378
$ 512
$633
$ 1,055
Shares outstanding at end of period
6,428,762(1)
7,814,026(2)
6,428,762(1)
7,814,026(2)
Book value per share
$ 13.76
$ 13.96
$ 13.76
$ 13.96
Net interest margin-quarter ended 06/30/2005
3.33%
Net interest margin-quarter ended 03/31/2005
3.59%
Net interest margin-quarter ended 12/31/2004
3.72%
Net interest margin-quarter ended 09/30/2004
3.99%
Net interest margin-quarter ended 06/30/2004
4.23%
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Rainier Pacific Financial Group, Inc. & Subsidiary |
As of June 30,
As of March 31,
2005
2005
2004
Loans/Deposits
138.04%
137.70%
145.75%
Equity/Assets
11.50%
11.58%
13.14%
Non-performing assets:
Loans 90 days or more past due
$156
$ 92
$ 303
Repossessed assets
51
9
54
Other real estate owned
-
-
-
Total non-performing assets
$ 101
$ 357
Loans greater than 30 days delinquent
$ 1,267
$ 1,484
$ 2,022
Loans greater than 30 days delinquent as a percentage of
loans
0.25%
0.30%
0.40%
Non-performing loans as a percentage of loans
0.03%
0.02%
0.06%
Non-performing assets as a percentage of assets
0.03%
0.01%
0.05%
Allowance for loan loss as a percentage of non-performing
loans
5,640.38%
9,811.96%
2,964.03%
Allowance for loan loss as a percentage of non-performing
assets
4,250.72%
8,937.62%
2,515.69%
Allowance for loan loss as a percentage of total loans
1.71%
1.81%
1.79%
Loan portfolio composition:
Real estate:
One- to four-family residential
$ 88,867
$ 87,117
$ 97,455
Home equity
30,373
29,426
28,775
Five or more family residential
127,439
126,470
126,199
Commercial
152,857
142,329
144,717
Total real estate
399,536
385,342
397,146
Real estate construction:
One- to four-family residential
34,290
29,551
16,183
Five or more family residential
-
-
-
Commercial
-
-
-
Total real estate construction
34,290
29,551
16,183
Consumer:
Automobile
45,057
48,596
52,567
Credit cards
21,357
21,270
22,447
Other
10,122
10,380
11,802
Total consumer
76,536
80,246
86,816
Commercial/Business
6,148
3,446
2,828
Subtotal
516,510
498,585
502,973
Less: Deferred loan (fees) costs, net
(515)
(431)
(254)
Less: Allowance for loan losses
(8,799)
(9,027)
(8,981)
Total loans, net
$ 507,196
$ 489,127
$ 493,738
Sold loans, serviced for others
$ 103,928
$ 107,554
$ 99,416
Core deposits (all deposits, excluding CDs)
$ 182,470
$ 192,584
$ 196,509
Non-core deposits (CDs)
191,335
169,174
148,407
Total deposits
$ 373,805
$ 361,758
$ 344,916
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