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): October 22, 2008
RAINIER PACIFIC FINANCIAL GROUP, INC.
(Exact name of registrant as specified in its charter)
| Washington | 000-50362 | 87-0700148 |
(State or other jurisdiction of incorporation) | (Commission File Number) | (I.R.S. Employer Identification No.) |
| 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 (17 CFR 240.14d-2(b)) |
| |
| [ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.02 Results of Operations and Financial Condition
On October 22, 2008, Rainier Pacific Financial Group, Inc. issued its earnings release for the quarter ended September 30, 2008. A copy of the press release is attached as Exhibit 99.1 and incorporated by reference herein.
Item 9.01 Financial Statements and Exhibits
(d) Exhibits
99.1 Press Release of Rainier Pacific Financial Group, Inc. dated October 22, 2008.
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: October 22, 2008 | /s/ John A. Hall |
| | John A. Hall |
| | President and Chief Executive Officer |
| | (Principal Executive Officer) |
EXHIBIT 99.1
| | | 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 Third Quarter Results
Tacoma, Washington – October 22, 2008 – Rainier Pacific Financial Group, Inc. (the “Company”) (NASDAQ GM: RPFG) announced today its third quarter results for the period ended September 30, 2008. The Company recognized a net loss of $3.0 million, or $0.49 per diluted share, for the quarter ended September 30, 2008, compared to net income of $1.1 million, or $0.18 per diluted share, for the same period in 2007. The net loss of $3.0 million for the third quarter was primarily attributable to the Company recording a $6.0 million (pre-tax) provision for loan losses, as a result of further deterioration in the underlying collateral values associated with its portfolio of residential construction and builder loans. This action increased the Company’s allowance for loan losses to 2.10% of total loans, or $13.9 million, at September 30, 2008, compared to $8.3 million at June 30, 2008, or 1.25% of total loans.
For the nine months ended September 30, 2008, the Company’s net loss was $489,000, or $0.08 per diluted share, compared to net income of $2.9 million, or $0.49 per diluted share, for the same nine month period in 2007.
The Company’s decision to increase the provision for loan losses was prompted by continued slowness in single-family home sales, declining real estate valuations, and the increased level of non-performing real estate construction loans. During the quarter ended September 30, 2008, the Company classified an additional $17.8 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 local residential builders during the quarter resulting in their inability to fully meet the debt service requirements of the loans. As a result of these additional classifications, a total of $31.8 million in loans were classified as non-performing loans (i.e., loans 90 day or more past due or non-accrual loans) as of September 30, 2008, representing 4.78% of total loans, and consisted of $20.4 million in developed one- to four-family residential lots, $6.9 million in one- to four-family residential construction loans with houses in varying states of completion, and $3.9 million in land for future development. Other non-performing loans at September 30, 2008 comprised of consumer, home equity, commercial business loans totaled $530,000, compared to a combined total of these types of loans of $415,000 at June 30, 2008. Based upon its analysis of the $31.8 million of non-performing loans at September 30, 2008, the Company established a $6.5 million specific allocation of the allowance for loan losses to these loans.
Non-performing assets, which include the previously mentioned non-performing loans, along with repossessed assets and other real estate owned, were $31.9 million, or 3.79% of total assets at September 30, 2008, compared to $14.3 million, or 1.65% of total assets, at June 30, 2008, and $220,000, or 0.02% of total assets, at September 30, 2007.
The ratio of loans more than 30 days delinquent as a percentage of total loans increased to 3.92% at September 30, 2008, compared to 1.07% and 0.28% at June 30, 2008 and September 30, 2007, respectively. Net charge-offs were $328,000 for the quarter ended September 30, 2008, compared to $258,000 for the quarter ended June 30, 2008 and $242,000 for the quarter ended September 30, 2007.
The Company’s revenue, (i.e., net interest income before provision for loan losses plus non-interest income) for the quarter ended September 30, 2008 was $8.6 million, compared to $9.1 million for the same period a year ago. Net interest income before the provision for loan losses for the quarter ended September 30, 2008 was $6.2 million, compared to $6.7 million for the same period a year ago. For the quarter ended September 30, 2008, the Company’s net interest margin was 3.06%, compared to 3.13% and 3.20% for the quarters ended June 30, 2008 and September 30, 2007, respectively. The yield on the Company’s interest-earning assets was 6.15% for the quarter ended September 30, 2008, compared to 6.32% and 6.94% for the quarters ended June 30, 2008 and September 30, 2007. For the quarter ended September 30, 2008, the Company’s cost of interest-bearing liabilities was 3.34%, compared to 3.51% and 4.15% for the quarters ended June 30, 2008 and September 30, 2007, respectively.
Non-interest income for the quarter ended September 30, 2008 was $2.5 million, or $67,000 more than the $2.4 million during the same period in 2007, primarily due to an increase in gains generated on the sale of single-family mortgages. For the nine months ended September 30, 2008, non-interest income was $7.9 million, or $900,000 more than the $7.0 million earning during the same period in 2007.
Non-interest expenses were $7.0 million for the quarter ended September 30, 2008, or $327,000 less than the $7.3 million during the same period in 2007, as the Company continued to effectively manage its operating expenses. For the nine months ended September 30, 2008, non-interest expenses were $20.9 million, or $700,000 less than the $21.6 million incurred during the same period in 2007.
During the third quarter, the Company continued to price customer deposits conservatively to manage the Company’s overall funding costs. For the quarter ended September 30, 2008, the average cost of interest-bearing deposits declined to 2.56%, compared to 2.84% for the quarter ended June 30, 2008 and 3.81% for the quarter ended September 30, 2007. Total deposits were relatively unchanged at $464.1 million at September 30, 2008, compared to $463.7 million at June 30, 2008 and $460.9 million at September 30, 2007. Core deposits (comprised of checking, savings, money market, and individual retirement accounts) were $248.0 million, or 53.4% of total deposits at September 30, 2008, compared to $236.4 million, or 51.3% of total deposits at September 30, 2007. Brokered deposit balances were $64.7 million at September 30, 2008, compared to $61.2 million at June 30, 2008 and $51.0 million at September 30, 2007.
Total loans were $664.2 million at September 30, 2008, compared to $664.0 million at June 30, 2008 and $633.3 million at September 30, 2007. For the quarter ended September 30, 2008, the yield on loans was 6.39%, compared to 6.80% and 7.53% for the quarters ended June 30, 2008 and September 30, 2007, respectively. Total loan originations were $36.4 million during the quarter ended September 30, 2008, compared to $46.1 million for the same quarter a year ago. At September 30,
2008, the loan portfolio consisted of 37.4% commercial real estate loans, 21.3% multi-family real estate loans, 12.9% land development and real estate construction loans, 9.9% one- to four-family real estate loans, 6.7% consumer loans (excluding home equity loans), 6.4% home equity loans, and 5.4% commercial business loans.
The Company sold $11.8 million of fixed-rate one- to four-family residential loans during the quarter ended September 30, 2008, which generated $190,000 in net gains, compared to $5.1 million in loan sales and $60,000 in net gains during the same period in 2007. The portfolio of loans serviced for others increased to $135.5 million at September 30, 2008, compared to $127.8 million and $113.3 million at June 30, 2008 and September 30, 2007, respectively.
The investment securities portfolio (excluding $13.7 million in Federal Home Loan Bank of Seattle stock holdings) at September 30, 2008 was $102.5 million, compared to $132.0 million at June 30, 2008 and $185.7 million at September 30, 2007. The investment securities portfolio contains $58.8 million ($108.3 million par value) of trust preferred pooled securities issued by FDIC-insured financial institutions and insurance companies, $31.9 million of mortgage backed securities, and $11.8 million of municipal bonds. All of the trust preferred securities are investment grade collateralized debt obligations, have paid as agreed, and are classified as available for sale. ��The current credit and liquidity crisis being experienced in the financial markets over recent calendar quarters has reduced the demand for the securities, resulting in an illiquid market and significant difficulty in determining the securities’ fair value. While some of the issuers of the trust preferred securities have reported weaker financial performance since the Company’s acquisition of these securities, the majority of these issuers continue to possess acceptable credit risk in management’s
opinion. Based upon management’s evaluation of the underlying issuers and the cash flows of the underlying debt obligations, these securities were determined to be temporarily impaired and their fair value was estimated by management to be $58.8 million, or 54.3% of unamortized cost, as of September 30, 2008. Under U.S. generally accepted accounting principles, the Company has reflected the temporary market value change of the available for sale portfolio, as an unrealized loss of $49.7 million (pre-tax) or $32.8 million net of income tax benefit, as a component of shareholders’ equity (i.e., accumulated other comprehensive loss). This unrealized loss does not affect the cash flows or regulatory capital of the Company. Management closely monitors these securities for changes in credit risk, and the Company has the intent and ability to hold these securities until the market value recovers or they mature. Management does not consider the impairment of these securities to be other than temporary. It should be noted, however, that should market conditions deteriorate and the Company determines that all or a portion of its trust preferred pooled securities portfolio are “other than temporarily impaired,” it could have a material adverse affect on the Company’s future earnings, shareholders’ equity, and regulatory capital.
Total shareholders’ equity at September 30, 2008 was $57.5 million, compared to $75.5 million at June 30, 2008 and $89.6 million at September 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 September 30, 2008, the Company purchased and retired 22,350 shares of its outstanding shares of common stock at an average price of $8.21 per share. At September 30, 2008, the Company had the authority to purchase an additional 48,040 shares of common stock under its currently approved stock repurchase program.
The Company’s capital ratio (i.e., equity divided by assets) was 6.84% at September 30, 2008, compared to 8.68% and 9.88% at June 30, 2008 and December 31, 2007, respectively. Tangible equity to assets was 6.46% at September 30, 2008, compared to 8.30% and 9.48% at June 30, 2008 and December 31, 2007, respectively. As of September 30, 2008, the Bank remained categorized “well capitalized” under regulatory standards with a total risk-based capital ratio of 12.11%.
The Company’s book value and tangible book value per share as of September 30, 2008 were $9.50 and $8.97 per share, respectively, based upon 6,054,391 outstanding shares of common stock. The number of outstanding shares includes 48,587 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 339,341 unallocated shares held by the Rainier Pacific 401(k) Employee Stock Ownership Plan.
“While the current economic, and unusually difficult credit and liquidity conditions, continue to place pressure on the financial services industry, the core fundamentals of Rainier Pacific’s underlying business remains stable, and our capital position continues to meet the “well-capitalized” regulatory standards. Despite the severity of the current market conditions, our non-performing loans are concentrated in only a handful of banking relationships, and we have not experienced any significant deterioration in other areas of our loan portfolio. With a total exposure of only 13% of our total loan portfolio in real estate development and construction loans, along with this quarter’s significant provision for loan losses, we believe we are well-positioned to manage through the credit quality challenges of this portfolio in the current difficult operating environment,” 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; ability of the issuers of trust preferred securities to repay the obligations, 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 September 30, | | At June 30, | | | At December 31, | |
| | | | | 2008 | | 2008 | | | 2007 | |
| | | | | | | | | | | |
| Cash and cash equivalents | | | | $ | 8,070 | | | $ | 11,832 | | | $ | 8,724 | |
| Interest-bearing deposits with banks | | | | | 15 | | | | 539 | | | | 90 | |
| Securities available-for-sale | | | | | 65,993 | | | | 94,056 | | | | 131,287 | |
Securities held-to-maturity (fair value atSeptember 30, 2008: $35,650; at June 30, 2008: $37,226; and at December 31, 2007: $45,541) | | | | | 36,516 | | | | 37,946 | | | | 45,756 | |
Federal Home Loan Bank of Seattle (“FHLB”) stock, at cost | | | | | 13,712 | | | | 13,712 | | | | 13,712 | |
| | | | | | | | | | | | | | | |
| | | | | 664,247 | | | | 663,974 | | | | 637,000 | |
Less: allowance for loan losses | | | | | (13,943 | ) | | | (8,271 | ) | | | (8,079 | ) |
| | | | | 650,304 | | | | 655,703 | | | | 628,921 | |
| | | | | | | | | | | | | | | |
Premises and equipment, net | | | | | 33,826 | | | | 34,286 | | | | 33,813 | |
Accrued interest receivable | | | | | 3,378 | | | | 3,400 | | | | 3,980 | |
| | | | | 28,835 | | | | 19,139 | | | | 12,581 | |
| | | | | | | | | | | | | | | |
| TOTAL ASSETS | | | | $ | 840,649 | | | $ | 870,613 | | | $ | 878,864 | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
| LIABILITIES AND SHAREHOLDERS’ EQUITY |
| LIABILITIES: | | | | | | | | | | | |
| Deposits | | | | | | | | | | | |
| Non-interest bearing | | | | | | $ | 40,526 | | | $ | 40,736 | | | $ | 33,924 | |
| Interest-bearing | | | | | | | 423,530 | | | | 422,989 | | | | 427,563 | |
| Total deposits | | | | | | | 464,056 | | | | 463,725 | | | | 461,487 | |
| | | | | | | | | | | | | | | | | |
| Borrowed funds | | | | | | | 308,500 | | | | 324,238 | | | | 320,454 | |
| Corporate drafts payable | | | | | | | 4,492 | | | | 2,110 | | | | 2,510 | |
| Accrued compensation and benefits | | | | | | | 1,269 | | | | 969 | | | | 1,758 | |
| Other liabilities | | | | | | | 4,824 | | | | 4,022 | | | | 5,835 | |
| | | | | | | | | | | | | | | | | |
| TOTAL LIABILITIES | | | | | | | 783,141 | | | | 795,064 | | | | 792,044 | |
| | | | | | | | | | | | | | | | | |
| SHAREHOLDERS’ EQUITY: | | | | | | | | | | | | | | | | |
Common stock, no par value: 49,000,000 shares authorized; 6,399,390 shares issued and 6,011,462 shares outstanding at September 30, 2008; 6,421,940 shares issued and 6,002,202 shares outstanding at June 30, 2008; and 6,466,633 shares issued and 5,977,645 shares outstanding at December 31, 2007 | | | | | | | 50,689 | | | | 50,636 | | | | 50,458 | |
| Unearned Employee Stock Ownership Plan (“ESOP”) shares | | | | | | | (3,393 | ) | | | (3,563 | ) | | | (3,903 | ) |
Accumulated other comprehensive loss, net of tax | | | | | | | (32,783 | ) | | | (17,921 | ) | | | (4,575 | ) |
Retained earnings | | | | | | | 42,995 | | | | 46,397 | | | | 44,840 | |
| | | | | | | | | | | | | | | | | |
| TOTAL SHAREHOLDERS’ EQUITY | | | | | | | 57,508 | | | | 75,549 | | | | 86,820 | |
| | | | | | | | | | | | | | | | | |
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | | | | | | $ | 840,649 | | | $ | 870,613 | | | $ | 878,864 | |
Rainier Pacific Financial Group, Inc. & Subsidiary
Consolidated Statements of Operations
(Dollars in Thousands, except per share data)
| | | Three Months Ended | | | Nine Months Ended | |
| | | September 30, | | | September 30, | |
| | | 2008 | | | 2007 | | | 2008 | | | 2007 | |
| INTEREST INCOME | | | | | | | | | | | | |
| Loans | | $ | 10,666 | | | $ | 12,127 | | | $ | 33,134 | | | $ | 35,371 | |
| Securities available-for-sale | | | 1,304 | | | | 2,015 | | | | 4,437 | | | | 6,099 | |
| Securities held-to-maturity | | | 398 | | | | 527 | | | | 1,269 | | | | 1,638 | |
| Interest-bearing deposits | | | - | | | | 28 | | | | 33 | | | | 108 | |
| FHLB dividends | | | 48 | | | | 21 | | | | 130 | | | | 55 | |
| Total interest income | | | 12,416 | | | | 14,718 | | | | 39,003 | | | | 43,271 | |
| INTEREST EXPENSE | | | | | | | | | | | | | | | | |
| Deposits | | | 2,735 | | | | 4,104 | | | | 9,301 | | | | 12,268 | |
| Borrowed funds | | | 3,527 | | | | 3,881 | | | | 10,567 | | | | 11,465 | |
| Total interest expense | | | 6,262 | | | | 7,985 | | | | 19,868 | | | | 23,733 | |
| Net interest income | | | 6,154 | | | | 6,733 | | | | 19,135 | | | | 19,538 | |
| PROVISION FOR LOAN LOSSES | | | 6,000 | | | | 150 | | | | 6,700 | | | | 450 | |
Net interest income after provision for loan losses | | | 154 | | | | 6,583 | | | | 12,435 | | | | 19,088 | |
| NON-INTEREST INCOME | | | | | | | | | | | | | | | | |
| Deposit service fees | | | 958 | | | | 906 | | | | 2,705 | | | | 2,611 | |
| Loan service fees | | | 310 | | | | 381 | | | | 912 | | | | 1,019 | |
| Insurance service fees | | | 598 | | | | 552 | | | | 1,677 | | | | 1,717 | |
| Investment service fees | | | 147 | | | | 189 | | | | 432 | | | | 446 | |
| Real estate lease income | | | 270 | | | | 298 | | | | 778 | | | | 863 | |
| Gain on sale of securities, net | | | 1 | | | | - | | | | 12 | | | | - | |
| Gain on sale of loans, net | | | 190 | | | | 60 | | | | 875 | | | | 262 | |
| Loss on sale of other real estate owned | | | (32 | ) | | | - | | | | (25 | ) | | | - | |
| Gain (loss) on sale of premises and equipment, net | | | - | | | | 1 | | | | (1 | ) | | | 11 | |
| Other operating income | | | 37 | | | | 25 | | | | 536 | | | | 69 | |
| Total non-interest income | | | 2,479 | | | | 2,412 | | | | 7,901 | | | | 6,998 | |
| NON-INTEREST EXPENSE | | | | | | | | | | | | | | | | |
| Compensation and benefits | | | 4,044 | | | | 4,237 | | | | 12,146 | | | | 12,298 | |
| Office operations | | | 990 | | | | 1,006 | | | | 2,882 | | | | 2,948 | |
| Occupancy | | | 572 | | | | 649 | | | | 1,802 | | | | 1,908 | |
| Loan servicing | | | 127 | | | | 130 | | | | 359 | | | | 369 | |
| Outside and professional services | | | 283 | | | | 250 | | | | 979 | | | | 940 | |
| Marketing | | | 260 | | | | 278 | | | | 762 | | | | 810 | |
| Other operating expenses | | | 746 | | | | 799 | | | | 1,950 | | | | 2,287 | |
| Total non-interest expense | | | 7,022 | | | | 7,349 | | | | 20,880 | | | | 21,560 | |
| | | | | | | | | | | | | | | | | |
| INCOME BEFORE PROVISION (BENEFIT) FOR FEDERAL INCOME TAX | | | (4,389 | ) | | | 1,646 | | | | (544 | ) | | | 4,526 | |
| | | | | | | | | | | | | | | | | |
| PROVISION (BENEFIT) FOR FEDERAL INCOME TAX | | | (1,439 | ) | | | 574 | | | | (55 | ) | | | 1,582 | |
| | | | | | | | | | | | | | | | | |
| NET INCOME (LOSS) | | $ | (2,950 | ) | | $ | 1,072 | | | $ | (489 | ) | | $ | 2,944 | |
| | | | | | | | | | | | | | | | | |
| EARNINGS (LOSS) PER COMMON SHARE | | | | | | | | | | | | | | | | |
| Basic | | $ | (0.49 | ) | | $ | 0.18 | | | $ | (0.08 | ) | | $ | 0.49 | |
| Diluted | | $ | (0.49 | ) | | $ | 0.18 | | | $ | (0.08 | ) | | $ | 0.49 | |
| Weighted average shares outstanding – Basic | | | 5,998,207 | (1) | | | 5,983,586 | (2) | | | 5,989,822 | (1) | | | 5,985,043 | (2) |
| Weighted average shares outstanding – Diluted | | | 5,998,207 | | | | 5,983,586 | | | | 5,989,822 | | | | 6,027,478 | |
| (1) | Weighted average shares outstanding – Basic includes 277,513 vested and ratably earned shares of the 326,100 restricted shares granted and issued under the 2004 Management Recognition Plan (“MRP”), net of forfeited shares. |
| (2) | Weighted average shares outstanding – Basic includes 212,593 vested and ratably earned shares of the 327,700 restricted shares granted and issued under the MRP, net of forfeited shares. |
Rainier Pacific Financial Group, Inc. & Subsidiary
Consolidated Statements of Operations
(Dollars in Thousands, except per share data)
| | | Three Months Ended | |
| | | September 30, 2008 | | | June 30, 2008 | | | March 31, 2008 | | | December 31, 2007 | |
| INTEREST INCOME | | | | | | | | | | | | |
| Loans | | $ | 10,666 | | | $ | 11,191 | | | $ | 11,277 | | | $ | 11,808 | |
| Securities available-for-sale | | | 1,304 | | | | 1,276 | | | | 1,857 | | | | 2,102 | |
| Securities held-to-maturity | | | 398 | | | | 420 | | | | 451 | | | | 512 | |
| Interest-bearing deposits | | | - | | | | 6 | | | | 27 | | | | 23 | |
| FHLB dividends | | | 48 | | | | 48 | | | | 34 | | | | 27 | |
| Total interest income | | | 12,416 | | | | 12,941 | | | | 13,646 | | | | 14,472 | |
| INTEREST EXPENSE | | | | | | | | | | | | | | | | |
| Deposits | | | 2,735 | | | | 2,979 | | | | 3,587 | | | | 3,960 | |
| Borrowed funds | | | 3,527 | | | | 3,524 | | | | 3,516 | | | | 3,751 | |
| Total interest expense | | | 6,262 | | | | 6,503 | | | | 7,103 | | | | 7,711 | |
| Net interest income | | | 6,154 | | | | 6,438 | | | | 6,543 | | | | 6,761 | |
| PROVISION FOR LOAN LOSSES | | | 6,000 | | | | 550 | | | | 150 | | | | 150 | |
Net interest income after provision for loan loss | | | 154 | | | | 5,888 | | | | 6,393 | | | | 6,611 | |
| NON-INTEREST INCOME | | | | | | | | | | | | | | | | |
| Deposit service fees | | | 958 | | | | 908 | | | | 839 | | | | 885 | |
| Loan service fees | | | 310 | | | | 287 | | | | 315 | | | | 295 | |
| Insurance service fees | | | 598 | | | | 529 | | | | 550 | | | | 595 | |
| Investment service fees | | | 147 | | | | 121 | | | | 164 | | | | 134 | |
| Real estate lease income | | | 270 | | | | 262 | | | | 246 | | | | 249 | |
| Gain on sale of securities, net | | | 1 | | | | - | | | | 11 | | | | - | |
| Gain on sale of loans, net | | | 190 | | | | 450 | | | | 235 | | | | 117 | |
| Gain (loss) on sale of other real estate owned | | | (32 | ) | | | 7 | | | | - | | | | - | |
| Gain (loss) on sale of premises and equipment, net | | | - | | | | (1 | ) | | | - | | | | (1 | ) |
| Other operating income | | | 37 | | | | 38 | | | | 461 | | | | 354 | |
| Total non-interest income | | | 2,479 | | | | 2,601 | | | | 2,821 | | | | 2,628 | |
| NON-INTEREST EXPENSE | | | | | | | | | | | | | | | | |
| Compensation and benefits | | | 4,044 | | | | 4,042 | | | | 4,060 | | | | 4,043 | |
| Office operations | | | 990 | | | | 937 | | | | 955 | | | | 1,014 | |
| Occupancy | | | 572 | | | | 616 | | | | 614 | | | | 672 | |
| Loan servicing | | | 127 | | | | 123 | | | | 109 | | | | 129 | |
| Outside and professional services | | | 283 | | | | 248 | | | | 448 | | | | 426 | |
| Marketing | | | 260 | | | | 218 | | | | 284 | | | | 226 | |
| Other operating expenses | | | 746 | | | | 716 | | | | 488 | | | | 943 | |
| Total non-interest expense | | | 7,022 | | | | 6,900 | | | | 6,958 | | | | 7,453 | |
| | | | | | | | | | | | | | | | | |
| INCOME BEFORE PROVISION (BENEFIT) FOR FEDERAL INCOME TAX | | | (4,389 | ) | | | 1,589 | | | | 2,256 | | | | 1,786 | |
| | | | | | | | | | | | | | | | | |
| PROVISION (BENEFIT) FOR FEDERAL INCOME TAX | | | (1,439 | ) | | | 572 | | | | 812 | | | | 876 | |
| | | | | | | | | | | | | | | | | |
| NET INCOME (LOSS) | | $ | (2,950 | ) | | $ | 1,017 | | | $ | 1,444 | | | $ | 910 | |
| | | | | | | | | | | | | | | | | |
| EARNINGS (LOSS) PER COMMON SHARE | | | | | | | | | | | | | | | | |
| Basic | | $ | (0.49 | ) | | $ | 0.17 | | | $ | 0.24 | | | $ | 0.15 | |
| Diluted | | $ | (0.49 | ) | | $ | 0.17 | | | $ | 0.24 | | | $ | 0.15 | |
| Weighted average shares outstanding – Basic | | | 5,998,207 | (1) | | | 5,987,866 | (2) | | | 5,983,393 | (3) | | | 5,979,580 | (4) |
| Weighted average shares outstanding – Diluted | | | 5,998,207 | | | | 5,987,866 | | | | 5,983,393 | | | | 5,979,580 | |
| (1) | Weighted average shares outstanding – Basic includes 277,513 vested and ratably earned shares of the 326,100 restricted shares granted and issued under the MRP, net of forfeited shares. |
| (2) | 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. |
| (3) | 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. |
| (4) | 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. |
Rainier Pacific Financial Group, Inc. & Subsidiary
Selected Information and Ratios
(Dollars in Thousands)
| | | As of | |
| | | September 30, | | | June 30, | | | March 31, | | | December 31, | | | September 30, | |
| | | 2008 | | | 2008 | | | 2008 | | | 2007 | | | 2007 | |
| Loan portfolio composition: | | | | | | | | | | | | | | | |
| Real estate: | | | | | | | | | | | | | | | |
| One- to four-family residential | | $ | 65,997 | | | $ | 75,879 | | | $ | 84,211 | | | $ | 76,882 | | | $ | 78,621 | |
| Five or more family residential | | | 141,449 | | | | 146,050 | | | | 148,991 | | | | 149,080 | | | | 149,474 | |
| Commercial | | | 248,243 | | | | 245,522 | | | | 223,076 | | | | 212,901 | | | | 214,130 | |
| Total real estate | | | 455,689 | | | | 467,451 | | | | 456,278 | | | | 438,863 | | | | 442,225 | |
| Real estate construction: | | | | | | | | | | | | | | | | | | | | |
| One- to four-family residential | | | 79,120 | | | | 79,581 | | | | 78,607 | | | | 73,114 | | | | 70,867 | |
| Five or more family residential | | | 471 | | | | - | | | | - | | | | 1,839 | | | | 2,019 | |
| Commercial | | | 5,991 | | | | 4,032 | | | | 4,157 | | | | 3,827 | | | | 1,834 | |
| Total real estate construction | | | 85,582 | | | | 83,613 | | | | 82,764 | | | | 78,780 | | | | 74,720 | |
| Consumer: | | | | | | | | | | | | | | | | | | | | |
| Automobile | | | 13,409 | | | | 15,621 | | | | 18,027 | | | | 20,798 | | | | 23,711 | |
| Home equity | | | 42,660 | | | | 42,344 | | | | 43,980 | | | | 45,293 | | | | 44,537 | |
| Credit cards | | | 22,793 | | | | 22,063 | | | | 22,120 | | | | 23,172 | | | | 22,601 | |
| Other | | | 8,123 | | | | 7,962 | | | | 7,812 | | | | 7,411 | | | | 7,383 | |
| Total consumer | | | 86,985 | | | | 87,990 | | | | 91,939 | | | | 96,674 | | | | 98,232 | |
| Commercial business | | | 35,991 | | | | 24,920 | | | | 24,643 | | | | 22,683 | | | | 18,142 | |
| Subtotal | | | 664,247 | | | | 663,974 | | | | 655,624 | | | | 637,000 | | | | 633,319 | |
| Less: Allowance for loan losses | | | (13,943 | ) | | | (8,271 | ) | | | (7,979 | ) | | | (8,079 | ) | | | (8,142 | ) |
| Total loans, net | | $ | 650,304 | | | $ | 655,703 | | | $ | 647,645 | | | $ | 628,921 | | | $ | 625,177 | |
| Sold loans, serviced for others | | $ | 135,496 | | | $ | 127,824 | | | $ | 115,214 | | | $ | 114,629 | | | $ | 113,306 | |
| Non-performing assets: | | | | | | | | | | | | | | | | | | | | |
Loans 90 days or more past due or non-accrual loans (1): | | | | | | | | | | | | | | | | | | | | |
| Real estate | | $ | - | | | $ | - | | | $ | - | | | $ | - | | | $ | - | |
| Real estate construction | | | 31,243 | | | | 13,461 | | | | - | | | | - | | | | - | |
| Consumer | | | 242 | | | | 415 | | | | 426 | | | | 497 | | | | 197 | |
| Commercial business | | | 288 | | | | - | | | | - | | | | - | | | | - | |
| Repossessed assets | | | - | | | | - | | | | 6 | | | | 49 | | | | 23 | |
| Other real estate owned | | | 103 | | | | 446 | | | | 1,222 | | | | - | | | | - | |
| Total non-performing assets | | $ | 31,876 | | | $ | 14,322 | | | $ | 1,654 | | | $ | 546 | | | $ | 220 | |
Loans greater than 30 days delinquent (1) | | $ | 26,049 | | | $ | 7,091 | | | $ | 1,678 | | | $ | 2,125 | | | $ | 1,762 | |
| Loans greater than 30 days delinquent as a percentage of loans | | | 3.92 | % | | | 1.07 | % | | | 0.26 | % | | | 0.33 | % | | | 0.28 | % |
| Non-performing loans as a percentage of loans | | | 4.78 | % | | | 2.09 | % | | | 0.06 | % | | | 0.08 | % | | | 0.03 | % |
| Non-performing assets as a percentage of assets | | | 3.79 | % | | | 1.65 | % | | | 0.19 | % | | | 0.06 | % | | | 0.02 | % |
| Allowance for loan loss as a percentage of non-performing loans | | | 43.88 | % | | | 59.61 | % | | | 1,873.00 | % | | | 1,625.55 | % | | | 4,132.99 | % |
| Allowance for loan loss as a percentage of non-performing assets | | | 43.74 | % | | | 57.75 | % | | | 482.41 | % | | | 1,479.67 | % | | | 3,700.91 | % |
| Allowance for loan loss as a percentage of total loans | | | 2.10 | % | | | 1.25 | % | | | 1.22 | % | | | 1.27 | % | | | 1.29 | % |
| | | | | | | | | | | | | | | | | | | | | |
| Core deposits (all deposits, excluding CDs) | | $ | 247,990 | | | $ | 238,271 | | | $ | 229,401 | | | $ | 226,743 | | | $ | 236,411 | |
| Non-core deposits (CDs) | | | 216,066 | | | | 225,454 | | | | 241,971 | | | | 234,744 | | | | 224,506 | |
| Total deposits | | $ | 464,056 | | | $ | 463,725 | | | $ | 471,372 | | | $ | 461,487 | | | $ | 460,917 | |
| Loans/Deposits | | | 143.14 | % | | | 143.18 | % | | | 139.09 | % | | | 138.03 | % | | | 137.40 | % |
| Equity/Assets | | | 6.84 | % | | | 8.68 | % | | | 9.56 | % | | | 9.88 | % | | | 10.16 | % |
| Tangible Equity/Assets | | | 6.46 | % | | | 8.30 | % | | | 9.18 | % | | | 9.48 | % | | | 9.80 | % |
(1) The Company may classify selected loans as non-accrual although 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 September 30, | | | Nine Months Ended September 30, | |
| | | 2008 | | | 2007 | | | 2008 | | | 2007 | |
| | | | | | | | | | | | | |
| Loan growth (decline) | | | 0.04 | % | | | (2.17 | %) | | | 4.28 | % | | | (0.95 | %) |
| Deposit growth (decline) | | | 0.07 | % | | | 0.13 | % | | | 0.56 | % | | | 0.76 | % |
| Equity growth (decline) | | | (23.88 | %) | | | (0.30 | %) | | | (33.76 | %) | | | 2.06 | % |
| Asset growth (decline) | | | (3.44 | %) | | | (2.50 | %) | | | (4.35 | %) | | | (2.26 | %) |
| | | | | | | | | | | | | | | | | |
| Loans originated | | $ | 36,390 | | | $ | 46,053 | | | $ | 182,911 | | | $ | 147,490 | |
| Loans sold | | $ | 11,765 | | | $ | 5,127 | | | $ | 48,221 | | | $ | 17,504 | |
| Loans charged-off, net | | $ | 328 | | | $ | 242 | | | $ | 836 | | | $ | 590 | |
| | | | | | | | | | | | | �� | | | | |
| Increase in non-interest income | | | 2.78 | % | | | 4.73 | % | | | 12.90 | % | | | 6.92 | % |
| Decrease in non-interest expense | | | (4.45 | %) | | | 0.52 | % | | | (3.15 | %) | | | (0.62 | %) |
| Net charge-offs to average loans | | | 0.20 | % | | | 0.15 | % | | | 0.17 | % | | | 0.12 | % |
| Efficiency ratio | | | 81.34 | % | | | 80.36 | % | | | 77.23 | % | | | 81.25 | % |
| Return on assets | | | (1.37 | %) | | | 0.48 | % | | | (0.08 | %) | | | 0.44 | % |
| Return on equity | | | (17.05 | %) | | | 4.78 | % | | | (0.83 | %) | | | 4.40 | % |
| | | | | | | | | | | | | | | | | |
| Interest-earning assets: | | | | | | | | | | | | | | | | |
| Yield on loans | | | 6.39 | % | | | 7.53 | % | | | 6.77 | % | | | 7.35 | % |
| Yield on investments | | | 5.41 | % | | | 5.41 | % | | | 5.25 | % | | | 5.36 | % |
| Yield on FHLB stock | | | 1.40 | % | | | 0.60 | % | | | 1.27 | % | | | 0.53 | % |
| Yield on interest-earning assets | | | 6.15 | % | | | 6.94 | % | | | 6.40 | % | | | 6.78 | % |
| | | | | | | | | | | | | | | | | |
| Interest-bearing liabilities: | | | | | | | | | | | | | | | | |
| Cost of deposits | | | 2.56 | % | | | 3.81 | % | | | 2.95 | % | | | 3.84 | % |
| Cost of borrowed funds | | | 4.37 | % | | | 4.58 | % | | | 4.38 | % | | | 4.49 | % |
| Cost of interest-bearing liabilities | | | 3.34 | % | | | 4.15 | % | | | 3.57 | % | | | 4.13 | % |
| Net interest rate spread | | | 2.81 | % | | | 2.79 | % | | | 2.83 | % | | | 2.65 | % |
| | | | | | | | | | | | | | | | | |
| Net interest margin | | | 3.06 | % | | | 3.20 | % | | | 3.14 | % | | | 3.06 | % |
| | | | | | | | | | | | | | | | | |
| Net interest margin-quarter ended 09/30/2008 | | | 3.06 | % | | | | | | | | | | | | |
| 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 | % | | | | | | | | | | | | |
| | | As of | |
| | | September 30, | | | June 30, | | | March 31, | | | December 31, | | | September 30, | |
| | | 2008 | | | 2008 | | | 2008 | | | 2007 | | | 2007 | |
| Shares outstanding at end of period | | | 6,054,391 | (1) | | | 6,065,625 | (2) | | | 6,078,444 | (3) | | | 6,076,370 | (4) | | | 6,109,633 | (5) |
| Book value per share | | $ | 9.50 | | | $ | 12.46 | | | $ | 13.83 | | | $ | 14.29 | | | $ | 14.67 | |
| Tangible book value per share | | $ | 8.97 | | | $ | 11.91 | | | $ | 13.27 | | | $ | 13.77 | | | $ | 14.15 | |
| (1) | Shares outstanding represent 6,399,390 shares issued (including 48,587 unvested restricted shares granted under the MRP), less 339,341 unallocated shares under the ESOP. |
| (2) | 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. |
| (3) | 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. |
| (4) | 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. |
| (5) | 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. |
