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 27, 2003
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RAINIER PACIFIC FINANCIAL GROUP, INC.
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(Exact name of registrant as specified in its charter)
Washington 000-50362 87-0700148
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(State or other jurisdiction (File number) (I.R.S. Employer
of incorporation) Identification No.)
3700 Pacific Highway East, Suite 200, Fife, Washington 98424
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(Address of principal executive office) (Zip code)
Registrant's telephone number, including are code: (253) 926-4000
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NA
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(Former name or former address, if changed since last report)
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
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(c) Exhibit
99.1 Press Release of Rainier Pacific Financial Group, Inc. on
October 27, 2003.
Item 9. Regulation FD Disclosure
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On October 27, 2003, Rainier Pacific Financial Group, Inc. issued its earnings
release for the third quarter ended September 30, 2003. A copy of the
earnings release is attached hereto as Exhibit 99.1, which is incorporated
herein by reference.
The information being furnished under this "Item 9. Regulation FD Disclosure"
is intended to be furnished under "Item 12. Disclosure of Results of
Operations and Financial Condition."
SIGNATURES
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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.
RAINER PACIFIC FINANCIAL GROUP, INC.
DATE: October 28, 2003 By: /s/ John A. Hall
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John A. Hall
President and Chief Executive Officer
Exhibit 99.1
Press Release of Rainier Pacific Financial Group, Inc. on October 27, 2003
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 27, 2003 Rainier Pacific Financial Group, Inc.
(NASDAQ: RPFG) today reported that its financial institution subsidiary,
Rainier Pacific Savings Bank (the "Bank"), had net income of $415,000 for the
quarter ended September 30, 2003, compared to $1.7 million in net income for
the same quarter one year ago. Per share earnings for the third quarter are
not being reported as Rainier Pacific did not complete the initial stock
offering associated with its mutual-to-stock conversion of the Bank until
October 20, 2003. Rainier Pacific's common stock began trading on October 21,
2003 on the NASDAQ National Market system. Lower earnings during the third
quarter of fiscal 2003 compared to the third quarter of fiscal 2002 were
primarily attributable to high operating expenses related to the Bank's
technology initiative scheduled for implementation in December 2003, higher
provisions for loan losses, and increased staffing that led to higher overall
compensation and benefit expenses.
At September 30, 2003, Rainier Pacific's total assets were $867.1 million,
compared to $499.5 million on December 31, 2002. Assets were significantly
higher at quarter end as a result of increased customer deposit activity
associated with the Bank's conversion and Rainier Pacific's initial public
offering of
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common stock. Net income for the first nine months of fiscal 2003 was $1.6
million, compared to $3.7 million for the first nine months of fiscal 2002.
Total equity at September 30, 2003 was $43.1 million, compared to $42.2
million on December 31, 2002.
Net interest income before provisions for loan losses was $7.1 million for the
quarter ended September 30, 2003, an increase of 22.4% from the $5.8 million
generated for the same quarter one year ago. Net interest margin was 4.21% in
the third quarter, a decrease of 0.68% from 4.89% for the same quarter last
year and 4.69% for the quarter ended June 30, 2003. The decline in net
interest margin was primarily attributable to the dilutive effect of a higher
volume of deposits generated during the third quarter related to the Bank's
conversion and Rainier Pacific's common stock offering. These deposits were
invested in overnight and short-term investments with relatively low yields.
The impact of lower interest rates on newly originated loans as compared to
the existing portfolio rates has also contributed to the decrease in the
Bank's net interest margin. The yield on the Bank's loan portfolio was 7.22%
for the quarter ended September 30, 2003, compared to 8.19% for the same
quarter last year.
Refinance activity from single-family mortgages, and strong multi-family and
non-residential real estate loan originations, generated a record level of
loan production in the third quarter. Third quarter loan originations
increased 74.2% to $76.3 million, compared to $43.8 million during the same
quarter in fiscal 2002. Loan originations for the nine months ended September
30, 2003 were $195.8 million, an increase of 38.2%, compared to $141.7 million
originated for the nine months ended September 30, 2002. As a result of the
significant increase in loan originations, the Bank's loan portfolio increased
28.1% to $443.5 million at September 30, 2003, compared to $346.1 million one
year ago. At quarter end, 30.4% of the Bank's loan portfolio was comprised of
single-family first mortgage loans (including one-to-four family
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construction loans), 23.0% of consumer loans, 20.2% of multi-family real
estate loans, 18.7% of non-residential real estate loans, 7.4% by home equity
loans, and 0.3% by commercial loans.
Non-interest income was $1.8 million for the three months ended September 30,
2003, compared to $2.8 million for the same period a year earlier. The sale
of loans and investments generated gains of $304,000 in the third quarter of
fiscal 2003, compared to $1.2 million in the same period in fiscal 2002. The
Bank sold $6.7 million in single-family, fixed-rate real estate loans during
the third quarter of fiscal 2003, compared to $29.0 million of loan sales for
the same quarter one year ago. For the nine months ended September 30, 2003,
$31.5 million of single-family, fixed-rate real estate loans were sold,
compared to $57.1 million during the first nine months of fiscal 2002. The
portfolio of single-family mortgage loans serviced for others decreased to
$75.9 million at September 30, 2003 from $94.4 million at September 30, 2002,
as lower interest rates continued to encourage many borrowers to refinance
their higher rate mortgage loans.
As of September 30, 2003, total customer deposits increased 122.8% to $645.0
million from $289.5 million at December 31, 2002. This increase primarily
occurred during the six months ended September 30, 2003 in connection with the
Bank's mutual-to-stock conversion and Rainier Pacific's common stock offering.
Accordingly, the increase is essentially temporary, and customer deposits are
expected to decline by year end as the deposit balances in excess of that
required to complete Rainier Pacific's common stock offering are returned to
depositors whose orders were not entirely filled.
Although the Bank has not experienced any significant deterioration in credit
quality during the past quarter, higher loan loss provisions continue to be
made by the Bank in recognition of the Bank's loan growth, the increasing
percentage of multi-family and non-residential real estate loans in the
portfolio, as
Page 3 of 10
well as continued weakness in the local economy. The provision for loan
losses was $1.2 million for the third quarter of fiscal 2003, compared to
$825,000 for the same period one year ago, and was also higher than the $1.1
million for the quarter ended June 30, 2003. The provision was $3.3 million
for the first nine months of fiscal 2003, compared to $2.3 million for the
same period in fiscal 2002. As a result of the increased provision for loan
losses, the allowance for loan losses increased 23.9% to $7.5 million at
September 30, 2003, compared to $6.1 million at December 31, 2002. The ratio
of the allowance for loan losses to total loans was 1.70% at September 30,
2003, compared to 1.66% at December 31, 2002, and 1.60% at September 30, 2002.
Net loan charge-offs of $519,000 for the third quarter of fiscal 2003
decreased from net loan charge-offs of $644,000 for the quarter ended June 30,
2003, and were relatively unchanged from the $496,000 incurred during the
third quarter of fiscal 2002. Net loan charge-offs for the nine months ended
September 30, 2003 increased 20.0% to $1.8 million compared to $1.5 million
for the same period in 2002. Loans more than 30-days delinquent, as a
percentage of total loans, declined to 0.49% as of September 30, 2003, from
0.65% at December 31, 2002, and 0.66% at September 30, 2002. Non-performing
assets at September 30, 2003 also decreased to $926,000 or 0.11% of assets,
compared to $976,000 or 0.20% of assets at December 31, 2002, and $1.2 million
or 0.24% of assets at September 30, 2002.
Total non-interest expense increased 36.5% to $7.1 million for the third
quarter of fiscal 2003, compared to $5.2 million during the same period last
year. For the nine months ended September 30, 2003, non-interest expense
increased 30.6% to $19.2 million, compared to $14.7 million for the same
period in 2002. Higher operating expenses during both the three and nine
month periods ended September 30, 2003 were primarily attributable to
increased costs associated with the implementation of the Bank's technology
Page 4 of 10
initiative, higher loan loss provisions, and increased compensation and
benefits expenses. The Bank's efficiency ratio for the three months ended
September 30, 2003 was 79.5%, compared to 60.7% for the same quarter one year
ago. Year-to-date, the efficiency ratio was 77.4% compared to 64.8% for the
nine months ended September 30, 2002. The Bank's technology initiative
involves the development and installation of enterprise-wide software and
hardware, including the replacement of the Bank's core processing systems and
the introduction of customer relationship management software in December
2003.
"We are pleased with our progress and accomplishments during the first nine
months of the year as we continue to make the necessary investments to develop
our operating capabilities and the associated infrastructure that will support
our banking, investment, and insurance offerings, and will enable us to
compete more effectively as a public company. With the completion of our
stock offering on October 20th and the implementation of our new technology
systems in December of this year, operating expenses in the fourth quarter are
expected to remain near their current levels. The recent resumption of rising
interest rates is also expected to slow home refinance activity and loan
origination volumes in the fourth quarter. In addition, Rainier Pacific will
be contributing approximately $6.4 million to fund the Rainier Pacific
Foundation to the benefit of our local community. The contribution to the
Foundation will result in an operating loss for the fourth quarter and the
year" said John Hall, President and CEO. "As we begin to turn our attention
to 2004, we look forward to serving our customers as a public company, and to
enhancing our focus and resources on growing our business."
Rainier Pacific Financial Group is the holding company for Rainier Pacific
Savings Bank, a Tacoma-based, state-chartered savings bank operating 11
branches located in Tacoma/Pierce County and Federal Way, Washington.
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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 Rainier Pacific operates,
projections of future performance, perceived opportunities in the market,
potential future credit experience, and statements regarding Rainier Pacific's
mission and vision. These forward-looking statements are based upon current
management expectations and may, therefore, involve risks and uncertainties.
Rainier Pacific'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 of range of factors including, but
not limited to, interest rate fluctuations, economic conditions in Rainier
Pacific'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. Accordingly, these factors should be
considered in evaluating forward-looking statements, and undue reliance should
not be placed on such statements. Rainier Pacific undertakes no
responsibility to update or revise any forward-looking statements.
# # #
Page 6 of 10
Rainier Pacific Bank & Subsidiary
Consolidated Statement of Condition
(Dollars in Thousands)
(Unaudited)
At September 30, At December 31, At September 30,
---------------- --------------- ----------------
2003 2002 2002
ASSETS --------- --------- ---------
ASSETS:
Cash and cash equivalents $ 9,440 $ 8,564 $ 8,784
Interest-bearing deposits
with banks 163,469 49 270
Securities available-
for-sale 76,087 52,502 61,393
Securities held-to-maturity
(fair value of $145,566 at
September 30, 2003: $52,219
at December 31, 2002; and
$56,391 at September 30,
2002) 145,835 49,495 54,853
Federal Home Loan Bank
stock 11,087 8,006 7,872
Loans 443,548 366,420 346,142
Less allowance for loan
losses (7,538) (6,084) (5,536)
--------- --------- ---------
Loans, net 436,010 360,336 340,606
Premises and equipment, net 13,889 13,221 11,855
Accrued interest receivable 3,480 2,647 2,655
Other assets 7,788 4,637 4,712
--------- --------- ---------
TOTAL ASSETS $ 867,085 $ 499,457 $ 493,000
========= ========= =========
LIABILITIES AND EQUITY
LIABILITIES
Deposits
Non-interest bearing $ 31,628 $ 24,700 $ 24,749
Interest bearing 613,389 264,760 260,320
--------- --------- ---------
TOTAL DEPOSITS 645,017 289,460 285,069
Borrowed funds 165,550 156,793 153,714
Corporate drafts payable 4,352 2,837 3,798
Deferred gain on sale and
leaseback transaction 1,069 1,219 1,269
Accrued compensation and
benefits 2,927 3,133 2,468
Other liabilities 5,098 3,803 4,766
--------- --------- ---------
TOTAL LIABILITIES 824,013 457,245 451,084
--------- --------- ---------
EQUITY
Accumulated other
comprehensive income,
net of tax 57 828 1,101
Retained earnings 43,015 41,384 40,815
--------- --------- ---------
TOTAL EQUITY 43,072 42,212 41,916
--------- --------- ---------
TOTAL LIABILITIES
AND EQUITY $ 867,085 $ 499,457 $ 493,000
========= ========= =========
Page 7 of 10
Rainier Pacific Bank & Subsidiary
Consolidated Income Statement
(Dollars in Thousands)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
------------------- -------------------
2003 2002 2003 2002
------- ------- -------- --------
INTEREST INCOME
Loans $ 7,609 $ 7,134 $ 22,300 $ 20,876
Securities available-for-sale 926 741 2,514 2,448
Securities held-to-maturity 1,199 688 2,427 2,150
Interest bearing deposits 66 1 77 11
FHLB stock dividends 134 117 379 311
------- ------- -------- --------
Total interest income 9,934 8,681 27,697 25,796
------- ------- -------- --------
INTEREST EXPENSE
Deposits 991 1,234 3,225 4,756
Borrowed funds 1,804 1,668 5,186 4,483
------- ------- -------- --------
Total interest expense 2,795 2,902 8,411 9,239
------- ------- -------- --------
Net interest income 7,139 5,779 19,286 16,557
PROVISION FOR LOAN LOSSES 1,200 825 3,300 2,325
------- ------- -------- --------
Net interest income after
provision for loan losses 5,939 4,954 15,986 14,232
------- ------- -------- --------
NON-INTEREST INCOME
Deposit service fees 854 937 2,605 2,670
Loan service fees 270 253 759 731
Insurance service fees 144 156 459 472
Investment service fees 124 131 437 498
Gain on sale of securities, net 131 5 130 151
Gain on sale of loans, net 173 1,226 1,055 1,383
Gain on sale of premise and
equipment, net 50 50 142 143
Other operating income 12 38 45 52
------- ------- -------- --------
Total non-interest income 1,758 2,796 5,632 6,100
------- ------- -------- --------
NON-INTEREST EXPENSE
Compensation and benefits 3,517 2,828 9,834 8,099
Office operations 851 734 2,460 2,105
Occupancy, net 326 279 890 822
Loan servicing 69 44 191 159
Outside and professional
services 1,600 651 3,541 1,604
Marketing 258 281 844 707
Other operating expenses 456 384 1,414 1,174
------- ------- -------- --------
Total non-interest expense 7,077 5,201 19,174 14,670
------- ------- -------- --------
INCOME BEFORE INCOME TAX 620 2,549 2,444 5,662
INCOME TAX EXPENSE 205 874 814 1,937
------- ------- -------- --------
NET INCOME $ 415 $ 1,675 $ 1,630 $ 3,725
======= ======= ======== ========
EARNINGS PER SHARE
Basic n/a n/a n/a n/a
Diluted n/a n/a n/a n/a
Page 8 of 10
Rainier Pacific Bank & Subsidiary
Selected Information and Ratios
(Dollars in Thousands)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
------------------- -------------------
2003 2002 2003 2002
------- ------- -------- --------
Loan Growth 8.19% -1.59% 21.05% 8.19%
Deposit Growth 30.73% -4.99% 122.83% -8.59%
Growth in Equity -0.97% 5.67% 2.04% 11.99%
Asset Growth 21.55% -0.53% 73.61% 6.10%
Net interest margin 4.21% 4.89% 4.55% 4.84%
Growth in non-interest income -37.12% 23.78% -7.67% 16.99%
Growth in non-interest expense 36.07% 25.83% 30.69% 17.05%
Net loan charge-offs to average
outstanding loans 0.49% 0.57% 0.62% 0.60%
Efficiency ratio 79.54% 60.65% 77.43% 64.75%
Return on assets (ROA) 0.22% 1.02% 0.35% 1.03%
Return on equity (ROE) 3.91% 16.31% 5.09% 12.70%
Loans originated $ 76,313 $ 43,776 $ 195,829 $ 141,712
Loans sold $ 6,696 $ 28,969 $ 31,458 $ 57,142
Net loan charge-offs $ 519 $ 496 $ 1,847 $ 1,544
Net interest margin -
quarter ending 6/30/2003 4.69%
Net interest margin -
quarter ending 12/31/2002 4.83%
Page 9 of 10
Rainier Pacific Bank & Subsidiary
Selected Information and Ratios
(Dollars in Thousands)
(Unaudited)
As of September 30, As of December 31,
---------------------- ------------------
2003 2002 2002
--------- --------- ---------
Loans/Deposits 68.77% 121.42% 126.59%
Allowance/Loans 1.70% 1.60% 1.66%
Equity/Assets 4.97% 8.50% 8.45%
Non-performing assets:
Loans 90 days or more past due $ 431 $ 856 $ 437
Repossessed assets and other
real estate owned 495 314 539
--------- --------- ---------
Total non-performing assets $ 926 $ 1,170 $ 976
========= ========= =========
Loans more than 30 days delinquent $ 2,188 $ 2,274 $ 2,389
Loans more than 30 days delinquent
as pct of loans 0.49% 0.66% 0.65%
Non-performing loans as % of loans 0.10% 0.25% 0.12%
Non-performing assets as % of assets 0.11% 0.24% 0.20%
Loan portfolio composition:
Real estate:
One-to-four family residential $ 126,576 $ 79,321 $ 87,799
Home equity 32,894 35,244 33,078
Five or more family residential 89,754 65,351 75,109
Non-residential 82,715 55,127 60,126
--------- --------- ---------
Total real estate 331,939 235,043 256,112
Real estate construction:
One-to-four family residential 8,425 1,905 792
Five or more family residential - - -
Non-residential - - -
--------- --------- ---------
Total real estate construction 8,425 1,905 792
Consumer:
Automobile 61,389 60,854 61,589
Credit cards 23,169 24,632 25,446
Other 17,542 22,634 21,328
--------- --------- ---------
Total consumer 102,100 108,120 108,363
Commercial/Business 1,274 1,214 1,188
--------- --------- ---------
Subtotal 443,738 346,282 366,455
Less: Deferred loan
(fees)/costs, net (190) (140) (35)
Less: Allowance for loan
losses (7,538) (5,536) (6,084)
--------- --------- ---------
Total loans $ 436,010 $ 340,606 $ 360,336
========= ========= =========
Sold loans, serviced for others $ 75,873 $ 94,378 $ 96,333
Core deposits $ 488,680 $ 154,265 $ 146,913
Non-core deposits (CDs
excluding IRAs) 156,337 130,804 142,547
--------- --------- ---------
Total deposits $ 645,017 $ 285,069 $ 289,460
========= ========= =========
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