RAINIER PACIFIC FINANCIAL GROUP INC. 
By Rainier Pacific Financial Group, Inc. (the ?Company?) (NASDAQ GM:RPFG) today announced its third quarter results. Net income for the quarter ended September 30, 2006 was $751,000, or $0.13 per diluted share, compared to net income of $613,000, or $0.10 per diluted share, for the same period in 2005. For the nine months ended September 30, 2006, the Company's net income was $2.1 million, or $0.35 per diluted share, compared to $2.0 million, or $0.32 per diluted share, for the same period in 2005.
The Company's revenue (i.e., net interest income before provisions for loan losses plus non-interest income) for the quarter ended September 30, 2006 was $8.6 million, compared to $7.8 million for the same period a year ago. Net interest income before the provision for loan losses for the quarter ended September 30, 2006 was $6.3 million, compared to $6.0 million for the same period a year ago, and was higher as a result of increased earning assets partially offset by a lower net interest margin. For the quarter ended September 30, 2006, the Company's net interest margin was 2.96%, compared to 2.87% for the quarter ended June 30, 2006, and 3.22% for the quarter ended September 30, 2005. For the quarter ended September 30, 2006, the yield on the Company's interest-earning assets was 6.60%, compared to 6.22% and 5.85% for the quarters ended June 30, 2006 and September 30, 2005, respectively. For the quarter ended September 30, 2006, the Company's cost of interest-bearing liabilities was 4.01%, compared to 3.69% and 2.96% for the quarters ended June 30, 2006 and September 30, 2005, respectively, as rate competition for deposits remains strong.
Non-interest income was $2.3 million for the quarter ended September 30, 2006, compared to $1.8 million for the same quarter in 2005. Insurance service fee income increased $406,000 to $545,000 in the third quarter of 2006, compared to $139,000 for the same quarter in 2005. This increase was primarily the result of additional revenue generated by the two insurance agency businesses that were acquired by the Company on January 3, 2006. Also contributing to the increase in non-interest income was an increase in real estate lease income, which increased to $277,000 during the quarter, compared to $192,000 for the same quarter in 2005. Higher real estate lease income was attributable to office and retail space in Rainier Pacific Bank's administrative building being fully-leased.
The Company's provision for loan losses was $150,000 for the quarter ended September 30, 2006, unchanged from the provision made for the quarters ended June 30, 2006 and September 30, 2005. The provision for loan losses remained stable as a result of the continued quality, the size, and the type of the growth in the loan portfolio.
Non-interest expense was $7.3 million for the quarter ended September 30, 2006, compared to $6.7 million for the same quarter in 2005. The $584,000 increase in non-interest expense was primarily attributable to increased compensation and benefits costs associated with the employees hired in connection with the two insurance agency acquisitions, the expensing of previously granted stock options to employees and directors, as well as additional operating costs related to the July opening of the Bank's fourteenth full-service branch in the Federal Way Crossings retail center. On January 1, 2006, the Company implemented Financial Accounting Standards Board Statement No. 123 (Revised 2004), ?Share Based Payment? (?Statement 123R?), which requires all share-based payments, including grants of stock options, to be recognized as compensation expense in the Company's Statement of Income. The implementation of Statement 123R resulted in additional non-cash compensation expenses of $93,000 in the third quarter of 2006, compared to no such expenses for the same quarter in 2005.
At September 30, 2006, the Company's total assets were $901.1 million, reflecting an increase of $30.3 million, or 3.5%, from $870.8 million at December 31, 2005. Total shareholders' equity at September 30, 2006 was $86.7 million, compared to $84.7 million at December 31, 2005.
The Company's book value and tangible book value per share as of September 30, 2006 were $14.12 and $13.57 per share, respectively, based upon 6,142,537 outstanding shares of common stock. The number of outstanding shares includes 173,488 restricted shares granted to participants under the Company's 2004 Management Recognition Plan that have not yet vested and excludes 475,133 of unallocated shares held by the Rainier Pacific 401(k) Employee Stock Ownership Plan.
During the third quarter ended September 30, 2006, the Company purchased and retired 10,000 shares of its outstanding shares of common stock at an average price of $18.32 per share. At September 30, 2006, the Company had the authority to purchase an additional 270,620 shares of common stock under its current approved stock repurchase program.
Total loans increased to $628.7 million at September 30, 2006, up $20.3 million, or 3.3%, and $45.8 million, or 7.9%, from $608.4 million at June 30, 2006 and $582.9 million at December 31, 2005, respectively. For the quarter ended September 30, 2006, the yield on loans was 7.22%, compared to 6.92% and 6.67% for the quarters ended June 30, 2006 and September 30, 2005, respectively. At September 30, 2006, the loan portfolio consisted of 30.3% commercial real estate loans, 25.9% multi-family real estate loans, 13.6% single-family real estate loans, 11.5% real estate construction loans, 10.2% consumer loans, 6.6% home equity loans, and 1.9% commercial business loans.
The Company sold $5.0 million of single-family fixed-rate real estate loans that generated net gains of $23,000 during the quarter ended September 30, 2006, compared to $13.5 million and net gains of $122,000 during the same period in 2005. During the nine months ended September 30, 2006, the Company sold $12.0 million of single-family loans, compared to $33.1 million during the same period in 2005. The loan sales during the first nine months of 2006 generated net gains of $75,000, compared to $438,000 generated on loan sales during the same period in 2005. The portfolio of loans serviced for others was $107.1 million at September 30, 2006, compared to $109.5 million at September 30, 2005. The declines in loan sales and gains were due to lower single-family real estate loan originations in 2006 compared to 2005.
Total loan originations during the quarter ended September 30, 2006 were $70.8 million, compared to $77.5 million for the same period in 2005 and $58.0 million for the quarter ended June 30, 2006. The Company continued to focus on generating multi-family, commercial real estate, and real estate construction loans; and originated $51.1 million of new loans in these categories during the third quarter of 2006, compared to $55.2 million for the same period one year ago.
The loan portfolio credit quality remained good during the third quarter. Net charge-offs were $145,000 during the quarter ended September 30, 2006, compared to $227,000 for the quarter ended June 30, 2006 and $219,000 for the quarter ended September 30, 2005. Loans more than 30 days delinquent as a percentage of total loans were 0.24% at September 30, 2006, compared to 0.21% at June 30, 2006 and 0.28% at December 31, 2005. Non-performing loans (i.e., loans 90 days or more past due or non-accrual loans) were $194,000, or 0.03% of total loans, at September 30, 2006; compared to $98,000, or 0.02% of total loans, at June 30, 2006; and $114,000, or 0.02% of total loans, at December 31, 2005. Non-performing assets were $202,000, or 0.02% of total assets, at September 30, 2006; compared to $98,000, or 0.01% of total assets, at June 30, 2006; and $141,000, or 0.02% of total assets, at December 31, 2005. The allowance for loan losses totaled $8.4 million at September 30, 2006, representing an allowance to total loans ratio of 1.34%, compared to $8.4 million, or 1.38%, at June 30, 2006, and $8.6 million, or 1.47%, at December 31, 2005.
The Company's investment securities portfolio at September 30, 2006 was $203.4 million (excluding $13.7 million in Federal Home Loan Bank of Seattle stock holdings), a decrease of $22.7 million compared to the $226.1 million portfolio at June 30, 2006, and also lower than the $225.7 million portfolio at December 31, 2005. The decrease in the investment securities portfolio during the quarter was primarily attributed to maturing securities and repayment of mortgage-backed-securities. These maturities and repayments have been primarily used to fund new loan originations.
Total deposits were $458.5 million at September 30, 2006, compared to $449.4 million at June 30, 2006, and were $20.5 million higher than the $438.0 million at December 31, 2005. During the third quarter, core deposits (comprised of checking, savings, money market, and individual retirement accounts) increased $18.7 million and totaled $224.3 million, or 48.9% of total deposits, as of September 30, 2006. The growth in core deposits during the third quarter was partially offset by a $7.6 million decline in retail certificates of deposit. Brokered deposit balances were modestly reduced to $44.4 million at September 30, 2006, compared to $46.4 million at June 30, 2006 and $52.2 million at December 31, 2005. The average cost of deposits was 3.67% for the quarter ended September 30, 2006, up 41 basis points compared to the 3.26% for the quarter ended June 30, 2006, and up 143 basis points compared to the 2.24% for the quarter ended September 30, 2005. The increased cost of deposits was the result of rising short-term interest rates and enhanced competition for deposits in our local market.
?During the third quarter, we made solid progress growing customer deposits and generating quality loans. Looking forward to year end, we will remain focused on growing our core business and on improving earnings. We also anticipate the credit quality of our loan portfolio to remain good, as the local economy remains strong,? said John A. Hall, President and CEO.
Rainier Pacific Financial Group, Inc. is the bank holding company for Rainier Pacific Bank, a Tacoma, Washington-based state-chartered savings bank operating 14 full-service locations in the Tacoma-Pierce County and City of Federal Way market areas.
For additional information, visit Rainier Pacific's website at www.rainierpac.com.
Forward-looking statements:
Certain matters discussed in this press release may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements relate to, among other things, expectations of the business environment in which the Company operates, projections of future performance, perceived opportunities in the market, potential future credit experience, and statements regarding the Company's mission and vision. These forward-looking statements are based upon current management expectations and may, therefore, involve risks and uncertainties. The Company's actual results, performance, or achievements may differ materially from those suggested, expressed, or implied by forward-looking statements as a result of a wide variety or range of factors including, but not limited to, interest rate fluctuations; economic conditions in the Company's primary market area; demand for residential, commercial real estate, consumer, and other types of loans; success of new products; competitive conditions between banks and non-bank financial service providers; regulatory and accounting changes; technological factors affecting operations; pricing of products and services; and other risks detailed in the Company's reports filed with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the fiscal year ended December 31, 2005. 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)
At Sept. 30, | At June 30, | At Dec. 31, | |||||||
| 2006 | 2006 | 2005 | |||||||
| ASSETS | |||||||||
| Cash and cash equivalents | $ | 11,964 | $ | 7,980 | $ | 9,955 | |||
| Interest-bearing deposits with banks | 2,782 | 22,816 | 3,836 | ||||||
| Securities available-for-sale | 148,617 | 149,320 | 144,212 | ||||||
| Securities held-to-maturity (fair value of $53,638 at September 30, 2006; $74,252 at June 30, 2006; and $79,885 at December 31, 2005) | 54,811 | 76,800 | 81,497 | ||||||
| Federal Home Loan Bank (?FHLB?) stock, at cost | 13,712 | 13,712 | 13,712 | ||||||
| Loans | 628,707 | 608,414 | 582,894 | ||||||
| Less: allowance for loan losses | (8,414) | (8,410) | (8,597) | ||||||
| Loans, net | 620,293 | 600,004 | 574,297 | ||||||
| Premises and equipment, net | 35,094 | 35,173 | 34,307 | ||||||
| Accrued interest receivable | 4,154 | 3,941 | 3,861 | ||||||
| Other assets | 9,648 | 9,481 | 5,166 | ||||||
| TOTAL ASSETS | $ | 901,075 | $ | 919,227 | $ | 870,843 | |||
| LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||||
| LIABILITIES: | |||||||||
| Deposits | |||||||||
| Non-interest bearing | $ | 32,205 | $ | 32,449 | $ | 31,065 | |||
| Interest-bearing | 426,289 | 416,982 | 406,965 | ||||||
| Total Deposits | 458,494 | 449,431 | 438,030 | ||||||
| Borrowed funds | 341,670 | 373,415 | 340,240 | ||||||
| Corporate drafts payable | 5,778 | 3,985 | 2,977 | ||||||
| Accrued compensation and benefits | 2,347 | 2,090 | 1,958 | ||||||
| Other liabilities | 6,041 | 5,040 | 2,928 | ||||||
| TOTAL LIABILITIES | 814,330 | 833,961 | 786,133 | ||||||
| SHAREHOLDERS' EQUITY: | |||||||||
| Common stock, no par value: 49,000,000 shares authorized; 6,617,670 shares issued and 5,969,049 shares outstanding at September 30, 2006; 6,628,870 shares issued and 5,946,193 outstanding at June 30, 2006; and 6,690,847 shares issued and 5,940,502 shares outstanding at December 31, 2005 | 49,864 | 49,603 | 49,598 | ||||||
| Unearned Employee Stock Ownership Plan (?ESOP?) shares | (4,751) | (4,921) | (5,261) | ||||||
| Accumulated other comprehensive loss, net of tax | (1,071) | (1,768) | (1,441) | ||||||
| Retained earnings | 42,703 | 42,352 | 41,814 | ||||||
| TOTAL SHAREHOLDERS' EQUITY | 86,745 | 85,266 | 84,710 | ||||||
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ | 901,075 | $ | 919,227 | $ | 870,843 | |||
Rainier Pacific Financial Group, Inc. & Subsidiary
Consolidated
Statements of Income
(Dollars in Thousands, except per share
data)
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||||||||||||||||||||||||||
Sept. 30, | Sept. 30, | ||||||||||||||||||||||||||||||||||||||||||||
| 2006 | 2005 | 2006 | 2005 | ||||||||||||||||||||||||||||||||||||||||||
| INTEREST INCOME | |||||||||||||||||||||||||||||||||||||||||||||
| Loans | $ | 11,206 | $ | 8,953 | $ | 31,613 | $ | 25,490 | |||||||||||||||||||||||||||||||||||||
| Securities available-for-sale | 2,187 | 1,162 | 6,117 | 3,307 | |||||||||||||||||||||||||||||||||||||||||
| Securities held-to-maturity | 617 | 780 | 2,082 | 2,434 | |||||||||||||||||||||||||||||||||||||||||
| Interest-bearing deposits | 168 | 20 | 284 | 29 | |||||||||||||||||||||||||||||||||||||||||
| FHLB stock dividends | - | - | - | 54 | |||||||||||||||||||||||||||||||||||||||||
| Total interest income | 14,178 | 10,915 | 40,096 | 31,314 | |||||||||||||||||||||||||||||||||||||||||
| INTEREST EXPENSE | |||||||||||||||||||||||||||||||||||||||||||||
| Deposits | 3,879 | 2,015 | 10,155 | 4,871 | |||||||||||||||||||||||||||||||||||||||||
| Borrowed funds | 3,986 | 2,925 | 11,132 | 8,118 | |||||||||||||||||||||||||||||||||||||||||
| Total interest expense | 7,865 | 4,940 | 21,287 | 12,989 | |||||||||||||||||||||||||||||||||||||||||
| Net interest income | 6,313 | 5,975 | 18,809 | 18,325 | |||||||||||||||||||||||||||||||||||||||||
| PROVISION FOR LOAN LOSSES | 150 | 150 | 450 | 600 | |||||||||||||||||||||||||||||||||||||||||
| Net interest income after provision for loan loss | 6,163 | 5,825 | 18,359 | 17,725 | |||||||||||||||||||||||||||||||||||||||||
| NON-INTEREST INCOME | |||||||||||||||||||||||||||||||||||||||||||||
| Deposit service fees | 932 | 976 | 2,633 | 2,821 | |||||||||||||||||||||||||||||||||||||||||
| Loan service fees | 308 | 267 | 858 | 723 | |||||||||||||||||||||||||||||||||||||||||
| Insurance service fees | 545 | 139 | 1,579 | 439 | |||||||||||||||||||||||||||||||||||||||||
| Investment service fees | 179 | 128 | 463 | 384 | |||||||||||||||||||||||||||||||||||||||||
| Real estate lease income | 277 | 192 | 841 | 382 | |||||||||||||||||||||||||||||||||||||||||
| Gain (loss) on sale of securities, net | 3 | - | 3 | Share
© Business Wire - 2006
Rainier Pacific Financial Group, Inc. (Rainier Pacific Financial Group) is the holding company for Rainier Pacific Savings Bank (Rainier Pacific Bank or the Bank). The Company offers consumers an array of deposit and loan services through Rainier Pacific Bank, and offers automobile and homeowners' insurance, financial planning, and non-federally insured mutual fund and investment services through two operating units of the Bank doing business as Rainier Pacific Insurance Services and Rainier Pacific Financial Services. It also provides deposit and loan services to small businesses, and local builders of single-family residential homes in its local markets. As of December 31, 2008, Rainier Pacific Financial Group operated a retail network of 14 branches throughout the Tacoma-Pierce County market and the City of Federal Way, Washington State, with its corporate office located in the central business district of downtown Tacoma.
Sector
Banks
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