UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549



FORM 10-Q

(Mark One)

[ X ]        QUARTERLY REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
                 
EXCHANGE ACT OF 1934

For the quarterly period ended ..............................  June 30, 2005

[    ]         TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES 
                 EXCHANGE ACT OF 1934

For the transition period from ________________ to _________________

Commission File Number 000-50362



RAINIER PACIFIC FINANCIAL GROUP, INC.

(Exact name of registrant as specified in its charter)



Washington                                                                                                                        87-0700148

1498 Pacific Avenue, Tacoma, WA 98402



(253) 926-4000



__________________________________________________________________ (Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

           

YesX  . No.

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).

APPLICABLE ONLY TO CORPORATE ISSUERS

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.

Title of class:                                                                                                                           As of June 30, 2005

Common stock, no par value6,988,766*

*  Includes 560,004 shares held by the Rainier Pacific 401(k) Employee Stock Ownership Plan that have not been
    released, committed to be released, or allocated to participant accounts; and 262,240 restricted shares granted under
    
 the Rainier Pacific Financial Group, Inc. 2004 Management Recognition Plan that have not yet vested.

<PAGE>

RAINIER PACIFIC FINANCIAL GROUP, INC.



Table of Contents





|PART 1 -   | FINANCIAL INFORMATION                                                                  | Page                                                                             
|---------- | -------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------
|           |                                                                                        |                                                                                  
|ITEM 1 -   | Financial Statements:                                                                  |                                                                                  
|           |                                                                                        |                                                                                  
|           | Consolidated Statements of Financial Condition as                                      |                                                                                  
|           |                                                                                        | of June 30, 2005 and December 31, 2004                                           
|           | Consolidated Statements of Income for the                                              |                                                                                  
|           |                                                                                        | Three Months and Six Months Ended June 30, 2005 and 2004                         
|           | Consolidated Statements of Cash Flows for the                                          |                                                                                  
|           |                                                                                        | Six Months Ended June 30, 2005 and 2004                                          
|           | Consolidated Statements of Shareholders' Equity                                        |                                                                                  
|           |                                                                                        | for the Six Months Ended June 30, 2005 and 
 for the Year Ended December 31, 2004
|           | Selected Notes to Unaudited Interim Consolidated Financial
Statements                  | 7                                                                                
|           |                                                                                        |                                                                                  
|ITEM 2 -   | Management's Discussion and Analysis of Financial Condition and Results of Operations: |                                                                                  
|           |                                                                                        |                                                                                  
|           | Forward-Looking Statements                                                             | 10                                                                               
|           | Comparison of Financial Condition at 
            June 30, 2005 and December 31, 2004  | 10                                                                               
|           | Comparison of Operating Results for the                                                |                                                                                  
|           |                                                                                        | Three Months Ended June 30, 2005 and June 30, 2004                               
|           | Comparison of Operating Results for the                                                |                                                                                  
|           |                                                                                        | Six Months Ended June 30, 2005 and June 30, 2004                                 
|           | Liquidity and Capital Resources                                                        | 17                                                                               
|           |                                                                                        |                                                                                  
|ITEM 3 -   | Quantitative and Qualitative Disclosures about Market Risk                             | 18                                                                               
|ITEM 4 -   | Controls and Procedures                                                                | 18                                                                               
|           |                                                                                        |                                                                                  
|PART II -  | OTHER INFORMATION                                                                      |                                                                                  
|           |                                                                                        |                                                                                  
|ITEM 1 -   | Legal Proceedings                                                                      | 19                                                                               
|ITEM 2 -   | Unregistered Sales of Equity Securities and Use of Proceeds                            | 19                                                                               
|ITEM 3 -   | Defaults Upon Senior Securities                                                        | 19                                                                               
|ITEM 4 -   | Submission of Matters to a Vote of Security Holders                                    | 20                                                                               
|ITEM 5 -   | Other Information                                                                      | 20                                                                               
|ITEM 6 -   | Exhibits                                                                               | 20                                                                               
|           |                                                                                        |                                                                                  
|SIGNATURES | 21                                                                                    
|           |                                                                                       



1

<PAGE>

RAINIER PACIFIC FINANCIAL GROUP, INC. AND SUBSIDIARY
Consolidated Statements of Financial Condition(Unaudited)
Dollars In Thousands



|                                                                                                                                                                                                                                                  |        | At June 30,              |        | At December 31,              
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------ | ------------------------ | ------ | -----------------------------
|                                                                                                                                                                                                                                                  |        | 2005                     |        | 2004                         
|ASSETS                                                                                                                                                                                                                                            |        |                          |        |                              
|ASSETS                                                                                                                                                                                                                                            |        |                          |        |                              
|Cash and cash equivalents                                                                                                                                                                                                                         |        | $                  7,499 |        | $                       8,927
|Interest-bearing deposits with banks                                                                                                                                                                                                              |        | 416                      |        | 1,271                        
|Securities available-for-sale                                                                                                                                                                                                                     |        | 109,682                  |        | 97,436                       
|Securities held-to-maturity (fair value of $86,624 at June 30, 2005, $92,779
          
 at December 31, 2004)                                                                                                                                    |        | 87,285                   |        | 93,540                       
|Federal Home Loan Bank ("FHLB") stock, at cost                                                                                                                                                                                                    |        | 13,712                   |        | 13,374                       
|                                                                                                                                                                                                                                                  |        |                          |        |                              
|Loans                                                                                                                                                                                                                                             |        | 515,995                  |        | 502,719                      
|Less: allowance for loan losses                                                                                                                                                                                                                   |        | (8,799)                  |        | (8,981)                      
|Loans, net                                                                                                                                                                                                                                        |        | 507,196                  |        | 493,738                      
|                                                                                                                                                                                                                                                  |        |                          |        |                              
|Premises and equipment, net                                                                                                                                                                                                                       |        | 34,654                   |        | 34,684                       
|Accrued interest receivable                                                                                                                                                                                                                       |        | 3,412                    |        | 3,354                        
|Other assets                                                                                                                                                                                                                                      |        | 5,562                    |        | 5,452                        
|                                                                                                                                                                                                                                                  |        |                          |        |                              
|TOTAL ASSETS                                                                                                                                                                                                                                      |        | $           
769,418     |        | $                  
751,776  
|                                                                                                                                                                                                                                                  |        |                          |        |                              
|LIABILITIES AND SHAREHOLDERS' EQUITY                                                                                                                                                                                                              |        |                          |        |                              
|LIABILITIES                                                                                                                                                                                                                                       |        |                          |        |                              
|Deposits                                                                                                                                                                                                                                          |        |                          |        |                              
|Non-interest bearing                                                                                                                                                                                                                              |        | $             28,028     |        | $                     29,654 
|Interest-bearing                                                                                                                                                                                                                                  |        | 345,777                  |        | 315,262                      
|Total Deposits                                                                                                                                                                                                                                    |        | 373,805                  |        | 344,916                      
|                                                                                                                                                                                                                                                  |        |                          |        |                              
|Borrowed funds                                                                                                                                                                                                                                    |        | 299,559                  |        | 295,722                      
|Corporate drafts payable                                                                                                                                                                                                                          |        | 3,433                    |        | 3,839                        
|Accrued compensation and benefits                                                                                                                                                                                                                 |        | 1,972                    |        | 1,828                        
|Other liabilities                                                                                                                                                                                                                                 |        | 2,176                    |        | 6,665                        
|                                                                                                                                                                                                                                                  |        |                          |        |                              
|TOTAL LIABILITIES                                                                                                                                                                                                                                 |        | 680,945                  |        | 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;
          
  7,672,260 shares issued and 6,779,634 shares outstanding at         December 31, 2004 |        | 53,532                   |        | 64,672                       
|Unearned Employee Stock Ownership Plan ("ESOP") shares                                                                                                                                                                                            |        | (5,600)                  |        | (5,940)                      
|Accumulated other comprehensive loss, net of tax                                                                                                                                                                                                  |        | (802)                    |        | (725)                        
|Retained earnings                                                                                                                                                                                                                                 | 41,343 |                          | 40,799
|                                                                                                                                                                                                                                                  |        |                          |        |                              
|TOTAL SHAREHOLDERS' EQUITY                                                                                                                                                                                                                        |        | 88,473                   |        | 98,806                       
|                                                                                                                                                                                                                                                  |        |                          |        |                              
|TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                                                                                                                                                                                                        |        | $            
769,418    |        | $                 
751,776   



2

<PAGE>

RAINIER PACIFIC FINANCIAL GROUP, INC. AND SUBSIDIARY
Consolidated Statements of Income

|                                                    | Three Months Ended
June 30, |  | Six Months Ended
June 30,
|--------------------------------------------------- | --------------------------- |  | -------------------------
|                                                    | 2005                        |  | 2004                     
|INTEREST INCOME                                     |                             |  |                          
|Loans                                               | $                8,364      |  | $             
8,030     
|Securities available-for-sale                       | 1,129                       |  | 1,105                    
|Securities held-to-maturity                         | 812                         |  | 1,019                    
|Interest-bearing deposits                           | 5                           |  | 1                        
|FHLB stock dividends                                | -                           |  | 124                      
|                                                    |                             |  |                          
|Total interest income                               | 10,310                      |  | 10,279                   
|                                                    |                             |  |                          
|INTEREST EXPENSE                                    |                             |  |                          
|Deposits                                            | 1,599                       |  | 966                      
|Borrowed funds                                      | 2,723                       |  | 1,820                    
|                                                    |                             |  |                          
|Total interest expense                              | 4,322                       |  | 2,786                    
|                                                    |                             |  |                          
|Net interest income                                 | 5,988                       |  | 7,493                    
|                                                    |                             |  |                          
|PROVISION FOR LOAN LOSSES                           | 150                         |  | 600                      
|                                                    |                             |  |                          
|Net interest income after provision for loan losses | 5,838                       |  | 6,893                    
|                                                    |                             |  |                          
|NON-INTEREST INCOME                                 |                             |  |                          
|Deposit service fees                                | 971                         |  | 1,069                    
|Loan service fees                                   | 238                         |  | 203                      
|Insurance service fees                              | 133                         |  | 135                      
|Investment service fees                             | 124                         |  | 70                       
|Gain/(loss) on sale of securities, net              | (2)                         |  | -                        
|Gain on sale of loans, net                          | 109                         |  | 144                      
|Gain/(loss) on sale of premise and equipment, net   | (2)                         |  | 43                       
|Other operating income                              | 120                         |  | 17                       
|                                                    |                             |  |                          
|Total non-interest income                           | 1,691                       |  | 1,681                    
|                                                    |                             |  |                          
|NON-INTEREST EXPENSE                                |                             |  |                          
|Compensation and benefits                           | 3,604                       |  | 3,588                    
|Office operations                                   | 1,312                       |  | 1,240                    
|Occupancy, net                                      | 472                         |  | 357                      
|Loan servicing                                      | 132                         |  | 114                      
|Outside and professional services                   | 403                         |  | 744                      
|Marketing                                           | 238                         |  | 314                      
|Other operating expenses                            | 408                         |  | 776                      
|                                                    |                             |  |                          
|Total non-interest expense                          | 6,569                       |  | 7,133                    
|                                                    |                             |  |                          
|INCOME BEFORE PROVISION FOR FEDERAL INCOME TAX      | 960                         |  | 1,441                    
|                                                    |                             |  |                          
|PROVISION FOR FEDERAL INCOME TAX                    | 325                         |  | 469                      
|                                                    |                             |  |                          
|NET INCOME                                          | $                   635     |  | $                    972 
|                                                    |                             |  |                          
|EARNINGS PER COMMON SHARE                           |                             |  |                          
|Basic                                               | $                 0.10      |  | $                   0.12 
|Diluted                                             | $                 0.10      |  | $                   0.12 
|Weighted average shares outstanding - Basic         | 6,148,455(1)                |  | 7,708,216(2)             
|Weighted average shares outstanding - Diluted       | 6,150,112(1)                |  | 7,708,216(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
         
 Company's 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.

3

<PAGE>



RAINIER PACIFIC FINANCIAL GROUP, INC. AND SUBSIDIARY
Consolidated Statements of Cash Flows(Unaudited)
Dollars In Thousands



|                                                                                   |  | Six Months Ended              
|---------------------------------------------------------------------------------- |  | ------------------------------
|                                                                                   |  | June 30,                      
|                                                                                   |  | 2005                          
|CASH FLOWS FROM OPERATING ACTIVITIES                                               |  |                               
|Net income                                                                         |  | $                       1,400 
|Adjustments to reconcile net income to net cash from operating  activities:        |  |                               
|Depreciation                                                                       |  | 1,831                         
|Provision for loan losses                                                          |  | 450                           
|FHLB stock dividends                                                               |  | (54)                          
|Deferred income tax expense                                                        |  | 26                            
|Loss/(gain) on sale of securities, net                                             |  | 2                             
|Loss/(gain) on sale of premises and equipment                                      |  | (286)                         
|Loss/(gain) on sale of loans, net                                                  |  | (316)                         
|Accrued compensation for restricted stock awards                                   |  | 530                           
|Amortization (accretion) of premium and discount on  
            
     securities |  | 515                           
|Change in operating assets and liabilities:                                        |  |                               
|Accrued interest receivable                                                        |  | (58)                          
|Other assets                                                                       |  | (96)                          
|Corporate drafts payable                                                           |  | (406)                         
|Other liabilities                                                                  |  | (4,345)                       
|                                                                                   |  |                               
|Net cash from operating activities                                                 |  | (807)                         
|                                                                                   |  |                               
|CASH FLOWS FROM INVESTING ACTIVITIES                                               |  |                               
|Activity in securities available-for-sale:                                         |  |                               
|Sales                                                                              |  | 11,156                        
|Maturities, prepayments, and calls                                                 |  | 5,916                         
|Purchases                                                                          |  | (29,751)                      
|Activity in securities held-to-maturity:                                           |  |                               
|Maturities, prepayments, and calls                                                 |  | 6,054                         
|Purchases of FHLB stock                                                            |  | (284)                         
|Increase in loans, net                                                             |  | (33,174)                      
|Proceeds from sales of loans                                                       |  | 19,582                        
|Purchases of premises and equipment                                                |  | (1,515)                       
|Increase (decrease) in interest-bearing deposits with
               
  banks      |  | 855                           
|                                                                                   |  |                               
|Net cash from investing activities                                                 |  | (21,161)                      
|                                                                                   |  |                               
|CASH FLOWS FROM FINANCING ACTIVITIES                                               |  |                               
|Net increase in deposits                                                           |  | 28,889                        
|Advances on borrowed funds                                                         |  | 1,156,074                     
|Repayments of borrowed funds                                                       |  | (1,152,237)                   
|Earned ESOP shares released                                                        |  | 340                           
|Change in value of ESOP shares                                                     |  | 156                           
|Dividends paid                                                                     |  | (856)                         
|Common stock repurchased                                                           |  | (11,826)                      
|                                                                                   |  |                               
|Net cash from financing activities                                                 |  | 20,540                        
|                                                                                   |  |                               
|NET CHANGE IN CASH AND CASH EQUIVALENTS                                            |  | (1,428)                       
|                                                                                   |  |                               
|CASH AND CASH EQUIVALENTS (at beginning of year)                                   |  | 8,927                         
|                                                                                   |  |                               
|CASH AND CASH EQUIVALENTS (at end of year)                                         |  | $                        7,499

4

<PAGE>

RAINIER PACIFIC FINANCIAL GROUP, INC. AND SUBSIDIARY
Consolidated Statements of Cash Flows (continued)(Unaudited)
Dollars In Thousands



|                                                               |  | Six Months Ended              
|-------------------------------------------------------------- |  | ------------------------------
|                                                               |  | June 30,                      
|                                                               |  | 2005                          
|SUPPLEMENTAL DISCLOSURES OF CASH FLOW                          |  |                               
|INFORMATION                                                    |  |                               
|Cash payments for:                                             |  |                               
|Interest                                                       |  | $                     8,074   
|                                                               |  |                               
|Income taxes                                                   |  | $                        555  
|                                                               |  |                               
|                                                               |  |                               
|SUPPLEMENTAL DISCLOSURES OF NON-CASH INVESTING   ACTIVITIES    |  |                               
|Unrealized losses on securities available-for sale, net of tax |  | $                         (77)
|                                                               |  |                               

5

<PAGE>

RAINIER PACIFIC FINANCIAL GROUP, INC. AND SUBSIDIARY
Consolidated Statements of Shareholders' Equity(Unaudited)
Dollars In Thousands



|                                                                                                                     |  | Common Stock |  | Unearned
ESOP |  | Retained | Accumulated
Other
Comprehensive |         
|-------------------------------------------------------------------------------------------------------------------- |  | ------------ |  | ------------- |  | -------- | ------------------------------- | --------
|                                                                                                                     |  | Shares       |  | Amount        |  | Shares   |                                 | Earnings
|                                                                                                                     |  |              |  |               |  |          |                                 |         
|Balance, December 31, 2003                                                                                           |  | 8,442,840    |  | $82,570       |  | $(6,618) |                                 | $38,837 
|Common stock repurchased                                                                                             |  | (1,103,880)  |  | (18,858)      |  |          |                                 |         
|Common stock issued for MRP                                                                                          |  | 336,800      |  |               |  |          |                                 |         
|MRP forfeitures                                                                                                      |  | (3,500)      |  |               |  |          |                                 |         
|Earned ESOP shares released                                                                                          |  |              |  |               |  | 678      |                                 |         
|ESOP activity-change in value of
      
 shares committed to be released                                             |  |              |  | 152           |  |          |                                 |         
|Dividends paid                                                                                                       |  |              |  |               |  |          |                                 | (1,665) 
|Amortization of compensation
       
 related to MRP                                                                 |  |              |  | 561           |  |          |                                 |         
|Comprehensive income:                                                                                                |  |              |  |               |  |          |                                 |         
|Net income                                                                                                           |  |              |  |               |  |          |                                 | 3,627   
|Other comprehensive income
         (loss):                                                                          |  |              |  |               |  |          |                                 |         
|Change in unrealized gain
            
 (loss) on securities, net of tax
             
  of $254                     |  |              |  |               |  |          |                                 |         
|Reclassification adjustment for
            
 gains on securities included
             
  in net income, net of tax |  |              |  | 247           |  |          |                                 |         
|Total comprehensive income                                                                                           |  |              |  |               |  |          |                                 |         
|Balance, December 31, 2004                                                                                           |  | 7,672,260    |  | 64,672        |  | (5,940)  |                                 | 40,799  
|Common stock repurchased                                                                                             |  | (678,494)    |  | (11,826)      |  |          |                                 |         
|MRP forfeitures                                                                                                      |  | (5,000)      |  |               |  |          |                                 |         
|Earned ESOP shares released                                                                                          |  |              |  |               |  | 340      |                                 |         
|ESOP activity-change in value of
      
 shares committed to be released                                             |  |              |  | 156           |  |          |                                 |         
|Dividends paid                                                                                                       |  |              |  |               |  |          |                                 | (856)   
|Amortization of compensation
       
 related to MRP                                                                 |  |              |  | 530           |  |          |                                 |         
|Comprehensive income:                                                                                                |  |              |  |               |  |          |                                 |         
|Net income                                                                                                           |  |              |  |               |  |          |                                 | 1,400   
|Other comprehensive income
    
 (loss):                                                                             |  |              |  |               |  |          |                                 |         
|Change in unrealized gain (loss) 
        on securities, net of tax of $40                                           |  |              |  |               |  |          |                                 |         
|Total comprehensive income                                                                                           |  |              |  |               |  |          |                                 |         
|Balance, June 30, 2005                                                                                               |  | 6,988,766    |  | $53,532       |  | $(5,600) |                                 | $41,343 
|                                                                                                                     |  |              |  |               |  |          |                                 |         

6

<PAGE>

RAINIER PACIFIC FINANCIAL GROUP, INC. AND SUBSIDIARY

Note 1 - Organization and Basis of Presentation



Organization.  On October 20, 2003, Rainier Pacific Savings Bank (the "Bank") converted from a Washington State chartered mutual savings bank to a Washington State chartered stock savings bank.  In connection with the Bank's conversion, Rainier Pacific Financial Group, Inc. (the "Company") was formed to be the bank holding company for the Bank.  The Company purchased 100% of the Bank's common stock simultaneously with the Bank's conversion to stock form and the Company's offering and sale of its common stock to the public.



The Bank provides a full range of banking services to consumers and limited banking services to small- and medium-sized businesses and professionals through 12 banking offices located in Pierce County and South King County.  Support Systems, Inc. ("SSI"), a wholly-owned subsidiary of the Bank, operates Rainier Pacific Insurance Agency and Rainier Pacific Financial Services.



Basis of Presentation.

Note 2 - Summary of Significant Accounting Policies

The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect amounts reported in the consolidated financial statements.  Changes in these estimates and assumptions are considered reasonably possible and may have a material impact on the consolidated financial statements and thus actual results could differ from the amounts reported herein.

Material estimates that are particularly susceptible to significant changes relate to the determination of the allowance for loan losses, deferred income taxes, and the valuation of real estate or other collateral acquired in connection with foreclosures or in satisfaction of loans.  In connection with the determination of the allowance for loan losses and the valuation of foreclosed or repossessed assets held-for-sale, management obtains independent appraisals for significant properties.  At June 30, 2005, there were no material changes in the Company's significant accounting policies or critical accounting estimates from those disclosed in the 2004 Form 10-K.

Note 3 - Mutual-to-Stock Conversion of the Bank

The Board of Directors of the Bank adopted a Plan of Conversion (the "Plan") on March 22, 2003, which was amended on August 6, 2003.  The Plan provided for the conversion of the Bank from a Washington State chartered mutual savings bank to a Washington State chartered stock savings bank pursuant to the rules and regulations of the Washington State Department of Financial Institutions and the Federal Deposit Insurance Corporation.  As part of the conversion, the Plan provided for the concurrent formation of the Company which owns 100% of the common stock of the Bank.  On October 20, 2003, the Bank consummated the conversion following receipt of all required regulatory approvals, the approval of the Plan by depositors of the Bank, and the satisfaction of all other conditions precedent to the conversion.

Upon conversion, the legal existence of the Bank did not terminate and the stock bank is a continuation of the mutual bank.  The stock bank has, holds, and enjoys the same in its own right as fully and to the same extent as the same was possessed, held, and enjoyed by the mutual bank.  The stock bank continues to have and succeeds to all the rights, obligations, and relations of the mutual bank.

7

<PAGE>

In connection with the conversion, the Bank established a liquidation account in an amount equal to its total net worth as of the latest statement of financial condition appearing in the financial statements contained in the Company's Registration Statement on Form S-1 filed with the SEC.  The liquidation account will be maintained for the benefit of eligible depositors who continue to maintain their accounts at the Bank after the conversion.  The liquidation account will be reduced annually to the extent that eligible depositors have reduced their qualifying deposits.  Subsequent increases will not restore an eligible account holder's interest in the liquidation account.  In the event of a complete liquidation of the Bank, each eligible depositor will be entitled to receive a distribution from the liquidation account in an amount proportionate to the current adjusted qualifying balances for accounts then held.  The liquidation account balance is not available for payment of dividends.

Note 4 - Stock-Based Compensation

The Company measures its employee stock-based compensation arrangements using the provisions outlined in Accounting Principles Board Opinion ("APB") No. 25, Accounting for Stock Issued to Employees, which is an intrinsic value-based method of recognizing compensation costs.  The Company has adopted the disclosure-only requirements of SFAS No. 123, as amended by SFAS No. 148, Accounting for Stock-Based Compensation - Transition and Disclosure - An Amendment of FASB Statement No. 123.  As such, no compensation expense was recorded on the date the options were granted and would only have been recorded if the then current market price of the underlying stock exceeded the exercise price.

If the Company had elected to recognize compensation cost based on the fair value at the grant dates for awards under its stock-based compensation plans, consistent with the method described in SFAS No. 123, net income and earnings per share would have been reduced to the pro forma amounts indicated below for the following periods (in thousands,
except per share data):



|                                 |  | Three Months Ended
June 30,                    |  | Six  Months Ended
June 30,              
|-------------------------------- |  | ---------------------------------------------- |  | ----------------------------------------
|                                 |  | 2005                                           |  | 2005                                    
|Pro forma disclosure:            |  |                                                |  |                                         
|Net income, as reported          |  | $                                        635   |  | $                                 1,400 
|Compensation expense, net of tax |  | (163)                                          |  | (347)                                   
|Pro forma net income             |  | $                                       
472   |  | $                                1,053  
|                                 |  |                                                |  |                                         
|Basic earnings per share:        |  |                                                |  |                                         
|As reported                      |  | $                                         0.10 |  | $                                   0.22
|Pro forma                        |  | $                                       0.08   |  | $                                   0.17
|                                 |  |                                                |  |                                         
|Diluted earnings per share:      |  |                                                |  |                                         
|As reported                      |  | $                                       0.10   |  | $                                   0.22
|Pro forma                        |  | $                                       0.08   |  | $                                   0.17

The fair value of options granted during 2004 is estimated on the date of grant using a binomial option-pricing model.  There were no options granted during the three or six months ended June 30, 2005.

At June 30, 2005, the Company had an aggregate of 173,284 options available for future issuance under the 2004 Stock Option Plan.

Note 5 - Earnings Per Share

Earnings per share ("EPS") is computed using the basic and diluted weighted average number of common shares outstanding during the period.  Basic EPS is computed by dividing the Company's net income or loss by the weighted average number of common shares outstanding for the period.  Diluted EPS is computed by dividing net income or loss by diluted weighted average shares outstanding, which includes common stock equivalent shares outstanding using the treasury stock method, unless such shares are anti-dilutive.  Common stock equivalents include the stock options and restricted stock awards under the 2004 Stock Option Plan and the MRP approved by the shareholders in April 2004.  Unallocated shares relating to the ESOP debt obligations are deducted in the calculation of weighted average shares outstanding.

8

<PAGE>

The following table presents the computation of basic and diluted earnings per share for the periods indicated (in thousands,
except per share data):



|                                                                                                             |  | Three Months Ended 
June 30, |  | Six Months Ended 
June 30,
|------------------------------------------------------------------------------------------------------------ |  | ---------------------------- |  | --------------------------
|                                                                                                             |  | 2005                         |  | 2004                      
|Numerator:                                                                                                   |  |                              |  |                           
|                                                                                                             |  |                              |  |                           
|Net Income                                                                                                   |  | $        635                 |  | $            972          
|                                                                                                             |  |                              |  |                           
|Denominator:                                                                                                 |  |                              |  |                           
|                                                                                                             |  |                              |  |                           
|Denominator for basic net income per share:                                                                  |  |                              |  |                           
|Weighted average shares                                                                                      |  | 6,148,455                    |  | 7,708,216                 
|Effect of dilutive securities:                                                                               |  |                              |  |                           
|Stock options                                                                                                |  | -                            |  | -                         
|Restricted stock                                                                                             |  | 1,657                        |  | -                         
|Denominator for diluted net income per share:                                                                |  |                              |  |                           
|Weighted average shares and assumed conversion of
          
    dilutive stock options and restricted stock |  | 6,150,112                    |  | 7,708,216                 
|                                                                                                             |  |                              |  |                           
|Basic earnings per share                                                                                     |  | $       0.10                 |  | $           0.12          
|                                                                                                             |  |                              |  |                           
|Diluted earnings per share                                                                                   |  | $       0.10                 |  | $            0.12         

Note 6 - Cash Dividends

On May 13, 2005, the Company announced a quarterly cash dividend of $0.06 cents per share payable on June 10, 2005 to shareholders of record on May 27, 2005.

Note 7 - Recently Issued Accounting Standards

On December 16, 2004, the Financial Accounting Standards Board ("FASB") issued Statement No. 123 (revised 2004), Share Based Payment, which is a revision of FASB Statement No. 123, Accounting for Stock-Based Compensation.  Statement 123 (R) supersedes APB Opinion No. 25, Accounting for Stock Issued to Employees, and amends FASB Statement No. 95, Statement of Cash Flows.  Generally, the approach in Statement 123 (R) is similar to the approach described in Statement No. 123.  However, Statement 123 (R) requires all share-based payments to employees, including grants of employee stock options, to be recognized in the income statement based on their fair value.  Pro forma disclosure is no longer an alternative.

The SEC announced on April 14, 2005 that it would provide for a phased-in implementation process for Statement 123 (R).  Based on this announcement, Statement 123 (R) must be adopted no later than January 1, 2006 and the Company expects to adopt the Statement on this date.  The Company plans to adopt Statement 123 (R) using the "modified prospective" method in which compensation cost is recognized beginning with the effective date based on the requirements of Statement 123 (R) for all share-based payments granted after the effective date and for all awards granted to employees prior to the effective date of Statement 123 (R) that remain unvested on the effective date.

As permitted by Statement 123, the Company currently accounts for share-based payments to employees using the intrinsic value method as detailed in APB Opinion No. 25 and, as such, generally recognizes no compensation cost for employee stock options.   Accordingly, the adoption of Statement 123 (R)'s fair value method will have an impact on the Company's results of operations.  The impact of adopting Statement 123 (R) cannot be predicted at this time due to all implementation issues not yet being fully resolved or clarified.

9

<PAGE>

ITEM 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking Statements

This Form 10-Q contains certain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995.  These forward-looking statements may be identified by the use of words such as "believe," "expect," "anticipate," "should," "planned," "estimated," and "potential."  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; deposit flows; demand for residential, commercial real estate, consumer, and other types of loans; real estate values; 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 SEC, including its 2004 Form 10-K.  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 statements.

Comparison of Financial Condition at June 30, 2005 and December 31, 2004

General.

Assets.

10

<PAGE>

The following table sets forth the Company's loan portfolio by type as of the dates indicated (in thousands):



|                               |  | June 30, 2005                                |  | December 31, 2004                         
|------------------------------ |  | -------------------------------------------- |  | ------------------------------------------
|Real estate:                   |  |                                              |  |                                           
|One-to-four family residential |  | $                                     88,867 |  | $                                   97,455
|Multi-family residential       |  | 127,439                                      |  | 126,199                                   
|Commercial                     |  | 152,857                                      |  | 144,717                                   
|                               |  | 369,163                                      |  | 368,371                                   
|Real estate construction:      |  |                                              |  |                                           
|One to four-family residential |  | 34,290                                       |  | 16,183                                    
|                               |  |                                              |  |                                           
|Consumer:                      |  |                                              |  |                                           
|Automobile                     |  | 45,057                                       |  | 52,567                                    
|Home equity loans              |  | 30,373                                       |  | 28,775                                    
|Credit cards                   |  | 21,357                                       |  | 22,447                                    
|Other                          |  | 10,122                                       |  | 11,802                                    
|                               |  | 106,909                                      |  | 115,591                                   
|                               |  |                                              |  |                                           
|Commercial / business          |  | 6,148                                        |  | 2,828                                     
|                               |  |                                              |  |                                           
|Subtotal                       |  | 516,510                                      |  | 502,973                                   
|                               |  |                                              |  |                                           
|Less:                          |  |                                              |  |                                           
|Deferred loan fees, net        |  | (515)                                        |  | (254)                                     
|Allowance for loan losses      |  | (8,799)                                      |  | (8,981)                                   
|                               |  |                                              |  |                                           
|Loans, net                     |  | $                                 
507,196   |  | $                                493,738  

Our investment securities portfolio (including mortgage-backed securities but excluding FHLB
of Seattle stock) increased $6.0 million, or 3.1% to $197.0 million at June 30, 2005 from $191.0 million at December 31, 2004.  The growth in the investment portfolio resulted primarily from the addition of adjustable rate trust preferred securities.  Trust preferred securities increased by $24.6 million, or 63.6%, to $63.3 million at June 30, 2005 from $38.7 million at December 31, 2004.  Mortgage-backed securities decreased $16.9 million, or 15.8%, to $90.0 million at June 30, 2005 from $106.9 million at December 31, 2004.  All other securities decreased by a net amount of $1.7 million.

The trust preferred securities purchased were variable rate securities with an average yield of 4.44% which reprice quarterly based on a London Interbank Offered Rate ("LIBOR") index.  These securities were purchased to increase our interest-earning assets while managing our interest rate risk exposure in the investment securities portfolio.

FHLB of Seattle stock, while not classified as an investment security for purposes of this discussion, remained relatively stable with an increase of $338,000, or 2.5%, to $13.7 million at June 30, 2005 from $13.4 million at December 31, 2004.  We purchased additional FHLB of Seattle stock to meet the minimum stock requirements to support our level of borrowed funds from the FHLB of Seattle.

Deposits.

Borrowed Funds.



<PAGE>

**Shareholders' Equity.**Total shareholders' equity (or "capital") decreased $10.3 million, or 10.4%, to $88.5 million at June 30, 2005 from $98.8 million at December 31, 2004.  Our capital-to-assets ratio was 11.50% at June 30, 2005 compared to 13.14% at December 31, 2004.  The decrease in our capital for the six months ended June 30, 2005 was a result of $11.8 million of common stock repurchases, $856,000 in dividends paid to shareholders, and a $77,000 net decline in the value of our available-for-sale investment securities, offset in part by $1.4 million in net income, a $496,000 increase in equity related to our ESOP, and a $530,000 increase in equity for the accrual of stock-based compensation related to the MRP.



Comparison of Operating Results for the Three Months Ended June 30, 2005 and June 30, 2004

General.  Net incomedecreased$337,000, or 34.7%, to $635,000 for the three months ended June 30, 2005 from $972,000 for the three months ended June 30, 2004.  The decrease in net income was primarily the result of a lower net interest income, partially offset by a lower provision for loan losses and lower operating expenses.

Net Interest Income.  Net interest income was $6.0 million for the three months ended June 30, 2005 which was $1.5 million, or 20.0%, less than the $7.5 million for the three months ended June 30, 2004.  The decline in net interest income was primarily attributable to the increase in the Company's cost of funds as a result of rising short-term interest rates.  Interest income was relatively unchanged for the three months ended June 30, 2005 compared to the same period a year before.  Interest expense, however, increased $1.5 million to $4.3 million for the three months ended June 30, 2005 compared to the same period in 2004.  Average interest-earning assets increased $10.3 million to $717.2 million for the three months ended June 30, 2005 from $706.9 million for the three months ended June 30, 2004.  Offsetting this increase was a 90 basis point decline in our net interest margin to 3.33% for the three months ended June 30, 2005 from 4.23% for the three months ended June 30, 2004.

Interest Income.  Interest income for the three months ended June 30, 2005 increased $31,000, or 0.3%, unchanged at $10.3 million compared to the same period in 2004.   An increase of $10.3
million in the average balance of interest-earning assets for the three months
ended June 30, 2005 compared to the three months ended June 30, 2004 mitigated
the impact from the lower yields on loans.  The increase in interest-earning assets was primarily a result of increased loan volume.  Interest earned on loans for the three months ended June 30, 2005 was $8.4 million compared to $8.0 million for the three months ended June 30, 2004.
The average yield on loans declined 20 basis points to 6.63% for the three
months ended June 30, 2005 compared to 6.83% for the three months ended June 30,
2004.

Interest income on investment securities (including mortgage-backed securities but excluding FHLB
of Seattle stock) decreased slightly to $1.9 million for the three months ended June 30, 2005 from $2.1 million for the three months ended June 30, 2004.  The decrease resulted from an average balance of investments that was $25.4 million lower during the second quarter of 2005 than it was for the same period a year ago.  However, this was partially offset by an 11 basis point rise in the average yield on investments to 3.92% for the three months ended June 30, 2005 from 3.81% for the three months ended June 30, 2004.

We did not receive a dividend of FHLB of Seattle stock during the second quarter of 2005, compared to dividends of $124,000 during the same quarter a year ago. 
The FHLB of Seattle is operating under a regulatory directive and in May 2005 announced that all future dividends will be suspended until its financial position and performance improves.

Interest Expense.  Interest expense increased $1.5 million, or 53.6%, to $4.3 million for the three months ended June 30, 2005 compared to $2.8 million for the three months ended June 30, 2004.  Interest paid on deposits, increased $633,000, or 65.5% to $1.6 million for the three months ended June 30, 2005 compared to $966,000 for the same period a year earlier.  This increase was primarily attributable to the average cost of interest-bearing deposits increasing 69 basis points to 1.92% for the three months ended June 30, 2005 from 1.23% for the three months ended June 30, 2004.  This rise in rates was coupled with an increase in the average balance of interest-bearing deposits of $19.0 million, or 6.0%, to $333.8 million for the three months ended June 30, 2005 from $314.8 million for the three months ended June 30, 2004.

Interest expense on FHLB of Seattle advances increased $903,000, or 49.6%, for the three months ended June 30, 2005 to $2.7 million from $1.8 million for the three months ended June 30, 2004.  The increase was attributable to a higher cost of advances as short-term rates continued to rise and a higher average outstanding balance of FHLB
of Seattle advances totaling $301.7 million for the three months ended June 30, 2005 compared to $279.7 million for the three months ended June 30, 2004.  FHLB
of Seattle overnight and term advances continue to be used to fund growth in the loan portfolio.

12

<PAGE>

Average Balances and Average Yields/Costs.  The following table sets forth, for the periods indicated, information regarding average balances of assets and liabilities as well as the resultant yields and costs, interest rate spread, and net interest margin (otherwise known as net yield on interest-earning assets) (dollars in thousands):



|                                         |  | Three months ended
 June 30, 2005 |  | Three months ended
June 30, 2004
|---------------------------------------- |  | --------------------------------- |  | --------------------------------
|                                         |  | Average
Balance                   |  | Average Yield/Cost              
|                                         |  |                                   |  |                                 
|INTEREST-EARNING ASSETS                  |  |                                   |  |                                 
|Loans, net                               |  | $           505,111               |  | 6.63%                           
|Investment securities                    |  | 197,664                           |  | 3.92%                           
|FHLB stock                               |  | 13,679                            |  | 0.00%                           
|Interest-bearing deposits in other banks |  | 761                               |  | 2.61%                           
|Total interest-earning assets            |  | 717,215                           |  | 5.75%                           
|                                         |  |                                   |  |                                 
|Non-interest-earning assets              |  | 45,259                            |  |                                 
|                                         |  |                                   |  |                                 
|Total assets                             |  | $          762,474                |  |                                 
|                                         |  |                                   |  |                                 
|INTEREST-BEARING LIABILITIES             |  |                                   |  |                                 
|Interest-bearing deposits                |  | $          333,769                |  | 1.92%                           
|FHLB advances                            |  | 301,715                           |  | 3.62%                           
|                                         |  |                                   |  |                                 
|Total interest-bearing liabilities       |  | 635,484                           |  | 2.73%                           
|                                         |  |                                   |  |                                 
|Non-interest-bearing liabilities:        |  |                                   |  |                                 
|Non-interest-bearing checking            |  | 28,665                            |  |                                 
|Other                                    |  | 10,245                            |  |                                 
|                                         |  |                                   |  |                                 
|Total non-interest-bearing liabilities   |  | 38,910                            |  |                                 
|                                         |  |                                   |  |                                 
|Total liabilities                        |  | 674,394                           |  |                                 
|                                         |  |                                   |  |                                 
|Equity                                   |  | 88,080                            |  |                                 
|                                         |  |                                   |  |                                 
|Total liabilities and equity             |  | $         762,474                 |  |                                 
|                                         |  |                                   |  |                                 
|Net interest income                      |  | $             5,988               |  |                                 
|Interest rate spread                     |  |                                   |  | 3.02%                           
|Net interest margin                      |  | 3.33%                             |  |                                 

Provision for Loan Losses.  Our Asset/Liability Committee (the "Committee") assesses the adequacy of the allowance for loan losses on a quarterly basis.  In connection with the quarterly assessment, the Committee analyzes several different factors, including delinquency ratios, charge-off rates, underwriting criteria, and the changing risk profile of the loan portfolio, as well as local economic conditions including unemployment rates, bankruptcies, and vacancy rates of commercial and residential properties.

Our methodology for analyzing the allowance for loan losses consists of three components: formula, specific, and general allowances.  The formula allowance component is determined by applying an estimated loss percentage to various groups of loans.  The loss percentages are principally based on historical measures, which could affect the collectibility of the respective loan types such as the amount and types of classified loans, past due ratios, and the actual loss experience.  The specific allowance component is created when management believes that the collectibility of a specific large loan, such as multi-family or commercial real estate or commercial/business loan, has been impaired and a loss is probable.  The general allowance component is established to ensure the adequacy of the allowance for loan losses in situations where the Committee believes that there are risk factors associated with the collectibility of the portfolio that may not be adequately addressed in the formula or specific allowance components.  Information considered for the general allowance component includes local economic and employment data.

13

<PAGE>

The provision for loan
losses decreased $450,000 to $150,000 for the three months ended June 30, 2005,
compared to $600,000 for the three months ended June 30, 2004. The decrease was
primarily a result of the continued improvement in the credit quality of the
loan portfolio. Net charge-offs were $378,000 for the three month period ended
June 30, 2005, compared to $512,000 for the three month period ended June 30,
2004. The provision for the three months ended June 30, 2005 was set at $150,000
primarily as a result of the increased percentage of loans secured by real estate, low net
charge-offs and delinquencies, and the improving regional and local economy.



|                                    |  | Three Months Ended                           |  | Three Months Ended                        
|----------------------------------- |  | -------------------------------------------- |  | ------------------------------------------
|                                    |  | June 30, 2005                                |  | June 30, 2004                             
|                                    |  | (in thousands)                              
|                                    |  |                                              |  |                                           
|Allowance as of beginning of period |  | $                                     
9,027 |  | $                                    8,593
|                                    |  |                                              |  |                                           
|Provision for losses on loans       |  | 150                                          |  | 600                                       
|                                    |  |                                              |  |                                           
|Recoveries                          |  | 94                                           |  | 93                                        
|                                    |  |                                              |  |                                           
|Charge-offs                         |  | (472)                                        |  | (605)                                     
|                                    |  |                                              |  |                                           
|Allowance as of the end of period   |  | $                                  
8,799    |  | $                                  8,681  

Non-interest Income.  Non-interest income was $1.7 million for the three months ended June 30, 2005 unchanged from $1.7 million for the three months ended June 30, 2004.  The $98,000 decrease in deposit service fees was essentially offset by increases in investment service fees of $54,000 and loan service fees of $35,000.  All other categories of non-interest income increased $19,000 for the three months ended June 30, 2005 compared to the same period a year ago.

Non-interest Expense.  Non-interest expense was $6.6 million for the three months ended June 30, 2005, and was $564,000, or 7.9%, less than the $7.1 million of non-interest expenses recognized during the same quarter in 2004.  While compensation and benefits expense was unchanged, there were decreases of $341,000 in outside and professional services and $76,000 in marketing expense.

Compensation and benefits for the three months ended June 30, 2005 were unchanged at $3.6 million compared to the three months ended June 30, 2004.  Compensation costs represented 54.9% and 50.3% of total non-interest expenses for the three months ended June 30, 2005, and 2004, respectively.  As of June 30, 2005, we employed 205 full-time equivalent employees, compared to 218 at June 30, 2004.

Occupancy expense increased $115,000 to $472,000 for the three months ended June 30, 2005 from $357,000 for the three months ended June 30, 2004.  This increase is primarily attributable to higher building depreciation and maintenance costs associated with our new corporate office building that we relocated into in December 2004.

Outside and professional services decreased $341,000 to $403,000 for the three months ended June 30, 2005 from $744,000 for the three months ended June 30, 2004.  This decrease is primarily related to costs associated with completing our technology initiative that were still being incurred in the second quarter of 2004.

Income Tax Expense.  Income tax expense decreased $144,000 to $325,000 for the three months ended June 30, 2005 from $469,000 for the same period a year ago.  Income before federal income tax was $960,000 for the three months ended June 30, 2005 compared to $1.4 million for the three months ended June 30, 2004, with effective tax rates of 33.9% and 32.6%, respectively.

Comparison of Operating Results for the Six Months Ended June 30, 2005 and June 30, 2004

General.  Net incomedecreased$326,000, or 17.6%, to $1.4 million for the six months ended June 30, 2005 compared to $1.7 million for the six months ended June 30, 2004.  The decrease in net income was primarily the result of lower net interest income due to a decrease in our net interest margin.  This decrease was partially offset by a lower provision for loan losses, higher non-interest income and lower non-interest expenses.

Net Interest Income.  Net
interest income decreased $2.3 million, or 15.6%, to $12.4 million for the six
months ended June 30, 2005 compared to $14.7 million for the six months ended
June 30, 2004. This decrease resulted from an increase in interest expense

14

<PAGE>

of $2.7 million partially offset by an increase in interest income of
$360,000. Average interest-earning assets increased to $712.7 million for the
six months ended June 30, 2005 from $683.4 million for the six months ended June
30, 2004. Offsetting this increase in average interest-earning assets was an 81
basis point decline in our net interest margin to 3.47% for the six months ended
June 30, 2005 from 4.28% for the six months ended June 30, 2004. The decline in
the net interest margin was primarily attributable to rising costs of customer
deposits and borrowed funds due to increased short-term interest rates and the
flattening of the yield curve.

Interest Income.  Interest income for the six months ended June 30, 2005 increased $360,000, or 1.8%, to $20.4 million compared to $20.0 million for the same period in 2004.  The increase was the result of a $29.3 million increase in the average balance of interest-earning assets from the six months ended June 30, 2004.  Interest earned on total loans for the six months ended June 30, 2005 was $16.5 million compared to $15.9 million for the same period a year ago.  However, the average yield on total loans declined to 6.59% for the six months ended June 30, 2005 compared to 6.91% for the six months ended June 30, 2004.

Interest income on investment securities (including mortgage-backed securities but excluding FHLB
of Seattle stock) decreased $137,000 to $3.8 million for the six months ended June 30, 2005 compared to $3.9 million for the six months ended June 30, 2004.  The decrease resulted from a $15.8 million decrease in average investments to $195.2 million for the six months ended June 30, 2005 compared to $211.0 million for the six months ended June 30, 2004.  This decrease was partially offset by a 15 basis point increase in the average yield on investments to 3.89% for the six months ended June 30, 2005 from 3.74% for the six months ended June 30, 2004.  We did not receive a dividend of  FHLB of Seattle stock during the second quarter of 2005. 
The FHLB of Seattle is operating under a regulatory directive and in May 2005 announced that all future dividends would be suspended until their financial position and performance improved.

Interest Expense.  Interest expense increased $2.6 million, or 48.1%, to $8.0 million for the six months ended June 30, 2005 compared to $5.4 million for the six months ended June 30, 2004.  The increase is primarily attributable to the average cost of interest-bearing liabilities increasing 68 basis points to 2.59% for the six months ended June 30, 2005 from 1.91% for the six months ended June 30, 2004.  Further accentuating this cost of funds increase, the average balance of interest-bearing liabilities increased $59.2 million to $626.1 million for the six months ended June 30, 2005 from $566.9 million for the six months ended June 30, 2004.

Interest expense on FHLB of Seattle advances increased $1.6 million, or 44.4%, for the six months ended June 30, 2005 to $5.2 million from $3.6 million for the six months ended June 30, 2004.  The increase is attributable to a larger average balance of FHLB of Seattle advances outstanding of $299.9 million for the six months ended June 30, 2005 compared to $263.0 million for the six months ended June 30, 2004 and a higher cost of funds as short-term rates rose.  Overnight and term borrowings continue to be used to fund growth in loans.

15

<PAGE>

Average Balances and Average Yields/Costs.  The following table sets forth, for the periods indicated, information regarding average balances of assets and liabilities as well as the resultant yields, and costs, interest rate spread, and net interest margin (otherwise known as net yield on interest-earning assets) (dollars in thousand):



|                                         |  | Six Months Ended
 June 30, 2005 |  | Six Months Ended
June 30, 2004
|---------------------------------------- |  | ------------------------------- |  | ------------------------------
|                                         |  | Average
Balance                 |  | Average Yield/Cost            
|                                         |  |                                 |  |                               
|INTEREST-EARNING ASSETS                  |  |                                 |  |                               
|Loans, net                               |  | $            503,251            |  | 6.59%                         
|Investment securities                    |  | 195,176                         |  | 3.89%                         
|FHLB stock                               |  | 13,548                          |  | 0.80%                         
|Interest-bearing deposits in other banks |  | 692                             |  | 2.60%                         
|Total interest-earning assets            |  | 712,667                         |  | 5.74%                         
|                                         |  |                                 |  |                               
|Non-interest-earning assets              |  | 45,337                          |  |                               
|                                         |  |                                 |  |                               
|Total assets                             |  | $            758,004            |  |                               
|                                         |  |                                 |  |                               
|INTEREST-BEARING LIABILITIES             |  |                                 |  |                               
|Interest-bearing deposits                |  | $            326,275            |  | 1.76%                         
|FHLB advances                            |  | 299,868                         |  | 3.49%                         
|                                         |  |                                 |  |                               
|Total interest-bearing liabilities       |  | 626,143                         |  | 2.59%                         
|                                         |  |                                 |  |                               
|Non-interest-bearing liabilities:        |  |                                 |  |                               
|Non-interest-bearing checking            |  | 28,583                          |  |                               
|Other                                    |  | 12,357                          |  |                               
|                                         |  |                                 |  |                               
|Total non-interest-bearing liabilities   |  | 40,940                          |  |                               
|                                         |  |                                 |  |                               
|Total liabilities                        |  | 667,083                         |  |                               
|                                         |  |                                 |  |                               
|Equity                                   |  | 90,921                          |  |                               
|                                         |  |                                 |  |                               
|Total liabilities and equity             |  | $           758,004             |  |                               
|                                         |  |                                 |  |                               
|Net interest income                      |  | $             12,350            |  |                               
|Interest rate spread                     |  |                                 |  | 3.15%                         
|Net interest margin                      |  | 3.47%                           |  |                               

Provision for Loan Losses.  The provision for loan losses decreased $1.1 million to $450,000 for the six months ended June 30, 2005 compared to $1.5 million for the six months ended June 30, 2004.  We decreased the provision primarily as a result of the improving credit quality of the loan portfolio, the increased percentage of loans secured by real estate and the strengthening regional and local economies.  Charge-offs for the six months ended June 30, 2005 totaled $632,000, compared to $1.1 million for the same period a year ago.



|                                    |  | Six Months Ended                   |  | Six Months Ended                   
|----------------------------------- |  | ---------------------------------- |  | -----------------------------------
|                                    |  | June 30, 2005                      |  | June 30, 2004                      
|                                    |  | (in thousands)                    
|                                    |  |                                    |  |                                    
|Allowance as of beginning of period |  | $                            8,981 |  | $                             8,237
|                                    |  |                                    |  |                                    
|Provision for losses on loans       |  | 450                                |  | 1,500                              
|                                    |  |                                    |  |                                    
|Recoveries                          |  | 187                                |  | 189                                
|                                    |  |                                    |  |                                    
|Charge-offs                         |  | (819)                              |  | (1,245)                            
|                                    |  |                                    |  |                                    
|Allowance as of the end of period   |  | $                         
8,799   |  | $                             8,681



16

<PAGE>

Non-interest Income.  Non-interest income increased $249,000 to $3.7 million for the six months ended June 30, 2005 compared to $3.4 million for the six months ended June 30, 2004.  The increase is primarily the result of a gain on the sale of one of our branches that was relocated and netted $288,000, and an increase in investment service fees of $101,000, partially offset by a decrease in gain on sale of investments of $181,000.  All other categories of non-interest income increased by a net amount of $41,000.

Non-interest Expense.  Non-interest expense decreased $578,000, or 4.1%, to $13.4 million for the six months ended June 30, 2005 from $14.0 million for the six months ended June 30, 2004.  This decrease was primarily the result of lower outside and professional services; partially offset by higher compensation and benefit costs, office operations, and other non-interest expenses.

Compensation and benefits increased $283,000 to $7.2 million for the six months ended June 30, 2005 compared to $6.9 million for the six months ended June 30, 2004.  Compensation and benefits costs represented 53.3% and 49.1% of total non-interest expense for the six months ended June 30, 2005, and 2004, respectively.

Office operations increased
$254,000 to $2.8 million for the six months ended June 30, 2005 compared to $2.5
million for the six months ended June 30, 2004. This increase was primarily
attributable to higher data processing maintenance and depreciation costs
associated with upgrading our communications and our data processing operations.

Outside professional services decreased $1.1 million to $705,000 for the six months ended June 30, 2005 compared to $1.8 million for the six months ended June 30, 2004.  This decrease was primarily attributable to lower costs associated with completing our technology initiative in 2004.

Income Tax Expense.  Income tax expense decreased $117,000 to $719,000 for the six months ended June 30, 2005 compared to $836,000 for the same period a year ago.  Income before federal income tax was $2.1 million for the six months ended June 30, 2005 compared to $2.6 million for the six months ended June 30, 2004 with effective tax rates of 33.9% and 32.6%, respectively.

Liquidity and Capital Resources

Liquidity.
We actively analyze and manage the Bank's liquidity with the objective of maintaining an adequate level of liquidity to ensure the availability of sufficient cash flows to support loan growth, fund deposit withdrawals, fund operations, and to satisfy other financial commitments.  See "Consolidated Statements of Cash Flows" contained in Item 1 - Financial Statements of Part I of this quarterly report.

Our primary sources of funds are from customer deposits, loan repayments, loan sales, maturing investment securities, borrowed funds from the FHLB of Seattle, and brokered deposits.  These sources of funds, together with retained earnings and equity, are used to make loans, acquire investment securities and other assets, and fund continuing operations.  While maturities and the scheduled amortization of loans are a predictable source of funds, deposit flows and mortgage prepayments are greatly influenced by the level of interest rates, economic conditions, and competition.  We believe that our current liquidity position and our forecasted operating results are sufficient to fund all of our existing commitments.

At June 30, 2005, we maintained a credit facility with the FHLB of Seattle equal to 45.0% of the Bank's total assets, with an unused portion of the facility amounting to 6.1% of the Bank's total assets, or $46.7 million.  This credit facility depends on us having sufficient collateral to pledge to the FHLB of Seattle.  At June 30, 2005, we were in compliance with our collateral requirements.  In addition, we held available-for-sale investment securities and readily saleable loans for liquidity purposes.

At June 30, 2005, certificates of deposit (excluding individual retirement account certificates of deposit) amounted to $191.3 million or 51.2% of total deposits, including $35.9 million of brokered deposits which are scheduled to mature by December 31, 2005.  Historically, we have been able to retain a significant amount of our retail deposits as they mature.  We have used brokered deposits for funding purposes to reduce disintermediation from our lower cost retail deposits.  We have also elected to borrow from the FHLB of Seattle to supplement deposit funding.  Management believes that we have adequate resources to fund all loan commitments through deposits, borrowing from the FHLB of Seattle, the sale of mortgage loans or investments, and brokered deposits.  Management also believes that we can adjust the offering rates of certificates of deposit to increase, retain, or decrease deposits in changing interest rate environments.

In addition, the Company has been repurchasing its common stock.  For information regarding the Company's repurchase of its outstanding common stock during the quarter ended June 30, 2005, see "Common Stock Repurchases" contained in
**Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds under Part II - Other Information of this quarterly report.**

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<PAGE>

Capital. Consistent with
our objective to operate a sound and profitable financial institution, we have
maintained and will continue to focus on maintaining a "well-capitalized" rating
from regulatory authorities. In addition, we are subject to certain capital
requirements set by our regulatory agencies. As of June 30, 2005, the Bank was
classified as a "well-capitalized" institution under the criteria established by the Federal Deposit Insurance Corporation and
exceeded all minimum capital requirements. Total equity was $88.5 million at
June 30, 2005, or 11.50% of total assets on that date. Our regulatory capital
ratios at June 30, 2005 were as follows: Tier I leverage of 11.32%; Tier I
risk-based capital of 15.68%; and total risk-based capital of 16.94%.

ITEM 3 - Quantitative and Qualitative Disclosures about Market Risk



One of our primary financial objectives is to generate ongoing profitability.  The Bank's profitability depends primarily on its net interest income, which is the difference between the income it receives on its loan and investment portfolio and its cost of funds, which consists of interest paid on deposits and borrowings.  Net interest income is also affected by the relative amounts of interest-earning assets and interest-bearing liabilities.  When interest-earning assets increase, any positive interest rate spread will increase net interest income.  Net income is further affected by the level of non-interest income and expenses.  Non-interest income includes items such as service charges and fees on deposit accounts, loan servicing fees, and gains on sale of investments and loans.  Non-interest expenses include items such as compensation and benefits, office operations, outside and professional services, marketing, and other expenses.

The Bank is exposed to interest rate risk and actively manages the impact of interest rate changes on net interest income and capital.  Management employs various strategies to manage the Bank's interest rate sensitivity including: (1) selling long-term fixed-rate mortgage loans; (2) borrowing intermediate- to long-term funds at fixed rates; (3) originating consumer and income property or residential construction loans with shorter maturities or at variable rates; (4) purchasing securities with short to intermediate maturities or repricing features; (5) appropriately modifying loan and deposit pricing to capitalize on the then-current market opportunities; and (6) increasing core deposits, such as savings, checking and money-market accounts, in order to reduce reliance on the traditionally higher cost, more rate sensitive certificates of deposit.  At June 30, 2005, there were no material changes in the Bank's market risk from the information provided in the 2004 Form 10-K which was filed with the SEC on March 9, 2005.

At June 30, 2005, the Bank had no off-balance sheet derivative financial instruments.  In addition, the Bank did not maintain a trading account for any class of financial instruments, nor has it engaged in hedging activities or purchased high risk derivative instruments.  Furthermore, the Bank is not subject to foreign currency exchange rate risk or commodity price risk.





ITEM 4 - Controls and Procedures



Evaluation of Disclosure Controls and Procedures



An evaluation of the Company's disclosure controls and procedures (as defined in Rule 13a-15(e) of the Securities Exchange Act of 1934 (the "Act")) was carried out under the supervision and with the participation of the Company's Chief Executive Officer, Chief Financial Officer, and other members of the Company's management team as of the end of the period covered by this quarterly report.  Based upon its evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures currently in effect are effective, in all material respects, in ensuring that the information required to be disclosed by the Company in the reports it files or submits under the Act is (i) accumulated and communicated to the Company's management (including the Chief Executive Officer and Chief Financial Officer) in a timely manner, and (ii) recorded, processed, summarized, and reported within the time periods specified in the SEC's rules and forms.  However, the Company continues to implement additional controls and processes to strengthen the overall system of internal controls.  See "Changes in Internal Controls" below.

Changes in Internal Controls



During the period covered by this quarterly report, management has implemented changes in the Company's internal controls relating to information technology systems' security and access privileges, segregation of duties, and the related management oversight thereof.  Management does not believe any of the changes made or currently underway in the Company's systems of internal control, or in other factors that could significantly affect internal control, have resulted in any significant deficiencies or material weaknesses in the Company's internal control subsequent to the date of their most recent evaluation.

The Company does not expect that
its disclosure controls and procedures and internal control over financial
reporting will prevent all error and all fraud. A control procedure, no matter
how well conceived and operated, can provide only reasonable, not absolute,
assurance that the objectives of the control procedure are met. Because of the
inherent limitations in all control procedures, no evaluation of controls can
provide absolute assurance that all control issues and instances of fraud, if
any, within the Company have been detected. These inherent limitations include
the realities that judgments in decision-making can be faulty, and that
breakdowns in controls or procedures can occur because of simple error or
mistake. Additionally, controls can be circumvented by the individual

18

<PAGE>

acts of some persons, by collusion of two or more people, or by management
override of the control. The design of any control procedure also is based in
part upon certain assumptions about the likelihood of future events, and there
can be no assurance that any design will succeed in achieving its stated goals
under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the
policies or procedures may deteriorate. Because of the inherent limitations in a
cost-effective control procedure, misstatements due to error or fraud may occur
and not be detected.



PART II - OTHER INFORMATION

ITEM 1 - Legal Proceedings

From time to time, the Company or its subsidiaries are engaged in legal proceedings in the ordinary course of business, none of which are considered to have a material impact on the Company's financial position or results of operations.

ITEM 2 - Unregistered Sales of Equity Securities and Use of Proceeds

The Company's common stock is traded on the NASDAQ National Market under the symbol "RPFG".  As of June 30, 2005, there were 6,988,766 shares of common stock issued, including 560,004 unearned ESOP shares and 262,240 unvested restricted shares granted under the MRP.  During the quarter ended June 30, 2005, the Company did not sell any securities that were not registered under the Securities Act of 1933.

Common Stock Repurchases

A bank holding company, except for certain "well-capitalized" and highly rated bank holding companies, is required to give the Federal Reserve prior written notice of any purchase or redemption of its outstanding equity securities if the gross consideration for the purchase or redemption, when combined with the net consideration paid for all such purchases or redemptions during the preceding 12 months, is equal to 10.0% or more of its consolidated net worth.  The Federal Reserve may disapprove such a purchase or redemption if it determines that the proposal would constitute an unsafe or unsound practice or would violate any law, regulation, Federal Reserve order, or any condition imposed by, or written agreement with, the Federal Reserve.

The following table sets forth information about the Company's repurchases of its outstanding common stock during the quarter ended June 30, 2005.



|Period                         |  | Total Number of Shares Purchased |  | Average Price Paid per Share |  | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1) |  | Maximum Number of Shares that May Yet be Purchased Under the Plans or Programs
|------------------------------ |  | -------------------------------- |  | ---------------------------- |  | ------------------------------------------------------------------------------------ |  | ------------------------------------------------------------------------------
|                               |  |                                  |  |                              |  |                                                                                      |  |                                                                               
|April 1, 2005 - April 30, 2005 |  | 12,600                           |  | $15.31                       |  | 12,600                                                                               |  | 8,216                                                                         
|May 1, 2005 - May 31, 2005     |  | -                                |  | -                            |  | -                                                                                    |  | 8,216                                                                         
|June 1, 2005 - June 30, 2005   |  | -                                |  | -                            |  | -                                                                                    |  | 8,216                                                                         
|Total                          |  | 12,600                           |  | $15.31                       |  | 12,600                                                                               |  |                                                                               
|                               |  |                                  |  |                              |  |                                                                                      |  |                                                                               
|                               |  |                                  |  |                              |  |                                                                                      |  |                                                                               

On July 22, 2005, the Company announced the completion of its fourth repurchase program of 336,400 of its shares at an average price of $16.73 per share.  The Company announced its intention to purchase an additional 5% of its outstanding shares (321,000) on July 25, 2005.  This fifth repurchase plan is expected to be completed within twelve months of the announcement date.



ITEM 3 - Defaults Upon Senior Securities



Not applicable.

19

<PAGE>



ITEM 4 - Submission of Matters to a Vote of Security Holders



The Company's Annual Meeting of Shareholders was held on April 25, 2005 at the Sheraton Tacoma Hotel located at 1320 Broadway Avenue, Tacoma, Washington.  Three directors were elected at the meeting (Charles E. Cuzzetto, Stephen M. Bader, and John A. Hall) and six directors continued their terms in office (Edward J. Brooks, Karyn R. Clarke, Robert H. Combs, Brian E. Knutson, Alan M. Somers, and Alfred H. Treleven, III).  The results of the vote item presented at the meeting are as follows:

Election of Directors

Shareholders elected the following nominees to the Board of Directors for the terms indicated by the following vote:



|                    |         |           |            |         
|------------------- | ------- | --------- | ---------- | --------
|                    |         | FOR       |            | WITHHELD
|                    | Term to | Number    |            |         
|                    | Expire  | of Votes  | Percentage |         
|                    |         |           |            |         
|Charles E. Cuzzetto | 2008    | 6,297,123 | 97.2%      |         
|Stephen M. Bader    | 2008    | 6,303,143 | 97.3%      |         
|John A. Hall        | 2008    | 6,303,156 | 97.3%      |         



ITEM 5 - Other Information



Not applicable.



ITEM 6 - Exhibits



3.1    Articles of Incorporation of the Registrant (1)3.2    Bylaws of the Registrant (1)10.1    Form of Employment Agreement for President and Chief Executive Officer (1)10.2    Form of Severance Agreement (1)10.3    Form of Rainier Pacific Savings Bank Employee Severance Compensation Plan (1)10.4    Rainier Pacific 2004 Stock Option Plan (2)10.5    Rainier Pacific 2004 Management Recognition Plan (2)14     Code of Ethics (3)31.1    Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act
                     
31.2    Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act



                       32      Certification of Chief Executive Officer and Chief Financial Officer Pursuant to Section 906 of the
                                 
 Sarbanes- Oxley Act

______________________
                               (1)

20

<PAGE>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 thereunto duly authorized.


Rainier Pacific Financial Group, Inc.




August 3, 2005                                                              
/s/ John A. Hall______________________

                                                                                         

John A. Hall
                                                                                         
President and Chief Executive Officer
                                                                                        
(Principal Executive Officer)




August 3, 2005                                                                /s/ Joel G. Edwards__________________
                                                                                          
Joel G. Edwards
                                                                                          
Chief Financial Officer
                                                                                          
(Principal Financial and Accounting Officer)



21

<PAGE>

EXHIBIT 31.1

Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, John A. Hall, certify that:



1.    I have reviewed this Quarterly Report on Form 10-Q of Rainier Pacific Financial Group, Inc.;

2.    Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a
        material fact necessary to make the statements made, in light of the circumstances under which such statements
        
  were made, not misleading with respect to the period covered by this report;

3.    Based on my knowledge, the financial statements, and other financial information included in this report, fairly
        present in all material respects the financial condition, results of operations and cash flows of the registrant as of,
        
  and for, the periods presented in this report;

4.    The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure
        controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over
        
  financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:





(a)      Designed such disclosure controls and procedures, or caused such disclosure controls and
                            procedures to be designed under our supervision, to ensure that material information relating to the
                            
  registrant, including its consolidated subsidiaries, is made known to us by others within those entities,                            particularly during the period in which this report is being prepared;

(b)      Designed such internal control over financial reporting, or caused such internal control over financial
                           reporting to be designed under our supervision, to provide reasonable assurance regarding the
                            reliability of financial reporting and the preparation of financial statements for external purposes in
                            
   accordance with generally accepted accounting principles;

(c)     Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this
                         
 report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end
                          
  of the period covered by this report based on such evaluation; and

(d)     Disclosed in this report any change in the registrant's internal control over financial reporting that
                          occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the
                           case of an annual report) that has materially affected, or is reasonably likely to materially affect, the
                           
   registrant's internal control over financial reporting; and





5.    The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal            control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of
           
 directors (or persons performing the equivalent functions):





(a)    All significant deficiencies and material weaknesses in the design or operation of internal control over
                         financial reporting which are reasonably likely to adversely affect the registrant's ability to record,                         process, summarize and report financial information; and
(b)    Any fraud, whether or not material, that involves management or other employees who have a significant
                       
 role in the registrant's internal control over financial reporting.








Date: August 3, 2005                                                               /s/ John A. Hall______________________
                                                                                              
John A. Hall
                                                                                              
President and Chief Executive Officer













22






<PAGE>



EXHIBIT 31.2

Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Joel G. Edwards, certify that:
1.    I have reviewed this Quarterly Report on Form 10-Q of Rainier Pacific Financial Group, Inc.;



2.    Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a
        material fact necessary to make the statements made, in light of the circumstances under which such statements
        
  were made, not misleading with respect to the period covered by this report;



3.    Based on my knowledge, the financial statements, and other financial information included in this report, fairly
        present in all material respects the financial condition, results of operations and cash flows of the registrant as of,
        
  and for, the periods presented in this report;



4.    The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure
        controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over
        
  financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:



(a)      Designed such disclosure controls and procedures, or caused such disclosure controls and
                            procedures to be designed under our supervision, to ensure that material information relating to the
                            
  registrant, including its consolidated subsidiaries, is made known to us by others within those entities,                            particularly during the period in which this report is being prepared;



(b)      Designed such internal control over financial reporting, or caused such internal control over financial
                           reporting to be designed under our supervision, to provide reasonable assurance regarding the
                            reliability of financial reporting and the preparation of financial statements for external purposes in
                            
   accordance with generally accepted accounting principles;



(c)     Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this
                         
 report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end
                          
  of the period covered by this report based on such evaluation; and



(d)     Disclosed in this report any change in the registrant's internal control over financial reporting that
                          occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the
                           case of an annual report) that has materially affected, or is reasonably likely to materially affect, the
                           
   registrant's internal control over financial reporting; and



5.    The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal            control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of
           
 directors (or persons performing the equivalent functions):



(a)    All significant deficiencies and material weaknesses in the design or operation of internal control over
                         financial reporting which are reasonably likely to adversely affect the registrant's ability to record,                         process, summarize and report financial information; and

(b)    Any fraud, whether or not material, that involves management or other employees who have a significant
                       
 role in the registrant's internal control over financial reporting.







Date: August 3, 2005                                                              /s/ Joel G. Edwards__________________
                                                                                             
Joel G. Edwards
                                                                                             
Chief Financial Officer



23

<PAGE>



EXHIBIT 32



Certification of Chief Executive Officer and Chief Financial Officer 
of Rainier Pacific Financial Group, Inc.
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002





The undersigned hereby certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and in connection with this Quarterly Report on Form 10-Q, that:



1. the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
2. the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.







/s/ John A. Hall                                    
/s/ Joel G. Edwards__________________
   
John A. Hall                                                                                          Joel G. Edwards
   
President and Chief Executive Officer                                              Chief Financial Officer



Dated: August 3, 2005

24

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