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

|   | For      the quarterly period ended .............................................  March      31, 2009 |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| [     ] | 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 itscharter) |
|--------|------------------------------------------------------------|

|  Washington                          |                       |  87-0700148                  |
|-------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------|-----------------------------------|
| (State      or other jurisdiction of      |                                                                                                                           |  (I.R.S.  Employer |
|  incorporation      or organization) |                                                                                                                           |  Identification      No.)    |

|  Large      accelerated      filer                                 ______      |   |  Accelerated      filer                                            X        |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  Non-accelerated      filer                                   ______ |   |  Smaller      reporting company                       _______                                                                                                                                                                |
|                                                                                                                                                                                                                                                     |   |                                                                                                                                                                                                                                                                                                              |

|                  Title of      class: |   |  As of March 31,      2009                          |
|-----------------------------------------------------------------------------------------|--------|----------------------------------------------------------|
|  Common stock, no par      value                                                   |   |             6,294,898    * |
|                                                                                    |   |                                                     |

|   | *  Includes      305,393 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 2,696 restricted shares granted under the      Rainier Pacific Financial Group, Inc. 2004 Management Recognition Plan      that have not yet vested. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| PART      I  - | FINANCIAL      INFORMATION                                                                                 | Page                                                                                 |
|--------------------------|------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------|
|                     |                                                                                                       |                                                                                 |   |
| ITEM      1 -            | Financial      Statements.                                                                                 |                                                                                 |
|                     |                                                                                                       |                                                                                 |   |
|                     | Consolidated      Statements of Financial Condition at                                                     |                                                                                 |
|                     |                                                                                                       | March      31, 2009 and December 31, 2008                                            | 2  |
|                     | Consolidated      Statements of Operations for the                                                         |                                                                                 |
|                     |                                                                                                       | Three      Months Ended March 31, 2009 and 2008                                      | 3  |
|                     | Consolidated      Statements of Shareholders’ Equity for the                                         |                                                                                 |
|                     |                                                                                                       | Three      Months Ended March 31, 2009 andTwelve      Months Ended December 31, 2008 |  4  |
|                     | Consolidated      Statements of Cash Flows for the                                                         |                                                                                 |
|                     |                                                                                                       | Three      Months Ended March 31, 2009 and 2008                                      | 5  |
|                     | 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                                                                            | 15                                                                              |
|                     | Comparison      of Financial Condition at    March      31, 2009 and December 31, 2008 | 16                                                                              |
|                     | Comparison      of Operating Results for the                                                               |                                                                                 |
|                     | Three Months Ended March 31,      2009 and 2008                                                            | 20                                                                              |
|                     | Liquidity      and Capital Resources                                                                       | 23                                                                              |
|                     |                                                                                                       |                                                                                 |   |
| ITEM      3 -            | Quantitative      and Qualitative Disclosures about Market Risk                                            | 24                                                                              |
|                     |                                                                                                       |                                                                                 |
| ITEM      4 -            | Controls      and Procedures                                                                               | 25                                                                              |
|                     |                                                                                                       |                                                                                 |   |
| PART      II -           | OTHER      INFORMATION                                                                                     |                                                                                 |
|                     |                                                                                                       |                                                                                 |   |
| ITEM      1 -            | Legal      Proceedings                                                                                     | 26                                                                              |
| ITEM      1A -           | Risk      Factors                                                                                          | 26                                                                              |
| ITEM      2 -            | Unregistered      Sales of Equity Securities and Use of Proceeds                                           | 26                                                                              |
| ITEM      3 -            | Defaults      Upon Senior Securities                                                                       | 26                                                                              |
| ITEM      4 -            | Submission      of Matters to a Vote of Security Holders                                                   | 26                                                                              |
| ITEM      5 -            | Other      Information                                                                                     | 26                                                                              |
| ITEM      6 -            | Exhibits                                                                                                   | 27                                                                              |
|                     |                                                                                                       |                                                                                 |   |
| SIGNATURES               | 28                                                                                                    |
|                     |                                                                                                       |
| EXHIBIT      INDEX       |                                                                                                       |
| Exhibit 31               | 30                                                                                                    |
| Exhibit 32               | 31                                                                                                    |

----

|                                                                                                                   ASSETS | At      March 31, |                       At      December 31, |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------------|----------------------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            | 2009              |                                                                                                                       | 2008   |
| ASSETS:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |              |                                                                                                                       |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |              |                                                                                                                       |   |   |   |
| Cash and cash      equivalents                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | $                 | 6,184                                                                                                                      |   | $ | 8,811 |
|     Interest-bearing      deposits with banks                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |              | 64,051                                                                                                                     |   |   | 29,425 |
| Securities      available-for-sale                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |              | 28,233                                                                                                                     |   |   | 14,895 |
| Securities held-to-maturity      (fair value at March 31, 2009: $33,243; at              December 31, 2008: $34,162)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |              | 32,598                                                                                                                     |   |   | 33,984 |
| Federal Home Loan Bank of      Seattle (“FHLB”) stock, at cost                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |              | 13,712                                                                                                                     |   |   | 13,712 |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |              |                                                                                                                       |   |   |   |   |   |   |   |
| Loans      held-for-sale                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |              | 9,573                                                                                                                      |   |   | 1,505 |
| Loans                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |              | 630,695                                                                                                                    |   |   | 670,776 |
| Less allowance for loan      losses                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |              | (8,456)                                                                                                                    |   |   | (13,329) |
| Loans, net                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |              | 631,812                                                                                                                    |   |   | 658,952 |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |              |                                                                                                                       |   |   |   |   |   |   |   |
| Premises and equipment,      net                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |              | 33,458                                                                                                                     |   |   | 33,770 |
| Accrued interest      receivable                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |              | 3,322                                                                                                                      |   |   | 3,535 |
| Real estate    owned                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |              | 6,087                                                                                                                      |   |   | 6,796 |
| Deferred tax asset,      net                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |              | 32,786                                                                                                                     |   |   | 37,551 |
| Other assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |              | 6,081                                                                                                                      |   |   | 5,802 |
| TOTAL ASSETS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    | $                 | 858,324                                                                                                                    |   | $ | 847,233 |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |              |                                                                                                                       |   |   |   |   |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| LIABILITIES      AND SHAREHOLDERS’ EQUITY                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |              |                                                                                                                       |   |   |   |   |   |   |   |
| LIABILITIES:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |              |                                                                                                                       |   |   |   |   |   |   |   |
| Deposits                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |              |                                                                                                                       |   |   |   |   |   |   |   |
| Non-interest      bearing                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       | $                 | 45,166                                                                                                                     |   | $ | 40,331 |
| Interest-bearing                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |              | 463,443                                                                                                                    |   |   | 478,908 |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |              |                                                                                                                       |   |   |   |   |   |   |   |
| Total deposits                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |              | 508,609                                                                                                                    |   |   | 519,239 |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |              |                                                                                                                       |   |   |   |   |   |   |   |
| Borrowed funds                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |              | 299,681                                                                                                                    |   |   | 291,217 |
| Corporate drafts      payable                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |              | 3,927                                                                                                                      |   |   | 1,554 |
| Accrued compensation and      benefits                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |              | 1,013                                                                                                                      |   |   | 1,745 |
| Other    liabilities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |              | 5,929                                                                                                                      |   |   | 4,184 |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |              |                                                                                                                       |   |   |   |   |   |   |   |
| TOTAL    LIABILITIES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |              | 819,159                                                                                                                    |   |   | 817,939 |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |              |                                                                                                                       |   |   |   |   |   |   |   |
| SHAREHOLDERS’      EQUITY:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |              |                                                                                                                       |   |   |   |   |   |   |   |
| Common stock, no par value:      49,000,000 shares authorized;6,294,898 shares issued and      5,986,809 shares outstanding atMarch 31, 2009; and 6,295,298      shares issued and 5,968,393 sharesoutstanding at December 31,      2008                                                                                                                                                                                                                                                                                                                                                                                                                                        |              | 51,284                                                                                                           |   |   | 51,303  |
| Unearned Employee Stock      Ownership Plan (“ESOP”) shares                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |              | (3,054)                                                                                                               |   |   | (3,224) |   |
| Accumulated other      comprehensive loss, net of tax                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |              |  (44,270)                                                                                                        |   |   | (47,206) |   |
| Retained    earnings                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |              | 35,205                                                                                                                |   |   | 28,421  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |              |                                                                                                                       |   |   |   |   |   |   |   |
| TOTAL SHAREHOLDERS’      EQUITY                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |              | 39,165                                                                                                                |   |   | 29,294  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |              |                                                                                                                       |   |   |   |   |   |   |   |
| TOTAL LIABILITIES AND      SHAREHOLDERS’ EQUITY                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | $                 | 858,324                                                                                                               |   | $ | 847,233  |

----

|                                                                     |   | Three      Months Ended March 31, |      |
|--------------------------------------------------------------------------|--------|-----------------------------------|-----------|
|                                                                     |   | 2009                              |      |   | 2008 |   |
| INTEREST      INCOME                                                     |   |                              |      |   |   |   |
| Loans                                                                    |   | $                                 | 10,242    |   |   | $ | 11,277 |   |
| Securities      available-for-sale                                       |   |                              | 834       |   |   |   | 1,857 |   |
| Securities      held-to-maturity                                         |   |                              | 353       |   |   |   | 451 |   |
| Interest-bearing      deposits                                           |   |                              | 19        |   |   |   | 27 |   |
| FHLB dividends                                                           |   |                              | -         |   |   |   | 34 |   |
| Total interest      income                                               |   |                              | 11,448    |   |   |   | 13,646 |   |
|                                                                     |   |                              |      |   |   |   |   |   |
| INTEREST      EXPENSE                                                    |   |                              |      |   |   |   |   |   |
| Deposits                                                                 |   |                              | 2,632     |   |   |   | 3,587 |   |
| Borrowed funds                                                           |   |                              | 3,226     |   |   |   | 3,516 |   |
| Total interest      expense                                              |   |                              | 5,858     |   |   |   | 7,103 |   |
| Net interest      income                                                 |   |                              | 5,590     |   |   |   | 6,543 |   |
|                                                                     |   |                              |      |   |   |   |   |   |
| PROVISION      FOR LOAN LOSSES                                           |   |                              | 2,300     |   |   |   | 150 |   |
| Net interest income after      provision for loan losses                 |   |                              | 3,290     |   |   |   | 6,393 |   |
|                                                                     |   |                              |      |   |   |   |   |   |
| NON-INTEREST      INCOME                                                 |   |                              |      |   |   |   |   |   |
| Deposit service      fees                                                |   |                              | 798       |   |   |   | 839 |   |
| Loan service    fees                                                     |   |                              | 231       |   |   |   | 315 |   |
| Insurance service      fees                                              |   |                              | 587       |   |   |   | 550 |   |
| Investment service      fees                                             |   |                              | 175       |   |   |   | 164 |   |
| Real estate lease      income                                            |   |                              | 257       |   |   |   | 246 |   |
| Gain on sale of securities,      net                                     |   |                              | -         |   |   |   | 11 |   |
| Gain on sale of loans,      net                                          |   |                              | 3,561     |   |   |   | 235 |   |
| Loss on sale of other real      estate owned                             |   |                              | (2        | ) |   |   | - |   |
| Gain on sale of premises and      equipment, net                         |   |                              | (1        | ) |   |   | - |   |
| Other operating      income                                              |   |                              | 44        |   |   |   | 461 |   |
| Total non-interest      income                                           |   |                              | 5,650     |   |   |   | 2,821 |   |
|                                                                     |   |                              |      |   |   |   |   |   |
| NON-INTEREST      EXPENSE                                                |   |                              |      |   |   |   |   |   |
| Compensation and      benefits                                           |   |                              | 3,625     |   |   |   | 4,060 |   |
| Office    operations                                                     |   |                              | 956       |   |   |   | 955 |   |
| Occupancy                                                                |   |                              | 638       |   |   |   | 614 |   |
| Loan servicing                                                           |   |                              | 135       |   |   |   | 109 |   |
| Outside and professional      services                                   |   |                              | 485       |   |   |   | 448 |   |
| Marketing                                                                |   |                              | 257       |   |   |   | 284 |   |
| Other operating      expenses                                            |   |                              | 1,293     |   |   |   | 488 |   |
| Total non-interest      expense                                          |   |                              | 7,389     |   |   |   | 6,958 |   |
|                                                                     |   |                              |      |   |   |   |   |   |
| IMPAIRMENT      ON SECURITITES                                           |   |                              |      |   |   |   |   |   |
| Total other-than-temporary      impairment (“OTTI”) losses   |   |                              | (1,433    | ) |   |   | - |   |
| Portion recognized in other      comprehensive income (loss)             |   |                              | (7,050    | ) |   |   | - |   |
| Net impairment      losses                                               |   |                              | (8,483    | ) |   |   | - |   |
|                                                                     |   |                              |      |   |   |   |   |   |
| INCOME      (LOSS) BEFORE PROVISION (BENEFIT) FOR FEDERALINCOME      TAX |   |                              | (6,932    | ) |   |   | 2,256 |   |
|                                                                     |   |                              |      |   |   |   |   |   |
| PROVISION      (BENEFIT) FOR FEDERAL INCOME TAX                          |   |                              | (2,319    | ) |   |   | 812 |   |
|                                                                     |   |                              |      |   |   |   |   |   |
| NET      INCOME (LOSS)                                                   |   | $                                 | (4,613    | ) |   | $ | 1,444 |   |
|                                                                     |   |                              |      |   |   |   |   |   |
| EARNINGS      (LOSS) PER COMMON SHARE:                                   |   |                              |      |   |   |   |   |   |
| Basic                                                                    |   | $                                 | (0.77     | ) |   | $ | 0.24 |   |
| Diluted                                                                  |   | $                                 | (0.77     | ) |   | $ | 0.24 |   |
| Weighted average shares      outstanding-Basic                           |   |                              | 5,974,588 | (1) |   |   | 5,983,393 | (2) |
| Weighted average shares      outstanding-Diluted                         |   |                              | 5,974,588 |   |   |   | 5,983,383 |   |

| (1)   | Weighted      average shares outstanding – Basic includes 266,644 vested and ratably      earned shares of the 269,340 restricted shares granted and issued under      the 2004 Management Recognition Plan (“MRP”), net of forfeited      shares. |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2)   | Weighted      average shares outstanding – Basic includes 245,972 vested and ratably      earned shares of the 326,300 restricted shares granted and issued under      the MRP, net of forfeited shares. |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                                                                                                                                                                  |   | Common      Stock |      |   | UnearnedESOP |   |   | Retained |   |   | AccumulatedOtherComprehensive |   |   |   |    |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------|-----------|--------|--------------|--------|--------|----------|--------|--------|-------------------------------|--------|--------|--------|---------|
|                                                                                                                                                                                  |   | Shares            |      |   | Amount       |   |   | Shares   |   |   | Earnings                      |   |   | Loss   |    |   | Total |   |
|                                                                                                                                                                                  |   |              |      |   |         |   |   |     |   |   |                          |   |   |   |    |   |   |   |
| Balance,      December 31, 2007                                                                                                                                                       |   |              | 6,466,633 |   |         | $      | 50,458 |     |   | $      | (3,903                        | )      |   | $      | 44,840  |   |   | $ | (4,575 | ) |   | $ | 86,820 |   |
|                                                                                                                                                                                  |   |              |      |   |         |   |   |     |   |   |                          |   |   |   |    |   |   |   |   |   |   |   |   |   |
| Common stock      repurchased                                                                                                                                                         |   |              | (114,175  | )      |         |   | (983   | )        |   |   |                          |   |   |   |    |   |   |   |   |   |   |   | (983 | ) |
| MRPforfeitures                                                                                                                                                                        |   |              | (57,160   | )      |         |   |   |     |   |   |                          |   |   |   |    |   |   |   |   |   |   |   |   |   |
| Earned ESOP shares      released                                                                                                                                                      |   |              |      |   |         |   |   |     |   |   | 679                           |   |   |   |    |   |   |   |   |   |   |   | 679 |   |
| ESOP activity - Change in      value of shares             committed to be released                                                                |   |              |      |   |         |   | (52    | )        |   |   |                          |   |   |   |    |   |   |   |   |   |   |   | (52 | ) |
| Dividends paid                                                                                                                                                                        |   |              |      |   |         |   |   |     |   |   |                          |   |   |   | (1,804  | ) |   |   |   |   |   |   | (1,804 | ) |
| Amortization of compensation      related to MRP                                                                                                                                      |   |              |      |   |         | 1,542  |   |     |   |   |                          |   |   |   |    |   |   |   |   |   |   | 1,542 |   |
| Amortization of compensation      related to             the Stock Option Plan (“SOP”)                                                      |   |              |      |   |         |   | 338    |     |   |   |                          |   |   |   |    |   |   |   |   |   |   |   | 338 |   |
| Comprehensive income      (loss):                                                                                                                                                     |   |              |      |   |         |   |   |     |   |   |                          |   |   |   |    |   |   |   |   |   |   |   |   |   |
| Net loss                                                                                                                                                                              |   |              |      |   |         |   |   |     |   |   |                          |   |   |   | (14,615 | ) |   |   |   |   |   |   | (14,615 | ) |
| Unrealized loss on securities,      net of                   tax benefit of $21,961                                  |   |              |      |   |         |   |   |     |   |   |                          |   |   |   |    |   |   |   | (42,631 | ) |   |   | (42,631 | ) |
| Total comprehensive income      (loss)                                                                                                                                                |   |              |      |   |         |   |   |     |   |   |                          |   |   |   |    |   |   |   |   |   |   |   | (57,246 | ) |
|                                                                                                                                                                                  |   |              |      |   |         |   |   |     |   |   |                          |   |   |   |    |   |   |   |   |   |   |   |   |   |
| Balance,      December 31, 2008                                                                                                                                                       |   |              | 6,295,298 |   |         |   | 51,303 |     |   |   | (3,224                        | )      |   |   | 28,421  |   |   |   | (47,206 | ) |   |   | 29,294 |   |
|                                                                                                                                                                                  |   |              |      |   |         |   |   |     |   |   |                          |   |   |   |    |   |   |   |   |   |   |   |   |   |
| Cumulative effect adjustment      for OTTI/                  credit loss, net of tax of $5,871(1)                         |   |              |      |   |         |   |   |     |   |   |                          |   |   |   | 11,397  |   |   |   | (11,397 | ) |   |   | - |   |
|                                                                                                                                                                                  |   |              |      |   |         |   |   |     |   |   |                          |   |   |   |    |   |   |   |   |   |   |   |   |   |
| Balance,      January 1, 2009                                                                                                                                                         |   |              | 6,295,298 |   |         |   | 51,303 |     |   |   | (3,224                        | )      |   |   | 39,817  |   |   |   | (58,602 | ) |   |   | 29,294 |   |
|                                                                                                                                                                                  |   |              |      |   |         |   |   |     |   |   |                          |   |   |   |    |   |   |   |   |   |   |   |   |   |
| MRPforfeitures                                                                                                                                                                        |   |              | (400      | )      |         |   |   |     |   |   |                          |   |   |   |    |   |   |   |   |   |   |   |   |   |
|     Earned      ESOP shares released                                                                                                                              |   |              |      |   |         |   |   |     |   |   | 170                           |   |   |   |    |   |   |   |   |   |   |   | 170 |   |
|     ESOP      activity - Change in value of shares             committed to be released                                        |   |              |      |   |         |   | (52    | )        |   |   |                          |   |   |   |    |   |   |   |   |   |   |   | (52 | ) |
| Amortization of compensation      related to MRP                                                                                                                                      |   |              |      |   |         | 24     |   |     |   |   |                          |   |   |   |    |   |   |   |   |   |   | 24 |   |
| Amortization of compensation      related to SOP                                                                                                                                      |   |              |      |   |         | 9      |   |     |   |   |                          |   |   |   |    |   |   |   |   |   |   | 9 |   |
| Comprehensive income (loss)      (1):                                                                                                                                                 |   |              |      |   |         |   |   |     |   |   |                          |   |   |   |    |   |   |   |   |   |   |   |   |   |
| Net loss                                                                                                                                                                              |   |              |      |   |         |   |   |     |   |   |                          |   |   |   | (4,613  | ) |   |   |   |   |   |   | (4,613 | ) |
| Unrealized gain on      available-for-sale                 securities,      net of tax of $7,383 |   |              |      |   |         |   |   |     |   |   |                          |   |   |   |    |   |   |   | 14,333 |   |   |   | 14,333 |   |
| Total comprehensive income      (loss)                                                                                                                                                |   |              |      |   |         |   |   |     |   |   |                          |   |   |   |    |   |   |   |   |   |   |   | 9,720 |   |
|                                                                                                                                                                                  |   |              |      |   |         |   |   |     |   |   |                          |   |   |   |    |   |   |   |   |   |   |   |   |   |
| Balance,      March 31, 2009                                                                                                                                                          |   |              | 6,294,898 |   |         | $      | 51,284 |     |   | $      | (3,054                        | )      |   | $      | 35,205  |   |   | $ | (44,270 | ) |   | $ | 39,165 |   |

| (1)   | The      impact of adopting FASB Staff Position (FSP) SFAS 115-2 and SFAS 124-2,      Recognition and      Presentation of Other-than-Temporarily Impairments, was to increase      the beginning balance of retained earnings and reduce the beginning      balance of other comprehensive income/(loss) by $17.3 million (or $11.4      million after tax) as of January 1, 2009.  The total unrealized      gain in the Company’s other comprehensive income/(loss) during the first      quarter of 2009 was $21.7 million (or $14.3 million after      tax).  The portion of this unrealized gain associated with      non-credit related factors on securities deemed to involve OTTI was $10.0      million (or $6.6 million after tax), while the portion of this unrealized      gain on non-OTTI securities is $11.7 million (or $7.7 million after      tax). |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                                                                   |   | Three      Months Ended March 31, |    |
|----------------------------------------------------------------------------------------|--------|-----------------------------------|---------|
|                                                                                   |   | 2009                              |    |   | 2008 |   |
| CASH      FLOWS FROM OPERATING ACTIVITIES                                              |   |                              |    |   |   |   |
| Net income    (loss)                                                                   |   | $                                 | (4,613  | ) |   | $ | 1,444 |   |
| Adjustments to reconcile net      income (loss) to net cash from operating activities: |   |                              |    |   |   |   |   |   |
| Depreciation                                                                           |   |                              | 574     |   |   |   | 599 |   |
| Impairment losses on      securities, net                                              |   |                              | 8,483   |   |   |   | - |   |
| Provision for loan      losses                                                         |   |                              | 2,300   |   |   |   | 150 |   |
| Deferred income      tax                                                               |   |                              | -       |   |   |   | 50 |   |
| Gain on sale of securities,      net                                                   |   |                              | -       |   |   |   | (11 | ) |
| Loss on sale of real estate      owned (“REO”)                             |   |                              | 2       |   |   |   | - |   |
| Loss on sale of premises and      equipment, net                                       |   |                              | 1       |   |   |   | - |   |
| Gain on sale of loans,      net                                                        |   |                              | (3,561  | ) |   |   | (235 | ) |
| Amortization of premiums and      discounts on securities                              |   |                              | 60      |   |   |   | 104 |   |
| Amortization of intangible      assets                                                 |   |                              | 107     |   |   |   | 73 |   |
| Compensation for restricted      stock awards                                          |   |                              | 24      |   |   |   | 290 |   |
| Compensation for stock      options                                                    |   |                              | 9       |   |   |   | 65 |   |
| Change in operating assets and      liabilities, net:                                  |   |                              |    |   |   |   |   |   |
| Accrued interest      receivable                                                       |   |                              | 213     |   |   |   | 345 |   |
| Other assets                                                                           |   |                              | (3,195  | ) |   |   | (161 | ) |
| Corporate drafts      payable                                                          |   |                              | 2,373   |   |   |   | 1,611 |   |
| Other    liabilities                                                                   |   |                              | 1,013   |   |   |   | (1,439 | ) |
|                                                                                   |   |                              |    |   |   |   |   |   |
| Net cash provided from      operating activities                                       |   |                              | 3,790   |   |   |   | 2,885 |   |
|                                                                                   |   |                              |    |   |   |   |   |   |
| CASH      FLOWS FROM INVESTING ACTIVITIES                                              |   |                              |    |   |   |   |   |   |
| Increase in interest-bearing      deposits with banks                                  |   |                              | (34,626 | ) |   |   | (6,913 | ) |
| Activity in securities      available-for-sale:                                        |   |                              |    |   |   |   |   |   |
| Sales                                                                                  |   |                              | -       |   |   |   | 14,294 |   |
| Maturities, prepayments, and      calls                                                |   |                              | 46      |   |   |   | 1,025 |   |
| Activity in securities      held-to-maturity:                                          |   |                              |    |   |   |   |   |   |
| Sales                                                                                  |   |                              | -       |   |   |   | 3,702 |   |
| Maturities, prepayments, and      calls                                                |   |                              | 1,366   |   |   |   | 1,537 |   |
| Increase in loans,      net                                                            |   |                              | (27,158 | ) |   |   | (32,217 | ) |
| Proceeds from sales of      loans                                                      |   |                              | 55,559  |   |   |   | 13,578 |   |
| Purchases of premises and      equipment                                               |   |                              | (263    | ) |   |   | (388 | ) |
| Proceeds from sales of      REO                                                        |   |                              | 707     |   |   |   | - |   |
|                                                                                   |   |                              |    |   |   |   |   |   |
| Net cash used in investing      activities                                             |   |                              | (4,369  | ) |   |   | (5,382 | ) |
|                                                                                   |   |                              |    |   |   |   |   |   |
| CASH      FLOWS FROM FINANCING ACTIVITIES                                              |   |                              |    |   |   |   |   |   |
| Net increase (decrease) in      deposits                                               |   |                              | (10,630 | ) |   |   | 9,885 |   |
| Advances on borrowed      funds                                                        |   |                              | 22,752  |   |   |   | 52,239 |   |
| Repayments of borrowed      funds                                                      |   |                              | (14,288 | ) |   |   | (58,340 | ) |
| Repayment of ESOP      debt                                                            |   |                              | 170     |   |   |   | 170 |   |
| Cash payments related to      acquisition of insurance agencies                        |   |                              | -       |   |   |   | (1,121 | ) |
| Change in value of ESOP shares      committed to be released                           |   |                              | (52     | ) |   |   | 66 |   |
| Dividends paid                                                                         |   |                              | -       |   |   |   | (453 | ) |
| Common stock      repurchased                                                          |   |                              | -       |   |   |   | (211 | ) |
|                                                                                   |   |                              |    |   |   |   |   |   |
| Net cash provided from (used      in) financing activities                             |   |                              | (2,048  | ) |   |   | 2,235 |   |
|                                                                                   |   |                              |    |   |   |   |   |   |
| NET      DECREASE IN CASH AND CASH EQUIVALENTS                                         |   |                              | (2,627  | ) |   |   | (262 | ) |
|                                                                                   |   |                              |    |   |   |   |   |   |
| CASH      AND CASH EQUIVALENTS, at beginning of period                                 |   |                              | 8,811   |   |   |   | 8,724 |   |
|                                                                                   |   |                              |    |   |   |   |   |   |
| CASH      AND CASH EQUIVALENTS, at end of period                                       |   | $                                 | 6,184   |   |   | $ | 8,462 |   |

----

|                                                             |   | Three Months      Ended March 31, |   |
|------------------------------------------------------------------|--------|----------------------------------------|--------|
|                                                             |   | 2009                                   |   |   | 2008 |   |
| SUPPLEMENTAL      DISCLOSURES OF CASH FLOW INFORMATION           |   |                                   |   |   |   |   |
| Cash payments    for:                                            |   |                                   |   |   |   |   |
| Interest                                                         |   | $                                      | 5,859  |   |   | $ | 7,047 |   |
|                                                             |   |                                   |   |   |   |   |   |   |
| Income taxes                                                     |   | $                                      | 300    |   |   | $ | 50 |   |
|                                                             |   |                                   |   |   |   |   |   |   |
| SUPPLEMENTAL      DISCLOSURES OF NON-CASH INVESTING ACTIVITIES   |   |                                   |   |   |   |   |   |   |
|                                                             |   |                                   |   |   |   |   |   |   |
| Loans charged-off to the      allowance for loan losses          |   | $                                      | 7,173  |   |   | $ | 250 |   |
|                                                             |   |                                   |   |   |   |   |   |   |
| Loans foreclosed upon with      repossessions transferred to REO |   | $                                      | -      |   |   | $ | - |   |
|                                                             |   |                                   |   |   |   |   |   |   |
| Unrealized gains (losses) on      available-for-sale securities  |   | $                                      | 21,715 |   |   | $ | (6,285 | ) |
|                                                             |   |                                   |   |   |   |   |   |   |

----

----

| ·   | FSP      SFAS 115-2 and SFAS 124-2, Recognition and Presentation      of Other-than-Temporary Impairments (“FSP 115-2”) provides      additional guidance designed to create greater clarity and consistency in      accounting for and presenting impairment losses on      securities.    This FSP is effective for interim      reporting periods ending after June 15, 2009, with early adoption      permitted for periods ending after March 15, 2009.  The Company      elected early adoption of this FSP in its interim consolidated financial      statements for the three months ended March 31,  2009. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | FSP      SFAS 157-4 Determining      Fair Value When the Volume and Level of Activity for the Assets or      Liability Have Significantly Decreased and Identifying Transactions That      Are Not Orderly (“FSP 157-4”) provides guidelines for making fair      value measurements more consistent with the principles presented in SFAS      157, Fair Value      Measurements.  FSP 157-4 provides additional guidance for      estimating fair value when the volume and level of activity for the asset      or liability has significantly decreased.  FSP 157-4 emphasizes      that even if there has been a significant decrease in the volume and level      of activity for the asset or liability and regardless of the valuation      technique(s) used, the objective of a fair value measurement remains the      same.  Fair value is the price that would be received to sell an      asset or paid to transfer a liability in an orderly transaction (that is,      not a forced liquidation or distressed sale) between market participants      at the measurement date under current market conditions.  FSP      157-4 is effective for all periods ending after June 15, 2009, and shall      be applied prospectively.  Early adoption is permitted for all      periods ending after March 15, 2009, and the Company elected early      adoption of this FSP in its interim consolidated financial statements for      the three months ended March 31, 2009 (see Note 9  below). |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | FSP      SFAS 107-1 and APB 28-1, Interim Disclosures about Fair      Value of Financial Instruments enhances consistency in financial      reporting by increasing the frequency of fair value      disclosures.  This FSP is effective for interim reporting      periods ending after June 15, 2009, with early adoption permitted for      periods ending after March 15, 2009.  The Company did not elect      early adoption of this FSP. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

|                                  |   | March      31, 2009 |   |   | December      31, 2008 |   |   | March      31, 2008 |   |
|---------------------------------------|--------|--------------------------|--------|--------|-----------------------------|--------|--------|--------------------------|--------|
| Allowance      at beginning of period |   | $                        | 13,329 |   |                        | $      | 13,943 |                     |   | $ | 8,079 |   |
|                                  |   |                     |   |   |                        |   |   |                     |   |   |   |   |
| Provision for loan      losses        |   |                     | 2,300  |   |                        |   | 300    |                     |   |   | 150 |   |
| Recoveries                            |   |                     | 38     |   |                        |   | 67     |                     |   |   | 72 |   |
| Charge-offs                           |   |                     | (7,211 | )      |                        |   | (981   | )                        |   |   | (322 | ) |
|                                  |   |                     |   |   |                        |   |   |                     |   |   |   |   |
| Allowance      at end of period       |   | $                        | 8,456  |   |                        | $      | 13,329 |                     |   | $ | 7,979 |   |

----

|                              |   | Number      of Options |    |   | Weighted-Average      Price Exercise Price |   | Aggregate      Intrinsic Value (1) |
|-----------------------------------|--------|-----------------------------|---------|--------|--------------------------------------------|--------|------------------------------------|
| Balance      at December 31, 2008 |   |                        | 560,800 |   |                                       | $      | 16.55                              |   |   |
|                              |   |                        |    |   |                                       |   |                               |   |   |
| Granted                           |   |                        | -       |   |                                       |   | -                                  |   |   |
| Exercised                         |   |                        | -       |   |                                       |   | -                                  |   |   |
| Cancelled                         |   |                        | (4,400  | )      |                                       |   | 16.45                              |   |   |
|                              |   |                        |    |   |                                       |   |                               |   |   |
| Balance      at March 31, 2009    |   |                        | 556,400 |   |                                       | $      | 16.55                              |   | $                                   -    |

| Year      of Grant |   | Number      of Outstanding Options |    |   | Weighted-AverageRemainingContractual      Lifein      Years |   |   | Weighted-AverageExercise      Price of Outstanding Options |   |   | NumberExercisable |   |   | Weighted-AverageExercise      Priceof      ExercisableOptions |    |
|--------------------|--------|------------------------------------|---------|--------|-------------------------------------------------------------|--------|--------|------------------------------------------------------------|--------|--------|-------------------|--------|--------|---------------------------------------------------------------|---------|
| 2004               |   |                               | 503,400 |   |                                                        |   | 5.25   |                                                       |   | $      | 16.26             |   |   |                                                          | 402,720 |   |   | $ | 16.26 |   |
| 2005               |   |                               | 15,600  |   |                                                        |   | 6.50   |                                                       |   |   | 16.72             |   |   |                                                          | 9,360   |   |   |   | 16.72 |   |
| 2007               |   |                               | 37,200  |   |                                                        |   | 8.25   |                                                       |   |   | 20.40             |   |   |                                                          | 7,480   |   |   |   | 20.40 |   |
|               |   |                               | 556,400 |   |                                                        |   | 5.49   |                                                       |   | $      | 16.55             |   |   |                                                          | 419,560 |   |   | $ | 16.34 |   |

----

|                                                                                                   |   | Three      Months EndedMarch      31, |      |
|--------------------------------------------------------------------------------------------------------|--------|---------------------------------------|-----------|
|                                                                                                   |   | 2009                                  |      |   | 2008 |   |
| Numerator:                                                                                             |   |                                  |      |   |   |   |
| Net income    (loss)                                                                                   |   | $                                     | (4,613    | ) |   | $ | 1,444 |   |
|                                                                                                   |   |                                  |      |   |   |   |   |   |
| Denominator:                                                                                           |   |                                  |      |   |   |   |   |   |
| Denominator for basic earnings      per share:                                                         |   |                                  |      |   |   |   |   |   |
| Weighted average      shares                                                                           |   |                                  | 5,974,588 |   |   |   | 5,983,393 |   |
| Effect of dilutive common      stock equivalents:                                                      |   |                                  |      |   |   |   |   |   |
| Stock options                                                                                          |   |                                  | -         |   |   |   | - |   |
| MRP restricted      stock                                                                              |   |                                  | -         |   |   |   | - |   |
| Denominator for diluted      earnings per share:                                                       |   |                                  |      |   |   |   |   |   |
| Weighted average shares and      assumed conversion ofdilutive stock options and restricted      stock |   |                                  | 5,974,588 |   |   |   | 5,983,393 |   |
|                                                                                                   |   |                                  |      |   |   |   |   |   |
| Basic      earnings (loss) per share                                                                   |   | $                                     | (0.77     | ) |   | $ | 0.24 |   |
| Diluted      earnings (loss) per share                                                                 |   | $                                     | (0.77     | ) |   | $ | 0.24 |   |

----

| Measured      on a recurring basis:                     |   | Quoted      Prices in Active Markets for Identical Assets(Level      1) |   |   | Significant      Other Observable Inputs(Level      2) |   |   | Significant      Unobservable Inputs(Level      3) |   |   | Assets at      Fair      Value |   |
|---------------------------------------------------------|--------|-------------------------------------------------------------------------|--------|--------|--------------------------------------------------------|--------|--------|----------------------------------------------------|--------|--------|-------------------------------------|--------|
| Available-for-sale      securities:                     |   |                                                                    |   |   |                                                   |   |   |                                               |   |   |                                |   |
|                                                    |   |                                                                    |   |   |                                                   |   |   |                                               |   |   |                                |   |
|      At      December 31, 2008 |   | $                                                                       | -      |   |                                                   | $      | -      |                                               |   | $      | 14,895                              |   |   | $ | 14,895 |   |
|                                                    |   |                                                                    |   |   |                                                   |   |   |                                               |   |   |                                |   |   |   |   |   |
|      At      March 31, 2009    |   | $                                                                       | -      |   |                                                   | $      | -      |                                               |   | $      | 28,233                              |   |   | $ | 28,233 |   |

| ·   | a      review of any market activity in the securities or similar securities, and      considered the sale price, including distressed sales, as a starting      indication of the securities’value; |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | a      review of the defaults and deferrals by the underlying issuers for each of      the securities; |
|--------------------|--------------------------------------------------------------------------------------------------------|

| ·   | a      review of any rating agency research reports and rating      indications; |
|--------------------|----------------------------------------------------------------------------------|

| ·   | a      review of the expected cash flows for relative value and to determine if      any payments will be missed; and |
|--------------------|-----------------------------------------------------------------------------------------------------------------------|

| ·   | a      review of the underlying collateral and credits, and for overlap of      issuers. |
|--------------------|------------------------------------------------------------------------------------------|

----

|                                                                     |   | SecuritiesAvailable-for-Sale(Level      3) |   |
|--------------------------------------------------------------------------|--------|--------------------------------------------|--------|
|                                                                     |   |                                       |   |
| Beginning      Balance at December 31, 2008                              |   | $                                          | 14,895 |   |
|    Transfers      into Level 3 (1)                        |   |                                       | 192    |   |
|    Total      realized losses on OTTI securities (2)      |   |                                       | (8,483 | ) |
|    Total      unrealized net gains on OTTI securities     |   |                                       | 7,050  |   |
|    Total      unrealized net gains on non-OTTI securities |   |                                       | 14,625 |   |
|    Purchases                                              |   |                                       | -      |   |
|    Paydowns      and Maturities                           |   |                                       | (46    | ) |
| Ending      Balance at March 31, 2009                                    |   | $                                          | 28,233 |   |
|                                                                     |   |                                       |   |   |

| Measured      on a non-recurring basis: |   | Quoted      Prices in Active Markets for Identical Assets(Level      1) |   |   | Significant      Other Observable Inputs(Level      2) |   |   | Significant      Unobservable Inputs(Level      3) |   |   | Assets      at Fair Value |   |
|-----------------------------------------|--------|-------------------------------------------------------------------------|--------|--------|--------------------------------------------------------|--------|--------|----------------------------------------------------|--------|--------|---------------------------|--------|
|                                    |   |                                                                    |   |   |                                                   |   |   |                                               |   |   |                      |   |
| Impaired      loans                     |   | $                                                                       | -      |   |                                                   | $      | -      |                                               |   | $      | 19,182                    |   |   | $ | 19,182 |   |
| Real      estate owned                  |   |                                                                    | -      |   |                                                   |   | -      |                                               |   |   | 6,087                     |   |   |   | 6,087 |   |
| Total                                   |   | $                                                                       | -      |   |                                                   | $      | -      |                                               |   | $      | 25,269                    |   |   | $ | 25,269 |   |

----

----

|                                      |   | At      March 31, |    |   | At      December 31, |   |    |  $      Increase |   |   |  %      Increase |   |
|-------------------------------------------|--------|-------------------|---------|--------|----------------------|--------|---------|-----------------------|--------|--------|-----------------------|--------|
|                                      |   | 2009              |    |   | 2008                 |   |    |  (Decrease)      |   |   |  (Decrease)      |   |
|                                      |   |              |    |   |                 |   |    |                  |   |   |                  |   |
| Total assets                              |   | $                 | 858,324 |   |                 | $      | 847,233 |                  |   | $      | 11,091                |   |   |   | 1.3 | % |
| Investment securities (1)                 |   |              | 60,831  |   |                 |   | 48,879  |                  |   |   | 11,952                |   |   |   | 24.5 |   |
| Interest-bearing deposits with      banks |   |              | 64,051  |   |                 |   | 29,425  |                  |   |   | 34,626                |   |   |   | 117.7 |   |
| Loans, net                                |   |              | 631,812 |   |                 |   | 658,952 |                  |   |   | (27,140               | )      |   |   | (4.1 | ) |
| Deposits                                  |   |              | 508,609 |   |                 |   | 519,239 |                  |   |   | (10,630               | )      |   |   | (2.0 | ) |
| Borrowed funds                            |   |              | 299,681 |   |                 |   | 291,217 |                  |   |   | 8,464                 |   |   |   | 2.9 |   |
| Total shareholders’      equity     |   |              | 39,165  |   |                 |   | 29,294  |                  |   |   | 9,871                 |   |   |   | 33.7 |   |

|                                 | At      March 31, 2009    |   | At      December 31, 2008       |   | $      Increase (Decrease) |   | %      Increase (Decrease)  |
|--------------------------------------|---------------------------|--------|---------------------------------|--------|---------------------------------|--------|-----------------------------|
|                                 | Amount                    |   | Percent                         |   | Amount                          |   | Percent                     |   |   |
| Real      estate:                    |                      |   |                            |   |                            |   |                        |   |   |   |   |
| One-to four-family      residential  |    $58,515 |   | 9.1%                            |   |    $56,325       |   | 8.4%                        |   |    $      2,190 |   | 3.9% |
| Five or more family      residential | 149,562                   |   | 23.4                            |   | 148,949                         |   | 22.2                        |   | 613 |   | 0.4 |
| Commercial                           | 256,985                   |   | 40.1                            |   | 253,801                         |   | 37.7                        |   | 3,184 |   | 1.3 |
| Total real    estate                 | 465,062                   |   | 72.6                            |   | 459,075                         |   | 68.3                        |   | 5,987 |   | 1.3 |
|                                 |                      |   |                            |   |                            |   |                        |   |   |   |   |
| Real      estate construction:       |                      |   |                            |   |                            |   |                        |   |   |   |   |
| One-to four-family      residential  | 59,263                    |   | 9.2                             |   | 71,424                          |   | 10.6                        |   | (12,161) |   | (17.0) |
| Five or more family      residential | 491                       |   | 0.1                             |   | 483                             |   | 0.1                         |   | 8 |   | 1.7 |
| Commercial                           | 9,602                     |   |     1.5     |   | 9,953                           |   |     1.5 |   | (351) |   | (3.5) |
| Total real estate      construction  | 69,356                    |   | 10.8                            |   | 81,860                          |   | 12.2                        |   | (12,504) |   | (15.3) |
|                                 |                      |   |                            |   |                            |   |                        |   |   |   |   |
| Consumer:                            |                      |   |                            |   |                            |   |                        |   |   |   |   |
| Automobile                           | 10,127                    |   | 1.6                             |   | 11,818                          |   | 1.8                         |   | (1,691) |   | (14.3) |
| Home equity                          | 40,843                    |   | 6.4                             |   | 42,442                          |   | 6.3                         |   | (1,599) |   | (3.8) |
| Credit cards                         | -                         |   |      - |   | 23,192                          |   | 3.4                         |   | (23,192) |   | (100.0) |
| Other                                | 7,547                     |   | 1.2                             |   | 8,132                           |   | 1.2                         |   | (585) |   | (7.2) |
| Total consumer                       | 58,517                    |   | 9.2                             |   | 85,584                          |   | 12.7                        |   | (27,067) |   | (31.6) |
|                                 |                      |   |                            |   |                            |   |                        |   |   |   |   |
| Commercial      business             | 47,333                    |   | 7.4                             |   | 45,762                          |   | 6.8                         |   | 1,571 |   | 3.4 |
|                                 |                      |   |                            |   |                            |   |                        |   |   |   |   |
| Total      loans                     | 640,268                   |   | 100.0%                          |   | 672,281                         |   | 100.0%                      |   | (32,013) |   | (4.8) |
|                                 |                      |   |                            |   |                            |   |                        |   |   |   |   |
| Less allowance for loan      losses  | (8,456)                   |   |                            |   | (13,329)                        |   |                        |   | 4,873 |   | (36.6) |
|                                 |                      |   |                            |   |                            |   |                        |   |   |   |   |
| Loans,      net                      | $631,812                  |   |                            |   | $658,952                        |   |                        |   | $(27,140) |   | (4.1)% |

----

|                                         |   | At      March 31, |   |   | At      December 31, |   |   | $      Increase |   |   | %      Increase |   |
|----------------------------------------------|--------|-------------------|--------|--------|----------------------|--------|--------|-----------------|--------|--------|-----------------|--------|
|                                         |   | 2009              |   |   | 2008                 |   |   | (Decrease)      |   |   | (Decrease)      |   |
| Available-for-sale:                          |   |              |   |   |                 |   |   |            |   |   |            |   |
| Trust preferred CDO      securities          |   | $                 | 28,233 |   |                 | $      | 14,895 |            |   | $      | 13,338          |   |   |   | 89.5 | % |
| Total      available-for-sale                |   |              | 28,233 |   |                 |   | 14,895 |            |   |   | 13,338          |   |   |   | 89.5 |   |
|                                         |   |              |   |   |                 |   |   |            |   |   |            |   |   |   |   |   |
| Held-to-maturity:                            |   |              |   |   |                 |   |   |            |   |   |            |   |   |   |   |   |
| Municipal      obligations                   |   |              | 11,086 |   |                 |   | 11,085 |            |   |   | 1               |   |   |   | - |   |
| Mortgage-backed      securities              |   |              | 21,512 |   |                 |   | 22,899 |            |   |   | (1,387          | )      |   |   | (6.1 | ) |
| Total      held-to-maturity                  |   |              | 32,598 |   |                 |   | 33,984 |            |   |   | (1,386          | )      |   |   | (4.1 | ) |
|                                         |   |              |   |   |                 |   |   |            |   |   |            |   |   |   |   |   |
| Total      Investment Securities             |   |              | 60,831 |   |                 |   | 48,879 |            |   |   | 11,952          |   |   |   | 24.5 |   |
|                                         |   |              |   |   |                 |   |   |            |   |   |            |   |   |   |   |   |
| Federal Home Loan Bank of      Seattle stock |   |              | 13,712 |   |                 |   | 13,712 |            |   |   | -               |   |   |   | - |   |
|                                         |   |              |   |   |                 |   |   |            |   |   |            |   |   |   |   |   |
|  Total                                  |   | $                 | 74,543 |   |                 | $      | 62,591 |            |   | $      | 11,952          |   |   |   | 19.1 | % |

----

|                                                                        |   | At      March 31, 2009 |   |   | At      December 31, 2008 |   |   | $      Increase |   |   | %      Increase  |   |
|-----------------------------------------------------------------------------|--------|------------------------|--------|--------|---------------------------|--------|--------|-----------------|--------|--------|------------------|--------|
|                                                                        |   | Amount                 |   |   | Percent      (1)          |   |   | Amount          |   |   | Percent      (1) |   |   | (Decrease) |   |   | (Decrease) |   |
| Loans      90 days or more past due or non-accrual loans:                   |   |                   |   |   |                      |   |   |            |   |   |             |   |   |   |   |   |   |   |
| Real estate                                                                 |   | $                      | -      |   |                      |   | -      | %               |   | $      | -                |   |   |   | - | %  |   | $ | - |   |   |   | - | % |
| Real estate      construction                                               |   |                   | 17,490 |   |                      |   | 2.73   |            |   |   | 24,042           |   |   |   | 3.58 |   |   |   | (6,552 | ) |   |   | (27.3 | ) |
| Consumer                                                                    |   |                   | 244    |   |                      |   | 0.04   |            |   |   | 488              |   |   |   | 0.07 |   |   |   | (244 | ) |   |   | (50.0 | ) |
| Commercial      business                                                    |   |                   | 1,596  |   |                      |   | 0.25   |            |   |   | 14               |   |   |   | 0.00 |   |   |   | 1,582 |   |   |   | 11,300.0 |   |
| Total non-performing      loans                                             |   |                   | 19,330 |   |                      |   | 3.02   |            |   |   | 24,544           |   |   |   | 3.65 |   |   |   | (5,214 | ) |   |   | (21.2 | ) |
|                                                                        |   |                   |   |   |                      |   |   |            |   |   |             |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other      non-performing assets                                            |   |                   |   |   |                      |   |   |            |   |   |             |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Repossessed    assets                                                       |   |                   | 6,087  |   |                      |   |   |            |   |   | 6,796            |   |   |   |   |   |   |   | (709 | ) |   |   | (10.4 | ) |
| Real estate    owned                                                        |   |                   | 25     |   |                      |   |   |            |   |   | 38               |   |   |   |   |   |   |   | (13 | ) |   |   | (34.2 | ) |
| Total other non-performing      assets                                      |   |                   | 6,112  |   |                      |   |   |            |   |   | 6,834            |   |   |   |   |   |   |   | (722 | ) |   |   | (10.6 | ) |
|                                                                        |   |                   |   |   |                      |   |   |            |   |   |             |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total      non-performing assets                                            |   | $                      | 25,442 |   |                      |   |   |            |   | $      | 31,378           |   |   |   |   |   |   | $ | (5,936 | ) |   |   | (18.9 | )% |
|                                                                        |   |                   |   |   |                      |   |   |            |   |   |             |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total      non-performing assets as a percentage       of total assets |   |                   | 2.96   | %      |                      |   |   |            |   |   | 3.70             | %      |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                        |   |                   |   |   |                      |   |   |            |   |   |             |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loans      greater than 30 days delinquent as percentage of total    loans  |   |                   | 3.13   | %      |                      |   |   |            |   |   | 4.00             | %      |   |   |   |   |   |   |   |   |   |   |   |   |

----

|                                  |   |                   |    |   |                      |   |   |                  |   |   |                  |   |   |             |   |   |             |   |
|---------------------------------------|--------|------------------------|---------|--------|---------------------------|--------|--------|-----------------------|--------|--------|-----------------------|--------|--------|------------------|--------|--------|------------------|--------|
|                                  |   | At      March 31, 2009 |    |   | At      December 31, 2008 |   |   |  $      Increase |   |   |  %      Increase |   |
|                                  |   |  Amount           |    |   |  Percent             |   |   |  Amount          |   |   |  Percent         |   |   |  (Decrease) |   |   |  (Decrease) |   |
|                                  |   |                   |    |   |                      |   |   |                  |   |   |                  |   |   |             |   |   |             |   |
| Non-interest-bearing      checking    |   | $                      | 45,166  |   |                      |   | 8.9    | %                     |   | $      | 40,331                |   |   |             | 7.8    | %      |             | $      | 4,835 |   |   |   | 12.0 | % |
| Interest-bearing      checking        |   |                   | 35,602  |   |                      |   | 7.0    |                  |   |   | 36,468                |   |   |             | 7.0    |   |             |   | (866 | ) |   |   | (2.4 | ) |
| Savings      accounts                 |   |                   | 31,195  |   |                      |   | 6.1    |                  |   |   | 28,197                |   |   |             | 5.4    |   |             |   | 2,998 |   |   |   | 10.6 |   |
| Money      market accounts            |   |                   | 151,118 |   |                      |   | 29.7   |                  |   |   | 145,311               |   |   |             | 28.0   |   |             |   | 5,807 |   |   |   | 4.0 |   |
| IRA      accounts                     |   |                   | 5,582   |   |                      |   | 1.1    |                  |   |   | 6,382                 |   |   |             | 1.2    |   |             |   | (800 | ) |   |   | (12.5 | ) |
| Brokered      certificates of deposit |   |                   | 70,800  |   |                      |   | 13.9   |                  |   |   | 87,442                |   |   |             | 16.9   |   |             |   | (16,642 | ) |   |   | (19.0 | ) |
| Retail      certificates of deposit   |   |                   | 169,146 |   |                      |   | 33.3   |                  |   |   | 175,108               |   |   |             | 33.7   |   |             |   | (5,962 | ) |   |   | (3.4 | ) |
| Total deposits                        |   | $                      | 508,609 |   |                      |   | 100.0  | %                     |   | $      | 519,239               |   |   |             | 100.0  | %      |             | $      | (10,630 | ) |   |   | (2.0 | )% |
|                                  |   |                   |    |   |                      |   |   |                  |   |   |                  |   |   |             |   |   |             |   |   |   |   |   |   |   |
| Core      deposits                    |   | $                      | 268,663 |   |                      |   | 52.8   | %                     |   | $      | 256,689               |   |   |             | 49.4   | %      |             | $      | 11,974 |   |   |   | 4.7 | % |
| Non-core      deposits                |   |                   | 239,946 |   |                      |   | 47.2   |                  |   |   | 262,550               |   |   |             | 50.6   |   |             |   | (22,604 | ) |   |   | (8.6 | ) |
| Total deposits                        |   | $                      | 508,609 |   |                      |   | 100.0  | %                     |   | $      | 519,239               |   |   |             | 100.0  | %      |             | $      | (10,630 | ) |   |   | (2.0 | )% |

----

|                               | Three      Months Ended March 31,                            |   | $      Increase (Decrease)                                                      |   | %      Increase (Decrease)                 |
|------------------------------------|--------------------------------------------------------------|--------|---------------------------------------------------------------------------------|--------|--------------------------------------------|
|                               | 2009                                                         |   | 2008                                                                            |   |                                       |
| Net      interest income           | $    5,590                               |   | $    6,543                                                  |   | $           (953) |   | (14.6)% |
| Non-interest      income           | 5,650                                                        |   | 2,821                                                                           |   | 2,829                                      |   | 100.3 |
| Total      revenue                 |               11,240 |   |      9,364                                             |   | 1,876                                      |   | 20.0 |
| Provision      for loan losses     |      2,300                          |   |        150                                   |   | 2,150                                      |   | 1,433.3 |
| Non-interest      expense          |       7,389                    |   |       6,958                                       |   | 431                                        |   | 6.2 |
| Impairment      loss on securities |     (8,483)                              |   |              - |   | (8,483)                                    |   | (100.0) |
| Net      income (loss)             | (4,613)                                                      |   | 1,444                                                                           |   | (6,057)                                    |   | (419.5) |

|                                  | Three      Months Ended March 31, |   | $      Increase (Decrease) |   | %      Increase (Decrease) |
|---------------------------------------|-----------------------------------|--------|---------------------------------|--------|---------------------------------|
|                                  | 2009                              |   | 2008                            |   |                            |
| Interest      income:                 |                              |   |                            |   |                            |   |   |
| Loans                                 | $10,242                           |   | $11,277                         |   | $ (1,035)                       |   | (9.2)% |
| Securities      available-for-sale    | 834                               |   | 1,857                           |   | (1,023)                         |   | (55.1) |
| Securities      held-to-maturity      | 353                               |   | 451                             |   | (98)                            |   | (21.7) |
| Interest-bearing      deposits        | 19                                |   | 27                              |   | (8)                             |   | (29.6) |
| Federal Home Loan Bank      dividends | -                                 |   | 34                              |   | (34)                            |   | (100.0) |
| Total interest      income            | 11,448                            |   | 13,646                          |   | (2,198)                         |   | (16.1) |
|                                  |                              |   |                            |   |                            |   |   |
| Interest      expense:                |                              |   |                            |   |                            |   |   |
| Deposits                              | 2,632                             |   | 3,587                           |   | (955)                           |   | (26.6) |
| Borrowed funds                        | 3,226                             |   | 3,516                           |   | (290)                           |   | (8.2) |
| Total interest      expense           | 5,858                             |   | 7,103                           |   | (1,245)                         |   | (17.5) |
| Net      interest income              | $    5,590    |   | $    6,543  |   | $    (953)  |   | (14.6)% |

----

|                                  | Three      Months Ended March 31, |   | $      Increase (Decrease) |   | %      Increase (Decrease)                                                                      |
|---------------------------------------|-----------------------------------|--------|----------------------------|--------|------------------------------------------------------------------------------------------------------|
|                                  | 2009                              |   | 2008                       |   |                                                                                                 |
| Allowance      at beginning of period | $13,329                           |   | $8,079                     |   | $5,250                                                                                               |   | 65.0% |
| Provision for loan      losses        | 2,300                             |   | 150                        |   |              2,150                  |   | 1,433.3 |
| Recoveries                            | 38                                |   | 72                         |   |                 (34) |   | (47.2) |
| Charge-offs                           | (7,211)                           |   | (322)                      |   |            (6,889)                            |   | 2,139.4 |
| Allowance      at end of period       | $8,456                            |   | $7,979                     |   | $      477                                                             |   | 6.0% |

----

|                                            | Three      Months Ended March 31,                                    |   | $      Increase (Decrease)                                |   | %      Increase (Decrease)                           |
|-------------------------------------------------|----------------------------------------------------------------------|--------|-----------------------------------------------------------|--------|------------------------------------------------------|
|                                            | 2009                                                                 |   | 2008                                                      |   |                                                 |
| Deposit      service fees                       | $      798                             |   | $      839                  |   | $      (41)            |   | (4.9)% |
| Loan      service fees                          |         231                  |   |         315       |   |         (84) |   | (26.7) |
| Insurance      service fees                     |     587                                          |   |     550                               |   |     37                           |   | 6.7 |
| Investment      service fees                    |     175                                          |   |     164                               |   |     11                           |   | 6.7 |
| Real      estate lease income                   |    257                                                |   |    246                                     |   |    11                                 |   | 4.5 |
| Gain      on sale of securities, net            |    -                                                  |   |    11                                      |   |     (11)                         |   | (100.0) |
| Gain      on sale of loans, net                 |    3,561                                              |   |    235                                     |   |    3,326                              |   | 1,415.3 |
| Loss      on sale of real estate owned, net     |    (2)                                                |   |    -                                       |   |    (2)                                |   | (100.0) |
| Loss      on sale of premises andequipment, net |    (1)                                                |   |    -                                       |   |    (1)                                |   | (100.0) |
| Other      operating income                     |            44 |   |          461 |   |        (417)      |   | (90.5) |
| Total non-interest      income                  | $   5,650                                             |   | $   2,821                                  |   | $   2,829                             |   | 100.3% |

|                                   | Three      Months Ended March 31, |   | $      Increase (Decrease) |   | %      Increase (Decrease)          |
|----------------------------------------|-----------------------------------|--------|---------------------------------|--------|------------------------------------------|
|                                   | 2009                              |   | 2008                            |   |                                     |
| Compensation      and benefits         | $3,625                            |   | $4,060                          |   | $    (435)           |   | (10.7)% |
| Office      operations                 | 956                               |   | 955                             |   | 1                                        |   | 0.1 |
| Occupancy                              | 638                               |   | 614                             |   | 24                                       |   | 3.9 |
| Loan      servicing                    | 135                               |   | 109                             |   | 26                                       |   | 23.9 |
| Outside      and professional services | 485                               |   | 448                             |   | 37                                       |   | 8.3 |
| Marketing                              | 257                               |   | 284                             |   | (27)                                     |   | (9.5) |
| Other      operating expenses          | 1,293                             |   | 488                             |   | 805                                      |   | 165.0 |
| Total non-interest      expense        | $7,389                            |   | $6,958                          |   | $      431 |   | 6.2% |

----

|                                                                                    | Three      Months Ended                                |   | Three      Months Ended                                                               |   |                                                  |   |                    |
|-----------------------------------------------------------------------------------------|--------------------------------------------------------|--------|---------------------------------------------------------------------------------------|--------|-------------------------------------------------------|--------|-------------------------|
|                                                                                    | March      31, 2009                                    |   | March      31, 2008                                                                   |   |                                                  |   |                    |
|                                                                                    | Average      Balance                                   |   | Average      Yield/Cost                                                               |   | Average      Balance                                  |   | Average      Yield/Cost |   | $      Increase (Decrease) |   | %      Increase (Decrease) |
| INTEREST-EARNING      ASSETS:                                                           |                                                   |   |                                                                                  |   |                                                  |   |                    |   |   |   |   |
|     Total      loans                                                | $656,548                                               |   | 6.26%                                                                                 |   | $635,217                                              |   | 7.12%                   |   | $21,331 |   | 3.4% |
|     Mortgage-backed      securities                                 | 22,309                                                 |   | 4.30                                                                                  |   | 44,258                                                |   | 4.35                    |   | (21,949) |   | (49.6) |
| Investment      securities                                                              |     42,761                         |   | 8.86                                                                                  |   |     118,047                       |   | 6.19                    |   |     (75,286) |   | (63.8) |
| Federal Home Loan Bank      stock                                                       |       13,712             |   |               - |   |       13,712            |   | 1.00                    |   |       - |   |  - |
| Interest-bearing deposits with      banks                                               |         42,360 |   | 0.18                                                                                  |   |         3,781 |   | 2.85                    |   |        38,579 |   | 1,020.3 |
| Total interest-earning      assets                                                      |     777,690                        |   | 5.90                                                                                  |   |     815,015                       |   | 6.71                    |   |     (37,325) |   | (4.6) |
|                                                                                    |                                                   |   |                                                                                  |   |                                                  |   |                    |   |   |   |   |
| Non-interest-earning      assets                                                        |       73,573             |   |                                                                                  |   |       54,713            |   |                    |   |       18,860 |   | 34.5 |
|                                                                                    |                                                   |   |                                                                                  |   |                                                  |   |                    |   |   |   |   |
| Total assets                                                                            | $      851,263                                         |   |                                                                                  |   | $      869,728                                        |   |                    |   | $      (18,465) |   |        (2.1)% |
|                                                                                    |                                                   |   |                                                                                  |   |                                                  |   |                    |   |   |   |   |
|                                                                                    |                                                   |   |                                                                                  |   |                                                  |   |                    |   |   |   |   |
| INTEREST-BEARING      LIABILITIES:                                                      |                                                   |   |                                                                                  |   |                                                  |   |                    |   |   |   |   |
| Savings    accounts                                                                     | $31,390                                                |   | 0.08                                                                                  |   | $30,345                                               |   | 0.27                    |   | $1,045 |   | 3.4% |
| Interest-bearing checking      accounts                                                 | 34,989                                                 |   | 0.27                                                                                  |   | 36,910                                                |   | 0.69                    |   | (1,921) |   | (5.2) |
| Money market deposit      accounts                                                      | 147,742                                                |   | 1.94                                                                                  |   | 116,863                                               |   | 2.95                    |   | 30,879 |   | 26.4 |
| Certificates of      deposit                                                            | 261,954                                                |   | 2.90                                                                                  |   | 230,784                                               |   | 4.61                    |   | 31,170 |   | 13.5 |
| Total deposits                                                                          | 476,075                                                |   | 2.24                                                                                  |   | 414,902                                               |   | 3.48                    |   | 61,173 |   | 14.7 |
|                                                                                    |                                                   |   |                                                                                  |   |                                                  |   |                    |   |   |   |   |
| Federal Home Loan Bank      advances                                                    |     292,353                        |   | 4.47                                                                                  |   |     320,442                       |   | 4.41                    |   |     (28,089) |   | (8.8) |
|                                                                                    |                                                   |   |                                                                                  |   |                                                  |   |                    |   |   |   |   |
|         Total      interest-bearing liabilities |     768,428                        |   | 3.09                                                                                  |   |     735,344                       |   | 3.89                    |   |     33,084 |   | 4.5 |
|                                                                                    |                                                   |   |                                                                                  |   |                                                  |   |                    |   |   |   |   |
| NON-INTEREST      BEARING LIABILITIES:                                                  |                                                   |   |                                                                                  |   |                                                  |   |                    |   |   |   |   |
| Non-interest bearing      checking                                                      |       39,198             |   |                                                                                  |   |       33,758            |   |                    |   |       5,440 |   | 16.1 |
| Other                                                                                   |       11,725             |   |                                                                                  |   |       14,322            |   |                    |   |       (2,597) |   | (18.1) |
| Total      non-interest bearing liabilities                                             |       50,923             |   |                                                                                  |   |       48,080            |   |                    |   |       2,843 |   | 5.9 |
|                                                                                    |                                                   |   |                                                                                  |   |                                                  |   |                    |   |   |   |   |
| Total    liabilities                                                                    |     819,351                        |   |                                                                                  |   |     783,424                       |   |                    |   |     35,927 |   | 4.6 |
|                                                                                    |                                                   |   |                                                                                  |   |                                                  |   |                    |   |   |   |   |
| Equity                                                                                  |       31,912             |   |                                                                                  |   |       86,304            |   |                    |   |      (54,392) |   | (63.0) |
|                                                                                    |                                                   |   |                                                                                  |   |                                                  |   |                    |   |   |   |   |
| Total liabilities and      equity                                                       | $      851,263                                         |   |                                                                                  |   | $      869,728                                        |   |                    |   | $      (18,465) |   | (2.1)% |
|                                                                                    |                                                   |   |                                                                                  |   |                                                  |   |                    |   |   |   |   |
| Net      interest income                                                                | $       5,590       |   |                                                                                  |   | $       6,543      |   |                    |   | $       (953) |   | (14.6)% |
| Interest      rate spread      (1)                                                      |                                                   |   | 2.81%                                                                                 |   |                                                  |   | 2.82%                   |   |   |   |   |
| Net      interest margin (2)                                                            | 2.85%                                                  |   |                                                                                  |   | 3.20%                                                 |   |                    |   |   |   |   |

----

----

----

----

|   |   |
|--------|--------|

|   | 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 | Amended      and Restated Employment Agreement between the Company and the Bank and      John A. Hall (2) |
|--------|------|-----------------------------------------------------------------------------------------------------------|

|   | 10.3 | Employment      Agreement between the Company and the Bank and Victor J. Toy (2) |
|--------|------|----------------------------------------------------------------------------------|

|   | 10.4 | Form      of Rainier Pacific Savings Bank Employee Severance Compensation Plan (1) |
|--------|------|------------------------------------------------------------------------------------|

|   | 10.5 | Rainier      Pacific 2004 Stock Option Plan (3) |
|--------|------|-------------------------------------------------|

|   | 10.6 | Rainier      Pacific 2004 Management Recognition Plan (3) |
|--------|------|-----------------------------------------------------------|

|   | 10.7 | Form      of Incentive Stock Option Agreement (4) |
|--------|------|---------------------------------------------------|

|   | 10.8 | Form      of Non-Qualified Stock Option Agreement (4) |
|--------|------|-------------------------------------------------------|

|   | 10.9 | Form      of Restricted Stock Award Agreement (4) |
|--------|------|---------------------------------------------------|

|   | 14 | Code      Business Conduct and Ethics (5) |
|--------|----|-------------------------------------------|

|   | 31 | Certification      of Chief Executive Officer and Chief Financial Officer Pursuant to      Section 302 of the Sarbanes-OxleyAct |
|--------|----|--------------------------------------------------------------------------------------------------------------------------------------|

|   | 32 | Certification      of Chief Executive Officer and Chief Financial Officer Pursuant to Section      906 |
|--------|----|--------------------------------------------------------------------------------------------------------|

|   | of      the Sarbanes-Oxley Act |
|--------|--------------------------------|

|   | (1) | Filed      as an exhibit to the Registrant's Registration Statement on Form S-1      (333-106349). |
|--------|-----|----------------------------------------------------------------------------------------------------|

|   | (3) | Filed      as an exhibit to the Registrant's Registration Statement on Form S-8      (333-117568) and incorporated herein by  reference. |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------------|

|   | (4) | Filed      as an exhibit to the Registrant’s Quarterly Report on Form 10-Q for the      quarter ended September 30, 2005 and incorporated herein by      reference. |
|--------|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (5) | Filed      as an exhibit to the Registrant's Annual Report on Form 10-K for the year      ended December 31, 2006 and incorporated herein by    reference. |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|                   |   |  Rainier      Pacific Financial Group, Inc.                                                                                                                                                                     |
|------------------------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                   |   |                                                                                                                                                                                                                 |
|                   |   |                                                                                                                                                                                                                 |
|  May 8,      2009 |   |  /s/John A.      Hall                                |
|                   |   |           John A. Hall                                                                                                                                                                           |
|                   |   |           President and Chief Executive Officer                                                                                                                                                  |
|                   |   |           (Principal Executive Officer),                                                                                                                                                         |
|                   |   |           Interim Chief Financial Officer                                                                                                                                                        |
|                   |   |          (Principal Financial and AccountingOfficer)                                                                                                                                                  |

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|           31 | Certification      of Chief Executive Officer and 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      |

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