UNITED STATESSECURITIES AND EXCHANGE
COMMISSIONWashington, D.C. 20549



FORM 10-Q

(Mark One)

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

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

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

For the
transition period from ________________ to _________________

Commission File Number 000-50362



RAINIER PACIFIC FINANCIAL GROUP, INC.

1498 Pacific Avenue, Tacoma, WA 98402



(253) 926-4000

.

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

Yes X.No.

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

YesX. No  .

Indicate by check mark whether the registrant is a shell company (as defined
in Rule 12b-2 of the Exchange Act).

Yes____.No X.

APPLICABLE ONLY TO CORPORATE ISSUERS

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

Title of
class:                                                                                                      
As of September 30, 2005

Common stock, no par
value                                                                                                      
6,783,189*



* Includes 543,030 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 260,640 restricted shares granted under
the Rainier Pacific Financial Group, Inc. 2004 Management Recognition Plan that
have not yet vested.



<PAGE>

RAINIER PACIFIC FINANCIAL GROUP, INC.



Table of Contents



|PART 1 -   | FINANCIAL INFORMATION                                                                             | Page                                                                                          
|---------- | ------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------
|           |                                                                                                   |                                                                                               
|ITEM 1 -   | Financial Statements.                                                                             |                                                                                               
|           |                                                                                                   |                                                                                               
|           | Consolidated Statements of Financial Condition as                                                 |                                                                                               
|           |                                                                                                   | of September 30, 2005 and December 31, 2004                                                   
|           | Consolidated Statements of Income for the                                                         |                                                                                               
|           |                                                                                                   | Three and Nine Months Ended September 30, 2005 and 2004                                       
|           | Consolidated Statements of Cash Flows for the                                                     |                                                                                               
|           |                                                                                                   | Nine Months Ended September 30, 2005 and 2004                                                 
|           | Consolidated Statements of Shareholders' Equity                                                   |                                                                                               
|           |                                                                                                   | for the Nine Months Ended September 30, 2005 and   Twelve
      Months Ended December 31, 2004
|           | Selected Notes to Unaudited Interim Consolidated Financial
      Statements                       | 7                                                                                             
|           |                                                                                                   |                                                                                               
|ITEM 2 -   | Management's Discussion and Analysis of Financial Condition and
      Results of Operations.      |                                                                                               
|           |                                                                                                   |                                                                                               
|           | Forward-Looking Statements                                                                        | 11                                                                                            
|           | Comparison of Financial Condition at
              September 30, 2005 and
      December 31, 2004 | 11                                                                                            
|           | Comparison of Operating Results for the                                                           |                                                                                               
|           |                                                                                                   | Three Months Ended September 30, 2005 and 2004                                                
|           | Comparison of Operating Results for the                                                           |                                                                                               
|           |                                                                                                   | Nine Months Ended September 30, 2005 and 2004                                                 
|           | Liquidity and Capital Resources                                                                   | 18                                                                                            
|           |                                                                                                   |                                                                                               
|ITEM 3 -   | Quantitative and Qualitative Disclosures about Market Risk                                        | 19                                                                                            
|ITEM 4 -   | Controls and Procedures                                                                           | 20                                                                                            
|           |                                                                                                   |                                                                                               
|PART II -  | OTHER INFORMATION                                                                                 |                                                                                               
|           |                                                                                                   |                                                                                               
|ITEM 1 -   | Legal Proceedings                                                                                 | 20                                                                                            
|ITEM 2 -   | Unregistered Sales of Equity Securities and Use of Proceeds                                       | 20                                                                                            
|ITEM 3 -   | Defaults Upon Senior Securities                                                                   | 21                                                                                            
|ITEM 4 -   | Submission of Matters to a Vote of Security Holders                                               | 21                                                                                            
|ITEM 5 -   | Other Information                                                                                 | 21                                                                                            
|ITEM 6 -   | Exhibits                                                                                          | 21                                                                                            
|           |                                                                                                   |                                                                                               
|SIGNATURES | 22                                                                                               
|           |                                                                                                  



1

<PAGE>

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

|                                                                                                                                                                                                                                                                |  | 2005                     |  | 2004                   
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------ |  | -----------------------
|**ASSETS**                                                                                                                                                                                                                                                      |  |                          |  |                        
|ASSETS:                                                                                                                                                                                                                                                         |  |                          |  |                        
|Cash and cash
      equivalents                                                                                                                                                                                                                                 |  | $           
      9,063 |  | $          
      8,927
|Interest-bearing deposits with banks                                                                                                                                                                                                                            |  | 498                      |  | 1,271                  
|Securities
      available-for-sale                                                                                                                                                                                                                             |  | 105,704                  |  | 97,436                 
|Securities
      held-to-maturity (fair value of $82,721 at September 30,
      2005      and $92,779 at December 31,
      2004.)                                                                                                                              |  | 84,097                   |  | 93,540                 
|Federal Home
      Loan Bank ("FHLB") stock, at cost                                                                                                                                                                                                            |  | 13,712                   |  | 13,374                 
|                                                                                                                                                                                                                                                                |  |                          |  |                        
|Loans                                                                                                                                                                                                                                                           |  | 540,746                  |  | 502,719                
|Less: allowance for loan losses                                                                                                                                                                                                                                 |  | (8,729)                  |  | (8,981)                
|Loans, net                                                                                                                                                                                                                                                      |  | 532,017                  |  | 493,738                
|                                                                                                                                                                                                                                                                |  |                          |  |                        
|Premises and equipment, net                                                                                                                                                                                                                                     |  | 35,125                   |  | 34,684                 
|Accrued interest receivable                                                                                                                                                                                                                                     |  | 3,342                    |  | 3,354                  
|Other assets                                                                                                                                                                                                                                                    |  | 6,015                    |  | 5,452                  
|                                                                                                                                                                                                                                                                |  |                          |  |                        
|TOTAL ASSETS                                                                                                                                                                                                                                                    |  | $     
      789,573     |  | $     
      751,776   
|                                                                                                                                                                                                                                                                |  |                          |  |                        
|**LIABILITIES AND
      SHAREHOLDERS' EQUITY**                                                                                                                                                                                                                  |  |                          |  |                        
|LIABILITIES:                                                                                                                                                                                                                                                    |  |                          |  |                        
|Deposits                                                                                                                                                                                                                                                        |  |                          |  |                        
|Non-interest
      bearing                                                                                                                                                                                                                                      |  | $       30,990           |  | $       29,654         
|Interest-bearing                                                                                                                                                                                                                                                |  | 364,077                  |  | 315,262                
|Total Deposits                                                                                                                                                                                                                                                  |  | 395,067                  |  | 344,916                
|                                                                                                                                                                                                                                                                |  |                          |  |                        
|Borrowed funds                                                                                                                                                                                                                                                  |  | 300,726                  |  | 295,722                
|Corporate drafts payable                                                                                                                                                                                                                                        |  | 3,170                    |  | 3,839                  
|Accrued compensation and benefits                                                                                                                                                                                                                               |  | 2,183                    |  | 1,828                  
|Other liabilities                                                                                                                                                                                                                                               |  | 2,956                    |  | 6,665                  
|                                                                                                                                                                                                                                                                |  |                          |  |                        
|TOTAL LIABILITIES                                                                                                                                                                                                                                               |  | 704,102                  |  | 652,970                
|                                                                                                                                                                                                                                                                |  |                          |  |                        
|SHAREHOLDERS' EQUITY:                                                                                                                                                                                                                                           |  |                          |  |                        
|Common stock, no par value: 49,000,000
      shares authorized; 6,783,189 shares         issued and
      5,997,076 shares outstanding at September 30, 2005;
      7,672,260        shares issued and 6,779,634 shares
      outstanding at December 31, 2004. |  | 50,450                   |  | 64,672                 

|Accumulated other comprehensive loss, net of
      tax |  | (1,086) |  | (725)
|------------------------------------------------------ |  | ------- |  | -----

|                                                 |  |                     |  |                   
|------------------------------------------------ |  | ------------------- |  | ------------------
|TOTAL SHAREHOLDERS' EQUITY                       |  | 85,471              |  | 98,806            
|                                                 |  |                     |  |                   
|TOTAL
      LIABILITIES AND SHAREHOLDERS' EQUITY |  | $    
      789,573 |  | $   
      751,776











2

<PAGE>

RAINIER PACIFIC FINANCIAL GROUP, INC. AND
SUBSIDIARYConsolidated Statements of Income



|                                                        |  | Three Months
    Ended |  | Nine Months
    Ended
|------------------------------------------------------- |  | ---------------------- |  | ---------------------
|                                                        |  | September 30,          |  | September
      30,  
|                                                        |  | 2005                   |  | 2004                 
|INTEREST INCOME                                         |  |                        |  |                      
|Loans                                                   |  | $      8,953           |  | $      8,030         
|Securities
      available-for-sale                     |  | 1,162                  |  | 1,078                
|Securities
      held-to-maturity                       |  | 780                    |  | 901                  
|Interest-bearing
      deposits                         |  | 20                     |  | 3                    
|FHLB stock
    dividends                                |  | -                      |  | 116                  
|                                                        |  |                        |  |                      
|Total interest income                                   |  | 10,915                 |  | 10,128               
|                                                        |  |                        |  |                      
|INTEREST EXPENSE                                        |  |                        |  |                      
|Deposits                                                |  | 2,015                  |  | 1,029                
|Borrowed
    funds                                      |  | 2,925                  |  | 2,040                
|Total interest expense                                  |  | 4,940                  |  | 3,069                
|                                                        |  |                        |  |                      
|Net interest
      income                               |  | 5,975                  |  | 7,059                
|                                                        |  |                        |  |                      
|PROVISION FOR LOAN LOSSES                               |  | 150                    |  | 600                  
|                                                        |  |                        |  |                      
|Net interest income
      after provision for loan loss |  | 5,825                  |  | 6,459                
|                                                        |  |                        |  |                      
|NON-INTEREST INCOME                                     |  |                        |  |                      
|Deposit service
      fees                              |  | 976                    |  | 1,115                
|Loan service
      fees                                 |  | 267                    |  | 242                  
|Insurance service
      fees                            |  | 139                    |  | 146                  
|Investment service
      fees                           |  | 128                    |  | 176                  
|Gain/(loss) on sale of
      securities, net            |  | -                      |  | (1)                  
|Gain on sale of loans,
      net                        |  | 122                    |  | 74                   
|Gain/(loss) on sale of
      premise & equipment, net   |  | (2)                    |  | 36                   
|Other operating
      income                            |  | 204                    |  | 47                   
|                                                        |  |                        |  |                      
|Total non-interest
      income                         |  | 1,834                  |  | 1,835                
|                                                        |  |                        |  |                      
|NON-INTEREST EXPENSE                                    |  |                        |  |                      
|Compensation
      and benefits                         |  | 3,575                  |  | 3,656                
|Office
      operations                                 |  | 1,368                  |  | 1,215                
|Occupancy                                               |  | 567                    |  | 383                  
|Loan
    servicing                                      |  | 127                    |  | 136                  
|Outside and
      professional services                 |  | 316                    |  | 580                  
|Marketing                                               |  | 254                    |  | 273                  
|Other operating
      expenses                          |  | 520                    |  | 1,136                
|                                                        |  |                        |  |                      
|Total non-interest
      expense                        |  | 6,727                  |  | 7,379                
|                                                        |  |                        |  |                      
|INCOME BEFORE PROVISION FOR
      FEDERAL   INCOME TAX  |  | 932                    |  | 915                  
|                                                        |  |                        |  |                      
|PROVISION FOR FEDERAL INCOME TAX                        |  | 319                    |  | 311                  
|                                                        |  |                        |  |                      
|NET INCOME                                              |  | $        
      613    |  | $        
      604  
|EARNINGS PER COMMON SHARE                               |  |                        |  |                      
|Basic                                                   |  | $       
      0.10    |  | $       
      0.08  
|Diluted                                                 |  | $       
      0.10    |  | $       
      0.08  
|Weighted average shares outstanding-Basic               |  | 6,101,912(1)           |  | 7,315,751(2)         
|Weighted average shares outstanding-Diluted             |  | 6,130,394(1)           |  | 7,383,959(2)         
|Dividends declared per
      share                      |  | $      0.060           |  | $      0.055         





(1) Weighted average shares outstanding
(both Basic and Diluted) include 83,617 shares of the 326,700 restricted shares
granted and issued under the     Company's 2004
Management Recognition Plan ("MRP").

(2)  Weighted average shares
outstanding (both Basic and Diluted) include 18,042 shares of the 334,800
restricted shares granted and issued under the     
MRP.

3

<PAGE>

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

|                                                                                |  | Nine Months
    Ended 
|------------------------------------------------------------------------------- |  | ----------------------
|                                                                                |  | September 30,         
|                                                                                |  | 2005                  
|CASH FLOWS FROM OPERATING ACTIVITIES                                            |  |                       
|Net income                                                                      |  | $         2,013       
|Adjustments to reconcile net income to net
      cash from operatingactivities: |  |                       
|Depreciation                                                                    |  | 2,747                 
|Provision for loan losses                                                       |  | 600                   
|FHLB stock dividends                                                            |  | (54)                  
|Deferred income tax expense/(benefit)                                           |  | 21                    
|Loss/(gain) on sale of securities, net                                          |  | 2                     
|Loss/(gain) on sale of premises and equipment                                   |  | (284)                 
|Loss/(gain) on sale of loans, net                                               |  | (438)                 
|Accrued compensation for restricted stock awards                                |  | 795                   
|Amortization (accretion) of premium and discount on securities                  |  | 754                   
|Change in operating assets and liabilities:                                     |  |                       
|Accrued interest receivable                                                     |  | 12                    
|Other assets                                                                    |  | (397)                 
|Corporate drafts payable                                                        |  | (669)                 
|Other liabilities                                                               |  | (3,354)               
|                                                                                |  |                       
|Net cash from operating activities                                              |  | 1,748                 
|                                                                                |  |                       
|CASH FLOWS FROM INVESTING
      ACTIVITIES                                      |  |                       
|Activity in securities available-for-sale:                                      |  |                       
|Sales                                                                           |  | 11,156                
|Maturities, prepayments, and calls                                              |  | 9,314                 
|Purchases                                                                       |  | (29,751)              
|Activity in securities held-to-maturity:                                        |  |                       
|Maturities, prepayments, and calls                                              |  | 9,152                 
|Purchases of FHLB stock                                                         |  | (284)                 
|Increase in loans, net                                                          |  | (71,506)              
|Proceeds from sales of loans                                                    |  | 33,065                
|Purchases of premises and equipment                                             |  | (2,904)               
|Decrease/(increase) in interest-bearing deposits with banks                     |  | 773                   
|                                                                                |  |                       
|Net cash from investing activities                                              |  | (40,985)              
|                                                                                |  |                       
|CASH FLOWS FROM FINANCING
      ACTIVITIES                                      |  |                       
|Net increase in deposits                                                        |  | 50,151                
|Advances on borrowed funds                                                      |  | 1,814,789             
|Repayments of borrowed funds                                                    |  | (1,809,785)           
|Earned ESOP shares release                                                      |  | 510                   
|Change in value of ESOP shares                                                  |  | 229                   
|Dividends paid                                                                  |  | (1,275)               
|Common stock repurchased                                                        |  | (15,246)              
|                                                                                |  |                       
|Net cash from financing activities                                              |  | 39,373                
|                                                                                |  |                       
|NET CHANGE IN CASH AND CASH
      EQUIVALENTS                                   |  | 136                   
|                                                                                |  |                       
|CASH AND CASH EQUIVALENTS (at beginning
      of  period)                       |  | 8,927                 
|                                                                                |  |                       
|CASH AND CASH EQUIVALENTS (at end
      of  period)                             |  | $         
      9,063







4



<PAGE>



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

|                                                                     |  | Nine Months
    Ended
|-------------------------------------------------------------------- |  | ---------------------
|                                                                     |  | September 30,        
|                                                                     |  | 2005                 
|SUPPLEMENTAL DISCLOSURES OF CASH FLOW
         INFORMATION           |  |                      
|Cash payments
    for:                                               |  |                      
|Interest                                                             |  | $     
      13,034  
|                                                                     |  |                      
|Income
      taxes                                                   |  | $        1,020       
|                                                                     |  |                      
|                                                                     |  |                      
|SUPPLEMENTAL DISCLOSURES OF
      NON-CASH   INVESTING ACTIVITIES    |  |                      
|Unrealized losses on securities
      available-for sale, net of tax |  | $        (361)       
|                                                                     |  |                      





5

<PAGE>

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



|                                                                                                                   |  |              |  |                |                  |                    |  |                |       | AccumulatedOtherComprehensive(Loss) |  |               
|------------------------------------------------------------------------------------------------------------------ |  | ------------ |  | -------------- | ---------------- | ------------------ |  | -------------- | ----- | ----------------------------------- |  | --------------
|                                                                                                                   |  |              |  |                |                  | UnearnedESOPShares |  |                |       |                                     | 
|                                                                                                                   |  | Common Stock |  |                | RetainedEarnings |                    |  |               
|                                                                                                                   |  | Shares       |  | Amount         |                  |                    |  |                | Total
|                                                                                                                   |  |              |  |                |                  |                    |  |                |       |                                     |  |               
|Balance, December 31,
      2003                                                                                   |  | 8,442,840    |  | $ 82,570       |                  | $
(6,618)          |  | $ 38,837       |       | $ (232)                             |  | $ 114,557     
|                                                                                                                   |  |              |  |                |                  |                    |  |                |       |                                     |  |               
|Common
      stock repurchased                                                                                     |  | (1,103,880)  |  | (18,858)       |                  |                    |  |                |       |                                     |  | (18,858)      
|Common stock
      issued for MRP                                                                                  |  | 336,800      |  |                |                  |                    |  |                |       |                                     |  |               
|MRP
      forfeitures                                                                                              |  | (3,500)      |  |                |                  |                    |  |                |       |                                     |  |               
|Earned
      ESOP shares released                                                                                  |  |              |  |                |                  | 678                |  |                |       |                                     |  | 678           
|ESOP
      activity-change in value of shares      
      committed to be released                                 |  |              |  | 152            |                  |                    |  |                |       |                                     |  | 152           
|Dividends
      paid                                                                                               |  |              |  |                |                  |                    |  | (1,665)        |       |                                     |  | (1,665)       
|Amortization of
      compensation related to MRP                                                                  |  |              |  | 561            |                  |                    |  |                |       |                                     |  | 561           
|Comprehensive
      income:                                                                                        |  |              |  |                |                  |                    |  |                |       |                                     |  |               
|Net income                                                                                                         |  |              |  |                |                  |                    |  | 3,627          |       |                                     |  | 3,627         
|Other
      comprehensive income (loss):                                                                           |  |              |  |                |                  |                    |  |                |       |                                     |  |               
|Change in unrealized
      gain (loss)
      on          
      securities, net of tax of $254                     |  |              |  |                |                  |                    |  |                |       | (493)                               |  | (493)         
|Reclassification
      adjustment for gains
      on          
      securities included in net income, net of tax |  |              |  | 247            |                  |                    |  |                |       |                                     |  | 247           
|Total
      comprehensive income                                                                                   |  |              |  |                |                  |                    |  |                |       |                                     |  | 3,381         
|Balance, December 31,
      2004                                                                                   |  | 7,672,260    |  | 64,672         |                  | (5,940)            |  | 40,799         |       | (725)                               |  | 98,806        
|                                                                                                                   |  |              |  |                |                  |                    |  |                |       |                                     |  |               
|Common stock
    repurchased                                                                                       |  | (882,471)    |  | (15,246)       |                  |                    |  |                |       |                                     |  | (15,246)      
|MRP forfeitures                                                                                                    |  | (6,600)      |  |                |                  |                    |  |                |       |                                     |  |               
|Earned ESOP shares
      released                                                                                  |  |              |  |                |                  | 510                |  |                |       |                                     |  | 510           
|ESOP
      activity-change in value of
      shares         committed to be
      released                         |  |              |  | 229            |                  |                    |  |                |       |                                     |  | 229           
|Dividends paid                                                                                                     |  |              |  |                |                  |                    |  | (1,275)        |       |                                     |  | (1,275)       
|Amortization of compensation related to MRP                                                                        |  |              |  | 795            |                  |                    |  |                |       |                                     |  | 795           
|Comprehensive income:                                                                                              |  |              |  |                |                  |                    |  |                |       |                                     |  |               
|Net income                                                                                                         |  |              |  |                |                  |                    |  | 2,013          |       |                                     |  | 2,013         
|Other
      comprehensive income (loss):                                                                           |  |              |  |                |                  |                    |  |                |       |                                     |  |               
|Change
      in unrealized gain (loss)
      on             
      securities, net of tax of $186                  |  |              |  |                |                  |                    |  |                |       | (361)                               |  | (361)         
|Total
      comprehensive income                                                                                   |  |              |  |                |                  |                    |  |                |       |                                     |  | 1,652         
|Balance,
      September 30, 2005                                                                                  |  | 6,783,189    |  | $
      50,450 |                  | $
      (5,430)    |  | $
      41,537 |       | $
      (1,086)                     |  | $
      85,471
|                                                                                                                   |  |              |  |                |                  |                    |  |                |       |                                     |  |               



6

<PAGE>

RAINIER PACIFIC FINANCIAL GROUP, INC. AND SUBSIDIARYSELECTED NOTES TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL
STATEMENTSSeptember 30, 2005



Note 1 - Organization and Basis of
Presentation



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



The Bank provides a
full range of banking services to consumers and limited banking services to
small- and medium-sized businesses and professionals through 13 banking offices
located in Pierce County and South King County. The Bank also provides insurance
and investment services through operating units of the Bank doing business as
Rainier Pacific Insurance Services and Rainier Pacific Financial Services.



Basis of
Presentation.

Note 2 - Summary of Significant Accounting Policies

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

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

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

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

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

7

<PAGE>

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

Note 4 - Stock-Based Compensation

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

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

|                                       |  | Three Months
      EndedSeptember 30, |  | Nine Months
      EndedSeptember 30,
|-------------------------------------- |  | ------------------------------------- |  | ------------------------------------
|                                       |  | 2005                                  |  | 2005                                
|Pro forma disclosure:                  |  |                                       |  |                                     
|Net income, as
      reported          |  | $                      
      613     |  | $                 
      2,013      
|Compensation expense, net
      of tax |  | (106)                                 |  | (453)                               
|Pro forma net
    income               |  | $                      
      507     |  | $                 
      1,560      
|                                       |  |                                       |  |                                     
|Basic earnings per share:              |  |                                       |  |                                     
|As
reported                            |  | $                     
      0.10     |  | $                   
      0.32     
|Pro forma                              |  | $                     
      0.08     |  | $                   
      0.25     
|                                       |  |                                       |  |                                     
|Diluted earnings per share:            |  |                                       |  |                                     
|As reported                            |  | $                     
      0.10     |  | $                   
      0.32     
|Pro forma                              |  | $                     
      0.08     |  | $                   
      0.25     









Stock Option Plan
("SOP"). On June 7, 2004, the Company granted non-qualified stock options of
351,750 shares of common stock to certain employees and directors and granted
incentive stock options of 328,250 shares of common stock to certain
employees.The fair market value of the Company's common stock on the
date of grant was $16.26. On August 17, 2005, the Company granted additional
incentive stock options of 40,000 shares of common stock to certain employees.
The fair market value of the Company's common stock on the date of grant was
$16.72. The Company implemented the SOP to promote the long-term interests of
the Company and its shareholders by providing an incentive to those key
employees who contribute to the operating success of the Company. The maximum
number of options that may be issued under the SOP is 844,284. Options are
granted at the then fair market value and vest over five years. Options expire
10 years from the date of grant and are subject to certain restrictions and
limitations.

8

<PAGE>



The fair value of options granted under the SOP is estimated on
the date of grant using a binomial option-pricing model with the following
assumptions:





|                          | 2005                     |  | 2004                      
|------------------------- | ------------------------ |  | --------------------------
|Option exercise price     | $           
      16.72 |  | $             
      16.26
|Stock price on grant date | $           
      16.72 |  | $             
      16.26
|Annual dividend yield     | 1.40%                    |  | 2.00%                     
|Expected volatility       | 19.63%                   |  | 21.95%                    
|Risk-free interest rate   | 3.99%                    |  | 4.39%                     
|Employee attrition rate   | 5.00%                    |  | 3.00%                     
|Vesting Period            | 5 Years                  |  | 5 Years                   
|Expected life             | 6 Years                  |  | 7 Years                   





The following represents the stock option activity and option
price information:

|                               | Number ofOptions |  | Weighted-AveragePrice of
      Options
|------------------------------ | ---------------- |  | --------------------------------------
|                               |                 
|Balance at December 31, 2004:  | 677,000          |  | $                      
      16.26   
|                               |                  |  |                                       
|Granted                        | -                |  | -                                     
|Exercised                      | -                |  | -                                     
|Cancelled                      | 5,000            |  | 16.26                                 
|                               |                  |  |                                       
|                               |                  |  |                                       
|Balance at March 31, 2005:     | 672,000          |  | 16.26                                 
|                               |                  |  |                                       
|Granted                        | -                |  | -                                     
|Exercised                      | -                |  | -                                     
|Cancelled                      | 1,000            |  | 16.26                                 
|                               |                  |  |                                       
|Balance at June 30, 2005:      | 671,000          |  | 16.26                                 
|                               |                  |  |                                       
|Granted                        | 40,000           |  | 16.72                                 
|Exercised                      | -                |  | -                                     
|Cancelled                      | 2,000            |  | 16.26                                 
|                               |                  |  |                                       
|Balance at September 30, 2005: | 709,000          |  | $                      
      16.29   
|                               |                  |  |                                       





Financial data pertaining to outstanding stock options  as of
September 30, 2005 is as follows:



|Exercise Priceof Options       |  | Number  |  | Weighted-Average Remaining Contractual Life in
      Years |  | Weighted-AverageExercise Price |  | Number Exercisable |  | Weighted-Average Exercise Price of Exercisable
      Options
|------------------------------ |  | ------- |  | ---------------------------------------------------------- |  | ------------------------------ |  | ------------------ |  | ------------------------------------------------------------
|$                 
      16.26 |  | 669,000 |  | 8.75                                                       |  | $                
      16.26  |  | 136,000            |  | $            
      16.26                                   
|$                 
      16.72 |  | 40,000  |  | 10.00                                                      |  | $                
      16.72  |  | -                  |  | $                  
      -                                 





At September 30, 2005, the Company had an aggregate of 135,284 options
available for future issuance under the SOP.

9

<PAGE>

Note 5 - Earnings Per Share

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

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



|                                                                                                                  |  | Three Months EndedSeptember 30, |  | Nine Months EndedSeptember 30,
|----------------------------------------------------------------------------------------------------------------- |  | ------------------------------- |  | ------------------------------
|                                                                                                                  |  | 2005                            |  | 2004                          
|Numerator:                                                                                                        |  |                                 |  |                               
|                                                                                                                  |  |                                 |  |                               
|Net Income                                                                                                        |  | $             
      613        |  | $          
      604         
|                                                                                                                  |  |                                 |  |                               
|Denominator:                                                                                                      |  |                                 |  |                               
|                                                                                                                  |  |                                 |  |                               
|Denominator for basic net income per share:                                                                       |  |                                 |  |                               
|Weighted average shares                                                                                           |  | 6,101,912                       |  | 7,315,751                     
|Effect of dilutive securities:                                                                                    |  |                                 |  |                               
|Stock options                                                                                                     |  | 7,969                           |  | 33,954                        
|Restricted stock                                                                                                  |  | 20,513                          |  | 34,254                        
|Denominator for diluted net income per share:                                                                     |  |                                 |  |                               
|Weighted average shares and assumed conversion
      of         dilutive stock
      options and restricted stock |  | 6,130,394                       |  | 7,383,959                     
|                                                                                                                  |  |                                 |  |                               
|Basic earnings per share                                                                                          |  | $           
      0.10         |  | $          0.08               
|                                                                                                                  |  |                                 |  |                               
|Diluted earnings per share                                                                                        |  | $          
      0.10          |  | $        
      0.08          





Note 6 - Cash Dividends

On August 17, 2005,
the Company announced a quarterly cash dividend of $0.06 cents per share payable
on September 12, 2005 to shareholders of record on August 29, 2005. Additional
cash dividends of $0.06 cents per share were declared on February 16, 2005, and
May 13, 2005 and paid March 11, 2005, and June 10, 2005, respectively.

Note 7 - Recently Issued Accounting Standards

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

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

10



<PAGE>

As permitted by
Statement 123, the Company currently accounts for share-based payments to
employees using the intrinsic value method as detailed in APB Opinion No. 25
and, as such, generally recognizes no compensation cost for employee stock
options. Accordingly, the adoption of Statement 123 (R)'s fair value method will
have an impact on the Company's results of operations. Starting in 2006, the
Company will begin recognizing compensation expense associated with its SOP. The
amount of compensation expense is estimated to be consistent with our Pro forma
disclosure in Note 4 - Stock-Based Compensation.

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

Forward-Looking Statements

This Form 10-Q
contains certain "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. These forward-looking statements may
be identified by the use of words such as "believe," "expect," "anticipate,"
"should," "planned," "estimated," and "potential." These forward-looking
statements relate to, among other things, expectations of the business
environment in which the Company operates, projections of future performance,
perceived opportunities in the market, potential future credit experience, and
statements regarding the Company's mission and vision. These forward-looking
statements are based upon current management expectations and may, therefore,
involve risks and uncertainties. The Company's actual results, performance, or
achievements may differ materially from those suggested, expressed, or implied
by forward-looking statements as a result of a wide variety or range of factors
including, but not limited to: interest rate fluctuations; economic conditions
in the Company's primary market area; deposit flows; demand for residential,
commercial real estate, consumer, and other types of loans; real estate values;
success of new products; competitive conditions between banks and non-bank
financial service providers; regulatory and accounting changes; technological
factors affecting operations; pricing of products and services; and other risks
detailed in the Company's reports filed with the SEC, including its 2004 Form
10-K. Accordingly, these factors should be considered in evaluating
forward-looking statements, and undue reliance should not be placed on such
statements. The Company undertakes no responsibility to update or revise any
forward-looking statements.

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

General.

Assets.

11

<PAGE>

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

|                                |  | September 30, 2005                     |  | December 31, 2004                      
|------------------------------- |  | -------------------------------------- |  | ---------------------------------------
|Real estate:                    |  |                                        |  |                                        
|One-to-four family residential  |  | $                        
      84,461 |  | $                         
      97,455
|Multi-family residential        |  | 144,036                                |  | 126,199                                
|Commercial                      |  | 162,896                                |  | 144,717                                
|                                |  | 391,393                                |  | 368,371                                
|Real estate construction:       |  |                                        |  |                                        
|One to four-family residential  |  | 39,700                                 |  | 16,183                                 
|                                |  |                                        |  |                                        
|Consumer:                       |  |                                        |  |                                        
|Automobile                      |  | 41,715                                 |  | 52,567                                 
|Home equity loans               |  | 30,518                                 |  | 28,775                                 
|Credit cards                    |  | 21,519                                 |  | 22,447                                 
|Other                           |  | 9,783                                  |  | 11,802                                 
|                                |  | 103,535                                |  | 115,591                                
|                                |  |                                        |  |                                        
|Commercial / business           |  | 6,991                                  |  | 2,828                                  
|                                |  |                                        |  |                                        
|Subtotal                        |  | 541,619                                |  | 502,973                                
|                                |  |                                        |  |                                        
|Less: Deferred loan fees, net   |  | (873)                                  |  | (254)                                  
|Loans                           |  | 540,746                                |  | 502,719                                
|                                |  |                                        |  |                                        
|Less: allowance for loan losses |  | (8,729)                                |  | (8,981)                                
|                                |  |                                        |  |                                        
|Loans, net                      |  | $                    
      532,017    |  | $                     
      493,738   





Our investment
securities portfolio (including mortgage-backed securities, but excluding FHLB
of Seattle stock) decreased $1.2 million, or 1.0%, to $189.8 million at
September 30, 2005 from $191.0 million at December 31, 2004. The decline in the
investment portfolio resulted primarily from repayments on mortgage-backed
securities. Trust preferred securities increased by $24.7 million, or 63.5%, to
$63.7 million at September 30, 2005 from $39.0 million at December 31, 2004.
Mortgage-backed securities decreased $23.6 million, or 22.0%, to $83.8 million
at September 30, 2005 from $107.4 million at December 31, 2004. All other
securities decreased by a net amount of $2.2 million.

The increase in
trust preferred securities was due to the purchase of variable rate trust
preferred securities with an average yield of 4.89% which reprice quarterly
based on a London Interbank Offered Rate ("LIBOR") index. These securities were
purchased to increase our interest-earning assets while managing our interest
rate risk exposure in the investment securities portfolio.

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

Deposits.

Borrowed
Funds.

Shareholders'
Equity.

12

<PAGE>

our available-for-sale investment securities, offset in part by
$2.0 million in net income, a $739,000 increase in equity related to our ESOP,
and a $795,000 increase in equity for the accrual of stock-based compensation
related to the MRP.



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

General. Net
incomeincreased$9,000, or 1.5%, to $613,000 for the three months
ended September 30, 2005 compared to $604,000 for the three months ended
September 30, 2004. The increase in net income was primarily the result of a
decrease in net interest income offset by lower operating expenses and a lower
provision for loan losses.

Net Interest Income.
Net interest income was $6.0 million for the three months ended September
30, 2005 compared to $7.1 million for the three months ended September 30, 2004.
Interest income increased by $787,000, while interest expense increased $1.8
million. Average interest-earning assets increasedto $744.3 million for
the three months ended September 30, 2005 from $709.6 million for the three
months ended September 30, 2004. Offsetting this increase was a 77 basis point
decline in our net interest margin to 3.22% for the three months ended
September 30, 2005 from 3.99% for the three months ended September 30,
2004. The decline in the net interest margin was primarily attributable to the
increase in the Company's overall cost of funds as a result of higher short-term
interest rates. In addition, the increased cost of funds were only partially
offset by the slightly higher yields on investments and loans as intermediate
and long-term interest rates rose moderately.

Interest Income.
Interest income for the three months ended September 30, 2005 increased
$787,000, or 7.8%, to $10.9 million compared to $10.1 million for the same
period in 2004. The increase was primarily the result of a $34.7million
increase in the average balance of interest-earning assets during the three
months ended September 30, 2005. Interest earned on total loans for the three
months ended September 30, 2005 was $9.0 million compared to $8.0 million for
the three months ended September 30, 2004. The average yield on total loans
increased to 6.67% for the three months ended September 30, 2005 compared to
6.63% for the three months ended September 30, 2004.

Interest income on
investment securities (including mortgage-backed securities, but excluding FHLB
of Seattle stock) decreased $37,000 to $1.9 million for the three months ended
September 30, 2005 compared to $2.0 million for the three months ended September
30, 2004. The decrease resulted from a $15.9 million decrease in average
investments to $193.8 million for the three months ended September 30, 2005
compared to $209.7 million for the three months ended September 30, 2004. This
decrease was primarily offset by a 22 basis point rise in the average yield on
investments to 4.00% for the three months ended September 30, 2005 from
3.78% for the three months ended September 30, 2004.

We did not receive a
dividend of FHLB of Seattle stock during the third quarter of 2005, compared to
dividends of $116,000 during the same quarter a year ago. The FHLB of Seattle is
operating under a regulatory directive and in April 2005 announced that all
future dividends will be suspended until its financial position and performance
improves.

Interest Expense.
Interest expense increased $1.8 million, or 61.0% to $4.9 million for the
three months ended September 30, 2005 compared to $3.1 million for the three
months ended September 30, 2004. The increase was primarily attributable to the
average cost of interest-bearing liabilities increasing 92 basis points to 2.96%
for the three months ended September 30, 2005 from 2.04% for the three months
ended September 30, 2004 and an increase in the average balance of
interest-bearing liabilities of $61.5 million, or 10.3%, to $660.7 million for
the three months ended September 30, 2005 from $599.2 million for the three
months ended September 30, 2004.

Interest expense on
deposits increased $986,000, or 95.8%, for the three months ended September 30,
2005 to $2.0 million from $1.0 million for the three months ended September 30,
2004. The average balance of interest-bearing deposits increased to $356.6
million at September 30, 2005 compared to $312.2 million at September 30, 2004.
Interest expense on FHLB of Seattle advances increased $885,000 or 43.4% for the
three months ended September 30, 2005 to $2.9 million from $2.0 million for the
three months ended September 30, 2004. The increase was attributable to a higher
average balance of FHLB of Seattle advances outstanding of $304.1 million for
the three months ended September 30, 2005 compared to $287.0 million for
the three months ended September 30, 2004. Overnight and term borrowings
continue to be used to fund growth in loans.

13

<PAGE>

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

|                                         |  | Three months endedSeptember 30, 2005 |  | Three months endedSeptember 30, 2004
|---------------------------------------- |  | ------------------------------------ |  | ------------------------------------
|                                         |  | AverageBalance                       |  | AverageYield/Cost                   
|                                         |  |                                      |  |                                     
|INTEREST-EARNING ASSETS                  |  |                                      |  |                                     
|Loans, net                               |  | $534,491                             |  | 6.67%                               
|Investment securities                    |  | 193,817                              |  | 4.00%                               
|FHLB of Seattle stock                    |  | 13,712                               |  | 0.00%                               
|Interest-bearing deposits in other banks |  | 2,333                                |  | 3.42%                               
|                                         |  |                                      |  |                                     
|Total interest-earning
    assets        |  | 744,353                              |  | 5.85%                               
|                                         |  |                                      |  |                                     
|Non-interest-earning assets              |  | 39,140                               |  |                                     
|                                         |  |                                      |  |                                     
|Total assets                             |  | $783,493                             |  |                                     
|                                         |  |                                      |  |                                     
|INTEREST-BEARING LIABILITIES             |  |                                      |  |                                     
|Interest-bearing deposits                |  | $356,630                             |  | 2.24%                               
|FHLB of Seattle advances                 |  | 304,111                              |  | 3.81%                               
|                                         |  |                                      |  |                                     
|Total interest-bearing
      liabilities |  | 660,741                              |  | 2.96%                               
|                                         |  |                                      |  |                                     
|Non-interest-bearing liabilities:        |  |                                      |  |                                     
|Non-interest-bearing checking            |  | 30,176                               |  |                                     
|Other                                    |  | 5,419                                |  |                                     
|Total non-interest-bearing liabilities   |  | 35,595                               |  |                                     
|                                         |  |                                      |  |                                     
|Total liabilities                        |  | 696,336                              |  |                                     
|                                         |  |                                      |  |                                     
|Equity                                   |  | 87,157                               |  |                                     
|                                         |  |                                      |  |                                     
|Total liabilities and
    equity         |  | $783,493                             |  |                                     
|                                         |  |                                      |  |                                     
|Net interest income                      |  | $5,975                               |  |                                     
|Interest rate spread                     |  |                                      |  | 2.89%                               
|Net interest margin                      |  | 3.22%                                |  |                                     





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

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

The provision for
loan losses decreased $450,000 to $150,000 for the three months ended September
30, 2005, compared to $600,000 for the three months ended September 30, 2004.
The decrease is primarily a result of the credit quality of the loan portfolio,
a decline in consumer loans, and the increased percentage of loans secured by
real estate. Net charge-offs were $220,000 for the three month period ended
September 30, 2005 compared to $344,000 for the three month period ended
September 30, 2004. The provision for the three months ended September 30, 2005
was $150,000, primarily as a result of the continued growth in real estate
secured loans, the lower net charge-offs being experienced, and the strength of
the regional and local economy.

14

<PAGE>

|                                    |  | Three Months Ended                        |  | Three Months Ended                      
|----------------------------------- |  | ----------------------------------------- |  | ----------------------------------------
|                                    |  | September 30, 2005                        |  | September 30, 2004                      
|                                    |  | (in thousands)                           
|                                    |  |                                           |  |                                         
|Allowance as of beginning of period |  | $                            
      8,799 |  | $                           
      8,681
|                                    |  |                                           |  |                                         
|Provision for losses on loans       |  | 150                                       |  | 600                                     
|                                    |  |                                           |  |                                         
|Recoveries                          |  | 80                                        |  | 77                                      
|                                    |  |                                           |  |                                         
|Charge-offs                         |  | (300)                                     |  | (421)                                   
|                                    |  |                                           |  |                                         
|Allowance as of the end of period   |  | $                            
      8,729 |  | $                           
      8,937





Non-interest
Income. Non-interest income decreased only $1,000, or 0.1%, and remained
consistent at $1.8 million for the three months ended September 30, 2005 and
2004. Deposit service fees decreased $139,000 and investment service fees
decreased $48,000. The decreases were primarily offset by an increase in other
operating income of $157,000 as a result of the rental income received from our
new administrative office building. Other increases include $48,000 for gains on
the sale of loans and $25,000 for service fees on loans. All other categories of
non-interest income decreased by a net amount of $44,000.

Non-interest
Expense. Non-interest expense decreased $652,000, or 8.8%, to $6.7 million
for the three months ended September 30, 2005 compared to $7.4 million for three
months ended September 30, 2004. The decrease was primarily the result of
decreases of $81,000 in compensation and benefits, $264,000 in outside and
professional services, $616,000 in other operating expenses, offset by an
increase of $184,000 in occupancy expenses, and $153,000 in office operations
expenses. All other categories of non-interest expense decreased by a net amount
of $28,000.

Compensation and
benefits decreased $81,000 to $3.6 million for three months ended September 30,
2005 compared to $3.7 million for the three months ended September 30, 2004.
Compensation and benefit costs represent 53.1% and 49.5% of total non-interest
expenses for the three months ended September 30, 2005, and 2004, respectively.
This decline is primarily the result of a decrease in average full-time
equivalent ("FTE") employees to 210 for the three months ended September 30,
2005 from 221 for the three months ended September 30, 2004.

Office
operations increased $153,000 to $1.4 million for the three months ended
September 30, 2005 compared to $1.2 million for the three months ended September
30, 2004. The increase was primarily attributable to higher data processing
maintenance and depreciation costs associated with upgrading our communications
and data processing operations.

Occupancy expense increased $184,000 to $567,000 for the three months ended
September 30, 2005 compared to $383,000 for the three month ended September 30,
2004 as a result of increased costs associated with operating our new
administrative office building.

Outside and professional services decreased $264,000 to $316,000 for the three
months ended September 30, 2005 compared to $580,000 for the three months ended
September 30, 2004. This decrease is primarily attributable to reduced costs
associated with completing our technology initiative in 2004.

Other operating expenses decreased $616,000 to $520,000 for the three months
ended September 30, 2005 compared to $1.1 million for the three months ended
September 30, 2004. The decrease was primarily attributable to three distinct
non-recurring items amounting to $570,000 that occurred in 2004 which did not
reoccur in 2005 as a result of enhanced internal control processes. These three
distinct non-recurring items in 2004 resulted from system conversion processing
errors, a comprehensive state tax audit, and a misappropriation of funds by a
Bank employee.

Income Tax Expense. Income tax expense increased $8,000 to $319,000 for the
three months ended September 30, 2005 compared to $311,000 for the same period a
year ago. Income before federal income tax was $932,000 for the three months
ended September 30, 2005 compared to $915,000 for the three months ended
September 30, 2004, with an effective tax rate of 34% for both periods.

Comparison of Operating Results for the Nine Months Ended
September 30, 2005 and September 30, 2004

General. Net income decreased $317,000, or 13.6%, to $2.0 million for the
nine months ended September 30, 2005 compared to $2.3 million for the nine
months ended September 30, 2004. The decrease in net income was primarily the
result of lower net interest income from increased interest expenses, partially
offset by increased interest income from loan growth, a lower provision for loan
losses, and lower non-interest expenses.

15

<PAGE>

Net
Interest Income. Net interest income decreased $3.4 million, or 15.7%, to
$18.3 million for the nine months ended September 30, 2005 compared to $21.7
million for the nine months ended September 30, 2004. This decrease in net
interest income resulted from an increase in interest expense of $4.6 million,
that was partially offset by an increase in interest income of $1.1 million.
Average interest-earning assets increased to $723.2 million for the nine months
ended September 30, 2005 from $691.2 for the nine months ended September 30,
2004. Offsetting the increase in average interest-earning assets was an 82 basis
point decline in our net interest margin to 3.37% for the nine months ended
September 30, 2005 from 4.19% for the nine months ended September 30, 2004. The
decline in the net interest margin was primarily attributable to rising costs of
deposits and borrowed funds attributable to increased short-term interest rates
and fairly stable intermediate- and long-term rates which resulted in a flatter
yield curve.

Interest
Income. Interest income for the nine months ended September 30, 2005
increased $1.1 million, or 3.8%, to $31.3 million compared to $30.2 million for
the same period in 2004. Interest earned on loans for the nine months ended
September 30, 2005 was $25.5 million compared to $23.9 million for the same
period a year ago. However, the average yield on total loans declined to 6.62%
for the nine months ended September 30, 2005 compared to 6.81% for the nine
months ended September 30, 2004.

Interest income on investment securities (including mortgage-backed securities,
but excluding FHLB of Seattle stock) decreased $174,000, or 2.9%, to $5.7
million for the nine months ended September 30, 2005 compared to $5.9 million
for the nine months ended September 30, 2004. The decrease resulted from a $16.3
million decrease in average investment securities to $194.7 million for the nine
months ended September 30, 2005 compared to $211.0 million for the nine months
ended September 30, 2004. This decrease was partially offset by a 19 basis point
increase in the average yield on investments to 3.93% for the nine months ended
September 30, 2005 from 3.74% for the nine months ended September 30, 2004.

Dividends from FHLB of Seattle stock for the nine months ended September 30,
2005 declined $300,000, or 84.7%, to $54,000 compared to $354,000 for the same
period in 2004. The sole reason for the decrease is that the FHLB of Seattle is
operating under a regulatory directive and in April 2005 announced that all
future dividends will be suspended until its financial position and performance
improves.

Interest Expense. Interest expense for the nine months ended September 30,
2005 increased $4.6 million, or 53.9%, to $13.0 million compared to $8.4 million
for the same period in 2004. The cost of interest-bearing liabilities increased
78 basis points from 1.95% for the nine months ended September 30, 2004 to 2.73%
for the nine months ended September 30, 2005. The average balance of
interest-bearing liabilities increased $59.7 million, or 10.3%, to $637.4
million for the nine-months ended September 30, 2005 compared to $577.7 million
for the nine months ended September 30, 2004.

Interest expense on FHLB of Seattle advances increased $2.5 million, or 44.6%,
for the nine months ended September 30, 2005 to $8.1 million from $5.6 million
for the nine months ended September 30, 2004. The increase is primarily
attributable to a larger average balance of FHLB of Seattle advances outstanding
of $301.3 million for the nine months ended September 30, 2005 compared to
$271.0 million for the nine months ended September 2004. Overnight and term
borrowings continue to be used to fund growth in loans. Additionally, interest
expense on deposits increased $2.1 million, or 72.5%, for the nine months ended
September 30, 2005 to $4.9 million from $2.8 million for the nine months ended
September 30, 2004. The cost of interest-bearing deposits increased 72 basis
points from 1.22% for the nine months ended September 30, 2004 to 1.94% for the
nine months ended September 30, 2005. The average balance of interest-bearing
deposits increased $29.4 million to $336.1 million compared to $306.7 million at
September 30, 2004.

16

<PAGE>



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

|                                         |  | Nine Months EndedSeptember 30, 2005 |  | Nine Months EndedSeptember 30, 2004
|---------------------------------------- |  | ----------------------------------- |  | -----------------------------------
|                                         |  | AverageBalance                      |  | AverageYield/Cost                  
|                                         |  |                                     |  |                                    
|INTEREST-EARNING ASSETS                  |  |                                     |  |                                    
|Loans, net                               |  | $     513,664                       |  | 6.62%                              
|Investment securities                    |  | 194,728                             |  | 3.93%                              
|FHLB of Seattle stock                    |  | 13,597                              |  | 0.53%                              
|Interest-bearing deposits in other banks |  | 1,239                               |  | 3.13%                              
|                                         |  |                                     |  |                                    
|Total interest-earning assets            |  | 723,228                             |  | 5.77%                              
|                                         |  |                                     |  |                                    
|Non-interest-earning assets              |  | 43,830                              |  |                                    
|                                         |  |                                     |  |                                    
|Total assets                             |  | $     767,058                       |  |                                    
|                                         |  |                                     |  |                                    
|INTEREST-BEARING LIABILITIES             |  |                                     |  |                                    
|Interest-bearing deposits                |  | $     336,083                       |  | 1.94%                              
|FHLB of Seattle advances                 |  | 301,283                             |  | 3.60%                              
|                                         |  |                                     |  |                                    
|Total interest-bearing
    liabilities   |  | 637,366                             |  | 2.73%                              
|                                         |  |                                     |  |                                    
|Non-interest-bearing liabilities:        |  |                                     |  |                                    
|Non-interest-bearing checking            |  | 30,152                              |  |                                    
|Other                                    |  | 9,880                               |  |                                    
|                                         |  |                                     |  |                                    
|Total non-interest-bearing liabilities   |  | 40,032                              |  |                                    
|                                         |  |                                     |  |                                    
|Total liabilities                        |  | 677,398                             |  |                                    
|                                         |  |                                     |  |                                    
|Equity                                   |  | 89,660                              |  |                                    
|                                         |  |                                     |  |                                    
|Total liabilities and equity             |  | $     767,058                       |  |                                    
|                                         |  |                                     |  |                                    
|Net interest income                      |  | $      
      18,325                |  |                                    
|Interest rate spread                     |  |                                     |  | 3.04%                              
|Net interest margin                      |  | 3.37%                               |  |                                    





Provision for Loan Losses. The provision for loan
losses decreased $1.5 million to $600,000 for the nine months ended September
30, 2005 compared to $2.1 million for the nine months ended September 30, 2004.
We decreased the provision primarily as a result of the improved credit quality
of the loan portfolio, a decrease in consumer loans, the increased percentage of
loans secured by real estate, and the strength of the regional and local
economies. Net charge-offs for the nine months ended September 30, 2005 totaled
$852,000 compared to $1.4 million for the same period last year.

|                                    |  | Nine Months Ended                       |  | Nine Months Ended                    
|----------------------------------- |  | --------------------------------------- |  | -------------------------------------
|                                    |  | September 30, 2005                      |  | September 30, 2004                   
|                                    |  | (in thousands)                         
|                                    |  |                                         |  |                                      
|Allowance as of beginning of period |  | $                          
      8,981 |  | $                        
      8,237
|                                    |  |                                         |  |                                      
|Provision for losses on loans       |  | 600                                     |  | 2,100                                
|                                    |  |                                         |  |                                      
|Recoveries                          |  | 267                                     |  | 266                                  
|                                    |  |                                         |  |                                      
|Charge-offs                         |  | (1,119)                                 |  | (1,666)                              
|                                    |  |                                         |  |                                      
|Allowance as of the end of period   |  | $                        
      8,729   |  | $                      
      8,937  









17

<PAGE>

Non-interest Income.
Non-interest income increased $176,000, or 3.3%, to $5.5 million for the
nine months ended September 30, 2005 compared to $5.3 million for the nine
months ended September 30, 2004. This increase is primarily a result of an
increase in other operating income of $269,000 attributable to the rental income
received from our new administrative office building. Other increases include
$166,000 in gains on the sale of premises and equipment, $125,000 in loan
service fees, and $82,000 in net gains on the sale of loans. These increases
were partially offset by decreases of $338,000 in deposit service fees and a
$180,000 decrease in net gains on the sale of securities. All other categories
of non-interest income increased by a net amount of $52,000.

Non-interest
Expense. Non-interest expense decreased $1.3 million, or 6.1%, to $20.2
million for the nine months ended September 30, 2005 compared to $21.5 million
for the nine months ended September 30, 2004. The decrease was primarily the
result of decreases of $1.3 million in outside and professional services and
$821,000 in other operating expenses, partially offset by an increase of
$407,000 in office operations expenses, $371,000 in occupancy expenses, and
$202,000 in compensation and benefits. All other categories of non-interest
expense decreased a net of $145,000.

Compensation and
benefits increased $202,000 to $10.7 million for the nine months ended September
30, 2005 compared to $10.5 million for the nine months ended September 30, 2004.
Compensation and benefit costs represent 53.3% and 49.1% of total non-interest
expenses for the nine months ended September 30, 2005 and 2004, respectively.
The increase was primarily the result of an expense increase of $501,000 for the
Company's MRP, or 170.5%, to $795,000 for the nine months ended September 30,
2005 compared to $294,000 for the nine months ended September 30, 2004. This
increase was partially offset by a decrease in salary and performance award
expenses as the number of average full-time equivalent employees decreased from
220 full-time equivalent employees for the nine months ended September 30, 2004
to 210 full-time equivalent employees for the nine months ended September 30,
2005.

Office operations
increased $407,000 to $4.1 million for the nine months ended September 30, 2005
compared to $3.7 million for the nine months ended September 30, 2004. This
increase was primarily attributable to higher data processing maintenance and
depreciation costs associated with upgrading our communications and our data
processing operations.

Occupancy expense
increased $371,000 to $1.5 million for the nine months ended September 30, 2005
compared to $1.2 million as for the nine months ended September 30, 2004 as a
result of increased costs associated with operating our new administrative
office building.

Outside and
professional services decreased $1.3 million to $1.0 million for the nine months
ended September 30, 2005 compared to $2.3 million for the nine months ended
September 30, 2004. The decrease was primarily attributable to reduced costs
associated with completing our technology initiative in 2004.

Other operating
expenses decreased $821,000 to $1.6 million for the nine months ended September
30, 2005 compared to $2.4 million for the nine months ended September 30, 2004.
The decrease was primarily attributable to three distinct non-recurring items
amounting to $570,000 that occurred in 2004 which did not reoccur in 2005 as a
result of enhanced internal control processes. These three distinct
non-recurring items in 2004 resulted from system conversion processing errors, a
comprehensive state tax audit, and a misappropriation of funds by a Bank
employee.

Income Tax
Expense. Income tax expense decreased $109,000 to $1.0 million for the nine
months ended September 30, 2005 compared to $1.1 million for the same period a
year ago. Income before federal income tax was $3.1 million for the nine months
ended September 30, 2005 compared to $3.5 million for the nine months ended
September 30, 2004, with effective tax rates of 34.0% and 33.0%, respectively.

Liquidity and Capital Resources

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

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

At September 30,
2005, we maintained a credit facility with the FHLB of Seattle equal to 45.0% of
the Bank's total assets, with an unused portion of the facility amounting to
6.91% of the Bank's total assets, or $54.6 million. This credit facility depends
on us

18

<PAGE>

having sufficient collateral to pledge to the FHLB of Seattle.
At September 30, 2005, we were in compliance with our collateral requirements.
In addition, we held available-for-sale investment securities and readily
saleable loans for liquidity purposes.

At September 30,
2005, certificates of deposit (excluding individual retirement account
certificates of deposit) amounted to $214.1 million or 54.2% of total deposits,
including $26.3 million of brokered deposits which are scheduled to mature by
December 31, 2005. Historically, we have been able to retain a significant
amount of our retail deposits as they mature. We have used brokered deposits for
funding purposes to reduce disintermediation from our lower cost retail
deposits. We have also elected to borrow from the FHLB of Seattle to supplement
deposit funding. Management believes that we have adequate resources to fund all
loan commitments through deposits, borrowing from the FHLB of Seattle, the sale
of mortgage loans or investments, and brokered deposits. Management also
believes that we can adjust the offering rates of certificates of deposit to
increase, retain, or decrease deposits in changing interest rate environments.

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

Capital.
Consistent with our objective to operate a sound and profitable financial
institution, we have maintained and will continue to focus on maintaining a
"well capitalized" rating from regulatory authorities. In addition, we are
subject to certain capital requirements set by our regulatory agencies. As of
September 30, 2005, the Bank was classified as a "well capitalized" institution
under the criteria established by the Federal Deposit Insurance Corporation and
exceeded all minimum capital requirements. Total equity was $85.5 million at
September 30, 2005, or 10.82% of total assets on that date. Our regulatory
capital ratios at September 30, 2005, were as follows: Tier I leverage of
10.35%; Tier I risk-based capital of 14.33%; and total risk-based capital of
15.58%.

ITEM 3 - Quantitative and Qualitative Disclosures about Market
Risk



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

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

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

19

<PAGE>



ITEM 4 - Controls and Procedures



Evaluation of Disclosure Controls and Procedures



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

Changes in Internal Controls



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

The Company does not
expect that its disclosure controls and procedures and internal control over
financial reporting will prevent all error and all fraud. A control procedure,
no matter how well conceived and operated, can provide only reasonable, not
absolute, assurance that the objectives of the control procedure are met.
Because of the inherent limitations in all control procedures, no evaluation of
controls can provide absolute assurance that all control issues and instances of
fraud, if any, within the Company have been detected. These inherent limitations
include the realities that judgments in decision-making can be faulty, and that
breakdowns in controls or procedures can occur because of simple error or
mistake. Additionally, controls can be circumvented by the individual acts of
some persons, by collusion of two or more people, or by management override of
the control. The design of any control procedure is also based in part upon
certain assumptions about the likelihood of future events, and there can be no
assurance that any design will succeed in achieving its stated goals under all
potential future conditions; over time, controls may become inadequate because
of changes in conditions, or the degree of compliance with the policies or
procedures may deteriorate. Because of the inherent limitations in a
cost-effective control procedure, misstatements due to error or fraud may occur
and not be detected.

PART II - OTHER INFORMATION

ITEM 1 - Legal Proceedings

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

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

The Company's common
stock is traded on the NASDAQ National Market under the symbol "RPFG". As of
September 30, 2005, there were 6,783,189 shares of common stock issued,
including 543,030 unearned ESOP shares and 260,640 unvested restricted shares
granted under the MRP. During the quarter ended September 30, 2005, the Company
did not sell any securities that were not registered under the Securities Act of
1933.

Common Stock Repurchases

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

20

<PAGE>

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

|Period                                 |  | Total Numberof SharesPurchased |  | Average PricePaid per Share       |  | Total Number ofShares Purchasedas Part of
      PubliclyAnnounced Plansor Programs (1) |  | Maximum Numberof Shares that MayYet be
      PurchasedUnder the Plans orPrograms
|-------------------------------------- |  | ------------------------------ |  | --------------------------------- |  | -------------------------------------------------------------------------------------- |  | --------------------------------------------------------------------------------
|                                       |  |                                |  |                                   |  |                                                                                        |  |                                                                                 
|July 1, 2005 - July 31, 2005           |  | 19,116                         |  | $                    
      16.74 |  | 19,116                                                                                 |  | 310,100                                                                         
|August 1, 2005 - August 31, 2005       |  | 139,416                        |  | 16.83                             |  | 139,416                                                                                |  | 170,684                                                                         
|September 1, 2005 - September 30, 2005 |  | 45,445                         |  | 16.59                             |  | 45,445                                                                                 |  | 125,239                                                                         
|                                       |  |                                |  |                                   |  |                                                                                        |  |                                                                                 
|Total                                  |  | 203,977                        |  | $                   
      16.77  |  | 203,977                                                                                |  |                                                                                 
|                                       |  |                                |  |                                   |  |                                                                                        |  |                                                                                 





(1)

ITEM 3 - Defaults Upon Senior Securities



Not applicable.



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



Not applicable.

ITEM 5 - Other Information



Not applicable.



ITEM 6 - Exhibits



3.1      Articles of Incorporation of the Registrant
(1)3.2      Bylaws of the Registrant
(1)10.1      Form of Employment Agreement for
President and Chief Executive Officer
(1)10.2      Form of Severance Agreement
(1)10.3      Form of Rainier Pacific Savings Bank
Employee Severance Compensation Plan
(1)10.4      Rainier Pacific 2004 Stock Option Plan
(2)10.5      Rainier Pacific 2004 Management
Recognition Plan
(2)10.6      Form of Incentive Stock Option
Agreement                     
10.7      Form of Non-Qualified Stock Option
Agreement                     
10.8      Form of Restricted Stock Award
Agreement                     
14         Code of Ethics
(3)31.1     Certification of Chief Executive Officer
Pursuant to Section 302 of the Sarbanes-Oxley
Act                      31.2     Certification of Chief Financial Officer Pursuant
to Section 302 of the Sarbanes-Oxley
Act                     
32         Certification of Chief
Executive Officer and Chief Financial Officer Pursuant to Section
906                                       
of the Sarbanes- Oxley
Act

21

<PAGE>

SIGNATURES



Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.





Rainier Pacific Financial Group, Inc.





November 3,
2005                                                      
     /s/John A.
Hall                                                                                           
John A.
Hall                                                                                           
President and Chief Executive
Officer                                                                                          
(Principal Executive Officer)







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



22

<PAGE>

EXHIBIT INDEX

10.6    Form of Incentive Stock Option
Agreement                           
10.7    Form of Non-Qualified Stock Option
Agreement                           
10.8    Form of Restricted Stock Award
Agreement                           
31.1    Certification of Chief Executive Officer pursuant to
Section 302 of the Sarbanes-Oxley Act
of                                       
2002                           
31.2    Certification of Chief Financial Officer pursuant to
Section 302 of the Sarbanes-Oxley
Act                           
32       Certification of Chief Executive
Officer and Chief Financial Officer pursuant to Section 906
of                                      
the Sarbanes-Oxley Act

23

<PAGE>

Exhibit 10.6Form of Incentive Stock Option
Agreement



RAINIER PACIFIC FINANCIAL GROUP, INC.



2004 STOCK OPTION PLAN



INCENTIVE STOCK OPTION AGREEMENT





ISO NO. _____



This Option is
granted on ________________ ____, ____ (the "Grant Date"), by Rainier Pacific
Financial Group, Inc., a Washington corporation ("Corporation"), to
_________________ (the "Optionee"), in accordance with the following terms and
conditions:



1.        Option Grant
and Exercise Period. The Corporation hereby grants to the Optionee an
Incentive Stock Option ("Option") to purchase, pursuant to the Rainier Pacific
Financial Group, Inc. 2004 Stock Option Plan, as the same may be amended from
time to time (the "Plan"), and upon the terms and conditions therein and
hereinafter set forth, an aggregate of _______ shares (the "Option Shares") of
the common stock of the Corporation ("Share" or "Shares") at the price of
$______ per Share (the "Exercise Price"). A copy of the Plan, as currently in
effect, is incorporated herein by reference and is attached to this Award
Agreement.



Except as provided
in Sections 8 and 9 below, this Option shall be exercisable only during the
period (the "Exercise Period") commencing on the dates set forth in Section 2
below, and ending at 5:00 p.m., Tacoma, Washington, on the date ten years after
the Grant Date, such later time and date being hereinafter referred to as the
"Expiration Date," subject to earlier expiration in accordance with Section 5 in
the event of a Termination of Service. The aggregate Market Value (as determined
on the Grant Date) of the Option Shares with respect to which Incentive Stock
Options are exercisable for the first time by the Optionee in any calendar year
shall not exceed One Hundred Thousand Dollars ($100,000.00). To the extent that
this Option does not qualify as an Incentive Stock Option for any reason, it
shall be deemed ab initioto be a Non-Qualified Stock Option.



2.        Method of
Exercise of This Option. This Option may be exercised during the Exercise
Period, with respect to not more than the cumulative number of the Option Shares
set forth below on or after the dates indicated, by giving written notice to the
Corporation as hereinafter provided specifying the number of the Option Shares
to be purchased.





|Cumulative Number ofOption Shares
      Exercisable | Date
|--------------------------------------------------- | ----
|                                                    |     
|                                                    |     







The notice of
exercise of this Option shall be in the form prescribed by the Committee
referred to in Section 3 of the Plan and directed to the address set forth in
Section 12 below. The date of exercise is the date on which such notice is
received by the Corporation. Such notice shall be accompanied by payment in full
of the Exercise Price for the Option Shares to be purchased upon such exercise.
Payment shall be made (i) in cash, which may be in the form of a check, money
order, cashier's check or certified check, payable to the Corporation, or (ii)
by delivering Shares already owned by the Optionee having a Market Value equal
to the Exercise Price, or (iii) a combination of cash and such Shares. Promptly
after such payment, subject to Section 3 below, the Corporation shall issue and
deliver to the Optionee or other person exercising this Option a certificate or
certificates representing the Option Shares so purchased, registered in the name
of the Optionee (or such other person), or, upon request, in the name of the

<PAGE>

Optionee (or such other person) and in the name of another in
such form of joint ownership as requested by the Optionee (or such other person)
pursuant to applicable state law.



3.        Delivery and
Registration of the Option Shares. The Corporation's obligation to deliver
the Option Shares hereunder shall, if the Committee so requests, be conditioned
upon the Optionee's compliance with the terms and provisions of Section 11 of
the Plan.



4.        Nontransferability of This Option. This Option may not be assigned,
encumbered, transferred, pledged or hypothecated except, in the event of the
death of the Optionee, by will or the applicable laws of descent and
distribution to the extent provided in Section 5 below. This Option is
exercisable during the Optionee's lifetime only by the Optionee or a person
acting with the legal authority of the Optionee. The provisions of this Option
shall be binding upon, inure to the benefit of and be enforceable by the parties
hereto, the successors and assigns of the Corporation and any person acting with
the legal authority of the Optionee to whom this Option is transferred by will
or by the laws of descent and distribution.



5.         Termination of
Service or Death or Disability of the Optionee. Except as provided in this
Section 5 and in Section 9 below, and notwithstanding any other provision
of this Option to the contrary, this Option shall be exercisable only if the
Optionee has not incurred a Termination of Service at the time of such
exercise.



If the Optionee
incurs a Termination of Service for any reason excluding death, Disability and
Termination of Service for Cause, then the Optionee may, but only within the
period of three months immediately succeeding such Termination of Service and in
no event after the Expiration Date, exercise this Option to the extent the
Optionee was entitled to exercise this Option on the date of Termination of
Service. If the Optionee incurs a Termination of Service for Cause, all rights
under this Option shall expire immediately upon the giving to the Optionee of
notice of such termination, except as provided in Section 9 below.



In the event of the
death or Disability of the Optionee prior to the Optionee's Termination of
Service or within three months thereafter, the Optionee or person or persons to
whom the Option has been transferred by will or by the laws of descent and
distribution may, but only to the extent the Optionee was entitled to exercise
this Option on the date of the Optionee's death or Disability, exercise this
Option at any time within one year following the death or Disability of the
Optionee, but in no event after the Expiration Date.



Following the death
of the Optionee, the Committee may, in its sole discretion, as an alternative
means of settlement of this Option, elect to pay to the person to whom this
Option is transferred by will or by the laws of descent and distribution, the
amount by which the Market Value per Share on the date of exercise of this
Option shall exceed the Exercise Price for each of the Option Shares, multiplied
by the number of the Option Shares with respect to which this Option is properly
exercised. Any such settlement of this Option shall be considered an exercise of
this Option for all purposes of this Option and of the Plan.



6.        Notice of
Sale. The Optionee or any person to whom the Option Shares shall have been
transferred shall promptly give notice to the Corporation in the event of the
sale or other disposition of the Option Shares within the later of (i) two years
from the Grant Date or (ii) one year from the date of exercise of this Option.
Such notice shall specify the number of the Option Shares sold or otherwise
disposed of and be directed to the address set forth in Section 12 below.



7.       
Adjustments for
Changes in Capitalization of the Corporation. In the event of any change in
the outstanding Shares by reason of any recapitalization, stock split, reverse
stock split, stock dividend, reorganization, consolidation, combination or
exchange of shares, merger, or any other change in the corporate structure of
the Corporation or in the Shares, the number and class of the Option Shares
covered by this Option and the Exercise Price shall be appropriately adjusted by
the Committee, whose determination shall be conclusive. However, any repurchases
by the Corporation of its Shares shall have no affect on the number of Shares
reserved for issuance under the Plan, or Awards granted under the Plan



8.     Effect of
Merger or Other Reorganization. In the event of any merger, consolidation or
combination of the Corporation with or into another corporation (other than a
merger, consolidation or combination in which the Corporation is the continuing
corporation and which does not result in the outstanding Shares being converted
into

<PAGE>

or exchanged for different securities, cash or other property,
or any combination thereof), the Optionee shall have the right (subject to the
provisions of the Plan and the limitations contained herein), thereafter and
during the Exercise Period, to receive upon exercise of this Option an amount
equal to the excess of the Market Value on the date of such exercise of the
securities, cash or other property, or combination thereof, receivable upon such
merger, consolidation or combination in respect of a Share over the Exercise
Price, multiplied by the number of the Option Shares with respect to which this
Option shall have been exercised. Such amount may be payable fully in cash,
fully in one or more of the kind or kinds of property payable in such merger,
consolidation or combination, or partly in cash and partly in one or more of
such kind or kinds of property, all in the discretion of the Committee. The
exercise of the right provided herein shall result in that portion of this
Option so exercised being disqualified as an incentive stock option for tax
purposes and being deemed a non-qualified stock option for tax purposes.



9.    Effect of
Change in Control. If a tender offer or exchange offer for Shares (other
than such an offer by the Corporation) is commenced, or if a change in control
as defined in the Plan shall occur, all Options theretofore granted and not
fully exercisable shall become exercisable in full upon the happening of such
event.



10.    Shareholder
Rights Not Granted by This Option. The Optionee is not entitled by virtue
hereof to any rights of a shareholder of the Corporation or to notice of
meetings of shareholders or to notice of any other proceedings of the
Corporation.



11.    Withholding
Tax. Where the Optionee or another person is entitled to receive the Option
Shares pursuant to the exercise of this Option, the Corporation shall have the
right to require the Optionee or such other person to pay to the Corporation the
amount of any taxes which the Corporation or any of its Affiliates is required
to withhold with respect to the Option Shares, or in lieu thereof, to retain, or
sell without notice, a sufficient number of the Option Shares to cover the
amount required to be withheld, or, in lieu of any of the foregoing, to withhold
a sufficient sum from the Optionee's compensation payable by the Corporation to
satisfy the Corporation's tax withholding requirements.



12.    
Notices.
All notices hereunder to the Corporation shall be delivered or mailed to it
addressed to the Corporate Secretary of Rainier Pacific Financial Group, Inc.,
1498 Pacific Avenue, Tacoma, WA 98402. Any notices hereunder to the Optionee
shall be delivered personally or mailed to the Optionee's address noted below.
Such addresses for the service of notices may be changed at any time provided
written notice of the change is furnished in advance to the Corporation or to
the Optionee, as the case may be.



13.        Plan and Plan
Interpretations as Controlling. This Option and the terms and conditions
herein set forth are subject in all respects to the terms and conditions of the
Plan, which are controlling. Capitalized terms used herein which are not defined
in this Award Agreement shall have the meaning ascribed to such terms in the
Plan. All determinations and interpretations made in the discretion of the
Committee shall be final and conclusive upon the Optionee or his legal
representatives with regard to any question arising hereunder or under the
Plan.



14.       Optionee
Service. Nothing in this Option shall limit the right of the Corporation or
any of its Affiliates to terminate the Optionee's service as an employee, or
otherwise impose upon the Corporation or any of its Affiliates any obligation to
employ or accept the services of the Optionee.



15.      Amendment.
The Committee may waive any conditions of or rights of the Corporation or modify
or amend the terms of this Award Agreement; provided, however, that the
Committee may not amend, alter, suspend, discontinue or terminate any provision
hereof which may adversely affect the Optionee without the Optionee's (or his
legal representative's) written consent and the Committee may not change the
Exercise Price unless pursuant to Section 7 hereof.



16.      Optionee
Acceptance. The Optionee shall signify his acceptance of the terms and
conditions of this Option by signing in the space provided below and returning a
signed copy hereof to the Corporation at the address set forth in Section 12
above.

<PAGE>

IN WITNESS WHEREOF, the parties hereto have caused this Award Agreement to be
executed as of the date first above written.



RAINIER PACIFIC FINANCIAL GROUP, INC.





By: _______________________________



Its: _______________________________



ACCEPTED:



__________________________________                                                                                        
(Signature)





__________________________________                                                                                        (Street
Address)





__________________________________                                                                                         (City,
State and Zip Code)

<PAGE>

Exhibit 10.7Form of Non-Qualified Stock Option Agreement



RAINIER PACIFIC FINANCIAL GROUP, INC.



2004 STOCK OPTION PLAN



NON-QUALIFIED STOCK OPTION AGREEMENT





NQSO NO. _____



This Option is
granted on ______________ ____, ____ (the "Grant Date"), by Rainier Pacific
Financial Group, Inc., a Washington corporation ("Corporation"), to
_________________ (the "Optionee"), in accordance with the following terms and
conditions:



1.        Option Grant and Exercise
Period. The Corporation hereby grants to the Optionee a Non-Qualified Option
("Option") to purchase, pursuant to the Rainier Pacific Financial Group, Inc.
2004 Stock Option Plan, as the same may be amended from time to time (the
"Plan"), and upon the terms and conditions therein and hereinafter set forth, an
aggregate of _______ shares (the "Option Shares") of the common stock of the
Corporation ("Share" or "Shares") at the price of $______ per Share (the
"Exercise Price"). A copy of the Plan, as currently in effect, is incorporated
herein by reference and is attached to this Award Agreement.



Except as provided
in Sections 7 and 8 below, this Option shall be exercisable only during the
period (the "Exercise Period") commencing on the dates set forth in Section 2
below, and ending at 5:00 p.m., Tacoma, Washington time, on the date ten years
after the Grant Date, such later time and date being hereinafter referred to as
the "Expiration Date," subject to earlier expiration in accordance with Section
5 in the event of a Termination of Service.



2.         Method of Exercise of This
Option. This Option may be exercised during the Exercise Period, with
respect to not more than the cumulative number of the Option Shares set forth
below on or after the dates indicated, by giving written notice to the
Corporation as hereinafter provided specifying the number of the Option Shares
to be purchased.





|Cumulative Number ofOption Shares
      Exercisable | Date
|--------------------------------------------------- | ----
|                                                    |     
|                                                    |     









The notice of
exercise of this Option shall be in the form prescribed by the Committee
referred to in Section 3 of the Plan and directed to the address set forth in
Section 11 below. The date of exercise is the date on which such notice is
received by the Corporation. Such notice shall be accompanied by payment in full
of the Exercise Price for the Option Shares to be purchased upon such exercise.
Payment shall be made (i) in cash, which may be in the form of a check, money
order, cashier's check or certified check, payable to the Corporation, or (ii)
by delivering Shares already owned by the Optionee having a Market Value equal
to the Exercise Price, or (iii) a combination of cash and such Shares. Promptly
after such payment, subject to Section 3 below, the Corporation shall issue and
deliver to the Optionee or other person exercising this Option a certificate or
certificates representing the Option Shares so purchased, registered in the name
of the Optionee (or such other person), or, upon request, in the name of the
Optionee (or such other person) and in the name of another in such form of joint
ownership as requested by the Optionee (or such other person) pursuant to
applicable state law.

<PAGE>



3.        Delivery and Registration of the
Option Shares. The Corporation's obligation to deliver the Option Shares
hereunder shall, if the Committee so requests, be conditioned upon the
Optionee's compliance with the terms and provisions of Section 11 of the
Plan.



4.        Nontransferability of This
Option. This Option may not be assigned, encumbered, transferred, pledged or
hypothecated except, (i) in the event of the death of the Optionee, by will or
the applicable laws of descent and distribution, (ii) pursuant to a "domestic
relations order," as defined in Section 414(p)(1)(B) of the Code, (iii) by gift
to any member of the Optionee's immediate family or to a trust for the benefit
of one or more of such immediate family members. During the lifetime of the
Optionee, this Option shall be exercisable only by the Optionee or a person
acting with the legal authority of the Optionee unless it has been transferred
as permitted hereby, in which case it shall be exercisable only by such
transferee. The provisions of this Option shall be binding upon, inure to the
benefit of and be enforceable by the parties hereto, the successors and assigns
of the Corporation and any person acting with the legal authority of the
Optionee to whom this Option is transferred in accordance with this Section
4.



5.        Termination of Service or Death
or Disability of the Optionee. Except as provided in this Section 5 and in
Section 8 below, and notwithstanding any other provision of this Option to the
contrary, this Option shall be exercisable only if the Optionee has not incurred
a Termination of Service at the time of such exercise.



If the Optionee
incurs a Termination of Service for any reason excluding death, Disability and
Termination of Service for Cause, then the Optionee may, but only within the
period of one year immediately succeeding such Termination of Service and in no
event after the Expiration Date, exercise this Option to the extent the Optionee
was entitled to exercise this Option on the date of Termination of Service. If
the Optionee incurs a Termination of Service for Cause, all rights under this
Option shall expire immediately upon the giving to the Optionee of notice of
such termination, except as provided in Section 8 below.



In the event of the
death or Disability of the Optionee prior to the Optionee's Termination of
Service or within three months thereafter, the Optionee or person or persons to
whom the Option has been transferred pursuant to Section 4 may, but only to the
extent the Optionee was entitled to exercise this Option on the date of the
Optionee's death or Disability, exercise this Option at any time within two
years following the death or Disability of the Optionee, but in no event after
the Expiration Date.



Cause shall mean
termination of the employment of the Optionee with either the Corporation or any
Affiliate, as the case may be, because of the Optionee's dishonesty,
incompetence, willful misconduct, breach of a fiduciary duty involving personal
profit, intentional failure to perform stated duties or willful violation of any
law, rule, or regulation (excluding violations which do not have a material
adverse affect on the Corporation or its Affiliates) or final cease-and-desist
order. No act or failure to act by the Optionee shall be considered willful
unless the Optionee acted or failed to act with an absence of good faith and
without a reasonable belief that his action or failure to act was in the best
interest of the Corporation.



Following the death
of the Optionee, the Committee may, in its sole discretion, as an alternative
means of settlement of this Option, elect to pay to the person to whom this
Option is transferred pursuant to Section 4 the amount by which the Market Value
per Share on the date of exercise of this Option shall exceed the Exercise Price
for each of the Option Shares, multiplied by the number of the Option Shares
with respect to which this Option is properly exercised. Any such settlement of
this Option shall be considered an exercise of this Option for all purposes of
this Option and of the Plan.



6.        Adjustments for Changes in
Capitalization of the Corporation. In the event of any change in the
outstanding Shares by reason of any recapitalization, stock split, reverse stock
split, stock dividend, reorganization, consolidation, combination or exchange of
shares, merger, or any other change in the corporate structure of the
Corporation or in the Shares, the number and class of the Option Shares covered
by this Option and the Exercise Price shall be appropriately adjusted by the
Committee, whose determination shall be conclusive. However, any repurchases by
the Corporation of its Shares shall have no affect on the number of Shares
reserved for issuance under the Plan, or Awards granted under the Plan

<PAGE>



7.        Effect of Merger or Other
Reorganization. In the event of any merger, consolidation or combination of
the Corporation with or into another corporation (other than a merger,
consolidation or combination in which the Corporation is the continuing
corporation and which does not result in the outstanding Shares being converted
into or exchanged for different securities, cash or other property, or any
combination thereof), the Optionee shall have the right (subject to the
provisions of the Plan and the limitations contained herein), thereafter and
during the Exercise Period, to receive upon exercise of this Option an amount
equal to the excess of the Market Value on the date of such exercise of the
securities, cash or other property, or combination thereof, receivable upon such
merger, consolidation or combination in respect of a Share over the Exercise
Price, multiplied by the number of the Option Shares with respect to which this
Option shall have been exercised. Such amount may be payable fully in cash,
fully in one or more of the kind or kinds of property payable in such merger,
consolidation or combination, or partly in cash and partly in one or more of
such kind or kinds of property, all in the discretion of the Committee.



8.        Effect of Change in Control.
If a tender offer or exchange offer for Shares (other than such an offer by the
Corporation) is commenced, or if a change in control as defined in the Plan
shall occur, all Options theretofore granted and not fully exercisable shall
become exercisable in full upon the happening of such event.



9.        Stockholder Rights Not Granted
by This Option. The Optionee is not entitled by virtue hereof to any rights
of a stockholder of the Corporation or to notice of meetings of stockholders or
to notice of any other proceedings of the Corporation.



10.     Withholding Tax. Where the Optionee or
another person is entitled to receive the Option Shares pursuant to the exercise
of this Option, the Corporation shall have the right to require the Optionee or
such other person to pay to the Corporation the amount of any taxes which the
Corporation or any of its Affiliates is required to withhold with respect to the
Option Shares, or in lieu thereof, to retain, or sell without notice, a
sufficient number of the Option Shares to cover the amount required to be
withheld, or, in lieu of any of the foregoing, to withhold a sufficient sum from
the Optionee's compensation payable by the Corporation to satisfy the
Corporation's tax withholding requirements.



11.      Notices. All notices hereunder to the
Corporation shall be delivered or mailed to it addressed to the Corporate
Secretary of Rainier Pacific Financial Group, Inc., 1498 Pacific Avenue,,
Tacoma, Washington 98402. Any notices hereunder to the Optionee shall be
delivered personally or mailed to the Optionee's address noted below. Such
addresses for the service of notices may be changed at any time provided written
notice of the change is furnished in advance to the Corporation or to the
Optionee, as the case may be.



12.        Plan and Plan Interpretations
as Controlling.This Option and the terms and conditions herein set forth are
subject in all respects to the terms and conditions of the Plan, which are
controlling. Capitalized terms used herein which are not defined in this Award
Agreement shall have the meaning ascribed to such terms in the Plan. All
determinations and interpretations made in the discretion of the Committee shall
be final and conclusive upon the Optionee or his legal representatives with
regard to any question arising hereunder or under the Plan.



13.        Optionee Service. Nothing
in this Option shall limit the right of the Corporation or any of its Affiliates
to terminate the Optionee's service as a director, advisory director, director
emeritus or employee, or otherwise impose upon the Corporation or any of its
Affiliates any obligation to employ or accept the services of the Optionee.



14.        Amendment. The Committee
may waive any conditions of or rights of the Corporation or modify or amend the
terms of this Award Agreement; provided, however, that the Committee may not
amend, alter, suspend, discontinue or terminate any provision hereof which may
adversely affect the Optionee without the Optionee's (or his legal
representative's) written consent and the Committee may not change the Exercise
Price unless pursuant to Section 6 hereof.



15.      Optionee Acceptance. The Optionee shall
signify his acceptance of the terms and conditions of this Option by signing in
the space provided below and returning a signed copy hereof to the Corporation
at the address set forth in Section 11 above.

<PAGE>

IN WITNESS WHEREOF, the parties
hereto have caused this Award Agreement to be executed as of the date first
above written.



RAINIER PACIFIC FINANCIAL GROUP, INC.





By:



Its:





ACCEPTED:





(Signature)





(Street Address)





(City, State and Zip Code)

<PAGE>

Exhibit 10.8Form of Restricted Stock Award Agreement



RAINIER PACIFIC FINANCIAL GROUP, INC.



MANAGEMENT RECOGNITION PLAN



AWARD AGREEMENT

THIS AGREEMENT is made as of the _______ day of _____________
2004 between Rainier Pacific Financial Group, Inc. (the "Company"), and
_________________ (the "Grantee").



In consideration of the agreements set forth below, the Company
and the Grantee agree as follows:



1.   
Grant. A Restricted Stock Award ("Award") of ______ shares ("Award
Shares") of the Company's common stock, no par value per share ("Common Stock"),
is hereby granted by the Company to the Grantee subject to the following terms
and conditions and subject to the provisions of the Rainier Pacific Financial
Group, Inc. Management Recognition (the "Plan"), the terms of which are
incorporated by reference herein.



2.   
Transfer Restrictions. None of the Award Shares shall be sold, assigned,
pledged, or otherwise transferred, voluntarily or involuntarily, by the
Grantee.



3.   
Release of Restrictions. The restrictions set forth in Section 2
above shall lapse: (i) ratably over a five (5) year period with one-fifth (or
20%) of the Award Shares vesting each year over a _____ year period with the
first vesting on ______________ __, 2005 and subsequent vesting on __________
__, 2006, __________ __, 2007, __________ __, 2008 and __________ __, 2009 so
long as the recipient continues service as a director or officer of the Company
or any of its subsidiaries; (ii) as to all Award Shares upon the Grantee's
death, disability or normal retirement after attainment of age 65; or (iii) upon
the occurrence of a Change in Control.



4.   
Forfeiture. Except as otherwise provided by the Plan or this Agreement,
the Award Shares shall be forfeited to the Company if the Grantee no longer
serves as a director or officer of the Company or its subsidiaries, prior to the
date the restrictions lapse as provided in Section 3 above.



5.   
Rights as Stockholder. The rights of the Grantee as a shareholder prior
to the release of the restrictions set forth in Section 2and Section 3
above shall be governed by Section 5 of the Plan.



6.   
Escrow of Share Certificates. Certificates (or the equivalent book entry
proof of shares) for the Award Shares shall be issued in the Grantee's name or
as otherwise provided under the Plan and shall be held in escrow by the Company
until all restrictions lapse or such shares are forfeited as provided herein. A
certificate or certificates (or the equivalent book entry proof of shares)
representing the Award Shares as to which restrictions have lapsed shall be
delivered to the Grantee upon such lapse.



7. Government
Regulations. Notwithstanding anything contained herein to the contrary, the
Company's obligation to issue or deliver certificates evidencing the Award
Shares shall be subject to all applicable laws, rules and regulations and to
such approvals by any governmental agencies or national securities exchanges as
may be required.



8.    Withholding Taxes. The Company shall have the right
to require the Grantee to remit to the Company, or to withhold from other
amounts payable to the Grantee, as compensation or otherwise, an amount
sufficient to satisfy all federal, state and local withholding tax
requirements.



9.    Governing Law. This Agreement shall be construed
under the laws of the State of Washington.



10.  
Effect of the Plan. In the event of a conflict between any provision of
this Agreement and the Plan, the provisions of the Plan, as interpreted by the
Board of Directors of the Company, shall prevail. Capitalized terms used herein
without definition shall have the meaning assigned to such terms in the
Plan.

<PAGE>

IN WITNESS WHEREOF, the Company has caused this Award to be granted on the
date first above written.



Attest:                                                                                  
RAINIER PACIFIC FINANCIAL GROUP, INC.



_____________________________                           
By: ______________________________



ACCEPTED:

_________________________________

Date: _____________________________

<PAGE>



EXHIBIT 31.1



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

I, John A. Hall, certify that:



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



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



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



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



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



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



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



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



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



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



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





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

<PAGE>



EXHIBIT 31.2



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

I, Joel G. Edwards, certify that:

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





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



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



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



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



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



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



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



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



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



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









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

<PAGE>



EXHIBIT 32



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





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



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





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



Dated: November 3, 2005

<PAGE>