-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, EonFKkB0yyf1QXlNbVD5mScxbHJfJHHxsNc8j2b6C/SeouzR5xmlvVqjQio6IwDa S/GAT9Wy/9MqSKNDGTgDsw== 0000950144-08-008631.txt : 20081114 0000950144-08-008631.hdr.sgml : 20081114 20081114085208 ACCESSION NUMBER: 0000950144-08-008631 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20081113 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20081114 DATE AS OF CHANGE: 20081114 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ORIENTAL FINANCIAL GROUP INC CENTRAL INDEX KEY: 0001030469 STANDARD INDUSTRIAL CLASSIFICATION: STATE COMMERCIAL BANKS [6022] IRS NUMBER: 660538893 STATE OF INCORPORATION: PR FISCAL YEAR END: 1207 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-12647 FILM NUMBER: 081187183 BUSINESS ADDRESS: STREET 1: MONACILLOS 1000 STREET 2: SAN ROBERTO ST CITY: RIO PIEDRAS STATE: PR ZIP: 00926 BUSINESS PHONE: 7877661986 MAIL ADDRESS: STREET 1: MONACILLOS 1000 STREET 2: SAN ROBERTO ST CITY: RIO PIEDRAS STATE: PR ZIP: 00926 8-K 1 g16658e8vk.htm FORM 8-K FORM 8-K
 
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): November 13, 2008
ORIENTAL FINANCIAL GROUP INC.
(Exact Name of Registrant as Specified in its Charter)
         
Commonwealth of Puerto Rico   001-12647   66-0538893
         
(State or other Jurisdiction of
Incorporation) 		  (Commission File No.)   (I.R.S. Employer
Identification No.)
     
Oriental Center    
Professional Offices Park    
997 San Roberto Street, 10th Floor    
San Juan, Puerto Rico   00926
     
(Address of Principal Executive Offices)   (Zip Code)
Registrant’s telephone number, including area code: (787) 771-6800
(Former Name or Former Address, if Changed Since Last Report)
     Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
     o   Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
     o   Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
     o   Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
     o   Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
 

 

 

Item 2.02. Results of Operations and Financial Condition.
     On November 13, 2008, Oriental Financial Group Inc. (the “Company”) announced the results for the quarter and nine-month periods ended September 30, 2008. A copy of the Company’s press release is attached as an exhibit to this report.
Item 9.01. Financial Statements and Exhibits.
     (d) Exhibits
         
Exhibit No.   Description of Document
       
 
  99    
Press release by the Company dated November 13, 2008.

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SIGNATURES
     Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
         
  ORIENTAL FINANCIAL GROUP INC.
 		  
Date: November 14, 2008  By:   /s/ Norberto González    
    Norberto González   
    Executive Vice President and Chief Financial Officer   
 

3

EX-99 2 g16658exv99.htm EX-99 EX-99
Exhibit 99.1

 
(Oriental Group Logo)
Puerto Rico Contact:
Marilyn Santiago-Colón,
Oriental Financial Group Inc.
(787) 993-4648
U.S. Contact:
Steven Anreder and Gary Fishman,
Anreder & Company
(212) 532-3232


ORIENTAL FINANCIAL GROUP REPORTS RESULTS
FOR THE THIRD QUARTER ENDED SEPTEMBER 30, 2008
SAN JUAN, Puerto Rico, November 13, 2008 — Oriental Financial Group Inc. (NYSE: OFG) today announced results for the third quarter ended September 30, 2008.
The Group reported a loss of $46.1 million, or ($1.89) per share (diluted), which includes three previously reported items: (i) an other-than-temporary impairment (OTTI) non-cash loss of $55.8 million, net of tax ($2.29 per diluted share); (ii) a net of tax loss of $4.1 million ($0.17 per diluted share), in connection with derivative transactions under option agreements in which the recoverability from the counterparty (Lehman Brothers Finance S.A.) is uncertain; and (iii) an income tax benefit of $500,000 ($0.02 per share), for the reassessment of the valuation allowance for the Group’s deferred tax asset.
Excluding these items, the Company had income available to common shareholders of $13.4 million, equal to $0.55 per share (diluted), an increase of 83.6% over the year ago quarter’s $7.3 million, equal to $0.30 per share (diluted).
Commentary and Outlook
Commenting on the Group’s operating results, José Rafael Fernández, President and Chief Executive Officer, said, “During the third quarter we continued to focus on increasing credit quality, minimizing risk and maintaining a capital position comfortably in excess of regulatory requirements, all of which we accomplished. Combined with the strategies we already had in place, we continued to perform well.”
“While our investment securities portfolio increased year over year, it declined during the third quarter, mainly as a result of repayments of securities in both the held-to-maturity and the available-for-sale portfolios, which we did not replace because of turbulent market conditions. Similarly, while loan balances and originations are up year over year due to our improving competitive position, we continued to take a conservative approach toward production during the quarter. And while the local economic situation is still soft, we maintained a good level of non-interest banking and financial services revenue.
“As a result, income available to common shareholders, excluding previously mentioned charges and tax benefit, was up strongly for the quarter, and net interest income and margin were significantly better than last year. The provision for loan losses is level with the

 

 

second quarter of 2008, and we have continued to increase our allowance coverage ratios while maintaining a low level of net credit losses. Non-performing loans declined, albeit slightly, for the second quarter in a row. We believe we are well positioned to continue to benefit from our strategies in the quarters ahead.”
Third Quarter 2008 Income Statement
Net interest income of $28.0 million increased 42.7% from the year ago quarter, reflecting higher overall yield (5.67% versus 5.59%) and average interest-earning assets (up 11.6%) combined with lower average rates paid on deposits and borrowings (4.04% versus 4.40%). Net interest margin increased to 1.88% as compared to 1.46% in the year ago quarter. On a tax-equivalent basis, the net interest margin increased to 3.74% as compared to 3.03% in the year ago quarter.
Total banking and financial service revenues of $6.3 million declined from the year ago and trailing quarter, but are up 1.3% year to date. Oriental’s high level of financial services revenue reflects the Group’s focus on financial planning for mid and high net worth clients. Assets under management, which generate recurring fees, totaled $3.08 billion at September 30, 2008, an increase of 1.9% from a year ago and a reduction of only 4.8% from June 30, 2008, despite 2008’s sharp decline in the stock and bond markets.
Non-interest expenses of $18.2 million increased 10.1% from the year ago quarter, but only nominally from the previous quarter. The efficiency ratio improved to 53.03% from 62.65% in the year ago quarter.
September 30, 2008 Balance Sheet Highlights
Total interest earning assets of approximately $5.74 billion increased 2.4% over a year ago and declined 2.1% from the end of the previous quarter. Year over year growth reflects management’s strategy of supplementing the loan originations in 2007 with the purchase of investment securities at a favorable spread.
Approximately 84% of Oriental’s investment portfolio consists of fixed-rate mortgage-backed securities or notes, guaranteed or issued by FNMA, FHLMC, or GNMA and U.S. agency senior debt obligations, and thus backed by a U.S. government sponsored entity or the full faith and credit of the U.S. government (82%), and Puerto Rico Government and agency obligations (2%). The remaining 16% consists of investment grade non-agency collateralized mortgage obligations (13%), the majority of which are backed by prime fixed-rate residential mortgage collateral, and structured credit investments (3%).
Total net loans increased 1.9% year over year and were approximately level with the end of the preceding quarter. Mortgage loan production for the quarter of $56.1 million was 120.4% greater than in the year ago quarter. The average FICO score was 719 and the average loan to value ratio was 83% on the mortgage loans originated in the third quarter. Commercial loan production increased 68.8% over the year ago quarter.

2

 

Oriental continued to change its funding mix during the third quarter, using wholesale certificates of deposit as a more economical and flexible alternative for replacing higher cost retail deposits and short-term repurchase agreements. As a result, deposits of $1.51 billion increased 19.1% year over year and 1.4% from the preceding quarter, while borrowings of $4.13 billion declined 2.1% year over year and 2.0% from the preceding quarter. The mix change, along with lower interest rates, helped reduce total interest expense as compared to the previous quarter. The change in the composition of retail deposits largely reflects the conversion in the third quarter of the Oriental Money savings and checking account to an interest-bearing checking account.
Credit Quality
Non-performing loans of $68.6 million at September 30, 2008 were down slightly on a sequential basis. Foreclosed properties increased to $8.2 million from $4.9 million at June 30, 2008. Net credit losses year to date are up $250,000, to $3.3 million, representing 0.36% of average loans outstanding versus 0.32% in the comparable 2007 period. The allowance for loan losses stood at $12.5 million (1.01% of total loans) at September 30, 2008, compared to $11.9 million (0.97% of total loans) at June 30, 2008.
Based on historical performance, the Group does not expect its non-performing loans to result in significantly higher losses as most are well-collateralized with adequate loan-to-value ratios. The Group follows a sound residential mortgage lending policy, with more than 90% of its residential mortgage loan portfolio consisting of fixed-rate, fully amortizing, fully documented loans that do not have the level of risk generally associated with subprime loans. Furthermore, the Group has not been active in negative amortization loans or adjustable rate mortgage loans.
Capital
Stockholders’ equity of $242.0 million at September 30, 2008 is down $59.1 million from June 30, 2008. The change primarily reflects the OTTI charge, a reduction in the fair value of other available-for-sale securities recorded as part of other comprehensive income, and dividends declared on common and preferred stock, partially offset by net income from operations.
The Group maintains capital ratios comfortably in excess of regulatory requirements. At September 30, 2008, the Leverage Capital Ratio was 5.98% (1.5 times the minimum of 4.00%), the Tier I Risk-Based Capital Ratio was 15.93% (4.0 times the minimum of 4.00%), and the Total Risk-Based Capital Ratio was 16.49% (2.1 times the minimum of 8.00%).
Non-GAAP Financial Measures
From time to time, the Group uses certain non-GAAP measures of financial performance to supplement the unaudited financial statements presented in accordance with GAAP. The Group presents non-GAAP measurements when we believe that the additional information is useful and meaningful to investors. Non-GAAP measurements do not have any standardized meaning and are therefore unlikely to be comparable to similar measures

3

 

presented by other companies. The presentation of non-GAAP measurements is not intended to be a substitute for, and should not be considered in isolation from, the financial measures reported in accordance with GAAP.
We have reported and discussed our results of operations herein both with and without the effect of impairment charges and tax benefit in the September 2008 quarter. We believe that, given the nature of these items, it is useful to state what our results of operations would have been without them so that investors can see the financial trends for our continuing business.
10-Q Filing
After receiving an extension from the SEC, the Group expects to file its Form 10-Q for the third quarter of 2008 on Monday, November 17, 2008.
About Oriental Financial Group
Oriental Financial Group Inc. is a diversified financial holding company operating under U.S. and Puerto Rico banking laws and regulations. Now in its 44th year in business, Oriental provides a full range of mortgage, commercial and consumer banking services through 23 Oriental Group financial centers in Puerto Rico, as well as financial planning, trust, insurance, investment brokerage and investment banking services. Investor information about Oriental can be found at www.orientalfg.com.
Forward-Looking Statements
This news release may contain forward-looking statements that reflect management’s beliefs and expectations and are subject to risks and uncertainties inherent to the Group’s business, including, without limitation, the effect of economic and market conditions, the level and volatility of interest rates, and other risks and considerations detailed in the Group’s filings with the Securities and Exchange Commission. These or other factors could cause actual results to differ materially from forward-looking statements. The Group also disclaims any obligations to update information contained in this news release because of developments occurring after the date of issuance.
# # #

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(OFG Logo)  
ORIENTAL FINANCIAL GROUP
Financial Summary
(NYSE: OGF)
            
                   
          QUARTER ENDED     NINE-MONTH PERIOD ENDED  
          30-Sep-08     30-Sep-07     %     30-Jun-08     30-Sep-08     30-Sep-07     %  
Summary of Operations (Dollars in thousands, except per share data):
 
       
 
                                                        
Interest Income:                                                        
Loans
   $ 19,971     $ 21,699       -8.0 %   $ 19,682     $ 59,481     $ 65,862       -9.7 %
Investment securities and other
     64,773       53,227       21.7 %     65,476       192,522       141,364       36.2 %
 
                                          
Total interest income
     84,744       74,926       13.1 %     85,158       252,003       207,226       21.6 %
       
 
                                          
Interest Expense:
                                                        
Deposits
     12,202       13,561       -10.0 %     12,265       36,746       39,409       -6.8 %
Securities sold under agreements to repurchase
     40,456       37,405       8.2 %     40,208       120,904       106,739       13.3 %
Other borrowed funds
     4,045       4,310       -6.1 %     4,250       12,818       10,350       23.8 %
       
 
                                          
Total interest expense
     56,703       55,276       2.6 %     56,723       170,468       156,498       8.9 %
 
                                          
       
 
                                                        
Net interest income
     28,041       19,650       42.7 %     28,435       81,535       50,728       60.7 %
Provision for loan losses
     1,950       1,614       20.8 %     1,980       5,580       4,064       37.3 %
 
                                          
Net interest income after provision for loan losses
     26,091       18,036       44.7 %     26,455       75,955       46,664       62.8 %
       
 
                                          
       
 
                                                        
Non-Interest Income:
                                                        
Financial service revenues
     3,756       3,737       0.5 %     4,500       12,496       12,629       -1.1 %
Banking service revenues
     1,406       1,862       -24.5 %     1,395       4,328       6,001       -27.9 %
Investment banking revenues
     200       113       77.0 %     12       950       113       740.7 %
Mortgage banking activities
     910       1,010       -9.9 %     545       2,461       1,242       98.1 %
       
 
                                          
Total banking and financial service revenues
     6,272       6,722       -6.7 %     6,452       20,235       19,985       1.3 %
Net gain (loss) on:
                                                        
Sale of securities available-for-sale
     386       —       100.0 %     198       9,908       358       2667.6 %
Other than temporary impairments
     (58,804 )     —       -100.0 %     —       (58,804 )     —       -100.0 %
Derivatives
     (5,522 )     154       -3686.0 %     228       (13,247 )     8,538       -255.2 %
Other investments
     16       297       -94.6 %     16       132       1,083       -87.8 %
Trading securities
     (31 )     (2 )     -1450.0 %     16       (32 )     —       -100.0 %
Foreclosed real estate
     58       (59 )     198.3 %     (260 )     (452 )     8       -5750.0 %
Other
     609       22       2668.2 %     —       608       88       590.9 %
       
 
                                          
Total non-interest income (loss), net
     (57,016 )     7,134       -899.2 %     6,650       (41,652 )     30,060       -238.6 %
       
 
                                          
       
 
                                                        
Non-Interest Expenses:
                                                        
Compensation and employee benefits
     7,742       7,561       2.4 %     7,824       23,281       21,222       9.7 %
Occupancy and equipment
     3,561       3,045       16.9 %     3,365       10,213       9,381       8.9 %
Professional and service fees
     2,457       1,543       59.2 %     2,267       6,604       5,316       24.2 %
Advertising and business promotion
     847       1,069       -20.8 %     836       2,757       2,980       -7.5 %
Directors and investor relations
     273       308       -11.4 %     303       854       1,608       -46.9 %
Loan servicing expenses
     352       349       0.9 %     339       1,022       1,412       -27.6 %
Taxes, other than payroll and income taxes
     644       607       6.1 %     607       1,862       1,543       20.7 %
Electronic banking charges
     428       431       -0.7 %     396       1,242       1,346       -7.7 %
Clearing and wrap fees expenses
     294       321       -8.4 %     313       901       997       -9.6 %
Communication
     314       354       -11.3 %     325       964       1,001       -3.7 %
Insurance
     618       210       194.3 %     579       1,799       638       182.0 %
Printing, postage, stationery and supplies
     214       177       20.9 %     245       736       568       29.6 %
Other
     453       547       -17.2 %     681       1,772       1,815       -2.4 %
       
 
                                          
Total non-interest expenses
     18,197       16,522       10.1 %     18,080       54,007       49,827       8.4 %
       
 
                                          
       
 
                                                        
Income (loss) before income taxes
     (49,122 )     8,648       -668.0 %     15,025       (19,704 )     26,897       -173.3 %
Income tax expense (benefit)
     (4,226 )     196       -2256.1 %     598       (6,083 )     1,007       -704.1 %
       
 
                                          
Net income (loss)
     (44,896 )     8,452       -631.2 %     14,427       (13,621 )     25,890       -152.6 %
Less: Dividends on preferred stock
     (1,200 )     (1,200 )     —       (1,200 )     (3,601 )     (3,601 )     —  
       
 
                                          
Income (loss) available to common shareholders
   $ (46,096 )   $ 7,252       -735.6 %   $ 13,227     $ (17,222 )   $ 22,289       -177.3 %
       
 
                                          

5

 

                                                                 
(OFG Logo)  
ORIENTAL FINANCIAL GROUP
Financial Summary
(NYSE: OGF)
            
                   
          QUARTER ENDED     NINE-MONTH PERIOD ENDED  
          30-Sep-08     30-Sep-07     %     30-Jun-08     30-Sep-08     30-Sep-07     %  
(Dollars in thousands, except per share data):
                                                        
EARNINGS (LOSSES) PER SHARE
                                                        
Basic
     ($1.90 )   $ 0.30       -733.3 %   $ 0.54       ($0.71 )   $ 0.91       -178.0 %
 
                                          
Diluted
     ($1.89 )   $ 0.30       -730.0 %   $ 0.54       ($0.71 )   $ 0.91       -178.0 %
       
 
                                          
       
 
                                                        
COMMON STOCK DATA
                                                        
Average common shares outstanding
     24,292       24,230       0.3 %     24,290       24,249       24,396       -0.6 %
Average potential common shares-options
     82       31       164.5 %     94       100       110       -9.1 %
 
                                          
Total average shares outstanding and equivalents
     24,374       24,261       0.5 %     24,384       24,349       24,506       -0.6 %
       
 
                                          
       
 
                                                        
Cash dividends per share of common stock
   $ 0.14     $ 0.14       —     $ 0.14     $ 0.42     $ 0.42       —  
       
 
                                          
Cash dividends declared on common shares
   $ 3,402     $ 3,377       0.7 %   $ 3,404     $ 10,206     $ 10,235       -0.3 %
       
 
                                          
Pay-out ratio
     -7.37 %     46.67 %     -115.8 %     25.93 %     -59.15 %     46.15 %     -228.2 %
       
 
                                          
       
 
                                                        
SELECTED FINANCIAL DATA
                                                        
PERFORMANCE RATIOS:
                                                        
Return on average assets
     -2.99 %     0.59 %     -606.8 %     0.95 %     -0.30 %     0.66 %     -145.5 %
       
 
                                          
Return on average common equity
     -88.58 %     11.17 %     -893.1 %     20.65 %     -8.97 %     11.20 %     -180.1 %
       
 
                                          
Efficiency ratio
     53.03 %     62.65 %     -15.4 %     51.82 %     53.07 %     70.47 %     -24.7 %
       
 
                                          
       
 
                                                        
TAX EQUIVALENT SPREAD
                                                        
Interest-earning assets
     5.67 %     5.59 %     1.4 %     5.69 %     5.64 %     5.56 %     1.4 %
Tax equivalent adjustment
     1.87 %     1.56 %     19.9 %     1.88 %     1.86 %     1.52 %     22.4 %
       
 
                                          
Interest-earning assets — tax equivalent
     7.54 %     7.15 %     5.5 %     7.57 %     7.50 %     7.08 %     5.9 %
Interest-bearing liabilities
     4.04 %     4.40 %     -8.2 %     4.01 %     4.08 %     4.46 %     -8.5 %
       
 
                                          
Tax equivalent interest rate spread
     3.50 %     2.75 %     27.3 %     3.56 %     3.42 %     2.62 %     30.5 %
       
 
                                          
Tax equivalent interest rate margin
     3.74 %     3.03 %     23.4 %     3.78 %     3.69 %     2.88 %     28.1 %
       
 
                                          
       
 
                                                        
NORMAL SPREAD
                                                        
Investments
     5.45 %     5.19 %     5.0 %     5.48 %     5.40 %     5.06 %     6.7 %
Loans
     6.52 %     6.92 %     -5.8 %     6.52 %     6.57 %     7.03 %     -6.5 %
       
 
                                          
Interest-earning assets
     5.67 %     5.59 %     1.4 %     5.69 %     5.64 %     5.56 %     1.4 %
       
 
                                          
       
 
                                                        
Deposits
     3.41 %     4.29 %     -20.5 %     3.44 %     3.62 %     4.19 %     -13.6 %
Borrowings
     4.26 %     4.43 %     -3.8 %     4.20 %     4.23 %     4.56 %     -7.2 %
Interest-bearing liabilities
     4.04 %     4.40 %     -8.2 %     4.01 %     4.08 %     4.46 %     -8.5 %
       
 
                                          
Interest rate spread
     1.63 %     1.19 %     37.0 %     1.68 %     1.56 %     1.10 %     41.8 %
       
 
                                          
Interest rate margin
     1.88 %     1.46 %     28.8 %     1.90 %     1.82 %     1.36 %     33.8 %
       
 
                                          
       
 
                                                        
AVERAGE BALANCES
                                                        
Investments
   $ 4,756,244     $ 4,104,277       15.9 %   $ 4,776,560     $ 4,749,345     $ 3,722,042       27.6 %
Loans
     1,224,318       1,253,760       -2.3 %     1,208,098       1,207,872       1,248,967       -3.3 %
       
 
                                          
Interest-earning assets
   $ 5,980,562     $ 5,358,037       11.6 %   $ 5,984,658     $ 5,957,217     $ 4,971,009       19.8 %
       
 
                                          
       
 
                                                        
Deposits
   $ 1,429,759     $ 1,264,282       13.1 %   $ 1,427,904     $ 1,354,863     $ 1,252,790       8.1 %
Borrowings
     4,182,375       3,763,340       11.1 %     4,236,568       4,210,306       3,424,695       22.9 %
       
 
                                          
Interest-bearing liabilities
   $ 5,612,134     $ 5,027,622       11.6 %   $ 5,664,472     $ 5,565,169     $ 4,677,485       19.0 %
       
 
                                          

 

                                                 
(OFG Logo)  
ORIENTAL FINANCIAL GROUP
Financial Summary
(NYSE: OGF)
    
                 
            AS OF    
            30-Sep-08     30-Sep-07     %     30-Jun-08     31-Dec-07  
(Dollars in thousands)
                                        
BALANCE SHEET
                                        
       
 
                                        
Cash and due from banks
   $ 40,382     $ 74,885       -46.1 %   $ 56,486     $ 88,983  
       
 
                              
       
 
                                        
Interest-earning assets:
                                        
Investments:
                                        
Trading securities
     1,061       240       342.1 %     1,311       1,122  
Investment securities available-for-sale, at fair value with amortized cost of $3,403,608 (September 30, 2007-$2,832,329; June 30, 2008- $3,467,005; December 31, 2007-$3,063,763)
     3,307,820       2,829,171       16.9 %     3,382,307       3,069,282  
Investment securities held-to-maturity, at amortized cost with fair value of $1,171,853 (September 30, 2007-$1,526,876; June 30, 2008- $1,198,736; December 31, 2007-$1,478,112)
     1,191,671       1,555,671       -23.4 %     1,238,147       1,492,887  
Federal Home Loan Bank (FHLB) stock, at cost
     19,812       21,387       -7.4 %     22,062       20,658  
Other investments
     150       1,613       -90.7 %     150       1,661  
       
 
                              
Total investments
     4,520,514       4,408,082       2.6 %     4,643,977       4,585,610  
       
 
                              
Loans:
                                        
Mortgage loans
     1,003,022       998,393       0.5 %     995,085       989,487  
Commercial loans, mainly secured by real estate
     177,687       159,477       11.4 %     170,844       157,198  
Consumer loans
     23,832       30,008       -20.6 %     25,479       29,245  
       
 
                              
Loans receivable, gross
     1,204,541       1,187,878       1.4 %     1,191,408       1,175,930  
Less: Deferred loan fees, net
     (3,389 )     (2,927 )     -15.8 %     (3,488 )     (2,875 )
       
 
                              
       
 
                                      
Loans receivable
     1,201,152       1,184,951       1.4 %     1,187,920       1,173,055  
Allowance for loan losses
     (12,466 )     (9,055 )     -37.7 %     (11,885 )     (10,161 )
       
 
                              
       
 
                                      
Loans receivable, net
     1,188,686       1,175,896       1.1 %     1,176,035       1,162,894  
Mortgage loans held for sale
     31,152       21,607       44.2 %     42,122       16,672  
       
 
                              
Total loans, net
     1,219,838       1,197,503       1.9 %     1,218,157       1,179,566  
       
 
                              
Total interest-earning assets
     5,740,352       5,605,585       2.4 %     5,862,134       5,765,176  
       
 
                              
Securities sold but not yet delivered
     4,857       45,866       -89.4 %     —       —  
Accrued interest receivable
     38,104       33,162       14.9 %     42,842       52,315  
Premises and equipment, net
     20,911       20,124       3.9 %     21,378       21,779  
Deferred tax asset, net
     22,577       14,136       59.7 %     17,249       10,362  
Foreclosed real estate
     8,220       4,349       89.0 %     4,906       4,207  
Investment in equity indexed options
     13,548       36,738       -63.1 %     27,641       40,709  
Prepaid expenses
     4,516       3,214       40.5 %     5,004       2,645  
Mortgage tax credits
     6,439       —       100.0 %     4,992       69  
Goodwill
     2,006       2,006       —       2,006       2,006  
Investment in Statutory Trusts
     1,086       1,086       —       1,086       1,086  
Servicing asset
     3,004       2,213       35.7 %     2,934       2,526  
Accounts receivable and other assets
     8,664       13,825       -37.3 %     11,521       7,992  
       
 
                              
Total assets
   $ 5,914,666     $ 5,857,189       1.0 %   $ 6,060,179     $ 5,999,855  
       
 
                              
       
 
                                        
Interest-bearing liabilities:
                                        
Deposits:
                                        
Non-interest bearing demand deposits
   $ 56,883     $ 43,065       32.1 %   $ 55,936     $ 49,998  
Interest-bearing demand deposits
     395,188       67,107       488.9 %     68,204       69,154  
Savings accounts
     59,250       338,128       -82.5 %     407,911       387,790  
Individual retirement accounts
     285,635       314,851       -9.3 %     293,354       317,744  
Retail certificates of deposit
     267,383       208,566       28.2 %     271,554       232,239  
       
 
                              
Total Retail Deposits
     1,064,339       971,717       9.5 %     1,096,959       1,056,925  
Wholesale certificates of deposit
     448,450       297,988       50.5 %     395,460       189,495  
       
 
                              
Total deposits
     1,512,789       1,269,705       19.1 %     1,492,419       1,246,420  
       
 
                              

7

 

                                                 
(OFG Logo)  
ORIENTAL FINANCIAL GROUP
Financial Summary
(NYSE: OGF)
    
                 
            AS OF    
            30-Sep-08     30-Sep-07     %     30-Jun-08     31-Dec-07  
(Dollars in thousands)
                                        
Borrowings:
                                        
Federal funds purchased and other short term borrowings
     41,026       27,246       50.6 %     41,583       27,460  
Securities sold under agreements to repurchase
     3,770,755       3,809,709       -1.0 %     3,810,752       3,861,411  
Advances from FHLB
     281,724       348,114       -19.1 %     331,895       331,898  
Term notes
     5,000       —       100.0 %     —       —  
Subordinated capital notes
     36,083       36,083       —       36,083       36,083  
       
 
                              
Total borrowings
     4,134,588       4,221,152       -2.1 %     4,220,313       4,256,852  
       
 
                              
Total interest-bearing liabilities
     5,647,377       5,490,857       2.9 %     5,712,732       5,503,272  
       
 
                              
Securities purchased but not yet received
     —       —       —       23,103       111,431  
Accrued expenses and other liabilities
     25,271       24,537       3.0 %     23,177       25,691  
       
 
                              
Total liabilities
     5,672,648       5,515,394       2.9 %     5,759,012       5,640,394  
       
 
                              
       
 
                                        
Preferred Equity
     68,000       68,000       —       68,000       68,000  
       
 
                              
Common Equity:
                                        
Common stock
     25,738       25,556       0.7 %     25,736       25,557  
Additional paid-in capital
     212,511       210,006       1.2 %     212,282       210,073  
Legal surplus
     38,992       39,298       -0.8 %     43,533       40,573  
Retained earnings
     19,449       35,773       -45.6 %     64,406       45,296  
Treasury stock, at cost
     (17,142 )     (17,042 )     -0.6 %     (17,136 )     (17,023 )
Accumulated other comprehensive loss
     (105,530 )     (19,796 )     -433.1 %     (95,654 )     (13,015 )
       
 
                              
Total common equity
     174,018       273,795       -36.4 %     233,167       291,461  
       
 
                              
Stockholders’ equity
     242,018       341,795       -29.2 %     301,167       359,461  
       
 
                              
       
 
                                        
Total liabilities and stockholders’ equity
   $ 5,914,666     $ 5,857,189       1.0 %   $ 6,060,179     $ 5,999,855  
       
 
                              
       
 
                                        
CAPITAL RATIOS
                                        
Leverage Capital Ratio
     5.98 %     6.79 %     -11.9 %     6.80 %     6.69 %
Minimum Leverage Capital Ratio Required
             4.00 %     4.00 %     4.00 %     4.00 %
Actual Tier 1 Capital
   $ 359,165     $ 385,661       -6.9 %   $ 413,767     $ 396,309  
Minimum Tier 1 Capital Required
   $ 240,281     $ 227,342       5.7 %   $ 243,414     $ 236,847  
       
 
                                        
Tier 1 Risk-Based Capital Ratio
     15.93 %     17.77 %     -10.4 %     17.26 %     18.59 %
Minimum Tier 1 Risk-Based Capital Ratio Required
             4.00 %     4.00 %     4.00 %     4.00 %
Actual Tier 1 Risk-Based Capital
   $ 359,165     $ 385,661       -6.9 %   $ 413,767     $ 396,309  
Minimum Tier 1 Risk-Based Capital Required
   $ 90,168     $ 86,817       3.9 %   $ 95,867     $ 85,292  
       
 
                                        
Total Risk-Based Capital Ratio
     16.49 %     18.19 %     -9.3 %     17.76 %     19.06 %
Minimum Total Risk-Based Capital Ratio Required
             8.00 %     8.00 %     8.00 %     8.00 %
Actual Total Risk-Based Capital
   $ 371,631     $ 394,716       -5.8 %   $ 425,652     $ 406,470  
Minimum Total Risk-Based Capital Required
   $ 180,336     $ 173,634       3.9 %   $ 191,735     $ 170,583  
       
 
                                        
Tangible Total Equity to Total Assets
     4.06 %     5.80 %     -30.0 %     4.94 %     5.96 %
Tangible Common Equity to Total Assets
     2.91 %     4.64 %     -37.3 %     3.81 %     4.82 %
       
 
                                        
SELECTED FINANCIAL DATA AT PERIOD-END
                                        
Common shares outstanding at end of period
     24,293       24,119       0.7 %     24,292       24,121  
       
 
                              
Book value per common share
   $ 7.16     $ 11.35       -36.9 %   $ 9.60     $ 12.08  
       
 
                              
       
 
                                        
Trust Assets Managed
   $ 1,839,702     $ 1,927,409       -4.6 %   $ 1,936,804     $ 1,962,226  
Broker-Dealer Assets Gathered
     1,236,760       1,090,255       13.4 %     1,294,010       1,281,168  
       
 
                              
Total Assets Managed
     3,076,462       3,017,664       1.9 %     3,230,814       3,243,394  
Assets owned
     5,914,666       5,857,189       1.0 %     6,060,179       5,999,855  
       
 
                              
Total financial assets managed and owned
   $ 8,991,128     $ 8,874,853       1.3 %   $ 9,290,993     $ 9,243,249  
       
 
                              
       
 
                                        
Number of financial centers
     23       24       -4.2 %     24       24  
       
 
                              

8

 

                                                                 
(OFG Logo)  
ORIENTAL FINANCIAL GROUP
Financial Summary
(NYSE: OGF)
            
                   
          QUARTER ENDED     NINE-MONTH PERIOD ENDED  
          30-Sep-08     30-Sep-07     %     30-Jun-08     30-Sep-08     30-Sep-07     %  
(Dollars in thousands)
                                                        
Loan Production and Purchases Summary:
                                                        
Mortgage loans production
   $ 56,109     $ 25,461       120.4 %   $ 75,549     $ 176,236     $ 111,766       57.7 %
Mortgage loans purchased
     —       52,563       -100.0 %     482       5,173       101,242       -94.9 %
       
 
                                          
Total mortgage
     56,109       78,024       -28.1 %     76,031       181,409       213,008       -14.8 %
       
 
                                          
Commercial
     10,894       6,454       68.8 %     15,171       41,802       26,987       54.9 %
Consumer
     947       2,597       -63.5 %     1,421       3,601       5,731       -37.2 %
       
 
                                          
Total loan production and purchases
   $ 67,950     $ 87,075       -22.0 %   $ 92,623     $ 226,812     $ 245,726       -7.7 %
       
 
                                          
       
 
                                                        
CREDIT DATA
                                                        
Net credit losses (recoveries):
                                                        
Mortgage
   $ 648     $ 248       161.3 %   $ 314     $ 1,128     $ 1,274       -11.5 %
Commercial
     54       248       -78.2 %     141       182       241       -24.5 %
Consumer
     667       495       34.7 %     732       1,965       1,510       30.1 %
       
 
                                          
Total net credit losses
   $ 1,369     $ 991       38.1 %   $ 1,187     $ 3,275     $ 3,025       8.3 %
       
 
                                          
Net credit losses to average loans outstanding
     0.45 %     0.32 %     40.6 %     0.39 %     0.36 %     0.32 %     12.5 %
       
 
                                          
 
            AS OF                    
            30-Sep-08     30-Sep-07     %     30-Jun-08                    
Allowance for loan losses
   $ 12,466     $ 9,055       37.70 %   $ 11,885  
       
 
                        
Allowance coverage ratios:
                                
Allowance for loan losses to total loans
     1.01 %     0.75 %     34.67 %     0.97 %
       
 
                        
Allowance for loan losses to non-performing loans
     18.16 %     14.72 %     23.40 %     17.27 %
       
 
                        
Allowance for loan losses to non-residential non-performing loans
     301.99 %      316.28 %     -4.50 %     299.67 %
       
 
                        
Non-performing assets summary:
                                
Mortgage
   $ 64,513     $ 58,664       10.00 %   $ 64,867  
Commercial, mainly real estate
     3,308       2,257       46.60 %     3,026  
Consumer
     820       606       35.30 %     940  
       
 
                        
Non-performing loans
     68,641       61,527       11.60 %     68,833  
Foreclosed properties
     8,220       4,349       89.00 %     4,906  
Non-performing assets
   $ 76,861     $ 65,876       16.70 %   $ 73,739  
       
 
                        
 
Non-performing loans to total loans
     5.57 %     5.10 %     9.20 %     5.60 %
       
 
                        
Non-performing loans to total assets
     1.16 %     1.05 %     10.50 %     1.14 %
       
 
                        
Non-performing assets to total assets
     1.30 %     1.12 %     16.10 %     1.22 %
       
 
                        
Non-performing assets to total capital
     31.76 %     19.27 %     64.80 %     24.48 %
       
 
                        

9

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