OFG Bancorp (OFG) 8-K Oriental Financial Group Reports Second Quarter 2012 Results

Exhibit 99

 

Oriental Financial Group Reports Second Quarter 2012 Results

SAN JUAN, Puerto Rico, July 23, 2012 – Oriental Financial Group Inc. (NYSE: OFG) today announced results for the second quarter ended June 30, 2012.

2Q12 Financial Summary

·Income per common share (diluted) of $0.34 compares to $0.23 in the preceding 2012 quarter and $0.56 in the year ago quarter.

·Income available to common shareholders of $13.8 million compares to $9.5 million in the preceding 2012 quarter and $25.3 million in the year ago quarter.

·Book value per share of $15.32 at June 30, 2012 compares to $15.27 at March 31, 2012 and $14.91 at June 30, 2011.

·Cash dividends per common share of $0.06 are up 20% from the year ago quarter.

As compared to the year ago period, the second quarter of 2012 reflects a reduced investment securities portfolio, higher premium amortization on those securities, and the absence of a $3.0 million benefit from the settlement of various tax contingencies. 

Over the past year, Oriental has sold securities to lock in gains, deleveraged the balance sheet, reduced wholesale funding costs, and built up its cash position, putting the Company in a favorable position to move forward with its recently announced plan to acquire the Puerto Rico operations of Banco Bilbao Vizcaya Argentaria, S.A. (NYSE: BBVA) for $500 million in cash.

CEO Comment

“We are continuing to move in the right direction for achieving our goals for 2012,” said José Rafael Fernández, President, Chief Executive Officer and Vice Chairman of the Board. 

“The investments made to expand our banking capabilities, the active management of our risk exposures, and the transformation of our financial model, have resulted in a growth oriented franchise with a very strong capital position.

“During the quarter, we continued to benefit from new commercial, consumer and auto lending; lower cost of deposits as well as reduced cost of wholesale funding; and increased banking activity and cross selling of services from our growing customer base.  We also continued to effectively manage non-interest expenses, while reducing our reliance on investment securities.

“Complementary to our focus on growing our banking business, our planned acquisition of BBVA’s Puerto Rico operations has been well received and remains on target for closing before year end 2012, subject to customary regulatory approvals.”

2Q12 Income Statement Analysis

All comparisons are to the preceding quarter unless otherwise noted

·Net interest income (after provision for loan and lease losses) was $27.8 million, a $0.9 million decline from the preceding quarter.

·Interest income from non-covered loans declined $0.9 million, primarily due to lower residential mortgage loan balances.  Oriental typically sells most new residential mortgage loans into the secondary market rather than holding them in its portfolio, and, in keeping with its emphasis on banking activity, Oriental has been building its commercial and consumer loan and auto leasing portfolios.  Interest income from covered loans declined $1.2 million due to lower balances as they continued to pay down in line with projections.

·Interest income from investment securities declined $7.0 million.  Approximately $4.4 million of the reduction was attributable to lower yield and lower balances, and approximately $2.6 million was due to higher premium amortization on Oriental’s mortgage backed securities (MBS) portfolio. During the second quarter of 2012, approximately $343 million of MBS were sold at a net gain of $11.9 million, reflecting Oriental’s ongoing strategy to sell MBS subject to higher prepayment speeds.

·In all, interest income from loans equaled 62% of total interest income, up from 35% in the year ago quarter, underscoring Oriental’s emphasis on increased banking activity.

·Total interest expense from deposits declined $1.3 million, primarily reflecting continuing progress in repricing Oriental’s core retail deposits.  Total interest expense from borrowings declined $2.1 million, primarily reflecting actions Oriental took prior to the second quarter to reduce cost of funds.  To further reduce cost of borrowings, in May 2012, Oriental renewed $350 million in repos costing 4.26% at a new effective rate of approximately 1.90%.

·While net interest rate margin was 2.28% versus 2.59% in the first quarter of 2012, Oriental expects it to be around 2.50% for all of 2012 primarily due to plans to further reduce cost of funds.

·Total banking and wealth management revenues of $11.7 million were level with the preceding quarter, but increased 14.7% year over year.  Compared to the year ago quarter, wealth management revenues grew 29.0% due to increased brokerage, trust and insurance business.  Assets under management were a record $4.5 billion at June 30, 2012, up 9.3% from a year ago.  Banking service revenues rose 5.3% due to increased electronic banking activity.

·Total non-core, non-interest income was $5.5 million compared to $1.3 million in the preceding quarter.  Second quarter 2012 results primarily reflect: (i) an $11.9 million net gain on the sale of above mentioned MBS as Oriental took advantage of market opportunities; and (ii) a $5.6 million amortization of the FDIC shared-loss indemnification assets, mainly due to an improvement in the revised cash flow projections of certain former Eurobank loan pools in 2011.

·Due to effective cost controls, non-interest expenses were approximately level at $29.0 million.

June 30, 2012 Balance Sheet Analysis

All comparisons are to March 31, 2012 unless otherwise noted

·Cash and cash equivalents (including securities purchased under agreements to resell) of $689.6 million increased $70.7 million, reflecting repayments on MBS and the gain on the sale of securities.

·Total investments of $3.5 billion declined $113.6 million, reflecting the previously noted sale of securities.

·Total non-covered loans of approximately $1.2 billion declined $19.4 million, primarily due to the repayment of residential mortgage loans.  Covered loans of $447.7 million declined $14.0 million as they continued to pay down in line with projections.

·Year to date, production of commercial loans totaled $90.9 million, up 45.9% from the year ago period, including $35.5 million in the second quarter of 2012.  Based on the current pipeline, Oriental continues to anticipate originating approximately $200 million in new commercial loans in 2012.

·Retail deposits of $2.0 billion declined slightly, while the cost of those deposits dropped to 1.34% from 1.52%.  Wholesale deposits declined $87.0 million as Oriental continued to allow short-term brokered CDs to mature.

·Borrowings of $3.4 billion remained approximately level with their cost dropping to 2.34% from 2.52% due to steps taken to reduce these costs of funds.

·Stockholders’ equity of $692.2 million increased $2.9 million.

Other 2Q12 Highlights

All comparisons are to the preceding quarter or March 31, 2012 unless otherwise noted

·Credit Quality – Non-Covered Assets:  Non-performing assets of $139.7 million and allowance for loan and lease losses of $37.4 million were relatively unchanged.  Net credit losses increased $1.1 million and provision for loan and lease losses increased $0.8 million.  Early delinquency loans (30-89 days past due) declined $2.6 million, while total delinquency (30 days and over past due) fell $11.9 million.

·Credit Quality – Covered Assets (the former Eurobank loans):  Provision for loan and lease losses was $1.5 million, a decline of $5.7 million, reflecting the results of quarterly revisions to the expected cash flows based on recent experiences of certain pools of loans.  The provision is net of the estimated losses claimable to the FDIC.

·Capital:   Oriental maintains regulatory capital ratios well above the requirements for a well-capitalized institution.  At June 30, 2012, the Leverage Capital Ratio was 10.81%, Tier-1 Risk-Based Capital Ratio was 32.52%, and Total Risk-Based Capital Ratio was 33.82%.

·New Capital:  The foregoing results concerning capital do not include $84.0 million of 8.75% non-cumulative convertible perpetual preferred stock raised in connection with the proposed acquisition of BBVA’s PR operations.  As this transaction settled in early July, the net increase in capital will be reflected in the third quarter of 2012.

Conference Call

A conference call to discuss Oriental’s results, outlook and related matters will be held Tuesday, July 24, 2012, at 10:00 AM Eastern and Puerto Rico Time.  The call will be accessible live via a webcast on Oriental’s Investor Relations website at www.orientalfg.com.  A webcast replay will be available shortly thereafter.  Access the webcast link in advance to download any necessary software.

Full Financial Tables

Full financial tables for the second quarter of 2012 can be found on the Webcasts, Presentations & Other Files page of Oriental’s Investor Relations website at www.orientalfg.com.

About Oriental Financial Group

Oriental Financial Group Inc. is a diversified financial holding company that operates under U.S. and Puerto Rico banking laws and regulations, principally through its two subsidiaries, Oriental Bank and Trust and Oriental Financial Services.  Now in its 48^th year in business, Oriental provides a full range of commercial, consumer and mortgage banking services, as well as financial planning, trust, insurance, investment brokerage and investment banking services, primarily in Puerto Rico, through 28 financial centers.  Investor information about Oriental can be found at www.orientalfg.com. 

Non-GAAP Financial Measures

From time to time, Oriental uses certain non-GAAP measures of financial performance to supplement the financial statements presented in accordance with GAAP. Oriental presents non-GAAP measures when its management believes that the additional information is useful and meaningful to investors. Non-GAAP measures do not have any standardized meaning and are therefore unlikely to be comparable to similar measures presented by other companies. The presentation of non-GAAP measures is not intended to be a substitute for, and should not be considered in isolation from, the financial measures reported in accordance with GAAP.

Oriental’s management has reported and discussed the results of operations herein both on a GAAP basis and on a pre-tax pre-provision operating income basis (defined as net interest income, plus banking and wealth management revenues, less non-interest expenses, and calculated on the accompanying table).  Oriental’s management believes that, given the nature of the items excluded from the definition of pre-tax pre-provision operating income, it is useful to state what the results of operations would have been without them so that investors can see the financial trends from Oriental’s continuing business.

Tangible common equity consists of common equity less goodwill. Management believes that the ratios of tangible common equity to total assets and to risk-weighted assets assist investors in analyzing Oriental’s capital position.

Forward-Looking Statements

The information included in this document contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.  These statements are based on management’s current expectations and involve certain risks and uncertainties that may cause actual results to differ materially from those expressed in forward-looking statements. 

Factors that might cause such a difference include, but are not limited to (i) the ability to receive and timing of necessary regulatory approvals to consummate the acquisition of BBVA’s Puerto Rico operations, (ii) difficulties in integrating BBVA’s Puerto Rico operations into Oriental’s operations; (iii) the amounts by which our assumptions related to the acquisition, including future financing, fail to approximate actual results; (iv) the rate of declining growth in the economy and employment levels, as well as general business and economic conditions; (v) changes in interest rates, as well as the magnitude of such changes; (vi) the fiscal and monetary policies of the federal government and its agencies; (vii) changes in federal bank regulatory and supervisory policies, including required levels of capital; (viii) the relative strength or weakness of the consumer and commercial credit sectors and of the real estate market in Puerto Rico; (ix) the performance of the stock and bond markets; (x) competition in the financial services industry; (xi) possible legislative, tax or regulatory changes; and (xii) difficulties in combining the operations of any other acquired entity. 

For a discussion of such factors and certain risks and uncertainties to which Oriental is subject, see Oriental’s annual report on Form 10-K for the year ended December 31, 2011, as well as its other filings with the U.S. Securities and Exchange Commission.  Other than to the extent required by applicable law, including the requirements of applicable securities laws, Oriental assumes no obligation to update any forward-looking statements to reflect occurrences or unanticipated events or circumstances after the date of such statements.

# # #

Contacts:

Puerto Rico: Alexandra Lopez (allopez@orientalfg.com), Oriental Financial Group Inc., (787) 522-6970

U.S.: Steven Anreder (steven.anreder@anreder.com) and Gary Fishman (gary.fishman@anreder.com), Anreder & Company, (212) 532-3232

ORIENTAL FINANCIAL GROUP
Financial Summary
(NYSE: OFG)	QUARTER ENDED							YEAR TO DATE
	30-Jun-12		30-Jun-11		%	31-Mar-12		30-Jun-12		30-Jun-11		%
SUMMARY OF OPERATIONS (Dollars in thousands):
Interest Income:
Loans
Loans not covered under shared-loss agreements with the FDIC	$	17,223	$	15,969	7.9%	$	18,122	$	35,345	$	33,934	4.2%
Loans covered under shared-loss agreements with the FDIC		20,342		13,060	55.8%		21,541		41,884		27,285	53.5%
Total interest income from loans		37,565		29,029	29.4%		39,663		77,229		61,219	26.2%
Mortgage-backed securities		22,011		51,021	-56.9%		28,326		50,337		94,759	-46.9%
Investment securities		831		1,882	-55.8%		1,524		2,355		3,738	-37.0%
Short term investments		381		270	41.1%		405		787		520	51.3%
Total interest income		60,788		82,202	-26.1%		69,918		130,708		160,236	-18.4%
Interest Expense:
Deposits		7,964		11,546	-31.0%		9,246		17,210		23,829	-27.8%
Securities sold under agreements to repurchase		16,586		23,512	-29.5%		17,570		34,156		47,671	-28.4%
Advances from FHLB and other borrowings		2,841		3,002	-5.4%		3,004		5,845		5,994	-2.5%
FDIC-guaranteed term notes		-		1,021	-100.0%		909		909		2,042	-55.5%
Subordinated capital notes		321		308	4.2%		328		649		611	6.2%
Total interest expense		27,712		39,389	-29.6%		31,057		58,769		80,147	-26.7%
Net interest income		33,076		42,813	-22.7%		38,861		71,939		80,089	-10.2%
Provision for non-covered loan and lease losses		3,800		3,800	0.0%		3,000		6,800		7,600	-10.5%
Provision for covered loan and lease losses, net		1,467		-	100.0%		7,157		8,624		549	1470.9%
Total provision for loan and lease losses, net		5,267		3,800	38.6%		10,157		15,424		8,149	89.3%
Net interest income after provision for loan and lease losses		27,809		39,013	-28.7%		28,704		56,515		71,940	-21.4%
Non-Interest Income:
Wealth management revenues		5,903		4,575	29.0%		5,889		11,791		9,257	27.4%
Banking service revenues		3,407		3,234	5.3%		3,286		6,693		6,958	-3.8%
Mortgage banking activities		2,436		2,435	0.0%		2,502		4,938		4,258	16.0%
Total banking and wealth management revenues		11,746		10,244	14.7%		11,677		23,422		20,473	14.4%
Net accretion (amortization) of FDIC shared-loss indemnification asset		(5,583)		1,020	-647.4%		(4,827)		(10,410)		2,231	-566.6%
Net gain (loss) on:
Sales of securities and derivative activities		11,872		5,422	119.0%		7,351		19,223		1,433	1241.5%
Foreclosed real estate		(886)		(3)	-100.0%		(398)		(1,284)		(135)	-851.1%
Other		63		76	-17.1%		(833)		(770)		162	-575.3%
Total non-interest income, net		17,212		16,759	2.7%		12,970		30,181		24,164	24.9%
Non-Interest Expenses:
Compensation and employee benefits		11,184		11,230	-0.4%		10,365		21,550		22,918	-6.0%
Professional and service fees		5,144		5,750	-10.5%		5,298		10,442		11,197	-6.7%
Occupancy and equipment		4,270		4,214	1.3%		4,186		8,455		8,619	-1.9%
Insurance		1,442		1,646	-12.4%		1,820		3,262		3,632	-10.2%
Electronic banking charges		1,609		1,155	39.3%		1,558		3,166		2,610	21.3%
Taxes, other than payroll and income taxes		(107)		858	-112.5%		1,174		1,067		2,237	-52.3%
Advertising, business promotion, and strategic initiatives		1,564		1,508	3.7%		848		2,412		2,700	-10.7%
Loan servicing and clearing expenses		955		1,076	-11.2%		967		1,923		2,097	-8.3%
Foreclosure, repossession and other real estate expenses		1,198		761	57.4%		954		2,153		1,484	45.1%
Communication		415		425	-2.4%		412		827		822	0.6%
Director and investor relations		342		339	0.9%		309		651		625	4.2%
Printing, postage, stationery and supplies		322		362	-11.0%		308		630		644	-2.2%
Other		668		1,372	-51.3%		885		1,554		1,890	-17.8%
Total non-interest expenses		29,006		30,696	-5.5%		29,084		58,092		61,475	-5.5%
Income before income taxes		16,015		25,076	-36.1%		12,590		28,604		34,629	-17.4%
Income tax expense (benefit)		1,057		(1,391)	176.0%		1,937		2,994		5,081	-41.1%
Net income		14,958		26,467	-43.5%		10,653		25,610		29,548	-13.3%
Less: Dividends on preferred stock		(1,200)		(1,200)	0.0%		(1,201)		(2,401)		(2,401)	0.0%
Income available to common shareholders	$	13,758	$	25,267	-45.5%	$	9,452	$	23,209	$	27,147	-14.5%

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ORIENTAL FINANCIAL GROUP
Financial Summary
(NYSE: OFG)	QUARTER ENDED							YEAR TO DATE
	30-Jun-12		30-Jun-11		%	31-Mar-12		30-Jun-12		30-Jun-11		%
(Dollars in thousands, except per share data)
PRE-TAX PRE-PROVISION OPERATING INCOME
Net interest income	$	33,076	$	42,813	-22.7%	$	38,861	$	71,939	$	80,089	-10.2%
Core non-interest income:
Wealth management revenues		5,903		4,575	29.0%		5,889		11,791		9,257	27.4%
Banking service revenues		3,407		3,234	5.3%		3,286		6,693		6,958	-3.8%
Mortgage banking activities		2,436		2,435	0.0%		2,502		4,938		4,258	16.0%
Total core non-interest income		11,746		10,244	14.7%		11,677		23,422		20,473	14.4%
Non-interest expenses		(29,006)		(30,696)	5.5%		(29,084)		(58,092)		(61,475)	5.5%
Total pre-tax pre-provision operating income	$	15,816	$	22,361	-29.3%	$	21,454	$	37,269	$	39,087	-4.7%
INCOME PER COMMON SHARE
Basic	$	0.34	$	0.56	-39.7%	$	0.23	$	0.57	$	0.60	-4.7%
Diluted	$	0.34	$	0.56	-39.8%	$	0.23	$	0.57	$	0.59	-4.8%
COMMON STOCK DATA
Average common shares outstanding and equivalents		40,808		45,135	-9.6%		41,162		40,986		45,656	-10.2%
Cash dividends per share of common stock	$	0.06	$	0.05	20.0%	$	0.06	$	0.12	$	0.10	20.0%
Cash dividends declared on common shares	$	2,444	$	2,206	10.8%	$	2,442	$	4,887	$	4,477	9.2%
Pay-out ratio		17.80%		8.95%	98.8%		26.14%		21.19%		17.11%	23.8%
SELECTED FINANCIAL DATA
PERFORMANCE RATIOS				��
Return on average assets		0.94%		1.48%	-36.8%		0.65%		0.79%		0.82%	-3.4%
Return on average common equity		8.73%		15.37%	-43.2%		6.02%		7.38%		8.26%	-10.7%
Equity-to-assets ratio		10.86%		10.23%	6.1%		10.67%		10.86%		10.23%	6.1%
Efficiency ratio		64.71%		57.85%	11.9%		57.55%		60.92%		61.13%	-0.3%
Expense ratio		1.19%		1.26%	-5.7%		1.16%		1.18%		1.25%	-6.3%
TAX EQUIVALENT SPREAD
Interest-earning assets		4.20%		5.08%	-17.4%		4.66%		4.43%		4.90%	-9.6%
Tax equivalent adjustment		0.86%		1.71%	-49.7%		0.73%		0.92%		0.96%	-4.2%
Interest-earning assets - tax equivalent		5.06%		6.79%	-25.5%		5.39%		5.35%		5.86%	-8.7%
Interest-bearing liabilities		1.97%		2.47%	-20.2%		2.13%		2.05%		2.49%	-17.7%
Tax equivalent interest rate spread		3.09%		4.32%	-28.6%		3.26%		3.30%		3.37%	-2.1%
Tax equivalent interest rate margin		3.15%		4.35%	-27.6%		3.32%		3.36%		3.41%	-1.5%
NORMAL SPREAD
Investments		2.25%		4.49%	-50.0%		2.80%		2.53%		4.14%	-38.9%
Loans
Loans not covered under shared-loss agreements with the FDIC		5.74%		5.48%	4.7%		6.05%		5.89%		5.83%	1.0%
Loans covered under shared-loss agreements with the FDIC		17.75%		9.12%	94.7%		17.52%		17.64%		9.21%	91.5%
		9.06%		6.67%	35.8%		9.39%		9.23%		6.97%	32.4%
Interest-earning assets		4.20%		5.08%	-17.4%		4.66%		4.43%		4.90%	-9.6%
Deposits
Retail deposits		1.34%		1.79%	-25.39%		1.52%		1.43%		1.88%	-23.94%
Wholesale deposits		2.04%		2.17%	-5.86%		1.81%		1.91%		1.87%	2.14%
		1.42%		1.86%	-23.75%		1.57%		1.49%		1.88%	-20.74%
Borrowings
Securities sold under agreements to repurchase		2.17%		2.72%	-20.2%		2.30%		2.23%		2.75%	-18.9%
Advances from FHLB and other borrowings		3.97%		4.23%	-6.2%		4.26%		4.11%		4.25%	-3.3%
FDIC-guaranteed term notes		-		3.88%	-		4.11%		4.11%		3.87%	6.2%
Subordinated capital notes		3.56%		3.41%	4.4%		3.64%		3.60%		3.39%	6.2%
		2.34%		2.86%	-18.3%		2.52%		2.43%		2.90%	-16.2%
Interest-bearing liabilities		1.97%		2.47%	-20.2%		2.13%		2.05%		2.49%	-17.7%
Interest rate spread		2.23%		2.61%	-14.7%		2.53%		2.38%		2.41%	-1.2%
Interest rate margin		2.28%		2.64%	-13.5%		2.59%		2.44%		2.45%	-0.4%
AVERAGE BALANCES
Investments	$	4,135,722	$	4,738,164	-12.7%	$	4,316,332	$	4,226,027	$	4,778,632	-11.6%
Loans		1,658,962		1,739,614	-4.6%		1,689,718		1,674,340		1,756,646	-4.7%
Interest-earning assets	$	5,794,684	$	6,477,778	-10.5%	$	6,006,050	$	5,900,367	$	6,535,278	-9.7%
Deposits	$	2,246,170	$	2,481,752	-9.5%	$	2,358,613	$	2,302,390	$	2,540,557	-9.4%
Borrowings		3,380,086		3,887,404	-13.1%		3,464,682		3,422,310		3,885,863	-11.9%
Interest-bearing liabilities	$	5,626,256	$	6,369,156	-11.7%	$	5,823,295	$	5,724,700	$	6,426,420	-10.9%

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ORIENTAL FINANCIAL GROUP
Financial Summary
(NYSE: OFG)	AS OF
	30-Jun-12		30-Jun-11		%	31-Mar-12		31-Dec-11
(Dollars in thousands)
BALANCE SHEET
Cash and cash equivalents	$	464,579	$	271,524	71.1%	$	448,882	$	591,487
Securities purchased under agreements to resell		225,000		-	100.0%		170,000		-
Investments:
Trading securities		214		864	-75.2%		364		180
Investment securities available-for-sale, at fair value, with amortized cost of $2,536,772
(June 30, 2011 - $3,529,671, March 31, 2012 - $2,591,603, December 31, 2011 - $2,873,682)
FNMA and FHLMC certificates		2,134,466		3,106,005	-31.3%		2,402,393		2,676,781
CMO's issued by US Government sponsored agencies		206,797		246,664	-16.2%		117,873		130,045
US Treasury Securities		154,998		-	100.0%		-		-
Obligations of US Government sponsored agencies		28,791		-	100.0%		32,031		-
Structured credit investments		27,280		45,713	-40.3%		29,643		37,288
GNMA certificates		22,491		98,892	-77.3%		25,796		28,336
Obligations of Puerto Rico Government and political subdivisions		22,352		77,703	-71.2%		58,887		81,482
Other debt securities		15,664		6,110	156.4%		5,793		5,980
Total investment securities available-for-sale		2,612,839		3,581,087	-27.0%		2,672,416		2,959,912
Investment securities held-to-maturity, at amortized cost, with fair value of $925,266
(June 30, 2011 - $858,226, March 31, 2012 - $969,400, December 31, 2011 - $904,556)
FNMA and FHLMC certificates		778,903		863,779	-9.8%		829,465		884,026
CMO's issued by US Government sponsored agencies		116,597		-	100.0%		119,025		-
Total investment securities held-to-maturity		895,500		863,779	3.7%		948,490		884,026
Federal Home Loan Bank (FHLB) stock, at cost		22,868		23,779	-3.8%		23,779		23,779
Other investments		69		150	-54.0%		69		73
Total investments		3,531,490		4,469,659	-21.0%		3,645,118		3,867,970
Loans:
Loans not covered under shared-loss agreements with the FDIC:
Mortgage		787,359		849,843	-7.4%		803,500		819,651
Commercial		321,684		264,962	21.4%		330,076		301,573
Leasing		30,024		17,104	75.5%		28,363		25,768
Consumer		40,282		33,037	21.9%		38,467		37,541
Total loans receivable not covered under shared-loss agreements with the FDIC, gross		1,179,349		1,164,946	1.2%		1,200,406		1,184,533
Less: Deferred loan fees, net		(4,029)		(4,780)	15.7%		(4,442)		(4,545)
Total loans receivable not covered under shared-loss agreements with the FDIC		1,175,320		1,160,166	1.3%		1,195,964		1,179,988
Allowance for loan and lease losses on non-covered loans		(37,402)		(34,229)	-9.3%		(37,361)		(37,010)
Loans receivable, net		1,137,918		1,125,937	1.1%		1,158,603		1,142,978
Mortgage loans held for sale		34,718		34,246	1.4%		33,439		26,939
Total loans not covered under shared-loss agreements with the FDIC, net		1,172,636		1,160,183	1.1%		1,192,042		1,169,917
Loans covered under shared-loss agreements with the FDIC:
Loans secured by 1-4 family residential properties		139,237		147,071	-5.3%		140,105		140,824
Construction and development secured by 1-4 family residential properties		19,130		16,309	17.3%		17,626		16,976
Commercial and other construction		317,534		360,536	-11.9%		321,632		325,832
Leasing		18,655		55,863	-66.6%		25,581		36,122
Consumer		11,792		15,800	-25.4%		13,252		13,778
Loans covered under shared-loss agreements with the FDIC		506,348		595,579	-15.0%		518,196		533,532
Allowance for loan and lease losses on covered loans		(58,628)		(53,036)	-10.5%		(56,437)		(37,256)
Loans covered under shared-loss agreements with the FDIC, net		447,720		542,543	-17.5%		461,759		496,276
Total loans, net		1,620,356		1,702,726	-4.8%		1,653,801		1,666,193
FDIC shared-loss indemnification asset		359,767		440,633	-18.4%		378,444		392,367
Foreclosed real estate covered under shared-loss agreements with the FDIC		13,910		16,918	-17.8%		12,181		13,867
Foreclosed real estate not covered under shared-loss agreements with the FDIC		17,721		12,031	47.3%		16,356		13,812
Other repossessed assets covered under shared-loss agreements with the FDIC		565		1,856	-69.6%		757		708
Core deposit intangible		1,114		1,257	-11.4%		1,150		1,185
Accrued interest receivable		17,258		26,430	-34.7%		18,750		20,182
Deferred tax asset, net		35,887		32,637	10.0%		33,123		32,023
Prepaid FDIC Insurance		8,986		13,851	-35.1%		10,106		11,599
Premises and equipment, net		20,090		23,649	-15.0%		20,722		21,520
Other prepaid expenses		11,762		11,572	1.6%		5,138		6,498
Servicing asset		10,776		9,840	9.5%		10,725		10,454
Servicing advance		7,717		9,413	-18.0%		5,116		13,990
Tax credits		1,303		2,604	-50.0%		1,303		1,303
Debt issuance costs		751		1,683	-55.4%		760		1,067
Goodwill		2,701		2,701	0.0%		2,701		2,701
Investment in statutory trust		1,086		1,086	0.0%		1,086		1,086
Derivative assets		11,367		12,015	-5.4%		12,515		9,317
Accounts receivable and other assets		11,462		18,380	-37.6%		12,833		14,346
Total assets	$	6,375,648	$	7,082,465	-10.0%	$	6,461,567	$	6,693,675

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ORIENTAL FINANCIAL GROUP
Financial Summary
(NYSE: OFG)	AS OF
	30-Jun-12		30-Jun-11		%	31-Mar-12		31-Dec-11
(Dollars in thousands)
Deposits:
Non-interest bearing demand deposits	$	188,328	$	192,034	-1.9%	$	183,800	$	192,256
Interest-bearing savings and demand deposits		1,104,443		1,039,131	6.3%		1,103,664		1,081,450
Individual retirement accounts		368,050		356,764	3.2%		368,787		361,410
Retail certificates of deposit		330,597		429,156	-23.0%		343,375		375,890
Total Retail Deposits		1,991,418		2,017,085	-1.3%		1,999,626		2,011,006
Institutional deposits		85,376		211,032	-59.5%		107,363		168,301
Brokered Deposits		146,148		188,586	-22.5%		211,143		255,878
Total deposits		2,222,942		2,416,703	-8.0%		2,318,132		2,435,185
Borrowings:
Securities sold under agreements to repurchase		3,053,865		3,459,135	-11.7%		3,056,165		3,056,238
Advances from FHLB and other borrowings		286,653		281,995	1.7%		281,713		281,753
FDIC-guaranteed term notes		-		105,834	-100.0%		-		105,834
Subordinated capital notes		36,083		36,083	0.0%		36,083		36,083
Total borrowings		3,376,601		3,883,047	-13.0%		3,373,961		3,479,908
Total interest-bearing liabilities		5,599,543		6,299,750	-11.1%		5,692,093		5,915,093
Derivative liabilities		56,217		13,918	303.9%		49,426		47,425
Accrued expenses and other liabilities		27,686		44,440	-37.7%		30,759		35,602
Total liabilities		5,683,446		6,358,108	-10.6%		5,772,278		5,998,120
Preferred stock		68,000		68,000	0.0%		68,000		68,000
Common stock		47,842		47,808	0.1%		47,841		47,809
Additional paid-in capital		499,852		498,556	0.3%		499,786		499,096
Legal surplus		52,668		49,410	6.6%		51,245		50,178
Retained earnings		83,982		71,095	18.1%		74,091		68,149
Treasury stock, at cost		(81,403)		(45,386)	-79.4%		(81,772)		(74,808)
Accumulated other comprehensive income, net		21,261		34,874	-39.0%		30,098		37,131
Total stockholders' equity		692,202		724,357	-4.4%		689,289		695,555
Total liabilities and stockholders' equity	$	6,375,648	$	7,082,465	-10.0%	$	6,461,567	$	6,693,675
SELECTED FINANCIAL DATA AT YEAR-END
Common shares outstanding at end of period		40,731		44,009	-7.4%		40,690		41,245
Book value per common share	$	15.32	$	14.91	2.8%	$	15.27	$	15.22
Tangible book value per common share	$	15.23	$	14.82	2.7%	$	15.17	$	15.12
Trust assets managed	$	2,412,785	$	2,266,770	6.4%	$	2,372,129	$	2,216,088
Broker-dealer assets gathered		2,097,095		1,859,580	12.8%		2,058,331		1,926,147
Total assets managed	$	4,509,880	$	4,126,350	9.3%	$	4,430,460	$	4,142,235

Page 4

ORIENTAL FINANCIAL GROUP
Financial Summary
(NYSE: OFG)	AS OF
	30-Jun-12		30-Jun-11		%	31-Mar-12		31-Dec-11
CAPITAL DATA
Leverage capital ratio		10.81%		9.74%	11.0%		10.25%		9.65%
Leverage capital ratio required		4.00%		4.00%			4.00%		4.00%
Actual tier 1 capital	$	675,622	$	690,453	-2.1%	$	663,897	$	661,614
Tier 1 capital required	$	249,987	$	283,517	-11.8%	$	259,162	$	274,230
Excess over regulatory requirement	$	425,635	$	406,936	4.6%	$	404,735	$	387,384
Tier 1 risk-based capital ratio		32.52%		30.33%	7.2%		32.34%		31.52%
Tier 1 risk-based capital ratio required		4.00%		4.00%			4.00%		4.00%
Actual tier 1 risk-based capital	$	675,622	$	690,453	-2.1%	$	663,897	$	661,614
Tier 1 risk-based capital required	$	83,092	$	91,069	-8.8%	$	82,104	$	83,964
Excess over regulatory requirement	$	592,530	$	599,384	-1.1%	$	581,793	$	577,650
Risk-weighted assets	$	2,077,300	$	2,276,734	-8.8%	$	2,052,603	$	2,099,109
Total risk-based capital ratio		33.82%		31.61%	7.0%		33.64%		32.80%
Total risk-based capital ratio required		8.00%		8.00%			8.00%		8.00%
Actual total risk-based capital	$	702,460	$	719,659	-2.4%	$	690,403	$	688,452
Total risk-based capital required	$	166,184	$	182,139	-8.8%	$	164,208	$	167,929
Excess over regulatory requirement	$	536,276	$	537,520	-0.2%	$	526,195	$	520,523
Risk-weighted assets	$	2,077,300	$	2,276,734	-8.8%	$	2,052,603	$	2,099,109
Tangible common equity to total assets		9.73%		9.22%	5.5%		9.56%		9.32%
Tangible common equity to total risk-weighted assets		29.87%		28.67%	4.2%		30.08%		29.71%
Total equity to total assets		10.86%		10.23%	6.1%		10.67%		10.39%
Total equity to risk-weighted assets		33.32%		31.82%	4.7%		33.58%		33.14%
Tier 1 common equity to risk-weighted assets		29.25%		27.34%	7.0%		29.03%		28.28%
Tier 1 common equity	$	607,622	$	622,453	-2.4%	$	595,897	$	593,614

Page 5

ORIENTAL FINANCIAL GROUP
Financial Summary
(NYSE: OFG)	QUARTER ENDED								YEAR TO DATE
	30-Jun-12		30-Jun-11		%		31-Mar-12		30-Jun-12		30-Jun-11		%
(Dollars in thousands)
Loan Production and Purchases Summary:
Mortgage loans production	$	48,909	$	56,940		-14.1%	$	45,031	$	93,940	$	105,106		-10.6%
Mortgage loans purchased		-		2,754		-100.0%		-		-		7,395		-100.0%
Total mortgage		48,909		59,694		-18.1%		45,031		93,940		112,501		-16.5%
Commercial		35,461		45,638		-22.3%		55,401		90,862		62,281		45.9%
Leasing		4,350		5,669		-23.3%		4,564		8,914		10,542		-15.4%
Consumer		7,676		5,666		35.5%		5,172		12,848		9,306		38.1%
Total loan production and purchases	$	96,396	$	116,667		-17.4%	$	110,168	$	206,564	$	194,630		6.1%
CREDIT DATA
Net credit losses, excluding loans covered under shared-loss agreements
with the FDIC:
Mortgage	$	1,948	$	1,268		53.6%	$	922	$	2,869	$	3,044		-5.7%
Commercial		1,687		713		136.6%		1,570		3,257		985		230.7%
Consumer		127		286		-55.6%		131		258		681		-62.1%
Leasing		(4)		30		-113.3%		27		23		91		-74.7%
Total net credit losses	$	3,758	$	2,297		63.6%	$	2,650	$	6,407	$	4,801		33.5%
Net credit losses to average loans outstanding		1.25%		0.78%		60.5%		0.89%		1.07%		0.82%		30.8%
					AS OF
					30-Jun-12		30-Jun-11		%		31-Mar-12		31-Dec-11
Allowance for loan and lease losses on non-covered loans					$	37,402	$	34,229		9.3%	$	37,361	$	37,010
Allowance coverage ratios:
Allowance for loan and lease losses to total loans (excluding loans covered under
shared-loss agreements with the FDIC)						3.17%		2.94%		7.9%		3.11%		3.12%
Allowance for loan and lease losses to non-performing loans						31.03%		26.38%		17.6%		30.54%		27.46%
Non-performing assets summary (excluding assets covered under shared-loss
agreements with the FDIC):
Mortgage					$	90,302	$	94,125		-4.1%	$	88,960	$	97,340
Commercial						29,888		35,061		-14.8%		33,082		36,988
Consumer						281		432		-35.0%		286		334
Leasing						77		130		-40.8%		12		102
Non-performing loans						120,548		129,748		-7.1%		122,340		134,764
Foreclosed properties						17,721		12,031		47.3%		16,356		13,812
Mortgage loans held for sale in non-accrual						1,418		547		159.2%		1,519		1,223
Non-performing assets					$	139,687	$	142,326		-1.9%	$	140,215	$	149,799
Non-performing loans to:
Total loans, excluding covered loans						10.26%		11.18%		-8.2%		10.23%		11.42%
Total assets, excluding covered assets						2.04%		1.99%		2.5%		2.04%		2.18%
Total capital						17.42%		17.91%		-2.7%		17.75%		19.38%
Non-performing assets to total assets, excluding covered assets						2.36%		2.18%		8.3%		2.34%		2.42%
Non-performing assets to total capital						20.18%		19.65%		2.7%		20.34%		21.54%
Loans past due (excluding loans covered under shared-loss
agreements with the FDIC):
Early delinquency (30-89 days past due)
Mortgage					$	33,703	$	39,430		-14.5%	$	35,697	$	37,435
Commercial						3,609		8,864		-59.3%		3,652		4,537
Consumer						453		802		-43.5%		1,076		783
Leasing						554		461		20.2%		484		339
					$	38,319	$	49,557		-22.7%	$	40,909	$	43,094
Total delinquency (30 days and over past due)
Mortgage					$	124,005	$	133,555		-7.2%	$	124,657	$	134,775
Commercial						20,992		31,684		-33.7%		31,736		32,894
Consumer						626		836		-25.1%		1,287		1,117
Leasing						630		570		10.5%		496		441
					$	146,253	$	166,645		-12.2%	$	158,176	$	169,227

Page 6