Oriental Financial Group Reports Strong Results for the Fourth Quarter Ended December 31, 2008

Tuesday, March 10, 2009 4:24 PM

Oriental Financial Group Inc. (NYSE: OFG) today announced results for the fourth quarter and year ended December 31, 2008.

For the quarter, the Group reported income available to common shareholders of $39.2 million, an increase of 176.7% over the year ago quarter’s $14.2 million. Income per common share (basic and diluted) of $1.61 was 172.9% greater than the $0.59 reported in the year ago quarter. Fourth quarter 2008 highlights included:

Strong performance in core revenues, with net interest income of $29.8 million or 6.2% higher than in the previous quarter, and banking and financial service revenues of $6.6 million or 5.3% higher than in the previous quarter.
Gain of $25.2 million on the sale of securities, as Oriental took advantage of the sharp increase in fair values, the result of the U.S. Treasury’s plan to purchase such securities in the secondary market, combined with reductions in the federal funds target rate, twice in October and once in December. This gain included $14.4 million from the sale on December 31, 2008 of $820.6 million of held-to-maturity (HTM) agency-issued securities. The proceeds from such sale were reinvested after year-end in similar quality agency-issued securities at a higher average yield. The remaining securities in the HTM portfolio were transferred to the available-for-sale (AFS) portfolio on that date.
Loss of $2.5 million, representing a provision for mortgage loan tax credits for new homeowners. The credits were instituted by the Commonwealth of Puerto Rico in 2008, but it is now doubtful whether these will be granted.
Income tax benefit of $3.2 million, primarily reflecting an increase in the deferred tax asset.

As a result of Oriental’s strong performance, regulatory capital and total common equity improved on a sequential quarter basis, with tier-1 regulatory capital increasing 8.4% to $389.2 million at December 31, 2008, book value per common share increasing 9.8% to $7.86, and Tangible Common Equity to Total Assets increasing to 3.05% from 2.91%.

Commentary and Outlook

Commenting on fourth quarter results and Oriental’s 2009 outlook, José Rafael Fernández, President and Chief Executive Officer, said, “We remain well positioned to benefit from our strategies in the foreseeable future, recognizing the fact that our investment securities portfolio will continue to be affected by conditions in financial markets around the world.”

“Despite the recession in Puerto Rico, we are successfully making inroads with our target clientele, resulting in satisfactory levels of loan production and banking and financial service revenues, considering today’s environment. For the year, total loan production of $290.1 million was up 43% compared to 2007, with increases in originations of 56.5% in residential mortgages and 14.5% in commercial loans, most of which are collateralized by real estate properties.”

“While Puerto Rico also continues to be challenging from a credit point of view, our conservative strategies have minimized our exposure, placing us in a good position going forward. Because of favorable average FICO scores, loan to value ratios and sufficient reserves, even if non-performing loans increase, we expect to continue providing credit to homeowners and businesses in Puerto Rico, while experiencing low net credit losses.”

Fourth Quarter 2008 Income Statement

Net interest income of $29.8 million increased 29.5% from the year ago quarter, reflecting higher overall yield (5.78% versus 5.73%) and average interest-earning assets (up 5.1%) combined with lower average rates paid on deposits and borrowings (4.01% versus 4.42%). Net interest margin increased to 1.98% compared to 1.61% in the year ago quarter. On a tax-equivalent basis, the net interest margin increased to 3.90% as compared to 3.49% in the year ago quarter.

While down from a year ago, total banking and financial service revenues of $6.6 million were up 5.3% sequentially. Recent growth reflects increased mortgage banking revenues due to the securitization and sale of conventional mortgages into the secondary market and increased financial services revenues from brokerage activity. Banking service fees remained relatively stable on a sequential basis as growth in commercial activity offset declines in consumer activity.

Assets under management, which generate recurring fees for the Group’s financial service businesses, stood at $2.9 billion at December 31, 2008, down 5.7% from September 30, 2008. A relatively high proportion of fixed income investments in the mix helped to offset the general decline in equity markets.

Non-interest expenses of $18.7 million increased 10.0% from the year ago quarter and 3.0% sequentially. The efficiency ratio improved to 51.49% from 55.48% in the year ago quarter and 53.03% in the previous quarter.

December 31, 2008 Balance Sheet Highlights

The average balance of the investment securities portfolio was $4.8 billion during the fourth quarter, up 5.4% from the year ago quarter and up slightly from the previous quarter. Approximately 84% of the 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 non-agency collateralized mortgage obligations (13%), the majority of which are backed by prime fixed-rate residential mortgage collateral, and structured credit investments (3%).

The average balance of the loan portfolio was $1.2 billion during the quarter, up 4.1% from the December 2007 quarter and up slightly from the preceding quarter. Loan production of $68.5 million was up 17.3% from the year ago quarter, as Oriental’s capital levels and low credit losses enabled it to continue prudent lending. Mortgage originations of $55.5 million increased 56.2% year over year and were level quarter over quarter. The average FICO score was 727 and the average loan to value ratio was 80% on the mortgage loans originated in the fourth quarter. While down from a year ago, commercial originations rebounded to the $14.0 million level, up from $10.9 million in the September 2008 quarter, and were in line with the $15 million quarterly range in the first half of 2008.

Total deposits of $1.8 billion increased 43.2% from the year ago quarter and 17.7% from the previous quarter, representing 30.2% of interest bearing liabilities, versus 22.6% at December 31, 2007 and 26.9% at September 30, 2008.

Credit Quality

Non-performing loans of $77.5 million at December 31, 2008 increased 17.2% from the year ago quarter and 12.9% on a sequential basis. Foreclosed properties increased to $9.2 million from $8.2 million at September 30, 2008. Net credit losses for the year rose $323,000, to $4.7 million, representing 0.39% of average loans outstanding versus 0.37% in 2007. The allowance for loan losses stood at $14.3 million (1.16% of total loans) at December 31, 2008, compared to $12.5 million (1.01% of total loans) at September 30, 2008.

Based on historical performance, the Group does not expect 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.

Capital

Stockholders’ equity of $259.1 million and total common equity of $191.1 million at December 31, 2008 were $17.1 million higher than September 30, 2008 levels, representing increases of 7.0% and 9.8%, respectively, mainly as a result of the net income for the quarter (less the dividends declared), partially offset by a net decrease in the fair value of the AFS securities portfolio.

The Group maintains capital ratios in excess of regulatory requirements. At December 31, 2008, the Leverage Capital Ratio was 6.38% (1.6 times the minimum of 4.00% and up 40 bps from September 30, 2008); Tier I Risk-Based Capital Ratio was 17.11% (4.3 times the minimum of 4.00% and up 118 bps), and the Total Risk-Based Capital Ratio was 17.73% (2.2 times the minimum of 8.00% and up 124 bps). In dollars, Leverage Capital and Tier I Risk-Based Capital of $389.2 million increased $30.1 million, or 8.4% from September 30, 2008, and Total Risk-Based Capital of $403.5 million increased $31.9 million or 8.6%.

2008 Results

For the year ended December 31, 2008, the Group reported income available to common shareholders of $22.0 million compared to $36.5 million in 2007, with income per common share (diluted) of $0.90 compared to $1.50. Excluding the other than temporary impairment loss of $55.8 million, net of tax ($2.29 per diluted share), reported in the third quarter of 2008, the Group had income available to common shareholders of $77.8 million, or $3.19 per common share (basic and diluted).

Non-GAAP Financial Measures

From time to time, the Group uses certain non-GAAP measures of financial performance to supplement the 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 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 for 2008 herein both with and without the effect of OTTI charges 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.

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 45^th 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.

ORIENTAL FINANCIAL GROUP
Financial Summary	QUARTER ENDED											YEAR ENDED
(NYSE: OFG)
	31-Dec-08			31-Dec-07			%		30-Sep-08			31-Dec-08			31-Dec-07			%

Summary of Operations (Dollars in thousands, except per share data):

Interest Income:
Loans	$	19,684		$	19,940		-1.3	%	$	19,971		$	79,165		$	85,802		-7.7	%
Investment securities and other		67,352			62,198		8.3	%		64,773			259,874			203,562		27.7	%
Total interest income		87,036			82,138		6.0	%		84,744			339,039			289,364		17.2	%
Interest Expense:
Deposits		13,035			13,385		-2.6	%		12,202			49,781			52,794		-5.7	%
Securities sold under agreements to repurchase		40,459			40,951		-1.2	%		40,456			161,363			147,690		9.3	%
Other borrowed funds		3,766			4,800		-21.5	%		4,045			16,584			15,150		9.5	%
Total interest expense		57,260			59,136		-3.2	%		56,703			227,728			215,634		5.6	%

Net interest income		29,776			23,002		29.4	%		28,041			111,311			73,730		51.0	%
Provision for loan losses		3,280			2,486		31.9	%		1,950			8,860			6,550		35.3	%
Net interest income after provision for loan losses		26,496			20,516		29.1	%		26,091			102,451			67,180		52.5	%

Non-Interest Income:
Financial service revenues		3,985			4,666		-14.6	%		3,756			16,481			17,295		-4.7	%
Banking service revenues		1,398			1,861		-24.9	%		1,406			5,726			7,862		-27.2	%
Investment banking revenues		-			13		0.0	%		200			950			126		654.0	%
Mortgage banking activities		1,224			1,159		5.6	%		910			3,685			2,401		53.5	%
Total banking and financial service revenues		6,607			7,699		-14.2	%		6,272			26,842			27,684		-3.0	%
Net gain (loss) on:
Sales of securities		25,162			2,594		870.0	%		386			35,070			2,953		1087.6	%
Other than temporary impairments		-			-		0.0	%		(58,804	)		(58,804	)		-		-100.0	%
Derivatives		304			2,459		-87.6	%		(5,522	)		(12,943	)		10,997		-217.7	%
Mortgage tax credits		(2,480	)		-		-100.0	%		-			(2,480	)		-		-100.0	%
Other investments		16			24		-33.3	%		16			148			1,174		-87.4	%
Trading securities		19			23		-17.4	%		(31	)		(13	)		23		-156.2	%
Foreclosed real estate		(218	)		(358	)	39.1	%		58			(670	)		(349	)	-92.0	%
Other		1			-		100.0	%		609			608			20		2945.0	%
Total non-interest income (loss), net		29,411			12,441		136.4	%		(57,016	)		(12,242	)		42,502		-128.8	%

Non-Interest Expenses:
Compensation and employee benefits		7,291			7,154		1.9	%		7,742			30,572			28,376		7.7	%
Occupancy and equipment		3,630			3,243		11.9	%		3,561			13,843			12,624		9.7	%
Professional and service fees		2,599			1,845		40.9	%		2,457			9,203			7,161		28.5	%
Advertising and business promotion		1,213			1,492		-18.7	%		847			3,970			4,472		-11.2	%
Taxes, other than payroll and income taxes		652			608		7.2	%		644			2,514			2,151		16.9	%
Insurance		622			210		196.2	%		618			2,421			848		185.5	%
Electronic banking charges		484			479		1.0	%		428			1,726			1,826		-5.5	%
Loan servicing expenses		361			328		10.1	%		352			1,383			1,740		-20.5	%
Clearing and wrap fees expenses		349			73		378.1	%		294			1,250			1,070		16.8	%
Communication		328			301		9.0	%		314			1,292			1,302		-0.8	%
Directors and investor relations		305			495		-38.4	%		273			1,159			2,103		-44.9	%
Other		901			804		12.1	%		667			3,409			3,187		7.0	%
Total non-interest expenses		18,735			17,032		10.0	%		18,197			72,742			66,860		8.8	%

Income (loss) before income taxes		37,172			15,925		133.4	%		(49,122	)		17,467			42,822		-59.2	%
Income tax expense (benefit)		(3,240	)		551		-688.0	%		(4,226	)		(9,323	)		1,558		-698.4	%
Net income (loss)		40,412			15,374		162.9	%		(44,896	)		26,790			41,264		-35.1	%
Less: Dividends on preferred stock		(1,201	)		(1,201	)	-			(1,200	)		(4,802	)		(4,802	)	-
Income available (loss) to common shareholders	$	39,211		$	14,173		176.7	%	$	(46,096	)	$	21,988		$	36,462		-39.7	%

ORIENTAL FINANCIAL GROUP
Financial Summary	QUARTER ENDED								YEAR ENDED
(NYSE: OFG)
	31-Dec-08		31-Dec-07		%		30-Sep-08		31-Dec-08		31-Dec-07		%
(Dollars in thousands, except per share data):
INCOME (LOSS) PER COMMON SHARE
Basic	$1.61		$0.59		172.9	%	($1.90	)	$0.91		$1.50		-39.3	%
Diluted	$1.61		$0.59		172.9	%	($1.89	)	$0.90		$1.50		-40.0	%

COMMON STOCK DATA
Average common shares outstanding	24,295		24,120		0.7	%	24,292		24,260		24,326		-0.3	%
Average potential common shares-options	16		34		-52.9	%	82		67		41		63.4	%
Total average shares outstanding and equivalents	24,311		24,154		0.6	%	24,384		24,327		24,367		-0.2	%

Cash dividends per share of common stock	$0.14		$0.14		-		$0.14		$0.56		$0.56		-
Cash dividends declared on common shares	$3,402		$3,377		0.7	%	$3,404		$13,608		$13,612		0.0	%
Pay-out ratio	8.70	%	23.73	%	-63.3	%	-7.37	%	61.54	%	37.33	%	64.9	%

SELECTED FINANCIAL DATA

PERFORMANCE RATIOS:
Return on average assets	2.57	%	1.04	%	147.10	%	-2.99	%	0.43	%	0.76	%	-43.4	%
Return on average common equity	99.67	%	20.07	%	396.6	%	-88.58	%	9.51	%	13.52	%	-29.7	%
Efficiency ratio	51.49	%	55.48	%	-7.2	%	53.03	%	52.65	%	65.93	%	-20.1	%

TAX EQUIVALENT SPREAD
Interest-earning assets	5.78	%	5.73	%	0.9	%	5.67	%	5.68	%	5.66	%	-3.9	%
Tax equivalent adjustment	1.92	%	1.89	%	1.6	%	1.87	%	1.88	%	1.89	%	-4.6	%
Interest-earning assets - tax equivalent	7.70	%	7.62	%	1.0	%	7.54	%	7.56	%	7.55	%	-4.1	%
Interest-bearing liabilities	4.01	%	4.42	%	-9.3	%	4.04	%	4.06	%	4.47	%	-12.5	%
Tax equivalent interest rate spread	3.69	%	3.20	%	15.3	%	3.50	%	3.50	%	3.08	%	8.0	%
Tax equivalent interest rate margin	3.90	%	3.49	%	11.7	%	3.74	%	3.74	%	3.33	%	7.8	%

NORMAL SPREAD
Investments	5.62	%	5.47	%	2.7	%	5.45	%	5.46	%	5.18	%	-0.2	%
Loans	6.39	%	6.74	%	-5.2	%	6.52	%	6.52	%	7.26	%	-10.3	%
Interest-earning assets	5.78	%	5.73	%	0.9	%	5.67	%	5.68	%	5.66	%	-3.9	%

Deposits	3.35	%	4.77	%	-29.8	%	3.41	%	3.54	%	4.42	%	-18.4	%
Borrowings	4.25	%	4.32	%	-1.6	%	4.26	%	4.24	%	4.49	%	-10.7	%
Interest-bearing liabilities	4.01	%	4.42	%	-9.3	%	4.04	%	4.06	%	4.47	%	-12.5	%

Interest rate spread	1.77	%	1.31	%	35.1	%	1.63	%	1.62	%	1.19	%	27.6	%
Interest rate margin	1.98	%	1.61	%	23.0	%	1.88	%	1.86	%	1.44	%	23.2	%

AVERAGE BALANCES
Investments	$ 4,791,032		$ 4,546,758		5.4	%	$ 4,756,244		$ 4,759,824		$ 3,927,849		28.0	%
Loans	1,231,864		1,182,799		4.1	%	1,224,318		1,213,401		1,181,061		2.8	%
Interest-earning assets	$ 6,022,896		$ 5,729,557		5.1	%	$ 5,980,562		$ 5,973,225		$ 5,108,910		21.9	%

Deposits	$ 1,554,648		$ 1,121,800		38.6	%	$ 1,433,129		$ 1,405,929		$ 1,193,121		15.5	%
Borrowings	4,159,521		4,232,917		-1.7	%	4,179,005		4,196,693		3,628,937		22.5	%
Interest-bearing liabilities	$ 5,714,169		$ 5,354,717		6.7	%	$ 5,612,134		$ 5,602,622		$ 4,822,058		20.7	%

ORIENTAL FINANCIAL GROUP
Financial Summary	AS OF
(NYSE: OFG)
	31-Dec-08			31-Dec-07			%		30-Sep-08
(Dollars in thousands)
BALANCE SHEET

Cash and due from banks	$	66,372		$	88,983		-25.4	%	$	40,382

Interest-earning assets:
Investments:
Trading securities		256			1,122		-77.2	%		1,061
Investment securities available-for-sale, at fair value with amortized cost of $4,052,574 (December 31, 2007-$ 3,063,763; September 30, 2008-$3,403,608)		3,921,958			3,069,282		27.8	%		3,307,820
Investment securities held-to-maturity, at amortized cost with fair value at December 31, 2007-$1,478,112 and September 30, 2008-$1,171,853		-			1,492,887		-100.0	%		1,191,671
Federal Home Loan Bank (FHLB) stock, at cost		21,013			20,658		1.7	%		19,812
Other investments		150			1,662		-91.0	%		150
Total investments		3,943,377			4,585,610		-14.0	%		4,520,514

Loans:
Mortgage loans		1,000,076			989,487		1.1	%		1,003,022
Commercial loans		187,077			157,198		19.0	%		177,687
Consumer loans		23,054			29,245		-21.2	%		23,832
Loans receivable, gross		1,210,207			1,175,930		2.9	%		1,204,541
Less: Deferred loan fees, net		(3,364	)		(2,875	)	-17.0	%		(3,389	)
Loans receivable		1,206,843			1,173,055		2.9	%		1,201,152
Allowance for loan losses		(14,293	)		(10,161	)	-40.7	%		(12,466	)
Loans receivable, net		1,192,550			1,162,894		2.6	%		1,188,686
Mortgage loans held for sale		26,562			16,672		59.3	%		31,152
Total loans, net		1,219,112			1,179,566		3.4	%		1,219,838
Total interest-earning assets		5,162,489			5,765,176		-10.5	%		5,740,352

Securities sold but not yet delivered		834,976			-		100.0	%		4,857
Accrued interest receivable		43,914			52,315		-16.1	%		38,104
Deferred tax asset, net		28,463			10,362		174.7	%		22,577
Premises and equipment, net		21,184			21,779		-2.7	%		20,911
Investment in equity indexed options		12,801			40,709		-68.6	%		13,548
Foreclosed real estate		9,162			4,207		117.8	%		8,220
Mortgage tax credits		5,047			69		7214.5	%		6,439
Prepaid expenses		3,433			2,645		29.8	%		4,516
Servicing asset		2,819			2,526		11.6	%		3,004
Goodwill		2,006			2,006		-			2,006
Investment in statutory trust		1,086			1,086		-			1,086
Accounts receivable and other assets		9,535			7,992		19.3	%		8,664
Total assets	$	6,203,287		$	5,999,855		3.4	%	$	5,914,666

Interest-bearing liabilities:
Deposits:
Non-interest bearing demand deposits	$	53,165		$	49,998		6.3	%	$	56,883
Interest-bearing demand deposits		400,633			69,154		479.3	%		395,188
Savings accounts		50,152			387,790		-87.1	%		59,250
Individual retirement accounts		286,691			317,744		-9.8	%		285,635
Retail certificates of deposit		296,937			232,239		27.9	%		272,383
Total Retail Deposits		1,087,578			1,056,925		2.9	%		1,069,339
Wholesale certificates of deposit		697,722			189,495		268.2	%		448,450
Total deposits		1,785,300			1,246,420		43.2	%		1,517,789

ORIENTAL FINANCIAL GROUP
Financial Summary	AS OF
(NYSE: OFG)
	31-Dec-08			31-Dec-07			%		30-Sep-08
(Dollars in thousands)
Borrowings:
Federal funds purchased and other short term borrowings		29,193			27,460		6.3	%		41,026
Securities sold under agreements to repurchase		3,761,121			3,861,411		-2.6	%		3,770,755
Advances from FHLB		308,442			331,898		-7.1	%		281,724
Subordinated capital notes		36,083			36,083		-			36,083
Total borrowings		4,134,839			4,256,852		-2.9	%		4,129,588
Total interest-bearing liabilities		5,920,139			5,503,272		7.6	%		5,647,377

Securities purchased but not yet received		398			111,431		-99.6	%		-
Accrued expenses and other liabilities		23,682			25,691		-7.8	%		25,271
Total liabilities		5,944,219			5,640,394		5.4	%		5,672,648

Preferred Equity		68,000			68,000		-			68,000
Common Equity:
Common stock		25,738			25,557		0.7	%		25,738
Additional paid-in capital		212,626			210,073		1.2	%		212,511
Legal surplus		43,016			40,573		6.0	%		40,573
Retained earnings		51,233			45,296		13.1	%		17,868
Treasury stock, at cost		(17,109	)		(17,023	)	-0.5	%		(17,142	)
Accumulated other comprehensive loss		(124,436	)		(13,015	)	-856.1	%		(105,530	)
Total common equity		191,068			291,461		-34.4	%		174,018
Stockholders' equity		259,068			359,461		-27.9	%		242,018

Total liabilities and stockholders' equity	$	6,203,287		$	5,999,855		3.4	%	$	5,914,666

CAPITAL RATIOS
Leverage Capital Ratio		6.38	%		6.69	%	-4.60	%		5.98	%
Minimum Leverage Capital Ratio Required		4.00	%		4.00	%				4.00	%
Actual Tier 1 Capital	$	389,235		$	396,309		-1.8	%	$	359,165
Minimum Tier 1 Capital Required	$	244,101		$	236,847		3.1	%	$	240,281

Tier 1 Risk-Based Capital Ratio		17.11	%		18.59	%	-8.0	%		15.93	%
Minimum Tier 1 Risk-Based Capital Ratio Required		4.00	%		4.00	%				4.00	%
Actual Tier 1 Risk-Based Capital	$	389,235		$	396,309		-1.8	%	$	359,165
Minimum Tier 1 Risk-Based Capital Required	$	91,022		$	85,292		6.7	%	$	90,168

Total Risk-Based Capital Ratio		17.73	%		19.06	%	-7.0	%		16.49	%
Minimum Total Risk-Based Capital Ratio Required		8.00	%		8.00	%				8.00	%
Actual Total Risk-Based Capital	$	403,528		$	406,470		-0.7	%	$	371,631
Minimum Total Risk-Based Capital Required	$	182,044		$	170,583		6.7	%	$	180,336

Tangible Total Equity to Total Assets		4.14	%		5.96	%	-30.5	%		4.06	%
Tangible Common Equity to Total Assets		3.05	%		4.82	%	-36.7	%		2.91	%

SELECTED FINANCIAL DATA AT PERIOD-END
Common shares outstanding at end of period		24,296			24,121		0.7	%		24,293
Book value per common share	$	7.86		$	12.08		-34.9	%	$	7.16

Trust Assets Managed	$	1,706,286		$	1,962,226		-13.0	%	$	1,839,702
Broker-Dealer Assets Gathered		1,195,739			1,281,168		-6.7	%		1,236,760
Total Assets Managed		2,902,025			3,243,394		-10.5	%		3,076,462
Assets owned		6,203,287			5,999,855		3.4	%		5,914,666
Total financial assets managed and owned	$	9,105,312		$	9,243,249		-1.5	%	$	8,991,128

Number of financial centers		23			24		-4.2	%		24

ORIENTAL FINANCIAL GROUP
Financial Summary	QUARTER ENDED											YEAR ENDED
(NYSE: OFG)
	31-Dec-08			31-Dec-07			%		30-Sep-08			31-Dec-08			31-Dec-07			%

(Dollars in thousands)
Loan Production and Purchases Summary:
Mortgage loans production	$	53,658		$	35,154		52.6	%	$	56,109		$	229,895		$	146,920		56.5	%
Mortgage loans purchased		1,858			389		377.6	%		-			7,031			101,630		-93.1	%
Total mortgage		55,516			35,543		56.2	%		56,109			236,926			248,550		-4.7	%
Commercial		14,000			21,758		-35.7	%		10,894			55,802			48,745		14.5	%
Consumer		814			1,470		-44.6	%		947			4,415			7,201		-38.7	%
Total loan production and purchases	$	70,330		$	58,771		19.7	%	$	67,950		$	297,143		$	304,496		-2.4	%

CREDIT DATA
Net credit losses:
Mortgage	$	850		$	740		14.9	%	$	648		$	1,977		$	2,014		-1.8	%
Commercial		225			12		1775.0	%		54			407			253		60.9	%
Consumer		379			628		-39.6	%		667			2,344			2,138		9.6	%
Total net credit losses	$	1,454		$	1,380		5.4	%	$	1,369		$	4,728		$	4,405		7.3	%
Net credit losses to average loans outstanding		0.47	%		0.47	%	0.0	%		0.45	%		0.39	%		0.37	%	5.40	%

	AS OF


	31-Dec-08			31-Dec-07			%		30-Sep-08

Allowance for loan losses	$	14,293		$	10,161		40.70	%	$	12,466
Allowance coverage ratios:
Allowance for loan losses to total loans		1.16	%		0.85	%	36.47	%		1.01	%
Allowance for loan losses to non-performing loans		18.45	%		15.37	%	20.00	%		18.16	%
Allowance for loan losses to non-residential non-performing loans		239.90	%		314.39	%	-23.70	%		301.99	%

Non-performing assets summary:
Mortgage	$	71,531		$	62,878		13.80	%	$	64,513
Commercial		5,186			2,413		114.90	%		3,308
Consumer		772			818		-5.60	%		820
Non-performing loans		77,489			66,109		17.20	%		68,641
Foreclosed real estate		9,162			4,207		117.80	%		8,220
Non-performing assets	$	86,651		$	70,316		23.20	%	$	76,861

Non-performing loans to total loans		6.28	%		5.56	%	12.90	%		5.57	%
Non-performing loans to total assets		1.25	%		1.10	%	13.60	%		1.16	%
Non-performing assets to total assets		1.40	%		1.17	%	19.70	%		1.30	%
Non-performing assets to total capital		33.45	%		19.56	%	71.00	%		31.76	%

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

(Source: Business Wire )

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