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TOWNSHIP OF WASHINGTON, N.J., Oct 29, 2007 /PRNewswire-FirstCall via COMTEX News Network/ -- Oritani Financial Corp. (the "Company") (Nasdaq: ORIT), the holding company for Oritani Savings Bank (the "Bank") reported net income of $3.0 million or $0.08 per share, for the three months ended September 30, 2007, as compared to net income of $2.0 million for the corresponding 2006 period.
"The September results represent the beginning of our first full fiscal year as a public company," said Kevin J. Lynch, the Company's Chairman, President and CEO. "The results for this period are free of the significant non-recurring items that impacted our last two quarters." Lynch continued "The interest rate environment continues to negatively impact our net interest income, spread and margin; yet we were still able to deliver strong results for the quarter and remain well-positioned to meet the challenges of the future."
Mr. Lynch commented on the highlight of the September quarter. "Our loan growth and credit quality continue to be the focal point of our balance sheet. Our annualized loan growth rate for the period was over 17% and our asset quality remains strong. Our delinquencies are extremely low and we have no subprime assets on our balance sheet."
Comparison of Operating Results for the Quarters Ended September 30, 2007 and 2006
Net Income. Net income increased $981,000 or 49.2%, to $3.0 million for the quarter ended September 30, 2007, from net income of $2.0 million for the corresponding 2006 quarter. This increase was primarily due to increased net interest income partially offset by increased income taxes. Over the period, our annualized return on average assets increased to 0.98% for the 2007 quarter compared to 0.76% for the 2006 quarter and the annualized return on average equity was 4.35% for the 2007 quarter compared to 5.29% for the 2006 quarter. These ratios were impacted by the funds raised from the initial public offering in January, 2007.
Total Interest Income. Total interest income increased by $3.4 million, or 25.1%, to $17.0 million for the three months ended September 30, 2007, from $13.6 million for the three months ended September 30, 2006. The largest increase occurred in interest on loans, which increased $2.5 million or 24.9%, to $12.8 million for the three months ended September 30, 2007, from $10.2 million for the three months ended September 30, 2006. Over that same period, the average balance of loans increased $123.5 million and the yield on the portfolio increased 32 basis points. Interest on the investment related captions of securities held to maturity ("HTM"), securities available for sale ("AFS"), mortgage-backed securities ("MBS") HTM and MBS AFS increased by $314,000, or 10.0%, to $3.5 million for the three months ended September 30, 2007, from $3.1 million for the three months ended September 30, 2006. The combined average balances of these portfolios decreased $3.4 million over the period while the combined average yield increased 15 basis points. The decrease in the average balance of these investment captions was partially mitigated by purchases totaling $48.6 million during the quarter ended September 30, 2007. Interest on federal funds sold and short term investments increased to $820,000 for the three months ended September 30, 2007, from $266,000 for the three months ended September 30, 2006. The increase in interest income was due to a $41.0 million increase in the average balance of fed funds sold and short term investments and a 4 basis point increase in yield.
Total Interest Expense. Total interest expense increased by $1.5 million, or 21.2%, to $8.8 million for the three months ended September 30, 2007, from $7.2 million for the three months ended September 30, 2006. Interest expense continues to be substantially affected by the current interest rate environment. Market rates for consumer deposits have remained high, and the Bank has increased rates on deposit products in order to minimize outflows and attract new deposit accounts. Interest expense on deposits increased by $1.1 million, or 20.5%, to $6.3 million for the three months ended September 30, 2007, from $5.2 million for the three months ended September 30, 2006. The average balance of deposits increased $8.0 million and the average cost of these funds increased 58 basis points over these periods. Interest expense on borrowings was affected by the higher interest rate environment as well as an increase in the average balance. Interest expense on borrowings increased by $459,000, or 22.9%, to $2.5 million for the three months ended September 30, 2007, from $2.0 million for the three months ended September 30, 2006. The average balance of borrowings increased $35.5 million and the cost increased 14 basis points for the three months ended September 30, 2007, versus the corresponding 2006 period.
Net Interest Income Before Provision for Loan Losses. Net interest income increased by $1.9 million, or 29.5%, to $8.3 million for the three months ended September 30, 2007, from $6.4 million for the three months ended September 30, 2006. The Company's net interest rate spread decreased to 2.11% for the three months ended September 30, 2007, from 2.22% for the three months ended September 30, 2006. The Company's net interest margin increased to 2.89% for the three months ended September 30, 2007, from 2.59% for the three months ended September 30, 2006. On a linked quarter comparison, the Company's net interest rate spread increased 4 basis points to 2.11% from 2.07% for the three months ended June 30, 2007 and the Company's net interest margin increased 8 basis points to 2.89% from 2.81% for the three months ended June 30, 2007. The quarterly increases in spread and margin were primarily due to increased prepayment penalties received during the three months ended September 30, 2007.
Provision for Loan Losses. The Company recorded provisions for loan losses of $350,000 for the three months ended September 30, 2007 as compared to $150,000 for the three months ended September 30, 2006. There were no recoveries or charge-offs in either period and delinquencies were minimal. The Company's allowance for loan losses is analyzed quarterly and many factors are considered. The primary reason for the provisions was loan growth during the three month periods. Loans, net grew by $32.6 million during the three months ended September 30, 2007 and by $23.9 million over the comparable 2006 period.
Other Income. Other income increased by $148,000, or 12.5%, to $1.3 million for the three months ended September 30, 2007, from $1.2 million for the three months ended September 30, 2006. Income on the real estate investment captions of net real estate operations and income from investments in real estate joint ventures increased by $142,000, or 22.4%, to $776,000 for the three months ended September 30, 2007, from $634,000 for the three months ended September 30, 2006. The income reported in these captions is dependent upon the operations of various properties and is subject to fluctuation.
Other Expenses. Operating expenses decreased by $36,000 or 0.8% to $4.2 million for the three months ended September 30, 2007, from $4.3 million for the three months ended September 30, 2006. Compensation, payroll taxes and fringe benefits decreased $19,000 over the periods. For the three months ended September 30, 2006 there was a $500,000 expense associated with the Company's defined benefit pension plan. There was no such expense in the comparable 2007 period. This decrease, along with decreased cost on other retirement plans, was partially offset by $286,000 of expense associated with our employee stock ownership plan and a $198,000 increase in compensation expense. Other expenses decreased $25,000 primarily due to decreased donations during the 2007 quarter. Various other expenses in this category decreased slightly but these decreases were offset by increased expenses associated with being a public company.
Income Tax Expense. Income tax expense for the three months ended September 30, 2007, was $2.1 million, due to pre-tax income of $5.0 million, resulting in an effective tax rate of 41.1%. For the three months ended September 30, 2006, income tax expense was $1.2 million, due to pre-tax income of $3.2 million, resulting in an effective tax rate of 37.3%. The Company's effective tax rate increased due to changes in New Jersey tax law.
Comparison of Financial Condition at September 30, 2007 and June 30, 2007
Total Assets. Total assets increased $41.6 million, or 3.5%, to $1.24 billion at September 30, 2007, from $1.19 billion at June 30, 2007. The increase was primarily funded through increased borrowings which were principally deployed in loans and securities, in addition to offsetting deposit erosion.
Cash and Cash Equivalents. The largest asset decrease occurred in cash and cash equivalents. Cash and cash equivalents (which include fed funds and short term investments) decreased $26.5 million to $37.0 million at September 30, 2007, from $63.5 million at June 30, 2007. The decrease was a result of utilizing cash to fund loan and security growth. As described under "net interest income before provision for loan losses," the Company has maintained high balances in this category but has recently begun redeploying these funds due to decreased available returns on short-term liquid investments.
Net Loans. Loans, net increased $32.6 million, or 4.3%, to $791.1 million at September 30, 2007, from $758.5 million at June 30, 2007. The Company continued its emphasis on loan originations, particularly multifamily and commercial real estate loans. Loan originations for the three months ended September 30, 2007 totaled $59.3 million.
Securities Available for Sale. Securities available for sale increased $7.0 million, or 19.9%, to $42.5 million at September 30, 2007 from $35.4 million at June 30, 2007. This increase was due to purchases during the period.
Mortgage-Backed Securities Held to Maturity. Mortgage-backed securities held to maturity decreased $14.4 million, or 6.6%, to $203.0 million at September 30, 2007 from $217.4 million at June 30, 2007. This decrease was due to principal repayments received on this portfolio.
Mortgage-Backed Securities Available for Sale. Mortgage-backed securities available for sale increased $40.2 million to $79.0 million at September 30, 2007 from $38.8 million at June 30, 2007. This increase was due to purchases during the period partially offset by principal repayments received on this portfolio.
Federal Home Loan Bank of New York ("FHLB-NY") Stock. FHLB-NY stock increased $2.2 million, or 20.9%, to $12.8 million at September 30, 2007, from $10.6 million at June 30, 2007. Additional purchases of this stock were required due to additional advances obtained from FHLB-NY.
Deposits. Deposits decreased $8.3 million, or 1.2%, to $687.4 million at September 30, 2007, from $695.8 million at June 30, 2007. The decrease was primarily in our savings account balances which decreased $5.3 million. Deposit growth continues to be challenging in the competitive New Jersey market.
Borrowings. Borrowings increased $49.3 million, or 25.1%, to $245.9 million at September 30, 2007, from $196.7 million at June 30, 2007. The Company committed to various advances from the FHLB-NY over the period with terms considered to be favorable.
Stockholders' equity. Stockholders' equity increased $4.6 million, or 1.7%, to $277.1 million at September 30, 2007, from $272.6 million at June 30, 2007. The increase was due to net income for the three month period augmented by an increase of $900,000 to retained income as a result of the adoption of Financial Interpretation Numer 48 on July 1, 2007, and a slight increase in the value of securities classified as available for sale.
About the Company
Oritani Financial Corp. is the holding company for Oritani Savings Bank, a savings bank offering a full range of retail and commercial loan and deposit products. Oritani Savings Bank is dedicated to providing exceptional personal service to their individual and business customers. The Bank currently operates its main office and 18 full service branches in the New Jersey Counties of Bergen, Hudson and Passaic. For additional information about Oritani Savings Bank, please visit www.oritani.com.
Forward Looking Statements
Certain statements contained herein are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such forward-looking statements may be identified by reference to a future period or periods, or by the use of forward-looking terminology, such as "may," "will," "believe," "expect," "estimate," "anticipate," "continue," or similar terms or variations on those terms, or the negative of those terms. Forward-looking statements are subject to numerous risks and uncertainties, including, but not limited to, those related to the economic environment, particularly in the market areas in which the Company operates, competitive products and pricing, fiscal and monetary policies of the U.S. Government, changes in government regulations affecting financial institutions, including regulatory fees and capital requirements, changes in prevailing interest rates, acquisitions and the integration of acquired businesses, credit risk management, asset-liability management, the financial and securities markets and the availability of and costs associated with sources of liquidity.
The Company wishes to caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. The Company wishes to advise readers that the factors listed above could affect the Company's financial performance and could cause the Company's actual results for future periods to differ materially from any opinions or statements expressed with respect to future periods in any current statements. The Company does not undertake and specifically declines any obligation to publicly release the result of any revisions, which may be made to any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.
Oritani Financial Corp. and Subsidiaries
Township of Washington, New Jersey
Consolidated Balance Sheets
September 30, 2007 and June 30, 2007
(in thousands, except share data)
Sept. 30 June 30,
Assets 2007 2007
(unaudited)
Cash on hand and in banks $6,190 $7,823
Federal funds sold and short term investments 30,848 55,703
Cash and cash equivalents 37,038 63,526
Loans, net 791,134 758,542
Securities held to maturity, estimated
market value of $5,392 and $5,347 at September
30, 2007 and June 30, 2007, respectively 5,415 5,415
Securities available for sale, at market value 42,491 35,443
Mortgage-backed securities held to
maturity, estimated market value of $198,704
and $210,505 at September 30, 2007 and
June 30, 2007, respectively 203,031 217,406
Mortgage-backed securities available for sale,
at market value 78,993 38,793
Bank Owned Life Insurance (at cash
surrender value) 25,625 25,365
Federal Home Loan Bank of New York
stock, at cost 12,837 10,619
Accrued interest receivable 5,447 4,973
Investments in real estate joint ventures, net 6,269 6,200
Real estate held for investment 2,446 2,492
Office properties and equipment, net 8,286 8,361
Other assets 17,051 17,308
$1,236,063 $1,194,443
Liabilities
Deposits $687,449 $695,757
Borrowings 245,949 196,661
Advance payments by borrowers for taxes
and insurance 5,136 5,684
Accrued taxes payable 15 1,463
Official checks outstanding 2,532 5,050
Other liabilities 17,862 17,258
Total liabilities 958,943 921,873
Stockholders' Equity
Preferred stock, $0.01 par value; 10,000,000
shares authorized-none issued or outstanding - -
Common stock, $0.01 par value; 80,000,000
shares authorized; 40,552,162 issued and
outstanding at September 30, 2007 and
June 30, 2007. 130 130
Additional paid-in capital 127,797 127,710
Unallocated common stock held by the
employee stock ownership plan (15,301) (15,499)
Retained income 165,173 161,300
Accumulated other comprehensive loss,
net of tax (679) (1,071)
Total stockholders' equity 277,120 272,570
$1,236,063 $1,194,443
Oritani Financial Corp. and Subsidiaries
Township of Washington, New Jersey
Consolidated Statements of Income
Three Months Ended September 30, 2007 and 2006
(unaudited)
Three months ended
Sept. 30,
2007 2006
(in thousands, except per share data)
Interest income:
Interest on mortgage loans $12,772 $10,223
Interest on securities held to maturity 271 239
Interest on securities available for sale 502 144
Interest on mortgage-backed
securities held to maturity 2,047 2,551
Interest on mortgage-backed
securities available for sale 631 203
Interest on federal funds sold
and short term investments 820 266
Total interest income 17,043 13,626
Interest expense:
Deposits 6,294 5,222
Borrowings 2,464 2,005
Total interest expense 8,758 7,227
Net interest income before
provision for loan losses 8,285 6,399
Provision for loan losses 350 150
Net interest income 7,935 6,249
Other income:
Service charges 256 258
Real estate operations, net 382 307
Income from investments in real
estate joint ventures 394 327
Bank-owned life insurance 260 238
Other income 37 51
Total other income 1,329 1,181
Operating expenses:
Compensation, payroll taxes and
fringe benefits 3,041 3,060
Advertising 123 124
Office occupancy and equipment expense 386 379
Data processing service fees 246 259
Federal insurance premiums 23 22
Telephone, Stationary, Postage and Supplies 99 84
Insurance, Legal, Audit and Accounting 152 153
Other expenses 148 173
Total operating expenses 4,218 4,254
Income before income tax expense 5,046 3,176
Income tax expense 2,073 1,184
Net income $2,973 $1,992
Basic income per common share $0.08 n/a
Average Balance Sheet and Yield/Rate Information
For the Three Months Ended (unaudited)
Sept. 30, 2007
Average Interest Average
Outstanding Earned/ Yield/
Balance Paid Rate
(Dollars in thousands)
Interest-earning assets:
Loans $776,327 $12,772 6.58%
Securities available for sale 37,465 502 5.36%
Securities held to maturity 17,182 271 6.31%
Mortgage backed securities available
for sale 45,974 631 5.49%
Mortgage backed securities held to
maturity 209,940 2,047 3.90%
Federal funds sold and short term
investments 60,953 820 5.38%
Total interest-earning assets 1,147,841 17,043 5.94%
Non-interest-earning assets 68,845
Total assets $1,216,686
Interest-bearing liabilities:
Savings deposits 155,777 649 1.67%
Money market 41,433 437 4.22%
NOW accounts 74,418 218 1.17%
Time deposits 421,917 4,990 4.73%
Total deposits 693,545 6,294 3.63%
Borrowings 222,181 2,464 4.44%
Total interest-bearing liabilities 915,726 8,758 3.83%
Non-interest-bearing liabilities 27,414
Total liabilities 943,140
Stockholder's equity 273,546
Total liabilities and stockholder's
equity $1,216,686
Net interest income $8,285
Net interest rate spread (1) 2.11%
Net interest-earning assets (2) $232,115
Net interest margin (3) 2.89%
Average of interest-earning assets to
interest-bearing liabilities 1.25X
Average Balance Sheet and Yield/Rate Information
For the Three Months Ended (unaudited)
Sept. 30, 2006
Average Interest Average
Outstanding Earned/ Yield/
Balance Paid Rate
(Dollars in thousands)
Interest-earning assets:
Loans $652,784 $10,223 6.26%
Securities available for sale 10,500 144 5.49%
Securities held to maturity 20,737 239 4.61%
Mortgage backed securities available
for sale 16,788 203 4.84%
Mortgage backed securities held to
maturity 265,929 2,551 3.84%
Federal funds sold and short term
investments 19,923 266 5.34%
Total interest-earning assets 986,661 13,626 5.52%
Non-interest-earning assets 58,006
Total assets $1,044,667
Interest-bearing liabilities:
Savings deposits 175,907 625 1.42%
Money market 27,406 231 3.37%
NOW accounts 73,023 219 1.20%
Time deposits 409,241 4,147 4.05%
Total deposits 685,577 5,222 3.05%
Borrowings 186,694 2,005 4.30%
Total interest-bearing liabilities 872,271 7,227 3.31%
Non-interest-bearing liabilities 21,722
Total liabilities 893,993
Stockholder's equity 150,674
Total liabilities and stockholder's
equity $1,044,667
Net interest income $6,399
Net interest rate spread (1) 2.21%
Net interest-earning assets (2) $114,390
Net interest margin (3) 2.59%
Average of interest-earning assets to
interest-bearing liabilities 1.13X
(1) Net interest rate spread represents the difference between the yield
on average interest-earning assets and the cost of average interest-
bearing liabilities.
(2) Net interest-earning assets represents total interest-earning assets
less total interest-bearing liabilities.
(3) Net interest margin represents net interest income divided by average
total interest-earning assets.
SOURCE Oritani Financial Corp.
http://www.oritani.com
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