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Oritani Financial Corp. Reports Record Quarterly And Annual Earnings

TOWNSHIP OF WASHINGTON, N.J., July 24, 2013 (GLOBE NEWSWIRE) -- Oritani Financial Corp. (the "Company" or "Oritani") (Nasdaq:ORIT), the holding company for Oritani Bank (the "Bank"), reported net income of $11.7 million, or $0.28 per basic (and $0.27 diluted) common share, for the three months ended June 30, 2013, and $39.5 million, or $0.94 per basic (and $0.92 diluted) common share, for the twelve months ended June 30, 2013. This compares to net income of $8.3 million, or $0.20 per basic (and $0.19 diluted) common share, for the three months ended June 30, 2012, and $31.7 million, or $0.72 per basic (and $0.71 diluted) common share, for the twelve months ended June 30, 2012.

The Company also reported that its Board of Directors has declared a $0.175 quarterly cash dividend on the Company's common stock. The record date for the dividend will be August 9, 2013 and the payment date will be August 23, 2013. Based on the recent trading range of the Company's common stock, the dividend yield is approximately 4.25%.

"I am pleased to report excellent financial results for the fiscal year ended June 30, 2013," said Kevin J. Lynch, the Company's Chairman, President and CEO. "We achieved record net income, a 24.9% increase over the prior year, as well as surpassing our goals for loans originations, core deposit growth and asset quality. Our team remains focused on the key elements of our business, which has enabled us to deliver these strong results."

Comparison of Operating Results for the Periods Ended June 30, 2013 and 2012

Net Income. Net income increased $3.4 million, or 41.0%, to $11.7 million for the quarter ended June 30, 2013, from $8.3 million for the corresponding 2012 quarter. Net income increased $7.9 million, or 24.9%, to $39.5 million for the twelve months ended June 30, 2013, from $31.7 million for the corresponding 2012 period. The primary causes of the increased net income in the 2013 periods were increased net interest income, increased other income and decreased provision for loan losses. Return on average assets was 1.66% and 1.43% for the three and twelve months ended June 30, 2013, respectively. Return on average equity was 9.06% and 7.68% for the three and twelve months ended June 30, 2013, respectively.

Total Interest Income

The components of interest income for the three months ended June 30, 2013 and 2012, changed as follows:

  Three Months Ended June 30 Increase / (decrease)
  2013 2012   Average  
  $ Yield $ Yield $ Balance Yield
  (Dollars in thousands)
Interest on loans  $ 29,028 5.20%  $ 28,271 5.81%  $ 757  $ 286,188 -0.61%
Dividends on FHLB stock  436 3.96%  380 4.17%  56  7,539 -0.21%
Interest on securities AFS  52 1.74%  90 1.38%  (38)  (14,064) 0.36%
Interest on MBS HTM  253 2.36%  221 2.67%  32  9,737 -0.31%
Interest on MBS AFS  1,449 1.73%  2,266 1.80%  (817)  (169,135) -0.07%
Interest on federal funds sold and short term investments  1 0.25%  1 0.25%  0  299 0.00%
Total interest income  $ 31,219 4.68%  $ 31,229 4.90%  $ (10)  $ 120,564 -0.22%

As discussed in previous public releases, the evidence of the impact of two of the Company's strategic business decisions is provided in the average balance changes. The Company's primary focus is organic growth of multifamily and commercial real estate loans. The average balance of loans increased $286.2 million, or 14.7%, over the periods. While growth was achieved throughout the year, recently the growth rate has slowed. On a linked quarter basis (June 30, 2013 versus March 31, 2013), the average balance of loans grew $45.2 million, which equates to an annualized rate of 8.3%. Management had been averse to offering the terms required to maintain our prior pace of growth, particularly loans with a fixed rate period longer than 5 years. The recent increase in market rates has made current loan terms more palatable, and management believes the Company can return to growth levels previously achieved. The growth was primarily achieved through originations, which totaled $143.2 million for the three months ended June 30, 2013. The yield on the loan portfolio decreased 61 basis points for the quarter ended June 30, 2013 versus the comparable 2012 period. The decreased yield was primarily due to the impact of current market rates on new originations, refinancings, prepayments and modifications. Prepayment penalties are recognized as interest on loans and impacted the loan yield in both periods. Prepayment penalties totaled $1.0 million for the three months ended June 30, 2013versus $779,000 for the comparable 2012 period. Prepayment penalty provisions are incorporated into all of the Company's multifamily and commercial real estate loan documents. The penalties are intended to provide the Company with compensation if the loan is prepaid. Although market interest rates have increased recently, the current interest rate environment continues to provide an economic incentive for many of our existing borrowers to refinance. Prepayment penalties boosted annualized loan yield by 18 basis points for the three months ended June 30, 2013versus 16 basis points for the comparable 2012 period. The second strategic business decision evidenced in the table was the determination to no longer deploy the cash flows from the investment portfolio back into new investments. This decision impacted the periods subsequent to September 30, 2011 and was made because the Company determined that the risk/reward profiles of permissible securities no longer warranted additional investment. The few purchases that occurred subsequent to that date were primarily to satisfy regulatory needs and were classified as held to maturity. The average balance of the primary investment category, mortgage-backed securities available for sale, decreased $169.1 million over the periods. The decision has aided overall yield on interest earning assets as the Company now has a lower percentage of its interest earning assets in lower yielding instruments like mortgage backed securities, investment securities and federal funds sold. The limited decrease in yield on interest earnings assets that occurred in 2013 versus 2012 (22 basis points), despite a much lower interest rate environment, is partially attributable to these strategic decisions. 

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