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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13
OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
Date of Report: April 8, 1999
ORIENTAL FINANCIAL GROUP INC.
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(Exact Name of Registrant as Specified in its Charter)
Commonwealth of Puerto Rico 001-12647 66-0538893
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State or other Jurisdiction (Commission File No.) (I.R.S. Employer
of Incorporation) Identification No.)
Hato Rey Tower, Suite 501
268 Munoz Rivera Avenue
San Juan, Puerto Rico 00918
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (787) 766-1986
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ITEM 5. OTHER EVENTS
Oriental Financial Services Inc. (the "Company"), on April 8, 1999,
released its unaudited earnings for the quarter ended March 31, 1999. The
Company's press release also included certain unaudited balance sheet and
operational data as of March 31, 1999. A copy of the press release disclosing
the Company's unaudited earnings for such period is attached as an exhibit to
this Current Report on Form 8-K.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(c) Exhibits
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Exhibit No. Description of Document
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99 Press Release dated April 8, 1999.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: April 22, 1999 By: /s/ Rafael Valladares
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Rafael Valladares
Senior Vice President and Controller
(Principal Financial Officer)
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INDEX OF EXHIBITS
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Exhibit No. Description of Document Page No.
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99 Press Release dated
April 8, 1999
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ORIENTAL FINANCIAL GROUP INC. CONTACT PERSON: RAFAEL VALLADARES
QUARTERLY PRESS RELEASE TEL: (787) 641-7472 EXT. 3010
FOR IMMEDIATE RELEASE ON
THURSDAY, APRIL 8, 1999
ORIENTAL FISCAL 1999 3RD QUARTER DILUTED EARNINGS PER SHARE RISE 25% VERSUS
FISCAL 1998
San Juan, PR-Jose E. Fernandez, President and Chief Executive Officer of
Oriental Financial Group Inc., the bank holding company of Oriental Bank and
Trust, reported an increase of 25% in diluted earnings per share for the third
quarter of fiscal 1999, as net income rose to $6.6 million or $.50 per share
from $5.4 million or $.40 per share in the same period of fiscal 1998. The
Group's profitability ratios for the third quarter of fiscal 1999 reflect
annualized returns of 1.76% on assets (ROA) and 25.06% on stockholders' equity
(ROE) versus 1.72% and 20.95%, respectively, in the comparable fiscal 1998
period.
For the first nine months of fiscal 1999, the Group's diluted earnings per share
also climbed 25%, as net income reached $19.0 million or $1.43 per share
compared with $15.6 million or $1.14 per share in the same period of fiscal
1998. The ROA and ROE for the first nine months of fiscal 1999 were 1.78% and
22.78%, respectively, up from 1.73% and 21.04%, respectively, in the same period
of fiscal 1998. The Group's earnings growth was driven by increases in net
interest income and non-interest income; partially offset by a rise in the
provision for loan losses. A solid growth in interest-earning assets and strong
performances by the Group's trust, brokerage and money management and treasury
business units fueled the Group's operating income improvement.
Commenting on the Group's financial results, Mr. Fernandez stated: "Management
is delighted with the growth achieved in our core business base and the strong
financial results realized during the first nine months of fiscal 1999. During
this past quarter our core business base expanded at a healthy pace, producing
record results in our mortgage origination and brokerage business units. We
expect to sustain this outstanding performance in the foreseeable future."
At March 31, 1999, the Group's total financial assets owned or managed, which
consists of Bank assets, assets managed by the trust and assets gathered by the
broker-dealer, reached $3.8 billion, an increase of 19% when compared to the
$3.2 billion a year ago. At March 31, 1999, Bank assets reached $1.532 billion
from $1.262 billion a year ago, an increase of 21%. Assets managed by the trust
grew 15% to $1.435 billion versus $1.243 billion a year ago, and assets gathered
by the broker-dealer increased 21% to $831.7 million from $686 million the year
before.
Net interest income for the third quarter of fiscal 1999, rose 17% to $13.2
million versus $11.3 million reported in the same period of fiscal 1998. For the
nine months of fiscal 1999, net interest income increased 14% to $36.1 million
from $31.7 million reported in the same period a year ago. These increases were
mainly due to a larger average balance of interest-earning assets coupled with a
lower cost of deposits and borrowings.
For the third quarter of fiscal 1999, trust, money management and brokerage fees
rose by 21% to $2.4 million, compared to $2.0 million in the same quarter of
fiscal 1998. Mortgage banking
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activities and other recurring income amounted to $1.6 million compared to $2.1
million for the same period of fiscal 1998. For the first nine months of fiscal
1999, trust, money management and brokerage fees, improved 17% to $7.0 million,
compared to $6.0 million for the same period a year ago. Mortgage banking
activities and other recurring income amounted to $5.5 million versus $6.0
million for the same period of fiscal 1998.
For the third quarter of fiscal 1999, other non-recurring income increased to
$1.9 million from $349,000 in fiscal 1998. For the first nine months of fiscal
1999, rose to $10.5 million from $4.3 million in fiscal 1998. These improvements
were driven by increases in securities and trading gains. As result of the
favorable market opportunities, during the past two quarters the Group sold a
significant quantity of investment securities as part of its asset/liability
management.
The Group's provision for loans losses for the third quarter of fiscal 1999
increased to $3.2 million from $1.9 million for the same period of fiscal 1998.
For the first nine months of fiscal 1999, the provision for loan losses amounted
to $13 million versus $6.9 million in the same period the year before. The main
reason for the increase in the provision was management's goal of further
expanding the Group's coverage ratio of reserve to total loans, which increased
to 1.63% from 1.21% a year ago.
Recurring non-interest expenses for the third quarter of fiscal 1999, increased
11% to $8.3 million from $7.5 million during the same period of fiscal 1998.
Notwithstanding the above increase, the annualized efficiency ratio and the
expense ratio for the third quarter of fiscal 1999 were 48.06% and 1.21%,
respectively, versus 48.52% and 1.15%, respectively, the year before. For the
first nine months of fiscal 1999 recurring non-interest expenses amounted to
$23.5 million versus $22.7 million, up 3%. The efficiency ratio and the expense
ratio for the first nine months of fiscal 1999 substantially improved to 48.40%
and 1.11%, respectively, from 50.99% and 1.20%, respectively, a year earlier.
Stockholders' equity at March 31,1999, totaled $104.5 million. The Group
continues to be a "well capitalized" institution, the highest classification
available under the capital standards set by the Federal Deposit Insurance
Corporation for bank or bank holding companies. Total risk-based and leverage
capital ratios as of March 31, 1999 were 21.30% and 7.21%, respectively, which
are well above the minimum capital ratios required by regulatory agencies. As
part of the Group's stock repurchase program, during the first nine months of
fiscal 1999, the Group repurchased a total number of 260,226 common shares, all
of which are held by the Group's treasury at March 31, 1999.
Oriental Financial Group Inc. is a bank holding company, which provides
diversified financial services to clients throughout Puerto Rico. The core
businesses of the Group are mortgage origination, trust, money management,
financial planning and investment brokerage services, as well as a full range of
consumer banking services through a 19-branch islandwide network.
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ORIENTAL FINANCIAL GROUP INC. THIRD QUARTER ENDED NINE MONTHS ENDED
QUARTERLY PRESS RELEASE SUMMARY MARCH 31, MARCH 31,
NYSE SYMBOL: OFG --------- --------
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1999 1998 % 1999 1998 %
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EARNINGS (In thousands, except for per share data):
INTEREST INCOME $ 29,514 $ 26,079 13% $ 84,386 $ 74,410 13%
INTEREST EXPENSE 16,317 14,799 10% 48,305 42,753 13%
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NET INTEREST INCOME 13,197 11,280 17% 36,081 31,657 14%
PROVISION FOR LOAN LOSSES 3,200 1,900 68% 12,950 6,900 88%
TRUST, MONEY MANAGEMENT AND BROKERAGE FEES 2,440 2,021 21% 7,035 6,034 17%
MORTGAGE BANKING ACTIVITIES AND OTHER RECURRING INCOME 1,584 2,073 -24% 5,484 6,038 -9%
OTHER NON RECURRING INCOME 1,949 349 458% 10,465 4,290 144%
RECURRING NON-INTEREST EXPENSES 8,277 7,478 11% 23,524 22,745 3%
NON RECURRING NON-INTEREST EXPENSES -- 82 -100% 337 133 153%
INCOME TAXES 1,070 825 30% 3,205 2,650 21%
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NET INCOME $ 6,623 $ 5,438 22% $ 19,049 $ 15,591 22%
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INCOME PER SHARE:
BASIC $ 0.51 $ 0.41 24% $ 1.46 $ 1.18 24%
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DILUTIVE $ 0.50 $ 0.40 25% $ 1.43 $ 1.14 25%
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AVERAGE SHARES OUTSTANDING 13,033,714 13,282,133 13,033,714 13,249,046
AVERAGE SHARES EQUIVALENTS 325,014 442,624 325,014 448,237
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TOTAL 13,358,728 13,724,757 13,358,728 13,697,283
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FINANCIAL HIGHLIGHTS (In thousands):
TOTAL BANK ASSETS $1,532,400 $ 1,261,500 21%
TRUST ASSETS MANAGED 1,435,000 1,242,900 15%
ASSETS GATHERED BY BROKER AND DEALER 831,700 686,000 21%
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TOTAL FINANCIAL ASSETS $3,799,100 $ 3,190,400 19%
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INVESTMENTS AND OTHER INTEREST-EARNING ASSETS $ 895,539 $ 640,608 40%
LOANS RECEIVABLE, NET 569,956 557,733 2%
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INTEREST-EARNING ASSETS $1,465,495 $ 1,198,341 22%
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DEPOSITS $ 639,010 $ 551,483 16%
OTHER BORROWINGS 749,620 574,406 31%
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INTEREST-BEARING LIABILITIES $1,388,630 $ 1,125,889 23%
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CAPITAL $ 104,492 $ 103,967 1%
SELECTED FINANCIAL RATIOS (in percent):
RETURN ON AVERAGE ASSETS (ROA) 1.76% 1.72% 1.78% 1.73%
RETURN ON AVERAGE CAPITAL (ROE) 25.06% 20.95% 22.78% 21.04%
EFFICIENCY RATIO 48.06% 48.52% 48.40% 50.99%
EXPENSE RATIO 1.21% 1.15% 1.11% 1.20%
INTEREST RATE SPREAD 3.52% 3.52% 3.43% 3.56%
TOTAL RISK-BASED CAPITAL RATIO 21.30% 19.79%
CORE CAPITAL (LEVERAGE) RATIO 7.21% 7.82%
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