Oriental Financial Group Reports Results for the Quarter and Year Ended December 31, 2007

Business Wire, Feb 7, 2008

Continued Strong Profit Growth on Year over Year and Sequential Quarter Basis

SAN JUAN, Puerto Rico -- Oriental Financial Group Inc. (NYSE: OFG) today announced results for the fourth quarter and year ended December 31, 2007.

For the fourth quarter, the Group reported income available to common shareholders of $14.2 million, or $0.59 per common share (basic and diluted), compared to a loss of $19.3 million, or ($0.78) per share (basic and diluted), in the corresponding year ago quarter.

* Returns on assets (ROA) and common equity (ROE) for the fourth quarter were 1.04% and 20.08%, respectively, a significant improvement from 0.59% and 11.17%, respectively, in the preceding quarter.

* Net interest margin for the fourth quarter increased to 1.61%, up 89 basis points from the corresponding year-ago period and 15 basis points from the preceding quarter. This is the fourth consecutive quarter in which net interest margin has grown.

* Book value per common share of $12.08 as of December 31, 2007, represents an increase of 9.5% from a year ago and 6.5% from the preceding quarter.

For the year, Oriental reported income available to common shareholders of $36.5 million, or $1.50 per common share (basic and diluted), compared to a loss of $9.9 million, or ($0.40) per share (basic and diluted), in 2006. ROA and ROE for 2007 were 0.76% and 13.52%, respectively, compared with negative returns of (0.11%) and (3.59%) for 2006, respectively.

Results for the fourth quarter of 2006 and year included $20.7 million, or $0.87 per share, in losses and write-offs, the majority of which related to the sale of lower yielding securities stemming from the repositioning of the available-for-sale securities portfolio that led to a sizeable increase in net interest income in 2007.

Commentary and Outlook

Jose Rafael Fernandez, President and Chief Executive Officer, commented, "The favorable results achieved in the 2007 fourth quarter and year continue to reflect the success of strategies we have been pursuing." These strategies included:

* 1. The decision to adopt conservative lending policies starting several years ago in light of weakening economic conditions in Puerto Rico and, in our opinion, excessively aggressive interest rates and other terms being offered by other banks on commercial and mortgage loans.

* 2. The repositioning of Oriental's investment portfolio and related funding to improve margins, in line with what the Group correctly anticipated would be a more positively sloped yield curve.

* 3. Growing Oriental's franchise with the objective of integrating the delivery of banking and financial services to mid- and high-net worth clients, building recurring non-interest revenues, closely monitoring non-interest expenses, and strengthening the Group's management team.

"Oriental remains very well positioned, and we expect to continue to benefit from these strategies in 2008," Mr. Fernandez said, specifically citing:

* 1. Maintaining the current profile of the investment securities portfolio while remaining attentive to market opportunities that could further improve net interest margin.

* 2. Continued success in the delivery of integrated financial services.

* 3. Expanded distribution of Oriental's mortgage banking capabilities through a recently announced exclusive relationship in Puerto Rico with Primerica, a wholly owned subsidiary of Citigroup; increased market penetration in the Western and Southern parts of the Island; the Group's relationships with realtors; and its wholesale mortgage purchasing unit.

* 4. Enhancements to Oriental's commercial lending operation, including new cash management products and an exclusive relationship with The Sage Group plc, which markets point of sale solutions in Puerto Rico.

* 5. Leveraging the Group's highly efficient, state of the art technological infrastructure, based on world class providers Metavante Corporation (for banking services), Fidelity's National Financial Services (for wealth management), and S1 Corporation (for customer internet access).

"With our strong capital structure, we also believe we will be able to take advantage of any good quality strategic growth opportunities that may arise," Mr. Fernandez added.

Analysis of Fourth Quarter 2007 Results of Operations

Interest income of $82.1 million increased 40.3% year over year and 9.6% quarter over quarter, primarily as a result of a higher overall yield and higher average balances of interest-earning assets. At the same time, total interest expense of $59.1 million increased only 19.9% year over year and 7.0% quarter over quarter, reflecting lower average borrowing rates, resulting in net interest income of $23.0 million, an increase of 148.6% year over year and 17.1% quarter over quarter.

Core non-interest revenue from banking and financial service sources totaled $7.7 million, approximately even with the year ago quarter, but up 14.5% from the preceding quarter. Key drivers were increased revenues from financial services and mortgage banking activities. Mortgage banking benefited from the Group's ability to securitize and sell conforming loans in the secondary market on a more consistent basis.