Oriental reports 4Q ’11 losses tied to string of one-time charges

Written by  //  January 31, 2012  //  Banking, Financial District  //  No comments

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Oriental Bank in Condado. (Credit: © Mauricio Pascual)

Oriental Financial Group Inc. reported a loss of $13.1 million during the fourth quarter of 2011, sharply contrasting the positive results for the same year-ago quarter, when it recorded $3.9 million in income. The result for the quarter ended Dec. 31, 2011 also reflected a drop from the $15.6 million in the books for the prior quarter ended Sept. 30.

The results reflected nearly $20 million in one-time charges not considered part of Oriental’s pre-tax operating income, including a $15 million other than temporary impairment charge on collateralized debt obligation — which was sold this month for $10.5 million.

The results also included a $2.4 million write-down of interest receivable on delinquent residential mortgage loans, and a $2.4 million write-down on foreclosed properties and other nonperforming real estate-related assets, most of which were taken over as part of its FDIC-assisted Eurobank acquisition in April 2010.

“During the fourth quarter, we reduced and renewed certain repos in a manner that should positively impact results in 2012 and beyond,” said Oriental CEO José Rafael Fernández. “We also recorded a charge on a CDO sold in January. On a pre-tax operating income basis, we had a solidly profitable fourth quarter and an excellent year.”

“The steps we have taken are expected to enhance Oriental’s plans to grow our banking capabilities, [strengthen] our already strong capital position, and further improve performance,” he said.

Oriental finished the year with income available to common shareholders of $29.6 million, compared to a loss of $18.2 million in 2010.

“We achieved major progress in 2011 executing on our strategies, growing our franchise value and returning capital to investors,” Fernández said. “We are entering 2012 with increasing momentum in our ability to expand quality credit and deposit relationships, as well as continuing to build our reputation as a solid commercial lender.”

Last year, Oriental reported “strong growth in core lending, banking and wealth management operations,” including a more than 38 percent increase in commercial loan production.

“We are also selectively reducing our wholesale funding and generating more interest income from loans. The 2010 Eurobank acquisition is becoming more accretive than originally expected,” he said. “This should continue to benefit Oriental in upcoming quarters as well.

During the last quarter of 2011, Oriental reported interest income from loans of $39.4 million, an increase of 11.3 percent from the third quarter.

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