Oriental Financial Group Inc. (NYSE: OFG) today announced results for the second quarter and six months ended June 30, 2008.

For the quarter, the Group reported income available to common shareholders of $13.2 million, an increase of 152.1% over the year ago quarter’s $5.2 million. This represents a return on average assets of 0.95% and a return on average common equity of 20.65%, compared with 0.49% and 7.87%, respectively, in the second quarter of 2007. Earnings per common share (basic and diluted) of $0.54 were 157.1% greater than the $0.21 reported in the year ago quarter.

Oriental’s second quarter 2008 results did not include any meaningful pre-tax gains or losses from the sale of securities, derivatives, other investments or foreclosed real estate, which benefited the year ago quarter by approximately $1.3 million and the trailing quarter by $1.4 million; or income tax benefits, which added $2.5 million to the results for the trailing quarter.

For the six months, the Group reported income available to common shareholders of $28.9 million, an increase of 92.0% over the year ago period. This represents a return on average assets of 1.01% and a return on average common equity of 20.64%, compared with 0.70% and 11.22%, respectively, in the first six months of 2007. Earnings per common share (basic and diluted) of $1.19 were 95.1% greater than the $0.61 reported in the 2007 period.

Commentary and Outlook

“The strategies we have in place enabled us to continue to perform well despite the turbulent credit markets and the recession in Puerto Rico,” said José Rafael Fernández, President and Chief Executive Officer. “Looking ahead, Oriental is well positioned to continue to benefit from its strategies.” He said highlights for the second quarter included:

• The sixth consecutive quarter of net interest margin improvement, to 1.90% from 1.40% in the year ago quarter and 1.68% in the previous quarter
• Significant reduction in cost of funds to 4.01%, down 9.7% from the year ago quarter and down 4.8% from the previous quarter
• Growth in loan originations, which totaled $92.6 million for the second quarter, representing increases of 7.2% from the year ago quarter and 39.8% from the previous quarter, while maintaining high credit quality
• The first sequential quarter reduction in non-performing loans in two years, the smallest sequential quarter increase in non-performing assets in the same time period, and a continued low level of net credit losses
• Sequential quarter increases of regulatory capital ratios
• A continued year over year increase in profitability even though the Group’s total assets are at the same level as at December 31, 2007 and slightly lower than at March 31, 2008

Second Quarter 2008 Income Statement

Net interest income of $28.4 million increased 60.7% from the year ago quarter and 14.2% from the previous quarter, primarily because of a higher overall yield and higher average balances of interest-earning assets and lower average costs of deposits and borrowings. Interest income from investment securities of $65.5 million increased 5.1% sequentially, due principally to Oriental having a full quarter’s benefit of higher yielding securities purchased in the first quarter of 2008. Interest income from loans of $19.7 million declined 0.7% sequentially, primarily reflecting reduced yields on variable rate commercial loans due to lower prevailing interest rates.

Total banking and financial service revenues of $6.5 million were approximately level with the year ago quarter, as increased revenues from financial services and mortgage banking activities offset lower banking services revenue. Growth in financial services reflects Oriental’s market strategy, focusing on financial planning for mid and high net worth clients. Assets under management, which generate recurring fees for the Group’s financial service businesses, reached $3.2 billion at June 30, 2008, an increase of 8.8% from a year ago and 0.4% from March 31, 2008, despite the second quarter 2008 decline in the stock and bond markets.

Non-interest expenses of $18.1 million increased 3.5% from the year ago quarter and 2.0% from the previous quarter. The efficiency ratio improved to 51.82% from 72.30% in the year ago quarter and 54.69% in the previous quarter.

June 30, 2008 Balance Sheet Highlights

Total interest earning assets of approximately $5.9 billion increased 17.1% over a year ago and declined 1.5% from the end of the previous quarter. Year over year, the investment securities portfolio grew 24.4% in line with management’s strategy of supplementing the generally low level of loan originations in 2007 with the purchase of investment securities at a favorable spread.

During the last twelve months the held to maturity (HTM) investment portfolio was reduced by $526.4 million, due to maturities and repayments, with the proceeds principally reinvested in the available for sale (AFS) investment portfolio at more favorable spreads. Sequentially, investment securities balances declined 2.5% due to repayments of securities in both the HTM and AFS portfolios and mark to market of securities in the AFS portfolio.

Total loans, net, declined 4.2% year over year, but increased 2.8% from the end of the preceding quarter. Mortgage originations for the quarter of $75.5 million were up 113.6% from the year ago quarter and 69.5% from the previous quarter, with an average FICO score of 719 and an average loan to value ratio of 82%. Rebounding from a year ago, commercial originations continued in the $15 million range as in the previous quarter.

During the second quarter of 2008, Oriental used a $117.4 million increase in wholesale certificates of deposit as a more economical and flexible alternative for replacing higher cost retail deposits and short-term repurchase agreements. The change in funding mix, along with lower interest rates, helped to reduce total interest expense as compared to the previous quarter.

Credit Quality

Non-performing loans declined 0.48% during the quarter. Net credit losses year to date remain even with the year ago period at 0.33% of average loans outstanding. The allowance for loan losses stood at $11.9 million (0.97% of total loans) at June 30, 2008, compared to $11.1 million (0.93% of total loans) at March 31, 2008.

Based on the Group’s historical performance, Oriental does not expect its non-performing loans to convert into significantly higher losses as most are well-collateralized with adequate loan-to-value ratios. The Group follows a conservative residential mortgage lending policy, with more than 90% of its residential mortgage portfolio consisting of fixed-rate, fully amortizing, fully documented loans that do not have the level of risk associated with subprime loans. Furthermore, Oriental has never been active in negative amortization loans or adjustable rate mortgage loans.

Capital

Stockholders’ equity of $301.2 million at June 30, 2008 is down 3.9% from a year ago and 11.1% from March 31, 2008. The change reflects a reduction in the fair value of the AFS portfolio, primarily due to the widening of credit spreads in the second quarter of 2008. The Group has the intent and ability to hold all of the securities in its investment portfolio with unrealized losses at June 30, 2008 until a period of time sufficient to allow for the recovery of their fair value up to or beyond their cost, and closely monitors them for any change in value that may be considered to be other than temporary.

The Group maintains capital ratios comfortably in excess of regulatory requirements. At June 30, 2008, the Leverage Capital Ratio was 6.80% (1.7 times the minimum of 4.00%), the Tier I Risk-Based Capital Ratio was 17.26% (4.3 times the minimum of 4.00%), and the Total Risk-Based Capital Ratio was 17.76% (2.2 times the minimum of 8.00%).

About Oriental Financial Group

Oriental Financial Group Inc. is a diversified financial holding company operating under U.S. and Puerto Rico banking laws and regulations. Now in its 44^th year in business, Oriental provides a full range of mortgage, commercial and consumer banking services through 24 Oriental Group financial centers in Puerto Rico, as well as financial planning, trust, insurance, investment brokerage and investment banking services. Investor information about Oriental can be found at www.orientalfg.com.

Forward-Looking Statements

This news release may contain forward-looking statements that reflect management's beliefs and expectations and are subject to risks and uncertainties inherent to the Group's business, including, without limitation, the effect of economic and market conditions, the level and volatility of interest rates, and other risks and considerations detailed in the Group’s filings with the Securities and Exchange Commission. These or other factors could cause actual results to differ materially from forward-looking statements. The Group also disclaims any obligations to update information contained in this news release because of developments occurring after the date of issuance.