Company Quick10K Filing
⚲
Oritani Financial
Financials
Price18.02 EPS1
Shares45 P/E16
MCap813 P/FCF20
Net Debt399 EBIT125
TEV1,212 TEV/EBIT10
TTM 2019-09-30, in MM, except price, ratios
Filings
10-Q 2019-09-30 Filed 2019-11-12
10-K 2019-06-30 Filed 2019-08-28
10-Q 2019-03-31 Filed 2019-05-10
10-Q 2018-12-31 Filed 2019-02-11
10-Q 2018-09-30 Filed 2018-11-09
10-K 2018-06-30 Filed 2018-08-29
10-Q 2018-03-31 Filed 2018-05-10
10-Q 2017-12-31 Filed 2018-02-09
10-Q 2017-09-30 Filed 2017-11-09
10-K 2017-06-30 Filed 2017-08-29
10-Q 2017-03-31 Filed 2017-05-10
10-Q 2016-12-31 Filed 2017-02-08
10-Q 2016-09-30 Filed 2016-11-09
10-K 2016-06-30 Filed 2016-09-13
10-Q 2016-03-31 Filed 2016-05-09
10-Q 2015-12-31 Filed 2016-02-09
10-Q 2015-09-30 Filed 2015-11-09
10-K 2015-06-30 Filed 2015-09-14
10-Q 2015-03-31 Filed 2015-05-08
10-Q 2014-12-31 Filed 2015-02-09
10-Q 2014-09-30 Filed 2014-11-07
10-K 2014-06-30 Filed 2014-09-15
10-Q 2014-03-31 Filed 2014-05-09
10-Q 2013-12-31 Filed 2014-02-10
10-Q 2013-09-30 Filed 2013-11-08
10-K 2013-06-30 Filed 2013-09-13
10-Q 2013-03-31 Filed 2013-05-09
10-Q 2012-12-31 Filed 2013-02-08
10-Q 2012-09-30 Filed 2012-11-08
10-K 2012-06-30 Filed 2012-09-12
10-Q 2012-03-31 Filed 2012-05-10
10-Q 2011-12-31 Filed 2012-02-09
10-Q 2011-09-30 Filed 2011-11-09
10-K 2011-06-30 Filed 2011-09-12
10-Q 2011-03-31 Filed 2011-05-09
10-Q 2010-12-31 Filed 2011-02-09
10-Q 2010-09-30 Filed 2010-11-08
10-K 2010-06-30 Filed 2010-09-13
Reports
8-K 2019-11-14 Shareholder Vote, Exhibits
8-K 2019-10-24 Earnings, Exhibits
8-K 2019-07-23 Earnings, Exhibits
8-K 2019-06-25 Enter Agreement, Other Events, Exhibits
8-K 2019-04-22 Earnings, Exhibits
8-K 2019-01-24 Earnings, Exhibits
8-K 2018-11-20 Shareholder Vote, Exhibits
8-K 2018-11-20 Earnings, Exhibits
8-K 2018-11-19 Regulation FD, Exhibits
8-K 2018-10-29 Earnings, Exhibits
8-K 2018-08-28 Officers, Exhibits
8-K 2018-07-24 Earnings, Exhibits
8-K 2018-04-25 Earnings, Exhibits
8-K 2018-03-08 Exhibits
8-K 2018-01-29 Earnings, Exhibits

ORIT 10Q Quarterly Report

Content
Part I. Financial Information
Item 1. Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II - Other Information
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 3. Defaults Upon Senior Securities
Item 4. Mine Safety Disclosures
Item 5. Other Information
Item 6. Exhibits
Exhibits
EX-31.1 exhibit31_1.htm
EX-31.2 exhibit31_2.htm
EX-32 exhibit32.htm

Oritani Financial Earnings 2019-09-30

Balance SheetIncome StatementCash Flow
4.23.42.51.70.80.02012201420172020
Assets, Equity
 0.10.10.10.00.00.02016201720182020
Rev, G Profit, Net Income
 0.30.20.1-0.1-0.2-0.32012201420172020
Ops, Inv, Fin
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________________

FORM 10-Q
______________________________

☒
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended September 30, 2019
 
OR

☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the transition period from   to
Commission File No. 001-34786
   
Oritani Financial Corp.
(Exact name of registrant as specified in its charter)
   

Delaware
 
30-0628335
(State or other jurisdiction of incorporation or organization)
 
(I.R.S. Employer Identification Number)
 
370 Pascack Road, Township of Washington, New Jersey 07676
(Address of Principal Executive Offices) (Zip Code)
 
(201) 664-5400
(Registrant’s telephone number, including area code)
 
N/A
(Former name, former address, and former fiscal year, if changed since last report)
   
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such requirements for the past 90 days. 
    Yes  ☒    NO  ☐
 
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). 
    Yes  ☒    NO  ☐
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company.  See definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company”, and "emerging growth company" in Rule 12b-2 of the Exchange Act.
 
Large accelerated filer
  
☒
 
Accelerated filer
 
☐  
Non-accelerated filer
 
☐  
 
Smaller Reporting company
 
☐
 
 
  
 
Emerging growth company
 
☐
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
    YES  ☐     NO  ☒ 
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
  
Trading
Symbol(s)
  
Name of each exchange on which registered
Common
  
ORIT
  
The NASDAQ Stock Market
 
As of November 12, 2019, there were 56,245,065 shares of the Registrant’s common stock, par value $0.01 per share, issued and 45,153,395 shares outstanding.



Oritani Financial Corp.
FORM 10-Q
 
Index

 
 
  
 
 Page
 
 
 
Item 1.
3
 
 
 
 
3
 
 
 
 
4
 
 
 
 
5
 
 
 
 
6
 
 
 
 
7
 
 
 
 
8
 
 
 
Item 2.
38
 
 
 
Item 3.
40
 
 
 
Item 4.
52
 
 
 
 
 
 
 
 
Item 1.
52
 
 
 
Item 1A.
52
 
 
 
Item 2.
52
 
 
 
Item 3.
52
 
 
 
Item 4.
52
 
 
 
Item 5.
52
 
 
 
Item 6.
53
 
 
 
 
54
 


Part I. Financial Information
Item 1. Financial Statements
 
Oritani Financial Corp. and Subsidiaries
Consolidated Balance Sheets
(In thousands, except share data)

 
  
September 30,
2019
    
June 30,
2019
  
   
(unaudited)
    
(audited)
  
Assets
            
Cash on hand and in banks
  
$
20,312
    
$
19,145
  
Federal funds sold and short term investments
    
6,831
      
7,366
  
Cash and cash equivalents
    
27,143
      
26,511
  
Loans, net
    
3,421,268
      
3,491,322
  
Equity securities
    
1,344
      
1,358
  
Debt securities available for sale, at market value
    
30,578
      
32,752
  
Debt securities held to maturity, fair value of $325,054 and $334,179, respectively
    
321,871
      
332,215
  
Bank Owned Life Insurance (at cash surrender value)
    
101,490
      
100,872
  
Federal Home Loan Bank of New York (“FHLB”) stock at cost
    
23,007
      
25,925
  
Accrued interest receivable
    
11,979
      
11,935
  
Real estate owned
    
—
      
557
  
Office properties and equipment, net
    
14,796
      
12,904
  
Deferred tax assets, net
    
32,231
      
31,045
  
Other assets
    
3,951
      
3,120
  
Total Assets
  
$
3,989,658
    
$
4,070,516
  
Liabilities
                
Deposits
  
$
2,936,546
    
$
2,923,244
  
Borrowings
    
426,563
      
521,555
  
Advance payments by borrowers for taxes and insurance
    
23,952
      
24,607
  
Other liabilities
    
73,297
      
71,963
  
Total Liabilities
    
3,460,358
      
3,541,369
  
Stockholders’ Equity
                
Common stock, $0.01 par value; 150,000,000 shares authorized; 56,245,065 shares issued; 45,100,052 shares outstanding at September 30, 2019 and 45,097,052 shares outstanding at June 30, 2019.
    
562
      
562
  
Additional paid-in capital
    
515,868
      
515,491
  
Non-vested restricted stock awards
    
(190
)
    
(216
)
Treasury stock, at cost; 11,145,013 shares at September 30, 2019 and 11,148,013 shares at June 30, 2019.
    
(153,050
)
    
(153,091
)
Unallocated common stock held by the employee stock ownership plan
    
(14,733
)
    
(15,085
)
Retained earnings
    
183,533
      
182,032
  
Accumulated other comprehensive income, net of tax
    
(2,690
)
    
(546
)
Total Stockholders’ Equity
    
529,300
      
529,147
  
Total Liabilities and Stockholders’ Equity
  
$
3,989,658
    
$
4,070,516
  

See accompanying notes to unaudited consolidated financial statements.
3

Oritani Financial Corp. and Subsidiaries
Consolidated Statements of Income
(In thousands, except per share data)

  
Three Months ended September 30,
  
   
2019
    
2018
  
   
(unaudited)
  
Interest income:
            
Interest on loans
  
$
37,257
    
$
35,952
  
Dividends on FHLB stock
    
405
      
448
  
Equity securities
    
11
      
10
  
Interest on debt securities available for sale
    
184
      
240
  
Interest on debt securities held to maturity
    
1,986
      
1,929
  
Interest on federal funds sold and short term investments
    
54
      
22
  
Total interest income
    
39,897
      
38,601
  
Interest expense:
                
Deposits
    
12,289
      
9,037
  
Borrowings
    
3,145
      
3,269
  
Total interest expense
    
15,434
      
12,306
  
Net interest income before provision for loan losses
    
24,463
      
26,295
  
Reversal of provision for loan losses
    
—
      
(2,000
)
Net interest income after provision for loan losses
    
24,463
      
28,295
  
Non-interest income:
                
Fees and service charges
    
367
      
312
  
Bank-owned life insurance
    
618
      
624
  
Gains on sale of OREO
    
29
      
—
  
Change in fair value of equity securities
    
(14
)
    
(119
)
Other income
    
2
      
4
  
Total non-interest income
    
1,002
      
821
  
Non-interest expense:
                
Compensation, payroll taxes and fringe benefits
    
6,233
      
6,331
  
Advertising
    
142
      
143
  
Office occupancy and equipment expense
    
723
      
760
  
Data processing service fees
    
540
      
499
  
Federal insurance premiums
    
—
      
300
  
Other expenses
    
1,209
      
2,594
  
Total non-interest expense
    
8,847
      
10,627
  
Income before income tax expense
    
16,618
      
18,489
  
Income tax expense
    
4,318
      
5,092
  
Net income
  
$
12,300
    
$
13,397
  
Earnings per basic common share
  
$
0.28
    
$
0.30
  
Earnings per diluted common share
  
$
0.28
    
$
0.30
  

See accompanying notes to unaudited consolidated financial statements.
4

Oritani Financial Corp. and Subsidiaries
Consolidated Statements of Comprehensive Income
(In thousands)

  
Three months ended
September 30,
  
   
2019
    
2018
  
   
(unaudited)
  
Net of tax:
            
Net income
  
$
12,300
    
$
13,397
  
Other comprehensive income
                
Change in unrealized holding gain (loss) on debt securities available for sale
    
56
      
(119
)
Amortization related to post-retirement obligations
    
9
      
8
  
Change in funded status of retirement obligations
    
(384
)
    
—
  
Net change in unrealized (loss) gain on interest rate swaps
    
(1,825
)
    
874
  
Total other comprehensive (loss) income
    
(2,144
)
    
763
  
Total comprehensive income
  
$
10,156
    
$
14,160
  

See accompanying notes to unaudited consolidated financial statements.
5

Oritani Financial Corp. and Subsidiaries
Consolidated Statements of Stockholders’ Equity
Three months ended September 30, 2019 and 2018 (unaudited)
(In thousands, except share data)

 
  
Shares
Outstanding
    
Common
stock
    
Additional
paid-in
capital
    
Non-vested
restricted stock
awards
    
Treasury
stock
    
Unallocated
common stock
held by ESOP
    
Retained
earnings
    
Accumulated
other
comprehensive
income (loss),
net of tax
    
Total
stockholders'
equity
  
Balance at June 30, 2018
    
46,616,646
    
$
562
    
$
514,002
    
$
(176
)
  
$
(129,433
)
  
$
(16,631
)
  
$
179,799
    
$
11,223
    
$
559,346
  
Net income
    
—
      
—
      
—
      
—
      
—
      
—
      
13,397
      
—
      
13,397
  
Other comprehensive income , net of tax
    
—
      
—
      
—
      
—
      
—
      
—
      
—
      
763
      
763
  
Cash dividends declared (0.25 per share)
    
—
      
—
      
—
      
—
      
—
      
—
      
(11,134
)
    
—
      
(11,134
)
Purchase of treasury stock
    
(18,788
)
    
—
      
—
      
—
      
(292
)
    
—
      
—
      
—
      
(292
)
Issuance of restricted stock awards
    
10,000
      
—
      
—
      
(135
)
    
135
      
—
      
—
      
—
      
—
  
Compensation cost for stock options and restricted stock
    
—
      
—
      
43
      
—
      
—
      
—
      
—
      
—
      
43
  
ESOP shares allocated or committed to be released
    
—
      
—
      
328
      
—
      
—
      
350
      
—
      
—
      
678
  
Exercise of stock options
    
12,000
      
—
      
—
      
—
      
161
      
—
      
(18
)
    
—
      
143
  
Reclassification due to the adoption of ASU No. 2016-01
    
—
      
—
      
—
      
—
      
—
      
—
      
658
      
(658
)
    
—
  
Balance at September 30, 2018
    
46,619,858
    
$
562
    
$
514,373
    
$
(311
)
  
$
(129,429
)
  
$
(16,281
)
  
$
182,702
    
$
11,328
    
$
562,944
  
 
                                                                        
Balance at June 30, 2019
    
45,097,052
    
$
562
    
$
515,491
    
$
(216
)
  
$
(153,091
)
  
$
(15,085
)
  
$
182,032
    
$
(546
)
  
$
529,147
  
Net income
    
—
      
—
      
—
      
—
      
—
      
—
      
12,300
      
—
      
12,300
  
Other comprehensive loss, net of tax
    
—
      
—
      
—
      
—
      
—
      
—
      
—
      
(2,144
)
    
(2,144
)
Cash dividends declared (0.25 per share)
    
—
      
—
      
—
      
—
      
—
      
—
      
(10,800
)
    
—
      
(10,800
)
Compensation cost for stock options and restricted stock
    
—
      
—
      
24
      
—
      
—
      
—
      
—
      
—
      
24
  
ESOP shares allocated or committed to be released
    
—
      
—
      
385
      
—
      
—
      
352
      
—
      
—
      
737
  
Exercise of stock options
    
3,000
      
—
      
—
      
—
      
41
      
—
      
(5
)
    
—
      
36
  
Vesting of restricted stock awards
    
—
      
—
      
(32
)
    
26
      
—
      
—
      
6
      
—
      
—
  
Balance at September 30, 2019
    
45,100,052
    
$
562
    
$
515,868
    
$
(190
)
  
$
(153,050
)
  
$
(14,733
)
  
$
183,533
    
$
(2,690
)
  
$
529,300
  
 
See accompanying notes to unaudited consolidated financial statements.
6

Oritani Financial Corp. and Subsidiaries
Consolidated Statements of Cash Flows
(In thousands)

 
  
Three months ended
September 30,
  
 
  
2019
    
2018
  
 
  
(unaudited)
  
Cash flows from operating activities:
      
Net income
  
$
12,300
    
$
13,397
  
Adjustments to reconcile net income to net cash provided by operating activities:
                
ESOP and stock-based compensation expense
    
761
      
721
  
Tax benefit from stock-based compensation
    
1
      
1
  
Depreciation of premises and equipment
    
174
      
196
  
Net amortization and accretion of premiums and discounts on securities
    
301
      
324
  
Reversal of provision for loan losses
    
—
      
(2,000
)
Amortization and accretion of deferred loan fees, net
    
(636
)
    
(551
)
Decrease in deferred taxes
    
354
      
595
  
Fair value adjustment for equity securities
    
14
      
119
  
Gain on sale of real estate owned
    
(29
)
    
—
  
Increase in cash surrender value of bank owned life insurance
    
(618
)
    
(623
)
Increase in accrued interest receivable
    
(44
)
    
(631
)
Increase in other assets
    
(6,649
)
    
(1,438
)
Increase in other liabilities
    
1,333
      
533
  
Net cash provided by operating activities
    
7,262
      
10,643
  
Cash flows from investing activities:
                
Net decrease in loans receivable
    
70,690
      
41,469
  
Purchase of mortgage loans
    
—
      
(7,896
)
Purchase of debt securities held to maturity
    
(7,469
)
    
—
  
Purchase of Federal Home Loan Bank stock
    
(3,141
)
    
(12,563
)
Proceeds from payments, calls and maturities of debt securities available for sale
    
2,234
      
3,285
  
Proceeds from payments, calls and maturities of debt securities held to maturity
    
17,531
      
15,381
  
Proceeds from redemption of Federal Home Loan Bank stock
    
6,059
      
15,624
  
Proceeds from sale of real estate owned
    
586
      
—
  
Purchase of fixed assets
    
(11
)
    
(64
)
Net cash provided by investing activities
    
86,479
      
55,236
  
Cash flows from financing activities:
                
Net increase in deposits
    
13,302
      
8,897
  
Purchase of treasury stock
    
—
      
(292
)
Dividends paid to shareholders
    
(10,800
)
    
(11,134
)
Exercise of stock options
    
36
      
143
  
(Decrease) increase in advance payments by borrowers for taxes and insurance
    
(655
)
    
435
  
Proceeds from borrowed funds
    
—
      
45,000
  
Repayment of borrowed funds
    
(94,992
)
    
(115,213
)
Net cash used in financing activities
    
(93,109
)
    
(72,164
)
Net increase (decrease) in cash and cash equivalents
    
632
      
(6,285
)
Cash and cash equivalents at beginning of period
    
26,511
      
34,848
  
Cash and cash equivalents at end of period
  
$
27,143
    
$
28,563
  
Supplemental cash flow information:
                
Cash paid during the period for:
                
Interest
  
$
15,478
    
$
12,210
  
Income taxes
  
$
4,705
    
$
5,079
  
Noncash item for lease adoption ASU 2016-02
  
$
2,208
    
$
—
  

See accompanying notes to unaudited consolidated financial statements.
7
Oritani Financial Corp. and subsidiaries
Notes to Unaudited Consolidated Financial Statements



1. Basis of Presentation

The consolidated financial statements are composed of the accounts of Oritani Financial Corp., its wholly owned subsidiaries, Oritani Bank (the “Bank”), Hampshire Financial LLC (inactive) and Oritani LLC (inactive), and the wholly owned subsidiaries of Oritani Bank; Zorm 2009, LLC, Ormon LLC (Ormon) (inactive), and Oritani Investment Corp., as well as its wholly owned subsidiary, Oritani Asset Corporation (a real estate investment trust), (collectively, the "Company").  Intercompany balances and transactions have been eliminated in consolidation.

In the opinion of management, all of the adjustments (consisting of normal and recurring adjustments) necessary for the fair presentation of the consolidated financial condition and the consolidated results of operations for the unaudited periods presented have been included.  The results of operations and other data presented for the three month period ended September 30, 2019 are not necessarily indicative of the results of operations that may be expected for the fiscal year ending June 30, 2020.

Certain information and note disclosures usually included in financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for the preparation of the Form 10-Q.  The consolidated financial statements presented should be read in conjunction with the Company’s audited consolidated financial statements and notes to consolidated financial statements included in the Company’s June 30, 2019 Annual Report on Form 10-K, filed with the SEC on August 28, 2019.

The consolidated financial statements have been prepared in conformity with GAAP. In preparing the consolidated financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities presented in the Consolidated Balance Sheets at September 30, 2019 and June 30, 2019 and in the Consolidated Statements of Income for the Three Months Ended September 30,  2019 and 2018.  Actual results could differ significantly from those estimates.

A material estimate that is particularly susceptible to significant changes relates to the determination of the allowance for loan losses. The allowance for loan losses represents management’s best estimate of losses known and incurred in the portfolio that are both probable and reasonable to estimate. While management uses the most current information available to estimate losses on loans, actual losses are dependent on future events and, as such, increases in the allowance for loan losses may be necessary.

In addition, various regulatory agencies, as an integral part of their examination process, periodically review the Bank’s allowance for loan losses. Such agencies may require the Bank to recognize additions to the allowance based on their judgments about information available to them at the time of their examination.

8
Oritani Financial Corp. and subsidiaries
Notes to Unaudited Consolidated Financial Statements


2. Earnings Per Share ("EPS")

Basic earnings per share is computed by dividing income available to common stockholders by the weighted average number of common shares outstanding for the period. The weighted average common shares outstanding includes the average number of shares of common stock outstanding and allocated or committed to be released Employee Stock Ownership Plan shares.
 
Diluted earnings per share is computed using the same method as basic earnings per share, but reflects the potential dilution that could occur if stock options were exercised and converted into common stock.  These potentially dilutive shares would then be included in the weighted average number of shares outstanding for the period using the treasury stock method.  When applying the treasury stock method, we add the assumed proceeds from option exercises and the average unamortized compensation costs related to stock options.  We then divide this sum by our average stock price to calculate shares assumed to be repurchased.  The excess of the number of shares issuable over the number of shares assumed to be repurchased is added to basic weighted average common shares to calculate diluted EPS.

The following is a summary of the Company’s earnings per share calculations and reconciliation of basic to diluted earnings per share.


 
Three months ended
September 30,
  
   
2019
    
2018
  
   
(In thousands, except per share data)
  
Net income
  
$
12,300
    
$
13,397
  
Weighted average common shares outstanding—basic
    
43,286
      
44,640
  
Effect of dilutive stock options outstanding
    
668
      
632
  
Weighted average common shares outstanding—diluted
    
43,954
      
45,272
  
Earnings per share-basic
  
$
0.28
    
$
0.30
  
Earnings per share-diluted
  
$
0.28
    
$
0.30
  

For the three months ended September 30, 2019 there were no option shares that could potentially dilute basic earnings per share. For the three months ended September 30, 2018 there were 1,677 option shares, that could potentially dilute basic earnings per share in the future that were not included in the computation of diluted earnings per share because to do so would have been anti-dilutive for those periods. 

3. Stock Repurchase Program

On March 4, 2015, the Board of Directors of the Company authorized a fourth stock repurchase plan pursuant to which the Company was authorized to repurchase up to 5% of the outstanding shares, or 2,205,451 shares.  During the twelve months ended  June 30, 2019, a total of  1,888,851  shares had been acquired under repurchase programs at a weighted average cost of  $15.20 per share.  With these purchases, the fourth repurchase plan was completed. Repurchased shares are held as treasury stock and will be available for general corporate purposes. The Company may conduct repurchases in accordance with a Rule 10b5-1 trading plan. 

9
Oritani Financial Corp. and subsidiaries
Notes to Unaudited Consolidated Financial Statements


4. Equity Incentive Plans
 
The 2007 Equity Incentive Plan (“the 2007 Equity Plan”) was approved by the Company’s stockholders on April 22, 2008, which authorized the issuance of up to 4,172,817 shares of Company common stock pursuant to grants of incentive and non-statutory stock options, stock appreciation rights, and restricted stock awards.  The 2011 Equity Incentive Plan (“2011 Equity Plan”) was approved by the Company’s stockholders on July 26, 2011.  The 2011 Equity Plan authorized the issuance of up to 5,790,849 shares of the Company’s common stock pursuant to grants of stock options, restricted stock awards and restricted stock units, with no more than 1,654,528 of the shares issued as restricted stock awards or restricted stock units.  Employees and outside directors of the Company or Oritani Bank are eligible to receive awards under the Equity Plans.
 
Stock options are granted at an exercise price equal to the market price of our common stock on the grant date, based on quoted market prices. Stock options generally vest over a five-year service period and expire ten years from issuance.  The vesting of the options accelerate upon death or disability, retirement or a change in control and expire 90 days after termination of service, excluding disability or retirement.  The Company recognizes compensation expense for all option grants over the awards’ respective requisite service periods.  Management estimated the fair values of all option grants using the Black-Scholes option-pricing model.   Management estimated the expected life of the options using the simplified method.  The Treasury yield in effect at the time of the grant provides the risk-free rate for periods within the contractual life of the option.  The Company classified share-based compensation for employees and outside directors within “compensation, payroll taxes and fringe benefits” in the consolidated statements of income to correspond with the same line item as the cash compensation paid.

There were no options granted during the three months ended September 30, 2019. The fair value of options granted during the three months ended September 30, 2018 was estimated using the Black-Scholes options-pricing model with the assumptions in the following table.

 
 
 
 
 
Three Months ended September 30, 2018
Option shares granted
 
20,000
Expected dividend yield
 
7.47%
Expected volatility
 
17.68%
Risk-free interest rate
 
2.82%
Expected option life (in years)
 
6.5

The following is a summary of the Company’s stock option activity and related information as of September 30, 2019 and changes therein during the three months then ended:

 
  
Number of
Stock
Options
    
Weighted
Average
Grant Date
Fair Value
    
Weighted
Average
Exercise
Price
    
Weighted
Average
Remaining
Contractual
Life (years)
  
Outstanding at June 30, 2019
    
2,222,691
    
$
2.64
    
$
12.16
      
2.4
  
Exercised
    
(3,000
)
    
2.71
      
11.95
      
2.0
  
Outstanding at September 30, 2019
    
2,219,691
    
$
2.64
    
$
12.16
      
2.2
  
Exercisable at September 30, 2019
    
2,150,091
    
$
2.69
    
$
12.05
      
2.0
  
 
The Company recorded $6,000 and $11,000 of share based compensation expense related to options for the three months ended September 30, 2019 and 2018, respectively.  Expected future expense related to the non-vested options outstanding at September 30, 2019 is $61,000 over a weighted average period of 3.3 years.  Upon exercise of vested options, management expects to draw on treasury stock as the source of the shares.

10
Oritani Financial Corp. and subsidiaries
Notes to Unaudited Consolidated Financial Statements

Restricted stock shares vest over a five-year service period on the anniversary date of the grant. Vesting of the restricted stock shares accelerate upon death or disability, retirement or a change in control. The product of the number of shares granted and the grant date market price of the Company’s common stock determines the fair value of restricted shares under the Company’s restricted stock plan. The Company recognizes compensation expense for the fair value of restricted shares on a straight-line basis over the requisite service period.
 
The following is a summary of the status of the Company’s restricted stock shares as of September 30, 2019 and changes therein during the three months then ended:

 
  
Number of
Shares
Awarded
    
Weighted
Average
Grant Date
Fair Value
  
Non-vested at June 30, 2019
    
16,800
    
$
15.97
  
Vested
    
(2,000
)
    
16.15
  
Non-vested at September 30, 2019
    
14,800
    
$
15.95
  
 
The Company recorded $19,000 and $32,000 of share based compensation expense related to the restricted stock shares for the three months ended September 30, 2019 and 2018, respectively.  Expected future expense related to the non-vested restricted shares at September 30, 2019 is $191,000 over a weighted average period of 2.9 years.

11
Oritani Financial Corp. and subsidiaries
Notes to Unaudited Consolidated Financial Statements

5. Post-retirement Benefits
 
The Company provides several post-retirement benefit plans to directors and to certain active and retired employees. The Company has a nonqualified Directors’ Retirement Plan ("Retirement Plan"), a nonqualified Benefit Equalization Plan ("BEP Plan"), which provides benefits to employees who are disallowed certain benefits under the Company’s qualified benefit plans, and a Post Retirement Medical Plan ("Medical Plan") for directors and certain eligible employees.

Net periodic benefit costs for the three months ended September 30, 2019 and 2018 are presented in the following table:


Retirement Plan
    
BEP Plan
    
Medical Plan
  
 
Three Months Ended September 30,
  
 
2019
    
2018
    
2019
    
2018
    
2019
    
2018
  
 
(In thousands)
  
Service cost
  
$
35
    
$
31
    
$
—
    
$
—
    
$
17
    
$
11
  
Interest cost
    
49
      
54
      
11
      
13
      
52
      
59
  
Amortization of unrecognized:
                                                
Net loss
    
—
      
—
      
12
      
8
      
1
      
—
  
Total
  
$
84
    
$
85
    
$
23
    
$
21
    
$
70
    
$
70
  

The service cost component of net periodic benefit cost is included in compensation and employee benefits on the Statements of Income. The other components of net periodic benefit cost, including interest cost and amortization of actuarial gain/loss are included in other expenses on the Statements of Income.


12
Oritani Financial Corp. and subsidiaries
Notes to Unaudited Consolidated Financial Statements

6. Loans, net
 
Loans, net are summarized as follows:

 
  
September 30,
2019
    
June 30,
2019
  
 
  
(In thousands)
  
Residential
  
$
260,651
    
$
267,011
  
Residential commercial real estate
    
2,018,584
      
2,086,314
  
Grocery/credit retail commercial real estate
    
469,753
      
482,831
  
Other commercial real estate
    
689,078
      
683,739
  
Construction and land loans
    
20,705
      
9,170
  
Total loans
    
3,458,771
      
3,529,065
  
Less:
                
Unearned deferred fees and discounts, net
    
8,895
      
9,147
  
Allowance for loan losses
    
28,608
      
28,596
  
Loans, net
  
$
3,421,268
    
$
3,491,322
  
 
The Company’s allowance for loan losses is analyzed quarterly and many factors are considered, including changes in the portfolio, delinquencies, nonaccrual loan levels, and other environmental factors.  There have been no material changes to the allowance for loan loss methodology as disclosed in the Company’s Annual Report on Form 10-K, filed with the Securities and Exchange Commission on August 28, 2019.

The activity in the allowance for loan losses for the three months ended September 30, 2019 and 2018 is summarized as follows: