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Oritani Financial Corp.

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Oritani Financial Corp. (ORIT - Free Report) continues to deliver strong results. The bank, which operates 24 branches in New Jersey, recently delivered its 3rd consecutive positive earnings surprise due to strong loan growth, expanding margins, and solid asset quality.

This has prompted analysts to raise their estimates for both 2012 and 2013, sending the stock to a Zacks #2 Rank (Buy).

In addition, the company recently announced a 20% hike in its quarterly dividend. It currently yields an attractive 4.2%.

First Quarter Results

Oritani delivered strong results for its fiscal third quarter on April 24. Earnings per share came in at 20 cents, beating the Zacks Consensus Estimate by 3 cents. It was a whopping 54% increase over the same quarter last year.

Net interest income rose 8% year-over-year as the net interest margin expanded 21 basis points to 3.58%. Interest on mortgage loans increased 7% while the balance on average loans outstanding rose 12%, as the Company continues to emphasize loan originations, particularly multifamily and commercial real estate loans.

The allowance for loan losses increased 10 basis points to 1.55% of total loans as the percentage of non-accrual loans rose 21 basis points to 0.96%. Net charge-offs were just 0.02% of average loans, however.

Estimates Rising

Earnings estimates for both 2012 and 2013 have been rising following strong Q3 results. As you can see in the Price & Consensus chart below, estimates have steadily risen over the last several months as Oritani has delivered three consecutive positive earnings surprises:

ORIT: Oritani Financial Corp.

It is a Zacks #2 Rank (Buy).

The Zacks Consensus Estimate for 2012 is now $0.73, representing 35% growth over 2011 EPS. The 2013 consensus estimate is 13% higher than the 2012 estimate at $0.82.

Dividend Rising

Oritani also announced a 20% increase in its quarterly dividend, marking its second hike in three quarters.

It currently yields a juicy 4.2%.

Reasonable Valuation

The valuation picture looks reasonable for Oritani with shares trading at just 1.3x book value, a discount to the industry median of 1.5x.

Its forward P/E ratio of 18x is above the industry median 14x, but this seems justified given the company's above-average growth rates.

The Bottom Line

With strong earnings momentum, a solid 4.2% yield and reasonable valuation, this quality bank stock offers investors a lot to like.

Read the November 11 article here.

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Todd Bunton is the Growth & Income Stock Strategist for Zacks Investment Research and Editor of the Income Plus Investor service.

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