Forward Looking Statements

This Quarterly Report contains certain "forward looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such forward looking statements may be identified by reference to a future period or periods, or by use of forward looking terminology, such as "may," "will," "believe," 'expect," "estimate," 'anticipate," "continue," or similar terms or variations on those terms, or the negative of those terms. Forward looking statements are subject to numerous risks and uncertainties, including, but not limited to, those related to the economic environment, particularly in the market areas in which Oritani Financial Corp. (the "Company") operates, competitive products and pricing, fiscal and monetary policies of the U.S. Government, changes in government regulations affecting financial institutions, including regulatory fees and capital requirements, changes in prevailing interest rates, acquisitions and the integration of acquired businesses, credit risk management, asset-liability management, the financial and securities markets and the availability of and costs associated with sources of liquidity.

The Company wishes to caution readers not to place undue reliance on any such forward looking statements, which speak only as of the date made. The Company wishes to advise readers that the factors listed above could affect the Company's financial performance and could cause the Company's actual results for future periods to differ materially from any opinions or statements expressed with respect to future periods in any current statements. The Company does not undertake and specifically declines any obligation to publicly release the results of any revisions, which may be made to any forward looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.

Overview

Oritani Financial Corp. is the federally chartered mid-tier stock holding company of Oritani Bank. Oritani Financial Corp. owns 100% of the outstanding shares of common stock of Oritani Bank. Since being formed in 1998, Oritani Financial Corp. has engaged primarily in the business of holding the common stock of Oritani Bank and two limited liability companies that own a variety of real estate investments. In addition, Oritani Financial Corp. has engaged in limited lending to the real estate investment properties in which (either directly or through one of its subsidiaries) Oritani Financial Corp. has an ownership interest. Oritani Bank's principal business consists of attracting retail and commercial bank deposits from the general public and investing those deposits, together with funds generated from operations, in multi-family and commercial real estate loans, one- to four-family residential mortgage loans as well as in second mortgage and equity loans, construction loans, business loans, other consumer loans, and investment securities. We originate loans primarily for investment and hold such loans in our portfolio. Occasionally, we will also enter into loan participations. Our primary sources of funds are deposits, borrowings and principal and interest payments on loans and securities. Our revenues are derived principally from interest on loans and securities as well as our investments in real estate and real estate joint ventures. We also generate revenues from fees and service charges and other income. Our results of operations depend primarily on our net interest income which is the difference between the interest we earn on interest-earning assets and the interest paid on our interest-bearing liabilities. Our net interest income is primarily affected by the market interest rate environment, the shape of the U.S. Treasury yield curve, the timing of the placement of interest-earning assets and interest-bearing liabilities, and the prepayment rate on our mortgage-related assets. Provisions for loan losses and asset impairment charges can also have a significant impact on our results of operations. Other factors that may affect our results of operations are general and local economic and competitive conditions, government policies and actions of regulatory authorities.

Our business strategy is to operate as a well-capitalized and profitable financial institution dedicated to providing exceptional personal service to our individual and business customers. Our primary focus has been, and will continue to be, growth in multi-family and commercial real estate lending. We do not originate or purchase sub-prime loans, and our loan portfolio does not include any such loans.

Comparison of Financial Condition at September 30, 2009 and June 30, 2009

Balance Sheet Summary

Total Assets. Total assets increased $72.1 million, or 3.8%, to $1.99 billion at September 30, 2009, from $1.91 billion at June 30, 2009. The increases were primarily in the captions of loans and securities available for sale ("AFS").

Cash and Cash Equivalents. Cash and cash equivalents (which includes fed funds and short term investments) decreased $102.4 million to $33.0 million at September 30, 2009, from $135.4 million at June 30, 2009. The decrease in cash and cash equivalents is primarily attributable to the increase in loans and securities available for sale ("AFS").

Loans, net. Loans, net increased $65.8 million, or 5.1%, to $1.34 billion at September 30, 2009, from $1.28 billion at June 30, 2009. The Company continued its emphasis on loan originations, particularly multifamily and commercial real estate loans. Loan originations totaled $132.3 million for the three months ended September 30, 2009.

The allowance for loan losses increased $485,000 to $21.2 million at September 30, 2009, from $20.7 million at June 30, 2009. The Company charged off a total of $2.1 million in loans during the quarter ended September 30, 2009. There were no recoveries in either of the periods. See discussion of the allowance for loan losses in "Comparison of Operating Results for the Three Months Ended September 30, 2009 and 2008".

Securities Available for Sale. Securities available for sale increased $132.7 million to $277.1 million at September 30, 2009 from $144.4 million at June 30, 2009. This increase was due to purchases during the period partially offset by maturities. The purchases made over the period were primarily to deploy excess liquid funds in invetsments that are likely to return the funds to the Company within one year. The Company felt the returns for longer term investments were insufficient to compensate for the additional interest rate risk.

Mortgage-Backed Securities Held to Maturity. Mortgage-backed securities held to maturity decreased $12.8 million, or 10.8%, to $106.0 million at September 30, 2009, from $118.8 million at June 30, 2009. This decreased was primarily due to principal repayments received.

Mortgage-Backed Securities Available for Sale. Mortgage-backed securities available for sale decreased $13.0 million, or 10.1%, to $115.6 million at September 30, 2009, from $128.6 million at June 30, 2009. This decreased was primarily due to principal repayments received.

Deposits. Deposits increased $60.2 million, or 5.3%, to $1.19 billion at September 30, 2009, from $1.13 billion at June 30, 2009. The Bank has implemented several initiatives designed to achieve deposit growth. A new branch location is expected to open in late 2009. Strong deposit growth remains a strategic objective of the Company.

Stockholders' Equity. Stockholders' equity increased $5.4 million, or 2.3%, to $245.6 million at September 30, 2009, from $240.1 million at June 30, 2009. On March 18, 2009, the Company announced the commencement of a fourth (967,828 shares) 10% repurchase program. As of September 30, 2009, the Company had repurchased a total of 3,648,637 shares at a total cost of $56.9 million and an average cost of $15.59 per share. Through November 3, 2009, the Company had repurchased a total of 3,656,437 shares at a total cost of $57.0 million and an average cost of $15.58 per share.

Average Balance Sheet for the Three Months Ended September 30, 2009 and 2008

The following table presents certain information regarding Oritani Financial Corp.'s financial condition and net interest income for the three months ended September 30, 2009 and 2008. The table presents the annualized average yield on interest-earning assets and the annualized average cost of interest-bearing liabilities. We derived the yields and costs by dividing annualized income or expense by the average balance of interest-earning assets and interest-bearing liabilities, respectively, for the periods shown. We derived average balances from daily balances over the periods indicated. Interest income includes fees that we consider adjustments to yields.

                                             Average Balance Sheet and Yield/Rate Information
                                                  For the Three Months Ended (unaudited)
                                     September 30, 2009                            September 30, 2008
                            Average         Interest       Average        Average         Interest       Average
                          Outstanding       Earned/        Yield/       Outstanding       Earned/        Yield/
                            Balance           Paid          Rate          Balance           Paid          Rate
                                                          (Dollars in thousands)

Interest-earning
assets:
Loans (1)                 $  1,322,362     $   21,290          6.44 %   $  1,069,121     $   16,689          6.24 %
Securities held to
maturity (2)                    25,527            357          5.59 %         24,027            324          5.39 %
Securities available
for sale                       224,416          1,602          2.86 %         22,187            229          4.13 %
Mortgage backed
securities held to
maturity                       110,157          1,031          3.74 %        158,782          1,557          3.92 %
Mortgage backed
securities available
for sale                       123,498          1,437          4.65 %        150,362          1,857          4.94 %
Federal funds sold and
short term investments          69,273             62          0.36 %            232              1          1.72 %
Total interest-earning
assets                       1,875,233         25,779          5.50 %      1,424,711         20,657          5.80 %
Non-interest-earning
assets                          84,042                                        74,640
Total assets              $  1,959,275                                  $  1,499,351

Interest-bearing
liabilities:
Savings deposits               146,718            350          0.95 %        146,720            546          1.49 %
Money market                   221,345          1,014          1.83 %         63,595            474          2.98 %
NOW accounts                    98,464            197          0.80 %         73,679            163          0.88 %
Time deposits                  706,731          4,752          2.69 %        424,485          3,856          3.63 %
Total deposits               1,173,258          6,313          2.15 %        708,479          5,039          2.84 %
Borrowings                     508,472          5,247          4.13 %        488,747          4,848          3.97 %
Total interest-bearing
liabilities                  1,681,730         11,560          2.75 %      1,197,226          9,887          3.30 %
Non-interest-bearing
liabilities                     36,818                                        32,134
Total liabilities            1,718,548                                     1,229,360
Stockholders' equity           240,727                                       269,991
Total liabilities and
stockholders' equity      $  1,959,275                                  $  1,499,351

Net interest income                        $   14,219                                    $   10,770
Net interest rate
spread (3)                                                     2.75 %                                        2.50 %
Net interest-earning
assets (4)                $    193,503                                  $    227,485
Net interest margin (5)                                        3.03 %                                        3.02 %
Average of
interest-earning assets
to interest-bearing
liabilities                                                  111.51 %                                      119.00 %

(1) Includes nonaccrual loans.

(2) Includes Federal Home Loan Bank Stock

(3) Net interest rate spread represents the difference between the yield on average interest-earning assets and the cost of average interest-bearing liabilities.

(4) Net interest-earning assets represents total interest-earning assets less total interest-bearing liabilities.

(5) Net interest margin represents net interest income divided by average total interest-earning assets.

Comparison of Operating Results for the Three Months Ended September 30, 2009 and 2008.

Net Income. Net income increased $2.0 million to $4.5 million for the quarter ended September 30, 2009, from $2.5 million for the corresponding 2008 quarter. Net interest income before provision for loan losses increased $3.4 million. We also recognized a $1.0 million gain on sale of assets in the three months ended September 30, 2009. These items were partially offset by a $954,000 increase in other expenses and an increase in the provision for loan losses of $675,000. These changes are discussed in greater detail below. Our annualized return on average assets was .92% for the quarter ended September 30, 2009, and .67% for the corresponding 2008 quarter. Our annualized return on average equity was 7.45% for the quarter ended September 30, 2009, and 3.71% for the corresponding 2008 quarter.

Total Interest Income. Total interest income increased by $5.1 million, or 24.8%, to $25.8 million for the three months ended September 30, 2009, from $20.7 million for the three months ended September 30, 2008. The majority of the increase was in interest on mortgage loans. Included in total interest income for the 2009 period is $1.5 million in interest income, prepayment penalties, default interest and deferred fees recovered on the resolution of three classified loans. Interest on mortgage loans increased by $4.6 million, or 27.6%, to $21.3 million for the three months ended September 30, 2009, from $16.7 million for the three months ended September 30, 2008. The average balance of loans, net increased to $1.32 billion for the three months ended September 30, 2009 from $1.07 billion for the corresponding 2008 period. Interest on securities available for sale ("AFS") increased by $1.4 million to $1.6 million for the three months ended September 30, 2009, from $229,000 for the three months ended September 30, 2008. The average balance of securities AFS increased over the period to $224.4 million from $22.2 million. Continuing a trend that began in the quarter ended June 30, 2009, excess liquidity was generally deployed in securities classified as AFS as management felt such investments provided the best risk/reward profile considering the current and projected cash needs of the Company. Such investments were typically callable notes of government sponsored agencies with limited optionality and call features that made the note likely to be called when the liquidity would be needed by the Company. Management classified the investments as AFS so they could be sold should unexpected liquidity needs develop. Interest on federal funds sold and short term investments increased to $62,000 for the three months ended September 30, 2009, from $1,000 for the three months ended September 30, 2008. Although interest in this caption has increased on a year to year comparison, September 30, 2009 federal fund balances decreased significantly as compared to the balance at June 30, 2009. Federal fund balances grew significantly over the year but are now being reduced as returns on this investment have decreased dramatically. The Company seeks to prudently deploy cash inflows as quickly as possible and excess liquidity is typically invested in federal funds sold.

Total Interest Expense. Total interest expense increased by $1.7 million, or 16.9%, to $11.6 million for the three months ended September 30, 2009, from $9.9 million for the three months ended September 30, 2008. Interest expense on deposits increased by $1.3 million and interest expense on borrowings increased $399,000. The average balance of deposits increased $464.8 million, or 65.6%, to $1.17 billion for the three months ended September 30, 2009 from $708.5 million for the three months ended September 30, 2008. The growth primarily occurred in money market and time deposits. The cost of deposits decreased to 2.15% for the three months ended September 30, 2009 from 2.84% for the three months ended September 30, 2008. The average balance of borrowings increased to $508.5 million for the three months ended September 30, 2009 from $488.7 million for the three months ended September 30, 2008. The cost of borrowings increased to 4.13% for the three months ended September 30, 2009 from 3.97% for the three months ended September 30, 2008.

Net Interest Income Before Provision for Loan Losses. Net interest income before provision for loan losses increased by $3.4 million, or 32.0%, to $14.2 million for the three months ended September 30, 2009, from $10.8 million for the three months ended September 30, 2008. On a trailing quarter basis, net interest income increased by $2.6 million, or 22.0%, from $11.7 million for the three months ended June 30, 2009. The Company's net interest rate spreads for the three months ended September 30, 2009, June 30, 2009 and September 30, 2008 were 2.75%, 2.33% and 2.50%, respectively. The Company's net interest income and net interest rate spread were both positively impacted in the three months ended September 30, 2009 due to the recovery of nonaccrual interest income and default interest on loans delinquent more than 90 days. The total of such income recovered was $1.5 million for the three months ended September 30, 2009. Absent these recoveries, the Company's net interest income and net interest rate spread for the three months ended September 30, 2009 would have been $12.7 million and 2.47%, respectively.

Provision for Loan Losses. The Company recorded a provision for loan losses of $2.6 million for the three months ended September 30, 2009 as compared to $1.9 million for the three months ended September 30, 2008. As in prior periods, loan growth was a component of the provision for loan losses in the 2009 period. The delinquency and nonaccrual totals, however, remain the primary contributors to the increased level of provision for loan losses.

Delinquency information is provided below:

Delinquency Totals (in thousands)
                                      09/30/09         06/30/09       03/31/09       12/31/08       09/30/08
30 - 59 days past due              $       14,318     $    6,727     $    4,897     $    4,979     $   16,624
60 - 89 days past due                       1,049         17,825          2,130          5,942          1,381
90+ days past due and accruing                  -              -              -              -              -
Nonaccrual                                 52,557         52,465         52,260         44,067         25,337
Total                              $       67,924     $   77,017     $   59,287     $   54,988     $   43,342

Total delinquent loans decreased by $9.1 million to $67.9 million at September 30, 2009, from $77.0 million at June 30, 2009. While the total decreased over the quarter, nonaccrual and total delinquent loan totals remain at an elevated level. There was significant activity within the delinquency captions over the quarter. Four loans, totaling $17.6 million, moved from the 60-90 days past due category at June 30, 2009, to the nonaccrual category at September 30, 2009. Resolution of these new nonaccrual loans has been a focus of management, and management is cautiously optimistic that the vast majority of these new matters can be resolved shortly. Three of the June 30, 2009 nonaccrual loans, totaling $17.2 million, were resolved as of September 30, 2009. One of the loans was paid in full by the borrower; another was paid in full via proceeds from a bankruptcy court sale and another was resolved through sale of the note. An additional component of the June 30, 2009 nonaccrual total was transferred to REO as title was obtained for this property. As discussed earlier, the Company realized $1.5 million of nonaccrual and default interest associated with the collection of the three nonaccrual loans. An additional $500,000 of late fee income and legal expense reimbursement was also obtained in conjunction with these collections. As discussed in prior releases, the Company has continued its aggressive posture toward delinquent borrowers. The Company realizes that such actions contribute to the high level of delinquencies but believes this is the most prudent path to addressing problem loans.

Nonaccrual loans totaled $52.6 million at September 30, 2009. Several of the loans that comprise this total have been discussed in prior public releases. A current summary of the significant nonaccrual loans follows:

• Two of these loans are to one borrower and totaled $16.1 million at September 30, 2009. The loans are secured by a condominium construction project and raw land with all building approvals, both of which are in Northern New Jersey. The borrower declared bankruptcy and Oritani has provided debtor in possession financing for the completion of the condominium construction project. While one commercial unit in the project was sold over the quarter, delays continue to be encountered in finalizing the project and obtaining certificates of occupancy for the residential units. Numerous residential units are under contract providing a clear indicator of current value. Oritani charged off $2.0 million of the construction loan during the quarter ended September 30, 2009, as this portion has been determined to be an incurred loss. Combined with prior charge offs, a total of $4.0 million of this loan had been charged off as of September 30, 2009. Both loans are classified as impaired as of September 30, 2009. Specific reserves totaling $1.8 million have been recorded against these loans.

• A $7.9 million loan secured by a retail mall in Northern New Jersey. This loan is classified as nonaccrual and impaired at September 30, 2009. Oritani is in litigation with this borrower, foreclosure proceedings are progressing and a rent receiver has been placed in control of the operations of this property. The borrower has declared bankruptcy. Net cash generated from the operation of this property is being forwarded from the rent receiver to Oritani. In accordance with the results of the impairment analyses, no reserve was required for this loan as it was considered to be well collateralized. Management is cautiously optimistic this loan can be resolved shortly.

• Three loans to one borrower that total $6.6 million. These loans are secured by various warehouse properties in Rockland, Nassau and Westchester counties, New York. All three of these loans are classified as nonaccrual and impaired at September 30, 2009. Oritani is in litigation with the borrower and the guarantor, and foreclosure proceedings are progressing. A rent receiver has been appointed on all three of the properties. Two of the three entities that were formed by the borrower to hold the assets that secure the borrowings, as well as the related operating company, have been placed in bankruptcy. A trustee has been appointed for these two properties and the trustee has converted the cases to a liquidation. The bankruptcy court sale of these properties is currently scheduled for December, 2009. In accordance with the results of the impairment analyses, specific reserves totaling $600,000 have been recorded against these loans.

• A $14.1 million loan secured by a multi-tenant commercial property in Hudson County, New Jersey. The borrower has experienced cash flow difficulties. Oritani is in litigation with this borrower, foreclosure proceedings are progressing and all tenant rent payments are being made directly to Oritani. In accordance with the results of the impairment analysis for this loan, no reserve was required as the loan is considered to be well collateralized. This loan was classified as 60-89 days past due at June 30, 2009.

• A $3.1 million commercial property located in Bergen County, New Jersey. The borrower and guarantor on this loan have declared bankruptcy. They have submitted a contract for sale of the property (with a December, 2009 closing) to the bankruptcy court in an amount sufficient to fully repay the amount due to Oritani. In accordance with the results of the impairment analysis for this loan, no reserve was required as the loan is considered to be well collateralized. This loan was classified as 60-89 days past due at June 30, 2009.

• A $1.1 million multifamily loan located in Hudson County, New Jersey. The Bank and the borrower have signed a forbearance agreement and the borrower is making payments in accordance with the agreement. The loan will remain classified as nonaccrual until a greater history of satisfactory payment under the forbearance agreement is demonstrated.

• A $2.3 million residential construction loan for two luxury homes and an improved lot located in Essex County, New Jersey. The borrower encountered cash flow difficulties due to an extended construction and marketing period. The borrower requested an extension of the loan but Oritani declined the request, and we are now pursuing legal remedies. This loan was less than 30 days past due at June 30, 2009.

Other Income. Other income increased by $1.3 million to $2.5 million for the three months ended September 30, 2009, from $1.2 million for the three months ended September 30, 2008. The primary reason for the increase is a $1.0 million gain on the sale of a commercial office property that had been held and operated as a real estate investment. Service charges increased by $143,000 to $428,000 for the three months ended September 30, 2009, from $285,000 for the three months ended September 30, 2008, primarily due to payment of late charges on the resolution of delinquent loans described above.

Other Expense. Operating expenses increased by $954,000, or 16.2%, to $6.8 million for the three months ended September 30, 2009, from $5.9 million for the three months ended September 30, 2008. FDIC insurance premiums increased significantly over the quarter due to an increase in FDIC insurance rates, an increase in insurable deposits and the depletion of a credit against FDIC insurance charges. FDIC insurance premiums increased to $574,000 for the three . . .