Oconee Federal Financial Corp. Announces Three Month and Year Ended Financial Results

  Oconee Federal Financial Corp. Announces Three Month and Year Ended
  Financial Results

Business Wire

SENECA, S.C. -- August 15, 2013

Oconee Federal Financial Corp. (Nasdaq: OFED) (the “Company”), the holding
company for Oconee Federal Savings and Loan Association (the “Association”),
announced today net income of $1.1 million, or $0.18 per diluted share, for
the three months ended June 30, 2013, compared to net income of $1.2 million,
or $0.19 per diluted share, for the three months ended June 30, 2012. The
Company had net income of $4.0 million, or $0.67 per diluted share, for the
year ended June 30, 2013, compared to net income of $4.0 million, or $0.65 per
diluted share, for the same period in 2012.

June 30, 2013 Three Months and Year Ended:

  *Continued strong earnings amidst a challenging economy and low interest
    rates.
  *Continued strong asset quality as evidenced by decreased levels of
    nonperforming loans to total loans and nonperforming assets to total
    assets.
  *Decreases in our provision for real estate owned and other related
    expenses to $142,000 for the year ended June 30, 2013 from $594,000 for
    the year ended June 30, 2012.
  *Four quarterly dividends of $0.10 per share for the year ended June 30,
    2013 and three quarterly dividends of $0.10 for the year ended June 30,
    2012.
  *Repurchased 147,800 shares of common stock during the three months ended
    June 30, 2013, which brought the total shares of common stock repurchased
    to 500,350 during the year ended June 30, 2013.

“Despite the tightening of our margins, we continue to experience strong
earnings by limiting loan and real estate owned losses to a low level and
keeping our operating costs low,” stated T. Rhett Evatt, President and Chief
Executive Officer. “Loan demand continues to be weak during this time of
economic recovery, and the continued environment of very low interest rates
have made it difficult to maintain the same interest rate margins that we
experienced in the prior year. We do see signs of recovery, albeit slow, in
the housing market, and with the increases in the long-term Treasury yield, we
should begin to see gradual improvements in our net interest margins in the
future.”

Results of Operations

Interest income decreased to $3.4 million for the three months ended June 30,
2013 from $3.8 million for the three months ended June 30, 2012. The decrease
was the result of both a decrease in the average yield on interest earning
assets to 3.77% for the three months ended June 30, 2013 from 4.09% for the
three months ended June 30, 2012 and a decrease in the average balance of our
interest-earning assets of $10.3 million to $356.4 million for the three
months ended June 30, 2013 from $366.7 million for the three months ended June
30, 2012. Interest expense decreased to $468,000 for the three months ended
June 30, 2013 from $667,000 for the three months ended June 30, 2012. The
decrease reflected a decrease in the average rate paid on deposits during the
three months ended June 30, 2013 to 0.65% from 0.94% during the three months
ended June 30, 2012, which more than offset the increase in the average
balance of interest-bearing deposits of $3.3 million, or 1.2%, to $289.1
million for the three months ended June 30, 2013 from $285.8 million for the
three months ended June 30, 2012.

Net interest income was $2.9 million for the three months ended June 30, 2013
compared to $3.1 million for the same period in 2012. The net interest margin
for the three months ended June 30, 2013 was 3.24%, a decrease of 12
basis-points from 3.36% for the three months ended June 30, 2012. This
decrease in net interest margin is reflective of the decrease in the average
yield on our loan portfolio of 10 basis-points and our investment securities
of 15 basis-points. These decreases in average yields on loans and investments
were partially offset by a 29 basis-point decrease in the average rate paid on
interest-bearing deposits. The decrease in the average yields on loans and
securities and average rate paid on deposits for the three months ended June
30, 2013 as compared to the same period in 2012 is due to the continuing low
interest rate environment.

Interest income decreased by $1.3 million to $14.0 million for the year ended
June 30, 2013 from $15.3 million for the year ended June 30, 2012. The
decrease was primarily the result of a decrease in the average yield on
interest earning assets to 3.85% for the year ended June 30, 2013 from 4.18%
for the year ended June 30, 2012 as well as a decrease in the average balance
of interest-earning assets to $363.9 million from $364.9 for the same periods
ended. Interest expense decreased to $2.2 million for the year ended June 30,
2013 from $3.2 million for the year ended June 30, 2012. The decrease
reflected a decrease in the average rate paid on deposits during the year
ended June 30, 2013 to 0.75% from 1.11% during the year ended June 30, 2012,
which more than offset a modest increase in the average balance of
interest-bearing deposits to $288.1 million for the year ended June 30, 2013
from $287.3 the year ended June 30, 2012.

Net interest income was $11.8 million for the year ended June 30, 2013
compared to $12.1 million for the same period in 2012. The net interest margin
for the year ended June 30, 2013 was 3.25%, down 6 basis-points from 3.31% for
the year ended June 30, 2012. This result reflected both a 9 basis-point
decrease in the average yield earned on the loan portfolio and a 19
basis-point decrease on the average yield earned on the investment portfolio.
These decreases in average yields on loans and investments were partially
offset by a 36 basis-point decrease in the average rate paid on interest
bearing deposits. The decrease in the net interest margin for the year ended
June 30, 2013 as compared to the same period in 2012 is due to the continuing
low interest rate environment.

Noninterest income for the three months ended June 30, 2013 was $188,000
compared with $199,000 for the same period in 2012. The slight decrease was a
result of a decrease in the gain on sales of real estate owned. No gains on
sale were recognized for the three months ended June 30, 2013 as compared to
$85,000 for the three months ended June 30, 2012. The decrease in gains on
sales of real estate owned was partially offset by an increase in gains on
sales of securities to $119,000 for the three months ended June 30, 2013
compared with $96,000 for the three months ended June 30, 2012. Noninterest
income remained relatively the same for the year ended June 30, 2013 at
$410,000 compared to $412,000 for the year ended June 30, 2012.

Noninterest expense for the three months ended June 30, 2013 increased by
$172,000 to $1.5 million compared to $1.3 million for the same period in 2012.
The increase is primarily related to an increase in salary and employee
benefits of $123,000 as a result of employee raises during 2013 and an
increase in professional and supervisory fees of $48,000 related to increased
legal and accounting related costs. Noninterest expense for the year ended
June 30, 2013 decreased by $128,000 to $5.5 million compared with $5.6 million
for the same period in 2012. The decrease in noninterest expenses was
primarily related to a decrease of $452,000 in the provision for real estate
owned and related expenses, a decrease of $45,000 for data processing
expenses, and a decrease of $46,000 in FDIC premiums. The decrease in our
provision for real estate owned and related expenses is primarily attributable
to a decrease in the provision for real estate owned during the year ended
June 30, 2013 to $23,000 compared with $346,000 during the year ended June 30,
2012 and a decrease in real estate owned related expenses to $119,000 for the
year ended June 30, 2013 as compared with $248,000 for the year ended June 30,
2012. The decrease in these expenses is a reflection of a decrease in the
average balance of real estate owned for the year ended June 30, 2013 to
$971,000 as compared with the average balance for the same period in 2012 of
$1.6 million. These decreases were offset by an increase in salaries and
employee benefits of $469,000 to $3.4 million for the year ended June 30, 2013
compared with $2.9 million for the year ended June 30, 2012. The increase in
salaries and employee benefits is related to raises in employee salaries and
the cost of our equity incentive plans that were not in place for the entire
year ended June 30, 2012. Total costs related to our equity incentive plans
for the year ended June 30, 2013 was $227,000 compared with $57,000 for the
year ended June 30, 2012.

We recorded a provision for loan losses of $3,000 for the three months ended
June 30, 2013, compared with a provision of $46,000 for the three months ended
June 30, 2012. Net charge-offs for the three months ended June 30, 2013 were
$0 compared with $46,000 for the three months ended June 30, 2012. The
provision for loan losses for the year ended June 30, 2013 was $260,000
compared with a provision of $270,000 for the year ended June 30, 2012. Net
charge-offs for the year ended June 30, 2013 were $366,000 compared to
$162,000 for the year ended June 30, 2012. The increase in net charge offs was
primarily impacted by one large one-to-four family residential real estate
loan charge off during the three months ended March 31, 2013 of $277,000.

The decrease in our provision for loan losses is a reflection of improvements
in our loan quality and the decrease in the size of our loan portfolio.
Impaired loans decreased to $2.0 million at June 30, 2013 from $2.5 million at
June 30, 2012, and the resulting allowance allocated to impaired loans was
$27,000 at June 30, 2013 compared with $101,000 at June 30, 2012. During 2013,
we experienced a decrease in the average balance of loans of $23.6 million, or
9.12%, to $235.6 million from $259.2 million for the year ended June 30, 2012.
Our decreasing loan portfolio results in an overall decrease in the general
portion of our allowance for loan losses.

Financial Condition at June 30, 2013 and June 30, 2012

Our ratio of nonperforming loans to total loans decreased to 0.89% at June 30,
2013 from 0.91% at June 30, 2012, and our ratio of nonperforming assets to
total assets has decreased to 0.82% at June 30, 2013 from 0.84% at June 30,
2012. Our allowance for loan losses as a percentage of total loans was 0.34%
at June 30, 2013 compared to 0.34% at June 30, 2012, and our allowance for
loan losses as a percentage of nonperforming loans at June 30, 2013 was 37.81%
compared to 37.23% at June 30, 2012.

Our total assets decreased $7.6 million, or 2.02%, to $370.1 million at June
30, 2013 from $377.8 million at June 30, 2012. A substantial portion of this
decrease is reflected in the decrease in net loans of $28.7 million, or
11.48%, offset partially by an increase in securities $22.8 million, or 31.0%.
We continue to deploy funds from loan repayments and payoffs to purchase
high-quality investment securities, which we have predominantly classified as
available-for-sale. The continued decrease in outstanding loans reflects the
continued decrease of loan demand in our market area and competitive pressure
from other lenders in this very low interest rate environment. Our total
deposits decreased modestly by $946,000 to $292.4 million at June 30, 2013
from $293.4 million at June 30, 2012. Total equity decreased $6.8 million to
$76.2 million at June 30, 2013 compared with $83.0 million at June 30, 2012.
The decrease in total equity is the result of the repurchase of 500,350 shares
of treasury stock for $7.8 million, the payment of dividends of $2.4 million
and an other comprehensive loss on our available-for-sale securities of $1.2
million, offset partially by net income of $4.0 million for the year ended
June 30, 2013.

Cash Dividend Declared

On April25, 2013, the Board of Directors of the Company declared a quarterly
cash dividend of $0.10 per share of the Company’s common stock. The dividend
was payable to stockholders of record as of May9, 2013, and would be paid on
or about May23, 2013. Total dividends paid for the three months ended June
30, 2012 were $602,000. Total dividends paid during the year ended June 30,
2013 were $2.4 million. On July 25, 2013, the Board of Directors of the
Company declared a quarterly cash dividend of $0.10 per share of the Company’s
common stock payable to stockholders of record as of August 15, 2013, which is
to be paid on or about August 29, 2013.

Stock Repurchase Program

During the three months ended June 30, 2013, the Company repurchased 147,800
shares of its common stock at a weighted average purchase price of $15.56 per
share pursuant to authorized stock repurchase programs approved by the Board
of Directors. During the year ended June 30, 2013, the Company repurchased a
total of 500,350 shares of common stock at a weighted average purchase price
of $15.54 per share pursuant to authorized repurchase programs approved by the
Board of Directors. On June 29, 2013, the Board of Directors approved another
stock repurchase program, authorizing the Company to repurchase up to 150,000
shares of its common stock. The timing of the purchases will depend on certain
factors, including but not limited to, market conditions and prices, available
funds and alternative uses of capital.

The Company terminated its stock repurchase program approved on March 15, 2013
for 175,000 shares. Under this program, 137,700 shares were repurchased. All
other stock repurchase programs prior to March 15, 2013 have been terminated.
The repurchase program approved on June 29, 2013 is the only repurchase
program that remains open at June 30, 2013. As of June 30, 2013, 10,100 shares
had been repurchased.

About Oconee Federal

Oconee Federal Financial Corp. (NASDAQ Capital Market: OFED) is the holding
company of Oconee Federal Savings and Loan Association. Oconee Federal Savings
and Loan Association is a federally chartered savings and loan association
founded in 1924 and headquartered in Seneca, South Carolina. Oconee Federal
Savings and Loan Association is a community oriented financial institution
operating four full-service branch locations in Oconee County, South Carolina.

Safe-Harbor

This release contains certain forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995 that are based on current
expectations, estimates and projections about the Company’s and the
Association’s industry, and management’s beliefs and assumptions. Words such
as anticipates, expects, intends, plans, believes, estimates and variations of
such words and expressions are intended to identify forward-looking
statements. Such statements are not guarantees of future performance and are
subject to certain risks, uncertainties and assumptions that are difficult to
forecast. Therefore, actual results may differ materially from those expressed
or forecast in such forward-looking statements. The Company and Association
undertake no obligation to update publicly any forward-looking statements,
whether as a result of new information or otherwise.


Oconee Federal Financial Corp.
Selected Financial Information

                                                   June 30,        June 30,
                                                                          *
                                                   2013            2012
                                                                             
                                                   (Dollars in thousands)
                                                                             
Financial condition data:                          (Unaudited)
Total assets                                       $  370,138      $ 377,753
Investment securities                                 96,024         73,273
Loans receivable, net                                 221,163        249,832
Deposits                                              292,422        293,368
Total equity                                          76,162         82,984
                                                                             
Condition ratios:                                  (Unaudited)
Total equity to total assets                          20.58    %     21.97   %
                                                                             
Total capital to risk weighted assets                 44.29    %     45.25   %
Tier I capital to risk weighted assets                43.83          44.74
Tier I capital to adjusted total assets               19.62          19.95
                                                                             
Total nonperforming loans to total loans              0.89     %     0.91    %
Total nonperforming assets to total assets            0.82           0.84
Total nonperforming assets to loans and real          1.35           1.25
estate owned
Allowance for loan losses as a percentage of          0.34           0.34
total loans
Allowance for loan losses as a percentage of          37.81          37.23
nonperforming loans
                                                                             
* Derived from audited consolidated financial
statements

                                                
                      For the Three Months Ended     For the Year Ended
                      June 30,         June 30,      June 30,       June 30,
                                                               
                      2013             2012          2013           2012*
                      (Dollars in thousands, except per share amounts)
                                                                             
Operating data:       (Unaudited)
Interest and          $  3,359         $ 3,750       $ 13,992       $ 15,269
dividend income
Interest expense        468            667          2,174         3,202
Net interest             2,891           3,083         11,818         12,067
income
Provision for            3               46            260            270
loan losses
Non-interest             188             199           410            412
income
Non-interest            1,462          1,290        5,496         5,624
expenses
Income before            1,614           1,946         6,472          6,585
income taxes
Income taxes            547            751          2,432         2,572
Net income            $  1,067         $ 1,195       $ 4,040        $ 4,013
                                                                             
Basic net income      $  0.18          $ 0.19        $ 0.67         $ 0.66
per share
Diluted net           $  0.18          $ 0.19        $ 0.67         $ 0.65
income per share
Dividends
declared per          $  0.10          $ 0.10        $ 0.40         $ 0.30
share
                                                                             
Performance           (Unaudited)
ratios:
Return on average        1.14   %        1.27  %       1.08   %       1.07   %
assets
Return on average        5.49            5.79          5.00           4.89
equity
Interest rate            3.12            3.15          3.09           3.07
spread
Net interest             3.24            3.36          3.25           3.31
margin
Average
interest-earning
assets to
average
interest-bearing         1.23   x        1.28  x       1.26   x       1.27   x
liabilities
                                                                             
* Derived from audited consolidated financial
statements

Contact:

Oconee Federal Financial Corp.
Curtis T. Evatt, 864-882-2765
Chief Financial Officer