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    Orrstown Financial Services, Inc. Reports First Quarter 2025 Results

    4/22/25 4:02:05 PM ET
    $ORRF
    Major Banks
    Finance
    Get the next $ORRF alert in real time by email
    • Net income of $18.1 million, or $0.93 per diluted share, for the three months ended March 31, 2025 compared to net income of $13.7 million, or $0.71 per diluted share, for the three months ended December 31, 2024; the first quarter of 2025 included $1.6 million in expenses related to the merger compared to $3.9 million in expenses related to the merger and $0.5 million for a legal settlement for the fourth quarter of 2024;
    • Excluding the impact of the non-recurring charges referenced above, net of taxes, net income and diluted earnings per share were $19.3 million(1) and $1.00(1), respectively, for the first quarter of 2025 compared to $16.7 million(1) and $0.87(1), respectively, for the fourth quarter of 2024;
    • Net interest margin, on a tax equivalent basis, was 4.00% in the first quarter of 2025 compared to 4.05% in the fourth quarter of 2024; the net accretion impact of purchase accounting marks was $6.9 million of net interest income, which represents 51 basis points of net interest margin for the first quarter of 2025 compared to $7.2 million of net interest income, which represents 52 basis points of net interest margin for the fourth quarter of 2024;
    • Return on average assets was 1.35% and return on average equity was 13.98% for the three months ended March 31, 2025, compared to 1.00% and 10.54% for the return on average assets and return on average equity, respectively, for the three months ended December 31, 2024;
    • Excluding the impact of non-recurring charges referenced above, net of taxes, adjusted return on average assets was 1.45%(1) and adjusted return on average equity was 14.97%(1) for the three months ended March 31, 2025 compared to 1.22% and 12.86%, respectively, for the three months ended December 31, 2024;
    • Commercial loans declined by $49.7 million, or 2%, from December 31, 2024 to March 31, 2025 due primarily to strategic actions to reduce risk in the portfolio in an uncertain economic environment, including reducing commercial real estate ("CRE") loan concentrations;
    • Noninterest expense decreased by $4.7 million from $42.9 million for the three months ended December 31, 2024 to $38.2 million for the three months ended March 31, 2025; salaries and benefits expense declined by $2.0 million from the fourth quarter of 2024 to the first quarter of 2025; merger-related expenses decreased by $2.3 million;
    • Recovery of $0.6 million was recorded for the provision for credit losses for the three months ended March 31, 2025 compared to expense of $2.1 million for the three months ended December 31, 2024; the decrease in loans contributed to the negative provision for credit losses during the first quarter of 2025; during the fourth quarter of 2024, the provision was driven by charge-offs of $3.0 million;
    • Total risk-based capital ratio was 13.1% at March 31, 2025 compared to 12.4% at December 31, 2024; the Tier 1 leverage ratio increased to 8.6% at March 31, 2025 compared to 8.3% at December 31, 2024; all capital ratios applicable to the Company were above relevant regulatory minimum levels to be deemed "well capitalized" under current bank regulatory guidelines;
    • Tangible common equity increased to 7.9% at March 31, 2025 compared to 7.5% at December 31, 2024;
    • Tangible book value per common share(1) increased to $21.99 per share at March 31, 2025 compared to $21.19 per share at December 31, 2024;
    • The Board of Directors declared a cash dividend of $0.26 per common share, payable May 13, 2025, to shareholders of record as of May 6, 2025.

    (1) Non-GAAP measure. See Appendix A for additional information.

    HARRISBURG, Pa., April 22, 2025 (GLOBE NEWSWIRE) -- Orrstown Financial Services, Inc. (NASDAQ:ORRF), the parent company of Orrstown Bank (the "Bank"), announced earnings for the three months ended March 31, 2025. Net income totaled $18.1 million for the three months ended March 31, 2025, compared to net income of $13.7 million for the three months ended December 31, 2024 and net income of $8.5 million for the three months ended March 31, 2024. Diluted earnings per share was $0.93 for the three months ended March 31, 2025, compared to diluted earnings per share of $0.71 for the three months ended December 31, 2024 and diluted earnings per share of $0.81 for the three months ended March 31, 2024. For the first quarter of 2025, excluding the impact of merger-related expenses, net of taxes, net income and diluted earnings per share were $19.3 million(1) and $1.00(1), respectively. For the fourth quarter of 2024, excluding the impact of merger-related expenses and other non-recurring charges, net of taxes, net income and diluted earnings per share were $16.7 million(1) and $0.87(1), respectively. For the first quarter of 2024, excluding the impact of the merger-related expenses, net of taxes, net income and diluted earnings per share were $9.2 million(1) and $0.88(1), respectively.

    "While operating results continued to be impacted by merger-related expenses, core earnings were solid and net interest margin remained strong," said Thomas R. Quinn, Jr., President and Chief Executive Officer. "We do not believe that merger-related expenses will be material going forward and expect operating results to normalize beginning later in the second quarter. A significant amount of our focus has been on completing a system conversion and creating a strong foundation for growth. The deliberate steps we have taken in the last few quarters to protect credit quality, build liquidity and enhance our capital ratios after the merger were intended to position the Company for growth, including the ability to accelerate commercial lending for strong credits and take advantage of strategic opportunities as they arise. We remain optimistic about the future, both in the short and long term."

    (1) Non-GAAP measure. See Appendix A for additional information.

    DISCUSSION OF RESULTS

    Balance Sheet

    Loans

    Loans held for investment decreased by $55.2 million and totaled $3.9 billion at both March 31, 2025 and December 31, 2024. The decrease from the fourth quarter of 2024 was primarily due to strategic actions to reduce risk in the portfolio, including reducing CRE loan concentrations.

    Investment Securities

    Investment securities, all of which are classified as available-for-sale, increased by $25.8 million to $855.5 million at March 31, 2025 from $829.7 million at December 31, 2024. During the first quarter of 2025, the Bank purchased $39.6 million of investment securities and net unrealized gains were $3.8 million. These increases were partially offset by paydowns of $18.4 million. The overall duration of the Company's investment securities portfolio was 4.3 years at March 31, 2025 compared to 4.1 years at December 31, 2024. See Appendix B for a summary of the Bank's investment securities at March 31, 2025, highlighting their concentrations, credit ratings and credit enhancement levels.

    Deposits

    During the first quarter of 2025, deposits increased by $10.6 million and totaled $4.6 billion at both March 31, 2025 and December 31, 2024. Interest-bearing demand deposits, non-interest bearing demand deposits and savings deposits increased by $52.5 million, $38.0 million and $4.1 million, respectively, from December 31, 2024 to March 31, 2025. These increases were partially offset by decreases in time deposits of $47.5 million and money market deposits of $36.5 million during the first quarter of 2025. The Bank has experienced some reductions in higher yielding promotional balances, but has been successful in retaining or replacing those deposits through demand deposit accounts. The Bank's loan-to-deposit ratio decreased slightly to 84% at March 31, 2025 from 85% at December 31, 2024.

    Borrowings

    The Bank actively manages its liquidity position through its various sources of funding to meet the needs of its clients. FHLB advances and other borrowings were $100.3 million at March 31, 2025 compared to $115.4 million at December 31, 2024 due to the maturity of a $15 million FHLB advance during the first quarter of 2025. The Bank seeks to maintain sufficient liquidity to ensure client needs can be addressed in a timely basis. The Bank had available alternative funding sources, such as FHLB advances and other wholesale options, of approximately $1.8 billion at March 31, 2025.

    Income Statement

    Net Interest Income and Margin

    Net interest income was $48.8 million for the three months ended March 31, 2025 compared to $50.6 million for the three months ended December 31, 2024. The net interest margin, on a tax equivalent basis, decreased to 4.00% in the first quarter of 2025 from 4.05% in the fourth quarter of 2024, which was impacted by the Federal Funds rate cuts in the fourth quarter of 2024. Overall, the yield on loans declined by 23 basis points and the cost of deposits declined by 15 basis points from the fourth quarter of 2024 to the first quarter of 2025.

    The net interest margin was positively impacted by the net accretion impact of purchase accounting marks on loans, securities, deposits and borrowings of $6.9 million, which represented 51 basis points of net interest margin during the first quarter of 2025. During the fourth quarter of 2024, the net accretion impact of purchase accounting marks was $7.2 million, which represented 52 basis points of net interest margin. Funding costs continue to decline as market rates have been reduced.

    Interest income on loans, on a tax equivalent basis, decreased by $4.7 million to $63.4 million for the three months ended March 31, 2025 compared to $68.1 million for the three months ended December 31, 2024. Average loans decreased by $51.6 million during the three months ended March 31, 2025 compared to the three months ended December 31, 2024. There were also two fewer days in the first quarter of 2025 compared to the fourth quarter of 2024. The accretion of purchase accounting marks on loans totaled $6.6 million during the first quarter of 2025 compared to $7.6 million during the fourth quarter of 2024. This decrease reduced net interest margin by six basis points during the first quarter of 2025.

    Interest income on investment securities, on a tax equivalent basis, was $10.1 million for the first quarter of 2025 compared to $9.9 million in the fourth quarter of 2024. Average investment securities increased by $15.7 million during the three months ended March 31, 2025 compared to the three months ended December 31, 2024 primarily due to the aforementioned purchases.

    Interest expense, on a tax equivalent basis, decreased by $2.6 million to $26.8 million for the three months ended March 31, 2025 compared to $29.4 million for the three months ended December 31, 2024. Average interest-bearing deposits decreased by $77.1 million during the three months ended March 31, 2025 compared to the three months ended December 31, 2024. The cost of interest-bearing deposits declined by 16 basis points from the fourth quarter of 2024 to the first quarter of 2025. In addition, interest expense includes $0.6 million and $0.9 million of amortization of purchase accounting marks for the three months ended March 31, 2025 and December 31, 2024, respectively.

    Provision for Credit Losses

    The allowance for credit losses ("ACL") on loans decreased to $47.8 million at March 31, 2025 from $48.7 million at December 31, 2024. The ACL to total loans was 1.23% at March 31, 2025 compared to 1.24% at December 31, 2024. The Company recorded a recovery in the provision for credit losses on loans of $0.6 million for the three months ended March 31, 2025 compared to provision expense of $2.1 million for the three months ended December 31, 2024. Net charge-offs were $0.3 million for the three months ended March 31, 2025 compared to $3.0 million for the three months ended December 31, 2024. During the fourth quarter of 2024, the Bank sold $6.0 million of loans, most of which were C&I loans, which resulted in a charge-off totaling $0.6 million. There was a corresponding $0.6 million of purchase accounting accretion associated with these loans during the fourth quarter of 2024.

    Classified loans decreased by $12.4 million to $76.2 million at March 31, 2025 from $88.6 million at December 31, 2024 primarily due to repayments. Non-accrual loans decreased by $1.4 million to $22.7 million at March 31, 2025 from $24.1 million at December 31, 2024. Nonaccrual loans to total loans decreased to 0.59% at March 31, 2025 compared to 0.61% at December 31, 2024. Management believes the ACL to be adequate based on current asset quality metrics and economic forecasts. Substantial efforts have been made in the last few quarters to reduce risk in the loan portfolio and properly position the Bank for future growth

    Noninterest Income

    Noninterest income increased by $0.4 million to $11.6 million in the three months ended December 31, 2024 from $11.2 million in the three months ended December 31, 2024.

    Wealth management income increased by $0.5 million to $5.4 million for the three months ended March 31, 2025 compared to $4.9 million for the three months ended December 31, 2024. While current market conditions are expected to negatively impact wealth management fees in the near term, the team continues to focus on alternative revenue sources and seeks to continuously grow the business.

    Income from service charges was $2.4 million for the three months ended March 31, 2025 compared to $2.1 million for the three months ended December 31, 2024. There were reduced service charges in the fourth quarter due to fee waivers provided to clients in the post-conversion period from November through the end of the year.

    Income from mortgage banking activities decreased from $0.5 million in the three months ended December 31, 2024 to $0.3 million in the three months ended March 31, 2025. This decrease was primarily due to a reduction in the fair value of mortgage servicing rights, which was driven by interest rate movements in the first quarter of 2025.

    Noninterest Expenses

    Noninterest expenses decreased by $4.7 million to $38.2 million in the three months ended March 31, 2025 from $42.9 million in the three months ended December 31, 2024.

    For the three months ended March 31, 2025, merger-related expenses totaled $1.6 million, a decrease of $2.3 million, compared to $3.9 million for the three months ended December 31, 2024. The merger costs incurred during the first quarter of 2025 included software conversion costs and professional fees associated with the conversion and the external audit. While the Company expects to incur some residual merger-related expenses in the second quarter of 2025, they are not expected to be significant.

    Salaries and benefits expense decreased by $2.0 million to $20.4 million for the three months ended March 31, 2025 compared to $22.4 million for the three months ended December 31, 2024. The decrease during the first quarter of 2025 is reflective of the continued synergies being achieved as a result of the merger. The generated savings are being partially offset by investments in talent designed to prepare the Company for additional growth and further enhance operational efficiency. In addition, salaries and benefits expense is typically elevated during the first quarter of the year due to employee benefit costs, including social security and unemployment taxes.

    Professional services expense increased by $0.2 million from the three months ended December 31, 2024 to the three months ended March 31, 2025. The Company continued to utilize an elevated level of third-party assistance to enhance daily functions and operational processes throughout the organization. It is anticipated that the reliance on these services will decline in the second quarter of 2025.

    Taxes other than income increased by $1.3 million in the three months ended March 31, 2025 compared to the three months ended December 31, 2024. This increase reflects an increase in the estimated state shares tax expense and the impact of certain tax credits recognized during the fourth quarter of 2024.

    Income Taxes

    The Company's effective tax rate was 20.7% for the first quarter of 2025 compared to 20.1% for the fourth quarter of 2024. The Company's effective tax rate for the three months ended March 31, 2025 is less than the 21% federal statutory rate primarily due to tax-exempt income, including interest earned on tax-exempt loans and securities and income from life insurance policies and tax credits partially offset by the disallowed portion of interest expense against earnings in association with the Bank's tax-exempt investments under the Tax Equity and Fiscal Responsibility Act of 1982 ("TEFRA") and the impact of nondeductible merger-related costs. The Company regularly analyzes its projected taxable income and makes adjustments to the provision for income taxes accordingly.

    Capital

    Shareholders' equity totaled $532.9 million at March 31, 2025 compared to $516.7 million at December 31, 2024. The increase is due to net income of $18.1 million and other comprehensive income of $4.7 million, primarily due to an increase in unrealized gains in the investment portfolio, partially offset by dividend payments of $5.0 million and share-based compensation activity of $1.6 million.

    Tangible book value per share(1) increased to $21.99 per share at March 31, 2025 from $21.19 per share at December 31, 2024.

    The Company's tangible common equity ratio was 7.9% at March 31, 2025 compared to 7.5% at December 31, 2024. The Company's total risk-based capital ratio was 13.1% at March 31, 2025 compared to 12.4% at December 31, 2024 driven by earnings and the effect of the decrease in loans on risk weighted assets. The Company's Tier 1 leverage ratio increased to 8.6% at March 31, 2025 compared to 8.3% at December 31, 2024 driven by earnings during the first quarter of 2025.

    At March 31, 2025, all four capital ratios applicable to the Company were above regulatory minimum levels to be deemed "well capitalized" under current bank regulatory guidelines. The Company continues to believe that capital is adequate to support the risks inherent in the balance sheet, as well as growth requirements.

    (1) Non-GAAP measure. See Appendix A for additional information.

    Investor Relations Contact:
    Neelesh Kalani
    Executive Vice President, Chief Financial Officer
    Phone (717) 510-7097



    FINANCIAL HIGHLIGHTS (Unaudited)    
         
         
      Three Months Ended
      March 31, March 31,
    (In thousands)  2025   2024 
         
    Profitability for the period:    
    Net interest income $48,761  $26,881 
    (Recovery of) Provision for credit losses  (554)  298 
    Noninterest income  11,624   6,630 
    Noninterest expenses  38,176   22,469 
    Income before income tax expense  22,763   10,744 
    Income tax expense  4,712   2,213 
    Net income available to common shareholders $18,051  $8,531 
         
    Financial ratios:    
    Return on average assets (1)  1.35%  1.11%
    Return on average assets, adjusted (1) (2) (3)  1.45%  1.19%
    Return on average equity (1)  13.98%  12.79%
    Return on average equity, adjusted (1) (2) (3)  14.97%  13.79%
    Net interest margin (1)  4.00%  3.77%
    Efficiency ratio  63.2%  67.0%
    Efficiency ratio, adjusted (2) (3)  60.5%  65.0%
    Income per common share:    
    Basic $0.94  $0.82 
    Basic, adjusted (2) (3) $1.01  $0.89 
    Diluted $0.93  $0.81 
    Diluted, adjusted (2) (3) $1.00  $0.88 
         
    Average equity to average assets  9.65%  8.66%
         
    (1) Annualized for the three months ended March 31, 2025 and 2024.
    (2) Ratio has been adjusted for the non-recurring charges for all periods presented.
    (3) Non-GAAP based financial measure. Please refer to Appendix A - Supplemental Reporting of Non-GAAP Measures and GAAP to Non-GAAP Reconciliations for a discussion of our use of non-GAAP based financial measures, including tables reconciling GAAP and non-GAAP financial measures appearing herein.
     



    FINANCIAL HIGHLIGHTS (Unaudited)   
    (continued)   
     March 31, December 31,
    (Dollars in thousands, except per share amounts) 2025   2024 
    At period-end:   
    Total assets$5,441,586  $5,441,589 
    Loans, net of allowance for credit losses 3,828,181   3,882,525 
    Loans held-for-sale, at fair value 5,261   6,614 
    Securities available for sale, at fair value 855,456   829,711 
    Total deposits 4,633,716   4,623,096 
    FHLB advances and other borrowings and Securities sold under agreements to repurchase 123,480   141,227 
    Subordinated notes and trust preferred debt 68,850   68,680 
    Shareholders' equity 532,936   516,682 
        
    Credit quality and capital ratios(1):   
    Allowance for credit losses to total loans 1.23%  1.24%
    Total nonaccrual loans to total loans 0.59%  0.61%
    Nonperforming assets to total assets 0.42%  0.45%
    Allowance for credit losses to nonaccrual loans 210%  202%
    Total risk-based capital:   
    Orrstown Financial Services, Inc. 13.1%  12.4%
    Orrstown Bank 13.0%  12.4%
    Tier 1 risk-based capital:   
    Orrstown Financial Services, Inc. 10.8%  10.2%
    Orrstown Bank 11.9%  11.2%
    Tier 1 common equity risk-based capital:   
    Orrstown Financial Services, Inc. 10.6%  10.0%
    Orrstown Bank 11.9%  11.2%
    Tier 1 leverage capital:   
    Orrstown Financial Services, Inc. 8.6%  8.3%
    Orrstown Bank 9.5%  9.1%
        
    Book value per common share$27.32  $26.65 
        
    (1) Capital ratios are estimated for the current period, subject to regulatory filings. The Company elected the three-year phase in option for the day-one impact of ASU 2016-13 for current expected credit losses ("CECL") to regulatory capital. Beginning in 2023, the Company adjusted retained earnings, allowance for credit losses includable in tier 2 capital and the deferred tax assets from temporary differences in risk weighted assets by the permitted percentage of the day-one impact from adopting the CECL standard.
     



    CONSOLIDATED BALANCE SHEETS (Unaudited)   
        
    (Dollars in thousands, except per share amounts)March 31, 2025 December 31, 2024
    Assets   
    Cash and due from banks$64,376  $51,026 
    Interest-bearing deposits with banks 222,744   197,848 
    Cash and cash equivalents 287,120   248,874 
    Restricted investments in bank stocks 19,693   20,232 
    Securities available for sale (amortized cost of $886,782 and $864,920 at March 31, 2025 and December 31, 2024, respectively) 855,456   829,711 
    Loans held for sale, at fair value 5,261   6,614 
    Loans 3,875,985   3,931,214 
    Less: Allowance for credit losses (47,804)  (48,689)
    Net loans 3,828,181   3,882,525 
    Premises and equipment, net 51,729   50,217 
    Cash surrender value of life insurance 144,798   143,854 
    Goodwill 68,106   68,106 
    Other intangible assets, net 45,230   47,765 
    Accrued interest receivable 19,893   21,058 
    Deferred tax assets, net 36,206   42,647 
    Other assets 79,913   79,986 
    Total assets$5,441,586  $5,441,589 
        
    Liabilities   
    Deposits:   
    Noninterest-bearing$932,152  $894,176 
    Interest-bearing 3,701,564   3,728,920 
    Total deposits 4,633,716   4,623,096 
    Securities sold under agreements to repurchase and federal funds purchased 23,131   25,863 
    FHLB advances and other borrowings 100,349   115,364 
    Subordinated notes and trust preferred debt 68,850   68,680 
    Other liabilities 82,604   91,904 
    Total liabilities 4,908,650   4,924,907 
        
    Shareholders' Equity   
    Preferred stock, $1.25 par value per share; 500,000 shares authorized; no shares issued or outstanding —   — 
    Common stock, no par value—$0.05205 stated value per share; 50,000,000 shares authorized; 19,721,340 shares issued and 19,509,642 outstanding at March 31, 2025; 19,722,640 shares issued and 19,389,967 outstanding at December 31, 2024 1,026   1027 
    Additional paid—in capital 421,445   423,274 
    Retained earnings 139,547   126,540 
    Accumulated other comprehensive loss (24,024)  (26,316)
    Treasury stock— 211,698 and 332,673 shares, at cost at March 31, 2025 and December 31, 2024, respectively (5,058)  (7,843)
    Total shareholders' equity 532,936   516,682 
    Total liabilities and shareholders' equity$5,441,586  $5,441,589 
            



    ORRSTOWN FINANCIAL SERVICES, INC.
    CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
         
      Three Months Ended
      March 31, March 31,
    (Dollars in thousands, except per share amounts)  2025   2024 
    Interest income    
    Loans $63,432  $36,233 
    Investment securities - taxable  8,944   4,584 
    Investment securities - tax-exempt  875   877 
    Short-term investments  2,268   956 
    Total interest income  75,519   42,650 
    Interest expense    
    Deposits  24,260   13,516 
    Securities sold under agreements to repurchase and federal funds purchased  84   25 
    FHLB advances and other borrowings  1,118   1,474 
    Subordinated notes and trust preferred debt  1,296   754 
    Total interest expense  26,758   15,769 
    Net interest income  48,761   26,881 
    (Recovery of) Provision for credit losses  (554)  298 
    Net interest income after (recovery of) provision for credit losses  49,315   26,583 
    Noninterest income    
    Service charges  2,395   1,200 
    Interchange income  1,427   911 
    Swap fee income  394   199 
    Wealth management income  5,415   3,102 
    Mortgage banking activities  302   458 
    Investment securities gains (losses)  13   (5)
    Other income  1,678   765 
    Total noninterest income  11,624   6,630 
    Noninterest expenses    
    Salaries and employee benefits  20,388   13,752 
    Occupancy, furniture and equipment  4,675   2,639 
    Data processing  924   1,265 
    Advertising and bank promotions  499   398 
    FDIC insurance  824   441 
    Professional services  1,826   631 
    Taxes other than income  942   494 
    Intangible asset amortization  2,535   225 
    Merger-related expenses  1,649   672 
    Restructuring expenses  91   — 
    Other operating expenses  3,823   1,952 
    Total noninterest expenses  38,176   22,469 
    Income before income tax expense  22,763   10,744 
    Income tax expense  4,712   2,213 
    Net income $18,051  $8,531 
     



         
      Three Months Ended
      March 31, March 31,
      2025 2024
    Share information:    
    Basic earnings per share $0.94 $0.82
    Diluted earnings per share $0.93 $0.81
    Dividends paid per share $0.26 $0.20
    Weighted average shares - basic  19,157  10,349
    Weighted average shares - diluted  19,328  10,482
           



    ANALYSIS OF NET INTEREST INCOME    
    Average Balances and Interest Rates, Taxable-Equivalent Basis (Unaudited)  
     Three Months Ended
     3/31/2025 12/31/2024 9/30/2024 6/30/2024 3/31/2024
       Taxable- Taxable-   Taxable- Taxable-   Taxable- Taxable-   Taxable- Taxable-   Taxable- Taxable-
     Average Equivalent Equivalent Average Equivalent Equivalent Average Equivalent Equivalent Average Equivalent Equivalent Average Equivalent Equivalent
    (In thousands)Balance Interest Rate Balance Interest Rate Balance Interest Rate Balance Interest Rate Balance Interest Rate
    Assets                             
    Federal funds sold & interest-bearing bank balances$203,347 $2,268  4.52% $199,236 $2,492  4.96% $184,465 $2,452  5.29% $142,868 $1,864  5.25% $74,523 $956  5.16%
    Investment securities (1)(2) 865,126  10,052  4.65   849,389  9,887  4.66   849,700  10,123  4.77   538,451  6,114  4.54   519,851  5,694  4.39 
    Loans (1)(3)(4)(5)(6) 3,909,694  63,641  6.59   3,961,269  68,073  6.82   3,989,259  70,849  7.07   2,324,942  35,690  6.17   2,308,103  36,382  6.34 
    Total interest-earning assets 4,978,167  75,961  6.17   5,009,894  80,452  6.38   5,023,424  83,424  6.61   3,006,261  43,668  5.84   2,902,477  43,032  5.96 
    Other assets 447,530      454,271      491,719      204,863      196,295    
    Total assets$5,425,697     $5,464,165     $5,515,143     $3,211,124     $3,098,772    
    Liabilities and Shareholders' Equity                        
    Interest-bearing demand deposits(7)$2,473,543  14,156  2.32  $2,522,885  15,575  2.45  $2,554,743  16,165  2.52  $1,649,753  10,118  2.47  $1,570,622  9,192  2.35 
    Savings deposits(7) 273,313  165  0.25   272,718  166  0.24   283,337  148  0.21   165,467  140  0.34   170,005  144  0.34 
    Time deposits 970,588  9,939  4.15   998,963  11,109  4.41   1,014,628  12,290  4.82   481,721  5,007  4.18   428,443  4,180  3.92 
    Total interest-bearing deposits 3,717,444  24,260  2.65   3,794,566  26,850  2.81   3,852,708  28,603  2.95   2,296,941  15,265  2.67   2,169,070  13,516  2.51 
    Securities sold under agreements to repurchase and federal funds purchased 26,163  84  1.30   21,572  67  1.23   23,075  96  1.66   13,412  27  0.81   12,010  25  0.85 
    FHLB advances and other borrowings 112,859  1,118  4.02   115,373  1,165  4.01   115,388  1,154  3.98   115,000  1,152  4.03   137,505  1,474  4.31 
    Subordinated notes and trust preferred debt 68,739  1,296  7.65   68,571  1,360  7.88   68,399  1,437  8.36   32,118  734  9.19   32,100  754  9.45 
    Total interest-bearing liabilities 3,925,205  26,758  2.76   4,000,082  29,442  2.92   4,059,570  31,290  3.07   2,457,471  17,178  2.81   2,350,685  15,769  2.70 
    Noninterest-bearing demand deposits 887,726      849,999      807,886      423,037      417,469    
    Other liabilities 89,077      97,685      110,017      57,828      62,329    
    Total liabilities 4,902,008      4,947,766      4,977,473      2,938,336      2,830,483    
    Shareholders' equity 523,689      516,399      537,670      272,788      268,289    
    Total$5,425,697     $5,464,165     $5,515,143     $3,211,124     $3,098,772    
    Taxable-equivalent net interest income / net interest spread   49,203  3.41%    51,010  3.46%    52,134  3.55%    26,490  3.02%    27,263  3.26%
    Taxable-equivalent net interest margin    4.00%     4.05%     4.14%     3.54%     3.77%
    Taxable-equivalent adjustment   (442)      (437)      (437)      (387)      (382)  
    Net interest income  $48,761      $50,573      $51,697      $26,103      $26,881   
    Ratio of average interest-earning assets to average interest-bearing liabilities    127%     125%     124%     122%     123%
                                  
                                  
    NOTES:                             
    (1) Yields and interest income on tax-exempt assets have been computed on a taxable-equivalent basis assuming a 21% tax rate.
    (2) Average balance of investment securities is computed at fair value.
    (3) Average balances include nonaccrual loans.
    (4) Interest income on loans includes prepayment and late fees, where applicable.
    (5) Interest income on loans includes interest recovered of $1.6 million from the payoff of a commercial real estate loan on nonaccrual status in the three months ended March 31, 2024.
    (6) Interest income on loans includes accretion on purchase accounting marks of $6.6 million, $7.6 million, $7.3 million, $0.2 million, and $0.1 million for the three months ended March 31, 2025, December 31, 2024, September 30, 2024, June 30, 2024 and March 31, 2024, respectively.
     



    ORRSTOWN FINANCIAL SERVICES, INC.    
    HISTORICAL TRENDS IN QUARTERLY FINANCIAL DATA (Unaudited)    
              
    (In thousands)March 31,

    2025
     December 31,

    2024
     September 30,

    2024
     June 30,

    2024
     March 31,

    2024
    Profitability for the quarter:         
    Net interest income$48,761  $50,573  $51,697  $26,103  $26,881 
    (Recovery of) Provision for credit losses (554)  1,755   13,681   812   298 
    Noninterest income 11,624   11,247   12,386   7,172   6,630 
    Noninterest expenses 38,176   42,930   60,299   22,639   22,469 
    Income (loss) before income taxes 22,763   17,135   (9,897)  9,824   10,744 
    Income tax expense (benefit) 4,712   3,451   (1,994)  2,086   2,213 
    Net income (loss)$18,051  $13,684  $(7,903) $7,738  $8,531 
              
    Financial ratios:         
    Return on average assets(1) 1.35%  1.00% (0.57)%  0.97%  1.11%
    Return on average assets, adjusted(1)(2)(3) 1.45%  1.22%  1.55%  1.09%  1.19%
    Return on average equity(1) 13.98%  10.54% (5.85)%  11.41%  12.79%
    Return on average equity, adjusted(1)(2)(3) 14.97%  12.86%  15.85%  12.88%  13.79%
    Net interest margin(1) 4.00%  4.05%  4.14%  3.54%  3.77%
    Efficiency ratio 63.2%  69.4%  94.1%  68.0%  67.0%
    Efficiency ratio, adjusted(2)(3) 60.5%  62.3%  60.2%  64.6%  65.0%
              
    Per share information:         
    Income (loss) per common share:         
      Basic$0.94  $0.72  $(0.41) $0.74  $0.82 
      Basic, adjusted(2)(3) 1.01   0.87   1.12   0.84   0.89 
      Diluted 0.93   0.71   (0.41)  0.73   0.81 
      Diluted, adjusted(2)(3) 1.00   0.87   1.11   0.83   0.88 
    Book value 27.32   26.65   26.65   25.97   25.38 
    Book value, adjusted(2) (3) 27.38   28.40   28.24   26.12   25.44 
    Tangible book value(3) 21.99   21.19   21.12   24.08   23.47 
    Tangible book value, adjusted(2) (3) 22.06   22.94   22.72   24.23   23.53 
    Cash dividends paid 0.26   0.23   0.23   0.20   0.20 
              
    Average basic shares 19,157   19,118   19,088   10,393   10,349 
    Average diluted shares 19,328   19,300   19,226   10,553   10,482 
    (1)Annualized.
    (2) Ratio has been adjusted for non-recurring expenses for all periods presented.
    (3) Non-GAAP based financial measure. Please refer to Appendix A - Supplemental Reporting of Non-GAAP Measures and GAAP to Non-GAAP Reconciliations for a discussion of our use of non-GAAP based financial measures, including tables reconciling GAAP and non-GAAP financial measures appearing herein.
     



    ORRSTOWN FINANCIAL SERVICES, INC.        
    HISTORICAL TRENDS IN QUARTERLY FINANCIAL DATA (Unaudited)    
    (continued)         
    (In thousands)March 31,

    2025
     December 31,

    2024
     September 30,

    2024
     June 30,

    2024
     March 31,

    2024
    Noninterest income:         
    Service charges$2,395 $2,050  $2,360 $1,283  $1,200 
    Interchange income 1,427  1,608   1,779  961   911 
    Swap fee income 394  597   505  375   199 
    Wealth management income 5,415  4,902   5,037  3,312   3,102 
    Mortgage banking activities 302  517   491  369   458 
    Other income 1,678  1,578   1,943  884   765 
    Investment securities gains (losses) 13  (5)  271  (12)  (5)
    Total noninterest income$11,624 $11,247  $12,386 $7,172  $6,630 
              
    Noninterest expenses:         
    Salaries and employee benefits$20,388 $22,444  $27,190 $13,195  $13,752 
    Occupancy, furniture and equipment 4,675  4,893   4,333  2,705   2,639 
    Data processing 924  1,540   2,046  1,237   1,265 
    Advertising and bank promotions 499  878   537  774   398 
    FDIC insurance 824  955   862  419   441 
    Professional services 1,826  1,591   1,119  801   631 
    Taxes other than income 942  (312)  503  49   494 
    Intangible asset amortization 2,535  2,838   2,464  215   225 
    Provision for legal settlement —  478   —  —   — 
    Merger-related expenses 1,649  3,887   16,977  1,135   672 
    Restructuring expenses 91  39   257  —   — 
    Other operating expenses 3,823  3,699   4,011  2,109   1,952 
    Total noninterest expenses$38,176 $42,930  $60,299 $22,639  $22,469 
              



    HISTORICAL TRENDS IN QUARTERLY FINANCIAL DATA (Unaudited)      
    (continued)         
    (In thousands)March 31,

    2025
     December 31,

    2024
     September 30,

    2024
     June 30,

    2024
     March 31,

    2024
    Balance Sheet at quarter end:         
    Cash and cash equivalents$287,120  $248,874  $236,780  $132,509  $182,722 
    Restricted investments in bank stocks 19,693   20,232   20,247   11,147   11,453 
    Securities available for sale 855,456   829,711   826,828   529,082   514,909 
    Loans held for sale, at fair value 5,261   6,614   3,561   1,562   535 
    Loans:         
    Commercial real estate:         
    Owner occupied 617,854   633,567   622,726   371,301   364,280 
    Non-owner occupied 1,157,383   1,160,238   1,164,501   710,477   707,871 
    Multi-family 257,724   274,135   276,296   151,542   147,773 
    Non-owner occupied residential 168,354   179,512   190,786   89,156   91,858 
    Agricultural 134,916   125,156   129,486   25,551   25,909 
    Commercial and industrial 455,494   451,384   471,983   349,425   339,615 
    Acquisition and development:         
    1-4 family residential construction 40,621   47,432   56,383   32,439   22,277 
    Commercial and land development 227,434   241,424   262,317   129,883   118,010 
    Municipal 30,780   30,044   27,960   10,594   10,925 
    Total commercial loans 3,090,560   3,142,892   3,202,438   1,870,368   1,828,518 
    Residential mortgage:         
    First lien 464,642   460,297   451,195   271,153   270,748 
    Home equity – term 9,224   5,988   6,508   4,633   4,966 
    Home equity – lines of credit 295,820   303,561   303,165   192,736   189,966 
    Installment and other loans 15,739   18,476   18,131   8,713   8,875 
    Total loans 3,875,985   3,931,214   3,981,437   2,347,603   2,303,073 
    Allowance for credit losses (47,804)  (48,689)  (49,630)  (29,864)  (29,165)
    Net loans held for investment 3,828,181   3,882,525   3,931,807   2,317,739   2,273,908 
    Goodwill 68,106   68,106   70,655   18,724   18,724 
    Other intangible assets, net 45,230   47,765   46,144   1,974   2,189 
    Total assets 5,441,586   5,441,589   5,470,589   3,198,782   3,183,331 
    Total deposits 4,633,716   4,623,096   4,650,853   2,702,884   2,695,951 
    FHLB advances and other borrowings and Securities sold under agreements to repurchase 123,480   141,227   137,310   129,625   127,099 
    Subordinated notes and trust preferred debt 68,850   68,680   68,510   32,128   32,111 
    Total shareholders' equity 532,936   516,682   516,206   278,376   271,682 
                        



    HISTORICAL TRENDS IN QUARTERLY FINANCIAL DATA (Unaudited)      
    (continued)         
     March 31,

    2025
     December 31,

    2024
     September 30,

    2024
     June 30,

    2024
     March 31,

    2024
    Capital and credit quality measures(1):         
    Total risk-based capital:         
    Orrstown Financial Services, Inc. 13.1%  12.4%  12.4%  13.3%  13.4%
    Orrstown Bank 13.0%  12.4%  12.2%  13.1%  13.1%
    Tier 1 risk-based capital:         
    Orrstown Financial Services, Inc. 10.8%  10.2%  10.0%  11.1%  11.2%
    Orrstown Bank 11.9%  11.2%  11.0%  12.0%  11.9%
    Tier 1 common equity risk-based capital:         
    Orrstown Financial Services, Inc. 10.6%  10.0%  9.8%  11.1%  11.2%
    Orrstown Bank 11.9%  11.2%  11.0%  12.0%  11.9%
    Tier 1 leverage capital:         
    Orrstown Financial Services, Inc. 8.6%  8.3%  8.0%  8.9%  9.0%
    Orrstown Bank 9.5%  9.1%  8.8%  9.5%  9.6%
              
    Average equity to average assets 9.65%  9.45%  9.75%  8.50%  8.66%
    Allowance for credit losses to total loans 1.23%  1.24%  1.25%  1.27%  1.27%
    Total nonaccrual loans to total loans 0.59%  0.61%  0.68%  0.36%  0.56%
    Nonperforming assets to total assets 0.42%  0.45%  0.49%  0.26%  0.40%
    Allowance for credit losses to nonaccrual loans 210%  202%  184%  357%  226%
              
    Other information:         
    Net charge-offs (recoveries)$331  $3,002  $269  $113  $(42)
    Classified loans 76,211   88,628   105,465   48,722   48,997 
    Nonperforming and other risk assets:         
    Nonaccrual loans 22,727   24,111   26,927   8,363   12,886 
    Other real estate owned 138   138   138   —   — 
    Total nonperforming assets 22,865   24,249   27,065   8,363   12,886 
    Financial difficulty modifications still accruing 5,127   4,897   9,497   —   — 
    Loans past due 90 days or more and still accruing 400   641   337   187   99 
    Total nonperforming and other risk assets$28,392  $29,787  $36,899  $8,550  $12,985 
     
    (1) Capital ratios are estimated for the current period, subject to regulatory filings. The Company elected the three-year phase in option for the day-one impact of ASU 2016-13 for current expected credit losses ("CECL") to regulatory capital. Beginning in 2023, the Company adjusted retained earnings, allowance for credit losses includable in tier 2 capital and the deferred tax assets from temporary differences in risk weighted assets by the permitted percentage of the day-one impact from adopting the new CECL standard.
     

    Appendix A- Supplemental Reporting of Non-GAAP Measures and GAAP to Non-GAAP Reconciliations

    Management believes providing certain other "non-GAAP" financial information will assist investors in their understanding of the effect on recent financial results from non-recurring charges.

    As a result of acquisitions, the Company has intangible assets consisting of goodwill, core deposit and other intangible assets, which totaled $113.3 million and $115.9 million at March 31, 2025 and December 31, 2024, respectively. In addition, during the three months ended March 31, 2025, December 31, 2024, September 30, 2024, June 30, 2024 and March 31, 2024, the Company incurred $1.6 million, $3.9 million, $17.0 million, $1.1 million and $0.7 million in in merger-related expenses, respectively. During the three months ended December 31, 2024 and September 30, 2024, the Company incurred other non-recurring charges totaling $0.5 million and $20.2 million, respectively.

    Tangible book value per common share and the impact of the non-recurring expenses on net income and associated ratios, as used by the Company in this earnings release, are determined by methods other than in accordance with U.S. Generally Accepted Accounting Principles ("GAAP"). While we believe this information is a useful supplement to GAAP based measures presented in this earnings release, readers are cautioned that this non-GAAP disclosure has limitations as an analytical tool, should not be viewed as a substitute for financial measures determined in accordance with GAAP, and should not be considered in isolation or as a substitute for analysis of our results and financial condition as reported under GAAP, nor are such measures necessarily comparable to non-GAAP performance measures that may be presented by other companies. This supplemental presentation should not be construed as an inference that our future results will be unaffected by similar adjustments to be determined in accordance with GAAP.

    The following tables present the computation of each non-GAAP based measure:

    (In thousands)

    Tangible Book Value per Common Share March 31,

    2025
     December 31,

    2024
     September 30,

    2024
     June 30,

    2024
     March 31,

    2024
    Shareholders' equity (most directly comparable GAAP-based measure) $532,936  $516,682  $516,206  $278,376  $271,682 
    Less: Goodwill  68,106   68,106   70,655   18,724   18,724 
    Other intangible assets  45,230   47,765   46,144   1,974   2,189 
    Related tax effect  (9,498)  (10,031)  (9,690)  (415)  (460)
    Tangible common equity (non-GAAP) $429,098  $410,842  $409,097  $258,093  $251,229 
               
    Common shares outstanding  19,510   19,390   19,373   10,720   10,705 
               
    Book value per share (most directly comparable GAAP-based measure) $27.32  $26.65  $26.65  $25.97  $25.38 
    Intangible assets per share  5.33   5.46   5.53   1.89   1.91 
    Tangible book value per share (non-GAAP) $21.99  $21.19  $21.12  $24.08  $23.47 
               



    (In thousands)Three Months Ended
    Adjusted Ratios for Non-recurring ChargesMarch 31,

    2025
     December 31,

    2024
     September 30,

    2024
     June 30,

    2024
     March 31,

    2024
    Net income (loss) (A) - most directly comparable GAAP-based measure$18,051  $13,684  $(7,903) $7,738  $8,531 
    Plus: Merger-related expenses (B) 1,649   3,887   16,977   1,135   672 
    Plus: Executive retirement expenses (B) —   35   4,758   —   — 
    Plus: Provision for credit losses on non-PCD loans (B) —   —   15,504   —   — 
    Plus: Provision for legal settlement (B) —   478   —   —   — 
    Less: Related tax effect (C) (368)  (1,386)  (7,915)  (139)  (1)
    Adjusted net income (D=A+B-C) - Non-GAAP$19,332  $16,698  $21,421  $8,734  $9,202 
              
    Average assets (E)$5,425,697  $5,464,165  $5,515,143  $3,211,124  $3,098,772 
    Return on average assets (= A / E) - most directly comparable GAAP-based measure(1) 1.35%  1.00% (0.57)        %  0.97%  1.11%
    Return on average assets, adjusted (= D / E) - Non-GAAP(1) 1.45%  1.22%  1.55%  1.09%  1.19%
              
    Average equity (F)$523,689  $516,399  $537,670  $272,788  $268,289 
    Return on average equity (= A / F) - most directly comparable GAAP-based measure(1) 13.98%  10.54% (5.85)        %  11.41%  12.79%
    Return on average equity, adjusted (= D / F) - Non-GAAP(1) 14.97%  12.86%  15.85%  12.88%  13.79%
              
    Weighted average shares - basic (G) - most directly comparable GAAP-based measure 19,157   19,118   19,088   10,393   10,349 
    Basic earnings (loss) per share (= A / G) - most directly comparable GAAP-based measure$0.94  $0.72  $(0.41) $0.74  $0.82 
    Basic earnings per share, adjusted (= D / G) - Non-GAAP$1.01  $0.87  $1.12  $0.84  $0.89 
              
    Weighted average shares - diluted (H) - most directly comparable GAAP-based measure 19,328   19,300   19,226   10,553   10,482 
    Diluted earnings (loss) per share (= A / H) - most directly comparable GAAP-based measure$0.93  $0.71  $(0.41) $0.73  $0.81 
    Diluted earnings per share, adjusted (= D / H) - Non-GAAP$1.00  $0.87  $1.11  $0.83  $0.88 
              
    (1) Annualized         
              



     Three Months Ended
     March 31,

    2025
     December 31,

    2024
     September 30,

    2024
     June 30,

    2024
     March 31,

    2024
    Noninterest expense (I) - most directly comparable GAAP-based measure$38,176  $42,930  $60,299  $22,639  $22,469 
    Less: Merger-related expenses (B) (1,649)  (3,887)  (16,977)  (1,135)  (672)
    Less: Executive retirement expenses (B) —   (35)  (4,758)  —   — 
    Less: Provision for legal settlement (B) —   (478)  —   —   — 
    Adjusted noninterest expense (J = I - B) - Non-GAAP$36,527  $38,531  $38,564  $21,504  $21,797 
              
    Net interest income (K)$48,761  $50,573  $51,697  $26,103  $26,881 
    Noninterest income (L) 11,624   11,247   12,386   7,172   6,630 
    Total operating income (M = K + L)$60,385  $61,820  $64,083  $33,275  $33,511 
              
    Efficiency ratio (= I / M) - most directly comparable GAAP-based measure 63.2%  69.4%  94.1%  68.0%  67.0%
    Efficiency ratio, adjusted (= J / M) - Non-GAAP 60.5%  62.3%  60.2%  64.6%  65.0%
              
    (1) Annualized         
              

    Appendix B- Investment Portfolio Concentrations

    The following table summarizes the credit ratings and collateral associated with the Company's investment security portfolio, excluding equity securities, at March 31, 2025:

    (In thousands)

    SectorPortfolio Mix Amortized Book Fair Value Credit Enhancement AAA AA A BBB BB NR Collateral / Guarantee Type
    Unsecured ABS—% $2,952 $2,768 27% —% —% —% —% —% 100% Unsecured Consumer Debt
    Student Loan ABS—   3,808  3,792 28  —  —  —  —  —  100  Seasoned Student Loans
    Federal Family Education Loan ABS9   78,231  77,955 11  1  47  33  7  12  —  Federal Family Education Loan (1)
    PACE Loan ABS—   1,943  1,710 7  100  —  —  —  —  —  PACE Loans (2)
    Non-Agency CMBS2   13,966  14,022 30  —  —  —  —  —  100   
    Non-Agency RMBS2   16,323  14,726 16  100  —  —  —  —  —  Reverse Mortgages (3)
    Municipal - General Obligation11   99,248  89,952   17  76  7  —  —  —   
    Municipal - Revenue14   120,676  107,154   —  82  12  —  —  6   
    SBA ReRemic (5)—   2,095  2,087   —  100  —  —  —  —  SBA Guarantee (4)
    Small Business Administration1   5,511  5,629   —  100  —  —  —  —  SBA Guarantee (4)
    Agency MBS19   164,144  162,334   —  100  —  —  —  —  Residential Mortgages (4)
    Agency CMO40   355,699  352,729   —  100  —  —  —  —   
    U.S. Treasury securities2   20,040  18,417   —  100  —  —  —  —  U.S. Government Guarantee (4)
    Corporate bonds—   1,939  1,974   —  —  52  48  —  —   
     100% $886,575 $855,249   4% 87% 5% 1% —% 3%  
                          
    (1) 97% guaranteed by U.S. government
    (2) PACE acronym represents Property Assessed Clean Energy loans
    (3) Non-agency reverse mortgages with current structural credit enhancements
    (4) Guaranteed by U.S. government or U.S. government agencies
    (5) SBA ReRemic acronym represents Re-Securitization of Real Estate Mortgage Investment Conduits
                          
    Note: Ratings in table are the lowest of the six rating agencies (Standard & Poor's, Moody's, Fitch, Morningstar, DBRS and Kroll Bond Rating Agency). Standard & Poor's rates U.S. government obligations at AA+.
     

    About the Company

    With $5.4 billion in assets, Orrstown Financial Services, Inc. and its wholly-owned subsidiary, Orrstown Bank, provide a wide range of consumer and business financial services in Berks, Cumberland, Dauphin, Franklin, Lancaster, Perry and York Counties, Pennsylvania and Anne Arundel, Baltimore, Harford, Howard, and Washington Counties, Maryland, as well as Baltimore City, Maryland. The Company's lending area also includes counties in Pennsylvania, Maryland, Delaware, Virginia and West Virginia within a 75-mile radius of the Company's executive and administrative offices as well as the District of Columbia. Orrstown Bank is an Equal Housing Lender and its deposits are insured up to the legal maximum by the FDIC. Orrstown Financial Services, Inc.'s common stock is traded on Nasdaq (ORRF). For more information about Orrstown Financial Services, Inc. and Orrstown Bank, visit www.orrstown.com. 

    Cautionary Note Regarding Forward-Looking Statements

    This press release contains "forward-looking statements" within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. Forward-looking statements reflect the current views of the Company's management with respect to, among other things, future events and the Company's financial performance. These statements are often, but not always, made through the use of words or phrases such as "may," "should," "could," "predict," "potential," "believe," "will likely result," "expect," "continue," "will," "anticipate," "seek," "estimate," "intend," "plan," "project," "forecast," "goal," "target," "would" and "outlook," or the negative variations of those words or other comparable words of a future or forward-looking nature. These forward-looking statements are not historical facts, and are based on current expectations, estimates, predictions or projections about events or the Company's industry, management's beliefs and certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond the Company's control. Accordingly, the Company cautions you that any such forward-looking statements are not guarantees of future performance and are subject to risks, assumptions and uncertainties that are difficult to predict. Although the Company believes that the expectations reflected in these forward-looking statements are reasonable as of the date made, actual results may prove to be materially different from the results expressed or implied by the forward-looking statements and there can be no assurances that the Company will achieve the desired level of new business development and new loans, growth in the balance sheet and fee-based revenue lines of business, cost savings initiatives and continued reductions in risk assets or mitigation of losses in the future. Factors which could cause the actual results to differ from those expressed or implied by the forward-looking statements include, but are not limited to, the following: interest rate changes or volatility; general economic conditions (including inflation and concerns about liquidity) on a national basis or in the local markets in which the Company operates; ineffectiveness of the Company's strategic growth plan due to changes in current or future market conditions; the effects of competition and how it may impact our community banking model, including industry consolidation and development of competing financial products and services; changes in consumer behavior due to changing political, business and economic conditions, or legislative or regulatory initiatives; changes in, and evolving interpretations of, existing and future laws and regulations; changes in credit quality; inability to raise capital, if necessary, under favorable conditions; volatility in the securities markets; the demand for our products and services; deteriorating economic conditions; geopolitical tensions; operational risks including, but not limited to, cybersecurity incidents, fraud, natural disasters and future pandemics; expenses associated with litigation and legal proceedings; the possibility that the anticipated benefits of the merger with Codorus Valley Bancorp are not realized when expected or at all; and other risks and uncertainties, including those detailed in our Annual Report on Form 10-K for the year ended December 31, 2024 under the sections titled "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" and in subsequent filings made with the Securities and Exchange Commission.

    The foregoing list of factors is not exhaustive. If one or more events related to these or other risks or uncertainties materializes, or if the Company's underlying assumptions prove to be incorrect, actual results may differ materially from what the Company anticipates. Accordingly, you should not place undue reliance on any such forward-looking statements. Any forward-looking statement speaks only as of the date on which it is made, and the Company disclaims any obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise. New risks and uncertainties arise from time to time, and it is not possible for the Company to predict those events or how they may affect it. In addition, the Company cannot assess the impact of each factor on its business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. All forward-looking statements, expressed or implied, included in this press release are expressly qualified in their entirety by this cautionary statement. This cautionary statement should also be considered in connection with any subsequent written or oral forward-looking statements that the Company or persons acting on the Company's behalf may issue.

    The review period for subsequent events extends up to and includes the filing date of a public company's financial statements, when filed with the Securities and Exchange Commission. Accordingly, the consolidated financial information presented in this announcement is subject to change. Annualized, pro forma, projected and estimated numbers in this document are used for illustrative purposes only and are not forecasts and may not reflect actual results.



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