Orrstown Financial Services, Inc. ("Orrstown" or the “Company”)
(NASDAQ: ORRF), the parent company of Orrstown Bank (the “Bank”),
announced earnings for the three months ended June 30, 2023. Net
income totaled $9.8 million for the three months ended June 30,
2023, compared to $9.2 million for the three months ended March 31,
2023 and $8.9 million for the three months ended June 30, 2022.
Diluted earnings per share totaled $0.94 for the three months ended
June 30, 2023, compared to $0.87 for the three months ended March
31, 2023 and $0.83 for the three months ended June 30, 2022.
“Orrstown delivered another quarter of earnings
growth despite headwinds from rising interest rates and the
inverted yield curve. Due to disciplined pricing of both loans and
deposits, our net interest margin remained strong at 3.83% for the
second quarter of 2023. Deposit stability has enabled the Bank to
maintain access to significant funding sources as core deposits
represent 86% of total deposits and our loan-to-deposit ratio was
89% at June 30, 2023,” commented Thomas R. Quinn, Jr., President
and Chief Executive Officer.
“Looking forward, we expect to continue to build
capital through earnings as we grow prudently, while simultaneously
seizing opportunities to maximize shareholder value. As we move
further away from the recent disruptions in the banking industry,
we are mindful of the lessons learned and remain focused on meeting
the needs of our clients to ensure confidence in Orrstown and the
industry as a whole. We believe that our continued focus on
financial performance and client relationships enhances our
prospects for long-term success," Quinn added.
DISCUSSION OF RESULTS
Balance Sheet
Loans
Loans held for investment, which includes SBA
PPP loans, increased by $26.9 million from March 31, 2023 to June
30, 2023, or 5% annualized. Commercial loans, excluding SBA PPP
loan forgiveness activity, increased by $20.3 million, or 5%
annualized, from March 31, 2023 to June 30, 2023. SBA PPP loans,
net of deferred fees and costs, declined by $3.6 million to $7.2
million at June 30, 2023 from $10.8 million at March 31, 2023 due
to forgiveness and payment activity. The first lien residential
mortgage portfolio increased by $8.8 million, or 15% annualized, in
the three months ended June 30, 2023.
Investment Securities
Investment securities, which are all
available-for-sale, decreased by $11.9 million to $521.2 million at
June 30, 2023 compared to $533.1 million at March 31, 2023.
Paydowns totaled $7.8 million during the second quarter of 2023.
Net unrealized losses on investment securities increased by $2.8
million during the second quarter primarily due to higher interest
rates at June 30, 2023. The overall duration of the Company's
investment securities portfolio is 4.6 years. The Company has
sufficient access to liquidity such that management does not
believe it would be necessary to sell any of its investment
securities at a loss to offset any unexpected deposit outflows.
Management believes the structure of the Bank's investment
portfolio is appropriately aligned with the rest of the balance
sheet to protect against significant and unexpected charges against
earnings and capital. See Appendix B for a summary of the Bank's
investment securities at June 30, 2023, highlighting their
concentrations, credit ratings and credit enhancement levels.
Deposits
Deposits increased by $7.2 million, totaling
approximately $2.5 billion at both June 30, 2023 and March 31,
2023. In the second quarter of 2023, time deposits increased by
$43.4 million, or 58% annualized, and interest-bearing demand
deposits increased by $33.0 million, or 13% annualized. These
increases were partially offset by decreases in noninterest-bearing
demand deposits of $28.7 million, or 23% annualized, money market
deposits of $23.7 million, or 19% annualized, and savings deposits
of $16.8 million, or 30% annualized. The increase in time deposits
was attributable to promotional offerings of up to 18-month terms.
The declines in the noninterest-bearing, money market and savings
deposit categories were primarily the result of clients seeking
higher-yielding products, including reciprocal deposits. At June
30, 2023, deposits that are uninsured and not collateralized
totaled $409.1 million, or 16%, of total deposits compared to
$474.2 million, or 19%, of total deposits at March 31, 2023. The
Bank's loan-to-deposit ratio of 89% at June 30, 2023 was only
modestly higher than 88% at March 31, 2023.
The Bank completed the previously announced sale
of its Path Valley branch on May 12, 2023. This sale included
deposits of approximately $18.7 million, which were sold at a
premium of 6.0%, as well as the building and land.
Borrowings
The Bank actively manages its liquidity position
through its various sources of funding to meet the credit needs of
its clients. FHLB advances and other borrowings decreased by $25.6
million to $136.7 million at June 30, 2023 compared to $162.3
million at March 31, 2023. The Bank repaid some overnight
borrowings and FHLB advances during the second quarter of 2023
based on available liquidity from deposits and paydowns on
investment securities. The Bank had available alternative funding
sources, such as the FHLB advances and other wholesale options, of
approximately $1.0 billion at June 30, 2023.
Income Statement
Net Interest Income and Margin
Net interest income was $26.4 million for the
three months ended June 30, 2023 compared to $26.3 million for the
three months ended March 31, 2023. The net interest margin, on a
tax equivalent basis, remained strong, but decreased to 3.83% in
the second quarter of 2023 from 3.94% in the first quarter of 2023.
The decrease in net interest margin was primarily the result of
increased funding costs due to competitive pressures on deposits
and higher cost borrowings.
Interest income on loans increased by $2.5
million to $31.2 million for the three months ended June 30, 2023
compared to $28.7 million for the three months ended March 31,
2023. Loan growth and higher interest rates on loans were the
primary drivers of this increase. Interest income on loans for the
three months ended June 30, 2023 included prepayment fee income of
$0.2 million, an increase of $0.1 million from the three months
ended March 31, 2023, which resulted in an increase of two basis
points in net interest margin.
Interest income on investment securities
increased by $0.2 million to $5.4 million for the three months
ended June 30, 2023 from $5.2 million for the first quarter of
2023. The increase reflects higher yields on adjustable-rate
securities.
Interest expense increased by $2.5 million to
$10.5 million for the three months ended June 30, 2023 compared to
$8.0 million for the three months ended March 31, 2023 due
primarily to increasing deposit and borrowing rates for both
existing and new balances. In addition, average interest-bearing
deposits increased by $43.3 million and average borrowings
increased by $25.5 million during the three months ended June 30,
2023.
Provision for Credit Losses
The allowance for credit losses remained at
approximately $28.4 million at both June 30, 2023 and March 31,
2023. The allowance for credit losses to total loans was 1.27% at
June 30, 2023 compared to 1.28% at March 31, 2023. The Company
recorded a provision for credit losses of $0.4 million for the
three months ended June 30, 2023 compared to $0.7 million for the
three months ended March 31, 2023. Classified loans decreased by
$7.7 million to $26.3 million at June 30, 2023 from $34.0 million
at March 31, 2023 primarily due to net upgrades and repayments
within this category. Special mention loans increased by $13.2
million from $32.3 million at March 31, 2023 to $45.5 million at
June 30, 2023 due to net downgrades partially offset by repayments.
The risk rating downgrades to Special Mention consisted of five
clients spread across various commercial loan classes; however,
other commercial loans in these categories do not reflect similar
risk characteristics that led to these downgrades. Non-accrual
loans decreased by $0.1 million to $21.1 million at June 30, 2023
from $21.2 million at March 31, 2023. The nonaccrual loans to total
loans metric improved to 0.94% at June 30, 2023 from 0.96% at March
31, 2023. Net charge-offs were $0.4 million for the three months
ended June 30, 2023 compared to net recoveries of $0.1 million for
the three months ended March 31, 2023. Management believes the
allowance for credit losses to be adequate based on current asset
quality metrics and economic conditions.
Management regularly analyzes the commercial
real estate portfolio, which includes the review of occupancy, cash
flows, expenses and expiring leases, as well as the location of the
real estate. At June 30, 2023, the Company had $236.7 million in
loans related to office space compared to $236.2 million at March
31, 2023. Management believes that the office space portfolio is
well-diversified and includes only limited exposure to properties
located in major metro markets (approximately 3% of the total
commercial real estate loan balance as of June 30, 2023).
Noninterest Income
Noninterest income increased by $1.1 million to
$7.2 million in the three months ended June 30, 2023 compared to
$6.1 million in the three months ended March 31, 2023.
Other income in the three months ended June 30,
2023 includes a gain of $1.2 million from the sale of the Bank's
Path Valley branch.
Mortgage banking income decreased by $0.4
million from $0.5 million in the first quarter of 2023 to $0.1
million in the second quarter of 2023. Market conditions and
elevated interest rates continued to hinder mortgage production
during the second quarter of 2023. Due to the current mortgage
interest rates, clients have shifted from conventional fixed-rate
mortgages to adjustable-rate products, which has reduced the
residential mortgage loan pipeline for sale in the secondary
market. Mortgage loans sold totaled $5.1 million in the second
quarter of 2023 compared to $9.6 million in the first quarter of
2023 and $22.6 million in the second quarter of 2022. During the
three months ended June 30, 2023, mortgage interest rates
increased, which resulted in a decline to the fair value mark of
the Bank's held-for-sale loans of $0.1 million compared to an
increase in the fair value mark of $0.3 million during the three
months ended March 31, 2023.
During the second quarter of 2023, the Company
recorded swap fee income of $0.2 million for the three months ended
June 30, 2023 compared to none in the three months ended March 31,
2023. Swap fee income fluctuates based on market conditions and
client demand.
Noninterest Expenses
Noninterest expenses increased by $0.4 million
to $20.7 million in the three months ended June 30, 2023 from $20.3
million in the three months ended March 31, 2023.
Salaries and benefits expense increased by $0.9
million to $13.1 million for the three months ended March 31, 2023
compared to $12.2 million for the three months ended March 31,
2023. The increase was attributed primarily to higher healthcare
costs of $0.5 million from increased claim volumes and employee
severance costs of $0.5 million.
Advertising and bank promotions expense
increased by $0.5 million to $0.9 million in the three months ended
June 30, 2023 from $0.4 million for the three months ended March
31, 2023 due to $0.5 million in contributions to tax credit
programs during the second quarter of 2023. Taxes other than income
decreased by $0.5 million to less than $0.1 million in the three
months ended June 30, 2023 compared to $0.5 million in the three
months ended March 31, 2023. This decrease reflects the tax credits
recognized on the contributions during the second quarter of
2023.
Professional fees decreased $0.2 million to $0.5
million in the three months ended June 30, 2023 from $0.7 million
in the three months ended March 31, 2023 due to a decrease in legal
costs, primarily due to the prior settlement of litigation, and
consulting fees.
Other operating expenses decreased by $0.2
million to $2.0 million during the second quarter of 2023 compared
to $2.2 million during the first quarter of 2023. This decrease
included a reduction of $0.2 million in mark-to-market losses on
derivatives not designated as hedging instruments for the three
months ended June 30, 2023 compared to the three months ended March
31, 2023. The remaining fluctuation is attributable to normal
business operations.
Income Taxes
The Company's effective tax rate for the second
quarter of 2023 was 20.6% compared to 19.6% for the first quarter
of 2023. The Company's effective tax rate for the three months
ended June 30, 2023 is less than the 21% federal statutory rate due
to tax-exempt income, including interest earned on tax-exempt loans
and securities and income from life insurance policies, as well as
tax credits. The increase in the effective tax rate was primarily
due to increases in taxable income and 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.
Capital
Shareholders’ equity totaled $245.6 million at
June 30, 2023, an increase of $5.4 million from $240.2 million at
March 31, 2023. The increase was primarily attributable to net
income of $9.8 million, partially offset by dividends paid of $2.2
million, other comprehensive losses of $1.4 million, and share
repurchase costs of $1.2 million. Other comprehensive losses
increased during the second quarter of 2023 due to after-tax
declines of $2.2 million in net unrealized losses on investment
securities partially offset by net unrealized gains on cash flow
hedges of $0.8 million.
Tangible book value per share(1) increased to
$21.19 per share at June 30, 2023 from $20.50 per share at March
31, 2023 primarily due to the increase in shareholders' equity.
The Company's tangible common equity ratio
increased to 7.5% at June 30, 2023 from 7.3% at March 31, 2023
primarily due to an increase in tangible equity from net income.
The Company's total risk-based capital ratio was 13.0% at June 30,
2023, up from 12.8% at March 31, 2023. The Company's Tier 1
leverage ratio increased from 8.5% at March 31, 2023 to 8.6% at
June 30, 2023. At June 30, 2023, 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.
The Board of Directors approved a cash dividend
of $0.20 per share, payable on August 15, 2023, to shareholders of
record as of August 8, 2023.
(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 |
ORRSTOWN FINANCIAL
SERVICES, INC. |
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FINANCIAL HIGHLIGHTS
(Unaudited) |
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Three Months Ended |
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Six Months Ended |
|
June 30, |
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June 30, |
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June 30, |
|
June 30, |
(Dollars in thousands) |
|
2023 |
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2022 |
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2023 |
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2022 |
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Profitability for the
period: |
|
|
|
|
|
|
|
Net interest income |
$ |
26,375 |
|
|
$ |
24,118 |
|
|
$ |
52,669 |
|
|
$ |
46,691 |
|
Provision for credit losses |
|
399 |
|
|
|
1,775 |
|
|
|
1,128 |
|
|
|
2,075 |
|
Noninterest income |
|
7,158 |
|
|
|
7,194 |
|
|
|
13,236 |
|
|
|
14,668 |
|
Noninterest expenses |
|
20,749 |
|
|
|
18,794 |
|
|
|
41,004 |
|
|
|
38,158 |
|
Income before income tax expense |
|
12,385 |
|
|
|
10,743 |
|
|
|
23,773 |
|
|
|
21,126 |
|
Income tax expense |
|
2,547 |
|
|
|
1,872 |
|
|
|
4,779 |
|
|
|
3,887 |
|
Net income available to common shareholders |
$ |
9,838 |
|
|
$ |
8,871 |
|
|
$ |
18,994 |
|
|
$ |
17,239 |
|
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|
|
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Financial ratios: |
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|
|
|
|
|
Return on average assets(1) |
|
1.32 |
% |
|
|
1.25 |
% |
|
|
1.29 |
% |
|
|
1.22 |
% |
Return on average equity(1) |
|
16.27 |
% |
|
|
14.42 |
% |
|
|
16.08 |
% |
|
|
13.51 |
% |
Net interest margin(1) |
|
3.83 |
% |
|
|
3.68 |
% |
|
|
3.88 |
% |
|
|
3.59 |
% |
Efficiency ratio |
|
61.9 |
% |
|
|
60.0 |
% |
|
|
62.2 |
% |
|
|
62.2 |
% |
Income per common share: |
|
|
|
|
|
|
|
Basic |
$ |
0.95 |
|
|
$ |
0.84 |
|
|
$ |
1.83 |
|
|
$ |
1.61 |
|
Diluted |
$ |
0.94 |
|
|
$ |
0.83 |
|
|
$ |
1.82 |
|
|
$ |
1.59 |
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|
|
|
|
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Average equity to average assets |
|
8.11 |
% |
|
|
8.64 |
% |
|
|
8.04 |
% |
|
|
9.05 |
% |
|
|
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(1) Annualized. |
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ORRSTOWN FINANCIAL
SERVICES, INC. |
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FINANCIAL
HIGHLIGHTS (Unaudited) |
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(continued) |
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June 30, |
|
December 31, |
(Dollars in thousands, except per share amounts) |
|
2023 |
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|
2022 |
|
At period-end: |
|
|
|
Total assets |
$ |
3,008,197 |
|
|
$ |
2,922,408 |
|
Total deposits |
|
2,522,861 |
|
|
|
2,476,246 |
|
Loans, net of allowance for credit losses |
|
2,206,034 |
|
|
|
2,126,054 |
|
Loans held-for-sale, at fair value |
|
6,450 |
|
|
|
10,880 |
|
Securities available for sale, at fair value |
|
508,612 |
|
|
|
513,728 |
|
Borrowings |
|
152,229 |
|
|
|
123,390 |
|
Subordinated notes |
|
32,059 |
|
|
|
32,026 |
|
Shareholders' equity |
|
245,641 |
|
|
|
228,896 |
|
|
|
|
|
Credit quality and capital
ratios(1): |
|
|
|
Allowance for credit losses to total loans |
|
1.27 |
% |
|
|
1.17 |
% |
Total nonaccrual loans to total loans |
|
0.94 |
% |
|
|
0.96 |
% |
Nonperforming assets to total assets |
|
0.70 |
% |
|
|
0.70 |
% |
Allowance for credit losses to nonaccrual loans |
|
135 |
% |
|
|
122 |
% |
Total risk-based capital: |
|
|
|
Orrstown Financial Services, Inc. |
|
13.0 |
% |
|
|
12.7 |
% |
Orrstown Bank |
|
12.5 |
% |
|
|
12.3 |
% |
Tier 1 risk-based capital: |
|
|
|
Orrstown Financial Services, Inc. |
|
10.5 |
% |
|
|
10.3 |
% |
Orrstown Bank |
|
11.4 |
% |
|
|
11.2 |
% |
Tier 1 common equity risk-based capital: |
|
|
|
Orrstown Financial Services, Inc. |
|
10.5 |
% |
|
|
10.3 |
% |
Orrstown Bank |
|
11.4 |
% |
|
|
11.2 |
% |
Tier 1 leverage capital: |
|
|
|
Orrstown Financial Services, Inc. |
|
8.6 |
% |
|
|
8.5 |
% |
Orrstown Bank |
|
9.3 |
% |
|
|
9.2 |
% |
|
|
|
|
Book value per common share |
$ |
23.15 |
|
|
$ |
21.45 |
|
|
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(1) Capital ratios are estimated, 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. In the first year of adoption 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. |
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ORRSTOWN FINANCIAL
SERVICES, INC. |
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CONSOLIDATED BALANCE
SHEETS (Unaudited) |
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(Dollars in thousands, except
per share amounts) |
June 30, 2023 |
|
December 31, 2022 |
Assets |
|
|
|
Cash and due from banks |
$ |
31,855 |
|
|
$ |
28,477 |
|
Interest-bearing deposits with
banks |
|
44,463 |
|
|
|
32,346 |
|
Cash and cash equivalents |
|
76,318 |
|
|
|
60,823 |
|
Restricted investments in bank
stocks |
|
12,602 |
|
|
|
10,642 |
|
Securities available for sale
(amortized cost of $552,224 and $563,278 at June 30, 2023 and
December 31, 2022, respectively) |
|
508,612 |
|
|
|
513,728 |
|
Loans held for sale, at fair
value |
|
6,450 |
|
|
|
10,880 |
|
Loans |
|
2,234,417 |
|
|
|
2,151,232 |
|
Less: Allowance for credit
losses |
|
(28,383 |
) |
|
|
(25,178 |
) |
Net loans |
|
2,206,034 |
|
|
|
2,126,054 |
|
Premises and equipment, net |
|
29,629 |
|
|
|
29,328 |
|
Cash surrender value of life
insurance |
|
72,309 |
|
|
|
71,760 |
|
Goodwill |
|
18,724 |
|
|
|
18,724 |
|
Other intangible assets, net |
|
2,589 |
|
|
|
3,078 |
|
Accrued interest receivable |
|
11,773 |
|
|
|
11,027 |
|
Deferred tax assets, net |
|
22,093 |
|
|
|
24,031 |
|
Other assets |
|
41,064 |
|
|
|
42,333 |
|
Total assets |
$ |
3,008,197 |
|
|
$ |
2,922,408 |
|
Liabilities |
|
|
|
Deposits: |
|
|
|
Noninterest-bearing |
$ |
465,938 |
|
|
$ |
494,131 |
|
Interest-bearing |
|
2,056,923 |
|
|
|
1,950,807 |
|
Deposits held for assumption in connection with sale of bank
branch |
|
— |
|
|
|
31,307 |
|
Total deposits |
|
2,522,861 |
|
|
|
2,476,246 |
|
Securities sold under agreements
to repurchase and federal funds purchased |
|
15,502 |
|
|
|
17,251 |
|
FHLB advances and other
borrowings |
|
136,727 |
|
|
|
106,139 |
|
Subordinated notes |
|
32,059 |
|
|
|
32,026 |
|
Accrued interest and other
liabilities |
|
55,407 |
|
|
|
61,850 |
|
Total liabilities |
|
2,762,556 |
|
|
|
2,693,512 |
|
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; 11,208,080 shares issued and 10,611,425 outstanding at
June 30, 2023; 11,229,242 shares issued and 10,671,413
outstanding at December 31, 2022 |
|
583 |
|
|
|
584 |
|
Additional paid—in capital |
|
187,859 |
|
|
|
189,264 |
|
Retained earnings |
|
105,239 |
|
|
|
92,473 |
|
Accumulated other comprehensive
losses |
|
(34,196 |
) |
|
|
(39,913 |
) |
Treasury stock— 596,655 and
557,829 shares, at cost at June 30, 2023 and December 31,
2022, respectively |
|
(13,844 |
) |
|
|
(13,512 |
) |
Total shareholders’ equity |
|
245,641 |
|
|
|
228,896 |
|
Total liabilities and shareholders’ equity |
$ |
3,008,197 |
|
|
$ |
2,922,408 |
|
|
ORRSTOWN
FINANCIAL SERVICES, INC. |
CONDENSED
CONSOLIDATED STATEMENTS OF INCOME (Unaudited) |
|
|
Three Months Ended |
|
Six Months Ended |
|
|
June 30, |
|
June 30, |
|
June 30, |
|
June 30, |
(In thousands) |
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Interest
income |
|
|
|
|
|
|
|
|
Loans |
|
$ |
31,203 |
|
|
$ |
22,027 |
|
|
$ |
59,947 |
|
|
$ |
43,396 |
|
Investment securities -
taxable |
|
|
4,415 |
|
|
|
1,957 |
|
|
|
8,785 |
|
|
|
3,555 |
|
Investment securities -
tax-exempt |
|
|
865 |
|
|
|
1,131 |
|
|
|
1,730 |
|
|
|
1,853 |
|
Short-term investments |
|
|
418 |
|
|
|
235 |
|
|
|
716 |
|
|
|
336 |
|
Total interest income |
|
|
36,901 |
|
|
|
25,350 |
|
|
|
71,178 |
|
|
|
49,140 |
|
Interest
expense |
|
|
|
|
|
|
|
|
Deposits |
|
|
8,608 |
|
|
|
701 |
|
|
|
14,810 |
|
|
|
1,386 |
|
Securities sold under agreements
to repurchase and federal funds purchased |
|
|
28 |
|
|
|
7 |
|
|
|
53 |
|
|
|
14 |
|
FHLB advances and other
borrowings |
|
|
1,386 |
|
|
|
21 |
|
|
|
2,638 |
|
|
|
43 |
|
Subordinated notes |
|
|
504 |
|
|
|
503 |
|
|
|
1,008 |
|
|
|
1,006 |
|
Total interest expense |
|
|
10,526 |
|
|
|
1,232 |
|
|
|
18,509 |
|
|
|
2,449 |
|
Net interest income |
|
|
26,375 |
|
|
|
24,118 |
|
|
|
52,669 |
|
|
|
46,691 |
|
Provision for credit losses |
|
|
399 |
|
|
|
1,775 |
|
|
|
1,128 |
|
|
|
2,075 |
|
Net interest income after provision for credit losses |
|
|
25,976 |
|
|
|
22,343 |
|
|
|
51,541 |
|
|
|
44,616 |
|
Noninterest
income |
|
|
|
|
|
|
|
|
Service charges |
|
|
1,251 |
|
|
|
1,194 |
|
|
|
2,408 |
|
|
|
2,267 |
|
Interchange income |
|
|
993 |
|
|
|
1,064 |
|
|
|
1,958 |
|
|
|
2,045 |
|
Swap fee income |
|
|
196 |
|
|
|
785 |
|
|
|
196 |
|
|
|
1,738 |
|
Wealth management income |
|
|
2,822 |
|
|
|
2,894 |
|
|
|
5,569 |
|
|
|
5,763 |
|
Mortgage banking activities |
|
|
112 |
|
|
|
498 |
|
|
|
590 |
|
|
|
1,219 |
|
Investment securities losses |
|
|
(2 |
) |
|
|
(3 |
) |
|
|
(10 |
) |
|
|
(149 |
) |
Other income |
|
|
1,786 |
|
|
|
762 |
|
|
|
2,525 |
|
|
|
1,785 |
|
Total noninterest income |
|
|
7,158 |
|
|
|
7,194 |
|
|
|
13,236 |
|
|
|
14,668 |
|
Noninterest
expenses |
|
|
|
|
|
|
|
|
Salaries and employee
benefits |
|
|
13,054 |
|
|
|
11,312 |
|
|
|
25,250 |
|
|
|
22,649 |
|
Occupancy, furniture and
equipment |
|
|
2,266 |
|
|
|
2,423 |
|
|
|
4,599 |
|
|
|
4,990 |
|
Data processing |
|
|
1,201 |
|
|
|
1,165 |
|
|
|
2,418 |
|
|
|
2,218 |
|
Advertising and bank
promotions |
|
|
919 |
|
|
|
881 |
|
|
|
1,324 |
|
|
|
1,236 |
|
FDIC insurance |
|
|
519 |
|
|
|
190 |
|
|
|
1,023 |
|
|
|
473 |
|
Professional services |
|
|
504 |
|
|
|
722 |
|
|
|
1,238 |
|
|
|
1,530 |
|
Taxes other than income |
|
|
3 |
|
|
|
108 |
|
|
|
460 |
|
|
|
672 |
|
Intangible asset
amortization |
|
|
239 |
|
|
|
281 |
|
|
|
489 |
|
|
|
573 |
|
Other operating expenses |
|
|
2,044 |
|
|
|
1,712 |
|
|
|
4,203 |
|
|
|
3,817 |
|
Total noninterest expenses |
|
|
20,749 |
|
|
|
18,794 |
|
|
|
41,004 |
|
|
|
38,158 |
|
Income before income tax expense |
|
|
12,385 |
|
|
|
10,743 |
|
|
|
23,773 |
|
|
|
21,126 |
|
Income tax expense |
|
|
2,547 |
|
|
|
1,872 |
|
|
|
4,779 |
|
|
|
3,887 |
|
Net income |
|
$ |
9,838 |
|
|
$ |
8,871 |
|
|
$ |
18,994 |
|
|
$ |
17,239 |
|
|
|
|
|
|
|
|
|
|
Share
information: |
|
|
|
|
|
|
|
|
Basic earnings per share |
|
$ |
0.95 |
|
|
$ |
0.84 |
|
|
$ |
1.83 |
|
|
$ |
1.61 |
|
Diluted earnings per
share |
|
$ |
0.94 |
|
|
$ |
0.83 |
|
|
$ |
1.82 |
|
|
$ |
1.59 |
|
Weighted average shares -
basic |
|
|
10,336 |
|
|
|
10,610 |
|
|
|
10,360 |
|
|
|
10,735 |
|
Weighted average shares -
diluted |
|
|
10,421 |
|
|
|
10,744 |
|
|
|
10,458 |
|
|
|
10,875 |
|
ORRSTOWN
FINANCIAL SERVICES, INC. |
|
|
|
|
ANALYSIS
OF NET INTEREST INCOME |
|
|
|
|
Average
Balances and Interest Rates, Taxable-Equivalent Basis
(Unaudited) |
|
|
|
Three Months Ended |
|
6/30/2023 |
|
3/31/2023 |
|
12/31/2022 |
|
9/30/2022 |
|
6/30/2022 |
|
|
|
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 |
(Dollars 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 |
$ |
37,895 |
|
$ |
418 |
|
|
4.42 |
% |
|
$ |
29,599 |
|
$ |
298 |
|
|
4.07 |
% |
|
$ |
28,419 |
|
$ |
238 |
|
|
3.31 |
% |
|
$ |
38,068 |
|
$ |
200 |
|
|
2.08 |
% |
|
$ |
131,449 |
|
$ |
235 |
|
|
0.72 |
% |
Investment securities (1) |
|
526,225 |
|
|
5,510 |
|
|
4.19 |
|
|
|
525,685 |
|
|
5,465 |
|
|
4.18 |
|
|
|
512,779 |
|
|
5,170 |
|
|
4.03 |
|
|
|
528,988 |
|
|
4,377 |
|
|
3.31 |
|
|
|
523,940 |
|
|
3,388 |
|
|
2.59 |
|
Loans (1)(2)(3) |
|
2,233,312 |
|
|
31,329 |
|
|
5.63 |
|
|
|
2,180,224 |
|
|
28,844 |
|
|
5.36 |
|
|
|
2,133,052 |
|
|
27,061 |
|
|
5.04 |
|
|
|
2,051,707 |
|
|
23,219 |
|
|
4.49 |
|
|
|
2,008,283 |
|
|
22,090 |
|
|
4.41 |
|
Total interest-earning
assets |
|
2,797,432 |
|
|
37,257 |
|
|
5.34 |
|
|
|
2,735,508 |
|
|
34,607 |
|
|
5.12 |
|
|
|
2,674,250 |
|
|
32,469 |
|
|
4.83 |
|
|
|
2,618,763 |
|
|
27,796 |
|
|
4.22 |
|
|
|
2,663,672 |
|
|
25,713 |
|
|
3.87 |
|
Other assets |
|
191,983 |
|
|
|
|
|
|
197,620 |
|
|
|
|
|
|
202,384 |
|
|
|
|
|
|
196,277 |
|
|
|
|
|
|
192,561 |
|
|
|
|
Total assets |
$ |
2,989,415 |
|
|
|
|
|
$ |
2,933,128 |
|
|
|
|
|
$ |
2,876,634 |
|
|
|
|
|
$ |
2,815,040 |
|
|
|
|
|
$ |
2,856,233 |
|
|
|
|
Liabilities and Shareholders' Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing demand
deposits |
$ |
1,511,468 |
|
|
6,273 |
|
|
1.66 |
|
|
$ |
1,503,421 |
|
|
4,862 |
|
|
1.31 |
|
|
$ |
1,459,109 |
|
|
2,838 |
|
|
0.77 |
|
|
$ |
1,379,082 |
|
|
912 |
|
|
0.26 |
|
|
$ |
1,420,051 |
|
|
301 |
|
|
0.09 |
|
Savings deposits |
|
204,584 |
|
|
135 |
|
|
0.26 |
|
|
|
219,408 |
|
|
133 |
|
|
0.25 |
|
|
|
228,521 |
|
|
132 |
|
|
0.23 |
|
|
|
237,462 |
|
|
90 |
|
|
0.15 |
|
|
|
236,916 |
|
|
63 |
|
|
0.11 |
|
Time deposits |
|
326,034 |
|
|
2,200 |
|
|
2.71 |
|
|
|
275,880 |
|
|
1,207 |
|
|
1.78 |
|
|
|
254,637 |
|
|
609 |
|
|
0.95 |
|
|
|
265,015 |
|
|
370 |
|
|
0.55 |
|
|
|
275,408 |
|
|
337 |
|
|
0.49 |
|
Total interest-bearing
deposits |
|
2,042,086 |
|
|
8,608 |
|
|
1.69 |
|
|
|
1,998,709 |
|
|
6,202 |
|
|
1.26 |
|
|
|
1,942,267 |
|
|
3,579 |
|
|
0.73 |
|
|
|
1,881,559 |
|
|
1,372 |
|
|
0.29 |
|
|
|
1,932,375 |
|
|
701 |
|
|
0.15 |
|
Securities sold under
agreements to repurchase and federal funds purchased |
|
13,685 |
|
|
28 |
|
|
0.82 |
|
|
|
13,868 |
|
|
25 |
|
|
0.72 |
|
|
|
18,211 |
|
|
20 |
|
|
0.46 |
|
|
|
23,480 |
|
|
10 |
|
|
0.18 |
|
|
|
24,045 |
|
|
7 |
|
|
0.11 |
|
FHLB advances and other
borrowings |
|
132,094 |
|
|
1,386 |
|
|
4.21 |
|
|
|
106,434 |
|
|
1,252 |
|
|
4.77 |
|
|
|
48,276 |
|
|
509 |
|
|
4.21 |
|
|
|
10,394 |
|
|
78 |
|
|
3.02 |
|
|
|
1,741 |
|
|
21 |
|
|
4.74 |
|
Subordinated notes |
|
32,049 |
|
|
504 |
|
|
6.29 |
|
|
|
32,033 |
|
|
504 |
|
|
6.29 |
|
|
|
32,016 |
|
|
503 |
|
|
6.29 |
|
|
|
32,000 |
|
|
504 |
|
|
6.29 |
|
|
|
31,985 |
|
|
503 |
|
|
6.29 |
|
Total interest-bearing
liabilities |
|
2,219,914 |
|
|
10,526 |
|
|
1.90 |
|
|
|
2,151,044 |
|
|
7,983 |
|
|
1.50 |
|
|
|
2,040,770 |
|
|
4,611 |
|
|
0.90 |
|
|
|
1,947,433 |
|
|
1,964 |
|
|
0.40 |
|
|
|
1,990,146 |
|
|
1,232 |
|
|
0.25 |
|
Noninterest-bearing demand
deposits |
|
476,123 |
|
|
|
|
|
|
495,562 |
|
|
|
|
|
|
540,275 |
|
|
|
|
|
|
575,777 |
|
|
|
|
|
|
572,171 |
|
|
|
|
Other liabilities |
|
50,851 |
|
|
|
|
|
|
52,630 |
|
|
|
|
|
|
74,602 |
|
|
|
|
|
|
49,964 |
|
|
|
|
|
|
47,190 |
|
|
|
|
Total liabilities |
|
2,746,888 |
|
|
|
|
|
|
2,699,236 |
|
|
|
|
|
|
2,655,647 |
|
|
|
|
|
|
2,573,174 |
|
|
|
|
|
|
2,609,507 |
|
|
|
|
Shareholders' equity |
|
242,527 |
|
|
|
|
|
|
233,892 |
|
|
|
|
|
|
220,987 |
|
|
|
|
|
|
241,866 |
|
|
|
|
|
|
246,726 |
|
|
|
|
Total |
$ |
2,989,415 |
|
|
|
|
|
$ |
2,933,128 |
|
|
|
|
|
$ |
2,876,634 |
|
|
|
|
|
$ |
2,815,040 |
|
|
|
|
|
$ |
2,856,233 |
|
|
|
|
Taxable-equivalent net
interest income / net interest spread |
|
|
|
26,731 |
|
|
3.44 |
% |
|
|
|
|
26,624 |
|
|
3.62 |
% |
|
|
|
|
27,858 |
|
|
3.93 |
% |
|
|
|
|
25,832 |
|
|
3.82 |
% |
|
|
|
|
24,481 |
|
|
3.62 |
% |
Taxable-equivalent net
interest margin |
|
|
|
|
3.83 |
% |
|
|
|
|
|
3.94 |
% |
|
|
|
|
|
4.14 |
% |
|
|
|
|
|
3.92 |
% |
|
|
|
|
|
3.68 |
% |
Taxable-equivalent
adjustment |
|
|
|
(356 |
) |
|
|
|
|
|
|
(330 |
) |
|
|
|
|
|
|
(374 |
) |
|
|
|
|
|
|
(377 |
) |
|
|
|
|
|
|
(363 |
) |
|
|
Net interest income |
|
|
$ |
26,375 |
|
|
|
|
|
|
$ |
26,294 |
|
|
|
|
|
|
$ |
27,484 |
|
|
|
|
|
|
$ |
25,455 |
|
|
|
|
|
|
$ |
24,118 |
|
|
|
Ratio of average
interest-earning assets to average interest-bearing
liabilities |
|
|
|
|
126 |
% |
|
|
|
|
|
127 |
% |
|
|
|
|
|
131 |
% |
|
|
|
|
|
134 |
% |
|
|
|
|
|
134 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
balances include nonaccrual loans. |
(3) Interest
income on loans includes prepayment and late fees, where
applicable. |
|
ORRSTOWN
FINANCIAL SERVICES, INC. |
|
|
|
|
|
|
ANALYSIS
OF NET INTEREST INCOME |
|
|
|
|
Average
Balances and Interest Rates, Taxable-Equivalent Basis
(Unaudited) |
|
|
(continued) |
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended |
|
June 30, 2023 |
|
June 30, 2022 |
|
|
|
Taxable- |
|
Taxable- |
|
|
|
Taxable- |
|
Taxable- |
|
Average |
|
Equivalent |
|
Equivalent |
|
Average |
|
Equivalent |
|
Equivalent |
(Dollars in thousands) |
Balance |
|
Interest |
|
Rate |
|
Balance |
|
Interest |
|
Rate |
Assets |
|
|
|
|
|
|
|
|
|
|
|
Federal funds sold & interest-bearing bank balances |
$ |
33,770 |
|
$ |
716 |
|
|
4.27 |
% |
|
$ |
165,430 |
|
$ |
336 |
|
|
0.41 |
% |
Investment securities (1) |
|
525,957 |
|
|
10,975 |
|
|
4.19 |
|
|
|
498,210 |
|
|
5,900 |
|
|
2.37 |
|
Loans (1)(2)(3) |
|
2,206,914 |
|
|
60,173 |
|
|
5.49 |
|
|
|
1,991,636 |
|
|
43,519 |
|
|
4.40 |
|
Total interest-earning
assets |
|
2,766,641 |
|
|
71,864 |
|
|
5.23 |
|
|
|
2,655,276 |
|
|
49,755 |
|
|
3.77 |
|
Other assets |
|
194,786 |
|
|
|
|
|
|
188,454 |
|
|
|
|
Total assets |
$ |
2,961,427 |
|
|
|
|
|
$ |
2,843,730 |
|
|
|
|
Liabilities and
Shareholders' Equity |
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing demand
deposits |
$ |
1,507,467 |
|
|
11,135 |
|
|
1.49 |
|
|
$ |
1,409,177 |
|
|
557 |
|
|
0.08 |
|
Savings deposits |
|
211,955 |
|
|
268 |
|
|
0.25 |
|
|
|
232,322 |
|
|
120 |
|
|
0.10 |
|
Time deposits |
|
301,095 |
|
|
3,407 |
|
|
2.28 |
|
|
|
286,949 |
|
|
709 |
|
|
0.50 |
|
Total interest-bearing
deposits |
|
2,020,517 |
|
|
14,810 |
|
|
1.48 |
|
|
|
1,928,448 |
|
|
1,386 |
|
|
0.14 |
|
Securities sold under
agreements to repurchase and federal funds purchased |
|
13,776 |
|
|
53 |
|
|
0.77 |
|
|
|
23,789 |
|
|
14 |
|
|
0.12 |
|
FHLB advances and other |
|
119,335 |
|
|
2,638 |
|
|
4.46 |
|
|
|
1,795 |
|
|
43 |
|
|
4.74 |
|
Subordinated notes |
|
32,041 |
|
|
1,008 |
|
|
6.29 |
|
|
|
31,977 |
|
|
1,006 |
|
|
6.29 |
|
Total interest-bearing
liabilities |
|
2,185,669 |
|
|
18,509 |
|
|
1.71 |
|
|
|
1,986,009 |
|
|
2,449 |
|
|
0.25 |
|
Noninterest-bearing demand
deposits |
|
485,789 |
|
|
|
|
|
|
556,243 |
|
|
|
|
Other liabilities |
|
51,736 |
|
|
|
|
|
|
44,072 |
|
|
|
|
Total liabilities |
|
2,723,194 |
|
|
|
|
|
|
2,586,324 |
|
|
|
|
Shareholders' equity |
|
238,233 |
|
|
|
|
|
|
257,406 |
|
|
|
|
Total liabilities and
shareholders' equity |
$ |
2,961,427 |
|
|
|
|
|
$ |
2,843,730 |
|
|
|
|
Taxable-equivalent net
interest income / net interest spread |
|
|
|
53,355 |
|
|
3.52 |
% |
|
|
|
|
47,307 |
|
|
3.52 |
% |
Taxable-equivalent net
interest margin |
|
|
|
|
3.88 |
% |
|
|
|
|
|
3.59 |
% |
Taxable-equivalent
adjustment |
|
|
|
(686 |
) |
|
|
|
|
|
|
(615 |
) |
|
|
Net interest income |
|
|
$ |
52,669 |
|
|
|
|
|
|
$ |
46,692 |
|
|
|
Ratio of average
interest-earning assets to average interest-bearing
liabilities |
|
|
|
|
127 |
% |
|
|
|
|
|
134 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
NOTES TO
ANALYSIS OF NET INTEREST INCOME: |
|
|
|
|
|
|
|
|
(1) Yields and
interest income on tax-exempt assets have been computed on a
taxable-equivalent basis assuming a 21% tax rate. |
(2) Average
balances include nonaccrual loans. |
(3) Interest
income on loans includes prepayment and late fees, where
applicable. |
ORRSTOWN
FINANCIAL SERVICES, INC. |
|
|
|
|
HISTORICAL TRENDS IN QUARTERLY FINANCIAL DATA
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In thousands) |
June 30,2023 |
|
March 31,2023 |
|
December 31,2022 |
|
September 30,2022 |
|
June 30,2022 |
Profitability for the
quarter: |
|
|
|
|
|
|
|
|
|
Net interest income |
$ |
26,375 |
|
|
$ |
26,294 |
|
|
$ |
27,484 |
|
|
$ |
25,455 |
|
|
$ |
24,118 |
|
Provision for credit losses |
|
399 |
|
|
|
729 |
|
|
|
585 |
|
|
|
1,500 |
|
|
|
1,775 |
|
Noninterest income |
|
7,158 |
|
|
|
6,078 |
|
|
|
6,226 |
|
|
|
6,058 |
|
|
|
7,194 |
|
Noninterest expenses |
|
20,749 |
|
|
|
20,255 |
|
|
|
21,236 |
|
|
|
36,412 |
|
|
|
18,794 |
|
Income (loss) before income taxes |
|
12,385 |
|
|
|
11,388 |
|
|
|
11,889 |
|
|
|
(6,399 |
) |
|
|
10,743 |
|
Income tax expense (benefit) |
|
2,547 |
|
|
|
2,232 |
|
|
|
2,263 |
|
|
|
(1,571 |
) |
|
|
1,872 |
|
Net income (loss) |
$ |
9,838 |
|
|
$ |
9,156 |
|
|
$ |
9,626 |
|
|
$ |
(4,828 |
) |
|
$ |
8,871 |
|
|
|
|
|
|
|
|
|
|
|
Financial ratios: |
|
|
|
|
|
|
|
|
|
Return on average assets(1) |
|
1.32 |
% |
|
|
1.27 |
% |
|
|
1.33 |
% |
|
|
(0.68 |
)% |
|
|
1.25 |
% |
Return on average assets, adjusted(1)(2)(3) |
|
1.32 |
% |
|
|
1.27 |
% |
|
|
1.33 |
% |
|
|
1.12 |
% |
|
|
1.25 |
% |
Return on average equity(1) |
|
16.27 |
% |
|
|
15.88 |
% |
|
|
17.28 |
% |
|
|
(7.92 |
)% |
|
|
14.42 |
% |
Return on average equity, adjusted(1)(2)(3) |
|
16.27 |
% |
|
|
15.88 |
% |
|
|
17.28 |
% |
|
|
13.02 |
% |
|
|
14.42 |
% |
Net interest margin(1) |
|
3.83 |
% |
|
|
3.94 |
% |
|
|
4.14 |
% |
|
|
3.92 |
% |
|
|
3.68 |
% |
Efficiency ratio |
|
61.9 |
% |
|
|
62.6 |
% |
|
|
63.0 |
% |
|
|
115.5 |
% |
|
|
60.0 |
% |
Efficiency ratio, adjusted(2)(3) |
|
61.9 |
% |
|
|
62.6 |
% |
|
|
63.0 |
% |
|
|
64.3 |
% |
|
|
60.0 |
% |
|
|
|
|
|
|
|
|
|
|
Per share information: |
|
|
|
|
|
|
|
|
|
Income (loss) per common share: |
|
|
|
|
|
|
|
|
|
Basic |
$ |
0.95 |
|
|
$ |
0.88 |
|
|
$ |
0.93 |
|
|
$ |
(0.47 |
) |
|
$ |
0.84 |
|
Basic, adjusted(2)(3) |
|
0.95 |
|
|
|
0.88 |
|
|
|
0.93 |
|
|
|
0.77 |
|
|
|
0.84 |
|
Diluted |
|
0.94 |
|
|
|
0.87 |
|
|
|
0.91 |
|
|
|
(0.47 |
) |
|
|
0.83 |
|
Diluted, adjusted(2)(3) |
|
0.94 |
|
|
|
0.87 |
|
|
|
0.91 |
|
|
|
0.75 |
|
|
|
0.83 |
|
Book value |
|
23.15 |
|
|
|
22.46 |
|
|
|
21.45 |
|
|
|
20.34 |
|
|
|
22.25 |
|
Tangible book value(2) |
|
21.19 |
|
|
|
20.50 |
|
|
|
19.47 |
|
|
|
18.34 |
|
|
|
20.23 |
|
Cash dividends paid |
|
0.20 |
|
|
|
0.20 |
|
|
|
0.19 |
|
|
|
0.19 |
|
|
|
0.19 |
|
|
|
|
|
|
|
|
|
|
|
Average basic shares |
|
10,336 |
|
|
|
10,385 |
|
|
|
10,382 |
|
|
|
10,369 |
|
|
|
10,610 |
|
Average diluted shares |
|
10,421 |
|
|
|
10,496 |
|
|
|
10,550 |
|
|
|
10,529 |
|
|
|
10,744 |
|
(1)Annualized. |
(2) Ratio has been adjusted for the restructuring charge and
provision for legal settlement for the three months ended September
30, 2022. |
(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) |
June 30,2023 |
|
March 31,2023 |
|
December 31,2022 |
|
September 30,2022 |
|
June 30,2022 |
Noninterest income: |
|
|
|
|
|
|
|
|
|
Service charges |
$ |
1,251 |
|
|
$ |
1,157 |
|
|
$ |
1,131 |
|
$ |
1,216 |
|
|
$ |
1,194 |
|
Interchange income |
|
993 |
|
|
|
965 |
|
|
|
996 |
|
|
1,014 |
|
|
|
1,064 |
|
Swap fee income |
|
196 |
|
|
|
— |
|
|
|
697 |
|
|
197 |
|
|
|
785 |
|
Wealth management income |
|
2,822 |
|
|
|
2,747 |
|
|
|
2,535 |
|
|
2,953 |
|
|
|
2,894 |
|
Mortgage banking activities |
|
112 |
|
|
|
478 |
|
|
|
202 |
|
|
(1,014 |
) |
|
|
498 |
|
Other income |
|
1,786 |
|
|
|
739 |
|
|
|
662 |
|
|
1,706 |
|
|
|
762 |
|
Investment securities (losses) gains |
|
(2 |
) |
|
|
(8 |
) |
|
|
3 |
|
|
(14 |
) |
|
|
(3 |
) |
Total noninterest income |
$ |
7,158 |
|
|
$ |
6,078 |
|
|
$ |
6,226 |
|
$ |
6,058 |
|
|
$ |
7,194 |
|
|
|
|
|
|
|
|
|
|
|
Noninterest expenses: |
|
|
|
|
|
|
|
|
|
Salaries and employee benefits |
$ |
13,054 |
|
|
$ |
12,196 |
|
|
$ |
12,650 |
|
$ |
12,705 |
|
|
$ |
11,312 |
|
Occupancy, furniture and equipment |
|
2,266 |
|
|
|
2,333 |
|
|
|
2,442 |
|
|
2,380 |
|
|
|
2,423 |
|
Data processing |
|
1,201 |
|
|
|
1,217 |
|
|
|
1,150 |
|
|
1,192 |
|
|
|
1,165 |
|
Advertising and bank promotions |
|
919 |
|
|
|
405 |
|
|
|
750 |
|
|
278 |
|
|
|
881 |
|
FDIC insurance |
|
519 |
|
|
|
504 |
|
|
|
316 |
|
|
294 |
|
|
|
190 |
|
Professional services |
|
504 |
|
|
|
734 |
|
|
|
837 |
|
|
887 |
|
|
|
722 |
|
Taxes other than income |
|
3 |
|
|
|
457 |
|
|
|
231 |
|
|
488 |
|
|
|
108 |
|
Intangible asset amortization |
|
239 |
|
|
|
250 |
|
|
|
260 |
|
|
272 |
|
|
|
281 |
|
Provision for legal settlement |
|
— |
|
|
|
— |
|
|
|
— |
|
|
13,000 |
|
|
|
— |
|
Restructuring expenses |
|
— |
|
|
|
— |
|
|
|
— |
|
|
3,155 |
|
|
|
— |
|
Other operating expenses |
|
2,044 |
|
|
|
2,159 |
|
|
|
2,600 |
|
|
1,761 |
|
|
|
1,712 |
|
Total noninterest expenses |
$ |
20,749 |
|
|
$ |
20,255 |
|
|
$ |
21,236 |
|
$ |
36,412 |
|
|
$ |
18,794 |
|
|
|
|
|
|
|
|
|
|
|
|
ORRSTOWN
FINANCIAL SERVICES, INC. |
|
|
|
|
|
|
|
|
HISTORICAL
TRENDS IN QUARTERLY FINANCIAL DATA (Unaudited) |
|
|
|
|
|
|
(continued) |
|
|
|
|
|
|
|
|
|
(In thousands) |
June 30,2023 |
|
March 31,2023 |
|
December 31,2022 |
|
September 30,2022 |
|
June 30,2022 |
Balance Sheet at quarter
end: |
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
$ |
76,318 |
|
|
$ |
98,323 |
|
|
$ |
60,823 |
|
|
$ |
66,927 |
|
|
$ |
111,906 |
|
Restricted investments in bank stocks |
|
12,602 |
|
|
|
12,869 |
|
|
|
10,642 |
|
|
|
6,469 |
|
|
|
6,500 |
|
Securities available for sale |
|
508,612 |
|
|
|
520,232 |
|
|
|
513,728 |
|
|
|
503,596 |
|
|
|
512,698 |
|
Loans held for sale, at fair value |
|
6,450 |
|
|
|
7,341 |
|
|
|
10,880 |
|
|
|
10,175 |
|
|
|
7,824 |
|
Loans: |
|
|
|
|
|
|
|
|
|
Commercial real estate: |
|
|
|
|
|
|
|
|
|
Owner occupied |
|
366,439 |
|
|
|
339,371 |
|
|
|
315,770 |
|
|
|
313,125 |
|
|
|
287,825 |
|
Non-owner occupied |
|
626,140 |
|
|
|
603,396 |
|
|
|
608,043 |
|
|
|
573,605 |
|
|
|
559,309 |
|
Multi-family |
|
145,257 |
|
|
|
144,053 |
|
|
|
138,832 |
|
|
|
114,561 |
|
|
|
116,110 |
|
Non-owner occupied residential |
|
105,504 |
|
|
|
106,390 |
|
|
|
104,604 |
|
|
|
105,267 |
|
|
|
109,141 |
|
Commercial and industrial(1) |
|
379,905 |
|
|
|
380,683 |
|
|
|
357,774 |
|
|
|
378,574 |
|
|
|
379,729 |
|
Acquisition and development: |
|
|
|
|
|
|
|
|
|
1-4 family residential construction |
|
20,461 |
|
|
|
20,941 |
|
|
|
25,068 |
|
|
|
20,810 |
|
|
|
22,650 |
|
Commercial and land development |
|
143,177 |
|
|
|
174,556 |
|
|
|
158,308 |
|
|
|
148,512 |
|
|
|
134,947 |
|
Municipal |
|
10,638 |
|
|
|
11,329 |
|
|
|
12,173 |
|
|
|
12,683 |
|
|
|
12,957 |
|
Total commercial loans |
|
1,797,521 |
|
|
|
1,780,719 |
|
|
|
1,720,572 |
|
|
|
1,667,137 |
|
|
|
1,622,668 |
|
Residential mortgage: |
|
|
|
|
|
|
|
|
|
First lien |
|
235,813 |
|
|
|
227,031 |
|
|
|
229,849 |
|
|
|
220,970 |
|
|
|
202,787 |
|
Home equity – term |
|
5,228 |
|
|
|
5,371 |
|
|
|
5,505 |
|
|
|
5,869 |
|
|
|
5,996 |
|
Home equity – lines of credit |
|
185,099 |
|
|
|
183,340 |
|
|
|
183,241 |
|
|
|
180,267 |
|
|
|
171,269 |
|
Installment and other loans |
|
10,756 |
|
|
|
11,040 |
|
|
|
12,065 |
|
|
|
13,684 |
|
|
|
14,909 |
|
Total loans |
|
2,234,417 |
|
|
|
2,207,501 |
|
|
|
2,151,232 |
|
|
|
2,087,927 |
|
|
|
2,017,629 |
|
Allowance for credit losses(2) |
|
(28,383 |
) |
|
|
(28,364 |
) |
|
|
(25,178 |
) |
|
|
(24,709 |
) |
|
|
(23,279 |
) |
Net loans held-for-investment |
|
2,206,034 |
|
|
|
2,179,137 |
|
|
|
2,126,054 |
|
|
|
2,063,218 |
|
|
|
1,994,350 |
|
Goodwill |
|
18,724 |
|
|
|
18,724 |
|
|
|
18,724 |
|
|
|
18,724 |
|
|
|
18,724 |
|
Other intangible assets, net |
|
2,589 |
|
|
|
2,828 |
|
|
|
3,078 |
|
|
|
3,338 |
|
|
|
3,610 |
|
Total assets |
|
3,008,197 |
|
|
|
3,011,548 |
|
|
|
2,922,408 |
|
|
|
2,852,092 |
|
|
|
2,824,201 |
|
Total deposits |
|
2,522,861 |
|
|
|
2,515,626 |
|
|
|
2,476,246 |
|
|
|
2,505,853 |
|
|
|
2,478,616 |
|
Borrowings |
|
152,229 |
|
|
|
176,315 |
|
|
|
123,390 |
|
|
|
22,632 |
|
|
|
25,965 |
|
Subordinated notes |
|
32,059 |
|
|
|
32,042 |
|
|
|
32,026 |
|
|
|
32,010 |
|
|
|
31,994 |
|
Total shareholders' equity |
|
245,641 |
|
|
|
240,161 |
|
|
|
228,896 |
|
|
|
217,378 |
|
|
|
237,527 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) This balance includes $7.2 million, $10.8 million, $13.8
million, $17.0 million and $30.2 million of SBA PPP loans, net of
deferred fees and costs, at June 30, 2023, March 31,
2023, December 31, 2022, September 30, 2022 and
June 30, 2022, respectively.
(2) The balance at June 30, 2023 includes $2.4 million in a
one-time cumulative-effect adjustment that increased the allowance
for credit losses from the adoption of the new CECL standard.
ORRSTOWN
FINANCIAL SERVICES, INC. |
|
|
|
|
|
|
|
|
HISTORICAL
TRENDS IN QUARTERLY FINANCIAL DATA (Unaudited) |
|
|
|
|
|
|
(continued) |
|
|
|
|
|
|
|
|
|
|
June 30,2023 |
|
March 31,2023 |
|
December 31,2022 |
|
September 30,2022 |
|
June 30,2022 |
Capital and credit quality
measures (1): |
|
|
|
|
|
|
|
|
|
Total risk-based capital: |
|
|
|
|
|
|
|
|
|
Orrstown Financial Services, Inc |
|
13.0 |
% |
|
|
12.8 |
% |
|
|
12.7 |
% |
|
|
12.7 |
% |
|
|
13.5 |
% |
Orrstown Bank |
|
12.5 |
% |
|
|
12.4 |
% |
|
|
12.3 |
% |
|
|
12.9 |
% |
|
|
13.3 |
% |
Tier 1 risk-based capital: |
|
|
|
|
|
|
|
|
|
Orrstown Financial Services, Inc |
|
10.5 |
% |
|
|
10.4 |
% |
|
|
10.3 |
% |
|
|
10.2 |
% |
|
|
10.9 |
% |
Orrstown Bank |
|
11.4 |
% |
|
|
11.2 |
% |
|
|
11.2 |
% |
|
|
11.8 |
% |
|
|
12.2 |
% |
Tier 1 common equity
risk-based capital: |
|
|
|
|
|
|
|
|
|
Orrstown Financial Services, Inc |
|
10.5 |
% |
|
|
10.4 |
% |
|
|
10.3 |
% |
|
|
10.2 |
% |
|
|
10.9 |
% |
Orrstown Bank |
|
11.4 |
% |
|
|
11.2 |
% |
|
|
11.2 |
% |
|
|
11.8 |
% |
|
|
12.2 |
% |
Tier 1 leverage capital: |
|
|
|
|
|
|
|
|
|
Orrstown Financial Services, Inc |
|
8.6 |
% |
|
|
8.5 |
% |
|
|
8.5 |
% |
|
|
8.4 |
% |
|
|
8.5 |
% |
Orrstown Bank |
|
9.3 |
% |
|
|
9.2 |
% |
|
|
9.2 |
% |
|
|
9.6 |
% |
|
|
9.5 |
% |
|
|
|
|
|
|
|
|
|
|
Average equity to average assets |
|
8.11 |
% |
|
|
7.97 |
% |
|
|
7.68 |
% |
|
|
8.59 |
% |
|
|
8.64 |
% |
Allowance for credit losses to total loans |
|
1.27 |
% |
|
|
1.28 |
% |
|
|
1.17 |
% |
|
|
1.18 |
% |
|
|
1.15 |
% |
Total nonaccrual loans to total loans |
|
0.94 |
% |
|
|
0.96 |
% |
|
|
0.96 |
% |
|
|
0.25 |
% |
|
|
0.27 |
% |
Nonperforming assets to total assets |
|
0.70 |
% |
|
|
0.71 |
% |
|
|
0.70 |
% |
|
|
0.19 |
% |
|
|
0.19 |
% |
Allowance for credit losses to nonaccrual loans |
|
135 |
% |
|
|
134 |
% |
|
|
122 |
% |
|
|
466 |
% |
|
|
432 |
% |
|
|
|
|
|
|
|
|
|
|
Other information: |
|
|
|
|
|
|
|
|
|
Net charge-offs (recoveries) |
$ |
380 |
|
|
$ |
(34 |
) |
|
$ |
116 |
|
|
$ |
70 |
|
|
$ |
4 |
|
Classified loans |
|
26,347 |
|
|
|
34,024 |
|
|
|
36,325 |
|
|
|
19,576 |
|
|
|
19,682 |
|
Nonperforming and other risk assets: |
|
|
|
|
|
|
|
|
|
Nonaccrual loans(2) |
|
21,062 |
|
|
|
21,246 |
|
|
|
20,583 |
|
|
|
5,303 |
|
|
|
5,387 |
|
Other real estate owned |
|
— |
|
|
|
85 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Total nonperforming assets |
|
21,062 |
|
|
|
21,331 |
|
|
|
20,583 |
|
|
|
5,303 |
|
|
|
5,387 |
|
Financial difficulty modifications / Troubled debt restructurings
still accruing(3) |
|
— |
|
|
|
— |
|
|
|
682 |
|
|
|
689 |
|
|
|
568 |
|
Loans past due 90 days or more and still accruing(2) |
|
539 |
|
|
|
28 |
|
|
|
439 |
|
|
|
232 |
|
|
|
322 |
|
Total nonperforming and other risk assets |
$ |
21,601 |
|
|
$ |
21,359 |
|
|
$ |
21,704 |
|
|
$ |
6,224 |
|
|
$ |
6,277 |
|
(1) Capital
ratios are estimated, 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. In the first year of adoption 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. |
(2) Includes
zero, zero, $0.4 million, $0.2 million and $0.3 million of
purchased credit impaired loans at June 30, 2023,
March 31, 2023, December 31, 2022, September 30,
2022, and June 30, 2022, respectively, in accordance with ASC
310-30. Upon adoption of the CECL standard, purchased credit
deteriorated loans were evaluated on an individual loan level and
reported on an individual loan basis under ASC 310-20,
Nonrefundable Fees and Other Costs. |
(3) On January 1,
2023, the Company adopted ASU No. 2022-02, Financial Instruments –
Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage
Disclosures (“ASU 2022-02”), which eliminated the troubled debt
restructuring ("TDR") accounting model and requires that the
Company evaluate, based on the accounting for loan modifications,
whether the borrower is experiencing financial difficulty and the
modification results in a more-than-insignificant direct change in
the contractual cash flows and represents a new loan or a
continuation of an existing loan. At June 30, 2023 and March 31,
2023, the Company did not have loans meeting the “Financial
Difficulty Modification” criteria in accordance with ASU
2022-02. |
Appendix A- Supplemental Reporting of Non-GAAP Measures
and GAAP to Non-GAAP Reconciliations
As a result of acquisitions, the Company has
intangible assets consisting of goodwill and core deposit and other
intangible assets, which totaled $21.3 million and $21.8 million at
June 30, 2023 and December 31, 2022, respectively.
Additionally, the Company incurred $3.2 million and $13.0 million
in restructuring charges and a provision for legal settlement,
respectively, during the three months ended September 30, 2022.
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.
Tangible book value per common share and the
impact of the restructuring charge and legal settlement 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:
(dollars and shares in thousands)
Tangible Book Value
per Common Share |
|
June 30,2023 |
|
March 31,2023 |
|
December 31,2022 |
|
September 30,2022 |
|
June 30,2022 |
Shareholders' equity (most directly comparable GAAP-based
measure) |
|
$ |
245,641 |
|
|
$ |
240,161 |
|
|
$ |
228,896 |
|
|
$ |
217,378 |
|
|
$ |
237,527 |
|
Less: Goodwill |
|
|
18,724 |
|
|
|
18,724 |
|
|
|
18,724 |
|
|
|
18,724 |
|
|
|
18,724 |
|
Other intangible assets |
|
|
2,589 |
|
|
|
2,828 |
|
|
|
3,078 |
|
|
|
3,338 |
|
|
|
3,610 |
|
Related tax effect |
|
|
(544 |
) |
|
|
(594 |
) |
|
|
(646 |
) |
|
|
(701 |
) |
|
|
(758 |
) |
Tangible common equity
(non-GAAP) |
|
$ |
224,872 |
|
|
$ |
219,203 |
|
|
$ |
207,740 |
|
|
$ |
196,017 |
|
|
$ |
215,951 |
|
|
|
|
|
|
|
|
|
|
|
|
Common shares outstanding |
|
|
10,611 |
|
|
|
10,692 |
|
|
|
10,671 |
|
|
|
10,686 |
|
|
|
10,676 |
|
|
|
|
|
|
|
|
|
|
|
|
Book value per share (most
directly comparable GAAP-based measure) |
|
$ |
23.15 |
|
|
$ |
22.46 |
|
|
$ |
21.45 |
|
|
$ |
20.34 |
|
|
$ |
22.25 |
|
Intangible assets per
share |
|
|
1.96 |
|
|
|
1.96 |
|
|
|
1.98 |
|
|
|
2.00 |
|
|
|
2.02 |
|
Tangible book value per share
(non-GAAP) |
|
$ |
21.19 |
|
|
$ |
20.50 |
|
|
$ |
19.47 |
|
|
$ |
18.34 |
|
|
$ |
20.23 |
|
(dollars and shares in thousands) |
|
Adjusted Ratios for
Restructuring Charges and Provision for Legal
Settlement |
September 30, 2022 |
|
Three Months Ended |
Net loss (A) - most directly comparable GAAP-based measure |
$ |
(4,828 |
) |
Plus: Restructuring expenses
(B) |
|
3,155 |
|
Plus: Provision for legal
settlement (B) |
|
13,000 |
|
Less: Related tax effect (C) |
|
(3,393 |
) |
Adjusted net income
(D=A+B-C) - Non-GAAP |
$ |
7,934 |
|
|
|
Average assets (E) |
$ |
2,815,040 |
|
Return on average assets
(= A / E) - most directly comparable GAAP-based
measure |
(0.68)% |
Return on average assets,
adjusted (= D / E) - Non-GAAP |
|
1.12 |
% |
|
|
Average equity (F) |
$ |
241,866 |
|
Return on average equity
(= A / F) - most directly comparable GAAP-based
measure |
(7.92)% |
Return on average equity,
adjusted (= D / F) - Non-GAAP |
|
13.02 |
% |
|
|
Weighted average shares - basic
(G) - most directly comparable GAAP-based measure |
|
10,369 |
|
Basic loss per share (= A
/ G) - most directly comparable GAAP-based measure |
$ |
(0.47 |
) |
Basic earnings per share,
adjusted (= D / G) - Non-GAAP |
$ |
0.77 |
|
|
|
Weighted average shares - diluted
(H) - most directly comparable GAAP-based measure |
|
10,369 |
|
Diluted loss per share (=
A / H) - most directly comparable GAAP-based measure |
$ |
(0.47 |
) |
Diluted earnings per
share, adjusted (= D / H) - Non-GAAP |
$ |
0.75 |
|
|
|
Noninterest expense (I) - most
directly comparable GAAP-based measure |
$ |
36,412 |
|
Less: Restructuring expenses
(B) |
|
(3,155 |
) |
Less: Provision for legal
expenses (B) |
|
(13,000 |
) |
Adjusted noninterest
expense (J = I - B) - Non-GAAP |
$ |
20,257 |
|
|
|
Net interest income (K) |
$ |
25,455 |
|
Noninterest income (L) |
|
6,058 |
|
Total operating income (M
= K + L) |
$ |
31,513 |
|
|
|
Efficiency ratio (= I /
M) - most directly comparable GAAP-based measure |
|
115.5 |
% |
Efficiency ratio,
adjusted (= J / M) - Non-GAAP |
|
64.3 |
% |
|
|
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 June 30, 2023:
(dollars in thousands)
Sector |
Portfolio Mix |
|
Amortized Book |
|
Fair Value |
|
Credit Enhancement |
|
AAA |
|
AA |
|
A |
|
BBB |
|
NR |
|
Collateral / Guarantee Type |
Unsecured ABS |
1 |
% |
|
$ |
4,331 |
|
$ |
3,761 |
|
32 |
% |
|
— |
% |
|
— |
% |
|
— |
% |
|
— |
% |
|
100 |
% |
|
Unsecured Consumer Debt |
Student Loan ABS |
1 |
|
|
|
6,171 |
|
|
6,024 |
|
27 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
100 |
|
|
Seasoned Student Loans |
Federal Family Education Loan
ABS |
19 |
|
|
|
104,657 |
|
|
102,466 |
|
8 |
|
|
89 |
|
|
11 |
|
|
— |
|
|
— |
|
|
— |
|
|
Federal Family Education Loan
(1) |
PACE Loan ABS |
— |
|
|
|
2,585 |
|
|
2,209 |
|
6 |
|
|
100 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
PACE Loans (4) |
Non-Agency CMBS |
4 |
|
|
|
23,888 |
|
|
23,953 |
|
19 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
100 |
|
|
|
Non-Agency RMBS |
3 |
|
|
|
16,789 |
|
|
13,100 |
|
14 |
|
|
100 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
Reverse Mortgages (2) |
Municipal - General
Obligation |
19 |
|
|
|
104,526 |
|
|
94,355 |
|
|
|
4 |
|
|
90 |
|
|
6 |
|
|
— |
|
|
— |
|
|
|
Municipal - Revenue |
22 |
|
|
|
120,251 |
|
|
107,226 |
|
|
|
— |
|
|
82 |
|
|
12 |
|
|
— |
|
|
6 |
|
|
|
SBA ReRemic (5) |
1 |
|
|
|
4,182 |
|
|
4,133 |
|
|
|
— |
|
|
100 |
|
|
— |
|
|
— |
|
|
— |
|
|
SBA Guarantee (3) |
Small Business
Administration |
2 |
|
|
|
9,595 |
|
|
10,226 |
|
|
|
— |
|
|
100 |
|
|
— |
|
|
— |
|
|
— |
|
|
SBA Guarantee (3) |
Agency MBS |
24 |
|
|
|
135,067 |
|
|
123,668 |
|
|
|
— |
|
|
100 |
|
|
— |
|
|
— |
|
|
— |
|
|
Residential Mortgages (3) |
U.S. Treasury securities |
4 |
|
|
|
20,064 |
|
|
17,373 |
|
|
|
— |
|
|
100 |
|
|
— |
|
|
— |
|
|
— |
|
|
U.S. Government Guarantee
(3) |
Bank CDs |
— |
|
|
|
— |
|
|
— |
|
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
FDIC-Insured CD |
|
100 |
% |
|
$ |
552,106 |
|
$ |
508,494 |
|
|
|
21 |
% |
|
67 |
% |
|
4 |
% |
|
— |
% |
|
8 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) 97%
guaranteed by U.S. government |
(2) Non-agency
reverse mortgages with current structural credit enhancements |
(3) Guaranteed by
U.S. government or U.S. government agencies |
(4) PACE acronym
represents Property Assessed Clean Energy loans |
(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 $3.0 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, Howard, and
Washington Counties, Maryland, as well as Baltimore City, Maryland.
The Company's lending area also includes adjacent counties in
Pennsylvania and Maryland, as well as Loudon County, Virginia and
Berkeley, Jefferson and Morgan Counties, West Virginia. 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,
and include, but are not limited to, statements related to new
business development, new loan opportunities, growth in the balance
sheet and fee-based revenue lines of business, merger and
acquisition activity, cost savings initiatives, reducing risk
assets and mitigating losses in the future. 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,
successful merger and acquisition activity, cost savings
initiatives and continued reductions in risk assets or mitigation
of losses in the future. Factors which could cause the actual
results of the Company's operations to differ materially from
expectations include, but are not limited to: 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; the integration of the Company's strategic acquisitions;
the inability to fully achieve expected savings, efficiencies or
synergies from mergers and acquisitions and cost savings
initiatives, or taking longer than estimated for such savings,
efficiencies and synergies to be realized; changes in laws and
regulations; interest rate movements; 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 pending litigation and legal
proceedings; and other risks and uncertainties, including those
detailed in our Annual Report on Form 10-K for the year ended
December 31, 2022 under the sections titled “Risk Factors” and
“Management’s Discussion and Analysis of Financial Condition and
Results of Operations” and in subsequently filings made with the
Securities and Exchange Commission. The statements are valid only
as of the date hereof and we disclaim any obligation to update this
information. 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 does not undertake 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.
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