Orrstown Financial Services, Inc. Reports First Quarter 2025 Results

Rhea-AI Summary

Orrstown Financial Services (NASDAQ: ORRF) reported Q1 2025 net income of $18.1 million, or $0.93 per diluted share, up from $13.7 million in Q4 2024. Excluding merger-related expenses, adjusted net income was $19.3 million ($1.00 per share).

Key financial metrics include:

• Net interest margin at 4.00% (down from 4.05% in Q4 2024)
• Return on average assets: 1.35%
• Return on average equity: 13.98%
• Commercial loans declined by $49.7 million (2%) due to strategic risk reduction

Notable developments include a $0.6 million recovery in credit loss provisions, improved capital ratios with total risk-based capital at 13.1%, and a declared cash dividend of $0.26 per share payable May 13, 2025. Tangible book value increased to $21.99 per share.

Positive

• Net income increased to $18.1M in Q1 2025 from $13.7M in Q4 2024
• Strong capital ratios with total risk-based capital at 13.1%
• Recovery of $0.6M in credit loss provisions
• Tangible book value per share increased to $21.99 from $21.19
• Noninterest expenses decreased by $4.7M to $38.2M

Negative

• Commercial loans declined by $49.7M (2%) due to portfolio risk reduction
• Net interest margin decreased to 4.00% from 4.05%
• Mortgage banking income decreased to $0.3M from $0.5M
• Merger-related expenses of $1.6M impacted earnings

Insights

Banking Financial Analyst

ORRF delivered strong Q1 earnings with net income up 32% QoQ to $18.1M despite merger costs, showing improved profitability and capital position.

Orrstown Financial's Q1 2025 results demonstrate robust financial performance with net income reaching $18.1 million ($0.93 per diluted share), a substantial 32% increase from Q4 2024's $13.7 million. On an adjusted basis excluding merger-related expenses, earnings per share reached $1.00, up from $0.87 in the previous quarter.

The bank's profitability metrics show meaningful improvement with return on average assets increasing to 1.35% (from 1.00%) and return on average equity jumping to 13.98% (from 10.54%). These returns significantly outpace industry averages and reflect effective capital deployment despite ongoing merger integration costs.

Capital position strengthened considerably during the quarter, with the total risk-based capital ratio improving to 13.1% from 12.4% and tangible common equity rising to 7.9% from 7.5%. This capital buffer provides flexibility for future growth opportunities while maintaining regulatory compliance.

The 2% reduction in commercial loans reflects management's deliberate strategy to reduce risk exposure in an uncertain economic environment, particularly in commercial real estate concentrations. This conservative approach, combined with a $0.6 million recovery in the provision for credit losses, indicates prudent risk management. The improvement in asset quality metrics, with classified loans decreasing by $12.4 million to $76.2 million, supports this assessment.

Expense management has been effective, with noninterest expenses decreasing by $4.7 million quarter-over-quarter. Merger-related costs decreased by $2.3 million, and management expects these expenses to normalize by Q2 2025, suggesting improved efficiency ratios moving forward. The $0.26 dividend underscores management's confidence in sustainable profitability.

The slight compression in net interest margin to 4.00% from 4.05% reflects the impact of recent Federal Reserve rate cuts, but remains robust compared to industry peers. With merger integration costs winding down and a strengthened capital position, the bank appears well-positioned for sustainable growth once it fully realizes merger synergies.

• 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 Charges	March 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)

Sector	Portfolio 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 ABS	9				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 CMBS	2				13,966			14,022		30			—			—			—			—			—			100
Non-Agency RMBS	2				16,323			14,726		16			100			—			—			—			—			—			Reverse Mortgages (3)
Municipal - General Obligation	11				99,248			89,952					17			76			7			—			—			—
Municipal - Revenue	14				120,676			107,154					—			82			12			—			—			6
SBA ReRemic (5)	—				2,095			2,087					—			100			—			—			—			—			SBA Guarantee (4)
Small Business Administration	1				5,511			5,629					—			100			—			—			—			—			SBA Guarantee (4)
Agency MBS	19				164,144			162,334					—			100			—			—			—			—			Residential Mortgages (4)
Agency CMO	40				355,699			352,729					—			100			—			—			—			—
U.S. Treasury securities	2				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.

FAQ

What is Orrstown Financial Services (ORRF) Q1 2025 earnings per share?

ORRF reported Q1 2025 earnings of $0.93 per diluted share, or $1.00 per share excluding merger-related expenses.

How much did ORRF's commercial loans change in Q1 2025?

Commercial loans declined by $49.7 million (2%) from December 31, 2024 to March 31, 2025 due to strategic risk reduction efforts.

What is ORRF's dividend payment for Q1 2025?

ORRF declared a cash dividend of $0.26 per common share, payable May 13, 2025, to shareholders of record as of May 6, 2025.

How did ORRF's net interest margin perform in Q1 2025?

Net interest margin was 4.00% in Q1 2025, slightly down from 4.05% in Q4 2024, impacted by Federal Funds rate cuts.

What is ORRF's capital position as of March 31, 2025?

Total risk-based capital ratio was 13.1%, Tier 1 leverage ratio was 8.6%, and tangible common equity was 7.9%, all above regulatory minimums.