Orrstown Financial Services, Inc. Reports Second Quarter 2021 Results and Announces Increased Quarterly Dividend

Rhea-AI Summary

Orrstown Financial Services reported a net income of $8.8 million for the second quarter of 2021, compared to $10.2 million in Q1 2021 and $6.4 million in Q2 2020. The diluted earnings per share were $0.79, down from $0.92 in Q1 2021. The Board declared a cash dividend of $0.19 per share, payable on August 9, 2021, up from $0.18. Commercial loan growth was strong, at an annualized rate of 24%. However, net interest margin decreased to 3.24% due to excess liquidity from PPP forgiveness.

Positive

• Net income increased to $8.8 million in Q2 2021 from $6.4 million in Q2 2020.
• Commercial loan growth annualized at 24%, indicating strong demand.
• Dividend increased to $0.19 per share, enhancing shareholder value.
• Tangible book value per share rose to $21.61 from $19.93 at the end of 2020.

Negative

• Diluted EPS decreased from $0.92 in Q1 2021 to $0.79 in Q2 2021.
• Net interest margin declined to 3.24% from 3.38% due to increased liquidity.
• Deposits decreased by $53 million, or 8% annualized, affecting liquidity.
• Provision expense increased to $0.6 million despite positive asset quality trends.

• Net income of $8.8 million for the quarter; diluted second quarter 2021 EPS of $0.79 per share versus $0.92 per share in the first quarter of 2021 and $0.58 per share in the second quarter of 2020
• The Board of Directors declared a cash dividend of $0.19 per common share, payable August 9, 2021, to shareholders of record as of August 2, 2021, an increase from $0.18 per common share in the first quarter of 2021
• Commercial loan growth for the quarter, excluding Small Business Administration ("SBA") Paycheck Protection Program ("PPP") loans, was 24% annualized as loan demand was robust late in the second quarter of 2021; momentum continues with a strong commercial pipeline
• Provision expense of $0.6 million was recorded in the second quarter of 2021 as compared to a provision reversal of $1.0 million in the first quarter of 2021; commercial loan production drove the increase; the provision included $0.8 million and $1.0 million of COVID-19 reserve reductions for the three months ended June 30, 2021 and March 31, 2021, respectively
• Noninterest expenses improved to $17.0 million in the second quarter of 2021 as compared to $17.8 million in the first quarter of 2021; the efficiency ratio was stable at 60% for first and second quarters of 2021
• Noninterest income was $6.7 million in the second quarter of 2021 as compared to $7.5 million in the first quarter of 2021; the first quarter included a $0.6 million reduction of the mortgage servicing rights valuation reserve
• Return on average assets totaled 1.2% in the second quarter of 2021 compared to 1.4% in the first quarter of 2021; second quarter provision increase caused the reduction
• Tangible book value per share⁽¹⁾ increased to $21.61 at June 20, 2021 from $20.59 at March 31, 2021 and $19.93 at December 31, 2020
• Net interest margin declined to 3.24% in the second quarter of 2021 from 3.38% in the first quarter of 2021 due primarily to increased liquidity that resulted from SBA PPP forgiveness
• The SBA PPP portfolio averaged $471.2 million in the three months ended June 30, 2021 as compared to $463.0 million in the three months ended March 31, 2021
• Deposits declined by $53.0 million, or 8% annualized, from the first quarter of 2021 as a result of the usage of stimulus and PPP funds; average deposits per branch remained strong at $97 million for the second quarter of 2021
• Cost of deposits fell by six basis points in the quarter due to late first quarter rate adjustments and changes in mix

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

SHIPPENSBURG, Pa., July 20, 2021 (GLOBE NEWSWIRE) -- 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, 2021. Net income totaled $8.8 million for the three months ended June 30, 2021, compared with $10.2 million for the three months ended March 31, 2021 and $6.4 million in the three months ended June 30, 2020. Diluted earnings per share totaled $0.79 for the three months ended June 30, 2021, compared with $0.92 in the three months ended March 31, 2021 and $0.58 in the three months ended June 30, 2020.

Thomas R. Quinn, Jr., President & CEO, commented, “With another quarter of strong earnings and growing optimism for sustained future earnings, Orrstown's Board saw an opportunity to further enhance shareholder value and approved an increase to its quarterly dividend. Orrstown strives to serve its community, employees and shareholders in the best way possible and this action along with the Company's efforts in the past 15 months solidifies that message. After tirelessly devoting the past several quarters to SBA PPP efforts, our seasoned lending team quickly pivoted to commercial loan production. While we continue to service the needs of our PPP clients as we help them navigate through the forgiveness process, our primary focus has returned to growing our core business. The commercial loan pipeline is robust and we expect to see excellent production through the second half of the year. Orrstown continues to take advantage of market disruption which has resulted in both new client relationships and new talent that fits with our strategic vision and core values.”

Mr. Quinn continued, “With the economy re-opened and COVID-19 mandates lifted, our commercial lenders have been enabled to do what they do best, which is interacting with clients and driving new business opportunities. Recruitment will be the key to increasing mortgage banking revenue and replenishing the mortgage loan portfolio. As the profit boost from PPP activity wanes through 2022, our focus remains on replacing that income over the long-term. With interest rates expected to remain at historical lows in the near term, we plan to maintain discipline with our commercial lending and seek appropriate opportunities to utilize excess liquidity that fit within our relationship model and drive long-term growth.”

DISCUSSION OF RESULTS

Balance Sheet

Loans

Loans held for investment, which includes SBA PPP loans, declined by $99.6 million from March 31, 2021 to June 30, 2021, or 20% annualized, due to SBA PPP forgiveness and consumer loan reductions, partially offset by net commercial loan production. SBA PPP loans, net of deferred fees and costs, declined during the quarter by $148.7 million to $355.6 million at June 30, 2021 from $504.3 million at March 31, 2021. Commercial loans, excluding SBA PPP loans, increased by $68.8 million, or 24% annualized, from March 31, 2021 to June 30, 2021 resulting from strong commercial loan production. Loans held for investment are down by $34.3 million, or 2%, from December 31, 2020 to June 30, 2021. Loan demand has increased and is expected to continue for the remainder of the year as the COVID-19 related restrictions were lifted in the second quarter of 2021.

We expect most of the 2020 SBA PPP loan balances to be forgiven by the end of 2021. The SBA PPP loan originations in 2021 totaled $231.7 million at June 30, 2021. A number of the 2021 loans began to achieve forgiveness in the second quarter of 2021 and it is expected most of these 2021 originations will be forgiven by the end of 2022. Net deferred fees of $11.2 million remain at June 30, 2021, the majority of which is expected to be earned by the end of 2022.

Residential mortgage loans declined by $13.3 million, or 24% annualized in the three months ended June 30, 2021. In addition to experiencing an overall decline in mortgage volume, the low interest rate environment has reduced the Company's appetite for portfolio mortgage loans. Despite this decline, overall loan growth in 2021, excluding SBA PPP, is expected to be mid-single digits with commercial lending growth exceeding 10%.

Deposits

Deposits declined by $53.0 million, or 8% annualized, but remained at $2.5 billion at June 30, 2021 compared to March 31, 2021. This decline is attributed to deposit customers' utilization of stimulus funds received in the first quarter of 2021, as well as usage of SBA PPP funds. Non-interest bearing demand deposits declined by $19.0 million in the second quarter of 2021, or 14% annualized, and interest bearing checking deposits declined by $28.9 million, or 12% annualized. This decline was partially offset by money market and savings account growth of $19.3 million, or 12% annualized, from March 31, 2021 to June 30, 2021. Certificates of deposit declined by $24.3 million from March 31, 2021 to June 30, 2021, or 25% annualized. Deposits are up by $137.2 million, or 6%, from December 31, 2020 to June 30, 2021 due primarily to SBA PPP loan fundings. Deposit balances are expected to continue to gradually decline over time as clients access their remaining PPP funds and deploy their excess liquidity, which contributed to the Bank's loan-to-deposit ratio of 78% at June 30, 2021. On a longer term basis, the Bank will continue to target a loan-to-deposit ratio of 90%.

Other

Investment securities increased by $42.1 million to $460.1 million at June 30, 2021 as compared to $418.0 million at March 31, 2021, due primarily to purchases of agency backed securities and municipal bonds. Longer term, the Bank will continue to seek to deploy excess liquidity to relationship lending strategies to maximize its net interest margin as rates rise. See Appendix C for a summary of the current investment portfolio that highlights the concentrations, quality and credit enhancement levels for the portfolio.

Income Statement

Net Interest Income and Margin

Net interest income remained consistent at $21.9 million for the three months ended June 30, 2021 compared to the three months ended March 31, 2021. The net interest margin declined to 3.24% in the second quarter of 2021 from 3.38% in the first quarter of 2021. The margin reduction was primarily a result of an increase in excess cash (17 basis points) and lower purchase accounting accretion (6 basis points), partially offset by a 13 basis point increase in yield on SBA PPP loans.

SBA PPP loans had an average outstanding balance of $471.2 million and yielded approximately 4.4% in the three months ended June 30, 2021. This yield increased from approximately 3.9% in the first quarter of 2021 due to the realization of fees on $197.5 million of SBA PPP loans forgiven in the second quarter of 2021 compared to $80.3 million forgiven in the first quarter of 2021. Net deferred SBA PPP fees of $3.8 million were earned in the second quarter of 2021.

Repricing actions by management at the end of the first quarter of 2021 led to a deposit cost reduction of six basis points in the second quarter of 2021 to 0.17%, which is down from 0.23% in the first quarter of 2021 and 0.60% in the second quarter of 2020.

Excess liquidity that has resulted from SBA PPP forgiveness and an inflow of deposit funds from the SBA PPP and government stimulus programs is expected to continue to negatively impact the margin in the short term as there is little spread on its earnings. We expect that this excess liquidity will exit the banking system in the future as our clients utilize these funds. Our objective of emphasizing balance sheet mix is expected to lead to a higher net interest margin over the long-term. These efforts may mute growth in assets, but should lead to growth in net interest income, earnings and return on assets. It is anticipated that the net interest margin will remain under pressure in 2021 due to excess liquidity combined with low interest rates anticipated for the remainder of the year, coupled with an asset sensitive balance sheet. We believe that our efforts on balance sheet mix enhancement, SBA PPP lending and fee income generation will be effective to manage through the currently challenging external environment.

Provision for Loan Losses

We continue to see favorable asset quality trends including most loans that we placed on payment deferral in 2020 having resumed paying status. The allowance for loan losses totaled $19.4 million at June 30, 2021, compared with $19.0 million at March 31, 2021. Total classified loans decreased by $3.7 million, or 11%, to $28.7 million from March 31, 2021 to June 30, 2021. As of June 30, 2021, the Bank had active COVID-19 related deferred loans totaling $3.9 million, or 0.25% of its total loan portfolio, excluding PPP loans. This compared to $7.5 million, or 0.49% of total loans, excluding PPP loans, at March 31, 2021 and $239.3 million, or 15.1% of total loans, excluding PPP loans, at June 30, 2020.

Net charge offs were $0.2 million, or 0.01% of total non-SBA PPP loans, for both the June 30, 2021 and March 31, 2021 quarters. Nonperforming loans totaled $9.9 million at both June 30, 2021 and March 31, 2021, which was 0.51% of gross loans at June 30, 2021 and 0.48% of gross loans at March 31, 2021. The ratio of the allowance for loan losses to nonperforming loans was 195% at June 30, 2021 compared to 192% at March 31, 2021. The allowance to non-SBA guaranteed loans⁽¹⁾ remained steady at 1.2% as of June 30, 2021 and March 31, 2021. Management believes the allowance for loan losses to be adequate based on current asset quality metrics.

Strong commercial loan growth and some charge-off activity resulted in provision expense of $0.6 million in the three months ended June 30, 2021 despite generally positive trends and sustained performance in the asset quality of the loan portfolio. This compares to a provision reversal of $1.0 million recorded in the three months ended March 31, 2021 and $1.9 million of provision expense recorded in the three months ended June 30, 2020. While there remains uncertainty in the external environment regarding the relative strength of the economy, management determined that a release of a portion of its COVID-19 qualitative reserve is appropriate. This was due to the satisfactory performance of borrowers in the commercial portfolio and consideration of the amount of deferrals that have resumed making regular monthly payments. Accordingly, the qualitative factor within the allowance designated for the impact of COVID-19 was lowered by $0.8 million from March 31, 2021 to $1.0 million at June 30, 2021.

The combination of active client relationship consultation, loan payment deferrals, increased risk management focus on higher risk loan concentrations (primarily hotels and restaurants) and significant client participation in the SBA PPP have contributed to the favorable delinquency and charge-off trends we experienced during the pandemic.

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

Noninterest Income

Noninterest income totaled $6.7 million in the three months ended June 30, 2021 compared with $7.5 million in the three months ended March 31, 2021 and $7.2 million in the three months ended June 30, 2020. Management continues to focus on opportunities to enhance fee income to offset potential net interest margin compression.

Total wealth management income for the three months ended June 30, 2021 grew to $2.9 million, as compared to $2.7 million for the three months ended March 31, 2021 and $2.3 million in the second quarter of 2020. Strong market conditions continue to drive wealth management income along with the addition of new clients.

Mortgage banking income declined by $1.0 million from the first quarter of 2021 to $1.2 million in the second quarter of 2021, partially due to a $0.5 million reduction in the fair value of the mortgages held for sale and interest rate lock commitments compared a reduction of $0.1 million in the first quarter of 2021. This was driven by declining production volume. Also, the second quarter of 2021 included a mortgage servicing valuation allowance reduction of $0.1 million as compared to $0.6 million in the first quarter of 2021. Mortgage loans sold totaled $51.8 million in the second quarter of 2021 compared with $57.3 million in the first quarter of 2021 and $49.5 million in the second quarter of 2020. As of June 30, 2021, the Bank services $480.4 million of loans for others, which is up by $16.4 million from March 31, 2021. On a year-to-date basis, mortgage activity has been strong. Mortgage banking income was $3.4 million for the six months ended June 30, 2021 as compared to $1.9 million for the six months ended June 30, 2020.

Debit card interchange income totaled $1.1 million in the second quarter of 2021, which is up $0.1 million from the prior quarter and up $0.2 million from the second quarter of 2020. Rising spending activity from the re-opening of the economy from COVID-19 and government stimulus payments drove this increase.

Noninterest Expenses

Noninterest expenses declined by $0.8 million to $17.0 million in the three months ended June 30, 2021 from the three months ended March 31, 2021. The decrease is due primarily to a $0.4 million reduction in the Bank's unfunded commitment reserve in the three months ended June 30, 2021 as compared to an increase of $0.3 million in the same reserve for the three months ended March 31, 2021. There were also declines in occupancy, advertising and professional services due to normal fluctuations. Market disruption continues to present opportunities to add experienced lenders and other valuable contributors to the organization. As these opportunities arise to facilitate the Company's growth, it could lead to increased expenses.

Income Taxes

The Company's effective tax rate for the second quarter of 2021 was 19.3% compared with 19.1% for the first quarter of 2021. The Company's effective tax rate 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 change in the effective rate reflects an increase in projected income for the full 2021 year.

Capital

Shareholders’ equity totaled $265.9 million at June 30, 2021, an increase of $11.5 million from $254.4 million at March 31, 2021. The increase was primarily attributable to net income and accumulated other comprehensive income from investment gains recorded in the three months ended June 30, 2021 offset by dividends paid in the period. Tangible book value per share grew from $19.93 per share at December 31, 2020 to $21.61 per share at June 30, 2021, an increase of 8%.

The Company's tangible common equity ratio increased to 8.4% at June 30, 2021 from 7.8% at March 31, 2021. The Company's Tier 1 leverage ratio was 8.0% at June 30, 2021 and 8.1% at March 31, 2021. The Company's total risk-based capital ratio decreased from 16.2% at March 31, 2021 to 15.6% at June 30, 2021. A balance sheet shift to higher risk assets, including commercial loans, drove this reduction. As the balance of SBA PPP loans starts to decline, the Bank's tier 1 leverage ratio is expected to gradually increase if the cash position remains stable or reduced. The ratio is still well above that required to be considered "well-capitalized" under applicable regulatory requirements. As a result of the Company's performance in the first half of 2021 and a strong capital position, the Board of Directors approved a quarterly dividend increase from $0.18 per share to $0.19 per share. The dividend payout ratio totaled 24% for the three months ended June 30, 2021. The Company continues to believe that capital is adequate at this time to support the risks inherent in the balance sheet, as well as growth requirements.

Investor Relations Contact:	Media Contact:
Matthew C. Schultheis, CFA	Luke Bernstein
Director Strategic Planning and Investor Relations	Corporate Communications Officer
Phone (717) 510-7127	Phone (717) 510-7107

ORRSTOWN FINANCIAL SERVICES, INC.
FINANCIAL HIGHLIGHTS (Unaudited)
	Three Months Ended								Six Months Ended
	June 30,				June 30,				June 30,				June 30,
(Dollars in thousands, except per share amounts)	2021				2020				2021				2020
Profitability for the period:
Net interest income	$	21,901			$	20,798			$	43,756			$	39,060
Provision for loan losses	625				1,900				(375		)		2,825
Noninterest income	6,664				7,193				14,208				14,267
Noninterest expenses	17,033				18,431				34,816				36,735
Income before income taxes	10,907				7,660				23,523				13,767
Income tax expense	2,131				1,301				4,540				2,340
Net income available to common shareholders	$	8,776			$	6,359			$	18,983			$	11,427
Financial ratios:
Return on average assets (1)	1.20		%		0.94		%		1.33		%		0.90		%
Return on average equity (1)	13.56		%		11.82		%		15.04		%		10.36		%
Net interest margin (1)	3.24		%		3.37		%		3.31		%		3.39		%
Efficiency ratio	59.6		%		65.8		%		60.1		%		68.9		%
Income per common share:
Basic	$	0.80			$	0.58			$	1.73			$	1.04
Diluted	$	0.79			$	0.58			$	1.71			$	1.04
Average equity to average assets	8.83		%		7.94		%		8.84		%		8.69		%
(1) Annualized.

ORRSTOWN FINANCIAL SERVICES, INC.
FINANCIAL HIGHLIGHTS (Unaudited)
(continued)
	June 30,				December 31,
	2021				2020
At period-end:
Total assets	$	2,912,717			$	2,750,572
Total deposits	2,494,100				2,356,880
Loans, net of allowance for loan losses	1,926,002				1,959,539
Loans held-for-sale, at fair value	8,092				11,734
Securities available for sale	450,402				466,465
Borrowings	80,709				77,511
Subordinated notes	31,932				31,903
Shareholders' equity	265,938				246,249
Credit quality and capital ratios (1):
Allowance for loan losses to total loans	1.00		%		1.02		%
Total nonaccrual loans to total loans	0.51		%		0.52		%
Nonperforming assets to total assets	0.34		%		0.37		%
Allowance for loan losses to nonaccrual loans	195		%		195		%
Total risk-based capital:
Orrstown Financial Services, Inc.	15.6		%		15.6		%
Orrstown Bank	14.7		%		14.7		%
Tier 1 risk-based capital:
Orrstown Financial Services, Inc.	12.8		%		12.5		%
Orrstown Bank	13.5		%		13.5		%
Tier 1 common equity risk-based capital:
Orrstown Financial Services, Inc.	12.8		%		12.5		%
Orrstown Bank	13.5		%		13.5		%
Tier 1 leverage capital:
Orrstown Financial Services, Inc.	8.0		%		8.1		%
Orrstown Bank	8.5		%		8.7		%
Book value per common share	$	23.61			$	21.98
(1) Capital ratios are estimated, subject to regulatory filings

ORRSTOWN FINANCIAL SERVICES, INC.
CONSOLIDATED BALANCE SHEETS (Unaudited)
(Dollars in thousands, except per share amounts)	June 30, 2021				December 31, 2020
Assets
Cash and due from banks	$	27,623			$	26,203
Interest-bearing deposits with banks	309,139				99,055
Cash and cash equivalents	336,762				125,258
Restricted investments in bank stocks	9,691				10,563
Securities available for sale (amortized cost of $440,411 and $460,999 at June 30, 2021 and December 31, 2020, respectively)	450,402				466,465
Loans held for sale, at fair value	8,092				11,734
Loans	1,945,383				1,979,690
Less: Allowance for loan losses	(19,381		)		(20,151		)
Net loans	1,926,002				1,959,539
Premises and equipment, net	34,529				35,149
Cash surrender value of life insurance	69,375				68,554
Goodwill	18,724				18,724
Other intangible assets, net	4,800				5,458
Accrued interest receivable	7,930				8,927
Other assets	46,410				40,201
Total assets	$	2,912,717			$	2,750,572
Liabilities
Deposits:
Noninterest-bearing	$	529,137			$	456,778
Interest-bearing	1,964,963				1,900,102
Total deposits	2,494,100				2,356,880
Securities sold under agreements to repurchase	22,872				19,466
FHLB advances and other	57,837				58,045
Subordinated notes	31,932				31,903
Accrued interest and other liabilities	40,038				38,029
Total liabilities	2,646,779				2,504,323
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; 11,265,510 shares issued and 11,262,751 outstanding at June 30, 2021; 11,257,046 shares issued and 11,201,317 outstanding at December 31, 2020	586				586
Additional paid—in capital	188,772				189,066
Retained earnings	69,052				54,099
Accumulated other comprehensive income	7,578				3,346
Treasury stock— 2,759 and 55,729 shares, at cost at June 30, 2021 and December 31, 2020, respectively	(50		)		(848		)
Total shareholders’ equity	265,938				246,249
Total liabilities and shareholders’ equity	$	2,912,717			$	2,750,572

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, except per share amounts)		2021				2020				2021				2020
Interest income
Loans		$	21,323			$	21,794			$	42,834			$	41,960
Investment securities - taxable		1,614				2,795				3,493				6,233
Investment securities - tax-exempt		638				420				1,138				704
Short-term investments		81				13				120				92
Total interest income		23,656				25,022				47,585				48,989
Interest expense
Deposits		1,081				3,310				2,473				7,664
Securities sold under agreements to repurchase		8				152				17				184
FHLB advances and other		164				260				335				1,078
Subordinated notes		502				502				1,004				1,003
Total interest expense		1,755				4,224				3,829				9,929
Net interest income		21,901				20,798				43,756				39,060
Provision for loan losses		625				1,900				(375		)		2,825
Net interest income after provision for loan losses		21,276				18,898				44,131				36,235
Noninterest income
Service charges		880				719				1,765				1,706
Interchange income		1,064				819				2,019				1,607
Swap fee income		15				232				68				432
Wealth management income		2,930				2,295				5,653				4,654
Mortgage banking activities		1,162				1,609				3,351				1,941
Gains on sale of portfolio loans		—				925				—				2,803
Investment securities gains (losses)		11				9				156				(31		)
Other income		602				585				1,196				1,155
Total noninterest income		6,664				7,193				14,208				14,267
Noninterest expenses
Salaries and employee benefits		10,212				10,063				20,409				21,657
Occupancy, furniture and equipment		2,400				2,326				4,918				4,615
Data processing, telephone, and communication		1,032				791				2,051				1,662
Advertising and bank promotions		274				167				699				956
FDIC insurance		158				214				352				261
Professional services		579				1,021				1,300				1,737
Taxes other than income		462				449				913				451
Intangible asset amortization		324				404				658				867
Insurance claim recovery		—				—				—				(486		)
Other operating expenses		1,592				2,996				3,516				5,015
Total noninterest expenses		17,033				18,431				34,816				36,735
Income before income tax expense		10,907				7,660				23,523				13,767
Income tax expense		2,131				1,301				4,540				2,340
Net income		$	8,776			$	6,359			$	18,983			$	11,427
Share information:
Basic earnings per share		$	0.80			$	0.58			$	1.73			$	1.04
Diluted earnings per share		$	0.79			$	0.58			$	1.71			$	1.04
Weighted average shares - basic		10,975				10,916				10,975				10,937
Weighted average shares - diluted		11,112				10,993				11,093				11,027

ORRSTOWN FINANCIAL SERVICES, INC.
ANALYSIS OF NET INTEREST INCOME
Average Balances and Interest Rates, Taxable-Equivalent Basis (Unaudited)
	Three Months Ended
	6/30/2021										03/31/21										12/31/20										09/30/20										6/30/2020
				Taxable-				Taxable-						Taxable-				Taxable-						Taxable-				Taxable-						Taxable-				Taxable-						Taxable-				Taxable-
(Dollars in thousands)	Average			Equivalent				Equivalent			Average			Equivalent				Equivalent			Average			Equivalent				Equivalent			Average			Equivalent				Equivalent			Average			Equivalent				Equivalent
	Balance			Interest				Rate			Balance			Interest				Rate			Balance			Interest				Rate			Balance			Interest				Rate			Balance			Interest				Rate
Assets
Federal funds sold & interest-bearing bank balances	$	290,039		$	81			0.11	%		$	145,595		$	39			0.11	%		$	48,019		$	14			0.12	%		$	31,087		$	9			0.12	%		$	27,949		$	13			0.18	%
Investment securities (1)	438,110			2,421				2.22			468,273			2,512				2.18			486,613			2,643				2.16			496,107			2,673				2.14			493,847			3,327				2.71
Loans (1)(2)(3)	2,014,600			21,375				4.26			2,033,219			21,574				4.30			2,015,749			23,960				4.73			2,054,193			21,741				4.21			1,988,114			21,912				4.43
Total interest-earning assets	2,742,749			23,877				3.49			2,647,087			24,125				3.70			2,550,381			26,617				4.15			2,581,387			24,423				3.76			2,509,910			25,252				4.05
Other assets	188,810										182,737										182,764										190,119										200,684
Total	$	2,931,559									$	2,829,824									$	2,733,145									$	2,771,506									$	2,710,594
Liabilities and Shareholders' Equity
Interest-bearing demand deposits	$	1,394,384		292				0.08			$	1,334,219		438				0.13			$	1,283,024		655				0.20			$	1,213,208		939				0.31			$	1,154,434		1,259				0.44
Savings deposits	200,439			50				0.10			183,576			45				0.10			172,068			52				0.12			168,377			67				0.16			160,738			63				0.16
Time deposits	382,467			739				0.78			397,271			909				0.93			411,395			1,155				1.12			432,438			1,477				1.36			462,664			1,988				1.73
Securities sold under agreements to repurchase	22,417			8				0.14			21,452			9				0.17			20,055			13				0.26			21,145			20				0.38			21,582			24				0.45
FHLB advances and other	57,896			164				1.14			58,000			171				1.20			135,558			320				0.94			219,567			394				0.71			175,336			388				0.89
Subordinated notes	31,924			502				6.29			31,909			502				6.29			31,895			502				6.29			31,881			501				6.28			31,867			502				6.33
Total interest-bearing liabilities	2,089,527			1,755				0.34			2,026,427			2,074				0.42			2,053,995			2,697				0.52			2,086,616			3,398				0.65			2,006,621			4,224				0.85
Noninterest-bearing demand deposits	545,617										516,849										406,454										417,939										452,253
Other	37,561										36,244										36,216										37,330										36,511
Total Liabilities	2,672,705										2,579,520										2,496,665										2,541,885										2,495,385
Shareholders' Equity	258,854										250,304										236,480										229,621										215,209
Total	$	2,931,559									$	2,829,824									$	2,733,145									$	2,771,506									$	2,710,594
Taxable-equivalent net interest income / net interest spread				22,122				3.15	%					22,051				3.28	%					23,920				3.63	%					21,025				3.12	%					21,028				3.20	%
Taxable-equivalent net interest margin								3.24	%									3.38	%									3.73	%									3.24	%									3.37	%
Taxable-equivalent adjustment				(221		)								(196		)								(192		)								(207		)								(230		)
Net interest income				$	21,901									$	21,855									$	23,728									$	20,818									$	20,798
Ratio of average interest-earning assets to average interest-bearing liabilities								131	%									131	%									124	%									124	%									125	%
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, prior periods have been adjusted to include these fees.

ORRSTOWN FINANCIAL SERVICES, INC.
ANALYSIS OF NET INTEREST INCOME
Average Balances and Interest Rates, Taxable-Equivalent Basis (Unaudited)
	Six Months Ended
	June 30, 2021										June 30, 2020
				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	$	218,216		$	120			0.11	%		$	25,409		$	92			0.73	%
Investment securities (1)	453,108			4,933				2.20			497,418			7,124				2.88
Loans (1)(2)(3)	2,023,858			42,949				4.28			1,820,830			42,199				4.66
Total interest-earning assets	2,695,182			48,002				3.59			2,343,657			49,415				4.24
Other assets	185,791										194,543
Total	$	2,880,973									$	2,538,200
Liabilities and Shareholders' Equity
Interest-bearing demand deposits	$	1,364,483		728				0.11			$	1,063,460		3,161				0.60
Savings deposits	192,039			96				0.10			155,966			127				0.16
Time deposits	389,828			1,649				0.85			483,014			4,376				1.82
Securities sold under agreements to repurchase	21,937			17				0.16			15,499			52				0.67
FHLB advances and other	57,948			335				1.17			181,372			1,210				1.34
Subordinated notes	31,916			1,004				6.29			31,860			1,003				6.29
Total interest-bearing liabilities	2,058,151			3,829				0.38			1,931,171			9,929				1.03
Noninterest-bearing demand deposits	531,313										351,208
Other	36,906										35,139
Total Liabilities	2,626,370										2,317,518
Shareholders' Equity	254,603										220,682
Total	$	2,880,973									$	2,538,200
Taxable-equivalent net interest income / net interest spread				44,173				3.22	%					39,486				3.21	%
Taxable-equivalent net interest margin								3.31	%									3.39	%
Taxable-equivalent adjustment				(417		)								(426		)
Net interest income				$	43,756									$	39,060
Ratio of average interest-earning assets to average interest-bearing liabilities								131	%									121	%
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, prior periods have been adjusted to include these fees.

ORRSTOWN FINANCIAL SERVICES, INC.
HISTORICAL TRENDS IN QUARTERLY FINANCIAL DATA (Unaudited)
(In thousands, except per share amounts )	June 30, 2021				March 31, 2021				December 31, 2020				September 30, 2020				June 30, 2020
Profitability for the quarter:
Net interest income	$	21,901			$	21,855			$	23,729			$	20,818			$	20,798
Provision for loan losses	625				(1,000		)		300				2,200				1,900
Noninterest income	6,664				7,544				7,181				6,861				7,193
Noninterest expenses	17,033				17,783				18,080				19,265				18,431
Income before income taxes	10,907				12,616				12,530				6,214				7,660
Income tax expense	2,131				2,409				2,471				1,237				1,301
Net income	$	8,776			$	10,207			$	10,059			$	4,977			$	6,359
Financial ratios:
Return on average assets (1)	1.20		%		1.44		%		1.47		%		0.72		%		0.94		%
Return on average equity (1)	13.56		%		16.31		%		17.01		%		8.67		%		11.82		%
Net interest margin (1)	3.24		%		3.38		%		3.73		%		3.24		%		3.37		%
Efficiency ratio	59.6		%		60.5		%		58.5		%		69.6		%		65.8		%
Per share information :
Income per common share:
Basic	$	0.80			$	0.93			$	0.92			$	0.45			$	0.58
Diluted	$	0.79			$	0.92			$	0.91			$	0.45			$	0.58
Book value	$	23.61			$	22.62			$	21.98			$	20.78			$	20.13
Tangible book value (2)	$	21.61			$	20.59			$	19.93			$	18.70			$	18.03
Cash dividends paid	$	0.18			$	0.18			$	0.17			$	0.17			$	0.17
Average basic shares	10,975				10,975				10,953				10,941				10,916
Average diluted shares	11,112				11,074				11,057				11,025				10,993
(1) Annualized.
(2) Non-GAAP based financial measure. Please refer to Appendix B - 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)
	June 30, 2021			March 31, 2021			December 31, 2020			September 30, 2020				June 30, 2020
Noninterest income:
Service charges	$	880		$	885		$	999		$	852			$	719
Interchange income	1,064			955			916			900				819
Loan swap referral fees	15			53			320			95				232
Wealth management income	2,930			2,723			2,615			2,464				2,295
Mortgage banking activities	1,162			2,189			1,348			1,985				1,609
Other income	602			594			955			578				1,510
Investment securities gains (losses)	11			145			28			(13		)		9
Total noninterest income	$	6,664		$	7,544		$	7,181		$	6,861			$	7,193
Noninterest expenses:
Salaries and employee benefits	$	10,212		$	10,197		$	10,998		$	10,695			$	10,063
Occupancy, furniture and equipment	2,400			2,518			2,467			2,434				2,326
Data processing, telephone, and communication	1,032			1,019			954			958				791
Advertising and bank promotions	274			425			507			197				167
FDIC insurance	158			194			195			230				214
Professional services	579			721			780			603				1,021
Taxes other than income	462			451			240			453				449
Intangible asset amortization	324			334			345			357				404
Merger related and branch consolidation expenses	—			—			—			1,310				—
Other operating expenses	1,592			1,924			1,594			2,028				2,996
Total noninterest expenses	$	17,033		$	17,783		$	18,080		$	19,265			$	18,431

ORRSTOWN FINANCIAL SERVICES, INC.
HISTORICAL TRENDS IN QUARTERLY FINANCIAL DATA (Unaudited)
(continued)
	June 30, 2021				March 31, 2021				December 31, 2020				September 30, 2020				June 30, 2020
Balance Sheet at quarter end:
Cash and cash equivalents	$	336,762			$	326,245			$	125,258			$	87,307			$	52,290
Restricted investments in bank stocks	9,691				10,307				10,563				12,646				16,256
Securities available for sale	450,402				407,690				466,465				478,288				483,936
Loans held for sale, at fair value	8,092				11,449				11,734				12,804				13,594
Loans:
Commercial real estate:
Owner occupied	191,595				177,934				174,908				166,623				164,442
Non-owner occupied	471,541				415,219				409,567				403,138				390,980
Multi-family	112,420				111,757				113,635				110,153				111,016
Non-owner occupied residential	99,631				101,381				114,505				111,958				116,531
Commercial and industrial (1)	599,123				750,831				647,368				690,330				665,312
Acquisition and development:
1-4 family residential construction	9,686				12,138				9,486				9,627				7,966
Commercial and land development	55,330				45,229				51,826				37,850				50,220
Municipal	14,452				19,238				20,523				28,867				34,276
Total commercial loans	1,553,778				1,633,727				1,541,818				1,558,546				1,540,743
Residential mortgage:
First lien	211,918				225,247				244,321				273,149				295,736
Home equity – term	8,321				9,183				10,169				11,108				11,944
Home equity – lines of credit	149,601				153,169				157,021				158,106				160,842
Installment and other loans	21,765				23,695				26,361				28,961				32,052
Total loans	1,945,383				2,045,021				1,979,690				2,029,870				2,041,317
Allowance for loan losses	(19,381		)		(18,967		)		(20,151		)		(19,725		)		(17,517		)
Net loans held-for-investment	1,926,002				2,026,054				1,959,539				2,010,145				2,023,800
Goodwill	18,724				18,724				18,724				18,724				18,724
Other intangible assets, net	4,800				5,124				5,458				5,803				6,160
Total assets	2,912,717				2,963,534				2,750,572				2,781,667				2,772,796
Total deposits	2,494,100				2,547,089				2,356,880				2,279,483				2,251,731
Borrowings	80,709				80,736				77,511				200,818				226,520
Subordinated notes	31,932				31,918				31,903				31,889				31,875
Total shareholders' equity	265,938				254,448				246,249				232,847				225,638

⁽¹⁾ This balance includes $355.6 million, $504.3 million, $403.3 million, $458.1 million and $447.2 million of SBA PPP loans, net of deferred fees and costs, at June 30, 2021, March 31, 2021, December 31, 2020, September 30, 2020, and June 30, 2020, respectively.

ORRSTOWN FINANCIAL SERVICES, INC.
HISTORICAL TRENDS IN QUARTERLY FINANCIAL DATA (Unaudited)
(continued)
	June 30, 2021				March 31, 2021				December 31, 2020				September 30, 2020				June 30, 2020
Capital and credit quality measures (1):
Total risk-based capital:
Orrstown Financial Services, Inc	15.6		%		16.2		%		15.6		%		15.0		%		14.5		%
Orrstown Bank	14.7		%		15.3		%		14.7		%		14.3		%		13.9		%
Tier 1 risk-based capital:
Orrstown Financial Services, Inc	12.8		%		13.2		%		12.5		%		12.0		%		11.7		%
Orrstown Bank	13.5		%		14.1		%		13.5		%		13.1		%		12.8		%
Tier 1 common equity risk-based capital:
Orrstown Financial Services, Inc	12.8		%		13.2		%		12.5		%		12.0		%		11.7		%
Orrstown Bank	13.5		%		14.1		%		13.5		%		13.1		%		12.8		%
Tier 1 leverage capital:
Orrstown Financial Services, Inc	8.0		%		8.1		%		8.1		%		7.8		%		7.6		%
Orrstown Bank	8.5		%		8.6		%		8.7		%		8.5		%		8.4		%
Average equity to average assets	8.83		%		8.85		%		8.65		%		8.29		%		7.94		%
Allowance for loan losses to total loans	1.00		%		0.93		%		1.02		%		0.97		%		0.86		%
Total nonaccrual loans to total loans	0.51		%		0.48		%		0.52		%		0.39		%		0.36		%
Nonperforming assets to total assets	0.34		%		0.33		%		0.37		%		0.28		%		0.27		%
Allowance for loan losses to nonaccrual loans	195		%		192		%		195		%		250		%		237		%
Other information:
Net charge-offs (recoveries)	$	211			$	184			$	(126	)		$	(8	)		$	186
Classified loans	28,731				32,408				33,147				36,408				33,376
Nonperforming and other risk assets:
Nonaccrual loans	9,941				9,895				10,310				7,899				7,404
Other real estate owned	—				—				—				—				17
Total nonperforming assets	9,941				9,895				10,310				7,899				7,421
Restructured loans still accruing	852				921				934				945				960
Loans past due 90 days or more and still accruing (2)	212				196				554				520				909
Total nonperforming and other risk assets	$	11,005			$	11,012			$	11,798			$	9,364			$	9,290
(1) Capital ratios are estimated, subject to regulatory filings.
(2) Includes $196 thousand, $179 thousand, $515 thousand, $520 thousand and $594 thousand of purchased credit impaired loans at June 30, 2021, March 31, 2021, December 31, 2020, September 30, 2020, and June 30, 2020, respectively.

Appendix A- Supplemental Reporting of Unusual Items

The following table presents unusual items that impacted each period shown. These items are presented to enable investors to better understand the magnitude of certain significant items on reported GAAP results in the context of the Company's growth and acquisition activities.

	Three Months Ended																Year To Date
	6/30/2021			3/31/21			12/31/20			9/30/20				6/30/2020			6/30/2021			6/30/2020
(In thousands)
Pretax Items
Branch consolidation expenses	$	—		$	—		$	—		$	1,310			$	—		$	—		$	—
Net securities gains (losses)	11			145			28			(13		)		9			156			(31		)
Gain on swap termination	—			—			226			—				—			—			—
Earnings on life insurance proceeds	—			—			58			—				—			—			—
Gains on sale of portfolio loans	—			—			—			—				925			—			2,803
Accretion - recoveries on purchased credit impaired loans	23			256			779			294				1,021			278			1,232
Insurance claim receivable recovery	—			—			—			—				—			—			486

Appendix B- 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 totaling $23.5 million and $24.2 million at June 30, 2021 and December 31, 2020, respectively. Additionally, the Company incurred approximately $1.3 million in charges associated with branch consolidation efforts during the three months ended September 30, 2020.

Management believes providing certain “non-GAAP” financial information will assist investors in their understanding of the effect of acquisition activity on reported results, particularly to overcome comparability issues related to the influence of intangibles (principally goodwill) created in acquisitions. Management also believes providing certain other “non-GAAP” financial information will assist investors in their understanding of the effect on recent financial results of non-recurring charges associated with increasing operational efficiencies for the long-term, and provide investors with clarity on its allowance for loan losses to total loans ratio. The Company believes that excluding SBA PPP loans, due to its credit enhancement, from loans held for investment is useful to investors due to the size and effect on the total and ratio.

Tangible book value per common share and allowance to non-SBA guaranteed loans, 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 in thousands, except per share information)

Tangible Book Value per Common Share		June 30, 2021				March 31, 2021				December 31, 2020				September 30, 2020				June 30, 2020
Shareholders' equity		$	265,938			$	254,448			$	246,249			$	232,847			$	225,638
Less: Goodwill		18,724				18,724				18,724				18,724				18,724
Other intangible assets		4,800				5,124				5,458				5,803				6,160
Related tax effect		(1,008		)		(1,076		)		(1,146		)		(1,219		)		(1,294		)
Tangible common equity (non-GAAP)		$	243,422			$	231,676			$	223,213			$	209,539			$	202,048
Common shares outstanding		11,263				11,251				11,201				11,204				11,209
Book value per share (most directly comparable GAAP based measure)		$	23.61			$	22.62			$	21.98			$	20.78			$	20.13
Intangible assets per share		2.00				2.03				2.05				2.08				2.10
Tangible book value per share (non-GAAP)		$	21.61			$	20.59			$	19.93			$	18.70			$	18.03

Allowance to Non-SBA Guaranteed Loans:
	June 30, 2021				March 31, 2021
Allowance for loan losses	$	19,381			$	18,967
Gross loans	1,945,383				2,045,021
less: SBA guaranteed loans	(356,905		)		(506,296		)
Non-SBA guaranteed loans	$	1,588,478			$	1,538,725
Allowance to non-SBA guaranteed loans	1.2		%		1.2		%

Appendix C- Investment Portfolio Concentrations

The following table summarizes the credit ratings and collateral associated with the Company's investment portfolio, excluding equity securities, at June 30, 2021:

(dollars in thousands)

Sector	Portfolio Mix			Amortized Book				Fair Value				Credit Enhancement			AAA			AA			A			BBB			NR			Collateral Type
Unsecured ABS	1	%		$	4,044			$	4,086			53	%		—	%		—	%		—	%		—	%		100	%		Unsecured Consumer Debt
Student Loan ABS	2	%		9,945				9,882				26			—	%		—	%		—	%		—	%		100	%		Seasoned Student Loans
Federal Family Education Loan ABS	41	%		176,220				176,388				6			71	%		16	%		13	%		—	%		—	%		Federal Family Education Loan (1)
PACE Loan ABS	1	%		4,525				4,644				6			100	%		—	%		—	%		—	%		—	%		PACE Loans
Non-Agency RMBS	3	%		14,013				14,642				47			100	%		—	%		—	%		—	%		—	%		Reverse Mortgages (2)
Municipal - General Obligation	19	%		83,541				89,179							2	%		90	%		8	%		—	%		—	%
Municipal - Revenue	15	%		66,344				70,237							—	%		70	%		15	%		—	%		15	%
SBA ReRemic	2	%		9,783				9,772							—	%		100	%		—	%		—	%		—	%		SBA Guarantee (3)
Agency MBS	16	%		71,597				71,173							—	%		100	%		—	%		—	%		—	%		Residential Mortgages (3)
Bank CDs	—	%		249				249							—	%		—	%		—	%		—	%		100	%		FDIC Insured CD
	100	%		$	440,261			$	450,252						33	%		52	%		9	%		—	%		6	%
(1) Minimum of 97% guaranteed by U.S. government
(2) Reverse mortgages fund over time and credit enhancement is estimated based on prior experience
(3) 100% guaranteed by U.S. government agencies
Note : Ratings in table are the lowest of the three rating agencies (Standard & Poors, Moody's & Fitch). Standard & Poors rates U.S. government obligations at AA+
Note: S&P rates US government obligations at AA+

About the Company

With $2.9 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. 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 of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. 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 and projections about 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 be able to continue to successfully execute on its strategic growth plan into Dauphin, Lancaster, York and Berks counties, Pennsylvania, and the greater Baltimore market in Maryland, with newer markets continuing to be receptive to our community banking model; to take advantage of market disruption; to experience sustained growth in loans and deposits or maintain the momentum experienced to date from these actions. In addition to risks and uncertainties related to the COVID-19 pandemic (including those related to variants, such as the delta variant) and resulting governmental and societal responses, 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, 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; deteriorating economic conditions; expenses associated with pending litigation and legal proceedings; the failure of the SBA to honor its guarantee of loans issued under the SBA PPP; the timing of the repayment of SBA PPP loans and the impact it has on fee recognition; our ability to convert new relationships gained through the SBA PPP efforts to full banking relationships; and other risks and uncertainties, including those set forth under the heading "Risk Factors" in the Company's 2020 Annual Report on Form 10-K and subsequent filings 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 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.

 

FAQ

What is the dividend amount declared by Orrstown Financial Services?

Orrstown Financial Services declared a cash dividend of $0.19 per share.

When will the cash dividend be paid?

The cash dividend will be paid on August 9, 2021.

What was the net income for Orrstown in the second quarter of 2021?

The net income for Orrstown in the second quarter of 2021 was $8.8 million.

What is the current diluted earnings per share (EPS) for Orrstown?

The diluted earnings per share for Orrstown in Q2 2021 was $0.79.

How much did commercial loan production increase in Q2 2021?

Commercial loan production increased by 24% annualized in Q2 2021.

What impact did PPP forgiveness have on Orrstown's net interest margin?

The net interest margin declined to 3.24% due to excess liquidity from PPP forgiveness.