Orrstown Financial Services, Inc. Announces Second Quarter Earnings of $700 Thousand And Quarterly Cash Dividend of $0.09 Per Share


  • Net income for the three months ended June 30, 2016 totaled $0.7 million, or $0.08 per diluted share, compared to $1.5 million, or $0.18 per diluted share, for the same period in 2015.  Net income for the six months ended June 30, 2016 totaled $3.3 million, or $0.40 per diluted share, compared to $4.0 million, or $0.49 per diluted share, for the same period in 2015.
  • 2016's quarter and year to date results were negatively impacted by the establishment of a $1.0 million reserve for outstanding legal matters, resulting in a decrease of diluted earnings per share of $0.12 for the three and six months ended June 30, 2016.
  • Gross loans outstanding at June 30, 2016, excluding loans held for sale, totaled $831.9 million, an increase of $50.2 million, or 12.9% on an annualized basis, as compared to the balance at December 31, 2015 of $781.7 million.  On a year-over-year basis, gross loans outstanding at June 30, 2016 increased 10.7% as compared to the balance at June 30, 2015.
  • Total deposits were $1.1 billion at June 30, 2016, a 5.4% (10.9% annualized) increase from December 31, 2015, with growth experienced in both non-interest and interest bearing deposits, allowing for a reduction in short-term borrowings.    
  • Net interest income for the three months ended June 30, 2016 totaled $9.0 million, an increase of 3.5% over the three months ended March 31, 2016 of $8.7 million, and resulted in an increase in net interest margin, on a fully-tax equivalent basis, from 3.06% to 3.15% for the respective periods.
  • The Board of Directors declared a cash dividend of $0.09 per common share, payable August 19, 2016 to shareholders of record as of August 10, 2016, an increase of 28.6% over the dividend declared in the third quarter of 2015.

SHIPPENSBURG, Pa., July 28, 2016 (GLOBE NEWSWIRE) -- Orrstown Financial Services, Inc. (the “Company”) (NASDAQ:ORRF), the parent company of Orrstown Bank (the “Bank”), announced earnings for the three and six months ended June 30, 2016.  Net income was $0.7 million for the three months ended June 30, 2016, compared to $1.5 million for the same period in 2015.  For the six months ended June 30, 2016, net income was $3.3 million, compared to $4.0 million for the same period in 2015.  Diluted earnings per share amounted to $0.08 and $0.40 for the three and six months ended June 30, 2016, compared to $0.18 and $0.49 for the same periods in 2015.

Thomas R. Quinn, Jr., President and Chief Executive Officer, commented, “Despite the negative earnings impact of the legal reserve established in the second quarter, we continue to successfully execute our long term strategic plan, expanding into Dauphin, Lancaster and Berks counties.  Our growth to our east, combined with solid performance in our established markets has led to annualized growth of 12.9% in loans and 10.9% in deposits since December 31, 2015.  We will continue to invest in people and locations in markets where we believe our banking model will work well.”

OPERATING RESULTS

Net Interest Income

Net interest income totaled $9.0 million for the three months ended June 30, 2016, a 4.1% increase compared to the same period in 2015.  For the six months ended June 30, 2016, net interest income was $17.6 million, a 4.1% increase compared to the six months ended June 30, 2015.  Net interest margin on a fully tax-equivalent basis was 3.15% and 3.11% for the three and six months ended June 30, 2016, compared to 3.18% for the same periods in 2015.  Despite higher average balances in loans during both periods in 2016 as compared to 2015 and a 25 basis point (bp) increase in the prime lending rate between the two years, the flattening yield curve negatively affected the Company's net interest margin for the period.  Maturing loan proceeds were generally reinvested at lower rates due to competitive market conditions.  Increases on yields on securities helped increase the average yield earned on interest earning assets in 2016, however, it was not enough to offset increased funding costs.  The cost of interest bearing liabilities is generally more influenced by changes in short-term interest rates, and resulted in the cost of interest bearing liabilities increasing from 42 and 41 basis points for the three and six months ended June 30, 2015 to 53 and 52 basis points for the corresponding periods in 2016.

Net interest income for the three months ended June 30, 2016 totaled $9.0 million, an increase of 3.5% over the three months ended March 31, 2016 of $8.7 million, and resulted in an increase in net interest margin from 3.06% to 3.15% for the respective periods. Proceeds from the sales and maturities of securities were reinvested in loans which have higher yields than securities, and was the primary reason for the increase in net interest income and net interest margin.

Provision for Loan Losses

The Company recorded no provision for loan losses during the three and six months ended June 30, 2016 and 2015.  In calculating the required provision for loan losses, both quantitative and qualitative factors are considered in the determination of the adequacy of the allowance for loan losses.  For all periods presented, favorable historical charge-off data combined with stable economic and market conditions has resulted in the determination that no additional provision for loan losses was required to offset net charge-offs, nor were additional reserves needed for loan growth experienced during the periods.

Asset quality ratios have remained strong.  The allowance for loan losses of $13.4 million at June 30, 2016 represented 1.62% of total loans, as compared to $13.6 million at December 31, 2015, or 1.74% of total loans.  Despite the decrease in the reserve balance, coverage on nonperforming loans increased from 82.0% at December 31, 2015 to 95.4% at June 30, 2016 as nonaccrual loans decreased. Classified loans, defined as loans rated substandard, doubtful or loss, totaled $20.7 million at June 30, 2016, or approximately 2.5% of total loans outstanding, and decreased from $25.3 million, or 3.2% of loans outstanding, at December 31, 2015.

Despite favorable historical charge-off data in 2015 and 2016 and improved asset quality ratios, the growth the Company has experienced in its loan portfolio may result in a provisions for loan losses being needed in future quarters.

Noninterest Income

Total noninterest income for the three months ended June 30, 2016, excluding securities gains, totaled $4.5 million and matched the results from 2015.  For the six months ended June 30, 2016, noninterest income, excluding securities gains, totaled $8.8 million, a $413 thousand increase, or 4.9%, compared to the same period in 2016.  Mortgage banking activities generated revenue of $727 thousand for the three months ended June 30, 2016, which was approximately 8.3% lower than the same period in 2015, due to the Company maintaining a portion of the mortgage production for its portfolio. On a year to date basis, mortgage banking revenues totaled $1.4 million which represented a 4.3% increase over the six months ended June 30, 2015. Service charges on deposit accounts totaled $1.4 million and $2.7 million for the three and six months ended June 30, 2016, compared to $1.3 million and $2.5 million for the same periods in 2015, due principally to revenues generated from new product offerings and higher interchange fees associated with increased usage by our customers. For the three months ended June 30, 2016, trust department and brokerage income totaled $1.8 million as compared to $1.7 million for the three months ended June 30, 2015.  On a year to date basis, trust department and brokerage income totaled $3.6 million for the six months ended June 30, 2016, compared to $3.4 million for the six months ended June 30, 2015, an increase of 3.5%. Several estates were settled in the first quarter of 2016, which favorably impacted income.

Securities gains totaled $0 and $1.4 million for the three and six months ended June 30, 2016, compared to $353 thousand and $1.9 million for the same periods in 2015.  For all periods in which securities were sold, asset/liability management strategies and interest rate conditions resulted in gains on sales of securities, as market conditions presented opportunities to accelerate earnings on securities through gains, while also meeting the funding requirements of anticipated lending activity.

Noninterest expenses

Noninterest expenses totaled $12.6 million and $23.7 million for the three and six months ended June 30, 2016, compared to $11.7 million and $22.2 million for the corresponding prior year periods.  A reserve of $1.0 million was established for outstanding legal matters, which increased noninterest expense for the three and six months ended June 30, 2016.

Salaries and employee benefits totaled $6.3 million and $12.5 million for the three and six months ended June 30, 2016, compared to $6.2 million and $12.1 million for the same periods in 2015.  Excluding the impact of severance costs of $63 thousand and $360 thousand for the three and six months ended June 30, 2016 and 2015, salaries and benefits increased 7.8% and 6.3% for the three and six month periods in 2016, compared to 2015.   The higher expenses in 2016 were due to merit increases, additional employees, as well as higher costs associated with supplemental executive compensation and additional share-based awards granted in 2016, with incremental expense on top of previous awards that have not fully vested. 

Advertising and bank promotion expense increased from $324 thousand and $569 thousand for the three and six months ended June 30, 2015 to $355 thousand and $811 thousand for the corresponding periods in 2016.  The increase in the year-to-date amount is due primarily to $100 thousand of incremental educational improvement tax credit (“EITC”) contributions that carried over to the first quarter of 2016, and increased expenditures as we continue to promote the Orrstown brand in markets we presently serve.

Professional services for the three and six months ended June 30, 2016 totaled $570 thousand and $1.1 million, decreased from $820 thousand and $1.3 million for the corresponding periods in the prior year.  In the second quarter of 2015, the Company had higher than normal legal expenses as it attended to legal matters, including the outstanding litigation against the Company and the ongoing confidential investigation with the Securities and Exchange Commission, which began in the second quarter of 2015.  Although both matters are ongoing, the professional services associated with them in 2016 have been less than the heightened levels in 2015.

Taxes other than income totaled $253 thousand and $408 thousand for the three and six months ended June 30, 2016, representing an increase of $27 thousand for three month period and a decrease of $44 thousand for the six month period.  The increase in the three month period is attributable to higher capital, which is used in the assessment of the Pennsylvania Bank Shares tax.  The decrease in the six month period is the result of the incremental EITC contributions made in the first quarter of 2016, a corresponding $90 thousand credit was recognized on our Bank Shares Tax liability, and reduced the tax expense for the period.

Income Taxes

Income tax expense totaled $252 thousand and $866 thousand for the three and six months ended June 30, 2016, compared to $321 thousand and $1.0 million for the same periods in 2015.  The Company’s effective tax rate is significantly less than the federal statutory rate of 35.0% principally due to tax-free income, including interest earned on tax-free loans and securities, and earnings on the cash surrender value of life insurance policies.  On a year to date basis, the effective tax rate for the six months ended June 30, 2016 was 21.0%, compared to 20.7% for the six months ended June 30, 2015.  The effective tax rate for the six months ended June 30, 2016 compared to the same period in 2015 is the result of a larger percentage of pre-tax income being tax-free, additional federal income tax credits in the current year’s results, offset by non-tax deductible expenses.

FINANCIAL CONDITION

Assets increased 1.4% from December 31, 2015 and totaled $1.3 billion at June 30, 2016.  Although total assets have remained consistent between periods, the composition of the balance sheet has changed.   Securities available for sale declined from $394.1 million at December 31, 2015 to $324.5 million at June 30, 2016.  As a result of interest rate market conditions during the six months ended June 30, 2016, the Company liquidated its government-sponsored enterprise commercial mortgage obligations portfolio of $63.6 million at December 31, 2015 at a gain of $1.4 million, and used the proceeds to fund loan demand, including liquidity for loans that will fund after the end of the quarter.

Gross loans, excluding those held for sale, totaled $831.9 million at June 30, 2016, an increase of $50.2 million, or 6.4% (12.9% annualized), from $781.7 million at December 31, 2015.  In comparison to June 30 2015’s loan balance of $751.5 million, loans increased $80.4 million, or 10.7%.

A summary of loan balances, by loan class within segments, is as follows at June 30, 2016, December 31, 2015 and June 30, 2015:

(Dollars in thousands)June 30, 2016 December 31, 2015 June 30, 2015
      
Commercial real estate:     
Owner-occupied$106,649  $103,578  $112,419 
Non-owner occupied190,558  145,401  149,022 
Multi-family38,957  35,109  25,376 
Non-owner occupied residential56,100  54,175  51,585 
Acquisition and development:     
1-4 family residential construction6,714  9,364  6,961 
Commercial and land development24,748  41,339  33,721 
Commercial and industrial82,616  73,625  60,286 
Municipal61,568  57,511  59,366 
Residential mortgage:     
First lien129,577  126,022  123,775 
Home equity – term16,216  17,337  18,952 
Home equity – lines of credit110,908  110,731  103,187 
Installment and other loans7,322  7,521  6,880 
 $831,933  $781,713  $751,530 
            

Growth was experienced in nearly all loan segments from December 31, 2015 to June 30, 2016, with the largest increase coming in the commercial real estate segment, which grew by $54.0 million, which includes construction loans that were converted to permanent amortization upon completion of the project.   The Company’s increased sales efforts and additional relationship managers have resulted in growth, as we capitalize on disruption in the market that has been caused by the acquisition of some of the competitors in the markets served by larger institutions.

Total deposits were $1.1 billion at June 30, 2016, a 5.4% (10.9% annualized) increase from December 31, 2015.  Non-interest bearing deposits increased $16.3 million, or 12.4%, from December 31, 2015 to June 30, 2016 and totaled $147.7 million at June 30, 2016.  Interest bearing deposits totaled $940.3 million at June 30, 2016, a 4.4% increase (8.8% annualized) from December 31, 2015.  The Company has been able to gather both non-interest bearing and interest bearing deposits as it increases its commercial relationships and obtains new relationships from its enhanced cash management offerings.  The additional deposits that the Company obtained in the first half of 2016 were used to fund the pay down of short-term borrowings.

Shareholders’ Equity
               
Shareholders’ equity totaled $141.0 million at June 30, 2016, an increase of $8.0 million, or 6.0%, from $133.1 million at December 31, 2015. This increase was primarily the result of an increase in accumulated other comprehensive income, net of tax, of $6.2 million and net income of $3.3 million for the six months ended June 30, 2016, offset by dividends declared on common stock of $1.4 million and treasury stock repurchases.

On September 14, 2015, the Board of Directors authorized a stock repurchase plan in which the Company may repurchase up to approximately 416,000 shares in the open market.  As of June 30, 2016, 82,725 shares had been repurchased under the plan at a total cost of $1.4 million.

Asset Quality

Risk assets, defined as nonaccrual loans, restructured loans, loans past due 90 days or more and still accruing, and other real estate owned totaled $15.7 million at June 30, 2016, a decrease of $1.8 million, or 10.3% from March 31, 2016 and $2.4 million, or 13.5%, from December 31, 2015.

The allowance for loan losses totaled $13.4 million at June 30, 2016, a decrease of $128 thousand from $13.6 million at December 31, 2015, due to net charge-offs for the period.  The allowance for loan losses to nonperforming loans totaled 95.4% at June 30, 2016 compared to 82.0% at December 31, 2015, and the allowance for loan losses to nonperforming loans and restructured loans still accruing totaled 89.6% at June 30, 2016, compared to 78.2% at December 31, 2015.  Management believes the allowance for loan losses to total loans ratio remains adequate at 1.62% as of June 30, 2016.

Operating Highlights (Unaudited):           
 Three Months Ended     Six Months Ended
 June 30, June 30,     June 30, June 30,
(Dollars in thousands, except per share data)2016 2015     2016 2015
            
Net income$678  $1,502      $3,258  $3,964 
Diluted earnings per share$0.08  $0.18      $0.40  $0.49 
Dividends per share$0.09  $0.07      $0.17  $0.07 
Return on average assets0.21% 0.50%     0.50% 0.67%
Return on average equity1.97% 4.58%     4.78% 6.12%
Net interest income$8,951  $8,598      $17,601  $16,913 
Net interest margin3.15% 3.18%     3.11% 3.18%


Balance Sheet Highlights (Unaudited):     
 June 30, December 31, June 30,
(Dollars in thousands, except per share data)2016 2015 2015
      
Assets$1,311,353  $1,292,816  $1,232,783 
Loans, gross831,933  781,713  751,530 
Allowance for loan losses(13,440) (13,568) (13,852)
Deposits1,087,969  1,032,167  962,854 
Shareholders' equity141,039  133,061  130,262 
Book value per share17.04  16.08  15.65 


ORRSTOWN FINANCIAL SERVICES, INC. AND ITS WHOLLY-OWNED SUBSIDIARY  
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)   
        
 June 30, December 31, June 30,
(Dollars in thousands)2016
 2015 2015
Assets     
Cash and cash equivalents$63,649  $28,340  $23,794 
Securities available for sale 324,540   394,124   376,436 
        
Loans held for sale 6,627   5,917   4,130 
      
Loans 831,933   781,713   751,530 
Less: Allowance for loan losses (13,440)  (13,568)  (13,852)
 Net loans818,493  768,145  737,678 
        
Premises and equipment, net 31,379   23,960   24,314 
Other assets 66,665   72,330   66,431 
  Total assets$1,311,353  $1,292,816  $1,232,783 
        
Liabilities     
Deposits:     
 Non-interest bearing$147,680  $131,390  $142,790 
 Interest bearing 940,289   900,777   820,064 
  Total deposits1,087,969  1,032,167  962,854 
Borrowings67,724  113,651  127,931 
Accrued interest and other liabilities14,621  13,937  11,736 
  Total liabilities1,170,314  1,159,755  1,102,521 
        
Shareholders' Equity     
Common stock 437   435   436 
Additional paid - in capital 124,807   124,317   123,829 
Retained earnings 9,787   7,939   5,272 
Accumulated other comprehensive income 7,421   1,199   745 
Treasury stock (1,413)  (829)  (20)
  Total shareholders' equity141,039  133,061  130,262 
  Total liabilities and shareholders' equity$1,311,353  $1,292,816  $1,232,783 


ORRSTOWN FINANCIAL SERVICES, INC. AND ITS WHOLLY-OWNED SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME  (UNAUDITED)
          
   Three Months Ended Six Months Ended
   June 30, June 30, June 30, June 30,
(Dollars in thousands, except per share data) 2016 2015 2016 2015
Interest and dividend income        
Interest and fees on loans $8,384  $7,749  $16,375  $15,076 
Interest and dividends on investment securities 1,888  1,819  3,858  3,720 
 Total interest and dividend income 10,272  9,568  20,233  18,796 
Interest expense        
Interest on deposits 1,191  780  2,330  1,557 
Interest on borrowings 130  190  302  326 
 Total interest expense 1,321  970  2,632  1,883 
Net interest income 8,951  8,598  17,601  16,913 
Provision for loan losses 0  0  0  0 
 Net interest income after provision for loan losses 8,951  8,598  17,601  16,913 
          
Noninterest income        
Service charges on deposit accounts 1,372  1,299  2,675  2,492 
Trust department and brokerage income 1,765  1,746  3,550  3,430 
Mortgage banking activities 727  793  1,369  1,313 
Other income 673  692  1,188  1,134 
Investment securities gains 0  353  1,420  1,882 
 Total noninterest income 4,537  4,883  10,202  10,251 
          
Noninterest expenses        
Salaries and employee benefits 6,312  6,158  12,495  12,058 
Occupancy, furniture and equipment 1,340  1,325  2,652  2,692 
Data processing 519  526  1,154  1,037 
Advertising and bank promotions 355  324  811  569 
FDIC insurance 223  184  455  430 
Professional services 570  820  1,090  1,332 
Collection and problem loan 96  102  148  198 
Real estate owned expenses 58  49  101  74 
Taxes, other than income 253  226  408  452 
Legal reserve 1,000  0  1,000  0 
Other operating expenses 1,832  1,944  3,365  3,322 
 Total noninterest expenses 12,558  11,658  23,679  22,164 
 Income before income tax 930  1,823  4,124  5,000 
Income tax expense 252  321  866  1,036 
Net income $678  $1,502  $3,258  $3,964 
          
Per share information:        
 Basic earnings per share $0.08  $0.19  $0.40  $0.49 
 Diluted earnings per share  0.08   0.18   0.40   0.49 
 Dividends per share  0.09   0.07   0.17   0.07 
 Average shares and common stock equivalents outstanding  8,136,003   8,138,430   8,137,537   8,136,462 


ANALYSIS OF NET INTEREST INCOME           
Average Balances and Interest Rates, Taxable Equivalent Basis (Unaudited)
            
 Three Months Ended
 June 30, 2016 June 30, 2015
   Tax Tax   Tax Tax
 Average Equivalent Equivalent Average Equivalent Equivalent
(Dollars in thousands)Balance Interest Rate Balance Interest Rate
Assets           
Federal funds sold & interest-bearing bank balances$50,491  $79  0.63% $14,429  $17  0.47%
Securities330,973  2,046  2.49   369,368   1,878  2.04 
Loans824,004  8,652  4.22   744,542   8,021  4.32 
Total interest-earning assets1,205,468  10,777  3.60   1,128,339   9,916  3.52 
Other assets98,376       82,987     
Total$1,303,844      $1,211,326     
            
Liabilities and Shareholders' Equity           
Interest bearing demand deposits$542,075  $282  0.21  $502,182  $225  0.18 
Savings deposits 91,341   36  0.16   84,366   34  0.16 
Time deposits 300,244  873  1.17   230,937   521  0.90 
Short term borrowings 47,810   25  0.21   94,953   81  0.34 
Long term debt 24,378   105  1.73   24,700   109  1.77 
Total interest bearing liabilities 1,005,848   1,321  0.53   937,138   970  0.42 
Non-interest bearing demand deposits 146,233       132,063     
Other 13,364       10,617     
Total Liabilities 1,165,445       1,079,818     
Shareholders' Equity 138,399       131,508     
Total$1,303,844      $1,211,326     
Net interest income (FTE)/net interest spread   9,456  3.07%    8,946  3.10%
Net interest margin    3.15%     3.18%
Tax-equivalent adjustment   (505)      (348)  
Net interest income  $8,951      $8,598   
            
NOTES:  Yields and interest income on tax-exempt assets have been computed on a fully taxable equivalent basis assuming a 35% tax rate.
For yield calculation purposes, nonaccruing loans are included in the average loan balance.    


ANALYSIS OF NET INTEREST INCOME           
Average Balances and Interest Rates, Taxable Equivalent Basis (Unaudited)
            
 Six Months Ended
 June 30, 2016 June 30, 2015
   Tax Tax   Tax Tax
 Average Equivalent Equivalent Average Equivalent Equivalent
(Dollars in thousands)Balance Interest Rate Balance Interest Rate
Assets           
Federal funds sold & interest-bearing bank balances$46,867  $144  0.62% $21,957  $43  0.39%
Securities347,294  4,189  2.43   363,037   3,783  2.10 
Loans809,894  16,914  4.20   729,022   15,622  4.32 
Total interest-earning assets1,204,055  21,247  3.55   1,114,016   19,448  3.52 
Other assets96,334       82,346     
Total$1,300,389      $1,196,362     
            
Liabilities and Shareholders' Equity           
Interest bearing demand deposits$531,757  $532  0.20  $503,277  $444  0.18 
Savings deposits 89,522   71  0.16   86,007   68  0.16 
Time deposits 302,523  1,727  1.15   232,981   1,045  0.90 
Short term borrowings 62,076   91  0.29   86,708   141  0.33 
Long term debt 24,419   211  1.74   20,430   185  1.83 
Total interest bearing liabilities1,010,297   2,632  0.52   929,403   1,883  0.41 
Non-interest bearing demand deposits 139,723       125,501     
Other 13,286       10,890     
Total Liabilities 1,163,306       1,065,794     
Shareholders' Equity 137,083       130,568     
Total$1,300,389      $1,196,362     
Net interest income (FTE)/net interest spread   18,615  3.03%    17,565  3.11%
Net interest margin    3.11%     3.18%
Tax-equivalent adjustment   (1,014)      (652)  
Net interest income  $17,601      $16,913   
            
NOTES:  Yields and interest income on tax-exempt assets have been computed on a fully taxable equivalent basis assuming a 35% tax rate.
For yield calculation purposes, nonaccruing loans are included in the average loan balance.    


Nonperforming Assets / Risk Elements (Unaudited)       
        
 June 30, March 31, December 31, June 30,
(Dollars in thousands)2016 2016 2015 2015
        
Nonaccrual loans (cash basis)$14,092  $15,906  $16,557  $10,261 
Other real estate (OREO)651  495  710  1,062 
Total nonperforming assets14,743  16,401  17,267  11,323 
Restructured loans still accruing907  1,044  793  1,004 
Loans past due 90 days or more and still accruing0  1  24  171 
Total risk assets$15,650  $17,446  $18,084  $12,498 
        
Loans 30-89 days past due$1,051  $1,391  $2,532  $1,984 
        
Asset quality ratios:       
Total nonaccrual loans to loans1.69% 1.98% 2.12% 1.37%
Total nonperforming assets to assets1.12% 1.27% 1.34% 0.92%
Total nonperforming assets to total loans and OREO1.77% 2.04% 2.21% 1.50%
Total risk assets to total loans and OREO1.88% 2.17% 2.31% 1.66%
Total risk assets to total assets1.19% 1.36% 1.40% 1.01%
        
Allowance for loan losses to total loans1.62% 1.66% 1.74% 1.84%
Allowance for loan losses to nonaccrual loans95.37% 83.91% 81.95% 135.00%
Allowance for loan losses to nonaccrual and restructured loans still accruing89.61% 78.74% 78.20% 122.96%


Roll Forward of Allowance for Loan Losses (Unaudited)      
        
 Three Months Ended Six Months Ended
 June 30, June 30, June 30, June 30,
(Dollars in thousands)2016 2015 2016 2015
        
Balance at beginning of period$13,347  $14,461  $13,568  $14,747 
Provision for loan losses0  0  0  0 
Recoveries247  50  355  99 
Loans charged-off(154) (659) (483) (994)
Balance at end of period$13,440  $13,852  $13,440  $13,852 

About the Company

With $1.3 billion in assets, Orrstown Financial Services, Inc. and its wholly-owned subsidiary, Orrstown Bank, provide a wide range of consumer and business financial services through 25 banking offices and two remote service facilities located in Cumberland, Franklin, Lancaster and Perry Counties, Pennsylvania and Washington County, 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 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 news release may contain forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements are statements that include projections, predictions, expectations, or beliefs about events or results or otherwise are not statements of historical facts, including, without limitation, our ability to integrate additional teams across all business lines as we continue our expansion into Dauphin and Lancaster counties and fill a void created in the community banking space from the disruption caused by acquisition of several competitors, and our belief that we are positioned to create additional long-term shareholder value from these expansion initiatives.

Actual results and trends could differ materially from those set forth in such statements and there can be no assurances that we will be able to continue to successfully execute on our strategic expansion into Dauphin, Lancaster and Berks counties and experience sustained growth in loans and deposits.  Factors that could cause actual results to differ from those expressed or implied by the forward looking statements include, but are not limited to, the following: ineffectiveness of the Company's business strategy due to changes in current or future market conditions; the effects of competition, including industry consolidation and development of competing financial products and services; changes in laws and regulations, including the Dodd-Frank Wall Street Reform and Consumer Protection Act; interest rate movements; changes in credit quality; inability to raise capital, if necessary, under favorable conditions; volatilities in the securities markets;  deteriorating economic conditions; and other risks and uncertainties, including those detailed in Orrstown Financial Services, Inc.'s Form 10-K for the year ended December 31, 2015 under the headings “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Risk Factors” and in other filings made with the Securities and Exchange Commission.  The statements are valid only as of the date hereof and Orrstown Financial Services, Inc. disclaims any obligation to update this information.

The review period for subsequent events extends up to and includes the filing date of a public company’s financial statements, when filed with the Securities and Exchange Commission. Accordingly, the consolidated financial information presented in this announcement is subject to change.


            

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