23/07/2024 | Press release | Distributed by Public on 23/07/2024 20:09
Investor Relations Contact: |
Neelesh Kalani |
Executive Vice President, Chief Financial Officer |
Phone (717) 510-7097 |
ORRSTOWN FINANCIAL SERVICES, INC. | ||||||||
FINANCIAL HIGHLIGHTS (Unaudited) | ||||||||
Three Months Ended |
Six Months Ended
|
|||||||
June 30, | June 30, | June 30, | June 30, | |||||
(Dollars in thousands) | 2024 | 2023 | 2024 | 2023 | ||||
Profitability for the period: | ||||||||
Net interest income | $ | 26,103 | $ | 26,375 | $ | 52,984 | $ | 52,669 |
Provision for credit losses | 812 | 399 | 1,110 | 1,128 | ||||
Noninterest income | 7,172 | 7,158 | 13,802 | 13,236 | ||||
Noninterest expenses | 22,639 | 20,749 | 45,108 | 41,004 | ||||
Income before income tax expense | 9,824 | 12,385 | 20,568 | 23,773 | ||||
Income tax expense | 2,086 | 2,547 | 4,299 | 4,779 | ||||
Net income available to common shareholders | $ | 7,738 | $ | 9,838 | $ | 16,269 | $ | 18,994 |
Financial ratios: | ||||||||
Return on average assets (1)
|
0.97 | % | 1.32 | % | 1.04 | % | 1.29 | % |
Return on average assets, adjusted (1) (2) (3)
|
1.09 | % | 1.32 | % | 1.14 | % | 1.29 | % |
Return on average equity (1)
|
11.41 | % | 16.27 | % | 12.09 | % | 16.08 | % |
Return on average equity, adjusted (1) (2) (3)
|
12.88 | % | 16.27 | % | 13.33 | % | 16.08 | % |
Net interest margin (1)
|
3.54 | % | 3.83 | % | 3.65 | % | 3.88 | % |
Efficiency ratio | 68.0 | % | 61.9 | % | 67.5 | % | 62.2 | % |
Efficiency ratio, adjusted (2) (3)
|
64.6 | % | 61.9 | % | 64.8 | % | 62.2 | % |
Income per common share:
|
||||||||
Basic | $ | 0.74 | $ | 0.95 | $ | 1.57 | $ | 1.83 |
Basic, adjusted (2) (3)
|
$ | 0.84 | $ | 0.95 | $ | 1.73 | $ | 1.83 |
Diluted | $ | 0.73 | $ | 0.94 | $ | 1.55 | $ | 1.82 |
Diluted, adjusted (2) (3)
|
$ | 0.83 | $ | 0.94 | $ | 1.71 | $ | 1.82 |
Average equity to average assets | 8.50 | % | 8.11 | % | 8.58 | % | 8.04 | % |
(1) Annualized for the three and six months ended June 30, 2024 and 2023
|
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(2) Ratio for the three and six months ended June 30, 2024 has been adjusted for merger-related expenses.
|
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(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. | ||||
FINANCIAL HIGHLIGHTS(Unaudited)
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(continued) | ||||
June 30, | December 31, | |||
(Dollars in thousands, except per share amounts) | 2024 | 2023 | ||
At period-end: | ||||
Total assets | $ | 3,198,782 | $ | 3,064,240 |
Loans, net of allowance for credit losses | 2,317,739 | 2,269,611 | ||
Loans held-for-sale, at fair value | 1,562 | 5,816 | ||
Securities available for sale, at fair value | 529,082 | 513,519 | ||
Total deposits | 2,702,884 | 2,558,814 | ||
Borrowings | 129,625 | 147,285 | ||
Subordinated notes | 32,128 | 32,093 | ||
Shareholders' equity | 278,376 | 265,056 | ||
Credit quality and capital ratios (1):
|
||||
Allowance for credit losses to total loans | 1.27 | % | 1.25 | % |
Total nonaccrual loans to total loans | 0.36 | % | 1.11 | % |
Nonperforming assets to total assets | 0.26 | % | 0.83 | % |
Allowance for credit losses to nonaccrual loans | 357 | % | 112 | % |
Total risk-based capital: | ||||
Orrstown Financial Services, Inc. | 13.3 | % | 13.0 | % |
Orrstown Bank | 13.1 | % | 12.8 | % |
Tier 1 risk-based capital: | ||||
Orrstown Financial Services, Inc. | 11.1 | % | 10.8 | % |
Orrstown Bank | 12.0 | % | 11.6 | % |
Tier 1 common equity risk-based capital: | ||||
Orrstown Financial Services, Inc. | 11.1 | % | 10.8 | % |
Orrstown Bank | 12.0 | % | 11.6 | % |
Tier 1 leverage capital: | ||||
Orrstown Financial Services, Inc. | 8.9 | % | 8.9 | % |
Orrstown Bank | 9.5 | % | 9.5 | % |
Book value per common share | $ | 25.97 | $ | 24.98 |
(1) Capital ratios are estimated, subject to regulatory filings. The Company elected the three-year phase in option for the day-one impact of ASU 2016-13 for current expected credit losses ("CECL") to regulatory capital. 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.
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ORRSTOWN FINANCIAL SERVICES, INC. | ||||
CONSOLIDATED BALANCE SHEETS (Unaudited)
|
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(Dollars in thousands, except per share amounts) | June 30, 2024 | December 31, 2023 | ||
Assets | ||||
Cash and due from banks | $ | 35,951 | $ | 32,586 |
Interest-bearing deposits with banks | 96,558 | 32,575 | ||
Cash and cash equivalents | 132,509 | 65,161 | ||
Restricted investments in bank stocks | 11,147 | 11,992 | ||
Securities available for sale (amortized cost of $566,421 and $549,089 at June 30, 2024 and December 31, 2023, respectively)
|
529,082 | 513,519 | ||
Loans held for sale, at fair value | 1,562 | 5,816 | ||
Loans | 2,347,603 | 2,298,313 | ||
Less: Allowance for credit losses | (29,864) | (28,702) | ||
Net loans | 2,317,739 | 2,269,611 | ||
Premises and equipment, net | 28,484 | 29,393 | ||
Cash surrender value of life insurance | 74,119 | 73,204 | ||
Goodwill | 18,724 | 18,724 | ||
Other intangible assets, net | 1,974 | 2,414 | ||
Accrued interest receivable | 14,120 | 13,630 | ||
Deferred tax assets, net | 21,674 | 22,017 | ||
Other assets | 47,648 | 38,759 | ||
Total assets | $ | 3,198,782 | $ | 3,064,240 |
Liabilities | ||||
Deposits: | ||||
Noninterest-bearing | $ | 425,255 | $ | 430,959 |
Interest-bearing | 2,277,629 | 2,127,855 | ||
Total deposits | 2,702,884 | 2,558,814 | ||
Securities sold under agreements to repurchase and federal funds purchased | 14,625 | 9,785 | ||
FHLB advances and other borrowings | 115,000 | 137,500 | ||
Subordinated notes | 32,128 | 32,093 | ||
Accrued interest and other liabilities | 55,769 | 60,992 | ||
Total liabilities | 2,920,406 | 2,799,184 | ||
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; 11,201,269 shares issued and 10,720,225 outstanding at June 30, 2024; 11,204,599 shares issued and 10,612,390 outstanding at December 31, 2023
|
583 | 583 | ||
Additional paid-in capital | 187,694 | 189,027 | ||
Retained earnings | 129,670 | 117,667 | ||
Accumulated other comprehensive losses | (28,404) | (28,476) | ||
Treasury stock- 481,044 and 592,209 shares, at cost at June 30, 2024 and December 31, 2023, respectively
|
(11,167) | (13,745) | ||
Total shareholders' equity | 278,376 | 265,056 | ||
Total liabilities and shareholders' equity | $ | 3,198,782 | $ | 3,064,240 |
ORRSTOWN FINANCIAL SERVICES, INC. | ||||||||
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
|
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Three Months Ended |
Six Months Ended
|
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June 30, | June 30, | June 30, | June 30, | |||||
(In thousands) | 2024 | 2023 | 2024 | 2023 | ||||
Interest income | ||||||||
Loans | $ | 35,537 | $ | 31,203 | $ | 71,770 | $ | 59,947 |
Investment securities - taxable | 4,999 | 4,415 | 9,583 | 8,785 | ||||
Investment securities - tax-exempt | 881 | 865 | 1,758 | 1,730 | ||||
Short-term investments | 1,864 | 418 | 2,820 | 716 | ||||
Total interest income | 43,281 | 36,901 | 85,931 | 71,178 | ||||
Interest expense | ||||||||
Deposits | 15,265 | 8,608 | 28,781 | 14,810 | ||||
Securities sold under agreements to repurchase and federal funds purchased | 27 | 28 | 52 | 53 | ||||
FHLB advances and other borrowings | 1,152 | 1,386 | 2,626 | 2,638 | ||||
Subordinated notes | 734 | 504 | 1,488 | 1,008 | ||||
Total interest expense | 17,178 | 10,526 | 32,947 | 18,509 | ||||
Net interest income | 26,103 | 26,375 | 52,984 | 52,669 | ||||
Provision for credit losses | 812 | 399 | 1,110 | 1,128 | ||||
Net interest income after provision for credit losses | 25,291 | 25,976 | 51,874 | 51,541 | ||||
Noninterest income | ||||||||
Service charges | 1,283 | 1,251 | 2,483 | 2,408 | ||||
Interchange income | 961 | 993 | 1,872 | 1,958 | ||||
Swap fee income | 375 | 196 | 574 | 196 | ||||
Wealth management income | 3,312 | 2,822 | 6,414 | 5,569 | ||||
Mortgage banking activities | 369 | 112 | 827 | 590 | ||||
Investment securities losses | (12) | (2) | (17) | (10) | ||||
Other income | 884 | 1,786 | 1,649 | 2,525 | ||||
Total noninterest income | 7,172 | 7,158 | 13,802 | 13,236 | ||||
Noninterest expenses | ||||||||
Salaries and employee benefits | 13,195 | 13,054 | 26,947 | 25,250 | ||||
Occupancy, furniture and equipment | 2,705 | 2,266 | 5,344 | 4,599 | ||||
Data processing | 1,237 | 1,201 | 2,502 | 2,418 | ||||
Advertising and bank promotions | 774 | 919 | 1,172 | 1,324 | ||||
FDIC insurance | 419 | 519 | 860 | 1,023 | ||||
Professional services | 801 | 504 | 1,432 | 1,238 | ||||
Taxes other than income | 49 | 3 | 543 | 460 | ||||
Intangible asset amortization | 215 | 239 | 440 | 489 | ||||
Merger-related expenses
|
1,135 | - | 1,807 | - | ||||
Other operating expenses | 2,109 | 2,044 | 4,061 | 4,203 | ||||
Total noninterest expenses | 22,639 | 20,749 | 45,108 | 41,004 | ||||
Income before income tax expense | 9,824 | 12,385 | 20,568 | 23,773 | ||||
Income tax expense | 2,086 | 2,547 | 4,299 | 4,779 | ||||
Net income | $ | 7,738 | $ | 9,838 | $ | 16,269 | $ | 18,994 |
continued
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Three Months Ended |
Six Months Ended
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June 30, | June 30, | June 30, | June 30, | |||||
2024 | 2023 | 2024 | 2023 | |||||
Share information: | ||||||||
Basic earnings per share | $ | 0.74 | $ | 0.95 | $ | 1.57 | $ | 1.83 |
Diluted earnings per share | $ | 0.73 | $ | 0.94 | $ | 1.55 | $ | 1.82 |
Dividends paid per share | $ | 0.20 | $ | 0.20 | $ | 0.40 | $ | 0.40 |
Weighted average shares - basic | 10,393 | 10,336 | 10,371 | 10,360 | ||||
Weighted average shares - diluted | 10,553 | 10,421 | 10,517 | 10,458 |
ORRSTOWN FINANCIAL SERVICES, INC. | ||||||||||||||||||||||||||||||
ANALYSIS OF NET INTEREST INCOME | ||||||||||||||||||||||||||||||
Average Balances and Interest Rates, Taxable-Equivalent Basis (Unaudited)
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Three Months Ended | ||||||||||||||||||||||||||||||
6/30/2024 | 3/31/2024 | 12/31/2023 | 9/30/2023 | 6/30/2023 | ||||||||||||||||||||||||||
Taxable- | Taxable- | Taxable- | Taxable- | Taxable- | Taxable- | Taxable- | Taxable- | Taxable- | Taxable- | |||||||||||||||||||||
Average | Equivalent | Equivalent | Average | Equivalent | Equivalent | Average | Equivalent | Equivalent | Average | Equivalent | Equivalent | Average | Equivalent | Equivalent | ||||||||||||||||
(Dollars in thousands) | Balance | Interest | Rate | Balance | Interest | Rate | Balance | Interest | Rate | Balance | Interest | Rate | Balance | Interest | Rate | |||||||||||||||
Assets | ||||||||||||||||||||||||||||||
Federal funds sold & interest-bearing bank balances | $ | 142,868 | $ | 1,864 | 5.25 | % | $ | 74,523 | $ | 956 | 5.16 | % | $ | 37,873 | $ | 460 | 4.82 | % | $ | 57,778 | $ | 633 | 4.35 | % | $ | 37,895 | $ | 418 | 4.42 | % |
Investment securities (1)(2)
|
538,451 | 6,114 | 4.54 | 519,851 | 5,694 | 4.39 | 508,891 | 5,890 | 4.63 | 521,234 | 5,548 | 4.26 | 526,225 | 5,510 | 4.19 | |||||||||||||||
Loans (1)(3)(4)(5)
|
2,324,942 | 35,690 | 6.17 | 2,308,103 | 36,382 | 6.34 | 2,286,678 | 34,055 | 5.91 | 2,256,727 | 32,878 | 5.78 | 2,233,312 | 31,329 | 5.63 | |||||||||||||||
Total interest-earning assets | 3,006,261 | 43,668 | 5.84 | 2,902,477 | 43,032 | 5.96 | 2,833,442 | 40,405 | 5.67 | 2,835,739 | 39,059 | 5.47 | 2,797,432 | 37,257 | 5.34 | |||||||||||||||
Other assets | 204,863 | 196,295 | 204,382 | 200,447 | 191,983 | |||||||||||||||||||||||||
Total assets | $ | 3,211,124 | $ | 3,098,772 | $ | 3,037,824 | $ | 3,036,186 | $ | 2,989,415 | ||||||||||||||||||||
Liabilities and Shareholders' Equity | ||||||||||||||||||||||||||||||
Interest-bearing demand deposits | $ | 1,649,753 | 10,118 | 2.47 | $ | 1,570,622 | 9,192 | 2.35 | $ | 1,543,575 | 8,333 | 2.14 | $ | 1,541,728 | 7,476 | 1.92 | $ | 1,511,468 | 6,273 | 1.66 | ||||||||||
Savings deposits | 165,467 | 140 | 0.34 | 170,005 | 144 | 0.34 | 178,351 | 153 | 0.34 | 190,817 | 164 | 0.34 | 204,584 | 135 | 0.26 | |||||||||||||||
Time deposits | 481,721 | 5,007 | 4.18 | 428,443 | 4,180 | 3.92 | 392,085 | 3,632 | 3.67 | 357,194 | 2,942 | 3.27 | 326,034 | 2,200 | 2.71 | |||||||||||||||
Total interest-bearing deposits | 2,296,941 | 15,265 | 2.67 | 2,169,070 | 13,516 | 2.51 | 2,114,011 | 12,118 | 2.27 | 2,089,739 | 10,582 | 2.01 | 2,042,086 | 8,608 | 1.69 | |||||||||||||||
Securities sold under agreements to repurchase and federal funds purchased | 13,412 | 27 | 0.81 | 12,010 | 25 | 0.85 | 13,874 | 30 | 0.85 | 15,006 | 31 | 0.83 | 13,685 | 28 | 0.82 | |||||||||||||||
FHLB advances and other borrowings | 115,000 | 1,152 | 4.03 | 137,505 | 1,474 | 4.31 | 127,843 | 1,358 | 4.21 | 128,131 | 1,354 | 4.19 | 132,094 | 1,386 | 4.21 | |||||||||||||||
Subordinated notes | 32,118 | 734 | 9.19 | 32,100 | 754 | 9.45 | 32,083 | 504 | 6.29 | 32,066 | 505 | 6.29 | 32,049 | 504 | 6.29 | |||||||||||||||
Total interest-bearing liabilities | 2,457,471 | 17,178 | 2.81 | 2,350,685 | 15,769 | 2.70 | 2,287,811 | 14,010 | 2.43 | 2,264,942 | 12,472 | 2.19 | 2,219,914 | 10,526 | 1.90 | |||||||||||||||
Noninterest-bearing demand deposits | 423,037 | 417,469 | 441,695 | 468,628 | 476,123 | |||||||||||||||||||||||||
Other liabilities | 57,828 | 62,329 | 59,876 | 54,353 | 50,851 | |||||||||||||||||||||||||
Total liabilities | 2,938,336 | 2,830,483 | 2,789,382 | 2,787,923 | 2,746,888 | |||||||||||||||||||||||||
Shareholders' equity | 272,788 | 268,289 | 248,442 | 248,263 | 242,527 | |||||||||||||||||||||||||
Total | $ | 3,211,124 | $ | 3,098,772 | $ | 3,037,824 | $ | 3,036,186 | $ | 2,989,415 | ||||||||||||||||||||
Taxable-equivalent net interest income / net interest spread | 26,490 | 3.02 | % | 27,263 | 3.26 | % | 26,395 | 3.24 | % | 26,587 | 3.29 | % | 26,731 | 3.44 | % | |||||||||||||||
Taxable-equivalent net interest margin | 3.54 | % | 3.77 | % | 3.71 | % | 3.73 | % | 3.83 | % | ||||||||||||||||||||
Taxable-equivalent adjustment | (387) | (382) | (377) | (368) | (356) | |||||||||||||||||||||||||
Net interest income | $ | 26,103 | $ | 26,881 | $ | 26,018 | $ | 26,219 | $ | 26,375 | ||||||||||||||||||||
Ratio of average interest-earning assets to average interest-bearing liabilities | 122 | % | 123 | % | 124 | % | 125 | % | 126 | % | ||||||||||||||||||||
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.
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ORRSTOWN FINANCIAL SERVICES, INC. | ||||||||||||
ANALYSIS OF NET INTEREST INCOME | ||||||||||||
Average Balances and Interest Rates, Taxable-Equivalent Basis (Unaudited)
|
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(continued) | ||||||||||||
Six Months Ended
|
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June 30, 2024 | June 30, 2023 | |||||||||||
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 | $ | 108,695 | $ | 2,820 | 5.22 | % | $ | 33,770 | $ | 716 | 4.27 | % |
Investment securities (1)(2)
|
529,151 | 11,808 | 4.47 | 525,957 | 10,975 | 4.19 | ||||||
Loans (1)(3)(4)(5)
|
2,316,522 | 72,072 | 6.25 | 2,206,914 | 60,173 | 5.49 | ||||||
Total interest-earning assets | 2,954,368 | 86,700 | 5.90 | 2,766,641 | 71,864 | 5.23 | ||||||
Other assets | 200,580 | 194,786 | ||||||||||
Total assets | $ | 3,154,948 | $ | 2,961,427 | ||||||||
Liabilities and Shareholders' Equity | ||||||||||||
Interest-bearing demand deposits | $ | 1,610,188 | 19,310 | 2.41 | $ | 1,507,467 | 11,135 | 1.49 | ||||
Savings deposits | 167,736 | 284 | 0.34 | 211,955 | 268 | 0.25 | ||||||
Time deposits | 455,082 | 9,187 | 4.06 | 301,095 | 3,407 | 2.28 | ||||||
Total interest-bearing deposits | 2,233,006 | 28,781 | 2.59 | 2,020,517 | 14,810 | 1.48 | ||||||
Securities sold under agreements to repurchase and federal funds purchased | 12,711 | 52 | 0.83 | 13,776 | 53 | 0.77 | ||||||
FHLB advances and other borrowings | 126,253 | 2,626 | 4.18 | 119,335 | 2,638 | 4.46 | ||||||
Subordinated notes | 32,109 | 1,488 | 9.32 | 32,041 | 1,008 | 6.29 | ||||||
Total interest-bearing liabilities | 2,404,079 | 32,947 | 2.76 | 2,185,669 | 18,509 | 1.71 | ||||||
Noninterest-bearing demand deposits | 420,253 | 485,789 | ||||||||||
Other liabilities | 60,078 | 51,736 | ||||||||||
Total liabilities | 2,884,410 | 2,723,194 | ||||||||||
Shareholders' equity | 270,538 | 238,233 | ||||||||||
Total liabilities and shareholders' equity | $ | 3,154,948 | $ | 2,961,427 | ||||||||
Taxable-equivalent net interest income / net interest spread | 53,753 | 3.14 | % | 53,355 | 3.52 | % | ||||||
Taxable-equivalent net interest margin | 3.65 | % | 3.88 | % | ||||||||
Taxable-equivalent adjustment | (769) | (686) | ||||||||||
Net interest income | $ | 52,984 | $ | 52,669 | ||||||||
Ratio of average interest-earning assets to average interest-bearing liabilities | 123 | % | 127 | % | ||||||||
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 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 for the six months ended June 30, 2024.
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ORRSTOWN FINANCIAL SERVICES, INC. | ||||||||||
HISTORICAL TRENDS IN QUARTERLY FINANCIAL DATA (Unaudited)
|
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(In thousands) |
June 30, 2024 |
March 31, 2024 |
December 31, 2023 |
September 30, 2023 |
June 30, 2023 |
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Profitability for the quarter: | ||||||||||
Net interest income | $ | 26,103 | $ | 26,881 | $ | 26,018 | $ | 26,219 | $ | 26,375 |
Provision for credit losses | 812 | 298 | 418 | 136 | 399 | |||||
Noninterest income | 7,172 | 6,630 | 6,491 | 5,925 | 7,158 | |||||
Noninterest expenses | 22,639 | 22,469 | 22,392 | 20,447 | 20,749 | |||||
Income before income taxes | 9,824 | 10,744 | 9,699 | 11,561 | 12,385 | |||||
Income tax expense | 2,086 | 2,213 | 2,056 | 2,535 | 2,547 | |||||
Net income | $ | 7,738 | $ | 8,531 | $ | 7,643 | $ | 9,026 | $ | 9,838 |
Financial ratios: | ||||||||||
Return on average assets (1)
|
0.97 | % | 1.11 | % | 1.00 | % | 1.18 | % | 1.32 | % |
Return on average assets, adjusted (1)(2)(3)
|
1.09 | % | 1.19 | % | 1.13 | % | 1.18 | % | 1.32 | % |
Return on average equity (1)
|
11.41 | % | 12.79 | % | 12.21 | % | 14.42 | % | 16.27 | % |
Return on average equity, adjusted (1)(2)(3)
|
12.88 | % | 13.79 | % | 13.77 | % | 14.42 | % | 16.27 | % |
Net interest margin (1)
|
3.54 | % | 3.77 | % | 3.71 | % | 3.73 | % | 3.83 | % |
Efficiency ratio | 68.0 | % | 67.0 | % | 68.9 | % | 63.6 | % | 61.9 | % |
Efficiency ratio, adjusted (2)(3)
|
64.6 | % | 65.0 | % | 65.6 | % | 63.6 | % | 61.9 | % |
Per share information: | ||||||||||
Income per common share:
|
||||||||||
Basic | $ | 0.74 | $ | 0.82 | $ | 0.74 | $ | 0.87 | $ | 0.95 |
Basic, adjusted (2)(3)
|
0.84 | 0.89 | 0.84 | 0.87 | 0.95 | |||||
Diluted | 0.73 | 0.81 | 0.73 | 0.87 | 0.94 | |||||
Diluted, adjusted (2)(3)
|
0.83 | 0.88 | 0.83 | 0.87 | 0.94 | |||||
Book value | 25.97 | 25.38 | 24.98 | 22.90 | 23.15 | |||||
Tangible book value | 24.08 | 23.47 | 23.03 | 20.94 | 21.19 | |||||
Cash dividends paid | 0.20 | 0.20 | 0.20 | 0.20 | 0.20 | |||||
Average basic shares | 10,393 | 10,349 | 10,321 | 10,319 | 10,336 | |||||
Average diluted shares | 10,553 | 10,482 | 10,419 | 10,405 | 10,421 | |||||
(1) Annualized.
|
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(2) Ratio has been adjusted for the merger-related expenses for the three months ended June 30, 2024, March 31, 2024 and December 31, 2023.
|
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(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.
|
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ORRSTOWN FINANCIAL SERVICES, INC. | ||||||||||
HISTORICAL TRENDS IN QUARTERLY FINANCIAL DATA (Unaudited)
|
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(continued) | ||||||||||
(In thousands) |
June 30, 2024 |
March 31, 2024 |
December 31, 2023 |
September 30, 2023 |
June 30, 2023 |
|||||
Noninterest income: | ||||||||||
Service charges | $ | 1,283 | $ | 1,200 | $ | 1,198 | $ | 1,260 | $ | 1,251 |
Interchange income | 961 | 911 | 952 | 963 | 993 | |||||
Swap fee income | 375 | 199 | 588 | 255 | 196 | |||||
Wealth management income | 3,312 | 3,102 | 2,945 | 2,826 | 2,822 | |||||
Mortgage banking activities | 369 | 458 | 143 | (142) | 112 | |||||
Other income | 884 | 765 | 704 | 761 | 1,786 | |||||
Investment securities (losses) gains | (12) | (5) | (39) | 2 | (2) | |||||
Total noninterest income | $ | 7,172 | $ | 6,630 | $ | 6,491 | $ | 5,925 | $ | 7,158 |
Noninterest expenses: | ||||||||||
Salaries and employee benefits | $ | 13,195 | $ | 13,752 | $ | 12,848 | $ | 12,885 | $ | 13,054 |
Occupancy, furniture and equipment | 2,705 | 2,639 | 2,534 | 2,460 | 2,266 | |||||
Data processing | 1,237 | 1,265 | 1,247 | 1,248 | 1,201 | |||||
Advertising and bank promotions | 774 | 398 | 501 | 332 | 919 | |||||
FDIC insurance | 419 | 441 | 460 | 477 | 519 | |||||
Professional services | 801 | 631 | 702 | 965 | 504 | |||||
Taxes other than income | 49 | 494 | 203 | 387 | 3 | |||||
Intangible asset amortization | 215 | 225 | 236 | 228 | 239 | |||||
Merger-related expenses
|
1,135 | 672 | 1,059 | - | - | |||||
Other operating expenses | 2,109 | 1,952 | 2,602 | 1,465 | 2,044 | |||||
Total noninterest expenses | $ | 22,639 | $ | 22,469 | $ | 22,392 | $ | 20,447 | $ | 20,749 |
ORRSTOWN FINANCIAL SERVICES, INC. | ||||||||||
HISTORICAL TRENDS IN QUARTERLY FINANCIAL DATA (Unaudited)
|
||||||||||
(continued) | ||||||||||
(In thousands) |
June 30, 2024 |
March 31, 2024 |
December 31, 2023 |
September 30, 2023 |
June 30, 2023 |
|||||
Balance Sheet at quarter end: | ||||||||||
Cash and cash equivalents | $ | 132,509 | $ | 182,722 | $ | 65,161 | $ | 94,939 | $ | 76,318 |
Restricted investments in bank stocks | 11,147 | 11,453 | 11,992 | 12,987 | 12,602 | |||||
Securities available for sale | 529,082 | 514,909 | 513,519 | 495,162 | 508,612 | |||||
Loans held for sale, at fair value | 1,562 | 535 | 5,816 | 6,448 | 6,450 | |||||
Loans: | ||||||||||
Commercial real estate: | ||||||||||
Owner occupied | 371,301 | 364,280 | 373,757 | 376,350 | 366,439 | |||||
Non-owner occupied | 710,477 | 707,871 | 694,638 | 630,514 | 626,140 | |||||
Multi-family | 151,542 | 147,773 | 150,675 | 143,437 | 145,257 | |||||
Non-owner occupied residential | 89,156 | 91,858 | 95,040 | 100,391 | 105,504 | |||||
Commercial and industrial
|
374,976 | 365,524 | 367,085 | 374,190 | 379,905 | |||||
Acquisition and development: | ||||||||||
1-4 family residential construction | 32,439 | 22,277 | 24,516 | 25,642 | 20,461 | |||||
Commercial and land development | 129,883 | 118,010 | 115,249 | 153,279 | 143,177 | |||||
Municipal | 10,594 | 10,925 | 9,812 | 10,334 | 10,638 | |||||
Total commercial loans | 1,870,368 | 1,828,518 | 1,830,772 | 1,814,137 | 1,797,521 | |||||
Residential mortgage: | ||||||||||
First lien | 271,153 | 270,748 | 266,239 | 248,335 | 235,813 | |||||
Home equity - term | 4,633 | 4,966 | 5,078 | 5,223 | 5,228 | |||||
Home equity - lines of credit | 192,736 | 189,966 | 186,450 | 188,736 | 185,099 | |||||
Installment and other loans | 8,713 | 8,875 | 9,774 | 10,405 | 10,756 | |||||
Total loans | 2,347,603 | 2,303,073 | 2,298,313 | 2,266,836 | 2,234,417 | |||||
Allowance for credit losses
|
(29,864) | (29,165) | (28,702) | (28,278) | (28,383) | |||||
Net loans held-for-investment | 2,317,739 | 2,273,908 | 2,269,611 | 2,238,558 | 2,206,034 | |||||
Goodwill | 18,724 | 18,724 | 18,724 | 18,724 | 18,724 | |||||
Other intangible assets, net | 1,974 | 2,189 | 2,414 | 2,650 | 2,589 | |||||
Total assets | 3,198,782 | 3,183,331 | 3,064,240 | 3,054,435 | 3,008,197 | |||||
Total deposits | 2,702,884 | 2,695,951 | 2,558,814 | 2,546,435 | 2,522,861 | |||||
Borrowings | 129,625 | 127,099 | 147,285 | 175,241 | 152,229 | |||||
Subordinated notes | 32,128 | 32,111 | 32,093 | 32,076 | 32,059 | |||||
Total shareholders' equity | 278,376 | 271,682 | 265,056 | 243,080 | 245,641 |
ORRSTOWN FINANCIAL SERVICES, INC. | ||||||||||
HISTORICAL TRENDS IN QUARTERLY FINANCIAL DATA (Unaudited)
|
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(continued) | ||||||||||
June 30, 2024 |
March 31, 2024 |
December 31, 2023 |
September 30, 2023 |
June 30, 2023 |
||||||
Capital and credit quality measures(1):
|
||||||||||
Total risk-based capital: | ||||||||||
Orrstown Financial Services, Inc | 13.3 | % | 13.4 | % | 13.0 | % | 13.0 | % | 13.0 | % |
Orrstown Bank | 13.1 | % | 13.1 | % | 12.8 | % | 12.5 | % | 12.5 | % |
Tier 1 risk-based capital: | ||||||||||
Orrstown Financial Services, Inc | 11.1 | % | 11.2 | % | 10.8 | % | 10.6 | % | 10.5 | % |
Orrstown Bank | 12.0 | % | 11.9 | % | 11.6 | % | 11.4 | % | 11.4 | % |
Tier 1 common equity risk-based capital: | ||||||||||
Orrstown Financial Services, Inc | 11.1 | % | 11.2 | % | 10.8 | % | 10.6 | % | 10.5 | % |
Orrstown Bank | 12.0 | % | 11.9 | % | 11.6 | % | 11.4 | % | 11.4 | % |
Tier 1 leverage capital: | ||||||||||
Orrstown Financial Services, Inc | 8.9 | % | 9.0 | % | 8.9 | % | 8.7 | % | 8.6 | % |
Orrstown Bank | 9.5 | % | 9.6 | % | 9.5 | % | 9.3 | % | 9.3 | % |
Average equity to average assets | 8.50 | % | 8.66 | % | 8.18 | % | 8.18 | % | 8.11 | % |
Allowance for credit losses to total loans | 1.27 | % | 1.27 | % | 1.25 | % | 1.25 | % | 1.27 | % |
Total nonaccrual loans to total loans | 0.36 | % | 0.56 | % | 1.11 | % | 0.98 | % | 0.94 | % |
Nonperforming assets to total assets | 0.26 | % | 0.40 | % | 0.83 | % | 0.73 | % | 0.70 | % |
Allowance for credit losses to nonaccrual loans | 357 | % | 226 | % | 112 | % | 127 | % | 135 | % |
Other information: | ||||||||||
Net charge-offs (recoveries) | $ | 113 | $ | (42) | $ | (6) | $ | 241 | $ | 380 |
Classified loans | 48,722 | 48,997 | 55,030 | 33,593 | 26,347 | |||||
Nonperforming and other risk assets: | ||||||||||
Nonaccrual loans | 8,363 | 12,886 | 25,527 | 22,324 | 21,062 | |||||
Other real estate owned | - | - | - | - | - | |||||
Total nonperforming assets | 8,363 | 12,886 | 25,527 | 22,324 | 21,062 | |||||
Financial difficulty modifications still accruing
|
- | - | 9 | - | - | |||||
Loans past due 90 days or more and still accruing | 187 | 99 | 66 | 277 | 539 | |||||
Total nonperforming and other risk assets | $ | 8,550 | $ | 12,985 | $ | 25,602 | $ | 22,601 | $ | 21,601 |
(1) Capital ratios are estimated, subject to regulatory filings. The Company elected the three-year phase in option for the day-one impact of ASU 2016-13 for current expected credit losses ("CECL") to regulatory capital. 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.
|
Tangible Book Value per Common Share |
June 30, 2024 |
March 31, 2024 |
December 31, 2023 |
September 30, 2023 |
June 30, 2023 |
|||||
Shareholders' equity (most directly comparable GAAP-based measure) | $ | 278,376 | $ | 271,682 | $ | 265,056 | $ | 243,080 | $ | 245,641 |
Less: Goodwill | 18,724 | 18,724 | 18,724 | 18,724 | 18,724 | |||||
Other intangible assets | 1,974 | 2,189 | 2,414 | 2,650 | 2,589 | |||||
Related tax effect | (415) | (460) | (507) | (557) | (544) | |||||
Tangible common equity (non-GAAP) | $ | 258,093 | $ | 251,229 | $ | 244,425 | $ | 222,263 | $ | 224,872 |
Common shares outstanding | 10,720 | 10,705 | 10,612 | 10,613 | 10,611 | |||||
Book value per share (most directly comparable GAAP-based measure) | $ | 25.97 | $ | 25.38 | $ | 24.98 | $ | 22.90 | $ | 23.15 |
Intangible assets per share | 1.89 | 1.91 | 1.95 | 1.96 | 1.96 | |||||
Tangible book value per share (non-GAAP) | $ | 24.08 | $ | 23.47 | $ | 23.03 | $ | 20.94 | $ | 21.19 |
(dollars and shares in thousands)
|
Three Months Ended | Six Months Ended | ||||||||||
Adjusted Ratios for Merger-Related Expenses |
June 30, 2024 |
March 31, 2024 |
December 31, 2023 |
June 30, 2023 |
June 30, 2024 |
June 30, 2023 |
||||||
Net income (A) - most directly comparable GAAP-based measure | $ | 7,738 | $ | 8,531 | $ | 7,643 | $ | 9,838 | $ | 16,269 | $ | 18,994 |
Plus: Merger-related expenses (B) | 1,135 | 672 | 1,059 | - | 1,807 | - | ||||||
Less: Related tax effect (C) | (139) | (1) | (79) | - | (140) | - | ||||||
Adjusted net income (D=A+B-C) - Non-GAAP | $ | 8,734 | $ | 9,202 | $ | 8,623 | $ | 9,838 | $ | 17,936 | $ | 18,994 |
Average assets (E) | $3,211,124 | $3,098,772 | $3,037,824 | $2,989,415 | $3,154,948 | $2,961,427 | ||||||
Return on average assets (= A / E) - most directly comparable GAAP-based measure (1)
|
0.97 | % | 1.11 | % | 1.00 | % | 1.32 | % | 1.04 | % | 1.29 | % |
Return on average assets, adjusted (= D / E) - Non-GAAP (1)
|
1.09 | % | 1.19 | % | 1.13 | % | 1.32 | % | 1.14 | % | 1.29 | % |
Average equity (F) | $ | 272,788 | $ | 268,289 | $ | 248,442 | $ | 242,527 | $ | 270,538 | $ | 238,233 |
Return on average equity (= A / F) - most directly comparable GAAP-based measure (1)
|
11.41 | % | 12.79 | % | 12.21 | % | 16.27 | % | 12.09 | % | 16.08 | % |
Return on average equity, adjusted (= D / F) - Non-GAAP (1)
|
12.88 | % | 13.79 | % | 13.77 | % | 16.27 | % | 13.33 | % | 16.08 | % |
Weighted average shares - basic (G) - most directly comparable GAAP-based measure | 10,393 | 10,349 | 10,321 | 10,336 | 10,371 | 10,360 | ||||||
Basic earnings per share (= A / G) - most directly comparable GAAP-based measure | $ | 0.74 | $ | 0.82 | $ | 0.74 | $ | 0.95 | $ | 1.57 | $ | 1.83 |
Basic earnings per share, adjusted (= D / G) - Non-GAAP | $ | 0.84 | $ | 0.89 | $ | 0.84 | $ | 0.95 | $ | 1.73 | $ | 1.83 |
Weighted average shares - diluted (H) - most directly comparable GAAP-based measure | 10,553 | 10,482 | 10,419 | 10,421 | 10,517 | 10,458 | ||||||
Diluted earnings per share (= A / H) - most directly comparable GAAP-based measure | $ | 0.73 | $ | 0.81 | $ | 0.73 | $ | 0.94 | $ | 1.55 | $ | 1.82 |
Diluted earnings per share, adjusted (= D / H) - Non-GAAP | $ | 0.83 | $ | 0.88 | $ | 0.83 | $ | 0.94 | $ | 1.71 | $ | 1.82 |
Noninterest expense (I) - most directly comparable GAAP-based measure | $ | 22,639 | $ | 22,469 | $ | 22,392 | $ | 20,749 | $ | 45,108 | $ | 41,004 |
Less: Merger-related expenses (B) | (1,135) | (672) | (1,059) | - | (1,807) | - | ||||||
Adjusted noninterest expense (J = I - B) - Non-GAAP | $ | 21,504 | $ | 21,797 | $ | 21,333 | $ | 20,749 | $ | 43,301 | $ | 41,004 |
continued | ||||||||||||
(1) Annualized |
Three Months Ended | Six Months Ended | |||||||||||
June 30, 2024 |
March 31, 2024 |
December 31, 2023 |
June 30, 2023 |
June 30, 2024 |
June 30, 2023 |
|||||||
Net interest income (K) | $ | 26,103 | $ | 26,881 | $ | 26,018 | $ | 26,375 | $ | 52,984 | $ | 52,669 |
Noninterest income (L) | 7,172 | 6,630 | 6,491 | 7,158 | 13,802 | 13,236 | ||||||
Total operating income (M = K + L) | $ | 33,275 | $ | 33,511 | $ | 32,509 | $ | 33,533 | $ | 66,786 | $ | 65,905 |
Efficiency ratio (= I / M) - most directly comparable GAAP-based measure | 68.0 | % | 67.0 | % | 68.9 | % | 61.9 | % | 67.5 | % | 62.2 | % |
Efficiency ratio, adjusted (= J / M) - Non-GAAP | 64.6 | % | 65.0 | % | 65.6 | % | 61.9 | % | 64.8 | % | 62.2 | % |
(1) Annualized |
Sector | Portfolio Mix | Amortized Book | Fair Value | Credit Enhancement | AAA | AA | A | BBB | NR | Collateral / Guarantee Type | |||||||||
Unsecured ABS | 1 | % | $ | 3,330 | $ | 3,022 | 26 | % | - | % | - | % | - | % | - | % | 100 | % | Unsecured Consumer Debt |
Student Loan ABS | 1 | 4,662 | 4,558 | 27 | - | - | - | - | 100 | Seasoned Student Loans | |||||||||
Federal Family Education Loan ABS | 16 | 89,830 | 89,516 | 10 | 7 | 80 | - | 13 | - |
Federal Family Education Loan (1)
|
|||||||||
PACE Loan ABS | - | 2,231 | 1,945 | 6 | 100 | - | - | - | - |
PACE Loans (2)
|
|||||||||
Non-Agency CMBS | 3 | 14,180 | 14,185 | 25 | - | - | - | - | 100 | ||||||||||
Non-Agency RMBS | 3 | 17,195 | 14,201 | 16 | 100 | - | - | - | - |
Reverse Mortgages (3)
|
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Municipal - General Obligation | 18 | 102,548 | 93,339 | 10 | 83 | 7 | - | - | |||||||||||
Municipal - Revenue | 21 | 118,856 | 107,107 | - | 82 | 12 | - | 6 | |||||||||||
SBA ReRemic (5)
|
- | 2,662 | 2,639 | - | 100 | - | - | - |
SBA Guarantee (4)
|
||||||||||
Small Business Administration | 1 | 7,222 | 7,662 | - | 100 | - | - | - |
SBA Guarantee (4)
|
||||||||||
Agency MBS | 32 | 183,546 | 173,086 | - | 100 | - | - | - |
Residential Mortgages (4)
|
||||||||||
U.S. Treasury securities | 4 | 20,050 | 17,713 | - | 100 | - | - | - |
U.S. Government Guarantee (4)
|
||||||||||
100 | % | $ | 566,312 | $ | 528,973 | 6 | % | 83 | % | 4 | % | 2 | % | 5 | % | ||||
(1) 97% guaranteed by U.S. government
|
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(2) PACE acronym represents Property Assessed Clean Energy loans
|
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(3) Non-agency reverse mortgages with current structural credit enhancements
|
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(4) Guaranteed by U.S. government or U.S. government agencies
|
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(5) SBA ReRemic acronym represents Re-Securitization of Real Estate Mortgage Investment Conduits
|
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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+. |