Exhibit 99.1
FOR IMMEDIATE RELEASE:
Orrstown Financial Services, Inc. Reports Second Quarter 2026 Results
- Net income of $21.2 million, or $1.09 per diluted share, for the three months ended June 30, 2026 compared to net income of $21.8 million, or $1.12 per diluted share, for the three months ended March 31, 2026;
- Return on average assets was 1.53% and return on average equity was 13.96% for the three months ended June 30, 2026, compared to 1.59% and 14.76%, respectively, for the three months ended March 31, 2026;
- Subordinated notes of $31.0 million were redeemed on June 30, 2026; the remaining fair value mark of $1.6 million was amortized and reflected in interest expense during the second quarter of 2026;
- Net interest margin, on a tax equivalent basis, was 3.87% in the second quarter of 2026 compared to 3.90% in the first quarter of 2026; excluding the amortization of the fair value mark on the redeemed subordinated notes, net interest margin was 4.00% (1) in the second quarter of 2026;
- Total loans increased by $51.7 million, or approximately 5% annualized, from March 31, 2026 to June 30, 2026; classified loans decreased by $8.4 million and nonaccrual loans decreased by $6.2 million during the second quarter of 2026; nonaccrual loans to total loans decreased to 0.58% at June 30, 2026 from 0.74% at March 31, 2026;
- Noninterest income was $13.8 million for the three months ended June 30, 2026 compared to $15.6 million for the three months ended March 31, 2026 due to $2.4 million in income from life insurance policy death benefits recorded in the first quarter of 2026;
- The purchase of federal income tax credits resulted in a $1.6 million income tax benefit;
- Tangible common equity increased to 9.5% of total tangible assets at June 30, 2026 from 9.2% at March 31, 2026;
- Tangible book value per common share(1) increased to $26.71 at June 30, 2026 from $25.76 at March 31, 2026; and
- The Board of Directors declared a cash dividend of $0.30 per common share, payable August 11, 2026, to shareholders of record as of August 4, 2026.
HARRISBURG, PA (July 21, 2026) -- Orrstown Financial Services, Inc. (the "Company") (NASDAQ: ORRF), the parent company of Orrstown Bank (the “Bank”), announced earnings for the periods ended June 30, 2026. Net income totaled $21.2 million for the three months ended June 30, 2026, compared to net income of $21.8 million and $19.4 million for the three months ended March 31, 2026 and June 30, 2025, respectively. Diluted earnings per share was $1.09 for the three months ended June 30, 2026, compared to $1.12 and $1.01 for the three months ended March 31, 2026 and June 30, 2025, respectively. For the second quarter of 2025, excluding the impact from merger-related expenses, net of taxes, net income and diluted earnings per share were $20.2 million(1) and $1.04(1), respectively.
“Orrstown is pleased to have produced an outstanding quarter in which the strength of our foundation was evident in our key financial metrics,” said Adam L. Metz, President and Chief Executive Officer. "The core net interest margin expanded during the quarter as we continued to effectively manage funding costs. The redemption of the subordinated notes is expected to enhance future performance. We continue to create strong fee income from a variety of sources, highlighted by record quarterly wealth management revenue. We maintain a strong credit risk profile and we expect to continue to build upon our capital ratios at a healthy pace through earnings generation. With a solid balance sheet, diversified revenue streams and strong momentum across the organization, we are well positioned to build on our success in the second half of 2026 and beyond.”
(1) Non-GAAP measure. See Appendix A for additional information.
DISCUSSION OF RESULTS
Balance Sheet
Loans
Loans held for investment increased by $51.7 million in the three months ended June 30, 2026 and totaled $4.1 billion at both June 30, 2026 and March 31, 2026. Residential mortgages increased by $32.8 million, or approximately 16% annualized, of which $17.1 million were home equities, and commercial loans increased by $18.9 million, or approximately 2% annualized, from March 31, 2026 to June 30, 2026.
Investment Securities
Investment securities, all of which are classified as available-for-sale, increased by $2.3 million to $949.3 million at June 30, 2026 from $947.0 million at March 31, 2026. During the three months ended June 30, 2026, net unrealized losses on investment securities decreased by $1.8 million. The Bank purchased $28.4 million of investment securities, consisting of $14.6 million of agency mortgage backed securities and collateralized mortgage obligations and $13.8 million of non-agency collateralized mortgage obligations during the second quarter of 2026. The remaining change in investment securities during the second quarter of 2026 was due to paydowns of $28.5 million and a call of $1.0 million, partially offset by net accretion of $1.5 million recorded on investment securities. The overall duration of the Company's investment securities portfolio was 4.5 years at June 30, 2026 compared to 4.7 years at March 31, 2026. See Appendix B for a summary of the Bank's investment securities at June 30, 2026, highlighting their concentrations and credit ratings.
Deposits
During the second quarter of 2026, deposits decreased by $7.4 million and totaled $4.6 billion at both June 30, 2026 and March 31, 2026. Time deposits, interest-bearing demand deposits and savings deposits decreased by $27.1 million, $24.7 million and $3.1 million, respectively. These decreases were partially offset by increases in non-interest demand deposits of $38.2 million and money market deposits of $9.3 million from March 31, 2026 to June 30, 2026. The Bank continues to focus on shifting its deposit mix to include more lower cost deposits. The Bank's loan-to-deposit ratio was 89% at June 30, 2026 compared to 88% at March 31, 2026.
Borrowings
On June 30, 2026, the Company redeemed the $31.0 million outstanding 4.50% fixed-to-floating rate subordinated notes assumed from Codorus Valley Bancorp, Inc. on July 1, 2024. At the time of redemption, the subordinated notes had an interest rate of 7.72%. During the three months ended June 30, 2026, the Company amortized the remaining fair value mark of $1.6 million to interest expense as a result of the redemption.
The Company actively manages its liquidity position through its various sources of funding to meet the needs of its clients. FHLB advances and other borrowings were $274.8 million at June 30, 2026 compared to $206.7 million at March 31, 2026. The increase was due to higher utilization of borrowings during the second quarter of 2026 primarily to fund loan growth. Despite the quarter-end increase, average FHLB advances and other borrowings decreased by $84.8 million from the three months ended March 31, 2026 to the three months ended June 30, 2026. The Bank seeks to maintain sufficient liquidity to ensure that client needs can be addressed in a timely basis. The Bank had available alternative funding sources, such as FHLB advances and other wholesale options, of $1.8 billion at both June 30, 2026 and March 31, 2026.
Income Statement
Net Interest Income and Margin
Net interest income was $48.8 million for the three months ended June 30, 2026 compared to $49.0 million for the three months ended March 31, 2026. The net interest margin, on a tax equivalent basis, decreased to 3.87% in the second quarter of 2026 from 3.90% in the first quarter of 2026. The decrease is primarily the result of the accelerated amortization of the subordinated notes' fair value mark in the second quarter of 2026. Excluding the amortization of the fair value mark on the redeemed subordinated notes, net interest margin was 4.00% (1) in the second quarter of 2026. A decrease of eight basis points in the cost of interest-bearing deposits during the second quarter of 2026 partially offset the impact of the amortization of the fair value mark from the subordinated note redemption.
Interest income on loans, on a tax equivalent basis, increased by $0.3 million to $63.5 million for the three months ended June 30, 2026 compared to $63.2 million for the three months ended March 31, 2026. There was no significant change in the net accretion impact of the purchase accounting marks on loans between the first and second quarters of 2026.
Interest income on investment securities, on a tax equivalent basis, was $11.1 million for both the second and first quarters of 2026. Interest income on investments securities benefited from the purchases of higher yielding investment securities despite a $12.1 million decrease in average investment securities during the three months ended June 30, 2026 compared to the three months ended March 31, 2026. The decrease in average investment securities between the periods was due to the timing of purchases and paydowns.
Interest expense, on a tax equivalent basis, increased by $0.5 million to $25.9 million for the three months ended June 30, 2026 compared to $25.4 million for the three months ended March 31, 2026. Borrowing costs increased by $0.8 million during the three months ended June 30, 2026 compared to the three months ended March 31, 2026 due to the accelerated amortization of the remaining subordinated debt fair value mark of $1.6 million. The cost of deposits decreased by eight basis points during the three months ended June 30, 2026 compared to the three months ended March 31, 2026.
Average interest-bearing deposits increased by $38.3 million during the three months ended June 30, 2026 compared to the three months ended March 31, 2026. Average FHLB advances and other borrowings decreased by $84.8 million from the three months ended March 31, 2026 to the three months ended June 30, 2026. There were seasonal deposit declines in the first quarter of 2026, which increased borrowing balances. However, significant deposit inflow from seasonal sources in the back half of the first quarter enabled the Bank to substantially reduce its borrowing levels.
Provision for Credit Losses on Loans
The allowance for credit losses ("ACL") on loans decreased to $46.6 million at June 30, 2026 from $47.5 million at March 31, 2026. The ACL to total loans was 1.13% at June 30, 2026 compared to 1.17% at March 31, 2026. The Company recorded provision expense on loans of $0.4 million for the three months ended June 30, 2026 compared to $0.7 million for the three months ended March 31, 2026 partially due to the increase in loans. Net charge-offs were $1.2 million during the three months ended June 30, 2026 compared to $0.9 million during the three months ended March 31, 2026. As a result of improvements noted in underlying criteria, certain qualitative factors were adjusted, which reduced the ACL and partially offset the impact from the increase in loans and net charge-offs.
Classified loans decreased by $8.4 million to $49.2 million at June 30, 2026 from $57.6 million at March 31, 2026 due primarily to repayments of $7.8 million. Nonaccrual loans totaled $23.8 million at June 30, 2026 compared to $30.0 million at March 31, 2026. The decrease of $6.2 million in nonaccrual loans was due to repayments of $6.9 million, which included $4.2 million in commercial and land development loans that were on nonaccrual status and risk rated as substandard. Nonaccrual loans to total loans decreased to 0.58% at June 30, 2026 from 0.74% at March 31, 2026. Management believes the ACL to be adequate based on current asset quality metrics and economic forecasts.
(1) Non-GAAP measure. See Appendix A for additional information.
Noninterest Income
Noninterest income decreased by $1.8 million to $13.8 million for the three months ended June 30, 2026 from $15.6 million for the three months ended March 31, 2026.
Income from life insurance decreased by $2.4 million to $1.4 million for the three months ended June 30, 2026 compared to $3.8 million for the three months ended March 31, 2026. During the first quarter of 2026, the Company recorded $2.4 million in income from life insurance policy death benefits.
Swap fee income decreased by $0.6 million to $0.7 million for the three months ended June 30, 2026 compared to $1.3 million for the three months ended March 31, 2026. Swap fee income will fluctuate based on market conditions and client demand.
Wealth management income increased by $0.3 million to $5.9 million for the three months ended June 30, 2026 compared to $5.6 million for the three months ended March 31, 2026.
Noninterest Expenses
Noninterest expenses increased by $1.0 million to $37.7 million for the three months ended June 30, 2026 from $36.7 million in the three months ended March 31, 2026.
Salaries and benefits expense increased by $1.0 million to $22.2 million for the three months ended June 30, 2026 compared to $21.2 million for the three months ended March 31, 2026. The increase during the second quarter of 2026 was due primarily to the impact from merit salary increases in May, higher healthcare costs due to claim volume and the impact of one extra day compared to the prior quarter.
Occupancy, furniture and equipment expense decreased by $0.3 million to $3.9 million for the three months ended June 30, 2026 compared to $4.2 million for the three months ended March 31, 2026 due to seasonal expenses incurred during the first quarter of 2026.
Advertising and bank promotions expense increased by $0.4 million to $1.1 million in the three months ended June 30, 2026 from $0.7 million in the three months ended March 31, 2026 due to $0.7 million in contributions to tax credit programs during the second quarter of 2026. Taxes other than income decreased by $0.6 million to $0.4 million in the three months ended June 30, 2026 compared to $1.0 million in the three months ended March 31, 2026. This decrease reflects the tax credits recognized in the second quarter of 2026 as result of the charitable contributions.
Other operating expenses increased by $0.2 million to $4.3 million for the three months ended June 30, 2026 compared to $4.1 million for the three months ended March 31, 2026. This was due primarily to an increase of $0.2 million in mark-to-market losses on non-hedging derivatives from the first quarter of 2026 to the second quarter of 2026.
Income Taxes
The Company's effective tax rate was 14.2% for the second quarter of 2026 compared to 20.7% for the first quarter of 2026. The Company's effective tax rate for the three months ended June 30, 2026 is less than the 21% federal statutory rate primarily due to the purchase of federal income tax credits, which reduced income tax expense by $1.6 million. In addition, the effective tax rate was impacted by tax-exempt income, including interest earned on tax-exempt loans and securities and non-taxable income from life insurance policies and tax credits partially offset by the disallowed portion of interest expense against earnings in association with the Bank's tax-exempt investments under the Tax Equity and Fiscal Responsibility Act of 1982 ("TEFRA"). The Company regularly analyzes its projected taxable income and makes adjustments to the provision for income taxes accordingly.
Capital
Shareholders’ equity totaled $621.7 million at June 30, 2026 compared to $603.2 million at March 31, 2026. The increase of $18.5 million is primarily due to net income of $21.2 million, other comprehensive income of $1.9 million and share-based compensation activity of $1.3 million, partially offset by dividends of $5.9 million.
Tangible book value per common share(1) increased to $26.71 at June 30, 2026 from $25.76 at March 31, 2026. The Company's tangible common equity ratio was 9.5% of total tangible assets at June 30, 2026 compared to 9.2% at March 31, 2026. Return on average tangible common equity per common share(1) was 16.86% for the three months ended June 30, 2026 compared to 17.96% for the three months ended March 31, 2026. The decrease in the return on average tangible common equity per common share was primarily due to the increase in average shareholders' equity.
(1) Non-GAAP measure. See Appendix A for additional information.
Most of the Company's capital ratios increased during the three months ended June 30, 2026 compared to the three months ended March 31, 2026 due to earnings. Total risk-based capital declined over that period due to the redemption of subordinated debt. The Company's tier 1 common equity, tier 1 capital and total risk-based capital ratios were 12.0%, 12.2% and 13.2%, respectively, at June 30, 2026 compared to 11.8%, 12.0% and 13.5%, respectively, at March 31, 2026. The Company's Tier 1 leverage ratio increased to 10.1% at June 30, 2026 compared to 9.7% at March 31, 2026.
At June 30, 2026, all four capital ratios applicable to the Company were above regulatory minimum levels to be deemed “well capitalized” under current bank regulatory guidelines. The Company continues to believe that capital is adequate to support the risks inherent in the balance sheet, as well as growth requirements.
| Investor Relations Contact: |
| Neelesh Kalani |
| Executive Vice President, Chief Financial Officer |
| Phone (717) 510-7097 |
| FINANCIAL HIGHLIGHTS (Unaudited)(In thousands) | Three Months EndedJune 30, 2026 | Three Months EndedJune 30, 2025 | Six Months EndedJune 30, 2026 | Six Months EndedJune 30, 2025 |
|---|---|---|---|---|
| Profitability for the period: | ||||
| Net interest income | $48,831 | $49,512 | $97,836 | $98,273 |
| Provision for (recovery of) credit losses - loans | 338 | 209 | 1,066 | (345) |
| Recovery of credit losses - unfunded loan commitments | — | (100) | (376) | (100) |
| Noninterest income | 13,836 | 12,915 | 29,413 | 24,539 |
| Noninterest expenses | 37,666 | 37,614 | 74,394 | 75,790 |
| Income before income tax expense | 24,663 | 24,704 | 52,165 | 47,467 |
| Income tax expense | 3,505 | 5,256 | 9,198 | 9,968 |
| Net income available to common shareholders | $21,158 | $19,448 | $42,967 | $37,499 |
| Financial ratios: | ||||
| Return on average assets (1) | 1.53% | 1.45% | 1.56% | 1.40% |
| Return on average assets, adjusted (1)(3)(4) | n/a | 1.51% | n/a | 1.48% |
| Return on average equity (1) | 13.96% | 14.56% | 14.35% | 14.28% |
| Return on average equity, adjusted (1)(3)(4) | n/a | 15.12% | n/a | 15.05% |
| Net interest margin (1) | 3.87% | 4.07% | 3.89% | 4.04% |
| Net interest margin, adjusted (1)(2)(4) | 4.00% | n/a | 3.95% | n/a |
| Efficiency ratio | 60.1% | 60.3% | 58.5% | 61.7% |
| Efficiency ratio, adjusted (2)(3)(4) | 58.6% | 58.7% | 57.7% | 59.6% |
| Income per common share: | ||||
| Basic | $1.10 | $1.01 | $2.23 | $1.96 |
| Basic, adjusted (3)(4) | n/a | $1.05 | n/a | $2.06 |
| Diluted | $1.09 | $1.01 | $2.21 | $1.94 |
| Diluted, adjusted (3)(4) | n/a | $1.04 | n/a | $2.04 |
| Average equity to average assets | 10.97% | 9.97% | 10.89% | 9.81% |
| (1) Annualized for the three and six months ended June 30, 2026 and 2025. | ||||
| (2) Ratio has been adjusted for accelerated amortization of the remaining fair value mark of $1.6 million from the redemption of the subordinated notes during the three and six months ended June 30, 2026. | ||||
| (3) Ratio has been adjusted for the non-recurring charges for the three and six months ended June 30, 2025. | ||||
| (4) Non-GAAP based financial measure. Please refer to Appendix A - Supplemental Reporting of Non-GAAP Measures and GAAP to Non-GAAP Reconciliations for a discussion of our use of non-GAAP based financial measures, including tables reconciling GAAP and non-GAAP financial measures appearing herein. |
| FINANCIAL HIGHLIGHTS (Unaudited) · (continued)(Dollars in thousands, except per share amounts) | June 30, 2026 | December 31, 2025 |
|---|---|---|
| At period-end: | ||
| Total assets | $5,612,151 | $5,542,255 |
| Loans, net of allowance for credit losses | 4,066,399 | 3,973,012 |
| Loans held-for-sale, at fair value | 3,639 | 6,090 |
| Securities available for sale, at fair value | 949,281 | 952,740 |
| Total deposits | 4,620,023 | 4,528,774 |
| FHLB advances and other borrowings and Securities sold under agreements to repurchase | 282,362 | 299,243 |
| Subordinated notes and trust preferred debt | 8,049 | 37,122 |
| Shareholders' equity | 621,650 | 591,535 |
| Credit quality and capital ratios (1): | ||
| Allowance for credit losses to total loans | 1.13% | 1.19% |
| Total nonaccrual loans to total loans | 0.58% | 0.70% |
| Nonperforming assets to total assets | 0.44% | 0.51% |
| Allowance for credit losses to nonaccrual loans | 196% | 170% |
| Total risk-based capital: | ||
| Orrstown Financial Services, Inc. | 13.2% | 13.3% |
| Orrstown Bank | 13.1% | 13.3% |
| Tier 1 risk-based capital: | ||
| Orrstown Financial Services, Inc. | 12.2% | 11.7% |
| Orrstown Bank | 12.1% | 12.2% |
| Tier 1 common equity risk-based capital: | ||
| Orrstown Financial Services, Inc. | 12.0% | 11.5% |
| Orrstown Bank | 12.1% | 12.2% |
| Tier 1 leverage capital: | ||
| Orrstown Financial Services, Inc. | 10.1% | 9.5% |
| Orrstown Bank | 10.0% | 9.9% |
| Book value per common share | $31.60 | $30.32 |
| (1) Capital ratios are estimated for the current period, subject to regulatory filings. The Company elected the three-year phase in option for the day-one impact of ASU 2016-13 for current expected credit losses ("CECL") to regulatory capital. At December 31, 2025, 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. At June 30, 2026, the day-one impact of ASU 2016-13 was fully applied to the capital ratios. |
| ORRSTOWN FINANCIAL SERVICES, INC. · CONSOLIDATED BALANCE SHEETS (Unaudited)(Dollars in thousands, except per share amounts) | June 30, 2026 | December 31, 2025 |
|---|---|---|
| Assets | ||
| Cash and due from banks | $58,319 | $42,083 |
| Interest-bearing deposits with banks | 86,522 | 107,691 |
| Cash and cash equivalents | 144,841 | 149,774 |
| Restricted investments in bank stocks | 27,429 | 26,717 |
| Securities available for sale (amortized cost of $973,712 and $972,138 at June 30, 2026 and December 31, 2025, respectively) | 949,281 | 952,740 |
| Loans held for sale, at fair value | 3,639 | 6,090 |
| Loans | 4,113,031 | 4,020,693 |
| Less: Allowance for credit losses | (46,632) | (47,681) |
| Net loans | 4,066,399 | 3,973,012 |
| Premises and equipment, net | 50,166 | 51,029 |
| Cash surrender value of life insurance | 147,787 | 146,994 |
| Goodwill | 69,751 | 69,751 |
| Other intangible assets, net | 33,572 | 37,990 |
| Accrued interest receivable | 19,789 | 21,473 |
| Deferred tax assets, net | 32,693 | 33,931 |
| Other assets | 66,804 | 72,754 |
| Total assets | $5,612,151 | $5,542,255 |
| Liabilities | ||
| Deposits: | ||
| Noninterest-bearing | $920,851 | $870,906 |
| Interest-bearing | 3,699,172 | 3,657,868 |
| Total deposits | 4,620,023 | 4,528,774 |
| Securities sold under agreements to repurchase and federal funds purchased | 7,594 | 24,542 |
| FHLB advances and other borrowings | 274,768 | 274,701 |
| Subordinated notes and trust preferred debt | 8,049 | 37,122 |
| Other liabilities | 80,067 | 85,581 |
| Total liabilities | 4,990,501 | 4,950,720 |
| Shareholders’ Equity | ||
| Preferred stock, $1.25 par value per share; 500,000 shares authorized; no shares issued or outstanding | — | — |
| Common stock, no par value—$0.05205 stated value per share; 50,000,000 shares authorized; 19,710,341 shares issued and 19,669,802 outstanding at June 30, 2026; 19,711,628 shares issued and 19,507,208 outstanding at December 31, 2025 | 1,026 | 1,026 |
| Additional paid—in capital | 421,960 | 424,596 |
| Retained earnings | 217,969 | 186,752 |
| Accumulated other comprehensive loss | (17,826) | (15,201) |
| Treasury stock— 40,539 and 204,420 shares, at cost at June 30, 2026 and December 31, 2025, respectively | (1,479) | (5,638) |
| Total shareholders’ equity | 621,650 | 591,535 |
| Total liabilities and shareholders’ equity | $5,612,151 | $5,542,255 |
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
| (Dollars in thousands, except per share amounts) | Three Months EndedJune 30, 2026 | Three Months EndedJune 30, 2025 | Six Months EndedJune 30, 2026 | Six Months EndedJune 30, 2025 |
|---|---|---|---|---|
| Interest income | ||||
| Loans | $63,315 | $63,036 | $126,310 | $126,468 |
| Investment securities - taxable | 9,906 | 9,406 | 19,757 | 18,350 |
| Investment securities - tax-exempt | 842 | 878 | 1,723 | 1,753 |
| Short-term investments | 639 | 1,513 | 1,276 | 3,781 |
| Total interest income | 74,702 | 74,833 | 149,066 | 150,352 |
| Interest expense | ||||
| Deposits | 21,687 | 22,855 | 43,673 | 47,115 |
| Securities sold under agreements to repurchase and federal funds purchased | 29 | 106 | 126 | 190 |
| FHLB advances and other borrowings | 1,635 | 1,030 | 3,990 | 2,148 |
| Subordinated notes and trust preferred debt | 2,520 | 1,330 | 3,441 | 2,626 |
| Total interest expense | 25,871 | 25,321 | 51,230 | 52,079 |
| Net interest income | 48,831 | 49,512 | 97,836 | 98,273 |
| Provision for (recovery of) credit losses - loans | 338 | 209 | 1,066 | (345) |
| Recovery of credit losses - unfunded loan commitments | — | (100) | (376) | (100) |
| Net interest income after provision for (recovery of) credit losses | 48,493 | 49,403 | 97,146 | 98,718 |
| Noninterest income | ||||
| Service charges | 2,734 | 2,630 | 5,605 | 5,025 |
| Interchange income | 1,602 | 1,441 | 3,115 | 2,868 |
| Swap fee income | 651 | 669 | 1,990 | 1,063 |
| Wealth management income | 5,946 | 5,267 | 11,503 | 10,682 |
| Mortgage banking activities | 436 | 478 | 762 | 780 |
| Income from life insurance | 1,376 | 1,311 | 5,137 | 2,600 |
| Investment securities gains | 57 | 8 | 55 | 21 |
| Other income | 1,034 | 1,111 | 1,246 | 1,500 |
| Total noninterest income | 13,836 | 12,915 | 29,413 | 24,539 |
| Noninterest expenses | ||||
| Salaries and employee benefits | 22,229 | 21,364 | 43,386 | 41,752 |
| Occupancy, furniture and equipment | 3,887 | 4,211 | 8,108 | 8,886 |
| Data processing | 1,703 | 965 | 3,240 | 1,889 |
| Advertising and bank promotions | 1,126 | 1,077 | 1,809 | 1,576 |
| FDIC insurance | 634 | 674 | 1,183 | 1,498 |
| Professional services | 1,202 | 2,016 | 2,423 | 3,842 |
| Taxes other than income | 392 | 295 | 1,417 | 1,237 |
| Intangible asset amortization | 2,179 | 2,472 | 4,418 | 5,007 |
| Merger-related expenses | — | 968 | — | 2,617 |
| Restructuring expenses | — | — | — | 91 |
| Other operating expenses | 4,314 | 3,572 | 8,410 | 7,395 |
| Total noninterest expenses | 37,666 | 37,614 | 74,394 | 75,790 |
| Income before income tax expense | 24,663 | 24,704 | 52,165 | 47,467 |
| Income tax expense | 3,505 | 5,256 | 9,198 | 9,968 |
| Net income | $21,158 | $19,448 | $42,967 | $37,499 |
| continued |
| Line item | Three Months EndedJune 30, 2026 | Three Months EndedJune 30, 2025 | Six Months EndedJune 30, 2026 | Six Months EndedJune 30, 2025 |
|---|---|---|---|---|
| Share information: | ||||
| Basic earnings per share | $1.10 | $1.01 | $2.23 | $1.96 |
| Diluted earnings per share | $1.09 | $1.01 | $2.21 | $1.94 |
| Dividends paid per share | $0.30 | $0.26 | $0.60 | $0.52 |
| Weighted average shares - basic | 19,313 | 19,173 | 19,293 | 19,165 |
| Weighted average shares - diluted | 19,432 | 19,342 | 19,421 | 19,335 |
| ANALYSIS OF NET INTEREST INCOME · Average Balances and Interest Rates, Taxable-Equivalent Basis (Unaudited)(In thousands) | ANALYSIS OF NET INTEREST INCOME · Average Balances and Interest Rates, Taxable-Equivalent Basis (Unaudited) · Three Months Ended · 6/30/2026 · AverageBalance | ANALYSIS OF NET INTEREST INCOME · Average Balances and Interest Rates, Taxable-Equivalent Basis (Unaudited) · Three Months Ended · 6/30/2026 · Taxable- · EquivalentInterest | ANALYSIS OF NET INTEREST INCOME · Average Balances and Interest Rates, Taxable-Equivalent Basis (Unaudited) · Three Months Ended · 6/30/2026 · Taxable- · EquivalentRate | ANALYSIS OF NET INTEREST INCOME · Average Balances and Interest Rates, Taxable-Equivalent Basis (Unaudited) · Three Months Ended · 3/31/2026 · AverageBalance | ANALYSIS OF NET INTEREST INCOME · Average Balances and Interest Rates, Taxable-Equivalent Basis (Unaudited) · Three Months Ended · 3/31/2026 · Taxable- · EquivalentInterest | ANALYSIS OF NET INTEREST INCOME · Average Balances and Interest Rates, Taxable-Equivalent Basis (Unaudited) · Three Months Ended · 3/31/2026 · Taxable- · EquivalentRate | ANALYSIS OF NET INTEREST INCOME · Average Balances and Interest Rates, Taxable-Equivalent Basis (Unaudited) · Three Months Ended · 12/31/2025 · AverageBalance | ANALYSIS OF NET INTEREST INCOME · Average Balances and Interest Rates, Taxable-Equivalent Basis (Unaudited) · Three Months Ended · 12/31/2025 · Taxable- · EquivalentInterest | ANALYSIS OF NET INTEREST INCOME · Average Balances and Interest Rates, Taxable-Equivalent Basis (Unaudited) · Three Months Ended · 12/31/2025 · Taxable- · EquivalentRate | ANALYSIS OF NET INTEREST INCOME · Average Balances and Interest Rates, Taxable-Equivalent Basis (Unaudited) · Three Months Ended · 9/30/2025 · AverageBalance | Three Months Ended · 9/30/2025 · Taxable- · EquivalentInterest | 9/30/2025 · Taxable- · EquivalentRate | 6/30/2025 · AverageBalance | 6/30/2025 · Taxable- · EquivalentInterest | 6/30/2025 · Taxable- · EquivalentRate |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Assets | |||||||||||||||
| Federal funds sold & interest-bearing bank balances | $69,784 | $639 | 3.67% | $70,086 | $637 | 3.69% | $103,886 | $1,017 | 3.88% | $101,728 | $1,123 | 4.38% | $136,106 | $1,513 | 4.46% |
| Investment securities (1)(2) | 971,932 | 11,096 | 4.57 | 984,060 | 11,079 | 4.51 | 976,957 | 11,177 | 4.58 | 906,399 | 10,593 | 4.67 | 904,119 | 10,626 | 4.70 |
| Loans (1)(3)(4)(5) | 4,075,290 | 63,542 | 6.25 | 4,070,889 | 63,214 | 6.29 | 3,997,842 | 64,635 | 6.42 | 3,979,044 | 65,975 | 6.58 | 3,894,978 | 63,246 | 6.52 |
| Total interest-earning assets | 5,117,006 | 75,277 | 5.90 | 5,125,035 | 74,930 | 5.91 | 5,078,685 | 76,829 | 6.01 | 4,987,171 | 77,691 | 6.19 | 4,935,203 | 75,385 | 6.13 |
| Other assets | 425,913 | 423,779 | 426,626 | 433,659 | 439,569 | ||||||||||
| Total assets | $5,542,919 | $5,548,814 | $5,505,311 | $5,420,830 | $5,374,772 | ||||||||||
| Liabilities and Shareholders' Equity | |||||||||||||||
| Interest-bearing demand deposits | $2,577,915 | 13,629 | 2.12 | $2,534,291 | 13,796 | 2.21 | $2,471,895 | 14,078 | 2.26 | $2,450,034 | 14,145 | 2.29 | $2,463,687 | 13,880 | 2.26 |
| Savings deposits | 260,712 | 128 | 0.20 | 259,585 | 143 | 0.22 | 262,240 | 164 | 0.25 | 264,761 | 164 | 0.25 | 269,309 | 165 | 0.25 |
| Time deposits | 900,412 | 7,930 | 3.53 | 906,875 | 8,047 | 3.60 | 912,611 | 8,342 | 3.63 | 897,416 | 8,330 | 3.68 | 914,108 | 8,810 | 3.87 |
| Total interest-bearing deposits | 3,739,039 | 21,687 | 2.33 | 3,700,751 | 21,986 | 2.41 | 3,646,746 | 22,584 | 2.46 | 3,612,211 | 22,639 | 2.49 | 3,647,104 | 22,855 | 2.51 |
| Securities sold under agreements to repurchase and federal funds purchased | 12,024 | 29 | 0.98 | 23,674 | 97 | 1.66 | 27,348 | 105 | 1.52 | 27,772 | 107 | 1.53 | 25,917 | 106 | 1.64 |
| FHLB advances and other borrowings | 175,734 | 1,635 | 3.73 | 248,357 | 2,355 | 3.85 | 238,806 | 2,371 | 3.94 | 168,939 | 1,791 | 4.21 | 104,068 | 1,030 | 3.97 |
| Subordinated notes and trust preferred debt | 36,664 | 2,520 | 27.57 | 37,175 | 921 | 10.05 | 37,023 | 669 | 7.17 | 68,749 | 1,597 | 9.21 | 68,910 | 1,330 | 7.74 |
| Total interest-bearing liabilities | 3,963,461 | 25,871 | 2.62 | 4,009,957 | 25,359 | 2.56 | 3,949,923 | 25,729 | 2.58 | 3,877,671 | 26,134 | 2.67 | 3,845,999 | 25,321 | 2.64 |
| Noninterest-bearing demand deposits | 889,378 | 850,415 | 882,552 | 902,128 | 904,031 | ||||||||||
| Other liabilities | 81,981 | 89,112 | 93,977 | 89,086 | 89,058 | ||||||||||
| Total liabilities | 4,934,820 | 4,949,484 | 4,926,452 | 4,868,885 | 4,839,088 | ||||||||||
| Shareholders' equity | 608,099 | 599,330 | 578,859 | 551,945 | 535,684 | ||||||||||
| Total | $5,542,919 | $5,548,814 | $5,505,311 | $5,420,830 | $5,374,772 | ||||||||||
| Taxable-equivalent net interest income / net interest spread | 49,406 | 3.28% | 49,571 | 3.35% | 51,100 | 3.43% | 51,557 | 3.52% | 50,064 | 3.49% | |||||
| Taxable-equivalent net interest margin | 3.87% | 3.90% | 4.00% | 4.11% | 4.07% | ||||||||||
| Taxable-equivalent adjustment | (575) | (566) | (569) | (569) | (552) | ||||||||||
| Net interest income | $48,831 | $49,005 | $50,531 | $50,988 | $49,512 | ||||||||||
| Ratio of average interest-earning assets to average interest-bearing liabilities | 129% | 128% | 129% | 129% | 128% |
| 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 accretion on purchase accounting marks of $4.3 million, $4.2 million, $4.7 million, $5.3 million and $4.9 million for the three months ended June 30, 2026, March 31, 2026, December 31, 2025, September 30, 2025 and June 30, 2025, respectively. |
| ANALYSIS OF NET INTEREST INCOME · Average Balances and Interest Rates, Taxable-Equivalent Basis (Unaudited) · (continued)(In thousands) | ANALYSIS OF NET INTEREST INCOME · Average Balances and Interest Rates, Taxable-Equivalent Basis (Unaudited) · Six Months Ended · June 30, 2026 · AverageBalance | ANALYSIS OF NET INTEREST INCOME · Average Balances and Interest Rates, Taxable-Equivalent Basis (Unaudited) · Six Months Ended · June 30, 2026 · Taxable- · EquivalentInterest | ANALYSIS OF NET INTEREST INCOME · Average Balances and Interest Rates, Taxable-Equivalent Basis (Unaudited) · Six Months Ended · June 30, 2026 · Taxable- · EquivalentRate | ANALYSIS OF NET INTEREST INCOME · Average Balances and Interest Rates, Taxable-Equivalent Basis (Unaudited) · Six Months Ended · June 30, 2025 · AverageBalance | Average Balances and Interest Rates, Taxable-Equivalent Basis (Unaudited) · Six Months Ended · June 30, 2025 · Taxable- · EquivalentInterest | Six Months Ended · June 30, 2025 · Taxable- · EquivalentRate |
|---|---|---|---|---|---|---|
| Assets | ||||||
| Federal funds sold & interest-bearing bank balances | $69,934 | $1,276 | 3.68% | $169,541 | $3,781 | 4.50% |
| Investment securities (1)(2) | 977,962 | 22,174 | 4.54 | 884,730 | 20,787 | 4.70 |
| Loans (1)(3)(4)(5) | 4,073,103 | 126,757 | 6.27 | 3,902,295 | 126,883 | 6.56 |
| Total interest-earning assets | 5,120,999 | 150,207 | 5.90 | 4,956,566 | 151,451 | 6.15 |
| Other assets | 424,852 | 443,528 | ||||
| Total assets | $5,545,851 | $5,400,094 | ||||
| Liabilities and Shareholders' Equity | ||||||
| Interest-bearing demand deposits | $2,556,224 | 27,424 | 2.16 | $2,468,589 | 28,036 | 2.29 |
| Savings deposits | 260,152 | 271 | 0.21 | 271,104 | 330 | 0.25 |
| Time deposits | 903,625 | 15,978 | 3.57 | 942,387 | 18,749 | 4.01 |
| Total interest-bearing deposits | 3,720,001 | 43,673 | 2.37 | 3,682,080 | 47,115 | 2.58 |
| Securities sold under agreements to repurchase and federal funds purchased | 17,817 | 126 | 1.43 | 26,039 | 190 | 1.47 |
| FHLB advances and other borrowings | 211,844 | 3,990 | 3.80 | 108,439 | 2,148 | 3.99 |
| Subordinated notes and trust preferred debt | 36,918 | 3,441 | 18.80 | 68,825 | 2,626 | 7.69 |
| Total interest-bearing liabilities | 3,986,580 | 51,230 | 2.59 | 3,885,383 | 52,079 | 2.70 |
| Noninterest-bearing demand deposits | 870,004 | 895,924 | ||||
| Other liabilities | 85,528 | 89,067 | ||||
| Total liabilities | 4,942,112 | 4,870,374 | ||||
| Shareholders' equity | 603,739 | 529,720 | ||||
| Total liabilities and shareholders' equity | $5,545,851 | $5,400,094 | ||||
| Taxable-equivalent net interest income / net interest spread | 98,977 | 3.31% | 99,372 | 3.45% | ||
| Taxable-equivalent net interest margin | 3.89% | 4.04% | ||||
| Taxable-equivalent adjustment | (1,141) | (1,099) | ||||
| Net interest income | $97,836 | $98,273 | ||||
| Ratio of average interest-earning assets to average interest-bearing liabilities | 128% | 128% |
| 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 accretion on purchase accounting marks of $8.5 million and $11.5 million for the six months ended June 30, 2026 and 2025, respectively. |
| ORRSTOWN FINANCIAL SERVICES, INC. · HISTORICAL TRENDS IN QUARTERLY FINANCIAL DATA (Unaudited) · (In thousands)Profitability for the quarter: | ORRSTOWN FINANCIAL SERVICES, INC. · HISTORICAL TRENDS IN QUARTERLY FINANCIAL DATA (Unaudited)June 30, 2026 | ORRSTOWN FINANCIAL SERVICES, INC. · HISTORICAL TRENDS IN QUARTERLY FINANCIAL DATA (Unaudited)March 31, 2026 | ORRSTOWN FINANCIAL SERVICES, INC. · HISTORICAL TRENDS IN QUARTERLY FINANCIAL DATA (Unaudited)December 31, 2025 | September 30, 2025 | June 30, 2025 |
|---|---|---|---|---|---|
| Net interest income | $48,831 | $49,005 | $50,531 | $50,988 | $49,512 |
| Net provision for credit losses on loans and unfunded loan commitments | 338 | 352 | 75 | 396 | 109 |
| Noninterest income | 13,836 | 15,577 | 14,392 | 13,382 | 12,915 |
| Noninterest expenses | 37,666 | 36,728 | 37,355 | 36,297 | 37,614 |
| Income before income taxes | 24,663 | 27,502 | 27,493 | 27,677 | 24,704 |
| Income tax expense | 3,505 | 5,693 | 6,002 | 5,812 | 5,256 |
| Net income | $21,158 | $21,809 | $21,491 | $21,865 | $19,448 |
| Financial ratios: | |||||
| Return on average assets (1) | 1.53% | 1.59% | 1.55% | 1.60% | 1.45% |
| Return on average assets, adjusted (1)(3)(4) | n/a | n/a | n/a | n/a | 1.51% |
| Return on average equity (1) | 13.96% | 14.76% | 14.73% | 15.72% | 14.56% |
| Return on average equity, adjusted (1)(3)(4) | n/a | n/a | n/a | n/a | 15.12% |
| Net interest margin (1) | 3.87% | 3.90% | 4.00% | 4.11% | 4.07% |
| Net interest margin, adjusted (1)(2)(4) | 4.00% | n/a | n/a | n/a | n/a |
| Efficiency ratio | 60.1% | 56.9% | 57.5% | 56.4% | 60.3% |
| Efficiency ratio, adjusted (2)(3)(4) | 58.6% | n/a | n/a | n/a | 58.7% |
| Per share information: | |||||
| Income per common share: | |||||
| Basic | $1.10 | $1.13 | $1.12 | $1.14 | $1.01 |
| Basic, adjusted (3)(4) | n/a | n/a | n/a | n/a | 1.05 |
| Diluted | 1.09 | 1.12 | 1.11 | 1.13 | 1.01 |
| Diluted, adjusted (3)(4) | n/a | n/a | n/a | n/a | 1.04 |
| Book value | 31.60 | 30.76 | 30.32 | 29.33 | 28.07 |
| Tangible book value(4) | 26.71 | 25.76 | 25.21 | 24.12 | 22.77 |
| Average tangible common equity(4) | 16.86 | 17.96 | 18.15 | 19.70 | 18.43 |
| Cash dividends paid | 0.30 | 0.30 | 0.27 | 0.27 | 0.26 |
| Average basic shares | 19,313 | 19,274 | 19,251 | 19,224 | 19,173 |
| Average diluted shares | 19,432 | 19,410 | 19,384 | 19,364 | 19,342 |
| (1) Annualized. | |||||
| (2) Ratio has been adjusted for accelerated amortization of the remaining fair value mark of $1.6 million from the redemption of the subordinated notes during the three months ended June 30, 2026. | |||||
| (3) Ratio has been adjusted for non-recurring expenses for the three months ended June 30, 2025. There were no non-recurring expenses for the three months ended June 30, 2026, March 31, 2026, December 31, 2025 and September 30, 2025. | |||||
| (4) Non-GAAP based financial measure. Please refer to Appendix A - Supplemental Reporting of Non-GAAP Measures and GAAP to Non-GAAP Reconciliations for a discussion of our use of non-GAAP based financial measures, including tables reconciling GAAP and non-GAAP financial measures appearing herein. |
| ORRSTOWN FINANCIAL SERVICES, INC. · HISTORICAL TRENDS IN QUARTERLY FINANCIAL DATA (Unaudited) · (continued)(In thousands) | ORRSTOWN FINANCIAL SERVICES, INC. · HISTORICAL TRENDS IN QUARTERLY FINANCIAL DATA (Unaudited)June 30, 2026 | HISTORICAL TRENDS IN QUARTERLY FINANCIAL DATA (Unaudited)March 31, 2026 | HISTORICAL TRENDS IN QUARTERLY FINANCIAL DATA (Unaudited)December 31, 2025 | September 30, 2025 | June 30, 2025 |
|---|---|---|---|---|---|
| Noninterest income: | |||||
| Service charges | $2,734 | $2,871 | $3,225 | $2,997 | $2,630 |
| Interchange income | 1,602 | 1,513 | 1,553 | 1,620 | 1,441 |
| Swap fee income | 651 | 1,339 | 1,112 | 816 | 669 |
| Wealth management income | 5,946 | 5,557 | 5,739 | 5,277 | 5,267 |
| Mortgage banking activities | 436 | 326 | 503 | 522 | 478 |
| Income from life insurance | 1,376 | 3,761 | 1,331 | 1,471 | 1,311 |
| Other income | 1,034 | 212 | 834 | 629 | 1,111 |
| Investment securities gains (losses) | 57 | (2) | 95 | 50 | 8 |
| Total noninterest income | $13,836 | $15,577 | $14,392 | $13,382 | $12,915 |
| Noninterest expenses: | |||||
| Salaries and employee benefits | $22,229 | $21,157 | $21,980 | $21,439 | $21,364 |
| Occupancy, furniture and equipment | 3,887 | 4,221 | 4,017 | 4,075 | 4,211 |
| Data processing | 1,703 | 1,537 | 1,292 | 1,116 | 965 |
| Advertising and bank promotions | 1,126 | 683 | 561 | 154 | 1,077 |
| FDIC insurance | 634 | 549 | 683 | 652 | 674 |
| Professional services | 1,202 | 1,221 | 1,947 | 1,703 | 2,016 |
| Taxes other than income | 392 | 1,025 | 574 | 828 | 295 |
| Intangible asset amortization | 2,179 | 2,239 | 2,348 | 2,410 | 2,472 |
| Merger-related expenses | — | — | — | — | 968 |
| Other operating expenses | 4,314 | 4,096 | 3,953 | 3,920 | 3,572 |
| Total noninterest expenses | $37,666 | $36,728 | $37,355 | $36,297 | $37,614 |
| HISTORICAL TRENDS IN QUARTERLY FINANCIAL DATA (Unaudited) · (continued) · (In thousands)Balance Sheet at quarter end: | HISTORICAL TRENDS IN QUARTERLY FINANCIAL DATA (Unaudited)June 30, 2026 | HISTORICAL TRENDS IN QUARTERLY FINANCIAL DATA (Unaudited)March 31, 2026 | December 31, 2025 | September 30, 2025 | June 30, 2025 |
|---|---|---|---|---|---|
| Cash and cash equivalents | $144,841 | $161,136 | $149,774 | $184,146 | $149,377 |
| Restricted investments in bank stocks | 27,429 | 23,984 | 26,717 | 24,111 | 21,204 |
| Securities available for sale | 949,281 | 947,018 | 952,740 | 890,357 | 885,373 |
| Loans held for sale, at fair value | 3,639 | 3,366 | 6,090 | 6,026 | 5,206 |
| Loans: | |||||
| Commercial real estate: | |||||
| Owner occupied | 679,295 | 645,026 | 644,713 | 629,481 | 622,315 |
| Non-owner occupied | 1,305,379 | 1,322,251 | 1,260,198 | 1,254,959 | 1,203,038 |
| Multi-family | 229,425 | 216,658 | 236,703 | 234,782 | 239,388 |
| Non-owner occupied residential | 150,917 | 151,560 | 155,749 | 163,138 | 165,479 |
| Agricultural | 97,729 | 114,409 | 121,417 | 118,596 | 124,291 |
| Commercial and industrial | 489,247 | 481,815 | 489,371 | 479,929 | 487,063 |
| Acquisition and development: | |||||
| 1-4 family residential construction | 39,344 | 46,355 | 41,489 | 41,141 | 38,490 |
| Commercial and land development | 198,399 | 198,957 | 198,234 | 195,158 | 198,889 |
| Municipal | 33,950 | 27,744 | 25,302 | 28,664 | 28,693 |
| Total commercial loans | 3,223,685 | 3,204,775 | 3,173,176 | 3,145,848 | 3,107,646 |
| Residential mortgage: | |||||
| First lien | 501,306 | 484,022 | 478,870 | 476,006 | 469,569 |
| Home equity – term | 5,401 | 5,685 | 5,972 | 5,800 | 5,784 |
| Home equity – lines of credit | 344,495 | 327,141 | 321,438 | 311,458 | 305,968 |
| Other - term(1) | 20,929 | 22,442 | 22,906 | 23,737 | 25,384 |
| Installment and other loans | 17,215 | 17,254 | 18,331 | 16,887 | 17,028 |
| Total loans | 4,113,031 | 4,061,319 | 4,020,693 | 3,979,736 | 3,931,379 |
| Allowance for credit losses | (46,632) | (47,463) | (47,681) | (48,105) | (47,898) |
| Net loans held for investment | 4,066,399 | 4,013,856 | 3,973,012 | 3,931,631 | 3,883,481 |
| Goodwill | 69,751 | 69,751 | 69,751 | 69,751 | 69,751 |
| Other intangible assets, net | 33,572 | 35,751 | 37,990 | 40,338 | 42,748 |
| Total assets | 5,612,151 | 5,576,972 | 5,542,255 | 5,470,233 | 5,387,645 |
| Total deposits | 4,620,023 | 4,627,424 | 4,528,774 | 4,533,560 | 4,516,625 |
| FHLB advances and other borrowings and Securities sold under agreements to repurchase | 282,362 | 225,958 | 299,243 | 241,719 | 166,381 |
| Subordinated notes and trust preferred debt | 8,049 | 37,274 | 37,122 | 36,970 | 69,021 |
| Total shareholders' equity | 621,650 | 603,184 | 591,535 | 571,936 | 548,448 |
| (1) Other - term includes property assessed clean energy ("PACE") loans. |
| HISTORICAL TRENDS IN QUARTERLY FINANCIAL DATA (Unaudited)(continued) | HISTORICAL TRENDS IN QUARTERLY FINANCIAL DATA (Unaudited)June 30, 2026 | HISTORICAL TRENDS IN QUARTERLY FINANCIAL DATA (Unaudited)March 31, 2026 | December 31, 2025 | September 30, 2025 | June 30, 2025 |
|---|---|---|---|---|---|
| Capital and credit quality measures(1): | |||||
| Total risk-based capital: | |||||
| Orrstown Financial Services, Inc. | 13.2% | 13.5% | 13.3% | 13.1% | 13.3% |
| Orrstown Bank | 13.1% | 13.6% | 13.3% | 12.9% | 13.3% |
| Tier 1 risk-based capital: | |||||
| Orrstown Financial Services, Inc. | 12.2% | 12.0% | 11.7% | 11.3% | 11.1% |
| Orrstown Bank | 12.1% | 12.5% | 12.2% | 11.8% | 12.1% |
| Tier 1 common equity risk-based capital: | |||||
| Orrstown Financial Services, Inc. | 12.0% | 11.8% | 11.5% | 11.1% | 10.9% |
| Orrstown Bank | 12.1% | 12.5% | 12.2% | 11.8% | 12.1% |
| Tier 1 leverage capital: | |||||
| Orrstown Financial Services, Inc. | 10.1% | 9.7% | 9.5% | 9.3% | 9.0% |
| Orrstown Bank | 10.0% | 10.2% | 9.9% | 9.6% | 9.8% |
| Average equity to average assets | 10.97% | 10.80% | 10.51% | 10.18% | 9.97% |
| Allowance for credit losses to total loans | 1.13% | 1.17% | 1.19% | 1.21% | 1.22% |
| Total nonaccrual loans to total loans | 0.58% | 0.74% | 0.70% | 0.66% | 0.57% |
| Nonperforming assets to total assets | 0.44% | 0.56% | 0.51% | 0.48% | 0.42% |
| Allowance for credit losses to nonaccrual loans | 196% | 158% | 170% | 184% | 214% |
| Other information: | |||||
| Net charge-offs | $1,169 | $946 | $499 | $189 | $115 |
| Classified loans | 49,190 | 57,584 | 58,351 | 64,089 | 65,754 |
| Nonperforming and other risk assets: | |||||
| Nonaccrual loans | 23,751 | 30,025 | 28,031 | 26,191 | 22,423 |
| Other real estate owned | 1,055 | 1,055 | — | — | — |
| Total nonperforming assets | 24,806 | 31,080 | 28,031 | 26,191 | 22,423 |
| Financial difficulty modifications still accruing | 1,794 | 949 | 1,253 | 1,245 | 5,759 |
| Loans past due 90 days or more and still accruing | 853 | 443 | 1,040 | 497 | 1,312 |
| Total nonperforming and other risk assets | $27,453 | $32,472 | $30,324 | $27,933 | $29,494 |
| (1) Capital ratios are estimated for the current period, subject to regulatory filings. The Company elected the three-year phase in option for the day-one impact of ASU 2016-13 for current expected credit losses ("CECL") to regulatory capital. Beginning in 2023, the Company adjusted retained earnings, allowance for credit losses includable in tier 2 capital and the deferred tax assets from temporary differences in risk weighted assets by the permitted percentage of the day-one impact from adopting the new CECL standard, which concluded at December 31, 2025. Starting with periods in 2026, the day-one impact of ASU 2016-13 was fully applied to the capital ratios. |
Appendix A- Supplemental Reporting of Non-GAAP Measures and GAAP to Non-GAAP Reconciliations
Management believes providing certain other “non-GAAP” financial information will assist investors in their understanding of the effect on recent financial results from non-recurring charges.
As a result of acquisitions, the Company has intangible assets consisting of goodwill, core deposit and other intangible assets, which totaled $103.3 million and $107.7 million at June 30, 2026 and December 31, 2025, respectively. During the three and six months ended June 30, 2025, the Company incurred $1.0 million and $2.6 million in merger-related expenses, respectively. The Company did not incur merger-related or other non-recurring expenses during the three months ended June 30, 2026, March 31, 2026, December 31, 2025 and September 30, 2025.
On June 30, 2026, the Company redeemed the $31.0 million outstanding 4.50% fixed-to-floating rate subordinated notes assumed from Codorus Valley Bancorp, Inc. on July 1, 2024. During the three and six months ended June 30, 2026, the Company amortized the remaining fair value mark to interest expense as a result of the redemption, which reduced net interest margin.
Tangible book value per common share, tangible common equity, and the impact of the accelerated amortization of fair value marks on net interest margin and the efficiency ratio and merger-related expenses on net income and associated ratios, as used by the Company in this earnings release, are determined by methods other than in accordance with U.S. Generally Accepted Accounting Principles ("GAAP"). While we believe this information is a useful supplement to GAAP based measures presented in this earnings release, readers are cautioned that this non-GAAP disclosure has limitations as an analytical tool, should not be viewed as a substitute for financial measures determined in accordance with GAAP, and should not be considered in isolation or as a substitute for analysis of our results and financial condition as reported under GAAP, nor are such measures necessarily comparable to non-GAAP performance measures that may be presented by other companies. This supplemental presentation should not be construed as an inference that our future results will be unaffected by similar adjustments to be determined in accordance with GAAP.
The following tables present the computation of each non-GAAP based measure:
(In thousands)
| Tangible Book Value per Common Share | June 30, 2026 | March 31, 2026 | December 31, 2025 | September 30, 2025 | June 30, 2025 |
|---|---|---|---|---|---|
| Shareholders' equity (most directly comparable GAAP-based measure) | $621,650 | $603,184 | $591,535 | $571,936 | $548,448 |
| Less: Goodwill | 69,751 | 69,751 | 69,751 | 69,751 | 69,751 |
| Other intangible assets | 33,572 | 35,751 | 37,990 | 40,338 | 42,748 |
| Related tax effect | (7,050) | (7,508) | (7,978) | (8,471) | (8,977) |
| Tangible common equity (non-GAAP) | $525,377 | $505,190 | $491,772 | $470,318 | $444,926 |
| Common shares outstanding | 19,670 | 19,611 | 19,507 | 19,501 | 19,536 |
| Book value per share (most directly comparable GAAP-based measure) | $31.60 | $30.76 | $30.32 | $29.33 | $28.07 |
| Intangible assets per share | 4.89 | 5.00 | 5.11 | 5.21 | 5.30 |
| Tangible book value per share (non-GAAP) | $26.71 | $25.76 | $25.21 | $24.12 | $22.77 |
| Return on Average Common Equity | June 30, 2026 | March 31, 2026 | December 31, 2025 | September 30, 2025 | June 30, 2025 |
|---|---|---|---|---|---|
| Net Income | $21,158 | $21,809 | $21,491 | $21,865 | $19,448 |
| Average shareholders' equity | $608,099 | $599,330 | $578,859 | $551,945 | $535,684 |
| Less: Average goodwill | 69,751 | 69,751 | 69,751 | 69,751 | 68,126 |
| Less: Average other intangible assets, gross | 34,920 | 37,132 | 39,467 | 41,809 | 44,304 |
| Average tangible equity | $503,428 | $492,447 | $469,641 | $440,385 | $423,254 |
| Return on average tangible equity (non-GAAP) (1) | 16.86% | 17.96% | 18.15% | 19.70% | 18.43% |
| (1) - Annualized |
| (In thousands)Adjusted Ratios for Non-recurring Charges | Three Months EndedJune 30, 2026 | Three Months EndedMarch 31, 2026 | Three Months EndedDecember 31, 2025 | Three Months EndedSeptember 30, 2025 | Three Months EndedJune 30, 2025 | Six Months EndedJune 30, 2026 | June 30, 2025 |
|---|---|---|---|---|---|---|---|
| Net income (A) - most directly comparable GAAP-based measure | $21,158 | $21,809 | $21,491 | $21,865 | $19,448 | $42,967 | $37,499 |
| Plus: Merger-related expenses (B) | — | — | — | — | 968 | — | 2,617 |
| Less: Related tax effect (C) | — | — | — | — | (221) | — | (590) |
| Adjusted net income (D=A+B-C) - Non-GAAP | $21,158 | $21,809 | $21,491 | $21,865 | $20,195 | $42,967 | $39,526 |
| Average assets (E) | $5,542,919 | $5,548,814 | $5,505,311 | $5,420,830 | $5,374,772 | $5,545,851 | $5,400,094 |
| Return on average assets (= A / E) - most directly comparable GAAP-based measure (1) | 1.53% | 1.59% | 1.55% | 1.60% | 1.45% | 1.56% | 1.40% |
| Return on average assets, adjusted (= D / E) - Non-GAAP (1) | n/a | n/a | n/a | n/a | 1.51% | n/a | 1.48% |
| Average equity (F) | $608,099 | $599,330 | $578,859 | $551,945 | $535,684 | $603,739 | $529,720 |
| Return on average equity (= A / F) - most directly comparable GAAP-based measure (1) | 13.96% | 14.76% | 14.73% | 15.72% | 14.56% | 14.35% | 14.28% |
| Return on average equity, adjusted (= D / F) - Non-GAAP (1) | n/a | n/a | n/a | n/a | 15.12% | n/a | 15.05% |
| Weighted average shares - basic (G) - most directly comparable GAAP-based measure | 19,313 | 19,274 | 19,251 | 19,224 | 19,173 | 19,293 | 19,165 |
| Basic earnings (loss) per share (= A / G) - most directly comparable GAAP-based measure | $1.10 | $1.13 | $1.12 | $1.14 | $1.01 | $2.23 | $1.96 |
| Basic earnings per share, adjusted (= D / G) - Non-GAAP | n/a | n/a | n/a | n/a | $1.05 | n/a | $2.06 |
| Weighted average shares - diluted (H) - most directly comparable GAAP-based measure | 19,432 | 19,410 | 19,384 | 19,364 | 19,342 | 19,421 | 19,335 |
| Diluted earnings (loss) per share (= A / H) - most directly comparable GAAP-based measure | $1.09 | $1.12 | $1.11 | $1.13 | $1.01 | $2.21 | $1.94 |
| Diluted earnings per share, adjusted (= D / H) - Non-GAAP | n/a | n/a | n/a | n/a | $1.04 | n/a | $2.04 |
| continued |
| Line item | Three Months EndedJune 30, 2026 | Three Months EndedMarch 31, 2026 | Three Months EndedDecember 31, 2025 | Three Months EndedSeptember 30, 2025 | Three Months EndedJune 30, 2025 | Six Months EndedJune 30, 2026 | June 30, 2025 |
|---|---|---|---|---|---|---|---|
| Noninterest expense (I) - most directly comparable GAAP-based measure | $37,666 | $36,728 | $37,355 | $36,297 | $37,614 | $74,394 | $75,790 |
| Less: Merger-related expenses (B) | — | — | — | — | (968) | — | (2,617) |
| Adjusted noninterest expense (J = I - B) - Non-GAAP | $37,666 | $36,728 | $37,355 | $36,297 | $36,646 | $74,394 | $73,173 |
| Net interest income (K) | $48,831 | $49,005 | $50,531 | $50,988 | $49,512 | $97,836 | $98,273 |
| Noninterest income (L) | 13,836 | 15,577 | 14,392 | 13,382 | 12,915 | 29,413 | 24,539 |
| Total operating income (M = K + L) - most directly comparable GAAP-based measure | $62,667 | $64,582 | $64,923 | $64,370 | $62,427 | $127,249 | $122,812 |
| Plus: Accelerated amortization of fair value mark on redeemed subordinated notes (N) | 1,624 | — | — | — | — | 1,624 | — |
| Adjusted total operating income (O = M + N) - Non-GAAP | $64,291 | $64,582 | $64,923 | $64,370 | $62,427 | $128,873 | $122,812 |
| Efficiency ratio (= I / M) - most directly comparable GAAP-based measure | 60.1% | 56.9% | 57.5% | 56.4% | 60.3% | 58.5% | 61.7% |
| Efficiency ratio, adjusted (= J / N) - Non-GAAP | 58.6% | n/a | n/a | n/a | 58.7% | 57.7% | 59.6% |
| (1) Annualized |
Three Months Ended June 30, 2026
| Line item | Average Balance - most directly comparable GAAP-based measure | Taxable-Equivalent Interest - most directly comparable GAAP-based measure | Less: accelerated amortization on fair value mark from subordinated notes redemption | Adjusted Taxable-Equivalent Interest - Non-GAAP | Taxable-Equivalent Rate - most directly comparable GAAP-based measure | Adjusted Taxable-Equivalent Rate - Non-GAAP |
|---|---|---|---|---|---|---|
| Total interest-earning assets | $5,117,006 | $75,277 | — | $75,277 | 5.90% | 5.90% |
| Total interest-bearing liabilities | $3,963,461 | $25,871 | $(1,624) | $24,247 | 2.62% | 2.45% |
| Taxable-equivalent net interest income / net interest spread | $49,406 | $1,624 | $51,030 | 3.28% | 3.45% | |
| Taxable-equivalent net interest margin | 3.87% | 4.00% | ||||
| Six Months Ended June 30, 2026 | ||||||
| Average Balance - most directly comparable GAAP-based measure | Taxable-Equivalent Interest - most directly comparable GAAP-based measure | Less: accelerated amortization on fair value mark from subordinated notes redemption | Adjusted Taxable-Equivalent Interest - Non-GAAP | Taxable-Equivalent Rate - most directly comparable GAAP-based measure | Adjusted Taxable-Equivalent Rate - Non-GAAP | |
| Total interest-earning assets | $5,120,999 | $150,207 | — | $150,207 | 5.90% | 5.90% |
| Total interest-bearing liabilities | $3,986,580 | $51,230 | $(1,624) | $49,606 | 2.59% | 2.51% |
| Taxable-equivalent net interest income / net interest spread | $98,977 | $1,624 | $100,601 | 3.31% | 3.40% | |
| Taxable-equivalent net interest margin | 3.89% | 3.95% |
Appendix B- Investment Portfolio Concentrations
The following table summarizes the credit ratings and collateral associated with the Company's investment security portfolio, excluding equity securities, at June 30, 2026:
(In thousands)
| Sector | Portfolio Mix | Amortized Book | Fair Value | Credit Enhancement | AAA | AA | A | BBB | BB | NR | CollateralGuarantee Type |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Unsecured ABS | — | $2,327 | $2,254 | 30% | — | — | — | — | — | 100% | Unsecured Consumer Debt |
| Student Loan ABS | — | 2,553 | 2,548 | 33 | — | — | — | — | — | 100 | Seasoned Student Loans |
| Federal Family Education Loan ABS | 7 | 66,511 | 66,295 | 12 | — | 49 | 31 | 7 | 13 | — | Federal Family Education Loan (1) |
| PACE Loan ABS | — | 1,602 | 1,469 | 8 | 100 | — | — | — | — | — | PACE Loans (2) |
| Non-Agency CMBS | 3 | 29,576 | 29,437 | 29 | — | — | — | — | — | 100 | |
| Non-Agency RMBS | 5 | 42,114 | 41,031 | 20 | 94 | 6 | — | — | — | — | Reverse Mortgages (3) |
| Municipal - General Obligation | 10 | 99,568 | 93,435 | 16 | 78 | 6 | — | — | — | ||
| Municipal - Revenue | 12 | 119,287 | 110,693 | — | 75 | 19 | — | — | 6 | ||
| SBA ReRemic (5) | — | 1,226 | 1,214 | — | 100 | — | — | — | — | SBA Guarantee (4) | |
| Small Business Administration | — | 2,648 | 2,699 | — | 100 | — | — | — | — | SBA Guarantee (4) | |
| Agency MBS | 25 | 238,301 | 234,635 | — | 100 | — | — | — | — | Residential Mortgages (4) | |
| Agency CMO | 36 | 351,736 | 348,092 | — | 100 | — | — | — | — | ||
| U.S. Treasury securities | 2 | 15,012 | 14,206 | — | 100 | — | — | — | — | U.S. Government Guarantee (4) | |
| Corporate bonds | — | 953 | 975 | — | — | — | 100 | — | — | ||
| 100% | $973,414 | $948,983 | 6% | 83% | 5% | 1% | 1% | 4% | |||
| (1) 97% guaranteed by U.S. government | |||||||||||
| (2) PACE acronym represents Property Assessed Clean Energy loans | |||||||||||
| (3) Non-agency reverse mortgages with current structural credit enhancements | |||||||||||
| (4) Guaranteed by U.S. government or U.S. government agencies | |||||||||||
| (5) SBA ReRemic acronym represents Re-Securitization of Real Estate Mortgage Investment Conduits | |||||||||||
| Note: Ratings in table are the lowest of the six rating agencies (Standard & Poor's, Moody's, Fitch, Morningstar, DBRS and Kroll Bond Rating Agency). Standard & Poor's rates U.S. government obligations at AA+. |
About the Company
With $5.6 billion in assets, Orrstown Financial Services, Inc. and its wholly-owned subsidiary, Orrstown Bank, provide a wide range of consumer and business financial services in Berks, Cumberland, Dauphin, Franklin, Lancaster, Perry and York Counties, Pennsylvania and Anne Arundel, Baltimore, Harford, Howard, and Washington Counties, Maryland, as well as Baltimore City, Maryland. The Company’s lending area also includes counties in Pennsylvania, Maryland, Delaware, Virginia and West Virginia within a 75-mile radius of the Company's executive and administrative offices as well as the District of Columbia. Orrstown Bank is an Equal Housing Lender and its deposits are insured up to the legal maximum by the FDIC. Orrstown Financial Services, Inc.’s common stock is traded on Nasdaq (ORRF). For more information about Orrstown Financial Services, Inc. and Orrstown Bank, visit www.orrstown.com.