Orrstown Financial Services, Inc. Announces Third Quarter Earnings of $2.8 Million And Quarterly Cash Dividend of $0.12 Per Share

  • Net income for the three months ended September 30, 2017 totaled $2.8 million, or $0.34 per diluted share, compared with $1.4 million, or $0.18 per diluted share, for the same period in 2016. Net income for the nine months ended September 30, 2017 totaled $8.1 million, or $0.98 per diluted share, compared with $4.7 million, or $0.58 per diluted share, for the same period in 2016.
  • Gross loans outstanding at September 30, 2017, excluding loans held for sale, totaled $981.2 million, an increase of $97.8 million, or 14.8% on an annualized basis, compared with the balance of $883.4 million at December 31, 2016. In a year-over-year comparison, gross loans outstanding at September 30, 2017 increased 15.8% over September 30, 2016.
  • Deposits totaled $1.22 billion at September 30, 2017 and grew at a 7.5% annualized basis compared with the $1.15 billion balance at December 31, 2016.
  • Net interest income for the three months ended September 30, 2017 totaled $11.1 million, an increase of 20.0% over the three months ended September 30, 2016, of $9.2 million, with net interest margin, on a taxable-equivalent basis, increasing from 3.14% to 3.31% for the respective periods. Net interest income totaled $32.0 million for the nine months ended September 30, 2017, a 19.4% increase compared with $26.8 million for the nine months ended September 30, 2016. Net interest margin, on a taxable-equivalent basis, increased from 3.12% in 2016 to 3.34% in 2017 for the respective periods.
  • The Board of Directors declared a cash dividend of $0.12 per common share, payable November 15, 2017, to shareholders of record as of November 6, 2017, an increase of 33.3% over the dividend declared in the fourth quarter of 2016 and 20.0% over prior quarters in 2017.

SHIPPENSBURG, Pa., Oct. 25, 2017 (GLOBE NEWSWIRE) -- Orrstown Financial Services, Inc. (the “Company”) (NASDAQ:ORRF), the parent company of Orrstown Bank (the “Bank”) and Wheatland Advisors, Inc. ("Wheatland"), announced earnings for the three and nine months ended September 30, 2017. Net income totaled $2.8 million for the three months ended September 30, 2017, compared with $1.4 million for the same period in 2016. For the nine months ended September 30, 2017, net income totaled $8.1 million, compared with $4.7 million for the same period in 2016. Diluted earnings per share totaled $0.34 and $0.98 for the three and nine months ended September 30, 2017, respectively, compared with $0.18 and $0.58 for the same 2016 periods. Earnings in 2017 continue to reflect increased interest income from expanding loan and investment portfolios.

Thomas R. Quinn, Jr., President and Chief Executive Officer, commented, "We are encouraged by continued momentum and improvement in key performance indicators as we continue to execute our strategic plan. In the third quarter we experienced solid earnings, continued double-digit annualized loan growth, and year-over-year margin expansion. Our results have enabled us to increase our dividend in the fourth quarter. We're also pleased that, in late August, we opened our newest full service branch in New Holland, Lancaster County, and initial results have validated our investment in this vibrant community.”

OPERATING RESULTS

Net Interest Income

Net interest income totaled $11.1 million for the three months ended September 30, 2017, a 20.0% increase compared with the same period in 2016. For the nine months ended September 30, 2017, net interest income totaled $32.0 million, a 19.4% increase compared with the nine months ended September 30, 2016. Net interest margin on a taxable-equivalent basis totaled 3.31% for the three months and 3.34% for the nine months ended September 30, 2017, compared with 3.14% and 3.12% for the same periods in 2016.

As had been experienced in the first half of 2017, increased yields on loans and investments reflected a higher interest rate environment in 2017 compared with 2016. Additionally, tax-exempt securities were added to the portfolio in late 2016 and early 2017 with taxable-equivalent yields higher than the portfolio average. The cost of interest-bearing liabilities has increased at a slower pace than the yields earned on interest-earning assets in 2017, as the market was initially slow to respond to interest rate changes. The net interest margin of 3.31% in the third quarter of 2017 was 4 basis points less than the 3.35% experienced in each of the first two quarters of 2017, principally due to increases in costs of interest-bearing liabilities.

Provision for Loan Losses

The Company recorded a $100 thousand provision for loan losses for the three months ended September 30, 2017 compared with $250 thousand in the same period in 2016. For the nine months ended September 30, the provision for loan losses totaled $200 thousand in 2017 compared with $250 thousand in 2016. In calculating the required provision for loan losses, both quantitative and qualitative factors are considered in the determination of the adequacy of the allowance for loan losses. Favorable historical charge-off data combined with continued stable economic and market conditions resulted in the determination that a modest provision for loan losses in the third quarter of 2017 was required to offset net charge-offs and for loan growth experienced.

While asset quality metrics have improved throughout 2016 and 2017, as noted below, the growth the Company has experienced in its loan portfolio is one factor that may result in the need for additional provisions for loan losses in future quarters.

Noninterest Income

Noninterest income for the three months ended September 30, 2017, excluding securities gains, totaled $4.7 million compared with $4.6 million in the prior year period. For the nine months ended September 30, 2017, noninterest income, excluding securities gains, totaled $14.0 million, a $674 thousand increase, or 5.0%, compared to the nine months ended September 30, 2016.

Trust, investment management and brokerage income increased $269 thousand and $773 thousand in comparing the three and nine month periods ended September 30 from 2016 to 2017. Wheatland Advisors, Inc., acquired in December 2016, has been a significant contributor to the increases in 2017. Trust department fees have also increased as additional revenues have been generated from favorable market conditions and the addition of an office in Berks County, Pennsylvania.

Mortgage banking income decreased $215 thousand in comparing the third quarter of 2017 with 2016, and decreased $268 thousand in comparing the nine months ended September 30, 2017 with 2016. The comparisons reflect decreased refinance activity as interest rates have increased, some slight compression in margins, as well as the effect of retaining a portion of mortgage production for the loan portfolio in 2017 over 2016.

Investment securities gains totaled $533 thousand and $1.2 million for the three and nine months ended September 30, 2017, compared with $0 and $1.4 million for the same periods in 2016. At times, the Company may accelerate earnings on securities through gains as market conditions present opportunities to act on asset/liability management strategies and interest rate conditions while also meeting the funding requirements of anticipated lending activity. In the third quarter of 2017, the Company took advantage of market conditions to reposition part of its investment portfolio at a gain to improve responsiveness of the portfolio to increases in Fed Funds rates.

Noninterest Expenses

Noninterest expenses totaled $13.1 million and $37.7 million for the three and nine months ended September 30, 2017, compared with $12.0 million and $35.7 million for the corresponding prior year periods.

The principal drivers of increased expense items in comparing 2017 with 2016 were salaries and employee benefits, occupancy, furniture and equipment costs and professional services. As noted in the past few quarters, increases for salaries and benefits and occupancy, furniture and equipment costs include previously disclosed market expansion actions by the Company as it has added new, primarily customer-facing, employees and facilities, principally in Berks, Cumberland, Dauphin and Lancaster counties. In the third quarter of 2017, the Company also expanded its lending activities in York County, Pennsylvania, with the addition of two lenders focused in this region.

Salaries and employee benefits totaled $7.5 million and $22.4 million for the three and nine months ended September 30, 2017, compared with $6.8 million and $19.3 million for the same periods in 2016. Higher expenses throughout 2017 have been incurred for the aforementioned additional employees, merit increases and increased incentive compensation, increased health care costs, and incremental expense for additional share-based awards granted in 2017.

Professional services expenses totaled $945 thousand and $1.9 million for the three and nine months ended September 30, 2017, compared with $585 thousand and $1.7 million for the same periods in 2016. Generally, professional fees in 2017 have been lower than in 2016, when additional costs for outstanding litigation against the Company and administrative proceedings by the Securities and Exchange Commission were incurred. Professional fees increased in the third quarter of 2017 due to indemnification costs to several professional service providers, totaling $508 thousand, incurred in connection with the previously disclosed outstanding litigation against the Company.

Noninterest expenses for the nine months ended September 30, 2016 included a regulatory settlement expense of $1.0 million paid to the Securities and Exchange Commission to settle previously disclosed administrative proceedings.

Other line items within noninterest expenses showed fluctuations attributable to normal business operations between 2017 and 2016.

Income Taxes

Income tax expense totaled $376 thousand and $1.3 million for the three and nine months ended September 30, 2017, compared with $125 thousand and $1.0 million for the same periods in 2016. The Company’s effective tax rate is significantly less than the 34.0% federal statutory rate principally due to tax-exempt income, including interest earned on tax-exempt loans and securities, earnings on the cash value of life insurance policies and income tax credits. The effective tax rate for the nine months ended September 30, 2017 was 14.0%, compared with 17.4% for the nine months ended September 30, 2016. The lower effective tax rate for 2017 compared with 2016 is primarily the result of a larger percentage of tax-exempt income to total income and additional tax credits in 2017, coupled with a larger percentage of non-tax deductible expenses in 2016.

FINANCIAL CONDITION

Assets totaled $1.53 billion at September 30, 2017, an increase of $119.1 million from $1.41 billion at December 31, 2016 and of $179.4 million from $1.35 billion at September 30, 2016. Loans, which are summarized below, were the principal driver for the growth in total assets at September 30, 2017 from December 31, 2016 and September 30, 2016. In the September 30 year-over-year comparison, securities available for sale were also a significant growth component, increasing 12.4%, from $374.9 million in 2016 to $421.5 million in 2017. Deposit growth of $64.3 million in the first nine months of 2017 was the primary source of funding for growth in loans in the period. Year-over-year growth in securities and loans was funded by deposit growth of $83.4 million, an overall increase in borrowings of $88.4 million and a reduction in cash balances of $15.2 million.

Gross loans, excluding those held for sale, totaled $981.2 million at September 30, 2017, increasing $97.8 million, or 11.1% (14.8% annualized), from $883.4 million at December 31, 2016. In comparison with September 30, 2016's loan balance of $847.1 million, loans increased $134.2 million, or 15.8%.

The following table presents loan balances, by loan class within segments, at September 30, 2017, December 31, 2016 and September 30, 2016.

(Dollars in thousands)September 30, 2017 December 31, 2016 September 30, 2016
Commercial real estate:
Owner occupied$117,687 $112,295 $111,437
Non-owner occupied231,111 206,358 192,449
Multi-family52,118 47,681 39,394
Non-owner occupied residential76,763 62,533 56,759
Acquisition and development:
1-4 family residential construction10,214 4,663 6,379
Commercial and land development24,219 26,085 28,030
Commercial and industrial107,998 88,465 87,492
Municipal50,533 53,741 54,241
Residential mortgage:
First lien155,811 139,851 134,498
Home equity – term12,506 14,248 14,896
Home equity – lines of credit129,911 120,353 114,274
Installment and other loans12,349 7,118 7,212
$981,220 $883,391 $847,061

Growth was experienced in nearly all loan segments from December 31, 2016 to September 30, 2017, with the largest dollar increase in the commercial real estate segment, which grew by $48.8 million (15.2% annualized), representing approximately one-half of the portfolio growth for the period. The residential mortgage and commercial and industrial segments also showed substantial growth of $23.8 million (11.6% annualized) and $19.5 million (29.5% annualized), respectively, during this period. The Company continues to grow in both core markets and new markets through expansion of its sales force and by capitalizing on market disruption caused by the acquisition of some of our competitors by larger institutions. The Company has placed emphasis on growing commercial and industrial loans in 2017 to increase diversification of its loan portfolio. In the third quarter of 2017, the Company also increased diversification of its loan portfolio with the purchase of approximately $5 million of automobile financing loans at returns higher than comparable cash flows in the investment portfolio. These purchased loans are included in installment and other loans.

Total deposits grew 5.6% (7.5% annualized) from $1.15 billion at December 31, 2016 to $1.22 billion at September 30, 2017, and increased 7.4% in comparison with $1.13 billion at September 30, 2016, due principally to growth in interest-bearing accounts. The Company continues to increase both noninterest-bearing and interest-bearing deposit relationships from enhanced cash management offerings delivered by its expanded sales force.

Shareholders’ Equity

Shareholders’ equity totaled $144.4 million at September 30, 2017, an increase of $9.5 million, or 7.1%, from $134.9 million at December 31, 2016. Equity increased principally from net income totaling $8.1 million for the nine months ended September 30, 2017 coupled with a $2.7 million increase in accumulated other comprehensive income (loss), net of tax, and was reduced by dividends declared on common stock during the first nine months of 2017.

Asset Quality

The allowance for loan losses balance totaled $12.8 million at September 30, 2017 and December 31, 2016, compared with $13.9 million at September 30, 2016. Management believes the allowance for loan losses to total loans ratio remains adequate at 1.30% at September 30, 2017. Favorable historical charge-off data and management's emphasis on loan quality have been significant contributors to the determination that a relatively stable allowance for loan losses balance is adequate even as the loan portfolio has been increasing.

Asset quality metrics have continued to improve throughout 2016 and 2017. Nonperforming and other risk assets, defined as nonaccrual loans, restructured loans still accruing, loans past due 90 days or more and still accruing, and other real estate owned totaled $7.7 million at September 30, 2017, a decrease of $620 thousand, or 7.5%, from $8.3 million at December 31, 2016 and $7.5 million, or 49.4%, from $15.2 million at September 30, 2016. Nonaccrual loans decreased $8.3 million from September 30, 2016 to September 30, 2017.

The allowance for loan losses to nonperforming loans totaled 243.3% at September 30, 2017 compared with 181.4% at December 31, 2016, and 102.2% at September 30, 2016, reflecting the decrease in nonaccrual loans. The allowance for loan losses to nonperforming and restructured loans still accruing totaled 198.3% at September 30, 2017, compared with 160.2% at December 31, 2016 and 95.8% at September 30, 2016.

Classified loans, or loans rated substandard, doubtful or loss, totaled $21.3 million at September 30, 2017 (approximately 2.2% of total loans), compared with $22.9 million (2.6%) at December 31, 2016 and $24.5 million (2.9%) at September 30, 2016.

ORRSTOWN FINANCIAL SERVICES, INC.
Operating Highlights (Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30, September 30, September 30,
(Dollars in thousands, except per share information)2017 2016 2017 2016
Net income$2,774 $1,442 $8,084 $4,700
Diluted earnings per share$0.34 $0.18 $0.98 $0.58
Dividends per share$0.10 $0.09 $0.30 $0.26
Return on average assets0.73% 0.43% 0.74% 0.48%
Return on average equity7.61% 4.09% 7.72% 4.54%
Net interest income$11,081 $9,234 $32,036 $26,835
Net interest margin3.31% 3.14% 3.34% 3.12%


ORRSTOWN FINANCIAL SERVICES, INC.
Balance Sheet Highlights (Unaudited)
September 30, December 31, September 30,
(Dollars in thousands, except per share information)2017 2016 2016
Assets$1,533,586 $1,414,504 $1,354,154
Loans, gross981,220 883,391 847,061
Allowance for loan losses(12,771) (12,775) (13,850)
Deposits1,216,727 1,152,452 1,133,332
Shareholders' equity144,384 134,859 139,795
Book value per share17.30 16.28 16.86


ORRSTOWN FINANCIAL SERVICES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
September 30, December 31, September 30,
(Dollars in thousands)2017 2016 2016
Assets
Cash and cash equivalents$22,474 $30,273 $37,641
Securities available for sale421,455 400,154 374,902
Loans held for sale8,217 2,768 3,956
Loans981,220 883,391 847,061
Less: Allowance for loan losses(12,771) (12,775) (13,850)
Net loans968,449 870,616 833,211
Premises and equipment, net35,225 34,871 34,630
Other assets77,766 75,822 69,814
Total assets$1,533,586 $1,414,504 $1,354,154
Liabilities
Deposits:
Noninterest-bearing$164,481 $150,747 $148,388
Interest-bearing1,052,246 1,001,705 984,944
Total deposits1,216,727 1,152,452 1,133,332
Borrowings155,474 112,027 67,099
Accrued interest and other liabilities17,001 15,166 13,928
Total liabilities1,389,202 1,279,645 1,214,359
Shareholders' Equity
Common stock435 437 437
Additional paid - in capital125,120 124,935 124,935
Retained earnings17,264 11,669 10,483
Accumulated other comprehensive income (loss)1,580 (1,165) 5,136
Treasury stock(15) (1,017) (1,196)
Total shareholders' equity144,384 134,859 139,795
Total liabilities and shareholders' equity$1,533,586 $1,414,504 $1,354,154


ORRSTOWN FINANCIAL SERVICES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30, September 30, September 30,
(Dollars in thousands, except per share information) 2017 2016 2017 2016
Interest and dividend income
Interest and fees on loans $10,337 $8,631 $29,392 $25,006
Interest and dividends on investment securities 2,761 2,023 8,004 5,881
Total interest and dividend income 13,098 10,654 37,396 30,887
Interest expense
Interest on deposits 1,619 1,295 4,429 3,625
Interest on borrowings 398 125 931 427
Total interest expense 2,017 1,420 5,360 4,052
Net interest income 11,081 9,234 32,036 26,835
Provision for loan losses 100 250 200 250
Net interest income after provision for loan losses 10,981 8,984 31,836 26,585
Noninterest income
Service charges on deposit accounts 1,437 1,370 4,224 4,045
Trust, investment management and brokerage income 1,975 1,706 6,029 5,256
Mortgage banking activities 797 1,012 2,113 2,381
Other income 514 480 1,658 1,668
Investment securities gains 533 0 1,190 1,420
Total noninterest income 5,256 4,568 15,214 14,770
Noninterest expenses
Salaries and employee benefits 7,544 6,823 22,366 19,318
Occupancy, furniture and equipment 1,576 1,465 4,600 4,117
Data processing 527 532 1,702 1,686
Advertising and bank promotions 325 433 1,103 1,244
FDIC insurance 139 143 454 598
Professional services 945 585 1,938 1,675
Collection and problem loan 56 39 134 187
Real estate owned 41 94 49 195
Taxes other than income 211 186 659 594
Regulatory settlement 0 0 0 1,000
Other operating expenses 1,723 1,685 4,645 5,050
Total noninterest expenses 13,087 11,985 37,650 35,664
Income before income tax expense 3,150 1,567 9,400 5,691
Income tax expense 376 125 1,316 991
Net income $2,774 $1,442 $8,084 $4,700
Per share information:
Basic earnings per share $0.34 $0.18 $1.00 $0.58
Diluted earnings per share 0.34 0.18 0.98 0.58
Dividends per share 0.10 0.09 0.30 0.26
Weighted-average shares outstanding - diluted8,239,374
8,149,416 8,215,215
8,141,525


ORRSTOWN FINANCIAL SERVICES, INC.
ANALYSIS OF NET INTEREST INCOME
Average Balances and Interest Rates, Taxable-Equivalent Basis (Unaudited)
Three Months Ended
September 30, 2017 September 30, 2016
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$22,507 $78 1.37% $23,330 $42 0.72%
Securities422,045 3,073 2.89 358,259 2,207 2.45
Loans954,943 10,549 4.38 844,547 8,860 4.17
Total interest-earning assets1,399,495 13,700 3.88 1,226,136 11,109 3.60
Other assets106,840 102,828
Total$1,506,335 $1,328,964
Liabilities and Shareholders' Equity
Interest-bearing demand deposits$660,980 $610 0.37 $584,257 $330 0.22
Savings deposits95,414 38 0.16 90,790 36 0.16
Time deposits289,285 971 1.33 279,006 929 1.32
Short-term borrowings84,228 182 0.86 33,912 21 0.25
Long-term debt42,868 216 2.00 24,295 104 1.70
Total interest-bearing liabilities1,172,775 2,017 0.68 1,012,260 1,420 0.56
Noninterest-bearing demand deposits173,112 161,874
Other15,846 14,515
Total Liabilities1,361,733 1,188,649
Shareholders' Equity144,602 140,315
Total$1,506,335 $1,328,964
Taxable-equivalent net interest income / net interest spread 11,683 3.20% 9,689 3.04%
Taxable-equivalent net interest margin 3.31% 3.14%
Taxable-equivalent adjustment (602) (455)
Net interest income $11,081 $9,234
NOTES:
(1) Yields and interest income on tax-exempt assets have been computed on a taxable-equivalent basis assuming a 34% tax rate.
(2) For yield calculation purposes, nonaccruing loans are included in the average loan balance.


ORRSTOWN FINANCIAL SERVICES, INC.
ANALYSIS OF NET INTEREST INCOME
Average Balances and Interest Rates, Taxable-Equivalent Basis (Unaudited)
Nine Months Ended
September 30, 2017 September 30, 2016
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$13,539 $142 1.40% $38,964 $186 0.64%
Securities418,095 9,070 2.90 350,975 6,374 2.43
Loans926,556 30,036 4.33 821,528 25,751 4.19
Total interest-earning assets1,358,190 39,248 3.86 1,211,467 32,311 3.56
Other assets108,070 98,517
Total$1,466,260 $1,309,984
Liabilities and Shareholders' Equity
Interest-bearing demand deposits$637,238 $1,449 0.30 $549,385 $861 0.21
Savings deposits95,004 112 0.16 89,948 107 0.16
Time deposits296,468 2,868 1.29 294,627 2,657 1.20
Short-term borrowings96,212 543 0.75 52,619 112 0.28
Long-term debt25,066 388 2.07 24,377 315 1.73
Total interest-bearing liabilities1,149,988 5,360 0.62 1,010,956 4,052 0.54
Noninterest-bearing demand deposits161,040 147,161
Other15,217 13,699
Total Liabilities1,326,245 1,171,816
Shareholders' Equity140,015 138,168
Total$1,466,260 $1,309,984
Taxable-equivalent net interest income / net interest spread 33,888 3.24% 28,259 3.02%
Taxable-equivalent net interest margin 3.34% 3.12%
Taxable-equivalent adjustment (1,852) (1,424)
Net interest income $32,036 $26,835
NOTES:
(1) Yields and interest income on tax-exempt assets have been computed on a taxable-equivalent basis assuming a 34% tax rate.
(2) For yield calculation purposes, nonaccruing loans are included in the average loan balance.


ORRSTOWN FINANCIAL SERVICES, INC.
Nonperforming Assets / Risk Elements (Unaudited)
September 30, June 30, December 31, September 30,
(Dollars in thousands)2017 2017 2016 2016
Nonaccrual loans (cash basis)$5,249 $5,160 $7,043 $13,552
Other real estate (OREO)1,258 1,012 346 719
Total nonperforming assets6,507 6,172 7,389 14,271
Restructured loans still accruing1,192 1,204 930 901
Loans past due 90 days or more and still accruing0 0 0 39
Total nonperforming and other risk assets$7,699 $7,376 $8,319 $15,211
Loans 30-89 days past due$914 $1,069 $1,218 $1,401
Asset quality ratios:
Total nonperforming loans to total loans0.53% 0.55% 0.80% 1.60%
Total nonperforming assets to total assets0.42% 0.42% 0.52% 1.05%
Total nonperforming assets to total loans and OREO0.66% 0.66% 0.84% 1.68%
Total risk assets to total loans and OREO0.78% 0.79% 0.94% 1.79%
Total risk assets to total assets0.50% 0.50% 0.59% 1.12%
Allowance for loan losses to total loans1.30% 1.36% 1.45% 1.64%
Allowance for loan losses to nonperforming loans243.30% 247.11% 181.39% 102.20%
Allowance for loan losses to nonperforming and restructured loans still accruing198.28% 200.36% 160.23% 95.83%


ORRSTOWN FINANCIAL SERVICES, INC.
Allowance for Loan Losses Activity (Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30, September 30, September 30,
(Dollars in thousands)2017 2016 2017 2016
Balance, beginning of period$12,751 $13,440 $12,775 $13,568
Provision for loan losses100 250 200 250
Recoveries55 264 138 619
Charge-offs(135) (104) (342) (587)
Balance, end of period$12,771 $13,850 $12,771 $13,850

About the Company

With over $1.5 billion in assets, Orrstown Financial Services, Inc. and its wholly-owned subsidiaries, Orrstown Bank and Wheatland Advisors, Inc., provide a wide range of consumer and business financial services through banking and financial advisory offices in Berks, Cumberland, Dauphin, Franklin, Lancaster and Perry Counties, Pennsylvania and Washington County, Maryland. Orrstown Bank is an Equal Housing Lender and its deposits are insured up to the legal maximum by the FDIC. Orrstown Financial Services, Inc.’s stock is traded on Nasdaq (ORRF). For more information about Orrstown Financial Services, Inc. and Orrstown Bank, visit www.orrstown.com. For more information about Wheatland Advisors, Inc., visit www.wheatlandadvisors.com.

Cautionary Note Regarding Forward-looking Statements:

This news release may contain forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements are statements that include projections, predictions, expectations, or beliefs about events or results or otherwise that are not statements of historical facts, including, without limitation, statements regarding our ability to integrate additional teams across all business lines as we continue expansion of our community banking model into Dauphin, Lancaster and Berks counties and fill a void created in the community banking space from the disruption caused by the acquisition of several competitors, and our belief that we are positioned to create additional long-term shareholder value from these expansion initiatives.

Actual results and trends could differ materially from those set forth in such statements and there can be no assurances that we will be able to continue to successfully execute on our strategic expansion east into Dauphin, Lancaster and Berks counties, take advantage of market disruption, and experience sustained growth in loans and deposits or maintain the momentum experienced to date from these actions. Factors that could cause actual results to differ from those expressed or implied by the forward looking statements include, but are not limited to, the following: ineffectiveness of the Company's business strategy due to changes in current or future market conditions; the effects of competition, including industry consolidation and development of competing financial products and services; changes in laws and regulations, including the Dodd-Frank Wall Street Reform and Consumer Protection Act; interest rate movements; changes in credit quality; inability to raise capital, if necessary, under favorable conditions; volatilities in the securities markets; deteriorating economic conditions; the integration of the Company's strategic acquisitions; expenses associated with pending litigation and legal proceedings; and other risks and uncertainties, including those detailed in Orrstown Financial Services, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2016 and Form 10-Q for the quarters ended March 31, 2017 and June 30, 2017, under the headings “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Risk Factors” and in other filings made with the Securities and Exchange Commission. The statements are valid only as of the date hereof and Orrstown Financial Services, Inc. disclaims any obligation to update this information.

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

Contact:
David P. Boyle
Executive Vice President & CFO
Phone 717.530.2294
77 East King Street | Shippensburg PA

Source:Orrstown Financial Services, Inc.