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Orrstown Financial Services, Inc. Reports Second Quarter 2022 Results

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Orrstown Financial Services, Inc.
Orrstown Financial Services, Inc.
  • Net income of $8.9 million and diluted earnings per share of $0.83 for the quarter ended June 30, 2022 compared to net income of $8.4 million and diluted earnings per share of $0.76 for the quarter ended March 31, 2022; earnings grew despite a significant reduction in Small Business Administration ("SBA") Paycheck Protection Program ("PPP") income and a higher provision for loan losses in the second quarter of 2022

  • Return on average assets of 1.25% in the second quarter of 2022 compared to 1.20% in the first quarter of 2022

  • Net interest margin on a tax equivalent basis increased to 3.68% in the second quarter of 2022 from 3.49% in the first quarter of 2022; reflects the deployment of excess liquidity into commercial loans and investments as well as the favorable impact of our asset-sensitive balance sheet in a rising interest rate environment

  • Second quarter commercial loan growth, excluding SBA PPP loans, was $125.9 million, or 34% annualized

  • Noninterest income of $7.2 million in the second quarter of 2022 compared to $7.5 million in the first quarter of 2022; swap fee income opportunities continue with commercial clients

  • Noninterest expenses decreased by $0.6 million to $18.8 million in the second quarter of 2022 from $19.4 million in the first quarter of 2022; efficiency ratio improved to 60% in the second quarter of 2022 from 64% in the first quarter of 2022

  • Provision for loan losses of $1.8 million in the second quarter of 2022 compared to $0.3 million in the first quarter of 2022; increase due to combined impact of higher loan production during the three months ended June 30, 2022 compared to the three months ended March 31, 2022 and the reduction of certain qualitative factor assumptions during the first quarter of 2022

  • The Company repurchased 407,824 shares of its common stock at an average price of $24.25 per share during the three months ended June 30, 2022

  • The Board of Directors declared a cash dividend of $0.19 per common share, payable August 8, 2022, to shareholders of record as of August 1, 2022

SHIPPENSBURG, Pa., July 19, 2022 (GLOBE NEWSWIRE) -- Orrstown Financial Services, Inc. ("Orrstown" or the “Company”) (NASDAQ: ORRF), the parent company of Orrstown Bank (the “Bank”), announced earnings for the three months ended June 30, 2022. Net income totaled $8.9 million for the three months ended June 30, 2022, compared with $8.4 million for the three months ended March 31, 2022 and $8.8 million for the three months ended June 30, 2021. Diluted earnings per share totaled $0.83 for the three months ended June 30, 2022, compared with $0.76 for the three months ended March 31, 2022 and $0.79 for the three months ended June 30, 2021.

Thomas R. Quinn, Jr., President & CEO, commented, “The Orrstown growth story was accelerated with key hires and acquisitions in 2018 and 2019 and resonated throughout 2020 and 2021 with our PPP success and significant loan production. This has led to strong profitability in 2022. In the second quarter of 2022, despite a $1.6 million reduction in PPP-related interest income and a $1.5 million increase in provision for loan losses, our net income and earnings per share grew on a linked quarter basis. This occurred as a result of the growth in the loan portfolio since 2020, strategic balance sheet management efforts and expense reductions. We have also benefited from three interest rate increases so far in 2022 and any future increases are expected to further enhance our net interest margin.”

Mr. Quinn added, “Our focus for the second half of 2022 is on navigating through an uncertain economic environment to enhance shareholder value. We will continue to adjust our balance sheet strategy while considering economic data in an effort to counteract the impact of a potential downturn. While we have experienced strong headwinds in mortgage banking, our wealth management team continues to generate steady earnings despite a steep market decline. We continue to seek opportunities to maintain or improve non-interest income from swaps and other relationship-based fees. Orrstown also plans to continue to make investments in technology to enhance its digital platform. Despite the uncertainty of the operating environment, we believe that Orrstown is well positioned for success."

DISCUSSION OF RESULTS

Balance Sheet

Loans

Excluding SBA PPP loans, total loans increased by $131.7 million from March 31, 2022 to June 30, 2022, or 29% annualized. SBA PPP loans, net of deferred fees and costs, declined by $92.3 million to $30.2 million at June 30, 2022 from $122.5 million at March 31, 2022 due to forgiveness activity. Commercial loans, excluding SBA PPP loans, increased by $125.9 million, or 34% annualized, from March 31, 2022 to June 30, 2022. Loans held for investment, which includes SBA PPP loans, increased by $39.3 million from March 31, 2022 to June 30, 2022, or 8% annualized, as the impact of SBA PPP loan forgiveness was offset by net commercial and home equity loan production.

The remaining gross balance of SBA PPP loans is $30.9 million at June 30, 2022. Net deferred SBA PPP fees of $0.7 million remain at June 30, 2022, substantially all of which are expected to be earned by the end of 2022.

The consumer portfolio grew by $5.7 million, or 6% annualized, in the three months ended June 30, 2022. Home equity lines of credit increased by $6.5 million, or 16% annualized, in the three months ended June 30, 2022.

Investment Securities

Investment securities decreased by $17.3 million to $519.2 million at June 30, 2022 compared to $536.5 million at March 31, 2022. During the second quarter of 2022, the Bank purchased municipal securities totaling $10.8 million and mortgage-backed securities totaling $15.8 million. These purchases were offset by net unrealized losses of $18.6 million, which resulted from market interest rate increases, the call of a non-agency collateralized mortgage obligation ("CMO") security of $13.5 million and normal paydown activity. With the rise in interest rates, the Company purchased certain investment securities, which have enhanced interest income, while still maintaining an acceptable interest rate risk profile. See Appendix B for a summary of the Bank's investment securities at June 30, 2022, highlighting the concentrations, credit ratings and credit enhancement levels of the investment securities portfolio at such date.

Deposits

Deposits decreased by $67.4 million, or 11% annualized, totaling approximately $2.5 billion at both June 30, 2022 and March 31, 2022. In the second quarter of 2022, interest-bearing demand deposits decreased by $46.3 million, or 19% annualized, certificates of deposits decreased by $21.4 million, or 30% annualized, and money market and savings deposits decreased by $11.1 million, or 6% annualized, in each case from March 31, 2022. These decreases were partially offset by an increase in non-interest bearing demand deposits of $11.5 million, or 8% annualized. The decrease in deposits resulted primarily from seasonality from public fund balances and certificate of deposit runoff. The Bank's loan-to-deposit ratio was 81% at June 30, 2022, an increase of 3% from March 31, 2022 due to the combination of loan growth and lower deposit balances.

Net Interest Income and Margin

Net interest income increased by $1.5 million to $24.1 million for the three months ended June 30, 2022 compared to $22.6 million for the three months ended March 31, 2022. Net interest margin on a tax equivalent basis increased to 3.68% in the second quarter of 2022 from 3.49% in the first quarter of 2022. The increase in net interest margin was primarily a result of the investment of cash into higher yielding commercial loans and investment securities and the rising interest rates that positively impacted interest-earning assets.

Interest income on loans, for the three months ended June 30, 2022, included prepayment fee income of $0.4 million, an increase of $0.3 million, compared to $0.1 million for the three months ended March 31, 2022.

Interest income recognized on SBA PPP loans totaled $1.9 million in the three months ended June 30, 2022 compared to $3.5 million in the three months ended March 31, 2022. The SBA PPP loan portfolio averaged $72.5 million in the three months ended June 30, 2022 compared to $155.3 million in the three months ended March 31, 2022, which reflects continued forgiveness from the SBA.

Average cash and cash equivalents decreased from $199.8 million in the three months ended March 31, 2022 to $131.4 million in the three months ended June 30, 2022. The decrease reflects the deployment of excess cash balances into commercial loans and investment securities, as well as a decrease in deposits.

Provision for Loan Losses

The Company recorded a provision for loan losses of $1.8 million for the three months ended June 30, 2022 compared to $0.3 million for the three months ended March 31, 2022 due to increased loan production during the second quarter of 2022 compared to the first quarter of 2022, and the reduction of certain qualitative factor assumptions for the three months ended March 31, 2022. Net charge-offs were $4 thousand for the three months ended June 30, 2022 compared to net recoveries of $28 thousand for the three months ended March 31, 2022. The allowance for loan losses totaled $23.3 million at June 30, 2022, compared with $21.5 million at March 31, 2022, and the allowance for loan losses to total loans increased to 1.15% at June 30, 2022 from 1.09% from March 31, 2022.

Asset quality metrics strengthened further in the second quarter of 2022. Classified loans decreased by $3.7 million, or 16%, to $19.6 million at June 30, 2022 from $23.4 million at March 31, 2022 due primarily to risk rating upgrades. Nonperforming loans remained relatively flat at 0.27% and 0.28% of gross loans at June 30, 2022 and March 31, 2022, respectively. As a result of the increase in the allowance for loan losses, the ratio of the allowance for loan losses to nonaccrual loans increased to 432% at June 30, 2022 from 390% at March 31, 2022. The allowance for loan losses to non-SBA guaranteed loans(1) remained at 1.2% at June 30, 2022 and March 31, 2022. Management believes the allowance for loan losses to be adequate based on current asset quality metrics and economic conditions.

Noninterest Income

Noninterest income totaled $7.2 million in the three months ended June 30, 2022 compared with $7.5 million in the three months ended March 31, 2022.

Swap fee income remained strong at $0.8 million for the three months ended June 30, 2022 compared to $1.0 million for the three months ended March 31, 2022.

Mortgage banking income decreased by $0.2 million from $0.7 million in the first quarter of 2022 to $0.5 million in the second quarter of 2022. Market conditions during the first half of 2022, including low housing inventory and a rising interest rate environment, caused a further decline in residential mortgage loan production and corresponding reductions in the residential mortgage loan pipeline and secondary market sales during the three months ended June 30, 2022,. These changes resulted in a decrease in the gain on sale of residential mortgage loans of $0.3 million compared to the first quarter of 2022. Mortgage loans sold totaled $22.6 million in the second quarter of 2022 compared with $31.9 million in the first quarter of 2022.

Other income decreased by $0.2 million to $0.8 million for the three months ended June 30, 2022 from $1.0 million during the three months ended March 31, 2022. The second quarter included a gain on the sale of an SBA loan of $35 thousand compared to a gain on the sale of an SBA loan of $271 thousand in the three months ended March 31, 2022.

For the three months ended June 30, 2022, net losses on investment securities decreased by $146 thousand to $3 thousand from the first quarter of 2022. During the three months ended March 31, 2022, there was an impairment charge of $171 thousand on a non-agency CMO, which was subsequently called in the three months ended June 30, 2022.

Noninterest Expenses

Noninterest expenses decreased by $0.6 million to $18.8 million in the three months ended June 30, 2022 from $19.4 million in the three months ended March 31, 2022.

Advertising and bank promotions increased by $0.5 million to $0.9 million for the three months ended June 30, 2022 from $0.4 million for the three months ended March 31, 2022 due to $0.5 million in contributions to the Pennsylvania Educational Improvement Tax Credit Program. The related tax credit on these contributions caused taxes other than income to decrease by $0.5 million to $0.1 million for the second quarter of 2022 from $0.6 million for the first quarter of 2022.

Other expenses decreased by $0.4 million from $2.1 million for the three months ended March 31, 2022 to $1.7 million for the three months ended June 30, 2022 due to a decline in loan-related costs incurred by the Bank of $0.3 million and improvement in the market value of derivatives of $0.1 million. FDIC insurance expense decreased from $0.3 million during the first quarter of 2022 to $0.2 million for the second quarter of 2022 due to a decline in both the assessment base and rate for the Bank.

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

Income Taxes

The Company's effective tax rate for the second quarter of 2022 was 17.4% compared with 19.4% for the first quarter of 2022. The Company's effective tax rate for the three months ended June 30, 2022 is less than the 21% federal statutory rate due to tax-exempt income, including interest earned on tax-exempt loans and securities and income from life insurance policies, as well as tax credits. The lower effective tax rate in the second quarter of 2022 resulted from an increase in non-taxable investment securities and loans, which lowered projected taxable income for the full year.

Capital

Shareholders’ equity totaled $237.5 million at June 30, 2022, a decrease of $17.3 million from $254.8 million at March 31, 2022. The decrease was primarily attributable to a decrease of $14.7 million in accumulated other comprehensive income due primarily to an increase in unrealized losses on available-for-sale securities resulting from higher market interest rates, share repurchases of $9.9 million, and dividends paid of $2.1 million, partially offset by net income of $8.9 million for the three months ended June 30, 2022. Tangible book value per share(1) decreased by 3.8% from $21.03 per share at March 31, 2022 to $20.23 per share at June 30, 2022 as a result of the decrease in shareholders' equity from the increase in unrealized losses on available-for-sale securities and share repurchases.

The Company's tangible common equity ratio decreased to 7.7% at June 30, 2022 from 8.1% at March 31, 2022 due primarily to the decrease in tangible equity from share repurchases and the unrealized losses on available-for-sale securities. The Company's Tier 1 leverage ratio decreased to 8.5% at June 30, 2022 from 8.8% at March 31, 2022 due to the impact of share repurchases on shareholders' equity and the increase in average assets caused primarily by an increase in average deposits over that period. The Company's total risk-based capital ratio decreased to 13.5% at June 30, 2022 from 14.3% at March 31, 2022 due to deployment of cash into commercial loans, a decrease in capital from the share repurchases and an increase in deferred tax assets resulting from the increase in unrealized losses on available-for-sale securities.

The Board of Directors approved a quarterly dividend of $0.19 per share, payable August 8, 2022, to shareholders of record as of August 1, 2022. The dividend payout ratio totaled 23% for the three months ended June 30, 2022 compared to 25% for the three months ended March 31, 2022. At this time, the Company continues to believe that capital is adequate to support the risks inherent in the balance sheet, as well as growth requirements.

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


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, except per share amounts)

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

 

 

 

 

 

 

 

 

Profitability for the period:

 

 

 

 

 

 

 

Net interest income

$

24,118

 

 

$

21,901

 

 

$

46,691

 

 

$

43,756

 

Provision for loan losses

 

1,775

 

 

 

625

 

 

 

2,075

 

 

 

(375

)

Noninterest income

 

7,194

 

 

 

6,664

 

 

 

14,668

 

 

 

14,208

 

Noninterest expenses

 

18,794

 

 

 

17,033

 

 

 

38,158

 

 

 

34,816

 

Income before income taxes

 

10,743

 

 

 

10,907

 

 

 

21,126

 

 

 

23,523

 

Income tax expense

 

1,872

 

 

 

2,131

 

 

 

3,887

 

 

 

4,540

 

Net income available to common shareholders

$

8,871

 

 

$

8,776

 

 

$

17,239

 

 

$

18,983

 

 

 

 

 

 

 

 

 

Financial ratios:

 

 

 

 

 

 

 

Return on average assets (1)

 

1.25

%

 

 

1.20

%

 

 

1.22

%

 

 

1.33

%

Return on average equity (1)

 

14.42

%

 

 

13.56

%

 

 

13.51

%

 

 

15.04

%

Net interest margin (1)

 

3.68

%

 

 

3.24

%

 

 

3.59

%

 

 

3.31

%

Efficiency ratio

 

60.0

%

 

 

59.6

%

 

 

62.2

%

 

 

60.1

%

Income per common share:

 

 

 

 

 

 

 

Basic

$

0.84

 

 

$

0.80

 

 

$

1.61

 

 

$

1.73

 

Diluted

$

0.83

 

 

$

0.79

 

 

$

1.59

 

 

$

1.71

 

 

 

 

 

 

 

 

 

Average equity to average assets

 

8.64

%

 

 

8.83

%

 

 

9.05

%

 

 

8.84

%

 

 

 

 

 

 

 

 

(1) Annualized.

 

 

 

 

 

 

 



ORRSTOWN FINANCIAL SERVICES, INC.

 

 

 

FINANCIAL HIGHLIGHTS (Unaudited)

 

 

 

(continued)

 

 

 

 

June 30,

 

December 31,

 

 

2022

 

 

 

2021

 

At period-end:

 

 

 

Total assets

$

2,824,201

 

 

$

2,834,565

 

Total deposits

 

2,478,616

 

 

 

2,464,929

 

Loans, net of allowance for loan losses

 

1,994,350

 

 

 

1,958,806

 

Loans held-for-sale, at fair value

 

7,824

 

 

 

8,868

 

Securities available for sale

 

512,698

 

 

 

472,438

 

Borrowings

 

25,965

 

 

 

25,197

 

Subordinated notes

 

31,994

 

 

 

31,963

 

Shareholders' equity

 

237,527

 

 

 

271,656

 

 

 

 

 

Credit quality and capital ratios (1):

 

 

 

Allowance for loan losses to total loans

 

1.15

%

 

 

1.07

%

Total nonaccrual loans to total loans

 

0.27

%

 

 

0.33

%

Nonperforming assets to total assets

 

0.19

%

 

 

0.23

%

Allowance for loan losses to nonaccrual loans

 

432

%

 

 

328

%

Total risk-based capital:

 

 

 

Orrstown Financial Services, Inc.

 

13.5

%

 

 

15.0

%

Orrstown Bank

 

13.3

%

 

 

14.0

%

Tier 1 risk-based capital:

 

 

 

Orrstown Financial Services, Inc.

 

10.9

%

 

 

12.2

%

Orrstown Bank

 

12.2

%

 

 

12.9

%

Tier 1 common equity risk-based capital:

 

 

 

Orrstown Financial Services, Inc.

 

10.9

%

 

 

12.2

%

Orrstown Bank

 

12.2

%

 

 

12.9

%

Tier 1 leverage capital:

 

 

 

Orrstown Financial Services, Inc.

 

8.5

%

 

 

8.5

%

Orrstown Bank

 

9.5

%

 

 

8.9

%

 

 

 

 

Book value per common share

$

22.25

 

 

$

24.29

 

 

 

 

 

(1) Capital ratios are estimated, subject to regulatory filings

 

 

 



ORRSTOWN FINANCIAL SERVICES, INC.

 

 

 

 

CONSOLIDATED BALANCE SHEETS (Unaudited)

 

 

 

 

 

 

 

 

 

(Dollars in thousands, except per share amounts)

 

June 30, 2022

 

December 31, 2021

Assets

 

 

 

 

Cash and due from banks

 

$

25,825

 

 

$

21,217

 

Interest-bearing deposits with banks

 

 

86,081

 

 

 

187,493

 

Cash and cash equivalents

 

 

111,906

 

 

 

208,710

 

Restricted investments in bank stocks

 

 

6,500

 

 

 

7,252

 

Securities available for sale (amortized cost of $549,876 and $466,806 at June 30, 2022 and December 31, 2021, respectively)

 

 

512,698

 

 

 

472,438

 

Loans held for sale, at fair value

 

 

7,824

 

 

 

8,868

 

Loans

 

 

2,017,629

 

 

 

1,979,986

 

Less: Allowance for loan losses

 

 

(23,279

)

 

 

(21,180

)

Net loans

 

 

1,994,350

 

 

 

1,958,806

 

Premises and equipment, net

 

 

33,429

 

 

 

34,045

 

Cash surrender value of life insurance

 

 

70,912

 

 

 

70,217

 

Goodwill

 

 

18,724

 

 

 

18,724

 

Other intangible assets, net

 

 

3,610

 

 

 

4,183

 

Accrued interest receivable

 

 

8,425

 

 

 

8,234

 

Other assets

 

 

55,823

 

 

 

43,088

 

Total assets

 

$

2,824,201

 

 

$

2,834,565

 

Liabilities

 

 

 

 

Deposits:

 

 

 

 

Noninterest-bearing

 

$

569,231

 

 

$

553,238

 

Interest-bearing

 

 

1,909,385

 

 

 

1,911,691

 

Total deposits

 

 

2,478,616

 

 

 

2,464,929

 

Securities sold under agreements to repurchase

 

 

24,287

 

 

 

23,301

 

FHLB advances and other

 

 

1,678

 

 

 

1,896

 

Subordinated notes

 

 

31,994

 

 

 

31,963

 

Accrued interest and other liabilities

 

 

50,099

 

 

 

40,820

 

Total liabilities

 

 

2,586,674

 

 

 

2,562,909

 

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; 11,236,558 shares issued and 10,675,679 outstanding at June 30, 2022; 11,258,167 shares issued and 11,183,050 outstanding at December 31, 2021

 

 

585

 

 

 

586

 

Additional paid—in capital

 

 

188,178

 

 

 

189,689

 

Retained earnings

 

 

91,723

 

 

 

78,700

 

Accumulated other comprehensive (loss) income

 

 

(29,370

)

 

 

4,449

 

Treasury stock— 560,879 and 75,117 shares, at cost at June 30, 2022 and December 31, 2021, respectively

 

 

(13,589

)

 

 

(1,768

)

Total shareholders’ equity

 

 

237,527

 

 

 

271,656

 

Total liabilities and shareholders’ equity

 

$

2,824,201

 

 

$

2,834,565

 



ORRSTOWN FINANCIAL SERVICES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Six Months Ended

 

 

June 30,

 

June 30,

 

June 30,

 

June 30,

(In thousands, except per share amounts)

 

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

Interest income

 

 

 

 

 

 

 

 

Loans

 

$

22,027

 

 

$

21,323

 

 

$

43,396

 

 

$

42,834

 

Investment securities - taxable

 

 

1,957

 

 

 

1,614

 

 

 

3,555

 

 

 

3,493

 

Investment securities - tax-exempt

 

 

1,131

 

 

 

638

 

 

 

1,853

 

 

 

1,138

 

Short-term investments

 

 

235

 

 

 

81

 

 

 

336

 

 

 

120

 

Total interest income

 

 

25,350

 

 

 

23,656

 

 

 

49,140

 

 

 

47,585

 

Interest expense

 

 

 

 

 

 

 

 

Deposits

 

 

701

 

 

 

1,081

 

 

 

1,386

 

 

 

2,473

 

Securities sold under agreements to repurchase

 

 

7

 

 

 

8

 

 

 

14

 

 

 

17

 

FHLB advances and other

 

 

21

 

 

 

164

 

 

 

43

 

 

 

335

 

Subordinated notes

 

 

503

 

 

 

502

 

 

 

1,006

 

 

 

1,004

 

Total interest expense

 

 

1,232

 

 

 

1,755

 

 

 

2,449

 

 

 

3,829

 

Net interest income

 

 

24,118

 

 

 

21,901

 

 

 

46,691

 

 

 

43,756

 

Provision for loan losses

 

 

1,775

 

 

 

625

 

 

 

2,075

 

 

 

(375

)

Net interest income after provision for loan losses

 

 

22,343

 

 

 

21,276

 

 

 

44,616

 

 

 

44,131

 

Noninterest income

 

 

 

 

 

 

 

 

Service charges

 

 

1,194

 

 

 

880

 

 

 

2,267

 

 

 

1,765

 

Interchange income

 

 

1,064

 

 

 

1,064

 

 

 

2,045

 

 

 

2,019

 

Swap fee income

 

 

785

 

 

 

15

 

 

 

1,738

 

 

 

68

 

Wealth management income

 

 

2,894

 

 

 

2,930

 

 

 

5,763

 

 

 

5,653

 

Mortgage banking activities

 

 

498

 

 

 

1,162

 

 

 

1,219

 

 

 

3,351

 

Investment securities (losses) gains

 

 

(3

)

 

 

11

 

 

 

(149

)

 

 

156

 

Other income

 

 

762

 

 

 

602

 

 

 

1,785

 

 

 

1,196

 

Total noninterest income

 

 

7,194

 

 

 

6,664

 

 

 

14,668

 

 

 

14,208

 

Noninterest expenses

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

 

11,312

 

 

 

10,212

 

 

 

22,649

 

 

 

20,409

 

Occupancy, furniture and equipment

 

 

2,423

 

 

 

2,400

 

 

 

4,990

 

 

 

4,918

 

Data processing

 

 

1,165

 

 

 

1,032

 

 

 

2,218

 

 

 

2,051

 

Advertising and bank promotions

 

 

881

 

 

 

274

 

 

 

1,236

 

 

 

699

 

FDIC insurance

 

 

190

 

 

 

158

 

 

 

473

 

 

 

352

 

Professional services

 

 

722

 

 

 

579

 

 

 

1,530

 

 

 

1,300

 

Taxes other than income

 

 

108

 

 

 

462

 

 

 

672

 

 

 

913

 

Intangible asset amortization

 

 

281

 

 

 

324

 

 

 

573

 

 

 

658

 

Other operating expenses

 

 

1,712

 

 

 

1,592

 

 

 

3,817

 

 

 

3,516

 

Total noninterest expenses

 

 

18,794

 

 

 

17,033

 

 

 

38,158

 

 

 

34,816

 

Income before income tax expense

 

 

10,743

 

 

 

10,907

 

 

 

21,126

 

 

 

23,523

 

Income tax expense

 

 

1,872

 

 

 

2,131

 

 

 

3,887

 

 

 

4,540

 

Net income

 

$

8,871

 

 

$

8,776

 

 

$

17,239

 

 

$

18,983

 

 

 

 

 

 

 

 

 

 

Share information:

 

 

 

 

 

 

 

 

Basic earnings per share

 

$

0.84

 

 

$

0.80

 

 

$

1.61

 

 

$

1.73

 

Diluted earnings per share

 

$

0.83

 

 

$

0.79

 

 

$

1.59

 

 

$

1.71

 

Weighted average shares - basic

 

 

10,610

 

 

 

10,975

 

 

 

10,735

 

 

 

10,975

 

Weighted average shares - diluted

 

 

10,744

 

 

 

11,112

 

 

 

10,875

 

 

 

11,093

 



ORRSTOWN FINANCIAL SERVICES, INC.

 

 

 

 

ANALYSIS OF NET INTEREST INCOME

 

 

 

 

Average Balances and Interest Rates, Taxable-Equivalent Basis (Unaudited)

 

 

 

Three Months Ended

 

6/30/2022

 

3/31/2022

 

12/31/2021

 

9/30/2021

 

6/30/2021

 

 

 

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

$

131,449

 

$

235

 

 

0.72

%

 

$

199,788

 

$

101

 

 

0.20

%

 

$

250,336

 

$

98

 

 

0.16

%

 

$

347,242

 

$

135

 

 

0.15

%

 

$

290,039

 

$

81

 

 

0.11

%

Investment securities (1)

 

523,940

 

 

3,388

 

 

2.59

 

 

 

472,195

 

 

2,512

 

 

2.13

 

 

 

477,217

 

 

2,506

 

 

2.08

 

 

 

464,417

 

 

2,339

 

 

2.00

 

 

 

438,110

 

 

2,421

 

 

2.22

 

Loans (1)(2)(3)

 

2,008,283

 

 

22,090

 

 

4.41

 

 

 

1,974,804

 

 

21,429

 

 

4.39

 

 

 

1,975,014

 

 

21,559

 

 

4.33

 

 

 

1,919,926

 

 

19,945

 

 

4.12

 

 

 

2,014,600

 

 

21,375

 

 

4.26

 

Total interest-earning assets

 

2,663,672

 

 

25,713

 

 

3.87

 

 

 

2,646,787

 

 

24,042

 

 

3.67

 

 

 

2,702,567

 

 

24,163

 

 

3.55

 

 

 

2,731,585

 

 

22,419

 

 

3.26

 

 

 

2,742,749

 

 

23,877

 

 

3.49

 

Other assets

 

192,561

 

 

 

 

 

 

184,300

 

 

 

 

 

 

187,622

 

 

 

 

 

 

195,089

 

 

 

 

 

 

188,810

 

 

 

 

Total

$

2,856,233

 

 

 

 

 

$

2,831,087

 

 

 

 

 

$

2,890,189

 

 

 

 

 

$

2,926,674

 

 

 

 

 

$

2,931,559

 

 

 

 

Liabilities and Shareholders' Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing demand deposits

$

1,420,051

 

 

301

 

 

0.09

 

 

$

1,398,182

 

 

256

 

 

0.07

 

 

$

1,430,845

 

 

273

 

 

0.08

 

 

$

1,411,243

 

 

286

 

 

0.08

 

 

$

1,394,384

 

 

292

 

 

0.08

 

Savings deposits

 

236,916

 

 

63

 

 

0.11

 

 

 

227,676

 

 

57

 

 

0.10

 

 

 

215,957

 

 

55

 

 

0.10

 

 

 

209,112

 

 

53

 

 

0.10

 

 

 

200,439

 

 

50

 

 

0.10

 

Time deposits

 

275,408

 

 

337

 

 

0.49

 

 

 

298,618

 

 

372

 

 

0.51

 

 

 

313,148

 

 

461

 

 

0.58

 

 

 

349,215

 

 

598

 

 

0.68

 

 

 

382,467

 

 

739

 

 

0.78

 

Total interest-bearing deposits

 

1,932,375

 

 

701

 

 

0.15

 

 

 

1,924,476

 

 

685

 

 

0.14

 

 

 

1,959,950

 

 

789

 

 

0.16

 

 

 

1,969,570

 

 

937

 

 

0.19

 

 

 

1,977,290

 

 

1,081

 

 

0.22

 

Securities sold under agreements to repurchase

 

24,045

 

 

7

 

 

0.11

 

 

 

23,530

 

 

7

 

 

0.12

 

 

 

24,069

 

 

7

 

 

0.12

 

 

 

23,578

 

 

8

 

 

0.13

 

 

 

22,417

 

 

8

 

 

0.14

 

FHLB advances and other

 

1,741

 

 

21

 

 

4.74

 

 

 

1,850

 

 

22

 

 

4.74

 

 

 

1,956

 

 

23

 

 

4.70

 

 

 

45,071

 

 

123

 

 

1.09

 

 

 

57,896

 

 

164

 

 

1.14

 

Subordinated notes

 

31,985

 

 

503

 

 

6.29

 

 

 

31,969

 

 

503

 

 

6.29

 

 

 

31,954

 

 

503

 

 

6.29

 

 

 

31,938

 

 

503

 

 

6.29

 

 

 

31,924

 

 

502

 

 

6.29

 

Total interest-bearing liabilities

 

1,990,146

 

 

1,232

 

 

0.25

 

 

 

1,981,825

 

 

1,217

 

 

0.25

 

 

 

2,017,929

 

 

1,322

 

 

0.26

 

 

 

2,070,157

 

 

1,571

 

 

0.30

 

 

 

2,089,527

 

 

1,755

 

 

0.34

 

Noninterest-bearing demand deposits

 

572,171

 

 

 

 

 

 

540,139

 

 

 

 

 

 

559,882

 

 

 

 

 

 

548,923

 

 

 

 

 

 

545,617

 

 

 

 

Other

 

47,190

 

 

 

 

 

 

40,919

 

 

 

 

 

 

42,380

 

 

 

 

 

 

38,409

 

 

 

 

 

 

37,561

 

 

 

 

Total Liabilities

 

2,609,507

 

 

 

 

 

 

2,562,883

 

 

 

 

 

 

2,620,191

 

 

 

 

 

 

2,657,489

 

 

 

 

 

 

2,672,705

 

 

 

 

Shareholders' Equity

 

246,726

 

 

 

 

 

 

268,204

 

 

 

 

 

 

269,998

 

 

 

 

 

 

269,185

 

 

 

 

 

 

258,854

 

 

 

 

Total

$

2,856,233

 

 

 

 

 

$

2,831,087

 

 

 

 

 

$

2,890,189

 

 

 

 

 

$

2,926,674

 

 

 

 

 

$

2,931,559

 

 

 

 

Taxable-equivalent net interest income / net interest spread

 

 

 

24,481

 

 

3.62

%

 

 

 

 

22,825

 

 

3.42

%

 

 

 

 

22,841

 

 

3.29

%

 

 

 

 

20,848

 

 

2.96

%

 

 

 

 

22,122

 

 

3.15

%

Taxable-equivalent net interest margin

 

 

 

 

3.68

%

 

 

 

 

 

3.49

%

 

 

 

 

 

3.35

%

 

 

 

 

 

3.03

%

 

 

 

 

 

3.24

%

Taxable-equivalent adjustment

 

 

 

(363

)

 

 

 

 

 

 

(252

)

 

 

 

 

 

 

(243

)

 

 

 

 

 

 

(228

)

 

 

 

 

 

 

(221

)

 

 

Net interest income

 

 

$

24,118

 

 

 

 

 

 

$

22,573

 

 

 

 

 

 

$

22,598

 

 

 

 

 

 

$

20,620

 

 

 

 

 

 

$

21,901

 

 

 

Ratio of average interest-earning assets to average interest-bearing liabilities

 

 

 

 

134

%

 

 

 

 

 

134

%

 

 

 

 

 

134

%

 

 

 

 

 

132

%

 

 

 

 

 

131

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NOTES:

 

 

(1) Yields and interest income on tax-exempt assets have been computed on a taxable-equivalent basis assuming a 21% tax rate.

(2) Average balances include nonaccrual loans.

(3) Interest income on loans includes prepayment and late fees, where applicable



ORRSTOWN FINANCIAL SERVICES, INC.

 

 

 

 

 

 

ANALYSIS OF NET INTEREST INCOME

 

 

 

 

Average Balances and Interest Rates, Taxable-Equivalent Basis (Unaudited)

 

 

 

Six Months Ended

 

June 30, 2022

 

June 30, 2021

 

 

 

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

$

165,430

 

 

$

336

 

 

0.41

%

 

$

218,216

 

 

$

120

 

 

0.11

%

Investment securities (1)

 

498,210

 

 

 

5,900

 

 

2.37

 

 

 

453,108

 

 

 

4,933

 

 

2.20

 

Loans (1)(2)(3)

 

1,991,636

 

 

 

43,519

 

 

4.40

 

 

 

2,023,858

 

 

 

42,949

 

 

4.28

 

Total interest-earning assets

 

2,655,276

 

 

 

49,755

 

 

3.77

 

 

 

2,695,182

 

 

 

48,002

 

 

3.59

 

Other assets

 

188,454

 

 

 

 

 

 

 

185,791

 

 

 

 

 

Total

$

2,843,730

 

 

 

 

 

 

$

2,880,973

 

 

 

 

 

Liabilities and Shareholders' Equity

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing demand deposits

$

1,409,177

 

 

 

557

 

 

0.08

 

 

$

1,364,483

 

 

 

728

 

 

0.11

 

Savings deposits

 

232,322

 

 

 

120

 

 

0.10

 

 

 

192,039

 

 

 

96

 

 

0.10

 

Time deposits

 

286,949

 

 

 

709

 

 

0.50

 

 

 

389,828

 

 

 

1,649

 

 

0.85

 

Total interest-bearing deposits

 

1,928,448

 

 

 

1,386

 

 

0.14

 

 

 

1,946,350

 

 

 

2,473

 

 

0.26

 

Securities sold under agreements to repurchase

 

23,789

 

 

 

14

 

 

0.12

 

 

 

21,937

 

 

 

17

 

 

0.16

 

FHLB advances and other

 

1,795

 

 

 

43

 

 

4.74

 

 

 

57,948

 

 

 

335

 

 

1.17

 

Subordinated notes

 

31,977

 

 

 

1,006

 

 

6.29

 

 

 

31,916

 

 

 

1,004

 

 

6.29

 

Total interest-bearing liabilities

 

1,986,009