Orrstown Financial Services, Inc. Reports Fourth Quarter 2024 Results

Net income of $13.7 million, or $0.71 per diluted share, for the three months ended December 31, 2024 compared to net loss of $7.9 million, or $0.41 per diluted share, for the three months ended September 30, 2024; the fourth quarter of 2024 included $3.9 million in expenses related to the merger and $0.5 million for a legal settlement compared to $17.0 million in expenses related to the merger, $15.5 million of provision for credit losses on non-purchase credit deteriorated loans and $4.8 million for an executive retirement, net of taxes, for the third quarter of 2024;Excluding the impact of the non-recurring charges referenced above, net income and diluted earnings per share, respectively, were $16.7 million(1) and $0.87(1) for the fourth quarter of 2024 compared to adjusted net income and diluted earnings per share of $21.4 million(1) and $1.11(1), respectively;The Board of Directors declared a cash dividend of $0.26 per common share, payable February 21, 2025, to shareholders of record as of February 14, 2025; this represents an increase in the Company's quarterly cash dividend of $0.03 per share, or 13%;The previously announced cost save target of 18% has been achieved for the go-forward operating run rate as of December 31, 2024;With the core conversion being completed in November 2024, the fourth quarter results reflected several ongoing activities associated with the conversion and the transitional period; the fourth quarter also included elevated salaries and employee benefit expenses due to year end performance-based incentive accruals;Net interest margin, on a tax equivalent basis, was 4.05% in the fourth quarter of 2024 compared to 4.14% in the third quarter of 2024; the net accretion impact of purchase accounting marks was $7.2 million of net interest income, which represents 52 basis points of net interest margin for the fourth quarter of 2024 compared to $5.8 million of net interest income, which represents 42 basis points of net interest margin, for the third quarter of 2024;Commercial loans declined by $59.5 million, or 2%, from September 30, 2024 to December 31, 2024 due primarily to strategic actions to reduce risk in the portfolio, including reducing commercial real estate ("CRE") loan concentrations; a pool of mostly commercial and industrial loans totaling $6.0 million was sold, including $2.6 million of nonaccrual loans; total classified loans declined by $16.9 million during the fourth quarter of 2024;Noninterest income decreased by $1.2 million to $11.2 million in the three months ended December 31, 2024 compared to $12.4 million in the three months ended September 30, 2024; this reduction was driven by certain courtesy fee waivers provided to clients as well as tax credits recognized in the third quarter of 2024 that did not recur in the fourth quarter;The provision for credit losses was $1.8 million for the three months ended December 31, 2024, inclusive of a charge-off of $2.4 million for one commercial and industrial (C&I) relationship and charge-offs associated with the loan sale of $0.6 million, which was offset by the acceleration of a purchase mark for the same amount;Tangible book value per common share(1) increased to $21.19 per share at December 31, 2024 compared to $21.12 per share at September 30, 2024. (1) Non-GAAP measure. See Appendix A for additional information. HARRISBURG, Pa., Jan. 31, 2025 (GLOBE NEWSWIRE) -- Orrstown Financial Services, Inc. (NASDAQ: ORRF), the parent company of Orrstown Bank (the “Bank”), announced earnings for the three months ended December 31, 2024. Net income totaled $13.7 million for the three months ended December 31, 2024, compared to net loss of $7.9 million for the three months ended September 30, 2024 and net income of $7.6 million for the three months ended December 31, 2023. Diluted earnings per share was $0.71 for the three months ended December 31, 2024, compared to diluted loss per share of $0.41 for the three months ended September 30, 2024 and diluted earnings per share of $0.73 for the three months ended December 31, 2023. For the fourth quarter of 2024, excluding the impact of merger-related expenses and other non-recurring charges, net of taxes, net income and diluted earnings per share were $16.7 million(1) and $0.87(1), respectively. For the third quarter of 2024, excluding the impact of the merger-related expenses, net of taxes, net income and diluted earnings per share were $21.4 million(1) and $1.11(1), respectively. For the fourth quarter of 2023, excluding the impact from the merger-related expenses, net income and diluted earnings per share were $8.6 million(1) and $0.83(1), respectively. “While we are pleased with another year of strong core earnings, we are even more excited about what lies ahead,” said Thomas R. Quinn, Jr., President and Chief Executive Officer. “We successfully completed our core conversion in November and have achieved the targeted 18% cost savings in our future operating run rate of the two banks’ combined noninterest expense base. With the integration behind us, we look forward to returning our focus to growing the company, enhancing shareholder value and building the premier community banking franchise in our Pennsylvania and Maryland markets.” (1) Non-GAAP measure. See Appendix A for additional information. DISCUSSION OF RESULTS Balance Sheet Loans Loans held for investment was $3.9 billion at December 31, 2024, a decrease of $50.2 million, compared to $4.0 billion at September 30, 2024. The decrease from the third quarter of 2024 was primarily due to strategic actions to reduce risk in the portfolio, including reducing CRE loan concentrations. Investment Securities Investment securities, all of which are classified as available-for-sale, increased by $2.9 million to $829.7 million at December 31, 2024 from $826.8 million at September 30, 2024. During the fourth quarter of 2024, investment securities totaling $37.7 million were purchased, partially offset by paydowns of $18.1 million and net unrealized losses of $16.2 million. The overall duration of the Company's investment securities portfolio was 4.1 years at December 31, 2024 compared to 4.6 years at September 30, 2024. See Appendix B for a summary of the Bank's investment securities at December 31, 2024, highlighting their concentrations, credit ratings and credit enhancement levels. Deposits During the fourth quarter of 2024, deposits decreased by $35.1 million to $4.6 billion at December 31, 2024 compared to $4.7 billion at September 30, 2024 due to normal seasonal activity. The Bank's loan-to-deposit ratio decreased slightly to 85% at December 31, 2024 from 86% at September 30, 2024. Borrowings The Bank actively manages its liquidity position through its various sources of funding to meet the needs of its clients. FHLB advances and other borrowings remained at $115.4 million at December 31, 2024 and September 30, 2024. The Bank seeks to maintain sufficient liquidity to ensure 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 approximately $1.7 billion at December 31, 2024. Goodwill and Intangible Assets Goodwill decreased by $2.5 million from September 30, 2024 to December 31, 2024 due to certain purchase accounting adjustments, primarily an increase in the core deposit intangible of $4.1 million. Income Statement Net Interest Income and Margin Net interest income was $50.6 million for the three months ended December 31, 2024 compared to $51.7 million for the three months ended September 30, 2024. The net interest margin, on a tax equivalent basis, decreased to 4.05% in the fourth quarter of 2024 from 4.14% in the third quarter of 2024. The net interest margin was positively impacted by the net accretion impact of purchase accounting marks on loans, securities, deposits and borrowings of $7.2 million, which represents 52 basis points of net interest margin during the fourth quarter of 2024. During the third quarter of 2024, the net accretion impact of purchase accounting marks was $5.8 million, which represented 42 basis points of net interest margin. Funding costs show signs of stabilizing. Interest income on loans, on a tax equivalent basis, decreased by $2.7 million to $68.1 million for the three months ended December 31, 2024 compared to $70.8 million for the three months ended September 30, 2024. Average loans decreased by $28.0 million during the three months ended December 31, 2024 compared to the three months ended September 30, 2024. Interest income on investment securities, on a tax equivalent basis, was $9.9 million for the fourth quarter of 2024 compared to $10.1 million in the third quarter of 2024. Interest expense, on a tax equivalent basis, decreased by $1.9 million to $29.4 million for the three months ended December 31, 2024 compared to $31.3 million for the three months ended September 30, 2024. Average interest-bearing deposits decreased by $58.1 million during the three months ended December 31, 2024 compared to the three months ended September 30, 2024. Average borrowings decreased by $1.3 million during the three months ended December 31, 2024 compared to the three months ended September 30, 2024. Interest expense includes $0.9 million and $1.5 million of amortization of purchase accounting marks for the three months ended December 31, 2024 and September 30, 2024, respectively. Provision for Credit Losses The allowance for credit losses ("ACL") on loans decreased to $48.7 million at December 31, 2024 from $49.6 million at September 30, 2024. The ACL to total loans was 1.24% at December 31, 2024 compared to 1.25% at September 30, 2024. The Company recorded a provision for credit losses on loans of $2.1 million for the three months ended December 31, 2024 compared to $14.1 million for the three months ended September 30, 2024. Net charge-offs were $3.0 million for the three months ended December 31, 2024 compared to net charge-offs of $0.3 million for the three months ended September 30, 2024. During the fourth quarter of 2024, the Bank sold $6.0 million of mostly C&I loans, which resulted in a charge-off totaling $0.6 million. There was also a corresponding $0.6 million of purchase accounting accretion associated with these loans. Classified loans decreased by $16.9 million to $88.6 million at December 31, 2024 from $105.5 million at September 30, 2024 primarily due to a combination of repayments and net rating upgrades, in addition to the loan sale. Non-accrual loans decreased by $2.8 million to $24.1 million at December 31, 2024 from $26.9 million at September 30, 2024 partially due to a sale of mostly C&I loans on nonaccrual status totaling $2.6 million during the fourth quarter of 2024. Nonaccrual loans to total loans decreased to 0.61% at December 31, 2024 compared to 0.68% at September 30, 2024 and decreased from 1.11% at December 31, 2023. Management believes the ACL to be adequate based on current asset quality metrics and economic conditions. Noninterest Income Noninterest income decreased by $1.2 million to $11.2 million in the three months ended December 31, 2024 from $12.4 million in the three months ended September 30, 2024. There were reduced service charges in the fourth quarter due to fee waivers provided to clients in the post-conversion period from November through the end of the year. Wealth management income decreased to $4.9 million in the three months ended December 31, 2024 compared to $5.0 million for the three months ended September 30, 2024. The team continues to provide value added services to clients and deliver strong results. Other income decreased by $0.3 million to $1.6 million in the three months ended December 31, 2024 compared to $1.9 million in the three months ended September 30, 2024 due to income from solar tax credits totaling $0.3 million recorded during the third quarter of 2024. Noninterest Expenses Noninterest expenses decreased by $17.4 million to $42.9 million in the three months ended December 31, 2024 from $60.3 million in the three months ended September 30, 2024. The Company’s financial results for any periods ended prior to July 1, 2024 reflect Orrstown’s results only on a standalone basis. As a result of this factor and the merger-related items below, the Company’s financial results for the fourth quarter of 2024 may not be directly comparable to prior reported periods. For the three months ended December 31, 2024, merger-related expenses totaled $3.9 million, a decrease of $13.1 million, compared to $17.0 million for the three months ended September 30, 2024. The merger costs incurred during the fourth quarter of 2024 include employee separation costs, software conversion costs and professional fees. The Company expect to incur some additional merger-related expenses in the first quarter of 2025. Salaries and benefits expense decreased by $4.8 million to $22.4 million for the three months ended December 31, 2024 compared to $27.2 million for the three months ended September 30, 2024. The three months ended September 30, 2024 included $4.8 million of expenses associated with the retirement of an executive. Intangible asset amortization increased to $2.8 million for the three months ended December 31, 2024 compared to $2.5 million for the three months ended September 30, 2024. This increase is due to the amortization expense recognized on the core deposit intangible of $40.1 million and wealth customer relationship intangible of $10.4 million established on July 1, 2024 from the merger. Due to the aforementioned purchase accounting adjustment, the three months ended December 31, 2024 included $0.4 million of additional amortization expense associated with this adjustment. Taxes other than income decreased by $0.8 million in the three months ended December 31, 2024 compared to the three months ended September 30, 2024. This decrease reflects tax credits recognized during the fourth quarter of 2024. Income Taxes The Company's effective tax rate was 20.1% for both the fourth and third quarters of 2024. The Company's effective tax rate for the three months ended December 31, 2024 is less than the 21% federal statutory rate primarily due to tax-exempt income, including interest earned on tax-exempt loans and securities and 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") and the impact of nondeductible merger-related costs. The Company regularly analyzes its projected taxable income and makes adjustments to the provision for income taxes accordingly. Capital Shareholders’ equity totaled $516.7 million at December 31, 2024 compared to $516.2 million at September 30, 2024. The impact of net income of $13.7 million was offset by a reduction of $10.4 million in accumulated other comprehensive loss from an increase in unrealized losses in the investment portfolio and dividend payments of $4.4 million. Tangible book value per share(1) increased to $21.19 per share at December 31, 2024 from $21.12 per share at September 30, 2024. The Company's tangible common equity ratio was 7.5% at both December 31, 2024 and September 30, 2024. The Company's total risk-based capital ratio was 12.4% at both December 31, 2024 and September 30, 2024. The Company's Tier 1 leverage ratio increased to 8.3% at December 31, 2024 compared to 8.0% at September 30, 2024 driven by earnings and a decrease in average assets during the fourth quarter of 2024. At December 31, 2024, 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. (1) Non-GAAP measure. See Appendix A for additional information. Investor Relations Contact:Neelesh KalaniExecutive Vice President, Chief Financial OfficerPhone (717) 510-7097 FINANCIAL HIGHLIGHTS (Unaudited) Three Months Ended Twelve Months Ended December 31, December 31, December 31, December 31,(In thousands) 2024 2023 2024 2023 Profitability for the period: Net interest income$50,573 $26,018 $155,254 $104,906 Provision for credit losses 1,755 418 16,546 1,682 Noninterest income 11,247 6,491 37,435 25,652 Noninterest expenses 42,930 22,392 148,337 83,843 Income before income tax expense 17,135 9,699 27,806 45,033 Income tax expense 3,451 2,056 5,756 9,370 Net income available to common shareholders$13,684 $7,643 $22,050 $35,663 Financial ratios: Return on average assets (1) 1.00% 1.00% 0.51% 1.19%Return on average assets, adjusted (1) (2) (3) 1.22% 1.13% 1.30% 1.22%Return on average equity (1) 10.54% 12.21% 5.62% 14.66%Return on average equity, adjusted (1) (2) (3) 12.86% 13.77% 14.29% 15.06%Net interest margin (1) 4.05% 3.71% 3.92% 3.80%Efficiency ratio 69.4% 68.9% 77.0% 64.2%Efficiency ratio, adjusted (2) (3) 62.3% 65.6% 62.5% 63.4%Income per common share: Basic$0.72 $0.74 $1.49 $3.45 Basic, adjusted (2) (3)$0.87 $0.84 $3.80 $3.54 Diluted$0.71 $0.73 $1.48 $3.42 Diluted, adjusted (2) (3)$0.87 $0.83 $3.76 $3.51 Average equity to average assets 9.45% 8.18% 9.08% 8.11% (1) Annualized for the three months ended December 31, 2024 and 2023.(2) Ratio has been adjusted for the non-recurring charges for all periods presented.(3) Non-GAAP based financial measure. Please refer to Appendix A - Supplemental Reporting of Non-GAAP Measures and GAAP to Non-GAAP Reconciliations for a discussion of our use of non-GAAP based financial measures, including tables reconciling GAAP and non-GAAP financial measures appearing herein. FINANCIAL HIGHLIGHTS (Unaudited) (continued) December 31, December 31, (Dollars in thousands, except per share amounts) 2024 2023 At period-end: Total assets$5,431,023 $3,064,240 Loans, net of allowance for credit losses 3,882,525 2,269,611 Loans held-for-sale, at fair value 6,614 5,816 Securities available for sale, at fair value 829,711 513,519 Total deposits 4,615,706 2,558,814 FHLB advances and other borrowings and Securities sold under agreements to repurchase 141,227 147,285 Subordinated notes and trust preferred debt 68,680 32,093 Shareholders' equity 516,682 265,056 Credit quality and capital ratios (1): Allowance for credit losses to total loans 1.24% 1.25%Total nonaccrual loans to total loans 0.61% 1.11%Nonperforming assets to total assets 0.45% 0.83%Allowance for credit losses to nonaccrual loans 202% 112%Total risk-based capital: Orrstown Financial Services, Inc. 12.4% 13.0%Orrstown Bank 12.4% 12.8%Tier 1 risk-based capital: Orrstown Financial Services, Inc. 10.2% 10.8%Orrstown Bank 11.2% 11.6%Tier 1 common equity risk-based capital: Orrstown Financial Services, Inc. 10.0% 10.8%Orrstown Bank 11.2% 11.6%Tier 1 leverage capital: Orrstown Financial Services, Inc. 8.3% 8.9%Orrstown Bank 9.1% 9.5% Book value per common share$26.65 $24.98 (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 CECL standard. CONSOLIDATED BALANCE SHEETS (Unaudited) (Dollars in thousands, except per share amounts)December 31, 2024 December 31, 2023Assets Cash and due from banks$51,026 $32,586 Interest-bearing deposits with banks 187,282 32,575 Cash and cash equivalents 238,308 65,161 Restricted investments in bank stocks 20,232 11,992 Securities available for sale (amortized cost of $864,920 and $549,089 at December 31, 2024 and December 31, 2023, respectively) 829,711 513,519 Loans held for sale, at fair value 6,614 5,816 Loans 3,931,214 2,298,313 Less: Allowance for credit losses (48,689) (28,702)Net loans 3,882,525 2,269,611 Premises and equipment, net 50,217 29,393 Cash surrender value of life insurance 143,854 73,204 Goodwill 68,106 18,724 Other intangible assets, net 47,765 2,414 Accrued interest receivable 21,058 13,630 Deferred tax assets, net 42,647 22,017 Other assets 79,986 38,759 Total assets$5,431,023 $3,064,240 Liabilities Deposits: Noninterest-bearing$886,786 $430,959 Interest-bearing 3,728,920 2,127,855 Total deposits 4,615,706 2,558,814 Securities sold under agreements to repurchase and federal funds purchased 25,863 9,785 FHLB advances and other borrowings 115,364 137,500 Subordinated notes and trust preferred debt 68,680 32,093 Other liabilities 88,728 60,992 Total liabilities 4,914,341 2,799,184 Shareholders’ Equity Preferred stock, $1.25 par value per share; 500,000 shares authorized; no shares issued or outstanding — — Common stock, no par value—$0.05205 stated value per share; 50,000,000 shares authorized; 19,722,640 shares issued and 19,389,967 outstanding at December 31, 2024; 11,204,599 shares issued and 10,612,390 outstanding at December 31, 2023 1,027 583 Additional paid—in capital 423,274 189,027 Retained earnings 126,540 117,667 Accumulated other comprehensive loss (26,316) (28,476)Treasury stock— 332,673 and 592,209 shares, at cost at December 31, 2024 and December 31, 2023, respectively (7,843) (13,745)Total shareholders’ equity 516,682 265,056 Total liabilities and shareholders’ equity$5,431,023 $3,064,240 ORRSTOWN FINANCIAL SERVICES, INC.CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited) Three Months Ended Twelve Months Ended December 31, December 31, December 31, December 31,(Dollars in thousands, except per share amounts) 2024 2023 2024 2023 Interest income Loans $67,870 $33,910 $210,287 $126,595 Investment securities - taxable 8,773 4,787 27,361 18,031 Investment securities - tax-exempt 880 871 3,521 3,462 Short-term investments 2,492 460 7,764 1,809 Total interest income 80,015 40,028 248,933 149,897 Interest expense Deposits 26,850 12,118 84,234 37,510 Securities sold under agreements to repurchase and federal funds purchased 67 30 215 114 FHLB advances and other borrowings 1,165 1,358 4,945 5,350 Subordinated notes and trust preferred debt 1,360 504 4,285 2,017 Total interest expense 29,442 14,010 93,679 44,991 Net interest income 50,573 26,018 155,254 104,906 Provision for credit losses 1,755 418 16,546 1,682 Net interest income after provision for credit losses 48,818 25,600 138,708 103,224 Noninterest income Service charges 2,050 1,198 6,893 4,866 Interchange income 1,608 952 5,259 3,873 Swap fee income 597 588 1,676 1,039 Wealth management income 4,902 2,945 16,353 11,340 Mortgage banking activities 517 143 1,835 591 Investment securities (losses) gains (5) (39) 249 (47)Other income 1,578 704 5,170 3,990 Total noninterest income 11,247 6,491 37,435 25,652 Noninterest expenses Salaries and employee benefits 22,444 12,848 76,581 50,983 Occupancy, furniture and equipment 4,893 2,534 14,570 9,593 Data processing 1,540 1,247 6,088 4,913 Advertising and bank promotions 878 501 2,587 2,157 FDIC insurance 955 460 2,677 1,960 Professional services 1,591 702 4,142 2,905 Taxes other than income (312) 203 734 1,050 Intangible asset amortization 2,838 236 5,742 953 Merger-related expenses 3,887 1,059 22,671 1,059 Restructuring expenses 39 — 296 — Other operating expenses 4,177 2,602 12,249 8,270 Total noninterest expenses 42,930 22,392 148,337 83,843 Income before income tax expense 17,135 9,699 27,806 45,033 Income tax expense 3,451 2,056 5,756 9,370 Net income $13,684 $7,643 $22,050 $35,663 continued Three Months Ended Twelve Months Ended December 31, December 31, December 31, December 31, 2024 2023 2024 2023 Share information: Basic earnings per share $0.72 $0.74 $1.49 $3.45 Diluted earnings per share $0.71 $0.73 $1.48 $3.42 Dividends paid per share $0.23 $0.20 $0.86 $0.80 Weighted average shares - basic 19,118 10,321 14,761 10,340 Weighted average shares - diluted 19,300 10,419 14,914 10,435 ANALYSIS OF NET INTEREST INCOME Average Balances and Interest Rates, Taxable-Equivalent Basis (Unaudited) Three Months Ended 12/31/2024 9/30/2024 6/30/2024 3/31/2024 12/31/2023 Taxable- Taxable- Taxable- Taxable- Taxable- Taxable- Taxable- Taxable- Taxable- Taxable- Average Equivalent Equivalent Average Equivalent Equivalent Average Equivalent Equivalent Average Equivalent Equivalent Average Equivalent Equivalent(In thousands)Balance Interest Rate Balance Interest Rate Balance Interest Rate Balance Interest Rate Balance Interest RateAssets Federal funds sold & interest-bearing bank balances$199,236 $2,492 4.96% $184,465 $2,452 5.29% $142,868 $1,864 5.25% $74,523 $956 5.16% $37,873 $460 4.82%Investment securities (1)(2) 849,389 9,887 4.66 849,700 10,123 4.77 538,451 6,114 4.54 519,851 5,694 4.39 508,891 5,890 4.63 Loans (1)(3)(4)(5)(6) 3,961,269 68,073 6.82 3,989,259 70,849 7.07 2,324,942 35,690 6.17 2,308,103 36,382 6.34 2,286,678 34,055 5.91 Total interest-earning assets 5,009,894 80,452 6.38 5,023,424 83,424 6.61 3,006,261 43,668 5.84 2,902,477 43,032 5.96 2,833,442 40,405 5.67 Other assets 454,271 491,719 204,863 196,295 204,382 Total assets$5,464,165 $5,515,143 $3,211,124 $3,098,772 $3,037,824 Liabilities and Shareholders' Equity Interest-bearing demand deposits(7)$1,257,316 5,360 1.69 $2,554,743 16,165 2.52 $1,649,753 10,118 2.47 $1,570,622 9,192 2.35 $1,543,575 8,333 2.14 Savings deposits(7) 1,538,287 10,381 2.68 283,337 148 0.21 165,467 140 0.34 170,005 144 0.34 178,351 153 0.34 Time deposits 998,963 11,109 4.41 1,014,628 12,290 4.82 481,721 5,007 4.18 428,443 4,180 3.92 392,085 3,632 3.67 Total interest-bearing deposits 3,794,566 26,850 2.81 3,852,708 28,603 2.95 2,296,941 15,265 2.67 2,169,070 13,516 2.51 2,114,011 12,118 2.27 Securities sold under agreements to repurchase and federal funds purchased 21,572 67 1.23 23,075 96 1.66 13,412 27 0.81 12,010 25 0.85 13,874 30 0.85 FHLB advances and other borrowings 115,373 1,165 4.01 115,388 1,154 3.98 115,000 1,152 4.03 137,505 1,474 4.31 127,843 1,358 4.21 Subordinated notes and trust preferred debt 68,571 1,360 7.88 68,399 1,437 8.36 32,118 734 9.19 32,100 754 9.45 32,083 504 6.29 Total interest-bearing liabilities 4,000,082 29,442 2.92 4,059,570 31,290 3.07 2,457,471 17,178 2.81 2,350,685 15,769 2.70 2,287,811 14,010 2.43 Noninterest-bearing demand deposits 849,999 807,886 423,037 417,469 441,695 Other liabilities 97,685 110,017 57,828 62,329 59,876 Total liabilities 4,947,766 4,977,473 2,938,336 2,830,483 2,789,382 Shareholders' equity 516,399 537,670 272,788 268,289 248,442 Total$5,464,165 $5,515,143 $3,211,124 $3,098,772 $3,037,824 Taxable-equivalent net interest income / net interest spread 51,010 3.46% 52,134 3.55% 26,490 3.02% 27,263 3.26% 26,395 3.24%Taxable-equivalent net interest margin 4.05% 4.14% 3.54% 3.77% 3.71%Taxable-equivalent adjustment (437) (437) (387) (382) (377) Net interest income $50,573 $51,697 $26,103 $26,881 $26,018 Ratio of average interest-earning assets to average interest-bearing liabilities 125% 124% 122% 123% 124% NOTES: (1) Yields and interest income on tax-exempt assets have been computed on a taxable-equivalent basis assuming a 21% tax rate.(2) Average balance of investment securities is computed at fair value.(3) Average balances include nonaccrual loans.(4) Interest income on loans includes prepayment and late fees, where applicable.(5) Interest income on loans includes interest recovered of $1.6 million from the payoff of a commercial real estate loan on nonaccrual status in the three months ended March 31, 2024.(6) Interest income on loans includes accretion on purchase accounting marks of $7.6 million, $7.3 million, $0.2 million, $0.1 million and $0.1 million for the three months ended December 31, 2024, September 30, 2024, June 30, 2024, March 31, 2024 and December 31, 2023, respectively.(7) Changes between average deposit type balances are due to operational updates for deposit sweeps during the three months ended December 31, 2024. ANALYSIS OF NET INTEREST INCOME Average Balances and Interest Rates, Taxable-Equivalent Basis (Unaudited) (continued) Twelve Months Ended December 31, 2024 December 31, 2023 Taxable- Taxable- Taxable- Taxable- Average Equivalent Equivalent Average Equivalent Equivalent(In thousands)Balance Interest Rate Balance Interest RateAssets Federal funds sold & interest-bearing bank balances$150,500 $7,764 5.14% $40,856 $1,809 4.43%Investment securities (1)(2) 690,223 31,817 4.60 520,465 22,414 4.31 Loans (1)(3)(4)(5)(6) 3,150,425 210,994 6.68 2,239,574 127,107 5.68 Total interest-earning assets 3,991,148 250,575 6.26 2,800,895 151,330 5.40 Other assets 330,324 198,632 Total assets$4,321,472 $2,999,527 Liabilities and Shareholders' Equity Interest-bearing demand deposits(7)$1,147,124 21,455 1.87 $1,525,204 26,944 1.77 Savings deposits(7) 1,153,097 30,193 2.61 198,157 585 0.30 Time deposits 732,446 32,586 4.44 338,170 9,981 2.95 Total interest-bearing deposits 3,032,667 84,234 2.77 2,061,531 37,510 1.82 Securities sold under agreements to repurchase and federal funds purchased 17,543 215 1.22 14,111 114 0.80 FHLB advances and other borrowings 120,787 4,945 4.08 123,697 5,350 4.32 Subordinated notes and trust preferred debt 50,397 4,285 8.48 32,058 2,017 6.29 Total interest-bearing liabilities 3,221,394 93,679 2.91 2,231,397 44,991 2.02 Noninterest-bearing demand deposits 625,714 470,349 Other liabilities 82,084 54,447 Total liabilities 3,929,192 2,756,193 Shareholders' equity 392,280 243,334 Total liabilities and shareholders' equity$4,321,472 $2,999,527 Taxable-equivalent net interest income / net interest spread 156,896 3.36% 106,339 3.39%Taxable-equivalent net interest margin 3.92% 3.80%Taxable-equivalent adjustment (1,642) (1,433) Net interest income $155,254 $104,906 Ratio of average interest-earning assets to average interest-bearing liabilities 124% 126% NOTES TO ANALYSIS OF NET INTEREST INCOME:(1) Yields and interest income on tax-exempt assets have been computed on a taxable-equivalent basis assuming a 21% tax rate.(2) Average balance of investment securities is computed at fair value.(3) Average balances include nonaccrual loans.(4) Interest income on loans includes prepayment and late fees, where applicable.(5) Interest income on loans includes interest recovered of $1.6 million from the payoff of a commercial real estate loan on nonaccrual status for the twelve months ended December 31, 2024.(6) Interest income on loans includes accretion on purchase accounting marks of $15.2 million and $0.7 million for the twelve months ended December 31, 2024 and 2023, respectively.(7) Changes between average deposit type balances are due to operational updates for deposit sweeps during the three months ended December 31, 2024. ORRSTOWN FINANCIAL SERVICES, INC. HISTORICAL TRENDS IN QUARTERLY FINANCIAL DATA (Unaudited) (In thousands)December 31,2024 September 30,2024 June 30,2024 March 31,2024 December 31,2023Profitability for the quarter: Net interest income$50,573 $51,697 $26,103 $26,881 $26,018 Provision for credit losses 1,755 13,681 812 298 418 Noninterest income 11,247 12,386 7,172 6,630 6,491 Noninterest expenses 42,930 60,299 22,639 22,469 22,392 Income (loss) before income taxes 17,135 (9,897) 9,824 10,744 9,699 Income tax expense (benefit) 3,451 (1,994) 2,086 2,213 2,056 Net income (loss)$13,684 $(7,903) $7,738 $8,531 $7,643 Financial ratios: Return on average assets (1) 1.00% (0.57)% 0.97% 1.11% 1.00%Return on average assets, adjusted (1)(2)(3) 1.22% 1.55% 1.09% 1.19% 1.13%Return on average equity (1) 10.54% (5.85)% 11.41% 12.79% 12.21%Return on average equity, adjusted (1)(2)(3) 12.86% 15.85% 12.88% 13.79% 13.77%Net interest margin (1) 4.05% 4.14% 3.54% 3.77% 3.71%Efficiency ratio 69.4% 94.1% 68.0% 67.0% 68.9%Efficiency ratio, adjusted (2)(3) 62.3% 67.2% 64.6% 65.0% 65.6% Per share information: Income (loss) per common share: Basic$0.72 $(0.41) $0.74 $0.82 $0.74 Basic, adjusted (2)(3) 0.87 1.12 0.84 0.89 0.84 Diluted 0.71 (0.41) 0.73 0.81 0.73 Diluted, adjusted (2)(3) 0.87 1.11 0.83 0.88 0.83 Book value 26.65 26.65 25.97 25.38 24.98 Book value, adjusted (2) (3) 28.40 28.24 26.12 25.44 25.07 Tangible book value (3) 21.19 21.12 24.08 23.47 23.03 Tangible book value, adjusted (2) (3) 22.94 22.72 24.23 23.53 23.12 Cash dividends paid 0.23 0.23 0.20 0.20 0.20 Average basic shares 19,118 19,088 10,393 10,349 10,321 Average diluted shares 19,300 19,226 10,553 10,482 10,419 (1) Annualized.(2) Ratio has been adjusted for non-recurring expenses for all periods presented.(3) Non-GAAP based financial measure. Please refer to Appendix A - Supplemental Reporting of Non-GAAP Measures and GAAP to Non-GAAP Reconciliations for a discussion of our use of non-GAAP based financial measures, including tables reconciling GAAP and non-GAAP financial measures appearing herein. ORRSTOWN FINANCIAL SERVICES, INC. HISTORICAL TRENDS IN QUARTERLY FINANCIAL DATA (Unaudited) (continued) (In thousands)December 31,2024 September 30,2024 June 30,2024 March 31,2024 December 31,2023Noninterest income: Service charges$2,050 $2,360 $1,283 $1,200 $1,198 Interchange income 1,608 1,779 961 911 952 Swap fee income 597 505 375 199 588 Wealth management income 4,902 5,037 3,312 3,102 2,945 Mortgage banking activities 517 491 369 458 143 Other income 1,578 1,943 884 765 704 Investment securities (losses) gains (5) 271 (12) (5) (39)Total noninterest income$11,247 $12,386 $7,172 $6,630 $6,491 Noninterest expenses: Salaries and employee benefits$22,444 $27,190 $13,195 $13,752 $12,848 Occupancy, furniture and equipment 4,893 4,333 2,705 2,639 2,534 Data processing 1,540 2,046 1,237 1,265 1,247 Advertising and bank promotions 878 537 774 398 501 FDIC insurance 955 862 419 441 460 Professional services 1,591 1,119 801 631 702 Taxes other than income (312) 503 49 494 203 Intangible asset amortization 2,838 2,464 215 225 236 Merger-related expenses 3,887 16,977 1,135 672 1,059 Restructuring expenses 39 257 — — — Other operating expenses 4,177 4,011 2,109 1,952 2,602 Total noninterest expenses$42,930 $60,299 $22,639 $22,469 $22,392 HISTORICAL TRENDS IN QUARTERLY FINANCIAL DATA (Unaudited) (continued) (In thousands)December 31,2024 September 30,2024 June 30,2024 March 31,2024 December 31,2023Balance Sheet at quarter end: Cash and cash equivalents$238,308 $236,780 $132,509 $182,722 $65,161 Restricted investments in bank stocks 20,232 20,247 11,147 11,453 11,992 Securities available for sale 829,711 826,828 529,082 514,909 513,519 Loans held for sale, at fair value 6,614 3,561 1,562 535 5,816 Loans: Commercial real estate: Owner occupied 633,567 622,726 371,301 364,280 373,757 Non-owner occupied 1,160,238 1,164,501 710,477 707,871 694,638 Multi-family 274,135 276,296 151,542 147,773 150,675 Non-owner occupied residential 179,512 190,786 89,156 91,858 95,040 Agricultural 125,156 129,486 25,551 25,909 26,847 Commercial and industrial 451,384 471,983 349,425 339,615 340,238 Acquisition and development: 1-4 family residential construction 47,432 56,383 32,439 22,277 24,516 Commercial and land development 241,424 262,317 129,883 118,010 115,249 Municipal 30,044 27,960 10,594 10,925 9,812 Total commercial loans 3,142,892 3,202,438 1,870,368 1,828,518 1,830,772 Residential mortgage: First lien 460,297 451,195 271,153 270,748 266,239 Home equity – term 5,988 6,508 4,633 4,966 5,078 Home equity – lines of credit 303,561 303,165 192,736 189,966 186,450 Installment and other loans 18,476 18,131 8,713 8,875 9,774 Total loans 3,931,214 3,981,437 2,347,603 2,303,073 2,298,313 Allowance for credit losses (48,689) (49,630) (29,864) (29,165) (28,702)Net loans held for investment 3,882,525 3,931,807 2,317,739 2,273,908 2,269,611 Goodwill 68,106 70,655 18,724 18,724 18,724 Other intangible assets, net 47,765 46,144 1,974 2,189 2,414 Total assets 5,431,023 5,470,589 3,198,782 3,183,331 3,064,240 Total deposits 4,615,706 4,650,853 2,702,884 2,695,951 2,558,814 FHLB advances and other borrowings and Securities sold under agreements to repurchase 141,227 137,310 129,625 127,099 147,285 Subordinated notes and trust preferred debt 68,680 68,510 32,128 32,111 32,093 Total shareholders' equity 516,682 516,206 278,376 271,682 265,056 HISTORICAL TRENDS IN QUARTERLY FINANCIAL DATA (Unaudited) (continued) December 31,2024 September 30,2024 June 30,2024 March 31,2024 December 31,2023Capital and credit quality measures (1): Total risk-based capital: Orrstown Financial Services, Inc. 12.4% 12.4% 13.3% 13.4% 13.0%Orrstown Bank 12.4% 12.2% 13.1% 13.1% 12.8%Tier 1 risk-based capital: Orrstown Financial Services, Inc. 10.2% 10.0% 11.1% 11.2% 10.8%Orrstown Bank 11.2% 11.0% 12.0% 11.9% 11.6%Tier 1 common equity risk-based capital: Orrstown Financial Services, Inc. 10.0% 9.8% 11.1% 11.2% 10.8%Orrstown Bank 11.2% 11.0% 12.0% 11.9% 11.6%Tier 1 leverage capital: Orrstown Financial Services, Inc. 8.3% 8.0% 8.9% 9.0% 8.9%Orrstown Bank 9.1% 8.8% 9.5% 9.6% 9.5% Average equity to average assets 9.45% 9.75% 8.50% 8.66% 8.18%Allowance for credit losses to total loans 1.24% 1.25% 1.27% 1.27% 1.25%Total nonaccrual loans to total loans 0.61% 0.68% 0.36% 0.56% 1.11%Nonperforming assets to total assets 0.45% 0.49% 0.26% 0.40% 0.83%Allowance for credit losses to nonaccrual loans 202% 184% 357% 226% 112% Other information: Net charge-offs (recoveries)$3,002 $269 $113 $(42) $(6)Classified loans 88,628 105,465 48,722 48,997 55,030 Nonperforming and other risk assets: Nonaccrual loans 24,111 26,927 8,363 12,886 25,527 Other real estate owned 138 138 — — — Total nonperforming assets 24,249 27,065 8,363 12,886 25,527 Financial difficulty modifications still accruing 4,897 9,497 — — 9 Loans past due 90 days or more and still accruing 641 337 187 99 66 Total nonperforming and other risk assets$29,787 $36,899 $8,550 $12,985 $25,602 (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. 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 $115.9 million and $21.1 million at December 31, 2024 and December 31, 2023, respectively. In addition, during the three months ended December 31, 2024, September 30, 2024, June 30, 2024, March 31, 2024 and December 31, 2023, the Company incurred $3.9 million, $17.0 million, $1.1 million, $0.7 million and $1.1 million in merger-related expenses, respectively. During the three months ended December 31, 2024 and September 30, 2024, the Company incurred other non-recurring charges totaling $0.5 million and $20.2 million, respectively. Tangible book value per common share and the impact of the non-recurring 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 December 31,2024 September 30,2024 June 30,2024 March 31,2024 December 31,2023Shareholders' equity (most directly comparable GAAP-based measure) $516,682 $516,206 $278,376 $271,682 $265,056 Less: Goodwill 68,106 70,655 18,724 18,724 18,724 Other intangible assets 47,765 46,144 1,974 2,189 2,414 Related tax effect (10,031) (9,690) (415) (460) (507)Tangible common equity (non-GAAP) $410,842 $409,097 $258,093 $251,229 $244,425 Common shares outstanding 19,390 19,373 10,720 10,705 10,612 Book value per share (most directly comparable GAAP-based measure) $26.65 $26.65 $25.97 $25.38 $24.98 Intangible assets per share 5.46 5.53 1.89 1.91 1.95 Tangible book value per share (non-GAAP) $21.19 $21.12 $24.08 $23.47 $23.03 (In thousands)Three Months Ended Twelve Months EndedAdjusted Ratios for Non-recurring ChargesDecember 31,2024 September 30, 2024 June 30,2024 March 31,2024 December 31,2023 December 31,2024 December 31,2023Net income (loss) (A) - most directly comparable GAAP-based measure$13,684 $(7,903) $7,738 $8,531 $7,643 $22,050 $35,663 Plus: Merger-related expenses (B) 3,887 16,977 1,135 672 1,059 22,671 1,059 Plus: Executive retirement expenses (B) 35 4,758 — — — 4,793 — Plus: Provision for credit losses on non-PCD loans (B) — 15,504 — — — 15,504 — Plus: Provision for legal settlement (B) 478 — — — — 478 — Less: Related tax effect (C) (1,386) (7,915) (139) (1) (79) (9,442) (79)Adjusted net income (D=A+B-C) - Non-GAAP$16,698 $21,421 $8,734 $9,202 $8,623 $56,054 $36,643 Average assets (E)$5,464,165 $5,515,143 $3,211,124 $3,098,772 $3,037,824 $4,321,472 $2,999,527 Return on average assets (= A / E) - most directly comparable GAAP-based measure (1) 1.00% (0.57)% 0.97% 1.11% 1.00% 0.51% 1.19%Return on average assets, adjusted (= D / E) - Non-GAAP (1) 1.22% 1.55% 1.09% 1.19% 1.13% 1.30% 1.22% Average equity (F)$516,399 $537,670 $272,788 $268,289 $248,442 $392,280 $243,334 Return on average equity (= A / F) - most directly comparable GAAP-based measure (1) 10.54% (5.85)% 11.41% 12.79% 12.21% 5.62% 14.66%Return on average equity, adjusted (= D / F) - Non-GAAP (1) 12.86% 15.85% 12.88% 13.79% 13.77% 14.29% 15.06% Weighted average shares - basic (G) - most directly comparable GAAP-based measure 19,118 19,088 10,393 10,349 10,321 14,761 10,340 Basic earnings (loss) per share (= A / G) - most directly comparable GAAP-based measure$0.72 $(0.41) $0.74 $0.82 $0.74 $1.49 $3.45 Basic earnings per share, adjusted (= D / G) - Non-GAAP$0.87 $1.12 $0.84 $0.89 $0.84 $3.80 $3.54 Weighted average shares - diluted (H) - most directly comparable GAAP-based measure 19,300 19,226 10,553 10,482 10,419 14,914 10,435 Diluted earnings (loss) per share (= A / H) - most directly comparable GAAP-based measure$0.71 $(0.41) $0.73 $0.81 $0.73 $1.48 $3.42 Diluted earnings per share, adjusted (= D / H) - Non-GAAP$0.87 $1.11 $0.83 $0.88 $0.83 $3.76 $3.51 continued(1) Annualized Three Months Ended Twelve Months Ended December 31,2024 September 30, 2024 June 30,2024 March 31,2024 December 31,2023 December 31,2024 December 31,2023Noninterest expense (I) - most directly comparable GAAP-based measure$42,930 $60,299 $22,639 $22,469 $22,392 $148,337 $83,843 Less: Merger-related expenses (B) (3,887) (16,977) (1,135) (672) (1,059) (22,671) (1,059)Less: Executive retirement expenses (B) (35) (4,758) — — — (4,793) — Less: Provision for legal settlement (B) (478) — — — — (478) — Adjusted noninterest expense (J = I - B) - Non-GAAP$38,531 $38,564 $21,504 $21,797 $21,333 $120,396 $82,784 Net interest income (K)$50,573 $51,697 $26,103 $26,881 $26,018 $155,254 $104,906 Noninterest income (L) 11,247 12,386 7,172 6,630 6,491 37,435 25,652 Total operating income (M = K + L)$61,820 $64,083 $33,275 $33,511 $32,509 $192,689 $130,558 Efficiency ratio (= I / M) - most directly comparable GAAP-based measure 69.4% 94.1% 68.0% 67.0% 68.9% 77.0% 64.2%Efficiency ratio, adjusted (= J / M) - Non-GAAP 62.3% 60.2% 64.6% 65.0% 65.6% 62.5% 63.4% (1) Annualized 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 December 31, 2024: (In thousands) SectorPortfolioMix AmortizedBook Fair Value Credit Enhancement AAA AA A BBB NR Collateral / Guarantee TypeUnsecured ABS—% $3,073 $2,854 27% —% —% —% —% 100% Unsecured Consumer DebtStudent Loan ABS1 4,060 4,035 27 — — — — 100 Seasoned Student LoansFederal Family Education Loan ABS9 80,121 80,063 11 7 81 — 12 — Federal Family Education Loan (1)PACE Loan ABS— 1,985 1,727 7 100 — — — — PACE Loans (2)Non-Agency CMBS2 15,920 15,901 27 — — — — 100 Non-Agency RMBS2 16,555 14,528 16 100 — — — — Reverse Mortgages (3)Municipal - General Obligation12 99,515 90,767 11 82 7 — — Municipal - Revenue14 120,903 109,261 — 82 12 — 6 SBA ReRemic (5)— 2,283 2,278 — 100 — — — SBA Guarantee (4)Small Business Administration1 5,926 6,263 — 100 — — — SBA Guarantee (4)Agency MBS19 160,027 155,778 — 100 — — — Residential Mortgages (4)Agency CMO38 332,380 326,045 — 100 — — — U.S. Treasury securities2 20,043 18,063 — 100 — — — U.S. Government Guarantee (4)Corporate bonds— 1,935 1,954 — — 52 48 — 100% $864,726 $829,517 4% 89% 3% 1% 3% (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 $5.4 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 adjacent counties in Pennsylvania and Maryland, as well as Loudon County, Virginia and Berkeley, Jefferson and Morgan Counties, West Virginia. 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. Cautionary Note Regarding Forward-Looking Statements This press release contains “forward-looking statements” within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. Forward-looking statements reflect the current views of the Company's management with respect to, among other things, future events and the Company's financial performance. These statements are often, but not always, made through the use of words or phrases such as “may,” “should,” “could,” “predict,” “potential,” “believe,” “will likely result,” “expect,” “continue,” “will,” “anticipate,” “seek,” “estimate,” “intend,” “plan,” “project,” “forecast,” “goal,” “target,” “would” and “outlook,” or the negative variations of those words or other comparable words of a future or forward-looking nature. These forward-looking statements are not historical facts, and are based on current expectations, estimates, predictions or projections about events or the Company's industry, management’s beliefs and certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond the Company's control. Accordingly, the Company cautions you that any such forward-looking statements are not guarantees of future performance and are subject to risks, assumptions and uncertainties that are difficult to predict. Although the Company believes that the expectations reflected in these forward-looking statements are reasonable as of the date made, actual results may prove to be materially different from the results expressed or implied by the forward-looking statements and there can be no assurances that the Company will achieve the desired level of new business development and new loans, growth in the balance sheet and fee-based revenue lines of business, cost savings initiatives and continued reductions in risk assets or mitigation of losses in the future. Factors which could cause the actual results of the Company's operations to differ materially from expectations include, but are not limited to: general economic conditions (including inflation and concerns about liquidity) on a national basis or in the local markets in which the Company operates; ineffectiveness of the Company's strategic growth plan due to changes in current or future market conditions; changes in interest rates; the diversion of management's attention from ongoing business operations and opportunities; the effects of competition and how it may impact our community banking model, including industry consolidation and development of competing financial products and services; changes in consumer behavior due to changing political, business and economic conditions, or legislative or regulatory initiatives; changes in laws and regulations; changes in credit quality; inability to raise capital, if necessary, under favorable conditions; volatility in the securities markets; the demand for our products and services; deteriorating economic conditions; geopolitical tensions; operational risks including, but not limited to, cybersecurity incidents, fraud, natural disasters and future pandemics; expenses associated with litigation and legal proceedings; the possibility that the anticipated benefits of the merger with Codorus (the “Merger”) are not realized when expected or at all; the possibility that the Merger may be more expensive to complete than anticipated; the possibility that revenues following the Merger may be lower than expected; potential adverse reactions or changes to business or employee relationships, including those resulting from the completion of the Merger; the ability to complete the integration of the two companies successfully; the dilution caused by the Company’s issuance of additional shares of its capital stock in connection with the Merger; and other risks and uncertainties, including those detailed in our Annual Report on Form 10-K for the year ended December 31, 2023 under the sections titled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and in subsequent filings made with the Securities and Exchange Commission. The foregoing list of factors is not exhaustive. If one or more events related to these or other risks or uncertainties materializes, or if the Company's underlying assumptions prove to be incorrect, actual results may differ materially from what the Company anticipates. Accordingly, you should not place undue reliance on any such forward-looking statements. Any forward-looking statement speaks only as of the date on which it is made, and the Company disclaims any obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise. New risks and uncertainties arise from time to time, and it is not possible for the Company to predict those events or how they may affect it. In addition, the Company cannot assess the impact of each factor on its business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. All forward-looking statements, expressed or implied, included in this press release are expressly qualified in their entirety by this cautionary statement. This cautionary statement should also be considered in connection with any subsequent written or oral forward-looking statements that the Company or persons acting on the Company's behalf may issue. 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. Annualized, pro forma, projected and estimated numbers in this document are used for illustrative purposes only and are not forecasts and may not reflect actual results.

Orrstown Financial Services, Inc. Reports Fourth Quarter 2024 Results

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