Orrstown Financial Services(US:ORRF)2024-07-23 20:08Financial Performance - Net income for Q2 2024 was $7.7 million, down from $8.5 million in Q1 2024, with diluted earnings per share at $0.73 compared to $0.81 in Q1 2024[6] - Excluding merger-related expenses, net income for Q2 2024 was $8.7 million, and diluted earnings per share were $0.83, compared to $9.2 million and $0.88 in Q1 2024[6] - Net income for the three months ended June 30, 2024, excluding merger-related expenses, was $5.5 million[24] - Net income for Q2 2024 was $7,738,000, down from $9,838,000 in Q2 2023, representing a decrease of 21.3%[34] - Basic earnings per share for Q2 2024 were $0.74, compared to $0.95 in Q2 2023, a decline of 22.1%[34] - Adjusted net income for June 30, 2024, was $8,734, compared to $9,202 for March 31, 2024, reflecting a decrease of 5.1%[48] - Basic earnings per share, adjusted for June 30, 2024, was $0.84, compared to $0.89 for March 31, 2024, showing a decline of 5.6%[48] - Return on average assets for the quarter was 0.97%, down from 1.32% in the same quarter last year[42] - Return on average equity was 11.41% for the quarter, compared to 16.27% in June 30, 2023[42] Income and Expenses - Noninterest income rose by $0.6 million to $7.2 million in Q2 2024 compared to $6.6 million in Q1 2024[17] - Total noninterest income for June 30, 2024, reached $7,172, an increase from $6,630 in March 31, 2024, representing a growth of 8.2%[50] - Total noninterest expenses increased to $22,639,000 from $20,749,000 year-over-year, reflecting a rise of 9.1%[32] - Total noninterest expenses for June 30, 2024, were $22,639, up from $22,469 in March 31, 2024, indicating an increase of 0.8%[50] - The company reported a provision for credit losses of $812,000, up from $399,000 in the same quarter last year[32] Loans and Credit Quality - Loans held for investment increased by $44.5 million, or 8% annualized, from Q1 2024 to Q2 2024, with commercial loans rising by $41.9 million, or 9% annualized[8] - Nonaccrual loans decreased to $8.4 million at June 30, 2024, down from $12.9 million at March 31, 2024, representing a decline of $4.5 million[6] - Non-performing loans totaled $8.9 million, with classified loans at $45.5 million as of June 30, 2024[24] - The allowance for credit losses on loans increased to $29.9 million at June 30, 2024, driven by loan growth, maintaining an ACL to total loans ratio of 1.27%[16] - The allowance for credit losses to total loans ratio remained stable at 1.27% as of June 30, 2024, consistent with the previous quarter[52] - Net charge-offs for the quarter were reported at $113 thousand, a decrease from a recovery of $(42) thousand in the previous quarter[52] Capital and Equity - Shareholders' equity increased to $278.4 million as of June 30, 2024, from $271.7 million at March 31, 2024, driven by net income of $7.7 million[22] - Tangible book value per share rose to $24.08 at June 30, 2024, compared to $23.47 at March 31, 2024, reflecting the increase in shareholders' equity[24] - The total shareholders' equity increased to $278,376 thousand from $271,682 thousand in March 2024, marking a growth of 2.55%[51] - Tier 1 risk-based capital ratio for Orrstown Financial Services, Inc. was reported at 11.1% as of June 30, 2024, slightly down from 11.2% in March 2024[52] Mergers and Acquisitions - Merger-related expenses totaled $1.1 million in Q2 2024, up from $0.7 million in Q1 2024, with additional expenses expected as integration continues[20] - The company completed a merger with Codorus Valley Bancorp, which had assets of $2.2 billion, including total loans of $1.7 billion and total deposits of $1.9 billion[61] - Merger-related expenses for June 30, 2024, totaled $1,135, compared to $672 for March 31, 2024, reflecting a significant increase of 68.9%[50] Market and Operational Strategy - The company plans to continue focusing on market expansion and enhancing its product offerings in the upcoming quarters[32] - The company operates in multiple counties across Pennsylvania and Maryland, providing a wide range of financial services[61] Asset Management - Total assets reached $2.2 billion, with total loans at $1.7 billion and total deposits at $1.9 billion as of June 30, 2024[24] - Total assets increased to $3,211,124 thousand, up from $3,098,772 thousand, representing a growth of 3.6%[36] - Total assets as of June 30, 2024, were $3,154,948 thousand, an increase from $2,961,427 thousand as of June 30, 2023[38] - Total liabilities rose to $2,938,336 thousand, compared to $2,830,483 thousand, marking an increase of 3.8%[36] Interest Income and Margin - Net interest margin decreased to 3.54% in Q2 2024 from 3.77% in Q1 2024, impacted by an increase in funding costs[15] - The net interest margin for the three months ended June 30, 2024, was 3.28%[24] - Total interest income for Q2 2024 reached $43,281,000, up 17.5% from $36,901,000 in Q2 2023[32] - Net interest income after provision for credit losses was $25,291,000, slightly down from $25,976,000 in the same quarter last year[32] - The average interest rate on interest-bearing demand deposits was 2.47%, an increase from 2.35% in the previous quarter[36] - The taxable-equivalent net interest margin was reported at 3.02%[36] Efficiency and Performance Ratios - The efficiency ratio for the three months ended June 30, 2024, was 68.0%, compared to 61.9% for the same period in 2023[27] - The adjusted efficiency ratio was 64.6% for the three months ended June 30, 2024, slightly down from 65.0% in the previous quarter[57] Investment Portfolio - The investment security portfolio had a fair value of $528,973K, with 97% guaranteed by the U.S. government[59] - The credit ratings for the investment portfolio included 6% rated AAA, 83% rated AA, and 4% rated A[59] Risks and Forward-Looking Statements - The company emphasizes the potential risks associated with forward-looking statements, including economic conditions and competition[62] - The company’s common stock is traded on Nasdaq under the ticker ORRF[61]