Orrstown Financial Services(ORRF) - 2025 Q2 - Quarterly Report

PART I – FINANCIAL INFORMATION This section presents the company's unaudited condensed consolidated financial statements and related disclosures. Glossary of Defined Terms This section defines key financial and operational terms and acronyms for clarity and consistent understanding. - Defines key financial and operational terms like ACL (Allowance for credit losses), CECL (Current expected credit losses), AFS (Available-for-sale), and various regulatory bodies and financial instruments[9] Item 1. Financial Statements Presents unaudited condensed consolidated financial statements and notes on accounting policies and key financial items. - The company operates as a financial holding company through Orrstown Bank, providing banking and financial advisory services in Pennsylvania and Maryland[24] - The unaudited condensed consolidated financial statements are prepared in accordance with GAAP for interim financial information and SEC rules[25] Condensed Consolidated Balance Sheets (Unaudited) - Total assets decreased by $53.9 million to $5,387.6 million at June 30, 2025, from $5,441.6 million at December 31, 2024. Total liabilities decreased by $85.7 million, while total shareholders' equity increased by $31.8 million over the same period[11] | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :--------------------------------- | :----------------------------- | :------------------------------- | | Total assets | $5,387,645 | $5,441,589 | | Total liabilities | $4,839,197 | $4,924,907 | | Total shareholders' equity | $548,448 | $516,682 | | Cash and cash equivalents | $149,377 | $248,874 | | Securities available for sale | $885,373 | $829,711 | | Net loans | $3,883,481 | $3,882,525 | | Total deposits | $4,516,625 | $4,623,096 | Condensed Consolidated Statements of Income (Unaudited) - Net income for the three months ended June 30, 2025, was $19.4 million, up from $7.7 million in the prior year, and for the six months, it was $37.5 million, up from $16.3 million, primarily due to the Codorus Valley merger[12][204] | Metric | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :--------------------------------- | :------------------------------------------ | :------------------------------------------ | :---------------------------------------- | :---------------------------------------- | | Net income | $19,448 | $7,738 | $37,499 | $16,269 | | Diluted earnings per share | $1.01 | $0.73 | $1.94 | $1.55 | | Total interest income | $74,833 | $43,281 | $150,352 | $85,931 | | Total interest expense | $25,321 | $17,178 | $52,079 | $32,947 | | Net interest income | $49,512 | $26,103 | $98,273 | $52,984 | | Total noninterest income | $12,915 | $7,172 | $24,539 | $13,802 | | Total noninterest expenses | $37,614 | $22,639 | $75,790 | $45,108 | | Income tax expense | $5,256 | $2,086 | $9,968 | $4,299 | | Dividends paid per share | $0.26 | $0.20 | $0.52 | $0.40 | Condensed Consolidated Statements of Comprehensive Income (Unaudited) - Total comprehensive income increased significantly to $18.99 million for the three months and $39.34 million for the six months ended June 30, 2025, driven by higher net income and a shift from unrealized losses to gains on available-for-sale securities for the six-month period[15] - Unrealized gains on AFS securities arising during the six months ended June 30, 2025, were $3,752 thousand, a significant improvement from a $1,769 thousand loss in the prior year[15] - Unrealized losses on interest rate swaps used in cash flow hedges for the six months ended June 30, 2025, were $(1,374) thousand, compared to a $1,862 thousand gain in the prior year[15] | Metric | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :------------------------------------------------- | :------------------------------------------ | :------------------------------------------ | :---------------------------------------- | :---------------------------------------- | | Net income | $19,448 | $7,738 | $37,499 | $16,269 | | Total other comprehensive (loss) income, net of tax | $(455) | $264 | $1,837 | $72 | | Total comprehensive income | $18,993 | $8,002 | $39,336 | $16,341 | Condensed Consolidated Statements of Changes in Shareholders' Equity (Unaudited) - Total shareholders' equity increased to $548.4 million at June 30, 2025, from $516.7 million at January 1, 2025, primarily due to net income of $37.5 million and other comprehensive income of $1.8 million, partially offset by $10.1 million in cash dividends[16][329] | Metric | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :--------------------------------- | :---------------------------------------- | :---------------------------------------- | | Balance, January 1 | $516,682 | $265,056 | | Net income | $37,499 | $16,269 | | Total other comprehensive income, net of taxes | $1,837 | $72 | | Cash dividends paid | $(10,116) | $(4,266) | | Balance, June 30 | $548,448 | $278,376 | Condensed Consolidated Statements of Cash Flows (Unaudited) - Net cash provided by operating activities increased to $35.4 million for the six months ended June 30, 2025, from $19.1 million in the prior year, but overall cash and cash equivalents decreased by $99.5 million due to investing and financing activities[20] - Cash paid for interest increased to $52,645 thousand for the six months ended June 30, 2025, from $33,044 thousand in the prior year[21] | Metric | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :------------------------------------ | :---------------------------------------- | :---------------------------------------- | | Net cash provided by operating activities | $35,430 | $19,103 | | Net cash used in investing activities | $(42,688) | $(73,312) | | Net cash (used in) provided by financing activities | $(92,239) | $121,557 | | Net (decrease) increase in cash and cash equivalents | $(99,497) | $67,348 | | Cash and cash equivalents at end of period | $149,377 | $132,509 | Notes to Condensed Consolidated Financial Statements (Unaudited) The notes provide detailed disclosures on significant accounting policies and various financial statement components. - The notes provide detailed disclosures on significant accounting policies, the Codorus Valley merger, investment securities, loans and allowance for credit losses, leases, goodwill and other intangible assets, share-based compensation, deposits, derivative financial instruments, shareholders