Orrstown Financial Services(US:ORRF)2025-11-06 13:39Financial Performance - For the three months ended September 30, 2025, the Company achieved a net income of $21.9 million, a significant improvement from a net loss of $7.9 million for the same period in 2024[215]. - Net income for the three months ended September 30, 2025, was $21.9 million, a significant increase from a net loss of $7.9 million in the same period of 2024[242]. - Net income for the nine months ended September 30, 2025, totaled $59.4 million, compared to $8.4 million for the same period in 2024, reflecting a significant increase[274]. - Diluted earnings per share for the three months ended September 30, 2025, were $1.13, compared to a diluted loss per share of $0.41 for the same period in 2024[216]. - Diluted earnings per share increased to $3.07 for the nine months ended September 30, 2025, up from $0.62 in the same period of 2024[274]. - Total comprehensive income for the nine months ended September 30, 2025, was $68.1 million, an increase of $47.1 million from $21.0 million for the same period in 2024[345]. Assets and Liabilities - As of September 30, 2025, the Company reported total assets of $5.5 billion, total liabilities of $4.9 billion, and total shareholders' equity of $571.9 million[214]. - The Company’s investment securities portfolio increased to $890.4 million, up $60.7 million from $829.7 million at the end of 2024[310]. - Total loans increased by $48.5 million from December 31, 2024, to September 30, 2025, reaching $3,979.736 million[315]. - Average interest-bearing liabilities increased by $922.8 million to $3.9 billion for the nine months ended September 30, 2025, from $3.0 billion for the same period in 2024[287]. Income and Expenses - Noninterest income increased to $13.4 million for the three months ended September 30, 2025, compared to $12.4 million in 2024[245]. - Noninterest income increased to $37.9 million for the nine months ended September 30, 2025, compared to $26.2 million for the same period in 2024[277]. - Noninterest expenses decreased significantly to $36.3 million for the three months ended September 30, 2025, from $60.3 million in 2024, reflecting the impact of the merger[245]. - Total noninterest expenses increased by $6.7 million, from $105.4 million in 2024 to $112.1 million in 2025, with salaries and employee benefits rising by $9.1 million (16.7%)[304]. Credit Losses and Charge-offs - The provision for credit losses decreased to $396 thousand for the three months ended September 30, 2025, down from $13.7 million in 2024, primarily due to the absence of merger-related reserves[244]. - The provision for credit losses included a recovery of $49 thousand for the nine months ended September 30, 2025, compared to an expense of $14.8 million for the same period in 2024[276]. - Net charge-offs for Q3 2025 totaled $189 thousand, a decrease from $269 thousand in Q3 2024, with nonaccrual loans at 0.66% of gross loans[267]. - Net charge-offs totaled $635 thousand for the nine months ended September 30, 2025, compared to $340 thousand for the same period in 2024[300]. Interest Income and Expenses - Net interest income decreased slightly to $51.0 million for the three months ended September 30, 2025, from $51.7 million in 2024[243]. - Interest income on loans decreased by $4.8 million to $65.8 million for the three months ended September 30, 2025, while interest income on investment securities increased by $360 thousand to $10.2 million[247]. - Total interest expense decreased by $5.2 million to $26.1 million for the three months ended September 30, 2025, compared to $31.3 million in 2024[247]. - Interest income on loans increased by $49.8 million, from $142.4 million for the nine months ended September 30, 2024, to $192.2 million for the same period in 2025[279]. Market Conditions - The Federal Funds rate was cut by a total of 125 basis points from September 2024 to October 2025, reflecting the FOMC's assessment of economic conditions[223]. - The 10-year Treasury bond yield was 4.16% as of September 30, 2025, down from 4.24% at June 30, 2025, but up from 3.81% at September 30, 2024[224]. - The personal consumption expenditures (PCE) price index increased by 2.1% in the second quarter of 2025, compared to an increase of 1.5% in the third quarter of 2024[221]. - The national unemployment rate was 4.3% in August 2025, up from 4.1% in June 2025 and September 2024[222]. Mergers and Acquisitions - The Company acquired Codorus Valley and its wholly-owned bank subsidiary PeoplesBank on July 1, 2024, which is expected to enhance its market position[215]. - The Company incurred zero merger-related expenses for the three months ended September 30, 2025, compared to $17.0 million for the same period in 2024[217]. - The company incurred merger-related expenses of $2.6 million for the nine months ended September 30, 2025, down from $18.8 million in the same period in 2024[274]. Shareholders' Equity - As of September 30, 2025, shareholders' equity increased to $571.9 million, up $55.3 million from $516.7 million at December 31, 2024, primarily due to net income of $59.4 million[344]. - Tangible book value per common share increased from $21.19 at December 31, 2024, to $24.12 at September 30, 2025, reflecting the rise in shareholders' equity[346]. Liquidity and Funding - The Company has sufficient access to liquidity, mitigating the need to sell investment securities at a loss[310]. - The maximum borrowing capacity from the FHLB of Pittsburgh was $1.9 billion as of September 30, 2025, with $209.5 million in advances outstanding[351]. - FHLB advances rose by $93.9 million to $208.9 million at September 30, 2025, compared to $115.0 million at December 31, 2024, driven by increased lending and investing activities[340].