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1. Company Snapshot

1.a. Company Description

Orrstown Financial Services, Inc.operates as the holding company for Orrstown Bank that provides commercial banking and trust services in the United States.The company accepts various deposits, including checking, savings, time, demand, and money market deposits.


It also offers commercial loans, such as commercial real estate, equipment, construction, working capital, and other commercial purpose loans, as well as industrial loans; consumer loans comprising home equity and other consumer loans, as well as home equity lines of credit; residential mortgage loans; acquisition and development loans; municipal loans; and installment and other loans.In addition, the company provides renders services as trustee, executor, administrator, guardian, managing agent, custodian, and investment advisor, as well as provides other fiduciary services under the Orrstown Financial Advisors name; and offers retail brokerage services through a third-party broker/dealer arrangement.Further, it offers investment advisory, insurance, and brokerage services.


The company operates through offices in Berks, Cumberland, Dauphin, Franklin, Lancaster, Perry, and York counties, Pennsylvania; and Anne Arundel, Baltimore, Howard, and Washington counties, Maryland, as well as Baltimore City, Maryland.Orrstown Financial Services, Inc.was founded in 1919 and is based in Shippensburg, Pennsylvania.

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1.b. Last Insights on ORRF

Orrstown Financial Services' recent performance was negatively impacted by several factors. The company's Q4 earnings and revenues missed estimates, with net income of $13.7 million, or $0.71 per diluted share, compared to a net loss of $7.9 million, or $0.41 per diluted share, in the previous quarter. Expenses related to the merger and a legal settlement contributed to the shortfall, totaling $4.4 million. Additionally, the company incurred $3.9 million in merger expenses and $0.5 million for a legal settlement, which weighed on its bottom line.

1.c. Company Highlights

2. Orrstown Financial Services' Strong Q3 2025 Earnings

Orrstown Financial Services reported its strongest quarter of earnings on record, with diluted EPS of $1.13, beating analyst estimates of $1.06. The company's net interest margin stood at 4.11% for the third quarter of 2025, driven by a 4.9% annualized loan growth. Fee income remained strong, accounting for 20.8% of operating revenue. Noninterest expenses declined by $1.3 million, resulting in an efficiency ratio of 56.4%. The company's return on assets was 1.60%, and return on equity was nearly 16%.

Publication Date: Oct -28

📋 Highlights
  • Record Earnings Performance: Achieved diluted EPS of $1.13, ROA of 1.60%, and ROE of nearly 16%, marking the strongest quarterly earnings on record.
  • Loan Growth and Margin Expansion: Annualized loan growth of 4.9% with a net interest margin of 4.11%, driven by a $4 billion loan portfolio yielding 6.58%.
  • Fee Income and Efficiency Gains: Fee income contributed 20.8% of operating revenue, while noninterest expenses dropped $1.3 million, improving the efficiency ratio to 56.4%.
  • Capital Strength and Credit Quality: Classified loans decreased by $1.7 million, with net charge-offs remaining nominal, and a robust capital position enabling strategic flexibility.
  • NIM Outlook and Pricing Strategy: Maintains NIM in 4.0%-4.15% range despite rate cuts, leveraging deposit cost management and disciplined loan pricing to offset potential NIM compression.

Loan Growth and Credit Quality

The company's balance sheet reflects its proactive approach to managing risk, with a focus on credit quality and relationship banking. Loan growth was driven by the company's relationship banking model, which emphasizes high engagement and local decision-making. Credit quality remains sound, with net charge-offs nominal and classified loans decreasing by $1.7 million. As CFO Neil Kalani highlighted, the company's loan portfolio grew to nearly $4 billion, with an average yield of 6.58%.

Net Interest Margin and Deposit Costs

The company expects to maintain its net interest margin in the range of 4.0% to 4.15% despite potential rate cuts, driven by its ability to manage funding costs and generate growth. Deposits increased by $17 million, and the cost of deposits declined. The company's investment portfolio performed well, with a yield of 4.67% and a decline in net unrealized losses. Neelesh Kalani discussed tools to avoid NIM compression in the event of rate cuts, citing pricing adjustments as a key factor.

Valuation and Outlook

With a Price-to-Tangible Book Value (P/TBV) of approximately 1.19, and a Dividend Yield of 2.98%, the stock appears reasonably valued. Analysts estimate next year's revenue growth at 2.8%. The company's ability to maintain its net interest margin and generate growth will be crucial in driving future returns. The shape of the curve over the next several quarters will be managed, with some contraction expected. If longer-term rates increase, it will benefit the company.

3. NewsRoom

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Contrasting Eastern Bankshares (NASDAQ:EBC) & Orrstown Financial Services (NASDAQ:ORRF)

Nov -30

Source: defenseworld.net

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Orrstown Financial Services (NASDAQ:ORRF) Shares Up 4.9% on Better-Than-Expected Earnings

Oct -23

Source: defenseworld.net

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Orrstown Financial Services, Inc. (ORRF) Q3 2025 Earnings Call Transcript

Oct -22

Source: seekingalpha.com

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Orrstown (ORRF) Q3 Earnings: Taking a Look at Key Metrics Versus Estimates

Oct -22

Source: zacks.com

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Orrstown Financial Services (ORRF) Tops Q3 Earnings and Revenue Estimates

Oct -21

Source: zacks.com

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Orrstown Financial Services, Inc. Reports Third Quarter 2025 Results

Oct -21

Source: globenewswire.com

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Will Orrstown (ORRF) Beat Estimates Again in Its Next Earnings Report?

Oct -20

Source: zacks.com

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Orrstown Financial Services, Inc. Announces Date of Third Quarter 2025 Earnings Release, Conference Call and Webcast

Oct -15

Source: globenewswire.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (7.40%)

6. Segments

Community Banking

Expected Growth: 7.4%

Orrstown Financial Services, Inc.'s 7.4% growth in Community Banking is driven by strategic branch expansions, increased commercial lending, and a focus on customer relationships. Additionally, investments in digital banking platforms and targeted marketing initiatives have contributed to the growth. The bank's commitment to community development and customer-centric approach have also fostered loyalty and attracted new customers.

7. Detailed Products

Commercial Loans

Orrstown Financial Services, Inc. offers a range of commercial loans to help businesses grow and thrive. From lines of credit to term loans, we have a loan solution to meet your business needs.

Personal Banking

Our personal banking services provide convenient and secure access to your money. From checking and savings accounts to credit cards and loans, we have a solution to meet your personal banking needs.

Mortgage Lending

Orrstown Financial Services, Inc. offers a range of mortgage lending options to help you achieve your dream of homeownership. From fixed-rate to adjustable-rate mortgages, we have a solution to fit your needs.

Wealth Management

Our wealth management services provide personalized investment advice and portfolio management to help you achieve your long-term financial goals.

Treasury Management

Orrstown Financial Services, Inc.'s treasury management services provide businesses with the tools they need to manage their cash flow, reduce risk, and optimize their financial performance.

8. Orrstown Financial Services, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for Orrstown Financial Services, Inc. is medium due to the presence of alternative financial institutions and online banking services.

Bargaining Power Of Customers

The bargaining power of customers for Orrstown Financial Services, Inc. is low due to the lack of concentration of buyers and the presence of multiple financial institutions.

Bargaining Power Of Suppliers

The bargaining power of suppliers for Orrstown Financial Services, Inc. is medium due to the presence of multiple suppliers and the moderate level of concentration.

Threat Of New Entrants

The threat of new entrants for Orrstown Financial Services, Inc. is low due to the high barriers to entry and the presence of regulatory requirements.

Intensity Of Rivalry

The intensity of rivalry for Orrstown Financial Services, Inc. is high due to the presence of multiple competitors and the high level of competition in the financial services industry.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 40.54%
Debt Cost 4.87%
Equity Weight 59.46%
Equity Cost 8.26%
WACC 6.89%
Leverage 68.18%

11. Quality Control: Orrstown Financial Services, Inc. passed 3 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
First Financial

A-Score: 7.0/10

Value: 7.3

Growth: 5.4

Quality: 6.0

Yield: 7.0

Momentum: 8.5

Volatility: 8.0

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Peoples Bancorp of North Carolina

A-Score: 7.0/10

Value: 8.0

Growth: 6.6

Quality: 7.2

Yield: 6.0

Momentum: 8.0

Volatility: 6.3

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Independent Bank

A-Score: 6.6/10

Value: 6.9

Growth: 6.9

Quality: 7.5

Yield: 7.0

Momentum: 3.5

Volatility: 8.0

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Oriental

A-Score: 6.4/10

Value: 7.1

Growth: 7.2

Quality: 7.2

Yield: 5.0

Momentum: 4.0

Volatility: 8.0

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Chemung Financial

A-Score: 6.4/10

Value: 5.8

Growth: 5.6

Quality: 5.5

Yield: 6.0

Momentum: 7.5

Volatility: 8.0

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Orrstown Financial Services

A-Score: 6.1/10

Value: 6.8

Growth: 5.0

Quality: 6.7

Yield: 6.0

Momentum: 4.0

Volatility: 8.0

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

36.94$

Current Price

36.94$

Potential

-0.00%

Expected Cash-Flows