ORRSTOWN FINANCIAL SERVICES, INC. |
(Exact name of registrant as specified in its charter) |
Pennsylvania | 001-34292 | 23-2530374 |
(State or other jurisdiction of incorporation) | (SEC File Number) | (IRS Employer Identification No.) |
77 East King Street, P.O. Box 250, Shippensburg, Pennsylvania | 17257 |
(Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code: | 717 532-6114 |
Not Applicable |
(Former name or former address, if changed since last report) |
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below): | |
o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)). |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter). | |
o | Emerging growth company |
o | If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. |
Exhibit No. | Description | ||
99 |
SIGNATURES | |||
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned hereunto duly authorized. | |||
ORRSTOWN FINANCIAL SERVICES, INC. | |||
Date: July 26, 2017 | By: | /s/ David P. Boyle | |
David P. Boyle Executive Vice President and Chief Financial Officer (Duly Authorized Representative) |
99 | Press Release dated July 26, 2017 |
• | Net income for the three months ended June 30, 2017 totaled $3.3 million, or $0.40 per diluted share, compared with $700 thousand, or $0.08 per diluted share, for the same period in 2016. Net income for the six months ended June 30, 2017 totaled $5.3 million, or $0.65 per diluted share, compared with $3.3 million, or $0.40 per diluted share, for the same period in 2016. |
• | Gross loans outstanding at June 30, 2017, excluding loans held for sale, totaled $934.4 million, an increase of $51.0 million, or 11.6% on an annualized basis, compared with the balance of $883.4 million at December 31, 2016. In a year-over-year comparison, gross loans outstanding at June 30, 2017 increased 12.3% over June 30, 2016. |
• | Deposits totaled $1.20 billion at June 30, 2017 and grew at a 7.6% annualized basis compared with the $1.15 billion balance at December 31, 2016. |
• | Net interest income for the three months ended June 30, 2017 totaled $10.7 million, an increase of 19.7% over the three months ended June 30, 2016, of $9.0 million, with net interest margin, on a taxable-equivalent basis, increasing from 3.15% to 3.35% for the respective periods. Net interest income totaled $21.0 million for the six months ended June 30, 2017, a 19.1% increase compared with $17.6 million for the six months ended June 30, 2016. Net interest margin, on a taxable-equivalent basis, increased from 3.11% in 2016 to 3.35% in 2017 for the respective periods. |
• | The Board of Directors declared a cash dividend of $0.10 per common share, payable August 15, 2017, to shareholders of record as of August 8, 2017, an increase of 11.1% over the dividend declared in the third quarter of 2016. |
(Dollars in thousands) | June 30, 2017 | December 31, 2016 | June 30, 2016 | ||||||||
Commercial real estate: | |||||||||||
Owner occupied | $ | 116,419 | $ | 112,295 | $ | 106,649 | |||||
Non-owner occupied | 217,070 | 206,358 | 190,558 | ||||||||
Multi-family | 48,637 | 47,681 | 38,957 | ||||||||
Non-owner occupied residential | 68,621 | 62,533 | 56,100 | ||||||||
Acquisition and development: | |||||||||||
1-4 family residential construction | 8,036 | 4,663 | 6,714 | ||||||||
Commercial and land development | 28,481 | 26,085 | 24,748 | ||||||||
Commercial and industrial | 97,913 | 88,465 | 82,616 | ||||||||
Municipal | 51,381 | 53,741 | 61,568 | ||||||||
Residential mortgage: | |||||||||||
First lien | 150,173 | 139,851 | 129,577 | ||||||||
Home equity – term | 13,019 | 14,248 | 16,216 | ||||||||
Home equity – lines of credit | 127,262 | 120,353 | 110,908 | ||||||||
Installment and other loans | 7,370 | 7,118 | 7,322 | ||||||||
$ | 934,382 | $ | 883,391 | $ | 831,933 |
ORRSTOWN FINANCIAL SERVICES, INC. | |||||||||||||||
Operating Highlights (Unaudited) | |||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, | June 30, | June 30, | June 30, | ||||||||||||
(Dollars in thousands, except per share data) | 2017 | 2016 | 2017 | 2016 | |||||||||||
Net income | $ | 3,308 | $ | 678 | $ | 5,310 | $ | 3,258 | |||||||
Diluted earnings per share | $ | 0.40 | $ | 0.08 | $ | 0.65 | $ | 0.40 | |||||||
Dividends per share | $ | 0.10 | $ | 0.09 | $ | 0.20 | $ | 0.17 | |||||||
Return on average assets | 0.90 | % | 0.21 | % | 0.74 | % | 0.50 | % | |||||||
Return on average equity | 9.49 | % | 1.97 | % | 7.78 | % | 4.78 | % | |||||||
Net interest income | $ | 10,718 | $ | 8,951 | $ | 20,955 | $ | 17,601 | |||||||
Net interest margin | 3.35 | % | 3.15 | % | 3.35 | % | 3.11 | % |
ORRSTOWN FINANCIAL SERVICES, INC. | |||||||||||
Balance Sheet Highlights (Unaudited) | |||||||||||
June 30, | December 31, | June 30, | |||||||||
(Dollars in thousands, except per share data) | 2017 | 2016 | 2016 | ||||||||
Assets | $ | 1,474,930 | $ | 1,414,504 | $ | 1,311,353 | |||||
Loans, gross | 934,382 | 883,391 | 831,933 | ||||||||
Allowance for loan losses | (12,751 | ) | (12,775 | ) | (13,440 | ) | |||||
Deposits | 1,195,936 | 1,152,452 | 1,087,969 | ||||||||
Shareholders' equity | 143,263 | 134,859 | 141,039 | ||||||||
Book value per share | 17.17 | 16.28 | 17.04 |
ORRSTOWN FINANCIAL SERVICES, INC. | |||||||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) | |||||||||||||
June 30, | December 31, | June 30, | |||||||||||
(Dollars in thousands) | 2017 | 2016 | 2016 | ||||||||||
Assets | |||||||||||||
Cash and cash equivalents | $ | 38,012 | $ | 30,273 | $ | 63,649 | |||||||
Securities available for sale | 401,904 | 400,154 | 324,540 | ||||||||||
Loans held for sale | 5,182 | 2,768 | 6,627 | ||||||||||
Loans | 934,382 | 883,391 | 831,933 | ||||||||||
Less: Allowance for loan losses | (12,751 | ) | (12,775 | ) | (13,440 | ) | |||||||
Net loans | 921,631 | 870,616 | 818,493 | ||||||||||
Premises and equipment, net | 35,036 | 34,871 | 31,379 | ||||||||||
Other assets | 73,165 | 75,822 | 66,665 | ||||||||||
Total assets | $ | 1,474,930 | $ | 1,414,504 | $ | 1,311,353 | |||||||
Liabilities | |||||||||||||
Deposits: | |||||||||||||
Noninterest-bearing | $ | 157,703 | $ | 150,747 | $ | 147,680 | |||||||
Interest-bearing | 1,038,233 | 1,001,705 | 940,289 | ||||||||||
Total deposits | 1,195,936 | 1,152,452 | 1,087,969 | ||||||||||
Borrowings | 114,553 | 112,027 | 67,724 | ||||||||||
Accrued interest and other liabilities | 21,178 | 15,166 | 14,621 | ||||||||||
Total liabilities | 1,331,667 | 1,279,645 | 1,170,314 | ||||||||||
Shareholders' Equity | |||||||||||||
Common stock | 435 | 437 | 437 | ||||||||||
Additional paid - in capital | 124,727 | 124,935 | 124,807 | ||||||||||
Retained earnings | 15,324 | 11,669 | 9,787 | ||||||||||
Accumulated other comprehensive income (loss) | 2,857 | (1,165 | ) | 7,421 | |||||||||
Treasury stock | (80 | ) | (1,017 | ) | (1,413 | ) | |||||||
Total shareholders' equity | 143,263 | 134,859 | 141,039 | ||||||||||
Total liabilities and shareholders' equity | $ | 1,474,930 | $ | 1,414,504 | $ | 1,311,353 |
ORRSTOWN FINANCIAL SERVICES, INC. | |||||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited) | |||||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||||
June 30, | June 30, | June 30, | June 30, | ||||||||||||||
(Dollars in thousands, except share data) | 2017 | 2016 | 2017 | 2016 | |||||||||||||
Interest and dividend income | |||||||||||||||||
Interest and fees on loans | $ | 9,851 | $ | 8,384 | $ | 19,055 | $ | 16,375 | |||||||||
Interest and dividends on investment securities | 2,617 | 1,888 | 5,243 | 3,858 | |||||||||||||
Total interest and dividend income | 12,468 | 10,272 | 24,298 | 20,233 | |||||||||||||
Interest expense | |||||||||||||||||
Interest on deposits | 1,484 | 1,191 | 2,810 | 2,330 | |||||||||||||
Interest on borrowings | 266 | 130 | 533 | 302 | |||||||||||||
Total interest expense | 1,750 | 1,321 | 3,343 | 2,632 | |||||||||||||
Net interest income | 10,718 | 8,951 | 20,955 | 17,601 | |||||||||||||
Provision for loan losses | 100 | 0 | 100 | 0 | |||||||||||||
Net interest income after provision for loan losses | 10,618 | 8,951 | 20,855 | 17,601 | |||||||||||||
Noninterest income | |||||||||||||||||
Service charges on deposit accounts | 1,429 | 1,372 | 2,787 | 2,675 | |||||||||||||
Trust, investment management and brokerage income | 2,141 | 1,765 | 4,054 | 3,550 | |||||||||||||
Mortgage banking activities | 813 | 727 | 1,316 | 1,369 | |||||||||||||
Other income | 586 | 673 | 1,144 | 1,188 | |||||||||||||
Investment securities gains | 654 | 0 | 657 | 1,420 | |||||||||||||
Total noninterest income | 5,623 | 4,537 | 9,958 | 10,202 | |||||||||||||
Noninterest expenses | |||||||||||||||||
Salaries and employee benefits | 7,422 | 6,312 | 14,822 | 12,495 | |||||||||||||
Occupancy, furniture and equipment | 1,531 | 1,340 | 3,024 | 2,652 | |||||||||||||
Data processing | 664 | 519 | 1,175 | 1,154 | |||||||||||||
Advertising and bank promotions | 391 | 355 | 778 | 811 | |||||||||||||
FDIC insurance | 178 | 223 | 315 | 455 | |||||||||||||
Professional services | 485 | 570 | 993 | 1,090 | |||||||||||||
Collection and problem loan | 3 | 96 | 78 | 148 | |||||||||||||
Real estate owned | (12 | ) | 58 | 8 | 101 | ||||||||||||
Taxes other than income | 220 | 253 | 448 | 408 | |||||||||||||
Regulatory settlement | 0 | 1,000 | 0 | 1,000 | |||||||||||||
Other operating expenses | 1,535 | 1,832 | 2,922 | 3,365 | |||||||||||||
Total noninterest expenses | 12,417 | 12,558 | 24,563 | 23,679 | |||||||||||||
Income before income tax | 3,824 | 930 | 6,250 | 4,124 | |||||||||||||
Income tax expense | 516 | 252 | 940 | 866 | |||||||||||||
Net income | $ | 3,308 | $ | 678 | $ | 5,310 | $ | 3,258 | |||||||||
Per share information: | |||||||||||||||||
Basic earnings per share | $ | 0.41 | $ | 0.08 | $ | 0.66 | $ | 0.40 | |||||||||
Diluted earnings per share | 0.40 | 0.08 | 0.65 | 0.40 | |||||||||||||
Dividends per share | 0.10 | 0.09 | 0.20 | 0.17 | |||||||||||||
Diluted weighted-average shares of common stock outstanding | 8,207,689 | 8,136,003 | 8,202,935 | 8,137,537 |
ORRSTOWN FINANCIAL SERVICES, INC. | |||||||||||||||||||||
ANALYSIS OF NET INTEREST INCOME | |||||||||||||||||||||
Average Balances and Interest Rates, Taxable-Equivalent Basis (Unaudited) | |||||||||||||||||||||
Three Months Ended | |||||||||||||||||||||
June 30, 2017 | June 30, 2016 | ||||||||||||||||||||
Taxable- | Taxable- | Taxable- | Taxable- | ||||||||||||||||||
Average | Equivalent | Equivalent | Average | Equivalent | Equivalent | ||||||||||||||||
(Dollars in thousands) | Balance | Interest | Rate | Balance | Interest | Rate | |||||||||||||||
Assets | |||||||||||||||||||||
Federal funds sold & interest-bearing bank balances | $ | 12,380 | $ | 46 | 1.49 | % | $ | 50,491 | $ | 79 | 0.63 | % | |||||||||
Securities | 416,823 | 2,986 | 2.87 | 330,973 | 2,046 | 2.49 | |||||||||||||||
Loans | 928,739 | 10,065 | 4.35 | 824,004 | 8,652 | 4.22 | |||||||||||||||
Total interest-earning assets | 1,357,942 | 13,097 | 3.87 | 1,205,468 | 10,777 | 3.60 | |||||||||||||||
Other assets | 109,793 | 98,376 | |||||||||||||||||||
Total | $ | 1,467,735 | $ | 1,303,844 | |||||||||||||||||
Liabilities and Shareholders' Equity | |||||||||||||||||||||
Interest-bearing demand deposits | $ | 641,111 | $ | 474 | 0.30 | $ | 542,075 | $ | 282 | 0.21 | |||||||||||
Savings deposits | 96,261 | 38 | 0.16 | 91,341 | 36 | 0.16 | |||||||||||||||
Time deposits | 303,473 | 972 | 1.28 | 300,244 | 873 | 1.17 | |||||||||||||||
Short-term borrowings | 99,983 | 189 | 0.76 | 47,810 | 25 | 0.21 | |||||||||||||||
Long-term debt | 10,634 | 77 | 2.90 | 24,378 | 105 | 1.73 | |||||||||||||||
Total interest-bearing liabilities | 1,151,462 | 1,750 | 0.61 | 1,005,848 | 1,321 | 0.53 | |||||||||||||||
Noninterest-bearing demand deposits | 161,236 | 146,233 | |||||||||||||||||||
Other | 15,205 | 13,364 | |||||||||||||||||||
Total Liabilities | 1,327,903 | 1,165,445 | |||||||||||||||||||
Shareholders' Equity | 139,832 | 138,399 | |||||||||||||||||||
Total | $ | 1,467,735 | $ | 1,303,844 | |||||||||||||||||
Taxable-equivalent net interest income / net interest spread | 11,347 | 3.26 | % | 9,456 | 3.07 | % | |||||||||||||||
Taxable-equivalent net interest margin | 3.35 | % | 3.15 | % | |||||||||||||||||
Taxable-equivalent adjustment | (629 | ) | (505 | ) | |||||||||||||||||
Net interest income | $ | 10,718 | $ | 8,951 | |||||||||||||||||
NOTES: | |||||||||||||||||||||
(1) Yields and interest income on tax-exempt assets have been computed on a taxable-equivalent basis assuming a 34% tax rate in 2017 and a 35% tax rate in 2016. | |||||||||||||||||||||
(2) For yield calculation purposes, nonaccruing loans are included in the average loan balance. |
ORRSTOWN FINANCIAL SERVICES, INC. | |||||||||||||||||||||
ANALYSIS OF NET INTEREST INCOME | |||||||||||||||||||||
Average Balances and Interest Rates, Taxable-Equivalent Basis (Unaudited) | |||||||||||||||||||||
Six Months Ended | |||||||||||||||||||||
June 30, 2017 | June 30, 2016 | ||||||||||||||||||||
Taxable- | Taxable- | Taxable- | Taxable- | ||||||||||||||||||
Average | Equivalent | Equivalent | Average | Equivalent | Equivalent | ||||||||||||||||
(Dollars in thousands) | Balance | Interest | Rate | Balance | Interest | Rate | |||||||||||||||
Assets | |||||||||||||||||||||
Federal funds sold & interest-bearing bank balances | $ | 8,981 | $ | 64 | 1.44 | % | $ | 46,867 | $ | 144 | 0.62 | % | |||||||||
Securities | 416,087 | 5,996 | 2.91 | 347,294 | 4,189 | 2.43 | |||||||||||||||
Loans | 912,127 | 19,487 | 4.31 | 809,894 | 16,914 | 4.20 | |||||||||||||||
Total interest-earning assets | 1,337,195 | 25,547 | 3.85 | 1,204,055 | 21,247 | 3.55 | |||||||||||||||
Other assets | 108,696 | 96,334 | |||||||||||||||||||
Total | $ | 1,445,891 | $ | 1,300,389 | |||||||||||||||||
Liabilities and Shareholders' Equity | |||||||||||||||||||||
Interest-bearing demand deposits | $ | 625,170 | $ | 837 | 0.27 | $ | 531,757 | $ | 532 | 0.20 | |||||||||||
Savings deposits | 94,795 | 74 | 0.16 | 89,522 | 71 | 0.16 | |||||||||||||||
Time deposits | 300,117 | 1,899 | 1.28 | 302,523 | 1,727 | 1.15 | |||||||||||||||
Short-term borrowings | 102,303 | 361 | 0.71 | 62,076 | 91 | 0.29 | |||||||||||||||
Long-term debt | 16,017 | 172 | 2.17 | 24,419 | 211 | 1.74 | |||||||||||||||
Total interest-bearing liabilities | 1,138,402 | 3,343 | 0.59 | 1,010,297 | 2,632 | 0.52 | |||||||||||||||
Noninterest-bearing demand deposits | 154,904 | 139,723 | |||||||||||||||||||
Other | 14,900 | 13,286 | |||||||||||||||||||
Total Liabilities | 1,308,206 | 1,163,306 | |||||||||||||||||||
Shareholders' Equity | 137,685 | 137,083 | |||||||||||||||||||
Total | $ | 1,445,891 | $ | 1,300,389 | |||||||||||||||||
Taxable-equivalent net interest income / net interest spread | 22,204 | 3.26 | % | 18,615 | 3.03 | % | |||||||||||||||
Taxable-equivalent net interest margin | 3.35 | % | 3.11 | % | |||||||||||||||||
Taxable-equivalent adjustment | (1,249 | ) | (1,014 | ) | |||||||||||||||||
Net interest income | $ | 20,955 | $ | 17,601 | |||||||||||||||||
NOTES: | |||||||||||||||||||||
(1) Yields and interest income on tax-exempt assets have been computed on a taxable-equivalent basis assuming a 34% tax rate in 2017 and a 35% tax rate in 2016. | |||||||||||||||||||||
(2) For yield calculation purposes, nonaccruing loans are included in the average loan balance. |
ORRSTOWN FINANCIAL SERVICES, INC. | |||||||||||||||
Nonperforming Assets / Risk Elements (Unaudited) | |||||||||||||||
June 30, | March 31, | December 31, | June 30, | ||||||||||||
(Dollars in thousands) | 2017 | 2017 | 2016 | 2016 | |||||||||||
Nonaccrual loans (cash basis) | $ | 5,160 | $ | 6,379 | $ | 7,043 | $ | 14,092 | |||||||
Other real estate (OREO) | 1,012 | 1,019 | 346 | 651 | |||||||||||
Total nonperforming assets | 6,172 | 7,398 | 7,389 | 14,743 | |||||||||||
Restructured loans still accruing | 1,204 | 921 | 930 | 907 | |||||||||||
Loans past due 90 days or more and still accruing | 0 | 0 | 0 | 0 | |||||||||||
Total nonperforming and other risk assets | $ | 7,376 | $ | 8,319 | $ | 8,319 | $ | 15,650 | |||||||
Loans 30-89 days past due | $ | 1,069 | $ | 1,315 | $ | 1,218 | $ | 1,051 | |||||||
Asset quality ratios: | |||||||||||||||
Total nonperforming loans to total loans | 0.55 | % | 0.71 | % | 0.80 | % | 1.69 | % | |||||||
Total nonperforming assets to total assets | 0.42 | % | 0.51 | % | 0.52 | % | 1.12 | % | |||||||
Total nonperforming assets to total loans and OREO | 0.66 | % | 0.82 | % | 0.84 | % | 1.77 | % | |||||||
Total risk assets to total loans and OREO | 0.79 | % | 0.92 | % | 0.94 | % | 1.88 | % | |||||||
Total risk assets to total assets | 0.50 | % | 0.57 | % | 0.59 | % | 1.19 | % | |||||||
Allowance for loan losses to total loans | 1.36 | % | 1.41 | % | 1.45 | % | 1.62 | % | |||||||
Allowance for loan losses to nonperforming loans | 247.11 | % | 198.59 | % | 181.39 | % | 95.37 | % | |||||||
Allowance for loan losses to nonperforming and restructured loans still accruing | 200.36 | % | 173.53 | % | 160.23 | % | 89.61 | % |
ORRSTOWN FINANCIAL SERVICES, INC. | |||||||||||||||
Allowance for Loan Losses Activity (Unaudited) | |||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, | June 30, | June 30, | June 30, | ||||||||||||
(Dollars in thousands) | 2017 | 2016 | 2017 | 2016 | |||||||||||
Balance, beginning of period | $ | 12,668 | $ | 13,347 | $ | 12,775 | $ | 13,568 | |||||||
Provision for loan losses | 100 | 0 | 100 | 0 | |||||||||||
Recoveries | 61 | 247 | 83 | 355 | |||||||||||
Charge-offs | (78 | ) | (154 | ) | (207 | ) | (483 | ) | |||||||
Balance, end of period | $ | 12,751 | $ | 13,440 | $ | 12,751 | $ | 13,440 |
/(O!JP_8XX7\/64FJQ6WW1$+\GS!A> ^,CMZ4I2C4
MBDW9H,-@\5EN,Q%2E3=6%:7.K.*:E:S3YFM.S5_0^4_V/-.?]H;_ (.%/B1X
MQT+_ $KP[X5FU![R[B;,+!;9=/0;NAWR!B!W",>U>-?#7PGJ_P '/VW_ (U_
MLNZ=!=KIOQ?\2V>B!HVVK::