-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, FhpfPN5vH9yZNYR+8OP1hmhcScyp64uTZqTK+u2mCTE8JSti1eWX20xta1DpufyW GNulabehIU5sDMlAnum6xQ== /in/edgar/work/20000814/0000950115-00-000997/0000950115-00-000997.txt : 20000921 0000950115-00-000997.hdr.sgml : 20000921 ACCESSION NUMBER: 0000950115-00-000997 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20000630 FILED AS OF DATE: 20000814 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ORRSTOWN FINANCIAL SERVICES INC CENTRAL INDEX KEY: 0000826154 STANDARD INDUSTRIAL CLASSIFICATION: [6022 ] IRS NUMBER: 232530374 STATE OF INCORPORATION: PA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 033-18888 FILM NUMBER: 696060 BUSINESS ADDRESS: STREET 1: 77 E KING STREET STREET 2: P O BOX 250 CITY: SHIPPENSBURG STATE: PA ZIP: 17257 BUSINESS PHONE: 7175326114 MAIL ADDRESS: STREET 1: 77 EAST KING STREET CITY: SHIPPANSBURG STATE: PA ZIP: 17257 10-Q 1 0001.txt QUARTERLY REPORT FORM 10 - Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For quarter ended June 30, 2000 Commission file number: 33-18888 ORRSTOWN FINANCIAL SERVICES, INC. ------------------------------------------------------ (Exact name of registrant as specified in its charter) Commonwealth of Pennsylvania 23-2530374 - --------------------------------------------- ------------------- (State or other jurisdiction of incorporation (I.R.S. Employer or organization) Identification No.) 77 East King Street 17257 - ---------------------------------------- ---------- P.O. Box 250, Shippensburg, Pennsylvania (Zip Code) (Address of principal executive offices) Registrant's telephone number, including area code: (717) 532-6114 -------------- Indicate by check mark whether the registrant (1) has filed all reports required to be filled by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES X NO ---- ---- Class Outstanding at August 4, 2000 ---------------------------- ----------------------------- (Common Stock, no par value) 2,233,670 ORRSTOWN FINANCIAL SERVICES, INC. INDEX Page ---- Part I - FINANCIAL INFORMATION Item 1. Financial statements ( unaudited ) Condensed consolidated balance sheets - June 30, 2000 and December 31, 1999 3 Condensed consolidated statements of income - Three months ended June 30, 2000 and 1999 4 Condensed consolidated statements of income - Six months ended June 30, 2000 and 1999 5 Condensed consolidated statements of comprehensive income - Three months & Six months ended June 30, 2000 and 1999 6 Condensed consolidated statements of cash flows - Six months ended June 30, 2000 and 1999 7 Notes to condensed consolidated financial statements 8-9 Item 2. Management's discussion and analysis of financial condition and results of operations 10-13 PART II - OTHER INFORMATION Other Information 15 Signatures 16 Exhibits 17 PART I - FINANCIAL INFORMATION PART I - FINANCIAL INFORMATION Item 1. Financial Statements ORRSTOWN FINANCIAL SERVICES, INC. AND ITS WHOLLY - OWNED SUBSIDIARY, ORRSTOWN BANK CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
June 30, December 31, 2000 1999* (Unaudited) ----------- ------------ ASSETS (000 Omitted) Cash and due from banks 11,133 8,585 Interest - bearing deposits with banks 93 115 Federal funds sold 0 0 Securities available for sale 63,567 60,455 Federal Home Loan Bank, Federal Reserve and Atlantic Central Bankers Bank Stock, at cost which approximates market value 2,134 1,509 Loans 192,733 180,691 Allowance for loan losses (2,554) (2,455) --------- --------- Net Loans 190,179 178,236 Bank premises and equipment, net 9,200 6,809 Accrued Interest receivable 1,784 1,599 Cash value-life insurance 5,502 5,384 Other assets 2,498 2,361 --------- --------- Total assets 286,090 $ 265,053 ========= ========= LIABILITIES AND STOCKHOLDERS' EQUITY LIABILITIES Deposits: Noninterest bearing $ 30,013 $ 25,264 Interest bearing 182,571 179,125 --------- --------- Total deposits 212,584 204,389 Federal funds purchased and other short term borrowed funds 26,650 15,406 Long term borrowed funds 20,816 20,822 Accrued interest payable 411 422 Other liabilities 2,081 2,146 --------- --------- Total liabilities 262,542 243,185 --------- --------- STOCKHOLDERS' EQUITY Common stock, no par value - $ .1041 Stated value per share at June 30, 2000 and December 31, 1999, 10,000,000 shares authorized with 2,228,359 shares issued at June 30, 2000 and 2,218,291 issued at December 31, 1999 232 231 Additional paid - in capital 18,888 18,498 Retained earnings 5,117 3,717 Accumulated other comprehensive income (loss) (689) (578) --------- --------- Total stockholders' equity 23,548 21,868 --------- --------- Total liabilities and stockholders' equity $ 286,090 $ 265,053 ========= =========
* Condensed from audited financial statements The accompanying notes are an integral part of these condensed financial statements. Page 3 ORRSTOWN FINANCIAL SERVICES, INC. AND ITS WHOLLY - OWNED SUBSIDIARY, ORRSTOWN BANK CONDENSED CONSOLIDATED STATEMENTS OF INCOME Three Months Ended June 30, 2000 and 1999 (UNAUDITED) 2000 1999 (Unaudited) (Unaudited) ----------- ----------- (000 Omitted) Interest and fees on loans $ 4,163 $ 3,550 Interest on federal funds sold 12 79 Interest and dividends on investment securities 1,145 801 Interest income on deposits with banks 3 3 ----------- ----------- Total interest income 5,323 4,433 Interest Expense Interest on deposits 1,795 1,590 Interest on borrowed money 676 351 ----------- ----------- Total interest expense 2,471 1,941 ----------- ----------- Net interest income 2,852 2,492 Provision for loan losses 75 90 ----------- ----------- Net interest income after provision for loan Losses 2,777 2,402 ----------- ----------- Other Income Service charges on deposits 287 298 Other service charges 149 130 Trust department income 277 231 Brokerage Income 106 120 Other income 80 83 Net gains on available for sale securities (1) (6) ----------- ----------- Total Other income 898 856 Other Expenses Salaries and employee benefits 1,141 1,052 Net occupancy and equipment expenses 355 229 Other operating expenses 700 639 ----------- ----------- Total other expense 2,196 1,920 Income before income tax 1,479 1,338 Income tax expenses 405 349 ----------- ----------- Net income $ 1,074 $ 989 =========== =========== Weighted average number of shares outstanding 2,226,313 2,059,406 Net income per share $ 0.48 $ 0.45 Cash dividends declared per share $ 0.14 $ 0.12 The accompanying notes are an integral part of these condensed financial statements. All per share amounts have been adjusted to give retroactive recognition to a 7 1/2% stock dividend effective November 19, 1999. Page 4 ORRSTOWN FINANCIAL SERVICES, INC. AND ITS WHOLLY - OWNED SUBSIDIARY, ORRSTOWN BANK CONDENSED CONSOLIDATED STATEMENTS OF INCOME Six Months Ended June 30, 2000 and 1999 (UNAUDITED) 2000 1999 (Unaudited) (Unaudited) ----------- ----------- (000 Omitted) Interest Income Interest and fees on loans $ 8,081 $ 7,015 Interest on federal funds sold 61 159 Interest and dividends on investment securities 2,158 1,563 Interest income on deposits with banks 11 5 ----------- ----------- Total interest income 10,311 8,742 Interest Expense Interest on deposits 3,513 3,171 Interest on borrowed money 1,251 692 ----------- ----------- Total interest expense 4,764 3,863 ----------- ----------- Net interest income 5,547 4,879 Provision for loan losses 150 180 ----------- ----------- Net interest income after provision for loan Losses 5,397 4,699 ----------- ----------- Other Income Service charges on deposits 557 505 Other service charges 264 282 Trust department income 530 415 Brokerage Income 185 202 Other income 166 171 Net gains on available for sale securities (3) (15) ----------- ----------- Total Other income 1,699 1,560 Other Expenses Salaries and employee benefits 2,317 2,053 Net occupancy and equipment expenses 710 444 Other operating expenses 1,306 1,252 ----------- ----------- Total other expense 4,333 3,749 Income before income tax 2,763 2,510 Income tax expenses 740 672 ----------- ----------- Net income $ 2,023 $ 1,838 =========== =========== Weighted average number of shares outstanding 2,226,313 2,058,319 Net income per share $ 0.91 $ 0.83 Cash dividends declared per share $ 0.28 $ 0.24 The accompanying notes are an integral part of these condensed financial statements. All per share amounts have been adjusted to give retroactive recognition to a 7 1/2% stock dividend effective November 19, 1999. Page 5 ORRSTOWN FINANCIAL SERVICES, INC. AND ITS WHOLLY - OWNED SUBSIDIARY, ORRSTOWN BANK CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME Three Months Ended June 30, 2000 and 1999 (UNAUDITED) 2000 1999 ------ ------ (000 Omitted) Net Income $1,074 $ 989 Other comprehensive income, net of tax Unrealized gain (loss) on investment securities available for sale 28 (666) Comprehensive Income $1,102 $ 323 ====== ====== The accompanying notes are integral part of these condensed financial statements. ******************************************************************************** ORRSTOWN FINANCIAL SERVICES, INC. AND ITS WHOLLY - OWNED SUBSIDIARY, ORRSTOWN BANK CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME Six Months Ended June 30, 2000 and 1999 (UNAUDITED) 2000 1999 ------- ------- (000 Omitted) Net Income $ 2,023 $ 1,838 Other comprehensive income, net of tax Unrealized gain (loss) on investment securities available for sale (111) (876) Comprehensive Income $ 1,912 $ 962 ======= ======= The accompanying notes are integral part of these condensed financial statements. Page 6 ORRSTOWN FINANCIAL SERVICES, INC. AND ITS WHOLLY - OWNED SUBSIDIARY, ORRSTOWN BANK CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS Six Months Ended June 30, 2000 and 1999 (UNAUDITED)
2000 1999 (Unaudited) (Unaudited) ----------- ----------- (000 Omitted) Cash flows from operating activities: Net income $ 2,023 $ 1,838 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 224 232 Provision for loan losses 150 180 Other, net (478) (538) -------- -------- Net cash provided by operating activities 1,919 1,712 Cash flows from investing activities: Net decrease in interest bearing deposits with banks 22 6 Purchase of available for sale securities (10,737) (9,016) Sales and maturities of available for sale securities 6,828 3,829 Net (increase) in loans (12,093) (11,372) Purchases of bank premises and equipment (2,592) (542) -------- -------- Net cash (used) by investing activities (18,572) (17,095) -------- -------- Cash flows from financing activities: Net increase in deposits 8,195 4,771 Cash dividends paid (623) (534) Dividend reinvestment plan purchases 391 143 Net increase in short term purchased funds 11,244 2,642 Payments on long term debt (6) (6) -------- -------- Net cash provided by financing activities 19,201 7,016 -------- -------- Net increase (decrease) in cash and cash equivalents 2,548 (8,367) Cash and cash equivalents at beginning of period 8,585 15,100 -------- -------- Cash and cash equivalents at end of period $ 11,133 $ 6,733 ======== ======== Supplemental disclosure of cash flows information: Cash paid during the period for: Interest $ 2,488 $ 3,887 Income Taxes 666 650 Supplemental schedule of noncash investing and financing activities: Unrealized gain (loss) on investments available for sale (net of deferred taxes of $(58) and $(450) at June 30, 2000 and 1999, respectively) (111) (876) The accompanying notes are an integral part of these condensed financial statements.
Page 7 ORRSTOWN FINANCIAL SERVICES, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS June 30, 2000 (UNAUDITED) Review of Interim Financial Statements The condensed consolidated financial statements as of and for the three and six month periods ended June 30, 2000 and 1999 have been reviewed by independent certified public accountants. Their report on their review is attached as Exhibit 99 to this 10-Q NOTE 1. Basis of Presentation The financial information presented at and for the three months ended and six months ended June 30, 2000 and 1999 is unaudited. Information presented at December 31, 1999 is condensed from audited year-end financial statements. However, unaudited information reflects all adjustments (consisting solely of normal recurring adjustments) that are, in the opinion of management, necessary for a fair presentation of the financial position, results of operations and cash flows for the interim period. NOTE 2. Principles of Consolidation The consolidated financial statements include the accounts of the corporation and its wholly-owned subsidiary, Orrstown Bank. All significant intercompany transactions and accounts have been eliminated. NOTE 3. Cash Flows For purposes of the statements of cash flows, the corporation has defined cash and cash equivalents as those amounts included in the balance sheet captions " cash and due from banks " and " federal funds sold ". As permitted by Statement of Financial Accounting Standards No. 104, the corporation has elected to present the net increase or decrease in deposits in banks, loans and time deposits in the statement of cash flows. NOTE 4. Federal Income Taxes For financial reporting purposes the provision for loan losses charged to operating expense is based on management's judgment, whereas for federal income tax purposes, the amount allowable under present tax law is deducted. Additionally, certain expenses are charged to operating expense in the period the liability is incurred for financial reporting purposes, whereas for federal income tax purposes, these expenses are deducted when paid. As a result of these timing differences, deferred income taxes are provided in the financial statements. Income tax expense is less than the amount calculated using the statutory tax rate primarily as a result of tax exempt income earned from state and political subdivision obligations. NOTE 5. Other Commitments In the normal course of business, the bank makes various commitments and incurs certain contingent liabilities which are not reflected in the accompanying financial statements. These commitments include various guarantees and commitments to extend credit and the bank does not anticipate any losses as a result of these transactions. Page 8 NOTE 6. Changes in Common Stock In October, 1999 the Board of Directors of Orrstown Financial Services, Inc. approved a 7 1/2 % stock dividend payable November 19, 1999 to shareholders of record November 1, 1999. All presentation amounts have been adjusted to give retroactive recognition to this event. NOTE 7. Investment Securities Management determines the appropriate classification of securities at the time of purchase. If management has the intent and the corporation has the ability at the time of purchase to hold securities until maturity or on a long - term basis, they are classified as securities held to maturity and carried at amortized historical cost. Securities to be held for indefinite periods of time and not intended to be held to maturity or on a long - term basis are classified as available for sale and carried at fair value. Securities held for indefinite periods of time include securities that management intends to use as part of its asset and liability management strategy and that may be sold in response to changes in interest rates, resultant prepayment risk and other factors related to interest rate and resultant prepayment risk changes. Realized gains and losses on dispositions are based on the net proceeds and the adjusted book value of the securities sold, using the specific indentification method. Unrealized gains and losses on investment securities available for sale are based on the difference between book value and fair value of each security. These gains and losses are credited or charged to shareholders' equity, whereas realized gains and losses flow through the corporation's operations. Management has classified all investments securities as "available for sale". At June 30, 2000 amortized cost exceeded fair value by $1,044,000. This resulted in a decrease in stockholders' equity of $689,000 after recognizing the tax effects of the unrealized losses. At December 31, 1999, amortized cost exceeded fair market value by $ 875,000 resulting in a decrease in stockholders' equity of $578,000 after recognizing the tax effects of the unrealized issues. Page 9 ORRSTOWN FINANCIAL SERVICES, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS Summary Orrstown Financial Services, Inc. recorded net income of $ 1,074,000 for the second quarter of 2000 compared to $ 989,000 for the same period in 1999, representing an increase of $ 85,000 or 8.6 %. Net income per share was $ .48 during 2000's second quarter up $ .03 from the $ .45 earned during 1999's second quarter. Net income for the first six months of 2000 was $ 2,023,000 compared to $ 1,838,000 for the same period in 1999, representing an increase of $185,000 or 10.1%. Net income per share for the first six months of 2000 was $ 0.91 up $.08 from the $ 0.83 per share realized during the six months ended June 30, 1999. Robust balance sheet growth has fueled the net income increases during 2000 since net interest margin has tightened slightly. The net interest margin remains well ahead of peer averages, however, as does the generation of noninterest income. Noninterest expenses have increased during 2000 due to growth and the fact that a ninth full services branch and an expanded operations center were placed in service near the end of 2000's second quarter. Sequentially, net income increased nicely with second quarter 2000 income up 13.2% or $125,000 over first quarter 2000 net income. The following statistics compare 2000's year to date performance to that of 1999: Second Quarter Six Months Year to Date 2000 1999 2000 1999 ----- ----- ----- ----- Return on average assets 1.54% 1.62% 1.48% 1.54% Return on average equity 18.53% 17.92% 17.77% 16.95% Average equity / Average assets 8.30% 9.06% 8.32% 9.07% A more detailed discussion of the elements having the greatest impact on net income follows. Net Interest Income Second Quarter 2000 vs. Second Quarter 1999 Net interest income for the second quarter of 2000 was $ 2,852,000 representing a growth of $ 360,000, or 14.4%, over the $ 2,492,000 realized during 1999's second quarter. The growth in net interest income is driven by volume factors since spreads have been flat to slightly tightening. Six Months 2000 vs. Six Months 1999 Net interest income for the first six months of 2000 was $5,547,000 representing an increase of $668,000 or 13.7 %, over the $ 4,879,000 generated during the first six months of 1999. Volume factors have generated the gains since rate factors tightened minimally. The table that follows states rates on a fully taxable equivalent basis, (F.T.E.) and demonstrates the aforementioned effects:
Second Quarter Six Months Year To Date ------------------------------------------------- -------------------------------------------------- 2000 1999 2000 1999 ----------------------- ---------------------- ---------------------- ----------------------- (in thousands) Avg. Balances Rates Avg. Balances Rates Avg. Balances Rates Avg. Balances Rates ------------- ------ ------------- ------ ------------- ------ ------------- ----- Interest earning assets $ 259,000 8.48% $226,613 8.11% $253,920 8.15% $223,578 8.13% Interest bearing liabilities 227,622 4.36% 193,720 4.01% 223,050 4.03% 191,989 4.05% --------- ----- -------- ----- -------- ----- -------- ----- Free Funds $ 31,378 $ 32,893 $ 30,870 $ 31,589 ========= ======== ======== ======== Net interest income $ 2,852 $ 2,492 $ 5,547 $ 4,879 ========= ======== ======== ======== Net interest spread (F.T.E.) 4.12% 4.10% 4.09% 4.08% ===== ===== ===== ===== Free funds ratio 12.12% 14.52% 12.16% 14.13% ===== ===== ===== ===== Net interest margin ( F.T.E ) 4.65% 4.67% 4.62% 4.65% ===== ===== ===== =====
Page 10 Other Income and Other Expenses Second Quarter 2000 vs. Second Quarter 1999 Other income increased $42,000, or 4.9%, from $865,000 during the second quarter of 1999 to $898,000 during the second quarter of 2000. Increases in trust department income were the most significant and helped offset slight declines in service charge income and brokerage income. Other expenses rose $276,000, or 14.4%, from $1,920,000 for second quarter 1999 to $2,196,000 for 2000's second quarter. Increases were across all categories and the percentage increase overall approximated the increase in the size of the company over those time periods. The opening of the ninth full service branch in Silver Spring, near Mechanicsburg, Pennsylvania, and an expanded operation center in Shippensburg, Pennsylvania contributed to cost increases during the quarter. The improved operations center and system changes effected during 1999 should improve operating efficiency in future quarters. Six Months 2000 vs. Six Months 1999 Other income increased $139,000, or 8.9%, to $1,699,000 from $1,560,000 a year ago. Trust department increases were the primary source of growth. Other expenses rose $584,000, or 15.6%, to $4,333,000 from $3,749,000 a year earlier with the aforementioned general growth in size; the opening of a ninth branch, which helped increase staff, and expanded operating systems and facilities all contributing to the increase. Income Tax Expense Income tax expense increased $56,000, or 16.0%, during 2000's second quarter versus second quarter 1999. Income tax expense rose $68,000, or 10.1% for the first six months of 2000 versus the same period a year ago. The growth in income tax expense is the byproduct of similar increases in pretax income since effective federal income tax rates has remained relatively stable, as shown below: Second Quarter Six Months Year to Date --------------- ----------------------- 2000 1999 2000 1999 ---- ---- ---- ---- Effective income tax rate 27.4% 26.1% 26.8% 26.8% The marginal federal income tax bracket is 34 % for all periods presented. Page 11 PROVISION AND ALLOWANCE FOR LOAN LOSSES The provision for loan losses and the other changes in the allowance for loan losses are shown below (in thousands): Quarter Ended Six Months Ended June 30 June 30 ------------------ ------------------ 2000 1999 2000 1999 ------ ------ ------ ------ Balance, beginning of Period $2,523 $2,057 $2,455 $1,971 Recoveries 3 1 4 2 Provision for loan loss charged to income 75 90 150 180 ------ ------ ------ ------ Total 2,601 2,148 2,609 2,153 Losses 47 99 55 104 ------ ------ ------ ------ Balance, end of period $2,554 $2,049 $2,554 $2,049 ====== ====== ====== ====== In the opinion of management, the allowance, when taken as a whole, is adequate to absorb reasonably estimated loan losses inherent in the Bank's loan portfolio. The unallocated portion of the allowance for loan losses exceeds 60% at June 30, 2000. Loans 90 days or more past due (still accruing interest) and those on nonaccrual status were as follows at June 30 (in thousands): 90 Days or More Past Due Nonaccrual Status ---------------------- ---------------------- 2000 1999 2000 1999 --------- -------- -------- --------- Real estate mortgage $ 101 $ 242 $ 41 $ 0 Installment loans 22 44 29 19 Commercial loans 312 0 45 45 Credit card 0 2 0 0 --------- -------- -------- --------- Total $ 435 $ 288 $ 115 $ 64 ========= ======== ======== ========= There were no restructured loans for any of the time periods set forth above. Any loans classified for regulatory purposes as loss, doubtful, substandard or special mention that have not been disclosed under Item III of Industry Guide 3 do not represent or result from trends or uncertainties which management reasonably expects will materially impact future operating results, liquidity or capital resources. Page 12 CAPITAL RESOURCES AND BALANCE SHEET FLUCTUATIONS A comparison of Orrstown Financial Services' capital ratios to regulatory minimum requirements at June 30, 2000 is as follows: Orrstown Financial Regulatory Minimum Services Requirements ------------------ ------------------ Leverage ratio 8.46% 4 % Risk based capital ratios: Tier I (core capital) 12.46% 4 % Combined tier I and tier II (core capital plus allowance for loan losses) 13.71% 8 % The growth experienced during 2000 has been supported by capital growth in the form of retained earnings and the popularity of the dividend reinvestment plan which has added $391,000 to equity. Equity represented 8.23% of assets at June 30, 2000 which is down slightly from 8.25% at December 31, 1999. Loan and investment securities has been funded partially by a temporary increase in short term purchased funds, most of which are customer repurchase agreements, while deposit growth has funded the two aforementioned building projects plus residual loan amounts. The opening of our ninth full service branch at Silver Spring, near Mechanicsburg, Pennsylvania on June 29, 2000 should allow the reduction of purchased funds during 2000's third quarter. All balance sheet fluctuations exceeding 5 % have been created by either the growth that has been experienced during 2000 or single day fluctuations. Management is not aware of any current recommendations by regulatory authorities which, if implemented, would have a material effect on the corporation's liquidity, capital resources or operations. Page 13 PART II - OTHER INFORMATION Page 14 OTHER INFORMATION Item 1 - Legal Proceedings None Item 2 - Changes in Securities None Item 3 - Defaults Upon Senior Securities Not applicable Item 4 - Submission of Matters to a Vote of Security Holders The annual meeting of shareholders of Orrstown Financial Services, Inc. was held on April 11, 2000 and shareholders approved the three matters upon which they were asked to vote. The approved matters included: a.) The election of three directors to Class C for three year terms expiring in 2003. b.) The ratification of the adoption by the Board of Directors of the Orrstown Financial Services, Inc. Employee Stock Purchase Plan c.) The ratification of the adoption by the Board of Directors of the Orrstown Financial Services, Inc. Employee Stock Option Plan of 2000. Item 5 - Other Information None Item 6 - Exhibits and Reports on Form 8 - K (a) Exhibits: Exhibit Number Referred to Item 601 Of Regulation S-K Description of Exhibit ----------------------------------- ---------------------- 27 Financial data schedule 99 Report of independent accountant's on interim financial statements (b) Reports on Form 8 - K - None Page 15 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 thereunto duly authorized. /s/ Kenneth R. Shoemaker ---------------------------------------- (Kenneth R. Shoemaker, President) (Duly Authorized Officer) August 10, 2000 /s/ Bradley S. Everly Date ------------------ ---------------------------------------- (Bradley S. Everly, Senior Vice President) (Chief Financial Officer) /s/ Robert B. Russell ---------------------------------------- (Robert B. Russell, Controller) (Chief Accounting Officer) Page 16 EX-27 2 0002.txt FDS --
9 6-MOS DEC-31-2000 JUN-30-2000 11,133 93 0 0 63,567 63,567 63,567 192,733 2,554 286,090 212,584 26,650 2,492 20,816 0 0 232 23,548 286,090 8,081 2,158 72 10,311 3,513 4,762 5,547 100 (3) 4,333 2,763 2,023 0 0 2,023 0.91 0.91 4.62 115 435 0 0 2,455 55 4 2,554 2,554 0 1,639
EX-99 3 0003.txt ACCOUNTANT REPORT EXHIBIT 99 INDEPENDENT ACCOUNTANT'S REPORT Board of Directors Orrstown Financial Services, Inc. Shippensburg, Pennsylvania We have reviewed the accompanying consolidated balance sheet of Orrstown Financial Services, Inc. and Subsidiary as of June 30, 2000 and the related consolidated statements of income for the three and six months ended June 30, 2000 and 1999 and consolidated statements of comprehensive income for the three and six months ended June 30, 2000 and 1999 and consolidated statements of cash flows for the six months ended June 30, 2000 and 1999. These financial statements are the responsibility of the corporation's management. We conducted our reviews in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical procedures to financial data and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the consolidated financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our reviews, we are not aware of any material modifications that should be made to the accompanying consolidated financial statements for them to be in conformity with generally accepted accounting principles. /s/ Smith Elliott Kearns & Company, LLC --------------------------------------- SMITH ELLIOTT KEARNS & COMPANY, LLC Chambersburg, Pennsylvania August 11, 2000 -----END PRIVACY-ENHANCED MESSAGE-----