Orrstown Financial Services reports Q2 net income of $19.4 million

HARRISBURG, Pa. - Orrstown Financial Services, Inc. (NASDAQ:ORRF), a $662 million market cap regional bank with a "GOOD" InvestingPro Financial Health score, reported net income of $19.4 million, or $1.01 per diluted share, for the second quarter ended June 30, 2025, compared to $18.1 million, or $0.93 per diluted share, for the first quarter.

Excluding merger-related expenses of $1.0 million in the second quarter, adjusted net income was $20.2 million, or $1.04 per diluted share, compared to adjusted net income of $19.3 million, or $1.00 per diluted share, in the first quarter.

The company’s net interest margin improved to 4.07% from 4.00% in the previous quarter, primarily due to a 12 basis point decline in cost of funds. Net interest income increased to $49.5 million from $48.8 million in the first quarter. According to InvestingPro analysis, the company is currently trading near its Fair Value, with analysts maintaining a bullish consensus and setting price targets between $35 and $39.

Loans increased by $55.4 million, or 6% annualized, from the previous quarter to $3.9 billion. Commercial loans grew by $16.1 million while residential mortgages increased by $37.9 million. The increase included a $25.4 million purchase of property assessed clean energy loans.

Noninterest income rose by $1.3 million to $12.9 million, driven by increases in swap fee income, service charges, and mortgage banking activities. Noninterest expenses decreased by $0.6 million to $37.6 million, reflecting lower merger-related expenses.

The efficiency ratio improved to 60.3% from 63.2% in the first quarter. Excluding merger-related expenses, the adjusted efficiency ratio was 58.7% compared to 60.5% in the previous quarter.

Credit quality remained strong with classified loans decreasing by $10.4 million to $65.8 million. The allowance for credit losses to total loans ratio was 1.22% at quarter-end.

The company’s board of directors declared a cash dividend of $0.27 per common share, representing a $0.01 increase from the previous quarter. The dividend is payable August 12, 2025, to shareholders of record as of August 5, 2025. InvestingPro data shows that Orrstown has maintained dividend payments for 11 consecutive years, with a current yield of 3.1% and impressive dividend growth of 30% over the last twelve months.

Based on a press release statement, Orrstown Financial Services’ tangible book value per share increased to $22.77 from $21.99 at the end of the first quarter. Trading at a P/E ratio of 18.3x and price-to-book of 1.24x, the stock has delivered a 9.4% return over the past year. Discover more detailed analysis and 8 additional key insights with an InvestingPro subscription, including the comprehensive Pro Research Report available for this stock.

In other recent news, Orrstown Financial Services reported a strong performance for the first quarter of 2025, exceeding analysts’ expectations with an adjusted earnings per share of $1.00, compared to the forecasted $0.94. The company also reported revenue of $60.39 million, slightly above the anticipated $60.13 million. Raymond James responded to these results by raising Orrstown’s price target from $35.00 to $37.00, while maintaining an Outperform rating, highlighting the company’s net interest margin outperformance and strategic de-risking of its loan portfolio. Similarly, Keefe, Bruyette & Woods reiterated their Outperform rating for Orrstown, citing confidence in the company’s strategic plans and recent executive appointments.

Orrstown Financial Services also announced a share repurchase program, authorizing the buyback of up to 500,000 shares, representing about 2.5% of its outstanding shares. Additionally, Orrstown Bank, a subsidiary of Orrstown Financial Services, elevated Zachary Khuri to Chief Revenue Officer and Joshua Hocker to Market President for the Central Pennsylvania Region. These strategic appointments are part of the company’s efforts to strengthen its leadership team. The recent developments reflect Orrstown’s ongoing strategies to enhance its market position and operational capabilities.

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