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Orrstown Financial Services, Inc. Reports Earnings for the Second Quarter 2023
Source: Nasdaq GlobeNewswire / 25 Jul 2023 15:02:52 America/Chicago
- Net income of $9.8 million and diluted earnings per share of $0.94 for the three months ended June 30, 2023 compared to net income of $9.2 million and diluted earnings per share of $0.87 for the three months ended March 31, 2023 and net income of $8.9 million and diluted earnings per share of $0.83 for the three months ended June 30, 2022;
- Second quarter of 2023 return on average assets of 1.32% and return on average equity of 16.27% compared to return on average assets of 1.27% and return on average equity of 15.88% during the first quarter of 2023;
- Net interest margin, on a tax equivalent basis, was 3.83% in the second quarter of 2023 as compared to 3.94% in the first quarter of 2023 and 3.68% for the three months ended June 30, 2022; increased funding costs have led to modest margin compression;
- Non-interest income increased by $1.1 million to $7.2 million for the three months ended June 30, 2023 from $6.1 million for the three months ended March 31, 2023 primarily due to a $1.2 million gain on the sale of the Bank's Path Valley branch;
- Non-interest expense of $20.7 million for the three months ended June 30, 2023 was $0.5 million higher than the prior linked quarter due to severance charges of $0.5 million;
- Second quarter deposit growth was $7.2 million, despite the sale of deposits totaling $18.7 million from the Bank's Path Valley branch; deposits that are uninsured and not collateralized were 16% of total deposits at June 30, 2023 compared to 19% of total deposits at March 31, 2023;
- Second quarter commercial loan growth, excluding SBA PPP loan forgiveness activity, was $20.3 million, or 5% annualized; year-to-date commercial loan growth of $83.5 million, or 10% annualized;
- Tangible book value per share was $21.19 at June 30, 2023 compared to $20.50 at March 31, 2023. The tangible common equity ratio improved from 7.3% at March 31, 2023 to 7.5% at June 30, 2023;
- The Company repurchased 76,330 shares of its common stock at an average price of $18.58 per share during the second quarter of 2023;
- The Board of Directors declared a cash dividend of $0.20 per common share, payable August 15, 2023, to shareholders of record as of August 8, 2023.
SHIPPENSBURG, Pa., July 25, 2023 (GLOBE NEWSWIRE) -- Orrstown Financial Services, Inc. ("Orrstown" or the “Company”) (NASDAQ: ORRF), the parent company of Orrstown Bank (the “Bank”), announced earnings for the three months ended June 30, 2023. Net income totaled $9.8 million for the three months ended June 30, 2023, compared to $9.2 million for the three months ended March 31, 2023 and $8.9 million for the three months ended June 30, 2022. Diluted earnings per share totaled $0.94 for the three months ended June 30, 2023, compared to $0.87 for the three months ended March 31, 2023 and $0.83 for the three months ended June 30, 2022.
“Orrstown delivered another quarter of earnings growth despite headwinds from rising interest rates and the inverted yield curve. Due to disciplined pricing of both loans and deposits, our net interest margin remained strong at 3.83% for the second quarter of 2023. Deposit stability has enabled the Bank to maintain access to significant funding sources as core deposits represent 86% of total deposits and our loan-to-deposit ratio was 89% at June 30, 2023,” commented Thomas R. Quinn, Jr., President and Chief Executive Officer.
“Looking forward, we expect to continue to build capital through earnings as we grow prudently, while simultaneously seizing opportunities to maximize shareholder value. As we move further away from the recent disruptions in the banking industry, we are mindful of the lessons learned and remain focused on meeting the needs of our clients to ensure confidence in Orrstown and the industry as a whole. We believe that our continued focus on financial performance and client relationships enhances our prospects for long-term success," Quinn added.
DISCUSSION OF RESULTS
Balance Sheet
Loans
Loans held for investment, which includes SBA PPP loans, increased by $26.9 million from March 31, 2023 to June 30, 2023, or 5% annualized. Commercial loans, excluding SBA PPP loan forgiveness activity, increased by $20.3 million, or 5% annualized, from March 31, 2023 to June 30, 2023. SBA PPP loans, net of deferred fees and costs, declined by $3.6 million to $7.2 million at June 30, 2023 from $10.8 million at March 31, 2023 due to forgiveness and payment activity. The first lien residential mortgage portfolio increased by $8.8 million, or 15% annualized, in the three months ended June 30, 2023.
Investment Securities
Investment securities, which are all available-for-sale, decreased by $11.9 million to $521.2 million at June 30, 2023 compared to $533.1 million at March 31, 2023. Paydowns totaled $7.8 million during the second quarter of 2023. Net unrealized losses on investment securities increased by $2.8 million during the second quarter primarily due to higher interest rates at June 30, 2023. The overall duration of the Company's investment securities portfolio is 4.6 years. The Company has sufficient access to liquidity such that management does not believe it would be necessary to sell any of its investment securities at a loss to offset any unexpected deposit outflows. Management believes the structure of the Bank's investment portfolio is appropriately aligned with the rest of the balance sheet to protect against significant and unexpected charges against earnings and capital. See Appendix B for a summary of the Bank's investment securities at June 30, 2023, highlighting their concentrations, credit ratings and credit enhancement levels.
Deposits
Deposits increased by $7.2 million, totaling approximately $2.5 billion at both June 30, 2023 and March 31, 2023. In the second quarter of 2023, time deposits increased by $43.4 million, or 58% annualized, and interest-bearing demand deposits increased by $33.0 million, or 13% annualized. These increases were partially offset by decreases in noninterest-bearing demand deposits of $28.7 million, or 23% annualized, money market deposits of $23.7 million, or 19% annualized, and savings deposits of $16.8 million, or 30% annualized. The increase in time deposits was attributable to promotional offerings of up to 18-month terms. The declines in the noninterest-bearing, money market and savings deposit categories were primarily the result of clients seeking higher-yielding products, including reciprocal deposits. At June 30, 2023, deposits that are uninsured and not collateralized totaled $409.1 million, or 16%, of total deposits compared to $474.2 million, or 19%, of total deposits at March 31, 2023. The Bank's loan-to-deposit ratio of 89% at June 30, 2023 was only modestly higher than 88% at March 31, 2023.
The Bank completed the previously announced sale of its Path Valley branch on May 12, 2023. This sale included deposits of approximately $18.7 million, which were sold at a premium of 6.0%, as well as the building and land.
Borrowings
The Bank actively manages its liquidity position through its various sources of funding to meet the credit needs of its clients. FHLB advances and other borrowings decreased by $25.6 million to $136.7 million at June 30, 2023 compared to $162.3 million at March 31, 2023. The Bank repaid some overnight borrowings and FHLB advances during the second quarter of 2023 based on available liquidity from deposits and paydowns on investment securities. The Bank had available alternative funding sources, such as the FHLB advances and other wholesale options, of approximately $1.0 billion at June 30, 2023.
Income Statement
Net Interest Income and Margin
Net interest income was $26.4 million for the three months ended June 30, 2023 compared to $26.3 million for the three months ended March 31, 2023. The net interest margin, on a tax equivalent basis, remained strong, but decreased to 3.83% in the second quarter of 2023 from 3.94% in the first quarter of 2023. The decrease in net interest margin was primarily the result of increased funding costs due to competitive pressures on deposits and higher cost borrowings.
Interest income on loans increased by $2.5 million to $31.2 million for the three months ended June 30, 2023 compared to $28.7 million for the three months ended March 31, 2023. Loan growth and higher interest rates on loans were the primary drivers of this increase. Interest income on loans for the three months ended June 30, 2023 included prepayment fee income of $0.2 million, an increase of $0.1 million from the three months ended March 31, 2023, which resulted in an increase of two basis points in net interest margin.
Interest income on investment securities increased by $0.2 million to $5.4 million for the three months ended June 30, 2023 from $5.2 million for the first quarter of 2023. The increase reflects higher yields on adjustable-rate securities.
Interest expense increased by $2.5 million to $10.5 million for the three months ended June 30, 2023 compared to $8.0 million for the three months ended March 31, 2023 due primarily to increasing deposit and borrowing rates for both existing and new balances. In addition, average interest-bearing deposits increased by $43.3 million and average borrowings increased by $25.5 million during the three months ended June 30, 2023.
Provision for Credit Losses
The allowance for credit losses remained at approximately $28.4 million at both June 30, 2023 and March 31, 2023. The allowance for credit losses to total loans was 1.27% at June 30, 2023 compared to 1.28% at March 31, 2023. The Company recorded a provision for credit losses of $0.4 million for the three months ended June 30, 2023 compared to $0.7 million for the three months ended March 31, 2023. Classified loans decreased by $7.7 million to $26.3 million at June 30, 2023 from $34.0 million at March 31, 2023 primarily due to net upgrades and repayments within this category. Special mention loans increased by $13.2 million from $32.3 million at March 31, 2023 to $45.5 million at June 30, 2023 due to net downgrades partially offset by repayments. The risk rating downgrades to Special Mention consisted of five clients spread across various commercial loan classes; however, other commercial loans in these categories do not reflect similar risk characteristics that led to these downgrades. Non-accrual loans decreased by $0.1 million to $21.1 million at June 30, 2023 from $21.2 million at March 31, 2023. The nonaccrual loans to total loans metric improved to 0.94% at June 30, 2023 from 0.96% at March 31, 2023. Net charge-offs were $0.4 million for the three months ended June 30, 2023 compared to net recoveries of $0.1 million for the three months ended March 31, 2023. Management believes the allowance for credit losses to be adequate based on current asset quality metrics and economic conditions.
Management regularly analyzes the commercial real estate portfolio, which includes the review of occupancy, cash flows, expenses and expiring leases, as well as the location of the real estate. At June 30, 2023, the Company had $236.7 million in loans related to office space compared to $236.2 million at March 31, 2023. Management believes that the office space portfolio is well-diversified and includes only limited exposure to properties located in major metro markets (approximately 3% of the total commercial real estate loan balance as of June 30, 2023).
Noninterest Income
Noninterest income increased by $1.1 million to $7.2 million in the three months ended June 30, 2023 compared to $6.1 million in the three months ended March 31, 2023.
Other income in the three months ended June 30, 2023 includes a gain of $1.2 million from the sale of the Bank's Path Valley branch.
Mortgage banking income decreased by $0.4 million from $0.5 million in the first quarter of 2023 to $0.1 million in the second quarter of 2023. Market conditions and elevated interest rates continued to hinder mortgage production during the second quarter of 2023. Due to the current mortgage interest rates, clients have shifted from conventional fixed-rate mortgages to adjustable-rate products, which has reduced the residential mortgage loan pipeline for sale in the secondary market. Mortgage loans sold totaled $5.1 million in the second quarter of 2023 compared to $9.6 million in the first quarter of 2023 and $22.6 million in the second quarter of 2022. During the three months ended June 30, 2023, mortgage interest rates increased, which resulted in a decline to the fair value mark of the Bank's held-for-sale loans of $0.1 million compared to an increase in the fair value mark of $0.3 million during the three months ended March 31, 2023.
During the second quarter of 2023, the Company recorded swap fee income of $0.2 million for the three months ended June 30, 2023 compared to none in the three months ended March 31, 2023. Swap fee income fluctuates based on market conditions and client demand.
Noninterest Expenses
Noninterest expenses increased by $0.4 million to $20.7 million in the three months ended June 30, 2023 from $20.3 million in the three months ended March 31, 2023.
Salaries and benefits expense increased by $0.9 million to $13.1 million for the three months ended March 31, 2023 compared to $12.2 million for the three months ended March 31, 2023. The increase was attributed primarily to higher healthcare costs of $0.5 million from increased claim volumes and employee severance costs of $0.5 million.
Advertising and bank promotions expense increased by $0.5 million to $0.9 million in the three months ended June 30, 2023 from $0.4 million for the three months ended March 31, 2023 due to $0.5 million in contributions to tax credit programs during the second quarter of 2023. Taxes other than income decreased by $0.5 million to less than $0.1 million in the three months ended June 30, 2023 compared to $0.5 million in the three months ended March 31, 2023. This decrease reflects the tax credits recognized on the contributions during the second quarter of 2023.
Professional fees decreased $0.2 million to $0.5 million in the three months ended June 30, 2023 from $0.7 million in the three months ended March 31, 2023 due to a decrease in legal costs, primarily due to the prior settlement of litigation, and consulting fees.
Other operating expenses decreased by $0.2 million to $2.0 million during the second quarter of 2023 compared to $2.2 million during the first quarter of 2023. This decrease included a reduction of $0.2 million in mark-to-market losses on derivatives not designated as hedging instruments for the three months ended June 30, 2023 compared to the three months ended March 31, 2023. The remaining fluctuation is attributable to normal business operations.
Income Taxes
The Company's effective tax rate for the second quarter of 2023 was 20.6% compared to 19.6% for the first quarter of 2023. The Company's effective tax rate for the three months ended June 30, 2023 is less than the 21% federal statutory rate due to tax-exempt income, including interest earned on tax-exempt loans and securities and income from life insurance policies, as well as tax credits. The increase in the effective tax rate was primarily due to increases in taxable income and the disallowed portion of interest expense against earnings in association with the Bank's tax-exempt investments under the Tax Equity and Fiscal Responsibility Act of 1982.
Capital
Shareholders’ equity totaled $245.6 million at June 30, 2023, an increase of $5.4 million from $240.2 million at March 31, 2023. The increase was primarily attributable to net income of $9.8 million, partially offset by dividends paid of $2.2 million, other comprehensive losses of $1.4 million, and share repurchase costs of $1.2 million. Other comprehensive losses increased during the second quarter of 2023 due to after-tax declines of $2.2 million in net unrealized losses on investment securities partially offset by net unrealized gains on cash flow hedges of $0.8 million.
Tangible book value per share(1) increased to $21.19 per share at June 30, 2023 from $20.50 per share at March 31, 2023 primarily due to the increase in shareholders' equity.
The Company's tangible common equity ratio increased to 7.5% at June 30, 2023 from 7.3% at March 31, 2023 primarily due to an increase in tangible equity from net income. The Company's total risk-based capital ratio was 13.0% at June 30, 2023, up from 12.8% at March 31, 2023. The Company's Tier 1 leverage ratio increased from 8.5% at March 31, 2023 to 8.6% at June 30, 2023. At June 30, 2023, all four capital ratios applicable to the Company were above regulatory minimum levels to be deemed “well capitalized” under current bank regulatory guidelines. The Company continues to believe that capital is adequate to support the risks inherent in the balance sheet, as well as growth requirements.
The Board of Directors approved a cash dividend of $0.20 per share, payable on August 15, 2023, to shareholders of record as of August 8, 2023.
(1) Non-GAAP measure. See Appendix A for additional information.
Investor Relations Contact: Neelesh Kalani Executive Vice President, Chief Financial Officer Phone (717) 510-7097 ORRSTOWN FINANCIAL SERVICES, INC. FINANCIAL HIGHLIGHTS (Unaudited) Three Months Ended Six Months Ended June 30, June 30, June 30, June 30, (Dollars in thousands) 2023 2022 2023 2022 Profitability for the period: Net interest income $ 26,375 $ 24,118 $ 52,669 $ 46,691 Provision for credit losses 399 1,775 1,128 2,075 Noninterest income 7,158 7,194 13,236 14,668 Noninterest expenses 20,749 18,794 41,004 38,158 Income before income tax expense 12,385 10,743 23,773 21,126 Income tax expense 2,547 1,872 4,779 3,887 Net income available to common shareholders $ 9,838 $ 8,871 $ 18,994 $ 17,239 Financial ratios: Return on average assets(1) 1.32 % 1.25 % 1.29 % 1.22 % Return on average equity(1) 16.27 % 14.42 % 16.08 % 13.51 % Net interest margin(1) 3.83 % 3.68 % 3.88 % 3.59 % Efficiency ratio 61.9 % 60.0 % 62.2 % 62.2 % Income per common share: Basic $ 0.95 $ 0.84 $ 1.83 $ 1.61 Diluted $ 0.94 $ 0.83 $ 1.82 $ 1.59 Average equity to average assets 8.11 % 8.64 % 8.04 % 9.05 % (1) Annualized. ORRSTOWN FINANCIAL SERVICES, INC. FINANCIAL HIGHLIGHTS (Unaudited) (continued) June 30, December 31, (Dollars in thousands, except per share amounts) 2023 2022 At period-end: Total assets $ 3,008,197 $ 2,922,408 Total deposits 2,522,861 2,476,246 Loans, net of allowance for credit losses 2,206,034 2,126,054 Loans held-for-sale, at fair value 6,450 10,880 Securities available for sale, at fair value 508,612 513,728 Borrowings 152,229 123,390 Subordinated notes 32,059 32,026 Shareholders' equity 245,641 228,896 Credit quality and capital ratios(1): Allowance for credit losses to total loans 1.27 % 1.17 % Total nonaccrual loans to total loans 0.94 % 0.96 % Nonperforming assets to total assets 0.70 % 0.70 % Allowance for credit losses to nonaccrual loans 135 % 122 % Total risk-based capital: Orrstown Financial Services, Inc. 13.0 % 12.7 % Orrstown Bank 12.5 % 12.3 % Tier 1 risk-based capital: Orrstown Financial Services, Inc. 10.5 % 10.3 % Orrstown Bank 11.4 % 11.2 % Tier 1 common equity risk-based capital: Orrstown Financial Services, Inc. 10.5 % 10.3 % Orrstown Bank 11.4 % 11.2 % Tier 1 leverage capital: Orrstown Financial Services, Inc. 8.6 % 8.5 % Orrstown Bank 9.3 % 9.2 % Book value per common share $ 23.15 $ 21.45 (1) Capital ratios are estimated, subject to regulatory filings. The Company elected the three-year phase in option for the day-one impact of ASU 2016-13 for current expected credit losses ("CECL") to regulatory capital. In the first year of adoption in 2023, the Company adjusted retained earnings, allowance for credit losses includable in tier 2 capital and the deferred tax assets from temporary differences in risk weighted assets by the permitted percentage of the day-one impact from adopting the new CECL standard. ORRSTOWN FINANCIAL SERVICES, INC. CONSOLIDATED BALANCE SHEETS (Unaudited) (Dollars in thousands, except per share amounts) June 30, 2023 December 31, 2022 Assets Cash and due from banks $ 31,855 $ 28,477 Interest-bearing deposits with banks 44,463 32,346 Cash and cash equivalents 76,318 60,823 Restricted investments in bank stocks 12,602 10,642 Securities available for sale (amortized cost of $552,224 and $563,278 at June 30, 2023 and December 31, 2022, respectively) 508,612 513,728 Loans held for sale, at fair value 6,450 10,880 Loans 2,234,417 2,151,232 Less: Allowance for credit losses (28,383 ) (25,178 ) Net loans 2,206,034 2,126,054 Premises and equipment, net 29,629 29,328 Cash surrender value of life insurance 72,309 71,760 Goodwill 18,724 18,724 Other intangible assets, net 2,589 3,078 Accrued interest receivable 11,773 11,027 Deferred tax assets, net 22,093 24,031 Other assets 41,064 42,333 Total assets $ 3,008,197 $ 2,922,408 Liabilities Deposits: Noninterest-bearing $ 465,938 $ 494,131 Interest-bearing 2,056,923 1,950,807 Deposits held for assumption in connection with sale of bank branch — 31,307 Total deposits 2,522,861 2,476,246 Securities sold under agreements to repurchase and federal funds purchased 15,502 17,251 FHLB advances and other borrowings 136,727 106,139 Subordinated notes 32,059 32,026 Accrued interest and other liabilities 55,407 61,850 Total liabilities 2,762,556 2,693,512 Shareholders’ Equity Preferred stock, $1.25 par value per share; 500,000 shares authorized; no shares issued or outstanding — — Common stock, no par value—$0.05205 stated value per share; 50,000,000 shares authorized; 11,208,080 shares issued and 10,611,425 outstanding at June 30, 2023; 11,229,242 shares issued and 10,671,413 outstanding at December 31, 2022 583 584 Additional paid—in capital 187,859 189,264 Retained earnings 105,239 92,473 Accumulated other comprehensive losses (34,196 ) (39,913 ) Treasury stock— 596,655 and 557,829 shares, at cost at June 30, 2023 and December 31, 2022, respectively (13,844 ) (13,512 ) Total shareholders’ equity 245,641 228,896 Total liabilities and shareholders’ equity $ 3,008,197 $ 2,922,408 ORRSTOWN FINANCIAL SERVICES, INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited) Three Months Ended Six Months Ended June 30, June 30, June 30, June 30, (In thousands) 2023 2022 2023 2022 Interest income Loans $ 31,203 $ 22,027 $ 59,947 $ 43,396 Investment securities - taxable 4,415 1,957 8,785 3,555 Investment securities - tax-exempt 865 1,131 1,730 1,853 Short-term investments 418 235 716 336 Total interest income 36,901 25,350 71,178 49,140 Interest expense Deposits 8,608 701 14,810 1,386 Securities sold under agreements to repurchase and federal funds purchased 28 7 53 14 FHLB advances and other borrowings 1,386 21 2,638 43 Subordinated notes 504 503 1,008 1,006 Total interest expense 10,526 1,232 18,509 2,449 Net interest income 26,375 24,118 52,669 46,691 Provision for credit losses 399 1,775 1,128 2,075 Net interest income after provision for credit losses 25,976 22,343 51,541 44,616 Noninterest income Service charges 1,251 1,194 2,408 2,267 Interchange income 993 1,064 1,958 2,045 Swap fee income 196 785 196 1,738 Wealth management income 2,822 2,894 5,569 5,763 Mortgage banking activities 112 498 590 1,219 Investment securities losses (2 ) (3 ) (10 ) (149 ) Other income 1,786 762 2,525 1,785 Total noninterest income 7,158 7,194 13,236 14,668 Noninterest expenses Salaries and employee benefits 13,054 11,312 25,250 22,649 Occupancy, furniture and equipment 2,266 2,423 4,599 4,990 Data processing 1,201 1,165 2,418 2,218 Advertising and bank promotions 919 881 1,324 1,236 FDIC insurance 519 190 1,023 473 Professional services 504 722 1,238 1,530 Taxes other than income 3 108 460 672 Intangible asset amortization 239 281 489 573 Other operating expenses 2,044 1,712 4,203 3,817 Total noninterest expenses 20,749 18,794 41,004 38,158 Income before income tax expense 12,385 10,743 23,773 21,126 Income tax expense 2,547 1,872 4,779 3,887 Net income $ 9,838 $ 8,871 $ 18,994 $ 17,239 Share information: Basic earnings per share $ 0.95 $ 0.84 $ 1.83 $ 1.61 Diluted earnings per share $ 0.94 $ 0.83 $ 1.82 $ 1.59 Weighted average shares - basic 10,336 10,610 10,360 10,735 Weighted average shares - diluted 10,421 10,744 10,458 10,875 ORRSTOWN FINANCIAL SERVICES, INC. ANALYSIS OF NET INTEREST INCOME Average Balances and Interest Rates, Taxable-Equivalent Basis (Unaudited) Three Months Ended 6/30/2023 3/31/2023 12/31/2022 9/30/2022 6/30/2022 Taxable- Taxable- Taxable- Taxable- Taxable- Taxable- Taxable- Taxable- Taxable- Taxable- Average Equivalent Equivalent Average Equivalent Equivalent Average Equivalent Equivalent Average Equivalent Equivalent Average Equivalent Equivalent (Dollars in thousands) Balance Interest Rate Balance Interest Rate Balance Interest Rate Balance Interest Rate Balance Interest Rate Assets Federal funds sold & interest-bearing bank balances $ 37,895 $ 418 4.42 % $ 29,599 $ 298 4.07 % $ 28,419 $ 238 3.31 % $ 38,068 $ 200 2.08 % $ 131,449 $ 235 0.72 % Investment securities (1) 526,225 5,510 4.19 525,685 5,465 4.18 512,779 5,170 4.03 528,988 4,377 3.31 523,940 3,388 2.59 Loans (1)(2)(3) 2,233,312 31,329 5.63 2,180,224 28,844 5.36 2,133,052 27,061 5.04 2,051,707 23,219 4.49 2,008,283 22,090 4.41 Total interest-earning assets 2,797,432 37,257 5.34 2,735,508 34,607 5.12 2,674,250 32,469 4.83 2,618,763 27,796 4.22 2,663,672 25,713 3.87 Other assets 191,983 197,620 202,384 196,277 192,561 Total assets $ 2,989,415 $ 2,933,128 $ 2,876,634 $ 2,815,040 $ 2,856,233 Liabilities and Shareholders' Equity Interest-bearing demand deposits $ 1,511,468 6,273 1.66 $ 1,503,421 4,862 1.31 $ 1,459,109 2,838 0.77 $ 1,379,082 912 0.26 $ 1,420,051 301 0.09 Savings deposits 204,584 135 0.26 219,408 133 0.25 228,521 132 0.23 237,462 90 0.15 236,916 63 0.11 Time deposits 326,034 2,200 2.71 275,880 1,207 1.78 254,637 609 0.95 265,015 370 0.55 275,408 337 0.49 Total interest-bearing deposits 2,042,086 8,608 1.69 1,998,709 6,202 1.26 1,942,267 3,579 0.73 1,881,559 1,372 0.29 1,932,375 701 0.15 Securities sold under agreements to repurchase and federal funds purchased 13,685 28 0.82 13,868 25 0.72 18,211 20 0.46 23,480 10 0.18 24,045 7 0.11 FHLB advances and other borrowings 132,094 1,386 4.21 106,434 1,252 4.77 48,276 509 4.21 10,394 78 3.02 1,741 21 4.74 Subordinated notes 32,049 504 6.29 32,033 504 6.29 32,016 503 6.29 32,000 504 6.29 31,985 503 6.29 Total interest-bearing liabilities 2,219,914 10,526 1.90 2,151,044 7,983 1.50 2,040,770 4,611 0.90 1,947,433 1,964 0.40 1,990,146 1,232 0.25 Noninterest-bearing demand deposits 476,123 495,562 540,275 575,777 572,171 Other liabilities 50,851 52,630 74,602 49,964 47,190 Total liabilities 2,746,888 2,699,236 2,655,647 2,573,174 2,609,507 Shareholders' equity 242,527 233,892 220,987 241,866 246,726 Total $ 2,989,415 $ 2,933,128 $ 2,876,634 $ 2,815,040 $ 2,856,233 Taxable-equivalent net interest income / net interest spread 26,731 3.44 % 26,624 3.62 % 27,858 3.93 % 25,832 3.82 % 24,481 3.62 % Taxable-equivalent net interest margin 3.83 % 3.94 % 4.14 % 3.92 % 3.68 % Taxable-equivalent adjustment (356 ) (330 ) (374 ) (377 ) (363 ) Net interest income $ 26,375 $ 26,294 $ 27,484 $ 25,455 $ 24,118 Ratio of average interest-earning assets to average interest-bearing liabilities 126 % 127 % 131 % 134 % 134 % NOTES: (1)Yields and interest income on tax-exempt assets have been computed on a taxable-equivalent basis assuming a 21% tax rate. (2)Average balances include nonaccrual loans. (3) Interest income on loans includes prepayment and late fees, where applicable. ORRSTOWN FINANCIAL SERVICES, INC. ANALYSIS OF NET INTEREST INCOME Average Balances and Interest Rates, Taxable-Equivalent Basis (Unaudited) (continued) Six Months Ended June 30, 2023 June 30, 2022 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 $ 33,770 $ 716 4.27 % $ 165,430 $ 336 0.41 % Investment securities (1) 525,957 10,975 4.19 498,210 5,900 2.37 Loans (1)(2)(3) 2,206,914 60,173 5.49 1,991,636 43,519 4.40 Total interest-earning assets 2,766,641 71,864 5.23 2,655,276 49,755 3.77 Other assets 194,786 188,454 Total assets $ 2,961,427 $ 2,843,730 Liabilities and Shareholders' Equity Interest-bearing demand deposits $ 1,507,467 11,135 1.49 $ 1,409,177 557 0.08 Savings deposits 211,955 268 0.25 232,322 120 0.10 Time deposits 301,095 3,407 2.28 286,949 709 0.50 Total interest-bearing deposits 2,020,517 14,810 1.48 1,928,448 1,386 0.14 Securities sold under agreements to repurchase and federal funds purchased 13,776 53 0.77 23,789 14 0.12 FHLB advances and other 119,335 2,638 4.46 1,795 43 4.74 Subordinated notes 32,041 1,008 6.29 31,977 1,006 6.29 Total interest-bearing liabilities 2,185,669 18,509 1.71 1,986,009 2,449 0.25 Noninterest-bearing demand deposits 485,789 556,243 Other liabilities 51,736 44,072 Total liabilities 2,723,194 2,586,324 Shareholders' equity 238,233 257,406 Total liabilities and shareholders' equity $ 2,961,427 $ 2,843,730 Taxable-equivalent net interest income / net interest spread 53,355 3.52 % 47,307 3.52 % Taxable-equivalent net interest margin 3.88 % 3.59 % Taxable-equivalent adjustment (686 ) (615 ) Net interest income $ 52,669 $ 46,692 Ratio of average interest-earning assets to average interest-bearing liabilities 127 % 134 % NOTES TO ANALYSIS OF NET INTEREST INCOME: (1) Yields and interest income on tax-exempt assets have been computed on a taxable-equivalent basis assuming a 21% tax rate. (2) Average balances include nonaccrual loans. (3) Interest income on loans includes prepayment and late fees, where applicable. ORRSTOWN FINANCIAL SERVICES, INC. HISTORICAL TRENDS IN QUARTERLY FINANCIAL DATA (Unaudited) (In thousands) June 30,
2023March 31,
2023December 31,
2022September 30,
2022June 30,
2022Profitability for the quarter: Net interest income $ 26,375 $ 26,294 $ 27,484 $ 25,455 $ 24,118 Provision for credit losses 399 729 585 1,500 1,775 Noninterest income 7,158 6,078 6,226 6,058 7,194 Noninterest expenses 20,749 20,255 21,236 36,412 18,794 Income (loss) before income taxes 12,385 11,388 11,889 (6,399 ) 10,743 Income tax expense (benefit) 2,547 2,232 2,263 (1,571 ) 1,872 Net income (loss) $ 9,838 $ 9,156 $ 9,626 $ (4,828 ) $ 8,871 Financial ratios: Return on average assets(1) 1.32 % 1.27 % 1.33 % (0.68 )% 1.25 % Return on average assets, adjusted(1)(2)(3) 1.32 % 1.27 % 1.33 % 1.12 % 1.25 % Return on average equity(1) 16.27 % 15.88 % 17.28 % (7.92 )% 14.42 % Return on average equity, adjusted(1)(2)(3) 16.27 % 15.88 % 17.28 % 13.02 % 14.42 % Net interest margin(1) 3.83 % 3.94 % 4.14 % 3.92 % 3.68 % Efficiency ratio 61.9 % 62.6 % 63.0 % 115.5 % 60.0 % Efficiency ratio, adjusted(2)(3) 61.9 % 62.6 % 63.0 % 64.3 % 60.0 % Per share information: Income (loss) per common share: Basic $ 0.95 $ 0.88 $ 0.93 $ (0.47 ) $ 0.84 Basic, adjusted(2)(3) 0.95 0.88 0.93 0.77 0.84 Diluted 0.94 0.87 0.91 (0.47 ) 0.83 Diluted, adjusted(2)(3) 0.94 0.87 0.91 0.75 0.83 Book value 23.15 22.46 21.45 20.34 22.25 Tangible book value(2) 21.19 20.50 19.47 18.34 20.23 Cash dividends paid 0.20 0.20 0.19 0.19 0.19 Average basic shares 10,336 10,385 10,382 10,369 10,610 Average diluted shares 10,421 10,496 10,550 10,529 10,744 (1)Annualized. (2) Ratio has been adjusted for the restructuring charge and provision for legal settlement for the three months ended September 30, 2022. (3) Non-GAAP based financial measure. Please refer to Appendix A - Supplemental Reporting of Non-GAAP Measures and GAAP to Non-GAAP Reconciliations for a discussion of our use of non-GAAP based financial measures, including tables reconciling GAAP and non-GAAP financial measures appearing herein. ORRSTOWN FINANCIAL SERVICES, INC. HISTORICAL TRENDS IN QUARTERLY FINANCIAL DATA (Unaudited) (continued) (In thousands) June 30,
2023March 31,
2023December 31,
2022September 30,
2022June 30,
2022Noninterest income: Service charges $ 1,251 $ 1,157 $ 1,131 $ 1,216 $ 1,194 Interchange income 993 965 996 1,014 1,064 Swap fee income 196 — 697 197 785 Wealth management income 2,822 2,747 2,535 2,953 2,894 Mortgage banking activities 112 478 202 (1,014 ) 498 Other income 1,786 739 662 1,706 762 Investment securities (losses) gains (2 ) (8 ) 3 (14 ) (3 ) Total noninterest income $ 7,158 $ 6,078 $ 6,226 $ 6,058 $ 7,194 Noninterest expenses: Salaries and employee benefits $ 13,054 $ 12,196 $ 12,650 $ 12,705 $ 11,312 Occupancy, furniture and equipment 2,266 2,333 2,442 2,380 2,423 Data processing 1,201 1,217 1,150 1,192 1,165 Advertising and bank promotions 919 405 750 278 881 FDIC insurance 519 504 316 294 190 Professional services 504 734 837 887 722 Taxes other than income 3 457 231 488 108 Intangible asset amortization 239 250 260 272 281 Provision for legal settlement — — — 13,000 — Restructuring expenses — — — 3,155 — Other operating expenses 2,044 2,159 2,600 1,761 1,712 Total noninterest expenses $ 20,749 $ 20,255 $ 21,236 $ 36,412 $ 18,794 ORRSTOWN FINANCIAL SERVICES, INC. HISTORICAL TRENDS IN QUARTERLY FINANCIAL DATA (Unaudited) (continued) (In thousands) June 30,
2023March 31,
2023December 31,
2022September 30,
2022June 30,
2022Balance Sheet at quarter end: Cash and cash equivalents $ 76,318 $ 98,323 $ 60,823 $ 66,927 $ 111,906 Restricted investments in bank stocks 12,602 12,869 10,642 6,469 6,500 Securities available for sale 508,612 520,232 513,728 503,596 512,698 Loans held for sale, at fair value 6,450 7,341 10,880 10,175 7,824 Loans: Commercial real estate: Owner occupied 366,439 339,371 315,770 313,125 287,825 Non-owner occupied 626,140 603,396 608,043 573,605 559,309 Multi-family 145,257 144,053 138,832 114,561 116,110 Non-owner occupied residential 105,504 106,390 104,604 105,267 109,141 Commercial and industrial(1) 379,905 380,683 357,774 378,574 379,729 Acquisition and development: 1-4 family residential construction 20,461 20,941 25,068 20,810 22,650 Commercial and land development 143,177 174,556 158,308 148,512 134,947 Municipal 10,638 11,329 12,173 12,683 12,957 Total commercial loans 1,797,521 1,780,719 1,720,572 1,667,137 1,622,668 Residential mortgage: First lien 235,813 227,031 229,849 220,970 202,787 Home equity – term 5,228 5,371 5,505 5,869 5,996 Home equity – lines of credit 185,099 183,340 183,241 180,267 171,269 Installment and other loans 10,756 11,040 12,065 13,684 14,909 Total loans 2,234,417 2,207,501 2,151,232 2,087,927 2,017,629 Allowance for credit losses(2) (28,383 ) (28,364 ) (25,178 ) (24,709 ) (23,279 ) Net loans held-for-investment 2,206,034 2,179,137 2,126,054 2,063,218 1,994,350 Goodwill 18,724 18,724 18,724 18,724 18,724 Other intangible assets, net 2,589 2,828 3,078 3,338 3,610 Total assets 3,008,197 3,011,548 2,922,408 2,852,092 2,824,201 Total deposits 2,522,861 2,515,626 2,476,246 2,505,853 2,478,616 Borrowings 152,229 176,315 123,390 22,632 25,965 Subordinated notes 32,059 32,042 32,026 32,010 31,994 Total shareholders' equity 245,641 240,161 228,896 217,378 237,527 (1) This balance includes $7.2 million, $10.8 million, $13.8 million, $17.0 million and $30.2 million of SBA PPP loans, net of deferred fees and costs, at June 30, 2023, March 31, 2023, December 31, 2022, September 30, 2022 and June 30, 2022, respectively.
(2) The balance at June 30, 2023 includes $2.4 million in a one-time cumulative-effect adjustment that increased the allowance for credit losses from the adoption of the new CECL standard.
ORRSTOWN FINANCIAL SERVICES, INC. HISTORICAL TRENDS IN QUARTERLY FINANCIAL DATA (Unaudited) (continued) June 30,
2023March 31,
2023December 31,
2022September 30,
2022June 30,
2022Capital and credit quality measures (1): Total risk-based capital: Orrstown Financial Services, Inc 13.0 % 12.8 % 12.7 % 12.7 % 13.5 % Orrstown Bank 12.5 % 12.4 % 12.3 % 12.9 % 13.3 % Tier 1 risk-based capital: Orrstown Financial Services, Inc 10.5 % 10.4 % 10.3 % 10.2 % 10.9 % Orrstown Bank 11.4 % 11.2 % 11.2 % 11.8 % 12.2 % Tier 1 common equity risk-based capital: Orrstown Financial Services, Inc 10.5 % 10.4 % 10.3 % 10.2 % 10.9 % Orrstown Bank 11.4 % 11.2 % 11.2 % 11.8 % 12.2 % Tier 1 leverage capital: Orrstown Financial Services, Inc 8.6 % 8.5 % 8.5 % 8.4 % 8.5 % Orrstown Bank 9.3 % 9.2 % 9.2 % 9.6 % 9.5 % Average equity to average assets 8.11 % 7.97 % 7.68 % 8.59 % 8.64 % Allowance for credit losses to total loans 1.27 % 1.28 % 1.17 % 1.18 % 1.15 % Total nonaccrual loans to total loans 0.94 % 0.96 % 0.96 % 0.25 % 0.27 % Nonperforming assets to total assets 0.70 % 0.71 % 0.70 % 0.19 % 0.19 % Allowance for credit losses to nonaccrual loans 135 % 134 % 122 % 466 % 432 % Other information: Net charge-offs (recoveries) $ 380 $ (34 ) $ 116 $ 70 $ 4 Classified loans 26,347 34,024 36,325 19,576 19,682 Nonperforming and other risk assets: Nonaccrual loans(2) 21,062 21,246 20,583 5,303 5,387 Other real estate owned — 85 — — — Total nonperforming assets 21,062 21,331 20,583 5,303 5,387 Financial difficulty modifications / Troubled debt restructurings still accruing(3) — — 682 689 568 Loans past due 90 days or more and still accruing(2) 539 28 439 232 322 Total nonperforming and other risk assets $ 21,601 $ 21,359 $ 21,704 $ 6,224 $ 6,277 (1) Capital ratios are estimated, subject to regulatory filings. The Company elected the three-year phase in option for the day-one impact of ASU 2016-13 for current expected credit losses ("CECL") to regulatory capital. In the first year of adoption in 2023, the Company adjusted retained earnings, allowance for credit losses includable in tier 2 capital and the deferred tax assets from temporary differences in risk weighted assets by the permitted percentage of the day-one impact from adopting the new CECL standard. (2) Includes zero, zero, $0.4 million, $0.2 million and $0.3 million of purchased credit impaired loans at June 30, 2023, March 31, 2023, December 31, 2022, September 30, 2022, and June 30, 2022, respectively, in accordance with ASC 310-30. Upon adoption of the CECL standard, purchased credit deteriorated loans were evaluated on an individual loan level and reported on an individual loan basis under ASC 310-20, Nonrefundable Fees and Other Costs. (3) On January 1, 2023, the Company adopted ASU No. 2022-02, Financial Instruments – Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures (“ASU 2022-02”), which eliminated the troubled debt restructuring ("TDR") accounting model and requires that the Company evaluate, based on the accounting for loan modifications, whether the borrower is experiencing financial difficulty and the modification results in a more-than-insignificant direct change in the contractual cash flows and represents a new loan or a continuation of an existing loan. At June 30, 2023 and March 31, 2023, the Company did not have loans meeting the “Financial Difficulty Modification” criteria in accordance with ASU 2022-02. Appendix A- Supplemental Reporting of Non-GAAP Measures and GAAP to Non-GAAP Reconciliations
As a result of acquisitions, the Company has intangible assets consisting of goodwill and core deposit and other intangible assets, which totaled $21.3 million and $21.8 million at June 30, 2023 and December 31, 2022, respectively. Additionally, the Company incurred $3.2 million and $13.0 million in restructuring charges and a provision for legal settlement, respectively, during the three months ended September 30, 2022.
Management believes providing certain other “non-GAAP” financial information will assist investors in their understanding of the effect on recent financial results from non-recurring charges.
Tangible book value per common share and the impact of the restructuring charge and legal settlement on net income and associated ratios, as used by the Company in this earnings release, are determined by methods other than in accordance with U.S. Generally Accepted Accounting Principles ("GAAP"). While we believe this information is a useful supplement to GAAP based measures presented in this earnings release, readers are cautioned that this non-GAAP disclosure has limitations as an analytical tool, should not be viewed as a substitute for financial measures determined in accordance with GAAP, and should not be considered in isolation or as a substitute for analysis of our results and financial condition as reported under GAAP, nor are such measures necessarily comparable to non-GAAP performance measures that may be presented by other companies. This supplemental presentation should not be construed as an inference that our future results will be unaffected by similar adjustments to be determined in accordance with GAAP.
The following tables present the computation of each non-GAAP based measure:
(dollars and shares in thousands)
Tangible Book Value per Common Share June 30,
2023March 31,
2023December 31,
2022September 30,
2022June 30,
2022Shareholders' equity (most directly comparable GAAP-based measure) $ 245,641 $ 240,161 $ 228,896 $ 217,378 $ 237,527 Less: Goodwill 18,724 18,724 18,724 18,724 18,724 Other intangible assets 2,589 2,828 3,078 3,338 3,610 Related tax effect (544 ) (594 ) (646 ) (701 ) (758 ) Tangible common equity (non-GAAP) $ 224,872 $ 219,203 $ 207,740 $ 196,017 $ 215,951 Common shares outstanding 10,611 10,692 10,671 10,686 10,676 Book value per share (most directly comparable GAAP-based measure) $ 23.15 $ 22.46 $ 21.45 $ 20.34 $ 22.25 Intangible assets per share 1.96 1.96 1.98 2.00 2.02 Tangible book value per share (non-GAAP) $ 21.19 $ 20.50 $ 19.47 $ 18.34 $ 20.23 (dollars and shares in thousands) Adjusted Ratios for Restructuring Charges and Provision for Legal Settlement September 30, 2022 Three Months Ended Net loss (A) - most directly comparable GAAP-based measure $ (4,828 ) Plus: Restructuring expenses (B) 3,155 Plus: Provision for legal settlement (B) 13,000 Less: Related tax effect (C) (3,393 ) Adjusted net income (D=A+B-C) - Non-GAAP $ 7,934 Average assets (E) $ 2,815,040 Return on average assets (= A / E) - most directly comparable GAAP-based measure (0.68)% Return on average assets, adjusted (= D / E) - Non-GAAP 1.12 % Average equity (F) $ 241,866 Return on average equity (= A / F) - most directly comparable GAAP-based measure (7.92)% Return on average equity, adjusted (= D / F) - Non-GAAP 13.02 % Weighted average shares - basic (G) - most directly comparable GAAP-based measure 10,369 Basic loss per share (= A / G) - most directly comparable GAAP-based measure $ (0.47 ) Basic earnings per share, adjusted (= D / G) - Non-GAAP $ 0.77 Weighted average shares - diluted (H) - most directly comparable GAAP-based measure 10,369 Diluted loss per share (= A / H) - most directly comparable GAAP-based measure $ (0.47 ) Diluted earnings per share, adjusted (= D / H) - Non-GAAP $ 0.75 Noninterest expense (I) - most directly comparable GAAP-based measure $ 36,412 Less: Restructuring expenses (B) (3,155 ) Less: Provision for legal expenses (B) (13,000 ) Adjusted noninterest expense (J = I - B) - Non-GAAP $ 20,257 Net interest income (K) $ 25,455 Noninterest income (L) 6,058 Total operating income (M = K + L) $ 31,513 Efficiency ratio (= I / M) - most directly comparable GAAP-based measure 115.5 % Efficiency ratio, adjusted (= J / M) - Non-GAAP 64.3 % Appendix B- Investment Portfolio Concentrations
The following table summarizes the credit ratings and collateral associated with the Company's investment security portfolio, excluding equity securities, at June 30, 2023:
(dollars in thousands)
Sector Portfolio Mix Amortized Book Fair Value Credit Enhancement AAA AA A BBB NR Collateral / Guarantee Type Unsecured ABS 1 % $ 4,331 $ 3,761 32 % — % — % — % — % 100 % Unsecured Consumer Debt Student Loan ABS 1 6,171 6,024 27 — — — — 100 Seasoned Student Loans Federal Family Education Loan ABS 19 104,657 102,466 8 89 11 — — — Federal Family Education Loan (1) PACE Loan ABS — 2,585 2,209 6 100 — — — — PACE Loans (4) Non-Agency CMBS 4 23,888 23,953 19 — — — — 100 Non-Agency RMBS 3 16,789 13,100 14 100 — — — — Reverse Mortgages (2) Municipal - General Obligation 19 104,526 94,355 4 90 6 — — Municipal - Revenue 22 120,251 107,226 — 82 12 — 6 SBA ReRemic (5) 1 4,182 4,133 — 100 — — — SBA Guarantee (3) Small Business Administration 2 9,595 10,226 — 100 — — — SBA Guarantee (3) Agency MBS 24 135,067 123,668 — 100 — — — Residential Mortgages (3) U.S. Treasury securities 4 20,064 17,373 — 100 — — — U.S. Government Guarantee (3) Bank CDs — — — — — — — — FDIC-Insured CD 100 % $ 552,106 $ 508,494 21 % 67 % 4 % — % 8 % (1) 97% guaranteed by U.S. government (2) Non-agency reverse mortgages with current structural credit enhancements (3) Guaranteed by U.S. government or U.S. government agencies (4) PACE acronym represents Property Assessed Clean Energy loans (5) SBA ReRemic acronym represents Re-Securitization of Real Estate Mortgage Investment Conduits Note: Ratings in table are the lowest of the six rating agencies (Standard & Poor's, Moody's, Fitch, Morningstar, DBRS and Kroll Bond Rating Agency). Standard & Poor's rates U.S. government obligations at AA+. About the Company
With $3.0 billion in assets, Orrstown Financial Services, Inc. and its wholly-owned subsidiary, Orrstown Bank, provide a wide range of consumer and business financial services 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. The Company's lending area also includes adjacent counties in Pennsylvania and Maryland, as well as Loudon County, Virginia and Berkeley, Jefferson and Morgan Counties, West Virginia. Orrstown Bank is an Equal Housing Lender and its deposits are insured up to the legal maximum by the FDIC. Orrstown Financial Services, Inc.’s common stock is traded on Nasdaq (ORRF). For more information about Orrstown Financial Services, Inc. and Orrstown Bank, visit www.orrstown.com.
Cautionary Note Regarding Forward-Looking Statements:
This press release contains “forward-looking statements” within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. Forward-looking statements reflect the current views of the Company's management with respect to, among other things, future events and the Company's financial performance. These statements are often, but not always, made through the use of words or phrases such as “may,” “should,” “could,” “predict,” “potential,” “believe,” “will likely result,” “expect,” “continue,” “will,” “anticipate,” “seek,” “estimate,” “intend,” “plan,” “project,” “forecast,” “goal,” “target,” “would” and “outlook,” or the negative variations of those words or other comparable words of a future or forward-looking nature. These forward-looking statements are not historical facts, and are based on current expectations, estimates, predictions or projections about events or the Company's industry, management’s beliefs and certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond the Company's control, and include, but are not limited to, statements related to new business development, new loan opportunities, growth in the balance sheet and fee-based revenue lines of business, merger and acquisition activity, cost savings initiatives, reducing risk assets and mitigating losses in the future. Accordingly, the Company cautions you that any such forward-looking statements are not guarantees of future performance and are subject to risks, assumptions and uncertainties that are difficult to predict. Although the Company believes that the expectations reflected in these forward-looking statements are reasonable as of the date made, actual results may prove to be materially different from the results expressed or implied by the forward-looking statements and there can be no assurances that the Company will achieve the desired level of new business development and new loans, growth in the balance sheet and fee-based revenue lines of business, successful merger and acquisition activity, cost savings initiatives and continued reductions in risk assets or mitigation of losses in the future. Factors which could cause the actual results of the Company's operations to differ materially from expectations include, but are not limited to: ineffectiveness of the Company's strategic growth plan due to changes in current or future market conditions; the effects of competition and how it may impact our community banking model, including industry consolidation and development of competing financial products and services; the integration of the Company's strategic acquisitions; the inability to fully achieve expected savings, efficiencies or synergies from mergers and acquisitions and cost savings initiatives, or taking longer than estimated for such savings, efficiencies and synergies to be realized; changes in laws and regulations; interest rate movements; changes in credit quality; inability to raise capital, if necessary, under favorable conditions; volatility in the securities markets; the demand for our products and services; deteriorating economic conditions; geopolitical tensions; operational risks including, but not limited to, cybersecurity incidents, fraud, natural disasters and future pandemics; expenses associated with pending litigation and legal proceedings; and other risks and uncertainties, including those detailed in our Annual Report on Form 10-K for the year ended December 31, 2022 under the sections titled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and in subsequently filings made with the Securities and Exchange Commission. The statements are valid only as of the date hereof and we disclaim any obligation to update this information. The foregoing list of factors is not exhaustive.
If one or more events related to these or other risks or uncertainties materializes, or if the Company's underlying assumptions prove to be incorrect, actual results may differ materially from what the Company anticipates. Accordingly, you should not place undue reliance on any such forward-looking statements. Any forward-looking statement speaks only as of the date on which it is made, and the Company does not undertake any obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise. New risks and uncertainties arise from time to time, and it is not possible for the Company to predict those events or how they may affect it. In addition, the Company cannot assess the impact of each factor on its business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. All forward-looking statements, expressed or implied, included in this press release are expressly qualified in their entirety by this cautionary statement. This cautionary statement should also be considered in connection with any subsequent written or oral forward-looking statements that the Company or persons acting on the Company's behalf may issue.
The review period for subsequent events extends up to and includes the filing date of a public company’s financial statements, when filed with the Securities and Exchange Commission. Accordingly, the consolidated financial information presented in this announcement is subject to change.
