third quarter of 2026
Filed Oct 21, 2026Orrstown Financial Services, Inc. Reports Third Quarter 2026 Results
Third-quarter net income, diluted earnings per share, net interest income, net interest margin and efficiency improved sequentially, while loan growth and credit-quality trends were favorable. The period also included a decline in deposits, higher borrowings, increased unrealized securities losses and lower shareholders' equity.
Key metrics
shortened, hover for the filing’s print| Metric | Value | q/q | y/y |
|---|---|---|---|
| Net income for the three months ended September 30, 2026GAAP | $22.8M | – | – |
| Net income available to common shareholders for the three months ended September 30, 2026GAAP | $22.82M | – | – |
| Diluted earnings per share for the three months ended September 30, 2026GAAP | $1.17 | – | – |
| Basic earnings per share for the three months ended September 30, 2026GAAP | $ 1.18 | – | – |
| Net interest income for the three months ended September 30, 2026GAAP | $53.3M | increased by $4.5 million | – |
| Taxable-equivalent net interest margin for the three months ended September 30, 2026other | 4.12% | increased by 25 basis points | – |
| Adjusted taxable-equivalent net interest margin for the three months ended June 30, 2026non-GAAP | 4.00% | – | – |
| Interest income on loans, taxable-equivalent basis, for the three months ended September 30, 2026other | $66.7M | increased by $3.2 million | – |
| Interest expense, taxable-equivalent basis, for the three months ended September 30, 2026other | $24.4M | decreased by $1.5 million | – |
| Provision for credit losses - loans for the three months ended September 30, 2026GAAP | $1.13M | increased by $0.7 million | – |
| Recovery of credit losses - unfunded loan commitments for the three months ended September 30, 2026GAAP | $ (84) | – | – |
| Noninterest income for the three months ended September 30, 2026GAAP | $13.4M | decreased by $0.4 million | – |
| Service charges for the three months ended September 30, 2026GAAP | $2.92M | – | – |
| Interchange income for the three months ended September 30, 2026GAAP | $1.60M | – | – |
| Swap fee income for the three months ended September 30, 2026GAAP | $400K | decreased by $0.3 million | – |
| Wealth management income for the three months ended September 30, 2026GAAP | $6M | – | – |
| Mortgage banking activities for the three months ended September 30, 2026GAAP | $200K | decreased by $0.2 million | – |
| Income from life insurance for the three months ended September 30, 2026GAAP | $1.41M | – | – |
| Investment securities gains for the three months ended September 30, 2026GAAP | $ 15 | – | – |
| Other income for the three months ended September 30, 2026GAAP | $ 824 | – | – |
| Noninterest expenses for the three months ended September 30, 2026GAAP | $37.3M | decreased by $0.4 million | – |
| Salaries and employee benefits for the three months ended September 30, 2026GAAP | $22.4M | increased by $0.2 million | – |
| Professional services for the three months ended September 30, 2026GAAP | $1M | decreased by $0.2 million | – |
| Advertising and bank promotions for the three months ended September 30, 2026GAAP | $400K | decreased by $0.7 million | – |
| Taxes other than income for the three months ended September 30, 2026GAAP | $1M | increased by $0.6 million | – |
| Other operating expenses for the three months ended September 30, 2026GAAP | $3.9M | decreased by $0.4 million | – |
| Income before income tax expense for the three months ended September 30, 2026GAAP | $28.32M | – | – |
| Income tax expense for the three months ended September 30, 2026GAAP | $5.51M | – | – |
| Effective tax rate for the third quarter of 2026GAAP | 19.4% | – | – |
| Efficiency ratio for the three months ended September 30, 2026GAAP | 56.0% | – | – |
| Return on average assets for the three months ended September 30, 2026GAAP | 1.60% | – | – |
| Return on average equity for the three months ended September 30, 2026GAAP | 14.62% | – | – |
| Return on average tangible equity for the three months ended September 30, 2026non-GAAP | 17.52% | – | – |
| Net income for the nine months ended September 30, 2026GAAP | $65.78M | – | – |
| Diluted earnings per share for the nine months ended September 30, 2026GAAP | $ 3.38 | – | – |
| Net interest income for the nine months ended September 30, 2026GAAP | $151.2M | – | – |
| Total assets at September 30, 2026GAAP | $5.71B | – | – |
| Cash and cash equivalents at September 30, 2026GAAP | $125.6M | – | – |
| Securities available for sale at September 30, 2026GAAP | $919.4M | decreased by $29.9 million | – |
| Loans at September 30, 2026GAAP | $4.2B | increased by $95.3 million, or approximately 9% annualized | – |
| Total deposits at September 30, 2026GAAP | $4.6B | decreased by $38.1 million, or 3% annualized | – |
| FHLB advances and other borrowings at September 30, 2026GAAP | $417.3M | – | – |
| Subordinated notes and trust preferred debt at September 30, 2026GAAP | $8.11M | – | – |
| Shareholders' equity at September 30, 2026GAAP | $605.2M | decreased by $16.5 million | – |
| Book value per common share at September 30, 2026GAAP | $ 30.77 | – | – |
| Tangible book value per common share at September 30, 2026non-GAAP | $25.96 | – | – |
| Allowance for credit losses at September 30, 2026GAAP | $46.8M | – | – |
| Allowance for credit losses to total loans at September 30, 2026other | 1.11% | – | – |
| Nonaccrual loans at September 30, 2026other | $22.9M | decreased by $0.9 million | – |
| Nonaccrual loans to total loans at September 30, 2026other | 0.54% | – | – |
| Classified loans at September 30, 2026other | $45.2M | decreased by $4.0 million | – |
| Net charge-offs for the three months ended September 30, 2026other | $1M | – | – |
| Total risk-based capital ratio, Orrstown Financial Services, Inc., at September 30, 2026other | 13.3% | – | – |
| Tier 1 common equity risk-based capital ratio, Orrstown Financial Services, Inc., at September 30, 2026other | 12.1% | – | – |
| Tier 1 leverage capital ratio, Orrstown Financial Services, Inc., at September 30, 2026other | 10.2% | – | – |
Capital returns
- The Board of Directors declared a cash dividend of $0.30 per common share, payable November 10, 2026, to shareholders of record as of November 3, 2026.
- Dividends paid per share were $ 0.30 for the three months ended September 30, 2026.
- Dividends of $5.9 million contributed to the decrease in shareholders' equity during the third quarter of 2026.
What drove it
- Net interest income increased by $4.5 million to $53.3 million as the taxable-equivalent net interest margin increased by 25 basis points to 4.12%.
- The yield on interest-earning assets increased by eight basis points and the cost of deposits decreased by five basis points sequentially.
- Average loans increased by $92.6 million, while interest income on loans included $3.9 million of accretion on purchase accounting marks.
- Commercial loans increased by $45.4 million, home equity lines of credit increased by $31.6 million, and first lien residential mortgages increased by $17.0 million.
- Noninterest expense decreased by $0.4 million, including lower professional services, advertising and bank promotions, and other operating expenses.
- Classified loans decreased by $4.0 million to $45.2 million and nonaccrual loans decreased by $0.9 million to $22.9 million.
Concerns
- Deposits decreased by $38.1 million during the third quarter of 2026, while FHLB advances and other borrowings increased to $417.3 million primarily to fund loan growth.
- Net unrealized losses on investment securities increased by $41.6 million due to widening spreads and a rise in interest rates.
- Shareholders' equity decreased by $16.5 million, primarily due to other comprehensive losses of $34.5 million and dividends of $5.9 million.
- The provision expense on loans increased to $1.1 million from $0.4 million, driven by loan growth, net charge-offs and updates to qualitative factors.
- Purchase accounting mark accretion on loans declined to $3.9 million from $4.3 million sequentially.
- Swap fee income decreased to $0.4 million and mortgage banking income decreased to $0.2 million.
What to watch
- Deposit trends, including the effect of seasonal activity, time deposit maturities, promotional activities and brokered deposits.
- Funding mix and the level of FHLB advances and other borrowings used to fund loan growth.
- Net interest margin as purchase accounting accretion declines and interest-rate and competitive conditions remain dynamic.
- The effect of interest rates and credit spreads on unrealized losses in the available-for-sale securities portfolio and shareholders' equity.
- Credit performance, including provision expense, net charge-offs, classified loans and nonaccrual loans.
- Commercial and industrial loan growth, home equity line growth, and the loan-to-deposit ratio, which was 92% at September 30, 2026.
Balance sheet and cash flow
- Cash and cash equivalents were $ 125,646 at September 30, 2026, compared to $ 144,841 at June 30, 2026.
- Loans increased by $95.3 million from $4.1 billion at June 30, 2026 to $4.2 billion at September 30, 2026.
- Total deposits decreased by $38.1 million during the third quarter of 2026 and were $4.6 billion at both September 30, 2026 and June 30, 2026.
- FHLB advances and other borrowings were $417.3 million at September 30, 2026 compared to $274.8 million at June 30, 2026.
- The Bank had available alternative funding sources, such as FHLB advances and other wholesale options, of $1.7 billion at September 30, 2026.
- Investment securities decreased by $29.9 million to $919.4 million at September 30, 2026 from $949.3 million at June 30, 2026.
- Net unrealized losses on investment securities increased by $41.6 million during the three months ended September 30, 2026.
- Shareholders' equity totaled $605.2 million at September 30, 2026 compared to $621.7 million at June 30, 2026.
Analysis
Orrstown reported third-quarter net income of $22.8 million, or $1.17 per diluted share, compared with $21.2 million, or $1.09 per diluted share, in the second quarter of 2026 and $21.9 million, or $1.13 per diluted share, in the third quarter of 2025. Net interest income increased by $4.5 million to $53.3 million sequentially. The taxable-equivalent net interest margin increased 25 basis points to 4.12%, compared with 3.87% in the prior quarter. The prior-quarter margin included $1.6 million of accelerated amortization expense related to redeemed subordinated notes, and the company reported adjusted second-quarter net interest margin of 4.00%.
Loan growth was the main balance-sheet driver. Loans held for investment increased by $95.3 million to $4.2 billion, or approximately 9% annualized. Commercial loans increased by $45.4 million, home equity lines of credit increased by $31.6 million, including purchases with a principal balance totaling $15.5 million, and first lien residential mortgages increased by $17.0 million. Deposits decreased by $38.1 million during the quarter, with declines in time, interest-bearing demand, non-interest bearing and savings deposits partly offset by a $48.6 million increase in money market deposits. The company increased FHLB advances and other borrowings to $417.3 million from $274.8 million, primarily to fund loan growth.
Expense control supported profitability. Noninterest expense decreased by $0.4 million to $37.3 million sequentially, and the efficiency ratio improved to 56.0% from 60.1%. Professional services expense, advertising and bank promotions expense, and other operating expenses declined, while salaries and benefits and taxes other than income increased. Noninterest income decreased by $0.4 million to $13.4 million, as lower swap fee income and mortgage banking income outweighed modestly higher wealth management income.
Credit metrics improved during the quarter despite a higher provision. Classified loans decreased by $4.0 million to $45.2 million, nonaccrual loans declined to $22.9 million from $23.8 million, and nonaccrual loans to total loans declined to 0.54% from 0.58%. The company recorded $1.1 million of provision expense on loans compared with $0.4 million in the second quarter, citing loan growth, net charge-offs and qualitative-factor updates, partly offset by a favorable GDP forecast and macroeconomic conditions. Net charge-offs were $1.0 million compared with $1.2 million in the prior quarter.
Capital and accumulated other comprehensive income remain areas of attention. Shareholders' equity declined to $605.2 million from $621.7 million, primarily due to other comprehensive losses of $34.5 million and dividends of $5.9 million, partly offset by net income of $22.8 million. Net unrealized losses on investment securities increased by $41.6 million because of widening spreads and a rise in interest rates. Tangible book value per common share declined to $25.96 from $26.71, while the company's reported regulatory capital ratios increased sequentially. The filing did not provide forward financial guidance.
Management, verbatim
Orrstown delivered strong third quarter results, with diluted earnings per common share of $1.17 and a return on average assets of 1.60%.
Adam L. Metz, President and Chief Executive Officer
The quarter demonstrated solid execution across the franchise, including a 25 basis point increase in net interest margin to 4.12%, a 56.0% efficiency ratio and 9% annualized loan growth.
Adam L. Metz, President and Chief Executive Officer
Our results reflect the progress we are making in growing core net interest income while actively managing funding costs and the declining benefit of purchase accounting accretion from our previous merger.
Adam L. Metz, President and Chief Executive Officer
Not in the filing
stated, not guessed- Total revenue was not reported.
- Gross margin was not reported.
- Operating income was not reported.
- Operating cash flow was not reported.
- Free cash flow was not reported.
- Share repurchase activity was not reported.
- Forward financial guidance was not reported.
- Prior-quarter total assets, cash and cash equivalents, securities, loans, deposits, borrowings and shareholders' equity were reported, but no explicit percentage changes were reported for those line items.
- No reportable business segment revenue was provided.
AlphAI analysis generated from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was cross-checked against the filing text; consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.