•Net income of $21.9 million, or $1.13 per diluted share, for the three months ended September 30, 2025 compared to net income of $19.4 million, or $1.01 per diluted share, for the three months ended June 30, 2025; excluding the impact of $1.0 million in merger-related expenses, net of taxes, net income and diluted earnings per share for the second quarter of 2025 were $20.2 million(1) and $1.04(1), respectively;

•Return on average assets was 1.60% and return on average equity was 15.72% for the three months ended September 30, 2025, compared to 1.45% and 14.56% for the return on average assets and return on average equity, respectively, for the three months ended June 30, 2025;

•Excluding the impact of the merger-related expenses referenced above, net of taxes, adjusted return on average assets and adjusted return on average equity were 1.51%(1) and 15.12%(1), respectively, for the three months ended June 30, 2025;

•Net interest margin, on a tax equivalent basis, was 4.11% in the third quarter of 2025 compared to 4.07% in the second quarter of 2025; the net accretion of purchase accounting marks positively impacted the margin by 52 basis points in the third quarter of 2025 compared to 50 basis points in the second quarter of 2025;

•Loans increased by $48.4 million, or approximately 5% annualized, from June 30, 2025 to September 30, 2025; classified loans decreased by $1.7 million from $65.8 million at June 30, 2025 to $64.1 million at September 30, 2025;

•Subordinated notes of $32.5 million were redeemed on September 30, 2025; as a result of the redemption, the Company amortized the remaining debt issuance costs of $0.3 million;

•Noninterest income increased by $0.5 million from $12.9 million for the three months ended June 30, 2025 to $13.4 million for the three months ended September 30, 2025;

•Noninterest expenses decreased by $1.3 million from $37.6 million for the three months ended June 30, 2025 to $36.3 million for the three months ended September 30, 2025; no merger-related expenses were incurred during the third quarter of 2025;

•Efficiency ratio decreased from 60.3% for the three months ended June 30, 2025 to 56.4% for the three months ended September 30, 2025;

•Tangible common equity increased to 8.8% at September 30, 2025 compared to 8.3% at June 30, 2025;

•Tangible book value per common share(1) increased to $24.12 per share at September 30, 2025 compared to $22.77 per share at June 30, 2025;

•The Board of Directors declared a cash dividend of $0.27 per common share, payable November 12, 2025, to shareholders of record as of November 5, 2025.

(1) Non-GAAP measure. See Appendix A for additional information.

HARRISBURG, PA (October 21, 2025) -- Orrstown Financial Services, Inc. (the "Company") (NASDAQ: ORRF), the parent company of Orrstown Bank (the “Bank”), announced earnings for the periods ended September 30, 2025. Net income totaled $21.9 million for the three months ended September 30, 2025, compared to net income of $19.4 million for the three months ended June 30, 2025 and net loss of $7.9 million for the three months ended September 30, 2024. Diluted earnings per share was $1.13 for the three months ended September 30, 2025, compared to diluted earnings per share of $1.01 for the three months ended June 30, 2025 and diluted loss per share of $0.41 for the three months ended September 30, 2024. The Company did not incur merger-related expenses during the third quarter of 2025. For the second quarter of 2025, excluding the impact of merger-related expenses, net of taxes, net income and diluted earnings per share were $20.2 million(1) and $1.04(1), respectively.

For the third quarter of 2024, excluding the impact from the non-recurring charges, net of taxes, net income and diluted earnings per share were $21.4 million(1) and $1.11(1), respectively.

“Orrstown generated another quarter of impressive earnings, demonstrating our continued momentum after a measured start to the year,” said Thomas R. Quinn, Jr., President and Chief Executive Officer. “Loan growth was strong, fee income increased again and expenses continue to decline. This all translated into our strongest quarter of earnings on record with diluted EPS of $1.13, return on assets of 1.60% and return on equity of nearly 16%. The synergies achieved since the prior year merger are clearly evident in our financial metrics. Our capital ratios remain sound even after redeeming subordinated debt during the third quarter. While we are proud of our recent accomplishments, we remain focused on structuring our balance sheet to facilitate success in a changing interest rate environment within a competitive landscape. We are mindful of some remaining economic uncertainty and its potential impact on the overall business environment. We therefore plan to continue to grow prudently while making appropriate strategic investments along the way.”

(1) Non-GAAP measure. See Appendix A for additional information.

Balance Sheet

Loans held for investment increased by $48.4 million and totaled $4.0 billion and $3.9 billion at September 30, 2025 and June 30, 2025, respectively. Commercial loans increased by $38.2 million, or approximately 5% annualized, and residential mortgages increased by $10.3 million, or approximately 5%, from June 30, 2025 to September 30, 2025.

Investment securities, all of which are classified as available-for-sale, increased by $5.0 million to $890.4 million at September 30, 2025 from $885.4 million at June 30, 2025. During the third quarter of 2025, the Bank purchased $57.7 million of investment securities, which was partially offset by sales of $41.6 million and paydowns totaling $20.5 million. Net unrealized losses declined by $9.1 million for the three months ended September 30, 2025 due to reduced market rates. The overall duration of the Company's investment securities portfolio was 4.4 years at September 30, 2025 compared to 4.5 years at June 30, 2025. See Appendix B for a summary of the Bank's investment securities at September 30, 2025, highlighting their concentrations, credit ratings and credit enhancement levels.

During the third quarter of 2025, deposits increased by $16.9 million and totaled $4.5 billion at both September 30, 2025 and June 30, 2025. Money market deposits and time deposits increased by $64.0 million and $36.1 million, respectively, and interest-bearing demand deposits, non-interest bearing demand deposits and saving deposits decreased by $60.9 million, $16.7 million and $5.6 million, respectively, from June 30, 2025 to September 30, 2025. Money market deposits and time deposits were impacted by increases in brokered money market deposits of $40.0 million and brokered time deposits of $50.6 million. Continued run-off in higher yielding promotional balances partially offset these deposits. The decreases in the other categories were consistent with normal cyclical activity. The Bank's loan-to-deposit ratio increased to 88% at September 30, 2025 from 87% at June 30, 2025.

On September 30, 2025, the Company redeemed its $32.5 million outstanding 6.0% fixed-to-floating rate subordinated notes. During the three months ended September 30, 2025, the Company amortized the remaining debt issuance costs of $0.3 million as a result of the redemption.

The Company actively manages its liquidity position through its various sources of funding to meet the needs of its clients. FHLB advances and other borrowings were $209.2 million at September 30, 2025 compared to $136.3 million at June 30, 2025. The increase was due to higher utilization of overnight borrowings during the third quarter of 2025 as lending and investing activities increased. This increase was partially offset by the subordinated note redemption. The Bank seeks to maintain sufficient liquidity to ensure client needs can be addressed in a timely basis. The Bank had available alternative funding sources, such as FHLB advances and other wholesale options, of approximately $1.7 billion at both September 30, 2025 and June 30, 2025.

Income Statement

Net interest income was $51.0 million for the three months ended September 30, 2025 compared to $49.5 million for the three months ended June 30, 2025. The net interest margin, on a tax equivalent basis, increased to 4.11% in the third quarter of 2025 from 4.07% in the second quarter of 2025. This increase is primarily the result of an increase of six basis points in the yield on loans from the three months ended June 30, 2025 to the three months ended September 30, 2025. This was partially offset by an increase of three basis points in the cost of funds between the same periods due to the accelerated amortization of debt issuance costs in the third quarter.

The net interest margin was positively impacted by the net accretion impact of purchase accounting marks on loans, securities, deposits and borrowings of $5.8 million during the third quarter of 2025 compared to $5.2 million for the second quarter of 2025. This change was due primarily to higher accelerated accretion in the three months ended September 30, 2025 compared to the three months ended June 30, 2025.

Interest income on loans, on a tax equivalent basis, increased by $2.8 million to $66.0 million for the three months ended September 30, 2025 compared to $63.2 million for the three months ended June 30, 2025. Average loans increased by $84.1 million during the three months ended September 30, 2025 compared to the three months ended June 30, 2025. The accretion of purchase accounting marks on loans totaled $5.3 million during the third quarter of 2025 compared to $4.9 million during the second quarter of 2025.

Interest income on investment securities, on a tax equivalent basis, was $10.6 million for both the third and second quarters of 2025. Average investment securities increased by $2.3 million during the three months ended September 30, 2025 compared to the three months ended June 30, 2025.

Interest expense, on a tax equivalent basis, increased by $0.8 million to $26.1 million for the three months ended September 30, 2025 compared to $25.3 million for the three months ended June 30, 2025. Average FHLB advances and other borrowings increased by $65.8 million from $104.1 million for the three months ended June 30, 2025 to $168.9 million for the three months ended September 30, 2025. Subordinated notes were redeemed on September 30, 2025, which resulted in the accelerated amortization of the remaining debt issuance costs of $0.3 million, which reduced the net interest margin by two basis points. Borrowing costs increased by 25 basis points during the three months ended September 30, 2025. Average interest-bearing deposits decreased by $34.9 million during the three months ended September 30, 2025 compared to the three months ended June 30, 2025. The cost of interest-bearing deposits declined by two basis points from the second quarter of 2025 to the third quarter of 2025. In addition, interest expense includes $0.3 million and $0.4 million of amortization of purchase accounting marks on interest bearing liabilities for the three months ended September 30, 2025 and June 30, 2025, respectively.

The allowance for credit losses ("ACL") on loans increased to $48.1 million at September 30, 2025 from $47.9 million at June 30, 2025. The ACL to total loans was 1.21% at September 30, 2025 compared to 1.22% at June 30, 2025. The Company recorded provision expense of $0.4 million for the three months ended September 30, 2025 compared to $0.2 million for the three months ended June 30, 2025. Net charge-offs were $0.2 million for the three months ended September 30, 2025 compared to $0.1 million for the three months ended June 30, 2025.

Classified loans decreased by $1.7 million to $64.1 million at September 30, 2025 from $65.8 million at June 30, 2025 due to repayments of $5.8 million, net downgrades of $4.3 million and charge offs of $0.3 million. Delinquent loans decreased by $0.4 million from $12.3 million at June 30, 2025 to $11.9 million at September 30, 2025. Non-accrual loans totaled $26.2 million at September 30, 2025 compared to $22.4 million at June 30, 2025 due to additions to nonaccrual status of $7.8 million primarily consisting of $4.7 million for one commercial construction and land development relationship, $1.3 million in owner-occupied commercial real estate loans and $1.1 million in residential mortgages, partially offset by repayments totaling $3.9 million. Nonaccrual loans to total loans increased to 0.66% at September 30, 2025 compared to 0.57% at June 30, 2025. Management believes the ACL to be adequate based on current asset quality metrics and economic forecasts.

Noninterest income increased by $0.5 million to $13.4 million for the three months ended September 30, 2025 from $12.9 million for the three months ended June 30, 2025.

Income from service charges was $3.0 million for the three months ended September 30, 2025 compared to $2.6 million for the three months ended June 30, 2025 based on increased interchange activity.

Swap fee income increased by $0.1 million to $0.8 million for the three months ended September 30, 2025 compared to $0.7 million for the three months ended June 30, 2025. Swap fee income will fluctuate based on market conditions and client demand.

Income from mortgage banking activities was $0.5 million for both the three months ended September 30, 2025 and June 30, 2025. The Bank sold 37 loans to the secondary market during the third quarter of 2025 compared to 47 loans during the second quarter of 2025. The impact of the reduction in loan sale activity was offset by gains from positive fair value adjustments resulting from the increase in the residential mortgage loan pipeline and declining market interest rates.

Other income decreased by $0.3 million to $2.1 million for the three months ended September 30, 2025 compared to $2.4 million for the three months ended June 30, 2025. During the second quarter of 2025, the Bank recorded $0.3 million in solar tax credits and a gain on the sale of other real estate owned of $0.1 million.

Noninterest expenses decreased by $1.3 million to $36.3 million in the three months ended September 30, 2025 from $37.6 million in the three months ended June 30, 2025.

For the three months ended September 30, 2025, the Company did not incur merger-related expenses compared to $1.0 million for the three months ended June 30, 2025.

Advertising and bank promotions expense decreased by $0.9 million from $1.1 million for the three months ended June 30, 2025 to $0.2 million for the three months ended September 30, 2025 due to $0.7 million in contributions to tax credit programs during the second quarter of 2025. Taxes other than income increased by $0.5 million in the three months ended September 30, 2025 compared to the three months ended June 30, 2025. This decrease reflects the tax impact of the contributions referenced above.

Salaries and benefits expense was $21.4 million for both the three months ended September 30, 2025 and June 30, 2025. The third quarter of 2025 reflects a full quarter impact from the increase in merit-based salaries that went into effect in May 2025 and third quarter contributions towards employee benefit expense that occur semi-annually. The second quarter of 2025 included $0.6 million of severance costs.

Professional services expense decreased by $0.3 million from $2.0 million for the three months ended June 30, 2025 to $1.7 million for the three months ended September 30, 2025. The third quarter of 2025 reflects a reduction in the level of third-party assistance to enhance daily functions and operational processes throughout the organization. While the Company will remain reliant on these services in the fourth quarter of 2025, the Company expects expenses related to these services to continue to decline.

The Company's effective tax rate was 21.0% for the third quarter of 2025 compared to 21.3% for the second quarter of 2025. The second quarter rate reflected a year-to-date adjustment to align with the revised projection for the full year. The Company's effective tax rate for the three months ended September 30, 2025 is aligned with the 21% federal statutory rate primarily due to 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 partially offset by the benefit of tax-exempt income, including interest earned on tax-exempt loans and securities and income from life insurance policies and tax credits. The Company regularly analyzes its projected taxable income and makes adjustments to the provision for income taxes accordingly.

Capital

Shareholders’ equity totaled $571.9 million at September 30, 2025 compared to $548.4 million at June 30, 2025. The increase is due to net income of $21.9 million and other comprehensive income of $6.9 million, partially offset by dividend payments of $5.3 million.

Tangible book value per common share(1) increased to $24.12 per share at September 30, 2025 from $22.77 per share at June 30, 2025.

The Company's tangible common equity ratio was 8.8% at September 30, 2025 compared to 8.3% at June 30, 2025. Return on average tangible common equity per common share(1) was 19.7% for the three months ended September 30, 2025 compared to 18.4% for the three months ended June 30, 2025.

Most of the Company's capital ratios increased during the three months ended September 30, 2025 due to earnings; however, total risk-based capital decreased due to impact of the redemption of subordinated notes. The Company's tier 1 common equity, tier 1 and total risk-based capital ratios were 11.1%, 11.3% and 13.1%, respectively, at September 30, 2025 compared to 10.9%, 11.1% and 13.3%, respectively, at June 30, 2025. The Company's Tier 1 leverage ratio increased to 9.3% at September 30, 2025 compared to 9.0% at June 30, 2025.

At September 30, 2025, 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.

(1) Non-GAAP measure. See Appendix A for additional information.

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.

As a result of acquisitions, the Company has intangible assets consisting of goodwill, core deposit and other intangible assets, which totaled $110.1 million and $115.9 million at September 30, 2025 and December 31, 2024, respectively. In addition, during the three months ended September 30, 2025, June 30, 2025, March, 31, 2025, December 31, 2024 and September 30, 2024, the Company incurred zero, $1.0 million, $1.6 million, $3.9 million, and $17.0 million in merger-related expenses, respectively. During the three months ended December 31, 2024 and September 30, 2024, the Company incurred other non-recurring charges totaling $0.5 million and $20.2 million, respectively.

Tangible book value per common share, tangible common equity and the impact of the non-recurring expenses 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: