•Net income of $21.5 million, or $1.11 per diluted share, for the three months ended December 31, 2025 compared to net income of $21.9 million, or $1.13 per diluted share, for the three months ended September 30, 2025;

•Net income of $80.9 million and diluted earnings per share of $4.18 for the year ended December 31, 2025 compared to net income of $22.1 million and diluted earnings per share of $1.48 for the year ended December 31, 2024;

•Adjusted net income and diluted earnings per share totaled $82.9 million(1) and $4.28(1), respectively, for the year ended December 31, 2025 compared to $56.1 million(1) and $3.76(1), respectively, for the year ended December 31, 2024 (excluding certain previously disclosed non-recurring expenses for both periods);

•Return on average assets was 1.55% and return on average equity was 14.73% for the three months ended December 31, 2025, compared to 1.60% and 15.72%, respectively, for the three months ended September 30, 2025;

•Net interest margin, on a tax equivalent basis, was 4.00% in the fourth quarter of 2025 compared to 4.11% in the third quarter of 2025; the net accretion impact of purchase accounting marks was 46 basis points in the fourth quarter of 2025 compared to 52 basis points in the third quarter of 2025;

•Total loans increased by $41.0 million, or approximately 4% annualized, from September 30, 2025 to December 31, 2025; classified loans decreased by $5.7 million from $64.1 million at September 30, 2025 to $58.4 million at December 31, 2025;

•Noninterest income increased by $1.0 million from $13.4 million for the three months ended September 30, 2025 to $14.4 million for the three months ended December 31, 2025; increase driven by wealth management and swap fee growth;

•Noninterest expenses increased by $1.1 million from $36.3 million for the three months ended September 30, 2025 to $37.4 million for the three months ended December 31, 2025 due primarily to increased health care and professional service costs;

•Tangible common equity increased to 9.0% at December 31, 2025 from 8.8% at September 30, 2025;

•Tangible book value per common share(1) increased to $25.21 per share at December 31, 2025 from $24.12 per share at September 30, 2025 and

•The Board of Directors declared a cash dividend of $0.30 per common share, payable February 17, 2026, to shareholders of record as of February 10, 2026; this represents a $0.03 per share increase in the Company's quarterly cash dividend.

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

HARRISBURG, PA (January 27, 2026) -- Orrstown Financial Services, Inc. (the "Company") (NASDAQ: ORRF), the parent company of Orrstown Bank (the “Bank”), announced earnings for the periods ended December 31, 2025. Net income totaled $21.5 million for the three months ended December 31, 2025, compared to net income of $21.9 million and $13.7 million for the three months ended September 30, 2025 and December 31, 2024, respectively. Diluted earnings per share was $1.11 for the three months ended December 31, 2025, compared to $1.13 and $0.71 for the three months ended September 30, 2025 and December 31, 2024, respectively. For the fourth quarter of 2024, excluding the impact from the previously disclosed non-recurring charges, net of taxes, net income and diluted earnings per share were $16.7 million(1) and $0.87(1), respectively.

Net income totaled $80.9 million and $22.1 million for the years ended December 31, 2025 and 2024, respectively. Diluted earnings per share totaled $4.18 for the year ended December 31, 2025, compared to $1.48 for the year ended December 31, 2024.

Excluding the impact from merger-related expenses, net income and diluted earnings per share were $82.9 million(1) and $4.28(1) for the year ended December 31, 2025, respectively. For the year ended December 31, 2024, net income and diluted earnings per share were $56.1 million(1) and $3.76(1), respectively, excluding the previously disclosed non-recurring expenses.

“In 2025, Orrstown achieved the highest reported annual net income in the Company’s history,” said Thomas R. Quinn, Jr., President and Chief Executive Officer. “Margin performance, together with continued growth in noninterest income, resulted in strong earnings and capital generation throughout the year. This discipline was reflected in our performance in the fourth quarter of 2025 with a return on average assets of 1.55%. Loan growth was steady during the fourth quarter while we saw a few projected closings push into the first quarter of 2026. We remain confident in our robust pipeline and the ability of our experienced relationship bankers to continue to grow the loan portfolio responsibly. Our credit metrics and capital ratios remain sound. We believe that there are significant upside opportunities in front of us and that we are well-positioned to take advantage of them.”

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

Balance Sheet

Loans held for investment increased by $41.0 million and totaled $4.0 billion at both December 31, 2025 and September 30, 2025, respectively. Commercial loans increased by $27.3 million, or approximately 3% annualized, and residential mortgages increased by $12.2 million, or approximately 6% annualized, from September 30, 2025 to December 31, 2025.

Investment securities, all of which are classified as available-for-sale, increased by $62.3 million to $952.7 million at December 31, 2025 from $890.4 million at September 30, 2025. During the fourth quarter of 2025, the Bank purchased $124.9 million of investment securities consisting of agency mortgage backed securities and collateralized mortgage obligations, which was partially offset by sales of $42.2 million and paydowns totaling $24.8 million. The purchase and sale activity during the period was to redeploy funds into higher yielding assets based on market opportunities as well as to manage balance sheet positioning. Net unrealized losses declined by $3.0 million during the three months ended December 31, 2025 due to lower market interest rates. The overall duration of the Company's investment securities portfolio was 4.6 years at December 31, 2025 compared to 4.4 years at September 30, 2025. See Appendix B for a summary of the Bank's investment securities at December 31, 2025, highlighting their concentrations, credit ratings and credit enhancement levels.

During the fourth quarter of 2025, deposits decreased by $4.8 million and totaled $4.5 billion at both December 31, 2025 and September 30, 2025. Non-interest bearing demand deposits and time deposits decreased by $30.7 million and $21.6 million, respectively, from September 30, 2025 to December 31, 2025. Interest bearing demand deposits, money market deposits and savings deposits increased by $25.8 million, $19.0 million and $2.7 million, respectively, from September 30, 2025 to December 31, 2025. The Bank's loan-to-deposit ratio was 89% at December 31, 2025 compared to 88% at September 30, 2025.

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 $274.7 million at December 31, 2025 compared to $209.2 million at September 30, 2025. The increase was due to higher utilization of borrowings during the fourth quarter of 2025 as lending and investing activities increased. The Bank seeks to maintain sufficient liquidity to ensure that 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 December 31, 2025 and September 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.

Income Statement

Net interest income was $50.5 million for the three months ended December 31, 2025 compared to $51.0 million for the three months ended September 30, 2025. The net interest margin, on a tax equivalent basis, decreased to 4.00% in the fourth quarter of 2025 from 4.11% in the third quarter of 2025. This decrease is primarily the result of a decrease of 16 basis points in the yield on loans from the three months ended September 30, 2025 to the three months ended December 31, 2025. This decrease in the yield on loans was partially offset by a decrease of six basis points in the cost of funds between the same periods.

Net interest income was positively impacted by the net accretion impact of purchase accounting marks on loans, securities, deposits and borrowings of $5.3 million during the fourth quarter of 2025 compared to $5.8 million for the third quarter of 2025. This change of $0.5 million was due partially to lower accelerated accretion on loans in the three months ended December 31, 2025 compared to the three months ended September 30, 2025.

Interest income on loans, on a tax equivalent basis, decreased by $1.4 million to $64.6 million for the three months ended December 31, 2025 compared to $66.0 million for the three months ended September 30, 2025. This decrease was primarily due to the impact of fed funds rate reductions on the Bank's variable rate loan portfolio. In addition, the accretion of purchase accounting marks on loans totaled $4.7 million during the fourth quarter of 2025 compared to $5.3 million during the third quarter of 2025.

Interest income on investment securities, on a tax equivalent basis, was $11.2 million for the fourth quarter of 2025 compared to $10.6 million for the third quarter of 2025. Average investment securities increased by $70.6 million during the three months ended December 31, 2025 compared to the three months ended September 30, 2025 primarily due to net purchases.

Interest expense, on a tax equivalent basis, decreased by $0.4 million to $25.7 million for the three months ended December 31, 2025 compared to $26.1 million for the three months ended September 30, 2025. Average FHLB advances and other borrowings increased by $69.9 million from $168.9 million for the three months ended September 30, 2025 to $238.8 million for the three months ended December 31, 2025. Borrowing costs decreased by 111 basis points during the three months ended December 31, 2025 compared to the three months ended September 30, 2025. This was primarily the result of the prior quarter redemption of subordinated debt, as well as the recent reductions to FHLB borrowing rates. Interest expense incurred on the subordinated notes decreased by $0.6 million to $0.4 million for the three months ended December 31, 2025 compared to $1.0 million for the three months ended September 30, 2025. In addition, there was $0.3 million of accelerated amortization of debt issuance costs during the third quarter of 2025. Average interest-bearing deposits increased by $34.5 million during the three months ended December 31, 2025 compared to the three months ended September 30, 2025. The cost of interest-bearing deposits declined by three basis points from the third quarter of 2025 to the fourth quarter of 2025.

The allowance for credit losses ("ACL") on loans decreased to $47.7 million at December 31, 2025 from $48.1 million at September 30, 2025. The ACL to total loans was 1.19% at December 31, 2025 compared to 1.21% at September 30, 2025. The Company recorded provision expense of $0.1 million for the three months ended December 31, 2025 compared to $0.4 million for the three months ended September 30, 2025. Net charge-offs were $0.5 million for the three months ended December 31, 2025 compared to $0.2 million for the three months ended September 30, 2025.

Classified loans decreased by $5.7 million to $58.4 million at December 31, 2025 from $64.1 million at September 30, 2025 due to repayments of $7.9 million, net downgrades of $2.7 million and gross charge offs of $0.5 million. Non-accrual loans totaled $28.0 million at December 31, 2025 compared to $26.2 million at September 30, 2025. The increase in nonaccrual loans was due to additions to nonaccrual status of $4.8 million of loans primarily consisting of $2.3 million for one commercial loan and $1.1 million in home equity line of credit loans. This increase was partially offset by repayments totaling $2.5 million and gross charge offs of $0.6 million. Nonaccrual loans to total loans increased to 0.70% at December 31, 2025 from 0.66% at September 30, 2025. Management believes the ACL to be adequate based on current asset quality metrics and economic forecasts.

Noninterest income increased by $1.0 million to $14.4 million for the three months ended December 31, 2025 from $13.4 million for the three months ended September 30, 2025.

Wealth management income increased by $0.4 million to $5.7 million for the three months ended December 31, 2025 compared to $5.3 million for the three months ended September 30, 2025 due to continued growth of our wealth management platform as well as market performance.

Swap fee income increased by $0.3 million to $1.1 million for the three months ended December 31, 2025 compared to $0.8 million for the three months ended September 30, 2025. Swap fee income will fluctuate based on market conditions and client demand.

Income from service charges increased by $0.2 million to $3.2 million for the three months ended December 31, 2025 from $3.0 million for the three months ended September 30, 2025 due to increased treasury management activity.

Noninterest expenses increased by $1.1 million to $37.4 million for the three months ended December 31, 2025 from $36.3 million in the three months ended September 30, 2025.

Salaries and benefits expense was $22.0 million for the three months ended December 31, 2025 compared to $21.4 million for the three months ended September 30, 2025. The fourth quarter of 2025 included an increase in health care costs.

Advertising and bank promotions expense increased by $0.4 million from $0.2 million for the three months ended September 30, 2025 to $0.6 million for the three months ended December 31, 2025 due to contributions to tax credit programs during the fourth quarter of 2025. Taxes other than income decreased by $0.3 million in the three months ended December 31, 2025 compared to the three months ended September 30, 2025. This decrease reflects the tax credit impact of the contributions referenced above.

Professional services expense increased by $0.2 million from $1.7 million for the three months ended September 30, 2025 to $1.9 million for the three months ended December 31, 2025. The increase was due to third-party assistance with internal projects.

The Company's effective tax rate was 21.8% for the fourth quarter of 2025 compared to 21.0% for the third quarter of 2025. The Company's effective tax rate for the three months ended December 31, 2025 is greater than 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 and an increase in non-deductible expenses. This increase in the effective tax rate was 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 $591.5 million at December 31, 2025 compared to $571.9 million at September 30, 2025. The increase is due to net income of $21.5 million, other comprehensive income of $2.3 million and share-based compensation activity of $1.0 million, partially offset by dividend payments of $5.2 million.

Tangible book value per common share(1) increased to $25.21 per share at December 31, 2025 from $24.12 per share at September 30, 2025. The Company's tangible common equity ratio was 9.0% at December 31, 2025 compared to 8.8% at September 30, 2025. Return on average tangible common equity per common share(1) was 18.15% for the three months ended December 31, 2025 compared to 19.70% for the three months ended September 30, 2025. The decrease in the return on average tangible common equity per common share was primarily due to the increase in average shareholders' equity.

The Company's capital ratios increased during the three months ended December 31, 2025 compared to the three months ended September 30, 2025 due to earnings. The Company's tier 1 common equity, tier 1 capital and total risk-based capital ratios were 11.5%, 11.7% and 13.3%, respectively, at December 31, 2025 compared to 11.1%, 11.3% and 13.1%, respectively, at September 30, 2025. The Company's Tier 1 leverage ratio increased to 9.5% at December 31, 2025 compared to 9.3% at September 30, 2025.

At December 31, 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 $107.7 million and $115.9 million at December 31, 2025 and December 31, 2024, respectively. In addition, during the three months ended December 31, 2025, September 30, 2025, June 30, 2025, March, 31, 2025 and December 31, 2024, the Company incurred zero, zero, $1.0 million, $1.6 million, and $3.9 million in merger-related expenses, respectively. During the three months ended December 31, 2024, the Company incurred other non-recurring charges totaling $0.5 million.

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: