HARRISBURG, Pa. - Orrstown Financial Services, Inc. (NASDAQ: NASDAQ:ORRF) has announced its financial results for the second quarter ended June 30, 2024. The report shows a net income of $7.7 million and diluted earnings per share of $0.73.
These figures are slightly lower than the first quarter's net income of $8.5 million and diluted earnings per share of $0.81. Excluding merger-related expenses, the adjusted net income for the second quarter was $8.7 million, or $0.83 per diluted share.
The recent merger with Codorus Valley Bancorp, Inc. has been a significant move for Orrstown, though the second quarter results reflect only Orrstown's standalone operations and do not yet include the combined results with Codorus. The merger is expected to enhance profitability and shareholder value through increased size and scale.
Orrstown's net interest margin for the second quarter was 3.54%, a decrease from 3.77% in the previous quarter. The decline is partly attributed to a one-time interest income recognized in the first quarter from the payoff of a nonaccrual loan.
Excluding this one-time event, the net interest margin would have been more stable quarter-to-quarter. Moreover, nonaccrual loans showed a notable decrease from $12.9 million at the end of the first quarter to $8.4 million at the end of the second quarter.
Non-interest income saw an increase of $0.6 million to $7.2 million, while tangible book value per common share rose to $24.08 at the end of the second quarter, up from $23.47 at the end of the first quarter. The Board of Directors also declared an increased quarterly cash dividend of $0.23 per common share, up 15% from the previous quarter.
The bank's investment portfolio remains strong, with a mix of assets that include federal agency mortgage-backed securities, municipal obligations, and asset-backed securities, among others. Most of the investment securities are rated AA or higher, ensuring a strong credit quality within the portfolio.
Orrstown Financial Services, Inc.'s capital ratios remain well above regulatory minimum levels, indicating a solid financial foundation. The company believes its capital is adequate to support the inherent risks in its balance sheet and to fuel growth requirements.
The second quarter results are a testament to Orrstown's prudent financial management, even as it embarks on integrating operations with Codorus, a process expected to be completed by November 2024. The information provided is based on a press release statement.
In other recent news, Orrstown Financial Services Inc. has updated its executive compensation agreements, as revealed in a recent SEC filing. The financial institution, based in Harrisburg, Pennsylvania, has finalized new agreements aimed at incentivizing the continued service of key executives Craig L. Kauffman and Thomas R. Quinn, Jr.
The Salary Continuation Agreement with Craig L. Kauffman, the firm's Executive Vice President and Chief Operating Officer, outlines a benefits package payable in monthly installments over a 15-year period post-separation, potentially amounting to an annual benefit of $357,260, given certain conditions.
In addition to this, Orrstown Financial Services has modified the existing Salary Continuation Agreement with President and CEO Thomas R. Quinn, Jr., with an increase in the annual benefit payable upon his separation or death. This adjustment reflects a monthly increase of 0.3274% for each full month beyond the normal retirement age until separation or death, capped at 60 months.
These agreements contain provisions for early termination, change in control, disability, and posthumous benefits, with specific conditions that could lead to forfeiture of these benefits. Orrstown Bank, a wholly-owned subsidiary of Orrstown Financial Services, has also procured a whole life insurance policy on Mr. Kauffman, with the bank as the beneficiary. These are among the recent developments within the company.
InvestingPro Insights
Orrstown Financial Services, Inc. (NASDAQ: ORRF) has displayed a robust financial performance as reflected in the recent earnings report. To further understand the company's market position, InvestingPro Tips highlight that ORRF has a commendable track record of raising its dividend for 9 consecutive years, signaling a consistent return to shareholders. Moreover, analysts predict the company will be profitable this year, which is corroborated by a net income of $7.7 million reported for Q2 2024.
From a valuation perspective, the company's P/E ratio stands at an attractive 9.49, suggesting that the stock is trading at a low price relative to near-term earnings growth. This is reinforced by the InvestingPro Tips indicating that ORRF has maintained dividend payments for 10 consecutive years, demonstrating the company's commitment to shareholder value and financial stability.
When we look at the real-time data provided by InvestingPro, ORRF's Market Cap is currently 618.8M USD, and the stock boasts a strong return over the last year with a 52.82% increase. Moreover, the company is trading near its 52-week high, with a price percentage of 99.47% of the high, reflecting the positive sentiment among investors.
For readers interested in a deeper analysis, there are additional InvestingPro Tips available that can provide further insights into ORRF's financial health and market performance. To access these tips and more detailed metrics, visit InvestingPro. Don't forget to use the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription, unlocking a wealth of financial data and expert analysis to guide your investment decisions.
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