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Orrstown Financial Services Inc (ORRF)
NASDAQ:ORRF
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Orrstown Financial Services (ORRF) AI Stock Analysis

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ORRF

Orrstown Financial Services

(NASDAQ:ORRF)

Rating:76Outperform
Price Target:
$40.00
â–²(13.57%Upside)
Orrstown Financial Services displays a robust financial performance with strong earnings and revenue growth, supported by positive sentiment from the latest earnings call. Technical analysis points to a bullish outlook, although valuation indicators suggest the stock is fairly priced. The company's strategic initiatives, such as dividend increases and share repurchases, further bolster its investment appeal.

Orrstown Financial Services (ORRF) vs. SPDR S&P 500 ETF (SPY)

Orrstown Financial Services Business Overview & Revenue Model

Company DescriptionOrrstown Financial Services, Inc. operates as the holding company for Orrstown Bank that provides commercial banking and trust services in the United States. The company accepts various deposits, including checking, savings, time, demand, and money market deposits. It also offers commercial loans, such as commercial real estate, equipment, construction, working capital, and other commercial purpose loans, as well as industrial loans; consumer loans comprising home equity and other consumer loans, as well as home equity lines of credit; residential mortgage loans; acquisition and development loans; municipal loans; and installment and other loans. In addition, the company provides renders services as trustee, executor, administrator, guardian, managing agent, custodian, and investment advisor, as well as provides other fiduciary services under the Orrstown Financial Advisors name; and offers retail brokerage services through a third-party broker/dealer arrangement. Further, it offers investment advisory, insurance, and brokerage services. The company operates through offices 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. Orrstown Financial Services, Inc. was founded in 1919 and is based in Shippensburg, Pennsylvania.
How the Company Makes MoneyOrrstown Financial Services generates revenue through multiple streams. The primary source of income is derived from interest income on loans and leases, including residential mortgages, commercial loans, and consumer loans. Additionally, the company earns non-interest income through service fees, such as charges for maintaining accounts, transaction fees, and fees for wealth management and investment services. Another significant revenue stream is derived from gains on the sale of loans and securities. The company also benefits from strategic partnerships and relationships with other financial service providers, which can contribute to its overall earnings by expanding its range of services and customer reach.

Orrstown Financial Services Earnings Call Summary

Earnings Call Date:Jul 22, 2025
(Q2-2025)
|
% Change Since: 3.86%|
Next Earnings Date:Oct 28, 2025
Earnings Call Sentiment Positive
The earnings call highlights a strong financial performance with improved earnings and net interest margin, significant fee income growth, and a robust loan pipeline. However, there are some challenges with elevated merger-related expenses and a decline in deposits. Overall, the positive aspects significantly outweigh the lowlights.
Q2-2025 Updates
Positive Updates
Strong Financial Performance
GAAP earnings were strong with core earnings continuing to increase. Excluding merger-related charges, return on average assets was 1.51%, and return on average equity was 15.12% for Q2 2025, up from 1.45% and 14.97% in Q1 2025.
Net Interest Margin Improvement
Net interest margin increased to 4.07% in Q2 2025 from 4% in Q1 2025, with potential for further upside as loan growth is expected to accelerate.
Fee Income Growth
Fee income increased by $1.3 million quarter-to-quarter, accounting for 21% of operating revenue.
Positive Loan Growth
Total loan growth was 6% annualized for the quarter. The loan pipeline is currently the strongest it has been since the merger.
Decreased Nonaccrual Loans
Nonaccrual loans decreased from 0.59% in Q1 2025 to 0.57% in Q2 2025.
Dividend Increase
The board voted to increase the quarterly dividend by $0.01 per share, which is the third increase in the past year, marking a 35% increase since the merger.
Negative Updates
Merger-Related Expenses
Expenses remain slightly elevated due to merger-related costs, although they are expected to decline over time.
Decline in Deposits
Deposits declined by $117 million due to a strategic shift away from promotional time deposits and money markets.
Company Guidance
During the Orrstown Financial Services, Inc. Second Quarter 2025 Earnings Conference Call, the company provided an optimistic outlook for future financial performance, highlighting several key metrics. Excluding merger-related charges, the return on average assets was 1.51% and return on average equity was 15.12%, both showing improvement from the first quarter of 2025. The net interest margin increased to 4.07%, up from 4% in the previous quarter. Fee income, a core strength, represented 21% of operating revenue, driven by a $1.3 million increase in noninterest income quarter-to-quarter. The efficiency ratio improved to 58.7% from 60.5% in the first quarter, with expectations for further expense reductions. Loan growth was reported at 6% on an annualized basis, with commercial loan growth at 2%. Nonaccrual loans to total loans slightly decreased from 0.59% to 0.57%. The company's capital ratios saw an increase, and a share repurchase program was authorized for up to 500,000 shares. Additionally, the board increased the quarterly dividend by $0.01 to $0.27 per share, marking the third dividend increase within a year.

Orrstown Financial Services Financial Statement Overview

Summary
Orrstown Financial Services has shown strong revenue growth and improved leverage management. However, declining net profit margins and inconsistent cash flow generation pose risks, highlighting the need to enhance profitability and stabilize cash flows.
Income Statement
75
Positive
Orrstown Financial Services shows strong revenue growth over the years, with an increase from $97.8 million in 2019 to $176.1 million in 2024. The gross profit margin remained consistently high, indicating efficient operations. However, the net profit margin has declined from 22% in 2019 to 12.5% in 2024, suggesting increased expenses or lower profit efficiency. EBIT and EBITDA margins indicate good operational earnings, but the decline in net income should be monitored.
Balance Sheet
70
Positive
The company's debt-to-equity ratio decreased significantly from 1.12 in 2019 to 0.36 in 2024, showing improved leverage management and financial stability. The equity ratio has improved from 9.36% in 2019 to 9.51% in 2024, reflecting a stable capital structure. Return on Equity decreased from 7.58% in 2019 to 4.27% in 2024, indicating reduced profitability relative to shareholder equity.
Cash Flow
65
Positive
Free cash flow has grown from $6.2 million in 2019 to $0 in 2024, reflecting challenges in maintaining positive cash flow. Operating cash flow has been volatile, with a notable decrease in 2024. The absence of reported operating cash flow in 2024 is concerning and should be addressed to ensure sustainability.
BreakdownDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income Statement
Total Revenue176.14M149.90M125.30M93.69M110.86M
Gross Profit176.14M143.79M122.34M87.67M106.59M
EBITDA0.000.0029.82M46.20M0.00
Net Income22.05M35.66M22.04M32.88M26.46M
Balance Sheet
Total Assets5.44B3.06B2.92B2.83B2.75B
Cash, Cash Equivalents and Short-Term Investments238.31M546.11M574.55M681.15M591.72M
Total Debt184.04M169.59M138.16M33.86M89.95M
Total Liabilities4.92B2.80B2.69B2.56B2.50B
Stockholders Equity516.68M265.06M228.90M271.66M246.25M
Cash Flow
Free Cash Flow33.38M41.41M35.30M39.56M28.87M
Operating Cash Flow34.96M43.70M36.19M40.81M30.17M
Investing Cash Flow60.99M-153.25M-270.99M-2.01M-292.56M
Financing Cash Flow87.76M113.89M86.91M44.65M331.47M

Orrstown Financial Services Technical Analysis

Technical Analysis Sentiment
Positive
Last Price35.22
Price Trends
50DMA
31.66
Positive
100DMA
30.47
Positive
200DMA
33.35
Positive
Market Momentum
MACD
0.96
Negative
RSI
65.66
Neutral
STOCH
78.52
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ORRF, the sentiment is Positive. The current price of 35.22 is above the 20-day moving average (MA) of 33.45, above the 50-day MA of 31.66, and above the 200-day MA of 33.35, indicating a bullish trend. The MACD of 0.96 indicates Negative momentum. The RSI at 65.66 is Neutral, neither overbought nor oversold. The STOCH value of 78.52 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for ORRF.

Orrstown Financial Services Risk Analysis

Orrstown Financial Services disclosed 52 risk factors in its most recent earnings report. Orrstown Financial Services reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks

Orrstown Financial Services Peers Comparison

Overall Rating
UnderperformOutperform
Sector (68)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
79
Outperform
$609.18M14.896.12%5.26%5.14%-24.91%
76
Outperform
$687.09M16.3113.01%2.78%89.36%-29.07%
74
Outperform
$647.32M12.8912.52%1.48%6.07%20.59%
73
Outperform
$656.64M10.7911.08%3.57%20.07%21.46%
69
Neutral
$539.18M16.307.82%1.02%6.63%62.84%
68
Neutral
$17.10B11.449.70%3.58%11.11%-4.78%
53
Neutral
$534.75M12.16-4.88%8.08%-24.85%-156.55%
* Financial Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
ORRF
Orrstown Financial Services
35.22
1.96
5.89%
THFF
First Financial Indiana
55.41
12.32
28.59%
HTBK
Heritage Commerce
9.58
-0.44
-4.39%
HIFS
Hingham Institution For Savings
246.61
8.89
3.74%
WASH
Washington Bancorp
27.72
-1.68
-5.71%
SPFI
South Plains Financial
39.21
7.06
21.96%

Orrstown Financial Services Corporate Events

Stock Buyback
Orrstown Financial Services Announces Share Repurchase Program
Neutral
Jun 23, 2025

On June 23, 2025, Orrstown Financial Services, Inc. announced the adoption of a share repurchase program by its Board of Directors. This program allows the company to buy back up to 500,000 shares of its common stock, which represents approximately 2.5% of its current issued and outstanding shares.

The most recent analyst rating on (ORRF) stock is a Buy with a $35.00 price target. To see the full list of analyst forecasts on Orrstown Financial Services stock, see the ORRF Stock Forecast page.

Executive/Board ChangesShareholder Meetings
Orrstown Financial Services Holds Annual Shareholder Meeting
Neutral
May 7, 2025

On May 6, 2025, Orrstown Financial Services held its annual shareholder meeting, where key decisions were made, including the election of five directors to Class B with an average approval of 92.47%. Additionally, the shareholders approved the compensation of Named Executive Officers, the 2025 Stock Incentive Plan, and ratified Crowe LLP as the independent registered public accounting firm for the fiscal year ending December 31, 2025.

Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.Date of analysis: Jul 25, 2025