Executive Summary

Q4 2024 GAAP EPS was $0.71 on net income of $13.7M; adjusted EPS was $0.87 excluding $3.9M merger costs and $0.5M legal settlement, versus Q3’s adjusted $1.11 and GAAP loss of $(0.41) due to heavy one-time charges .
Net interest margin was 4.05%, down 9 bps QoQ, aided by $7.2M purchase accounting accretion; noninterest income fell $1.2M due to fee waivers post core conversion completed in November .
Asset quality improved: classified loans fell $16.9M QoQ to $88.6M; nonaccrual loans/total loans decreased to 0.61% (from 0.68% in Q3 and 1.11% YoY), despite $3.0M net charge-offs including a targeted $0.6M sale-related charge-off .
Dividend raised 13% to $0.26 per share (payable Feb 21, 2025); management achieved its 18% cost-savings run-rate, positioning for growth post-integration .
Catalysts: completed core conversion, realized cost saves, and improving credit metrics; watch remaining merger-related expenses expected in Q1 2025 and NIM normalization as purchase accretion fades .

What Went Well and What Went Wrong

What Went Well

Achieved targeted 18% cost-saves on combined noninterest expense base as of Dec 31, 2024; core conversion completed in November, enabling focus on growth (“building the premier community banking franchise”) .
Credit clean-up and risk reduction: classified loans down $16.9M QoQ; CRE concentration being reduced; nonaccrual ratio improved to 0.61% YoY from 1.11% .
Capital and TBV stable/improving: TBV per share rose to $21.19 (from $21.12 in Q3); Tier 1 leverage increased to 8.3% (from 8.0%) on earnings and lower average assets .

What Went Wrong

Net interest margin compressed to 4.05% (from 4.14%), with reliance on $7.2M purchase accounting accretion (52 bps of NIM); this benefit will diminish over time .
Noninterest income fell $1.2M QoQ due to fee waivers post-conversion and absence of Q3 solar tax credits; wealth management ticked down $0.1M QoQ .
Net charge-offs of $3.0M (vs. $0.3M in Q3) including $2.4M on a single C&I relationship; deposit balances declined $35.1M seasonally, and commercial loans down $59.5M due to strategic derisking .

Financial Results

Summary vs Prior Periods and Estimates

Metric	Q4 2023	Q3 2024	Q4 2024	Consensus (Q4 2024)
Net Interest Income ($USD Millions)	$26.0	$51.7	$50.6	N/A (unavailable)
Noninterest Income ($USD Millions)	$6.5	$12.4	$11.2	N/A (unavailable)
Total Operating Income ($USD Millions)	$32.5	$64.1	$61.8	N/A (unavailable)
Diluted EPS (GAAP) ($USD)	$0.73	$(0.41)	$0.71	N/A (unavailable)
Diluted EPS (Adjusted) ($USD)	$0.83	$1.11	$0.87	N/A (unavailable)
Net Interest Margin (%)	3.71%	4.14%	4.05%	N/A (unavailable)
Efficiency Ratio (%)	68.9%	94.1%	69.4%	N/A (unavailable)
ROAA (%)	1.00%	(0.57)%	1.00%	N/A (unavailable)
ROAE (%)	12.21%	(5.85)%	10.54%	N/A (unavailable)

Notes: S&P Global Wall Street consensus was unavailable at time of analysis due to SPGI request limit; estimate comparisons are therefore not shown.

Segment/Line-Item Breakdown (Noninterest Income)

Component ($USD Millions)	Q4 2023	Q3 2024	Q4 2024
Service Charges	$1.20	$2.36	$2.05
Interchange Income	$0.95	$1.78	$1.61
Swap Fee Income	$0.59	$0.51	$0.60
Wealth Management Income	$2.95	$5.04	$4.90
Mortgage Banking Activities	$0.14	$0.49	$0.52
Other Income	$0.70	$1.94	$1.58
Investment Securities Gains/(Losses)	$(0.04)	$0.27	$(0.01)

KPIs and Balance Sheet

KPI	Q4 2023	Q3 2024	Q4 2024
Loans, Net ($USD Billions)	$2.27	$3.93	$3.88
Deposits ($USD Billions)	$2.56	$4.65	$4.62
Loan-to-Deposit Ratio (%)	—	86%	85%
ACL / Total Loans (%)	1.25%	1.25%	1.24%
Nonaccrual Loans / Total Loans (%)	1.11%	0.68%	0.61%
Net Charge-offs ($USD Millions)	$(0.006)	$0.269	$3.002
Classified Loans ($USD Millions)	$55.030	$105.465	$88.628
TBV per Share ($USD)	$23.03	$21.12	$21.19
Tier 1 Leverage Ratio (%)	8.9%	8.0%	8.3%

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Quarterly Dividend per Share	Q1 2025 payout	$0.23 (Q3 2024)	$0.26 (payable Feb 21, 2025; record Feb 14, 2025)	Raised
Cost Savings Target (Run-Rate)	Ongoing	18% target announced	18% achieved as of Dec 31, 2024	Achieved
Merger-Related Expenses	Q1 2025	Ongoing through conversion	Expect some additional in Q1 2025	Maintained (timing update)
Effective Tax Rate	Q4/Q3 2024	~20%	20.1% in Q4 and Q3 2024	Maintained

Earnings Call Themes & Trends

Earnings call transcript for Q4 2024 was not available in our document corpus; themes below reflect management disclosures across earnings materials.

Topic	Previous Mentions (Q2 2024)	Previous Mentions (Q3 2024)	Current Period (Q4 2024)	Trend
Core System Conversion & Integration	Merger announced; integration planning	System conversion scheduled for Nov 2024	Core conversion completed Nov 2024	Completed
Cost Savings/Synergies	Cost saves underway	On target to achieve cost saves	18% cost-saves achieved	Positive
Funding Costs & NIM	NIM 3.54%; funding costs rising	NIM 4.14%; funding costs stabilizing	NIM 4.05%; funding costs show signs of stabilizing	Stabilizing with accretion
Wealth Management Growth	Sequential growth and strong markets	AUM ~$3.2B; strong fee generation	Wealth income $4.9M; slight QoQ dip	Strong but normalizing
Credit Quality & Risk	Office CRE metrics; NPLs down	NPLs up from merger; classified loans up	Classified loans down; nonaccrual ratio improved	Improving
Technology Leadership	—	—	New CIO appointed (Jan 2025)	Strengthening tech focus
Legal/Regulatory	—	—	$0.5M legal settlement in Q4	One-time item

Management Commentary

“We successfully completed our core conversion in November and have achieved the targeted 18% cost savings... With the integration behind us, we look forward to returning our focus to growing the company, enhancing shareholder value and building the premier community banking franchise...” — Thomas R. Quinn, Jr., President & CEO .
Q4 narrative emphasized stabilization: “Funding costs show signs of stabilizing,” with NIM supported by purchase accounting accretion of $7.2M (52 bps) .
Strategic derisking: CRE concentrations reduced; classified loans decreased $16.9M; sale of $6.0M mostly C&I loans including $2.6M nonaccruals .

Q&A Highlights

Earnings call transcript for Q4 2024 was not available in our document set; therefore, specific Q&A themes, clarifications, and tone changes cannot be reported. Management disclosures indicate focus on integration completion, cost-saves realization, credit clean-up, and stabilization of funding costs .

Estimates Context

Wall Street consensus (S&P Global) for Q4 2024 EPS and revenue was unavailable at time of analysis due to SPGI daily request limit; comparisons to consensus cannot be provided. As a result, any estimate-related adjustments by the Street will likely hinge on: lower NIM QoQ, fee income softness from waiver-driven service charges, and improved asset quality offset by higher net charge-offs .

Key Takeaways for Investors

Integration is done and cost-saves realized (18% run-rate), positioning the bank to pivot from consolidation to growth; expect opex benefits to carry into 2025 .
NIM declined QoQ to 4.05%, but purchase accounting accretion was a large contributor (52 bps); monitor underlying core NIM as accretion fades .
Credit metrics improved (classified/nonaccrual ratios down), despite targeted charge-offs; continued derisking of CRE concentration adds resilience .
Noninterest income normalization is evident post conversion; wealth management remains a strong contributor at $4.9M .
Capital levels remain sound (Tier 1 leverage 8.3%); TBV per share increased to $21.19; dividend raised to $0.26, suggesting confidence in earnings power .
Near-term watch items: any additional Q1 2025 merger-related costs, deposit seasonality, and trajectory of fee waivers’ impact on service charges .
Medium-term thesis: scale and synergy capture from the Codorus merger, technology leadership additions, and fee-line durability (wealth/swaps) can support EPS growth once one-time items pass through .

Sources: Q4 2024 earnings 8-K/press release and exhibits, Q3 2024 press release, Q2 2024 8-K, and related management disclosures.

ORRSTOWN FINANCIAL SERVICES INC (ORRF)·Q4 2024 Earnings Summary