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Orrstown Financial Services, Inc. Reports Earnings for the First Quarter 2023
ソース: Nasdaq GlobeNewswire / 25 4 2023 15:02:26 America/Chicago
- Net income of $9.2 million and diluted earnings per share of $0.87 for the three months ended March 31, 2023 compared to net income of $9.6 million and diluted earnings per share of $0.91 for the three months ended December 31, 2022 and net income of $8.4 million and diluted earnings per share of $0.76 for the three months ended March 31, 2022;
- First quarter 2023 return on average assets of 1.27% and return on average equity of 15.88%;
- Tangible book value per share was $20.50 at March 31, 2023 compared to $19.47 at December 31, 2022. Tangible common equity improved from 7.1% at December 31, 2022 to 7.3% at March 31, 2023; capital impact of $13.0 million legal settlement expense and $3.2 million restructuring expense recorded in the third quarter of 2022 has been fully recovered;
- First quarter deposit growth was $39.4 million, or 6% annualized; deposits that are uninsured and not collateralized totaled $474.2 million, or 19%, of total deposits at March 31, 2023; deposit outflows outside of ordinary course were minimal;
- Net unrealized losses on securities available-for-sale improved by $8.8 million during the first quarter of 2023; net unrealized losses were 7% of the amortized cost of the investment security portfolio at March 31, 2023;
- Net interest margin, on a tax equivalent basis, was 3.94% in the first quarter of 2023 as compared to 4.14% in the fourth quarter of 2022 and 3.49% for the three months ended March 31, 2022; an increase in funding costs was the primary driver of the first quarter 2023 decrease; higher prepayment fees in the fourth quarter accounted for five basis points of the current quarter decrease;
- First quarter commercial loan growth, excluding SBA PPP loan forgiveness activity, was $63.2 million, or 15% annualized, as some expected fourth quarter closings were completed in the first quarter of 2023; the pace of loan production is expected to moderate for the remainder of 2023;
- Provision for credit losses was $0.7 million in the first quarter of 2023 under the new current expected credit loss ("CECL") standard compared to $0.6 million in the fourth quarter of 2022 under the incurred loss model; asset quality metrics remain strong despite growing economic uncertainty;
- The Company repurchased 54,262 shares of its common stock at an average price of $21.65 per share during the first quarter of 2023;
- The Board of Directors declared a cash dividend of $0.20 per common share, payable May 16, 2023, to shareholders of record as of May 9, 2023.
SHIPPENSBURG, Pa., April 25, 2023 (GLOBE NEWSWIRE) -- Orrstown Financial Services, Inc. ("Orrstown" or the “Company”) (NASDAQ: ORRF), the parent company of Orrstown Bank (the “Bank”), announced earnings for the three months ended March 31, 2023. Net income totaled $9.2 million for the three months ended March 31, 2023, compared to $9.6 million for the three months ended December 31, 2022 and $8.4 million for the three months ended March 31, 2022. Diluted earnings per share totaled $0.87 for the three months ended March 31, 2023, compared to $0.91 for the three months ended December 31, 2022 and $0.76 for the three months ended March 31, 2022.
“Despite widespread challenges in the banking industry, Orrstown’s dedication to the communities we serve, combined with the trust our clients have shown in us, resulted in another successful quarter. Strong commercial loan growth and net interest margin helped the Company generate higher than expected net income and return metrics. While we expect the pace of loan growth to slow in the near term as we assess the economic and credit environment and anticipate some further margin compression, we remain confident that we are positioned to generate solid earnings going forward,” commented Thomas R. Quinn, Jr., President and Chief Executive Officer.
“Community banks have demonstrated their resilience even during the recent market disruption the industry has experienced since March when an already competitive deposit environment was further fueled by concerns about the banking sector," Quinn added. "Thanks in large part to our proactive client outreach and emphasis on our stability, we experienced modest deposit growth in a difficult deposit-gathering environment. Our capital position remains strong, and our balance sheet is closely monitored to ensure appropriate interest rate risk management. There is a new set of challenges ahead and we will continue to take a measured approach to drive client satisfaction and maximize shareholder value.”
DISCUSSION OF RESULTS
Balance Sheet
Loans
Loans held for investment, which includes SBA PPP loans, increased by $56.3 million from December 31, 2022 to March 31, 2023, or 11% annualized. Commercial loans, excluding SBA PPP loan forgiveness activity, increased by $63.2 million, or 15% annualized, from December 31, 2022 to March 31, 2023. SBA PPP loans, net of deferred fees and costs, declined by $3.0 million to $10.8 million at March 31, 2023 from $13.8 million at December 31, 2022 due to forgiveness and payment activity. Net deferred SBA PPP fees of $0.2 million remain at March 31, 2023. The first lien residential mortgage portfolio declined by $2.8 million, or 5% annualized, in the three months ended March 31, 2023.
Investment Securities
Investment securities, which are all available-for-sale, increased by $8.7 million to $533.1 million at March 31, 2023 compared to $524.4 million at December 31, 2022. Net unrealized losses on investment securities declined by $8.8 million primarily due to the further inversion of the yield curve. During the first quarter of 2023, the Bank purchased investment securities totaling $9.5 million. These purchases were offset by normal paydown activity of $11.1 million. In addition, Federal Home Loan Bank ("FHLB") stock increased $2.2 million due to an increase in borrowings during the first quarter of 2023. The overall duration of the Company's investment securities portfolio is 4.8 years. The Company has sufficient access to liquidity such that management does not believe it would be necessary to sell any of its investment securities at a loss to offset any unexpected deposit outflows. Management believes the structure of the Bank's investment portfolio is appropriately aligned with the rest of the balance sheet to protect against significant and unexpected charges against earnings and capital. See Appendix B for a summary of the Bank's investment securities at March 31, 2023, highlighting their concentrations, credit ratings and credit enhancement levels.
Deposits
Deposits increased by $39.4 million, or 6% annualized, totaling approximately $2.5 billion at both March 31, 2023 and December 31, 2022. In the first quarter of 2023, time deposits increased by $51.6 million, or 83% annualized, money market deposits increased by $4.1 million, or 3% annualized, and interest-bearing demand deposits increased by $2.8 million, or 1% annualized. These increases were partially offset by a decrease in savings deposits of $11.7 million, or 21% annualized, and a decrease in noninterest-bearing demand deposits of $7.4 million, or 6% annualized. The increase in time deposits was attributable to promotional offerings of up to 18-month terms. The decline in the savings and noninterest-bearing deposit categories was primarily the result of clients seeking higher-yielding products. During the first quarter of 2023, the Bank was successful at retaining many of those deposits and driving inflows from new clients as well. At March 31, 2023, deposits that are uninsured and not collateralized totaled $474.2 million, or 19%, of total deposits. Alternative solutions, such as reciprocal deposit products, have been offered to clients concerned about uninsured deposits. The Bank's loan-to-deposit ratio was only modestly higher at 88% at March 31, 2023 from 87% at December 31, 2022.
The previously announced sale of the Bank's Path Valley branch is expected to be completed in the second quarter of 2023. It is expected that an estimated $27.5 million in deposits will be sold at a premium of 6.0%.
Borrowings
FHLB advances and other borrowings increased by $56.2 million to $162.3 million at March 31, 2023 compared to $106.1 million at December 31, 2022. The increase in borrowings during the first quarter of 2023 includes fixed-rate advances from the FHLB totaling $40.0 million. With the continued strength in loan fundings and increased competition for deposits, the Bank elected to replace some of its overnight borrowings with lower cost term advances. The Bank tested its various sources of funding during the first quarter of 2023 to ensure accessibility. The availability of alternative funding sources, such as the FHLB advances and other wholesale options, exceeded $1.0 billion at March 31, 2023.
Income Statement
Net Interest Income and Margin
Net interest income decreased by $1.2 million to $26.3 million for the three months ended March 31, 2023 compared to $27.5 million for the three months ended December 31, 2022. The net interest margin, on a tax equivalent basis, remained strong, but decreased to 3.94% in the first quarter of 2023 from 4.14% in the fourth quarter of 2022. The decrease in net interest margin was primarily the result of increased funding costs due to competitive pressures and an increase in higher cost borrowings.
Interest income on loans increased by $1.7 million to $28.7 million for the three months ended March 31, 2023 compared to $27.0 million for the three months ended December 31, 2022. Loan growth and higher interest rates on loans were the primary drivers of this increase. Interest income on loans for the three months ended March 31, 2023 included prepayment fee income of $0.1 million, a decrease of $0.3 million, from $0.4 million for the three months ended December 31, 2022, which resulted in a decrease of five basis points in net interest margin.
Interest income on investment securities increased by $0.3 million to $5.2 million for the three months ended March 31, 2023 from $4.9 million for the fourth quarter of 2022. The increase reflects higher yields on adjustable rate securities.
Interest expense increased by $3.4 million to $8.0 million for the three months ended March 31, 2023 compared to $4.6 million for the three months ended December 31, 2022 due primarily to increasing deposit and borrowing rates for both existing and new balances. In addition, average interest-bearing deposits increased by $56.4 million and average borrowings increased by $53.8 million during the three months ended March 31, 2023.
Provision for Credit Losses
The allowance for credit losses increased by $3.2 million to $28.4 million at March 31, 2023, compared to $25.2 million at December 31, 2022. The allowance for credit losses to total loans was 1.28% at March 31, 2023 compared to 1.17% at December 31, 2022. On January 1, 2023, the Company adopted Accounting Standards Update No. 2016-13, Financial Instruments - Credit Losses (Topic 326) ("ASU 2016-13"), the current expected credit losses accounting standard commonly referred to as "CECL," resulting in a cumulative-effect adjustment that increased the allowance for credit losses by $2.4 million. The Company recorded a provision for credit losses of $0.7 million for the three months ended March 31, 2023 under the CECL model compared to $0.6 million for the three months ended December 31, 2022 under the incurred loss model. Asset quality metrics remain strong despite growing economic uncertainty. Net recoveries were less than $0.1 million for the three months ended March 31, 2023 compared to net charge-offs of $0.1 million for the three months ended December 31, 2022. Non-accruals increased by $0.6 million to $21.2 million at March 31, 2023 from $20.6 million at December 31, 2022 primarily due to additions of $1.5 million, inclusive of $0.9 million transferred to non-accrual due to the treatment of purchased credit deteriorated loans at the individual asset level under CECL, partially offset by payments of $0.7 million, partial charge-offs of $0.1 million and loans returned to accrual status of $0.1 million. Management believes the allowance for credit losses to be adequate based on current asset quality metrics and economic conditions.
Management regularly analyzes the commercial real estate portfolio, which includes the review of occupancy, cash flows, expenses and expiring leases, as well as the location of the real estate. At March 31, 2023, the Company had $236.2 million in loans related to office space. Management believes that the office space portfolio is well-diversified and includes only limited exposure to properties located in major metro markets (less than 3% of the total commercial real estate loan balance as of March 31, 2023). In addition, management recently completed stress testing on commercial real estate loans totaling $1.0 million or greater. The average loan-to-value ratio was less than 60% for the tested loans. The results of this stress testing, for which projected cash flows were reduced by 30%, indicated that the average projected cash flows are sufficient for borrowers to meet covenant requirements.
Noninterest Income
Noninterest income decreased by $0.1 million to $6.1 million in the three months ended March 31, 2023 compared to $6.2 million in the three months ended December 31, 2022.
Wealth management income increased by $0.2 million to $2.7 million during the first quarter of 2023 from $2.5 million during the fourth quarter of 2022 due to slight improvement in market conditions in the stock and bond markets.
Mortgage banking income increased by $0.3 million from $0.2 million in the fourth quarter of 2022 to $0.5 million in the first quarter of 2023. Market conditions and elevated interest rates continued to hinder mortgage production during the first quarter of 2023. Due to the current mortgage interest rates, clients have shifted from conventional fixed-rate mortgages to adjustable-rate products, which has reduced the residential mortgage loan pipeline for sale in the secondary market. Mortgage loans sold totaled $9.6 million in the first quarter of 2023 compared to $8.6 million in the fourth quarter of 2022 and $31.9 million in the first quarter of 2022. During the three months ended March 31, 2023, mortgage interest rates declined, which resulted in an improvement to the fair value mark of the Bank's held-for-sale loans of $0.3 million.
During the first quarter of 2023, the Company did not execute any customer interest rate swaps. As a result, swap fee income decreased by $0.7 million for the three months ended March 31, 2023 compared to the three months ended December 31, 2022. Swap fee income fluctuates based on market conditions and client demand.
Noninterest Expenses
Noninterest expenses decreased by $0.9 million to $20.3 million in the three months ended March 31, 2023 from $21.2 million in the three months ended December 31, 2022.
Salaries and benefits expense decreased by $0.5 million to $12.2 million for the three months ended March 31, 2023 compared to $12.7 million for the three months ended December 31, 2022. The decrease was attributed primarily to performance-based bonuses recognized during the fourth quarter of 2022, partially offset by an increase in employee benefit costs and employment taxes in the first quarter of 2023 as these costs typically are higher early in the year.
Advertising and bank promotions expense decreased by $0.4 million to $0.4 million in the three months ended March 31, 2023 from $0.8 million for the three months ended December 31, 2022 due to $0.4 million in contributions to tax credit programs during the fourth quarter of 2022. Taxes other than income increased by $0.3 million to $0.5 million in the three months ended March 31, 2023 compared to $0.2 million in the three months ended December 31, 2022. This increase reflects the tax credits recognized on the contributions during the fourth quarter of 2022.
Other operating expenses decreased by $0.4 million to $2.2 million during the first quarter of 2023 compared to $2.6 million during the fourth quarter of 2022. This decrease included a reduction in client fraud losses of $0.1 million. Included in this balance is $0.2 million of mark-to-market losses on derivatives not designated as hedging instruments for the three months ended March 31, 2023 and December 31, 2022 at $0.2 million. The remaining fluctuation is attributable to normal business operations.
Income Taxes
The Company's effective tax rate for the first quarter of 2023 was 19.6% compared to 19.0% for the fourth quarter of 2022. The Company's effective tax rate for the three months ended March 31, 2023 is less than the 21% federal statutory rate due to tax-exempt income, including interest earned on tax-exempt loans and securities and income from life insurance policies, as well as tax credits. The increase in the effective tax rate was primarily due to an increase in taxable income as the effective tax rate in 2022 included the impact from the restructuring charge and legal settlement. In addition, as interest expense increases, the portion that is disallowed as a deduction against earnings, in association with the Bank's tax-exempt investments under the Tax Equity and Fiscal Responsibility Act of 1982 ("TEFRA"), also increases.
Capital
Shareholders’ equity totaled $240.2 million at March 31, 2023, an increase of $11.3 million from $228.9 million at December 31, 2022. The increase was primarily attributable to net income of $9.2 million and other comprehensive income of $7.1 million, partially offset by dividends paid of $2.1 million for the three months ended March 31, 2023 and the cumulative-effect adjustment from the adoption of CECL that decreased retained earnings by $2.0 million. Other comprehensive income increased due to after-tax declines of $6.8 million and $0.3 million in net unrealized losses on investment securities and cash flow hedges, respectively.
Tangible book value per share(1) increased to $20.50 per share at March 31, 2023 from $19.47 per share at December 31, 2022 primarily as a result of the increase in shareholders' equity. Recently, tangible book value per share was as low as $18.34 per share at September 30, 2022 after the Company recorded litigation and restructuring-related charges. Tangible book value per share increased in part due to improvement in other comprehensive income, which increased from $14.1 million in after-tax net unrealized losses during the third quarter of 2022 to after-tax net unrealized gains of $6.8 million during the first quarter of 2023.
(1) Non-GAAP measure. See Appendix A for additional information.
The Company's tangible common equity ratio increased to 7.3% at March 31, 2023 from 7.1% at December 31, 2022 primarily due to an increase in tangible equity from net income and the decrease in unrealized losses on available-for-sale securities. The Company's total risk-based capital ratio was 12.8% at March 31, 2023 up from 12.7% at December 31, 2022. The Company's Tier 1 leverage ratio remained at 8.5% at March 31, 2023 and December 31, 2022. At March 31, 2023, all four capital ratios applicable to the Company were above regulatory minimum levels to be deemed “well capitalized” under current bank regulatory guidelines. At this time, the Company continues to believe that capital is adequate to support the risks inherent in the balance sheet, as well as growth requirements.
The Board of Directors approved a cash dividend of $0.20 per share, payable on May 16, 2023, to shareholders of record as of May 9, 2023.
Investor Relations Contact:
Neelesh Kalani
Executive Vice President, Chief Financial Officer
Phone (717) 510-7097ORRSTOWN FINANCIAL SERVICES, INC. FINANCIAL HIGHLIGHTS (Unaudited) Three Months Ended March 31, March 31, (Dollars in thousands) 2023 2022 Profitability for the period: Net interest income $ 26,294 $ 22,573 Provision for credit losses 729 300 Noninterest income 6,078 7,474 Noninterest expenses 20,255 19,364 Income before income tax expense 11,388 10,383 Income tax expense 2,232 2,015 Net income available to common shareholders $ 9,156 $ 8,368 Financial ratios: Return on average assets (1) 1.27 % 1.20 % Return on average equity (1) 15.88 % 12.65 % Net interest margin (1) 3.94 % 3.49 % Efficiency ratio 62.6 % 64.4 % Income per common share: Basic $ 0.88 $ 0.77 Diluted $ 0.87 $ 0.76 Average equity to average assets 7.97 % 9.47 % (1) Annualized.
ORRSTOWN FINANCIAL SERVICES, INC. FINANCIAL HIGHLIGHTS (Unaudited) (continued) March 31, December 31, (Dollars in thousands, except per share amounts) 2023 2022 At period-end: Total assets $ 3,011,548 $ 2,922,408 Total deposits 2,515,626 2,476,246 Loans, net of allowance for credit losses 2,179,137 2,126,054 Loans held-for-sale, at fair value 7,341 10,880 Securities available for sale, at fair value 520,232 513,728 Borrowings 176,315 123,390 Subordinated notes 32,042 32,026 Shareholders' equity 240,161 228,896 Credit quality and capital ratios (1): Allowance for credit losses to total loans 1.28 % 1.17 % Total nonaccrual loans to total loans 0.96 % 0.96 % Nonperforming assets to total assets 0.71 % 0.70 % Allowance for credit losses to nonaccrual loans 134 % 122 % Total risk-based capital: Orrstown Financial Services, Inc. 12.8 % 12.7 % Orrstown Bank 12.4 % 12.3 % Tier 1 risk-based capital: Orrstown Financial Services, Inc. 10.4 % 10.3 % Orrstown Bank 11.2 % 11.2 % Tier 1 common equity risk-based capital: Orrstown Financial Services, Inc. 10.4 % 10.3 % Orrstown Bank 11.2 % 11.2 % Tier 1 leverage capital: Orrstown Financial Services, Inc. 8.5 % 8.5 % Orrstown Bank 9.2 % 9.2 % Book value per common share $ 22.46 $ 21.45 (1) Capital ratios are estimated, subject to regulatory filings. The Company elected the three-year phase in option for the day-one impact of ASU 2016-13 for current expected credit losses ("CECL") to regulatory capital. In the first year of adoption in 2023, the Company adjusted retained earnings, allowance for credit losses includable in tier 2 capital and the deferred tax assets from temporary differences in risk weighted assets by the permitted percentage of the day-one impact from adopting the new CECL standard.
ORRSTOWN FINANCIAL SERVICES, INC. CONSOLIDATED BALANCE SHEETS (Unaudited) (Dollars in thousands, except per share amounts) March 31, 2023 December 31, 2022 Assets Cash and due from banks $ 27,612 $ 28,477 Interest-bearing deposits with banks 70,711 32,346 Cash and cash equivalents 98,323 60,823 Restricted investments in bank stocks 12,869 10,642 Securities available for sale (amortized cost of $561,008 and $563,278 at March 31, 2023 and December 31, 2022, respectively) 520,232 513,728 Loans held for sale, at fair value 7,341 10,880 Loans 2,207,501 2,151,232 Less: Allowance for credit losses (28,364 ) (25,178 ) Net loans 2,179,137 2,126,054 Premises and equipment, net 29,106 29,328 Cash surrender value of life insurance 72,179 71,760 Goodwill 18,724 18,724 Other intangible assets, net 2,828 3,078 Accrued interest receivable 10,911 11,027 Deferred tax assets, net 21,335 24,031 Other assets 38,563 42,333 Total assets $ 3,011,548 $ 2,922,408 Liabilities Deposits: Noninterest-bearing $ 488,630 $ 494,131 Interest-bearing 1,999,479 1,950,807 Deposits held for assumption in connection with sale of bank branch 27,517 31,307 Total deposits 2,515,626 2,476,246 Securities sold under agreements to repurchase and federal funds purchased 13,989 17,251 FHLB advances and other borrowings 162,326 106,139 Subordinated notes 32,042 32,026 Accrued interest and other liabilities 47,404 61,850 Total liabilities 2,771,387 2,693,512 Shareholders’ Equity Preferred stock, $1.25 par value per share; 500,000 shares authorized; no shares issued or outstanding — — Common stock, no par value—$0.05205 stated value per share 50,000,000 shares authorized; 11,222,732 shares issued and 10,691,907 outstanding at March 31, 2023; 11,229,242 shares issued and 10,671,413 outstanding at December 31, 2022 584 584 Additional paid—in capital 187,572 189,264 Retained earnings 97,519 92,473 Accumulated other comprehensive losses (32,825 ) (39,913 ) Treasury stock— 530,825 and 557,829 shares, at cost at March 31, 2023 and December 31, 2022, respectively (12,689 ) (13,512 ) Total shareholders’ equity 240,161 228,896 Total liabilities and shareholders’ equity $ 3,011,548 $ 2,922,408 ORRSTOWN FINANCIAL SERVICES, INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited) Three Months Ended March 31, March 31, (In thousands) 2023 2022 Interest income Loans $ 28,744 $ 21,369 Investment securities - taxable 4,370 1,598 Investment securities - tax-exempt 865 722 Short-term investments 298 101 Total interest income 34,277 23,790 Interest expense Deposits 6,202 685 Securities sold under agreements to repurchase and federal funds purchased 25 7 FHLB advances and other borrowings 1,252 22 Subordinated notes 504 503 Total interest expense 7,983 1,217 Net interest income 26,294 22,573 Provision for credit losses 729 300 Net interest income after provision for credit losses 25,565 22,273 Noninterest income Service charges 1,157 1,073 Interchange income 965 981 Swap fee income — 953 Wealth management income 2,747 2,869 Mortgage banking activities 478 721 Investment securities losses (8 ) (146 ) Other income 739 1,023 Total noninterest income 6,078 7,474 Noninterest expenses Salaries and employee benefits 12,196 11,337 Occupancy, furniture and equipment 2,333 2,567 Data processing 1,217 1,053 Advertising and bank promotions 405 355 FDIC insurance 504 283 Professional services 734 808 Taxes other than income 457 564 Intangible asset amortization 250 292 Other operating expenses 2,159 2,105 Total noninterest expenses 20,255 19,364 Income before income tax expense 11,388 10,383 Income tax expense 2,232 2,015 Net income $ 9,156 $ 8,368 Share information: Basic earnings per share $ 0.88 $ 0.77 Diluted earnings per share $ 0.87 $ 0.76 Weighted average shares - basic 10,385 10,860 Weighted average shares - diluted 10,496 11,007 ORRSTOWN FINANCIAL SERVICES, INC. ANALYSIS OF NET INTEREST INCOME Average Balances and Interest Rates, Taxable-Equivalent Basis (Unaudited) Three Months Ended 3/31/2023 12/31/2022 9/30/2022 6/30/2022 3/31/2022 Taxable- Taxable- Taxable- Taxable- Taxable- Taxable- Taxable- Taxable- Taxable- Taxable- Average Equivalent Equivalent Average Equivalent Equivalent Average Equivalent Equivalent Average Equivalent Equivalent Average Equivalent Equivalent (Dollars in thousands) Balance Interest Rate Balance Interest Rate Balance Interest Rate Balance Interest Rate Balance Interest Rate Assets Federal funds sold & interest-bearing bank balances $ 29,599 $ 298 4.07 % $ 28,419 $ 238 3.31 % $ 38,068 $ 200 2.08 % $ 131,449 $ 235 0.72 % $ 199,788 $ 101 0.20 % Investment securities (1) 525,685 5,465 4.18 512,779 5,170 4.03 528,988 4,377 3.31 523,940 3,388 2.59 472,195 2,512 2.13 Loans (1)(2)(3) 2,180,224 28,844 5.36 2,133,052 27,061 5.04 2,051,707 23,219 4.49 2,008,283 22,090 4.41 1,974,804 21,429 4.39 Total interest-earning assets 2,735,508 34,607 5.12 2,674,250 32,469 4.83 2,618,763 27,796 4.22 2,663,672 25,713 3.87 2,646,787 24,042 3.67 Other assets 197,620 202,384 196,277 192,561 184,300 Total Assets $ 2,933,128 $ 2,876,634 $ 2,815,040 $ 2,856,233 $ 2,831,087 Liabilities and Shareholders' Equity Interest-bearing demand deposits $ 1,503,421 4,862 1.31 $ 1,459,109 2,838 0.77 $ 1,379,082 912 0.26 $ 1,420,051 301 0.09 $ 1,398,182 256 0.07 Savings deposits 219,408 133 0.25 228,521 132 0.23 237,462 90 0.15 236,916 63 0.11 227,676 57 0.10 Time deposits 275,880 1,207 1.78 254,637 609 0.95 265,015 370 0.55 275,408 337 0.49 298,618 372 0.51 Total interest-bearing deposits 1,998,709 6,202 1.26 1,942,267 3,579 0.73 1,881,559 1,372 0.29 1,932,375 701 0.15 1,924,476 685 0.14 Securities sold under agreements to repurchase and federal funds purchased 13,868 25 0.72 18,211 20 0.46 23,480 10 0.18 24,045 7 0.11 23,530 7 0.12 FHLB advances and other borrowings 106,434 1,252 4.77 48,276 509 4.21 10,394 78 3.02 1,741 21 4.74 1,850 22 4.74 Subordinated notes 32,033 504 6.29 32,016 503 6.29 32,000 504 6.29 31,985 503 6.29 31,969 503 6.29 Total interest-bearing liabilities 2,151,044 7,983 1.50 2,040,770 4,611 0.90 1,947,433 1,964 0.40 1,990,146 1,232 0.25 1,981,825 1,217 0.25 Noninterest-bearing demand deposits 495,562 540,275 575,777 572,171 540,139 Other liabilities 52,630 74,602 49,964 47,190 40,919 Total Liabilities 2,699,236 2,655,647 2,573,174 2,609,507 2,562,883 Shareholders' Equity 233,892 220,987 241,866 246,726 268,204 Total $ 2,933,128 $ 2,876,634 $ 2,815,040 $ 2,856,233 $ 2,831,087 Taxable-equivalent net interest income / net interest spread 26,624 3.62 % 27,858 3.93 % 25,832 3.82 % 24,481 3.62 % 22,825 3.42 % Taxable-equivalent net interest margin 3.94 % 4.14 % 3.92 % 3.68 % 3.49 % Taxable-equivalent adjustment (330 ) (374 ) (377 ) (363 ) (252 ) Net interest income $ 26,294 $ 27,484 $ 25,455 $ 24,118 $ 22,573 Ratio of average interest-earning assets to average interest-bearing liabilities 127 % 131 % 134 % 134 % 134 % NOTES: (1) Yields and interest income on tax-exempt assets have been computed on a taxable-equivalent basis assuming a 21% tax rate. (2) Average balances include nonaccrual loans. (3) Interest income on loans includes prepayment and late fees, where applicable ORRSTOWN FINANCIAL SERVICES, INC. HISTORICAL TRENDS IN QUARTERLY FINANCIAL DATA (Unaudited) (In thousands) March 31,
2023December 31,
2022September 30,
2022June 30,
2022March 31,
2022Profitability for the quarter: Net interest income $ 26,294 $ 27,484 $ 25,455 $ 24,118 $ 22,573 Provision for credit losses 729 585 1,500 1,775 300 Noninterest income 6,078 6,226 6,058 7,194 7,474 Noninterest expenses 20,255 21,236 36,412 18,794 19,364 Income (loss) before income taxes 11,388 11,889 (6,399 ) 10,743 10,383 Income tax expense (benefit) 2,232 2,263 (1,571 ) 1,872 2,015 Net income (loss) $ 9,156 $ 9,626 $ (4,828 ) $ 8,871 $ 8,368 Financial ratios: Return on average assets (1) 1.27 % 1.33 % (0.68 )% 1.25 % 1.20 % Return on average assets, adjusted (1)(2)(3) 1.27 % 1.33 % 1.12 % 1.25 % 1.20 % Return on average equity (1) 15.88 % 17.28 % (7.92 )% 14.42 % 12.65 % Return on average equity, adjusted (1)(2)(3) 15.88 % 17.28 % 13.02 % 14.42 % 12.65 % Net interest margin (1) 3.94 % 4.14 % 3.92 % 3.68 % 3.49 % Efficiency ratio 62.6 % 63.0 % 115.5 % 60.0 % 64.4 % Efficiency ratio, adjusted (2)(3) 62.6 % 63.0 % 64.3 % 60.0 % 64.4 % Per share information: Income (loss) per common share: Basic $ 0.88 $ 0.93 $ (0.47 ) $ 0.84 $ 0.77 Basic, adjusted (2)(3) 0.88 0.93 0.77 0.84 0.77 Diluted 0.87 0.91 (0.47 ) 0.83 0.76 Diluted, adjusted (2)(3) 0.87 0.91 0.75 0.83 0.76 Book value 22.46 21.45 20.34 22.25 23.00 Tangible book value (2) 20.50 19.47 18.34 20.23 21.03 Cash dividends paid 0.20 0.19 0.19 0.19 0.19 Average basic shares 10,385 10,382 10,369 10,610 10,860 Average diluted shares 10,496 10,550 10,529 10,744 11,007 (1) Annualized. (2) Ratio has been adjusted for the restructuring charge and provision for legal settlement for the three months ended September 30, 2022. (3) Non-GAAP based financial measure. Please refer to Appendix A - Supplemental Reporting of Non-GAAP Measures and GAAP to Non-GAAP Reconciliations for a discussion of our use of non-GAAP based financial measures, including tables reconciling GAAP and non-GAAP financial measures appearing herein. ORRSTOWN FINANCIAL SERVICES, INC. HISTORICAL TRENDS IN QUARTERLY FINANCIAL DATA (Unaudited) (continued) (In thousands) March 31,
2023December 31,
2022September 30,
2022June 30,
2022March 31,
2022Noninterest income: Service charges $ 1,157 $ 1,131 $ 1,216 $ 1,194 $ 1,073 Interchange income 965 996 1,014 1,064 981 Swap fee income — 697 197 785 953 Wealth management income 2,747 2,535 2,953 2,894 2,869 Mortgage banking activities 478 202 (1,014 ) 498 721 Other income 739 662 1,706 762 1,023 Investment securities (losses) gains (8 ) 3 (14 ) (3 ) (146 ) Total noninterest income $ 6,078 $ 6,226 $ 6,058 $ 7,194 $ 7,474 Noninterest expenses: Salaries and employee benefits $ 12,196 $ 12,650 $ 12,705 $ 11,312 $ 11,337 Occupancy, furniture and equipment 2,333 2,442 2,380 2,423 2,567 Data processing 1,217 1,150 1,192 1,165 1,053 Advertising and bank promotions 405 750 278 881 355 FDIC insurance 504 316 294 190 283 Professional services 734 837 887 722 808 Taxes other than income 457 231 488 108 564 Intangible asset amortization 250 260 272 281 292 Provision for legal settlement — — 13,000 — — Restructuring expenses — — 3,155 — — Other operating expenses 2,159 2,600 1,761 1,712 2,105 Total noninterest expenses $ 20,255 $ 21,236 $ 36,412 $ 18,794 $ 19,364 ORRSTOWN FINANCIAL SERVICES, INC. HISTORICAL TRENDS IN QUARTERLY FINANCIAL DATA (Unaudited) (continued) (In thousands) March 31,
2023December 31,
2022September 30,
2022June 30,
2022March 31,
2022Balance Sheet at quarter end: Cash and cash equivalents $ 98,323 $ 60,823 $ 66,927 $ 111,906 $ 214,238 Restricted investments in bank stocks 12,869 10,642 6,469 6,500 6,791 Securities available for sale 520,232 513,728 503,596 512,698 529,730 Loans held for sale, at fair value 7,341 10,880 10,175 7,824 7,403 Loans: Commercial real estate: Owner occupied 339,371 315,770 313,125 287,825 256,526 Non-owner occupied 603,396 608,043 573,605 559,309 558,999 Multi-family 144,053 138,832 114,561 116,110 93,158 Non-owner occupied residential 106,390 104,604 105,267 109,141 102,269 Commercial and industrial (1) 380,683 357,774 378,574 379,729 443,170 Acquisition and development: 1-4 family residential construction 20,941 25,068 20,810 22,650 15,115 Commercial and land development 174,556 158,308 148,512 134,947 105,204 Municipal 11,329 12,173 12,683 12,957 14,626 Total commercial loans 1,780,719 1,720,572 1,667,137 1,622,668 1,589,067 Residential mortgage: First lien 227,031 229,849 220,970 202,787 203,231 Home equity – term 5,371 5,505 5,869 5,996 5,820 Home equity – lines of credit 183,340 183,241 180,267 171,269 164,818 Installment and other loans 11,040 12,065 13,684 14,909 15,371 Total loans 2,207,501 2,151,232 2,087,927 2,017,629 1,978,307 Allowance for credit losses (2) (28,364 ) (25,178 ) (24,709 ) (23,279 ) (21,508 ) Net loans held-for-investment 2,179,137 2,126,054 2,063,218 1,994,350 1,956,799 Goodwill 18,724 18,724 18,724 18,724 18,724 Other intangible assets, net 2,828 3,078 3,338 3,610 3,891 Total assets 3,011,548 2,922,408 2,852,092 2,824,201 2,900,537 Total deposits (3) 2,515,626 2,476,246 2,505,853 2,478,616 2,545,992 Borrowings 176,315 123,390 22,632 25,965 26,412 Subordinated notes 32,042 32,026 32,010 31,994 31,978 Total shareholders' equity 240,161 228,896 217,378 237,527 254,804 (1) This balance includes $10.8 million, $13.8 million, $17.0 million, $30.2 million and $122.5 million of SBA PPP loans, net of deferred fees and costs, at March 31, 2023, December 31, 2022, September 30, 2022, June 30, 2022 and March 31, 2022, respectively.
(2) The balance at March 31, 2023 includes $2.4 million in a one-time cumulative-effect adjustment that increased the allowance for credit losses from the adoption of the new CECL standard.
(3) This balance includes deposits of approximately $27.5 million expected to be conveyed in the Path Valley branch sale at March 31, 2023, which is comprised of $21.5 million in interest-bearing deposits and $6.0 million in non-interest bearing deposits. At December 31, 2022, $31.7 million in deposits were expected to be conveyed in the branch sale, consisting of $24.3 million in interest-bearing deposits and $7.4 million in non-interest bearing deposits.
ORRSTOWN FINANCIAL SERVICES, INC. HISTORICAL TRENDS IN QUARTERLY FINANCIAL DATA (Unaudited) (continued) March 31,
2023December 31,
2022September 30,
2022June 30,
2022March 31,
2022Capital and credit quality measures (1): Total risk-based capital: Orrstown Financial Services, Inc 12.8 % 12.7 % 12.7 % 13.5 % 14.3 % Orrstown Bank 12.4 % 12.3 % 12.9 % 13.3 % 13.8 % Tier 1 risk-based capital: Orrstown Financial Services, Inc 10.4 % 10.3 % 10.2 % 10.9 % 11.7 % Orrstown Bank 11.2 % 11.2 % 11.8 % 12.2 % 12.7 % Tier 1 common equity risk-based capital: Orrstown Financial Services, Inc 10.4 % 10.3 % 10.2 % 10.9 % 11.7 % Orrstown Bank 11.2 % 11.2 % 11.8 % 12.2 % 12.7 % Tier 1 leverage capital: Orrstown Financial Services, Inc 8.5 % 8.5 % 8.4 % 8.5 % 8.8 % Orrstown Bank 9.2 % 9.2 % 9.6 % 9.5 % 9.5 % Average equity to average assets 7.97 % 7.68 % 8.59 % 8.64 % 9.47 % Allowance for credit losses to total loans 1.28 % 1.17 % 1.18 % 1.15 % 1.09 % Total nonaccrual loans to total loans 0.96 % 0.96 % 0.25 % 0.27 % 0.28 % Nonperforming assets to total assets 0.71 % 0.70 % 0.19 % 0.19 % 0.19 % Allowance for credit losses to nonaccrual loans 134 % 122 % 466 % 432 % 390 % Other information: Net (recoveries) charge-offs $ (34 ) $ 116 $ 70 $ 4 $ (28 ) Classified loans 34,024 36,325 19,576 19,682 23,421 Nonperforming and other risk assets: Nonaccrual loans (3) 21,246 20,583 5,303 5,387 5,510 Other real estate owned 85 — — — — Total nonperforming assets 21,331 20,583 5,303 5,387 5,510 Financial difficulty modifications / Troubled debt restructurings still accruing (2) — 682 689 568 575 Loans past due 90 days or more and still accruing (3) 28 439 232 322 238 Total nonperforming and other risk assets $ 21,359 $ 21,704 $ 6,224 $ 6,277 $ 6,323 (1) Capital ratios are estimated, subject to regulatory filings. The Company elected the three-year phase in option for the day-one impact of ASU 2016-13 for current expected credit losses ("CECL") to regulatory capital. In the first year of adoption in 2023, the Company adjusted retained earnings, allowance for credit losses includable in tier 2 capital and the deferred tax assets from temporary differences in risk weighted assets by the permitted percentage of the day-one impact from adopting the new CECL standard. (2) On January 1, 2023, the Company adopted ASU No. 2022-02, Financial Instruments – Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures (“ASU 2022-02”), which eliminated the troubled debt restructuring ("TDR") accounting model and requires that the Company evaluate, based on the accounting for loan modifications, whether the borrower is experiencing financial difficulty and the modification results in a more-than-insignificant direct change in the contractual cash flows and represents a new loan or a continuation of an existing loan. At March 31, 2023, the Company did not have loans meeting the “Financial Difficulty Modification” criteria in accordance with ASU 2022-02. (3) Includes zero, $0.4 million, $0.2 million, $0.3 million and $0.2 million of purchased credit impaired loans at March 31, 2023, December 31, 2022, September 30, 2022, June 30, 2022, and March 31, 2022, respectively, in accordance with ASC 310-30. Upon adoption of the CECL standard, purchased credit deteriorated loans were evaluated on an individual loan level and reported on an individual loan basis under ASC 310-20, Nonrefundable Fees and Other Costs. Appendix A- Supplemental Reporting of Non-GAAP Measures and GAAP to Non-GAAP Reconciliations
As a result of acquisitions, the Company has intangible assets consisting of goodwill and core deposit and other intangible assets, which totaled $21.6 million and $21.8 million at March 31, 2023 and December 31, 2022, respectively. Additionally, the Company incurred $3.2 million and $13.0 million in restructuring charges and a provision for legal settlement, respectively, during the three months ended September 30, 2022.
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.
Tangible book value per common share and the impact of the restructuring charge and legal settlement 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:
(dollars and shares in thousands)
Tangible Book Value per Common Share March 31,
2023December 31,
2022September 30,
2022June 30,
2022March 31,
2022Shareholders' equity (most directly comparable GAAP-based measure) $ 240,161 $ 228,896 $ 217,378 $ 237,527 $ 254,804 Less: Goodwill 18,724 18,724 18,724 18,724 18,724 Other intangible assets 2,828 3,078 3,338 3,610 3,891 Related tax effect (594 ) (646 ) (701 ) (758 ) (817 ) Tangible common equity (non-GAAP) $ 219,203 $ 207,740 $ 196,017 $ 215,951 $ 233,006 Common shares outstanding 10,692 10,671 10,686 10,676 11,079 Book value per share (most directly comparable GAAP-based measure) $ 22.46 $ 21.45 $ 20.34 $ 22.25 $ 23.00 Intangible assets per share 1.96 1.98 2.00 2.02 1.97 Tangible book value per share (non-GAAP) $ 20.50 $ 19.47 $ 18.34 $ 20.23 $ 21.03 (dollars and shares in thousands) Adjusted Ratios for Restructuring Charges and Provision for Legal Settlement September 30, 2022 Three Months Ended Net loss (A) - most directly comparable GAAP-based measure $ (4,828 ) Plus: Restructuring expenses (B) 3,155 Plus: Provision for legal settlement (B) 13,000 Less: Related tax effect (C) (3,393 ) Adjusted net income (D=A+B-C) - Non-GAAP $ 7,934 Average assets (E) $ 2,815,040 Return on average assets (= A / E) - most directly comparable GAAP-based measure (0.68 )% Return on average assets, adjusted (1) (= D / E) - Non-GAAP 1.12 % Average equity (F) $ 241,866 Return on average equity (= A / F) - most directly comparable GAAP-based measure (7.92 )% Return on average equity, adjusted (1) (= D / F) - Non-GAAP 13.02 % Weighted average shares - basic (G) - most directly comparable GAAP-based measure 10,369 Basic loss per share (= A / G) - most directly comparable GAAP-based measure $ (0.47 ) Basic earnings per share, adjusted (= D / G) - Non-GAAP $ 0.77 Weighted average shares - diluted (H) - most directly comparable GAAP-based measure 10,369 Diluted loss per share (= A / H) - most directly comparable GAAP-based measure $ (0.47 ) Diluted earnings per share, adjusted (= D / H) - Non-GAAP $ 0.75 Noninterest expense (I) - most directly comparable GAAP-based measure $ 36,412 Less: Restructuring expenses (B) (3,155 ) Less: Provision for legal expenses (B) (13,000 ) Adjusted noninterest expense (J = I - B) - Non-GAAP $ 20,257 Net interest income (K) $ 25,455 Noninterest income (L) 6,058 Total operating income (M = K + L) $ 31,513 Efficiency ratio (= I / M) - most directly comparable GAAP-based measure 115.5 % Efficiency ratio, adjusted (= J / M) - Non-GAAP 64.3 % Appendix B- Investment Portfolio Concentrations
The following table summarizes the credit ratings and collateral associated with the Company's investment security portfolio, excluding equity securities, at March 31, 2023:
(dollars in thousands)
Sector Portfolio Mix Amortized Book Fair Value Credit Enhancement AAA AA A BBB NR Collateral / Guarantee Type Unsecured ABS 1 % $ 4,610 $ 4,055 33 % — % — % — % — % 100 % Unsecured Consumer Debt Student Loan ABS 1 6,542 6,309 27 — — — — 100 Seasoned Student Loans Federal Family Education Loan ABS 19 108,157 105,437 8 89 11 — — — Federal Family Education Loan (1) PACE Loan ABS — 2,633 2,402 6 100 — — — — PACE Loans (4) Non-Agency CMBS 4 24,299 24,390 19 — — — — 100 Non-Agency RMBS 3 16,862 13,050 14 100 — — — — Reverse Mortgages (2) Municipal - General Obligation 19 104,797 95,481 4 90 6 — — Municipal - Revenue 22 120,511 108,121 — 82 12 — 6 SBA ReRemic (5) 1 4,827 4,741 — 100 — — — SBA Guarantee (3) Small Business Administration 2 10,043 10,708 — 100 — — — SBA Guarantee (3) Agency MBS 24 137,290 127,475 — 100 — — — Residential Mortgages (3) U.S. Treasury securities 4 20,067 17,693 — 100 — — — U.S. Government Guarantee (3) Bank CDs — 249 249 — — — — 100 FDIC-Insured CD 100 % $ 560,887 $ 520,111 21 % 67 % 4 % — % 8 % (1) 97% guaranteed by U.S. government (2) Non-agency reverse mortgages with current structural credit enhancements (3) Guaranteed by U.S. government or U.S. government agencies (4) PACE acronym represents Property Assessed Clean Energy loans (5) SBA ReRemic acronym represents Re-Securitization of Real Estate Mortgage Investment Conduits Note: Ratings in table are the lowest of the six rating agencies (Standard & Poor's, Moody's, Fitch, Morningstar, DBRS and Kroll Bond Rating Agency). Standard & Poor's rates U.S. government obligations at AA+. About the Company
With $3.0 billion in assets, Orrstown Financial Services, Inc. and its wholly-owned subsidiary, Orrstown Bank, provide a wide range of consumer and business financial services 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. The Company's lending area also includes adjacent counties in Pennsylvania and Maryland, as well as Loudon County, Virginia and Berkeley, Jefferson and Morgan Counties, West Virginia. Orrstown Bank is an Equal Housing Lender and its deposits are insured up to the legal maximum by the FDIC. Orrstown Financial Services, Inc.’s common stock is traded on Nasdaq (ORRF). For more information about Orrstown Financial Services, Inc. and Orrstown Bank, visit www.orrstown.com.
Cautionary Note Regarding Forward-Looking Statements:
This press release contains “forward-looking statements” within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. Forward-looking statements reflect the current views of the Company's management with respect to, among other things, future events and the Company's financial performance. These statements are often, but not always, made through the use of words or phrases such as “may,” “should,” “could,” “predict,” “potential,” “believe,” “will likely result,” “expect,” “continue,” “will,” “anticipate,” “seek,” “estimate,” “intend,” “plan,” “project,” “forecast,” “goal,” “target,” “would” and “outlook,” or the negative variations of those words or other comparable words of a future or forward-looking nature. These forward-looking statements are not historical facts, and are based on current expectations, estimates and projections about the Company's industry, management’s beliefs and certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond the Company's control. Forward-looking statements are statements that include projections, predictions, expectations, estimates or beliefs about events or results or otherwise are not statements of historical factors, many of which, by their nature, are inherently uncertain and beyond the Company's control, and include, but are not limited to, statements related to new business development, new loan opportunities, growth in the balance sheet and fee-based revenue lines of business, merger and acquisition activity, cost savings initiatives, reducing risk assets and mitigating losses in the future. Accordingly, the Company cautions you that any such forward-looking statements are not guarantees of future performance and are subject to risks, assumptions and uncertainties that are difficult to predict. Although the Company believes that the expectations reflected in these forward-looking statements are reasonable as of the date made, actual results may prove to be materially different from the results expressed or implied by the forward-looking statements and there can be no assurances that the Company will achieve the desired level of new business development and new loans, growth in the balance sheet and fee-based revenue lines of business, successful merger and acquisition activity and cost savings initiatives and continued reductions in risk assets or mitigate losses in the future. Factors which could cause the actual results of the Company's operations to differ materially from expectations include, but are not limited to: ineffectiveness of the Company's strategic growth plan due to changes in current or future market conditions; the effects of competition and how it may impact our community banking model, including industry consolidation and development of competing financial products and services; the integration of the Company's strategic acquisitions; the inability to fully achieve expected savings, efficiencies or synergies from mergers and acquisitions and cost savings initiatives, or taking longer than estimated for such savings, efficiencies and synergies to be realized; changes in laws and regulations; interest rate movements; changes in credit quality; inability to raise capital, if necessary, under favorable conditions; volatility in the securities markets; the demand for our products and services; deteriorating economic conditions; geopolitical tensions; changes in litigation matters, including the failure to obtain Court approval of proposed settlements, the number of plaintiffs who opt-out of proposed settlements and whether a proposed settlement is appealed; operational risks including, but not limited to, cybersecurity incidents, fraud, natural disasters and future pandemics; expenses associated with pending litigation and legal proceedings; and other risks and uncertainties, including those detailed in our Annual Report on Form 10-K for the year ended December 31, 2022 under the sections titled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and in subsequently filings made with the Securities and Exchange Commission. The statements are valid only as of the date hereof and we disclaim any obligation to update this information. The foregoing list of factors is not exhaustive.
If one or more events related to these or other risks or uncertainties materializes, or if the Company's underlying assumptions prove to be incorrect, actual results may differ materially from what the Company anticipates. Accordingly, you should not place undue reliance on any such forward-looking statements. Any forward-looking statement speaks only as of the date on which it is made, and the Company does not undertake any obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise. New risks and uncertainties arise from time to time, and it is not possible for the Company to predict those events or how they may affect it. In addition, the Company cannot assess the impact of each factor on its business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. All forward-looking statements, expressed or implied, included in this press release are expressly qualified in their entirety by this cautionary statement. This cautionary statement should also be considered in connection with any subsequent written or oral forward-looking statements that the Company or persons acting on the Company's behalf may issue.
The review period for subsequent events extends up to and includes the filing date of a public company’s financial statements, when filed with the Securities and Exchange Commission. Accordingly, the consolidated financial information presented in this announcement is subject to change.
