About Orrstown Financial Services

Orrstown Financial Services, Inc. operates as the bank holding company for Orrstown Bank that provides banking and financial advisory services located in south central Pennsylvania, principally in Berks, Cumberland, Dauphin, Franklin, Lancaster, Perry and York counties, Pennsylvania, and in 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. The company operates in the community banking segment and engages in lending activities, including commercial, residential, commercial mortgages, construction, municipal, and various forms of consumer lending and deposit services, including checking, savings, time and money market deposits. The company also provides fiduciary, investment advisory, insurance and brokerage services. These activities engaged in by the company are authorized by the Pennsylvania Banking Code of 1965. The company and the bank are subject to regulation by certain federal and state agencies and undergo periodic examinations by such regulatory authorities. Commercial Lending The company originates commercial real estate, equipment, construction, working capital and other commercial purpose loans to commercial clients throughout its various markets. The company has significant market share in south central Pennsylvania and has been expanding its presence geographically in recent years. Growth markets include the Harrisburg region, Lancaster County and Maryland markets. The company’s commercial lending focuses in these geographic regions or with borrowers headquartered in these geographic regions; however, its lending area has also expanded into adjacent counties in Pennsylvania and Maryland, as well as Loudon County, Virginia and Berkeley, Jefferson and Morgan Counties, West Virginia. The company’s credit policy dictates the underwriting requirements for the various types of commercial loans it makes available to borrowers. The policy covers such requirements as debt coverage ratios, advance rates against different forms of collateral, loan-to-value ratios and maximum term. A majority of the company’s loans are for business purposes. Consumer Lending The company originates home equity loans, home equity lines of credit and other consumer loans, primarily through its branch network and client service center. A large majority of the consumer loans are secured by either a first or second lien position on the borrower’s primary residential real estate. The company requires a loan-to-value ratio of no greater than 85% of the value of the real estate being taken as collateral with a minimum credit score of 710. The company also, at times, purchases consumer loans to help diversify credit risk in its loan portfolio. Residential Lending The company originates residential mortgages throughout its various markets referred from retail branches and through a network of mortgage loan officers. Residential mortgages originated by the company may be sold to secondary market investors, which include both the United States government-sponsored enterprise (GSE) and non-GSE investors. All mortgages, regardless of being sold or held in the Bank’s portfolio, are generally underwritten to secondary market industry standards for prime mortgages. Investment Services Through its trust department, the company renders services as trustee, executor, administrator, guardian, managing agent, custodian, investment advisor, and other fiduciary activities authorized by law under the trade name Orrstown Financial Advisors, or OFA. OFA offers retail brokerage services through a third-party broker/dealer arrangement with Cetera Advisor Networks LLC. Deposit Products The company offers deposit products to retail, commercial, non-profit and government clients through its retail branch network. Product offerings for retail clients include checking accounts, money market, savings and certificates of deposit. The company offers a strong suite of treasury management solutions for businesses that help them to forecast and manage their cash and receivables. Regulation and Supervision The company is a bank holding company registered with the Board of Governors of the Federal Reserve System (FRB) and has elected status as a Financial holding company (FHC). The bank is a Pennsylvania-chartered commercial bank and a member bank of the Federal Reserve System. The statutory and regulatory framework that governs the company is generally intended to protect depositors and clients, the FDIC's Deposit Insurance Fund, the U.S. banking and financial system, and financial markets as a whole by ensuring the safety and soundness of bank holding companies (BHCs) and banks. Bank regulators regularly examine the operations of BHCs and banks. Regulators have broad supervisory and enforcement authority over BHCs and banks, including the power to impose nonpublic supervisory agreements, issue cease and desist orders, impose fines and other civil and criminal penalties, terminate deposit insurance, and appoint a conservator or receiver. The company is also subject to the disclosure and regulatory requirements of the Securities Act and the Exchange Act, both as administered by the SEC, as well as the rules of Nasdaq that apply to companies with securities listed on the Nasdaq Capital Market. As a FHC, the company is generally subject to the same regulation as other BHCs, including the reporting, examination, supervision and consolidated capital requirements of the FRB. To preserve its FHC status, the company must remain well-capitalized and well-managed and ensure that the bank remains well-capitalized and well-managed for regulatory purposes and earns satisfactory or better ratings on its periodic Community Reinvestment Act examinations. The bank accepts client deposits that are insured by the Deposit Insurance Fund and, therefore, must pay insurance premiums. The bank is subject to certain risk-based capital and leverage ratio requirements under the U.S. Basel III capital rules adopted by the FRB. The bank is subject to the Bank Secrecy Act and, therefore, is required to provide its employees with anti-money laundering training, designate an anti-money laundering compliance officer, and undergo an annual, independent audit to assess the effectiveness of its anti-money laundering program. The bank is subject to the regulations promulgated by the CFPB, as administered by the FRB, with respect to federal consumer protection laws. The bank is also subject to certain state consumer protection laws and, under the Dodd-Frank Act, state attorneys general and other state officials are empowered to enforce certain federal consumer protection laws and regulations. The bank is subject to the regulations promulgated by the CFPB, as administered by the FRB, with respect to federal consumer protection laws. The Bank is also subject to certain state consumer protection laws and, under the Dodd-Frank Act, state attorneys general and other state officials are empowered to enforce certain federal consumer protection laws and regulations. The company is subject to the informational requirements of Securities Exchange Act of 1934, as amended (the Exchange Act) and, in accordance with the Exchange Act, it files annual, quarterly, and current reports, proxy statements, and other information with the Securities Exchange Act of 1934, as amended (SEC). History Orrstown Financial Services, Inc., a Pennsylvania corporation, was founded in 1919.