Orrstown Financial Services, Inc. Reports First Quarter 2019 Net Income

  • Net income for the quarter ended March 31, 2019  totaled $3.1 million, or $0.33 per diluted share.
  • Gross loans outstanding at March 31, 2019 totaled $1.27 billion.
  • Deposits totaled $1.62 billion at March 31, 2019.
  • Net interest income for the quarter ended March 31, 2019 totaled $14.7 million. Net interest margin, on a taxable-equivalent basis, totaled 3.41% for the first quarter of 2019.
  • As previously reported, the Board of Directors declared a cash dividend of $0.15 per common share, payable May 7, 2019, to shareholders of record as of April 30, 2019, a 15.4% increase over the dividend declared in April, 2018.

SHIPPENSBURG, Pa., April 24, 2019 (GLOBE NEWSWIRE) -- Orrstown Financial Services, Inc. (the “Company”) (NASDAQ: ORRF), the parent company of Orrstown Bank (the “Bank”) and Wheatland Advisors, Inc. ("Wheatland"), announced earnings for the quarter ended March 31, 2019. Net income totaled $3.1 million for the first quarter of 2019, compared with $3.6 million for the first quarter of 2018. Diluted earnings per share totaled $0.33 for the quarter ended March 31, 2019, compared with $0.44 for the same period in 2018. Net income in 2019 was impacted by merger related expenses and by a previously disclosed expense related to a cyber incident insurance claim dispute, as described in the Noninterest Expense section.

Thomas R. Quinn, Jr., President & CEO, commented, “First quarter results continue to reflect solid core results as well as the impact of the seamless systems integration of First Community Bank of Mercersburg.  Over the next several quarters we will apply that same level of diligence to the integration and growth of the Hamilton Bank organization, while simultaneously remaining focused on our organic results.”

Earnings in the first quarter of 2019 reflected the acquisition of Mercersburg Financial Corporation ("Mercersburg"), completed on October 1, 2018, as well as continuing increased interest income from expanding interest-earning assets in a higher interest rate environment versus the first quarter of 2018, partially offset by increases in interest expense. In general, the comparability of operating results for the first quarter of 2019 with the first quarter of 2018 have been impacted by the Mercersburg acquisition.


As previously reported, on October 23, 2018, the Company entered into an agreement and plan of merger with Hamilton Bancorp, Inc. ("Hamilton"), the holding company for Hamilton Bank, based in Towson, Maryland. At December 31, 2018, Hamilton reported $496.3 million in assets, $369.5 million in loans, $384.2 million in deposits and had 3,416,414 common shares outstanding. Pursuant to the merger agreement, at the effective time of the merger, each outstanding share of Hamilton common stock will be converted into the right to receive (1) $4.10 in cash, without interest, and (2) 0.54 shares of the Company’s common stock.

The merger has been approved by Hamilton's shareholders and is expected to close on May 1, 2019, subject to receipt of remaining regulatory approvals and the satisfaction of other customary closing conditions.

The Company incurred merger related expenses totaling $645,000 for the quarter ended March 31, 2019, representing principally legal and consulting fees for the Hamilton acquisition and system conversion expenses for the Mercersburg acquisition, which are included in noninterest expenses.


Net Interest Income

Net interest income totaled $14.7 million in the first quarter of 2019, a 25.7% increase compared with $11.7 million for the first quarter of 2018. Net interest margin on a taxable-equivalent basis totaled 3.41% for the first quarter of 2019, compared with 3.26% for the first quarter of 2018 and 3.35% for the fourth quarter of 2018.

The principal contributor to year-over-year revenue growth was an increase in interest and fees on loans, as total loans grew by $221.4 million from March 31, 2018 to March 31, 2019, with approximately $94.0 million in net organic growth and approximately $127.0 million representing the balance, at March 31, 2019, of loans acquired from Mercersburg. Taxable-equivalent yields on interest-earning assets and costs of interest-bearing liabilities both increased from 2018 to 2019, reflecting the increased interest rate environment between years. Other factors impacting the comparison of taxable-equivalent yields between 2018 and 2019 included the effect of purchase accounting related to the Mercersburg acquisition and the Company's gradual increase in rates paid on interest-bearing deposits in response to market demand.

Provision for Loan Losses

The provision for loan losses totaled $400,000 in the first quarter of 2019, compared with $200,000 for the same period in 2018. Net loan charge-offs experienced in the first quarter of 2019 and the Company's organic loan portfolio growth, taking into account favorable historical charge-off statistics and generally stable economic and market conditions for the last several years, were key factors included in the quantitative and qualitative considerations used by management in the determination of the provision expense required to maintain an adequate allowance for loan losses.

Additional loan portfolio growth and changes in historical charge-off statistics are factors that may result in the need for a determination of additional provisions for loan losses in future quarters.

Noninterest Income

Noninterest income, excluding securities gains, total $4.9 million for both quarters ended March 31 in 2019 and 2018.

Total trust, investment management and brokerage income was comparable year-over-year and included increased estate fees in 2019 offset by fluctuations in customer volumes and market conditions. 

Mortgage banking income for the first quarter of 2019 decreased $167,000 year-over-year and continued to reflect a lower number of transactions due to the reduced inventory of saleable homes and also decreased refinancing activity due to higher mortgage rates than a year ago.

Net investment securities gains totaled $339,000 for the quarter ended March 31, 2019, compared with $816,000 for  same period in 2018. At times, the Company may impact earnings through realized gains or losses on securities as opportunities become available to reposition part of its investment portfolio under asset/liability management strategies or to improve responsiveness of the portfolio to interest rate conditions, while also considering funding requirements of anticipated lending activity.

Noninterest Expenses

Noninterest expenses totaled $16.2 million for the quarter ended March 31, 2019, compared with $13.1 million for the quarter ended March 31, 2018. In addition to the previously noted merger related expenses, the following line items reflected notable changes between periods.

Salaries and employee benefits totaled $8.7 million for the quarter ended March 31, 2019, compared with $8.1 million for the same period in 2018, principally reflecting employees added in the Mercersburg acquisition in the fourth quarter of 2018 and a higher level of expense year-over-year for additional employees as a result of the Company's new branches and overall expansion efforts, annual merit increases, and incremental expense for additional share-based compensation awards granted in 2019. In 2019, overall costs associated with the Company's self-insured group health plan were higher than in 2018 due to an increased number of employees and fluctuations in claims experience.

Occupancy, furniture and equipment costs for the quarter ended March 31, 2019 increased $307,000 year-over-year, reflecting Mercersburg branches acquired and the Company's expanded presence in Lancaster County, Pennsylvania, with two branch banking locations added in the third and fourth quarters of 2018 and two in the first quarter of 2019.

Intangible asset amortization increased $184 thousand in comparing the quarter ended March 31, 2019 to 2018 due to the core deposit intangible recorded in the Mercersburg acquisition.

Noninterest expenses in the first quarter of 2019 includes an expense to write off an insurance claim receivable from a cyber security incident reported in 2018. Orrstown Bank was the victim of a phishing attack in October 2017, and, upon discovery of the attack in the third quarter of 2018, the Company apprised its cyber insurance carrier of the incident. The Bank engaged third party cyber security experts and other professionals, including a credit notification and monitoring services provider, and incurred approximately $765,000 in fees and expenses related to the incident. Orrstown notified its carrier of its response efforts and expected to receive an insurance reimbursement of approximately $615,000 for the cyber incident claim, which amount was carried as a receivable on the Company’s consolidated balance sheet. The Company believes that its policy provided coverage for the expenses related to the incident but the Company was notified by its carrier that the claim had been denied in its entirety. While the Company believes that the basis for the carrier's denial is improper and intends to assert its rights to coverage of the expenses, there can be no assurance that the Company’s position regarding coverage will prevail or, if it does prevail, that the coverage will be sufficient to reimburse the Company for the entire amount of the receivable. Pending resolution of its insurance claim, the Company recorded a pretax expense of $615,000, or approximately $0.05 per diluted share, in its first quarter results for 2019.

Income Taxes

Income tax expense totaled $232,000 for the quarter ended March 31, 2019, compared with $492,000 for the same period in 2018. The effective tax rate for the year ended March 31, 2019 was 7.0%, compared with 12.0% for the year ended March 31, 2018. Generally, the Company's effective tax rate is significantly 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. In addition, in the first quarter of 2019, the Company recorded a tax benefit of approximately $185,000, or approximately $0.02 per diluted share, related to a change in tax law concerning the treatment of life insurance assets of an acquired entity. This tax benefit had the effect of lowering the effective tax rate for the first quarter of 2019 by approximately 5.5%.


The following table presents loan balances, by loan class within segments, at March 31, 2019, December 31, 2018 and March 31, 2018.

(Dollars in thousands)March 31, 2019 December 31, 2018 March 31, 2018
Commercial real estate:     
Owner occupied$123,100 $129,650 $119,657
Non-owner occupied264,869 252,794 247,097
Multi-family83,009 78,933 53,812
Non-owner occupied residential101,312 100,367 79,269
Acquisition and development:     
1-4 family residential construction6,361 7,385 9,408
Commercial and land development49,784 42,051 30,003
Commercial and industrial169,651 160,964 128,076
Municipal50,599 50,982 41,679
Residential mortgage:     
First lien231,243 235,296 165,499
Home equity – term11,828 12,208 11,380
Home equity – lines of credit143,308 143,616 132,684
Installment and other loans30,475 33,411 25,550
 $1,265,539 $1,247,657 $1,044,114

Loans grew $17.9 million, from $1.25 billion at December 31, 2018 to $1.27 billion at March 31, 2019. Growth of $10.5 million in the commercial real estate segment (1.9%, or approximately 7.6% annualized), $6.7 million in the acquisition and development segment (13.6%, or approximately 55.0% annualized) and $8.7 million in the commercial and industrial segments (5.4%, or approximately 21.9% annualized) was partially offset by decreases in the residential mortgage and installment and other loans segments, as weaker loan demand has been experienced overall, but particularly in the residential and consumer loan categories.

Deposits grew $61.9 million (4.0%, or approximately 16.1% annualized) from $1.56 billion at December 31, 2018 to $1.62 billion at March 31, 2019, with growth principally in interest-bearing deposits. The Company continues to increase both noninterest-bearing and interest-bearing deposit relationships from its cash management offerings. The Company has experienced a gradual repricing of term and non-maturity deposits in the first quarter of 2019.  

Shareholders’ Equity

Shareholders’ equity totaled $179.2 million at March 31, 2019, an increase of $5.7 million from $173.4 million at December 31, 2018. The increase was attributable to growth in retained earnings through net income, net of the impact of dividends paid, and an improvement in accumulated other comprehensive income (loss) from changes in net unrealized gains and losses in securities available for sale.

Asset Quality

The allowance for loan losses totaled $14.3 million at March 31, 2019, compared with $14.0 million at December 31, 2018. Management believes the allowance for loan losses to total loans ratio remains adequate at 1.13% at March 31, 2019. Favorable historical charge-off data and management's emphasis on loan quality have been significant contributors to the determination that the increase between periods in the allowance for loan losses is adequate for the increasing loan portfolio. At March 31, 2018, the allowance for loan losses to total loans ratio totaled 1.25%. The principal factor impacting a comparison with March 31, 2019, was loans acquired in the Mercersburg transaction that were recorded at fair value, which incorporated a credit factor, and therefore did not require an increase in the Company's allowance for loan losses.

Nonperforming and other risk assets, consisting of nonaccrual loans, other real estate owned, restructured loans still accruing and loans past due 90 days or more and still accruing, totaled $6.6 million at March 31, 2019, and $6.5 million at December 31, 2018.

Classified loans, or loans rated substandard, doubtful or loss, totaled $17.8 million at March 31, 2019 (1.4% of total loans), compared with $19.8 million (1.6% of total loans) at December 31, 2018.

Operating Highlights (Unaudited)
  Three Months Ended
  March 31, March 31,
(Dollars in thousands, except per share information) 2019 2018
Net income $3,102 $3,625
Diluted earnings per share $0.33 $0.44
Adjusted diluted earnings per share (excluding intangible amortization and merger related expenses) (1)

 $0.41 $0.44
Cash dividends per share $0.15 $0.12
Return on average assets 0.65% 0.92%
Return on average equity 7.23% 10.38%
Net interest income $14,689 $11,684
Net interest margin 3.41% 3.26%
Net interest margin (excluding the impact of purchase accounting) (1)

 3.33% 3.26%

Balance Sheet Highlights (Unaudited)
 March 31, December 31, March 31,
(Dollars in thousands, except per share information)2019
 2018  2018 
Assets$1,973,283  $1,934,388  $1,635,906
Loans, gross1,265,539  1,247,657  1,044,114
Allowance for loan losses(14,283)  (14,014)  (13,000)
Deposits1,620,696  1,558,756  1,299,514
Shareholders' equity179,167  173,433  142,556
Book value per share18.89  18.39  16.95
(1) 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.

 March 31, December 31, March 31,
(Dollars in thousands)2019
Cash and cash equivalents$77,217  $88,815  $30,172 
Securities available for sale490,221  465,844  454,800 
Loans held for sale4,787  3,340  3,659 
Loans1,265,539  1,247,657  1,044,114 
Less: Allowance for loan losses(14,283)  (14,014)  (13,000) 
 Net loans1,251,256  1,233,643  1,031,114 
Premises and equipment, net38,107  38,201  34,387 
Goodwill12,592  12,592  719 
Other intangible assets, net3,702  3,910  332 
Other assets95,401  88,043  80,723 
  Total assets$1,973,283  $1,934,388  $1,635,906 
 Noninterest-bearing$214,308  $204,843  $172,496 
 Interest-bearing1,406,388  1,353,913  1,127,018 
  Total deposits1,620,696  1,558,756  1,299,514 
Borrowings144,745  179,378  177,456 
Accrued interest and other liabilities28,675  22,821  16,380 
  Total liabilities1,794,116  1,760,955  1,493,350 
Shareholders' Equity     
Common stock494  491  438 
Additional paid-in capital151,702  151,678  125,988 
Retained earnings26,161  24,472  18,667 
Accumulated other comprehensive income (loss)810  (2,972)  (2,238) 
Treasury stock0  (236)  (299) 
  Total shareholders' equity179,167  173,433  142,556 
  Total liabilities and shareholders' equity$1,973,283  $1,934,388  $1,635,906 

   Three Months Ended
   March 31, March 31,
(In thousands, except per share information) 2019 2018
Interest income    
Loans $15,059 $11,056
Investment securities and short-term investments 4,507 3,219
 Total interest income 19,566 14,275
Interest expense    
Deposits 3,694 1,824
Borrowings 1,183 767
 Total interest expense 4,877 2,591
Net interest income 14,689 11,684
Provision for loan losses 400 200
 Net interest income after provision for loan losses 14,289 11,484
Noninterest income    
Service charges on deposit accounts 1,489 1,418
Trust, investment management and brokerage income

 2,236 2,226
Mortgage banking activities 468 635
Other income 695 607
Investment securities gains 339 816
 Total noninterest income 5,227 5,702
Noninterest expenses    
Salaries and employee benefits 8,677 8,022
Occupancy, furniture and equipment 2,024 1,717
Data processing 770 619
Advertising and bank promotions 521 382
FDIC insurance 185 166
Professional services 557 369
Taxes other than income 306 251
Intangible asset amortization 208 24
Merger related 645 0
Insurance claim receivable write off 615 0
Other operating expenses 1,674 1,519
 Total noninterest expenses 16,182 13,069
 Income before income tax expense 3,334 4,117
Income tax expense 232 492
Net income $3,102 $3,625
Per share information:    
 Basic earnings per share $0.34 $0.45
 Diluted earnings per share 0.33 0.44
 Cash dividends per share 0.15 0.12
 Weighted-average shares outstanding - diluted

 9,326 8,268

Average Balances and Interest Rates, Taxable-Equivalent Basis (Unaudited)
 Three Months Ended
 March 31, 2019 March 31, 2018
   Taxable- Taxable-   Taxable- Taxable-
 Average Equivalent Equivalent Average Equivalent Equivalent
(Dollars in thousands)Balance Interest Rate Balance Interest Rate
Federal funds sold & interest-bearing bank balances$29,108 $173  2.41%  $14,272 $55  1.56%
Securities499,755 4,558  3.70  448,667 3,395  3.07
Loans1,257,654 15,180  4.90  1,030,817 11,142  4.38
Total interest-earning assets1,786,517 19,911  4.52  1,493,756 14,592  3.96
Other assets137,802     103,819    
Total$1,924,319     $1,597,575    
Liabilities and Shareholders' Equity           
Interest-bearing demand deposits$845,092 1,828  0.88  $717,430 809  0.46
Savings deposits114,314 43  0.15  97,381 38  0.16
Time deposits403,095 1,822  1.83  281,835 977  1.41
Short-term borrowings42,124 243  2.34  99,774 363  1.48
Long-term debt88,076 443  2.04  83,776 404  1.96
Subordinated notes31,886 497  6.32  0 0  0.00
Total interest-bearing liabilities1,524,587 4,876  1.30  1,280,196 2,591  0.82
Noninterest-bearing demand deposits202,365     159,996    
Other23,310     15,696    
Total Liabilities1,750,262     1,455,888    
Shareholders' Equity174,057     141,687    
Total$1,924,319     $1,597,575    
Taxable-equivalent net interest income / net interest spread  15,035  3.22%    12,001  3.14%
Taxable-equivalent net interest margin    3.41%      3.26%
Taxable-equivalent adjustment  (346)      (317)   
Net interest income  $14,689      $11,684   
(1) Yields and interest income on tax-exempt assets have been computed on a taxable-equivalent basis assuming a 21% tax rate.
(2) For yield calculation purposes, nonaccruing loans are included in the average loan balance.

Nonperforming Assets / Risk Elements (Unaudited)
 March 31, December 31, March 31,
(Dollars in thousands)2019 2018 2018
Nonaccrual loans (cash basis)$4,743 $5,165 $9,144
Other real estate (OREO)454 130 1,329
Total nonperforming assets5,197 5,295 10,473
Restructured loans still accruing1,116 1,132 1,166
Loans past due 90 days or more and still accruing295 57 0
Total nonperforming and other risk assets$6,608 $6,484 $11,639
Loans 30-89 days past due (1)$5,344 $5,186 $2,081
Asset quality ratios:     
Total nonperforming loans to total loans0.37% 0.41% 0.88%
Total nonperforming assets to total assets0.26% 0.27% 0.64%
Total nonperforming assets to total loans and OREO0.41% 0.42% 1.00%
Total risk assets to total loans and OREO0.52% 0.52% 1.11%
Total risk assets to total assets0.33% 0.34% 0.71%
Allowance for loan losses to total loans1.13% 1.12% 1.25%
Allowance for loan losses to nonperforming loans301.14% 271.33% 142.17%
Allowance for loan losses to nonperforming and restructured loans still accruing

243.78% 222.55% 126.09%
(1) At March 31, 2019 and at December 31, 2018, includes $1.4 million (recorded at fair value) of loans 30-89 days past due acquired in October 2018 from Mercersburg.  

Allowance for Loan Losses Activity (Unaudited)
  Three Months Ended
  March 31, March 31,
(Dollars in thousands) 2019
Balance, beginning of period $14,014 $12,796
Provision for loan losses 400 200
Recoveries 203 75
Charge-offs (334) (71)
Balance, end of period $14,283 $13,000

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 totaling $16.3 million and $1.1 million at March 31, 2019 and 2018, respectively. Amortization of core deposit and other intangible assets, after tax, totaled $164,000 and $19,000 for the quarter ended March 31, 2019 and 2018, respectively.

Management believes providing certain “non-GAAP” financial information will assist investors in their understanding of the effect of acquisition activity on reported results, particularly to overcome comparability issues related to the influence of intangibles (principally goodwill) created in acquisitions and the impact of merger related expenses.

Adjusted net income and adjusted diluted net income per share (excluding intangible amortization and merger related expenses), tangible book value per share, tangible return on average tangible equity, tangible return on average tangible assets and net interest margin excluding the impact of purchase accounting, as used by the Company in this earnings release and Appendix A, are determined by methods other than in accordance with 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 U.S. Generally Accepted Accounting Principles ("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 table presents the computation of each non-GAAP based measure shown together with its most directly comparable GAAP based measure.

  At or For The Three Months Ended
(in thousands, except per share information) March 31, 2019 March 31, 2018
Adjusted Diluted Net Income per Share (1)

Net income as reported (most directly comparable GAAP based measure) $3,102 $3,625
Amortization of core deposit and other intangible assets (2)

 164 19
Merger related expenses (2)

 535 0
Adjusted net income(1) (non-GAAP)

 $3,801 $3,644
Weighted average diluted common shares outstanding (denominator) 9,326 8,268
Diluted earnings per share as reported (most directly comparable GAAP based measure) $0.33 $0.44
Amortization of core deposit and other intangible assets (2)

 0.02 0.00
Merger related expenses (2)

 0.06 0.00
Adjusted diluted net earnings per share (1) (non-GAAP)

 $0.41 $0.44
Tangible Book Value per Common Share    
Shareholders' equity $179,167 $142,556
Goodwill and other intangible assets (2)

 15,517 987
Tangible common equity (non-GAAP) $163,650 $141,569
Common shares outstanding 9,485 8,412
Book value per share (most directly comparable GAAP based measure) $18.89 $16.95
Intangible assets per share 1.64 0.12
Tangible book value per share (non-GAAP) $17.25 $16.83

  At or For The Three Months Ended
(in thousands, except per share information) March 31, 2019 March 31, 2018
Tangible Return on Average Tangible Equity    
Net income as reported (numerator) $3,102 $3,625
Average equity as reported (denominator) $174,057 $141,687
Return on average equity (most directly comparable GAAP based measure) 7.23% 10.38%
Adjusted net income(1) (non-GAAP) - per above

 $3,801 $3,644
Average equity as reported $174,057 $141,687
Average goodwill (12,592)  (719)
Average core deposit and other intangible assets (2)

 (3,008)  (273)
Average tangible common equity (non-GAAP) $158,457 $140,695
Tangible Return on Average Tangible Equity (non-GAAP) 9.73% 10.50%
Tangible Return on Average Tangible Assets    
Net income as reported (numerator) $3,102 $3,625
Average assets as reported (denominator) $1,924,319 $1,597,575
Return on average assets (most directly comparable GAAP based measure) 0.65% 0.92%
Adjusted net income(1) (non-GAAP) - per above

 $3,801 $3,644
Average assets as reported $1,924,319 $1,597,575
Average goodwill (12,592) (719)
Average core deposit and other intangible assets (2)

 (3,008) (273)
Average tangible assets (non-GAAP) $1,908,719 $1,596,583
Tangible Return on Average Tangible Assets (non-GAAP) 0.81% 0.93%
Net Interest Margin (excluding the impact of purchase accounting)    
Net interest margin as reported 3.41% 3.26%
Adjustment for purchase accounting:    
Total interest-earning assets (loans) (0.08)% 0.00%
Net Interest Margin (excluding the impact of purchase accounting) (non-GAAP) 3.33% 3.26%
(1) Excluding intangible amortization and merger related expenses
(2) Net of related tax effect.

About the Company

With nearly $2.0 billion in assets, Orrstown Financial Services, Inc. and its wholly-owned subsidiaries, Orrstown Bank and Wheatland Advisors, Inc., provide a wide range of consumer and business financial services through banking and financial advisory offices in Berks, Cumberland, Dauphin, Franklin, Lancaster, Perry and York Counties, Pennsylvania and Washington County, Maryland. 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. For more information about Wheatland Advisors, Inc., visit www.wheatlandadvisors.com.

Cautionary Note Regarding Forward-looking Statements:

This press release contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. 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. 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 be able to successfully consummate the Hamilton acquisition; continue to successfully execute on our strategic growth plan into Dauphin, Lancaster, York and Berks counties, Pennsylvania, and the greater Baltimore market in Maryland, with newer markets continuing to be receptive to our community banking model; to take advantage of market disruption; and to experience sustained growth in loans and deposits or maintain the momentum experienced to date from these actions. 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, 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; volatilities in the securities markets; deteriorating economic conditions; expenses associated with pending litigation and legal proceedings; and other risks and uncertainties, including those set forth under the heading "Risk Factors" in the Company's 2018 Annual Report on Form 10-K and subsequent filings. The foregoing list of factors is not exhaustive.

If one or more events related to these or other risks or uncertainties materialize, 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.

David P. Boyle
Executive Vice President & CFO
Phone 717.530.2294
77 East King Street | Shippensburg PA

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