Orrstown Financial Services (ORRF)

Risks

• If our allowance for loan losses is not sufficient to cover actual losses, our earnings would decrease.
• Commercial real estate lending may expose us to a greater risk of loss and impact our earnings and profitability.
• Our loan portfolio has a significant concentration in commercial real estate loans.
• The credit risk related to commercial and industrial loans is greater than the risk related to residential loans.
• Environmental liability associated with our lending activities could result in losses.
• As a participating lender in the SBA Paycheck Protection Program (“PPP”), we are subject to additional risks of litigation from our clients or other parties regarding our processing of loans for the PPP and risks that the SBA may not fund some or all PPP loan guaranties.
• Changes in interest rates could adversely impact the Company’s financial condition and results of operations.
• Our securities portfolio performance in difficult market conditions could have adverse effects on our results of operations.
• Potential downgrades of U.S. government securities by one or more of the credit ratings agencies could have a material adverse effect on our operations, earnings and financial condition.
• The expected discontinuance of LIBOR presents risks to the financial instruments originated, issued or held by us that use LIBOR as a reference rate.
• If we cannot replace interest income on PPP loans, our net income would be adversely affected.
• Difficult economic and market conditions can adversely affect the financial services industry and may materially and adversely affect the Company.
• Because our business is concentrated in south central Pennsylvania, the greater Baltimore region, and Washington County, Maryland, our financial performance could be materially adversely affected by economic conditions and real estate values in these market areas.
• Competition from other banks and financial institutions in originating loans, attracting deposits and providing other financial services may adversely affect our profitability and liquidity.
• Our business may be adversely affected if we fail to adapt our products and services to technological advances, evolving industry standards and consumer preferences.
• The Company’s business strategy includes the continuation of moderate growth plans, and our financial condition and results of operations could be negatively affected if we fail to grow or fail to manage our growth effectively.
• We may incur significant losses as a result of ineffective risk management processes and strategies.
• We face security risks, including denial-of-service attacks, hacking, social engineering attacks targeting our colleagues and clients, malware intrusion or data corruption attempts, and identity theft that could result in the disclosure of confidential information, adversely affect our business or reputation, and create significant legal and financial exposure.
• Cybersecurity and data privacy are areas of heightened legislative and regulatory focus.
• We may not be able to successfully implement future information technology system enhancements, which could adversely affect our business operations and profitability.
• We may become subject to claims and litigation pertaining to fiduciary responsibility.
• Climate change may adversely affect our business and results of operations.
• Growing by acquisition involves risks.
• We may be unable to successfully integrate the operations of acquired entities over time.
• The market price of our common stock after acquisitions may be affected by factors different from those affecting our shares currently.
• Governmental regulation and regulatory actions against us may impair our operations or restrict our growth.
• Altering our overdraft fee practices could materially adversely affect the Company’s fee income and results of operations.
• Increases in FDIC insurance premiums may have a material adverse effect on our results of operations.
• Legislative, regulatory and legal developments involving income and other taxes could materially adversely affect the Company’s results of operations and cash flows.
• The Company is required to use judgment in applying accounting policies and different estimates and assumptions in the application of these policies could result in a decrease in capital and/or other material changes to the reports of financial condition and results of operations.
• Changes in our accounting policies or in accounting standards could materially affect how we report our financial results and condition.
• Noncompliance with the Bank Secrecy Act and other anti-money laundering statutes and regulations could cause us material financial loss.
• We are subject to numerous laws designed to protect consumers, including the Community Reinvestment Act and fair lending laws, and failure to comply with these laws could lead to a wide variety of sanctions.
• We may become subject to enforcement actions even though noncompliance was inadvertent or unintentional.
• Pending litigation and legal proceedings and the impact of any finding of liability or damages could adversely impact the Company and its financial condition and results of operations.
• We are subject to liquidity risk, which could negatively affect our funding levels.
• Loss of deposits or a change in deposit mix could increase our cost of funding.
• Wholesale funding sources may prove insufficient to replace deposits at maturity and support our operations and future growth.
• The Parent Company is a holding company dependent on liquidity through payments, including dividends, from its bank subsidiary, which is subject to restrictions.
• The soundness of other financial institutions could adversely affect the Company.
• If the Company wants, or is compelled, to raise additional capital in the future, that capital may not be available when it is needed or on terms favorable to current shareholders.
• The market price of our common stock is subject to volatility.
• A reduction in our credit rating could adversely affect our access to capital and could increase our cost of funds.
• The COVID-19 pandemic may continue to adversely affect our employees, clients, business and results of operations.
• The Company may not be able to attract and retain skilled people.
• Negative public opinion could damage our reputation and adversely affect our earnings.
• Acts of terrorism, natural disasters, global climate change, pandemics and global conflicts may have a negative impact on our business and operations.
• Anti-takeover provisions could negatively impact our shareholders.