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SHAREHOLDERS’ EQUITY AND REGULATORY CAPITAL
 12 Months Ended
Dec. 31, 2015
Equity [Abstract]  
SHAREHOLDERS’ EQUITY AND REGULATORY CAPITAL
SHAREHOLDERS’ EQUITY AND REGULATORY CAPITAL
The Company maintains a stockholder dividend reinvestment and stock purchase plan. Under the plan, shareholders may purchase additional shares of the Company’s common stock at the prevailing market prices with reinvestment dividends and voluntary cash payments. The Company reserved 1,045,000 shares of its common stock to be issued under the dividend reinvestment and stock purchase plan. As of December 31, 2015, approximately 665,000 shares were available to be issued under the plan.
On January 19, 2016, the Company filed a shelf registration statement on Form S-3 with the SEC that provides for up to an aggregate of $100,000,000, through the sale of common stock, preferred stock, warrants, debt securities, and units. To date, the Company has not issued any securities under this shelf registration.
The Company (on a consolidated basis) and the Bank are subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company’s and Bank’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company and the Bank must meet specific guidelines that involve quantitative measures of assets, liabilities and certain off-balance sheet items as calculated under regulatory accounting practices. The capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors. Although applicable to the Bank, prompt corrective action provisions are not applicable to bank holding companies, including financial holding companies.
Quantitative measures established by regulators to ensure capital adequacy require the Company and the Bank to maintain minimum amounts and ratios (as set forth in the following table) of total and Tier 1 capital (as defined in regulations) to risk-weighted assets (as defined), common equity and Tier 1 capital (as defined) to risk weighted assets, and of Tier 1 capital (as defined) to average assets (as defined). Management believes, as of December 31, 2015 and 2014, the Company and the Bank met all capital adequacy requirements to which they are subject.
Effective January 1, 2015, the Company and Bank became subject to final rules establishing a new comprehensive capital framework for U.S. banking organizations, including community banks (the "Basel III Capital Rules"), which substantially revised the risk-based capital requirements in comparison to the previously existing U.S. risk-based capital rules. The Basel III Capital Rules, among other things, (i) introduced a new capital measure called “Common Equity Tier 1” (“CET1”), (ii) increased the minimum requirements for Tier 1 Capital ratio as well as the minimum levels to be considered well capitalized under prompt corrective action; (iii) and introduced the "capital conservation buffer”, designed to absorb losses during periods of economic stress. Institutions with a ratio of CET1 to risk-weighted assets above the minimum but below the conservation buffer are subject to constraints on dividends, equity repurchases and discretionary bonuses to executive officers based on the amount of the shortfall. The implementation of the capital conservation buffer will begin on January 1, 2016 at the 0.625% level and be phased in over a four-year period (increasing by that amount on each subsequent January 1, until it reaches 2.5% on January 1, 2019).
As of December 31, 2015 the most recent notification from the Federal Deposit Insurance Corporation categorized the Bank as well capitalized under the regulatory framework for prompt corrective action. To be categorized as well capitalized, an institution must maintain minimum total risk-based, Tier 1 risk-based and Tier 1 leverage ratios as set forth in the following table. There are no conditions or events since the notification that management believes have changed the Bank’s category.
The Company and the Bank’s actual capital ratios as of December 31, 2015 and December 31, 2014 are also presented in the table. 
 
Actual
 
Minimum Capital
Requirement
 
Minimum to Be Well
Capitalized Under
Prompt Corrective
Action Provisions
(Dollars in thousands)
Amount
 
Ratio
 
Amount
 
Ratio
 
Amount
 
Ratio
December 31, 2015
 
 
 
 
 
 
 
 
 
 
 
Total capital to risk weighted assets
 
 
 
 
 
 
 
 
 
 
 
Orrstown Financial Services, Inc.
$
134,562

 
15.8
%
 
$
68,078

 
8.0
%
 
n/a

 
n/a

Orrstown Bank
118,671

 
14.0
%
 
68,027

 
8.0
%
 
$
85,034

 
10.0
%
Tier 1 capital to risk weighted assets
 
 
 
 
 
 
 
 
 
 
 
Orrstown Financial Services, Inc.
123,825

 
14.6
%
 
51,058

 
6.0
%
 
n/a

 
n/a

Orrstown Bank
107,942

 
12.7
%
 
51,021

 
6.0
%
 
68,027

 
8.0
%
CET1 to risk weighted assets
 
 
 
 
 
 
 
 
 
 
 
Orrstown Financial Services, Inc.
123,825

 
14.6
%
 
38,294

 
4.5
%
 
n/a

 
n/a

Orrstown Bank
107,942

 
12.7
%
 
38,265

 
4.5
%
 
55,272

 
6.5
%
Tier 1 capital to average assets
 
 
 
 
 
 
 
 
 
 
 
Orrstown Financial Services, Inc.
123,825

 
9.8
%
 
50,684

 
4.0
%
 
n/a

 
n/a

Orrstown Bank
107,942

 
8.5
%
 
50,695

 
4.0
%
 
63,368

 
5.0
%
December 31, 2014
 
 
 
 
 
 
 
 
 
 
 
Total capital to risk weighted assets
 
 
 
 
 
 
 
 
 
 
 
Orrstown Financial Services, Inc.
$
119,713

 
16.8
%
 
$
56,859

 
8.0
%
 
n/a

 
n/a

Orrstown Bank
118,540

 
16.7
%
 
56,835

 
8.0
%
 
$
71,043

 
10.0
%
Tier 1 capital to risk weighted assets
 
 
 
 
 
 
 
 
 
 
 
Orrstown Financial Services, Inc.
110,750

 
15.6
%
 
28,429

 
4.0
%
 
n/a

 
n/a

Orrstown Bank
109,581

 
15.4
%
 
28,417

 
4.0
%
 
42,626

 
6.0
%
Tier 1 capital to average assets
 
 
 
 
 
 
 
 
 
 
 
Orrstown Financial Services, Inc.
110,750

 
9.5
%
 
46,496

 
4.0
%
 
n/a

 
n/a

Orrstown Bank
109,581

 
9.4
%
 
46,518

 
4.0
%
 
58,148

 
5.0
%

On September 14, 2015, the Board of Directors of the Company authorized a stock repurchase program under which the Company may repurchase up to 5% of the Company's outstanding shares of common stock, or approximately 416,000 shares, in the open market, in accordance with all applicable securities laws and regulations, including Rule 10b-18 of the Securities Exchange Act of 1934, as amended. The extent to which the Company repurchases its shares, and the timing of such repurchases, will depend upon a variety of factors, including market conditions, regulatory requirements and other corporate considerations, as determined by management. Purchases may be made from time to time on open market or privately negotiated transactions. The repurchase program may be suspended or discontinued at any time. As of December 31, 2015, 47,077 shares had been repurchased under the program at a total cost of $808,680, or $17.18 per share.