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SHAREHOLDERS’ EQUITY AND REGULATORY CAPITAL | 3 Months Ended
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Mar. 31, 2016
Equity [Abstract] |
SHAREHOLDERS’ EQUITY AND REGULATORY CAPITAL | SHAREHOLDERS’ EQUITY AND REGULATORY CAPITAL On January 19, 2016, the Company filed a shelf registration statement on Form S-3 with the Securities and Exchange Commission (the "Commission") 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 and state 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 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 March 31, 2016 and December 31, 2015, the Company and the Bank meet 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 began 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 March 31, 2016, 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, Common Equity Tier 1, 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 March 31, 2016 and December 31, 2015, 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
March 31, 2016 |  |  |  |  |  |  |  |  |  |  |
Total capital to risk weighted assets |  |  |  |  |  |  |  |  |  |  |
Orrstown Financial Services, Inc. | $ | 137,389 |  |  | 15.7 | % |  | $ | 70,181 |  |  | 8.0 | % |  | n/a |  |  | n/a |
Orrstown Bank | 121,703 |  |  | 13.9 | % |  | 70,133 |  |  | 8.0 | % |  | $ | 87,666 |  |  | 10.0 | %
Tier 1 capital to risk weighted assets |  |  |  |  |  |  |  |  |  |  |
Orrstown Financial Services, Inc. | 126,352 |  |  | 14.4 | % |  | 52,636 |  |  | 6.0 | % |  | n/a |  |  | n/a |
Orrstown Bank | 110,673 |  |  | 12.6 | % |  | 52,599 |  |  | 6.0 | % |  | 70,133 |  |  | 8.0 | %
CET1 to risk weighted assets |  |  |  |  |  |  |  |  |  |  |
Orrstown Financial Services, Inc. | 126,352 |  |  | 14.4 | % |  | 39,477 |  |  | 4.5 | % |  | n/a |  |  | n/a |
Orrstown Bank | 110,673 |  |  | 12.6 | % |  | 39,450 |  |  | 4.5 | % |  | 56,983 |  |  | 6.5 | %
Tier 1 capital to average assets |  |  |  |  |  |  |  |  |  |  |
Orrstown Financial Services, Inc. | 126,352 |  |  | 9.8 | % |  | 51,579 |  |  | 4.0 | % |  | n/a |  |  | n/a |
Orrstown Bank | 110,673 |  |  | 8.6 | % |  | 51,609 |  |  | 4.0 | % |  | 64,511 |  |  | 5.0 | %
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 | %
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 March 31, 2016, 61,298 shares had been repurchased under the program at a total cost of $1,051,000, or $17.15 per share.

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