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SHAREHOLDERS’ EQUITY AND REGULATORY CAPITAL
 9 Months Ended
Sep. 30, 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 September 30, 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 will 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 September 30, 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 September 30, 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
September 30, 2016
 
 
 
 
 
 
 
 
 
 
 
Total capital to risk weighted assets
 
 
 
 
 
 
 
 
 
 
 
Orrstown Financial Services, Inc.
$
138,574

 
14.9
%
 
$
74,381

 
8.0
%
 
n/a

 
n/a

Orrstown Bank
124,299

 
13.4
%
 
74,322

 
8.0
%
 
$
92,902

 
10.0
%
Tier 1 capital to risk weighted assets
 
 
 
 
 
 
 
 
 
 
 
Orrstown Financial Services, Inc.
126,876

 
13.7
%
 
55,786

 
6.0
%
 
n/a

 
n/a

Orrstown Bank
112,610

 
12.1
%
 
55,741

 
6.0
%
 
74,322

 
8.0
%
CET1 to risk weighted assets
 
 
 
 
 
 
 
 
 
 
 
Orrstown Financial Services, Inc.
126,876

 
13.7
%
 
41,839

 
4.5
%
 
n/a

 
n/a

Orrstown Bank
112,610

 
12.1
%
 
41,806

 
4.5
%
 
60,386

 
6.5
%
Tier 1 capital to average assets
 
 
 
 
 
 
 
 
 
 
 
Orrstown Financial Services, Inc.
126,876

 
9.6
%
 
52,847

 
4.0
%
 
n/a

 
n/a

Orrstown Bank
112,610

 
8.5
%
 
52,851

 
4.0
%
 
66,064

 
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 September 30, 2016, 82,725 shares had been repurchased under the program at a total cost of $1,438,000, or $17.38 per share.