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SHAREHOLDERS' EQUITY AND REGULATORY CAPITAL | 3 Months Ended
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Mar. 31, 2024
Equity [Abstract] |
SHAREHOLDERS’ EQUITY AND REGULATORY CAPITAL | SHAREHOLDERS’ EQUITY AND REGULATORY CAPITAL Banks and bank holding companies are subject to regulatory capital requirements administered by federal banking agencies. Capital adequacy guidelines and, additionally for banks, prompt corrective action regulations, involve quantitative measures of assets, liabilities and certain off-balance sheet items calculated under regulatory accounting practices. Capital amounts and classifications are also subject to qualitative judgments by regulators. Failure to meet capital requirements can initiate regulatory action. Under the Basel Committee on Banking Supervision's capital guidelines for U.S. Banks, an entity must hold a capital conservation buffer above the adequately capitalized risk-based capital ratios. The Company and the Bank have elected not to include net unrealized gains or losses included in AOCI in computing regulatory capital. On January 1, 2023, the Company adopted ASU No. 2016-13, which replaced the existing incurred loss model for recognizing credit losses with an expected loss model referred to as the CECL model, and resulted in a reduction to opening retained earnings, net of income tax, and an increase to the allowance for credit losses for loans of approximately $2.4 million and allowance for credit losses for off-balance sheet exposures of $100 thousand, which combined totals $2.5 million. The federal bank regulatory agencies issued a rule, which provided for the option to elect a three-year transition provision of the day-one impact of the CECL model beginning with regulatory capital at March 31, 2023. The Company elected the three-year phase in option. The Company and the Bank met all capital adequacy requirements to which they are subject at March 31, 2024 and December 31, 2023. Prompt corrective action regulations provide five classifications: well-capitalized, adequately capitalized, undercapitalized, significantly undercapitalized and critically undercapitalized, although these terms are not used to represent overall financial condition. If adequately capitalized, regulatory approval is required to accept brokered deposits. If undercapitalized, capital distributions are limited, as is asset growth and expansion, and capital restoration plans are required. At March 31, 2024, the most recent regulatory notifications categorized the Bank as well capitalized under the regulatory framework for prompt corrective action. There are no conditions or events since that notification that management believes have changed the Bank's classification. The following table presents capital amounts and ratios at March 31, 2024 and December 31, 2023:
| Actual |  | For Capital Adequacy Purposes (includes applicable capital conservation buffer) |  | To Be Well Capitalized Under Prompt Corrective Action Provisions
| Amount |  | Ratio |  | Amount |  | Ratio |  | Amount |  | Ratio
March 31, 2024 |  |  |  |  |  |  |  |  |  |  |
Total risk-based capital: |  |  |  |  |  |  |  |  |  |  |
Orrstown Financial Services, Inc. | $ | 334,597 |  |  | 13.4 | % |  | $ | 263,098 |  |  | 10.5 | % |  | n/a |  | n/a
Orrstown Bank | 328,644 |  |  | 13.1 | % |  | 263,020 |  |  | 10.5 | % |  | $ | 250,495 |  |  | 10.0 | %
Tier 1 risk-based capital: |  |  |  |  |  |  |  |  |  |  |
Orrstown Financial Services, Inc. | 279,405 |  |  | 11.2 | % |  | 212,984 |  |  | 8.5 | % |  | n/a |  | n/a
Orrstown Bank | 299,141 |  |  | 11.9 | % |  | 212,921 |  |  | 8.5 | % |  | 200,396 |  |  | 8.0 | %
Tier 1 common equity risk-based capital: |  |  |  |  |  |  |  |  |  |  |
Orrstown Financial Services, Inc. | 279,405 |  |  | 11.2 | % |  | 175,399 |  |  | 7.0 | % |  | n/a |  | n/a
Orrstown Bank | 299,141 |  |  | 11.9 | % |  | 175,347 |  |  | 7.0 | % |  | 162,822 |  |  | 6.5 | %
Tier 1 leverage capital: |  |  |  |  |  |  |  |  |  |  |
Orrstown Financial Services, Inc. | 279,405 |  |  | 9.0 | % |  | 124,560 |  |  | 4.0 | % |  | n/a |  | n/a
Orrstown Bank | 299,141 |  |  | 9.6 | % |  | 124,550 |  |  | 4.0 | % |  | 155,687 |  |  | 5.0 | %
December 31, 2023 |  |  |  |  |  |  |  |  |  |  |
Total risk-based capital: |  |  |  |  |  |  |  |  |  |  |
Orrstown Financial Services, Inc. | $ | 326,878 |  |  | 13.0 | % |  | $ | 264,019 |  |  | 10.5 | % |  | n/a |  | n/a
Orrstown Bank | 320,687 |  |  | 12.8 | % |  | 263,942 |  |  | 10.5 | % |  | $ | 251,373 |  |  | 10.0 | %
Tier 1 risk-based capital: |  |  |  |  |  |  |  |  |  |  |
Orrstown Financial Services, Inc. | 272,677 |  |  | 10.8 | % |  | 213,730 |  |  | 8.5 | % |  | n/a |  | n/a
Orrstown Bank | 292,160 |  |  | 11.6 | % |  | 213,667 |  |  | 8.5 | % |  | 201,099 |  |  | 8.0 | %
Tier 1 common equity risk-based capital: |  |  |  |  |  |  |  |  |  |  |
Orrstown Financial Services, Inc. | 272,677 |  |  | 10.8 | % |  | 176,013 |  |  | 7.0 | % |  | n/a |  | n/a
Orrstown Bank | 292,160 |  |  | 11.6 | % |  | 175,961 |  |  | 7.0 | % |  | 163,393 |  |  | 6.5 | %
Tier 1 leverage capital: |  |  |  |  |  |  |  |  |  |  |
Orrstown Financial Services, Inc. | 272,677 |  |  | 8.9 | % |  | 122,907 |  |  | 4.0 | % |  | n/a |  | n/a
Orrstown Bank | 292,160 |  |  | 9.5 | % |  | 122,907 |  |  | 4.0 | % |  | 153,634 |  |  | 5.0 | %
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 reinvested 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. At March 31, 2024, approximately 665,000 shares were available to be issued under the plan. In September 2015, the Board of Directors of the Company authorized a share repurchase program pursuant to which the Company could repurchase up to 416,000 shares of the Company's outstanding shares of common stock, in accordance with all applicable securities laws and regulations, including Rule 10b-18 of the Exchange Act, as amended. On April 19, 2021, the Board of Directors authorized the additional repurchase of up to 562,000 shares of its outstanding common stock for a total of 978,000 shares. When and if appropriate, repurchases may be made in the open market or privately negotiated transactions, depending on market conditions, regulatory requirements and other corporate considerations, as determined by management. Share repurchases may not occur and may be discontinued at any time. For the three months ended March 31, 2024, the Company repurchased zero shares of its common stock. At March 31, 2024, 949,533 shares had been repurchased at a total cost of $21.2 million, or $22.36 per share. Common stock available for future repurchase totals 28,467 shares, or 0.3% of the Company's outstanding common stock at March 31, 2024. On April 23, 2024, the Board of Directors declared a cash dividend of $0.20 per common share, which will be paid on May 14, 2024 to shareholders of record at May 7, 2024.

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