Orrstown Financial Services, Inc. (ORRF): Business Model Canvas [Dec-2025 Updated]

You're looking to really dissect how Orrstown Financial Services, Inc. makes its money now, especially after that recent merger, so I've mapped out their entire operating blueprint using the latest figures-think of it as a post-mortem on their current strategy. We're talking about a firm managing about $5.4 billion in assets, balancing that deep-rooted community banking feel with the need to hit a 4.11% Net Interest Margin (NIM) as of Q3 2025 across their 51 locations. Honestly, integrating a bank this size while keeping local decision-making intact is a tightrope walk. Here's the quick math on their nine core building blocks, showing exactly where the value comes from and where the costs lie, so you can see the whole picture below.

Orrstown Financial Services, Inc. (ORRF) - Canvas Business Model: Key Partnerships

You're looking at how Orrstown Financial Services, Inc. builds its operational backbone through external relationships, which is critical for a regional bank of its size-$5.4 billion in total assets as of mid-2025. These alliances let Orrstown Bank focus on local relationship banking while accessing broader capabilities and capital markets.

Here's a quick look at the financial context that drives the need for these partnerships, based on the latest reported figures:

Metric	Value (as of Q3 2025 or latest report)	Context
Q3 2025 Net Income	$21.9 million	Demonstrates profitability supported by these relationships.
Q3 2025 Net Interest Margin (NIM)	4.11%	Indicates effective management of funding costs, often involving wholesale partners.
Loan-to-Deposit Ratio (Sep 30, 2025)	88%	A high ratio suggests active management of liquidity, often via wholesale sources.
FHLB Advances & Borrowings (Sep 30, 2025)	$209.2 million	Direct evidence of reliance on wholesale funding for liquidity.
Fee Income / Operating Revenue (Q3 2025)	20.8%	Highlights the importance of wealth management partnerships for fee generation.

Correspondent banks for liquidity and wholesale funding access

While specific correspondent bank names aren't always public, the need for external liquidity is clear given the 88% loan-to-deposit ratio as of September 30, 2025. Orrstown Financial Services, Inc. actively manages this through borrowings, evidenced by $209.2 million in FHLB advances and other borrowings reported on that same date. This wholesale funding access is a crucial partnership to meet client loan demand and manage balance sheet fluctuations, especially after redeeming $32.5 million in subordinated notes on September 30, 2025.

FinTech vendors for digital banking and loan origination solutions

Orrstown Bank partners with technology providers to enhance its service delivery, moving beyond traditional branch banking. This focus on operational excellence is supported by technology investments, including:

• Use of a new Commercial and Small Business loan origination solution.
• Implementation of enhanced card management features.
• Improved electronic signature capabilities for efficiency.
• Focus on robotic processing automation and workflow solutions for the back office.

These vendor relationships help maintain a competitive edge in service while driving down costs, as seen by the efficiency ratio improving from 60.3% to 56.4% quarter-over-quarter in Q3 2025.

Broker-dealer partner (e.g., Cetera Advisor Networks) for wealth product offerings

The wealth management segment is a key revenue driver, contributing to noninterest income of $13.4 million in the third quarter of 2025. Securities and investment advisory services are offered through Cetera Advisor Networks, LLC, a member of FINRA/SIPC. This partnership allows Orrstown Financial Advisors to offer a broad range of products without being tied to proprietary sales quotas. The scale of the partner is significant; Cetera Financial Group oversees over $545 billion in assets under administration as of September 30, 2024.

Legal and financial advisors for ongoing regulatory compliance and M&A

Navigating the regulatory environment and integrating past transactions, like the merger of equals with Codorus Valley Bancorp in 2024, requires specialized external counsel. Evidence of these ongoing advisory relationships appears in public filings concerning executive compensation and governance. These agreements include:

• Deferred Compensation Agreements with executives.
• Salary Continuation Agreements for key personnel.
• Change in Control Agreements related to corporate governance.

These structures ensure compliance and provide clear frameworks for executive transitions and retention, which is vital for a company that reported $22.7 million in merger-related expenses in a prior period.

Local community organizations for engagement and brand building

Orrstown Financial Services, Inc.'s stated mission centers on creating value through outstanding client experiences through community engagement and local decisions. This commitment is operationalized through local presence across Pennsylvania and Maryland counties, including Adams, Berks, Cumberland, Dauphin, Franklin, Lancaster, Perry, and York Counties in Pennsylvania, and Anne Arundel, Baltimore, Howard, and Washington Counties in Maryland. This local focus is the core of their brand differentiation against larger, non-local institutions.

Finance: draft 13-week cash view by Friday.

Orrstown Financial Services, Inc. (ORRF) - Canvas Business Model: Key Activities

You're looking at the core engine of Orrstown Financial Services, Inc. as of late 2025. The key activities are centered on deploying capital efficiently, managing the balance sheet post-merger, and maintaining strict operational discipline. Here's how the main functions break down based on the latest figures.

Commercial and residential mortgage loan origination and servicing

The bank is actively managing its loan book, which stood at $3.9 billion in total loans held for investment as of March 31, 2025. Origination and growth are back on track following risk alignment actions earlier in the year; Q3 2025 saw a strong 4.9% annualized loan growth. Servicing is a smaller, specialized activity, as Orrstown Financial Services, Inc. qualifies as a "Small Servicer" by servicing 5,000 or fewer mortgage loans it owns or originated.

• Commercial loans declined by $49.7 million between December 31, 2024, and March 31, 2025, due to strategic risk reduction.
• Average loans increased by $84.1 million during the three months ended September 30, 2025.
• The accretion of purchase accounting marks on loans totaled $5.3 million during the third quarter of 2025.

Deposit gathering and liability management to maintain a Net Interest Margin (NIM) of 4.11%

Gathering low-cost funding is critical for profitability. Deposits totaled $4.6 billion at March 31, 2025. Management is successfully executing on liability management, evidenced by the Q3 2025 Net Interest Margin hitting 4.11%. The team plans to maintain this in the 4.05-4.10% range going forward through prudent loan pricing and cost control.

Here's a quick look at the liability side as of Q1 2025:

Deposit Category	Change from Dec 31, 2024 (to Mar 31, 2025)	Proportion (as of Q1 2025)
Total Deposits	Increased by $10.6 million	N/A
Noninterest-Bearing Deposits	Increased by $38.0 million	20% of total deposits
Interest-Bearing Demand Deposits	Increased by $52.5 million	N/A

Wealth management and trust services via Orrstown Financial Advisors

This segment contributes meaningfully to noninterest income. Orrstown Financial Advisors managed assets totaling $3.2 billion as of December 31, 2024. Income from this division showed growth, moving from $4.9 million in Q4 2024 to $5.4 million in Q1 2025. Service charges, which are related to transactional banking and other fees, also increased to $3.0 million in Q3 2025.

Post-merger integration and operational streamlining to maintain efficiency

The merger integration with Codorus Valley, effective July 1, 2024, is largely complete as of early 2025. A key activity has been absorbing the associated costs and driving down the cost structure. Merger-related expenses were $1.6 million in Q1 2025, down significantly from $3.9 million in Q4 2024. This streamlining is reflected in the efficiency ratio, which improved from 60.3% in the prior quarter to 56.4% in Q3 2025.

• Net income for Q3 2025 was $21.9 million.
• Return on average assets (ROA) was 1.60% in Q3 2025.
• Return on average equity (ROE) was near 16% in Q3 2025.

Regulatory compliance and risk management for a $5.4 billion asset base

With total assets at $5.4 billion as of the Q3 2025 announcement, compliance and risk management are paramount activities. Proactive risk management led to a slight decrease in the loan portfolio in Q1 2025, but credit quality remains a focus. The allowance coverage ratio stood at 1.223% in Q3 2025, near the top of peers. This is all managed under the supervision of federal and state agencies, including the Federal Reserve Board.

Key risk and capital metrics as of late 2025 reporting periods:

Metric	Value	Date/Period
Total Assets	$5.4 billion	As of Q3 2025 announcement
Allowance Coverage Ratio	1.223%	Q3 2025
Tangible Common Equity Ratio	8.8%	September 30, 2025
Noninterest Expense Reduction	Declined by $1.3 million	Q3 2025 vs. prior quarter

Finance: draft 13-week cash view by Friday.

Orrstown Financial Services, Inc. (ORRF) - Canvas Business Model: Key Resources

You're looking at the core assets Orrstown Financial Services, Inc. relies on to execute its business strategy as of late 2025. These aren't just line items on a balance sheet; they are the engines driving their community banking and wealth management operations.

The scale of the balance sheet provides the foundation for lending and investment activities. As of the merger completion on December 31, 2024, Orrstown Financial Services, Inc. reported $5.4 billion in total assets. This scale was further supported by strong operational performance in the third quarter of 2025, with net income totaling $21.9 million for the three months ended September 30, 2025.

The physical footprint is a critical resource for local relationship building and deposit gathering. Orrstown Bank operates a network of 51 banking offices across 12 counties in Pennsylvania and Maryland.

The wealth management arm, Orrstown Financial Advisors, represents a significant fee-based resource. As of December 31, 2024, this division managed assets totaling $3.2 billion. This segment contributed to the Q3 2025 performance, where fee income as a percentage of operating revenue was reported at 20.8%.

Here's a quick look at the primary quantitative resources:

Resource Metric	Value	As of Date/Period
Total Assets	$5.4 billion	December 31, 2024
Physical Banking Offices	51	Late 2025 Data
Assets Under Management (Orrstown Financial Advisors)	$3.2 billion	December 31, 2024
Q3 2025 Net Income	$21.9 million	Three Months Ended September 30, 2025
Q3 2025 Diluted EPS	$1.13	Three Months Ended September 30, 2025

Beyond the balance sheet numbers, the operational and human capital assets are just as important for a community bank. These resources enable the delivery of the value proposition.

• Core banking technology systems and enhanced client relationship management (CRM) solutions, which were recently integrated following the merger completion in November 2024.
• Localized decision-making authority, allowing for quicker responses to local market needs.
• A team of experienced relationship managers, supported by recent leadership appointments, such as the Market President for the Central Pennsylvania Region.

The efficiency of using these resources is measured by the efficiency ratio, which decreased to 56.4% for the three months ended September 30, 2025, down from 60.3% in the prior quarter.

Finance: draft 13-week cash view by Friday.

Orrstown Financial Services, Inc. (ORRF) - Canvas Business Model: Value Propositions

You're looking at Orrstown Financial Services, Inc. (ORRF) as of late 2025, and the value proposition is clearly rooted in its identity as a relationship-focused regional bank that successfully navigated a major merger.

Relationship-based community banking with local decision-making

The firm's core value proposition centers on its commitment to relationship banking, meaning decisions are made locally, not by a distant corporate office. This approach is fundamental to how Orrstown Financial Services, Inc. serves its clients across Pennsylvania and Maryland. This focus on local connection is what management ties directly to their strong performance, aiming to create shareholder value through superior client experiences. It's a classic community bank model, just scaled up after the merger.

Full-service financial solutions for business, consumer, and wealth clients

Orrstown Financial Services, Inc. doesn't just offer basic checking and savings; they provide a full spectrum of financial services. For businesses and consumers, this means commercial, consumer, and residential mortgage lending capabilities. Furthermore, the value proposition extends into wealth management through Orrstown Financial Advisors, which handles trust and investment advisory services. This bundling of services helps keep client relationships deep and broad.

Strong credit quality and prudent risk management for depositor security

Security for depositors is a non-negotiable value, and the numbers from Q3 2025 show management is actively managing the balance sheet to support this. They are focused on prudent risk management, which you can see in the reduction of classified loans. The loan portfolio, which grew at a 4.9% annualized rate in Q3 2025, is being managed carefully. Honestly, maintaining strong credit quality while growing is a tough balancing act, but the data suggests they are succeeding.

Here are some key metrics supporting this focus on quality and efficiency as of the third quarter of 2025:

Metric	Value (Q3 2025)	Context
Net Income	$21.9 million	Record profitability for the quarter
Return on Assets (ROA)	1.60%	Indicates efficient asset utilization
Return on Equity (ROE)	Near 16% (or 15.72%)	Strong return for shareholders
Classified Loans	$64.1 million	Decreased from $65.8 million at June 30, 2025
Tangible Book Value per Share	$24.12	As of September 30, 2025

Competitive Net Interest Margin (NIM) of 4.11% in Q3 2025

The Net Interest Margin (NIM) is the lifeblood of a bank, showing how effectively they earn more on loans than they pay out on deposits. For the third quarter of 2025, Orrstown Financial Services, Inc. posted a competitive 4.11% NIM. This was an improvement from the 4.07% seen in the second quarter of 2025. Management credits this stability to prudent loan pricing and effective management of funding costs, even while navigating heavy competition on both loan and deposit pricing. The NIM was positively impacted by 52 basis points of net accretion from purchase accounting marks in the quarter.

Convenience through an expanded branch and ATM network post-merger

The merger of equals with Codorus Valley Bancorp, completed in July 2024, was designed to deliver greater value, and convenience is a key part of that. By late 2025, the systems integration, which included the full conversion of PeoplesBank ATMs to Orrstown Bank ATMs, was complete (it was expected in November 2024). This means clients benefit from an expanded footprint across Pennsylvania and Maryland. The immediate benefit post-merger was free withdrawals across the combined ATM network. The company now operates with total assets of approximately $5.4 billion.

The operational strength underpinning these value propositions is clear in the efficiency metrics:

• Fee income represented 20.8% of operating revenue in Q3 2025.
• Noninterest expense declined by $1.3 million quarter-over-quarter.
• The efficiency ratio improved to 56.4% in Q3 2025 from 60.3% in Q2 2025.

Finance: draft the Q4 2025 expense run-rate projection by next Tuesday.

Orrstown Financial Services, Inc. (ORRF) - Canvas Business Model: Customer Relationships

You're building a regional bank strategy where trust is the primary currency, and Orrstown Financial Services, Inc. (ORRF) clearly anchors its model on deep, local relationships. This approach is what allows them to maintain a strong Net Interest Margin (NIM) of 4.11% in Q3 2025, a direct reflection of stable, low-cost funding sources built on personal connections.

Dedicated relationship managers for commercial and wealth clients

The core of the commercial and high-net-worth service model relies on dedicated personnel, which is evident in the focus on disciplined relationship Commercial & Industrial (C&I) and Commercial Real Estate (CRE) lending. This personal touch is essential for securing the bank's substantial deposit base, which stood at $4.5 billion as of September 30, 2025. The wealth management arm, Orrstown Financial Advisors, contributes significantly to non-interest income, reporting revenue of $5.2 million for the three months ended June 30, 2025.

The financial scale supporting this relationship focus is clear:

Metric	Value (as of late 2025)	Period/Date
Total Assets	Over $5.4 billion	Q3 2025
Total Deposits	$4.5 billion	September 30, 2025
Wealth Management Income	$5.2 million	Q2 2025
Total Noninterest Income	$13.4 million	Q3 2025

High-touch, personal service rooted in the community banking tradition

The commitment to a high-touch model is operationalized through a core value of being actively engaged in their communities. This local decision-making is the engine that drives client loyalty, helping Orrstown Financial Services, Inc. (ORRF) translate purpose into profit, evidenced by a Q3 2025 Return on Average Equity near 16%. This tradition is reinforced by recent leadership moves, such as the promotion of a Chief Revenue Officer in June 2025, signaling a continued focus on client-facing growth initiatives.

Key elements reinforcing the personal service ethos include:

• Maintaining local decision-making authority.
• Upholding core values of integrity and accountability.
• Focus on disciplined relationship lending.

Transactional service via digital channels (online and mobile banking)

To complement the personal service, Orrstown Financial Services, Inc. (ORRF) is actively modernizing its transactional capabilities to ensure frictionless client interaction. This digital enhancement is not replacing the relationship manager but supporting the client's day-to-day needs. The bank has integrated technology to streamline processes for commercial clients, which is critical for retention.

Recent digital improvements include:

• New Commercial and Small Business loan origination solution.
• Enhanced card management features.
• Improved electronic signature capabilities.
• Integration of an enhanced client relationship management solution with core banking.

Centralized Client Service Center for support and inquiries

While specific metrics for a centralized support center aren't public, the drive for operational excellence, including focusing on robotic process automation and workflow solutions, suggests a strategy to make support efficient when clients need it. The goal is to ensure that when a client needs support beyond their dedicated manager, the response is swift and effective. This operational focus helped reduce the efficiency ratio to 56.4% in Q3 2025.

Community engagement to foster trust and local loyalty

Community engagement is explicitly listed as a core value, which is the foundation for earning local trust. This isn't just about marketing; it's about being the preferred local partner. The bank's mission is to create shareholder value through outstanding client experiences and local decisions. The commitment to credit quality, for example, by proactively managing risk and reducing classified loans to $65.8 million at June 30, 2025, shows accountability to the community's financial well-being.

Community loyalty is fostered through:

• Active participation in local markets in Pennsylvania and Maryland.
• A stated value to 'Be actively engaged in their communities.'
• A strategy to cross-sell and retain new clients gained through past programs.

Finance: draft the next 13-week cash flow view by Friday.

Orrstown Financial Services, Inc. (ORRF) - Canvas Business Model: Channels

You're looking at how Orrstown Financial Services, Inc. gets its products and services-from checking accounts to wealth management-into the hands of its clients across Pennsylvania and Maryland. It's a mix of old-school presence and modern digital tools, which is typical for a regional bank aiming for market share.

The physical branch network is still a core channel, providing that local, in-person touch. Orrstown Bank has grown to 51 banking offices across its operating footprint. This physical presence spans 12 counties in Pennsylvania and Maryland, specifically including Berks, Cumberland, Dauphin, Franklin, Lancaster, Perry, and York Counties in Pennsylvania, and Anne Arundel, Baltimore, Harford, Howard, and Washington Counties in Maryland, along with Baltimore City, Maryland. The bank has been strategically adjusting this footprint; for instance, it has consolidated branches to increase the average branch size to approximately \$118 million in deposits as of mid-2022, following earlier closures.

To support focused lending growth, Orrstown Financial Services, Inc. utilizes dedicated Loan Production Offices (LPOs). The bank operates 8 loan production centers throughout Pennsylvania and Maryland. Specific LPOs have been established to target growth markets, including locations in Berks and York counties.

Digital access is crucial for convenience, and Orrstown Financial Services, Inc. supports this with its online and mobile platforms for both retail and business clients. A key metric showing digital adoption is the rise of noninterest-bearing deposits, which reached 20% of total deposits by the first quarter of 2025. The bank emphasizes its digital capabilities to enhance client convenience.

Here's a quick look at the scale of the physical and specialized channels as of the latest available data:

Channel Type	Specific Metric/Count	Data Point/Value
Physical Banking Offices	Total Banking Offices	51
Loan Production Offices (LPOs)	Total LPOs	8
Geographic Reach (Counties)	Pennsylvania Counties Served	7
Geographic Reach (Counties)	Maryland Counties Served	5 plus Baltimore City
Wealth Management (Advisory)	Assets Under Management (AUM) by Orrstown Financial Advisors (as of 12/31/2024)	\$3.2 billion

For immediate, non-digital service, the bank maintains ATMs and telephone banking. The telephone banking service can be accessed by dialing 1-800-588-3092. Orrstown Financial Advisors, the wealth management division, is a distinct channel for fiduciary and investment advisory services.

The overall asset base supporting these channels was reported at \$5.4 billion in early 2025. The bank is focused on scaling technology and operations to support growth in these established markets.

You can see the multi-pronged approach here:

• Physical branch network across 12 counties in Pennsylvania and Maryland.
• Digital banking platforms for retail and business clients, with noninterest-bearing deposits at 20% of total.
• 8 Loan Production Offices for focused lending.
• Orrstown Financial Advisors managing \$3.2 billion in assets.
• Telephone banking available via 1-800-588-3092.

Finance: draft 13-week cash view by Friday.

Orrstown Financial Services, Inc. (ORRF) - Canvas Business Model: Customer Segments

You're looking at the core client base for Orrstown Financial Services, Inc. as of late 2025. The bank serves a defined geographic area, providing services through convenient locations throughout Pennsylvania and Maryland. The lending focus is principally on customers within Central Pennsylvania and Maryland.

Small to mid-sized commercial businesses in the Mid-Atlantic region represent a key segment, evidenced by the historical focus on commercial lending. For instance, as of June 30, 2020, Commercial (non-PPP) loans made up 19% of the total gross loans. Management has shown a commitment to managing this segment's risk profile; in Q1 2025, total loans decreased by $55 million from year-end 2024, with $50 million of that reduction coming from commercial loans due to payoffs that didn't fit the long-term credit profile. Still, commercial lending remains a growth area, as commercial loans increased by $16.1 million, or 2% annualized, between March 31, 2025, and June 30, 2025.

Retail consumers and families seeking traditional banking services are the foundation for the deposit base, which totaled $4.6 billion at March 31, 2025. This segment supports the bank's funding needs, with non-interest-bearing deposits representing 20% of total deposits at that same date. The overall asset base supporting these customers stood at $5.4 billion as of the Q3 2025 earnings report. The bank's mission centers on providing outstanding client experiences through community engagement and local decisions, which speaks directly to this relationship-focused consumer base.

High-net-worth individuals utilizing wealth management and trust services contribute significantly to fee income, a core strength of Orrstown Financial Services, Inc. Fee income as a percentage of operating revenue was nearly 21% for the third quarter of 2025. The bank is engaged in the trust business as authorized by the Pennsylvania Banking Code of 1965.

Non-profit and government entities in the core geographic footprint are key deposit holders. The bank grants loans to entities like State & Municipal organizations, which historically represented 3% of the loan portfolio as of June 30, 2020. The deposit base includes municipal deposits, which contributed to a rise in total deposits by $145.2 million, or 6%, from December 31, 2020, to September 30, 2021.

The segment of Commercial Real Estate (CRE) investors is actively being managed for risk reduction. As of December 31, 2023, the loan portfolio included Non-owner occupied CRE loans of approximately $694,638 (in thousands, based on context) and Owner-occupied CRE loans of approximately $373,757 (in thousands, based on context). Management has taken strategic actions to reduce CRE loan concentrations, which contributed to a $55.2 million decrease in total loans held for investment in Q1 2025. The bank is focused on prudent loan pricing, as evidenced by the Q3 2025 Net Interest Margin of 4.11%, which management attributes to managing funding costs well alongside pricing loans prudently.

Here's a look at how the loan portfolio has been structured, showing the shift in focus:

Loan/Deposit Category Context	Associated Financial Metric	Date/Period
Total Gross Loans	$1,654 million	2019 (Historical Context)
Total Gross Loans	$3.9 billion	March 31, 2025
Total Deposits	$4.6 billion	March 31, 2025
Non-owner Occupied CRE Loans (Historical)	$694,638 (in thousands)	December 31, 2023
Commercial Loan Production vs. Payoffs	Payoffs of $116 million outpaced production in Q1 2025	Q1 2025
Loan-to-Deposit Ratio	87%	June 30, 2025

The bank's overall strategy supports these segments through strong profitability:

• Net Income of $21.9 million reported for Q3 2025.
• Return on Average Assets (ROAA) at 1.6% in Q3 2025.
• Return on Average Equity (ROAE) at 15.7% in Q3 2025.
• Tangible Book Value per Common Share at $24.12 as of September 30, 2025.

Orrstown Financial Services, Inc. (ORRF) - Canvas Business Model: Cost Structure

The cost structure for Orrstown Financial Services, Inc. is primarily driven by interest expense on deposits and borrowings, which fluctuates directly with market interest rates and the mix/cost of funding sources. For the three months ended September 30, 2025, interest expense, on a tax equivalent basis, was $26.1 million. This followed an interest expense of $25.3 million for the second quarter of 2025.

The second major cost category is noninterest expense. Orrstown Financial Services, Inc. reported noninterest expenses of $36.3 million for the three months ended September 30, 2025. The company expects a quarterly expense run rate of approximately $36 million going forward.

Here's a quick look at the key cost-related financial metrics from Q3 2025:

Cost Component Metric	Amount / Rate	Period
Interest Expense (Tax Equivalent Basis)	$26.1 million	Q3 2025 (3 Months Ended Sept 30)
Noninterest Expense	$36.3 million	Q3 2025 (3 Months Ended Sept 30)
Projected Quarterly Expense Run Rate	~$36 million	Forward Guidance
Total Deposits	$4.5 billion	As of September 30, 2025
Average FHLB Advances and Other Borrowings	$168.9 million	Q3 2025 (3 Months Ended Sept 30)

Salaries and benefits expense represents a major component of the noninterest costs, though specific figures for this sub-category within the $36.3 million total for Q3 2025 aren't explicitly detailed in the latest reports, other than noting that advertising and bank promotions expense decreased by $0.9 million to $0.2 million in Q3 2025. The company has focused on operational efficiencies, which helped drive the efficiency ratio down to 56.4% in the third quarter of 2025.

Costs related to technology and data processing for core systems and digital tools are embedded within the overall noninterest expense. The company has made investments in technology to create operational efficiencies. The focus on efficiency is clear, as the company aims for a sub-55% efficiency target going forward.

Occupancy and equipment costs for the physical footprint, which includes the stated 51-branch network, are another fixed element within the noninterest expense base. The company has actively managed its physical presence, having previously announced branch closures to reduce facilities costs. The cost structure reflects the ongoing expense of maintaining this network across Pennsylvania and Maryland.

Key drivers influencing the interest-related costs include:

• Deposit costs declined by 14 basis points from Q1 2025 to Q2 2025.
• Subordinated notes totaling $32.5 million were redeemed on September 30, 2025, which reduces go-forward interest expense.
• The company is guiding its Net Interest Margin (NIM) between 4.0% and 4.15% for the coming year.

Finance: review the Q4 2025 noninterest expense breakdown against the $36 million run rate target by next Tuesday.

Orrstown Financial Services, Inc. (ORRF) - Canvas Business Model: Revenue Streams

You're looking at how Orrstown Financial Services, Inc. converts its core activities into actual dollars, which is the heart of any financial institution's revenue model. For Orrstown Financial Services, Inc., the streams are quite traditional for a bank, but the recent performance shows some clear execution wins, especially in the fee-based areas.

Net Interest Income (NII) from commercial, consumer, and mortgage loans remains the primary driver. This is the difference between the interest earned on the assets-like your commercial, consumer, and mortgage loans-and the interest paid out on liabilities, mainly customer deposits. The Net Interest Margin (NIM), on a tax equivalent basis, was reported at 4.11% for the three months ended September 30, 2025, an improvement from 4.07% in the second quarter of 2025. While the specific NII breakdown by loan type isn't itemized for Q3 2025, the total operating revenue for Q3 2025 was $64.37 million. Given that Noninterest Income was $13.4 million for the same period, the approximate Net Interest Income for Q3 2025 was around $50.97 million ($64.37 million total revenue minus $13.4 million noninterest income). For context, NII was $48.8 million for the first quarter of 2025.

Noninterest income, which is fee-based revenue not tied to lending rates, was a significant contributor. This category represented 20.8% of operating revenue in the third quarter of 2025. This is the second consecutive quarter this ratio has been near 21%. The absolute dollar amount for Noninterest income rose by $0.5 million to $13.4 million for the three months ended September 30, 2025, up from $12.9 million in the prior quarter. Management is guiding the run-rate for this income to be between $12.5-$13.0 million/quarter going forward.

The components making up that Noninterest income show where the growth is coming from. You can see the breakdown of the fee-related revenue streams below:

Revenue Component	Q3 2025 Amount (Three Months Ended Sept 30, 2025)	Q2 2025 Amount (Three Months Ended June 30, 2025)
Total Noninterest Income	$13.4 million	$12.9 million
Service Charges on Deposit Accounts	$3.0 million	$2.6 million
Swap Fee Income	$0.8 million	$0.7 million

Fee income from wealth management and trust services is clearly a focus area, contributing to the strength in Noninterest income. The asset management division has grown to $3 billion, signaling a clear opportunity to build on this base to increase fee revenue.

Service charges on deposit accounts and card-related interchange fees are showing positive momentum. Service charges specifically were $3.0 million for the third quarter of 2025, up from $2.6 million in the second quarter, which the company attributed to increased interchange activity.

Swap fee income, which you correctly noted fluctuates based on market conditions, also saw a slight uptick. It increased by $0.1 million to reach $0.8 million for the third quarter of 2025, compared to $0.7 million in the preceding quarter.

Here's a quick summary of the key fee income metrics for the third quarter:

• Fee income represented 20.8% of operating revenue.
• Wealth management strength is a key driver of fee income.
• Asset management reached $3 billion.
• Service charges on deposits increased by $0.4 million quarter-over-quarter.
• Swap fee income increased by $0.1 million quarter-over-quarter.

The successful execution of the prior year's merger is definitely showing up in these noninterest income figures, which is helping drive the efficiency ratio down to 56.4% in Q3 2025.

Finance: draft Q4 2025 revenue projection based on guided run-rates by next Tuesday.