Orrstown Financial Services Inc (ORRF) 2026 Q1 法說會逐字稿

Good morning. My name is John, and I will be your conference operator today. At this time, I would like to welcome everyone to the Orrstown Financial Services, Inc., first-quarter 2026 earnings conference call. (Operator Instructions)

早安。我叫 John，今天將擔任各位的電話會議接線員。此刻，我謹代表奧斯敦金融服務公司（Orrstown Financial Services, Inc.）歡迎各位參加 2026 年第一季財報電話會議。（接線員指示）

I will now turn the call over to Tom Quinn, President and Chief Executive Officer of Orrstown Financial Services, Inc., and Orrstown Bank, who will begin the conference. Mr. Quinn, please go ahead.

現在我將把電話交給奧斯敦金融服務公司（Orrstown Financial Services, Inc.）及奧斯敦銀行（Orrstown Bank）總裁兼執行長 Tom Quinn，由他開始今天的會議。Quinn 先生，請開始。

Thank you, operator, and good morning. I'd like to thank everyone for participating in Orrstown's first-quarter 2026 earnings conference call, both by telephone and through the webcast.

謝謝接線員，早安。感謝各位透過電話與網路直播參與奧斯敦 2026 年第一季財報電話會議。

If you have not read the earnings release we issued yesterday afternoon, you may access it along with the financial tables and schedules by going to our website, www.orrstown.com. Once there, you can click on the Investor Relations link and then on the Events and Presentations link.

若各位尚未閱讀我們昨天下午發布的財報新聞稿，可至我們的網站 www.orrstown.com 取得，並可同時下載財務表格與附表。進入網站後，請點選 Investor Relations（投資人關係）連結，再點選 Events and Presentations（活動與簡報）連結。

Also, before we start, I would like to mention that today's presentation may contain forward-looking information. Cautionary statements about this information are included in the earnings release, the investor presentation, and our SEC filings. The earnings release and investor presentation also include non-GAAP financial measures. The appropriate reconciliations to GAAP are included in those documents.

另外，在開始之前，我想提醒各位，今天的簡報可能包含前瞻性資訊。關於此類資訊的警示性聲明已載於財報新聞稿、投資人簡報以及我們向美國證券交易委員會（SEC）提交的文件中。財報新聞稿與投資人簡報亦包含非 GAAP 財務衡量指標。與 GAAP 的適當調節表已包含於上述文件中。

Joining me on the call this morning are Orrstown's Senior Executive Vice President and Chief Operating Officer, Adam Metz; as well as Chief Financial Officer, Neel Kalani; our Chief Revenue Officer, Zach Khuri, Chief Risk Officer, Bob Coradi; and Chief Credit Officer, Dave Chajkowski, will also participate on the call.

今天早上與我一同參與電話會議的還有：奧斯敦資深執行副總裁兼營運長 Adam Metz；以及財務長 Neel Kalani；我們的營收長 Zach Khuri、風險長 Bob Coradi；以及信貸長 Dave Chajkowski 也將參與本次電話會議。

For our financial highlights, Orrstown achieved another successful quarter, delivering strong results across the board. Net income increased to $21.8 million, or $1.12 per diluted share. Return on average equity and return on average assets continued to exceed peer multiples.

就財務重點而言，奧斯敦再度交出成功的一季，各項表現皆相當強勁。淨利增加至 2,180 萬美元，稀釋後每股盈餘為 1.12 美元。平均股東權益報酬率與平均資產報酬率持續高於同業水準。

Fee income of $15.6 million contributed 24.1% of the total operating income. Non-interest expense declined, highlighting our continued commitment to creating efficiencies within the company. Our net interest margin remained near the top of all peers. We started off the year with another profitable quarter and created momentum leading into the rest of the year.

手續費收入為 1,560 萬美元，占總營運收入的 24.1%。非利息費用下降，凸顯我們持續致力於提升公司營運效率。我們的淨利差仍維持在同業中的前段班。我們以另一個獲利季度為今年揭開序幕，並為接下來的年度進展建立動能。

I will now turn the call over to Adam Metz, who will speak about our balance sheet. Adam?

接下來我將把電話交給 Adam Metz，由他說明我們的資產負債表。Adam？

Thank you, Tom. Good morning, everyone.

謝謝你，Tom。各位早安。

Loan growth was steady during the quarter, coming in at 4% on an annualized basis. Loan production was excellent, but overall growth was impacted by unexpected loan prepayments. Growth has occurred across our footprint and our product set, a mix of C&I and CRE. Our pipelines continue to be robust and support our growth targets.

本季放款成長穩健，年化成長率為 4%。放款承作表現非常出色，但整體成長受到非預期提前還款的影響。成長遍及我們的營運版圖與產品組合，涵蓋企業與工業（C&I）及商用不動產（CRE）。我們的案源管線仍然強勁，並支撐我們的成長目標。

On the credit front, we recorded moderate provision expense aligning with the portfolio growth and experienced a reduction in classified loans. We remain prudent in our lending decisions, but we feel that the credit environment remains sound and without significant signs of stress.

在信用方面，我們提列了適度的備抵費用，與投資組合成長相符，且分類放款（classified loans）有所下降。我們在授信決策上仍維持審慎，但我們認為整體信用環境依然穩健，未見明顯壓力跡象。

We are pleased with our meaningful deposit growth during the quarter. Deposits increased by $98.7 million, reflecting increases in interest-bearing demand deposits, non-interest demand deposits, time deposits, and money market deposits.

我們對本季顯著的存款成長感到滿意。存款增加 9,870 萬美元，反映計息活期存款、非計息活期存款、定期存款以及貨幣市場存款均有增加。

This deposit growth accelerated in the second half of the quarter, which enabled us to reduce borrowings at quarter-end. This shift from borrowings to deposits reduced our go-forward funding costs, which we expect to become more apparent in the second quarter. Neel will discuss this in more detail during his presentation.

這波存款成長在本季後半段加速，使我們得以在季末降低借款。由借款轉向存款的結構調整，降低了我們未來的資金成本，我們預期在第二季會更為明顯。Neel 將在他的簡報中更詳細說明。

Our capital ratios continue to build quickly with our earnings generation, which will create flexibility for us in the future. Capital levels continue to support our growth as well as providing the ability to facilitate other capital allocation opportunities.

隨著獲利能力的提升，我們的資本比率持續快速累積，將為未來帶來更大的彈性。目前資本水準不僅支持我們的成長，也提供推動其他資本配置機會的能力。

We maintain a long-term focus on generating earnings and growth to continually build shareholder value. In support of that, the Board declared a quarterly dividend of $0.30 per share payable in May.

我們長期聚焦於創造獲利與成長，以持續提升股東價值。為此，董事會宣布每股 0.30 美元的季度股利，將於 5 月發放。

Neel Kalani, our CFO, will now discuss our quarterly results in more detail. Neel?

接下來由我們的財務長 Neel Kalani 更詳細說明本季業績。Neel？

Thanks, Adam. Good morning, everyone.

謝謝你，Adam。各位早安。

We started 2026 off strong with net income of $21.8 million, or $1.12 in earnings per diluted share. Return on average assets for the quarter was 1.59%, and return on average equity was 14.76%.

2026 年我們開局強勁，淨利為 2,180 萬美元，稀釋後每股盈餘為 1.12 美元。本季平均資產報酬率為 1.59%，平均股東權益報酬率為 14.76%。

As noted on slide 4 of the earnings deck, the net interest margin was 3.90% in the first quarter, down from 4.00% in the fourth quarter of '25. This was driven by a combination of the impact of the December Fed rate cut on interest income, reduced purchase accounting accretion, and temporarily elevated funding costs. We typically experience seasonal deposit outflows at the beginning of the year. This persisted for longer than in prior years, which drove borrowing balances higher for the first half of the quarter.

如財報簡報第 4 頁所示，第一季淨利差為 3.90%，低於 2025 年第四季的 4.00%。主要原因包括：12 月聯準會降息對利息收入的影響、收購會計增額攤提（purchase accounting accretion）減少，以及資金成本短期偏高。我們通常在年初會出現季節性的存款流出。今年此情況持續時間較往年更長，導致本季前半段借款餘額較高。

In the second half of the quarter, deposit balances grew substantially and we implemented some delayed deposit rate reductions. As a result of actions taken during the quarter, cost of funds was still down from the prior quarter, but not by as much as previously projected. With a full quarter of impact, I expect funding costs will decline further in the second quarter of '26.

在本季後半段，存款餘額大幅成長，我們也執行了部分延後的存款利率下調。因此，雖然本季資金成本仍較前一季下降，但降幅不如先前預期。在完整反映一整季影響後，我預期 2026 年第二季資金成本將進一步下降。

The previous guidance for net interest margin in the range of 3.90% to 4.00% for '26 remains, with an expectation of the margin increasing from here. Overall, in an extremely competitive environment, we feel good about the first quarter's deposit growth, reduced reliance on borrowings, and where our funding costs are settling in.

先前對 2026 年淨利差介於 3.90% 至 4.00% 的指引維持不變，並預期淨利差將自此回升。整體而言，在競爭極為激烈的環境下，我們對第一季存款成長、降低對借款的依賴，以及資金成本逐步穩定的走勢感到樂觀。

On slide 5, fee income increased to $15.6 million in the first quarter from $14.4 million in the fourth quarter. In the first quarter, $2.4 million of life insurance proceeds were recognized. The quarter included Wealth Management income of $5.6 million, down only slightly from the prior quarter, despite difficult stock market conditions. Swap fees were very strong at $1.3 million in the quarter. While there is expected volatility in some of the components, I expect normalized non-interest income to be in line with previously reported guidance.

在第 5 頁，第一季手續費收入由第四季的 1,440 萬美元增加至 1,560 萬美元。第一季認列了 240 萬美元的人壽保險理賠收入。本季財富管理收入為 560 萬美元，儘管股市環境艱困，仍僅較前一季小幅下滑。本季換匯/利率交換（swap）手續費表現非常強勁，達 130 萬美元。雖然部分組成項目預期會有波動，但我預期常態化的非利息收入將符合先前公布的指引。

Now, I'll cover non-interest expenses on slide 6. Expenses declined by $700,000 this quarter to $36.7 million. Salaries and benefits declined with lower healthcare costs and some year-end incentive adjustments. Professional services came down substantially as we continued to reduce our reliance on third-party support, and I anticipate our expenses will fall into the lower end of the guidance range unless we choose to make some strategic investments in personnel to drive or support growth.

接下來我將說明第 6 頁的非利息費用。本季費用減少 70 萬美元至 3,670 萬美元。薪資與福利因醫療保健成本降低以及部分年終獎酬調整而下降。隨著我們持續降低對第三方支援的依賴，專業服務費用大幅下降；除非我們選擇在人員方面進行策略性投資以推動或支援成長，否則我預期費用將落在指引區間的下緣。

Slide 7 discusses credit quality. Provision expense was $728,000 for the quarter, primarily due to loan growth. We had approximately $900,000 of net charge-offs, which was offset by the impact of favorable economic factors in the allowance calculation. Our allowance coverage ratio was 1.17% on March 31, 2026, and we believe it remains adequately aligned with the risk profile of our loan portfolio.

第 7 頁討論信用品質。本季備抵費用為 72.8 萬美元，主要因放款成長所致。本季淨沖銷（net charge-offs）約 90 萬美元，但在備抵計算中，受惠於有利的經濟因素影響而予以抵銷。截至 2026 年 3 月 31 日，我們的備抵覆蓋率為 1.17%，我們認為其仍與放款組合的風險輪廓保持適當一致。

Classified loans declined again in the first quarter. Non-accruals increased by $2 million from the prior quarter, primarily due to two relationships. While we experienced some movement into the non-performing category, we also continue to see payoffs and upgrades out of that bucket, resulting from our focus on achieving the best solutions for the bank.

分類貸款在第一季再度下降。非應計款項較前一季增加200萬美元，主要來自兩個往來關係。雖然我們看到部分資產移入不良類別，但同時也持續看到該類別中的清償與評等改善，這得益於我們專注於為銀行達成最佳解決方案。

Our earnings and performance metrics are on slide 8. All metrics remain strong. TCE has increased to 9.2% despite an increase since December 31, 2025, of $6.8 million in unrealized losses on investment securities due to changes in market rates.

我們的獲利與績效指標在第8頁投影片。所有指標仍然強勁。儘管自2025年12月31日以來，因市場利率變動導致投資證券未實現損失增加680萬美元，TCE仍提升至9.2%。

Slide 9 addresses our loan portfolio. Loans again grew by 4% in the quarter. Loan yields declined during the first quarter due to the impact of lower rates on the variable rate loan portfolio. We did have $211 million of loan production during the first quarter and still have a strong pipeline.

第9頁投影片說明我們的貸款組合。本季貸款再度成長4%。由於較低利率對浮動利率貸款組合的影響，第一季貸款殖利率下降。第一季我們的貸款承作量為2.11億美元，且目前仍有強勁的案源管道。

As noted on slide 10, deposits grew by $98.7 million or 9% annualized in the first quarter. The loan-to-deposit ratio declined slightly to 88%, leaving us plenty of room to support balance sheet growth. The cost of deposits declined to 1.96% for the first quarter. With the timing of rate reductions in the middle of the first quarter and having 86% of the deposit growth being in demand deposits, we expect deposit costs to come down further.

如第10頁投影片所示，第一季存款增加9,870萬美元，年化成長率為9%。貸存比小幅下降至88%，使我們仍有充足空間支持資產負債表成長。第一季存款成本下降至1.96%。由於降息時點落在第一季中段，且存款成長中有86%來自活期存款，我們預期存款成本將進一步下降。

Another positive trend for the quarter was the increase in non-interest-bearing deposits of $14 million, or 7% annualized. Our sales team remains focused on expanding existing relationships and creating new ones to continue building lower-cost deposit balances.

本季另一項正向趨勢是無息存款增加1,400萬美元，年化成長率為7%。我們的銷售團隊仍專注於擴大既有往來關係並建立新關係，以持續累積較低成本的存款餘額。

The investment portfolio is covered on slide 11. There was a little bit of purchase activity during the quarter in order to keep the portfolio flat. The overall portfolio yield declined during the quarter due to the impact of the December Fed rate cut on floating-rate investments. We view the investment portfolio as a reliable source for income generation, and we'll continue to facilitate that by taking advantage of any market opportunities that correspond with our balance sheet strategy.

投資組合在第11頁投影片說明。本季為維持投資組合規模持平，進行了少量買入。由於12月聯準會降息對浮動利率投資的影響，整體投資組合殖利率於本季下降。我們將投資組合視為可靠的收益來源，並將持續把握與我們資產負債表策略相符的市場機會，以促進其收益貢獻。

As presented on slide 12, our regulatory capital ratios continue to build at a rapid pace. Capital generation is expected to remain strong going forward based on projected earnings, and we continue to believe we're positioned to take advantage of various capital allocation options.

如第12頁投影片所示，我們的監理資本比率持續快速提升。基於預估獲利，未來資本生成預期仍將維持強勁，我們也持續相信自身已具備把握各種資本配置選項的有利位置。

So in summary, we believe the net interest margin has stabilized with the opportunity to grow from here with declining funding costs. Fee income remains a core strength and a differentiator, particularly with Wealth Management, if the market can maintain or improve from current levels. And expense management remains a key focus for us in order to achieve our financial goals.

總結而言，我們認為淨利差已趨於穩定，且隨著資金成本下降，未來有機會自此向上成長。手續費收入仍是核心優勢與差異化來源，特別是在財富管理方面，前提是市場能維持或優於目前水準。而費用管理仍是我們達成財務目標的關鍵重點。

Thank you for your time this morning, and I'll turn it back to Adam Metz for his closing remarks. Adam?

感謝各位今早撥冗，我將把時間交回Adam Metz作結語。Adam？

Thank you, Neel.

謝謝你，Neel。

As Tom and Neel has emphasized, it was another highly successful quarter. Having spent nearly a decade at Orrstown, I've seen firsthand the strength of our franchise, the power of our culture, and the collective commitment to our clients and community. An incredibly talented team with common alignment to our core principles will continue to build upon the foundation already in place, driving prudent growth, deepening client relationships, thoughtfully expanding fee-based businesses, and continuing our unwavering commitment to sound risk management and long-term shareholder value.

正如Tom與Neel所強調的，這又是一個非常成功的季度。我在Orrstown工作近十年，親眼見證了我們特許經營的實力、企業文化的力量，以及我們對客戶與社區的共同承諾。一支極具才華、並與我們核心原則高度一致的團隊，將持續在既有基礎上再接再厲，推動審慎成長、深化客戶關係、審慎擴展以手續費為主的業務，並持續堅定不移地致力於健全的風險管理與長期股東價值。

We would now like to open the call to questions. Before we get started, the operator will briefly review the instructions with you.

接下來我們想開放提問。在開始之前，接線生將先簡要說明操作指引。

(Operator Instructions) Tim Switzer, KBW.

(接線生指引) Tim Switzer，KBW。

Hey. Good morning, guys. Thank you for taking my questions. I appreciate the commentary on kind of the puts and takes on the NIM this quarter. And it sounds like the primary driver here was that seasonal deposit runoff at the beginning was maybe a little bit stronger, lasted longer than normal. Was there anything that surprised you on the loan or security yield side as well, or is it just primarily the NIM -- or deposits?

嗨。各位早安。謝謝讓我提問。我很感謝你們對本季淨利差（NIM）各項拉抬與拖累因素的說明。聽起來主要驅動因素是年初季節性存款流失可能比以往更強、且持續時間更久。在貸款或證券殖利率方面，有沒有任何讓你們意外的地方？還是主要就是NIM——或存款端的因素？

No, there's nothing surprising. It is primarily deposits. As I've indicated in the past, since we are a little bit on the asset-sensitive side, we did expect the yields to drop on loans and investments, so it truly is driven by the deposit, the timing of the deposits. So as I indicated, we do expect to see improvement in both the funding costs and translating into the reduction on the NIM side. On the assets side, the lending team continues to price well to help us maintain and improve the margin from here.

沒有，沒有任何意外。主要是存款。如我過去所提到的，由於我們在資產敏感度上略偏資產端，我們確實預期貸款與投資的殖利率會下降，因此這確實是由存款、也就是存款時點所驅動。所以如我所說，我們確實預期資金成本會改善，並反映為NIM端的改善。在資產端，放款團隊持續良好定價，以協助我們自此維持並提升利差。

Okay, got it. And are you able to help -- you said an upward trajectory from here. Can you help us quantify that at all? Maybe what was the spot NIM at the end of Q1 once those deposits came back and you were able to run off some of the higher cost borrowings? And any idea on maybe where we would end the year, say, if we get just a zero rate cut?

好的，了解。另外你提到接下來會呈現上升趨勢。你們能否幫我們量化一下？例如在第一季末、當那些存款回流且你們得以償還部分高成本借款後，當時的即期NIM大概是多少？以及如果今年完全不降息（零次降息），你們覺得年底大概會落在哪個水準？

So we ended the quarter a few basis points higher than the average for the quarter -- for the reported NIM for the quarter and expect to be able to go up a few basis points from there over the course of the remainder of the year.

我們在季末的水準比本季平均值——也就是本季揭露的NIM——高出幾個基點，並預期在今年剩餘期間可在此基礎上再上升幾個基點。

Okay, great. That's very helpful. And then one last one, if I can get it on the deposit side. There's been some chatter about increasing deposit competition, but it's more extreme in some markets than others. Have you guys experienced that? I'd get you still have some room to move downward, but are you starting to see some deposit competition? Is it more competitive in certain markets or deposit categories than others for you?

好的，很好。這非常有幫助。最後一題，如果可以的話，關於存款端。市場上有一些聲音在談存款競爭加劇，但在不同市場的程度不一。你們有感受到嗎？我知道你們仍有一些下調空間，但你們是否開始看到存款競爭？對你們而言，是否在某些市場或某些存款類別的競爭更激烈？

Yeah. Tim, I would say competition remains as prevalent. But I would tell you, we challenge the team to reach out to the relationships and drive deposit growth, and the team has absolutely responded to that initiative. And so we were very pleased with the results, and we think that we have a lot of momentum going forward.

是的。Tim，我會說競爭仍然同樣普遍。但我也想告訴你，我們要求團隊主動聯繫既有往來關係並推動存款成長，而團隊對這項倡議的回應非常到位。因此我們對成果非常滿意，也認為未來將有很強的動能。

Great. Very helpful. Thanks for taking my question.

很好。非常有幫助。謝謝回答我的問題。

That concludes the Q&A portion of the presentation. Mr. Quinn, I turn the call back over to you for concluding remarks.

以上為簡報的問答部分。Quinn先生，我把電話交回給您作結語。

Thank you again, operator, and thank you all for participating today. As always, if we can clarify any of the items discussed on this call or in the earnings release, please contact us. Have a great day.

再次感謝接線生，也感謝各位今天的參與。一如往常，若我們能釐清本次電話會議或財報新聞稿中討論的任何事項，請與我們聯繫。祝各位有美好的一天。

This concludes the Orrstown Financial Services, Inc., first-quarter 2026 earnings conference call. You may disconnect your lines at this time.

Orrstown Financial Services, Inc. 2026年第一季財報電話會議到此結束。您現在可以掛斷電話。