Orrstown Financial Services, Inc. Announces Continued Earnings Improvement in the Third Quarter and Fourth Quarter Dividend

Orrstown Financial Services, Inc. Announces Continued Earnings Improvement in
the Third Quarter and Fourth Quarter Dividend

SHIPPENSBURG, Pa., Oct. 29 /PRNewswire-FirstCall/ -- Orrstown Financial
Services, Inc. (Nasdaq: ORRF) is pleased to announce net operating results for
the third quarter and the nine months ended September 30, 2009.

Commenting on the third quarter results, Thomas R. Quinn, Jr., President and
Chief Executive Officer, stated, "We continued the trend of consistent
sequential quarter-over-quarter progress, and were extremely pleased with our
steadily improving results and metrics. We increased net income by $426,000,
or 12.33%, when comparing third quarter 2009 results to second quarter 2009
results. We also grew primary earnings per share from $.54 to $.61 and diluted
earnings per share from $.51 to $.58 within the same time frame. Net interest
income advanced 7.57% from $8,812,000 during the second quarter 2009 to
$9,479,000 in the third quarter.

Net interest margin continued to increase, advancing six basis points, from
3.57% to 3.63%, following a 17 basis point increase the previous quarter.
Return on assets improved 10 basis points to 1.36%, vs. the previous quarter,
and return on equity grew 1.19% to 14.33% during that same period. In the
third quarter we added $750,000 to our loan loss reserve due to continued loan
growth and a continuation of our historical prudent approach. This raised our
loan loss reserve to 0.92% of loans, up from 0.84% one year earlier. However,
our ratio of non performing loans to average loans of 0.55% is still well
below peers and demonstrates our continued focus on credit quality. The
Company also demonstrated significant improvements in expense control,
reflected by an efficiency ratio of 57.22% at the end of the third quarter
compared to 62.64% at mid-year."

Net income for the third quarter 2009 increased 22.7% to $3,880,000 from
$3,163,000 during the same period last year. Primary earnings per share were
$.61 for third quarter 2009 compared to $.49 per share for third quarter 2008.
As a result of the Company's continued robust growth, net interest income for
the third quarter of 2009 was $9,479,000; an increase of 12.7% over the
$8,408,000 realized during the same quarter in 2008. Non-interest income
showed an increase of 17.9%, while non-interest expenses rose 10.0%.

During the third quarter of 2009, the net interest margin compressed 27 basis
points, to 3.63%, versus third quarter 2008. This compares favorably, however,
to the 3.57% net interest margin realized during the second quarter 2009.
Balance sheet growth of 15.1% over last year resulted in total assets reaching
$1.160 billion as of September 30, 2009.

Year over year comparisons also demonstrated solid progress. Net income for
the nine months ended September 30, 2009 was $10,359,000, a 3.4% increase from
the $10,016,000 earned during the nine months of 2008. Primary earnings per
share increased from $1.56 during the first nine months of 2008 to $1.62 in
2009. Year-to-date net interest income for 2009 increased to $26,313,000 from
$24,488,000, a 7.5% increase compared to the first nine months of 2008,
despite the low interest rate environment. For the first nine months of 2009,
the net interest margin compressed 40 basis points to 3.53%.

The Board of Directors approved the fourth quarter cash dividend of $.22 per
share for shareholders of record on November 13, 2009. The dividend will be
paid on November 25, 2009. For the full year, the Company's cash dividend has
increased 1.1% from $.87 per share to $.88 per share.

A summary of financial highlights follows:

For Quarter Ended: September 30, September 30, % Change
2009 2008
Net Income $3,880,000 $3,163,000 +22.7%
Primary Earnings Per Share $.61 $.49 +24.5%
Diluted Earnings Per Share $.58 $.46 +26.1%
Dividends Per Share $.22 $.22 0.0%
Return on Average Assets 1.36% 1.31%
Return on Average Equity 14.33% 12.57%
Return on Average
Tangible Assets (1) 1.40% 1.36%
Return on Average
Tangible Equity (1) 18.01% 16.17%

For Nine Months Ended: September 30, September 30, % Change
2009 2008
Net Income $10,359,000 $10,016,000 +3.4%
Primary Earnings Per
Share $1.62 $1.56 +3.8%
Diluted Earnings Per
Share $1.54 $1.48 +4.1%
Dividends Per Share $.66 $.65 +1.5%
Return on Average Assets 1.26% 1.44%
Return on Average Equity 13.13% 13.59%
Return on Average
Tangible Assets (1) 1.30% 1.49%
Return on Average
Tangible Equity (1) 16.60% 17.55%

Balance Sheet Highlights: September 30, September 30, % Change
2009 2008
Assets $1,159,996,000 $1,008,291,000 +15.0%
Loans, Gross $867,435,000 $784,074,000 +10.6%
Deposits $849,094,000 $708,802,000 +19.8%
Equity $110,649,000 $101,176,000 +9.4%
Tangible Equity (1) $89,649,000 $79,927,000 +12.2%

(1) Supplemental Reporting of Non-GAAP-based Financial Measures
Return on average tangible assets and return on average tangible equity is
a non-GAAP-based financial measure calculated using non-GAAP-based
amounts. The most directly comparable measure is return on average assets
and return on average equity, which are calculated using GAAP-based
amounts. The Company calculates the return on average tangible assets and
equity by excluding the balance of intangible assets and their related
amortization expense from the calculation of return on average assets and
equity. Management uses the return on average tangible assets and equity
to assess the Company's core operating results and believes that this is a
better measure of our performance. In addition, this is consistent with
the treatment by bank regulatory agencies, which excluded goodwill and
other intangible assets from the calculation of risk-based capital ratios.
A reconciliation of return on average assets and equity to the return on
average tangible assets and equity, respectively, is set forth below.

For Quarter Ended: September 30, 2009 September 30, 2008
------------------ ------------------ ------------------
Return on Average Assets (GAAP
basis) 1.36% 1.31%
Effect of excluding average
intangible assets and related
amortization 0.04% 0.05%
Return on Average Tangible
Assets 1.40% 1.36%

Return on Average Equity (GAAP
basis) 14.33% 12.57%
Effect of excluding average
intangible assets and related
amortization 3.68% 3.60%
Return on Average Tangible
Equity 18.01% 16.17%

For Nine Months Ended: September 30, 2009 September 30, 2008
---------------------- ------------------ ------------------
Return on Average Assets (GAAP
basis) 1.26% 1.44%
Effect of excluding average
intangible assets and related
amortization 0.04% 0.05%
Return on Average Tangible
Assets 1.30% 1.49%

Return on Average Equity (GAAP
basis) 13.13% 13.59%
Effect of excluding average
intangible assets and related
amortization 3.47% 3.96%
Return on Average Tangible
Equity 16.60% 17.55%

With over $1 billion in assets, Orrstown Financial Services, Inc. and its
subsidiary, Orrstown Bank, provide a full range of consumer and business
financial services through twenty one banking offices and two remote service
facilities located in Cumberland, Franklin and Perry Counties, Pennsylvania
and Washington County, Maryland. Orrstown Financial Services, Inc.'s stock is
quoted on the NASDAQ Capital Market under the symbol ORRF.

Certain statements in this release may constitute "forward looking statements"
under the Private Securities Litigation Reform Act of 1995, which involve risk
and uncertainties. Orrstown Financial's actual results may differ
significantly from the results discussed in such forward-looking statements.
Factors that might cause such a difference include, but are not limited to,
economic conditions, competition in the geographic and business areas in which
Orrstown Financial conducts its operations, fluctuations in interest rates,
credit quality, and government regulation.

SOURCE Orrstown Financial Services, Inc.

Bradley S. Everly, SVP, Chief Financial Officer of Orrstown Financial
Services, Inc., +1-717-530-2604