UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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ORRSTOWN FINANCIAL SERVICES, INC.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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The Road Ahead:
Paving The Way To Greater Success
Orrstown Financial Services, Inc.
2009 Annual Report
09
Table of Contents
Financial Highlights 1
Letter to Shareholders 2
Board of Directors 8
Executive Management Team 9
Directors Emeriti and Advisory Councils 10
Office Locations 11
Market & Investor Information 12
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 LOCATED IN CUMBERLAND, FRANKLIN, AND PERRY
COUNTIES OF PENNSYLVANIA, AND WASHINGTON COUNTY, MARYLAND. ORRSTOWN FINANCIAL SERVICES, INC.’S STOCK IS TRADED ON THE
NASDAQ CAPITAL MARKET UNDER THE SYMBOL ORRF.
ORRF Total Assets
In Millions
05 06 07 08 09
$601.5 $809.0 $885.0 $1,052.0 $1,196.0
ORRF Shareholders’ Equity
In Millions
05 06 07 08 09
$57.3 $89.4 $96.1 $103.3 $110.9
ORRF Cash Dividends
Per Share
05 06 07 08 09
$0.56 $0.74 $0.82 $0.87 $0.88
ORRF Return on Average Assets
05 06 07 08 09
1.81% 1.61% 1.50% 1.38% 1.19%
ORRF Return on Average Equity
05 06 07 08 09
18.69% 15.10% 13.64% 13.20% 12.48%
ORRF Net Income
Per Share
05 06 07 08 09
$1.76 $1.87 $1.95 $2.04 $2.09
05 06 07 08 09
ORRF 1.81% 1.61% 1.50% 1.38% 1.19%
Peer Group* 1.13% 1.12% 0.97% 0.52% 0.17%
05 06 07 08 09
ORRF 18.69% 15.10% 13.64% 13.20% 12.48%
Peer Group* 13.15% 12.88% 10.33% 5.06% 1.65%
0
5
10
15
20
ROA ROE
0.0
0.5
1.0
1.5
2.0
0
5
10
15
20
ROA ROE
Return on Average Assets
Peer Comparison
Return on Average Equity
Peer Comparison
*Publicly traded banks and thrifts with assets between $1 billion and $5 billion. Source SNL Financial.
Our Mission:
We help customers realize their dreams.
Financial Highlights
(Dollars in thousands except per share amounts) 2009 2008 % Increase
For the Year Ended December 31
Interest income .............................................................$53,070 . . . . . . . . . . . .$52,313 . . . . . . . . . . .1.4%
Interest expense .............................................................16,500 . . . . . . . . . . . . .19,408 . . . . . . . . . .-15.0%
Net interest income ........................................................36,570 . . . . . . . . . . . . .32,905 . . . . . . . . . .11.1%
Noninterest income (excluding securities gains) ...........16,233 . . . . . . . . . . . . .15,444 . . . . . . . . . . .5.1%
Noninterest expense ......................................................32,176 . . . . . . . . . . . . ..28,287 . . . . . . . . . .13.7%
Net income ......................................................................13,373 . . . . . . . . . . . . .13,103 . . . . . . . . . . .2.1%
At Year End
Assets .......................................................................$1,196,432 . . . . . . . . . .$1,051,783 . . . . . . . . . .13.8%
Loans ............................................................................881,074 . . . . . . . . . . . .820,468 . . . . . . . . . . .7.4%
Deposits .......................................................................915,170 . . . . . . . . . . . .757,368 . . . . . . . . . .20.8%
Repurchase agreements ................................................64,614 . . . . . . . . . . . . .63,407 . . . . . . . . .. . .1.9%
Shareholders’ equity ....................................................110,886 . . . . . . . .. . . . .103,347 . . . . . . . . . . .7.3%
Trust assets under management ..................................414,000 . . . . . . . . . . . .354,000 . . . . . . . . .16.9%
Per Share Data
Net income - basic ...........................................................$2.09 . . . . . . . . . . . . . ..$2.04 . . . . . . . . . .2.5%
Net income - diluted ...........................................................1.98 . . . . . . . . . . . . . . .1.94 . . . . . . . . . .2.1%
Cash dividends ..................................................................0.88 . . . . . . . . . . . . . . .0.87 . . . . . . . . . .1.1%
Book value at year end ....................................................17.21 . . . . . . . . . . . . . .16.18 . . . . . . . . . .6.4%
Performance Statistics
Return on average equity .............................................12.48% . . . . . . . . . . . .13.20%
Return on average assets ...............................................1.19% . . . . . . . . . . . . .1.38%
Equity / assets at year end .............................................9.27% . . . . . . . . . . . . .9.83%
1
To Our Shareholders,
Customers, and Friends:
2009 was a year of great achievement for the Company.
We celebrated our 90th anniversary; listed on the NASDAQ
Capital Market; were selected for inclusion on the Russell
2000 and 3000 Indices; were recognized by Sandler O’Neill
& Partners as one of the 30 best performing banks in the nation; saw significant stock appreciation;
continued the trend of annual dividend increases; and posted record earnings. While we are
proud of our 2009 results, we are not content with the status quo and are making considerable
commitments in technology, infrastructure, and talent to position the Company for the road ahead.
2
2009 was a year
of great achievement
for the Company.
Thomas R. Quinn, Jr.
President and CEO
09
3
The Road to Success
Great companies excel during difficult times by deftly adapting to changing
circumstances. In 2009 Orrstown Financial Services, Inc. was able to steer clear
of many obstacles that other financial institutions encountered:
Many banks curtailed their commercial lending in 2009 and adopted a “bunker
mentality”; our team recognized that quality customers need a bank that can support
their needs. As a result, we grew net loans by more than 7%.
We added thousands of new customers, growing deposits more than 20% from
$757,368,000 in 2008 to $915,170,000 at year end.
As local financial institutions were closing branches and reducing staff, we hired
some of the most talented individuals in the area. By year end the Orrstown Bank
team was almost 300 strong and had made significant additions to its workforce,
primarily in customer facing roles.
In 2009 the value of our peer group’s stock (publicly traded banks and thrifts
with assets between $1 billion and $5 billion) decreased 30.35%. By remaining
focused on activities that delivered shareholder value, our stock increased 29.19%.
The market downturn and dislocation experienced over the past two years
caused profound changes within the investment management industry. Orrstown
Financial Advisors, our wealth management and trust group, came through this
Great companies excel
during difficult times
by deftly adapting to
changing circumstances.
4
5
most recent downturn with a proven business model that has been able to withstand even the most severe
financial crisis. They recognized opportunities, proactively met with current clients, and sought new relationships.
As a result, combined trust and brokerage assets under management grew from $599,319,640 as of 12/31/2008
to $740,028,263 at year end—an increase of 24%.
We recorded the strongest earnings in our Company’s history, $13,373,000—an increase of 2.1% over our
2008 results.
The Company grew net interest income from $32,905,000 in 2008 to $36,570,000 in 2009—an increase of
11.1%. We also controlled expenses, resulting in an efficiency ratio of 58.85% for the year ended 12/31/2009.
In 2009 non-profit and community organizations struggled with funding. In recognition of the critical role
we play to support the quality of life in our communities, we increased our total giving, supporting nearly 250
organizations with thousands of hours of volunteer time and more than $400,000 in contributions.
Quality is our Driving Force
The quality of our loan portfolio has been a critical component of the Company’s strong results over the years.
In 2009, in addition to our already rigorous quality control procedures, we performed a comprehensive review
of our commercial loan portfolio and conducted extensive stress testing of our largest credits. We also added
additional staff to ensure that we continue to meet our asset quality standards. Throughout the year we
increased our loan loss reserve in recognition of sustained growth and as a continuation of our historically
prudent approach. This resulted in a year end loan loss reserve of 1.26% of loans, compared to 0.87% one
year earlier.
The quality of our loan
portfolio has been a
critical component of
the Company’s strong
results over the years.
The Road Ahead: 2010
Our 2010 road map is characterized by tremendous opportunity for Orrstown Bank to bring its community
banking model to new customers throughout south central Pennsylvania and northern Maryland. As we look to
capitalize on our strengths, we recognize that great companies continually reevaluate their core competencies
and seek ways to improve. There are several key areas that the executive management team is focusing on this
year. These include a complete review of all our processes, from something as basic as how we order supplies,
to sophisticated market analysis and prioritization of potential branch locations. Each line of business and
support group is evaluating its functions and ensuring that return on investment is the guiding principle of their
daily activities.
Late last year we identified a number of key technology initiatives that will be critical to the continued growth
of the organization. We are currently implementing a centralized consumer loan underwriting solution which will
enable us to process loans more efficiently and provide our customers with faster turnaround times. As a result,
we have increased our mortgage origination sales force and plan to add additional talent throughout the year.
Our team is now supported by a state-of-the-art system that enables them to take applications at the customer’s
home or business via laptop. Additionally, we have added several new mortgage products including: Federal
Home Administration, Veterans Administration, and USDA Guaranteed Rural Housing programs. Later in the
year customers will have the ability to apply for both consumer loans and mortgages electronically. Consumer
loan pre-approvals will be instant, and most loan decisions will be made within 24 hours. After approval, the
entire process will be simplified and expedited, enabling the Bank to handle a much larger volume of lending
without significant increases in support staff.
A new website is also slated for 2010 that will provide the platform for the new consumer loan and mortgage
products, as well as other enhancements to improve the customer experience. A customer relationship
management system will also be implemented, enabling our sales staff to more effectively meet our customers’
needs. The new system will provide real time sales management tools and metrics to support the growth of all
our lines of business.
Of course great processes and technology can’t be leveraged to their fullest potential without a team of talented
bankers. To that end, we have begun a formalized “rising star” program to identify and promote our best and
brightest into positions of increased responsibility.
As we look to capitalize on our strengths,
we recognize that great companies
continually reevaluate their core
competencies and seek ways to improve.
6
7
Detours and Speed Bumps
As we enter 2010, the changing regulatory landscape poses more questions than answers. Last year we
absorbed almost $1,000,000 in additional FDIC costs and are aware that there may be other speed bumps on
our journey this year. We are committed to an organization that is strong, safe, and secure. As each obstacle
approaches, our team will assess the situation and continue to choose the path that is best for our shareholders,
our employees, and our communities. While we may not always know what lies around the next corner, our
talented team is prepared for the road ahead.
Traveling Companions
The road that leads to greater success is never traveled alone. It takes teamwork, dedication, and integrity to
maintain our standards of excellence and take advantage of opportunities during these challenging times.
I am sincerely thankful to the Board of Directors, our Regional Advisory Councils, our Executive Management
Team, and each of our employees for their contributions to the Company’s success in 2009. I would also like to
acknowledge Ken Shoemaker once more for his 22 years of leadership and his guidance during my transition
last spring. Orrstown Bank is truly an outstanding organization and the entire team is excited about what lies
ahead. Thank you for your support—the best is yet to come!
Thomas R. Quinn, Jr.
President and Chief Executive Officer
While we may not always know
what lies around the next
corner, our talented team is
prepared for the road ahead.
8
Kenneth R. Shoemaker
Secretary of the Board
Years on Board—23
President Emeritus, Orrstown Bank
John S. Ward
Board Member
Years on Board—10
President, Modern Transit Partnership
Retired Chief Clerk of Cumberland County
Gregory A. Rosenberry
Board Member
Years on Board—12
President and General Partner,
Rosenberry Family Limited Partnership
Thomas R. Quinn, Jr.
President and Chief Executive Officer
Mark K. Keller
Board Member
Years on Board—2
State Representative 86th District
Joel R. Zullinger
Chairman of the Board
Years on Board—28
Attorney-at-Law
Glenn W. Snoke
Board Member
Years on Board—10
President, Snokes Excavating & Paving, Inc.
Jeffrey W. Coy
Vice Chairman of the Board
Years on Board—25
Commissioner, PA Gaming Control Board
Former 89th District State Representative 1983-2004
Anthony F. Ceddia
Board Member
Years on Board—13
President Emeritus, Shippensburg University
Leadership and Management Consultant
Andrea Pugh
Board Member
Years on Board—13
President & Sole Member, PharmCare Consultants LLC
Board of Directors
Pictured above, left to right
9
Michelle N. Paulnock
Senior Vice President
Operations
Gary R. Holder
Senior Vice President
Chief Retail Officer
Bradley S. Everly
Senior Vice President
Chief Financial Officer
Jeffrey S. Gayman
Senior Vice President
Chief Commercial Officer
All you need is the plan, the road map, and
the courage to press on to your destination.
—Earl Nightingale
Executive Management Team
Pictured above, left to right
Benjamin S. Stoops
Senior Vice President
Chief Technology Officer
Thomas R. Quinn, Jr.
President and
Chief Executive Officer
Jeffrey W. Embly
Executive Vice President
Chief Credit Officer
Mark G. Bayer
Vice President
Director of Marketing
Stephen C. Caldwell
Vice President
Director of Human Resources
Barbara E. Brobst
Senior Vice President
Senior Trust Officer
Philip E. Fague
Executive Vice President
Mortgage and Consumer Business
Directors Emeriti and
Advisory Councils
Directors Emeriti
Richard M. Diffenbaugh, Eldon E. Funk, Frank S. Heberlig, William O. Hykes, Galen L. Myers,
Raymond I. Pugh, Denver L. Tuckey, Peter C. Zimmerman
Carlisle Advisory Council
Zane R. Highlands, Dale F. Shughart, Jr., William A. Duncan, Robert G. Frey, William M. Miller, Jr.,
Kenneth L. Tuckey, Mary E. Duxbury, H. David Miller, Jr., H. Robert Davis, William H. Kronenberg
Chambersburg Advisory Council
Fred Stenger, Robert J. Hickey, Thomas G. Burkey, Michael Ocker, G. Bryan Salzmann,
Karl Shreiner, Amy L. Hinton, Tammi M. Hennessy, Cheryl Plummer
Hagerstown Advisory Council
Johnny Barr, George C. Harne, Cindy Joiner, Cynthia Moler, Kent Reynolds, David Rider,
Michael Zampelli
Shippensburg Advisory Council
Thomas N. Papoutsis, William E. Naugle, W. Mickey Nye, Jeffrey S. Craig, John E. Clinton,
Duaine A. Collier, Thomas Colley, Kathy Pugh, Kathy J. Frazer, Jerry S. Lyons, Stephen C. Oldt
Perry County Advisory Council
John J. Amsler, Allen E. Hench, Robert W. Morris, II, Charles A. Connell, Jr., Kermit B. Harry, Jr.,
Dale E. McGuire
West Shore Advisory Council
Mark R. Baseshore, Bony R. Dawood, Fred A. Gettys, John W. Gleim, Jr., Max J. Hempt,
Deborah B. Keys, Dr. Dennis J. Red, Keith A. Sealover, Robert L. Slagle, Richard C. Snelbaker,
Richard W. Stewart, Lorin Stough, Patricia H. Vance, Glenda M. Wethington
Youth Advisory Council
Crystal Stine—Chairperson, Anna Kovanic, Jessica Rabuck, Scott Henry, Mary-Carolyn Burt,
Lauren Furry, Arnela Zejcirovic
10
In Memoriam
It was with great sadness that we noted the passing in November of
Director Emeritus Robert T. Henry. Mr. Henry served as a member of
the Board of Directors for over 10 years and was a well respected local
businessman and community leader.
11
Camp Hill
3045 Market Street
Carlisle
22 South Hanover Street
427 Village Drive
2250 Spring Road
1 Giant Lane
Chambersburg
625 Norland Avenue
1725 Lincoln Way East
1355 Orchard Drive
Duncannon
403 North Market Street
Greencastle
308 Carolle Street
Hagerstown, MD
201 South Cleveland Avenue
1020 Professional Court
Mechanicsburg
3 Baden Powell Lane
1110 East Simpson Street
New Bloomfield
1 South Carlisle Street
Newport
15 North Second Street
18 Newport Plaza
Orrstown
3580 Orrstown Road
Shippensburg
77 East King Street
121 Lurgan Avenue
Spring Run
16400 Path Valley Road
Office Locations
12
Market & Investor Information
Market Information
The common stock of Orrstown Financial Services, Inc. is traded on the NASDAQ Capital Market under the symbol ORRF. At the
close of business December 31, 2009, there were 3,109 shareholders of record, with a total of 6,469,508 shares outstanding.
Investor Information
Annual Meeting
The annual meeting of Orrstown Financial Services, Inc. shareholders is scheduled for May 4, 2010 at 9:00 a.m. at the H. Ric Luhrs
Performing Arts Center, 1871 Old Main Drive, Shippensburg, PA 17257. All shareholders are cordially invited to attend.
Annual and Quarterly Reports
Copies of the annual and quarterly reports may be obtained at any office of Orrstown Bank, by writing to Registrar and Transfer
Company or by contacting Robin Burnhisel, Orrstown Bank, P O Box 250, Shippensburg, PA 17257.
Form 10-K
A copy of the Corporation’s Form 10-K, as filed with the Securities and Exchange Commission, may be obtained by writing to
Orrstown Bank, P O Box 250, Shippensburg, PA 17257.
The Notice of Annual Meeting of Shareholders, Proxy Statement, Annual Report on Form 10-K and Form of Proxy are available free
of charge at www.orrstown.com.
Transfer Agent
The transfer agent for Orrstown Financial Services, Inc. is Registrar and Transfer Company, 10 Commerce Drive, Cranford, NJ 07016-3572.
E-mail: info@rtco.com. Internet address: www.rtco.com. Phone 800.368.5948.
Market Makers
Stifel, Nicolaus & Company, Inc. Sandler O’Neill & Partners, L.P.
2000 Oxford Drive, Suite 605 919 Third Avenue, 6th Floor
Bethel Park, PA 15102 New York, NY 10022
866.253.0500 800.635.6851
Boenning & Scattergood, Inc. Janney Montgomery Scott, LLC
Four Tower Bridge 1801 Market Street
200 Barr Harbor Drive, Suite 300 10th Floor
West Conshohocken, PA 19428 Philadelphia, PA 19103
800.883.1212 800.526.6397
Business Card
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.
77 East King Street P O Box 250 Shippensburg, PA 17257
1.888.677.7869 www.orrstown.com
We help customers realize their dreams.
ORRSTOWN
FINANCIAL SERVICES, INC.