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DATE

  • Wednesday, July 23, 2025, at 9 a.m. EDT

CALL PARTICIPANTS

  • President and Chief Executive Officer — Tom Quinn
  • Senior Executive Vice President and Chief Operating Officer — Adam Metz
  • Executive Vice President and Chief Financial Officer — Neel Kalani
  • Chief Risk Officer — Bob Coradi
  • Chief Credit Officer — David Chajkowski

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TAKEAWAYS

  • Adjusted ROA and ROE: Adjusted return on average assets reached 1.51% in Q2 2025, and adjusted return on average equity was 15.1% in Q2 2025, both up from the prior quarter.
  • Net Interest Margin (NIM): Net interest margin rose to 4.07% from 4% sequentially despite a highly competitive lending environment.
  • Fee Income as Revenue Percent: Fee income accounted for 21% of operating revenue in Q2 2025, which is higher than recent periods.
  • Noninterest Income: Noninterest income increased by $1.3 million quarter over quarter, driven by strong performance in wealth management and swap fee generation.
  • Loan Growth: Total loans grew at a 6% annualized rate in Q2 2025, and commercial loans advanced at a 2% annualized rate in Q2 2025, with management citing a strong and growing pipeline.
  • Credit Quality: Net charge-offs remained nominal, while nonaccrual loans to total loans decreased to 0.57% in the second quarter, compared to 0.59% in the first quarter of 2025.
  • Allowance for Loan Losses: Allowance coverage ratio stood at 1.22% in Q2 2025, with management stating it "adequately addresses the risk in the loan portfolio."
  • Noninterest Expense Trend: Noninterest expenses fell by approximately $600,000 quarter over quarter in Q2 2025, including merger-related and consulting costs; core efficiency ratio, excluding merger expenses, improved to 58.7% in the second quarter, compared to 60.5% in the first quarter of 2025.
  • Deposit Change and Cost: Deposits declined by $117 million in Q2 2025, while cost of deposits decreased to 2.01% from 2.14% as strategic pricing actions were implemented.
  • Capital and Liquidity: Tier 1 common equity (TCE) exceeded 8% in Q2 2025, all key capital ratios increased in Q2 2025, and the loan-to-deposit ratio was 87% in Q2 2025, providing liquidity headroom.
  • Shareholder Return Actions: The board authorized a new share repurchase program up to 500,000 shares, and repurchased 2,134 shares in Q2 2025; dividend increased by 1¢ to 27¢ per share in Q2 2025, marking the third dividend increase over the past year and a cumulative 35% rise since the merger.
  • Securities Portfolio: Purchased $50 million of securities in Q2 2025, bringing the total to $885 million as of Q2 2025; duration remained steady at four and a half years as of June 30, 2025, with unrealized losses were unchanged at approximately 3% of book value as of June 30, 2025.

SUMMARY

Orrstown Financial Services (ORRF 7.61%) reported sequential improvements in profitability, margin, and operating leverage in Q2 2025, citing a strong lending pipeline and capital flexibility as key forward drivers. Management emphasized that deposit costs declined in Q2 2025, while the loan yield experienced a minor decline due to reduced purchase loan accretion in Q2 2025, and that further merger-related expenses are not expected in future quarters (as stated on the Q2 2025 earnings call). Notably, strategic shareholder returns expanded through increased repurchases and dividends in Q2 2025, while the wealth management business and fee-based revenue streams remained central to noninterest income growth initiatives.

  • Neel Kalani stated, "We are asset sensitive, so there would be a negative impact to overall net interest income going forward, with the floating rate loans resetting, but we would certainly have the opportunity to continue to bring the deposit cost down."
  • Hiring initiatives added experienced middle market bankers, including "the number one lender from a $40 billion regional bank," contributing to what management described as the largest pipeline since the merger.
  • Share repurchase activity and the expanded authorization highlight board confidence in current valuation and capital adequacy, with merger integration progress supporting further optionality.
  • Management noted, "the broad fee waivers that we've discussed previously that we temporarily implemented are no longer in place," which contributed to the improved fee income mix in Q2 2025.

INDUSTRY GLOSSARY

  • Net Interest Margin (NIM): A measure of the difference between interest income generated and interest paid relative to average earning assets.
  • Core Efficiency Ratio: Noninterest expense as a percentage of revenue, excluding merger-related or one-time charges, indicating cost efficiency of the banking operation.
  • Classified Loans: Loans designated by regulators as having a higher risk of loss due to credit concerns or borrower performance deterioration.
  • Allowance Coverage Ratio: The ratio of allowance for loan losses to total loans outstanding, used as a gauge of reserve adequacy against potential loan defaults.
  • Loan Accretion: Incremental interest income recognized as acquired loans are paid off at a faster pace than estimated, often tied to accounting for purchased credit-impaired loans.
  • TCE (Tier 1 Common Equity): A capital adequacy metric that measures a bank's core equity capital compared to its risk-weighted assets.

Full Conference Call Transcript

Tom Quinn: Thank you, Kate, and good morning. I'd like to thank everyone for participating in Orrstown's second quarter 2025 earnings conference call, both by telephone and through the webcast. 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 may click on the investor relations link and then on the events and presentations link. 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 presentation also includes non-GAAP financial measures as identified in the earnings release and investor presentation. The appropriate reconciliations to GAAP are included in the appendices. Joining me on the call this morning are Orrstown Bank Senior Executive Vice President and Chief Operating Officer, Adam Metz, as well as our Executive Vice President and Chief Financial Officer, Neel Kalani. Our Chief Risk Officer, Bob Coradi, and our Chief Credit Officer, David Chajkowski, will also participate on the call. Our financial highlights for the quarter are summarized on slide three of the deck. Despite some lingering merger-related expenses, GAAP earnings were strong and core earnings continued to increase.

Excluding certain merger-related charges, return on average assets was 1.51%, and return on average equity was 15.12% for the second quarter of 2025, compared to 1.45% and 14.97%, respectively, for the first quarter of 2025. We expect stronger net income going forward as loan growth accelerates. Net interest margin also increased. NIM was 4.07% in the second quarter of 2025, compared to 4% in the first quarter of 2025, with the possibility of further upside. We believe that we are pricing loans prudently and managing funding costs well, which is evidenced by the improving margin. Fee income remained a core strength of the organization during the second quarter.

Fee income as a percentage of operating revenue was 21% during the quarter, an improvement from prior periods. Noninterest income increased $1.3 million quarter to quarter. The team has been doing an excellent job of generating fee income from various sources, led by our wealth management fees, which remained the largest component of our fee income. Now at $3 billion in assets under management, there is significant opportunity to build this business. While expenses remain slightly more elevated than we would like, they are coming down over time, and our core operating expenses are in line with expectations. The team remains focused on establishing a foundation to support future growth.

Excluding the impact of merger-related expenses, the efficiency ratio is 58.7% for the second quarter compared to 60.5% for the first quarter of 2025. We do not anticipate any meaningful merger-related expenses going forward. We do expect expenses to continue to decline throughout the year, which will further boost our already strong earnings stream. We believe that we consistently have demonstrated the ability to maintain strong profitability in any environment. I would now like to turn it over to Adam Metz for a discussion on our balance sheet. Adam?

Adam Metz: Thank you, Tom, and good morning, everybody. Loan growth was relatively modest this quarter, but we believe that the loan pipeline is strong. Total loan growth was 6% for the quarter on an annualized basis. Annualized commercial loan growth was 2%. During the quarter, we saw a good mix of C&I and CRE, and also a good mix between floating and fixed. We believe our overall loan pipeline is strong. Currently, it's the highest it's been since the merger of the two companies. This reflects the strength and resilience of our regional economy, the deep engagement of our team with our clients, and the impact of new talent we've attracted, including individuals with middle market experience.

As I've said before, talent matters, and we feel confident in the team we have in place and continue to build upon. It does remain a competitive lending environment, but we remain confident in our ability to grow loans the right way. And credit quality remains sound. We believe that the work we have done since the merger to protect credit quality has been very beneficial. Net charge-offs were again nominal in the second quarter. Classified loans and nonaccrual loans decreased quarter to quarter. Nonaccrual loans to total loans decreased to 0.57% for the second quarter compared to 0.59% for the first quarter. And we continue to build capital, which will create flexibility for us in the future.

Capital ratios increased across the board quarter to quarter. We remain well-capitalized by all measures. We can continue to prioritize shareholder value. Late in the second quarter, the board of directors authorized a share repurchase program of up to 500,000 shares of common stock. The company repurchased 2,134 common during the quarter. We plan to utilize this authorization judiciously to support our currency as well as we believe we remain undervalued. The board voted to increase our quarterly dividend by 1¢ per share from 26¢ to 27¢ per share. This is the third dividend increase in the past year. And our dividend has increased 35% since the merger.

Neel Kalani, our CFO, will now discuss our second-quarter results in more detail. Neel?

Neel Kalani: Thanks, Adam. Good morning, everyone. We had a very strong second quarter both from a GAAP basis and adjusted for some of the residual merger-related noise. We've achieved normalized ROA over 1.5% and expect improvement from there. Already walked through the numbers at a high level, so I'll just jump into the details starting on slide four. The margin remained very strong and improved to 4.07% in the second quarter. Cost of deposits declined by 12 basis points. This was partially offset by loan yields, declining by seven basis points due to the lower purchase loan accretion than prior quarter. Absent the impact of the loan accretion, loan yields remain relatively flat compared to the previous quarter.

This highlights our continued discipline on both loan and deposit pricing. The environment remains very competitive on both fronts, and the potential for margin pressure is real. But I do see further upside in margin into the third quarter with the expectation that it stabilizes after that point, assuming rates remain unchanged. We do remain asset sensitive. As noted on slide five, fee income was $12.9 million for the second quarter, up by $1.3 million from the prior quarter. But our goal remains to continue to exceed 20%. The team had an excellent quarter from a swap fee generation standpoint with just short of $700,000 in swap fees.

Service charges increased by $200,000 as our treasury management team continues to successfully grow its base. And the broad fee waivers that we've discussed previously that we temporarily implemented are no longer in place. Wealth management had another very strong quarter and remains a significant focus for Orrstown to boost our noninterest income going forward. Obviously, there was a rough start to the stock market in the beginning of the quarter that did have some impact quarter to quarter, but we're very happy with the income generated from that business and the opportunities that lie ahead. The quarter also included some solar tax credit income and other items that are not necessarily consistent from quarter to quarter.

I don't expect the current fee income run rate to continue in the near term, but it is a longer-term expectation for us. But several components do remain dependent on timing. A quarterly run rate around $12 million is likely reasonable there, but certainly within the range of $11.5 to $12.5 million. Noninterest expense is covered on slide six. We had a little more noise than we expected during the second quarter, but the picture of our efforts on expenses is becoming more evident. Noninterest expense declined by approximately $600,000 in the quarter, and that includes merger-related expenses of almost $1 million and severance costs of approximately $600,000. The efficiency ratio continues to come down as Tom noted.

And I've been messaging a go-forward run rate around $35 million each quarter. If you back out the items I just talked about and about $1 million in consulting fees kind of in excess of normal in the quarter associated with the continued process improvement work that we have going, it gets you to that $35 million number. Merger-related expenses this quarter were associated with the final components of core system conversion, and we don't anticipate any associated costs of significance going forward associated with the merger.

The excess consulting costs are expected to decline over the next couple quarters, so I expect the quarterly expense run rate in the $35 to $36 million range for the next few quarters and early next year, approaching a 55% efficiency ratio inclusive of amortization costs. However, I will continue to reiterate that the primary reason for our success over the years has been our ability to attract strong talent to set us up for growth. So that approach will continue and could potentially impact the expense run rate. Would obviously expect that those decisions, if they do happen, would impact the revenue side of the equation over time as well. Credit quality is covered on slide seven.

We recorded a small provision this quarter primarily from a negligible amount of charge-offs on a net basis. Classified loans decreased by 14%. Nonaccruals were down slightly as well. Our allowance coverage ratio was 1.22%, which we continue to believe adequately addresses the risk in the loan portfolio. Slide eight highlights our key performance metrics as adjusted for merger-related expenses. The second quarter normalized EPS reached $1.04, adjusted ROA was 1.51%, and adjusted ROE was 15.1%. With both the expected impact of our loan pipeline on interest income and the momentum we have on expenses, we do see some upside in those numbers, which puts us near the top of our peer group.

In addition, now that we're a year out from the merger, we've built TCE back over 8%. Moving to the balance sheet slide on slide nine. Total loans grew to $3.93 billion, while commercial loans, as Adam mentioned, grew by 2% annualized. We do have a strong pipeline heading into the third quarter, and we remain prudent in our lending decisions and continued focus on risk and long-term relationships. Average yield on loans was 6.5%. As mentioned earlier, the yield was impacted by the lower purchase accounting accretion, which will vary each quarter based on timing of prepayments of pre-acquired loans.

On slide 10, deposits did decline by $117 million as we continue to shift away from promotional time deposits and money markets. Cost of deposits declined from 2.14% to 2.01% in the quarter due to the impact of pricing decisions in the first quarter and new funding at lower cost. The 87% loan-to-deposit ratio provides us sufficient liquidity to fund our loan pipeline without placing a heavy reliance on alternative funding sources. As I've indicated in the past, we're fairly comfortable in the low 90% range. We feel good about where we are from that standpoint.

And then as communicated previously and shown on slide 11, we used some of our liquidity to enhance the securities portfolio and generate additional interest income as loan production ramps up. Purchased $50 million of securities in the quarter, and the portfolio is now up to $885 million. We'll continue to look for opportunities as the market creates them to strengthen our balance sheet and create strong yields. The duration remains relatively short at four and a half years, and unrealized losses are still around 3% of the book balance at June 30. On slide 12, you can see that our regulatory capital ratios are now at or above pre-merger levels.

As we've said previously, the capital levels and expected growth in the ratios as we move forward present us with many options to continue our growth trajectory. I'd like to now turn the call back over to Adam Metz for some closing remarks.

Adam Metz: Thank you, Neel. We believe that the work we have done since the merger to protect credit quality, enhance liquidity, and build capital has presented us with significant strategic flexibility going forward. Capacity to accelerate commercial lending for strong relationships, considering buybacks as we believe our stock is undervalued, contemplating redemption of sub-debt, and ability to take advantage of other strategic opportunities. We remain optimistic about the future both in the short and long term. We would now like to open the call to questions. Before we get started, the operator will briefly review the instructions with you.

Operator: At this time, I would like to remind everyone in order to ask a question, press star and then the number one on your telephone keypad. We request that your questions be limited to one question and one follow-up. We will pause for just a moment to compile the Q&A roster. Your first question comes from the line of Gregory Zingone with Piper Sandler. Your line is open.

Gregory Zingone: Hey. Good morning, guys. How are you?

Tom Quinn: Morning. Good morning, Greg. Good morning.

Gregory Zingone: You guys had a pretty clean quarter on credit. I was wondering, though, are there still other credits in the Codorus Valley deal that you were still looking to move off of or sell?

Tom Quinn: I have other credits in the Codorus Valley deal that we wanted to...

Adam Metz: Well, you know, in the past, we have engaged in some loan sales. We haven't in the past two quarters because we've, as you've seen, been relatively successful working them out with very little in the way of any charge-offs. There might be a couple of loans that we may see as an opportunity in the next couple of quarters. But I wouldn't look for anything real substantial in terms of major loan sales.

Gregory Zingone: Okay. Thank you. And then, as a follow-up, is there a capital level that you guys have in mind that you would like to reach before seriously considering another acquisition? Thank you.

Neel Kalani: I'm sorry. You're asked, was there a capital level we want to achieve? Before? Okay. Correct. Yeah. Like, we've kind of, like, said before, I think we're there. We need to continue to, we're at pre-merger levels now. We'll continue to build to a good spot over the next couple quarters. I think we're at the point where we don't have to get any outside capital to do something. Obviously, it depends on the type of deal and the size and all that, but we feel we're in a good spot now and particularly over the next quarters can build it up even more. Next several quarters.

Gregory Zingone: Thank you.

Operator: Your next question comes from the line of Tim Fidler with KBW. Your line is open.

Tim Fidler: Hey, good morning. Thank you for taking my question.

Neel Kalani: Morning, Tim.

Tim Fidler: I wanted to follow-up on your comments about the potential for NIM expansion in Q3 and then maybe some stabilization. It sounds like that assumes rates stay unchanged. Can you provide some commentary on how, you know, two to three rate cuts in the back half of the year could impact that particularly, you know, going into 2026, maybe where the exit NIM would be?

Neel Kalani: So what was the end of your question? Where the what would be?

Tim Fidler: Where would the exit NIM be at the end of this year? Say we get, you know, two to three Fed rate cuts?

Neel Kalani: So we are, like I said, we are asset sensitive, so there would be a negative impact to overall net interest income going forward, with the floating rate loans resetting, but we would certainly have the opportunity to continue to bring the deposit cost down. So a couple of rate cuts would negatively impact us, but we will need to keep pushing on the loan side to offset some of that impact. So that's really kind of where we're at from a kind of margin projection standpoint. Deposit costs are probably still very competitive. I think we've seen the reduction that we're going to experience probably stay relatively flat from here without rate reductions.

But, as I've always said, it is a difficult question to answer to a certain extent going forward if rates get cut is how hard can we push on deposit costs and how competitive it is. But, certainly, there's some downside as rates come down.

Tom Quinn: I will add to that, something Adam mentioned that our pipelines have not been bigger since the two companies came together. And so properly pricing those loans will be critical, as we see rate cuts.

Tim Fidler: Great. Okay. And I'd love to follow-up on some of your commentary about the wealth management business. Obviously, you had a pretty good quarter. But it sounds like it's an area where you guys see a lot of opportunity for growth. You know, I'm sure there's maybe some, you know, synergies you can achieve with Codorus, but I'd love to get some more details on, you know, maybe what initiatives you have there. Where the growth is coming from, and, you know, your outlook for that business.

Tom Quinn: I think it's encouraging to the bank right now when you see in the RIA space that Ozaik snapped up CW advisers 13 and a half billion dollar acquisition of assets under management for 900 plus $950 million. You're sitting on $3 billion in AUM, and you realize that you grow the franchise there. The value of your franchise should only improve. And I think Adam's got a real strong strategic mindset towards bringing in more advisers, and I'll let you talk about it, Adam, to share with them kind of some of the things we're doing not only in Maryland, but in Lancaster as well.

Adam Metz: Yeah. I do think we have an opportunity in front of us, and a lot of that will be through talent acquisition, and I think we're pretty close on some fronts there. We also have, as I said before, we have a lot of opportunity in what I say are growth markets. And so we are just sort scratching the surface as it relates to our Maryland market. There's a lot of opportunity there, but also in Lancaster and Harrisburg as well.

Tim Fidler: Great. Thank you, guys.

Operator: Your next question comes from the line of David Long with Raymond James. Your line is open.

David Long: Good morning, everyone, and thanks for taking my questions. In your prepared remarks, you talked about the strength of the economic backdrop within your footprint. And I just on top of that, I wanted to get some color from you guys as far as what are you hearing from your business customers. You know, when we talked in April, I think sentiment was pretty poor. As you said, the market was much lower than where we are today, and coming off of Liberation Day, how is the sentiment of your commercial clients adjusted or changed over the last few months?

Adam Metz: Yeah. I would just answer that question by saying our pipeline is the largest it's been since the merger of the two companies. So we are having daily conversations with our clients, but I would tell you we've seen the pipeline not only grow, but fund, here in July, and expect it to continue. So, yes, there is some noise on the headlines on any given day. But right now, they're moving forward, and we feel good about where we are.

David Long: Got it. Thanks for that. And then as a follow-up, can you maybe elaborate a little bit more on your appetite to add middle market bankers and are these bankers what do you have in your model today for ads? And with growing the team, is it coming from bankers from larger institutions, smaller institutions? Where are you finding the best opportunities? Thank you.

Tom Quinn: Yeah. This is Tom. I'll turn it over to Adam in a second. But in recent weeks, we hired the number one lender from a $40 billion regional bank. That individual was the number one person in that company in the middle market space. And I think Adam can elaborate on some of the other areas that he wants to focus on. Adam?

Adam Metz: Yeah. I think we do have some upside there. To sort of balance out the team. We were very pleased to hire this individual who brings a lot of experience in a variety of industries. But we've also been successful in hiring individuals for our Lancaster York market, another one for our York market. So, talent matters, and we've been very, you know, we allow them the ability to service their clients in a way that's meaningful for them. But we also, you know, as we always lead with risk. And so we feel like we've been telling a pretty compelling story, and we've been successful in attracting talent. And we're always on the lookout for great talent.

So I think that will continue.

David Long: Great. Thanks a lot for the color. Appreciate it.

Operator: Your next question comes from the line of Dan Cardenas with Janney Montgomery Scott. Your line is open.

Dan Cardenas: Good morning, everybody. Good morning. Just a quick couple of follow-up questions on the lending side. Maybe you give us some color on what the line utilization rate is on your commercial portfolio? And how does that compare to historical levels?

Neel Kalani: Yeah. We've not seen a material change in line utilization in the quarter. I think it's remained fairly stable. Utilization rates are fairly modest right now in the commercial portfolio.

Dan Cardenas: Alright. So then as you look at growth in the back half of the year, is that going to be primarily CRE driven? Or and what's where do you see the most opportunity in your footprint?

Adam Metz: Yeah. I would tell you the first half of this last quarter the loan growth came mostly from C&I. The second half of the last quarter, we had some good CRE deals. We are now at 293% of risk-based capital in our CRE bucket. So we do have, as we talked about earlier, there are a number of measures to reduce that. But we now feel like we have capacity to go out and do the right CRE deals with the right relationships. So I feel like right now, we're pretty well mixed, as we look forward in our pipeline, but we do have room for additional CRE.

Dan Cardenas: So the wins on those deals are is that primarily pricing driven, or what's kind of the secret sauce that will allow you to get the transactions that you want?

Adam Metz: I'm sorry. I didn't necessarily hear your question there.

Dan Cardenas: Yeah. I was just wondering if, you know, to win the loans. I know it's competitive out there, but are those wins primarily driven by pricing, or are there some other factors that come into play that allow you to win a customer over?

Adam Metz: Yeah. I mean, I would speak to our relationship model there. I mean, it's not just, you know, certainly, we have to be competitive on the loan pricing, but I think we constantly speak about earning an extra, you know, we earn what we price our loans at. So we have to, you know, speak to our relationship-driven model, and it's not just the commercial lender. It's treasury management. It's the retail franchise. It's the wealth management as well.

Tom Quinn: Yeah. I would add to that if you go back to 2020 when our lending team embraced clients to help them with PPP when they couldn't get them at the banks they were at. When you go back to the SIVB failure, and we contacted all our clients to help them as they were nervous about, you know, liquidity challenges they might have or might not have. When you look at the consultative nature of how we approach, we're looking for bankers, not just people that can lend money. And so sometimes you're saying no to the client and winning a relationship because the client truly appreciates what you're doing in the long term.

And I think Adam has spoken at length to our lending team about the importance of managing the relationship, being there for the relationship, and fostering kind of an attitude that we're there to help them and their businesses. And that approach seems to work. Right? And it's paid long-term dividends.

Dan Cardenas: Excellent. And then my last question. It's been a year since the Codorus Valley deal has been consummated. Are you guys ready to do another transaction? And what are the parameters that you're looking for in potential targets? In terms of size and geographic location?

Tom Quinn: Yeah. I think it's a question we don't typically answer publicly. What I would tell you is that the bank has done a really fantastic job of integrating the Peoples Bank merger in the sense that by the end of 2024, we had pushed 18% cost saves out, and that was a target we had for this past June 30. So we exceeded that. We continued to move on integrating. Clearly, there are some loans we wanted to move out of the bank. We did that pretty judiciously as well. And I think we're now looking at, you know, best idea, best practice wins long term for the clients.

And we've got a few other things we're rounding out, but as we look to the future, we would want something that added tremendous value to the franchise. A product or service we don't currently have, in a geography that was, you know, close to where we are or, you know, within a state or two. We've always focused on. But I think that's something that we've done three acquisitions of banks in 106 years. So it's something we take and discuss at length with our board and move through that. I don't think we it's not ego-driven. It's what's right for the shareholders, and we live by that every day.

Dan Cardenas: Great. Thank you for taking my questions.

Operator: Your next question comes from the line of Tim Switzer with KBW. Your line is open.

Tim Switzer: Hey. Thanks for letting me back on. I just had one follow-up. I appreciate you guys have gone through, I think, most of the work, derisking the loan book from Codorus has resulted in some good credit trends. But I'd love to hear the details on what kind of loan review you guys have done to gauge the risk of tariffs and what the outcome of that has been.

Neel Kalani: Yeah. Sure. We took a couple of different approaches on how we tried to assess the risk relative to tariffs. The one thing we did was we just did a full stress of the entire C&I book. We stressed our NOI at 10-20%. And, you know, the outcome of that was that, under that 20% stress scenario, our classified as total risk-based capital ratio would still be below our 25% threshold that we've set internally. So we feel pretty good about the resiliency of the portfolio as it relates to any risk around tariffs.

Tim Switzer: Great. That's all I had. Thank you, guys.

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

Tom Quinn: Thank you again, Kate, 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 feel free to give us a call. Wishing you all a wonderful day. Thank you very much.

Operator: This concludes the Orrstown Financial Services, Inc. second quarter 2025 earnings conference call. You may disconnect your line at this time.