826154--3/15/2010--ORRSTOWN_FINANCIAL_SERVICES

related topics

{loan, real, estate}

{acquisition, growth, future}

{condition, economic, financial}

{loss, insurance, financial}

{competitive, industry, competition}

{tax, income, asset}

{regulation, change, law}

{system, service, information}

{debt, indebtedness, cash}

{control, financial, internal}

{regulation, government, change}

{product, market, service}

Unfavorable economic and market conditions due to the current global financial crisis may materially and adversely affect us. We operate in a highly regulated environment and may be adversely affected by changes in laws or regulations. We may be required to make further increases in our provisions for loan losses and to charge off additional loans in the future, which could materially adversely affect us. Changes in interest rates could adversely impact our financial condition and results of operations. Increases in FDIC insurance premiums may have a material adverse effect on our results of operations. We are a holding company dependent for liquidity on payments from Orrstown Bank, our sole our subsidiary, which are subject to restrictions. Because our business is concentrated in South Central Pennsylvania and Washington County, Maryland, our financial performance could be materially adversely affected by economic conditions and real estate values in these market areas. Our commercial real estate lending may expose us to a greater risk of loss and hurt our earnings and profitability. Our construction loans and land development loans involve a higher degree of risk than other segments of our loan portfolio. We are required to make a number of judgments in applying accounting policies and different estimates and assumptions in the application of these policies could result in a decrease in capital and/or other material changes to our reports of financial condition and results of operations. Also, changes in accounting standards can be difficult to predict and can materially impact how we record and report our financial condition and results of operations. Competition from other banks and financial institutions in originating loans, attracting deposits and providing various financial services may adversely affect our profitability and liquidity. Impairment of investment securities, goodwill, other intangible assets, or deferred tax assets could require charges to earnings, which could result in a negative impact on our results of operations. Our business strategy includes the continuation of moderate growth plans, and our financial condition and results of operations could be negatively affected if we fail to grow or fail to manage our growth effectively. If we want to, or are compelled to, raise additional capital in the future, that capital may not be available when it is needed and on terms favorable to current shareholders. We may be adversely affected by technological advances. The soundness of other financial institutions could adversely affect us. A substantial decline in the value of our Federal Home Loan Bank of Pittsburgh common stock may adversely affect our financial condition. An interruption or breach in security with respect to our information system, or our outsourced service providers, could adversely impact our reputation and have an adverse impact on our financial condition or results of operations. If we fail to maintain an effective system of internal control over financial reporting and disclosure controls and procedures, we may be unable to accurately report our financial results and comply with the reporting requirements under the Securities Exchange Act of 1934. As a result, current and potential shareholders may lose confidence in our financial reporting and disclosure required under the Securities Exchange Act of 1934, which could adversely affect our business and could subject us to regulatory scrutiny.

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826154--3/15/2010--ORRSTOWN_FINANCIAL_SERVICES_INC