Orrstown Financial Services Announces Board Changes and Financial Obligations

TL;DR

Orrstown Financial Services (ORRF) board shakeup and new debt – watch for strategy shifts.

AI Summary

Orrstown Financial Services, Inc. announced on July 1, 2024, the departure of Director Robert L. Boscov and the election of new directors, including David L. Kunkle and Michael L. McCurdy. The company also reported the creation of a direct financial obligation and other events, including amendments to its articles of incorporation and bylaws.

Why It Matters

Changes in the board of directors can signal shifts in company strategy or governance, while new financial obligations could impact the company's financial health and future borrowing capacity.

Risk Assessment

Risk Level: medium — Board changes and the creation of new financial obligations introduce uncertainty regarding future company direction and financial stability.

Key Players & Entities

• Orrstown Financial Services, Inc. (company) — Registrant
• Robert L. Boscov (person) — Departing Director
• David L. Kunkle (person) — Elected Director
• Michael L. McCurdy (person) — Elected Director

FAQ

Key Financial Figures

• $2.50 — h share of Codorus Valley common stock, $2.50 par value per share ("Codorus Common St
• $31,000,000 — egate principal amount not in excess of $31,000,000, (ii) floating rate junior subordinated
• $3,093,000 — egate principal amount not in excess of $3,093,000 (the "2034 Debentures") and (iii) junio
• $7,217,000 — egate principal amount not in excess of $7,217,000 (the "2036 Debentures" and together wit
• $600,000 — auffman's minimum annual base salary is $600,000. Subject to the approval of the Orrstow
• $400,000 — od, equal to the difference between (a) $400,000, and (b) the amount distributed pursuan

Filing Documents

• ef20031890_8k.htm (8-K) — 65KB
• ef20031890_ex3-1.htm (EX-3.1) — 101KB
• ef20031890_ex99-1.htm (EX-99.1) — 23KB
• image00001.jpg (GRAPHIC) — 6KB
• 0001140361-24-031867.txt ( ) — 370KB
• orrf-20240701.xsd (EX-101.SCH) — 4KB
• orrf-20240701_lab.xml (EX-101.LAB) — 22KB
• orrf-20240701_pre.xml (EX-101.PRE) — 16KB
• ef20031890_8k_htm.xml (XML) — 4KB

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Item 2.01 Completion of Acquisition or Disposition of Assets. On July 1, 2024, Orrstown Financial Services, Inc. ("Orrstown") completed the previously announced merger of equals (the "Merger") with Codorus Valley Bancorp, Inc. ("Codorus Valley"), pursuant to the Agreement and Plan of Merger (the "Merger Agreement"), dated as of December 12, 2023, by and between Orrstown and Codorus Valley. At the effective time of the Merger (the "Effective Time"), Codorus Valley was merged with and into Orrstown, with Orrstown as the surviving corporation, which was promptly followed by the merger of Codorus Valley's wholly-owned bank subsidiary, PeoplesBank, A Codorus Valley Company ("PeoplesBank"), with and into Orrstown Bank, a wholly-owned subsidiary of Orrstown, with Orrstown Bank as the surviving bank. Pursuant to the terms of the Merger Agreement, each share of Codorus Valley common stock, $2.50 par value per share ("Codorus Common Stock"), outstanding immediately prior to the Effective Time was canceled and converted into the right to receive 0.875 shares (the "Exchange Ratio") of Orrstown common stock, no par value per share ("Orrstown Common Stock"), with an amount in cash, without interest, to be paid in lieu of fractional shares. In addition, at the Effective Time, (i) each option to purchase Codorus Common Stock under Codorus Valley's 2007 Long-Term Incentive Plan, as amended, and 2017 Long-Term Incentive Plan, as amended, and any other similar plan (collectively, the "Codorus Valley Equity Plans"), outstanding immediately prior to the Effective Time was automatically converted into an option to purchase a number of shares of Orrstown Common Stock equal to the product of the number of shares of Codorus Common Stock subject to such stock option immediately prior to the Effective Time and the Exchange Ratio, at an exercise price per share (rounded up to the nearest whole cent) equal to (a) the exercise price per share of Codorus Common Stock of such stock option imme

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Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant. In connection with the completion of the Merger, on July 1, 2024, Orrstown assumed Codorus Valley's obligations with respect to Codorus Valley's outstanding trust preferred securities and subordinated notes, consisting of: (i) 4.50% fixed to floating rate notes due December 9, 2030 with an aggregate principal amount not in excess of $31,000,000, (ii) floating rate junior subordinated deferrable interest debentures due 2034 in an aggregate principal amount not in excess of $3,093,000 (the "2034 Debentures") and (iii) junior subordinated debt securities due 2036 in an aggregate principal amount not in excess of $7,217,000 (the "2036 Debentures" and together with the 2034 Debentures, the "Debentures"), each previously issued by Codorus Valley. The supplemental indentures pursuant to which Orrstown assumed each of the Debentures, as well as the original indentures pursuant to which each Debenture was issued, have not been filed herewith pursuant to Item 601(b)(4)(v) of Regulation S-K under the Securities Act. Orrstown agrees to furnish a copy of such indentures to the SEC upon request.

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Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. Board of Directors At the Effective Time, in accordance with the terms of the Merger Agreement, Orrstown and Orrstown Bank expanded the size of the Orrstown Board of Directors (the "Orrstown Board") and the Orrstown Bank Board of Directors (the "Orrstown Bank Board"), respectively, to 13 directors, including seven of the directors of Orrstown and Orrstown Bank immediately prior to the Effective Time and six of the directors of Codorus Valley and PeoplesBank immediately prior to the Effective Time. Resignation of ORRF Directors In connection with the transactions contemplated by the Merger Agreement, Thomas D. Longenecker, Meera R. Modi, Andrea L. Pugh and Floyd E. Stoner tendered their resignations as members of the Orrstown Board and Orrstown Bank Board and from all committees of the Orrstown Board and Orrstown Bank Board, in each case effective as of the Effective Time. Such resignations did not involve any disagreement with Orrstown management or the Orrstown Board on any matter relating to Orrstown's operations, policies or practices. Resignation and Reappointment of ORRF Directors Solely in order to rebalance the classes of the Orrstown Board in connection with the transactions contemplated by the Merger Agreement, Glenn W. Snoke and Joel R. Zullinger, members of the Orrstown Board, resigned from each of their position as a Class A Director, subject to and conditioned upon each of their immediate reappointment as a Class C Director. The Orrstown Board accepted the resignations of Messrs. Snoke and Zullinger and immediately reappointed each of them as a Class C Director. The resignations and reappointments of Messrs. Snoke and Zullinger were effected solely for the purpose of reclassifying the members of the Orrstown Board, and for all other purposes, their services on the Orrstown Board are deemed t

03

Item 5.03. Amendments To Articles of Incorporation or Bylaws; Change in Fiscal Year. Effective immediately prior to the Effective Time, the Amended and Restated By-Laws of Orrstown were amended to add certain corporate governance provisions required by the Merger Agreement, including among other things, the composition of the ORRF Board of Directors and its committees. The foregoing description of the amendment to the Amended and Restated Bylaws does not purport to be complete and is qualified entirely by the text of the Amended and Restated Bylaws, a copy of which is attached hereto as Exhibits 3.1 to this Current Report on Form 8-K and incorporated into this Item 5.03 by reference.

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Item 8.01. Other Events On July 1, 2024, Orrstown and Codorus Valley issued a joint press release announcing the completion of the Merger. A copy of the press release is attached as Exhibit 99.1 to this Current Report on Form 8-K.

Financial Statements and Exhibits

Financial Statements and Exhibits. (a) Financial statements of businesses or funds acquired. The financial statements of Codorus Valley required by Item 9.01(a) of Current Report on Form 8-K will be filed by amendment no later than 71 calendar days after the date this Current Report on Form 8-K is required to be filed. (b) Pro forma financial information The pro forma financial information required by Item 9.01(b) of Current Report on Form 8-K will be filed by amendment no later than 71 calendar days after the date this Current Report on Form 8-K is required to be filed. (d) Exhibits. Exhibit No. Exhibit 2.1 Agreement and Plan of Merger, dated as of December 14, 2022, by and between Orrstown Financial Services and Codorus Valley Bancorp, Inc. (incorporated by reference to Exhibit 2.1 to Orrstown's Form 8-K filed with the SEC on December 12, 2023) 3.1 Amended and Restated By-Laws of Orrstown Financial Services, Inc., dated July 1, 2024 10.1 Employment Agreement, dated as of December 12, 2023, by and among Orrstown Financial Services, Inc., Orrstown Bank and Craig Kauffman (incorporated by reference to Exhibit 10.1 to Orrstown's Form 8-K filed with the SEC on December 12, 2023) 10.2 Change in Control Agreement, dated as of December 12, 2023, by and among Orrstown Financial Services, Inc., Orrstown Bank and Craig Kauffman (incorporated by reference to Exhibit 10.2 to Orrstown's Form 8-K filed with the SEC on December 12, 2023) 99.1 Joint press release, dated July 1, 2024 104 Cover Page Interactive Data File (embedded within the Inline XBRL document)

SIGNATURES

SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. Date: July 1, 2024 Orrstown Financial Services, Inc. By: /s/ Neelesh Kalani Neelesh Kalani Executive Vice President, Chief Financial Officer

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View this 8-K filing on SEC EDGAR