Orrstown Financial Services, Inc. · NASDAQ:ORRF
Orrstown Financial Services — IPO Roadshow (March 2010)
32 slides from Orrstown Financial Services's IPO roadshow presentation, Mar 16, 2010
Slide 1: Follow-on Offering of Common Shares $40,000,000
Exhibit 99.1 Orrstown Financial Services, Inc. Follow-on Offering of Common Shares $40,000,000 March 2010 NASDAQ: ORRF Thomas R. Quinn, Jr. Jeffrey W. Embly Bradley S. Everly President & Chief Executive Officer EVP, Chief Credit Officer SVP, Chief Financial Officer
Slide 2: Legal Disclaimers
Legal Disclaimers Safe Harbor Regarding Forward-Looking Statements This presentation may contain forward-looking information about Orrstown Financial Services, Inc. that is intended to be covered by the safe harbor for forward-looking statements provided by the Private Securities Litigation Reform A
Slide 3: Offering Details
Offering Details Issuer: Orrstown Financial Services, Inc. Type of Offering: Follow-on Public Offering Type of Security: Common Stock Ticker Symbol: ORRF Exchange: NASDAQ Capital Market Offering Size: Gross Proceeds of $40 Million Over-Allotment Option: 15% Use of Proceeds: General corporate purpose
Slide 4: Offering Highlights & Rationale
Offering Highlights & Rationale • Regional community bank with operations presence in South Central Pennsylvania and Western Maryland • Deep and experienced management team with strong community ties, operational ability and proven track record of acquisition integration • Significant market share p
Slide 5: 2009 Achievements
2009 Achievements • Achieved record earnings in a challenging environment • Added 7,499 new customers as deposit base grew by more than 20% • 12 net new hires, primarily in customer facing positions (including 14 sales-related positions), bringing total headcount to nearly 300 • Significant investme
Slide 6: Franchise Overview
Franchise Overview • Headquartered in Shippensburg, PA • Founded in 1919 • 21 branches in Pennsylvania and Maryland – 8 branches in Cumberland County, PA – 7 branches in Franklin County, PA – 4 branches in Perry County, PA – 2 branches in Washington County, MD • $1.2 billion in assets and $915 milli
Slide 7: Experienced Management Team
Experienced Management Team Executive Title Years with ORRF Banking Experience Thomas R. Quinn, Jr. President / CEO 1 Year 20 Years Jeffrey W. Embly Executive Vice President / Chief Credit Officer 13 Years 18 Years Bradley S. Everly Senior Vice President / Chief Financial Officer 12 Years 32 Years P
Slide 8: Track Record of Strong Growth
Track Record of Strong Growth Assets Loans Deposits $1,196,432 CAGR: 18.8% $1,051,783 CAGR: 17.6% CAGR: 18.5% $915,170 $884,979 $881,074 $809,031 $820,468 $757,368 $701,964 $618,827 $638,719 $646,356 $601,460 $460,386 $462,822 2005 2006¹ 2007 2008 2009 2005 2006¹ 2007 2008 2009 2005 2006¹ 2007 2008
Slide 9: Favorable Performance Relative to Regional Peers
Favorable Performance Relative to Regional Peers(1) Metric Range Rank/19 Peer AVG. 1.19% 2009 ROAA (3.98%) 1.36% 3 (0.01%) (53.81%) 12.48% 18.30% 5 (1.20%) 2009 ROAE 3.66% Net Interest Margin 2.43% 4.72% 10 3.56% 55.42% 58.85% 105.85% 2 68.92% Efficiency Ratio Non-Interest Income / Revenue 6.71% 30.
Slide 10: Summary Financial Highlights
Summary Financial Highlights Year Ended December 31, (Dollar Values in Thousands) 2005 2006 2007 2008 2009 Total Assets $601,460 $809,031 $884,979 $1,051,783 $1,196,432 Gross Loans $460,386 $618,827 $701,964 $820,468 $881,074 Total Deposits $462,822 $638,719 $646,356 $757,368 $915,170 Total Sharehol
Slide 11: Pro Forma Capital Ratios
Pro Forma Capital Ratios 18.00% 15.3% 14.0% 11.3% 12.00% 10.5% 10.5% 10.1% 7.6% 7.6% 6.00% 0.00% (1) (2) (2) (2) TCE / TA Tier 1 Leverage Tier 1 RBC Total RBC (1) See note on page 4 regarding non-GAAP financial measures. 31-Dec-09 Pro Forma (2) Calculated in accordance with bank regulatory requireme
Slide 12: Stock Performance & Liquidity
Stock Performance & Liquidity Three Year Stock Price Performance Volume ORRF NASDAQ Bank Index Regional Peers¹ 80,000 120% 70,000 ORRF Listed on NASDAQ 110% April 28, 2009 3.28% 100% 60,000 90% 50,000 (15.49%) 80% 40,000 70% Average Daily Volume - Pre and Post NASDAQ Listing 30,000 Feb. 23, 2007 - A
Slide 13: Targeted Market Area
Targeted Market Area • Currently operating 21 full-service locations along the Route 81 corridor from Washington County, Maryland through Franklin, Cumberland and Perry Counties, Pennsylvania • The combined population of the current market area is approximately 573,000 as of June 30, 2009 • The curr
Slide 14: Key Saturation Markets
Key Saturation Markets 2009 Deposit Growth 2009 Market Market Population Branches Deposits Year-Over-Year (2) Total Market (1) Market Share Rank ($000)(1) (%) Deposits ($000) Shippensburg 5,586 2 + 2 ATMs $232,393 57.89% $380,911 61.01% 1 Carlisle 17,970 4 $174,082 12.90% $847,553 20.54% 2 Chambersb
Slide 15: Market Share & Demographics
Market Share & Demographics ORRF Market Share² 2009 Pop. Growth Household Inc. Growth Household Price Appreciation¹ Unemploy. Deposits Mkt. Share County Population '00 - '09 08 - '14 Est. '00 - '09 08 - '14 Est. 1YR 5YR Rate ($000) Branches (%) Rank Current Counties of Operations Cumberland, PA 232,
Slide 16: Deposit Composition
Deposit Composition (Dollars in Thousands) December 31, 2007 December 31, 2008 December 31, 2009 Deposit Type Amount % of Total Amount % of Total Amount % of Total Period End Balances Non-Interest Bearing DDA $91,365 14.1% $84,261 11.1% $90,676 9.9% Interest Bearing DDA 231,413 35.8% 272,372 36.0% 3
Slide 17: Investment Portfolio
Investment Portfolio • As of December 31, 2009, the market value of the investment portfolio was approximately $203 million • Duration of 3.4 years and average life of 4.0 years • Investment portfolio is comprised of 97% A or better rated securities • Currently do not hold any corporate or high-yiel
Slide 18: Historical Credit Cycle Analysis
Historical Credit Cycle Analysis 0.5% NCOs/Average Loans 0.54% 0.4% ORRF Regional Peers¹ 0.3% 0.26% 0.2% 0.11% 0.1% 0.06% 0.0% 2.0% Non-Performing Assets/Total Assets 1.5% 1.28% ORRF Regional Peers¹ 1.0% 0.63% 0.44% 0.5% 0.09% 0.0% (1) Includes publicly-traded Mid-Atlantic commercial banks with asse
Slide 19: Disciplined Credit Culture
Disciplined Credit Culture • Created the position of Chief Credit Officer in September 2009 to further strengthen the approval process and provide independence between sales and credit • Conservative Loan Approval Authorities: – No individual commercial lender has a maximum aggregate approval author
Slide 20: Proactive & Thorough Approach to Credit
Proactive & Thorough Approach to Credit • In November 2009, the Bank undertook an expanded review of the commercial loan portfolio which covered $526 million in outstanding and committed balances • This review was in addition to the normal loan review process conducted by loan review officers and th
Slide 21: Loan Portfolio Overview
Loan Portfolio Overview Loans Stratification by Purpose Commercial Loans by Purpose Home Equity Construction & Loans & Lines Consumer Land 13% 1% Development 17% C&I, Term and Other Multifamily 37% 4% Residential Mortgage 11% Commercial Non-Owner Occupied 19% Commercial 75% Owner Occupied 23% Gross
Slide 22: Loan Portfolio Overview
Loan Portfolio Overview Geographic Distribution¹ Commercial Loans by Industry Non-profit Other 2% 4% Agriculture Other Public Admin. 2% 13% 5% Cumberland, Service & C&D Washington, PA Entertainment 19% 9% Manufacturing MD 41% 2% 13% Healthcare Wholesale Trade 2% 1% Retail Trade Perry, PA 4% 6% Profe
Slide 23: Asset Quality Summary
Asset Quality Summary For the Quarter ended, (Dollars in Thousands) 12/31/2008 03/31/2009 06/30/2009 09/30/2009 12/31/2009 30-89 Days Past Due 12,178 13,824 16,563 12,702 19,043 90 Days Past Due and Still Accruing 6,176 6,506 6,324 8,186 6,155 Total Non-Performing Loans and Leases 341 562 1,905 4,71
Slide 24: Nonperforming Assets
Nonperforming Assets 1 NPAs by Type NPAs by Market Res. Installment (Dollar Values in Thousands) Mortgage 1% Non-Acc. Total Gross NPAs / 14% County Loans OREO NPAs Loans Loans+REO Cumberland, PA $14 $59 $73 $363,533 0.02% Franklin, PA $1,892 $565 $2,457 $239,512 1.02% Perry, PA $1,188 $233 $1,421 $4
Slide 25: Home Price Appreciation (PA)
Home Price Appreciation (PA) 14.00% 12.00% Pennsylvania (5Yr Avg.) 10.00% Harrisburg - Carlisle, PA (5Yr Avg.) 8.00% 6.00% 4.00% 2.00% 0.00% (2.00%) 2004 2005 2006 2007 2008 2009-Q3 Source: Federal Housing Finance Agency; Freddie Mac 25
Slide 26: Credit Quality Trends
Credit Quality Trends Non-Performing Assets / Total Assets Reserves / Loans 1.50% ORRF Regional Peers¹ 1.26% ORRF Regional Peers¹ 1.25% 1.25% 1.00% 1.15% 0.75% 1.05% 0.44% 0.50% 0.96% 0.30% 0.95% 0.25% 0.09% 0.89% 0.87% 0.87% 0.05% 0.04% 0.00% 0.85% 2005 2006 2007 2008 2009 2005 2006 2007 2008 2009
Slide 27: The Road Ahead: 2010
The Road Ahead: 2010 • Continue to diversify - add additional consumer retail products and services and expand delivery channels • Technology enhancements to support consumer retail growth, diversification, and non- interest income goals: – Implementing centralized consumer loan underwriting system
Slide 28: Investment Highlights
Investment Highlights • Established South-Central Pennsylvania bank with a history of strong performance • Emphasis on credit quality, return to shareholders, solid financial performance, and delivering peer-group leading results • Well-positioned for future growth throughout the region, both organi
Slide 29: APPENDIX
APPENDIX Fart OrrsTowN FINANCIAL SERVICES, INC. 29 2 Tati Eli
Slide 30: Regional Peer Analysis
Regional Peer Analysis Balance Sheet Profitability (LTM) Asset Quality Valuation Non- Total Int. Inc./ Res./ NCOs/ NPAs/ Total Total Gross TCE / RBC Eff. Total Gross Res./ Ave Total Market Dividend Assets Deposits Loans TA(1) Ratio ROAA ROAE NIM Ratio Rev. Loans NPAs Loans Assets Cap. Yield Company
Slide 31: Non-GAAP Financial Measures
Non- GAAP Financial Measures The ratio of tangible common equity to tangible assets is a non-GAAP-based financial measure calculated using non-GAAP- based amounts. The most directly comparable GAAP-based measure is the ratio of stockholders’ equity to assets. In order to calculate tangible common eq
Slide 32: Non-GAAP Financial Measures
Non- GAAP Financial Measures Return on average tangible equity is a non-GAAP-based financial measure calculated using non-GAAP-based amounts. The most directly comparable GAAP-based measure is return on average equity, which is calculated using GAAP-based amounts. The Company calculates the return o
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