Orrstown Financial Services, Inc. · NASDAQ:ORRF
Orrstown Financial Services — Sandler O'Neill + Partners 2010 East Coast Financial Services Conference
31 slides from Orrstown Financial Services's conference presentation, Nov 10, 2010
Slide 1: Orrstown Financial Services, Inc.
Exhibit 99.1 Orrstown Financial Services, Inc. NASDAQ: ORRF Sandler O’Neill + Partners L.P. 2010 East Coast Financial Services Conference Aventura, Florida November 10 -12, 2010 Thomas R. Quinn, Jr. Jeffrey W. Embly Bradley S. Everly President & Chief Executive Officer EVP, Chief Credit /Risk Office
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: Highlights
Highlights • Listed on the NASDAQ Capital Market – April, 2009 • Included in the Russell 2000 & 3000 Indices – June, 2009 and June, 2010 • Selected as one of the top 200 best performing community banks in the nation by US Banker Magazine for 5 consecutive years • Recognized as one of the 50 Fastest
Slide 4: Highlights
Highlights • In a challenging environment earnings up 17.8% year-over-year • Excellent Return Ratios: – ROA: 1.36% for 3Q 2010 & 1.23% for 9 months ended 9/30/2010 – ROE: 12.18% for 3Q 2010 & 11.47% for 9 months ended 9/30/2010 – ROTE: 14.03% for 3Q 2010 & 13.57% for 9 months ended 9/30/2010(1) • As
Slide 5: Highlights
Highlights • Net Interest Margin up 19bp for 9 months 2010 vs. 9 months 2009 (3.72% vs. 3.53%) • Lowered Cost of Funds for 21 consecutive months • Increased dividends for over 20 consecutive years, and a 10 year annual dividend CAGR(1) of 14.8% • Trust and brokerage assets grew 20.1% since 12/31/09
Slide 6: Highlights
Highlights • Recently hired commercial lenders have generated $63 million in new loan volume since March, 2009 • Emphasis on growing mortgage business has resulted in 11% increase in total volume from $78 million 1Q-3Q ‘09 to $87 million 1Q-3Q ‘10 – Added new products (FHA, VA, USDA Guaranteed Rural
Slide 7: Franchise Overview
Franchise Overview • Headquartered in Shippensburg, PA • Founded in 1919 • 20 branches in Pennsylvania and Maryland – 8 branches in Cumberland County, PA – 7 branches in Franklin County, PA – 4 branches in Perry County, PA – 1 branch in Washington County, MD • $1.478 billion in assets and $1.139 bil
Slide 8: Targeted Market Area
Targeted Market Area • Currently operating 20 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 PENNSYLVANIA market area is approximately 568,889 (1) • The current
Slide 9: Market Share & Demographics
Market Share & Demographics Total County ORRF Market Share (1) 2010 Pop. Growth Household Inc. Growth Institutions Deposit Deposits Mkt. Share County Population '00 - '10 '10 - '15 Est. '00 - '10 '10 - '15 Est. in Market Totals ($000) Branches (%) Rank Current Counties of Operations Cumberland, PA 2
Slide 10: Favorable Performance Relative to Regional Peers
Favorable Performance Relative to Regional Peers(1) As of 6/30/2010 ORRF Peer Range Peer YTD Metric ORRF High Low Average 9/30/2010 YTD ROA 1.15% 1.39% (1.17%) 0.46% 1.23% YTD ROE 11.04% 15.77% (44.46%) 3.57% 11.47% YTD ROTCE 12.02% 18.79% (44.46%) 4.61% 13.57% Net Interest Margin 3.77% 4.98% 2.76%
Slide 11: Track Record of Strong Growth
Track Record of Strong Growth Assets Loans Deposits CAGR: 27.09% CAGR: 15.75% CAGR: 20.87% 2006¹ 2007 2008 2009 YTD 2006¹ 2007 2008 2009 YTD 2006¹ 2007 2008 2009 YTD 2010 2010 2010 (1) 2006 reflects the acquisition of the First National Bank of Newport ($120mm of assets and $106mm of deposits) (2) N
Slide 12: Capital Ratios
Capital Ratios 14.90% 15.00% 13.70% 14.00% 14.00% 12.36% 13.00% 11.30% 12.00% 9.80% 10.10% 11.00% 9.50% 10.00% 8.67% 9.00% 7.60% 7.60% 8.00% 7.20% 7.00% 6.00% 5.00% 4.00% 3.00% 2.00% 1.00% 0.00% (1) (2) (2) TCE/ TA Tier 1 Leverage Tier 1 RBC Total RBC (2) Peer Group Average 6/30/10 ORRF 12/31/09 ORR
Slide 13: Deposit Composition
Deposit Composition (Dollars in Thousands) December 31, 2007 December 31, 2008 December 31, 2009 September 30, 2010 Deposit Type Amount % of Total 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% $105,452 9.3%
Slide 14: Investment Portfolio
Investment Portfolio • As of September 30, 2010, the market value of the investment portfolio was approximately $424 million • Duration of 3.9 years and average life of 4.5 years • Investment portfolio is comprised of 99% A or better rated securities • Currently do not hold any corporate or high-yie
Slide 15: Historical Credit Cycle Analysis NCOs/ Average Loans
Historical Credit Cycle Analysis NCOs/ Average Loans 1.2 1.1 1.11 1.03 1 0.9 0.85 0.8 0.8 0.7 0.6 0.5 0.41 0.37 0.41 0.4 0.35 0.3 0.31 0.2 0.16 0.16 0.1 0.11 0.06 0 0.02 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 LTM as of (1) (2) (3) 6/30/10 All B
Slide 16: Historical Credit Cycle Analysis NPAs/ Assets
Historical Credit Cycle Analysis NPAs/ Assets 3.3 3.25 3.2 3.1 3 2.9 2.92 2.8 2.75 2.7 2.6 2.5 2.46 2.4 2.3 2.2 2.1 2 1.9 1.8 1.7 1.6 1.53 1.5 1.4 1.42 1.38 1.3 1.26 1.2 1.16 1.1 1 0.9 0.8 0.77 0.7 0.6 0.5 0.5 0.45 0.45 0.4 0.3 0.2 0.04 0.1 0.09 0 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 20
Slide 17: Loan Portfolio Overview
Loan Portfolio Overview Loan Stratification by Purpose Home Equity Loans & Lines 12.3% Consumer 1.2% Residential Mortgage 12.1% Commercial 74.4% Gross Loans: $921 million Most Recent Quarter Yield: 5.37% Year to Date Yield: 5.42% Source: Company Documents as of 9/30/10 17
Slide 18: Loan Portfolio Overview
Loan Portfolio Overview Commercial Loans by Purpose Construction & Land Development 17.0% C&I, Term and Other 36.8% Multifamily 3.3% Non-Owner Occupied 19.7% Owner Occupied 23.2% Commercial Loans: $685 million Source: Company Documents as of 9/30/10 18
Slide 19: Loan Portfolio Overview
Loan Portfolio Overview Construction & Land Development Breakdown Commercial Raw Land Residential Vertical 16% Construction 18% Commercial Vertical Construction Residential Raw 11% Land 18% Commercial Land Development 2% Residential Land Development 35% Construction & Land Development Portfolio: $11
Slide 20: Loan Portfolio Overview
Loan Portfolio Overview Geographic Distribution¹ Commercial Loans by Industry Other 5% Agriculture Other Public Admin. 2% 13% 6% Construction & Development Cumberland, PA 19% Service & 41% Entertainment Manufacturing Washington, MD 9% 2% 13% Wholesale Trade Healthcare 1% 3% Retail Trade Perry, PA 4%
Slide 21: Asset Quality Summary
Asset Quality Summary Calendar Year to Date (Dollars in Thousands) 12/31/2008 12/31/2009 3/31/2010 6/30/2010 9/30/2010 90 Days Past Due and Still Accruing 6,176 6,155 8,929 7,255 3,526 Total Non-Performing Loans and Leases 341 4,267 23,020 14,496 14,427 ORE and Repossessed Assets 608 1,065 873 1,264
Slide 22: Nonperforming Assets
Nonperforming Assets NPAs by Market¹ (Dollar Values in Thousands) Non-Acc. Total Gross NPAs / County Loans OREO NPAs Loans Loans+REO Cumberland, PA Cumberland, PA $8,662 $1,212 $9,874 $379,642 2.59% Franklin, PA Franklin, PA $2,151 $1,204 $3,355 $248,092 1.35% Perry, PA Perry, PA $902 $0 $902 $54,24
Slide 23: Credit Quality Trends
Credit Quality Trends Reserves / Loans Non-Performing Assets / Total Assets All Banks(1) 3.25% 3.25 2.05% 2.03 All Banks(1) Mid Atlantic(2) 3.00% 1.95% 1.84 2.75% Mid Atlantic(2) 2.75 1.85% $1-$5 Billion Banks(3) 1.67 2.50% 1.75% $1-$5 Billion Banks(3) ORRF 1.62 2.25% 1.65% 2.00% ORRF 1.55% 1.75% 1.
Slide 24: Compelling Investment Considerations
Compelling Investment Considerations • 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 regi
Slide 25: APPENDIX
APPENDIX Fart OrrsTowN FINANCIAL SERVICES, INC. 25 2 Tati Eli
Slide 26: Experienced Management Team
Experienced Management Team Executive Title Years with ORRF Banking Experience Thomas R. Quinn, Jr. President / CEO 2 Years 19 Years Jeffrey W. Embly Executive Vice President / Chief Credit/Risk Officer 14 Years 19 Years Bradley S. Everly Executive Vice President / Chief Financial Officer 14 Years 3
Slide 27: Summary Financial Highlights
Summary Financial Highlights Year Ended December 31, 9 Months Ended (Dollar Values in Thousands) 2005 2006 2007 2008 2009 September 30, 2010 Total Assets $601,460 $809,031 $884,979 $1,051,783 $1,196,432 $1,477,780 Gross Loans $460,386 $618,827 $701,964 $820,468 $881,074 $921,807 Total Deposits $462,
Slide 28: Regional Peer Analysis
Regional Peer Analysis Balance Sheet Profitability 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 St. Ti
Slide 29: 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 30: 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 measure is return on average equity, which is calculated using GAAP-based amounts. The Company calculates the return on average t
Slide 31: Thomas R. Quinn, Jr. President & Chief Executive Officer
Thomas R. Quinn, Jr. Jeffrey W. Embly Bradley S. Everly President & Chief Executive Officer EVP, Chief Credit /Risk Officer EVP, Chief Financial Officer tquinn@orrstown.com jembly@orrstown.com beverly@orrstown.com Toll Free: 1-888-677-7869 or 717-530-2648 31