Orrstown Financial Services, Inc. · NASDAQ:ORRF
Orrstown Financial Services — Boenning & Scattergood Community Bank Conference 2019
31 slides from Orrstown Financial Services's conference presentation, Aug 7, 2019
Slide 1: Celebrating 100 Years as an Independent and Growing Community Bank
Orrstown Fin ial Services, | Yeans¢ = Celebrating 100 Years as an Independent and Growing Community Bank Boenning & Sc yd, Inc. * Community Bank Conference * August 7-8, 2019
Slide 2: Cautionary Note Regarding Forward-Looking Statements
Cautionary Note Regarding Forward-Looking Statements This presentation contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21£ of the Securities Exchange Act of 1934, as amended. Forward-looking statement reflect the current
Slide 3: Non-GAAP Measures Disclosure
Non-GAAP Measures Disclosure In this presentation we refer to net interest margin, excluding the impact of purchase accounting, which is a non-GAAP measure. For a reconciliation of this non-GAAP measure to GAAP results and our rationale for usage of non-GAAP measures, see the appendix in this presen
Slide 4: Core ROAA
Core ROAA (%4) 2015 2016 2017 2018 yD ee oRRF Peers Data Source: S&P Global Market Intelligence + Mercersburg Transaction: Full integration not reflected in 4Q18 + Hamilton Transaction: Conversion slated for 3Q19 + Fee Income: Average mortgage at former Hamilton Bank $403,000 vs. $202,000 in legacy
Slide 5: Company Overview
soma ny Overview uniter > ae Key Metrics at 6/30/2019 is “lo ‘Lebanon Lebanon 34 MILES 7 rs sm ecil wit ‘arroilt bs coc Frarplievalle RéGsterstown ier os wooo, dest P oe a Gren yan Ce i sal eben omc. Howl Z Loudoun lontas cage, S1umbid” B : Clarke Ny 55 Lis ice ALG) <o toe ; ee i South @te I ae W: v
Slide 6: Company Overview (continued)
Company Overview (continued) + Favorable regional demographics in both South-Central Pennsylvania and Maryland GROWING REGIONAL [Ramoabubeae benefit from market disruption in PA and expect similar benefit in MD ; ; + Market President organizational structure; benefitting from mix of talent from larg
Slide 7: Experienced Leadership Team
Experienced Leadership Team n, JT. President & CEO Thomas R. Brugger EvP/Chief Financial Officer Barbara E. Brobst vP/Chief Human Resources Officer Robert G. Coradi EVP/Chief Risk Officer Philip E. Fague vP/Trust and Wealth Management Robert Fignar EvP/Operations, Technology, Logistics Jeffreys. Gay
Slide 8: Demographics Trends & Market Share
Demographics Trends & Market Share 2019 5 Year | 2019 Median 2019 May 19 Entered Branch Market Households Proj. Gr. HHI Businesses|Unemploy}] Market Count Deposits Share IGeography (@) (a) (S) (@) (%)__|_ (Year) __(#)_($000)_(%) |Cumberland, PA 102,597 3.76 69.844 9,335 3.0 1981, 7 761,594 11.92 Dau
Slide 9: 2015-2019: Strategic Investments Continue
2015-2019: Strategic Investments Continue 2015 2016 2017 2018 2019 Investments Investments in Reaped rewards of + First acquisition + Successful customer-facing talent customer-facing talent previous investments announced: Mercersburgcore to take advantage of continue: : Mercersburg conversion Qi «d
Slide 10: Community Bank Technology Leader
Community Bank Technology Leader Defensive capabi + Real-time monitoring of malicious actor penetration attempts (left) * Real-time monitoring of network, core, and ancillary systems by location (right) Underwriting queue by processorandstatus Offensive capabilities: * Beginning to use a intelligenc
Slide 11: Proven Track Record of Organic Expansion in New Markets
Proven Track Record of Organic Expansion in New Markets 3 $500000000 Total Loans’ (Lancaster County) $462,272,463 Rohrerstown Rd (Lancaster)"]_50 | $45,352,944 $450,000,000 [Manheim Pike (Lancaster) | 27 | $29,011,074 Staaten $395,734,102 New Holland (Lancaster) 23 | $21,103,46: $350,000,000 [Olde H
Slide 12: Favorable Conditions for Success in Maryland
Favorable Conditions for Success in Maryland + Strategically located in the Mid-Atlantic, Baltimore is the 20" most populated MSAin the nation + Significant market disruption expected from BB&/SunTrust merger, Old Line/WesBanco + Greater Baltimore's growth has outpaced Philadelphia, Chicago and Detr
Slide 13: Loan Mix
Loan Mix rstown Financial Services, Inc. Mix Year-end YTD a5Yr 20e 205 2016 208 Tsso201T CAGR Category mil) (ey (Smily (ey) mil) (ey) (Smily (ey) (Smily (ey) (%) Construction 307 307 35 49440 oo8 44 205 Consumer/HELOC 11a2 181 | 1273 144 1769 142 1999 125 178 Residential Mortgage 1975 253 | 2186 245
Slide 14: Deposit Mix
Deposit Mix Year-end YTD a5 Yr 2015 2016 2017 2018 0673072019 CAGR Category (%) (%) {$ mil.) _(%) {%) ($ (%) (%) DDA B14 168 TA 162.6 16.1 16.7 2494 16.6 85 Now 366.5 45.6 443.8 50.2 4765 472 556.9 44.6 6035 377 126 MMDA & Savings 239.4 306 2611 296 3064 303 409.2 328 5012 313 182 Retail CDs 1853 23
Slide 15: 2018 Acquisition Activity: Highlights
2018 Acquisition Activity: Highlights Mercersburg Financial Hamilton Bancorp, In Corporation Deal Announced 5/31/2018 10/23/2018 Regulatory Approval 9/12/2018 4/1/2019 Deal Closed 10/1/2018 5/1/2019 Core Systems Conversion (both Fl’s Fiserv to JHA Silverlake) 2/2/2019 8/16/2019 (scheduled) Transacti
Slide 16: Key Metrics Current
y Metrics Curren Core ROAA (*4) Return metrics improved due to: 140 + Capacity utilization 120 + Loan growth ba aa - 080 + Capital deployment, and 0.60 + The risk profile of the company. 0 2015, 2016 2017 2018 wm eORRF me=Peers NPAS/ Assets (4) Efficiency Ratio (%) 90.00 150 50.00 ee om 70.00 050 0.
Slide 17: Contact details
Thomas R. Quinn, Jr. President & CEO tquinn@orrstown.com 717-530-2602 Christopher D. Holt Market President-Maryland cholt@orrstown.com 410-616-1857 Thomas R. Brugger Chief Financial Officer tbrugger@orrstown.com 717-510-7131 Matthew C. Schultheis, CFA Investor Relations mschultheis@orrstown.com 717-
Slide 18: Appendix
Appendix * Five year performance metrics and operating results * Five quarter performance metrics and operating results * GAAP to non-GAAP reconciliation
Slide 19: Five Year Trends: Summary Financials
Five Year Trends: Summary Financials (Dolls in thousands, unless indicated) 2018 2017 2016 2015 2014 Tax-equivalent interest income 66,254 53,462 43,871 40,288 «39.653 Interest expense 13.467 7.644 5417 4301 4.159 Tax-equivalent net interest income 52,787 45,818 «38,454 35,987 35,494 Tax-equivalent
Slide 20: Five Year Trends: Key Performance Metrics
Five Year Trends: Key Performance Metrics (Percent unless indicated) 2018 2017 2016 2015 2014 Return on average assets 0.75 0.54 0.50 0.64 248 Return on average common eauity 8.56 5.73 480 5.99 28.78 Yield on average interest-earning assets 415 3.87 3.58 3.51 3.57 Rate on average interest-bearing li
Slide 21: Five Quarter Trends: Summary Financials
Five Quarter Trends: Summary Financials (Dollars in thousands, unless indicated) 06/19 03/19 1218 098 Tax-equivalent interest income 24,659 19.912 19.401 16,575 ‘15,686 Interest expense 5,935 4.877 4.383 3,522 2971 Tax-equivalent net interest income 18,724 15,035 15.018 13,053 12.715 Tax-equivalent
Slide 22: Five Quarter Trends: Key Performance Metrics
Five Quarter Trends: Key Performance Metrics (Percent uniessingicated) 06/19 03/19 1218 09/18 0618 Return on average assets 0.65 0.24 0.94 0.98 Return on average common equity : 5 7.23 2.70 10.97 11.31 Yield on average interest-earning assets 476 452 433 aay 410 Rate on average interest-bearing liab
Slide 23: Performance Trends
Performance Trends Reported: Net Interest Mars Reported: Net Interest Margin (2%) 400 400 le 8 3.60 ao 340 240 320 a 320 280 3.00 2015 2016 2017 2018 YID 06/18 09/18 1/18 03/19 06/19 eons me Peers eons ees Data Source: S&P Global Market intelligence Data Source: S&P Global Market intelligence Netint
Slide 24: Performance Trends (Continued)
Performance Trends (Continued) Reported: ROAA (% 120 140 an Se 320 US 0.80 200 060 ~~. Be 060 0.40 ae 020 020 0.00 0.00 2015 2016 2017 2018 yo os/t8 ote ype 03/19 os/19 eon me Peers eon ee Peers Reported: ROAE (% Reported: ROAE (24 1200 1200 10.00 10.00 8.00 8.00 6.00 6.00 4.00 4.00 2.00 2.00 0.00 0
Slide 25: Asset Quality Trends
Asset Quality Trends 2015 2016 2017 2018 yo 020 0.00 0.00 2015 2016 2017 2018 wp 06/18 09/38 vps 3/19 06/39 eo oRRE Me Peers em ORF ee Peers Reserves/ Loans Held For Investment (2 (iéserves/ iaans Held tbr iwestinent Gi 2.00 140 120 1.50 1.00 a 100 —-____—_—> oa 0.60 050 040 020 0.00 0.00 06/18 09/1
Slide 26: Capital Trends
Capital Trends 2015 2016 2017 2018 me oRRF oe Peers 10.00 950 950 3.00 3.00 850 850 2.00 800 750 2015 2016 2017 2018 06/18 09/18 ws 03/19 eORRF —e=Peers enn ee Peers Tier 4 Ratio (24) Tier 4 Ratio (2) 16.00 1250 1400 12.00 1150 12.00 11.00 10.00 ne 8.00 10.00 06/18 09/18 ws 03/19 eo oRRF me Peers Da
Slide 27: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation APPENDIX - Supplemental Reporti ‘of Non-GAAP Measures and GAAP to Nor |AAP Reconci Management believes providing certain “non-GAAP” financial information will assist investors in their understanding of the effect of acquisition activity on reported results, particular
Slide 28: S&P Global Reconciliation
S&P Global Reconciliatio Appendix: Reconci ion of S&P Global Market Intelligence Core Return on Average Assets Full Year in thou 2017 2016 Net Income $ 5,789 $ 12,805 $ 8,090 $ 6628 $ 7,874 -Securities Gains (Losses) 2,403 1,006 1,190 1,420 1,924 -Life Insurance Proceeds 255 - - - - +Amortization of
Slide 29: S&P Global Reconciliation
S&P Global Reconciliation Appendix: Reconciliation of S&P Global Market Intelligence Efficiency Ratio Full Year Dollars in thousands unless indicated 2017 2015 GAAP Total Expenses $ 20,496 $ 57.871 $ 50312 $ 47.958 $ 44373 $ 43,469 -Amortization of Intangible Assets 610 286 107 99 207 208 -Merger-re
Slide 30: S&P Global Reconciliation
S&P Global Reconciliatio Appendix: Reconciliation of S&P Global Market Intelligence Efficiency Ratio Quarter Ended Dollars in thousands unless indicated 06/30/19 03/31/19 12/31/18 09/30/18 06/30/18 GAAP Total Expenses $ 23,314 $ 16,182 $ 18,305 $ 13,331 $ 13,166 -Amortization of Intangible Assets 40
Slide 31: Celebrating 100 Years as an Independent and Growing Community Bank
Orrstown Fin ial Services, | Yeans¢ = Celebrating 100 Years as an Independent and Growing Community Bank Boenning & Sc yd, Inc. * Community Bank Conference * August 7-8, 2019
Orrstown Financial Services — Boenning & Scattergood Community Bank Conference 2019 on 6ix