Orrstown Financial Services, Inc. · NASDAQ:ORRF
Orrstown Financial Services — Merger or Acquisition (June 2018)
23 slides from Orrstown Financial Services's merger presentation, Jun 1, 2018
Slide 1: Creating a Premier Community Banking Franchise
EXHIBIT: 99.1 FIRST COMMUNITY BANK ‘OF MERCERSBURG Values you trust. ORRSTOWN + Financial Services, Inc. Creating a Premier Community Banking Franchise May 31, 2018
Slide 2: Cautionary Note Regarding Forward-Looking Statements
Cautionary Note Regarding Forward-Looking Statements This document contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements include statement
Slide 3: Additional Information and Where to Find It
Additional Information and Where to Find It In connection with the proposed acquisition, Orrstown will file with the Securities and Exchange Commission (the “SEC”) a Registration Statement on Form S-4 that will include a Proxy Statement of Mercersburg and a Prospectus of Orrstown as well as other re
Slide 4: Transaction Overview and Impact
Transaction Overview and Impact
Slide 5: Mercersburg Financial Corporation Snapshot
Mercersburg Financial Corporation Snapshot Company HIGHUGHTs* BRANCH FOOTPRINT m Overview: m Headquartered in Mercersburg, PA OTC Pink: MCBG m President and CEO: Bob Fignar $184 million assets $150 million gross loans a oo pod c $161 million deposits across 6 Franklin County branch locations = Finan
Slide 6: Transaction Rationale
Transaction Rationale ® Logical in-market acquisition: Creates approximately $2 billion asset community bank (estimated at closing) ™ Combined bank has top 5 deposit share in Hagerstown-Chambersburg, MD-PA Fed Market Two longstanding community banks with deep roots in the markets m Strong cultural f
Slide 7: Pro Forma Branch Network
Pro Forma Branch Network c There are no anticipated HHI divestitures. [nn SESE SS eT Pen IO ice Sin millions Market baie ee ¢ Bank Branches Deposits Share costinies e BBaT 18 $1,262.1 275 % tigdon, Per @ of ompnin hewn ee Ma 23 833.0 18.3% Franklin Financial Senices 15 760.8 16.7 % )3 Fulton Financi
Slide 8: Pro Forma Financial Highlights — Q1 2018
Pro Forma Financial Highlights — Q1 2018 (Doesnt) QRRSTOWN [SR = Gross Loans $1,044 $150 $1,191 Assets 1,636 184 1,824 Deposits 1,300 161 1,460 TCE 142 24 153 Loans / Deposits 80.2% 93.5% 81.5% TCE/TA' 8.7% 11.5% 8.5% Yield on Loans 4.38% 4.60% 441% Cost of Deposits 0.58% 0.49% 0.57% Net Interest Ma
Slide 9: Key Transaction Terms and Assumptions
Key Transaction Terms and Assumptions ™ Mercersburg shareholders may elect 1.5291 ORRF shares or $40.00 in cash & Proration to ensure 85% of Mercersburg shares exchanged for stock and 15% for cash ™ Per share consideration valued at $40.00" Aggregate consideration valued at $32.4 million? $2.6 milli
Slide 10: Transaction Pricing and Financial Impact
Transaction Pricing and Financial Impact Price / LTM Earnings? 23.7x Normalized Price / LTM Earnings?* 19.0x Normalized Price / LTM Earnings + Cost Savings?* 7.6% Price / Tangible Book Value (LTM ROATCE) 1.53x (6.2%) Normalized Price / Tangible Book Value (LTM ROATCE)? 1.77x (9.0%) Core Deposit Prem
Slide 11: Credit Review and Due Diligence
Credit Review and Due Diligence = Credit due diligence: Review process led by Orrstown’s senior credit executives with geographic and functional area expertise Assisted by experienced third party in review of agricultural loans, particularly dairy Reviewed 60% (by dollar) of commercial loan portfoli
Slide 12: About Orrstown
About Orrstown
Slide 13: Orrstown Financial Services, Inc. Snapshot
Orrstown Financial Services, Inc. Snapshot Company HiGHuGHTs* BRANCH FOOTPRINT ™ Overview: b rea State chartered commercial bank headquartered in Z _ eave Shippensburg, PA. Seasoned commercial lending, roy trust & wealth management, and mortgage lending disciplines NASDAQ listed: ORRF Lebenon ® List
Slide 14: Company Highlights
Company Highlights 1m Favorable regionaldemographics 1 Continue to benefit from market disruption 1 Market President organizationalstructure; local empowerment to ensure speed to market and flexibility within “guiderails” Double digit loan growth last two years 1 Diversified revenue stream with noni
Slide 15: Loan and Deposit Composition
anand Deposit Compositio Other Noninterest: 40% bearing 16.2% uititariy cap = interest-bearing deposes Total Loans $1,048|| | [Total Deposits $1,300| [Yield on Loans 438%|| | [Cost of Deposits 0.58%| Loan / Deposits: 80.3% CRE / Total RBC: 218.3% DECREASED DEPENDENCE ON CRE SINCE 2011 FOCUS ON CORE
Slide 16: Timeline of Key Events: 2015-2016
Timeline of Key Events: 2015-2016 Releasedtrom Quarteriy Openedtirst Opened ‘OpenedPO in Relocated Opened enforcement Dividend Lancaster Lancaster Berks County’ Camp Hill Harrisburg actions Restored County Regional HO: Three person Regional Regional Branch: Baseot OFAteamhas Office: Office: $1322M n
Slide 17: Timeline of Key Events: 2017-2018
Timeline of Key Events: 2017-2018 Closeatwo ‘Opened ‘OpenedThird ‘OpenedLPO in aoe eeel aaiisteee under SecondBranch Branch in York County dividends since acquistionot performing inLancaster Lancaster (Downtown aya fet branchesin County: County York) community Carlisle Market S10.7M in s1e™M in ieee
Slide 18: Stock Performance
Stock Performance RF RMANCE (PRICE CHANGE %| Market Cap ($MM) $218.3 P/TBV 154x P /2018E EPS 16.4x P/ 2019E EPS 14.7x Dividend Yield 2.01% LY. ADTV ($000s) $344.3 = ‘ORRF | |e 1 A = z e in & z
Slide 19: Senior Leadership Team
Senior Leadership Team Thomas R. Quinn, Jr. President & CEO Mark G. Bayer svp/Strategic Corporate Initiatives Luke Bernstein EvP/Chief Retail Officer David P. Boyle Evp/Chief Financial Officer Barbara E. Brobst EvP/Chief Human Resources Officer Robert G. Coradi EVP/Chief Risk Officer Philip E. Fague
Slide 20: Appendix
Appendix
Slide 21: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures ORRSTOWN fig," Francia Services, Ine. {Botiar in thousands) [Tangible common equity / tangible asets (TCE/ TA) Total culty - GAAP ste 21128 Adjustments Goodtil 0 Intangible arsets cther than good Tangle common equiy (TOE) Total aets GAAP Adjustments Good
Slide 22: Glossary of Terms
Glossary of Term 1 ADTV: Average Daily Trading Volume & Bps: Basis points = C&D: Construction & Land Development C&l: Commercial & Industrial CRE: Commercial Real Estate m EPS: Earnings Per Share = GAAP: Generally Accepted Accounting Principles = LTM: Last Twelve Months = MF: Multifamily = MRQ;: Mos
Slide 23: Future Success
Future Success ‘OF MERCERSBURG Financial Services, Inc. Valesyoutrs. ORRSTOWN + FIRST COMMUNITY BANK May 31, 2018
Orrstown Financial Services — Merger or Acquisition (June 2018) on 6ix