Orrstown Financial Services, Inc. · NASDAQ:ORRF
Orrstown Financial Services — 18th Annual Emerald Groundhog Day Investment Forum (February 2011)
31 slides from Orrstown Financial Services's conference presentation, Feb 2, 2011
Slide 1: The 18th Annual Emerald Groundhog Day Investment Forum
Exhibit 99.1 NASDAQ: ORRF th The 18 Annual Emerald Groundhog Day Investment Forum February 2, 2011 The Radisson Plaza- Warwick Hotel Philadelphia, Pennsylvania Bradley S. Everly Everly Thomas R. Quinn, Jr. Jeffrey W. Embly Embly Embly EVP, Chief Financial Officer President & Chief Executive 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: 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 • $1.512 billion in assets and $1.188 bil
Slide 4: 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 5: Highlights
Highlights • In a challenging environment earnings up 24% year-over-year to $16,581,000 • Excellent Return Ratios: – ROA: 1.21% for 2010 – ROE: 11.22% for 2010 – ROTE: 13.19% for 2010 (1) • Asset Growth 12/31/09-12/31/10 up 26.4% • Deposit Growth 12/31/09-12/31/10 up 29.9% • Reduced NPAs by 32% (3/3
Slide 6: Highlights
Highlights • Net Interest Margin up 6 bps to 3.72% for 2010 vs. 3.66% in 2009 • Lowered Cost of Funds for 24 consecutive months to 85 bps at December 2010 • Increased dividends for over 20 consecutive years, with a 10 year annual dividend CAGR(1) of 14.9%. • Announced an increase in our quarterly ca
Slide 7: Highlights
Highlights • Continued to take advantage of market dislocation to hire talented bankers • Recently hired commercial lenders have generated $86 million in new loan volume since March, 2009 • Emphasis on growing mortgage business has resulted in 29% increase in total volume 2010 vs. 2009 – Expanded mo
Slide 8: Targeted Market Area
Targeted Market Area • The combined population of the current market area is approximately 578,401. Over the next 5 years the Household Income is expected to grow 12.4% (1) • The current combined market has over $9.6 billion in total deposits as of June PENNSYLVANIA 30, 2010 • Orrstown has $1.188 bi
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 9/30/2010 Peer Range Peer Metric ORRF High Low Average YTD ROA 1.23% 1.42% (1.24)% 0.45% YTD ROE 11.47% 15.76% (43.83)% 3.50% YTD ROTCE 13.57% 18.81% (43.83)% 4.60% Net Interest Margin 3.72% 5.00% 2.77% 3.70% Efficiency Ratio 53.97% 101.37% 5
Slide 11: Track Record of Strong Growth
Track Record of Strong Growth Assets Loans Deposits $1,511,722 CAGR: 20.23% CAGR: 20.74% $1,196,432 $1,188,377 $1,051,783 CAGR: 15.99% $966,986 $884,979 $915,170 $881,074 $809,031 $820,468 $757,368 $701,964 $638,719 $646,356 $618,827 2006¹ 2007 2008 2009 2010 2006¹ 2007 2008 2009 2010 2006¹ 2007 200
Slide 12: Capital Ratios
Capital Ratios 14.80% 14.00% 15.00% 13.60% 14.00% 12.47% 13.00% 11.30% 12.00% 10.10% 11.00% 9.40% 9.40% 10.00% 8.65% 9.00% 7.30% 7.60% 7.60% 8.00% 7.00% 6.00% 5.00% 4.00% 3.00% 2.00% 1.00% 0.00% (1) (2) (2) (2) TCE/ TA Tier 1 Leverage Tier 1 RBC Total RBC Peer Group Average 9/30/10 ORRF 12/31/09 ORR
Slide 13: Deposit Composition
Deposit Composition (Dollars in Thousands) December 31, 2007 December 31, 2008 December 31, 2009 December 31, 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% $104,646 8.8%
Slide 14: Investment Portfolio
Investment Portfolio • As of December 31, 2010, the market value of the investment portfolio was approximately $432 million • Duration of 4.7 years and average life of 5.6 years • Investment portfolio is comprised of 99% A or better rated securities • Currently do not hold any corporate or high-yiel
Slide 15: Historical Credit Cycle Analysis: NCOs / Average Loans
Historical Credit Cycle Analysis NCOs/ Average Loans (3) (1) All Banks as defined by SNL Financial (2) Mid-Atlantic Banks as defined by SNL Financial (3) $1-$5 Billion Banks as defined by SNL Financial Source: Company Documents as of 12/31/10; SNL Financial 15
Slide 16: Historical Credit Cycle Analysis: NPAs / Assets
Historical Credit Cycle Analysis NPAs/ Assets (1) All Banks as defined by SNL Financial (2) Mid-Atlantic Banks as defined by SNL Financial (3) $1-$5 Billion Banks as defined by SNL Financial Source: Company Documents as of 12/31/10; SNL Financial 16
Slide 17: Loan Portfolio Overview
Loan Portfolio Overview Loan Stratification by Purpose Consumer Home Equity 1% Loans & Lines 12% Residential Mortgage 13% Commercial 74% Gross Loans: $967 million Most Recent Quarter Yield: 5.24% Year to Date Yield: 5.42% Source: Company Documents as of 12/31/10 17
Slide 18: Loan Portfolio Overview
Loan Portfolio Overview Commercial Loans by Purpose Construction & Land Development 16% C&I, Term and Other Multifamily 37% 3% Non-Owner Occupied 20% Owner Occupied 24% Commercial Loans: $721 million Source: Company Documents as of 12/31/10 18
Slide 19: Loan Portfolio Overview
Loan Portfolio Overview Construction & Land Development Breakdown Residential Commercial Vertical Raw Land Construction 13% 24% Residential Commercial Raw Land Vertical 19% Construction 13% Commercial Residential Land Land Development Development 5% 26% 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% 6% 15% Construction & Cumberland, Development Service & 18% PA Manufacturing Washington, 40% Entertainment 2% MD 10% 12% Wholesale Trade 1% Healthcare Retail Trade 3% 4% Perry, P
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 12/31/2010 Loans on a Nonaccrual (cash) Basis $ 341 $ 4,267 $ 23,020 $ 14,496 $ 14,427 $ 13,896 Loans whose Terms have been Renegotiated - - - - - 1,180 Total Non-Performing Loans 3
Slide 22: Nonperforming Assets
Nonperforming Assets NPAs by Market¹ Other 9% (Dollar Values in Thousands) Washington, Non-Acc. Total Gross NPAs / MD 10% County Loans TDRs OREO NPAs Loans Loans+REO Cumberland, PA $8,801 $0 $126 $8,927 $389,376 2.29% Perry, PA 8% Franklin, PA $1,543 $710 $711 $2,964 $261,050 1.13% Perry, PA $1,251
Slide 23: Credit Quality Trends
Credit Quality Trends Reserves / Loans Non-Performing Assets / Total Assets NPAs +90days Delinq/ Assets Net Charge-Offs / Average Loans (1) All Banks as defined by SNL Financial (2) Mid Atlantic Banks as defined by SNL Financial (3) $1-$5 Billion Dollar Banks as defined by SNL Financial Source: Comp
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 20 Years Jeffrey W. Embly Executive Vice President / Chief Credit/Risk Officer 14 Years 20 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, (Dollar Values in Thousands) 2005 2006 2007 2008 2009 2010 Total Assets $601,460 $809,031 $884,979 $1,051,783 $1,196,432 $1,511,722 Gross Loans $460,386 $618,827 $701,964 $820,468 $881,074 $966,986 Total Deposits $462,822 $638,719 $646,356 $757,36
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: Ratio of Tangible Common Equity to Tangible Assets
Ratio of Tangible Common Equity to Tangible Assets 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 calcul
Slide 30: Return on Average Tangible Equity
Return on Average Tangible Equity 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 aver
Slide 31: Bradley S. Everly Thomas R. Quinn, Jr. EVP, Chief Financial Officer
Bradley S. Everly Thomas R. Quinn, Jr. Jeffrey W. Embly EVP, Chief Financial Officer President & Chief Executive Officer EVP, Chief Credit /Risk Officer beverly@orrstown.com tquinn@orrstown.com jembly@orrstown.com 717-530-3521 31