Orrstown Financial Services, Inc. · NASDAQ:ORRF
Orrstown Financial Services — Investor Presentation (December 2021)
33 slides from Orrstown Financial Services's investor presentation, Dec 10, 2021
Slide 1: Mission and Vision
MISSION: “We create value for our shareholders by providing outstanding client experiences through community engagement and local decisions from people you know and trust.” VISION: “We aspire to be the financial institution of choice focused on quality client service, innovative solutions and sound
Slide 2: Cautionary Note Regarding Forward Looking Statements | Non-GAAP Disclosures
Cautionary Note Regarding Forward Looking Statements | Non-GAAP Disclosures Cautionary Note Regarding Forward Looking Statements + Thispresentation contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21£ of the Securities Exc
Slide 3: Trendline: Profitable and Effective Franchise Expansion
Trendline: Profitable and Effective Franchise Expansion ‘$3,500,000 1.40% % 120% $3,000,000 1.00% $2,500,000 0.64% ial $2,000,000 0.60% 040% $1,500,000 C4 - $1,000,000 0.00% TOTAL 32/31/2015 22/31/2016 32/31/2017 32/31/2018 32/31/2019 32/31/2020 y1p2021 ane Ses (coos) es Total ASSets | exeeRezurn on
Slide 4: Geographic Focus Driven by Relationship Banking Model
Geographic Focus Driven by Relationship Banking Model — + Four geographic regions: Market Presidents have full ey) = authority and autonomy (within ERM guidelines) aa SS + Market Presidents are all seasoned best-in-class bankers 2 nen eae Cajon + Markets connected by significant highway infrastructu
Slide 5: Diversified Products and Expansion Opportunities
vides Expansion Opportun COMMERCIAL BANKING INVESTMENTS & TRUST Rd and CRE Lending + Wealth Management + Treasury Management + Retirement Planning + Small Business Lending + Estate Planning + SBALending + Trust Services Insurance (e.g. key man coverage) MORTGAGE BANKING Fixed-rate and Adjustable Rat
Slide 6: 2021 / 2022 Strategic Focus: Optimizing Results
2021 / 2022 Strategic Focus: Optimizing Results SBA PPP portfolio provides significant earnings contribution: * Approximately $260 million in net PPP loans at September 30, 2021 * At September 30, 2021, total of $8.6 million in net deferred fees remaining - expect majority of fees to be earned by en
Slide 7: 2021 / 2022 Strategic Focus: Investments for Growth
2021 / 2022 Strategic Focus: Investments for Growth Investments in Revenue Producing Talent: * Committed to additional investments in client-facing bankers as we grow our relationship banking model, particularly in our growth markets Expand Use of Technology: * Continue to assess and adapt to changi
Slide 8: Technology Transformation
Technology Tr: Improving client interaction with new Commercial and Small Business loan cmp origination solution. Contactless capability in new ATM units. Enhanced card management features. Improved electronic signature capabilities. abrigo A e > Mm is Utilizing data to maximize Marketing initiative
Slide 9: Financial Overview: Balance Sheet Mix
Financial Overview: Balance Sheet Mix Deposit Mix Loan Mix (september 30, 2021) (september 30, 2021) Residential Rental, Consumer/ HELOC, 10.9% Residential 8.9% Mortgage DDA, 59.2% Construction, 4.3% Municipal, 0.7% Jumbo CDs, 2.1% | eng Balance Sheet Management to Defend Net Interest Margin — Utili
Slide 10: Financial Overview: Revenue Mix—3Q'21
Financial Overview: Revenue Mix—3Q’21 Netinterest Income, 72.9% Opportunity to gain market share in growth markets > Wealth management and mortgage not yet to scale in growth markets — Recruit wealth management professionals and mortgage originators in growth markets > Focus on interchange income —
Slide 11: Right People and Aligned for Success
Right People and Aligned for Success President & CEO Neelesh Kalani EvP/Chief Financial Officer Barbara. Brobst EVP/Chief Human Resources Officer Robert. Coradi EVP/Chief Risk Officer Philip E. Fague EvP/Trust and Wealth Management Robert Fignar EvP/Chief Retail Officer Jeffrey S. Gayman Evp/Market
Slide 12: COVID-19 Modification Experience and Loan Exposure
$300.0 $2500 $200.0 150.0 $100.0 $50.0 $00 Non Guarantee Outstanding Balances as of Septmeber 30, 2021 Industry Segment Segment Total (S000) Hotel/Motel 50,305, Strip Center/Retail 91,223 Restaurant/Bar 30,525 Mixed Use 21,587 Commercial Construction 71,783 Multi Family CRE 115,131 Senior Housing 82
Slide 13: PPP: Generating Long-Term Opportunity
PPP: Generating Long-Term Opportunity * Success in PPP serves as “proof of concept” for future growth * Prior hires of commercial lenders and access to new clients were crucial to PPP volume 2019 Hired 17 commercial lenders, primarily in the 20719 and 3Q’19. Produced strong results. 4Q/19 net loan g
Slide 14: Value Proposition
Value Proposition fauencielLxonoly Line Item 12/31/18 | 09/30/2021 ‘Recent Market Performance (as of 12092021) Prce201 Prie22— Pri’ CaeDepas. lTangible Book Value per Market Dirdend PrceLTAC Esimted Estimated Tangle Premium A Vale Yield «Earning: «EPSPS. Book Per She IShare $16.73 $21.98 10.4% — soe
Slide 15: Performance Ratios
ce Ratios Growth Growth YTD Pr ity Ratios 2016 2017 2018 2019 2020 | 1Year 3Year [ 9/30/21 [Reported [Pre-tax Pre-provision Income ($millions) 8.1 13.4 15.2 205 37.8 84% 182% 32.4 Pre-tax Pre-provision Inc/AvgAssets 0.61% 0.90% 0.89% 0.92% 1.43% 1.49%! Pre-tax Pre-provision Inc/ Avg Equity 5.9% 9.5%
Slide 16: For Additional Information
or Additional In Thomas R. Quinn, Jr. Neil Kalani President & CEO Chief Financial Officer tquinn@orrstown.com nkalani@orrstown.com 717-530-2602 717-510-7097 Robert Coradi Matthew C. Schultheis, CFA Chief Risk Officer Investor Relations rcoradi@orrstown.com mschultheis@orrstown.com 717-709-3039 717-5
Slide 17: Appendix and Supplemental Information
Appendix and Supplemental Information ORRSTOWN FINANCIAL SERVICES, INC.
Slide 18: Five Year Trends: Summary Financials
Five Year Trends: Summary Financials (Palas in thousands, except per share data, unless Inscies 2020 2019 2018 20172016 Results of Operations: Texcequivalentinterestincome 100,485 94037 67,084 «$3,900 44,185 Interest expense 16,026 2369913510 7644 5417 Tex-equivalentnetinterestincome 34,431 70338 «5
Slide 19: Five Year Trends: Key Performance Metrics
Five Year Trends: Key Performance Metrics 2020 2019 2018 2017 2016 Return on average assets 1.00 076 0.75 0.54 0.50 Return on average common equity 11.66 821 8.56 573 4.80 Yield on average interest-eaming assets 4.09 459 4.20 3.90 361 Rate on average interest-bearing liabilities 0.80 135 0.99 0.65 0
Slide 20: Five Quarter Trends: Summary Financials
Five Quarter Trends: Summary Financials (Palas in thousands, except per share dat, unless Indosted) 9124 06/24 03124 42/20 09120 Results of Operations: Tex-equivalentinterestincome 22.619 23877 24,125 24,423 Interest expense asm 4788 2078 3,398 Tex-equivalentnetinterestincome 20,848 22,122 22,081 23
Slide 21: Five Quarter Trends: Key Performance Indicators
Five Quarter Trends: Key Performance Indicators (Percent unless indicated) 09/21 06/21 03/21 12/20 09/20 Return on average assets 0.98 1.20 1.44 147 0.72 Return on average common equity 10.69, 1356 16.31 17.01 8.67 Yield on average interest-eaming assets 3.26 3.49 3.70 415 376 Rate on average intere
Slide 22: Performance Trends
Performance Trends Reported: Net Interest Mar 3.80 ai 338 3.40 340 326 3.24 3.20 320 3.00 3.00 280 es 3.03 2017 2018 2019 2020 09/20 12/20 03/21 06/21 09/21 enORRF mee Peers en ORRF mee Peers Ratio (% Ratio (% 90.00 78.96 ay aT 0.00 69.60 20.00 — 6733 66.19 ae 70.00 6245 58.49 59.68 60.00 60.00 a a
Slide 23: Performance Trends (continued)
Performance Trends (continued) 120 1.00 07s 080 os 98 076 040 2017 2018 2s 2m0—Yrpogat eORRE SO Peers 12/20 03/21, 06/21 09/21 a oRRF Peers Reported: ROAE (*) 15.00 1349 11.866 10.00 B56 a2. 5.00 573 0.00 2017 2018 2019 2020 yrD 09/21 er oRRF eres Reported: ROAE (%4) 20.00 15.00 10.00 500 857 0.00 0
Slide 24: Capital Trends
Capital Trends Leverage Ratio (% Leverage Ratio (% 950 850 39s 825 9.00 a0 205 210 850 225 781 807 aan 856 790 202 2.00 ie 770 750 750 2017 2018 2019 2020 yrD 09/21 09/20 12/20 03/21 06/21, 09/21 eo ORRF Peers en ORRF me Peers ier 1 Ratio (9) Tier 1 Ratio (24) 13.50 cy 13:16 278 13.00 13.00 see 1250
Slide 25: Asset Quality Trends
Asset Quality Trends NPAS/ Assets (2) 0.60 050 040 se 030 037 on 020 0.28 = 032 010 0.00 09/20 12/20 03/21 05/21 9/2 er ORRF ee Peers NPAs/ Assets (% 080 0.60 oS 0 oz 0.46 037 020 032 0.00 2017 2018 2019 2020 yrD 09/21 me oRRF mee Peers Reserves/ Loans Held For Investment (% 1.40 127 112 120 Pr 089
Slide 26: Income Statement Trends
Income Statement Trends dollar: in mi Growth Growth Income Statement 2016 2017 2018 2019 2020 1Year 3 Year Net Interest Income 36.5 438 52.2 693 83.6 21% 91% Non-Interest Income 18.3 188 20.0 23.8 283 19% 51% Net Securities Gains 14 12) 10 47° 00 (100%) -101% Total Revenue 56.3 638 73.2 97.8 111.9 1
Slide 27: Balance Sheet Trends & Select Loan Metrics
Balance Sheet Trends & Select Loan Metrics dollars in millions Growth Growth Loan Portfolio Mix 2016 2017 2018 2019 2020 1Year 3 Year Total Gross Loans 886 1,016 1,251 1,654 1,991 20% 96% Residential Mortgage 16% 16% 19% 20% 12% Home Equity 15% 14% 12% 11% 8% Other Consumer 1% 2% 3% 3% 1% Total Cons
Slide 28: Capital Adequacy
Capital Adequa Growth Growth 1Year 3 Year 2016 2017 2018 2019 2020 Tier 1 Capital $127.0 $138.8 $160.1 $196.5 $217.6 11% 57% Tier 2 Capital $12.0 $ 13.6 $ 469 S$ 47.6 S$ 53.6 13% 294% Total Regulatory Capital $139.0 $152.4 $207.0 $244.0 $271.2 11% 78% Tier 1 Leverage Ratio 9.3% 9.0% 8.4% 8.6% 8.1% C
Slide 29: ESG Initiatives and Focus
ESG Initiatives and Focus General Philosophy Environmental responsibility is in alignment with strong business practices and our core values. Being good stewards of the environment, reducing energy consumption and eliminating waste through proactive and conscious planning reduces costs, enhances our
Slide 30: Summary Financial Trends
Summary Financial Trends dollars in millions (except for per share information) Summary Trends (as of and for the year ended December 31, ) rangible Book Value / Share? 16.15% 17.22% 16.73% 17.66% 19.93% 13% 16% [Diluted Earnings / Share $0.81 $0.98 $1.50 $1.61 $2.40 49% 145% idend / Share $0.35 $0.
Slide 31: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation APPENDIX - Supplemental Reporting of Non-GAAP Measures and GAAP to Non-GAAP Reconciliations Management believes providing certain “non-GAAP” financial information willassist investors in their understanding of the effect of acquisition activity on reported results, pa
Slide 32: GAAP to Non-GAAP Reconciliation (continued)
GAAP to Non-GAAP Reconciliation (continued) (Sin millions, except per share data) Non GAAP Financial Measure Reconciliation Reporied 2016 2017 2018 2019 2020 365 438 522 693 836 Plus Non-Interest Income: 197 199 210 285 283 56.3 63.8 732 97.8 111.9) Net Interest Income Total Revenue (A) Efficiency R
Slide 33: GAAP to Non-GAAP Reconciliation (continued)
GAAP to Non-GAAP Reconciliation (continued) (Sin thousands) Non-interest expense (A) 19,035 § 17,033 § 17,783 § 18,080 § 19,265 Net interest income (B) 20,620 21,901 21,888 23,728 20,818 Non-interest income (C) 7.651 6.664 7.544 7.181 6.861 Total revenue (B+C) = D 28,271 28,568 29,399) 30,909 27.679
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