Orrstown Financial Services, Inc. · NASDAQ:ORRF
Orrstown Financial Services — Shareholder Meeting (April 2021)
32 slides from Orrstown Financial Services's shareholder meeting presentation, Apr 27, 2021
Slide 1: 2021 Annual Shareholder Meeting
2021 Annual Shareholder Meeting 2020: Record Results During an Unprecedented Year CARES Act Economic Relief Plan Paycheck Protection Program > ——— ORRSTOWN FINANCIAL SERVICES, INC.
Slide 2: Conduct Meeting Business
Conduct Meeting Business Joel R. Zullinger Chairman of the Board 2 ORRSTOWN FINANCIAL SERVICES, INC.
Slide 3: Important Disclosures
Important Disclosures Forward Looking Statements Certain statements we may make today may constitute “forward-looking statements” under the Private Securities Litigation Reform Act of 1995. The actual results of Orrstown Financial Services, Inc. (the “Company”) may differ significantly from the resu
Slide 4: Rules of Conduct
Rules of Conduct = Inthe interest of an orderly Meeting of the Shareholders of Orrstown Financial Services, Inc., we ask you to honor the following rules of procedure: = Shareholders who are attending via webcast can submit questions during the meeting and those questions will be addressed prior to
Slide 5: Conduct Meeting Business
Conduct Meeting Business Joel R. Zullinger Chairman of the Board 5 ORRSTOWN FINANCIAL SERVICES, INC.
Slide 6: Board of Directors
Board of Directors Cindy J. Joiner, CPA Markk. Keller = = 7 AndreaL. Pugh MichaelJ. Rice Eric A. Segal S Linford L. Weaver Glenn W. Snoke Floyd E. Stoner
Slide 7: Conduct Meeting Business
Conduct Meeting Business Joel R. Zullinger Chairman of the Board 7 ORRSTOWN FINANCIAL SERVICES, INC.
Slide 8: Management Report
Management Report Thomas R. Quinn, Jr. President & CEO 8 ORRSTOWN FINANCIAL SERVICES, INC.
Slide 9: 2020 Year in Review
2020 Year in Review It is impossible to discuss 2020 without acknowledging the impact of COVID-19 on all of our lives for more thana year. = Allof our actions were informed by local, state, and federal guidance and the non-negotiable goal to keep our employees, clients, and communities safe. We: ="
Slide 10: 2020 Year in Review: PPP Results
2020 Year in Review 2020 PPP Results * 3,200 PPP loans in 2020 totaling $467.7 million * 66% to new clients of the Company * Over 25,000 jobs saved * Generated $13.5 million of net processing fees? Mnewclient Mcurrent client 2021 PPP Results * 3,006 PPP loans in 2021 totaling $212.9 million? * 33% t
Slide 11: Experienced Leadership Team
Experienced Leadership Team Name/Title Ban Joined | Experience / Disciplines Prior Experience Experience ORRF Thomas R. Quinn, Jr. President & CEO Thomas R. Brugger EVP/Chief Financial Officer Barbara E. Brobst EVP/Chief Human Resources Officer Robert G. Coradi EVP/Chief Risk Officer Philip E. Fague
Slide 12: In Addition to PPP and Financial Success
In Addition to PPP and Financial Success 2020 Initiative Continued focus on enterprise risk management Expand fee income sources Further automation of Ops. & Tech. to support work-from-home needs and provide additional efficiencies of scale Consistent and repeatable sales process across all business
Slide 13: Record Performance / Dividend Trend
Record Performance / Dividend Trend * The Company had its best year ever, earning $32.5 million (pre-tax), while rapidly deploying technology to meet the needs of our clients, the business community, and our employees ¢ |t remains our goal to reward shareholders through a combination of consistent d
Slide 14: Financial Report
Financial Report Neelesh (“Neil”) Kalani Chief Accounting Officer ORRSTOWN FINANCIAL SERVICES, INC.
Slide 15: Long-term phases of growth
Long-term phases of growth Phase 1 (completed) BUILD SCALE WITH ACQUISITIONS, ORGANIC GROWTH, AND KEY HIRES Market expansion efforts in Eastern, Central, and Maryland regions (investments in customer facing talentand infrastructure to successfully enter new markets) Two acquisitions last year Focus
Slide 16: Long-term Path to Improving Profitability
Long-term Path to Improving Profitability Continue to grow the relationship community bank =" Expand loan origination capacity with 3 new lending teams and invest in new locations (York County, Central Region, Maryland Region) in target markets Branch efficiency optimization = Utilize continuous ass
Slide 17: Long-term Path to Improving Profitability
Long-term Path to Improving Profitability Balance sheet mix optimization with the goal of expanding the net interest margin =" Grow relationship C&l, CRE and cash management deposits =" Reduce on balance sheet mortgages; sell new production =" Reduce investment portfolio concentration & wholesale fu
Slide 18: 2020 Financial Highlights
2020 Financial Highlights ¢ 20% loan growth and 26% deposit growth * Cost savings initiatives implemented leading to approximately $4 million of annualized savings * Core revenue per share? grew 15% while core expense per share grew 1% leading to 51% increase in pre-tax pre-provision income per shar
Slide 19: 2020 Financial Highlights (continued)
2020 Financial Highlights (continued) * Tangible book value per share grew 12.9% to $19.93 / share * SBA PPP originations totaled $467.7 million with $14.1 million of processing fees collected * Despite pandemic related stress, net recoveries for the year of $0.2 million ¢ Allowance for loan losses
Slide 20: Summary Financial Trends
Summary Financial Trends dollars in millions Growth Growth Summary Trends 1 Year 3 Year Assets 1415 1,589 1934 2883 275] 15% 76% Net Loans 873 1,003 1,237 1,639 1,971 20% 96% Deposits 1,152 1,220 1,559 1,876 2,357 26% 93% Equity 135 145 173 223 246 10% 70% Tangible Book Value 16.15 17.22 16.73 17.66
Slide 21: Income Statement Trends
Income Statement Trends dollars in millions Growth Growth Income Statement 2016 2017 2018 2019 2020 1Year 3Year Net Interest Income 36.5 43.8 52.2 69.3 83.6 21% W% Non-Interest Income 18.3 18.8 20.0 23.8 28.3 19% 51% Security Gains 1.4 iL. 1.0 47 0.0 -100% -101% Total Revenue 56.3 $3.8 73.2 97.8 111
Slide 22: Balance Sheet Trends
Balance Sheet Trends dollars in millions Loan Portfolio Mix 2016 2017 Gross Loans 886 1,016 Residential Mortgage 16% 16% Home Equity 15% 14% Other Consumer 1% 2% Total Consumer Loans 32% 33% Construction Loans 3% 3% Commercial Real Estate 49% 49% Commercial & Industrial 10% 11% Other Commercial 6% 4
Slide 23: Capital Adequacy
Capital Adequacy dollars in millions Growth Growth Capital Adequacy 2016 2017 2018 2019 2020 1Year 3 Year Tier 1 Capital 127.0 138.8 160.1 196.5 217.6 11% 57% Tier 2 Capital 12.0 13.6 469 47.6 53.6 13% 294% Total Regulatory Capital 139.0 152.4 207.0 244.0 271.2 11% 78% Tier 1 Lev erage Ratio 9.3% 90
Slide 24: Pre-tax Pre-Provision View
Pre-tax Pre-Provision View dollars in millions Growth Growth Profitability Ratios 2016 2017 2018 2019 2020 1Year 3 Year Reported Pre-tax Pre-provision Income 8.1 13.4 15.2 20.5 37.8 84% 182% Pre-tax Pre-provision Inc / AvgAssets 0.61% 0.90% 0.89% 0.92% 1.43% Pre-tax Pre-provision Inc /AvgEquity 5.9%
Slide 25: Management Report
Management Report Thomas R. Quinn, Jr. President & CEO ORRSTOWN FINANCIAL SERVICES, INC.
Slide 26: Areas of Focus in 2021
Areas of Focus in 2021 * SBA PPP Optimization ¢ Achieve forgiveness for our clients during first three quarters of 2021 for 2020 originations * Broaden relationships with new PPP clients beyond initial PPP loan and deposit account ¢ Will continue to participate in 2021 PPP offering until SBA funding
Slide 27: Areas of Focus in 2021
Areas of Focus in 2021 ¢ Balance Sheet Optimization ¢ Grow relationship C&l and CRE * Continue to improve balance sheet mix ¢ Focus on relationship clients to drive profitability ¢ Asset Quality * Continue proactive efforts to maintain superior asset quality; early identification and quick resolutio
Slide 28: Conduct Meeting Business: Shareholder Questions
Conduct Meeting Business SHAREHOLDER QUESTIONS ORRSTOWN FINANCIAL SERVICES, INC.
Slide 29: Conduct Meeting Business
Conduct Meeting Business Joel R. Zullinger Chairman of the Board ORRSTOWN FINANCIAL SERVICES, INC.
Slide 30: 2021 Annual Shareholder Meeting
2021 Annual Shareholder Meeting Thank You for being a Loyal Shareholder ORRSTOWN FINANCIAL SERVICES, INC.
Slide 31: Appendix: Reconciliation of Non-GAAP Measures to GAAP Results
Appendix Reconciliation of Non-GAAP Measures to GAAP Results As a result of acquisitions, the Company has intangible assets consisting of goodwill and core deposit and other intangible assets. Management believes providing certain “non-GAAP” financial information will assist investors in their under
Slide 32: Non GAAP Financial Measure Reconciliation
Non GAAP Financial Measure Reconciliation Non GAAP Financial Measure Reconciliation 2017 2018 2019 Income Statement / Diluted Share 2016 2017 2018 2019 2020 Net Interest Income 36.5 43.8 52.2 69.3 83.6 Core Revenue (C) 549 626 72.2 93.1 IIL Plus Non-Interest Income 19.7, 19.9 21.0 28.5 28.3 Core Nor
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