Orrstown Financial Services, Inc. · NASDAQ:ORRF
Orrstown Financial Services — Merger or Acquisition (December 2023)
22 slides from Orrstown Financial Services's merger presentation, Dec 12, 2023
Slide 1: Investor Presentation: Merger of Equals with Codorus Valley Bancorp
December 12, 2023 Investor Presentation Orrstown Financial Services, Inc. (Nasdaq: ORRF) Merger of Equals with Codorus Valley Bancorp, Inc. (Nasdaq: CVLY) Exhibit 99.2
Slide 2: Forward Looking Statements
Forward Looking Statements This presentation contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 regarding the financial condition, results of operations, business plans and the future performance of Orrstown Financial Services, Inc. (“Orr
Slide 3: No Offer or Solicitation
No Offer or Solicitation This document is not a proxy statement or solicitation or a proxy, consent or authorization with respect to any securities or in respect of the proposed transaction and shall not constitute an offer to sell or a solicitation of an offer to buy the securities of Orrstown, Cod
Slide 4: Pro Forma Company Snapshot
Baltimore PA MD New Headquarters ORRF Branches (21) CVLY Branches (30) 2025 ROAA 2025 ROATCE 2025 Efficiency 2025 Net Income 2025 GAAP EPS Accretion 2025 Cash EPS Accretion3 Market Cap AUM Assets Loans Deposits IRR TBV Earnback4
Slide 5: Strategic Rationale
Strategic Rationale Significantly Enhanced Scale 1 Peer Leading Performance 2 Strategically Compelling 3 Strong Transaction Metrics 4 Benefits All Stakeholders 5
Slide 6: Orrstown Financial Services, Inc. Company Overview
Lancaster Harrisburg Baltimore Hagerstown Chambersburg Company Overview Branch Footprint Q3 2023 Financial Highlights Thomas Quinn, Jr. (President & CEO) $258M Market Capitalization1 $3.1B Total Assets $1.7B AUM/A 3.73% Net Interest Margin Holding company for Orrstown Bank, founded in 1919, and head
Slide 7: Codorus Valley Bancorp, Inc. Company Overview
CVLY (30) Company Overview Branch Footprint Q3 2023 Financial Highlights Craig Kauffman (President & CEO) Holding company for PeoplesBank, A Codorus Valley Company, founded in 1864, and headquartered in York, Pennsylvania Largest full-service bank headquartered in York County with 30 branches spanni
Slide 8: Commanding Positions in Attractive and Diverse Markets
Central Maryland Eastern Community Bank Deposits in PA and MD1 #7 Community Bank in PA & MD #10 #17 New Headquarters ORRF Branches (21) CVLY Branches (30) Regional Breakout Commanding Positions in Attractive and Diverse Markets Maryland Region: $769M Deposits 9 Branches Central Region: $3.3B Deposit
Slide 9: Market Demographics and Pro Forma Deposits by Region
Population: Median HHI: # of Businesses: Projected ’23 - ‘28 Growth Population: HHI: 302K $68K 7.0K 3.6% 9.3% Population: Median HHI: # of Businesses: Projected ’23 - ‘28 Growth Population: HHI: 557K $75K 28.6K 1.7% 11.5% Population: Median HHI: # of Businesses: Projected ’23 - ‘28 Growth Population
Slide 10: High-Quality Core Deposit Base
Pro forma $2.5B Deposits $1.9B Deposits $4.5B Deposits Cost of Deposits: 1.65% Deposit Beta1: 29.1% Loans to Deposits: 89.0% High-Quality Core Deposit Base IB Demand, Savings & MMDA Jumbo Time Deposits Retail Time Deposits Noninterest Bearing Cost of Deposits: 1.84% Deposit Beta1: 30.2% Loans to Dep
Slide 11: Diversified Pro Forma Loan Portfolio
Pro forma $2.3B loans $1.7B loans $4.0B loans Yield on Loans: 5.78% Yield on Loans: 6.08% Yield on Loans: 5.91% Diversified Pro Forma Loan Portfolio CRE & Multi Residential RE C&I Home Equity C&D Other
Slide 12: Enhances Wealth Management Offering
Enhances Wealth Management Offering $2.7B pro forma assets under management 42% of pro forma non-interest income Combined company provides a full spectrum of wealth management, financial planning and brokerage solutions and services Opportunity to gain market share in growth markets Pro Forma Non-In
Slide 13: Comprehensive Due Diligence
Thorough management review of all key functional areas for both companies Joint on-site management meetings provided understanding of shared cultural values and business functions Rigorous evaluation of each company’s risk management process, compliance and internal controls and BSA/AML Comprehensiv
Slide 14: Merger Overview
Merger Overview Merger of equals Codorus Valley Bancorp, Inc. to merge into Orrstown Financial Services, Inc.; Peoples Bank to merge into Orrstown Bank 100% stock consideration 0.875x of a ORRF share for each CVLY share Implied price per share of $21.31, or approximately $207 million in aggregate1 M
Slide 15: Key Merger Assumptions
Key Merger Assumptions After-tax negative AOCI of approximately $38.4 million1 is accreted back into earnings straight-line over 6 years AOCI ORRF and CVLY earnings per share per street consensus estimates ORRF:$0.82 in 2023Q4 | $2.93 in 2024 | $3.05 in 2025 CVLY:$0.53 in 2023Q4 | $1.75 in 2024 | $2
Slide 16: Pro Forma Financial Impact
Earnings Impact TBV Impact Pro Forma Capital5 (20.9%) Dilution at Close 2.6 years Earnback4 ~21% 2024E EPS Accretion ~46% 2025E EPS Accretion 6.8% TCE / TA 7.9% Leverage Ratio 9.5% Tier 1 Ratio 11.8% TRBC Ratio GAAP Metrics Financially compelling transaction with significantly increased profitabilit
Slide 17: Top-Tier Pro Forma Profitability
Top-Tier Pro Forma Profitability Efficiency Ratio Return on Average Assets Return on Average Equity 2025 Estimated Profitability: Pro Forma Company1 vs. Peers2 Pro Forma Pro Forma Pro Forma
Slide 18: Potential for Significant Shareholder Value Creation
Profitability 2025E GAAP2 2025E Cash3 ROAA 1.50% 1.29% 0.88% 0.92% ROAE 16.3% 14.0% 8.9% 10.4% Net interest margin 4.04% 3.55% 3.01% 3.40% Efficiency ratio 49.5% 55.0% 62.8% 55.9% Fee income / revenue 17.9% 19.9% 11.8% 19.2% Implied Trading Multiples Price / 2025 EPS4 5.5x 6.4x 9.3x 10.1x Trading mu
Slide 19: Merger Synergies & Profitability Acceleration
Merger Synergies & Profitability Acceleration 2025E Noninterest Expense / Avg. Assets 2025E Efficiency Ratio Achievable Cost Savings $25M in annual pre-tax cost savings identified 18% of combined operating expense Inclusive of incremental expenses Elimination of redundancies will enhance operating l
Slide 20: Merger Benefits All Stakeholders
Both banks have served their respective markets for over 100 years and will maintain their strong presence Contiguous branch networks ensure continued involvement in and support of local communities Deep commitment to community banking business model Community Merger Benefits All Stakeholders Client
Slide 21: Appendix
ORRSTOWN Financial Services, Inc. Sz CODORUS VALLEY BANCORP, INC. Appendix
Slide 22: Pro Forma Reconciliation
Tangible Book Value Per Share Dilution 2025 Earnings Per Share Accretion Pro Forma Reconciliation
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