Orrstown Financial Services, Inc. · NASDAQ:ORRF
Orrstown Financial Services — Investor Presentation (July 2020)
32 slides from Orrstown Financial Services's investor presentation, Jul 28, 2020
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 This presentation contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21€ of the Securities Exch
Slide 3: Company Overview—Strong Geographically Diverse Markets
Company Overview—Strong Geographically Diverse Markets ‘omstte wounedoves |_ 22 ———_"—™" vi » Since 2015, Orrstown has invested in markets with higher density, higher household wealth, and strong growth to drive future expansion and enhance geographic diversification. 2020 5 Year | 2020 Median 2020
Slide 4: Geographic Focus Driven by Relationship Banking Model
Geographic Focus Driven by Relationship Banking Model Four geographic regions: Market Presidents have full authority and autonomy (within ERM guidelines) Market Presidents are all seasoned best-in-class bankers Markets connected by significant highway infrastructure Focus on commercial lending & dep
Slide 5: Products and services by business line
vides Expa COMMERCIAL BANKING INVESTMENTS & TRUST C&I and CRE Lending + Wealth Management + Treasury Management * Retirement Planning + Small Business Lending + Estate Planning + SBA Lending + Trust Services Insurance (e.g. key man coverage) Personal and Home Equity Loans and Lines of Credit Auto Lo
Slide 6: Company Overview—Balance Sheet Mix
Company Overview—Balance Sheet Mix Loan Mix Deposit Mix (6/30/2020) (6/30/2020) Jumbo CDs, 2.9% Construction — State & Municipal Other 3% 2% Multifamily 3% 5% DDA, 19.5% ‘Commercial (PPP) ‘Consumer/HELOC 23% o% Balance Sheet Managementto Defend NIM — Allow residential mortgage run-off to fund commer
Slide 7: Company Overview—Revenue Mix
Company Overview—Revenue Mix— = Service Charges 11% Interchange Income 3% Loan Swap Referral Fees Noninterest Wealth Management Income, 26% Net Interest Income, 74% = Mortgage Banking ® Gain on Portfolio Loan Sales = Other Income 32% Opportunity in gaining market share in new markets — Wealth manage
Slide 8: Right People and Aligned for Success
Right People and Aligned for Success Thomas R. Quinn, J. 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 EvP/Trust and Wealth Management Robert Fignar EvP/Operations, Technology,
Slide 9: Employees, Clients and Communities during COVID-19
Employees Initiated work-from-home (“WFH") protocol on 3/18/2020 , 67% of employees telecommuted (more than 300) Continuous (daily/weekly) employee commu ions throughout WFH period Re-emphasized availability of employee assistance programs Updates relative to proliferation of scams and enhanced cybe
Slide 10: Serving the Community through Payroll Protection Program
Serving the Community through Payroll Protection Program KEY TAKEAWAYS: Payroll Protection Program * Ability to ramp up quickly and assign resources key to Orrstown’s PPP success + All hands on deck approach and solid technology infrastructure enabled bank to outperform most competitors (based on re
Slide 11: Loan Portfolio Exposure and COVID-19 Deferrals
Multifamily Residential Strip Center / Retail Commercial Construction Hotel / Motel Warehouses Restaurants & Bars Storage Units Residential Construction As a Percentage of Total Loans | As a Percentage of al | COVID-19 Deferrals as a Percentage of Category 8.0% 67.0% 12.0% 5.5% 46.0% 32.7% 0.5% 21.0
Slide 12: Performance Ratios
rmance Ratios Growth Growth Profitability Ratios 2015 2016 2017 2018 1Year 3 Year ane ‘Reported IPre-tax Pre-provision Income 89 81 134 15.2 205 35% 152% 16.6 Pre-taxPre-provision Inc/AvgAssets 0.72% 0.61% 0.90% 0.89% 0.92% 1.31% Pre-taxPre-provision Inc/AvgEquity 6.8% 5.9% 9.5% 10.2% 10.0% 15.0% Ef
Slide 13: Value Proposition
Value Proposition As a Percentage of Peers! | Orrstown | Orrstown EES EE) Average Assets Q1 2020 Q2 2020 INet Interest Income 3.27 3.10 3.07 SS -Loan Loss Provision 0.26 0.16 0.28 imaew wa ees tea PS +Noninterest Income 0.96 1.20 1.06 Viel Earnings EPS Book Per Share a |Comspany Name State Ticker Ce
Slide 14: For Additional Information
or Additional Information Thomas R. Quinn, Jr. President & CEO tquinn@orrstown.com 717-530-2602 Thomas R. Brugger Chief Financial Officer tbrugger@orrstown.com 717-510-7131 Matthew C. Schultheis, CFA Investor Relations mschultheis@orrstown.com 717-510-7127
Slide 15: Appendix and Supplemental Information
Appendix and Supplemental Information ORRSTOWN FINANCIAL SERVICES, INC.
Slide 16: Five Year Trends: Summary Financials
Five Year Trends: Summary Financials its wi ic a a ee ee Toc equi eticooe Sey Biss SS aa esas = eo Toc oqaiattce Receicane a ese a a SS a mee a ST aaa Fc ass ora as aes ah ees So Paar 5 — ae ar rr or tnd ofp pre pe shre a TT ey a ea ie cc Se Net rene (ose) ed per tare esa see Si sncr on So porn PTT
Slide 17: Annual performance ratios 2015-2019
(Percent unless indicated) 2019 2018 2017 2016 2015 Performance Ratios: Return on average assets 076 0.75 0.54 0.50 0.64 Return on average common equity 821 8.56 573 4.80 5.99 Yield on average interest-eaming assets 459 4.20 3.90 361 3.54 Rate on average interest-bearing liabilities 1.35 0.99 0.65 0
Slide 18: Five Quarter Trends: Summary Financials
Five Quarter Trends: Summary Financials (Dotars mthousanssunessinSostes) 06720 03/20 sng ost9 ositg Texcequivalentinterestincome 25282 24,164 242255048 24,768 Interest expense 4224 5.705 6.087 6787 5957 Tex-equivalentnetinerestincome 21028 13459-18138 18.287 18,807 Tex-equivalentadustment 230 197 19
Slide 19: Five Quarter Trends: Key Performance Indicators
Five Quarter Trends: Key Performance Indicators Return on average assets 0.94 0.86 072 115 0.48 Return on average common equity 11.82 8.96 7.53 1237 5.26 Yield on average interest-eaming assets 4.05 4.46 451 452 478 Rate on average interest-bearing liabilities 0.85 1.24 133 142 134 Net interest spre
Slide 20: Performance Trends
Performance Trends 3.40 am 340 337 3.20 3.35 3.36 a0 a gas 3.00 3.16 3.20 +m 280 3.10 2016 2017 2018 2019 YTD 06/20 06/19 09/19 ays 03/20 06/20 —eonnF —e=Peers mem oRRF ee Peers Netinterest Margin (9) (1) Netinterest Margin (9) (1) 400 4.00 oa 350 0.03 is 0.23 350 0.19 0.26 o2 0.27 3.00 3.00 250 250
Slide 21: Performance Trends (Continued)
Performance Trends (Continued) 2016 2017 2018 2019 Reported: ROAA (%) 150 14s 0.94 Th 0.86 0.48 050 072 0.00 06/19 09/19 ys 03/20 06/20 en oRRF Peers Reported: ROAE (*4 12.00 10.00 2.00 ea 356 Pa 373 40 —{% 2.00 0.00 2016 2017 2018 2019 a oRRF Peers Reported: ROAE (*4 15.00 1237 TET] a0 8.96 5.26 5.
Slide 22: Capital Trends
Capital Trends Leverage Ratio (24) Leverage Ratio (24 950 933 10.00 8.95 60 950 856 8.42 9.00 850 85 850 =m 8.46 856 757 Ey sy 750 750 757 2016 2017 2018 2019 7006/20 06/19 09/19 pas 03/20 06/20 em ORRF mee Peers em ORRF Me Peers jer 1 Ratio (%) Tier 4 Ratio (26) 135 133 B B 125 125 2 & 1156 a8 11.3
Slide 23: Asset Quality Trends
Asset Quality Trends NPAs/ Assets (% NPAS/ Assets (% 1.00 1.00 0.80 0.80 059 060 _ 060 — 033 033 034 040 Y 040 , 046 23r 021 046 =o 020 020 0.00 0.00 2016 2017 2018 2019 v1 06/19 09/39 aps 03/20 06/20 eon ee Peers eo onRF epee Reserves/ Loans Held For Investment (9 Reserves/ Loans Held For Investmen
Slide 24: Income Statement Trends
Income Statement Trends Growth Growth dollar: in mi Income Statement 2015 2016 2017 2018 2019 1Year 3 Year Net Interest Income 34.3 36.5 43.8 52.2 69.3 33% 90% Non-Interest Income 17.3 18.3 188 20.0 23.8 19% 30% Net Securities Gains 13 14 £2 1.0 47 372% 234% Total Revenue 535 56.3 63.8 73.2 97.8 34%
Slide 25: Balance Sheet Trends
Balance Sheet Trends dollars in millions Growth Growth Loan Portfolio Mix 2015 2016 2017 2018 2019 1Year 3 Year Total Gross Loans 788 886 1,016 1,251 1,654 32% 87% Residential Mortgage 16% 16% 16% 19% 20% Home Equity 16% 15% 14% 12% 11% Other Consumer 1% 1% 2% 3% 3% Total Consumer Loans 33% 32% 33%
Slide 26: Capital Adequacy
Capital Adequa Growth Growth 1Year 3 Year Tier 1 Capital 123.8 127.0 138.8 160.1 196.5 23% 55% Tier 2 Capital 10.7 12.0 13.6 46.9 47.6 1% 296% Total Regulatory Capital 134.6 139.0 152.4 207.0 244.0 18% 76% Tier 1 Leverage Ratio 9.8% 9.3% 9.0% 8.4% 8.6% Common Equity Tier 1 Ratio 14.6% 13.3% 12.1% 12
Slide 27: ESG Initiatives and Focus
ESG Initiatives and Focus General Philosophy Environmentalresponsibility is in alignment with strong business practices and our core values. Beinggood stewards of the environment, reducing energy consumption and eliminating waste through proactive and conscious planning reduces costs, enhances our p
Slide 28: Summary Financial Trends / Select Loan Concentrations
Summary Financial Trends / Select Loan Concentrations dollars in millions (except for per share information) [Summary Trends rangible Book Value / Share? 16.06 16.14 17.22 16.73 17.51 5% 8% [Diluted Earnings / Share 0.97 0.81 0.98 1.50 1.61 7% 99% idend / Share 0.22 0.35, 0.42 0.51 0.60 18% 71% Mark
Slide 29: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation Management believes providing certain “non-GAAP” financialinformation will assist investors in their understanding of the effect of certain activity on reported results, particularly to overcome comparabilityissues related to the influence of purchase accounting adjus
Slide 30: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation C (Sin millions, except per share data) Non GAAP Financial Measure Reconciliation Reported 2015 2016 2017 2018 2019 Net Interest Income, 343 365 438 522 693 Pus Nor-interest Income. 192 197 199 210 285 Total Revenue (A) 535 563 638 732 978 Total Non Interest Expense (
Slide 31: Efficiency Ratio Reconciliation
Efficiency Ratio Reconciliation EFFICIENCY RATIO RECONCILIATION (ANNUAL): 2019 2018 2017 2016 2015 Non-interest expense 77,302 57,935 50,330 48,140 44,607 Net interest income 69,295 52,156 43,809 36,545 34,334 Non-interest income 28,541 21,024 19,949 19,739 19,178 Total revenue 97,836 73,180 63,758
Slide 32: 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
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