Orrstown Financial Services, Inc. · NASDAQ:ORRF
Orrstown Financial Services — Q2 2023 Earnings Presentation
20 slides from Orrstown Financial Services's earnings presentation, Jul 31, 2023
Slide 1: Investor Presentation Second Quarter 2023
ORRSTOWN Financial Services, Inc. Investor Presentation Second Quarter 2023
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: Financial Highlights and Franchise Overview
rstown Fin ial Services, In Financial Highlights + $3.08 $2.28 $2.5B 3.83% $1.7B Assets Loans Deposits NIM? AUM 1.32% 16.27% 61.9% 21.3% $203MM 0 cara ROAA 2 ROAE ? Efficiency Feelncome Market Se ee a Ratio / Op. Cap carl gy @0°0 Revenue ok Go Franchise Overview * re) 5 oe + Founded in 1919 ee” i +
Slide 4: Track Record of Profitable Growth
Track Record of Profitable Growth oo-o-0o-OQ-0- 0-@ ed Eastern PA, Acquired First + Entered MD market ginated 3,200+ ginated3,350+PPP * LoanGrowthof — + Loan Growthof. market Community Bank of ca Paycheck Protection loans totaling $349MMor 19% (x 90MM or 8.4% ed Harrisburg, Mercersburg Hamilton Banc
Slide 5: Focus on Growth
Focus on Growth ACQUISITIONS ORGANIC GROWTH KEY HIRES Market Expansio + Investin customer facing talent and infrastructure Branch Optimization: + Closed 14 branches since 2019 = Currently have 26 branches Acquisitions: First Community Bank of Mercersburg = Hamilton Bank Focus on Revenue Growth: + De
Slide 6: Geographically Diverse Markets
ng Geographically Diverse Markets Relationship Banking Model v Three geographic regions Franklin & land Defend Market Share Harrisburg & West Shore Growth Market v Markets connected by significant Lancaster/ Berk : - ancaster/ Berks highway infrastructure Growth Market v Focus on commercial lending
Slide 7: Loans and 2Q23 Loan Composition
Loans ($in millions) 2Q23 Loan Composition + $2,151 $2,234 $1,980 $1,980 Non-owner occupied CRE $1,644 Owner 28% occupied CRE 16% 1,72: 1,798 Multi-family “ Yield on 7% ce Acquisition & development B Loans: Non-owner 7% 5.63% 2 ay occupied 2016 2017 2018 2019 2020 2021 2022 2Q23 residential 5% Other
Slide 8: Focus on Growing Core Deposits
Focus on wing Core Deposits Deposits ($ in millions) 2023 Deposit Composition + 2,523 $2,357 92/465 $2,476 $s Interest DDA Money $1,876 41% Markets $1,559 19% $1152 $1,220 Cost of $2,163} $2,176] Total Deposits: A $1,961 a oe Deposits: $1,175 mo355 z 1.37%2 Savings . 8% 2016 2017 2018 2019 2020 2021
Slide 9: Diversified Revenue Streams
Diversified Revenue Streams + $1.7 billion in assets under management as of June 30, 2023 * Opportunity to gain market share in growth markets Y Wealth management and mortgage not yet to scale in growth markets * Focus on value added fee income * Continue to seek swap fee opportunities 20.1% 2Q23 YT
Slide 10: Operational Efficiency
Operational Efficienc ici io? Our current focus is on implementing processing Efficiency Ratio efficiencies and optimizing results: 86% 79% 79% 79% * Efficiency ratio declined from 86% for the year ended December 31, 2016 to 62% for the quarter ended June 30, 2023 * Technology enhancements and proce
Slide 11: Disciplined Underwriting and Risk Management
der Disciplined * Conservative underwriting approach supported by strong asset quality metrics * Recently tightened credit policy on select segments * Credit analysis for both new deals and periodic reviews includes targeted review of potential negative factors * Recent increase in NPLs/ NPAs relate
Slide 12: Enhanced Profitability Levels
Enhanced Profitability Levels Earnings Growth + Return on Average Assets & Equity $3.25 $2.96 $2.49 $32.9 eo e ° 0.75% 0.76% 0.54% giso | 51 rae 0.50% 2016 2017 2018 2019 2020 2021 2022 2Q23YTD $0.98, = ROAE ROAA gost $16.9 eee : $128 Net Interest Income and Net Interest Margin 3.81% 3.88% y oy 3.43
Slide 13: Tangible Book Value per Share and Earnings
rnings Tangible Book Value per Share (“TBVPS”) + $25.27 $25.30 $22.14 ae $16.14 $17-64 $17.66 912/19 $16.14 $17.22 9S16.73 $19.93 9 $22.32 9S19.47 $21.19 2016 2017 2018 2019 2020 2021 2022 2Q23 mTBVPS Cumulative Dividends Since 2016 4.3% 7.1% TBVPS TBVPS incl. CAGR dividends CAGR $14.2 million of sh
Slide 14: Right People, Aligned for Success
Right People, Aligned for Success 1g Joined NEUE ite Experience ORRF Significant Experience ThomasR. Quinn, Jr. President & CEO 32 years 2009 * Average 26 years of banking experience, mostly from money Neelesh Kalani EVP/Chief Financial Officer 18 years 2020 A center and large regional banks Adam D.
Slide 15: Strategic Focus: Optimizing Results
Strategic Focus: Optimizing Results * Effective management of pricing and interest rate sensitivity : es * Emphasis on growing fee income from valued added products and services Diversified income Y sw. streams provide Swaps flexibility in uncertain v Interchange market conditions Y Trust & Wealth M
Slide 16: Strategic Focus: Optimizing Results (cont'd)
Strategic Focus: Optimizing Results (cont’d) Balance sheet optimization Capital Managemen: Expand use of technology / process automation initiatives Continue with a disciplined growth mentality Improve balance sheet mix through cross selling efforts Grow deposits to limit reliance on other funding s
Slide 17: Investment Highlights
Investment Highlights v Strong geographically diverse markets Vv Established track record of profitable growth through relationship banking model Y Diversified revenue streams v Stable core deposit base v Balance Sheet well-positioned for changing rate environments Y Disciplined underwriting and ris
Slide 18: Reconciliation of Non-GAAP Measures to GAAP Results
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 understanding
Slide 19: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation sfonaiees Efficiency Ratio (Non-GAAP) azar 2022 2a 220 2019 2018 27 216 (Presented in Millions) Net interest Income. 27 8 wes a7o $ aes co 522 § 438 8 288 Plus Nor-Intarast Income 132 70 292 282 285 210 199 194 Total Revenue (A) 59 § tase Set Sins S 78S 732_§ 38 § Eo
Slide 20: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation Ratio (Non-GAAP) 2023TD 2022 2024 2020 2019 2018 2017 (Presented In Millions) Net interest Income s 527 $ mes a0 $ 36 $ 693 $ 522 $ 38 $ 369 Plus Non-Interest Income @) 43.2 2.0 292 283 285 21.0 199 194 Total Revenue (A) z 659 $166 S$ M64 $19 S 788 732_§ 63.8 § 563 Fe
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