Orrstown Financial Services, Inc. · NASDAQ:ORRF
Orrstown Financial Services — Shareholder Meeting (April 2022)
30 slides from Orrstown Financial Services's shareholder meeting presentation, Apr 26, 2022
Slide 1: 2022 Annual Shareholder Meeting
2022 Annual Shareholder Meeting 2021: Record Results in an Unprecedented Year 1 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: Forward Looking Statements
mportant Disclosures Forward Looking Statements Certain statements we make today may constitute “forward-looking statements” under Section 27A of the Securities Act and Section 21E of the Exchange Act, and are intended to be covered by the safe harbor provisions of the Private Securities Litigation
Slide 4: Important Disclosures: Non-GAAP Measures
mportant Disclosures Non-GAAP Measures Throughout this presentation, we refer to certain non-GAAP measures, including, without limitation, core revenue, core non-interest expense, core pre-tax pre-provision income, core efficiency ratio, core diluted per share measures, tangible book value per commo
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 ‘Andrea L. Pugh
Slide 7: Conduct Meeting Business
Conduct Meeting Business Joel R. Zullinger Chairman of the Board OrrSTOWN FINANCIAL SERVICES, INC.
Slide 8: Management Report
Management Report Thomas R. Quinn, Jr. President & CEO OrrSTOWN FINANCIAL SERVICES, INC.
Slide 9: Experienced Leadership Team
Experienced Leadership Team Name/Title Thomas R. Quinn, Jr. President & CEO Neelesh Kalar EvP/Chief Financial Officer Luke M. Bernstein EvP/Chief Operations & Technology Officer Barbara E. Brobst EvP/Chief Human Resources Officer Robert G. Coradi Eve /Chief Risk Officer Matthew Dyckman. EvP/General
Slide 10: Year in Review
021 Year in Review * COVID-19 once again had major impacts on our business: * We started the year focused on continuing PPP outreach, resulting in 3,300 PPP loans totaling ~$238 million and nearly 6,500 loans totaling ~$700 million for the entire program * Our 2021 PPP efforts resulted in net proces
Slide 11: Dividend Trend Analysis
Dividend Trend Analysis $021 ae 171% bat INCREASE $0.15, $0.19 $0.13 soa. $0.03 $0.07 $0.05 102 3 4 5 6 7 8 $ Wl RB w 15 we 17 18 1 2 mM BW 3B mM B 2% 7 Ww may 2015 May 2022 * 28 consecutive quarterly dividends since May of 2015 * Dividend has increased nine times over the last 28 quarters; 171% inc
Slide 12: 2021 Year in Review
2021 Year in Review SBA PPP Optimization + Successfully processed forgiveness for ~4,000 applications * Achieve forgiveness for our clients totaling $443 million * Continue to participate until SBA funding + Funded nearly 6,500 loans totaling ~$700 million? exhausted + 43% of PPP applicants were new
Slide 13: 2021 Year in Review
2021 Year in Review Asset Quality * Delinquency % of total non-PPP loans at 0.40% * Continue proactive efforts to maintain strongasset * Non-accrual % of total loans at 0.33% quality; early identification and quick resolution of + Allowance to total loans of 1.07% problems * Allowance to non-SBA gua
Slide 14: Financial Report
Financial Report Neelesh (“Neil”) Kalani Chief Financial Officer 14 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 talent and infrastructure to successfully enter new markets) * Two acquis 2018 * Focus on r
Slide 16: Financial Highlights
021 Financial Highlights * Record net income of $32.9 million * Return on average assets of 1.14% * Average cost of interest-bearing liabilities decreased from 0.80% in 2020 to 0.33% in 2021 due to rate reductions in 2021 and maturity of higher yielding certificates of deposit * 14% loan growth (exc
Slide 17: Financial Highlights (continued)
021 Financial Highlights (continued) * Market capitalization grew to $281.8 million * Classified loans decreased from $33.1 million at December 31, 2020 to $23.1 million at December 31, 2021 * Despite pandemicrelated stress, net charge-offs for the year of only $0.1 million * Tangible book value per
Slide 18: Summary Financial Trends
ummary Financial Trends dollars in millions (except p Summary Trends 2018 2019 2020 2021 Assets $1,559 $1,934 $2,383 $2,751 $2,835 Net Loans 1,003 1,237 1,639 «1,971 1,968 0% 59% Deposits 1,220 1,559 1,876 2,357 2,465 5% 58% Equity 145° «173-223, 246272 11% 57% Tangible Book Value $17.22 $16.73 $17.
Slide 19: Income Statement Trends
ncome Statement Trends follars in milli Growth Income Statement 2020 2021 1 Year Net Interest Income $83.6 $87.0 Ao Non-Interest Income 188 200 238 283 285 1% Security Gains 1.2 1.0 47 0.0 0.6 100% Total Revenue $63.8 $73.2 $97.8 $111.9 $116.1 4% Non-Interest Expense 503° 547 683 728 74.1 2h Merger
Slide 20: Balance Sheet Trends
Balance Sheet Trends Growth Growth 2017 2018 2017 ~—_-2020__2021 1Year 3 Year Gross Loans $1,016 $1,251 $1,654 $1,991 $1,989 59% Residential Mortgage 16% 19% 2% 12% 1% Home Equity 14% 12% 11% 8% 8% Other Consumer WY 3% 3% 1% 1% Total Consumer Loans 33% 34% «= 34%_~=— 22% 20% Construction Loans 3% 4%
Slide 21: Capital Adequacy
Capital Adequac dollars in milli Growth Growth Capital Adequacy 2017 2018 2019 2020 2021 1Year 3 Year Tier 1 Capital $138.8 $160.1 $196.5 $217.6 $243.1 12% 52% Tier 2 Capital 13.6 469 476 536 547 2% 17% Total Regulatory Capital $152.4 $207.0 $244.0 $271.2 $297.8 10% 44% Tier 1 Leverage Ratio 90% 84%
Slide 22: Pre-tax Pre-Provision View
Pre-tax Pre-Provision View Growth Growth 2017 2018 2019 2020 2021 1Year_ 3 Year Reported Pre-tax Pre-provision Income $13.4 $15.2 $20.5 $37.8 $42.0 11% 176% Pre-tax Pre-provision Inc / Avg Assets 0.90% 0.89% 0.92% 1.43% 1.45% Pre-tax Pre-provision Inc / AvgEquity 9.5% 10.2% 10.0% 16.7% 16.0% Efficie
Slide 23: Management Report
Management Report Thomas R. Quinn, Jr. President & CEO OrrSTOWN FINANCIAL SERVICES, INC.
Slide 24: Areas of Focus in 2022
Areas of Focus in 2022 izing the Company to operate ina rising rate environment * We have been operating in a low interest rate environment since late 2008 * Consensus expectation for rapidly increasing interest rates throughout 2022 * Opportunities for margin pick up and strong volume to replace PP
Slide 25: Areas of Focus in 2022 (continued)
reas of Focus in 2022 (continued) * Expand use of Technology / Process Automation Initiatives * Refine Abrigo (launched last year) * Focus on robotic process automation throughout the organization to gain efficiencies * New Treasury Management application will launch later in 2022 * Balance Sheet Op
Slide 26: Conduct Meeting Business
Conduct Meeting Business Joel R. Zullinger Chairman of the Board OrrSTOWN FINANCIAL SERVICES, INC.
Slide 27: Thank You for being a Loyal Shareholder
2021 Annual Shareholder Meeting Thank You for being a Loyal Shareholder OrrSTOWN FINANCIAL SERVICES, INC.
Slide 28: 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 29: Non-GAAP Financial Measure Reconciliation
Non-GAAP Financial Measure Reconciliation Core Efficiency Rati Net Interest Income s 87.0 $ 836 $ Plus Non-Interest Income 285 283 Minus Security Gains 06 - Total Core Revenue (A) s 116.1_$ Tm19 $ Non-interest Expense s 4.1 4.1 § Minus Branch Consolidation & Merger Expense - (1.3) Total Core Non-Int
Slide 30: Non-GAAP Financial Measure Reconciliation
Non-GAAP Financial Measure Reconciliation Income Statement / Diluted Share ‘Core Revenue (A) s 116.1 $ 1119 § 3.1 $ 722 § 62.6 Core Non-Interest Expense (8) 14.4 728 68.3 547 503 Core Pre-Tax Pre-Provision Income (A - B) $ 42.0 $ 301 $ m8 $ 15 $ 23 Diluted Shares (C) m4 1.0 10.5 85 82 Core Revenue /
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