Orrstown Financial Services, Inc. · NASDAQ:ORRF
Orrstown Financial Services — Shareholder Meeting (May 2023)
31 slides from Orrstown Financial Services's shareholder meeting presentation, May 2, 2023
Slide 1: 2023 Annual Shareholder Meeting
2023 Annual Shareholder Meeting 2022: Setting a Foundation for Continued Growth 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
Important 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
Important Disclosures Non-GAAP Measures Throughout this presentation, we refer to certain non-GAAP measures, including, without limitation, efficiency ratio, tangible book value per common share, adjusted net income, adjusted diluted earnings per common share (EPS), adjusted return on average assets
Slide 5: Rules of Conduct
Rules of Conduct In the interest of an orderly Meeting of the Shareholders of Orrstown Financial Services, Inc., we ask you to honor the following rules of procedure: v Shareholders who are attending via webcast can submit questions during the meeting and those questions will be addressed prior to a
Slide 6: Board of Directors
Board of Directors A Joe! R. Zullinger Thomas R. Quinn, Jr. Cindy J. Joiner, CPA Mark kK. Keller Eric A. Segal 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 OrrSTOWN FINANCIAL SERVICES, INC.
Slide 9: Experienced Leadership Team
Experienced Leadership Team Name/Title Banking | Joined Experience / Di es r Experience sipesienne | Gite eee Se | ae Seen iti, Fifth Third eee ayers 2020 Boanes [esa | Sun National, Harleysvill, Willow Financial arf Gptos sty ters tan ty Diemer, Tr uaa oir Offer oo ee | oe | aieeniesaesies — Eeysie
Slide 10: Corporate Overview
Corporate Overview Financial Highlights * $2.98 $2.2B $2.5B 4.14% Assets Loans Deposits. NIM 1.33% 17.28% 63.0% | 18.5% ROAA non See toe Franchise Overview * * Founded in 1919 + Established track record of profitable growth since 2016 + 22 branches serving customers throughout Central and Eastern Pe
Slide 11: Strong Geographically Diverse Markets
trong Geographically Diverse Markets Central Region Franklin, Cumberland, Geographic Focus Driven by Relationship Banking Model v Three geographic regions v Markets connected by significant highway infrastructure v Focus on commercial lending and deposit relationships Y Growth markets are well- posi
Slide 12: Track Record of Profitable Growth
Track Record of Profitable Growth ntered Eastern PA market ed First + Entered MD market ginated3,200 + Originated 3,350+PPP + Loan Growth of Community Bank of Paycheck loans totaling $232 $349MM or 19% (x Entered Harrisburg, PA ™2! Mercersburg Hamilton Bancorp Protection Program + abrigo loan origin
Slide 13: 2022 Year in Review
2022 Year in Review > Adjusted Net Income: $34.9’ million / Diluted EPS of $3.25" Y Strong Loan Growth + $349 million or 19% (Excl. PPP Loan Forgiveness Activity) Y Asset Quality Metrics Remain Strong * Allowance to Loan Losses (ALL) to Total Loans Ratio of 1.17% + Net Charge-Offs (NCO) of $162 thou
Slide 14: Dividend Trend
Dividend Trend $0.24 $0.22 556, 18 6% $0.20 sors INCREASE $0.16 $0.14 $0.12 $0.10 $0.08 $0.06 $0.07 $0.04 12 3 4 5 6 7 8B 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 26 25 26 27 28 29 30 31 32 33 May 2015 May 2023, * 33 consecutive quarterly dividends since May of 2015 * Dividend has increased 10 ti
Slide 15: Financial Report
Financial Report Neelesh Kalani Chief Financial Officer 15 OrrSTOWN FINANCIAL SERVICES, INC.
Slide 16: Phases of Growth
Phases of Growth Phase 2 Phase 3 2022-2023 Post 2023 ACQUISITIONS ORGANIC GROWTH KEY HIRES ORGANIC GROWTH BUILD EFFICIENCIES KEY HIRES ORGANIC GROWTH ACQUISITION BUILD EFFICIENCIES Market Expansion: Market Expansion: Market Expansi "= Invest in customer facing = Continue to Invest in customer talent
Slide 17: 2022 Financial Highlights
2022 Financial Highlights > Modest Growth in Assets - $88 million, or 3.1% * Utilized excess cash at the end of 2021 to support loan growth of $173 million, or 9% = Excluding PPP forgiveness, total loans grew by $349 million or 19% Y Commercial loan growth - $300 million or 21% Y Consumer loan growt
Slide 18: 2022 Financial Highlights
2022 Financial Highlights L > Adjusted Net Income $34.8' million / Diluted EPS of $3.25 * — 3Q22 included a provision of $13 million for a litigation settlement and $3.2 million for restructuring to improve long-term growth and operating efficiencies * Inclusive of the one-time charges, Net Income w
Slide 19: Enhanced Profitability Levels
Enhanced Profitability Levels Earnings Growth + Return on Average Assets & Equity + $3.25 14.25% $2.96 11.65% 12.12% 12.54% eet 10.24% te ——, —— 1.22% $2.49 = 1.08% 1.04% 1.14% $2.28 0.90% $27 1.80 : $240 2018 2019 2020 2021 2022 $153 —e-ROAE —e-ROAA Net Interest Income and Net Interest Margin 3.81%
Slide 20: Strong Loan Growth
rong Loan Growth Loans ($ in millions) 2022 Loan Composition * CRE, Nee ‘Multi-Family. Total Loans: Owner oe $2.28 Occupied Non-Owner $2,162 28% a ‘oausied $1,992 $1,989 ee CRE - Owner 5% $1,654 Cait Commercial & $14 we OF industriat $1,251 17% Acquisition & = Development other Residential 1% ee 8%
Slide 21: Focus on Growing Core Deposits
Focus on Growing Core Deposits Deposits ($ in millions) 2022 Deposit Composition * $2,357 $2,465 $2,476 $1,876 $1,559 $1,961 fm 92,163 $1,175 2018 2019 2020 2021 2022 Core Deposits Time Deposits 12% 17% Total Deposit Total Core CAGR Deposit CAGR jateas of December 31, 2022. Money Markets 40% Savings
Slide 22: Diversified Revenue Streams
Diversified Revenue Streams Non-Interest Income ($ in millions) * Focus on “Value Added” Fee Income . . $28.5 $28.3 $29.2 * Gain market share in growth markets $27.0) $21.9 v Wealth Management v Mortgage Banking * AUM at Year-End - $1.7 billion * Seek Swap Fee opportunities 2018 2019 2020 2021 2022
Slide 23: Operational Efficiency
Operational Efficiency Continue to monitor and improve upon our processing efficiencies: * Initiatives to enhance Technology and automate processes + Designed to further increase efficiencies from both a cost and workflow perspective + Provide a better level of service both internally and externally
Slide 24: Summary Financial Overview
Summary Financial Overview = a rT [Total Gross Loans* 1,251 1,654 1,991, 1,989 2,162 9% 15% ee | 1L- Includes PPP loans, 2- Non-GAAP agjustmentsfo ges. Please refer tothe appendix for addtional information.
Slide 25: Areas of Focus in 2023
Areas of Focus in 2023 Thomas R. Quinn, Jr. President & CEO 25 OrrSTOWN FINANCIAL SERVICES, INC.
Slide 26: Areas of Focus in 2023
Areas of Focus in 2023 Relationship Banking Model in Focus Manage Margin Effectively with Disciplined Pricing Strategy Maintain Credit Quality Levels Technology Initiatives / Digital Transformation Process Automation Initiatives Deposit Retention and Growth Emphasize Additional Fee Income Opportunit
Slide 27: Conduct Meeting Business
Conduct Meeting Business Joel R. Zullinger Chairman of the Board OrrSTOWN FINANCIAL SERVICES, INC.
Slide 28: Thank You for Being a Loyal Shareholder
2023 Annual Shareholder Meeting Thank You for Being a Loyal Shareholder OrrSTOWN FINANCIAL SERVICES, INC.
Slide 29: 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 used by the Company, are determined by methods other than in a. Additionally, the Company incurred $3.2 mil
Slide 30: Non-GAAP Financial Measure Reconciliation
Non-GAAP Financial Measure Reconciliation Efficiency Ratio (Non-GAAP) 2022 2021 2020 2019 2018 (Presented In Millions) Net Interest income s 6S 870 $ 36 $ 693 $ 522 Plus Nondnterest Income 27.0 292 283 285 21.0 Total Revenue (A) S166 $ 1164_$ 1119 $ 78 § 32 Non-Interest Expense s 958 741 $ 741 $ 73:
Slide 31: Non-GAAP Financial Measure Reconciliation
Non-GAAP Financial Measure Reconciliation NetIncome / Diluted EPS / Ratios 2022 2021 2020 2019 2018 (Presented ly Millionsexcept for Diluted EPS) Average Assets S 28448 S 2848 S$ 26458 S 22251 $ 1.7108 ‘Average Equity 2443 2622 2289 206.0 149.7 Netincome (GAAP) $ 20 $ 329 $ 25 8 16.9 $ 128 ‘Add Liti
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