Orrstown Financial Services, Inc. · NASDAQ:ORRF
Orrstown Financial Services — Investor Presentation (May 2021)
34 slides from Orrstown Financial Services's investor presentation, May 18, 2021
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 ORRSTOWN FINANCIAL SERVICES, IN Since 2015, Orrstown has invested in markets with higher density, higher household wealth, and strong growth to drive future expansion and enhance geographic diversification. Orrstown has made significant investme
Slide 4: Company Overview—Business Model
Company Overview—Business Model Geographic Focus Driven by Relationship Banking Model + Fourgeographic regions: Market Presidents have full ae Ne thea authority and autonomy (within ERM guidelines) ‘ d et Letterkenny Wi Market Presidents are all seasoned best-in-class bankers + Markets connected by
Slide 5: Company Overview—Product Suite Provides Expansion Opportunity
Company Overview—Product Suite Provides Expansion Opportunity Insurance (e.g. key man coverage) Construction Credit Cards COMMERCIAL BANKING INVESTMENTS & TRUST MORTGAGE BANKING PERSONAL BANKING + Cd and CRE Lending + Wealth Management + Fixed-rate and Adjustable Mortgages Depostt Products and Servi
Slide 6: 2021 / 2022 Strategic Focus: Optimizing Results
2021 / 2022 Strategic Focus: Optimizing Results SBA PPP portfolio provides significant earnings contribution: * Approximately $516.9 million in gross PPP loans as of March 31, 2021. * As of March 31, 2021, 22% or $3.0 million of net SBA PPP processing fees from 2020 vintage PPP loans are unearned. A
Slide 7: 2021 / 2022 Strategic Focus (continued)
2021 / 2022 Strategic Focus (continued) Investments in Revenue Producing Talent: * Committed to additional investments in client-facing bankers as we grow our relationship banking model, particularly in our newest markets Expand use of Technology: * Continue to assess and adapt accordingly to changi
Slide 8: Company Overview—Balance Sheet Mix
Company Overview—Balance Sheet Mix Deposit Mix (3/31/2021) MMDA & Savings, 26.3% Retail CDs, 12.7% EE bumbo cos, 2.05 Now, 36.9% DDA, 21.5% Balance Sheet Management to Defend Net Interest Margin — Utilize excess cash to fund commercial relationship loans Loan Mix (3/31/2021) Residential Mortgage, 11
Slide 9: Company Overview—Revenue Mix
Company Overview—Revenue Mix— Net Interest Noninterest Wealth Income, Income, Managemen 74.3% 25.7% £,9.3% Other Income, 27% Interchange Income, 3.2% Opportunity to gain market share in new markets — Wealth management and mortgage not yet to scale in newer markets — Look to recruit wealth management
Slide 10: Right People and Aligned for Success
Right People and Aligned for Success Name/Title Joi Eipeticnoe ORE Significant Experience ented for Profi ity Thomas R. Quinn, J. a Average 27 years of banking experience + Pay for profitability, not growth years 2009 President & CEO Neelesh Kalani 16 Average 10 years tenure at Orrstown * Short term
Slide 11: Built to Serve the Communities
Built to Serve the Communities Employees Clients & Pros, Initiated work-from-home (“WFH") protocol on 3/18/2020 , 67% of employees telecommuted as mandated by authorities First COVID-19 communication on March 12, 2020 and regular cadence of frequent ‘communication continues Seen as community leader
Slide 12: COVID Modification Experience
COVID Modification Exper 5250 160% 140% $200 hos an 10.0% 2.0% $100 60% a 40% 20% 30 0.0% 03/20 06/20 09/20 12/20 03/21. ME Covid Modifications | —Covid Mods As% of nen-PPPLoans Non Guarantee Exposure as of March 31, 2021 * Total COVID-19 loan deferrals of $7.5 million at March 31, 2021. $2.2 millio
Slide 13: Paycheck Protection Program
Paycheck Protection Program + Success in PPP serves as “proof of concept” for future growth in newer markets * Prior hires of commercial lenders and access to new clients were crucial to PPP volume 2020 PPP Vintage + 3,200 PPP loans in 2020 totaling $467.7 million + 66% to new clients of the Company
Slide 14: Value Proposition
Value Proposition As a Percentage of Peers! | Orrstown | Orrstown Average Assets Q4 2020 Qi 2021 Recent Market Peformance (a 0f05/142021) INet Interest Income 1.97 3.47 3.09 SES HEGEL” Pinel Teme ieee -Loan Loss Provision 014 0.04 (0.14) scat eel Pen [eit (Btieed Tea Pee u Vale “Yield Earmiigs = EPS
Slide 15: Performance Ratios
rmance Ratios Growth Growth Profitability Ratios 2016 2017 2018 1Year 3 Year ME ‘Reported IPre-tax Pre-provision Income 81 134 152 205 378 84% 182% 11.6 Pre-taxPre-provision Inc/AvgAssets 0.61% 0.90% 0.89% 0.92% 1.43% 1.64961 Pre-tax Pre-provision Inc / Avg 5.9% 9.5% 10.2% 10.0% 16.7% 18.6% Efficien
Slide 16: For Additional Information
or Additional Information Thomas R. Quinn, Jr. President & CEO tquinn@orrstown.com 717-530-2602 Neil Kalani Chief Financial Officer nkalani@orrstown.com 717-510-7097 Matthew C. Schultheis, CFA Investor Relations mschultheis@orrstown.com 717-510-7127
Slide 17: Appendix and Supplemental Information
Appendix and Supplemental Information ORRSTOWN FINANCIAL SERVICES, INC.
Slide 18: Five Year Trends: Summary Financials
Five Year Trends: Summary Financials gel wel Pa a ae ee eos Fe Tr Tocaniateat vs ncn Ro re er SS a se rm ea ee ee jecuemeees ee ee aang ene eee er es aa es Fn es a a oy esaeenes a a a RT peer a a ans SonosT2 soamane sigusee sissaeca —suatesne tom fg ety es ne eT oan aS ST TS ener a pats FS TESTE EST
Slide 19: Five Year Performance Ratios
(Percent unless indicated) 2020 2019 2018 2017 2016 Performance Ratios: Return on average assets 1.00 0.76 0.75 0.54 0.50 Return on average common equity 11.66 8.21 8.56 5.73 4.80 Yield on average interest-earning assets 4.09 459 4.20 3.90 3.61 Rate on average interest-bearing liabilities 0.80 1.35
Slide 20: Five Quarter Trends: Summary Financials
Five Quarter Trends: Summary Financials Wars n thousands unecs nists) 0324 +2720 03120 05720 03120 Results of Operations: Tex-equivalentinterestincome $24,125 $25617 $24,423 $25,282 $24,164 Interest expense 2074 2697 3,398 4726 5,708 Tex-equivalentnetinterestincome 22081 23920 21,05 21,028 18,489 Te
Slide 21: Five Quarter Trends: Key Performance Indicators
Five Quarter Trends: Key Performance Indicators (Percent unless indicated) 03/21 12/20 09/20 06/20 03/20 Performance Ratios: Return on average assets! 1.44 147 0.72 0.94 0.86 Return on average common equity’ 16.31 17.01 8.67 11.82 8.96 Yield on average interest-earning assets! 3.70 415 3.76 4.05 446
Slide 22: Performance Trends
Performance Trends Reported: Net Interest Margin (%) Reported: Net Interest Margin (%) ago 8715 269 a. = 4.00 3.60 aaa 350 340 3.20 335 336 sa om 300 346 ae 250 220 200 2016 2017 2018 2019 2020 03/20 05/20 09/20 12/20 03/2 a ORR me Peers eon ePeers Net interest Margin (2 (1) Netinterest Ma 1 4.00 40
Slide 23: Performance Trends (Continued)
Performance Trends (Continued) Reported: ROAA (4 200 13 120 110 “ it 1.00 034 100 0.80 0 050 og 0.60 0.00 040 03/20 06/20 09/20 apo 03/2 2018 2017 2018 2018 2020 monn me Peers en ORRF y= Peers Reported: ROAE (6) ‘Reported: ROAE (24) 1400 1186 20.00 1200 1107 1631 10.00 1500 8.00 me 10.00 4.00 5.00 2
Slide 24: Capital Trends
Capital Trends Leverage Ratio (4 og 2238 9.00 850 8.00 750 2016 2017 2018 2019 ee oRRF Peers 2020 Leverage Ratio (9) 391 03/20 06/20 09/20 12/20 03/21 ee oRRF Peers 138 2016 2017 2018 2019 Tier 1 Ratio (%) ee oRRF Peers 2020 ORRSTOWN FINANCIAL SERVICES, INC. ier 4 Ratio (9 4 135 3 25 2 us u 105 10 1
Slide 25: Asset Quality Trends
Asset Quality Trends er oRRF ee Peers wna ee = 0.69 1.00 ‘cai 087 054 ost 027 034 027 Aa mE: oa 0.00 0.00 2016 2017 2018 03/20 06/20 09/20 12/20 03/21 a Seal pi 2.00 = ‘121 123 1.23 +0 Lica 1.00 — LiL ——— — = ws 2016 2017 2018 03/20 06/20 09/20 12/20 03/21 en oRRF Peers ORRSTOWN FINANCIAL SERVICES,
Slide 26: Income Statement Trends
Income Statement Trends dollar: Growth Growth in mi Income Statement 2016 2017 +2018 2019 2020 1Year 3 Year Net Interest Income 36.5 43.8 52.2 69.3 83.6 21% 91% Non-Interest Income 18.3 18.8 20.0 23.8 28.3 19% 51% Net Securities Gains 1.4 1.2 1.0 47 0.0 -100% -101% Total Revenue 56.3 63.8 73.2 97.8
Slide 27: Balance Sheet Trends & Select Loan Metrics
Balance Sheet Trends & Select Loan Metrics dollars in millions Growth Growth Loan Portfolio Mix 2016 2017 2018 2019 2020 1Year 3 Year Total Gross Loans 886 1,016 1,251 1,654 1,991 20% 96% Residential Mortgage 16% 16% 19% 20% 12% Home Equity 15% 14% 12% 11% 8% Other Consumer 1% 2% 3% 3% 1% Total Cons
Slide 28: Capital Adequacy
Capital Adequa Growth Growth 1Year 3 Year Tier 1 Capital 127.0 138.8 160.1 196.5 217.6 11% 57% Tier 2 Capital 12.0 13.6 46.9 47.6 53.6 13% 294% Total Regulatory Capital 139.0 152.4 207.0 244.0 271.2 11% 78% Tier 1 Leverage Ratio 9.3% 9.0% 8.4% 8.6% 8.1% Common Equity Tier 1 Ratio 13.3% 12.1% 12.0% 1
Slide 29: ESG Initiatives and Focus
ESG Initiatives and Focus General Philosophy Environmental responsibility is in alignment with strong business practices and our core values. Being good stewards of the environment, reducing energy consumption and eliminating waste through proactive and conscious planning reduces costs, enhances our
Slide 30: Summary Financial Trends
Summary Financial Trends dollars in millions (except for per share information) Summary Trends (as of and for the year ended December 31, ) rangible Book Value / Share* 16.15 17.22 16.73 17.66 19.93 13% 16% [Diluted Earnings / Share 0.81 0.98 1.50 161 2.40 49% 145% idend / Share 0.35 0.42 0.51 0.60
Slide 31: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation APPENDIX - Supplemental Rey Reconciliations Management believes providing certain “non-GAAP” financial information willassist investors in their understanding of the effect of certain activity on reported results, particularly to overcome comparability issues related
Slide 32: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation C (Sin millions, except per share data) Non GAAP Financial Measure Reconciliation Reporied 2016 2017 2018 2019 2020 365 438 522 693 836 Plus Non-Interest Income: 197 199 210 285 283 56.3 63.8 732 97.8 111.9) Net Interest Income Total Revenue (A) Efficiency Roti [B / A
Slide 33: Efficiency Ratio Reconciliation
Efficiency Ratio Reconciliation EFFICIENCY RATIO RECONCILIATION (ANNUAL): 2020 2019 2018 2017 2016 Non-interest expense 74,080 7,300 57,935 50,330 48,140 Net interest income 83,607 69,295 52,156 43,809 36,545 Non-interest income 28,309 28,539 21,024 19,949 19,739 Totalrevenue 111,916 97,834 73,180 6
Slide 34: 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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