Orrstown Financial Services, Inc. · NASDAQ:ORRF
Orrstown Financial Services — Shareholder Meeting (May 2014)
41 slides from Orrstown Financial Services's shareholder meeting presentation, May 1, 2014
Slide 1: Annual Shareholder Meeting April 29, 2014
ORRSTOWN FINANCIAL SERVICES, INC. A Tradition of Excellence Annual Shareholder Meeting April 29, 2014
Slide 2: Forward Looking Statement
Forward Looking Statement Certain statements we may make today may constitute “forward looking statements” under the Private Securities Litigation Reform Act of 1995. Orrstown Financial’s actual results may differ significantly from the results discussed in such forward-looking statements. Factors t
Slide 3: Conduct Meeting Business
ORRSTOWN FINANCIAL SERVICES, INC. A Tradition of Excellence Joel Zullinger Chairman of the Board Conduct Meeting Business
Slide 4: Rules of Conduct
Rules of Conduct In the interest of an orderly Meeting of the Shareholders of Orrstown Financial Services, Inc. (the “Company”), we ask you to honor the following rules of procedure: Shareholders should not address the Meeting until recognized by the Chairman of the Meeting. Upon recognition by the
Slide 5: Rules of Conduct
Rules of Conduct Shareholders should confine comments to one subject at a time in order to give other shareholders an opportunity to speak on that subject. Please permit the speaker to conclude his or her remarks without interruption. A shareholder will be permitted up to two minutes to address the
Slide 6: Rules of Conduct
Rules of Conduct The views, constructive comments and criticisms of the shareholders are welcome, but the purpose of the Meeting will be observed. The Chairman will stop discussions that are: Irrelevant to the matter under consideration Proposals related to the conduct of the Company’s ordinary busi
Slide 7: Conduct Meeting Business
ORRSTOWN FINANCIAL SERVICES, INC. A Tradition of Excellence Joel Zullinger Chairman of the Board Conduct Meeting Business
Slide 8: Management Report
ORRSTOWN FINANCIAL SERVICES, INC. A Tradition of Excellence Thomas R. Quinn, Jr. President & Chief Executive Officer Management Report
Slide 9: Management Report Agenda
Management Report Agenda 2013: Summary of performance Update on last year’s objectives Financial review Primary focus for 2014 Questions from our shareholders
Slide 10: 2013: Summary of Performance
2013: Summary of Performance Returned to full-year profitability Many regulatory issues resolved Safe and sound footing Poised for growth Will restore dividend as soon as able
Slide 11: 2013 Priorities: Status Report
2013 Priorities: Status Report Enterprise risk focus Regulatory progress Sustainable earnings quarter over quarter Enhance earnings through loan growth Strategic investments in technology Reinforce the Orrstown Bank brand Enhance shareholder value Expense control Restore dividends Build a diversifie
Slide 12: 1: Enterprise Risk Management
1: Enterprise Risk Management
Slide 13: 2: Regulatory Progress
2: Regulatory Progress SL
Slide 14: 3: Earnings
3: Earnings Sustainable earnings quarter over quarter
Slide 15: 4: Earnings
4: Earnings Enhance earnings through loan growth Commercial Lending growth (Q1 2014) Strong year for Retail Banking Another strong year for the Mortgage Unit Another record revenue year for OFA
Slide 16: 5: Strategic Investments
5: Strategic Investments Technology Operations and infrastructure Support safety and soundness
Slide 17: 6: Reinforce the Orrstown Brand
6: Reinforce the Orrstown Brand More efficient marketing spend (optimize delivery channels) Year over Year reduction of ~$500,000 VIDEO PLAYS: “(0:30) Orrstown Bank TV Commercial, on the spot/retail banking”
Slide 18: 7: Enhance Shareholder Value
7: Enhance Shareholder Value
Slide 19: 8: Expense Control
8: Expense Control A
Slide 20: 9: Restore Dividends
9: Restore Dividends EE
Slide 21: 10: Balance Sheet
10: Balance Sheet Build a diversified and growing balance sheet
Slide 22: Summary Financial Review
Orrstown FINANCIAL SERVICES, INC. A Tradition of Excellence David P. Boyle Chief Financial Officer Summary Financial Review
Slide 23: Enhancing Shareholder Value
Enhancing Shareholder Value $16.35 price per share 70% increase in 2013 Y/E 2011 Y/E 2012 Y/E 2013 $8.25 $9.64 $98% increase over two years
Slide 24: 2013: Return to Profitability
2013: Return to Profitability (net income in millions) $13.37 $16.58 2011 2012 $10.00 2009 2010 2013 $19.0 goodwill $20.2 DTA (yet to be reversed) impairment) -$31.96 -$38.45
Slide 25: 2013: Financial Recap
2013: Financial Recap For the Year Ended December 31, Balance Sheet 2013 2012 2011 Assets $ 1,177,812 $ 1,232,668 $ 1,444,097 Loans 672,973 711,601 967,993 Deposits 1,000,390 1,085,039 1,216,902 Total shareholders equity 91,439 87,694 128,197 Trust Assets Under Management—Market Value 1,085,216 992,
Slide 26: 2013: A Transition Year
2013: A Transition Year For the Quarter Ended For the Year Ended For the Quarter Ended 03/31/13 06/30/13 09/30/13 12/31/13 12/31/13 03/31/14 Operating Highlights Net Income 1,560 3,408 2,109 2,927 10,004 1,978 Diluted Earnings Pershare 0.19 0.42 0.26 0.36 1.24 0.24 Return on Average Assets 0.53°% 1.
Slide 27: Capital Preservation and Balance Sheet Impact
Capital Preservation and Balance Sheet Impact 2011 2012 2013 Y/E Assets (000s) $1,511,722 $1,444097 $1,231,668 $1,177,812 Shareholders’ Equity $160,484 $128,197 $87,694 $91,439 8% Capital Requirement $120,938 $120,938 $120,938 $120,938 Capital Shortfall N/A N/A ($33,234) ($29,499) *internal capital
Slide 28: Update: Operation Bottom Line
Update: Operation Bottom Line Goal Results $5 Million expense reduction over two years: • Led by BOD 25% voluntary fee cut • No raises or bonuses for executive mgmt. • Right-sizing of organization to leverage efficiencies of 2013 technology investment • $3.5 realized million by 12/31/13 • $1.2 milli
Slide 29: Disciplined Expense Control
Disciplined Expense Control *less $19.5 MM Goodwill impairment expense Total Non-Interest Expense (in millions) $42.47* $43.35 $43.25 2011 2012 2013
Slide 30: Loan Portfolio Breakdown
Loan Portfolio Breakdown 50% Acquis. & Devel 5% 3 5% 4 10% Residential Mort. 29% Other 1% 2012 1 49% Acquis. & Devel 3% 3 5% 4 9% Residential Mort. 33% 2011 Residential Mort. 23% CRE 53% Muni 6% 2011 2013 1 Other 1%
Slide 31: Funding Composition
Funding Composition 3 7% 4 20% 5 9% Brokered Money 11% Noninterest bearing 11% 2 44% 3 8% 4 18% 5 8% (12/31/11) A Core Funded Franchise 2 42% Brokered Money 11% Noninterest bearing 11% 2 42% 3 6% 4 20% 5 12% Brokered Money 11% Noninterest bearing 11%
Slide 32: Noninterest Income
Noninterest Income 26% Mortgage Banking 14% Merchant Processing 1% Securities Gains 21% Other 11% Charges on Deposits 24% 2 22% 3 11% 4 7% 5 23% Other 13% Strong & Stable Diversified Non-Interest Income Charges on Deposits 27% 2 38% 3 17% 5 2% Other 11%2013 2012 Charges on Deposits 27% Trust / Broke
Slide 33: 2013: The Year in Review
2013: The Year in review 12/31/13 Capital Ratios (%) 16.0% 14.0% 1 2.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% 13.70% 13.87% Key Red Line Exceed all internal policy target limits Blue Line Regulatory definition of well capitalized Tier 1 Leverage Ratio Total Risk-Based Ratio Tier 1 Risk-Based Ratio 12/31/20
Slide 34: Enhancing Shareholder Value
Enhancing Shareholder Value $16.35 price per share 70% increase in 2013 Y/E 2011 Y/E 2012 Y/E 2013 $8.25 $9.64 $16.35 98% increase over two years
Slide 35: Management Report
Orrstown FINANCIAL SERVICES, INC. A Tradition of Excellence Thomas R. Quinn, Jr. President & Chief Executive Officer Management Report
Slide 36: 2014 Priorities
2014 Priorities Continue to Work with Primary Regulators to Remediate few remaining matters Build a Diversified and Growing Balance Sheet Revenue Growth Improve our Efficiency Ratio Orrstown
Slide 37: 2014 Priorities
2014 Priorities Leverage Data and Technology Retail enhancements New delivery channels Simplified product line Focus on fee income generation Obtain greater share of customers’ business Restore dividends
Slide 38: Conduct Meeting Business
Orrstown FINANCIAL SERVICES, INC A Tradition of Excellence Joel Zullinger Chairman of the Board Conduct Meeting Business
Slide 39: The Floor is Open for Questions
Orrstown FINANCIAL SERVICES, INC A Tradition of Excellence The Floor is Open for Questions
Slide 40: Thank You
Orrstown FINANCIAL SERVICES, INC. A Tradition of Excellence Annual Shareholder Meeting Thank You
Slide 41: VIDEO PLAYS: (2:54) closing video-Orrstown Bank “on the spot” employee montage
VIDEO PLAYS: (2:54) closing video-Orrstown Bank “on the spot” employee montage
Orrstown Financial Services — Shareholder Meeting (May 2014) on 6ix