Orrstown Financial Services, Inc. · NASDAQ:ORRF
Orrstown Financial Services — Q2 2024 Earnings Presentation
27 slides from Orrstown Financial Services's earnings presentation, Jul 30, 2024
Slide 1: Investor Presentation Second Quarter 2024
ORRSTOWN Financial Services, Inc. Investor Presentation Second Quarter 2024
Slide 2: Cautionary Note Regarding Forward Looking Statements | Non-GAAP Disclosures
Cautionary Note Regarding Forward Looking Statements | Non-GAAP Disclosures Forward-Looking Statements This presentation contains “forward-looking statements” within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. Forward-looking statements reflect the current v
Slide 3: Financial Highlights and Franchise Overview
ial Services, In Financial Highlights + $3.2B $2.3B $2.7B 3.54% $2.1B Assets Loans Deposits NIM? AUM 1.09% 12.88% 64.6% 21.6% $293MM 0 cara ROAA 2 ROAE ? Efficiency Feelncome Market Se ee a Ratio 2 / Op. Cap carl gy @0°0 Revenue ok Go Franchise Overview + r) ° Lancto ‘Chambersburg York + Founded in
Slide 4: Track Record of Profitable Growth
Track Record of Profitable Growth Acquired First + Entered Baltimore 3,200+ ginated 3350+ PPP + Loan Growth of - Community Bank of market s "paycheck Protection loans totling52 $349MM or 19% (x Mercersburg of Hamilton Bancorp Program (PPP) loans + Abrigo loan origination system insta $155MM or 7.3%
Slide 5: Focus on Growth
ACQUISITIONS ORGANIC GROWTH KEY HIRES Market Expansio + Investin customer facing talent and infrastructure Branch Optimization: + Closed 14 branches since 2019 = Currently have 26 branches Acquisitions: = First Community Bank of Mercersburg = Hamilton Bank Focus on Revenue Growth: = Deploying excess
Slide 6: Geographically Diverse Markets
ng Geographically Diverse Markets Relationship Banking Model v Three geographic regions pre- merger; added fourth York and Adams County region in the merger Franklin & land Defend Market Share Harrisburg & West Shore Growth Market Lancaster/ Berks Growth Market v Markets connected by significant hig
Slide 7: Loans and 2Q24 Loan Composition
Loans ($in millions) 2Q24 Loan Composition + spasi $2,298 $2,347 bee E occupied CRE 1,980 1,980 ” : $ owner 30% $1,644 occupied CRE 16% Sigal $1,870 Vieldon Multi-family Sa Acquisition & y 7% development Loans: Non-owner 7% 6.17%? ROY occupied 2018 2019 2020 2021 2022 2023 2024 residential Other 4%
Slide 8: Focus on Core Deposits
Focus on Core Deposits Deposits ($ in millions) 2024 Deposit Composition + 2,702 $2,465 $2,476 $2,559 s Money $2,357 s Markets $1,876 Interest DDA, 23% $1,559 37% i Cost of Total Deposits: . $1,961 $2,152 fi $2,213 pee Deposits: Savings $1,175 fig $2,356 2.26%2 6% Time 2018 2019 2020 2021 2022 2023
Slide 9: Diversified Revenue Streams
Diversified Revenue Streams + $2.1 billion in assets under management as of June 30, 2024 * 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 4 21% 2Q24 YT
Slide 10: Operational Efficiency
Operational Efficienc Our current focus is on implementing processing efficiencies and optimizing results: * Efficiency ratio declined from 79% for the year ended December 31, 2018 to 65% 1 for the quarter ended June 30, 2024 * Technology enhancements and process automation initiatives designed to f
Slide 11: Disciplined Underwriting and Risk Management
der ng and Risk Managemen Disciplined Strong Historical Performance * Conservative underwriting approach ose 0.70% supported by strong asset quality metrics * Recently tightened credit policy on select 0.27% ; 26% segments 0.02% (0.01%) 0.00% 0.01% 0.03% 0.01% a HN ele * Credit analysis for both new
Slide 12: Enhanced Profitability Levels
Enhanced Profitability Levels Earnings Growth ? Return on Average Assets & Equity * 15.06% 14.25% 13.33% $351 ss 193 $3.25 8.56% + - i $2.96 ee 1.22% 1.22% 4 . « $2.40 $34.8 sae 0.75% 0.76% $329 caso 5161 2018 2019 2020 2021 2022 2028 = 2Q24YTD —ROAE —e-ROAA So $179 $128 Net Interest Income and Net
Slide 13: Earnings Driving Capital & Dividend Growth
Earnings Driving Capital & Dividend Growth Tangible Book Value per Share (“TBVPS”) + Tangible Common Equity and TCE/TA % $27.12 $28.57 8.2% 8.3% — 82% 8.9% % 8.1% g2i72 52485 $22.76 2 2 3 7.1% 8.09 1 $17.24 $18.76 $250 $245 fm 9258 s198 9223 $208 $16.73 $17.65 $19.93 ff $22.32 9 $19.47 I $23.03 ff $
Slide 14: Right People, Aligned for Success
Right People, Aligned for Success Joined Name le Experience ORRF ste . ThomasR. Quinn, Jr. President & CEO 33 years 2009 Significant Experience Craig Kauffman EVP /Chief Operating Officer 39 years 2024 * Average 30 years of banking experience, mostly from Neelesh Kalani EVP/Chief Financial Officer 1
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) * Continue with a disciplined growth mentality Balance sheet neues * Improve balance sheet mix through cross selling efforts optimization * Grow deposits to limit reliance on other funding sources * Remain well capitalized with retained earnings supportin
Slide 17: Investment Highlights
Investment Highlights Commanding Position in Attractive and Diverse Markets Established Track Record of Profitable Growth through Relationship Banking Model Diversified Revenue Streams High Quality Core Deposit Base Balance Sheet Well-Positioned for Changing Rate Environments Disciplined Underwritin
Slide 18: Appendix A: Merger of Equals With Codorus Valley Bancorp
Appendix A ORRSTOWN Financial Services, Inc. Merger of Equals With Codorus Valley Bancorp, Inc. Completed July 1, 2024 Note: The slides in Appendix A are from the Investor Presentation filed with the SEC on December 12, 2023.
Slide 19: Creating a High Performing Community Banking Franchise
Creating a High Performing Community Banking Franchise Pineal Series Ta PReTOWN CODORUS OrrsTown COPORY BANCORP, INC. Significantly Enhanced Scale" $5.3B $4.0B $4.5B Assets Loans Deposits $2.7B S460M+ AUM Market Cap Peer Leading Performance’ 150% ~20% ~49% 2025 ROAA 2025 ROATCE 2025 Efficiency Compe
Slide 20: Commanding Positions in Attractive and Diverse Markets
Commanding Positions in Attractive and Diverse Markets CODORUS VALLEY BANCORP, INC. ORRSTOWN Financial Services, Inc. Regional Breakout Community Bank Deposits in PA and MD? Hy New Headquarters @ ORRF Branches (21) @ CVLY Branches (30) S&q Bancorp Univest Forbright Shore Bancshares Peoples Financial
Slide 21: Pro Forma Financial Impact
2 . ORRSTOWN CODORUS Pro Forma Financial Impact Finanehl Serices,Ine. WAULEY Financially compelling transaction with significantly increased profitability GAAP Metrics [i= Non-GAAP Metrics” GAAP Metrics’ ze (Excl. AOCI & Rate Marks) (Excl. CECL Day-2 Double Count) == Earnings ~21% ~46% ~8% ~25% ~19%
Slide 22: Potential for Significant Shareholder Value Creation
Potential for Significant Shareholder Value Creation RRSTOWN CODORUS OrrsTown COPORY Financial Services, Inc. g\ntonpinc, Spiaare Th SS ORRSTOWN / coponus Financial Services, Inc. VALLEY —————e BANCORP.INC Profitability 2025E GAAP? 2025E Cash? ROAA 1.50% 1.29% ROAE 16.3% 14.0% Net interest margin 4.
Slide 23: Merger Benefits All Stakeholders
ODORUS a RRSTOWN ©! Merger Benefits All Stakeholders ORRSTOWN VALLEY BANCORP, INC. v y v v Shareholders fopeXe) v =) = < Clients va v @ v v Employees g v | Community v Materially accretive to each entity’s EPS, ROA and ROE Pro forma market capitalization enhances shareholder liquidity Significant up
Slide 24: Appendix B: Reconciliation of Non-GAAP Measures to GAAP Results
Appendix B: 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 un
Slide 25: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation Net Income / Diluted EPS / Ratios (Presented In M ilionsexcept for Diluted EPS) Average Assets S$ 31549 5 32118 2995 5 2948 § 2eM48 5 2658 $ 22251 § 17106 Average Equity 2705 2728 243.3 2443 2522 228.9 206.0 149.7 Net income (GAAP) $ 163 $ 17 $ 367 $ 20 $ 29 $ 25 § 16
Slide 26: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation Efficiency Ratio (Non-GAAP) zazayTD = 20240TD (Presented h Million Net interest Income 8 530 S 261 § 1049 § m6 S 870 § 6 § 693 § 522 Plus Nor-interest Income 138 72 257 2.0 29.2 28.3 28.5 21.0 Total Revenue (A) g 66.8 § 333_$ 130.6_$ 126.6 $ 116.1 $§ 119 $ 7.8 732 Non
Slide 27: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation Tangible Book Value (Non-GAAP) 2a2vTD 2024Q7TD (Presented in Millionsexcept for Tangible Book Value Per Share) Total Shareholders’ Equity (GAAP) 8 784 § 784 § 2651 § 2289 § IT § 2452 § 232 § 1734 Less Goodwill a7) (18.7) (187) a7) (18.7) (18.7) (1a.9) (12.6) Less Inta
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