Orrstown Financial Services, Inc. · NASDAQ:ORRF
Orrstown Financial Services — Investor Presentation (December 2020)
34 slides from Orrstown Financial Services's investor presentation, Dec 2, 2020
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 Since 2015, Orrstown has invested in markets with higher density, higher household wealth, and strong growth to drive future expansion and enhance geographic diversification. 2020 5 Year | 2020 Median 2020 Households Proj. Gr. HHI Businesses |Ge
Slide 4: Geographic Focus Driven by Relationship Banking Model
o Westminster 2 ©. este wet case bY . Green Vale amass Balignore’ heck cen Ciyg eS)” Dundee Gerttaigen? ‘Yoiney cbiasbure Geographic Focus Driven by Relationship Banking Model Four geographic regions: Market Presidents have full authority and autonomy (within ERM guidelines) Market Presidents are al
Slide 5: Products and services by business line
vides Expa COMMERCIAL BANKING INVESTMENTS & TRUST C&I and CRE Lending + Wealth Management + Treasury Management * Retirement Planning + Small Business Lending + Estate Planning + SBA Lending + Trust Services Insurance (e.g. key man coverage) Personal and Home Equity Loans and Lines of Credit Auto Lo
Slide 6: Company Overview—Balance Sheet Mix
Company Overview—Balance Sheet Mix Deposit Mix Loan Mix (9/30/2020) (9/30/2020) State& Municipal Other , Construction Jumbo CDs, 2.9% 1% 4% 2% Consumer/HELOC Muttitamity a % 5% \ DDA, 18.2% \ Retail CDs, 15.7% \ \\ Residential Mortgage 20% (MMA & Savings, 26.6% NOW, 36.7% cre 20% Balance Sheet Manag
Slide 7: Company Overview—Revenue Mix—3Q
Company Overview—Revenue Mix—3Q Opportunity to gain market share in new markets — Wealth management and mortgage not yet to scale in newer markets — Focus on interchange income — Continue swap fee rollout ORRSTOWN FINANCI
Slide 8: Right People and Aligned for Success
Right People and Aligned for Success Thomas R. Quinn, J. President & CEO Thomas R. Brugger EVP/Chief Financial Officer Barbara E. Brobst EVP/Chief Human Resources Officer Robert G. Coradi EVP/Chief Risk Officer Philip E. Fague EvP/Trust and Wealth Management Robert Fignar EvP/Operations, Technology,
Slide 9: Employees
Employees Initiated work-from-home (“WFH") protocol on 3/18/2020 , 67% of employees telecommuted (more than 300), continue to follow all applicable requirements as COVID-19 cases increase in our markets Continuous (daily/weekly) employee communications throughout WFH period Re-emphasized availabilit
Slide 10: Serving the Community through Payroll Protection Program
Serving e Community through Payroll P PPP Results (at 9/30/2020) 3,163 loans $467.7 million = new PPP loans from new bank clients = new PPP loans from existing bank clients PPP results sourced from Small Business Administration's e-Tran reporting system OrrsTOwn F\ SERVICES, INC. ection Program KEY
Slide 11: Select Loan Concentrations
Select Loan Concent Select Loan Concentrations as of 10/31/2020: Active COVID-19 Deferralsas a ‘Asa Percentage of Risk-based Capital COVID-19 Deferralsas a Percentage of Category Percentage of Total non-PPP Loans Office 0% 65.6% 0% Multifamily Residential 0% 45.7% 0% Strip Center / Retail 0% 20.9% 0
Slide 12: Performance Ratios
rmance Ratios Growth Growth Profitability Ratios 2015 2016 2017 2018 1Year 3 Year ane ‘Reported IPre-tax Pre-provision Income 89 81 134 15.2 205 35% 152% 25.0 Pre-taxPre-provision Inc/AvgAssets 0.72% 0.61% 0.90% 0.89% 0.92% 1.3% Pre-taxPre-provision Inc/AvgEquity 6.8% 5.9% 9.5% 10.2% 10.0% 14.9% Eff
Slide 13: Value Proposition
Value Proposition As a Percentage of Peers! | Orrstown | Orrstown ase EES) Average Assets Q2 2020 Q3 2020 INet Interest Income 3.19 3.07 3.00 Reem Merketerbeomeee (nf 15030) -Loan Loss Provision 0.33 0.28 0.32 Market Dividend PriceLTM Estinntad Tangible Prem +Noninterest Income 0.97 1.06 0.99 — some
Slide 14: 2021 Strategic Focus: Optimizing Results in an Uncertain Environment
2021 Strategic Focus: Optimizing Results in an Uncertain Environmen SBA PPP portfolio provides significant earnings contribution: * Approximately $467.7 million in PPP loans as of 09/30/2020. * Asof Q3 2020, 70% or $9 million of SBA PPP processing fees are unearned. + Strategy is to retain portfolio
Slide 15: 2021 Strategic Focus (Continued)
2021 Strategic Focus: (Continued) Balance Sheet Optimization: * Protect margin through continued focus on relationship C&l and CRE clients while deemphasizing investments, wholesale funding and low margin mortgage Asset quality: * Proactive efforts to maintain superior asset quality with early ident
Slide 16: For Additional Information
or Additional Information Thomas R. Quinn, Jr. President & CEO tquinn@orrstown.com 717-530-2602 Thomas R. Brugger Chief Financial Officer tbrugger@orrstown.com 717-510-7131 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 si mss ws ne was peryrericiniramm TT TTT eee eo cr Ta Saar ea oC oT Porcine) ater aes SAR peters ed oaoe eS ests TT ia Con aie cen eae urea SSN aE) a or or tnd eter pre pe shre SST i a a Se Net rene (ose) ed per tare i an Se peenasiy rer ae porn LT TET Sines a rE
Slide 19: Performance ratios 2015-2019
(Percent unless indicated) 2019 2018 2017 2016 2015 Performance Ratios: Return on average assets 076 0.75 0.54 0.50 0.64 Return on average common equity 821 8.56 573 4.80 5.99 Yield on average interest-eaming assets 459 4.20 3.90 361 3.54 Rate on average interest-bearing liabilities 1.35 0.99 0.65 0
Slide 20: Five Quarter Trends: Summary Financials
Five Quarter Trends: Summary Financials (Dollars in thousands, unless indicated) 09/20 06/20 03/20 12/19 09/19 T ax-equivalent interest income (24,423 (25,252 24.164 24,225 25,044 Interest expense 3,398 4,224 5,705 6,087 6,757 T ax-equivalent net interest income 21,025 21,028 18.459 18,138 18,286 Ta
Slide 21: Five Quarter Trends: Key Performance Indicators
Five Quarter Trends: Key Performance Indicators (Percent unless infoate) 09/20 06/20 03/20 12119 09/19 Return on average assets 0.72 0.94 0.72 1.15 Return on average common equity 8.67 11.82 A 5 753 12.37 Yield on average interest-eaming assets 3.76 4.05 446 451 4.52 Rate on average interest-bearing
Slide 22: Performance Trends
Performance Trends Reported: Net Interest Margin (9) Core NIM —m™Purchase Accounting Accretion 400 378 a 374 3.80 3615 3.60 3.40 3.20 3.00 280 2016 2017 2018 2019 7D 09/20 ee oRRF Peers Netinterest Mar 4) 4.00 350 <9 o 03 21 023 3.00 250 2.00 = a5 3.35 3.33 3.22 aan 1.00 050 0.00 2016 2017 2018 2019
Slide 23: Performance Trends (Continued)
Performance Trends (Continued) Reported: ROAA (%) 120 1.00 0.80 0.60 040 2016 2017 2018 2019 yD er oRRF Se Peers Reported: ROAE (%4 1072 nee 12.00 1002 1900 847 ‘500 7 6.00 856 Ba. 833 400 aSp 5.73 2.00 0.00 2016 2017 2018 2019 7D 09/20 er oRRF Se Peers 150 1.24 tos Te 0.86 ase 1.00 1s 050 0615 om.
Slide 24: Capital Trends
Capital Trends Leverage Ratio (9) Leverage Ratio (9) 933 950 28 950 2.28 28 9.00 9.00 250 250 2.00 2.00 7a1— 762 — 781 750 750 2016 2017 2018 2019 7D 09/20 09/19 ays 03/20 06/20 09/20 ee oRRF Peers ee oRRF Peers 1238 1133 a 1133 112 105 105 10 10 2016 2017 2018 2019 YTD 09/20 09/19 wig 03/20 06/20 0
Slide 25: Asset Quality Trends
Asset Quality Trends 0.80 0.60 040 020 0.00 NPAs/ Assets (9 0.59 7 0.28 2016 2017 2018 2019 7D 09/20 ee ORRF Peers NPAs/ Assets (9 1.00 0.80 a 052 050 oss 037 038 040 046 020 9.33 ae Aa aS 0.00 09/19 ays 03/20 06/20 09/20 er oRRF Peers 2.00 150 1.00 050 0.00 Reserves/ Loans Held For Investment (9 1.
Slide 26: Income Statement Trends
Income Statement Trends Growth Growth dollar: in mi Income Statement 2015 2016 2017 2018 2019 1Year 3 Year Net Interest Income 34.3 36.5 43.8 52.2 69.3 33% 90% Non-Interest Income 17.3 18.3 188 20.0 23.8 19% 30% Net Securities Gains 13 14 £2 1.0 47 372% 234% Total Revenue 535 56.3 63.8 73.2 97.8 34%
Slide 27: Balance Sheet Trends & Select Loan Metrics
Balance Sheet Trends & Select Loan Metrics dollars in millions Growth Growth Loan Portfolio Mix 2015 2016 2017 2018 2019 1Year 3 Year Total Gross Loans 788 886 1,016 1,251 1,654 32% 87% Residential Mortgage 16% 16% 16% 19% 20% Home Equity 16% 15% 14% 12% 11% Other Consumer 1% 1% 2% 3% 3% Total Consu
Slide 28: Capital Adequacy
Capital Adequa Growth Growth 1Year 3 Year Tier 1 Capital 123.8 127.0 138.8 160.1 196.5 23% 55% Tier 2 Capital 10.7 12.0 13.6 46.9 47.6 1% 296% Total Regulatory Capital 134.6 139.0 152.4 207.0 244.0 18% 76% Tier 1 Leverage Ratio 9.8% 9.3% 9.0% 8.4% 8.6% Common Equity Tier 1 Ratio 14.6% 13.3% 12.1% 12
Slide 29: ESG Initiatives and Focus
ESG Initiatives and Focus General Philosophy Environmentalresponsibility is in alignment with strong business practices and our core values. Beinggood stewards of the environment, reducing energy consumption and eliminating waste through proactive and conscious planning reduces costs, enhances our p
Slide 30: Summary Financial Trends
Summary Financial Trends dollars in millions (except for per share information) [Summary Trends rangible Book Value / Share? 16.06 16.15 17.22 16.73 17.66 5% 8% [Diluted Earnings / Share 0.97 0.81 0.98 1.50 1.61 7% 99% idend / Share 0.22 0.35, 0.42 0.51 0.60 18% 71% Market Capitalization 148 186 241
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 (continued)
GAAP to Non-GAAP Reconciliation C (Sin millions, except per share data) Non GAAP Financial Measure Reconciliation Reported 2015 2016 2017 2018 2019 Net Interest Income, 343 365 438 522 693 Pus Nor-interest Income. 192 197 199 210 285 Total Revenue (A) 535 563 638 732 978 Total Non Interest Expense (
Slide 33: Efficiency Ratio Reconciliation
Efficiency Ratio Reconciliation EFFICIENCY RATIO RECONCILIATION (ANNUAL): 2019 2018 2017 2016 2015, Non-interest expense 7,302 57,935 50,330 48,140 44,607 Net interest income 69,295 52,156 43,809 36,545 34,334 Non-interest income 28,541 21,024 19,949 19,739 19,178 Totalrevenue 97,836 73,180 63,758 5
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
Orrstown Financial Services — Investor Presentation (December 2020) on 6ix