Orrstown Financial Services, Inc. · NASDAQ:ORRF
Orrstown Financial Services — Shareholder Meeting (May 2016)
49 slides from Orrstown Financial Services's shareholder meeting presentation, May 4, 2016
Slide 1: Annual Shareholders Meeting May 3, 2016
1 Annual Shareholders Meeting May 3, 2016
Slide 2: Forward Looking Statement
2 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
Slide 3: Meeting Agenda
3 Meeting Agenda • Call to Order • Conduct Meeting Business • Introduce Board of Directors • Management Report • Thomas R. Quinn, Jr., President & CEO Recap of 2015 Achievements • David P. Boyle, EVP/ CFO Financial Review • Benjamin W. Wallace, EVP/ Operations & Technology Monetizing Technology • Th
Slide 4: Call to Order
4 Call to Order Joel R. Zullinger, Chairman of the Board
Slide 5: Introduction of Board of Directors
5 Introduction of Board of Directors L-R: Glenn Snoke; Eric Segal; Greg Rosenberry; Dr. Anthony Ceddia; Mark Keller; Cindy Joiner; Jeffrey Coy; Andrea Pugh; Joel Zullinger; Thomas Longenecker; Thomas R. Quinn, Jr.; Floyd Stoner
Slide 6: Conduct Meeting Business
6 Conduct Meeting Business Joel R. Zullinger, Chairman of the Board
Slide 7: Rules of Conduct
7 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 b
Slide 8: Rules of Conduct
8 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 addres
Slide 9: Rules of Conduct
9 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 ordi
Slide 10: Conduct Meeting Business
10 Conduct Meeting Business Joel R. Zullinger, Chairman of the Board
Slide 11: Agenda
11 Agenda • Management Report • 2015: Year in review • David Boyle, EVP/Chief Financial Officer will review financial results • Ben Wallace, EVP/Operations and Technology will discuss monetizing technology investments • Looking Forward: 2016 & Beyond • Questions from Shareholders
Slide 12: Management Report
12 Management Report Thomas R. Quinn, Jr. , President & CEO
Slide 13: Introduction of the Team
13 Introduction of the Team • Barbara Brobst: Chief Human Resources Officer • David Boyle: Chief Financial Officer • Robert Coradi: Chief Risk Officer • Philip Fague: Mortgage and Trust Businesses • Zachary Flynn: Commercial Real Estate • Jeffrey Gayman: Retail and C&I Lending • Benjamin Wallace: Op
Slide 14: A Review of 2015
14 A Review of 2015 • Exited all formal enforcement actions on April 1, 2015 • Net income of $7.9 million • 10.9% year-over-year loan growth; + $76.8 million • Annualized loan growth of 11.8% in the first quarter of 2016; +23.0 million • 8.7% year-over-year deposit growth; + $82.5 million • Deposit
Slide 15: A Review of 2015
15 A Review of 2015 • Maintained enterprise risk management culture and asset quality: • 1.34% total non-performing assets to assets • 1.74% allowance for loan losses to total loans • 81.95% allowance for loan losses to non-performing loans • Began the development and execution of five year strategi
Slide 16: A Review of 2015: Reinstated quarterly cash dividend
16 A Review of 2015 • Reinstated quarterly cash dividend $0.07 $0.07 $0.08 $0.08 $0.09 $0.05 $0.06 $0.07 $0.08 $0.09 $0.10 May 2015 August 2015 November 2015 February 2016 May 2016 Divide n d p er Sha re
Slide 17: A Review of 2015
17 A Review of 2015 • Continued investment in our current markets • Our employees gave countless volunteer hours in positions of leadership and grass roots efforts throughout our markets • $250,000* in Educational Improvement Tax Credit (“EITC”) contributions • $200,000 in donations to 125 non-profi
Slide 18: Agenda
18 Agenda • Management Report • 2015: Year in review • David Boyle, EVP/Chief Financial Officer will review financial results • Ben Wallace, EVP/Operations and Technology will discuss monetizing technology investments • Looking Forward: 2016 & Beyond • Questions from Shareholders
Slide 19: Summary Financial Review
19 Summary Financial Review David P. Boyle, EVP/Chief Financial Officer
Slide 20: 2015: Financial Recap
20 2015: Financial Recap Dollars in 000s (for the year ended): 2013 2014 2015 Balance Sheet Assets $1,177,812 $1,190,443 $1,292,816 Loans 671,037 704,946 781,713 Deposits 1,000,390 949,704 1,032,167 Total Shareholders’ Equity 91,439 127,265 133,061 Trust Assets Under Management 1,085,216 1,017,013 9
Slide 21: Five Quarter View Selected Financial Data
21 Five Quarter View Selected Financial Data 2015 2016 (Dollars in 000s) Q1 Q2 Q3 Q4 Q1 Total Assets $1,189,420 $1,232,783 $1,274,340 $1,292,816 1,287,279 Loans 727,753 751,530 762,858 781,713 804,703 Total Deposits 945,756 962,854 1,047,978 1,032,167 1,048,376 Total Interest Income 9,228 9,568 9,88
Slide 22: Loan Growth Momentum
22 Loan Growth Momentum C.A.G.R.=Compound Annual Growth Rate [VALUE] [VALUE] [VALUE] [VALUE] [VALUE] [VALUE] $600,000 $650,000 $700,000 $750,000 $800,000 $850,000 $900,000 $950,000 $1,000,000 Quarterly Loan Growth Trend (dollars in 000s) Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q4 2014
Slide 23: Noninterest Expense Review
23 2013 2014 2015 2012 $43,349 $43,247 $43,768 $44,607 $30,000 $35,000 $40,000 $45,000 $50,000 $55,000 $60,000 A n n u al N o n -I n ter es t Ex p en se (0 0 0 s) Noninterest Expense Review 1.2% 1.9% -0.2%
Slide 24: Revenue and Expense Trend
24 Revenue and Expense Trend* Total Assets 2013 2012 2014 2015 ($ in 000s) $1,444,097 $1,232,668 $1,177,812 $1,190,443 $1,292,816 $0 $200,000 $400,000 $600,000 $800,000 $1,000,000 $1,200,000 $1,400,000 $1,600,000 2011 2013 2012 2014 2015 2011 *Excluding securities gains, goodwill impairment, and rev
Slide 25: Cash Dividend Review
25 Cash Dividend Review $0.07 $0.07 $0.08 $0.08 $0.09 $0.05 $0.06 $0.07 $0.08 $0.09 $0.10 May 2015 August 2015 November 2015 February 2016 May 2016 Divide n d p er Sha re
Slide 26: Regulatory Capital Ratios
26 8.1% 13.7% 15.0% 9.5% 15.6% 16.8% 9.8% 14.6% 15.8% 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% 16.0% 18.0% Regulatory Capital Ratios 2013 2014 2015 2013 2014 2015 2013 2014 2015 TIER 1 LEVERAGE RATIO TIER 1 RISK-BASED RATIO TOTAL RISK-BASED RATIO
Slide 27: Stock Performance
27 Stock Performance Data Source: SNL as OF 5/2/16 11:07 a.m.; one year view Orrstown +3.55% S&P 500 -1.97% SNL U.S. Banks -5.50% May 2016
Slide 28: Agenda
28 Agenda • Management Report • 2015: Year in review • David Boyle, EVP/Chief Financial Officer will review financial results • Ben Wallace, EVP/Operations and Technology will discuss monetizing technology investments • Looking Forward: 2016 & Beyond • Questions from Shareholders
Slide 29: Management Report: Operations and Technology
29 Management Report Ben Wallace, EVP/Operations and Technology
Slide 30: Monetizing Technology
30 Monetizing Technology 30 • Foundational investments since 2013 have been significant • Improving the customer experience continues to be at the center of these investments • As a result: • +100% year-over-year growth in Mobile adoption • ~10% of overall check deposits now using Mobile or ATM tech
Slide 31: Using Technology to Deepen Relationships
31 Using Technology to Deepen Relationships 31 Relationships Enabling more sophisticated offerings Expansion of Products & Services – Relationship Focused 2 0 1 4 2 0 1 5 2 0 1 6 Simplification of Products – Centered around products that reinforce and reward clients for engaging deeper with the Ban
Slide 32: Strategic Priorities Related to Digital
32 Strategic Priorities Related to Digital • With our digital “backbone” established – we have opened entirely new ways for our customers to interact and engage • Our leadership teams are focused on: • Ensuring a consistent and positive customer experience across our digital channels • Optimizing ho
Slide 33: Maturing Customer Acquisition - Online
33 Maturing Customer Acquisition - Online • Significant work has been completed on aligning our Brand more actively in our markets over the last 18 months • With the expansion of our Online capabilities, we believe we are well positioned to increase customer acquisition – across the millennial demog
Slide 34: Managing Technology as a Strategic Asset
34 Managing Technology as a Strategic Asset Offering customers richer experiences within the Online, Mobile, and Branch network requires continuous investment. To support this investment and our growth, Orrstown has focused on automation and efficiency efforts across the firm: • Implemented numerous
Slide 35: Agenda
35 Agenda • Management Report • 2015: Year in review • David Boyle, EVP/Chief Financial Officer will review financial results • Ben Wallace, EVP/Operations and Technology will discuss monetizing technology investments • Looking Forward: 2016 & Beyond • Questions from Shareholders
Slide 36: Management Report
36 Management Report Thomas R. Quinn, Jr. , President & CEO
Slide 37: Looking Forward: 2016 & Beyond
37 Looking Forward: 2016 & Beyond 37 • Strategic plan: defining the market opportunities • Integrate the teams joining the company in 2016-2017 and their valued relationships • Optimize our delivery channels to attract the growing millennial demographic that will be 50% of the work force in 10 years
Slide 38: Market Opportunities: Deposits and Loans
38 38 $10.3 Billion in Deposits $39.2 Billion in Deposits 1,683 Companies with annual sales between $1-$50 million 6,290 Companies with annual sales between $1-$50 million Market Opportunities: Deposits and Loans Deposit data from FDIC, June 30, 2015; Company sales data from Dun and Bradstreet, Apri
Slide 39: Market Opportunities: Significant Disruption
39 39 Market Opportunities: Significant Disruption Acquiring Bank Acquired Bank
Slide 40: Market Disruption: Branch View by County
40 40 Market Disruption: Branch View by County Legend FNB/Metro BB&T/Susquehanna BB&T/National Penn S&T/Integrity Data Source: SNL
Slide 41: Market Disruption: Quantified
41 41 FNB, Integrity, Metro, Susquehanna 23 Branches - $1.41 billion Integrity, Metro, Susquehanna, FNB 26 Branches - $1.30 billion B of A, FNB, Metro, Nat Penn, Susquehanna 33 Branches - $1.72 billion B of A, Integrity, Metro, Nat Penn, Susquehanna 44 Branches - $3.68 billion FNB Fredericksburg, Me
Slide 42: Integration of New Teams
42 42 Integration of New Teams Cash Management • 3 customer facing and 2 support • Already generated $24.2 million in new business YTD • Based in Harrisburg and support entire bank market Commercial Lending (C&I and CRE) • 4 customer facing • 72 years combined experience at Metro, FNB and M&T • Base
Slide 43: Integration of New Teams
43 43 Integration of New Teams • We recently added regional facilities in Dauphin and Lancaster Counties • Our strategic plan also anticipates deployment of tech-centric branches in new markets utilizing “hub and spoke” model 4750 Lindle Rd., Harrisburg 1800 Fruitville Pk., Lancaster
Slide 44: Optimize Delivery Channels for Millennials
44 44 Optimize Delivery Channels for Millennials • 50% of the work force in ~10 years • Demand convenience, including a “tech-centric” branch network • Integration of technology and a “data-rich” experience is critical • Future beneficiaries of a sizeable transfer of wealth
Slide 45: Summary
45 45 Summary • One year removed from enforcement actions • Consistent loan growth, deposit growth, and fee income growth • Integration of experienced bankers into our culture • Execution of expanded delivery channel strategy to broaden appeal to all demographic groups • Opportunistic and discipline
Slide 46: Agenda
46 Agenda • Management Report • 2015: Year in review • David Boyle, EVP/Chief Financial Officer will review financial results • Ben Wallace, EVP/Operations and Technology will discuss monetizing technology investments • Looking Forward: 2016 & Beyond • Questions from Shareholders
Slide 47: Shareholder Questions
EEE _________________ Shareholder Questions Orrstown,.e™
Slide 48: Conduct Meeting Business
48 Conduct Meeting Business Joel R. Zullinger, Chairman of the Board
Slide 49: Adjournment
LEE Adjournment Thank you WN Era nroran Grnsone Thc
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