Orrstown Financial Services, Inc. · NASDAQ:ORRF
Orrstown Financial Services — Shareholder Meeting (May 2018)
43 slides from Orrstown Financial Services's shareholder meeting presentation, May 1, 2018
Slide 1: Annual Shareholders Meeting: Momentum, Priorities, Milestones
pe SHEMSIe tolSis Meeting | EN 1, ae MOMENTUM PRIORITIES MILESTONES ORRSTOWN i Financial Services, Inc,
Slide 2: Hurricanes Harvey and Irma Video
Hurricanes Harvey and Irma Video ORRSTOWN Financial Services,
Slide 3: Introductory comments
Introductory comments Joel R. Zullinger Chairman of The Board ©) (e) (©) ORRSTOWN 3 Financial Services, Inc.
Slide 4: Call to Order
Call to Order Joel R. Zullinger Chairman of The Board ©) (e) (©) ORRSTOWN 4 Financial Services, Inc.
Slide 5: Forward-Looking Statements
Forward-Looking Statements 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 6: Conduct Meeting Business
Conduct Meeting Business Joel R. Zullinger Chairman of The Board ORRSTOWN Financial Services,
Slide 7: 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
Slide 8: Rules of Conduct (continued)
Rules of Conduct (continued) ¢ The views, constructive comments and criticisms from 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 Compan
Slide 9: Conduct Meeting Business
Conduct Meeting Business Joel R. Zullinger Chairman of The Board ORRSTOWN Financial Services,
Slide 10: Meeting Agenda
* Conduct Meeting Business Joel Zullinger, Chairman of the Board * Management Reports ¢ Thomas R. Quinn, Jr., President & CEO Recap of 2017 Achievements * David P. Boyle, EVP/Chief Financial Officer Financial Review ¢ Thomas R. Quinn, Jr., President & CEO 2018 Strategic Priorities * Questions from o
Slide 11: Conduct Meeting Business
Conduct Meeting Business Joel R. Zullinger Chairman of The Board ORRSTOWN Financial Services,
Slide 12: Management Report
Management Report Thomas R. Quinn, Jr. President & CEO e) (e) (©) ORRSTOWN 12 Financial Services, Inc.
Slide 13: Experienced Leadership Team
Experienced Leadership Team Thomas R. Quinn, Jr. President & CEO David P. Boyle 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 Jeffrey S. Gayman EVP/Market President David T. Horn
Slide 14: Summary of 2017 Achievements
Summary of 2017 Achievements Our focus as described at last year’s Annual Shareholders Meeting: = Continue to take advantage of market dislocation = Continue to leverage the balance sheet and improve earnings and dividends through loan, deposit and fee income growth = Continue to use technology to a
Slide 15: Continue to Take Advantage of Market Dislocation
Continue to Take Advantage of Market Dislocation * Hired new lender in Lancaster, opened two new branches, hired two new OFA employees, and one new Wheatland Advisors team member ¢ Hired two new lenders in York and opened LPO in April of 2018 * Hired new lender in Chambersburg
Slide 16: Continue to Take Advantage of Market Dislocation
Continue to Take Advantage of Market Dislocation * Each and every one of our investments has exceeded our internal projections: * 14.3% loan growth--solid gains throughout the region and diversified growth by loan type ¢ 5.8% deposit growth--strong retail and cash management results * 4.8% nonintere
Slide 17: Continue to Take Advantage of Market Dislocation: New Branch Results
Continue to Take Advantage of Market Dislocation: New Branch Results MANHEIM PIKE (OPENED 4/2017) $25,000,000 $1,500,000 ¢ 462% of core deposit goal $20,000,000 ¢ $23.1 million in core deposits and 369 new accounts in less than $15,000,000 $1,000,000 9 months $10,000,000 86 8 mem” ; ¢ 170% of consum
Slide 18: Improve Earnings Through Loan, Deposit and Fee Income Growth
Improve Earnings Through Loan, Deposit and Fee Income Growth Year-end Information Assets $1,292,816 $1,414,504 $1,558,849 10.2% Loans 781,713 883,391 1,010,012 14.3% Deposits 1,032,167 1,152,452 1,219,515 5.8% Total Shareholders’ Equity 133,061 134,859 144,765 7.4% Assets Under Management (mkt. valu
Slide 19: Use Technology to Attract and Retain Customers
Use Technology to Attract and Retain Customers 13,862 current mobile banking customers 165% increase since 2014 5,528 customers enrolled in online bill pay 50% increase since 2014 * 8,481 mobile deposits in first quarter 2018 * 91% increase since 2014 * $17 million of mortgage applications originate
Slide 20: Continue to Focus on Enterprise Risk Management
Continue to Focus on Enterprise Risk Management ¢ Significant investments in technology over past 4 years * Recognized community bank leader in cybersecurity preparedness * Solid asset quality metrics* * NPAs / Assets of 0.69% ~~ ¢ Nonaccrual Loans / Loans of 0.97% e) (©) © *At December 31, 2017 ORR
Slide 21: Allow Our Investments in People, Processes, Technology and New Markets to Mature
Allow Our Investments in People, Processes, Technology and New Markets to Mature * People: customer-facing hires over past several years are contributing to our growth * Processes: We have built a solid foundation that is scalable * Technology: * leveraging our data to grow through total relationshi
Slide 22: Dividend Growth Trend
Dividend Growth Trend $0.13 $0.12 $0.11 $0.10 $0.09 $0.08 $0.07 $0.06 = [3075 J 2016 2017 ore ORRSTOWN 22 Financial Services, Inc,
Slide 23: Management Report
Management Report David P. Boyle Chief Financial Officer ) © (©) ORRSTOWN 23 Financial Services, Inc.
Slide 24: Improve Earnings Through Loan, Deposit and Fee Income Growth
Improve Earnings Through Loan, Deposit and Fee Income G h For the year ended: 20 2017 % Change (Dollars in 000s) (2016 to 2017) Year-end Information Assets $1,292,816 $1,414,504 $1,558,849 10.2% Loans 781,713 883,391 1,010,012 14.3% Deposits 1,032,167 1,152,452 1,219,515 5.8% Total Shareholders’ Equ
Slide 25: Assets, Loans and Deposits: Year Trend
Assets, Loans and Deposits: 5 Year Trend $1,800,000 $1,600,000 $1,558,849 600, $1,414,504 $1,400,000 $1,292,816 $1,177,812 $1,190,443 $1,152,452 $1,219,515 $1,200,000 152, $1,000,390 $949,704 $1,032,167 $1,010,012 $1,000,000 Z $883,391 $781,713 $800,000 $671,037 $704,946 $600,000 00's 2013 FY 2014 F
Slide 26: Net Income: Year Trend
Net Income: 5 Year Trend Net Income $35,000 $30,000 $25,000 $20,000 $29,142 $15,000 $10,004 $10,000 $7,874 $6,628 $8,090 $5,000 $0 (00's) 2013 2014 2015 2016 2017 Net Income: 5 Quarter Trend Net Income $4,000 $3,625 $3,500 $3,308 $3,000 $2,774 $2,002 $6 ($000's) 2017 FQL 2017 FQ2 2017 FO 2017 Fa4 20
Slide 27: Operating Performance Highlights
Operating Performance Highlights Ay gS oS $1,085 $866 $671 12/31/2013 03/31/2018 12/31/2013 03/31/2018 12/31/2013 03/31/2018 E/ 87.1% <n 0.57% ; 12/31/2013 03/31/2018 12/31/2013 03/31/2018 1 ($000,000’s) (Annualized) ORRSTOWN 27
Slide 28: Earnings Per Share: Year Trend
Earnings Per Share: 5 Year Trend Diluted Earnings Per Share $4.00 $3.59 $3.00 $2.00 $1.24 $1.00 $0.97 $0.81 $0.98 a | 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY Earnings Per Share: 5 Quarter Trend Diluted Earnings Per Share $0.50 0.44 $0.40 $ $0.40 $0.34 $0.30 $0.24 $0.20 $0.10 p00 $0.00 2017 FOL 2017
Slide 29: Noninterest Income & Noninterest Expenses: Quarter Trend
Noninterest Income & Noninterest Expenses: 5 Quarter Trend $6,000 $5,623 $5,702 $5,500 = #5:256 as oases ams $4,000 $3,500 $3,000 ($000's) 2017 FQ1 2017 FQ2 2017 FAR 2017 FQ4 2018 FQ1 =e=Noninterest Income (includes realized gains on securities) $15,000 914,000 $13,087 $13,069 $12,417 ~~ $12,680 — 9
Slide 30: Core Deposits / Total Deposits: Year Trend
Core Deposits / Total Deposits: 5 Year Trend $1,250,000 $1,219,515 $1,200,000 $1,152,452 $1,147,560 $1,150,000 $1,100,000 : $1,032,167 STUATEY 4,050,000 $1,000,390 $1,000,000 $949,704 $950,000 $900,000 $865,818 $850,000 $800,000 ($000's) 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY =@®—Total Deposits | —
Slide 31: Regulatory Capital Ratios
Regulatory Capital Ratios 18.0% 16.8% 16.0% 15.6% ee 14,6% 14.6% 14.0% 13.3% 13.3% 12.1% 12.0% 5 9.8% 10.0% aii 9.3% ———_— . : Oy 6.0% 4.0% 2.0% 0.0% Tier 1 Leverage Tier 1 Risk Based Total Risk Based 2014 2015(j2016j 2017, ORRSTOWN 31 Financial Services, In
Slide 32: 5-Year Stock Performance and Total Return
5-Year Stock Performance and Total Return $26.40 80.0% 82.2% 71.8% 60.0% 40.0% 20.0% 0.0% (20.0)% Xe) be v) fo A % » vy oy ty “y ba $ $ ¢ a RY x é é x x e ——ORRF Stock Appreciation ——ORPF Total Return ©) ; re) ; : o) Data source: SNL; share price of 26.40 on 4/25/18
Slide 33: 12 Month Stock Performance vs. S&P Banks
12 Month Stock Performance vs. S&P 500 Banks 30 20 10 -10 Orrstown (yellow line): 12 month total return of 22.32% S&P 500 Banks (red line): 12 month total return of 19.33% May ‘17 Jul'17 Sep "17 Nov ‘17 Jan ‘18 Mar ‘18 © (e) Source SNL: Data from April 27, 2017 to April 27,2018 (©) ORRSTOWN Financia
Slide 34: Management Report
Management Report Thomas R. Quinn, Jr. President & CEO e) (e) (©) ORRSTOWN 34 Financial Services, Inc.
Slide 35: Strategic Focus 2018: Key Goals
Strategic Focus 2018: 7 Key Goals Schuylkill Miflin pais © DOMFIELD — ® DUNCANNON S Berks County {ar} “LEBANON — WYOMISSING®\_ 3 y Lebanon County &} Huntingdon ea > —————=~ ED i OO = foe MECHANICSBURG SS a — ‘SPRING RUN fas Ti e ORRSTOWN® NEW HOLLAND SHIPPENSBURG® /| ie _ , CASTER aL ——~ fs gases CH
Slide 36: Strategic Focus 2018: Key Goals
Strategic Focus 2018: 7 Key Goals Support Commercial Loan Growth with Deposit Growth $400 million in retail deposit growth to fund lending expansion (organic branch expansion) ¢ Lancaster County: Four new branches to open in 2018 * Dauphin County: Currently reviewing site options ¢ Berks County: Cur
Slide 37: Strategic Focus 2018: Technology and Operations Strategies
Strategic Focus 2018: 7 Key Goals 3 Technology and Operations Strategies Technology: Maintain our advantage and prioritize key initiatives in 2018: ¢ New teller platform for fast and efficient account opening * OFA/ Wheatland platform Operations: Leverage and streamline for maximum efficiency and to
Slide 38: Strategic Focus 2018: Key Goals
Ta tegic Focus 2018: 7 Key Goals Enhance our brand to leverage our capabilities and key differentiators. 2018 priorities include: ¢ Marketing of our trust and wealth management capabilities ¢« More emphasis on social media * Begin branch refresh (consistent signage, color schemes, look and feel) Div
Slide 39: Strategic Focus 2018: Enhance Shareholder Value
Strategic Focus 2018: 7 Key Goals NEWBgetF IEPBLOOMFIELD @) CARLIG WYOMISSING SPRING RUN ENHANCE SHAREHOLDER io NEW HOLLAND VALUE ANCASTER o ORRSTOWN SHIPPENSBURG’ CHAMBERSBURG _/ Franklin County GREENCASTLE 5 4 | * 71.8% stock appreciation over last five years * Total return of 82.2% over last five
Slide 40: Questions From Shareholders
Questions From Shareholders Joel R. Zullinger Chairman of The Board ORRSTOWN Financial Services,
Slide 41: Conduct Meeting Business
Conduct Meeting Business Joel R. Zullinger Chairman of The Board ORRSTOWN Financial Services,
Slide 42: Adjournment
Adjournment Joel R. Zullinger Chairman of The Board ©) (e) (©) ORRSTOWN 42 Financial Services, Inc.
Slide 43: Momentum, Priorities, Milestones
pe SHEMSIe tolSis Meeting | EN 1, ae MOMENTUM PRIORITIES MILESTONES OrRSTOWN 43 Financial Services, Inc,
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