Orrstown Financial Services (ORRF) 8-K Submission of Matters to a Vote of Security Holders

Exhibit 99.2

1

2

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 that might cause such a difference

include, but are not limited to, economic conditions, competition in the

geographic and business areas in which Orrstown Financial conducts its

operations, fluctuations in interest rates, credit quality, government regulation

and other risks and uncertainties, including those described in the Company’s

filings with the Securities and Exchange Commission. The statements we make

today are valid only as of today’s date and we disclaim any obligation to update

this information.

3

3

Joel R. Zullinger                       

Chairman of the Board

Call to Order

Opening Remarks

4

4

In Memoriam

Robert T. Henry

5

5

Joel R. Zullinger

Chairman of the Board

Years

on

Board

-

28

Attorney-at-Law

Jeffrey W. Coy

Vice Chairman of the Board

Years

on

Board

-

25

Commissioner, PA Gaming Control Board 

Former 89th District State Representative

1983-2004

Kenneth R. Shoemaker

Secretary of the Board

Years

on

Board

-

23

President Emeritus, Orrstown

Bank

Anthony F. Ceddia

Board Member

Years

on

Board

-

13

President Emeritus, Shippensburg University

Leadership and Management Consultant

Mark K. Keller

Board Member

Years

on

Board

-

2

State Representative 86th District

Andrea Pugh

Board Member

Years

on

Board

-

13

President & Sole Member,

PharmCare

Consultants LLC

Thomas R. Quinn, Jr.

Board Member

Years

on

Board

-

1

President & Chief Executive Officer

Gregory A. Rosenberry

Board Member

Years

on

Board

-

12

President & General Partner,

Rosenberry

Family Limited Partnership

Glenn W. Snoke

Board Member

Years

on

Board

-

10

President, Snoke’s

Excavating & Paving, Inc.

John S. Ward

Board Member

Years

on

Board

-

10

President, Modern Transit Partnership

Retired Chief Clerk of Cumberland County

Board of Directors

6

6

Joel R. Zullinger                       

Chairman of the Board

7

7

Rick Weiss

Director/Research

Janney Montgomery Scott, LLC

8

8

Thomas R. Quinn, Jr.                

President and Chief Executive Officer

2009 Highlights

9

9

Your Management Team

Executive

Title

Years with ORRF

Banking Experience

Thomas R. Quinn, Jr.

President / CEO

1 Year

20 Years

Jeffrey W. Embly

EVP / Chief Credit Officer

13 Years

18 Years

Philip E. Fague

EVP / Mortgage & Consumer

Business 

22 Years

22 Years

Barbara E. Brobst

SVP / Senior Trust Officer,

Orrstown Financial Advisors

12 Years

29 Years

Bradley S. Everly

SVP / Chief Financial Officer

12 Years

32 Years

Jeffrey S. Gayman

SVP / Chief Commercial Officer

14 Years

15 Years

Gary R. Holder

SVP / Chief Retail Officer

7 Years

17 Years

Michelle N. Paulnock

SVP / Operations

1 Year

33 Years

Benjamin S. Stoops

SVP / Chief Technology Officer

12 Years

39 Years

Mark G. Bayer

VP  & Director of Marketing

3 Years

23 Years

Stephen C. Caldwell

VP  & Director of Human

Resources

8 Years

8 Years

10

10

Your Company

•

Headquartered in Shippensburg,

PA

•

Founded in 1919

•

21 branches in Pennsylvania and

Maryland

–

8 branches in Cumberland County, PA

–

7 branches in Franklin County, PA

–

4 branches in Perry County, PA

–

2 branches in Washington County, MD

•

$1.2 billion in assets and $915

million in deposits as of December

31, 2009

•

In addition to community banking

services, provides trust and

investment services to individuals,

businesses, non-profits and

municipalities ($740 million of trust

and brokerage assets under

management)

11

11

12

12

What a Year!

•

TARP

•

Stress tests

•

FDIC special assessment

•

Very difficult operating environment

•

56% of banks and thrifts decreased their dividend in 2009; an

additional

28%

suspended

their

dividend

altogether

(1)

•

140 banks were closed by the FDIC in 2009

•

YTD

64

banks

have

been

closed

(2)

and

the

FDIC

estimates

200

bank closings in 2010

•

Why?

Poor

credit

quality

and

weak

capital

are

the

primary

drivers

of

bank

failure

and have resulted in dramatic changes to the regulatory

environment.

(1)

Source: SNL Financial data of 245 banks and thrifts surveyed

(2)

FDIC data as of 4/30/2010

13

13

Changing Regulatory Landscape

Regulatory Changes

Key Issues

Financial Regulatory Reform

Consumer Financial Protection Agency

End “too big to fail”

Accounting changes needed-FASB (loans mark-to-market)

Regulation E

Beginning this summer customers will need to opt-in to

have non-recurring overdrafts paid on ATM and debit card

transactions

We have a multi-step communication plan in place to

ensure our customers make an informed decision

Other initiatives to replace potential lost income

FDIC Assessment

Last year we paid nearly $1 Million in unbudgeted

additional costs to the FDIC, yet still posted record earnings.

With 200 projected bank failures this year there is the

possibility of additional assessments.

14

14

15

15

2009 Achievements

•

Listed on the NASDAQ Capital Market and added to Russell 2000

and 3000 Indices

•

Selected by Sandler O’Neill + Partners as one of the top

performing small-cap banks in the country. “Our 2009 Sm-All Stars

have performed exceptionally well in a difficult banking

environment and represent some of the top performing banks and

thrifts

in

the

nation.”

-

Dan

Arnold,

Associate

Director

–

Equity

Research

•

Ranked as one of the top 200 best performing community banks in

the

nation

for

the

past

4

years

(1)

•

Achieved record earnings in a challenging environment

(1) Based on reports published by U.S. Banker in June 2006 – 2009, based on 3 year average ROAE of publicly traded commercial banks 

Source: Company Documents 

16

16

2009 Achievements

•

Net charge-offs to average loans for 2009 of 11 basis

points

-

nearly

5

x

better

than

peer

of

54

basis

points

(1)

•

Added 7,499 new customers as deposit base grew by

more than 20%

•

12 net new hires, primarily in customer facing positions

(including 14 sales-related positions), bringing total head

count to nearly 300

•

Significant investment in technology, including consumer

and mortgage lending initiatives

•

Trust and brokerage assets under management grew 24%

•

Increased dividends for over 20 consecutive years, and a

10

year

annual

dividend

CAGR

(2)

of

15.8%

(1)  Includes publicly-traded Mid-Atlantic commercial banks with assets between $1bn and $2bn. Company Documents; SNL Financial

(2)Compound annual growth rate

17

17

(1) 2006 reflects the acquisition of the First National Bank of Newport ($120mm of assets and $106mm of deposits)

Note: Dollar values in thousands

Source: Company Documents

Track Record of Strong Growth

Assets

Loans

Deposits

CAGR:

17.6%

CAGR:

18.5%

CAGR:

18.8%

18

18

Favorable Performance vs. Regional Peers

(1)

(1) Includes publicly-traded Mid-Atlantic commercial banks with assets between $1bn and $2bn.

Source: Company Documents; SNL Financial

(2) The Tangible Common Equity Ratio is a non-GAAP based financial measure. See note  (2) on page 23.

2009 ROAA

(3.98%)

1.36%

3

(0.01%)

2009 ROAE

(53.81%)

18.30%

5

(1.20%)

Net Interest Margin

2.43%

4.72%

10

3.56%

Efficiency Ratio

55.42%

105.85%

2

68.92%

Non-Interest Income / Revenue

6.71%

47.35%

5

23.22%

Tangible Common Equity Ratio

(2)

1.95%

13.15%

6

6.63%

Total Risk-Based Capital Ratio

5.65%

17.89%

16

12.87%

Reserves / Gross Loans

0.84%

3.56%

6

1.42%

Reserves / NPAs

17.79%

426.42%

3

106.96%

NCOs / Average Loans

0.00%

2.68%

5

0.69%

Metric

Range

Rank/19

Peer AVG.

3.66%

58.85%

7.6%

11.3%

1.26%

207.56%

12.48%

1.19%

0.11%

30.74%

19

19

•

ORRF

stock

price

in

perspective

-

in

2009

traded

from

low of $22.00 to high of $40.00

•

At 5/5/09 Shareholder Meeting, $24.50/share and 600

shares volume

•

Increased dividends for over 20 consecutive years, and

a 10 year annual dividend CAGR of 15.8%

ORRF Stock Price & Capital Raise

20

20

•

On 3/29 we completed the offering of 1.48 million shares

of common stock netting approximately $37.5 million of

additional capital

•

Long term strategy with unanimous board support

•

Deploying capital for the road ahead:

Growth opportunities

Flexibility

“Capital is King”

in current regulatory environment

Capital Raise

21

21

“Better than Orr-dinary!”

“We

initiate

coverage

of

Orrstown

Financial

Services

with a BUY rating and a 12-month fair value estimate of

$31.

We believe management will continue to grow its

franchise through local opportunities and sustained

hiring of experienced local bankers. Better run banks,

such as Orrstown, will continue to differentiate

themselves from the competition and therefore, we

view the current price level as an opportunity for

investors to buy a conservatively-managed company at

a reasonable value.”

-

Janney

Montgomery Scott, LLC

(1)

Janney

Capital Markets Initiated with BUY on 4/5/2010

(1)

22

22

Brad Everly

Senior Vice President, Chief Financial Officer

Financial Review

23

23

Summary Financial Highlights

(1) Return on average tangible equity is a non-GAAP-based financial measure calculated using non-GAAP-based amounts, including management’s

definition of tangible assets and tangible common equity.  The most directly comparable GAAP-based measure is return on average equity.  Please see

the Appendix for a  reconciliation of non-GAAP financial measures to the most directly comparable GAAP based measures. 

(2) The ratio of tangible common equity to tangible assets is a non-GAAP based financial measure calculated using non-GAAP based amounts. The most 

      directly comparable GAAP based measure is the ratio of shareholders’ equity to assets. Please see the appendix for a reconciliation of non-GAAP

      financial measures to the most directly comparable GAAP based financial measures. 

Source: Company Documents

Year Ended December 31,

(Dollar Values in Thousands)

2005

2006

2007

2008

2009

Total Assets

$601,460

$809,031

$884,979

$1,051,783

$1,196,432

Gross Loans

$460,386

$618,827

$701,964

$820,468

$881,074

Total Deposits

$462,822

$638,719

$646,356

$757,368

$915,170

Total Shareholders' Equity

$57,310

$89,388

$96,124

$103,347

$110,886

Net Income

$9,987

$11,632

$12,558

$13,103

$13,373

Diluted Earnings Per Share

$1.69

$1.79

$1.86

$1.94

$1.98

Return on Average Assets

1.81%

1.61%

1.50%

1.38%

1.19%

Return on Average Equity

18.69%

15.10%

13.64%

13.20%

12.48%

Return on Average Tangible Equity

(1)

19.28%

18.98%

18.02%

17.02%

15.73%

Net Interest Margin

4.55%

4.32%

4.08%

3.93%

3.66%

Efficiency Ratio

52.86%

53.98%

55.58%

56.73%

58.85%

Non-Interest Expense / Avg. Assets

3.15%

2.99%

2.97%

2.98%

2.87%

Tang. Common Equity / Tang. Assets

(2)

9.2%

8.6%

8.7%

8.0%

7.6%

Total Risk-Based Capital Ratio

12.8%

12.0%

11.6%

10.9%

11.3%

Non-Performing Assets / Assets

0.30%

0.05%

0.04%

0.09%

0.44%

Loan Loss Reserves / Gross Loans

0.96%

0.89%

0.87%

0.87%

1.26%

24

Stock Performance

24

25

25

Stock Performance

26

Pro Forma Capital Ratios

(1)

(2)

(2)

(2)

(1) See note on page 4 regarding non-GAAP financial measures

(2) Calculated in accordance with bank regulatory requirements

Note: Assumes a $40 million offering with an underwriting spread of 5.50% and other expenses of $250,000.  Net proceeds are risk-weighted at 50%

Source: Company Documents

26

27

27

Total Assets

($ in millions)

Increase     9.0%             16.9%            34.5%           9.4%         

18.9%            13.7%

28

28

Gross Loans

($ in millions)

Increase   12.8%          18.3%          34.4%         13.4%   

16.9%          7.4%

29

29

Total Deposits

($ in millions)

Increase    13.1%           14.2%           38.0%           1.2%

17.2%           20.8%

30

30

Total Shareholders’

Equity

($ in millions)

Increase    15.2%           16.2%           56.0%           7.5%

7.5%             7.4%

31

31

Net Income

($ in thousands)

Increase   11.3%           28.5%            16.5%            8.0%             4.3%              2.1%

32

Regional Income

Northern

2009

2008

Amt

%

Carlisle

3,847,363

3,058,780

788,583

25.8%

West Shore

2,452,176

1,753,228

698,948

39.9%

Perry County

1,696,801

1,252,252

444,549

35.5%

Totals

7,996,340

6,064,260

1,932,080

31.8%

Southern

Shippensburg

5,106,996

4,407,840

699,156

15.9%

Chambersburg

4,515,924

3,779,301

736,623

19.5%

Hagerstown

1,626,436

1,822,480

-196,044

-10.8%

Totals

11,249,356

10,009,621

1,239,735

12.4%

Change

33

33

Peer Comparisons

(Based on Year-End Results)

Peer financial information obtained from SNL Financial.

Peer percentile rankings obtained from Board of Governors of the

Federal Reserve

System for all BHCs with assets between $1 billion and $3 billion.

34

Return on Average Assets (%)

0

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6

1.8

2

2004

2005

2006

2007

2008

2009

ORRF

$1-5Billion

All Banks

2004

2005

2006

2007

2008

2009

ORRF

1.57

1.81

1.61

1.5

1.38

1.19

$1-5Billion

1.08

1.12

1.1

0.96

0.51

0.12

All Banks

0.98

1.01

0.98

0.82

0.36

0.15

FRB Percentile

87th

91st

89th

89th

93rd

90th

35

35

Return On Average Assets (%)

(Local Bank Comparison)

2004

2005

2006

2007

2008

2009

ORRF

1.57

1.81

1.61

1.50

1.38

1.19

FRAF

0.93

1.03

1.07

1.14

1.01

0.69

TOBC

1.55

1.51

1.34

1.25

0.57

0.32

MPB

1.12

1.10

1.08

0.94

0.66

-0.39

CVLY

1.03

1.06

1.05

1.11

0.70

0.41

METR

0.73

0.61

0.41

0.36

0.64

-0.09

ACNB

1.04

0.79

0.76

0.81

0.72

0.75

-0.50

0.00

0.50

1.00

1.50

2.00

2004

2005

2006

2007

2008

2009

ORRF

FRAF

TOBC

MPB

CVLY

METR

ACNB

36

Return on Average Equity (%)

0.00

2.00

4.00

6.00

8.00

10.00

12.00

14.00

16.00

18.00

20.00

2004

2005

2006

2007

2008

2009

ORRF

$1-5Billion

All Banks

2004

2005

2006

2007

2008

2009

ORRF

16.80

18.70

15.10

13.60

13.20

12.50

$1-5Billion

10.70

11.10

10.50

8.40

3.90

1.50

All Banks

12.40

13.10

12.60

10.00

5.40

1.50

37

Return on Average Equity (%)

(Local Bank Comparison)

2004

2005

2006

2007

2008

2009

ORRF

16.8

18.7

15.1

13.6

13.2

12.5

FRAF

9.8

11.1

11.9

12.6

11.0

8.7

TOBC

11.2

10.9

9.1

8.4

4.0

3.2

MPB

13.0

12.9

12.9

12.0

8.9

-4.4

CVLY

11.5

12.2

13.0

13.9

8.9

4.9

METR

14.8

9.9

7.6

6.6

11.4

-1.3

ACNB

12.8

10.0

9.7

9.8

8.0

8.3

-10.0

-5.0

0.0

5.0

10.0

15.0

20.0

2004

2005

2006

2007

2008

2009

ORRF

FRAF

TOBC

MPB

CVLY

METR

ACNB

38

Net Interest Margin (%)

2004

2005

2006

2007

2008

2009

ORRF

4.21

4.55

4.32

4.08

3.92

3.66

$1-5Billion

3.95

4.05

4.03

3.84

3.70

3.52

All Banks

3.97

4.08

4.06

3.91

3.71

3.60

FRB Percentile

64th

73rd

64th

62nd

71st

61st

3.25

3.45

3.65

3.85

4.05

4.25

4.45

4.65

2004

2005

2006

2007

2008

2009

ORRF

$1-5Billion

All Banks

39

39

Net Charge Offs/Average Loans (%)

0.00

0.20

0.40

0.60

0.80

1.00

1.20

2004

2005

2006

2007

2008

2009

ORRF

$1-5Billion

All Banks

2004

2005

2006

2007

2008

2009

ORRF

0.01

0.01

0.00

0.02

0.06

0.11

$1-5Billion

0.15

0.10

0.11

0.16

0.43

1.10

All Banks

0.11

0.08

0.06

0.11

0.33

0.84

FRB Percentile

83rd

82nd

86th

86th

95th

95th

40

Net Charge Offs/Average Loans (%)

2004

2005

2006

2007

2008

2009

ORRF

0.01

0.01

0.00

0.02

0.06

0.11

FRAF

-0.07

-0.02

0.04

0.09

0.19

0.26

TOBC

0.15

0.02

0.01

0.09

0.16

0.17

MPB

0.03

0.06

0.08

0.09

0.13

1.56

CVLY

0.09

0.03

0.02

-0.20

0.12

0.20

METR

0.14

0.02

0.13

0.06

0.11

1.00

ACNB

0.08

0.00

-0.01

0.00

0.68

0.03

-0.50

0.00

0.50

1.00

1.50

2.00

ORRF

FRAF

TOBC

MPB

CVLY

METR

ACNB

41

Efficiency Ratio (%)

2004

2005

2006

2007

2008

2009

ORRF

55.10

52.97

53.06

55.73

57.27

58.85

$1-5Billion

62.14

59.87

61.10

62.47

64.45

64.15

All Banks

65.00

64.13

64.79

67.31

70.47

72.43

40.00

45.00

50.00

55.00

60.00

65.00

70.00

75.00

2004

2005

2006

2007

2008

2009

ORRF

$1-5Billion

All Banks

42

Dividend Payout Ratio (%)

0.0

10.0

20.0

30.0

40.0

50.0

60.0

2004

2005

2006

2007

2008

2009

ORRF

$1-5Billion

All Banks

2004

2005

2006

2007

2008

2009

ORRF

34.1

32.9

41.5

44.1

44.8

44.4

$1-5Billion

33.0

30.7

30.4

35.4

50.0

46.0

All Banks

30.0

29.7

28.9

33.1

44.7

42.4

43

43

Bank/Thrift 2009 Stock Index Values

Full Year 2009

YTD

SNL Bank

-2.79

SNL Thrift

-10.23

SNL All Bank & Thrift

-3.21

NASDAQ

43.89

Bank Mid Atlantic

3.48

Bank New England

13.12

Bank Southeast

-1.21

ORRF Market Change

29.19%

ORRF Dividend

2.52

31.71

Percent Change (%)

YTD

Bank w/ Assets < $500M

-11.45

Bank w/ Assets $500M-$1B

-7.37

Bank w/ Assets $1B-$5B

-30.35

Bank w/ Assets $5B-$10B

-25.45

Bank w/ Assets > $10B

-1.86

Percent Change (%)

ORRF YTD 31.71% at

$34.88 close 12/31/2009

44

Growth of Your Investment

December

31

st

,

2009

Original Purchase

1/1/1981

$12,000

(1000 shares X $12.00 market price)

Current Value

$903,775.68

(25,911 shares at $34.88)

2009 Dividends

$22,802

(1.9 times original investment)

Cumulative Dividends, 1982-2009

$183,430.0

(15.3 times the original investment)

Annual Compounded Return, 28 year

excluding dividend (adding dividend represents

16.69%

approximately 18.5% per year)

End of Year Dividend Yield at $0.88 per year

2.52%

45

2004

2005

2006

2007

2008

2009

0.45

0.56

0.74

0.82

0.87

0.88

1.38

1.76

1.87

1.95

2.04

2.09

Dividends

Earnings

Cash Dividends and Earnings

($ per share)

46

46

Jeff Embly

Executive Vice President,

Chief Credit Officer

Credit Quality Review

47

47

Historical Credit Cycle Analysis

0.06%

0.54%

0.26%

0.11%

0.09%

1.28%

0.63%

0.44%

(1) Includes publicly-traded Mid-Atlantic commercial banks with assets between $1bn and $2bn

Source: Company Documents; SNL Financial

48

48

Proactive & Thorough Approach to Credit

•

In November 2009, the Bank undertook an expanded review of the

commercial loan portfolio which covered $526 million in outstanding

and committed balances

•

This review was in addition to the normal loan review process

conducted by loan review officers and the Bank’s Credit

Administration Committee

•

The specific review process included:

3 employees and 2 contract employees

Review of all commercial loan relations with an aggregate committed exposure

greater than or equal to $750,000

Review focused on global cash flow and debt service coverage ratios of the

borrower,

LTV

ratios

shocked

10

and

20%,

and

borrowers’

and

guarantors’

cash

flow

and liquidity

•

Reserves increased from 0.87% to 1.26% as a percentage of gross

loans (aggregate 2009 provision of $4.9 million ($3.6 million Q4

2009)

versus $938,000 of net charge offs)

49

49

Disciplined Credit Culture

•

Created the position of Chief Credit Officer in September 2009 to further

strengthen

the

approval

process

and

provide

independence

between

sales

and

credit

•

Conservative Loan Approval Authorities:

No

individual

commercial

lender

has

a

maximum

aggregate

approval

authority

over

$350,000

Chief Commercial Officer’s maximum aggregate approval authority of $500,000

Chief Credit Officer’s maximum aggregate approval authority of $1 million, with any single loan

approved of $500,000 or greater reviewed and ratified by Executive Loan Committee

Maximum joint authority of $1.5 million with required ratification by Executive Loan Committee

•

Global credit oversight by the Bank’s Credit Administration Committee, which is

comprised of four independent directors

•

Annual review process that focuses on the review of:

All

loan

relationships

with

aggregate

committed

exposure

greater

than

or

equal

to

$750,000,

all Reg

O loans, a sample of 5% of loan relationships under the threshold and any credits

determined by the Committee to be deserving of special attention

Additionally, all loan relationships with aggregate committed exposure less than or equal to $1

million are rated, with committee ratification and approval of all gradings

50

50

Loan Portfolio Overview

Loans Stratification by Purpose

Gross Loans: $881 million

Most Recent Quarter Yield: 5.46%

Source: Company Documents

51

51

Commercial Loans by Purpose

Loan Portfolio Overview

52

52

Nonperforming Assets

NPAs by Type

(1) Based on location where the borrower resides

Source: Company Documents

53

53

Credit Quality Trends

0.30%

0.05%

0.04%

0.09%

0.44%

0.00%

0.25%

0.50%

0.75%

1.00%

1.25%

1.50%

2005

2006

2007

2008

2009

ORRF

Regional Peers¹

Net Charge-Offs / Average Loans

Non-Performing Assets / Total Assets

Reserves / Loans

0.96%

0.89%

0.87%

0.87%

1.26%

0.85%

0.95%

1.05%

1.15%

1.25%

2005

2006

2007

2008

2009

ORRF

Regional Peers¹

0.01%

0.00%

0.02%

0.06%

0.11%

0.00%

0.10%

0.20%

0.30%

0.40%

0.50%

0.60%

2005

2006

2007

2008

2009

ORRF

Regional Peers¹

(1) Includes publicly-traded Mid-Atlantic commercial banks with assets between $1bn and $2bn

Source: Company Documents; SNL Financial

Delinquencies / Loans

1.00%

1.40%

1.90%

2.30%

3.34%

0.50%

1.00%

1.50%

2.00%

2.50%

3.00%

3.50%

4.00%

4.50%

5.00%

2005

2006

2007

2008

2009

ORRF

Regional Peers¹

54

54

Barb Brobst

Senior Vice President, Senior Trust Officer

Orrstown Financial Advisors

55

55

•

Implement New Advisory Platform

•

Expand Insurance Products Offered

•

Additional Advisors in Southern Region

2009 Strategic Objectives

56

56

•

Risk Management Discipline

•

Depth of Staff

•

Investment Policy Statement

Investment Process

•

Foundation/Endowment Experience

57

57

2009 Assets Under Management

•

Beginning Assets Under Management:

$599,319,640

•

Ending Assets Under Management:

$740,028,263

•

24% Increase!

58

58

BAR Financial

Division of Financial Network             

Investment Corp (FNIC)

2009 -

Bob Russoli

2008 -

Bob Russoli

2007 -

Phyllis Nye

2006 -

Paul Ritchie

Dual Rep of the Year

Orrstown Financial

Advisors is ranked #1!

Overall Production

59

59

Philip Fague

Executive Vice President,

Mortgage & Consumer Business

Mortgage Update

60

60

•

Technology

Automated from application through settlement

•

Expertise

Two Mortgage Underwriters with over 40 years

experience

Two Mortgage Processer/Closers with over 25

years experience

•

Loan Volume

Capacity to double loan volume

•

Pricing and Servicing

Selling over 90% of mortgages written and retaining

servicing

Mortgage Operations

61

61

•

Hired five Mortgage Lenders, which

doubled the sales force since May 2009

•

Expanded market from Hagerstown to

Hershey

•

Competitive products and rates

Sales Team

62

62

2009

2008

Mortgage Revenue

$2,858,000

$1,593,000

Mortgage Income

$1,128,000

$584,000

Secondary Market Loans

$183,000,000

$121,000,000

Income

63

63

Investment Portfolio

Gov't

Agency

60.0%

CMO

4.0%

Municipal

19.0%

Cert. of Dep.

2.0%

MBS 

15.0%

Current Par Distribution

Source: Company Documents

•

As of December 31, 2009, the market value of the investment portfolio

was approximately $203 million

•

Duration of 3.4 years and average life of 4.0 years

•

Investment portfolio is comprised of 97% A or better rated securities

•

Currently do not hold any corporate or high-yield instruments

AAA

83.5%

A

3.3%

NR

1.4%

BB

0.3%

BBB

1.3%

AA

10.1%

Debt Portfolio Breakdown by Rating

64

64

Thomas R. Quinn, Jr.                

President and Chief Executive Officer

The Road Ahead

65

65

•

We are a community bank with a proud heritage and we will continue to

invest in our communities

•

We

will

continue

our

trend

of

strong

financial

performance

mixed

with

conservative

lending

practices

•

Our

employees

are

our

competitive

advantage

-

we

will

develop

our

existing

talent

and

continue

to

hire

the

best

and

brightest

•

We

will

continue

to

invest

in

our

business

with

responsible

growth

as

a

byproduct

•

We

will

look

at

market

opportunities

with

an

eye

toward

the

future

•

Our

Board,

management,

and

nearly

300

employees

will

make

every

effort

to

move

Orrstown

Bank

ahead

through

these

challenging

times

•

The

Road

Ahead

is

filled

with

great

opportunities

for

Orrstown

Bank

The Road Ahead: 2010

66

66

Joel R. Zullinger                       

Chairman of the Board

Results of Election

Closing Comments

67

67

68

68

APPENDIX

69

69

Regional Peer Analysis

(1) See note on page 4 regarding non-GAAP financial measures

Note:

Includes publicly-traded commercial banks with assets between $1bn and $2bn headquartered in the Mid Atlantic

Financial data as of December 31, 2009; Market data as of March 12, 2010

Source: Company Documents; SNL Financial, FactSet

Balance Sheet

Non-

Total

Int. Inc./

Res./

NCOs/

NPAs/

Total

Total

Gross

TCE /

RBC

Eff.

Total

Gross

Res./

Ave

Total

Market

Dividend

Assets

Deposits

Loans

TA

(1)

Ratio

ROAA

ROAE

NIM

Ratio

Rev.

Loans

NPAs

Loans

Assets

Cap.

Yield

Company

St.

Ticker

($mm)

($mm)

($mm)

(%)

(%)

(%)

(%)

(%)

(%)

(%)

(%)

(%)

(%)

(%)

($mm)

(%)

Arrow Financial Corporation

NY

AROW

1,842

1,444

1,112

6.8

15.4

1.24

16.16

3.58

59.41

24.52

1.26

315.42

0.09

0.24

286.3

3.82

Eagle Bancorp, Inc.

MD

EGBN

1,806

1,460

1,401

9.0

13.6

0.65

6.49

3.85

63.67

8.99

1.47

76.00

0.42

2.14

238.3

0.00

Suffolk Bancorp

NY

SUBK

1,694

1,385

1,160

8.1

11.7

1.36

18.30

4.72

56.17

13.01

1.06

59.51

0.09

0.96

304.4

2.78

First United Corporation

MD

FUNC

1,682

1,237

1,138

3.6

11.3

(0.14)

(2.50)

3.67

60.01

23.47

1.49

21.14

0.91

4.39

35.9

0.68

First of Long Island Corporation

NY

FLIC

1,675

1,278

828

6.9

15.8

0.96

12.14

3.87

63.02

11.72

1.25

NM

0.00

0.04

184.3

3.13

State Bancorp, Inc.

NY

STBC

1,608

1,350

1,098

7.0

12.5

(0.91)

(9.77)

4.03

71.88

6.71

2.61

426.42

2.64

2.09

128.4

2.54

Canandaigua National Corporation

NY

CNND

1,566

1,378

1,160

6.2

13.8

0.99

14.58

4.06

61.65

31.44

1.23

66.77

0.19

1.36

150.7

3.22

Peapack-Gladstone Financial Corporation

NJ

PGC

1,512

1,350

984

6.1

13.6

0.49

6.11

3.58

65.95

22.13

1.34

58.01

0.61

1.50

118.0

1.48

Tower Bancorp, Inc.

PA

TOBC

1,477

1,222

1,148

10.2

14.5

0.32

3.22

3.49

69.32

18.95

0.84

171.74

0.17

0.38

194.1

4.11

Alliance Financial Corporation

NY

ALNC

1,417

1,076

915

6.0

13.1

0.81

8.68

3.37

66.23

30.13

1.03

125.42

0.64

0.64

132.0

3.92

First Mariner Bancorp

MD

FMAR

1,385

1,147

1,013

2.0

5.7

(1.69)

(53.81)

2.43

104.26

47.35

1.15

17.79

1.17

4.89

7.7

0.00

Royal Bancshares of Pennsylvania, Inc.

PA

RBPAA

1,362

908

706

6.1

15.9

(3.98)

(47.71)

2.45

105.85

20.27

3.56

22.15

2.68

7.76

27.8

0.00

Citizens & Northern Corporation

PA

CZNC

1,322

927

722

8.7

17.9

(3.03)

(27.74)

3.84

55.42

22.58

1.15

80.31

0.04

0.84

141.8

2.74

VIST Financial Corp.

PA

VIST

1,309

1,021

913

4.6

11.8

0.04

0.48

3.06

76.28

34.34

1.25

31.65

0.58

2.80

51.1

2.27

Bryn Mawr Bank Corporation

PA

BMTC

1,239

938

889

7.5

12.5

0.88

10.55

3.70

67.47

38.90

1.17

120.26

0.76

0.67

162.4

3.06

Center Bancorp, Inc.

NJ

CNBC

1,197

814

715

6.4

12.5

0.37

4.87

2.85

64.82

10.71

1.16

102.69

0.18

0.67

127.7

1.37

CNB Financial Corporation

PA

CCNE

1,162

957

715

5.1

12.0

0.80

12.99

3.82

64.77

20.64

1.35

70.25

0.49

1.20

153.6

3.78

Shore Bancshares, Inc.

MD

SHBI

1,157

991

917

9.4

12.6

0.65

5.39

3.90

64.43

32.02

1.19

52.80

0.81

1.37

112.4

1.80

High

1,842

1,460

1,401

10.2

17.9

1.36

18.30

4.72

105.85

47.35

3.56

426.42

2.68

7.76

304.4

4.11

Low

1,157

814

706

2.0

5.7

(3.98)

(53.81)

2.43

55.42

6.71

0.84

17.79

0.00

0.04

7.7

0.00

Mean

1,467

1,160

974

6.6

13.1

(0.01)

(1.20)

3.57

68.92

23.22

1.42

106.96

0.69

1.89

142.1

2.26

Median

1,447

1,184

950

6.6

12.9

0.57

5.75

3.69

64.80

22.35

1.24

70.25

0.54

1.28

136.9

2.64

Orrstown Financial Services, Inc.

PA

ORRF

1,196

915

881

7.6

11.3

1.19

12.48

3.66

58.85

30.74

1.26

207.56

0.11

0.44

227.2

2.49

Asset Quality

Profitability (LTM)

Valuation

70

70

Non-

GAAP Financial Measures

The

ratio

of

tangible

common

equity

to

tangible

assets

is

a

non-GAAP-based

financial

measure

calculated

using

non-GAAP-

based

amounts.

The

most

directly

comparable

GAAP-based

measure

is

the

ratio

of

stockholders’

equity

to

assets.

In

order

to

calculate

tangible

common

equity

and

tangible

assets,

the

Company’s

management

subtracts

intangible

assets

from

both

common

equity

and

assets.

Tangible

common

equity

is

then

divided

by

tangible

assets

to

arrive

at

the

ratio

of

tangible

common

equity

to

tangible

assets.

Management

uses

the

ratio

of

tangible

common

equity

to

tangible

assets

to

assess

the

strength

of

the

Company’s

capital

position.

A

reconciliation

of

the

ratio

of

stockholders’

equity

to

assets

and

tangible

common

equity

to

tangible

assets

is

set

forth

below.

Year Ended December 31,

(Dollar Values in Thousands)

2005

2006

2007

2008

2009

Common Equity

57,310

89,388

96,124

103,347

110,886

Intangible Assets

1,935

21,567

21,368

21,186

20,938

Tangible Common Equity

55,375

67,821

74,756

82,161

89,948

Assets

601,460

809,031

884,979

1,051,783

1,196,432

Intangible Assets

1,935

21,567

21,368

21,186

20,938

Tangible Assets

599,525

787,464

863,611

1,030,597

1,175,494

Equity / Assets

9.53%

11.05%

10.86%

9.83%

9.27%

Tangible Common Equity / Tangible Assets

9.24%

8.61%

8.66%

7.97%

7.65%

71

71

Non-

GAAP Financial Measures

Return on average tangible equity is a non-GAAP-based financial measure calculated using non-GAAP-based amounts.  The

most directly comparable measure is return on average equity, which is calculated using GAAP-based amounts.  The

Company calculates the return on average tangible equity by excluding the balance of intangible assets and their related

amortization expense from the calculation of return on average equity.  Management uses the return on average tangible

equity to assess the Company’s core operating results and believes that this is a better measure of our performance.  In

addition, this is consistent with the treatment by bank regulatory agencies, which exclude goodwill and other intangible assets

from the calculation of risk-based capital ratios.  However, these non-GAAP financial measures are supplemental and are not

a substitute for an analysis based on GAAP measures.  A reconciliation of return on average equity to the return on average

tangible equity is set forth below.

Year Ended December 31,

(Dollar Values in Thousands, Except Per Share)

2005

2006

2007

2008

2009

Return on average equity (GAAP basis)

18.69%

15.10%

13.64%

13.20%

12.48%

Effect of excluding average intangible assets and related amortization

0.59%

3.88%

4.38%

3.82%

3.25%

Return on average tangible equity

19.28%

18.98%

18.02%

17.02%

15.73%