Proforma Statement on Orrstown financials
A continuation of the first two case studies, this assignment continues to focus on Orrstown
Financial Services, Inc., ticker ORRF. Using the structure developed in the first two cases and
the new understanding of forecasting financial statements, complete five year pro forma
statement for Orrstown Financial. Include Balance Sheet, Income and Cash Flow statement.
As part of the analysis, all financial ratios must be forecast. Remember to include percent
change by year and document and justify each forward assumption. All assumptions must be
realistic and documented.
The final continuation of the first three case studies, this assignment continues to focus on
Orrstown Financial Services, Inc., ticker ORRF, and its valuation. Using the completed five year
pro forma statement for Orrstown Financial value the entity as a whole and forecast equity price,
assuming no additional equity issuance, for the next five years.
For this final case, consider yourself an equity analyst and present the final case as a
“Buy/Sell/Hold” position for the equity. Justify your forecasted equity price.
In addition, consider yourself an expert regarding financial statements for SEPTA. What is your
expert opinion of Orrstown Financial? Has the current President/CEO acted as a fiduciary for
investors? Have the Board acted in the best interests of investors. Finally, should the current
President/CEO remain in his position or should the Board ask for his immediate resignation and
You did the second part of the four parts I will copy the first one below just so you can have an idea.
The case study assignments will focus on Orrstown Financial Services, Inc., ticker ORRF.
Beginning with Financial Statements in 2006 compute the common size balance sheet and
income statements. The Balance Sheet will normalize all line items to 100% of Total Assets; the
Income Statement will normalize all line items to 100% of Net Revenue. Calculate and
demonstrate not just the common size statements but also % change by year.
Choose a relevant competitor in the market to Orrstown Financial Services and complete the
same analysis and compare/contrast. How well has Orrstown performed to date versus its peer?
Why the difference(s)? What is different between the two lending institutions?
Additionally, compare Orrstown Financial Services versus industry metrics. Has Orrstown
under- or over-performed the industry? Why/why not? What is the difference between
Orrstown’s performance, its peer and the industry? (Hint: GET YOUR HEAD OUT OF THE
FINANCIAL STATEMENTS! Read all filings and understand the economics of the industry
and the economy.)
As part of this analysis, a written understanding of industry economics (national and regional)
must be completed. Review Orrstown’s annual reports and stated strategies? Have these
strategies been followed? Review past annual reports. In 2009 Orrstown named a new president
and Chief Executive? What are his/her credentials? Has this individual performed well or
poorly? Why/why not?
Finally, comment on the quality of the Financial Statements issue by Orrstown. Do they explain
the performance of the equity over time? Are the Financial Statements supporting equity
valuation or not? Why/why not?
This assignment must include common size statements, proven understanding and knowledge of
the industry, and conclusions taken from common size and equity valuation. It will be relevant
to discuss not just the changes in the common size statements but to overlay equity performance
seeing how Financial Statements interact with market valuation of equity pricing.