The 2020 annual meeting of the shareholders of Orrstown Financial Services, Inc will please come to order. Welcome to the 2020 annual meeting of shareholders. I'm Joel R. Zullinger, Chairman of the Board, and I will act as chairman of the meeting. As is self-evident to all in attendance today, due to the unusual circumstances we find ourselves in, today's meeting is being conducted virtually via a webcast and audio conference call. I would like to call your attention to the important disclosures on slide three relative to forward-looking statements. I would also call your attention to the disclosure relative to non-GAAP measures cited in today's presentation. Finally, on the next slide, I call your attention to the rules of conduct. Shareholders who are attending via webcast may submit questions during the meeting, and those questions will be addressed prior to adjournment.
Shareholders also had the opportunity to pose questions before the meeting via email. Thomas R. Quinn, Jr., President and CEO, and Thomas R. Brugger, Chief Financial Officer, will discuss the impact of the novel coronavirus pandemic on our company shortly when they provide management's report. Robert "Bob" Coradi, Secretary of the company, will act as Secretary of the meeting. I also welcome our directors present today, Rob DeAlmeida, Cindy Joiner, Mark Keller, Tom Longenecker, Andrea Pugh, Mike Rice, Eric Segal, Glenn Snoke, Floyd Stoner, and of course, Tom Quinn. Other distinguished guests attending, include corporate counsel Ken Rollins from the law firm of Pillar+Aught. Most of all, I'd like to welcome you, our loyal shareholders. A special thanks for your understanding and flexibility as we conduct our first virtual shareholder meeting.
The only persons entitled to vote at this meeting are shareholders of record as of the close of business on March 12th, 2020, the voting record date. In accordance with Pennsylvania law, the company has prepared a complete alphabetical list of shareholders entitled to vote at the meeting with their addresses and number of shares held on the record date. We have previously received an affidavit that the notice of annual meeting of shareholders and a form of proxy were mailed on or about March 19th, 2020, to each shareholder of record as of the close of business on the voting record date. This affidavit will be attached as an exhibit to the minutes of this meeting. The board of directors have previously appointed Robert Russoli to act as judge at this meeting.
The judge has taken an oath to fairly and impartially perform his duties, which oath will be filed as an exhibit to the minutes of the meeting. We have previously delivered to the judge the certified list of shareholders and all proxies which have been received. Our records show that there were outstanding on the record date and entitled to notice of and to vote at this annual meeting, 11,165,812 shares of common stock. Our records further show that more than a majority of such shares are present at this meeting in person or by proxy. The judge is making an exact count and will submit a formal report on the number of shares present or represented during the course of the meeting. Based on our preliminary count, a quorum is declared present, subject to the confirmation of that fact by the judge in his report.
We have made available electronically the rules of conduct for the meeting. If you would like to discuss an issue not on the agenda, I encourage you to contact any officer or director of the bank after the meeting. We provided an opportunity for shareholders to submit questions in advance of the meeting, and if any shareholder. If any shareholder attending via webcast wishes to ask a question, they can type it into the question field on their screen and click submit. In order to save time at this meeting, we propose to arrange the proceedings so that the vote will not be taken until all items have been moved and seconded. Registered shareholders who are attending via webcast do have the opportunity to vote their shares during the meeting.
However, f you have already voted your proxy or proxies, you do not need to vote again unless you wish to make a change. The first item of business to be acted upon by shareholders at the meeting, as stated in the notice of annual meeting of shareholders, is the election of three directors. In accordance with the bylaws, Cindy J. Joiner, Eric A. Segal, and myself, Joel Zullinger, have each been nominated by the board of directors to serve for a three-year term and until their respective successors have been elected and qualified. I therefore declare the board slate to be in nomination. No timely notice of any other nominations having been received, I declare the nominations to be closed.
The next item of business on the agenda is the approval of a non-binding advisory vote regarding compensation paid to our named executive officers, commonly referred to as Say- on- Pay. The chair will entertain a motion to vote on the approval of the advisory vote proposal regarding the executive compensation. Ms. Joiner moves and Mr. Stoner seconds. The next item of business on the agenda is the ratification of the audit committee's selection of Crowe LLP as the company's independent registered public accounting firm. For the fiscal year 2020, the chair will entertain a motion that Crowe LLP be ratified as the company's independent registered public accounting firm for the 2020 fiscal year. Mr. Longenecker moves, and Ms. Pugh seconds. The vote will now be taken on proposals one, two, and three. Will anyone who wishes to vote electronically do so now?
Remember, if you already voted your proxies, you do not need to vote again unless you wish to make a change. I will now pause for two minutes to provide an opportunity for anyone wishing to vote electronically. I now declare the polls closed. While the judges counting the votes, Tom Quinn, President and Chief Executive Officer of the company, and Tom Brugger, Chief Financial Officer, will report to you about the affairs of the company. After their presentations, we will entertain questions from our shareholders. Tom, would you please begin management's report?
Thank you, Joel. For the first time in 101-year history, we are not meeting face-to-face. We continue to balance the safety of our employees, our shareholders, and the communities with our responsibility to provide essential services. Due to the many significant and ongoing changes to our economy and social fabric, we cannot predict with any certainty how COVID-19 will impact our results for the last three quarters of the year. Tom Brugger will discuss potential impacts during his financial report. I'd like to introduce you to our management team. Tom Brugger, he is our Executive Vice President and Chief Financial Officer, who would speak later. Barbara Brobst, Human Resources. Bob Coradi, our Chief Risk Officer. Philip Fague, Trust, Wealth Management, and Mortgage. Bob Fignar, Operations and Technology and Logistics. Jeff Gayman, our Market President for our Southern region. Chris Holt, our Market President for Maryland Region.
Dave Hornberger, our Market President for the Lancaster region. Zach Curry, our Market President for the Harrisburg market. Adam Metz, our Chief Lending Officer. Steve Bernstein, our Chief Retail Officer, and Matt Schultheis is responsible for investor relation and strategic planning. At last year's annual meeting, I explained some of the areas we would focus on in 2019. We would expand and build out our commercial lending and fee income businesses to take advantage of the current and new markets. We would complete the integration of Hamilton Bank, continue our branch refresh and optimization of our branch network. We would enhance our client experience. We would optimize the Hamilton network, focus on operational efficiency, focus on enterprise risk management, including cybersecurity. We would make investments in learning and development in Orrstown University throughout the organization, and we would reward our shareholders.
Last year, we expanded our lending and fee income businesses. We had 72% growth in commercial relationship managers in 2019 to 31%. Since July, our pipeline has increased over $150 million, and we saw that in the fourth quarter with 20% annualized growth. To follow that up with 15% annualized growth in the commercial side in the first quarter of 2020. Between Q2 and Q4, we are predicting slower growth rate as a result of the COVID-19 pandemic. I am proud to say, though, that we continue to serve our customers as we process 1,500 payroll protection loan totaling over $370 million, which is expected to result in $9 million in fee income in the second and third quarter of this year. If you look at our success in commercial lending and fee income businesses since 2014, we have an 18.5% compounded annual growth rate.
Our loan portfolio has more than doubled in the last five years. We do have favorable demographics of our newest markets of Lancaster and Berks County, Baltimore and the West Shore, and Maryland should support our strong growth trajectory going forward absent the COVID-19 impacts. Just last year alone, you can see where we had 19% growth in our non-interest income. Focused on growth of non-interest income throughout the company in 2019 as a result. We had strong upside potential in our mortgage, our trust wealth management, and cash management businesses. We completed the acquisition of Hamilton Bank. We closed the deal in the second quarter of 2019.
We completed a successful systems conversion in the third quarter of 2019, and we were fortunate enough to hire Chris Holt, our Market President, who joined us in 2019 and successfully recruited a strong team that has had significant impact ahead of our internal projections. We announced in the fourth quarter the closure of five underperforming branches and the North Pointe Operations Center sale in excess of 50,000 sq ft. Branches to close in the first quarter of 2020, and the operations center is scheduled for sale in Q3 of 2020. We are also investing in existing branch network by selecting and upgrading our facilities to deliver an optimal client experience. These decisions are not made lightly, and as stewards of your investment in Orrstown, we have an obligation to continuously evaluate our delivery channels. The COVID-19 impacts have been profound.
There are already 24 branches of our 32 that have drive-through lanes and drive-through only mode. Branches without drive-through lanes are closed to regular walk-in traffic. Branch visits by appointment only are another viable option in following all federal, state, and local guidelines on social distancing, face masks, et cetera. We will continuously evaluate our regional footprint choice, particularly given the dramatic changes in client preferences over the past decade, which may have accelerated due to COVID-19. We continue to make numerous enhancements to ensure scalability and efficiency, including a rollout of our e-sign throughout the entire branch network, quality control automation process for loan boarding, utilization of robotics automation to eliminate inefficient data key and entering efforts, significant automation of PATRIOT OFFICER, our BSA/AML anti-fraud software, and the automation of data updates. We continue to support a culture that balances appropriate risk management with the business development efforts.
Our Bank Secrecy Act enhancements to include additional focus on client due diligence. We've continued down the path of CSOR readiness, although we have not yet determined when we will adopt. We've enhanced our CRA reporting and management of our CRA function. Credit administration works closely with the business lines to assign appropriate risk ratings for Mercersburg and Hamilton acquired portfolios. We have established procedures and staffing to accommodate the newly formed large mortgage servicing unit with the acquisition of Hamilton. We have invested in technologies that operationalize threat intelligence and use artificial intelligence to detect and thwart threat actors. We've invested in enhanced training and awareness programs for all employees. We've invested in the reduction and control over sensitive company and personal information. We've enhanced our incident response plan and described realistic actions and timelines.
We have focused on communication technologies and cybersecurity to support a work-from-home environment. We continue to make investments in Orrstown University and our webpage, the introduction of Orrstown Connections, a weekly e-newsletter, employee learning. We completed the Mercersburg and Hamilton conversions. 805 participant training sessions were held in 2019, and the customer experience rollout across the entire company took place. That has resulted in a reward to our shareholders. 7% dividend increases since 2015. Most recent dividend increase was 13% declared in January of 2020. Our quarterly dividend increase is 143% since 2015. We accomplished all that while celebrating our 100th year anniversary with our clients and our communities. We supported our communities with more than 2,285 new loans totaling $523 million. We expanded the Orrstown University to meet the learning and development needs of a growing organization. We completed the system conversion of First Community Bank of Mercersburg.
We completed the acquisition of Hamilton Bancorp, completed the systems conversion of Hamilton Bancorp, all while adding 185 new employees joined the Orrstown family in 2019. Dedicating more than 9,250 hours of community service were logged. More than $650,000 was donated toward the organizations. We hired two new market presidents, Zach Curry and Chris Holt, as I mentioned earlier, along with Tom Brugger and Matt Schultheis to our management team. We had the highest income in 100-year history of $16.9 million. We added 16,258 core deposit accounts and grew core deposits by $311 million. While the stock has clearly been impacted by COVID-19, in the year 2019, the stock return was 27.9%. All banks have been impacted by COVID-19, we continue to work on improving that. We increased our dividends 13.3%.
Clearly, the COVID-19 pandemic introduces uncertainty into the ability to achieve similar results in 2020, but we are working day and night to make sure that happens. Tom Brugger will now review all the financial results and discuss further. Tom?
Thank you, Tom. Good morning, everyone. It's my pleasure to give the financial report for 2019. Before going into results, I wanted to spend a few minutes going through short-term focus with the COVID-19 event. What are some of the things we're going to focus on to manage through this crisis? Number one is risk management. We're going to have a more conservative risk appetite in the short term. We will work hard to help our clients get through this difficult period with payment deferrals and show them the solution of the SBA PPP loan, which is basically a forgivable loan if they continue to pay their employees. We will focus on identifying problem loans quickly so we don't have a large increase in our problem assets in the future. Put a lot of emphasis on the higher risk concentrations such as restaurants, construction.
There is increased risk with the shutdown. We always maintain strong liquidity and monitor our investment portfolio risks. When rates drop, the net interest income of the bank comes under pressure, which is 70% of the revenue of the company. We will work on margin management, focusing on repricing our funding lower and optimizing our balance sheet. On the next slide, we talk about capturing fee income. When rates are low, we have pressure on our net interest income revenue, but there's more opportunity for fee income from clients who want to refinance their mortgages or interest rate hedging solutions for commercial clients and our wealth management business. We will focus on maintaining strong capital. Balance sheet growth will slow due to the crisis with less growth. We will focus on maintaining our common dividend.
Of course, when times are tough, we need to tighten our belt a little bit, reduce controllable expenses, and defer capital investments. Moving on to the next slide. I think it's helpful to look at the phases of growth for a company. From a financial perspective, your tactics shift when you go from phase to phase. We've outlined that on this slide. Phase I was just completed, which was the scale-up of the company, which was become more geographically diverse, expanding into Harrisburg area, Lancaster, and then into Maryland. Growing the revenue base and also building the platform, the infrastructure for the future. It costs money to run a bank, and to build the platform is expensive. You need to scale up your company to be able to do that.
That phase was completed last year with a couple of acquisitions behind us, and there was significant recruiting of commercial lenders, as Tom Quinn mentioned earlier. Now we're in phase II, and phase II is now moving the company, scaling up those investments, and moving the company to pure profitability over time. Once that's achieved, phase III is to grow profitably through organic strategies and potentially acquisitions while maintaining that pure profitability. Phase IV is ongoing. On the next slide, specifically, wanted to cover what strategies we're focused on this year, and this is phase II, a little bit more detail on that. We will focus on growing the relationship bank. Obviously, when you have multiple products that you're offering to a relationship, it's more profitable.
That's if you look at the franchise that we had where Orrstown started, moved into Harrisburg, Lancaster, Maryland, and we have a lot of products that we could distribute and improve our market share over time in those markets, which would make the bank more profitable. Branch efficiency. One of the big costs of running a bank is the physical branch structure. We have a continuous assessment process that resulted in the consolidation of five branch locations in the first quarter of 2020. We will continue to assess the branches over time. In the growth markets, it's a scale-up process. We have a long-term plan to build branches to $75 million-$80 million in size, and that is ongoing. We want to look at optimizing the Maryland branch market.
That market, there was an acquisition of Hamilton Bank. We are transitioning the strategies that were in place there to the relationship strategies that Orrstown has historically executed. On the next slide, we talk about balance sheet mix optimization. This is building the more profitable assets on our balance sheet, which are commercial loans and cash management deposits or cross deposits, reduce on balance sheet the mortgages, the investments, the low margin business, the wholesale funding. That optimization will improve our net interest income, which again, is 70% of our revenue. We will focus on fee income enhancement. If you look at the fee, the product offerings where we earn fees, they're all relationship products, from refinancing mortgages to our wealth management solutions, interest rate hedging solutions for commercial clients, interchange revenue which comes from clients using debit cards and other retail services.
We have a lot of great products, and if we build our market share over time, the bank will be more profitable. Enhancing the numbers on the next slide. You see results of the scale up I talked about phase I. You could see it in the numbers over the five-year period. Over three years, the assets of the company grew 68%, loans 88%, and deposits 63%. That's resulted in diluted earnings per share over three years, growth of 99%. That scale up is improving the income of the company and allowed Orrstown to increase the dividend by 71% over the past three years. The market cap of the company is up 36%. On the next slide, focusing on revenue specifically. Scan to the bottom in the orange box, you can see the core revenues and expenses. We stripped out merger charges and branch consolidation expenses in there.
You can see over a three-year period, the core revenues are up 70% and the core expenses are only up 42%. That's a concept of positive operating leverage, where your revenues grow faster than your expenses, and it translates into a 268% increase in pre-tax, pre-provision income. On a per share basis, at the bottom, you see the revenues up around 31%, expenses 10%, and 185% increase in pre-provision income. On the next slide, looking at the asset growth. The loan portfolio you see grew 87% over three years, and the deposit book by 63%. I talked about mix earlier, you could scan through the mix here. Over time, we would like to grow the commercial loans and the C&I categories and reduce the on-balance sheet residential mortgages. We'll originate those and sell those.
As we change the mix, the returns are higher for the commercial business, and that will translate into higher income. On the deposit side, we can see the same thing, the mix at the bottom, where the low cost deposits are more profitable. We look to grow the non-interest bearing DDAs and reduce the CDs. The next slide is capital adequacy. Five years ago, the company had a lot of excess capital. That capital was deployed into the organic growth strategies and the acquisitions. With that being done, the capital ratios are still very solid, and that capital being deployed generated the results I talked about earlier. The next slide is the performance ratios. These are the profitability metrics. If you look at the core profitability of the balance sheet, it is improving every year.
As you scale up the investments from the past and add more revenues, the efficiency ratio is improving every year. The operating expense to average assets then the pre-tax, pre-provision income to average assets is a proxy for return on assets. You could see continuous improvement over time, and those we would like to continue to see move in that direction. With that's the overview of 2019. 2020 is a little bit of a different year than we expected. We're changing our focus in the near term, the long-term focus is still the same. With that, I'd like to turn it back over to Tom Quinn. Thank you very much.
Thank you, Tom. As we continue to focus on the challenges of the pandemic, it certainly is going to change the way we operate some pieces of our business. It's unrealistic to think that there are fantastic business relationships that aren't suffering a little bit right now, and we'll continue to manage those. As we focus on 2020, we want to continue to reach out to our investor community and improve our investor relations, not only in our activities and our capabilities. We want to continue to expand our fee income sources. We've got off to a nice start, obviously under the tough situation with the SBA PPP program. It's an example of being very nimble and taking advantage of a new opportunity.
As I said earlier, we've completed over 1,500 applications and $372 million in round one of the PPP program. We're on to round two right now and continuing to have some success. Further automation of our operations and technology to support not only the work from home needs, but to provide additional efficiencies and scale. I think the pandemic and working from home has demonstrated some opportunities for us to even take a very strong system and improve upon it. We want to improve our data availability and usability of the front line. I think our business leaders are very talented, some of the best in the region and across the state lines, and giving them the appropriate data up front, they'll make better decisions. We want a consistent and repeatable sales process across all business lines.
As I said, we've come close to doubling the company in the last several years. We want to make sure that our sales processes will fit a growing company. We are going to continue to expand on Orrstown University. We think that educating our employees is an essential part of growth and giving them opportunities. We want to continue to focus on enterprise risk management, especially in the times that we're in right now. This has been a constant process for Orrstown and it will be as we move forward. With that, I'll turn the meeting back over to Joel. Joel?
Thank you to both Tom Quinn and Tom Brugger for their insightful remarks. At this time, we will entertain questions relating to proposals one, two, and three. If shareholders attending via webcast have not submitted their questions yet, please do so now. Mark Bayer, a member of the bank's management team, will identify the shareholder by name and read his or her question.
Thank you, Mr. Chairman. Actually, two questions did come during the meeting itself, and I'll read them in order. The first one is from a shareholder, Brenda K. Mayer. Her question was, "Focus loans, what is projection to actually collect?" I believe what Ms. Mayer is referring to is this question came across when Mr. Quinn was talking about our success in Q4 and Q1. I believe she's probably asking about the pandemic and how it affected.
Sure. Yeah, it's a fantastic question. Clearly, we are doing more loans primarily because we have more people. We have 17 new lenders out there in the market, and they are bringing to the company many of their strong relationships that they have had for years while being employed at a different location. Those relationships need to fit within the Orrstown underwriting process and procedures. We've been pretty stringent in those requirements. I will not say that some businesses will not be impacted by the COVID-19 experience, and we are working with many of those now. Our intent is to continue to be somewhat conservative as we approach lending during these times and prior to this. We've been in a strong economic cycle for a long time prior to this COVID-19 pandemic.
We've managed that process knowing we were going to have an event at some point with a level of conservatism as we approached it. It's part of our process. We'll continue to work with the clients. We have been very fortunate to bring over some wonderful clients over the last couple of years to the organization.
Thank you. Ms. Mayer, again, we did a little bit of interpretation of your question. If that's not exactly what you were asking, I would remind you that you can reach out to us afterwards at ir@orrtstown.com or simply give us a call and we can talk further. One other question also from Brenda K. Mayer, she says, "Is the sale of the operation center really happening in the third quarter?
Obviously, we take deposits and we lend those deposits out and make loans. We're not in the real estate business. We had some excess space down at one of our operations centers down in Chambersburg. We had an opportunity to sell that piece of property and lease back a sizable portion of it, which we agreed to. It's my understanding that is going to close sometime between now and the third quarter. As every transaction, until they close, you kind of continue to march down that path of using the facility the way it's intended. My best answer, that is the expectation. We have a contract regarding it, and we'll continue to move down that path.
Thank you. There are no other questions at this time. I would just remind anybody listening that if you have questions after the meeting, you can reach out to us in the usual methods that the Chairman laid out, ir@orrstown.com, or simply give us a call. Mr. Chairman?
Thank you, Mr. Bayer. There being no further questions, we will turn now to the judge of elections. He has completed his count and will now read the report. Bob?
Mr. Chairman, as duly appointed judge of election, I have examined the proxies submitted and hereby confirm that there are represented at this meeting by valid and legal proxies at least 8,781,929 shares of common stock of Orrstown Financial Services, Inc. This represents 78% of the total of the 11,165,802 voting shares issued and outstanding as of the record date. This includes proxies for a number of shareholders who are present at this meeting. There may also be present in person shareholders from whom proxies have not been received. Mr. Chairman, as the duly appointed judge of election, I hereby certify that I have counted the votes cast for the election of three directors to Class A to serve a three-year term, and the three nominees have received the highest number of votes cast.
I have counted the votes cast in connection with the approval of the compensation of the named executive officers, and a majority of the votes cast have been cast in favor of approval of the compensation of the named executive officers. Finally, I have counted the votes cast in connection with the ratification of Crowe LLP as the company's independent registered public accounting firm for 2020, and a majority of the votes cast have been cast in favor of ratification. Thank you, Mr. Chairman.
The report of the judge confirms that a quorum is and has been in attendance at this meeting for all purposes. It also shows that Cindy J. Joiner, Eric A. Segal, and Joel R. Zullinger have each been duly elected as directors of the company for three-year terms. The report shows that more than a majority of the votes cast have been voted in favor of Proposal 2, approval of the non-binding advisory vote regarding the compensation paid to our named executive officers. The report also shows that more than a majority of votes cast have been voted in favor of Proposal 3, the ratification of the audit committee's selection of Crowe LLP as the company's independent registered public accounting firm for the 2020 fiscal year. The report of the judge is accepted and approved and will be attached to the minutes of the meeting.
Thank you for attending our annual meeting virtually. There being no further business, a motion to adjourn is in order, and I have a motion from Mr. Rice and a second from Mr. Keller. Those in favor signify by saying aye.
Those opposed say no. The motion is carried and the annual meeting is adjourned. Thank you for coming to this annual meeting, and we look forward to seeing you face-to-face next year.