SHIPPENSBURG–Orrstown Financial Services, Inc. , the parent company of Orrstown Bank, has announced initiatives designed to drive long-term growth, focus the organization on a rapidly changing banking environment and improve operating efficiencies–including the closure of five branch locations.
Orrstown Bank provides a wide range of consumer and business financial services in Berks, Cumberland, Dauphin, Franklin, Lancaster, Perry and York Counties in Pennsylvania and Anne Arundel, Baltimore, Howard, Kent and Washington Counties, as well as Baltimore in Maryland.
The initiatives currently are expected to generate approximately $3.4 million of pre-tax annual expense savings once completed ($2.7 million from staffing model adjustments and $700,000 from reduced facilities costs). The Company intends to utilize a portion of the savings generated from these initiatives to address ongoing wage pressures and make additional investments in technology to both create operational efficiencies and enhance the Bank’s digital client experience. Based on the Company’s expected third quarter operating expense rate (excluding the one-time charge), the Company estimates that the impact of these net savings on operating expenses will be a reduction of approximately $1.0 million annually.
The five branches expected to be closed are located in Chambersburg (Lincoln Way East), East Earl (Shady Maple), Mechanicsburg (Simpson Street), Orrstown (Orrstown) and Spring Run (Path Valley). The branch closures, subject to regulatory approval, are expected to be completed in the fourth quarter of 2022.
When combined with the 11 branch closures completed in 2020 and 2021, the Company will have eliminated 16 branches, or 43% of its physical branch locations, since December 31, 2019. Once the branch closures are completed, the Bank’s average branch size, based on deposits as of June 30, 2022, is expected to be approximately $118 million, a significant increase from approximately $50 million in December of 2019.
The staffing model adjustments will be comprised of the elimination of certain positions within the Bank and early retirement packages for three officers.
The Company expects to retain many of the impacted retail employees to fill existing vacancies within the organization. Employees impacted by the branch closures will be given preference in filling the remaining open positions. Employees who will not be retained will be paid severance based on their years of service with the Bank and be provided with outplacement services to assist them with identifying other employment opportunities.
For more information about Orrstown Financial Services, Inc. and Orrstown Bank, visit www.orrstown.com.