Orrstown Financial Services, Inc. (“Orrstown” or the “Company”), the parent company of Orrstown Bank (the “Bank”), announced initiatives designed to drive long-term growth, focus the organization on a rapidly changing banking environment and improve operating efficiencies. These initiatives include the closing of five branch locations and certain staffing model adjustments.
As a result of these initiatives, the Company expects to incur a one-time pre-tax charge of approximately $3.1 million (consisting of building and fixed asset write-offs of $1.9 million and early retirement/severance costs of $1.2 million) in the third quarter of 2022.
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 actions announced today serve as a critical step towards repositioning the franchise to focus on emerging delivery channels and digital solutions and maximizing our efficiency through continued automation. We will still seek to expand the franchise through strategic placement of brick-and-mortar locations along with providing best in class digital solutions. We intend to continue to provide the service our clients have come to expect while broadening our impact across the region. The savings generated will allow for expense control while also supporting the investments needed to achieve our long-term vision, which includes a robust digital experience to align with evolving client needs,” commented Thomas R. Quinn, Jr., Orrstown’s President and Chief Executive Officer.