| Central Penn Business Journal
Philly Fed, state will have stricter oversight of Orrstown
The Federal Reserve Bank of Philadelphia and the state Department of Banking will exercise stricter oversight of the management and operations of Orrstown Financial Services Inc. and Orrstown Bank, according to a filing today with the U.S. Securities and Exchange Commission.
Shippensburg-based Orrstown Bank and its parent company Thursday signed the agreements that will require the additional oversight, following a fourth quarter in which Orrstown Financial Services posted a $20.5 million dollar loss due to a goodwill impairment charge. That excluded, the company still would have posted a $1.5 million loss.
Company executives did not immediately return a call seeking comment on the agreements.
The oversight conditions with the Fed include adoption and implementation of multiple plans to:
- Strengthen oversight of management and operations.
- Reduce the bank's interest in criticized or classified assets.
- Strengthen its credit risk management practices.
- Maintain an adequate allowance for loan and lease losses.
- Maintain sufficient capital on a consolidated basis for the company and on a stand-alone basis for the bank.
- Revise the bank's loan underwriting and credit administration policies.
The bank agreed to similar provisions with the state, according to the filing. The Fed and state will determine when the agreements should end but no date was set, according to the filing.
The Banking Department is not permitted to comment on companies or its actions, spokesman Ed Novak said.
Documents had not yet been posted to the Fed archives and no additional information about the agreement was available at this time, spokeswoman Marilyn Wimp said.
Orrstown was one of four Central Pennsylvania banks that profited after borrowing $226 million in eight emergency lending program loans from the Fed, according to reports last year.
Orrstown Financial Services trades its shares on the Nasdaq under the ticker symbol ORRF.
Editor's note: This item was modified from its previous version to change the wording to "emergency lending program."