Talk about a roller coaster week at Orrstown.
The good news came Monday when Shippensburg-based Orrstown Financial Services Inc. announced it had been upgraded from the state’s double-not-so-secret probation to merely kind-of probation.
Then came the bad news Thursday. Net income plummeted almost 32 percent from the previous quarter, and the bank sent out a news release about its plans to lay off 32 employees this quarter.
Executives at Orrstown could not be reached for comment Thursday or Friday.
First, the good news of Tuesday. After more than two years of increased oversight, the state confirmed it downgraded the level of scrutiny it will exercise with Orrstown going forward.
It’s still going to be watching, as a memorandum of understanding between the state and bank still requires the bank to update reports for state perusal. It’s just not doing it as heavily. The Orrstown news release didn’t mention the MOU, but a subsequent Securities and Exchange Commission filing did.
The original federal consent agreement still is in effect, and federal officials said that agreement is independent from the state’s order.
Then came the bad news Thursday: Income down, jobs lost. Orrstown reported net income of $1.98 million for 2014’s first quarter, which is up from the first quarter of 2013 when it reported $1.56 million in net income. But it was far down from the previous quarter that ended in December, when it reported $2.9 million in net income. (In its Thursday news release, it didn’t mention the fourth-quarter earnings, only the 2013 first-quarter earnings, though that’s not different from previous company practice).
The $2.9 million looks like somewhat of an outlier since the company reported $2.1 million for the 2013 third quarter, but looking back to the second quarter, it reported net income of $3.4 million.
That $3.4 million more than doubled the 2013 first-quarter net income mark.
So not only has it been a roller coaster week at Orrstown, but it’s also been a roller coaster 12 months.
Included in Thursday’s earnings report was a blurb for the company’s plans to eliminate 32 positions at the bank because of a technology upgrade it made in 2013. The cuts will save $1.5 million in salary and benefits but will cost $150,000 in the second quarter.
The technology upgrades allowed Orrstown to “streamline its operations and retail network,” according to the news release, meaning the positions were no longer necessary.
Rome wasn’t built in a day, and Orrstown couldn’t be completely rebuilt in the two years since the state and federal government decided to keep their very watchful eyes on the company. Until it is rebuilt, we can probably expect the roller coaster to keep rolling along.