Orrstown Financial Services in Shippensburg, Pa., plans to close five branches and adjust its staffing model.
The $2.8 billion-asset company said in a press release Wednesday that the moves are “designed to drive long-term growth, focus … on a rapidly changing banking environment and improve operating efficiencies.”
The branches, all of which are in Pennsylvania, are expected to close in the fourth quarter.
Orrstown expects to incur $3.1 million of one-time charges in the third quarter, including $1.9 million for building and fixed asset writeoffs and $1.2 million of early retirement and severance costs.
The initiatives are expected to generate about $3.4 million of pretax annual expense savings once completed, including $2.7 million from staffing model adjustments and $700,000 from reduced facilities costs.
Orrstown said it plans to use some of the savings to address ongoing wage pressures and make more investments in technology to become more efficient and enhance its digital offerings.
The net annual savings are expected to be about $1 million.
“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,” Thomas Quinn Jr., Orrstown’s president and CEO, said in the release.
“We will still seek to expand the franchise through strategic placement of brick-and-mortar locations along with providing best-in-class digital solutions,” Quinn added. “The savings generated will allow for expense control while also supporting the investments needed to achieve our long-term vision.”
Orrstown, which closed 11 branches in 2020 and 2021, has reduced the size of its branch network by 46% in the past three years.
The job eliminations include early retirement packages for three officers.