Project #39113 - rephrase

Orrstown Financial Services, Inc. (ORRF) operates as the bank holding company for Orrstown Bank that provides commercial banking and trust services through 21 locations across Central Pennsylvania and Washington County, Maryland. Orrstown is a hundred years old bank, but the last 10 years have been a roller coaster ride for them. From listing on NASDAQ, management reshuffle, high growth followed by years of big losses, business restructuring, Orrstown experienced it all in less than 10 years. It can be broken up into three phases i.e. pre 2008, 2009-12 and 2012 onwards. While pre 2008 period was dominated by steady compounding growth and low net profit margin, 2009-12 was a period full of turbulence with high losses and loan assets going bad. Post 2012 appeared to be a period of recovery by selling off bad assets, and recovery back to profits; the bank has posted profits in last two quarters. 

Macro/Micro Overview

Following across the board write-down and purge of toxic assets from the global bank’s balance sheets and previously stated sluggish US economic recovery, the US financial institutions are well placed to continue moving from capital preservation to measured sustainable growth. Orrstown Bank and its peer, Macatawa Bank (which underwent a similar Fed enforcement action from Jul-10 to Oct-12) both have different strategies going forward.

Orrstown Bank has lagged its peers in disclosing and provisioning for bad loans from fiscal year 2008 through 2012 culminating with the Federal Reserve Board executing enforcement action against both Orrstown Financial Services a registered bank holding company, Inc. and its subsidiary Orrstown Bank to “maintain [their] financial soundness.” These steps include, but are not limited to taking steps to strengthen the Board of Directors to enable them to “condition and maintain effective control over, and supervisions of the bank’s major operations and activities, including but not limited to credit risk management, lending and credit administration, asset quality, liquidity, audit, capital, and earnings” all of which seemed to be majorly deficient in some respect. This Fed enforcement action is costing the bank $575,000 to $750,000 per year in the fees for consultants (Sources: ORRF 10K).

Porter’s Five Forces analysis for Orrstown Bank with a one word descriptive mention pertaining to each force would be - internal rivalry: high, entry/exit costs: high/moderate, substitutes: moderate, supplier power: Low and buying power: Low.

Subject English
Due By (Pacific Time) 09/04/2014 12:10 pm
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