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Orrstown Financial Services (ORRF) reached a legal settlement with PL Capital over a requirement that the outside investor said wrongly benefited management.
February 4 -
Orrstown Financial Services (ORRF) in Shippensburg, Pa., has been hit with a lawsuit alleging that it misled investors about its financial strength during its March 2010 stock offering.
May 31
A Pennsylvania transportation agency has added new accusations to the securities lawsuit it filed against the $1.2 billion-asset Orrstown Financial Services (ORRF).
Members of Orrstown's loan committee approved loans in an effort to juice growth, despite recommendations from the bank's credit analysts to reject the applications, the Southeastern Pennsylvania Transportation Authority said in an amended lawsuit.
Orrstown also used proceeds from its March 2010 securities offering to "mask" problems with certain loans made to real estate developers in Hagerstown, Md., and Chambersburg, Pa. In one case, a borrower defaulted on loans that were being used to finance the redevelopment of a historic former hotel in Hagerstown into a mixed-use facility, according to the lawsuit. Orrstown eventually sued that borrower.
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Some allegations included in the amended lawsuit are based on statements made by four unnamed former Orrstown employees and two unnamed current and former Orrstown customers.
The authority also added new defendants, naming Sandler O'Neill & Partners and Janney Montgomery Scott; both investment banks served as underwriters on Orrstown's March 2010 stock offering. It also named as a defendant the accounting firm Smith Elliott Kearns, which issued "clean" audits of Orrstown's books from 2009 to 2011, the authority says.
Between March 24, 2010, and May 9, 2011, the authority bought 14,574 shares of Orrstown, the lawsuit says. The shares during that period traded around $20 to $28 when adjusted for dividends and splits; they were at $14.68 apiece on Tuesday afternoon.
Orrstown, based in Shippensburg, Pa., last month
