SecProbe.io

August 23, 2012

Via E -mail
Mr. Thomas R, Quinn, Jr.
President and Chief Executive Officer
Orrstown Financial Services, Inc.
77 East King Street, P. O. Box 250
Shippensburg, Pennsylvania  17257

Re: Orrstown Financial Services, Inc.
Form 10 -K for the Fiscal Year Ended December 31 , 2011
Filed March  23, 2012
Form 10 -Q for the Period Ended June 30, 2012
Filed August 9, 2012
File No. 00 1-34292

Dear Mr. Quinn :
We have reviewed your filing s and have the following comments.   In some of our
comments, we may ask you to provide us with information so we may better understand your
disclosure.
Please respond to this letter within ten business days by amending your filing s, by
providing the requested information, or by advising us when you will provide the requested
response.   Where we have specifically requested a draft of your proposed disclosures in future
filings, please ensure that it clearly identifies  new, revised or delete d disclosures, as
appropriate.   If you do not believe our comments apply to your facts and circumstances or do not
believe an amendment is appropriate, please tell us why in your response.
After reviewing any amendment to your filing s and the information you provide in
response to these comments, including the draft of your proposed disclosures, we may have
additional comments .
Form 8 -K filed March 12, 2012

1. We noted the revised earnings release filed for the quarter and year ended December 31,
2011.  Please explain to us , in specific detai l, the nature of the subsequent events which
resulted in the recording of additional impairments and the increase in the level of
nonaccrual loans for the respective periods impacted.

Mr. Thomas R. Quinn, Jr.
Orrstown Financial Services, Inc.
August 23,2012
Page 2

 Form 10 -K for the Fiscal Year Ended December 31, 2011

Notes to Consolidated Financial Statements

Note 8. Income Taxes, page 107

2. We note that you have recorded a net deferred tax asset of $18.2 million at December 31,
2011. Your disclosures and management’s assertion of realiza bility of the net deferred
tax asset is based on the reversal of deferred tax liabilities, tax planning strategies and
estimated future taxable income. Forming a conclusion that a valuation allowance is not
needed is difficult when there is negative eviden ce such as cumulative losses, which is
considered a significant piece of negative evidence that is difficult to overcome (refer to
paragraphs 21 – 23 of ASC 740 -10-30).  Furthermore the weight given to the potential
effect of negative and positive evidence  should be commensurate with the extent to
which it can be objectively verified.

In light of the significant losses recognized in the fiscal year ended December 31, 2011,
the continued significant losses recognized in each of the quarterly interim period s of
fiscal 2012, the regulatory agreements entered into in March of 2012, as well as the
uncertainty around the current geographic and economic operating environment, please
provide us with specific detailed information to support the realizability of the  net
deferred tax asset at December 31, 2011 as well for each of the interim reporting periods
during fiscal 2012.

Form 10 -Q filed for the Quarter Ended March 31, 2012

Item 4. Controls and Procedures

(a)Evaluation of disclosure controls and procedures, page 58

3. Please tell us how management is able to conclude that the disclosure controls a nd
procedures were  effective as of both March 31, 2012 and as of June 30, 2012 , in light of
the fact that the Com pany has not fully remediated the material weaknesses in internal
control over financial reporting relating to loan ratings and its impact on the allowance
for loan losses

We urge all persons who are responsible for the accuracy and adequacy of the disc losure
in the filing to be certain that the filing includes the information the Securities Exchange Act of
1934 and all applicable Exchange Act rules require.   Since the company and its management are
in possession of all facts relating to a company’s disc losure, they are responsible for the accuracy
and adequacy of the disclosures they have made.
 In responding to our comments, please provide a written statement from the company
acknowledging that:

 the company is responsible for the adequacy and accuracy of the disclosure in the filing;

Mr. Thomas R. Quinn, Jr.
Orrstown Financial Services, Inc.
August 23,2012
Page 3

  staff comments or changes to disclosure in response to staff comments do not foreclose
the Commission from taking any action with respect to the filing; and

 the company may not assert staff comments as a defense in any proceeding initiated by
the Commission or any person under the federal securities laws of the United States.

Please address questions regarding all comments to Marc Thomas, Staff Accountant, at (202)
551-3452 or, if you thereafter need further ass istance, to me at (202) 551 -3474 .

Sincerely,

 /s/ Sharon Blume

Sharon Blume
Assistant Chief Accountant