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SEC Response Letter

 FOIA Confidential Treatment Request

The entity requesting confidential treatment is:

 Orrstown Financial Services, Inc.

 77 E. King Street

Shippensburg, PA 17257

 Attn: Thomas R. Quinn, Jr., President & CEO

 (717) 530-2602

April 8, 2011

 United States Securities
and Exchange Commission

 Division of Corporation Finance

 100 F Street, N.E.

 Washington, D.C. 20549-4561

Attention: Marc Thomas, Staff Accountant

Re:
Orrstown Financial Services, Inc.

 Form 10-K for the Fiscal Year Ended December 31, 2010

 Filed March 11,
2011

 File No. 1-34292

 Dear Mr. Thomas:

 By this letter, Orrstown Financial Services, Inc. (the
“Company”) is responding to the comments of the staff (the “Staff) of the United States Securities and Exchange Commission (the “Commission”) to our Annual Report on Form 10-K for the year ended December 31, 2010 as
filed with the Commission on March 11, 2011. The Company’s responses to the Staff’s letter of comment dated March 25, 2011 have been titled and numbered to correspond to the Staff’s comments.

As set forth below, we are requesting confidential treatment for portions of this letter as identified by [***] (the “Confidential
Portions”), pursuant to Rule 83 of the Commission’s Rules on Information and Requests, 17 CFR §200.83 (the “Rule”), and in connection with the Freedom of Information Act (5 USC §552). In accordance with Rule 83, we have
separately filed this letter (but not the Confidential Portions) with the Freedom of Information and Privacy Act Office of the Commission. The unredacted Confidential Portions are being submitted to you separately.

Form 10-K for the Fiscal Year Ended December 31, 2010

 Management’s Discussion and Analysis of Financial Condition and Results of Operation

Asset Quality, Risk Elements page 45

Staff Comment:

1.
We note your discussion of the four commercial relationships which encompass the majority of the nonaccrual loan balance at December 31, 2010. Please provide us
with the following as it relates to each of these relationships:

•

 When the loan was originated;

•

 The allowance for loan losses associated with the loan, as applicable;

 1

 When the loan became non-accrual;

•

 The underlying collateral supporting the loan;

•

 The last appraisal obtained from the loan, as applicable;

•

 The amount of any charge-offs recorded to date; and

•

 Any other pertinent information deemed necessary to understand your review of the loan and related accounting for the loan as of December 31, 2010
and through the date of your response.

 Company’s Response:

A separate attachment outlining the information requested above has been provided in response to your letter of comment. In drafting our
disclosure for inclusion in the Management’s Discussion & Analysis (MD&A), management balanced the need for transparent disclosure to its shareholders and other users of the financial information with our desire not to over
disclose pertinent facts and information that the borrowers, or their attorneys, may read. In the event a borrower could decipher our discussion and determine that they were the relationship mentioned, they may have attempted to use such information
to their benefit in loan workout negotiations. The information set forth in the attachment is subject to the Rule 83 confidential treatment request set forth elsewhere in this letter.

 Staff Comment:

2.
As it relates to your consideration of guarantors in the determination of the allowance for loan losses on loans which have personal guarantees, please address the
following:

•

 Tell us how the company evaluates the strength of the guarantor, including the specific type of information reviewed, how current and objective the
information reviewed is, and how often the review is performed;

•

 Tell us how often you have pursued and successfully collected from a guarantor during the past two years. As part of your response, please discuss the
decision making process you go through in deciding whether to pursue the guarantor and whether there are circumstances you would not seek to enforce the guarantee; and

•

 Quantify the dollar amount of commercial loans in which your carrying value is in excess of the appraised value but not considered impaired due to the
existence of guarantees.

 Company’s Response:

On certain credit relationships, consideration is given to the financial strength of a guarantor in determining specific reserve
allocations on loans individually evaluated for impairment. In those situations in which a personal guarantee is considered in the impairment analysis, the following factors are considered specifically related to the guarantor:

Financial strength of the guarantor – the guarantor’s most recent financial statements are obtained and the excess cash
flows are analyzed to determine if there are sufficient amounts to keep the loan current and/or pay the loan off. Additional factors considered would the type of liquid investments the guarantor holds and their liquidity. In addition, the
guarantor’s net worth and contingent liabilities, including their guarantees of other credit relationships, would also be analyzed and considered.

 Guarantor’s willingness to meet the debt service requirements – The willingness of the guarantor to meet a loan’s debt service requirements is also considered in determining if any
reliance can be placed on the guarantee for any deficiencies in cash flows or collateral values. Personal interactions with the guarantor, past experience with the guarantor, and credit scores and ratings are evaluated and considered.

 2

 An evaluation of the guarantor’s ability to continue to enhance the credit is done
quarterly to coincide with financial reporting. A review of the guarantor’s financial statements is performed periodically, but not less frequently than annually, in connection with the evaluation.

Despite having guarantees on numerous loans that have been in loan workout or have been foreclosed upon, management typically does not
rely on guarantees unless the guarantor is financially strong and has demonstrated a willingness to meet the obligations of the borrower. Often times, the financial perils of a guarantor mirror that of the borrower, and they declare bankruptcy in
order to avoid the Company’s pursuit of their guarantee. In the past twenty four months, the Company has been successful in enforcing the guarantee either in total, or a partial pay-down of the loan in three separate instances. In one case, the
guarantors paid the deficient balance in total, and in two other cases, the guarantors reduced the charge-off to the Bank by $275,000 and $112,000.

 Generally speaking, the Company attempts to enforce the guarantee despite the fact it has not placed reliance on it in the determination of an impairment reserve. In cases of bankruptcy, the Company will
file a judgment against the guarantor. In limited situations, the Company will not pursue a guarantee course of action when it feels the publicity may have a negative impact on its image or public perception.

As of December 31, 2010, the Company had four (4) relationships in which the borrower’s income, or the collateral securing
the loan is not sufficient to cover the loan balance, for which the Bank is relying upon the guarantors, due to their financial strength and willingness to meet the contractual terms of the loan agreement, in determining not to consider the loans
impaired. These four relationships total $11,490,000 at December 31, 2010.

 Credit Risk Management – Allowance for Loan Losses,
page 47

 Staff Comment:

3.
We noted your disclosure on page 49, that the Company modified its criteria for identifying impaired loans, as performing substandard loans were no longer considered
impaired. We also note that you consider “Substandard loans, by definition, to have a well –defined weakness, or weaknesses that jeopardize the liquidation of the debt and these loans are characterized by the distinct possibility that the
Bank will sustain some loss if the deficiencies are not corrected. Please tell us and revise your disclosures in future filings, as it relates to the definition of ‘substandard loans’ to indicate that this category includes loans that are
performing. Further, you should address the reasons for the including these types of loans within this specific category, and not some other category, within your internal risk rating system and why the change was made in 2010. Additionally, you
should quantify the amount of loans included within the ‘substandard’ category that are performing. We reference the requirement of ASC 310-10-50-28 as it relates to an entity’s credit quality indicators.

Company’s Response:

In our future filings, beginning with the Quarterly Report for the quarter ended March 31, 2011, the Credit Risk Management –
Allowance For Loan Losses section of our Management’s Discussion and Analysis will include revised disclosure to indicate that the “Substandard” loan category includes loans that management has determined not to be impaired, as well
as loans that are impaired. Such disclosure would appear substantially as follows and include the indicated table:

 Credit
Risk Management

 Allowance for Loan Losses

 *  *  *

 In order to monitor ongoing risk associated with its
loan portfolio and specific credits within the segments, management uses an eight point internal grading system. The first four rating categories, representing the lowest risk to the Bank, are combined and given a “Pass” rating. The
“Special Mention” category includes

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loans that have potential weaknesses that may, if not monitored or corrected, weaken the asset or inadequately protect the Bank’s position at some future date. These assets pose elevated
risk, but their weakness does not yet justify a more severe, or criticized rating. Management generally follows regulatory definitions in assigning criticized ratings to loans, including substandard, doubtful or loss. “Substandard” loans
are classified as they have a well-defined weakness, or weaknesses that jeopardize liquidation of the debt. These loans are characterized by the distinct possibility that the Bank will sustain some loss if the deficiencies are not corrected.
“Substandard” loans include loans that management has determined not to be impaired, as well as loans considered to be impaired. A “doubtful” loan has a high probability of total or substantial loss, but because of specific
pending events that may strengthen the asset, its classification of loss is deferred. “Loss” assets are considered uncollectible, as the underlying borrowers are often in bankruptcy, have suspended debt repayments, or ceased business
operations. Once a loan is classified as “Loss”, there is little prospect of collecting the loan’s principal or interest and it is generally written off.

 *  *  *

(Dollars in thousands)

Pass

Special
Mention

Non-
Impaired
Substandard

Impaired
Substandard

Doubtful

Total

 Commercial real estate:

 Owner-occupied

$
162,968

$
2,035

$
6,311

$
—

$
686

$
172,000

 Non-owner occupied

120,633

4,274

15,495

2,970

—

143,372

 Multi-family

20,030

676

3,853

—

90

24,649

 Acquisition and development:

 1-4 family residential construction

24,199

2,297

2,801

—

—

29,297

 Commercial and land development

79,391

2,487

6,134

93

—

88,105

 Commercial and industrial

221,111

17,062

14,992

9,770

1,008

263,943

 Residential mortgage:

 First lien

117,607

—

1,843

119,450

 Home equity - term

39,279

—

1,539

—

—

40,818

 Home equity - lines of credit

71,364

—

183

—

—

71,547

 Installment and other loans

11,062

—

50

—

—

11,112

$
867,644

$
28,831

$
53,201

$
12,833

$
1,784

$
964,293

 Classified loans may also be evaluated for impairment. A loan is considered impaired when, based on current
information and events, it is probable that the Bank will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Factors considered by management in determining
impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as
impaired. Generally, loans that are more than 90 days past due are assigned a “Substandard” rating. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of
the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record, and the amount of the shortfall in relation to the principal and interest owed.
Impairment is measured on a loan-by-loan basis for commercial, construction and restructured loans by either the present value of the expected future cash flows discounted at the loan’s effective interest rate, the loan’s obtainable market
price, or the fair value of the collateral if the loan is collateral dependent.

 In 2010, the Company began to distinguish
Substandard loans on both an impaired and non-impaired basis, as it placed less emphasis on a loan’s classification, and increased reliance on whether the loan was performing in accordance with the contractual terms. “Substandard”
classification does not automatically meet the

 4

definition of “impaired”. A substandard credit is one that is inadequately protected by current sound worth, paying capacity of the obligor or the collateral pledged, if any. Extensions
of credit so classified have well-defined weaknesses which may jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the bank will sustain some loss if the deficiencies are not corrected. Loss potential,
while existing in the aggregate amount of substandard credits, does not have to exist in individual extensions of credit classified substandard. As a result, the Company revised its methodology in its evaluation of certain accruing commercial real
estate, acquisition and development and commercial and industrial loans rated “substandard” collectively for impairment as opposed to evaluating these loans individually for impairment. Although we believe these loans have well defined
weaknesses and meet the definition of “substandard”, they are generally performing and management has concluded that it is likely it will be able to collect the scheduled payments of principal and interest when due according to the
contractual terms of the loan agreement. Approximately $53,201,000 of loans that were in previous years evaluated individually for impairment were collectively evaluated for impairment at December 31, 2010, resulting in an additional allowance
for loan losses allocation of $3,710,000.

 *  *  *

Staff Comment:

4.
Please address and revise your future filings to disclose the following information related to your troubled debt restructurings:

•

 TDRs or renegotiated loans quantified by loan type classified separately as accrual/nonaccrual;

•

 Policy regarding how many payments the borrower needs to make on restructured loans before returning loans to accrual status;

•

 Quantification of the types of concessions made (e.g. rate reductions, payment extensions, forgiveness of principal, forbearance or other actions) and
discussion of your success with the different type of concessions.

 Company’s Response:

The following will be incorporated into future filings in the Loan Significant Accounting Policy, consistent with the requirements of the
recently issued Accounting Standards Update (ASU) No. 2011-2, “A Creditor’s Determination of Whether a Restructuring is a Troubled Debt Restructuring.” This disclosure will initially be incorporated into the Quarterly Report on
Form 10-Q for the quarter ended March 31, 2011.

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