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It doesn't look like it's the loop that's the problem, to me. It's the creation of all those tiny files, and all those external tr -d calls, and the >> re-opening the same file over and over and...

Some data samples might help. Wouldn't a performance / time profile make sense?

Please provide the information for #4 above - THANK YOU.

PS: you invoke ksh but seem to have some bash code in your example. It will not run.