Orrstown Financial Services, the Shippensburg, Pa.-based parent company of Orrstown Bank, has announced that it has completed sale of distressed loans worth $45.6 million, reducing its troubled assets by 61 percent this year.
The bank, which has offices in Cumberland, Franklin and Perry counties in Pennsylvania, and in Hagerstown on Eastern Boulevard, has been under the oversight of the Federal Reserve Bank of Philadelphia and the Pennsylvania Department of Banking since March this year.
According to reports, the bank’s risk-management assessment system for lending came under scrutiny from regulatory agencies after it listed losses of about $23 million in 2011.
The sale of the commercial loans will bring the company $32 million, according to the company. In a media release Friday, the company said it had been profitable for the first two months of the fourth quarter and was optimistic about fourth-quarter results.
The discount to book value because of the sale of the troubled assets would “be absorbed through existing loan loss reserves,” according to the media release.
“We have turned a corner and have some positive news,” Thomas Quinn, president & CEO of the company, said last week.
Quinn said the sale of the distressed loans was an opportunity to clean up the balance sheet.
“I think it is a wonderful opportunity to serve our customers,” Quinn said. “We have lending capacity, and we have some new lenders.”
He predicted that 2013 would be a strong year for the bank, which has about 330 full-time employees.
“No one likes to go through this, but we have embraced the feedback we have received,” Quinn said.