Orrstown Financial Services (ORRF) sold $28.6 million of nonperforming commercial loans to an unnamed outside investor.
The $1.4 billion-asset company, which has been taking steps to reduce problem assets, said in a regulatory filing Wednesday that it would record an after-tax charge of $5.8 million for the second quarter to reflect the loan sale. Orrstown said the sale will cut its ratio of nonperforming assets to total assets by more than 300 basis points; the ratio stood at 5.84% on March 31.
The loan sale comes as executives have departed the Shippensburg, Pa., company and its stock price has declined due to losses and an enforcement order.
Orrstown is the second community banking company in as many days to report a sale of troubled loans. Fulton Financial (FULT), of Lancaster, Pa., last month sold $44.1 million of nonaccrual commercial real estate, commercial and construction loans to an unnamed investor.