Orrstown Financial Services (ORRF) in Shippensburg, Pa., is trimming its troubled loans again.
The $1.3 billion-asset company said Thursday it has sold 172 commercial loans with a combined balance of $45.6 million to an investor group for roughly $32 million. Orrstown did not identify the buyer or describe the types of loans that it sold.
Separately, Orrstown on Friday announced a plan to cut costs and boost revenues with the goal of operating more efficiently and improving earnings.
The sale of the loans has lowered its troubled assets by roughly 42% since the third quarter, Orrstown said. Nonperforming assets made up 4.8% of Orrstown's total assets as of Sept. 30.
In July, Orrstown sold $28.6 million of nonperforming commercial loans to an unnamed investor.
"The company demonstrated profitability in the first two months of the fourth quarter, and we are optimistic about our fourth-quarter results," Thomas Quinn, Jr., Orrstown's chief executive, said in a news release. "The board and management have worked tirelessly this year to address the critical issues facing the company and we look forward to … 2013 and beyond."
Orrstown reported on Oct. 29 that its provision for loan losses fell 35%, to $5.1 million, in the third quarter compared with a year earlier.
Orrstown said it hopes to improve its efficiency ratio, which stood at roughly 75.07% as of Sept. 30, to between 58% and 62% over the next three years. The company, which recorded an efficiency ratio of 52.36% for the third quarter of 2011, said it expects to cut back on costs related to working out troubled loans, to boost productivity and to invest in lines of business that can generate revenue.
Quinn described the initiative in a news release as "one element" of Orrstown's plan "to return to historical levels of performance."
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