The Pennsylvania Department of Banking and Securities has freed Orrstown Bank in Shippensburg from all enforcement actions related to its recent credit troubles.
The $1.2 billion-asset bank said Monday that state regulators released it from a memorandum of understanding on Feb. 6. That memorandum replaced a more severe consent agreement that was terminated in April 2014.
The original consent agreement, issued in March 2012, required the bank to improve its underwriting and credit management practices at a time when it was enduring massive losses on real estate loans. The bank lost a combined $69 million in 2011 and 2012, according to Federal Deposit Insurance Corp. data. The bank and its parent company, Orrstown Financial Services, remain under an enforcement order with the Federal Reserve Bank of Philadelphia.
Its release from the state enforcement action comes just weeks after Orrstown reported a $19.1 million profit in the fourth quarter that was aided largely by the recapture of its $16.2 million deferred tax asset valuation allowance. It marked the bank's ninth consecutive profitable quarter following the steep losses of 2011 and 2012.
Orrstown operates 22 banking offices and two remote services facilities in Cumberland, Franklin, Lancaster and Perry Counties in Pennsylvania and Maryland's Cumberland County.