First National Community Bancorp in Dunmore, Pa., showed that there is still life left in some charged-off loans.

The community bank fully recovered millions of dollars from credits that previously had been written off, leading to a $6.6 million profit in the second quarter, it said in a news release Tuesday. That was an improvement from its $720,000 profit in the same period a year earlier.

A legal settlement related to "a large credit relationship" brought in $5.8 million, of which $3.6 million was from the full recovery of previously charged-off commercial real estate loans, the release said.

The settlement also covered "all past due interest and late charges" and helped reimburse all legal fees and other payments related to the credit dispute.

Noninterest income more than doubled , to $5 million, thanks to gains from the settlement and net gains on the sale of investment securities.

However, First National faced some challenges in the quarter, including a 10-basis-point drop in net interest margin year over year, to 3.16%. And it remains under a consent order with the Office of the Comptroller of the Currency, though it said its total risk-based capital ratio of 14.74% and its Tier 1 leverage ratio of 9.62% exceeded the order's minimum requirements.

The $960 million-asset company is the parent of First National Community Bank.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.