Stonebridge Financial in West Chester, Pa., plans to sell its bank through bankruptcy proceedings.

A U.S. district bankruptcy court on Monday approved the $131 million-asset company's voluntary petition to sell Stonebridge Bank. The bank will be sold to the highest and best bidder.

Stonebridge said in a press release Tuesday that a group of investors led by Gordon Denlinger has signed a purchase agreement, which awaits regulatory approval. The transaction is expected to close in the second quarter.

"Recent merger activities in the marketplace, and expectations of further consolidation, have created an opening for a locally owned and based community bank in the south-central Pennsylvania region," Denlinger said in the release. "We are pleased that Stonebridge Bank … will be the platform from which to execute our vision and mission."

The bank had faced troubles prior to its planned sale. The Federal Reserve Board had entered into an agreement with the company in 2011 after regulators placed a consent order on the 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.