Orrstown Bank has sold millions of dollars worth of its troubled loan portfolio to a group of private investors, the Shippensburg-based financial institution said Wednesday.
Orrstown sold the investors a package of 65 distressed commercial real estate loans “with a carrying balance of $28.6 million,” the company said in a regulatory filing. The filing did not disclose details of the transaction or the investors’ identities.
Orrstown will write off $5.8 million against its after-tax earnings in the second quarter as a result of the sale, the company said.
The sale reduces the bank’s ratio of nonperforming assets to total assets by more than 3 percentage points, Orrstown said.
“The sale of these classified loans is a major step in allowing the Company to strengthen its balance sheet,” Orrstown said.
Orrstown is under federal and state directives to improve the quality of its loan portfolio. The bank reported $81.9 million in nonperforming loans in March, up from $13.1 million a year earlier, according to Federal Deposit Insurance Corp. data.