Community Bank announced the completion of a balance sheet re-structuring that began over a year ago.
The low rate environment has allowed us to lock in fixed rate funding at favorable rates while utilizing the gains in our investment portfolio to reduce our higher rate wholesale borrowings, giving us the opportunity to further strengthen our financial position" said David R. Misch, Chief Executive Officer.
The completion of the program announced today included the repayment of $153 million in high fixed- rate borrowings with rates averaging 3.65% and the sale of investments yielding 2.65% on average.
While the repayment will reduce second quarter after-tax earnings by $3.8 million, the combined actions will lower the cost of funds to the low thirties, increase net interest margin and improve the Bank’s after-tax income approximately $1.0 million per year.
Chairman of the Board, Douglas J. McEachern commented "The Management and Board of Directors, after thorough review and consideration, made the determination it was in the best interest of the Bank, its clients and shareholders to deleverage the balance sheet and reduce ongoing funding costs.
"We strongly believe that this action positions us for the future and enhances our ability to fund our current and ongoing business operations."