Nicolet Bankshares in Green Bay, Wis., reported a quarterly loss after repositioning its balance sheet.
The $8.2 billion-asset company said in a press release that it lost $9 million in the first quarter, a reversal of the $24 million profit it reported a year earlier.
Nicolet said it sold U.S. Treasury held-to-maturity securities with a par value of $500 million on March 7 at a pretax loss of $38 million. The company used some of the proceeds from the sale to reduce FHLB borrowings, holding the rest as cash.
Nicolet noted that the move happened prior to the high-profile failures of Silicon Valley Bank and Signature Bank.
The company said it should take about two years to earn back the loss tied to the repositioning.
Nicolet also reclassified $177 million of securities as available for sale. An estimated $20 million of unrealized loss increased the balance of accumulated other comprehensive loss by $15 million, net of the deferred tax effect.
“Our goal with these moves was to make Nicolet a stronger and more nimble organization going forward,” Mike Daniels, the company’s president and CEO, said in the release.
The U.S. Treasuries “were depressing our net interest margin, which had a negative effect on our earnings,” Daniels added. “We expect our net interest margin to increase for at least the next few quarters. Additionally, a benefit of this decision provides for better financial transparency as the recent public macro market has cast a cloud over the banking sector.”
Separately, deposits fell by 3.5% from the end of last year, to $6.9 billion.