NSTS Bancorp in Waukegan, Ill., sold lower-yielding securities at a loss.
The $252 million-asset company said in a press release that it sold $30.5 million of securities at an after-tax loss of $1.8 million. The securities included U.S. Treasury notes, agency, mortgage-backed securities and collateralized mortgage obligations.
A portion of the proceeds will be used to repay about $10 million in existing debt. The rest will be redeployed into cash and short-term U.S. Treasury notes, with long-term plans to fund mortgages and general working capital.
“The sale of these securities is designed to seek to improve the bank’s earnings going forward, beginning in fiscal year 2024, and to provide liquidity to deleverage its balance sheet,” the company said.
Separately, NSTS said it expects to recognize a $1.1 million valuation allowance in the fourth quarter tied to the remaining portion of its deferred tax asset. The company said the decision reflects its belief that the DTAs “are more likely than not to not be realized.”