USCB Financial Holdings in Miami is the latest bank to unload underperforming securities.
The company said in a press release that it sold $44.6 million in lower-yielding securities, representing 12.6% of its portfolio, at an after-tax loss of $5.6 million. The plan is to reinvest the proceeds in higher-yielding securities.
It should take the company more than three years to earn back the upfront loss.
“Our strong capital position gives us the flexibility to proactively reshape the balance sheet, which we believe will provide us with significant opportunities to deliver greater value for the company and our shareholders through stronger earnings and an improved net interest margin,” Luis de la Aguilera, the company’s chairman, president and CEO, said in the release.
“While the sales transactions will result in a material decrease in net income for the fourth quarter as compared to prior quarters this year, it positions us for meaningful profitability growth, with expected net interest margin expansion beginning in the first quarter … and estimated EPS accretion over the next four quarters,” he added.