Riverview Bancorp in Vancouver, Wash., sells a large batch of securities.
The $1.5 billion-asset company said in a press release that it sold $149.3 million in lower-yielding investment securities at an estimated pretax loss of $11.4 million. The move happened after Riverview reclassified all of its bonds as available-for-sale.
Riverview said it expects to reinvest the proceeds into higher-yielding bonds that will be classified as available-for-sale, support loan originations, pay down Federal Home Loan Bank borrowings, or hold in cash.
The strategic optimization should add about 25 basis points to net interest margin and roughly 13 cents to annual earnings per share, once fully realized. The company said it expects to earn back the securities loss in less than four years
“Over the past 20 months since joining Riverview as CEO, it’s been energizing to experience our teams consistently delivering on our five strategic priorities,” Nicole Sherman said in the release.
“This balance sheet optimization is part of our profitable growth priority,” she added. “The repositioning of the securities portfolio … reflects a prudent deployment of excess capital aimed at enhancing our net interest margin. We expect this strategic optimization to enhance future earnings benefit and strengthen the value of our company.”