First Niagara Financial Group Inc. has sold $3.1 billion of mortgage-backed securities (MBS) and plans to use the proceeds of the sale to repay a ‘comparable amount of short-term debt.’
The Buffalo, N.Y.-based company says this sale will ‘improve overall earnings quality and consistency by reducing the impact of prepayments on the MBS portfolio yield and net interest margin, as well as further strengthen key financial metrics.’ First Niagara adds that it will recognize a $16 million pre-tax gain from the sale of the securities in the second quarter of this year.
‘Given the expected duration of this historically low rate and volatile economic environment, we took decisive actions to better position our balance sheet without impacting the longer-term business fundamentals and to shine a brighter light on the strength of our core operations,’ says John R. Koelmel, First Niagara president and CEO.