First Niagara Financial Group Inc. has sold $3.1 billion of mortgage-backed securities, with proceeds used to repay short-term debt, the Buffalo-based bank announced.
The sale will improve the bank’s overall earnings quality and consistency by reducing the impact of prepayments on portfolio yield and net interest margin, as well as strengthen key financial metrics, bank officials said Wednesday.
First Niagara plans to recognize a pretax gain of $16 million in the second quarter as a result of the sale, with no prepayment penalties on the debt payoffs, the bank said.
“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 operations,” First Niagara president and CEO John Koelmel said in a statement.
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