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Bank of Marin, part of Bank of Marin Bancorp (NASDAQ:BMRC), offloaded $293M in available-for-sale (AFS) securities as part of a strategy to reposition its balance sheet to drive earnings growth and increase return on equity, it said on Wednesday.
“We have already redeployed some of the proceeds and expect to reinvest the remainder into higher yielding loans and short-duration securities,” said Bank of Marin President and CEO Tim Myers.
The securities sold represented 56% of the AFS portfolio and had an average yield of 1.94%. Bank of Marin estimates the sale will result in a ~$23M after-tax loss, which will be recorded in Q2 2024.
But, assuming a 5.75% average yield on reinvestment, the securities repositioning is expected to have an approximate 3-year capital earn back and contribute about 30 basis points to annualized net interest margin starting in Q3, resulting in $0.46 estimated earnings per share accretion over the next four quarters.