is restructuringits balance sheet in an effort to increase net interest margin, return on averageassets, and return on average equity.
The restructuringwill be done in two steps, the first being the prepayment of $100 million of highfixed-rate borrowings with contractual maturities in November 2017. Then, the companywill reposition its investment securities portfolio by replacing certain lower-yieldingshort-term investments with higher-yielding bonds under a normalized investmentstrategy.
A mix of excesscash and proceeds from the sale of investment securities — with an average yieldof 2.97% — will be used to fund the debt repayment.
Funding forthe debt prepayment included excess low-yielding cash deposits of $10.4 millioncombined with proceeds from the sale of available-for-sale investment securitiesof $93.4 million. The company realized a net gain on the sale of investment securitiesof $3.8 million, which matched and offset the cost of the debt prepayment.
The deleveragingstrategy is still in process, with completion expected to occur by the end of thecurrent quarter or early in the fourth quarter.