Community Bank in Pasadena, Calif., has completed a debt restructuring that will reduce second-quarter profit, but will improve its cost of funds and margins and increase yearly income.

The $3.6 billion-asset bank repaid $153 million in high fixed-rate borrowings with rates averaging 3.65%, and it sold investments yielding an average 2.65%, according to a news release.

The repayment will reduce second-quarter earnings by $3.8 million, after tax. The total restructuring will lower Community Bank's cost of funds, increase net interest margin and improve yearly after-tax income by about $1 million.

"The low rate environment has allowed us to lock in fixed-rate funding at favorable rates while utilizing the gains in our investment portfolio to reduce our higher-rate wholesale borrowings," David Misch, chief executive, said in the release.

Community Bank began the balance-sheet restructuring more than a year ago. The completion was announced last week.

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