F.N.B. Corp. of Hermitage, Pa., announced a balance-sheet restructuring Thursday that it said will result in an $11.2 million charge against fourth-quarter earnings.
The $5.7 billion-asset company said it intends to sell off about $570 million worth of securities, with an average yield of 4.15%. It will use the proceeds to retire $100 million of borrowings and invest the remaining $470 million in securities with an average yield of 4.90%, it said.
Stephen Gurgovits, F.N.B.'s chief executive officer, said it expects the restructuring to improve profits and the net interest margin.
"While these actions will result in a current charge to earnings, we believe the net future benefits outweigh the cost," Mr. Gurgovits said in a press release.
F.N.B. reported earnings of $18.1 million for the quarter that ended Sept. 30. It said it expects to recoup the $11.2 million charge within three years. Faced with a persistent flat yield curve, a number of companies have announced restructurings similar to F.N.B.'s. On Monday the $3.1 billion-asset Banner Corp. in Walla Walla, Wash., said it would take an $8.9 million charge against fourth-quarter earnings to pay down $200 million of debt.
Banner's CEO, D. Michael Jones, also said the move would lead to improved margins and earnings.
Last year the $2.7 billion-asset Integra Bank Corp. of Evansville, Ind., took a $32 million charge to retire $467 million of debt. That resulted in a $27 million loss for the first quarter of 2004, but Integra's net interest margin has widened by about 70 basis points since then.
