SELINSGROVE, PA. - Sun Bancorp said it expects to take a $2.1 million hit to earnings in a restructuring of its mortgage securities portfolio to take advantage of higher interest rates.
The company decided to cash out mortgage securities yielding 6.5% and buy more Ginnie Maes with a 7.5% return "to improve yield and liquidity," said Robert J. McCormack, president and chief operating officer.
The $715 million-asset banking company earned $1.8 million in the first quarter. Sun expects ultimately to recoup the loss and increase its income.
Richard D. Weiss of Janney Montgomery Scott LLC in Philadelphia said the restructuring made sense for the well-capitalized bank. Sun is "better off in the long run to take [its] lumps" now, he said.