Taylor Capital (TAYC) will take a $3.7 million charge for the third quarter after its bank decided to extinguish some of its outstanding debt.
The Chicago company said in a regulatory filing Wednesday that Cole Taylor Bank will prepay $60 million of subordinated debt four years ahead of its maturity date, including $270,000 in accrued interest. The bank will pay off the debt, which carries a 10% coupon, using available liquidity.
The move should improve the company's profitability next year, Brad Milsaps, an analyst at Sandler O'Neill, wrote in a Wednesday note to his clients.
"We estimate that [Taylor Capital] will pick up at least 900 [basis points] in reduced costs on the prepayment based" the company's current deposit costs," Milsaps wrote. "This prepayment will save the company at least $1.3 million quarterly."