WSFS Financial (WSFS) in Wilmington, Del., warned that its fourth-quarter results will include a nearly $4 million hit from paying off Federal Home Loan Bank advances.

The $4.3 billion-asset company said in a regulatory filing Thursday that it prepaid $125 million in FHLB advances and is planning to reduce the size of its mortgage-backed securities portfolio by another $125 million. The FHLB prepayment incurred a penalty of $3.7 million, the filing said.

WSFS said it took the steps to improve its net interest margin, return on assets, interest rate profile and capital ratios. The company, which will release its quarterly results on Jan. 31, had a 14.24% ratio of capital to risk-weighted assets on Sep. 30. WSFS did not immediately respond to a request for further comment.

The FHLB prepayment took place on Dec. 13, and WSFS expects its MBS sales to finish this month. The FHLB loans had an average time to maturity of 16 months and an average rate of 2.63%. The MBS yield is about 1.85%, the company said.

WSFS paid down its FHLB advances significantly last year. It had previously prepaid $146 million in advances earlier the year. It held $393 million of FHLB advances on Sept. 30, paying $1.4 million in interest during the third quarter.

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