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Stock Market & Financial Investment News

News Breaks
December 31, 2013
08:01 EDTCBUCommunity Bank System disposes of certain assets in response to Volcker Rule
Community Bank System announced that it has sold its entire portfolio of bank and insurance trust preferred collateralized debt obligation securities in response to uncertainties created by the announcement of the final rules implementing the Volcker Rule, which was released jointly by the Federal Reserve and other federal regulatory agencies on December 10. The company believes that the final rules that implement Section 619 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, commonly referred to as the “Volcker Rule”, require banking entities to divest certain disallowed securities, including its holdings of trust preferred CDOs. In addition, the company extinguished $226.4M of Federal Home Loan Bank term advances and sold $417.6M of Treasury securities previously classified as “Held to Maturity”. The impact of these actions was a pre-tax loss of approximately $6.9M, or 12c per share, after-tax, which will be reflected in the company’s 4Q13 results. The $6.9M pre-tax loss was comprised of $32.4M of gains on the Treasury securities, $15.5M of losses on the trust preferred CDOs, and a $23.8M charge from the early debt extinguishment. The company reinvested the net cash proceeds created from these transactions of approximately $246M into Treasury securities with similar durations to the assets sold in order to replace the net interest income impact of the security sales and debt reduction.
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