Anchor BanCorp Wisconsin Inc., the Madison-based holding company for AnchorBank, has completed the prepayment of $150 million of Federal Home Loan Bank (FHLB) advances.
The borrowings extinguished were floating rate advances with maturities in 2015 and had a current weighted average rate of 1.41 percent. The repayment of the FHLB advances triggered a pre-payment penalty of $3.5 million.
Chris Bauer, president and chief executive officer of the corporation and the bank, said, “As stated in our second quarter 2012 earnings release, we have been implementing strategies to increase bank profitability. Given the economic environment, using excess cash at the Bank level to reduce total funding cost is an opportunity to enhance the Bank’s profitability by increasing net interest margin going forward. Even though the Bank’s cash position has been reduced by $150 million, the bank’s balance sheet remains strong as we continue to maintain a high degree of liquidity.”
The transaction eliminates estimated annualized interest cost of approximately $2.1 million on $150 million of paid off advances, reducing the bank’s overall cost of funds going forward.
