Community Bank System Sells Collateralized Debt Obligation Securities

(RTTNews) - Community Bank System, Inc. (CBU) Tuesday said it has sold its entire portfolio of bank and insurance trust preferred collateralized debt obligation, or CDO securities in response to uncertainties created by 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, 2013. 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 said it extinguished $226.4 million of Federal Home Loan Bank term advances and sold $417.6 million of Treasury securities previously classified as 'Held to Maturity'.

The actions resulted in a pre-tax loss of about $6.9 million, or $0.12 per share, after-tax, which will be reflected in the firm's fourth quarter 2013 results, it noted.