Doral Financial Corp. swung to a second-quarter profit on higher interest income and lower expenses.
The news sent shares up 16% to $16.15.
The Puerto Rico-based banking firm reported net income of $1.64 million, compared with a year-earlier net loss of $37.5 million. On a per-share basis, which includes preferred-stock dividends, Doral had a 12 cent loss.
Revenue rose 24% to $73.7 million as net interest income surged 41% on lower interest and deposit costs.
The mean estimates of analysts polled by Thomson Reuters were for a loss of 20 cents a share and revenue of $64 million.
A company led by Bear Stearns bought a 90% stake in Doral last year for $610 million, months after the firm said it would need significant outside financing to meet its liquidity and capital needs.
President and Chief Executive Glen R. Wakeman said Doral has added thousands of banking customers and increased mortgage production 56% in the latest quarter while cutting costs. "There is more work to be done and we remain cautious about the economic environment as we move forward," he added.
Net interest margin, the difference between what a bank pays in interest and what it receives from loans, jumped to 2.02% from 1.3%.
Loan-loss provisions slumped 45% to $10.7 million due to a prior-year one-time impact, though they more than doubled from the first quarter.