Bank stocks finished a strong week on a positive note Friday, and shares of Puerto Rican banking companies led the way for the second straight day.
Shares of First BanCorp. of San Juan jumped 6.6% Friday after gaining 3.5% Thursday. W Holding Co. Inc. of Mayaguez gained 6.6% after rising 3.6% Thursday. R&G Financial Corp. of San Juan gained 2.7% Friday and 3.7% Thursday. Doral Financial Corp. of San Juan gained 1.9% Friday.
The island rally began Thursday when First BanCorp. released its 2005 financial results, which had been delayed because of accounting issues. The company said full-year net income fell 35%, to $114.6 million, and earnings per share fell 75 cents, to 90 cents.
First BanCorp. also disclosed one-time charges of $88.75 million for the possible settlement of a class action and a dispute with the Securities and Exchange Commission, as well as legal, accounting and consulting fees.
Joseph Gladue, an analyst at Cohen & Co., said Friday that the results were viewed as a positive for the entire Puerto Rican banking sector.
However, "I'm a bit puzzled by some of it," he said "Some people are looking" at the filing "as a clearing away for a merger." A rumor that circulated this week that Bank of Nova Scotia had made a bid for the company. First BanCorp. would not discuss the speculation Friday, and Bank of Nova Scotia did not return calls.
The American Banker index of 225 banking stocks rose 0.71% Friday and 3.68% for the week. The index of the top 50 banks rose 0.11% Friday and 1.43% for the week. The Standard & Poor's 500 gained 0.1% Friday and 1.84% for the week. The Dow Jones industrial average fell 0.16% Friday.
The Labor Department reported that nonfarm payrolls rose by 111,000 last month. Economists had expected a rise of 150,000.
Shares of Astoria Financial Corp. rose 2.4% Friday after a setback in a legal battle prompted one analyst to raise the possibility of a sale of the Lake Success, N.Y., thrift company.
Astoria said late Thursday that a federal appeals court reversed a $436 million damages award granted by a lower court in 2005. The appeals court denied Astoria's breach of contract claim against the U.S. government arising from the 1983 supervisory acquisition of Suffolk County Federal Savings and Loan by Long Island Savings Bank, which Astoria acquired in 1998.
The court ruled that contractual claims against the government were forfeited because of actions by Long Island Savings' former chief executive, Astoria said.
Anthony R. Davis, an analyst at BankAtlantic Bancorp Inc.'s Ryan Beck & Co. Inc., wrote in a research report issued Friday, "This decision could prompt management to re-assess its strategic options, one of which is a sale of the company."
The company did not return calls seeking comment on Mr. Davis' note.
CoBiz Inc. gained 1.8% after Ben Crabtree, an analyst with Stifel, Nicolaus & Co. Inc., upgraded the Denver banking company's stock Friday to "buy," from "hold."
Fourth-quarter loan growth "continued to be strong," and credit quality "was very good," Mr. Crabtree wrote in a report. Last week CoBiz reports fourth-quarter earnings of 28 cents a share, or 3 cents above the average analyst expectation.
Though its price-earnings ratio of 20.2 looks frothy for a bank, "we view the valuation as a bit too modest in light of the company's past and projected growth rate, which we would put at 15% or better," Mr. Crabtree wrote.
Ocwen Financial Corp. of West Palm Beach, Fla., fell 2.6% Friday, and Pacific Mercantile Bancorp of Costa Mesa, Calif., fell 2.5%.
