Shares of Sterling Financial Corp. of Lancaster, Pa., plunged 38.3% a day after the company said a fraud scheme could cost it $145 million to $165 million.
As a result of the early findings of an investigation of its Equipment Finance LLC, Sterling said late Thursday, it has suspended dividend payments and is exploring options, including selling assets and business units and selling the company itself.
Matthew Schultheis, an analyst at Ferris, Baker Watts Inc., downgraded the stock to "sell," from "buy," and wrote in a research report, "Though we believe the company will ultimately be sold, we believe investments" in the stock "will represent dead money until the exact impact of the fraud has been further quantified."
Coast Financial Holdings Inc. fell 5.7%. Late Friday the Bradenton, Fla., company said that it had fired Brian F. Grimes, its president and chief executive officer, and had received a cease-and-desist order from the Federal Deposit Insurance Corp. as a result of a January safety-and-soundness examination that found problems in its construction loan portfolio.
Anne V. Lee, Coast's chief operating officer, has been named the acting president and CEO.
Doral Financial Corp. gained 1.7%. The San Juan, Puerto Rico, company said Thursday that it expects to report a loss of $77.9 million for this year but return to profitability next year. In a proxy filing, it said it intends to diversify away from mortgage lending and become "a more traditional community banking institution, offering a broader range of products and services."
Last week Doral announced a recapitalization plan that hinges on raising $610 million by issuing new stock to private investors.
Other big gainers included PremierWest Bancorp of Medford, Ore., which rose 3.6%, and First Bancorp of Troy, N.C., which gained 3.4%.
The American Banker index of 225 banking stocks gained 0.18% Friday but fell 0.49% for the week. The index of top 50 banks gained 0.21% Friday but fell 0.67% for the week. The Standard & Poor's 500 rose 0.55% Friday but fell 0.46% for the week. The Dow Jones industrial average gained 0.49% but fell 0.36% for the week.
In a reversal of fortune for the housing sector, data released Friday by the National Association of Realtors showed home resales fell 2.6% last month from March, to an annual rate of 5.99 million. The average forecast of analysts had called for a rate of 6.12 million. A government report Thursday showed that sales of new homes jumped 16.2%, to an annual rate of 981,000; the average forecast of analysts had called for a rate of 860,000.
Calling the resales data "an antidote to the new sales numbers," Ian Shepherdson, chief U.S. economist at High Frequency Economics Ltd., wrote in a report issued Friday, "Price pressures will remain downwards, scaring off buyers."