Bank stocks advanced Thursday, led by shares of Puerto Rican banking companies.
Shares of Doral Financial Corp. of San Juan rose 3.6% a day after rising nearly 20% on speculation that it was close to a deal or debt restructuring.
Wednesday's gain was the $13.8 billion-asset company's biggest in one day since July 1994. Doral had not released any news by press time Thursday.
The $4.6 billion-asset Oriental Financial Group Inc. of San Juan rose 4.4%, while the $8.9 billion-asset W Holding Co. Inc. of Mayaguez increased 2.6%.
The American Banker index of 225 banking companies increased 0.98%, the thrift index rose 0.51%, the Standard & Poor's 500 gained 0.63%, and the Dow Jones industrial average advanced 0.59%.
The yield on the 10-year Treasury note rose 5 basis points, to 4.74%, after the Bank of England unexpectedly raised its benchmark interest rate to 5.25%.
Bank of Richmond was among the day's biggest gainers in financial services, jumping 52%. The bank announced that it had agreed to sell itself to Gateway Financial Holdings Inc. of Elizabeth City, N.C., for $55.8 million.
Megan Malanga, an analyst at BankAtlantic Bancorp Inc.'s Ryan Beck & Co. Inc., wrote in a research note that the deal values Bank of Richmond at $30.05 a share, or 56.5% above its recent price. Gateway would have nearly $1.3 billion of assets, according to her data.
The deal is set to close on or about May 31, she wrote.
Shares of the $1.1 billion-asset Gateway Financial dropped 1.2%.
Decliners included Allied Capital Corp. of Washington, which lost 6.9%. The $4.6 billion-asset company said Wednesday that a former employee of its Business Loan Express LLC was indicted on charges of conspiracy and fraud. The charges are related to $76.9 million of federal small-business loans, Allied Capital said.
"We believe that it is important to put the potential financial impact of this matter into its perspective," Allied Capital said Thursday. However, "it is our understanding that if the allegations against Mr. Harrington are proven true, the Business Loan Express unit will also have suffered losses."
Business Loan Express represents 6.2% of Allied Capital's assets, the parent said.
Shares of two companies slipped after reporting fourth-quarter earnings.
M&T Bank Corp. slipped 1%. The $57.1 billion-asset Buffalo company's fourth-quarter earnings met analysts' estimates, but nonperforming loans rose 43% from a year earlier and 24.9% from the third quarter, to $224.2 million.
Zions Bancorp. slid 0.7%. The $44.7 billion-asset Salt Lake City company said it expects to report fourth-quarter earnings of $1.31 to $1.33 a share on Jan. 23, compared with the $1.32 it reported for a year earlier.
The average estimate of 20 analysts surveyed by Thomson Financial had expected Zions to report earnings of $1.43 cents a share.
In a filing with the Securities and Exchange Commission, Zions said its fourth-quarter results would include a $10.9 million loss from an equipment lease related to an alleged accounting fraud at an unnamed water bottling company, resulting in a charge of 6 cents a share. It also cited two charges of 4 cents a share each: one related to the redemption of trust preferred stock, and another for a preferred-stock dividend declared last month.
Also Thursday, Zions said that its Zions First National Bank would sell the insurance agency Grant-Hatch & Associates Inc. and certain books of business of ZionsDirect and Zions Insurance Agency to Leavitt Group Enterprises.