Banking stocks received a boost after the Labor Department's report of an unexpected drop in core wholesale prices provided some statistical support to the Federal Reserve Board's decision last week to hold interest rates steady.
The producer price index rose just 0.1% last month. Excluding food and fuel, wholesale prices fell 0.3% -- the best showing in nine months.
The American Banker index of 225 bank stocks rose 3.32%, and the thrift index gained 1.99%. The Standard & Poor's index rose 1.37%, while the Dow Jones industrial average rose 1.19%.
Only five companies tracked by American Banker posted losses for the day.
Doral Financial Corp.'s shares soared 13.2% after the San Juan, Puerto Rico, company filed its long-delayed 2005 annual report with the Securities and Exchange Commission. Doral also said it expects to return to a regular reporting schedule this quarter.
For the fourth quarter, Doral reported a $44.2 million loss, compared with a $126.2 million profit a year earlier. It also gave investors a glimpse at its first- and second-quarter results, which it has yet to report, and said its first-half originations fell 50%, to $1.4 billion.
Doral ran into major financial and operational problems last year over the valuation of interest-only securities and loan sales. This year it restated earnings for 2000 through 2004 and reported results for the first three quarters of last year. (Other Puerto Rican banking companies have also restated results because of accounting for interest-only strips.)
Shares of other Puerto Rican companies also rose. W Holding Co. Inc. climbed 4.1%, and R&G Financial Corp. climbed 3.9%.
Sovereign Bancorp Inc. gained 2.2% after Jay S. Sidhu, its chairman, president, and chief executive officer, said that Spain's Banco Santander Central Hispano SA had raised its stake in his Philadelphia thrift company to 24.1%, from the initial 19.8% stake it took in May.
During a Kohler, Wis., conference hosted by Keefe, Bruyette & Woods Inc., he said that Santander is on pace to increase its stake to 24.9% by the end of the month.
Mr. Sidhu also outlined several ways Sovereign could position itself against what he expects to be a prolonged period of depressed net interest margins. He said his company could shrink its balance sheet further, focus on certain business lines, and de-emphasize others, while looking for acquisitions that would make it less reliant on interest income.
At the same conference, Zions Bancorp. chief financial officer Doyle Arnold said his Salt Lake City company would be more aggressive in landing commercial deposits.
A more aggressive cash management effort will be crafted to do just that, he said. "It's fair to say that Zions has largely been a credit-driven banking company in the past and took the deposits that came with the relationship, as opposed to leading with cash management."
Zions shares rose 1.5%.
Other gainers included Sterling Bancorp of New York, which rose 5.4%; TriCo Bancshares in Chico, Calif., which rose 5%; National Penn Bancshares Inc. in Boyertown, Pa., which rose 4.7%; and Community Trust Bancorp Inc. in Pikeville, Ky., which rose 4.7%.
Decliners included Fremont General Corp. of Santa Monica, Calif., which fell 1.1%; City National Corp. of Beverly Hills, which fell 1.1%; and Gateway Financial Holdings Inc. in Elizabeth City, N.C., which fell 0.6%.
