Sector Update: Financial

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Financial stocks were broadly higher today with the NYSE Financial Sector Index advancing about 0.8% and the S&P Financial 100 Index posting a 1.0% gain.

In company news, Doral Financial Corp ( DRL ) Monday was again posting strong gains, with shares today adding as much as 45% after the bank said it has asked the Commonwealth of Puerto Rico to immediately repay $229.9 million in tax receivables owed the bank by the government.

Under terms of a March 2012 agreement, the Puerto Rican government agreed with DRL contentions it overpaid taxes in prior years, with the bank immediately recognizing a $100 million tax benefit due to release of deferred tax asset reserves along with adding around $200 million to its Tier I capital levels.


The Federal Deposit Insurance Agency, however, late last month told DRL it could no longer include the tax receivables in its Tier 1 capital calculations, effectively reducing its Tier 1 capital by over 42% to around $390 million. The FDIC decision sent DRL shares into a steep swoon, falling nearly 81% from a $9.82 a share close on May 1 to an intra-day low of $1.87 last Wednesday, May 8.

In its May 9 letter to Puerto Rico's Department of the Treasury released today as part of a regulatory filing, DRL officials said they intend to exercise any and all legal remedies available to enforce collection, also requesting a meeting "as soon as possible" to discuss the repayment request and "to understand the Department's timeline for meeting its payment obligations."

DRL shares were ahead 47% at $4.44 apiece in late Monday trade, just 2 cents off its session high. The stock spiked nearly 59% on Friday, closing at $3.02 a share, with the bank issuing a mid-session statement that it was company policy not to comment on unusual stock movements.

In other sector news,

(+) HDB, Together with a 3.9% gain for rival ICICI Bank ( IBN ), shares of Indian bank companies were rising on the final day of parliamentary voting that began April 17. Results are scheduled to be announced on Friday.

(-) AGM, Q1 core earnings of $0.97 trails analyst estimates by $0.19 per share. Total revenue declines 8.7% to $30.3 mln, lagging forecasts by around $4.22 mln.



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

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This article appears in: Investing , Commodities

Referenced Stocks: DRL , IBN

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