Frontier Financial shares were headed for a third straight drop of more than 25 percent this morning before the company announced that its application for a federal capital infusion was still pending and had not been rejected.
Frontier Financial shares were headed for a third straight drop of more than 25 percent Wednesday morning before the company announced that its application for a federal capital infusion was still pending and had not been rejected.
That apparently reassured traders, who bid the stock up 26 percent, or 67 cents, to close at $3.23. Frontier shares plunged 26.4 percent Monday and 39.5 percent Tuesday, then started Wednesday with another 28 percent fall before the bank’s statement.
The bounce followed an unusual statement from Frontier president and CEO John Dickson, who said the Treasury has not yet acted on the Everett-based bank’s request for an unspecified injection of capital.
“The steep drop in our stock price the last two days is partially due to persistent rumors that our Capital Purchase Program application had been denied by our regulators,” Dickson’s statement said. “Our application is being processed and they have neither approved nor denied it. The regulators face a monumental task of addressing the applications for the potentially thousands of banks in the country which have not received a response to their application.”
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He said it’s unknown when the bank will get an answer.
The bank recently reported a $17.8 million third-quarter loss, and said it will reduce executives’ total compensation by about 34 percent this year.
Four local banking companies have already announced preliminary approval to participate in the U.S. Treasury’s program, which extends to smaller banks the kind of government support first provided to Bank of America, JPMorgan Chase and seven other major banks.
The largest infusion announced locally is $200 million for Seattle-based Washington Federal. The others are Banner Corp. of Walla Walla, $124 million; Heritage Financial of Olympia, $27.6 million; and Cascade Financial of Everett, $39 million.