EVERETT — Shares of Frontier Financial Corp. dropped 37 percent Friday, fueling concerns about the future of Everett-based Frontier Bank.
Frontier was not one of three banks seized nationwide by the federal government on Friday. The local bank has seen its share of trouble lately, posting a $89.5 million loss in the fourth quarter of 2008, as losses from past real estate loans grow. Frontier Financial is the parent company for Frontier Bank.
Frontier’s stock decreased 58 cents to close at 98 cents after trading as low as 97 cents. That sets a new 52-week low for the bank. The company’s shares recovered somewhat in after-hours trading, finishing at $1.08.
The sharp decline on Friday puzzled John Dickson, president of Frontier Bank, who noted the drop took place in the last 45 minutes of trading. A very large block of trades by an institutional holder at the end of the day pushed down Frontier’s shares, he said.
“That’s what we can ascertain here,” Dickson said.
Edmonds businessman Tim Raetzloff monitors locally based publicly traded companies listed on his Abarim Snohomish County Stock Index. Like Dickson, Raetzloff was surprised by Frontier’s 37 percent decline. Frontier’s closing price, of 98 cents, is the lowest that Raetzloff remembers the bank trading.
“There the only one in Snohomish County that hasn’t made it back over the $2 mark,” he said.
Dickson speculates that the drop could have something to do with Friday being what’s known as “quadruple witching” day — a day that comes once every quarter. Stock options, stock index options, stock index futures contracts and single stock futures all expire on the same day, sometimes prompting volatile trading.
Frontier, founded in 1978, has more than 50 branches in Washington and Oregon. Its loan portfolio relied heavily on building and real estate, which have been hit hard in the global recession. But Dickson emphasized that the bank is doing what it can to recover.
“We’re continuing to work on our problem loans,” Dickson said.
Regulators on Friday shut down banks in Georgia, Colorado and Kansas, marking 20 failures of federally insured banks this year. More are expected to succumb to the prolonged recession. The Federal Deposit Insurance Corp. was appointed receiver of the failed banks.
The Associated Press contributed to this report.
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