This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Doral Financial Sells Mortgage Loan Portfolio

Stocks in this article: DRL BPOP

NEW YORK (The Deal) -- As part of a larger effort to shore up its balance sheet, troubled bank operator Doral Financial (DRL) has sold a $242.1 million portfolio of mortgage loans and servicing rights to FirstBank Puerto Rico in exchange for the lender canceling a $234.1 million loan.

The San Juan, Puerto Rico-based company, which runs Doral Bank, is evaluating all strategic alternatives to boost its capital position in the wake of a dispute with Puerto Rico's government over $229.88 million in potential tax refunds, which accounted for 43% of the bank's Tier 1 Capital.

The Federal Deposit Insurance Corp. sent a letter to Doral Bank on May 1, asserting that the bank may no longer count some or all of the expected tax refunds from the Treasury as Tier 1 capital, and gave the bank 120 days to submit a new capitalization plan.

After the mortgage loan sale was announced in the late afternoon on June 2, the stock, which is listed on the New York Stock Exchange under the symbol DRL, plunged 17.13% on Tuesday, June 3, closing at $2.95 with a market cap of $19.61 million. The stock closed at $3.56 on Monday.

However, some investors still see Doral Financial as a long-term turnaround case.

Steve Lococo, the president and senior portfolio manager of Omaha-based asset management firm Footprints Asset Management and Research, believes Doral Financial was making progress toward an operating turnaround before Puerto Rico's Treasury Department claimed that it didn't owe Doral Financial nearly $230 million and the FDIC sent a warning letter.

"The letter from FDIC threw a monkey wrench into [its operational efforts], and it's unfortunate," Lococo said by phone on Tuesday. However, Lococo said he doesn't believe the bank's regulators are on the cusp of a takeover.

"The FDIC is not in business to seize banks...They want to see Doral go forward," Lococo said.

1 of 2

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 18,030.21 +6.04 0.03%
S&P 500 2,081.88 -0.29 -0.01%
NASDAQ 4,773.4720 +8.0480 0.17%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs