EVERETT — The stock price of Everett-based Frontier Financial Corp., which dropped dramatically Monday and Tuesday, rose Wednesday on news that the company had applied for federal funds to have more money available for loans.
In announcing that Frontier, the parent company of Frontier Bank, had yet to hear about its application, Chief Executive John Dickson acknowledged that his company had been the subject of a rumor that its application had been denied.
“The steep drop in our stock price that last two days is partially due to persistent rumors that our capital purchase program application had been denied by our regulators,” he said in a news release. “Our application is being processed and they have neither approved nor denied it.”
Efforts to reach Dickson by telephone for further comment were unsuccessful.
Frontier stock, which lost 39 percent Tuesday to hit a 52-week low of $2.36 a share, rose to $3.23, a 26 percent rise, during Wednesday’s trading.
The denial rumors had hit chat lines for Yahoo and other areas for stock traders on Monday and Tuesday.
Both Frontier and Everett-based Cascade Bank have been the target of persistent short sellers, people who make money when the stock goes down.
Cascade recently announced that it had been approved for the government program in which it will receive $39 million in exchange for company stock.
In its prepared statement, bank officials said they didn’t know when they would receive an answer on the company’s application. Friday is the deadline for banks to apply for the program.
The company will continue to participate in a temporary program with the government that allows for unlimited FDIC insurance coverage for all noninterest-bearing checking accounts through Dec. 31, 2009.
In its third-quarter earnings report, the company reported a $17.8 million loss, with Dickson saying the economy and Frontier’s positions in the housing market have “created some challenging times for Frontier Bank and our borrowers.”
Dickson announced that the company was reducing executive pay and expanding a special group to work on reducing “nonperforming assets” at the bank.