Investing in the stock market is a game of risk and reward. An investor can make money or lose money. Most would read this and say that it is apparent and understood. Others, however, might say, since when? Given the events of the last year (and, more to the point, the last week or so), quite a few investors have lost sight of the fact that they could lose money while investing. What they may have also lost sight of is the fact that not all companies followed the practices of those that are currently having problems.
There are companies that played the conservative investment line of business and are in fine financial shape. At this time, these companies are actually fairly good investments that are making many people a nice return. Performing solid due diligence is the name of the game, and when done correctly it can lead to solid returns, even in this stranger-than-strange stock marketplace.
PFF Bancorp Inc., a bank holding company, offers a full range of financial services, primarily to the Southern California marketplace. The holding company currently consists of PFF Bank & Trust, Diversified Builder Services and Glencrest Investment Advisors. Slated for proxy vote on September 25, 2008 is a vote concerning a possible merger with FBOP Corp., the parent company of California National Bank.
From a very general perspective (regarding recent financial events), most of the negative impacts experienced by financial institutions revolve around an institution’s lending practices and the securitization of their loan portfolios. If, however, a financial lending institution did not securitize their loan portfolios (carrying them in-house) and followed proper lending criteria, their overall exposure would be less.
This is not to suggest that PFF is sliding through the current financial situation free and clear. Operating in the Southern California marketplace is sure to entail a loss regardless of how conservative an organization is. PFF, however, does appear to have its house in order and a deposit base, certified by the Fed as having a capitalization level of “acceptable,” to back up its practices.
How the possibility of adding FBOP to its balance sheet will affect the company is unknown. The company’s shareholders may well say no to the merger. Regardless of how the vote turns out, and after only a short inspection of the company’s reporting, PFF Bancorp may well be one of the few financials that could offer a return through the current financial dilemma.
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