Why should investors buy or even hold stocks of an organization that reports decline in business and earnings for 2007? There are good reasons for doing so when the organization involved is a financial institution, because 2007 has gone down in history as the year of sub-prime. It has also been a depressed year as far as economic and business conditions in many parts of the United States are concerned.
Discerning stock market players will take encouraging note of the 2007 business results for this holding company that wholly owns a local bank in Southern California. The company has increased its reserves to meet contingencies of delayed loan repayments, though it has held this pernicious figure at well below 1% of all advances during the past year. 2007 business performance should also be seen in light of the reduction in the regulated interest rate.
The operating bank combines excellent customer service with the prudent and conservative financial policies of its parent organization. Stock of the holding company therefore presents excellent prospects of both value and growth. The bank is in a strong position to leverage the full economic potential of the local community within which it operates. Banks with strong control systems are likely to fare well as markets search for professional financial services to meet their fund needs.
The holding company has impressive credentials as well, providing irrevocable trust receipts against owned assets. It is therefore a sound stock investment in a volatile environment with recurrent governance failures, and an unreliable regulatory environment.
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