Despite a drop in earnings and "near hysteria" in the financial markets, Parkvale Financial Corp. CEO Robert McCarthy Jr. says he's confident the Monroeville company's stock will rebound.
Shares of the savings institution have lost about half their value this year, dropping from about $28 in early January. The stock closed Friday at $14.60, down 40 cents from Thursday's close.
The parent of Parkvale Bank reported net income plunged to $1.1 million, or 20 cents a share, for the fiscal first quarter ended Sept. 30, compared with more than $3.6 million, or 65 cents a share the year earlier.
Results were mainly hurt by expenses from writing down the value of securities owned by Parkvale. It wrote down preferred stock holdings in troubled home mortgage giant Freddie Mac by $2.6 million, and debt securities of now-failed Washington Mutual, once the nation's largest savings institution, by $1.3 million. Parkvale had no such charges the year before.
David Lazar, bank analyst and managing director of Stifel Nicolaus & Co., Philadelphia, said Parkvale should not be "criticized" for its exposure to those two institutions, which were beset with subprime mortgages. He termed Parkvale's losses "relatively small," compared with many of its peers.
"I do believe our stock price will recover," McCarthy told shareholders at their annual meeting in Oakland on Thursday.
"We just have to get through these unprecedented times," he said, referring to the housing and financial crises, including the failure of several giant commercial and investment banks.
"Parkvale has not originated or purchased subprime loans and does not own any," said the CEO. "But unfortunately, our investment portfolio did include some companies that invested in subprime."
McCarthy also said Parkvale might want to acquire branches or institutions in Ohio, central Pennsylvania or western Maryland, if it can strike the "right price." But he's not interested until the housing and financial turmoil "hits bottom," which McCarthy expects to happen in the next six to 12 months.
Parkvale is the 10th-largest financial institution in the seven-county Pittsburgh region. It has 41 branches in the region (sixth-most) and seven in northern West Virginia and northeast Ohio.
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