Imploded: PFF Bank and Trust, Pomona, CA

veritasbroker at 00:36 2008-11-23 said:

PFF was the institution I banked with for my real estate brokerage but stopped banking there sometime ago. PFF was far over leveraged according to regulator guidelines as late as last year. Richard Suttmeier reported in October of 2007 that PFF's Commercial and Development loans and Commercial Real Estate Loans were at 273% and 479% vs. risk capital. He says, "regulatory guidelines are 100% and 300%, and these loans are 100% disbursed, which typically indicates that the bank is having difficulty getting the loans repaid. "

Even after the companies financials for the 2nd quarter of 2007 showed it is highly over leveraged the Riverside Press Enterprise did a news highlight on the strenght of the company in December 2007 where CEO Kevin McCarthy says, "PFF's finances remain sound," as he and the directors of the bank rebuff a takeover of the institutions by California National Bank's Parent Company FBOP. No less than 6 months later PFF Bank announces that it agreed to sell the institution to FBOP for a mere $30million due to PFF's declining assets and increasing defaults. During the summer PFF stock was delisted and began trading OTC and the bank announced a stock sale to raise some capital. Apparently FBOP ended up backing out of the aquisition in October according to one news report as PFF's became more unstable.

http://www.pe.com/business/local/stories/PE_Biz_D_mccarthyceo19.26cc9fd.html Permalink