Last month, we wrote about how the problems in the housing market are hurting local homeowners. And Yahoo's Real Estate site lists 97 foreclosures currently in Claremont, nine of them listed at $1 million or more. You can find foreclosure information here.These same housing market problems are hitting financial institutions, even local ones, hard. PFF Bancorp, a local banking concern based in Rancho Cucamonga, has been stung by the housing market downturn, according to an article by Daily Bulletin reporter Pat Maio.
The article said that PFF has had to sell off a $100 million pool of problematic home builder and commercial loans to a private equity fund controlled by developer Jeffrey Burum:
The PFF loans purchased by Burum's fund had previously raised the collective eyebrows of Wall Street as PFF's earnings have all but evaporated over the past year.
PFF's woes have even caught the attention of some potential suitors wanting to buy the bank.
In recent months, the Rancho Cucamonga-based parent of PFF Bank and Trust has fended off an attempted takeover from privately held FBOP Corp., a $14 billion asset company near Chicago that claims to have accumulated a nearly 20 percent "passive investment" in PFF since the fall.
PFF officers have stated they are not interested in selling the bank, which is roughly a third the size of FBOP, according to filings made by PFF with the federal securities regulators.
But the region's real estate mess has made things difficult for PFF.
"We don't know yet the depths of the financial crisis. The tidal wave has not finished hitting the shores yet. It is still amassing volume," said Burum, who declined to comment on PFF specifically.
Still, Burum predicts it may take three to five years for a recovery to take hold in the Inland Empire.
In February, PFF reported a loss of $14.7 million in its 2007 fourth quarter, and said it would suspend its quarterly cash dividend due to "uncertainty on the timing of the recovery in residential real estate" and the impact of credit on the company's operating results.
PFF had been collecting a higher yield on some home-builder and commercial loans that were to mature in a year or so.
But some developers could not sell homes in the tracts they've developed, or lease some commercial property after it was built, leading to some borrowers becoming delinquent.
As a result, PFF was forced to set aside reserves on possible losses, further aggravating its financial condition.
The problems PFF has faced are reflected in its stock price, which is down from a 52-week high of $30.91 per share to below $7.00 as of 8am PDT this morning.
UPDATE (4/2/08, 7:30PM): PFF Bancorp stock closed down 19.1%, or $1.62 today, ending the day at $6.86 per share.
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