Fruit Falling Far From the Tree

CUSD Board Member

Jeff Stark

That photo of Jeff Stark at the Labor Day campaign kickoff for Russ Warner, the Democratic candidate running against incumbent Republican David Dreier for California's 26th congressional district seat, reminded us of some Stark's own family history and how it's linked to Dreier.

Dreier, for those of you who don't know, got his undergraduate degree in political science from Claremont Men's College (now Claremont McKenna College) in 1975. Dreier later earned a masters degree in government from Claremont Graduate School (now CGU). He also worked as a director of corporate relations at CMC. In 1980, our district elected Dreier to Congress, where he has been ensconced ever since.

At CMC Dreier (photo, right) no doubt crossed paths with Jeff Stark's father, Jack Stark, who was CMC's president from 1970 to 1999. Dreier would have also met Jeff's mother, Jil Stark, who was the director of the Marion Miner Cook Athenaeum. It turns out that the Starks kept in contact with Dreier after he became a congressman.

We checked and saw that both of Jeff's parents donated to Dreier's campaign war chest. The Huffington Post's FundRace listed two donations for Jil, one in 2009 for $1,000 and one in 2007 for $1,150. Notice that the latter contribution Jil's trustee position with the now-defunct PFF Bank & Trust, a 116-year-old local institution that survived the Great Depression but couldn't survive our Great Recession.

You'll recall that Jil Stark made a small fortune off PFF stock options right before the stock price plummeted. She may have used some of that windfall to help out a friend:

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Jack Stark, too, got into the act, throwing a $600 bone Dreier's way in 2009:



We noticed that the Starks' son Jeff is a registered Republican, so one would presume he's a Dreier supporter as well. That's why we were so surprised to see him caught at the Russ Warner event. We hear Jeff didn't stick around very long. Maybe word got out to Dreier's office. Or to Jeff's folks.

Next time, Jeff ought to send Ken Corhan in his place. Ken's much more slick when it comes to this kind of sneaking around.

End of Year Lists

TOP STORIES

The year's end brings, as usual, the obligatory backward glances at the annum gone by. Top stories of 2008, best of lists - movies, books, music, recipes and more - have been popping up on websites all over the Interwebs in recent weeks.

The Daily Bulletin has had several "look back" articles this past week. One, by Wes Woods II, covered his top Claremont stories of 2008. Woods had among his top stories: the failed affordable housing project on Base Line Rd., the medical marijuana issue, the Padua Hills Theatre renovation, and the Thanksgiving Pilgrim incident at Condit School.

Woods also listed the passing a few notable Claremont residents, including the painter Milford Zornes, Bulletin writer Leo Greene, and novelist and Pomona College visiting professor David Foster Wallace.

Woods also had a forward-looking piece about what might be the top issues for the city in 2009. Among these is the economic environment, which continues to deteriorate, as Woods' piece pointed out:

It's gonna be a tough year," Mayor Ellen Taylor said. "I'm hoping we can balance that aspect with continued service to our residents."

Councilman Peter Yao said the most immediate issue will be the amount of revenue coming into the city.

"Our majority source is Claremont Toyota and they're having a hard time," Yao said.

"Around mid-January, we will figure out what adjustments we need to make to finish this year through June, and what changes we want to make to next year's budget."

And David Allen had his list of "2008's Strangest News" for the wider area, including things from Ontario and Pomona. We won't spoil the suspense and give away Allen's Number One, but here's one Claremont-centric item that weighed in at Number Three:

3. HEAD CASE: A crystal skull on loan to a New Age shop in Claremont was reported missing by its owner, who believed the skull originated hundreds or thousands of years ago and had healing powers. The reported theft in April coincided with publicity for the fourth Indiana Jones movie. To my knowledge, Claremont suffered no stolen fedoras.

OUR LIST

Not wanting to miss out on all the rearview mirror glancing, here are some of the issues we thought were hot Claremont topics in 2008:

• Budgetary Problems - State and Local all thanks partly to a $42 billion state deficit, a recession, and a credit market freeze but mostly to:
  
  
• The Housing Market Crash that saw housing prices fall nationwide by large percentages. Loan defaults and foreclosures soared as the real estate bubble deflated. The housing market failure led to a domino effect that killed the credit markets. That in turn led to things like:
  
  
• The Failure of PFF Bancorp. - An Inland Empire institution for over 100 years, PFF survived the Great Depression but could not withstand the mismanagement of a not-too-smart board of directors who bet much too heavily on loans to developers and builders.
  
  The same sort of hubris expressed itself differently in the another local issue:
  
  
• The Affordable Housing Crash fueled by the bubbly, and unrealistic magical thinking of the local chapter of the League of Women Voters, who at considerable expense pushed a project that had no real hope of getting approved. The LWV and their leaders, Helaine Goldwater, Barbara Musselman, Sharon Hightower, and especially Claremont Mayor Ellen Taylor were most responsible for this particular debacle.
  
  Fortunately for Taylor, she only had two feet to fit into her mouth. It might have been much worse if her bipedalism weren't a limiting factor in her political missteps. As it was, her other big boo-boo was:
  
  
• Cookiegate - Ellen chased off a troop of Girl Scouts, first from the stoop of her Claremont Village office building, then from the street corner. We suspect this mini-scandal, which drew lots of local and national attention, might have factored into Taylor's decision not to seek re-election - though she'd never publicly admit it.
  
  Taylor's transgressions paled in comparison to:
  
  
• Xavier Alvarez - the gift that keeps on giving, conviction-wise. The South Pomona representative to the Three Valleys Municipal Water District board pleaded guilty to a federal misdemeanor for lying about receiving a Medal of Honor and now faces felony insurance fraud charges in LA Superior Court.
  
  Not all things rose to Alvarezian heights, but Claremont McKenna College did have to do some PR damage control for:
  
  
• Jonathan Petropoulos - the CMC history professor who stepped down from his position as director of CMC's Center for the Study of the Holocaust, Genocide, and Human Rights after news broke in CMC's student paper about an investigation into Petropoulos' role in the attempted restitution of a painting looted by Nazis during World War II to the work's rightful owner.
  
  Not all the news at the Claremont Colleges was such heavy stuff, though. There was, for instance:
  
  
• The White Party - A Scripps College dean read the wrong things into a party flyer, leading to a PC faux-pas.
  
  And in a similar vein:
  
  
• Pomona Alma Mater-gate - Pomona College's Alma Mater, "Hail! Pomona, Hail!" is slated to die a slow death, while Pomona's other traditional song, "Torchbearers," gets sent to rewrite.
  
  Not to be outdone, Claremont Unified School District had its own racially sensitive issue:
  
  
• Indian-Pilgrim War - elementary school parents take umbrage at a long CUSD tradition of kids dressing up as Native Americans and Pilgrims and end up offending other parents who rather liked the tradition.
  
  

We've no doubt forgotten one thing or another - the Wilderness Park bulldozing, for instance (how often does a city make an easily avoidable $250,000 goof in the middle of a financial crisis?) - and we'll almost certainly hear from our dear readers about our omissions.


IN MEMORIAM

We do want to note, as the Bulletin's Wes Woods II did, the passings of a few notable Claremonters in 2008:

• Milford Zornes - the long-time Claremont resident and renowned watercolorist died in February not long after his 100th birthday. Zornes' mural work can be seen in the lobby of the Claremont Post Office.
  
  
• Leo Greene - the Daily Bulletin columnist and Claremonter also passed away in February. Greene wrote about his coping with amyotrophic lateral sclerosis (ALS) in a Bulletin series called "Leo's Story."
  
  
• David Foster Wallace - Writer and Pomona College professor David Foster Wallace committed suicide at his Claremont home in September. Wallace was very popular with his students, and his death shook the college community. We found a March, 1997, interview Wallace did with PBS' Charlie Rose for those who never had a chance to meet DFW.
  
  
• Enid Douglass - A former Claremont mayor and councilmember, Douglass was a Claremont Graduate School alumna and helped develop an oral history program there. Following her death in mid-October, the Claremont Courier had a long obit on Douglass life and her many accomplishments.
  
  

A Not-So-Golden Dream

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It's beginning to look a lot like 1994, at least in terms of the economy, housing, and unemployment in the Southern California exurbs....


FDIC CLOSES PFF BANK

PFF Bank & Trust and Downey Savings yesterday became the 21st and 22nd banks to be taken over by the Federal Deposit Insurance Corporation this year, the LA Times reported.

The FDIC, as is their usual practice, moved in late Friday afternoon and took over both banks. PFF's proposed merger with FBOP Corp. appeared to be falling apart, so the FDIC brokered another buyout by Minneapolis-based U.S. Bank.

U.S. Bank will take over both PFF and Downey Savings. The Times article gave the specifics:

PFF, short for Pomona First Federal, specialized in loans to Inland Empire developers and home builders, running up $289.5 million in losses in the January-September period.

"The closing of these two thrifts once again demonstrates the tremendous impact of the housing market distress on the state of California," John Reich, director of the Office of Thrift Supervision, said in a statement announcing the seizure of the institutions.

Downey Financial Corp., parent of Downey Savings, was founded in 1957 by developer Maurice McAlister, a bass fisherman and nickelodeon collector who built shopping centers that included Downey branches. Co-founder Gerald McQuarrie died 15 years ago. McAlister remained chairman until July, when Downey's problems were already apparent.

PFF was the oldest banking outfit in Southern California, founded in Pomona in 1892 to serve towns in what was then the citrus belt. Parent PFF Bancorp Inc., based in Rancho Cucamonga, had hoped to sell itself to Oak Park, Ill.-based FBOP Corp., which owns California National Bank and other community banks.

The Times had a separate blurb that reported the takeover should be seamless, and customers should see no disruption in service:

The Federal Deposit Insurance Corp. said the 213 branches of the two organizations would reopen as branches of Minneapolis-based U.S. Bank under their normal business hours, including those with Saturday hours. Depositors automatically will become depositors of U.S. Bank. Deposits will continue to be insured by the FDIC, so there is no need for customers to change their banking relationship to retain insurance coverage.

Customers of both banks should continue to use their existing branches until U.S. Bank can fully integrate the deposit records of the organizations, regulators said. Over the weekend, depositors can access their money by writing checks or using ATM or debit cards.

One reason for the Friday takeovers is to allow a weekend transition period, which also gives bank customers time to let the news sink in. The Times listed the FDIC's call center phone numbers for information about the two banks:

PFF Bank - (800) 930-6827
Downey Savings - (800) 930-5169

The hours for the phone lines this weekend are today from 8am to 6pm PST, Sunday from noon to 6pm, and daily from 8am to 8pm after that.

The Times also noted that the FDIC's website also has separate pages with information for PFF and Downey Savings.


INLAND EMPIRE UNEMPLOYMENT RATE HIGHEST IN US

The LA Times also carried a front page article today on the rising unemployment rates in the Inland Empire. The Times reported that unemployment in the region that includes San Bernardino, Riverside, and Ontario reached 9.5% in October, the highest level here in 13 years and the highest current unemployment rate of any U.S. metropolitan area.

Like the PFF troubles, the local unemployment problem is linked to the housing market crash, as the Times noted:

Ignited by the collapse of the local housing market, which decimated the construction and lending industries, the wave of unemployment has trickled into almost every area, including retail, manufacturing and local government.

The region's troubles are set against a backdrop of growing unemployment throughout the nation. The U.S. Department of Labor reported last week that a growing number of jobless Americans are turning to government assistance. The number of workers collecting unemployment insurance payments has now reached a 25-year high at 3.95 million.

Meanwhile, the percentage of people unemployed in the Inland Empire has more than doubled from a year ago, and some experts predict the situation will worsen before it improves.

"It's a perfect storm," said Brad Kemp, director of regional research for Beacon Economics, which recently conducted the second annual Inland Empire Economic Forecast Conference.

"It was one of the fastest-growing places in America," he said. "And when you have that kind of growth, you have the potential for loss."

The downturn has all but erased the glow of optimism the Inland Empire enjoyed only two years ago, when newly minted mansions and an array of upscale retailers fashioned parts of the region into a more affordable Orange County in the making.

In many cases, those developments are now symbols of the decline, from the sparsely populated outdoor malls to the rows of repossessed homes -- victims of housing price plunges of 35% in Riverside and 37% in San Bernardino in the last year.

All over, there are signs of reversed prosperity.

Ontario International Airport went from setting growth records to losing about a third of its airline traffic in the last year. To curtail costs, buildings and a parking lot were closed. And at night, one of its unused runways shuts off its lights.

So, we're back to 1994 or back to 1982. Or 1932. The more things change, they say. Boom gives way to bust, with each successive era erasing the preceding one from the collective memory.

One begins to wonder if Joan Didion's essay "Some Dreamers of the Golden Dream," about a 1965 murder in the San Bernardino Valley, was written in the mid-1960's or yesterday:

This is the country in which a belief in the literal interpretation of Genesis has slipped imperceptibly into a belief in the literal interpretation of Double Indemnity, the country of teased hair and the Capris and the girls for whom all life's promise comes down to a waltz-length white wedding dress and the birth of a Kimberly or a Sherry or a Debbi and a Tijuana divorce and a return to hairdresser's school. "We were just crazy kids," they say without regret and look to the future. The future always looks good in the golden land, because no one remembers the past. Here is where the hot wind blows and the old ways do not seem relevant, where the divorce rate is double the national average and where one person in every thirty-eight lives in a trailer. Here is the last stop for all those who come from somewhere else, for all those who drifted away from the cold and the past and the old ways.

Local Financial News

PFF Bank & Trust was back in the news yesterday. The bank's planned merger with Illinois-based FBOP Corp., is being carefully watched by federal officials, according to an article by Matt Wrye in yesterday's Daily Bulletin.

PFF stock has fallen off a cliff this past year, tumbling from a high of nearly $40 a share to under $2. Here's what Wrye had to say:

More than $1.1 billion has been drained from PFF Bancorp and its bank branches since March 2007, most in customer withdrawals from its banks.

Walter Hackett, a former PFF executive, isn't sure the merger will be halted, but he thinks FBOP may be getting nervous about the deal.

PFF's losses and mounting shareholder lawsuits "may be part of the reason that FBOP is blinking now," said Hackett, who during the housing market boom was a vice president and commercial loan department manager for PFF.

Hackett is also a witness for a group of shareholders who recently filed a lawsuit against PFF - one of several suits claiming PFF executives foresaw financial losses and dumped their stock while telling shareholders everything was OK.

At the same time, FBOP is suffering major losses due to its exposure to Freddie Mac and Fannie Mae stock meltdown, according to a September article published by Crain's Chicago Business newspaper.

FBOP, owned by billionaire Michael Kelly, is trying to "extend the Federal Reserve approval of the merger, and to obtain other regulatory approvals," and intends to complete the merger on or before Dec. 31, documents show.

* * *

The Los Angeles County Metropolitan Transit Authority, whose board is chaired by Los Angeles Mayor Antonio Villaraigosa, is in some potential trouble over lease-back arrangements it and other public transit agencies made over the past decade.

The Daily Bulletin has an article that explains how the failure of insurer AIG figures into the MTA's problems, which started when the MTA sold off assets like buses and trains to private investors over the past decade. The MTA then turned around and leased the assets back from the investors. The deals generated about $65 million in cash for the MTA's operating costs.

The MTA's lease-back deals were insured by AIG, and the insurance included a provision that requires the MTA to find a new insurer within 60 days if AIG's credit rating ever fell below a AAA rating, something that is a given as a result of AIG's current problems. If the MTA cannot find another insurer, the investors can take possession of the assets. Now, MTA officials are lobbying Washington to step in to guarantee the lease-back arrangments, the Bulletin article reported:

"Because the federal government now owns over 80 percent of AIG shares, they would be the logical candidate to guarantee those deals," said MTA spokesman Marc Littman.

The MTA is one of dozens of transit agencies nationwide that are in Washington this week seeking help because of troubles with similar deals.

The MTA's deals originated in the late 1990s and early 2000s, when it sold off a huge number of buses and trains to corporate investors, including Phillip Morris and Comerica.

It then entered into long-term leases to use the equipment. The sales netted about $65 million to put toward operating costs, said Littman.

"Essentially, they were tax shelters," said Joseph Henchman of the Washington-based Tax Foundation, a taxpayer rights organization that opposes guaranteeing the leases. "They were a way to get short-term revenue that was never appropriated."

These sorts of things don't exactly inspire confidence in the MTA or Villaraigosa, who pushed the half-cent county sales tax increase passed by LA-area voters this past election. The Bulletin article mentioned a concern that some of the revenue from the sales tax increase might have to be used as collateral against money the MTA would have to borrow if they don't get a bailout. Move to the back of the funding queue, Gold Line folks.

A FOOTNOTE: This same sort of arrangement was suggested by former Claremont City Manager Glenn Southard in 2005. Shortly after he left Claremont, Southard recommended this to some of his Claremont 400 friends as a way of financing projects like Padua Park, saying that city property - City Hall or the Hughes Center, for example - could be used as collateral and leased back from private investors in exchange for project funds.

Luckily for Claremont, Southard's scheme never gained traction.

PFF Shareholder Meeting Set for September

The Daily Bulletin's Matt Wrye reports that PFF Bancorp has set a date for its shareholder meeting to vote on the proposed merger of PFF and FBOC Corp., which also owns Cal National Bank.

Wrye's article, also posted on his blog The Bizz, had the info on the next month's meeting:

PFF Bancorp, the financial parent of PFF Bank & Trust, announced on Wednesday that its shareholder meeting will be held on Sept. 25 at 9:30 a.m. at the company's headquarters on 9337 Milliken Ave.

Votes will be tallied for the proposed merger between PFF and FBOP Corp., an Illinois-based company which owns several banks throughout the country.

If shareholders approve the acquisition, PFF banks will become Cal National Bank institutions.

With its common stock -- along with special series shares that PFF issued to FBOP through an agreement -- FBOP controls 28 percent voting power and will vote "yes" on the merger.

Collectively, PFF's board members and certain executive officers hold almost 3 percent voting power and will also vote "yes" on the merger.

Odds are that the merger will be approved, putting an end 116-year-old PFF as an independent institution. A shareholder class-action suit was settled recently, but PFF still faces a suit by employees who participated in the company's 401(k) and stock-option program and who are claiming to have lost millions of dollars it when the stock went belly-up.

PFF Faces 2nd Lawsuit

Rancho Cucamonga-based PFF Bank settled its shareholder lawsuit last week, potentially easing the way for its planned merger with FBOC, Inc., an Illinois banking concern.

As an article by the Daily Bulletin's Matt Wrye reported, the suit had alleged that PFF executives got rid of their company stock at a time when they knew they faced big losses from problem loans to builders and developers.

Wrye also informs us that PFF workers and retires have filed their own class action suit against the company:

Meanwhile, Pittsburgh- based Stember, Feinstein, Doyle & Payne - in conjunction with an Agoura Hills firm - filed a class-action suit against PFF and executives on Tuesday seeking to recover $80 million for 900 employees and retirees.

It says executives invested workers' 401(k) and stock plans into PFF shares while knowing the company wasn't "accurately recording its financial condition on its books" and disclosing its true condition to the public.

"They knew the company was headed for trouble," said Steven Pincus, attorney at the Pittsburgh law firm.

More lawsuits could be on their way. If those plaintiffs win, it would deliver a devastating blow to a bank already being watched by federal regulators because of liquidity issues.

Wrye's piece also reminds us of how poorly PFF has performed. According to the article, the company has suffered over $240 million in combined losses in the past three quarters and customers have withdrawn $600 million in assets between March and June this year.

As we previously noted, some of the PFF board fared well with stock options before the bank's fall from grace, to the tune of many hundreds of thousands of dollars in profit from stock sales.

PFF Bancorp Now Traded OTC

As of last Friday's close of the New York Stock Exchange, PFF Bancorp is no longer traded on the NYSE.

Shares of PFF, formerly listed as PFB on the NYSE, is now traded on the Over the Counter Bulletin Board, as the Riverside Press-Enterprise reported. PFF will now trade on the OTCBB under the symbol PFFB.

According to the PE article, the move to the OTCBB has no effect on PFF's sale to FBOC Corp., the Illinois-based banking company that is attempting to take over the troubled local bank. FBOC also owns Cal National Bank, whose operations will merge with PFF's.

PFF Bancorp has a redesigned website trumpeting the sale to FBOC with the slogan, "the Best is yet to come..." We can only hope.

PFF's stock price has tumbled precipitously in the couple years, from a high near $40 a share to $1.05 as of Friday's NYSE close. So, just in case, apparently to inspire depositor confidence, the new PFF site also has a link to "A Comprehensive Guide to FDIC Insurance."

At least a lucky few were fortunate enough to escape the wreckage with their own, special insurance.

Trickle Down

The top stories yesterday seemed to be of the financial sort. The Federal Reserve and U.S. Treasury stepped in to help shore up mortgage lenders Fannie Mae and Freddie Mac, which together either directly hold or supply the backing for $5.3 trillion in mortgages.

And then there was the Federal Deposit Insurance Corp.'s takeover of Pasadena-based IndyMac Bank. A run on the bank by IndyMac depositors left the institution so cash-poor that it triggered the FDIC action last week.

With over $32 billion in assets, IndyMac represents the second-largest U.S. bank closure since 1934. The lines of rattled depositors queued up outside IndyMac branches yesterday seemed more like images from the Great Depression than contemporary America. The Daily Bulletin has an article covering the story from a local angle:

La Verne residents Bill and Nancy Armstrong arrived at the Foothill Boulevard branch an hour before the bank opened and got in a line that was 100 people long.

The elderly couple has their life savings in their neighborhood bank, including assets from inherited property.

Nancy Armstrong said she remembers the stories of her parents going through the Depression.

"Once you live through that, you learn to be frugal," she said. "Now here we are."

David Barr, an FDIC spokesman, said customers will be informed about how their accounts are structured and may be eligible to recoup dollar-for-dollar beyond the $100,000 limit.

If deposits aren't fully insured, customers will receive a receivership certificate and told about the process to possibly recoup more of their money.

More bank trouble is on the way, all courtesy of the mortgage meltdown. The FDIC lists 90 banks as troubled, and more failures are on the horizon. None of this bodes well for Rancho Cucamonga-based PFF Bancorp, whose shares closed yesterday at $ .80 per share, down from nearly $40 two years ago. PFF is awaiting shareholder approval of a sale to FBOC Corp., an Illinois banking concern that owns California National Bank. The sale may also be affected by a pending shareholder suit.

The Bulletin's Matt Wrye also had an article about the PFF sale, which noted that top PFF officials should get by just fine after the buyout, thank you:

If the acquisition is approved, PFF's president and CEO, Kevin McCarthy, and its chief financial officer, Greg Talbott, would each receive more than $2 million if they quit their jobs or are fired within 90 days of the merger. McCarthy already has said he will leave the company after the transition.

These employment agreements were inked in September, according to SEC documents, and they're on top of another $4 million other executives would get under the same rules.

"There are shareholders interested in stopping the sale," said Walter Hackett, who during the housing boom was a vice president and commercial note department manager.

He's also a witness for a group of shareholders building its case against PFF.

"I had to remind them that I didn't work for them, that I worked for PFF shareholders," Hackett said about certain PFF executives he worked with. "Ultimately, that's why I left."

Most analysts seem to think the current crisis of confidence will be less severe than the Savings and Loan bailout of the 1980's, which ended up costing Joe and Jane Taxpayer nearly $125 billion. As with every preceding financial crisis, we'll just have to ride this one out. That's the price of being a debtor nation when the bill comes due.

In the meantime, the effects of the current troubles continue to trickle down to the local level. Faced with tightened credit, rising food and energy costs, and a general uncertainly, consumers are reining in spending, which means lower sales tax revenue to cities like Claremont that are dependent on that income source.

It was telling at last week's city council meeting to hear councilmembers comment that Claremont cannot really afford $500,000 from the General Fund for a one of the proposed plan to mitigate tree root damage along Shenandoah Dr. near The Claremont Club. Cost was not the main reason councilmembers cited for opting for one of the other less expensive choices, but it was nonetheless a concern.

Time will tell if the Big Project mentality that has dominated our city government in recent years will give way to fiscal restraint as we wait for this storm to pass. There is an city election next year, and Claremont Mayor Ellen Taylor has hitched her wagon to a number of big ticket items: Police station - $25-30 million; Padua Ave. Sports Park - $10-12 million; water company takeover - $100 million-plus; affordable housing project - unknown costs.

We get to see in coming months whether politics trumps reason.

Accounting for PFF's Fall

Daily Bulletin reader Dwight Siebert of Claremont has a letter in today's paper commenting on the collapse of PFF Bancorp. Siebert, who says he had a PFF account 50 years ago as a paperboy, writes that PFF, which survived two world wars and the Great Depression may need some lessons in accountability:

Now PFF board member Jil Stark is quoted in the Daily Bulletin (June 16, 2008) saying she never thought the bank would be in such dire straits where a buyout was the only viable option.

Sounds to me like the rest of the board wasn't thinking, either.

As we wrote last week, PFF and its board have been sued by a shareholder who is seeking class-action status for PFF shareholders claiming the PFF board breached its fiduciary duties by failing to adequately manage the bank's crisis.

Stark and the PFF board may be learning that the Claremont way of handling crises - ignoring them when they're developing and denying responsibility after the fact - won't work in this case.

Penny Stock News

PFF Bancorp has certainly fallen on hard times, selling itself off at a fire sale price of $1.35 a share a few short years after trading at almost $40 a share. Correction: maybe selling itself off....

Now, PFF is making headlines in Europe as an example of the excesses of the housing bubble here. The Financial Times had an article about the pounding small banks have taken, and they led off with PFF:

When PFF Bancorp, Southern California's oldest bank, was sold for the fire-sale price of $30.5m this month, it was buckling under the weight of soured loans to real estate developers and its stock had plunged more than 95 per cent from its 2006 peak.

Like many small regional and community banks, PFF increased its loan portfolio over the past decade - doubling it to more than $4bn - in large part by financing commercial and residential developers and homebuilders during the house price boom. Now, as these companies struggle through the housing slump, lenders such as PFF are feeling the pinch.

Banks' first-quarter losses on such real estate loans were more than 15 times the amount of the same quarter last year, according to the Federal Deposit Insurance Corporation.

PFF Bancorp, which trades as PFB on the New York Stock Exchange, closed yesterday at $1.08 a share.

Class Action Suit Sought Against PFF Board

Former Claremont McKenna College official Jil Stark and the rest of the PFF Bancorp board of directors are being sued for selling the Rancho Cucamonga-based company in what amounts to a fire sale price of $1.35 per share. That deal, which would allow FBOP Corp., to takeover troubled PFF, is awaiting approval by the Securities and Exchange Commission and PFF shareholders.

According to the Riverside Press-Enterprise, the lawsuit was filed earlier this month by a shareholder upset with the sale:

The lawsuit was filed June 18 in Los Angeles Superior Court by attorneys for plaintiff Menachem Maiman. It alleges PFF officials "breached their fiduciary responsibilities to maximize" shareholder value, failed to engage in an orderly sale of the company, and agreed to sell at a price that is "grossly unfair."

The suit notes PFF stock had once traded as high as $30 in July 2007. As recently as April 30, it closed at $3.78 per share. On the day the merger was announced, the closing price was $1.25.

The suit asks the court to stop the merger, or rescind it if a court judgment is not rendered until after the merger is completed. It also asks that the defendants account to plaintiffs for all damages caused to them, and account for all profits and "any special benefits' obtained by defendants in the planning of the merger.

Joseph Levi, the attorney handling the suit for the plaintiff, is seeking to have the case certified as a class-action suit. PFF officials kept characteristically silent on the matter.

You can read the complaint on Attorney Levi's website. One of the interesting points it makes is that at a time when PFF's most immediate concern should have been a $44 million debt obligation that was coming due, the PFF board wasted valuable time trying to generate $460 million in cash through a stock offering that seemed to have very little likelihood of working out. In the meantime, the loan payment was coming due, and the PFF board was forced to hold their fire sale rather than conduct what the plaintiff's filing called "an orderly sale." According to the lawsuit, the $460 million the PFF board was chasing "far exceeded its historical equity."

Great leadership shows its strengths in times of crisis, no? This certainly seems to support what PFF employee Virginia Soper was saying back in May when PFF stock was still trading above $1.50 per share. If the FBOP takeover is allowed to go through, the PFF name will cease to exist after 116 years.

Imagine a financial institution surviving the Great Depression and then succumbing to this latest turn of events. That's a truly remarkable mismanagerial acheivement. An Inland Empire all-timer even.

PFF Bancorp shareholders can get more information about the lawsuit here.

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Money Matters

PFF BY THE NUMBERS

Daily Bulletin business reporter Matt Wrye has a post about PFF Bancorp on the Bulletin's blog The Bizz.

Wrye says the numbers underlying the collapse of PFF's stock (PFB:NYSE) are, to say the least, sobering:

The Rancho Cucamonga-based financial holding company released some mind-boggling data on Thursday morning in its 186-page annual 10-K financial report, and the numbers aren't surprising.

For starters, customers collectively pulled out almost $520 million in deposits between March 31 and June 13. That's about 16 percent of the bank's total deposits reported for the fiscal year ending March 31.

Over the same fiscal year, PFF's debtors couldn't pay back 468 loans worth $955 million, and about $608 million of this shows "weakness in the underlying collateral or borrower strength."

PFF announced last week that it had worked out an agreement to allow Illinois-based FBOP Corp. to takeover PFF. That sale will have to go to PFF shareholders for approval.

The Press-Enterprise reported that PFF has no alternatives to the takeover because its cash reserves have fallen precariously low. The Press-Enterprise article actually described the withdrawals by PFF customers as a "run on the bank":

Because of bad home loans, the bank lost $225.4 million in its fiscal year that ended March 31, according to filings.

Since that time, a run on the bank by customers pulling out their deposits put PFF in position where it had no cash flow and no means to pay off its debts.

PFF's auditors, KPMG LLP, wrote in the Thursday filing that the company wouldn't be able to pay off its debts without being sold.

SAY NO MORE

The Bulletin's Will Bigham has an article about the budget Claremont's city staff is presenting to the City Council for the next two-year budget cycle.

Bigham reports that city sales tax revenues are off $1.7 million from the $5.8 million staff had previously estimated for the current fiscal year which ends June 30th. Staff is claiming that property tax revenue will be up, however, and the city has also seen an increase in revenue from the transient-occupancy tax money it receives thanks to the new Hotel Casa 425 and the spruced-up Doubletree Hotel.

City staff has trimmed the city's operating budget slightly, according to the article. The current fiscal year's operating budget was $38.4 million. That drops off to $37.5 million for FY2008-09 and $38 million for FY2009-10.

The article did not indicate how the belt-tightening would affect any large-scale projects, such as a new police station or a new affordable housing project.

Claremont staff reports that they did not have to lay off any employees and they achieve the budget cuts by not replacing employees who leave, other than a few key positions, as you will read below.

People visiting Claremont should also take note that the city is counting on another revenue stream for money. Call it a highway end-user tax:

The city is also estimating that money collected from traffic fines and parking citations will balloon in the next two years.

Parking citations are expected to rise from $110,000 in this fiscal year to $200,000 in each of the next two years. Traffic fines are expected to rise from $325,000 annually to $405,000 annually.

Police Capt. Gary Jenkins said the increases are expected mainly because vacancies have been filled at the department for traffic and parking enforcement.

There's no effort at all to go out and do more traffic enforcement with the intent of gaining revenue," Jenkins said. "It's more an issue of proper staffing, and these are the revenues we're projecting because of proper staffing."

Right.

Claremont would never institute speed traps or traffic citation quotas, nudge nudge, wink wink.

PFF Agrees to Buyout

The Los Angeles Times reported today that PFF Bancorp, parent company to PFF Bank & Trust, has agreed to be acquired by FBOP, Inc, an Illinois-based banking concern and parent company to California National Bank.

The Times article focused on the problems facing local community banks, problems directly tied to construction loans and the housing market crash:

Southern California's oldest bank, PFF -- formerly Pomona First Federal -- had doubled its loan portfolio to $4 billion over the last decade, in large part by financing residential developers and builders of affordable housing in the Inland Empire.

But the bank's losses on such lending has soared, sending the stock price of its parent company, PFF Bancorp, down 90% this year. Desperate for fresh capital, the company agreed Monday to be acquired for $30.5 million in cash.

Home-mortgage specialists may have been the first lenders to suffer for their roles in financing the housing bubble. But, as foreclosures rise and home prices fall, many smaller banks and thrifts that backed residential developers and home builders are watching black ink turn red and are spending uncomfortable amounts of time with regulators. The financial institutions also are enduring jabs from critics who say they tossed lending standards out the window.

PFF Chief Executive Kevin McCarthy said in an interview that his bank started pulling back on land loans two years ago, anticipating a downturn like "the normal economic cycles we've always had out here."

"But nobody foresaw what would happen to the housing market, or that sub-prime mortgages would collapse so completely," he said. As for the sale to Oak Park, Ill.-based FBOP Corp., parent company of community banks including California National Bank, McCarthy said it was a hard but necessary choice: "I'm doing this to keep as many employees on the job as I can."

Community banks embraced commercial lending in recent years, largely ceding home loans, credit cards and other mass-market products to big national players.

Residential construction loans, which generate big fees, were especially profitable for smaller banks -- until housing collapsed in places like the Inland Empire, where prices are down more than 30% from their highs, and the Central Valley, where some former boom markets are off more than 40%. Raw land on which Ontario-based Empire Land installed roads, sewers and utilities, expecting to then sell it to builders, has declined even more.

The Daily Bulletin's Matt Wrye also reported on PFF and said the takeover deal is pending shareholder approval. The article painted a dire picture for PFF:

"I don't think shareholders have a whole lot of options," said Joseph Gladue, banking analyst with Los Angeles-based B. Riley & Company, Inc., about whether shareholders will approve the deal. "They're sort of between a rock and a hard spot. If the company falls under `adequately capitalized,' the (federal) regulators will come in and put some severe restrictions on it."

PFF reported millions of dollars in loan losses over its last two quarters because housing developers stung by the subprime mortgage meltdown can't repay PFF what they borrowed.

Monday marked the bank's deadline to pay off a $44 million overdue loan from an undisclosed lender, but the bank, once again, couldn't make deadline. It's been pushed off until June 16 of next year.

PFF's losses for the quarter ending March 31 are also a lot higher than expected: $204 million.

Claremonter Jil Stark, who has been on the PFF Board of Directors since 1975, is also quoted in the article. When PFF stock (PFB: NYSE) was flying high not all that long ago, Stark made about $417,000 from her stock options.

Boom Towns

The boom town that was the Inland Empire has been undergoing a "boom" of another sort, and Claremont isn't excepted from from the experience:


BROTHER CAN YOU SPARE $460 MILLION?

PFF Bancorp (NYSE: PFB) was back in the news Friday. The Daily Bulletin's business reporter Matt Wrye had a brief article noting that PFF Bancorp was looking to generate $460 million. The Rancho Cucamonga-based banking company had to ask for an extension on a $44 million overdue loan at the end of May and is looking to pay that off.

Wrye's article stated that PFF hadn't disclosed any details about the $460 million deal and said that it would require shareholder approval. The article also said the deal would involve a stock offering. The piece gave some background on PFF's problems:

The bank has written off millions of dollars in losses over the last couple of quarters.

In the midst of a booming, inflated housing market, CEO Kevin McCarthy signed off on loans to housing developers who can't repay what they borrowed.

Some experts speculate PFF is on the verge of government receivership if private equity doesn't come to its rescue, or if the bank isn't bought out.

The bank's stock closed Thursday at $1.33, a mere fraction of its $39 value just two years ago.

PFF's board of directors had no problems with CEO McCarthy's management of the company when it was flying high, and several of them, including San Dimas Mayor Curt Morris and former Claremont McKenna College Athenaeum director Jil Stark made out pretty well with their stock options prior to PFF's collapse.

Now that the party's over, the PFF board has kept a pretty low profile. We'll see how long they can keep that up.


HOUSING MARKET WOES

As Matt Wrye's article observed, PFF's problems had their roots in the housing market downturn. Loans to builders and developers turned bad, and share value eroded as a result. The Inland Empire has been hit particularly hard by the problems in the housing market.

Wrye had another article yesterday that posed the question, "When will it end?" to several real estate experts. One of them, Rancho Cucamonga developer Jeffrey Burum, thought the market might not fully recover until 2012.

Burum, coincidentally, helped PFF Bancorp out a couple months back when he bought a portfolio of problem loans from PFF. The loans had originally been valued at around $100 million, but by the time Burum bought them off PFF, they were worth only $60 million. Burum paid $22.5 cents on the dollar for those loans, the Daily Bulletin reported.


CITIES HELPING BUILDERS CLOG THE ROADWAYS

People who've grown up in the area can tell you that traffic has worsened over the years. Builders and their lobbying groups such as the Building Industry Association, funnel large amounts of money to elected officials (see our piece on Pomona Mayor Norma Torres' contributors for her State Assembly run), and that gets translated into poorly planned residential and business developments getting easy approval by those same officials.

At the same time, state officials have been siphoning off transportation funds to try to balance the state budget. Consequently, much-need transportation infrastructure repairs and improvements have been neglected. The added traffic created by all those building projects over the years hasn't been matched by new freeway and public transit projects and simply gets dumped onto our already crowded roads.

The LA Times is running a series on traffic issues and the failure of state and local governments to address these issues, despite voters approving billions in financing for transportation funds. Today's installment in the Times' series charges local officials with bypassing laws requiring builders to help pay for transportation projects to carry the traffic their projects generate:

* State and local officials have not expanded the region's highways and mass transit systems enough to keep up with population growth.

The population of the five-county Southern California region grew 22% from 1990 to 2006, and the total miles driven by motorists has increased about 42%. But the number of miles of highway in the region has increased by only 7.5%.

Since 2001, Govs. Gray Davis and Arnold Schwarzenegger, along with state legislators, repeatedly have diverted money from the state's taxes on gasoline to pay for non-transportation programs. Schwarzenegger plans to do so again in the budget for the coming year. Roughly $5.8 billion in highway and mass-transit funds that were diverted during the state's repeated budget crises this decade have not yet been repaid.

While the region's highway capacity has lagged behind population growth, mass transit has not made up the difference. Los Angeles County for the last 25 years has put three-quarters of its voter-approved transportation money into rail and bus systems. Even with the investment of about $7 billion, 85% of commuters still drive.

* At the same time, local officials repeatedly have sidestepped state laws that were supposed to require developers to lessen the traffic-snarling effects of projects.

For years, elected county and city officials across Southern California have put economic development and jobs ahead of mobility, approving major commercial and residential developments without requiring builders to pay enough for improvements needed to handle extra traffic.

All that development contributes to congestion that for the average motorist in L.A. and Orange counties adds up to almost two workweeks of delay each year, according to the Texas Transportation Institute, a think tank at Texas A&M University that compiles annual assessments of congestion nationwide. That's almost double what it was in the 1980s. In Ventura County , congestion-related delays each year consume roughly a workweek of the average motorist's life. The delay in the Inland Empire equals about six workdays.

Keep all of that in mind if in the future you see Claremont councilpeople greenlighting a new condo project or if you see a local State Assemblyperson voting for legislation affecting the building industry.

If traffic keeps going the way it has the past 20 years, the next boom we observe just may be one lowered on irresponsible state and local elected officials.

Economy in Recession, Buffett Says

San Bernardino business writer Matt Wrye has a blog called The Bizz where he writes about Inland Empire business issues.

Wrye had a post yesterday about billionaire investor Warren Buffet comments that the U.S. economy is in recession. Buffett also said that the recession is going to be longer and deeper than people are expecting right now.

So, with California already facing a projected budget deficit of over $15 billion, and cities across the state, including Claremont, having similar budget problems, elected officials are having to deal with a sea of red with no prospect for relief in the immediate future.

At the state level, Governor Arnold Schwarzenegger is proposing to borrow against California Lottery revenues while simultaneously cutting back on health and social services. Here in Claremont, the Claremont City Council and its various commissions and committees continues to spend like drunken sailors as City Manager Jeff Parker wrestles with a possible loss of $3.5 million or more in sales tax and state money. Claremont receives approximately 57% of its sales tax revenue from the Claremont Auto Center, whose sales are down because of the rise in gas prices and the downturn in the economy.

And other local businesses are suffering as well. PFF Bancorp (NYSE: PFB) has continued to plummet in value, going from a peak market capitalization of over $900 million to $30.31 million as of Friday's market close. PFF's fall has been tied to the housing market's problems and to loans made to home builders.

If Warren Buffett is correct, then we all have some more belt-tightening to do before things improve.

Money Pits

Troubles in the credit markets have hit local banks hard, leaving several in need of money to cover loan losses. The Daily Bulletin's Matt Wrye writes that loan losses by area banks have eaten up large amounts cash:

In the last two quarters, local banks collectively shoveled a whopping $230 million into their loan loss reserves to cover tens of millions of dollars in loan write-offs, and they may have to set aside even more cash for future losses.

Is the environment ripe for bank buyouts?

The answer is no, according to one financial guru on Wall Street steeped in years of industry knowledge.

"Bankers become very cautious in markets like this," said John Eggemeyer, chairman of San Diego-based PacWest Bancorp and CEO of Castle Creek Capital private equity firm. "It's a mistake to jump into a troubled market too early. Banks are reluctant to expose their own balance sheets to other banks."

The next choices in line: private equity or institutional capital.

"There's plenty of private equity flying around, looking for banks like these," said Eggemeyer, who has cobbled together PacWest through several acquisitions in recent years.

The most glaring examples of possible buyouts or capital infusions are Rancho Cucamonga-based PFF Bancorp and Corona-based Vineyard National Bancorp, but smaller banks' financial statements are also raising eyebrows.

We've written about PFF's troubles recently, and we suspect that the worst is not over.

PFF Bank Employee Speaks Out

The Daily Bulletin had a letter from a long-time PFF Bank & Trust employee who said she knew where to place the blame for what she called the bank's "rapid descent into obvious bankruptcy."

The bank, whose parent company, Rancho Cucamonga-based PFF Bancorp, Inc. (PFB: NYSE), has lost more than 95-percent of it stock's value from its all-time high in August, 2006, has been in the news several times the past few months as it had to sell off what had originally been $100 million worth of bad loans to developers and home builders, then had to announce a loss of $159 million in the first quarter of 2008.

The Bulletin's letter writer, Virginia Soper, lays the blame squarely on the bank's CEO and on the current board of directors:

I can't help but recall some of our former directors and CEOs - founder Carl Lorbeer, Fred Palmer, Paul Walker, William Montgomery, Fred Mack, Bob Nichols, Don Des Combs and many others who would not have allowed this financial nightmare.

This reminds me of a book I read about the collapse of Enron. It was not a financial institution, but the basics are the same. It is called "The Smartest Guys in the Room." I suggest the officers and directors take the time to read it.

PFF Bancorp: Directors First

Trading in PFF Bancorp shares resumed on the New York Stock Exchange yesterday, a day after the NYSE suspended trading of the stock. PFF is the parent company of PFF Bank & Trust.

PFF Bancorp (PFB: NYSE) continued it plunge from its 52-week high of $30.37 and closed yesterday down to $2.48 per share, or minus 34% for the day. Yesterday's fall came on the heels of bad from the bank Wednesday, according to a Daily Bulletin article by Matt Wrye:

But late Wednesday, PFF announced that it expects to report one of its largest ever quarterly losses, totaling $159 million for its fourth quarter ended March 31.

"These losses reflect continued difficulty in the real estate market that all financial institutions are experiencing," said PFF spokesman David Sweet.

PFF also disclosed plans to restructure a $44 million loan with an unidentified commercial bank that it couldn't repay by an April 30 deadline - an event that could have led to a default.

In yet another surprise, PFF announced loan and lease losses greater than expected in the quarter, a sign of the deepening real estate quagmire gripping the region.

A provision for loan and lease losses of $196 million is expected in the quarter, the bank said. This provision is related to real estate loans in the greater Inland Empire region.

PFF director Jil Stark, who is described on PFF's website as a retired Claremont McKenna College administrator and former Scripps College faculty member,was also quoted in the article:

Long-time PFF board member Jil Stark was out of town on Wednesday but said she was "surprised" to hear news of the halted stock trading. Bad weather cut off the phone connection to her June Lake cabin most of the day, she said. Stark joined the board in 1975. "We've weathered many cycles of ups and downs, and each had its unique challenges," Stark said.

The current crisis, due in part to homebuilder loans that have gone bad, certainly qualifies as a unique challenge. For PFF, which has been around since the late 1800's, this is probably the worst down for them since the Great Depression.

Of course, one thing easing Stark's pain is the fact that she was able to cash in on some PFF stock options in early 2007 for a $417,000 profit.

For bank employees, shareholders, and customers, the prospect of weathering the current down cycle may be considerably less certain without the sort of cushion Stark has.

After the Matt Wrye article was posted on the Bulletin's website, one of our readers wrote in and was less than enamored of Stark's stiff-upper-lip talk:

You should have included Jil Stark's comments in your blog. She sounds somewhat like Marie Antoinette who, when informed that the masses were without bread, allegedly said "Let them eat cake". Jil, who is enjoying her June Lake home and could not be reached, has been able to have HER cake and eat it as well by cashing out her stock (some or all, I am not sure which) before the bottom fell out of the PFF stock.

Yes, and at least one other PFF director, San Dimas Mayor Curt Morris did even better than Stark, netting $515,000 in 2006.

PFF Bank & Trust, assuming they are able to weather this down cycle without having to file for bankruptcy or being bought out, may need to change its motto.

PFF Bancorp Suspends Trading of Stock

Rancho Cucamonga-based PFF Bancorp suspended trading of its stock on the New York Stock Exchange this morning, the San Bernardino Sun reported.

PFF Bancorp (PFB: NYSE), which had a 52-week high of $30.37, closed yesterday at $3.74 per share. PFF had been hammered as part of the fallout from the mortgage crisis and had to sell off $100 million in problem loans to homebuilders and developers earlier month.

The Sun article said:

RANCHO CUCAMONGA - PFF Bancorp, a troubled Rancho Cucamonga-based banking institution stung by the real estate meltdown, halted trading in its stock today.

Sal Curasi, a PFF spokesman, declined to comment why.

"We have no information to share with you on that," Curasi said.

NYSE spokesman Scott Peterson said the stock was halted at 9:30 a.m. (EDT) for announcement of "pending news." As of mid-day, the stock still hadn't traded. "Unfortunately, any interaction between the NYSE and its listed companies is non-public information," Peterson said.

"That's unusual," said Joe Gladue, an analyst with B. Riley & Co. Inc. "Of course, someone could be buying them."

If you were lucky enough to get out of the stock when it was still up, you might have made out okay, as San Dimas Mayor Curt Morris did. Or the former director of Claremont McKenna College's Marian Miner Cook Athenaeum, Jil Stark. Both are on PFF Bancorp's Board of Directors.

For those lucky few there was an embarrassment of riches, to the tune of many hundreds of thousands of dollars. For the rest, not so much. Looking back on it, the collapse to under $7.00 a share at the beginning of the month doesn't look so bad now.

Cashing In on PFF Bancorp

On Friday, a reader responded to our last post about PFF Bancorp and the money earned by San Dimas Mayor Curt Morris (about $515,000) in August 2006 when the mayor cashed in his stock options, which he used to buy 17,852 shares of PFF stock for $7.38 in two transactions. Morris turned around and sold the shares the same days that he bought them for the going share price of around $36.00.

Morris had earned the options as a member of the PFF Board of Directors. As some loans to homebuilders and developers went south with the housing market, the stock (NYSE: PFB) fell on hard times recently and closed Friday with a stock price of $4.23 per share.

The reader wrote that Claremont's local connection on the PFF board, Jil Stark, also made out pretty well with her stock options. Stark was formerly the director of Claremont McKenna College's Marian Cook Miner Athenaeum. Stark's husband Jack served as CMC's third president from 1970 to 1999. Jack Stark is currently on the CMC Board of Trustees.

Our reader says:

Subject: Honi soit qui mal y pense??
To: claremontbuzz@yahoo.com

Dear Buzz,

As one who has lost a few dollars by investing in Pomona First Federal, I found your article on April 6 about Curt Morris, Mayor of San Dimas and PFF board member and his good luck and timing of stock sales quite interesting. Your article also mentions one of our local leading citizens Jil Stark, contributor to local charitable as well as political causes, as a member of that governing board. She did quite well, too. Personally, that is. In her position as presiding director of PFF's audit committee she did not do as well for the company.

When you published your article the closing stock price was $6.19. Today, it closed at $4.23, another 68% down. What does that have to do with Jill, you ask? Well, she is the only director who totally sold out all her stock during the period from February 12 to February 28, 2007, at prices ranging from $33 to $31.

According to published records in Yahoo.com, she has zero stock in the company. These same records show that she cleared about $417,000. One must be impressed by her skill and timing.

You wrote ... "one can do pretty well sitting on local boards...". I would change what follows to "even if the company does not perform well."


Cheers

As seen in the chart below, in February 2007 Stark made a series of five stock option transactions that netted her the approximately $417,000 our reader alluded to. The transactions were:

• 2/12/07
  Option exercised: 2,000 shares at $7.38 per share; approximate cost: $15,000
  Sold 2,000 shares at $11.37 per share; approximate proceeds: $23,000
  
• 2/14/07
  Option exercised: 2,400 shares at $7.38 per share; approximate cost: $18,000
  Sold 2,000 shares at $33.50 - $33.69 per share; approximate proceeds: $81,000
  
• 2/20/07
  Option exercised: 6,300 shares at $7.38 per share; approximate cost: $46,000
  Sold 6,300 shares at $33.63 per share; approximate proceeds: $212,000
  
• 2/22/07
  Option exercised: 2,500 shares at $7.38 per share; approximate cost: $18,000
  Sold 2,500 shares at $33.50 per share; approximate proceeds: $84,000
  
• 2/28/07
  Option exercised: 4,652 shares at $7.38 per share; approximate cost: $34,000
  Sold 4,652 shares at $31.84 per share; approximate proceeds: $148,000
  

And the preceding years were also good to Stark as PFF stock appreciated during the housing boom. Stark's investment strategy seems to be sound one: Get while the getting is good.

As the reader points out, at PFF Bancorp, as well as at any number of American companies, there seems to be a disconnect between risk, borne by shareholders (and taxpayers who have to bail out failing financial institutions) and rewards given to management.

Click to Enlarge