Claremont Insider: PFF Bancorp Notes

Sunday, April 6, 2008

PFF Bancorp Notes

PFF Bancorp, the parent company of PFF Bank & Trust, has been taking a beating on the New York Stock Exchange, as we noted Wednesday.

The Daily Bulletin had reported that Rancho Cucamonga-based PFF had to sell about $100 million in problem commercial and builder loans to a local private equity firm run by developer Jeffrey Burum. A reader has pointed out that Burum's bio indicates that he was the chairman and CEO of Southern California Housing Development Corporation (now known as National CORE), a non-profit dedicated to developing affordable housing opportunities. He currently serves as co-chair of National CORE's board of directors.

Our reader noted that Southern California Affordable Housing Corp. was the developer former Claremont City Manager Glenn Southard was pushing to develop the affordable housing site at Towne Ave. and Base Line Rd.

Let's take a look at PFF Bancorp's Board of Directors:

PFF Bancorp Board of Directors

Our reader also pointed out that there are some interesting local connections to the PFF's board. For instance, Jil Stark, the former director of Claremont McKenna College's Marian Cook Miner Athenaeum, is a longtime PFF board member. Stark, who has been on PFF's board since 1975 and has been chair of the Audit Committee since 1977. Stark is also on the Los Angeles County Fair board, the City of Claremont's Committee on Aging, the Claremont Community Foundation's Argus Board, and was even a $200 contributor to Preserve Claremont, that group of morally upright citizens who promised to bring civility and righteousness back to Claremont back in 2005 city elections.

(On that last point, the cure was worse than the alleged disease, it turned out - the Preserve Claremont campaign, fronted by Human Services Commissioner Valerie Martinez and former Claremont Mayor and current Kiwanis president Paul Held, degenerated into a whispering campaign of false innuendo. All of the responsible parties, though, seem to have come out of it unharmed and guilt-free. )

But we digress.

Getting back to PFF Bancorp, the reader also pointed out that San Dimas Mayor Curt Morris is on the PFF board. Morris, an attorney and mayor of San Dimas since 1996, has done pretty well by PFF. SEC filings showed that in August, 2006, Morris made a series of stock option trades that netted him around $515,000 before taxes.

Using his stock options, Morris was able to purchase the PFF stock for an option price of $7.38 per share, and then turn around and sell the stock for the then-current market price of about $36 per share. Good thing Morris used his options two years ago - at the close of trading on Friday, PFF Bancorp was down to $6.19 per share.

The records show that on 8/25/06, Morris purchased 6,000 shares of PFF stock for a total price of about $44,000 and sold the stock on the same day for $219,000. Then, on 8/28/06, he purchased 11,852 for $87,000 and again sold the same day for $427,000.

There was nothing wrong with these transactions that we are aware of. Morris was simply exercising options he had presumably been awarded as a board member. It does show, though, that one can do pretty well sitting on local boards, provided the company performs well.

With PFF stock currently in free-fall over its bad loans, is there a commensurate cost to board members for poor performance?