When Southern California’s oldest bank, PFF Bancorp, 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.
