RANCHO CUCAMONGA, Calif., April 1, 2008 /PRNewswire-FirstCall/ -- PFFBancorp, Inc. (NYSE: PFB) announced today that its subsidiary, DiversifiedBuilder Services, Inc. ('DBS') has completed the sale of substantially all ofits loan portfolio. The risk profile of this portfolio was significantlygreater than that of the Bank's loan portfolio, with second trust deeds andunsecured loans comprising a significant portion of the portfolio. As part ofits overall risk reduction strategy, the Company undertook an accelerateddisposition program that included negotiated payoffs and principal reductions,culminating in the sale of substantially all remaining loans in a singletransaction on March 31, 2008. DBS recorded a provision for loan losses ofapproximately $48 million in the March quarter, reflecting the write-downsassociated with the expedited disposition of the portfolio. The proceeds fromthe payoffs, principal reductions and sale of the portfolio, together withrefunds of prior year income taxes arising from the carryback of net operatinglosses, will be utilized by the Company principally to retire short-term debt.
Kevin McCarthy, PFF Bancorp President and CEO commented: 'Thistransaction marks a significant milestone in our proactive efforts to reducethe risk profile of the Bancorp and all but eliminates the uncertainty thatwas surrounding the DBS portfolio.'
On March 26, 2008, at the request of the Office of Thrift Supervision (the'OTS'), the Company's Board of Directors passed a resolution requiring, amongother things, that the Company obtain the OTS's non-objection prior todeclaring or paying any dividends or permitting the Company or itssubsidiaries (other than the Bank) to incur or rollover any debt. The Companyhad previously announced the suspension of the Company's cash dividend inJanuary 2008 due to the uncertainty surrounding the timing of the recovery inresidential real estate and the impact of credit on the Company's operatingresults. The resolution also states that the Company will reduce the level ofproblem assets at DBS, which has been addressed with the expedited dispositionprogram described above.
The Company's bank subsidiary, PFF Bank & Trust (the 'Bank'), iscontinuing its process of completing a comprehensive quarterly review of itsloan portfolio, including the updating of appraisals on properties securingloans that have been previously identified as classified or criticized. Thisreview will not be completed for several more weeks. However, based uponpreliminary results of this review, the Company believes that the Bank'sprovision for loan and lease losses for the quarter ended March 31, 2008, mayexceed $120 million.
