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PFF Bancorp, the parent firm of PFF Bank & Trust, has a history dating to 1892 in the Pomona Valley, but it was not involved in the ill-fated financing trend of the current decade: subprime mortgage lending to borrowers with questionable credit.
However, like many financial companies nationwide with a stake in the homebuilding industry, said President and CEO Kevin McCarthy, PFF felt the fallout when borrowers began defaulting on home loans they couldn't afford when introductory rates expired.
Dropping demand and tightened credit standards left builders with a growing glut of newly constructed houses, and some are having difficulties paying back their construction loans from banks such as PFF.
PFF's finances remain sound, McCarthy said, but the company responded to the housing situation in October by placing $34 million in reserve to guard against expected losses from construction loans.
The 55-year-old McCarthy grew up in Claremont and has seen plenty of housing market ups and downs since joining PFF in 1978, when it was still called Pomona First Federal. He remains bullish on the Inland region's chances of bouncing back from the housing slump as long-term population growth continues.
"In the long run, the Inland Empire is going to be seen as still having some of the most affordable housing in California," said McCarthy, who is based at the company's headquarters in Rancho Cucamonga.
PFF Bank & Trust has 38 offices around Southern California, and its $4.5 billion in assets makes it the second-largest banking institution with Inland headquarters.
Q: How do you retain good employees?
A: We have a career (path) program. We help our workers pay tuition at two-year and four-year colleges to learn new skills. If they learn those skills, they move up in the company and they stay with us. The average tenure of many of our current employees is 15 to 20 years.
Q: How does being in the Inland Empire affect your company?
A: We're able to grow our business based on the natural growth of the Inland Empire. We don't have to acquire other banks to grow, and we don't have to go outside of our area to get new business. That's rare in banking -- you don't have many regions in the country where that is the case.
Q: Why did you choose this industry?
A: My original interest was in international banking and finance. I decided on community banking because it places a bigger emphasis on service. Your success is measured on how you provide service to your customers.
Q: What are the major changes you see for your industry in the next five years?
A: With the changes that are being made in management, and also some of the new (government) oversight, the banking industry is going to be stronger than it's ever been. When you raise the credit standards, that's going to ensure that the people who get loans for a house are the people who can afford to have a house. That's good for everyone.
Q: What is your advice for other executives?
A: The advice I would give is that the employees in your organization are the most important thing. Your success is going to be based on the quality of service that your employees are giving to your customers.
Q: What do you do to distinguish your company from others in the field?
A: For us it's our familiarity with the Inland Empire. We know the market, we know our customers, and they come back to us because of that knowledge.
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