PFF Bancorp agrees to debt limitations as condition of sale

Jun 19, 2008 (The Press-Enterprise - McClatchy-Tribune Information Services via COMTEX) -- PFB | Quote | Chart | News | PowerRating -- Officials with financially troubled PFF Bancorp, who announced this week that it had agreed to let an out-of-state bank buy it for about $30.5million, has promised its regulator that it won't get further into debt or attempt to pay off any of its debts without approval, according to the documents filed with the Security and Exchange Commission Thursday.

The bank also agreed to use all available cash and liquidated assets to infuse the bank's bottom line, according to the Rancho Cucamonga-based company's annual report.

The memorandum of understanding was signed June 13 with the Office of Thrift Supervision, on the same day it signed a merger agreement with Illinois-based FBOP Corp., the parent company of California National Bank.

FBOP has offered to pay $1.35 per share for the bank's common stock and a $7 million loan in exchange for a secured note worth voting rights equal to 19.9 percent of PFF's stock.

PFF's stock was $1.22 per share after trading ended Thursday on the New York Stock Exchange.

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.

The merger would require the approval of regulators and the company's stockholders.

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