July 2008 Archives

     Are we in a recession?
     Experts and politicians argue this question every day.
     Meanwhile, the nation's gross domestic product -- a barometer of recession territory -- is floundering like a fish out of water.
     The Commerce Department revised its second-quarter outlook and said the nation's economy grew 1.9 percent.
     But the government revised its positive fourth-quarter 2007 number and said the economy actually shrunk by 0.2 percent over that period.
     In the meantime, large retailers keep going bankrupt.
     Mervyns LLC, Shoe Pavilion Inc., Steve & Barry's LLC, Shaper Image Inc., Linens 'n Things Inc., Levitz Furniture Inc., Wickes Furniture Co. and Metromedia Restaurant Group -- which owns Bennigan's and Steak & Ale and Tavern restaurants -- have all recently filed Chapter 7 or Chapter 11 bankruptcy documents.
     Rumors are flying that Circuit City could be next.
     "This is the beginning of a wave," said Harlan Platt, professor of finance and corporate-turnaround expert at Northeastern University in Boston. "In every economic boom, investor enthusiasm leads to over-expansion. In recessions and slow periods, companies on the fringe begin to fail."
     The recent bankruptcies -- along with the financial failure of IndyMac bank and a handful of other institutions across the country -- is only the beginning of more to come, Platt said.
     "Many of these companies are in California," he said, but wouldn't divulge names. "If the stock price is less than $5, they're in trouble. Any investor in those stocks should give them a serious look."
     During the real-estate rush, several banks never made covenant deals when lending money. A covenant gives a bank authority to usher in a turn-around strategy for a failing company.
     "They must've been on LSD to lend money with no covenants," Platt said. "That's like buying a car without brakes. You eventually know it has to crash."
     --matthew.wrye@inlandnewspapers.com

     Mervyn Morris isn't surprised the company he founded in 1949 filed for bankruptcy on Tuesday.
     Even more interesting: the filing was made on the same date that Mervyns opened its first store in San Lorenzo 59 years ago.
     "That smarts," Morris said over the phone on Wednesday. "It's ironic."
     Almost all of us have walked out of the iconic department store at one time in our lives with bags stuffed full of discounted clothes and other goodies on sale.
     Morris headed Mervyns until 1978, when Dayton Hudson Corp. bought the company. Dayton Hudson eventually became Target Corp.
     The ten Mervyns stores doing business across San Bernardino and Riverside counties could be on the chopping block, but spokesman Andrew Siegel said the company hasn't announced what stores, if any, will shut their doors.
     Siegel wouldn't speculate on whether or not the Mervyns store slated for Inland Center Mall in San Bernardino will open in October as planned.
     Could the plan go bust?
     "Anything is possible," Siegel said.
     Meanwhile, construction is continuing on the Inland Center building that Mervyns said it would move into, according to Arun Parmar, senior property manager of the mall.
     Macerich Co., a Santa Monica real-estate company, owns and manages the mall.
     Wachovia Capital Finance Corp. is lending Mervyns LLC $465 million to keep the company on its legs while chartering the bankruptcy process.
     Several private equity firms, including Cerberus Capital Management and Sun Capital Partners Inc., bought Mervyns from Target Corp. in 2004 through a partnership.
     Mervyns LLC might be going bankrupt, but the partnership made millions of dollars from selling off several real-estate holdings.
     In Morris's opinion, the CEOs behind Mervyns "lost their focus," and at the same time "they devoted all their energy to Target."
     "Mervyns went through a whole series of management changes," Morris said. "One CEO would throw out lady's dresses, while another one said they needed more cosmetics. Then the next one would bring lady's dresses back. One decided they should compete with Kohl's, and the other decided they should compete with Wal-Mart."
     Morris now owns and operates a family investment firm in Menlo Park called Morris Management Co.
     Macerich -- which also owns The Mall of Victor Valley and the Mervyns storefront there -- bought 43 Mervyns buildings in December, with 13 of them in their own malls.
     Mervyns laid off almost 200 workers at its Ontario distribution warehouse in April, saying it would save millions of dollars by outsourcing to a third-party logistics vendor.
     Mervyns moved into its 650,000 square-foot Ontario warehouse in the mid-1990s. It serves as the cargo hub for stores in Arizona, Nevada, New Mexico, Texas and Utah.
     --matthew.wrye@inlandnewspapers.com

     With five major dealers closing stores and factories over the last year, the local RV industry is going down the tubes fast.
     Will it be near dead in a couple of years?
     It's not unfathomable, given tanking sales and homeowners' dried up well of home-equity credit.
     One thing is for sure: It pays to be in the RV market's spin-off industry.
     While recreational vehicle manufacturers and dealers across the two-county region keep downsizing, Valerie Parmenter is still employing her eight workers to paint, maintain, repair and refurbish used RVs at her company in northern San Bernardino, VIP Enterprises.
     "We're slow too, but we're still hanging in there pretty strong," Parmenter said. "My volume is down a tad. Right now we're looking OK, but I don't know what the next three months are going to bring."
     RVs get 8 to 10 mpg, which is plenty of incentive to vacation at campgrounds closer to home. Some families feeling squeezed by gas prices and inflation are opting for this choice more often than not.
     And they're throwing the cash savings at places like VIP Enterprises to "get their RVs looking new again," Parmenter says.
     "Because customers aren't buying new coaches, they're fixing up the ones they have," she said. "These campgrounds have rules that you can't have a ratty-looking coach. So (RV owners) come to me to clean them up."
     Perris-based Weekend Warrior Trailers Inc. announced this week it's closing two factories and laying off 250 workers.
     Fleetwood Enterprises in Riverside just closed its plant there, on top of shutting doors at another one in Fontana last year. The company has cut dozens of jobs over the last year.
     Earlier this month, La Mesa RV Center Inc., a San Diego-based RV and motor home dealer, announced the closure of its San Bernardino store by the end of this year.
     Ontario-based Alfa Leisure Inc. shut down in April, slashing 150 jobs.
     And National RV closed down its Perris headquarters and manufacturing plant in December, laying off 600 employees.
     --matthew.wrye@inlandnewspapers.com

     Vineyard Bank announced on Monday that it is voluntarily agreeing to a federal regulator's consent order, which says the bank must manage its financial woes by following a three-year capital plan and numerous other rules.

     It's the latest regulatory eyeing of the bank and its parent company, Corona-based Vineyard National Bancorp.

     In May, the Federal Reserve Board and Office of the Comptroller of the Currency in Washington D.C. said the holding company was in a "troubled condition."

     On top of a heated proxy battle coming to head at the Aug. 5 shareholder meeting, the OCC charged Vineyard with the daunting task of keeping its head above regulatory waters, according to a Securities Exchange Commission filing on Monday.

     Vineyard must not only diversify its investments, but also get the OCC's permission if it wants to grow its loan portfolio by more than 5 percent from the prior year, among a litany of other regulations.

     The documents also said Vineyard told its creditor -- First Tennessee Bank National Association -- on Thursday that it might need another extension on a $48 million loan. The overdue loan was already extended to Aug. 29, and Vineyard is backing nonpayment with its entire shareholder stock.

     Vineyard is suffering unprecedented losses because it loaned money to developers and builders who can't repay what they borrowed.

     A new board of directors, if elected at the shareholder meeting, could challenge the OCC's consent order.

     Vineyard's shareholder meeting will be held at 2 p.m. at the Doubletree Hotel in Ontario on 222 N. Vineyard Ave.

     Investor John Salmanson and former CEO Norman Morales are expected to nominate their hand-picked candidates for the board of directors. Besides himself, Morales is asking for approval of Thomas Koss II, Douglas Kratz, Cynthia Harriss, Harice "Dev" Ogle, Lester Strong and Glen Terry.

     Through investor group One Investments LLC, Kratz bought almost 10 percent of Vineyard's stock in late June for about $6.3 million. Morales and Salmanson joined Kratz in the stock purchase.

     Vineyard is asking shareholders to approve interim CEO James LeSieur, Frank Alvarez, David Buxbaum, Charles Keagle, Robb Quincey, Joel Ravitz and J. Steven Roush as board members.

     --matthew.wrye@inlandnewspapers.com

     Look below to read Vineyard's news release about their agreed-upon consent order with the OCC:

     You've heard the ole' saying: One man's junk is another man's treasure.
     It couldn't be more true for Frank Gallardo, a Fontana-based entrepreneur that's stumbled across a business that's putting more than just bread on the table.
     In fact, it's employing his entire family.
     As Southern California's housing foreclosure crisis keeps shutting the doors on homeowners every month, Gallardo's crew keeps showing up at the doorstep with mops and trash bags in hand.
     For banks repossessing these homes, the beds, clothes, shoes, televisions and toys left behind by evicted homeowners amounts to one big pile of junk.
     But for Gallardo, junk equals cash.
     "The money is there," said Gallardo, who owns Zzazz Industries. "It puts a lot of bread and butter on the table."
     A year ago, he was subcontracting with real-estate agents who were in charge of overhauling bank repossessions.
     "Now I work directly with the banks," he said. "And it's the whole package."
     Besides cleaning homes, he makes repairs so that houses reform back to city construction laws which were violated by the prior owners.
     Gallardo feels he's struck gold, but he knows it won't last forever.
     "I see it ending about five years down the line," he said. "With all the inventory banks have, the longer the homes sit, the more deteriorated they're becoming."
     --matthew.wrye@inlandnewspapers.com

     The hammered banking industry is creating shock waves throughout San Bernardino and Riverside counties.
     First it was Pasadena-based IndyMac. The failed institution's branches drew local customers eager to yank their money out of accounts just as the federal government took over the bank's operations.
     Now it's Downey Savings & Loan.
     The bank hasn't failed, but it's holding people's money at more than 25 full-service and in-store branches in the two-county region.
     Investors and banking analysts are speculating whether Downey will have to close certain branches because it's falling on hard times.
     The bank's Newport Beach-based holding company, Downey Financial Corp. (NYSE: DSL), reported on Thursday that it lost $466 million over the first six months of this year compared to about $75 million in profit gained over the same period in 2007. Downey made risky mortgage loans to home buyers during the real-estate rush.
     There could be a silver lining, though. Downey owns 174 retail branches that held $9.9 billion in customer deposits by second quarter's end. The financial base might help Downey whether hard times, some financial experts say.
     But others disagree. Paul Miller, analyst with FBR Capital Markets Corp., said in a Thursday research note that Downey's deposit's will only help so much, given California's deteriorating housing market.
     Customer deposits dropped 12 percent between now and a year ago, the company reported.
     --matthew.wrye@inlandnewspapers.com

     From April to June, one in every 32 homeowners in the San Bernardino-Ontario-Riverside region either gave up the keys to their house, saw it auctioned off or couldn't pay their mortgage on time, according to a report released today by Irvine-based data company RealtyTrac.
     On a quarterly basis, the area ranked No. 2 in foreclosure filings nationwide, the same rank bestowed during this year's first quarter.  The so-called "filings" include foreclosures, default notices and auctions.  Stockton was No. 1 and four other California metro areas placed in the top 10 out of RealtyTrac's list of 100 cities.
     The 43,600 second-quarter foreclosure filings in our region jumped 17 percent from the first quarter and almost tripled from a year ago.
     On Thursday, the National Association of Realtors said nationwide existing home sales dropped 2.6 percent in June -- more than double the decline that had been expected and 15 percent lower than where they were a year ago.
     The association also said the median price for a home sold in June dropped 6 percent from a year ago, the fifth largest year-over-year price decline on record.
     Nationwide, one in every 171 households received a foreclosure filing during the second quarter, which amounts to almost 740,000 properties, RealtyTrac said.
     More than 202,000 of these properties are in California, where one in every 65 homes received a filing, the highest state ratio in the country.
     --matthew.wrye@inlandnewspapers.com

     Look below to read RealtyTrac's news release:

     Fremont Investment & Loan is slashing 243 jobs at its home loan center in Ontario, according to records filed with the state's Employment Development Department.
     The investment-lending bank snatched the regional spotlight in June when it announced that its Brea-based parent company, Fremont General Corp. (OTC: FMNTQ), was filing for bankruptcy.
     But Fremont Investment & Loan is following a different course.
     In May, Litton Loan Servicing -- a Goldman, Sachs & Co. affiliate -- purchased the Fremont Investment & Loan home mortgage unit, which held $12 billion in loans.
     Fremont General also said last week that CapitalSource Inc., a Maryland-based investment and loan company, got approval by a federal bankruptcy court to acquire Fremont Investment & Loan's retail bank branches and assets.
     The merger apparently wasn't enough to stem job losses.
     Shares of Fremont General Corp. spiked at more than $30 in early 2004. The stock closed at 18 cents on Wednesday.
     The company had one retail bank in Redlands and several others located throughout Los Angeles and Orange counties.
     Fremont's layoffs add to a growing list of financial service jobs being cut throughout San Bernardino and Riverside counties since the housing boom went bust.
     In December, Wells Fargo's home finance arm in Diamond Bar shut its doors, laying off 58 workers, and JP MorganChase's subprime lending branch in Ontario axed 91 employees.
     First Magnus Financial Corp., a secondary-mortgage service based in Tucson, Ariz., shut down its Rancho Cucamonga branch in August and let 76 employees go before filing for bankruptcy.
     Option One Mortgage Corp., a subsidiary of H & R Block, cut 39 jobs in Rancho Cucamonga in July 2007.
     And Orange-based ACC Capital Holdings had two subsidiaries in Rancho Cucamonga that laid off 51 workers in May 2007.
     --matthew.wrye@inlandnewspapers.com

     Ten Mervyns stores sell goods across San Bernardino and Riverside counties, and management at the Inland Center Mall in San Bernardino is promoting what's slated to be the 11th.
     But will the Hayward-based retailer still be in business by this time next year?
     That's the million-dollar question.
     Rumors flew on Monday that Mervyns might go bankrupt in the near future.
     The Wall Street Journal, using unnamed sources, reported that New York-based investment firm CIT Group Inc. stopped financing Mervyns in spring. It also said merchandise dealers are thinking twice about selling their wares to the nationwide chain.
     "I can't comment on what's been published," said Mervyns spokesman Roy Berces on Tuesday. "There's nothing for us to say right now on those stories."
     Both Berces and Arun Parmar, senior property manager at Inland Center, say Mervyns will still open a store at the mall in October. Macerich Co., a Santa Monica real-estate company, owns and manages Inland Center.
     If Mervyns files for bankruptcy, any back-up plan to fill the empty space left at Inland Center with another tenant is "speculation" at this point, Parmar said.
     "There's probably a lot of options available to us if something were to occur," he said.
Mervyns laid off almost 200 workers at its Ontario distribution warehouse in April, saying it would save millions of dollars by outsourcing to a third-party logistics vendor.
     Mervyns moved into its 650,000 square-foot Ontario warehouse in the mid-1990s. It serves as the cargo hub for stores in Arizona, Nevada, New Mexico, Texas and Utah.
     Two private equity firms, Cerberus Capital Management and Sun Capital Partners Inc., bought Mervyns from Target Corp. in 2004.
     Macerich -- which also owns The Mall of Victor Valley and the Mervyns storefront there -- bought 43 Mervyns buildings in December, with 13 of them in their own malls.
     --matthew.wrye@inlandnewspapers.com

     Look below to read the Wall Street Journal article:

     Chino Commercial Bancorp (OTCBB: CCBC.OB) said on Monday that its earnings slid more than 50 percent for the first six months this year compared to the same period in 2007, but it still avoided red on its balance sheet by more than $180,000.
     For the same six months, the Chino-based holding company of two-branch Chino Commercial Bank also reported loan loss provisions of almost $280,000 -- more than quadruple the amount seen last year.
     No stock traded on Monday, and its price stayed at $17.00 a share. In October, shares reached $26.
     Two delinquent loans are to blame for Chino Commercial's earnings drop -- one being a business loan whose performance is getting hit by the real-estate market.
     "The other one is a construction loan on a housing tract," said Dann Bowman, president and CEO. "They're both real-estate secured."
     Out of the bank's $51-million loan portfolio, less than 2 percent is invested in residential real estate. Most loans are small business or commercial real-estate related.
     "There are clearly opportunities for expansion right now with other banks having trouble or possibly going away," Bowman said. He didn't mention names.
     Federal banking regulators have been eyeing Rancho Cucamonga-based PFF Bancorp, parent of PFF Bank & Trust, and Corona-based Vineyard National Bancorp, parent of Vineyard Bank.
     Both banks made big loans to home developers and builders who can't repay what they borrowed. Between both, losses are amounting to hundreds of millions of dollars.
     Chino Commercial also said its total deposits dropped more than 5 percent from December to June from about $70.4 million to $66.4 million.
     Recently, the bank was recognized by U.S. Banker magazine as being one of the top 200 community banks in the country for the second consecutive year. The bank made the top-200 list because of its return on average equity (ROE) over the past three years of 13.5 percent this year and 12.69 percent in 2007.
     --matthew.wrye@inlandnewspapers.com

     The real-estate meltdown's negative effects haven't bypassed Upland-based Lewis Operating Corp., one of the largest real-estate companies in Southern California.
     Still, the Inland Empire's iconic developer and real-estate manager announced on Tuesday that it shelved out about $57 million for almost 700 acres of land throughout California and Nevada since December.
     "We're one of the only companies that's actually been buying deals," said Randall Lewis, executive vice president, about lots that've dropped significantly in price since the downturn.
     It might be finding deals, but Lewis Operating Corp. isn't doing the same amount of business it saw in 2003 and 2004. The company has had layoffs.
     "The sheer number of transactions is down... more than half," Lewis said about land contracts. "We'll continue to be selective. But we think, if anything, there will probably be more opportunities in the next six months than the last six months."
     Overall, he thinks the commercial real-estate industry's downturn isn't changing anytime soon.
     But the niche market for new homes could be bottoming out by the end of 2008, he said.
     As far as the resale residential market, "it's probably sometime in 2009," Lewis said.
     He joins an ever-increasing group of real-estate and finance professionals who are pushing off their bets that the entire residential market will bottom out late this year and instead pegging the time frame in 2009, 2010, or even 2011.
     The company's recent purchases include 36 acres of commercial land in Adelanto slated for a Target-anchored shopping center, 21 acres in Mira Loma which will sport a mixed-use retail-residential project, and 30 acres in Chino for upcoming housing projects in The Preserve at Chino, a master-planned community.
     More than 500 acres of residential land was bought in the Sacramento area for homes, parks, retail shops and an elementary school, and 90 acres purchased in North Las Vegas for homes.
     --matthew.wrye@inlandnewspapers.com

     Look below to read Lewis Operating Corp.'s news release on recent land acquisitions:

      Unemployment keeps shooting upward in San Bernardino and Riverside counties and now stands at 8 percent, according to June numbers released on Friday by the state's Employment Development Department.
     It stood at 5 percent in late 2006.
     From May to June, most job losses came from local government. Federal, state and local government laid off 1,700 employees, the area's greatest month-over-month decline, the report says.
     The leisure and hospitality business shed 1,200 workers during the same period. The arts, entertainment, accommodation, recreation and food services industries each slashed 600 jobs.
     It's no surprise that the two-county region's badly-bruised housing sector is spilling over into other areas, but residential construction workers are taking the worst beating.
     Throughout the mid- to late-1990s and during the housing boom, the area's construction employment soared to more than 127,000 jobs by 2006, according to a quarterly economic report released on Friday by Redlands-based regional economist John Husing.
     But in two years, the counties lost more than 28,000 of these jobs -- about 22 percent of the hiring peak in 2006.
     We're facing "the most challenging economy in over four decades," Husing states. "2008 will be the first year since at least 1964 when the economy will have a net job loss."
     The region's 8-percent unemployment rate hasn't been seen since the mid-1990s.
     --matthew.wrye@inlandnewspapers.com

     Look below to read the latest unemployment report from the state's Employment Development Department:

     On a year-over-year basis, San Bernardino and Riverside counties are the only counties in Southern California seeing an up-tick in home sales, according to a report published on Wednesday.
     But the news out of DataQuick Information Systems, a La Jolla-based real-estate information service, comes amid home sales across Southern California dropping to their slowest pace in more than 20 years, the company said.
     On the same day, the Los Angeles Economic Development Corporation said in a mid-year forecast that California is "on the brink of a recession" and that the Inland Empire is already in the throes of one.
     A major housing slump has put thousands of residential construction workers out of work over the last year and keeps pummeling the local real-estate market.
     After months of negative home sales numbers, the two-county region is finally getting rid of some inventory. Median home prices dropped more than 31 percent in both counties from June 2007 to June 2008, DataQuick said.
     Hefty price drops and thousands of foreclosures have spurred a mere 1.1 percent increase in new and existing home sales in San Bernardino County this June compared to June 2007, while sales in Riverside County jumped almost 12 percent during the same period.
     Some home builders are fighting tooth and nail to slash prices in a market that several economists say won't bottom out any time soon.
     More than 17,400 houses and condos across Southern California sold in June versus about 20,100 in June 2007 -- a 13-percent drop.
     Compare that to June of 2005, when more than 40,000 homes sold, DataQuick's report says.
     --matthew.wrye@inlandnewspapers.com

     Look below to see DataQuick's full report:

     Ontario-based Soyo Group Inc. (OTCBB: SOYO.OB) tried reassuring investors on Monday afternoon that its growth prospects are "solid" even though a similar Tempe, Ariz.-based high-definition TV manufacturer will probably be delisted from the Nasdaq Stock Exchange in New York because of bankruptcy.
     A number of concerned Soyo investors called and e-mailed the Ontario company because of the industry news.
     Syntax-Brillian Corp. (NasdaqGM: BRLC) filed bankruptcy last week and said on Monday that it's receiving $7.5 million from various lenders and Silver Point Finance LLC to continue operations while selling assets to its major investor, Olevia International Group LLC.
     Olevia is owned by privately-held TCV Group and would assume $60 million of Syntax's debt.
     Soyo, which supplies Honeywell International Inc. and other companies with flat-panel televisions, saw its stock close at 51 cents on Monday.
     Soyo also said it signed a five-year lease at a 75,000-square-foot building -- double its current space -- in Ontario about five miles from where the company is currently located. It's scheduled to move there in September.
     Soyo is trying to get on the American Stock Exchange, which means increasing its stock value. The stock peaked at $1.48 in October 2007.
     Shareholders will be asked to approve a common stock increase from 75 million to 200 million shares at Soyo's Aug. 4 annual shareholder meeting. If approved, the company might be a lucrative prospect for institutional investors.
     The company is trying to rebound from almost $5 million in losses for 2003 and 2004, and build upon the $6.5 million in earnings it reported from 2005 to 2007.
     --matthew.wrye@inlandnewspapers.com

     History was made on Monday when the Federal Reserve said it would lend money to the nation's two mega mortgage holders, Fannie Mae and Freddie Mac, and the Treasury Department also said it would invest in them if needed.
     Freddie and Fannie fell prey to the same financial woes hitting real-estate markets across the nation, especially the Inland Empire's market for new homes.
     As foreclosures keep pounding San Bernardino and Riverside counties, and elsewhere, some experts say the Fed and treasury's action is going past liquidity measures and borderlines government solvency, thus saddling taxpayers with millions in potential liabilities.
     Congress may be asked to ultimately approve $300 billion in credit to the two government-chartered stockholder-owned financial institutions.
     Besides the Inland Empire, the state of California's real-estate market is a prime example of a housing market in the middle of going bust after a huge boom, and also why Freddie and Fannie are in the mess they're facing today.
     According to real-estate data analysis company Loan Performance / First American CoreLogic, California home prices dropped almost 15 percent in 2007, and several economists believe prices will continue to fall another 15-25 percent throughout 2008.
     In California, more than 78,000 subprime adjustable -rate mortgages worth about $27 billion are scheduled to reset between January 2008 and January 2017. Most will reset between now and December 2008.
     Also, 325,000 adjustable-rate mortgages statewide worth about $120 billion are scheduled to reset between January 2008 and early 2017. Most will reset between now and early 2013.
     Home values nationwide were inflated by a total of $5 trillion in January of this year, some financial real-estate experts say.

     --matthew.wrye@inlandnewspapers.com

     Look below to read the Associated Press story on Freddie Mac and Fannie Mae:

     India. Poland. China.
     Leaders from these countries are eager to throw more credit unions into their financial markets, and they've visited the California Credit Union League over the last year to learn how to do it.
     But from Sunday to Wednesday, executives from the Rancho Cucamonga-based organization will be guests in a foreign land.
     The league will join its sister branch, the Nevada Credit Union League, and meet with government and financial representatives from more than 50 countries at the World Council of Credit Unions' 2008 World Credit Union Conference in Hong Kong.
     The four-day conference targets credit union issues and lets leaders share ideas that they can take back and implement in their own countries. The sluggish U.S. economy, marred by a roiling financial crisis, will also take center stage.
     Conference attendees will also discuss mobil-phone Internet banking services at European credit unions and how that model can be applied in America.
     Both leagues provide information, education, advocacy and support services to more than 400 credit unions in California and Nevada.
     More than 9 million Californians and Nevadans are credit union members and part of the International Credit Union, which has 177 million members.

     --matthew.wrye@inlandnewspapers.com

     Rancho Cucamonga-based EMRISE Corp. said on Thursday it's been awarded one of the largest ever production contracts in the company's history from a "long-standing U.K. customer" for Eurofighter Typhoon aircraft electrical devices.
     The aerospace-industry manufacturer's England-based subsidiary, Xcel Power Systems Ltd, received more than $2.3 million in orders and said it expects to ship out $1.1 million in Eurofighter parts for the rest of this year and more than $4 million from now until 2010.
     On the same day, Heartland Advisors Inc., a Milwaukee-based private investment firm, reported it owned 4.9 percent of EMRISE -- more than 1.8 million shares of stock. Heartland previously reported that it owned 8.7 percent in early February.
     EMRISE stock closed at 55 cents a share on Friday. It peaked at $11.25 in 1992.  The company must increase stock value to stay listed on the New York Stock Exchange. It will ask shareholders to approve a reverse stock split later this year.
     EMRISE suffered a first-quarter loss of $900,000, mostly due to production and customer-related delays. Before that, the company saw a total of $5.5 million in losses between 2006 and 2007 because of slower sales, among other reasons.
     The company must acquire Advanced Control Components for the reverse stock split to happen, assuming shareholders approve the split. It expects to close the deal by Aug. 15.
     European aerospace companies in Germany, Italy, Spain and elsewhere, as well as the Royal Saudi Air Force, use EMRISE products for making fighter aircrafts.
     --matthew.wrye@inlandnewspapers.com

     Look below to read the latest news release from EMRISE Corp.:

     Medina International Holdings Inc. (OTCBB: MIHI), a small boat manufacturer in San Bernardino, announced on Wednesday that it signed a five-year deal with Timothy Spooner to market Medina's commercial and recreational boats.
     The $2.5 million market-capitalized company went public in September at 48 cents a share, but it closed at 7 cents a share on Thursday afternoon.
     Medina International has reported more than $2.7 million in combined losses since its inception in 1998, according to documents filed with the Securities Exchange Commission.
     The company's first-quarter filing in March shows a deficit of $2.8 million and liabilities exceeding assets by more than $500,000.
     It also says the company needs to raise capital if it's going to stay alive. There was "substantial doubt about the company's ability to continue," according to the annual report filed in April 2007.
     Daniel Medina, president of Medina International, couldn't be reached Thursday afternoon.
     Spooner has been working at Harbor Guard Boats -- also known as Modena Sports Design LLC -- for the past five years as vice president of sales and distribution. Modena Sports became a subsidiary of Medina International in June.
     Medina International produces commercial fire, rescue, police and patrol boats utilizing the highest design and performance standards. The company's products combine safety, power, handling and stability with a proprietary hull design and equipment features that address specific niche markets.
     --matthew.wrye@inlandnewspapers.com

     Look below to read the latest press release from Medina International Holdings Inc.:

     Nationwide foreclosure activity dropped 3 percent in June, but the San Bernardino-Riverside-Ontario metropolitan area still ranks No. 5 in the country on the foreclosure filing totem pole.
     One in every 95 local households received a foreclosure filing, according to a report released this morning by Irvine-based real-estate data company RealtyTrac Inc.
     These so-called "filings" include default notices, auction sale notices and bank repossessions.
     June marks the region's second consecutive month of being ranked at No. 5. In April, the area's rank peaked at No. 4.
     Seven out of the top 10 cities in today's report are in California, a sign that foreclosures will continue to pummel the state's real-estate market for the time being.
     Foreclosure filings for California decreased 4.5 percent from May to June, but they're up 77 percent when compared to June 2007.
     One out of every 192 households in California received a foreclosure filing in June, more than double the national average.
     Quarterly, the San Bernardino-Riverside-Ontario area ranks even worse.
     RealtyTrac said in late April that the region was No. 2 nationwide in foreclosure filings for the first quarter of this year. Its second-quarter report will be released in late July.
     --matthew.wrye@inlandnewspapers.com

     Look below to see RealtyTrac's foreclosure report for June:

     Vineyard National Bancorp's former CEO led the financial institution through risky waters from 2005 to 2007 as it made shaky loans to home developers, but now the ousted executive stated he wants to nominate a new board who can transform the bank into a business and commercial lender.
     On Monday evening, Norman Morales, along with investor Jon Salmanson, submitted a proposed slate for the board of directors in opposition to Vineyard's proposed slate that was filed last week. Morales has nominated himself.
     After being forced to resign in January, the ex-CEO is vying for control over the holding company, which is parent company of Vineyard Bank.
     Morales's nominees are steeped in commercial lending experience, according to a Securities Exchange Commission document he filed on Monday.
     Vineyard was designated as a financially "troubled condition" in May by the Federal Reserve Board and Office of Comptroller of the Currency in Washington, D.C. Any board-of-director candidate nominations will have to pass approval by those regulatory agencies.
     Vineyard reported a loss of $13.3 million in its first quarter and also said it has $142 million in "substandard loans" from 2007 on its books.
     Shareholders will vote on the nominees at the annual meeting on Aug. 5.
Besides himself, Morales is asking shareholders to approve Thomas Koss II, Douglas Kratz, Cynthia Harriss, Harice "Dev" Ogle, Lester Strong and Glen Terry as board members.
     Through investor group One Investments LLC, Kratz bought almost 10 percent of Vineyard's stock in late June for about $6.3 million. Morales and Salmanson joined Kratz in the $6.3 million stock purchase.
     Vineyard is asking shareholders to approve Frank Alvarez, David Buxbaum, Charles Keagle, James LeSieur, Robb Quincey, Joel Ravitz and J. Steven Roush as board members.
     --matthew.wrye@inlandnewspapers.com

     Vineyard National Bancorp (NasdaqGS: VNBC) couldn't pay a $48.3 million loan to its lender on time, so the financially troubled holding company based in Corona is getting a much-needed extension.
     Documents filed Thursday evening with the Securities Exchange Commission say that Vineyard -- the parent company of Vineyard Bank -- will have until Aug. 29 to pay off First Tennessee Bank National Association, a subsidiary of Memphis, Tenn.-based First Horizon National Corporation (NYSE: FHN).
     First Horizon is also suffering the consequences of its risky residential construction loans. The largest bank in Tennessee is shoveling millions of dollars into its loan loss reserves as it watches its portfolios deteriorate.
     Vineyard was pegged for $120,000 under the agreement, and the loan's interest rate jumped 0.45 percent to a rate equaling LIBOR plus 3.5 percent.
     Vineyard also said its Aug. 5 annual shareholder meeting will be held at 2 p.m. at the Doubletree Hotel in Ontario on 222 N. Vineyard Ave.
     Investor John Salmanson and former CEO Norman Morales are expected to nominate their hand-picked candidates for the board of directors, but Vineyard is urging shareholders to vote down those nominees.
     The bank wants shareholders to approve the following candidates to the board of directors: Frank Alvarez, David Buxbaum, Charles Keagle, James LeSieur, Robb Quincey, Joel Ravitz and J. Steven Roush.
     --matthew.wrye@inlandnewspapers.com

     Vons supermarket is going through some tough times, and local stores are feeling the brunt of it.
     A subsidiary of Pleasanton-based Safeway Inc. (NYSE: SWY), the Southern California chain's Inland Empire stores laid off nine union employees, demoted 52, and switched 30 from full-time to part-time status in June
     "The biggest part of the (Southern California layoffs) are in our jurisdiction," said Brent Denkers, secretary-treasurer of Local 1167, a Bloomington-based chapter within United Food and Commercial Workers International Union.
     The union's Inland Empire jurisdiction represents workers at 37 Vons stores.
     He said Vons never completely recouped from the huge union strikes that hit Southern California grocery stores in 2003.
     "Regular customers didn't shop there during the strike," Denkers said. "Customers didn't return, and (Vons) lost business. It's required the company to do some layoffs."
     The union is filing grievances on behalf of employees.
     "We believe there was an error made by the company in the procedures they used to lay off," Denkers said.
     Union employees have "recall rights," which means if the company is looking to hire or promote anyone, the laid off and demoted workers get first dibs.
     "We're hopeful it's a temporary thing," he said. "It depends on how soon business picks up. Everything is impacting our economy right now."
     --matthew.wrye@inlandnewspapers.com

     The opponents vying for control over Vineyard National Bancorp won't come head to head this month, but in the meantime, they're fortifying their positions.
     They only agree on one thing: to nominate Douglas Kratz to the Corona company's board of directors at the Aug. 5 shareholder meeting.
     Through investor group One Investments LLC, Kratz bought almost 10 percent of Vineyard's stock in late June for about $6.3 million, according to documents filed on Monday with the Securities Exchange Commission.
     Kratz is chairman and CEO of Opportunity Bancshares Inc., an investment bank in Bettendorf, Iowa.
     Former CEO Norman Morales -- who was forced by Vineyard to resign in January -- and investor Jon Salmanson, who is embedded with Morales, joined Kratz in the $6.3 million stock purchase.
     Now all eyes are on the August shareholder meeting, where Morales and Salmanson are expected to nominate their hand-picked candidates for Vineyard's board of directors. Both Vineyard and the Morales-Salmanson team support nominating Kratz.
     Morales is trying to gain control of the bank, which reported a loss of $13.3 million in its first quarter and also said it has $142 million in "substandard loans" from 2007 on its books.
     Vineyard's losses stem from the risky loans it made to local home builders during the housing boom.
     Now its looking for a major capital infusion to satisfy regulatory requirements. The bank was designated to be in a "troubled condition" in May by the Federal Reserve Board and Office of Comptroller of the Currency in Washington, D.C.
     B.U. Patel, an Orange County hotel mogul, purchased 600,000 shares of Vineyard stock in late May -- 5 percent of the company's stock.
     Salmanson and Morales have argued for a "transition plan" instead of waiting to resolve issues at the August meeting, but Vineyard's executives won't have any of it.
     Any board-of-director candidate nominations will have to pass approval by The Fed and OCC.
     Kratz is also chairman of National Bancshares Inc. and is director of its subsidiary, THE National Bank.
     --matthew.wrye@inlandnewspapers.com

     Soyo Group Inc. (SOYO.OB) is looking for bigger britches, but the penny-stock company that's traded on OTC Bulletin Board needs investors with deeper pockets.
     The Ontario-based consumer electronics distributor's stock has taken a roller-coaster ride between October 2007 and now, falling 67 percent from its record peak of $1.48 to close at $0.49 on Thursday.
     Nonetheless, over the last two-and-a-half years the 43-employee company has gone from 800 to 1,200 shareholders and will soon be doubling its office space.
     Now Soyo wants a spot on the American Stock Exchange in New York, which means increasing its stock value to where it stood just nine months ago.
     Shareholders will be asked to approve a common stock increase from 75 million to 200 million shares at Soyo's Aug. 4 annual meeting. If approved, the company might be a lucrative prospect for institutional investors with big piggy-banks.
     "We've already filed our application for the American Stock Exchange and meet every requirement to get there, except our share price," said Ed Obrien, director of marketing.
     The company is trying to shrug off almost $5 million in losses for 2003 and 2004 and build upon its $6.5 million in earnings from 2005 to 2007.
     Some of those losses stem from Soyo's bad debts. It's customers got hit with stiff competition from companies like Dell Inc. and couldn't pay up.
     "Their direct-end user model really commoditized the motherboard industry," he said about Dell. "When that happened is when everything converted to LCD monitors and Bluetooth technology. It's difficult knowing what's going to be hot next."
     To compound the issue, Soyo was being led by managers who were "a little more old-school," Obrien said.
     The company's big news over the last year was a deal signed with Honeywell International Inc. to supply the electrical industry giant with LCD and plasma flat-panel televisions.
     Soyo went public in mid-2005 after completing a reverse merger with Vermont Witch Hazel, a Los Angeles-based skin care company.
     Soyo has a market capitalization of $26 million and contracts with manufacturing companies in Taiwan, China and Mexico.
     --matthew.wrye@inlandnewspapers.com

     Local independent coffee shop owners could see a boon from Starbucks Corp.'s decision to close 600 stores nationwide, although it's unknown which local stores will be axed.
     The Seattle-based retail coffee giant said Tuesday afternoon that certain unprofitable stores -- 70 percent of them having been opened between early 2006 and now -- will shut their doors this year and into 2009, leaving 12,000 employees without jobs.
     Dozens of Starbucks stores opened across San Bernardino and Riverside counties during the housing boom and in its aftermath.
     With yesterday's news, some residents are no doubt feeling they may have to pick up a cup of Joe at the Starbucks across town or the mom-and-pop coffee shop around the corner in the future.
     "It's the buzz," said Morris Siancuri about Starbucks' announcement.
     Siancuri helps manage Last Drop Coffee House in downtown Claremont, a coffee shop with loyal customers.
     "It's good news for us, but it's also bad news for the people who'll lose their jobs," he said. "My cliental doesn't support Starbucks anyway."
     While Starbucks has forced several small coffee retailers either out of business or back to the strategic drawing board, the multi-million-dollar company's pricey menu for roasted grounds has actually been a good thing for some independent owners, Siancuri said.
     Christian Carrizales, manager of Coffee Nutzz in Rialto, agrees. He says most of his cliental are either existing or ex-Starbucks customers.
     "If one were to close near us, it might give us a chance at the people that haven't given us a chance," he said.
     --matthew.wrye@inlandnewspapers.com

    

     Look below to read the Associated Press story on Starbucks Corp.'s decision to close 600 stores:

     It seems the Inland Empire's construction scene is following a national trend.
     Construction spending nationwide fell for the 11th time in May, the Commerce Department said on Tuesday, but it wasn't because developers cut back on commercial spending.
     In fact, nonresidential construction rose in May by 0.2 percent to a record $405 billion, while home and apartment starts dropped 1.6 percent -- the 25th decline over the last 26 months.
     While local commercial building rates are fairing much better than home building, the commercial market looks like it's starting to take a nose dive this year.
     When the housing market peaked in the two-county region in late 2006, commercial developers and brokers were still pouring hundreds of slabs and soliciting work space.
     Builders pulled 22,000 residential permits during the first five months of 2004 across the two-county area, but that number has plunged 80 percent when compared to the same period this year, according to the Burbank-based Construction Industry Research Board.
     Commercial permits, on the other hand, have mostly risen. CIRB only tracks the dollar amount of commercial permits and reports that the value of these permits rose 50 percent in San Bernardino County for the five-month period from 2004 to 2007 before finally dropping 40 percent this year.
     Likewise, the value of commercial permits jumped 23 percent in Riverside County for the same five-month period from 2004 to 2007, but this year that value dropped 15 percent.
     --matthew.wrye@inlandnewspapers.com