Fizz, bubbles coming to desert economy

     Carbonation, fizz and high-fructose corn syrup will bubble over into the High Desert economy come 2010.
     Dr Pepper Snapple Group Inc — formerly Cadbury Schweppes plc Americas Beverages — announced on Wednesday it will build a $120 million beverage-producing plant at Southern California Logistics Airport near Victorville.
     The 850,000-square-foot building will employ 200 people and “become the company’s Western hub… serving California and parts of the Southwest,” a news release states.
     It’s expected to produce 40 million cases of soft drinks, juices, teas, energy drinks and other beverages every year.
     Construction starts this October on the gigantic facility.
     The news, no doubt, is welcome to residents living in an economy that once flew high during the housing boom. A downtrodden real-estate market has put thousands of dry wall hangers, electricians, framers, roofers, and general contractors out of work.
     The sluggish economy also forced AGC Flat Glass North America Inc. to lay off 275 employees at its Victorville plant in April. The Georgia-based company — part of Japan-based Mitsubishi — made glass for window manufacturers and wholesalers at the High Desert location.
     Dr Pepper Snapple Group Inc went public earlier this year at $25.50 a share and closed at $23.79 on Wednesday evening.

Look below to read Dr Pepper Snapple Group Inc’s news release:

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A double whammy for grocery shoppers?

     On Tuesday the Labor Department said U.S. wholesale prices posted the largest gain in six months, mostly because of energy and food costs.
     Are you feeling the squeeze?
     Fontana resident Mary Austin sure is.
     The retiree keeps track of every penny making its round through her monthly budget.
     “People really don’t know how bad the economy is getting,” she said. “Everyone knows prices are going up, but the (food) companies are shrinking everything. There’s less in the actual containers. People are getting a double whammy, but they’re not aware of it.”
     Food industry expert Wayne Howard “can’t imagine” food producers saving on costs by scrimping on the amount of tuna they put in a can, or cutting a fraction of an ounce of apple juice they fill a bottle with.
     “We do have enforcement of weights and measures,” said the chairman of the agribusiness department at Cal Poly San Luis Obispo. “If you’re going to change the size of anything, you put it on the package.”
     The troubling news on rising food prices doesn’t surprise Howard.
     “The thing that’s making those prices worse are all those floods (in the Midwest),” he said. “And we’ve got increased demand from China and India. They want to eat more than they used to because they’ve got the money now.”
     The restaurant business is especially feeling the brunt of things — so much so that some eateries are serving a little less entree’ for the same price or higher.
     “We’ve opted not to do that,” said Maricela Banks, co-owner of Jolly Farms BAR-B-QUE in Fontana.
     But that decision comes with its consequences.
     To stay competitive, Maricela and her husband have halted food shipments.
     “Now we go ourselves to pick up supplies,” Banks said. “We go on the weekends and mornings before we open the restaurant.”
     Even with skyrocketing gas prices, it’s still cheaper doing things this way, she said.
     (909) 386-3871

     Look below to read the Associated Press story on wholesale prices and the producer price index:

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Will uptick in home sales become trend?

   Real-estate agents and brokers are seeing minor up-ticks in home sales, especially foreclosure sales, which is spurring optimism among some that a turn-around is coming soon.
   One veteran, however, begs to differ.
“Some people may be finding bargains, but I don’t think they’re the trend,” says Richard Tegley, who’s been in the business more than 20 years.
   Tegley has clients all over San Bernardino and Riverside counties, but he works out of National Realty Group in Moreno Valley.
   He thinks the market will flatten out sometime in 2010 because “those subprime loans are still coming through.”
   “I think some properties are still overpriced,” he said about foreclosures. “Most banks want to sell them within 90 days, but prices haven’t reached a stable mark. They’re still declining.”
   “A 30-day competitive price will move a property much faster than a 60- to 90-day price (that’s overpriced),” Tegley added. “By the time you get interest in a 60- or 90-day price, you’re chasing the market.”
   He said that bargain hunters are popping their heads out instead of coming out in droves, and some of them still can’t qualify because of credit issues.
   “What’s a ‘bargain’?,” Tegley said. “It’s in the eyes of the person who’s looking. You may find one, but you go through a lot just to find it.”

Click below to read my Tuesday, June 17 article about May home sales across Southern California and the Inland Empire:

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IE seeing more condominium construction

   On Tuesday, June 17, all eyes will be on May’s national numbers for housing starts and building permits.
   Perhaps there’s no other region more connected to this upcoming news than San Bernardino and Riverside counties.  In the middle of a downtrodden housing market, several local business professionals and economists aren’t expecting a pick-up in building permits any time soon.
   In the two-county region, single-family home building permits issued during the first four months of this year have dropped 85 percent compared with the same period in 2004, according to the Burbank-based Construction Industry Research Board.
   But the number of multifamily permits handed out tell somewhat of a better story.
   From January to April, 553 permits for condominiums and apartments were issued, which is up from 366 during that period in 2007, but about the same amount as were issued in that period in 2006 and 2005.
   New York-based financial research firm Fitch Ratings said last week<NO1>June 10<NO> that construction on homes nationwide for January through April of this year plunged almost 30 percent, and single-family housing starts were down almost 40 percent from April 2007 to April 2008.
   Meanwhile, “Multifamily volume (nationwide) for the first four months of 2008 rose 11.3 percent (and) April multifamily starts improved 18.6 percent,” a news release states.
   To see Fitch’s June 10 news release, click on:
   To view the Construction Industry Research Board’s Web site, click on:


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Vineyard National Bancorp sets Aug. 5 shareholder meeting

   Finally, the date has arrived.
   Corona-based Vineyard National Bancorp, the holding company for Vineyard Bank, announced Thursday evening that its much-anticipated 2008 annual shareholder meeting is set for Aug. 5.
   Vineyard also said that its discussions with a “third party” to recapitalize the bank’s capital levels has been “terminated.”
   The cash-strapped bank has been on the prowl for more money because it made loans to developers who can’t repay what they borrowed.
   The bank’s stock closed at $4.17 on Friday — just a fraction of its $32.82-value spike recorded in mid-2005.
   What Vineyard didn’t mention is its heated proxy battle ongoing between the company and former CEO Norman Morales.
   After Morales was fired in January and cut a check for $1.15 million and other severence benefits, he resigned from the board of directors.
   It’s a fair bet he’ll nominate his own board-of-director candidates at the shareholder meeting this August. Jon Salmanson, a major shareholder, is backing Morales.
   The bank’s financial reports show portfolio deterioration on construction loans issued between 2005 and 2007, a period when Morales was CEO.
   Because of the bank’s “troubled condition” — a designation given to Vineyard by the Federal Reserve Board in May — Morales’s nominations are subject to approval by both the Fed and the Office of Comptroller of the Currency in Washington, D.C.
   Vineyard was in danger of being delisted from the Nasdaq and AMEX stock exchanges in May, but it soon regained compliance with listing requirements.
   At the same time, Orange County hotel mogul B.U. Patel purchased 600,000 shares of Vineyard stock — a 5-percent stake — for almost $1.9 million, according to filings made with the Securities Exchange Commission.
   The bank’s connection with the Inland Empire’s real-estate mess is still emerging as it reports millions of dollars in loan losses.
   Experts disagree over whether Vineyard is looking to be bought out by another financial holding company or looking for a private equity firm to come to its rescue.
   Some private equity firms possibly in the market for small debt-ridden banks include San Francisco-based Belvedere Capital, Cincinnati-based Financial Stocks LLF, and New York-based CapGen Capital Advisors.

To see Vineyard’s latest news release and view a snapshot of the company, visit:

SB County retirement fund rolling with punches

     When news hit the airwaves on Monday that California developer LandSource Communities Development LLC filed for bankruptcy, eyebrows were raised in San Bernardino County.

     That’s because LandSource — which owns 15,000 acres of land north of Los Angeles — was backed by millions of investment dollars from CalPERS, the largest U.S. pension fund.

     Luckily, not a penny of the $6.3 billion administered by San Bernardino County Employees’ Retirement Association is invested in the CalPERS portfolio.

     But like other pension pools, the county’s retirement fund is taking a licking from the global economy right now.

     The fund’s investment return was 1.5 percent — about $90 million — by the end of May, with one month to go in its fiscal year.

     Compare that to a 20-percent return — about $1.26 billion — during the 2006 – 07 fiscal year.

     “It’s been very rough across the board for any investment,” said Tim Barrett, executive director and chief investment officer of the association. “The credit crunch has hurt everything across the board.”

     Most of the county’s 19,000 employees are planning to retire on their portion of the fund.

     “We own real estate, but we don’t own large blocks of raw land,” Barrett said. “We own apartments, industrial warehouses, office buildings and retail real estate all around the world, but primarily in the U.S.”

     Drastic events take drastic measures. Barrett said he’s been pulling money from volatile stock market investments and rolling it into bonds, credit, distressed debt, private equity and real estate over the last seven years.

For more information, visit:

To see the June 10 Los Angeles Times article about LandSource Communities LLC and CalPERS, look below:

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IE foreclosure sales up, but auctions struggling

   Their owners couldn’t afford them.
   The lenders don’t want ’em.
   Even bargain hunters can’t justify fighting over them right now.
   Banks are struggling to unload foreclosed housing inventory through auctions at desired prices, according to a report released on Wednesday by Discovery Bay-based ForeclosureRadar, a foreclosure analysis company.
   What’s more interesting: San Bernardino and Riverside counties collectively saw foreclosure sales increase by 22 percent in May, with Riverside County experiencing the highest level of foreclosures per capita.
   The numbers vary month to month, but San Bernardino County’s monthly rank on the foreclosure totem pole moved from No. 9 to No. 5, the report said. Riverside County moved from No. 3 to No. 1.
   The ranking is based on the number of default notices, trustee sales and auctions.
   In California, “Sales at auctions increased 11.8 percent to a total of 25,523 properties,” the report states. “Of those, 24,831 received no bid higher than the lenders opening bid and became lender-owned (REO). The combined loan value at the time of foreclosure on this new REO inventory exceeded $10 billion for the first time.”

– Matt Wrye, staff writer,, or 909-386-3871

Here is ForeclosureRadar’s May report:

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IE residents gloomy about economy

With a sagging housing market, rising unemployment and higher gas prices throwing the nationwide economy a curve ball, it’s no wonder San Bernardino County residents are a bit gloomier than they were in 2006.

That’s what the 2007 Inland Empire Annual Survey says — a report released on Tuesday by the Institute of Applied Research and Policy Analysis at Cal State San Bernardino.

It also says the financial well-being of local residents is at an all-time low since the survey’s inception, which was in 1997. A good deal of these residents live in the High Desert and Ontario area.

“43 percent (of respondents) expect to be better off financially a year from now. That figure was 51 percent in the 2006 survey,” the report states.

The survey comprises the results of more than 2,300 respondents living in San Bernardino and Riverside counties who gave their thoughts about the economy, private and public services, environmental initiatives, water conservation and other issues.


You can find the report by visiting

Will PFF Bancorp stock hit 99 cents a share?

PFF Bancorp’s stock dropped almost 10 percent to close at $1.18 on Monday afternoon — 97 percent lower than it was valued in the summer of 2006.

Could shares of the Rancho Cucamonga-based holding company drop to 99 cents?

“It’s certainly headed in that direction,” said Joseph Gladue, banking analyst with Los Angeles-based Riley & Company, Inc. “It’s not that far from it, in dollar terms.”

However, a proposed $460 million capital infusion may boost investor optimism and keep PFF’s stock from hitting the $1 mark.

Details haven’t been disclosed on the potential deal, but shareholders would be required to approve an increase in the number of common stock shares issued.

The bank has until June 16 to pay off a $44 million overdue loan from an undisclosed lender.

A boost of capital would help pay for this, and it might return the bank’s position with the Federal Reserve from “well capitalized” to “above well capitalized.”

“They’re under some time pressure to get their capital raised by the 16th,” Gladue said.

PFF wrote off millions of dollars in loan losses over the last couple of quarters because it loaned money to housing developers who can’t repay what they borrowed.

PFF Bancorp is the holding company for Pomona First Federal Bank & Trust, a 116-year-old institution.

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IE manufacturing index is a bear to deal with

You’ve probably heard the news: commodity prices are trying to squeeze blood out of the manufacturing industry.

Well, not literally.  But some manufacturing managers probably wouldn’t hesitate to describe it that way.   (Check out this New York Times story on manufacturing data for the month of May:

We’ve got a prime example of this phenomenon right here in the Inland Empire.

Today, Cal State San Bernardino’s Institute of Applied Research said its purchasing manager’s index fell to 48.4 percent.  Above 50 equals growth.

Below 50 isn’t the best of news.  In fact, since fall of last year the local index has been below 50 more than it has above.

Fifty percent of managers surveyed said they believe the economy will weaken in the next three months.

You can view the monthly report on the first Monday of every month here:   (scroll down to the “2008” column on the right-hand side)

Here’s the New York Times article:

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