BANKING

On the Rebound: One troubled institution whose owners believe it has bottomed out is Pioneer Bank in Fullerton.

William K. Hood, founding chairman of the bank’s parent company, Pioneer Bancorp, said the board will sell the bank as a last resort but expects to raise $7 million in new capital--its final cushion against losses--within the next three months.

The bank has about $4 million in capital, which Hood said is still above the “drop-dead” level that would give regulators reason to seize the bank.

He said that he and other local investors have socked away a “significant amount” of cash and are raising more money in a private placement. Once it attains enough to satisfy regulators, he said, the company intends to issue new stock in a so-called rights offering, which lets current shareholders purchase stock first, before the general public is allowed to buy.

Beat up by the deflated real estate market, Pioneer has cut its payroll by nearly a third--to fewer than 70 employees--and has written down the value of its real estate loans and investments by $15 million to less than their appraised value, Hood said. It has also sold loans and real estate investments, lowering its total assets from $220 million to about $140 million.

“We’ve cut total expenses by $3 million on an annual basis and raised revenue by $1 million,” Hood said.

Last fall, the bank was losing $250,000 a month, he said, and it posted a $9.1-million loss for the year.

But with a cleaner slate this year, the bank has earned $45,000 in the first two months, “and we expect to make a profit every month this year,” Hood said.

“We’re doing a great job. We’re going to make it,” he said.