Three homes, short of their true potential, bear testament to better days gone.
They're all that's left of a dormant development project, funded by construction loans from San Joaquin Bank to Phoenix Custom Homes and Roberson Building.
Ron Roberson envisioned a robust residential community in northeast Bakersfield with a shopping center. "It's very sad. If the bank would have lived up to its promises, our hopes and our dreams were to finish the project, but when I drive by now it's nothing but depression and sadness.
At the height of the housing boom, the Roberson family took out a $10 million construction loan from San Joaquin Bank to finance this project, some 200 lots for single family homes in northeast Bakersfield. But as well all know, the bubble burst, these model homes went unfinished and the financial troubles started for the Roberson family.
Ron Roberson claims that when he got behind on his loan payments, bank executives made verbal assurances they wouldn't take legal action against him. Roberson's attorney Tom Anton says his client was a valued customer, with more than a million dollars in cash deposits.
The lawsuit contends bank president Bart Hill, with the blessing of his senior executives, let the Roberson loan ride, interest payments deferred and pushed to the back end of the loan, and then perhaps written off altogether, as the family worked to complete its model homes off Morning Drive.
"And when these transactions occured, we allege, they occured behind closed doors, with the top senior executives of the bank and approved by members of the board of directors. This didn't just get done in a hallway," says Anton.
"We were told, "Ron, your success is our success." Our reply was let's put it in writing. And they said no, you're just going to have to take our word for it," says Roberson.
"And for two years, the interest payments stopped, the accruals stopped, everything. They were told if they kept their money there, it would help the bank," says Anton.
But in 2009, just weeks before federal and state regulators swooped in and closed the bank, San Joaquin sued Ron Roberson and his nephew's construction business, Phoenix Custom Homes, his partner in the Morning Drive development, to collect on a $10.5 million loan.
The cross-complaint filed by Roberson against the bank claims San Joaquin broke its promise not to sue. On top of that, Tom Anton says he'll prove to a jury, that San Joaquin Bank had a so-called "shadow account" essentially two sets of books.
Troubled loans like the Roberson's, the suit claims, were placed in the "shadow account" concealing them from the bank's shareholders and regulators.
Anton contends that when the bottom dropped out of the housing market, and more loans went into default, San Joaquin Bank needed that account to prevent a run on the bank by shareholders. "The reason why San Joaquin Bank wants to hide the problems, particularly when they're in a capital crunch, their incentive is to keep cash deposits in the bank at all costs. The injury to customers like the Robersons...had they know the truth about the bank's troubles, they would have had an opportunity to sell their stock higher."
Anton contends the bank finally sued the Robersons and other construction clients in default, because executives knew the feds were coming. "To the government, they gave the impression they were pursuing the Robersons and others on that list by foreclosure and lawsuits, but they didn't do that until roughly two months before they were seized."
The lawsuit argues that the verbal assurances allegedly made to the Robersons must be honored by Citizens Business Bank. "It's put us out of business. There's nothing for us to do. Where can we get a loan?," says Roberson.
The bank's president and ceo Chris Meyers refuses to comment on the cross complaint, except to say he has no knowledge of a "shadow account" for bad loans. "I never have heard of that before, no knowledge of such a thing. This was pre-Citizens and I'd never heard of that before."
For the record, San Joaquin's former president Bart Hill would not comment on this story, nor would his former senior vice presidents. Our calls to Janet Hepp, Phil McGloughlin and cfo Steve Annis, who all work for Valley Republic Bank now, were referred to the bank's marketing director, who issued a statement saying, the bank and its employees "have no reason to comment on any matters concerning San Joaquin Bank."
Senior vice president John Ivy, who now works at Citizens, did not return our calls. It's worth noting that a recent FDIC investigation of the bank's collapse made no mention of a so-called "shadow account" at San Joaquin Bank.