Pacific Valley Bank to Restate Financial Statements
April 25 2014 - 9:30AM
Marketwired
Pacific Valley Bank to Restate Financial Statements
SALINAS, CA--(Marketwired - Apr 25, 2014) - Pacific Valley Bank
(OTCQB: PVBK) today announced that the Audit Committee of the Board
of Directors of Pacific Valley Bank, after consultation with
management, determined that the company's financial statements for
the fiscal year ended December 31, 2013 and the three month period
ended March 31, 2014, can no longer be relied upon as being in
compliance with generally accepted accounting
principles. Accordingly, the company will restate such
financial statements.
Similarly, related press releases and shareholder communications
describing the company's financial statements for these periods
should no longer be relied upon.
The Audit Committee's decision to restate these financial
statements follows a recent examination of the company by the
Federal Deposit Insurance Corporation ("FDIC") and a recommendation
by management that the allowance for loan losses and the level of
non-performing and classified loans in these previously issued
financial statements should be adjusted due to errors in
calculating the level of nonperforming and classified loans.
Preliminary indications from the company's evaluation are that
the changes will result in an increase in the company's allowance
for loan losses and a decrease in the company's net income for the
year ended December 31, 2013 and possibly the three months ended
March 31, 2014.
In addition, the company is in the process of conducting a
thorough review of the loan portfolio to determine if loan grades
are appropriate, if additional provisions to the allowance for loan
losses should be made and if adjustments should be made to any
prior periods. Further, the company will be conducting a
complete review of its policies, procedures and internal controls
and the company's corporate governance policy, procedures and
framework, to ensure that certain problem loans and loan grading
issues and corporate governance deficiencies will not occur in the
future.
The cause of the restatement is primarily related to the company
granting lines of credit to certain borrowers who then made loans
to other company borrowers whose loans were not
performing. The Board of Directors believes that all such
lines of credit will be paid off and that no loss will result to
the company, although no assurance can be given that this will
occur. The deficiencies noted in the loan portfolio, in the
company's policies, procedures and internal controls, and in the
company's corporate governance framework, may result in increased
levels of expenses to remedy.
In connection with the potential for increased expenses to
remedy, the company may need to reevaluate the projected level of
such expenses and their potential impact on the company's ability
to realize its net deferred tax assets. Consequently, if
deemed appropriate under generally accepted accounting principles,
the company's restatement of its December 31, 2013 financial
statements could also include the reestablishment of a full
valuation allowance against its net deferred tax assets as of
December 31, 2013, and a corresponding increase to its income tax
expense for the year then ended. This would also require
reassessment of the income tax expense reported in the March 31,
2014 financial statements.
The company intends to amend its consolidated reports of
condition and income ("Call Reports") for December 31, 2013 and
March 31, 2014, as appropriate, as soon as reasonably practicable
after this release. The Board of Directors and Management have
also considered the effect of the matters that led to the
restatement on the company's prior conclusions of the adequacy of
its internal controls and procedures, and its corporate governance
policy, procedures, practices and framework, as of the end of each
of the applicable restatement periods.
The Board of Directors has also appointed Mr. Joe Robello as
Chairman of the Board and formed an executive committee composed of
Messrs. Rodney Braga, Mike Cling and Joe Robello to assist the
company with the day-to-day management of the company.
About Pacific Valley Bank
Pacific Valley Bank is a California state-chartered bank that
commenced operations in September 2004. The company serves
three locations; administrative headquarters and branch offices in
Salinas, King City and Monterey, California. The company
offers a broad range of banking products and services, including
credit and deposit services to small and medium-sized businesses,
agriculture-related businesses, non-profit organizations,
professional-service providers and individuals. The company
serves customers primarily in Monterey County. For more
information, visit www.pacificvalleybank.com.
Cautionary Statement Regarding Forward-Looking Statements
Certain statements contained herein constitute forward-looking
statements within the meaning of Section 21E of the Securities
Exchange Act of 1934. Forward-looking statements are indicated
by words or phrases such as "anticipates," "estimates," "projects,"
"believes," "intends," "expects" and similar words and
phrases. These statements are based upon beliefs and
assumptions by the company's management and on information
currently available to management. These involve risks and
uncertainties.
Such risks and uncertainties include, but are not limited to:
the timing and nature of the final resolution of the accounting
issues discussed in this press release; any delay in the filing of
call reports with the FDIC; the timing and results of the review of
the loan portfolio and the allowance for loan losses; the timing,
requirements, and expenses of potential remedies; the timing and
results of the review of the company's ability to realize its net
deferred tax assets and the appropriateness of reestablishing a
valuation allowance against its net deferred tax assets; the timing
and results of review of the effectiveness of the company's system
of internal controls and procedures including its corporate
governance policies and structural framework; changes in the ranges
of estimates and adjustments in this press release due to the audit
of the company's financial statements; whether a restatement of
financial results will be required for other accounting issues for
the same or other periods in addition to the restatement currently
expected by management; additional uncertainties related to
accounting issues generally; adverse effects on the company's
business as a result of the restatement process or the review of
the effectiveness of internal control over financial reporting,
rumors or otherwise; and adverse developments in existing legal
proceedings or the initiation of new legal proceedings; and
volatility of the company's stock price.
Actual outcomes and results may differ materially from what is
expressed, estimated or implied in any guidance, preliminary
revenue estimate or any other forward-looking statement. The
company undertakes no obligation to update or correct any
forward-looking statement made herein due to the occurrence of
events after the issuance of this press release, except as required
under applicable securities law.
CONTACT INFORMATION Joe Robello (831) 682-0838 Chairman of the
Board Mike Cling (831) 771-2040 Chairman of the Audit Committee
Pacific Valley Bancorp (PK) (USOTC:PVBK)
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