Mission Valley Bank Restates Year-To-Date Earnings
Accounting error corrected, bank officials say portfolio is strong.
Mission Valley Bancorp, the parent company of Mission Valley Bank, has announced that it will restate its earnings for the first half of 2009 to show a smaller net income for the period ending June 2009. The Company will now report $45,000 in year-to-date after-tax income as of June 2009, rather than the $635,000 previously reported.
According to Tamara Gurney, Mission Valley Bank's president and CEO, an internal review of the Bank's merchant bankcard processing records identified an accounting problem. It was determined that not all expenses related to transaction fees were properly reported, resulting in an overstatement of net income. Outside auditors deemed the accounting problem was solely linked to this one area.
"We take our responsibility to safeguard the accuracy and integrity of our financial reporting very seriously," said Gurney. "Upon discovery of this systems error, we immediately began working with an expert team of outside consultants and auditors. This team has confirmed this to be an isolated incident and have assisted us in implementing additional internal controls to further ensure accurate financial reporting."
Mission Valley Bancorp also will report its year-to-date results through September 30th showing a net loss of $564,000. This loss, which is the first in the past eight years, is the result of the Bank's moves to increase reserves to cover possible loan losses. During the first nine months of 2009, the Bank increased its loan loss reserves by $3.66 million.
"We just felt that, given the current regulatory environment and the way banks are being looked at, we are erring on the side of caution," Gurney said. "We will just continue to work with clients through a difficult time."
Gurney is optimistic about what the future holds.
"In this economic climate, increasing reserves for possible loan losses is prudent. We sincerely believe that the majority of issues within the Bank's loan portfolio are well collateralized, short term and resolvable. As we work through these issues with our clients, we anticipate the need for additional provisions for possible loan losses may be reduced, and could result in increases to net income in 2010," she said.
She went on to note that overall the bank has been growing.
"It is important to note that despite these challenges Mission Valley remains well-capitalized with strong revenue generation, resulting in Net Operating Income of $2.2 million through September 2009 as compared to $946,000 for the same period last year (before extraordinary income and expenses, taxes and the provision for potential loan losses) representing a 133% increase over the previous year, further demonstrating the ongoing strength of the organization."
There are two Mission Valley Bank branches in Santa Clarita; one in the Valencia Industrial Center and the other in Centre Pointe.