First Choice Bancorp restated its financial statements for fiscal 2016 and the first three quarters of 2017, after determining that unit First Choice Bank's financials for those periods were not compliant with generally accepted accounting principles. The company found that the bank actually earned around $1.1 million more in profit than originally reported in the financials for the years ended Dec. 31, 2014, through 2016.
The Cerritos, Calif.-based company plans to record the restatement as an increase in shareholders' equity account "retained earnings" for the bank's opening balance sheet as of Jan. 1, 2016, restating the income statement for that year, along with the ensuing three quarters the next year.
As for the reasoning of this restatement decision, the company concluded that it had been overly conservative in its earnings calculations, especially in connection with the accounting treatment for the equity compensation plan of the bank. Moreover, the bank over-accrued for expenses, never incurring certain costs it had anticipated.
Also in the earnings release, the company recorded an additional tax expense of $1.8 million during the fourth quarter of 2017, due to the revaluation of deferred tax assets.
With the DTA-related calculations incorporated, the company reported net income of $955,000, or 13 cents per share, for the fourth quarter of 2017, as compared to restated net income of $2.3 million, or 32 cents per share, a year ago. For full year 2017, the company reported net income of $7.4 million, or $1.02 per share, compared to restated net income of $8.3 million, or $1.18 per share, in the previous year.
