7 comments on “Accountant’s Report in the 10-k

  1. The auditors have “substantial doubt” whether the bank can continue as a “going concern.” Info on what is meant by an auditor’s “going concern” opinion here: http://en.wikipedia.org/wiki/Going_concern

    Don’t you suspect that PNBC tried to urge their outside auditors not to put that in their letter? Now that the bank and its outsider auditors have let the genie out of the bottle, don’t you think that the feds will have to move in rather quickly?

    Not good news for us shareholders. If the bank winds up being closed, We will still own PNBC, at least on paper. And PNBC will still own the shares of Citizens – but Citizens will no longer be a bank with a charter to operate – and its assets will be stripped.

    • The auditors are obviously concerned about their liability. Issuing financial statements under the premise that the business is expected to remain in business and solvent when there exists a high likelihood that the business is going to falter significantly increases the possibility that they can be sued by investors/shareholders. Legally the feds will have to wait until the deadline of the warning letter sent by the OCC or they expose themselves to a lawsuit. A bank in Colorado is suing the former OTS as they claim that the OTS enforcement action caused their stock price to plummet and therefore impossible to raise capital, as if they were in great financial condition prior to the enforcement. It is all about crossing the t’s and the lower case j’s….I had predicted back in December that CFNB would be sold or under receivorship by the end of the 2nd quarter of 2012. Many people I have spoken to did not believe that CFNB would last through 2011, but it is the same concept as a home foreclosure, every person or entity is entitled to due process even when the situation is hopeless.

    • Doug this article is a great find. Could you send a copy to each member of the board and management? 🙂 I would do it but they don’t want to acknowledge my letters or email. This must be the new open door policy that Tom talked about in the newspaper article.

      I wonder what the board and management have been doing for the past couple of
      years? I know that they knew about the problem because Tom alluded to it at last years annual meeting when he said that we would not be able to grow our way out of the situation.

      When the article talked about the existing shareholders investing more capital in the bank, I asked myself if I would be willing to put additional capital in the bank with the present board still in place. As much as I want the bank to succeed I would be hard pressed to anti up more capital when there has not been one positive change with the board. Maybe that is one possible explanation for the difficulty in raising capital. Any large investor is going to want more say in the structure of the board and they don’t want to give up the salary & stock options.

      • An “anchor investor,” as envisioned by the above article, probably would need to come up with at least a couple of million, probably much more. Shareholders, and maybe some directors, have already lost their shirt in the stock.

        The article also alludes to the possibiitiy of tapping a well-heeled, civic-minded person stepping up to the table. I can’t think of any prospects.

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