Responding to concerns voiced by the Securities and Exchange Commission, North Dakota's Community First Bankshares has restated three years of earnings.
The $6 billion-asset company said Monday that it earned $43 million, or 90 cents a share, in 1998, down from the $45 million figure announced in January. Net income for the two previous years went up, to $59 million in 1997, from $46 million, and $46.5 million in 1996, from $32.5 million.
The company made these changes to comply with interpretations by SEC staff members on pooling-of-interest acquisitions. Businesses are customarily asked to restate earnings only when a pooling deal is large enough to have material effect on the buyer. Because Community First makes only smaller deals, it has not restated earnings for each deal.
But combined, Community First's five deals in 1998 did materially effect the company, says the SEC. The bank company has decided to restate earnings rather than debate the matter further with regulators.
Donald R. Mengedoth, chairman and chief executive officer of Community First, said the revised statement "does not change the substance of the transactions, only the way in which they were reported." The deals will still contribute to 1999 earnings, he added.
The restated earnings do not change analyst's opinions of the company.
"This is purely an accounting adjustment," said Erick Reim of U.S. Bancorp Piper Jaffray in Minneapolis. "If the stock does get hurt, it would be because people do not understand what the company is doing, and it would create a buying opportunity."
Fast-growing Community First has used deals throughout the West to build a market area that now spans 11 states. The company has more than doubled in size since yearend 1995, when it reported $2.4 billion of assets.
