Pacific Valley Bank in Salinas, Calif., is wasting no time taking advantage of a new law that relieves small banks from the burden of registering their shares with federal regulators.
The $178 million-asset bank announced Monday that it intends to de-register its thinly traded shares and suspend filing periodic financial reports with the Federal Deposit Insurance Corp. as a result of the Jumpstart Our Business Startups (JOBS) Act signed into law by President Obama earlier this month.
Under the old law, banks with at least 500 shareholders had to register their shares with the Securities and Exchange Commission or, in some cases, the FDIC and report financial results quarterly. Small banks have complained for years that the threshold is too law and have lobbied to have it increased in order to reduce their compliance costs and improve their ability to raise capital.
The new law raises the threshold to 2,000 shareholders and permits banks to de-register if they have fewer than 1,200 shareholders. The eight-year-old Pacific Valley is believed to be the first bank to publicly take advantage of the change since the law was passed.
Only about 215 of Pacific Valley's shares trade hands each day, so the cost of registering the shares have generally outweighed the benefits, David B. Warner, Pacific Valley's chief executive officer said in a news release.
"We anticipate that de-registration of our securities will generate significant noninterest expense savings and allow a greater focus of our personnel resources on our customers and profitable growth," he said.
The company said that while its obligation to file 10-Ks, 10-Qs and 8-Ks is immediately suspended, it intends to issue press releases on its quarterly results for the benefit of shareholders. As with all banks, it must also continue to file quarterly Call Reports with its regulator.