National Mercantile Bancorp in Los Angeles is restating earnings to conform to the accounting requirements for interest rate swaps.
The $459 million-asset company said late Tuesday that it would restate full-year and quarterly earnings for 2003, 2004, 2005, and the first quarter of 2006 to reflect a cumulative after-tax charge of about $598,000.
It is taking the charge because of an accounting-methodology change for a 2003 interest rate swap involving trust-preferred securities and related subordinated debt. National Mercantile had previously used the “short-cut” hedge accounting methodology, but because of recent interpretations of hedge accounting requirements, it will not use that methodology in its restatements.
The restatements will affect individual quarters differently; earnings will increase for some quarters, and decrease for others. National Mercantile said it will file the restatements “as soon as practical.”
Because of the restatements, the company said that it would delay its second-quarter results until Aug. 21. It expects to report that net income fell 21%, to $1.1 million, because of a $216,000 charge reflecting the change in accounting methodology for the swaps.
