Congaree Bancshares will have to correct financial statements issued in the company’s 2007 annual report and quarterly reports for the first three quarters of 2008, it announced Monday.
“After discussion with the SEC staff between January and March 2009 and discussion among our management, accountants and audit committee, we determined it was appropriate to correct the financial statements included in the Original Periodic Reports,” according to a Securities and Exchange Commission filing. “We had failed to include a valuation allowance that would offset our deferred tax assets recorded during the year ended December 31, 2007, and the three quarters ended March 31, 2008, June 30, 2008 and September 30, 2008.”
Specifically, the Cayce, SC-based parent of Congaree State Bank concluded that it should restate its financial statements to reflect that the company likely would not have realized all its net deferred tax assets within a reasonable period of time for the year ended Dec. 31, 2007, and the three quarters ended March 31, 2008, June 30, 2008 and Sept. 30, 2008.
“As a result, we have determined that our financial statements included in the Original Periodic Reports should be restated to reflect a valuation allowance of $1,352,119 for our deferred tax assets that offsets the previously recorded deferred tax benefit of $982,682 for the year ended December 31, 2007,” according to the SEC filing. “The restatement will eliminate the previously recorded deferred tax benefit of $982,682 for the year ended December 31, 2007 and $211,761, $284,878 and $253,705 for the quarters ended March 31, 2008, June 30, 2008 and September 30, 2008, respectively.”
Congaree State Bank’s Chief Financial Officer, Charlie Lovering, who is also interim CEO, had a conference call with the bank’s accounting firm, Elliott Davis, on March 27 to resolve the error and concluded the previously issued financial statements could no longer be relied upon.
The past few months have been trying ones for the young bank, begun in 2006. In January, founder and chief executive Hank Ray left the bank, though no official reason was given for his departure. Earlier this month another founding board member, Dr. Victoria Samuels, stepped down. Samuels left her position with Congaree Bancshares to take a position with an out-of-state hospital, according to the SEC filing.
Congaree State Bank lost $430,533 during the quarter ended Sept. 30, according to earlier information put out by the company.
Earlier this year, the bank received $3.3 million in federal bailout money. Shares of company stock haven’t traded since early February.