Bank’s Error Results In Upward Revision

By CONOR DOUGHERTY

Staff Reporter

A mathematical error has forced PFF Bancorp Inc., parent of PFF Bank & Trust, to restate its earnings per share for the past four years.

But while the Pomona-based bank was not happy about the restatement, which it blamed on human error, the impact was actually positive earnings per share went up once the problem was rectified. The revisions resulted in an increase of no more than 5 cents a share in any year affected.

“We’re certainly not proud that this has occurred,” said Gregory Talbott, executive vice president and chief financial officer of PFF, which has $3 billion in assets and was formerly known as Pomona First Federal Bank.

The error was discovered when the company was preparing results for the first quarter ended June 30. In essence, PFF neglected to include tax benefits associated with non-qualified stock options when it was performing its earnings per share calculation. (Companies can issue two types of stock options, incentive stock options and non-qualified stock options. There is not usually a tax benefit associated with incentive stock options.)

By including the tax benefits, a higher average price per diluted share was reported. For the year ended March 31, earnings per share rose to $2.74 from $2.69. Earnings in 1999, the first year of revision, increased a penny, to $1.30.

PFF issued a release announcing the revision, indicating the nervousness in today’s marketplace, said James Manegold, an accounting professor at USC’s Leventhal School of Accounting. “These kinds of things do happen everybody makes mistakes,” he said.