8-K/A: Southern California Bancorp Amends Report on Auditor Change Following Eide Bailly Exit

Southern California Bancorp filed an amended report detailing the termination of Eide Bailly as their independent auditor after the completion of the March 31, 2024, quarterly review.

Summary

• Southern California Bancorp has amended its previous report regarding the change in their independent auditor.
• Eide Bailly LLP decided to exit the financial institution portion of its SEC audit practice and therefore did not stand for reappointment for the year ending December 31, 2024.
• Eide Bailly continued to serve as the auditor for the year ending December 31, 2023, and reviewed the interim financial statements for the quarter ending March 31, 2024.
• The engagement with Eide Bailly terminated on May 8, 2024, after they completed the review of the March 31, 2024, interim financial statements.
• Eide Bailly's reports on the 2023 and 2022 financial statements did not contain any adverse opinions, disclaimers, or qualifications.
• There were no disagreements with Eide Bailly on accounting principles, financial statement disclosures, or auditing scope during the relevant periods.
• There were no reportable events as defined by Item 304(a)(1)(v) of Regulation S-K.
• Eide Bailly provided a letter to the SEC confirming their agreement with the disclosures made by Southern California Bancorp.

Sentiment

Score: 7

Explanation: The document is neutral to slightly positive. While there is a change in auditors, it was expected and there were no disagreements or issues reported. The transition appears to be smooth.

Positives

• Eide Bailly's audit reports for 2023 and 2022 were clean, with no adverse opinions or qualifications.
• There were no disagreements with Eide Bailly on accounting principles, financial statement disclosures, or auditing scope.
• There were no reportable events during the engagement with Eide Bailly.

Negatives

• Eide Bailly's decision to exit the financial institution portion of its SEC audit practice necessitated a change in Southern California Bancorp's auditor.

Risks

• The company will need to engage a new independent registered public accounting firm for the year ending December 31, 2024.
• The transition to a new auditor could present challenges and require additional resources.

Future Outlook

The company will need to appoint a new independent registered public accounting firm for the year ending December 31, 2024.

Management Comments

• The company provided Eide Bailly with a copy of the disclosures and requested a letter confirming their agreement.

Industry Context

The exit of Eide Bailly from the financial institution audit space reflects a trend of consolidation and specialization within the accounting industry, potentially impacting other smaller financial institutions.

Comparison to Industry Standards

• The change in auditors is not uncommon, especially when firms decide to narrow their focus or exit certain sectors.
• Other regional banks have also experienced auditor changes due to similar reasons, such as firm restructuring or strategic shifts.
• The fact that there were no disagreements or reportable events with Eide Bailly is a positive sign, indicating a smooth transition process.

Stakeholder Impact

• Shareholders will be interested in the appointment of a new auditor and the smooth transition process.
• The change in auditor is not expected to have a significant impact on employees or customers.

Next Steps

• Southern California Bancorp will need to engage a new independent registered public accounting firm for the year ending December 31, 2024.

Key Dates

Keywords

auditor, Eide Bailly, accounting, financial statements, SEC, audit, Southern California Bancorp