Socal bank subpoenaed by SEC

The parent company of Citizens Business Bank is being asked to provide information about lending guidelines and the way it calculates its allowance for loan losses. The feds also want to know how the Ontario-based bank grades its loans. From the Press-Enterprise:

In a research report issued Tuesday, Cantor Fitzgerald analyst Michael Diana attributed the SEC's investigation to allegations by short sellers "that CVB Financial is in effect a fraud," but to date "have been frustrated in their attempts to convince others." On May 10, federal regulators completed their annual examination of CVB Financial, "which judging by the Q2 results was a 'clean' exam." "Our view of the SEC subpoena ... is that the shorts may have written the SEC a letter that was so inflammatory that, especially in the current regulatory environment, the SEC decided that is had no choice but to pursue an investigation," Diana wrote.

After taking a big dive yesterday, CVB stock is up this morning (despite the overall market being way down). That could mean investors are minimizing the inquiry.