February 25, 2005
Mail Stop 0408
By U.S. Mail and Facsimile to (570) 343-1892
Frederick L. Hickman
President and Chief Executive Officer
North Penn Bancorp, Inc.
216 Adams Avenue
Scranton, Pennsylvania 18503-0345
Re: North Penn Bancorp, Inc.
Amendment No. 1 to Form SB-2, filed February 15, 2005
File No. 333-121121
Dear Mr. Hickman:
We have reviewed your filing and have the following
comments.
Where indicated, we think you should revise your document in
response
to these comments. If you disagree, we will consider your
explanation as to why our comment is inapplicable or a revision is
unnecessary. Please be as detailed as necessary in your
explanation.
In some of our comments, we may ask you to provide us with
supplemental information so we may better understand your
disclosure.
After reviewing this information, we may or may not raise
additional
comments.
The purpose of our review process is to assist you in your
compliance with the applicable disclosure requirements and to
enhance
the overall disclosure in your filing. We welcome any questions
you
may have about our comments or on any other aspect of our review.
Feel free to call us at the telephone numbers listed at the end of
this letter.
General
1. We note that you have included within your "Recent
Developments"
and "Management`s Discussion and Analysis of Recent Developments"
sections of your filing, updated financial information as of
December
31, 2004 and have appropriately disclosed that this information is
unaudited. Given the above, please revise your filing accordingly
to
present December 31, 2004 audited financial information in
accordance
with SAB Topic 1C, if available.
Summary - page 1
2. We note your response to our prior comment 8. However, we are
unable to locate the summary discussion regarding possible
termination of the offering. Please revise or advise.
How We Will Use the Proceeds - page 7
3. We note your response to prior comment 11. Please include your
estimate of the cost to open the new branch in the Summary
discussion.
4. Reference is made to the first bullet point. It is unclear why
you have included the term "arms length." Given the relationship
between the company and is subsidiary is it is unclear to us how
the
transaction can be at arms length. Given the relationship between
the parties, it is also not apparent to us why the parties need to
go
to any difficult length to insure that the transaction is at arms
length. Please advise.
After - Market Performance Information - page 11
5. We continue to believe that the term "short-term price
performance" is at the very least unclear. We also concur with
the
concerns expressed in the last two sentences of your response to
our
prior comment. We suggest that you revise the material to delete
the
term short-term price performance and replace it with an
explanation
of the valid concerns express in letter of February 16, 2005.
Comparison of Independent Valuation and Pro Forma Financial
Information with... - page 51
6. Please include a new row at the top of the table that discloses
in
each column the number of shares the will be outstanding after the
transaction is completed. Include a footnote to the table that
briefly explains why the number is changing for, with foundation
and
for, no foundation.
Management Strategy - page 61
7. We note your response to our prior comment 21. However, we are
unable to locate the discussion regarding possible targets for
diversification in your loan portfolio. Please revise or advise.
Our Business - page 69
8. We note the disclosure on page 69 regarding the cease-and-
desist
order. Please revise to include a brief description of the
subject
or subjects covered by that order.
Allowance for Loan Losses and Asset Quality - pages 82 - 85
9. We note the revisions made to your filing pertaining to our
original comment 22. Please further revise filing to address the
following:
* Please explain if there has been a revision to your methodology
for
allocating the allowance for loan losses. For instance, we note
that
your loans continue to increase but your related allowance for
loan
losses has decreased. You only mention that you have reallocated
the
allowance as a result of a change in the composition of your
portfolio;
* Please explain if you continue to use historical loss rates in
determining your allowance for loan losses attributable to your
passed assets or if you have changed this methodology;
* Please explain how you determine the allowance for loan losses
attributable to your classified assets. Specifically address how
your
non-accrual loans are included in your allowance determination for
your classified assets. We note that your non-accrual loans have
increased from $991 to $1,024, but your allowance for classified
assets has decreased from $284 to $173.
Consolidated Statements of Operations - page F-3
10. We note the revisions made to your filing as a result of our
original comment 31 in which you have reclassified your previously
recorded extraordinary loss as an increase in interest expense for
your borrowed funds. Please supplementally explain to us how you
determined the reclassification as discussed above, including what
consideration was given to paragraph 20 of APB No. 26 and/or other
relevant authoritative literature, as applicable.
11. As a result of this revision to the Consolidated Statement of
Operations, please update and reissue the auditor`s opinion to
incorporate the material reclassification that has occurred as a
result of the adoption of SFAS No. 145.
Other
12. Please note the updating requirements in Article 3-12 of
Regulation S-X.
13. Please include an updated consent of the independent
accountants
in your next amendment.
* * *
Closing Comments
As appropriate, please amend your registration statement in
response to these comments. You may wish to provide us with
marked
copies of the amendment to expedite our review. Please furnish a
cover letter with your amendment that keys your responses to our
comments and provides any requested supplemental information.
Detailed cover letters greatly facilitate our review. Please
understand that we may have additional comments after reviewing
your
amendment and responses to our comments.
We direct your attention to Rules 460 and 461 regarding
requesting acceleration of a registration statement. Please allow
adequate time after the filing of any amendment for further review
before submitting a request for acceleration. Please provide this
request at least two business days in advance of the requested
effective date.
We urge all persons who are responsible for the accuracy and
adequacy of the disclosure in the filings reviewed by the staff to
be
certain that they have provided all information investors require
for
an informed decision. Since the company and its management are in
possession of all facts relating to a company`s disclosure, they
are
responsible for the accuracy and adequacy of the disclosures they
have made.
Notwithstanding our comments, in the event the company
requests
acceleration of the effective date of the pending registration
statement, it should furnish a letter, at the time of such
request,
acknowledging that
* should the Commission or the staff, acting pursuant to delegated
authority, declare the filing effective, it does not foreclose the
Commission from taking any action with respect to the filing;
* the action of the Commission or the staff, acting pursuant to
delegated authority, in declaring the filing effective, does not
relieve the company from its full responsibility for the adequacy
and
accuracy of the disclosure in the filing; and
* the company may not assert this action as defense in any
proceeding
initiated by the Commission or any person under the federal
securities laws of the United States.
In addition, please be advised that the Division of
Enforcement
has access to all information you provide to the staff of the
Division of Corporation Finance in connection with our review of
your
filing or in response to our comments on your filing.
We will consider a written request for acceleration of the
effective date of the registration statement as a confirmation of
the
fact that those requesting acceleration are aware of their
respective
responsibilities under the Securities Act of 1933 and the
Securities
Exchange Act of 1934 as they relate to the proposed public
offering
of the securities specified in the above registration statement.
We
will act on the request and, pursuant to delegated authority,
grant
acceleration of the effective date.
You may contact John Spitz, Staff Accountant, at (202) 824-
5477
or Amit Pande, Senior Accountant at (202) 942-2952 if you have
questions regarding comments on the financial statements and
related
matters. Please contact Gregory Dundas at (202) 942-2932 or me at
(202) 942-2889 with any other questions.
Sincerely,
William Friar
Senior Financial Analyst
cc: Corey D. O`Brien, Esq.
Stevens & Lee, P.C.
425 Spruce Street, Suite 300
Scranton, Pennsylvania 18503
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North Penn Bancorp, Inc.
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