October 2, 2006
MAIL STOP 3561
via U.S. mail and facsimile
Robert L. McKean, President and CEO
Albina Community Bancorp
2002 N.E. Martin Luther King, Jr. Blvd.
Portland, Oregon 97212
Re: Albina Community Bancorp
Form 1-A, filed August 24, 2006
File No.: 24-10150
Dear Mr. McKean:
We have the following comments on your amended filing. 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.
Please understand that 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 look forward to working with you in these respects. 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
Part 1 - Notification
Item 1. Significant Parties
1. We partially reissue prior comment three from our letter dated
July 21, 2006. Disclose the control person(s) for each entity
listed
in this section. This would be
2.
the person(s) that have ultimate voting or dispositive control of
the
shares. We may have further comment.
3. Please provide a residential address for Mr. Keane in Item
1(d).
4. Provide a separate table listing the information required by
Item
1(e) rather than referring back to Item 1(d).
5. Provide the business and residential address for each person
listed as "unknown" in Item 1(f), as required by Item 1.
Item 5. Unregistered Securities Issued or Sold Within One Year
6. Disclose the facts relied upon in the issuance to Ms. Edmeades
pursuant to Section 4(2).
Risk Factors, page 3
7. Revise the subheading to risk factor eight to indicate the risk
- -
i.e. the default risk. Also, clearly discuss the risk to the bank
of
potential defaults.
8. Revise risk factor ten to discuss your current sensitivity gap,
if
any.
9. Revise risk factor 11 to discuss the extent of your dependence
upon adjustable rate loans.
10. Please include in risk factor 11 a brief discussion of your
experience regarding defaults on adjustable rate loans and the
experience of the Portland market in general in this regard.
Terms of the Offering, page 8
11. We note the disclosure on page 10 that you desire to maintain
less than 300 shareholders of record so that you do not become
subject to the reporting requirements of the Exchange Act. Please
disclose the current number of shareholders of record. Discuss
the
impact this may have on your ability to sell the entire offering
and
the resultant risks. Add a risk factor.
Dilution, page 13
12. Provide a more detailed discussion of the dilution if Davidson
sells more than 70% of the total shares.
Use of Proceeds, page 16
13. As we requested in prior comment 37 from our letter dated July
21, 2006, please revise the table to provide a detailed use of
proceeds for each level of funds raised. Please explain how the
funds contributed to the bank`s capital will be used. Provide a
detailed use of proceeds allocated to general corporate purposes.
14. We note that some of the funds allocated to general corporate
purposes will be allocated to director fees and holding company
level
expenses for executive salaries. Clearly name each officer or
director that will receive compensation or fees from these funds
and
state the amount allocated to each individual.
Market for Common Equity and Related Stockholder Matters, page 17
15. We partially reissue prior comment 50 from our letter dated
July
21, 2006. Clarify that "the quotations reflect inter-dealer
prices"
without retail mark-up, mark-down or commission.
16. As we requested in prior comment 51 from our letter dated July
21, 2006, please revise the table to reflect the high and low bid
information for each quarter.
Albina Community Bank, page 20
17. We reissue prior comment 42 from our letter dated July 21,
2006.
Please include a more detailed discussion of your business and
your
principal products and services.
18. Please remove the references to "significant" growth and
expansion or "significant" future expansion.
19. Explain the New Markets Tex Credit and the proposed business
of
Albina Development Company LLC.
20. Explain in greater detail this "off-balance sheet" rated
investment product pursuant to an agreement with Dreyfus Funds.
21. We note that the company is considering leasing a facility
that
would require approximately $1 million in improvements or
developing
a larger mixed retail and office space, at an estimated cost of
$4.5
to 6 million. Please clarify whether any of the proceeds of the
offering will be used for this purpose. If so, please revise the
use
of proceeds table to clearly reflect this allocation.
22. Please explain your discussion of the opportunity to relocate
in
light of the expiration of the lease of your administrative
offices
in light of the disclosure on page 22 that the lease was extended.
23. In discussing your market area, provide detailed demographic
information on the census tracts where at least 60% of our loans
are
designated.
24. We note the disclosure on page 43 that in 1998 you decided to
exit the residential mortgage business. For the benefit of
investors, please discuss the specific risks you face as a result
of
focusing on commercial real estate and construction loans as
opposed
to residential loans.
25. If available, for the area(s) in which your branches are
presently located, please provide additional detailed disclosure
of
the demographic profile, such as industry, income, age,
employment,
occupation, education, family size, marital status, home ownership
and household by types. Also, please disclose where, outside of
North/Northeast Portland you now have branches, or will have
branches, and when. Discuss the status of your plans for each
planned branch.
Management`s Discussion and Analysis, page 29
26. We reviewed your response to prior comment 58 from our letter
dated June 21, 2006, but were unable to find your revision as
indicated. We also note from your response that your current
presentation of average equity takes into consideration the timing
of
an equity infusion in late 2005. As this calculation requires the
use of average equity, not weighted average equity, the timing of
this infusion would not be considered. Please revise to present
the
return on average equity for the year ended December 31, 2005
(approximately 9.9%). Also, revise your Average Yields Earned and
Rates Paid table on page 46 accordingly.
27. The Management`s Discussion and Analysis ("MD&A") section is
one
of the most critical aspects of the offering circular. As such,
we
ask that you revise this section to provide a detailed executive
overview to discuss the events, trends, and uncertainties that
management views as most critical to the company`s revenues,
financial position, liquidity, plan of operations and results of
operations. In an effort to assist you in this regard, please
refer
to the Commission Guidance Regarding Management`s Discussion and
Analysis of Financial Condition and Results of Operations, Release
Nos. 33-8350 (December 19, 2003) at
http://www.sec.gov/rules/interp/33-8350.htm. This guidance is
intended to elicit more meaningful disclosure in MD&A in a number
of
areas, including the overall presentation and focus of MD&A, with
general emphasis on the discussion and analysis of known trends,
demands, commitments, events and uncertainties, and specific
guidance
on disclosures about liquidity, capital resources and critical
accounting.
28. Discuss the reason(s) for the decrease in net income for the
six
months ended June 30, 2006 as compared to 2005.
29. Explain the reason for the decrease in loan fees on brokered
loans.
Liquidity Management, page 55
30. We reviewed your revised disclosure in response to our prior
comment 73 from our letter dated June 21, 2006, noting your
current
focus to aggressively market money market accounts over
certificates
of deposit. Your response did not completely address our comment,
thus it will be reissued. We note approximately $42 million of
certificates of deposit will mature in 12 months or less whereas
your
total primary and secondary liquidity is approximately $35
million.
Please revise to discuss the historical and expected renewal rates
of
these certificates as well as any liquidity need that could arise
from these certificates not being renewed as anticipated.
31. We reviewed your response and revised disclosure regarding our
prior comment 74 from our letter dated June 21, 2006, and it
appears
you have merely duplicated your statements of cash flows.
Therefore,
we are reissuing our comment in its entirety. Please provide an
enhanced analysis and explanation of the sources and uses of cash
and
material changes in the items underlying the major captions (i.e.
operating, investing, and financing) reported in your statements
of
cash flows for all periods presented. Your analysis of cash
flows
should not merely recite information presented in the consolidated
statements of cash flows.
Management, page 49
32. We reissue prior comment 75 from our letter dated July 21,
2006.
Disclose the beginning and ending dates of employment for each
employment position listed. For example, provide the period Mr.
Dixon was employed with Stanley Tools, discuss Mr. Henderson`s
employment from 2004 to the present, provide the period Ms. Holden
was in each employment position listed, provide the period Mr.
McKean
has been President and CEO of the company and the bank, etc.
Stock Ownership of Management and Certain Stockholders, page 70
33. We note that you provide disclosure regarding only
shareholders
owning more than 5%. Please be advised that Item 1(e) requires
that
you include shareholders owning 5% or more. Please revise the
disclosure, if necessary, to ensure that you include all persons
owning 5% or more of any class of securities.
34. We reissue prior comment 79 from our letter dated June 21,
2006.
Disclose the control person(s) for each entity listed in the
table.
This would be the person(s) that have ultimate voting or
dispositive
control of the shares. We may have further comment.
35. Please add clear disclosure to the last two columns of the
table
to make it clear that there is no minimum and no guarantee the
company will raise the maximum amount in this offering.
Financial Statements
Notes to Financial Statements
Note 1 - Organization and Summary of Significant Accounting
Policies
Investment in limited liability corporation, F-12
36. We reviewed your response to our prior comment 84 from our
letter
dated June 21, 2006, noting the bank owned 56.2% interest in the
limited liability corporation, yet you used the equity method of
accounting. Tell us how your accounting treatment (i.e. not
consolidated) is consistent with GAAP and cite the specific
authoritative literature you used to support your conclusion. In
your response, please address the applicability of ARB 51 and FIN
46(R). Please advise or revise accordingly.
Stock-based compensation, F-13
37. We reviewed your response to our prior comment 83 from our
letter
dated June 21, 2006; however, your response did not address our
comment as it related to your ESPP. Therefore, we are reissuing
our
comment in part. Please revise your accounting policy to
specifically address how paragraph 12 of SFAS 123(R) impacts the
change in your ESPP (i.e. the SFAS 123(R) impact of the new ESPP
purchase price determination on your financial statements).
Note 17 - Stock-Based Compensation, F-35
38. We reviewed your response to our prior comment 86 from our
letter
dated June 21, 2006. Please revise to provide disclosures
required
by paragraph A240(b)(2) of SFAS 123(R).
Other Regulatory
39. Please provide a current dated consent of the independent
accountants with your amended filing in accordance with Part III-
Exhibits Item 2 (10) of the Form 1-A general instructions.
Exhibits
40. We reissue prior comment 89 from our letter dated June 21,
2006.
Please file a validly executed placement agent agreement as
exhibit
1.1.
41. Please provide an updated legality opinion with each
amendment.
Closing Comments
As appropriate, please amend your offering 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.
You may contact Brian Bhandari at (202) 551-3390 if you have
questions regarding
comments on the financial statements and related matters. Please
contact Susann Reilly at (202) 551-3236 with other questions.
Sincerely,
John Reynolds
Assistant Director
Office of Emerging Growth Companies
cc: Gordon Crim, Esq.
503-221-0607
Robert L. McKean, President and CEO
Albina Community Bancorp
October 2, 2006
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