Mail Stop 4561
July 3, 2006
Ms. Maria L. Bouvette
President and Chief Executive Officer
Porter Bancorp, Inc.
2500 Eastpoint Parkway
Louisville, Kentucky 40223
Re: Porter Bancorp, Inc.
Amendment Number Two to Registration Statement on Form S-1
File No. 333-133198
Filed June 21, 2006
Dear Ms. Bouvette:
We have reviewed your filings and have the following initial
comments; we intend to issue additional comments. Where
indicated,
we think you should revise your documents 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 information so we may
better understand your disclosure. After reviewing this
information,
we may 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 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 various references to Mr. Porter and Ms. Bouvette
owning
"more than 50%" of your stock. Please revise each of these
references to disclose the actual percentage owned.
2. As we requested in comment 11 of our letter to you dated June
15,
2006, please revise each of your references to non-voting common
stock throughout the filing to state that this stock is
automatically
convertible into voting stock. Please provide an explanation of
the
conversion terms as appropriate.
Overview, page 1
3. We note your responses to comment 1 of our letter to you dated
June 15, 2006. Please disclose any relationship between Mr.
Porter
and Ms. Bouvette and disclose the actual percentage beneficially
owned by each. Please disclose the percentage beneficially owned
by
Mr. Porter`s brother and by officers and directors as a group.
History and Growth, page 1
4. Please disclose that in December 31, 2005, approximately four
months before you filed your registration statement, you paid Mr.
Porter, Ms. Bouvette and Mr. Porter`s brother over 872,000 shares
of
your common stock based upon a value of $25.50 per share, in three
separate related party transactions. As we requested in comment
10
of our letter dated June 16, 2006, once you have determined the
estimated initial public offering price of your common stock,
please
identify, using bullet points, each of the significant factors
contributing to the difference between your estimated IPO price
per
share and price you established on December 31,2005.
5. As we requested in comment 2 of our letter to you dated June
15,
2006 please revise this section as follows:
* disclose actual results, not compound annual growth since your
growth has not been constant each year;
* disclose data for interest income and interest expense; and
* substantiate your claim that you have "experienced substantial
net
income ...growth" by providing data regarding net income and by
disclosing that because of your subchapter S status you were not
subject to income taxes and that in the future you will be subject
to
a tax of 34 percent and your net income will be reduced
accordingly.
Risks Relating to This Offering, page 17
6. We note your response to comment 5 of our letter to you dated
June
15, 2006. As we requested clarify, on page 17. whether they will
in
fact have control by, for instance, replacing the terms
"controlling
influence" on the fifth line with "control" and replacing "may" on
the sixth line with "will." Please explain, using examples, of
the
actions that they can take unilaterally without the approval of
other
shareholders. Please make similar revisions to the discussion on
pages 79-80.
7. We note your response, on page 18, to comment 6 of our letter
dated June 16, 2006 addressing your exemption from Nasdaq
corporate
governance rules. Please revise this disclosure as follows:
* list all Nasdaq requirements that you may elect not to comply
with:
* identify those that you currently will not comply with and note
that you can change your mind at any time without stockholder
consent;
* revise your statement in the third paragraph that "a majority of
our directors are independent directors" to indicate whether they
were selected by Mr. Porter and Ms. Bouvette.
Please make similar changes in your discussion on pages 78-80.
8. We note your response, on page 19, to comment 6 of our letter
dated June 16, 2006 addressing dilution. As we requested, clarify
whether "some" or all existing shareholders paid less than your
offering price. In addition, please disclose the price paid or
assumed, the fact that your Chairman and CEO and their family
entities received over 872,000 shares of the stock at $25.50 and
the
date of the sale.
Potential Consequences of Control on Corporate Governance, page 79
9. We note your response, on page 79, to comment 7 of our letter
dated June 16, 2006 addressing dilution. Please revise this
section
as follows:
* as we requested, revise the caption to include the concept of
control of the Board and the Company by Mr. Porter and Ms.
Bouvette
and Mr. Porter`s brother;
* as we requested, disclose, in the third paragraph on page
80,that
each of your directors was selected by Mr. Porter and Ms.
Bouvette;
and
* disclose those actions that can be taken by written consent of
Mr.
Porter, Ms. Bouvette, Mr. Porter`s brother and the directors and
officers without prior notice to shareholders.
Certain Relationships and Related Transactions, page 88
10. As we requested in comment 10 of our letter dated June 16,
2006,
once you have determined the estimated initial public offering
price
of your common stock, please provide detailed analysis of the
reasons
for the difference between the IPO price and the price of $25.50
which you used on December 31, 2005, as the basis for selling
stock
to your Chairman, CEO, CFO and other related parties.
11. We note your response, on page 88, to comment 9 of our letter
dated June 16, 2006 relating to the three related party
transactions.
As we requested, please provide more detailed disclosure including
but not limited to the following:
* as we requested, disclose, in each of the three subsections the
amount and percentage of stock owned by related parties and
identify
each of them by name and by relationship;
* disclose the price per share originally paid by the related
parties
for their interest in each of the three entities and the date of
the
original purchase;
* disclose the price per share that you paid and when you paid it
for
the interests that you had before the reorganization in each of
the
three entities;
* disclose, on page 88, how much of the minority interest in
Ascencia
was beneficially owned by related parties;
* provide detailed disclosure and quantitative data, on page 88,
in
separate paragraphs the basis on which you determined to pay
related
parties 1.90 times book value for their aggregate one third
interest
in each of Ascencia and Mammoth and disclose the procedures
utilized
and disclose whether or not you obtained an appraisal of these
shares;
* provide more detail as to the basis for paying 2.75 times book
value to your Chairman and CEO fro BBA and only 1.9 for Ascencia
and
Mammoth;
* explain or delete your claim, in the first full paragraph on
page
89, that the negotiations for each of the transactions were "arms
length;" in light of the interests and roles of your Chairman,
CEO,
CFO and Chairman`s brother on both sides of each transaction;
* provide substantially more detail, on page 89, regarding the
basis
for your determination that on December 31, 2005 your stock was
worth
$25.50 per share including the aggregate value of the company, the
multiple of book value used to determine the price, the
methodology
utilized and the comparable data utilized;
* as we requested disclose, on page 89, whether the "independent
regional investment banking and consulting firm had any
relationship,
direct or indirect, with any of the related parties or any
entities
with which they are affiliated;
* as we requested, revise your statement, on page 89, that federal
and stare bank regulatory authorities "approved" the financial and
other terms of each of the three transactions to explain the
limited
nature of the "approval;" and
* provide us with a copy of the fairness opinion, to which you
refer
on pages 89 and 90 and a copy of the proxy statement and placement
memorandum to which you refer on page 90.
* * * * * * * * * * * * *
After we issue additional comments, 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
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 urge all persons who are responsible for the accuracy and
adequacy of the disclosure in the filing 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.
In connection with responding to our comments, please
provide,
in writing, a statement from the company and each filing person
acknowledging that:
* the company or filing person is responsible for the adequacy and
accuracy of the disclosure in the filing;
* staff comments or changes to disclosure in response to staff
comments do not foreclose the Commission from taking any action
with
respect to the filing; and
* the company or filing person may not assert staff comments as a
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 our review of your filing or in
response to our comments on your filing.
You may contact Lisa A. Haynes at (202) 551-3424 or Donald
A.
Walker at 202-551-3490 if you have questions regarding comments on
the financial statements and related matters. Please contact
either
Jonathan E. Gottlieb at (202) 551-3416 or me at (202) 551-3491
with
any other questions.
Sincerely,
Todd K. Schiffman
Assistant Director
cc. Alan K. MacDonald, Esquire
Frost Brown Todd LLC
Suite 3200
400 West Market Street
Louisville, Kentucky 40202
Ms. Maria L. Bouvette
Porter Bancorp, Inc.
July 3, 2006
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