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November 10, 2005
VIA EDGAR
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Mr. Todd Schiffman
Assistant Director
U.S. Securities and Exchange Commission
Division of Corporation Finance
100 F Street, N.E.
Washington, DC 20549
RE: NEBS BANCSHARES, INC.
AMENDMENT NUMBER ONE TO REGISTRATION STATEMENT ON FORM SB-2
FILED OCTOBER 26, 2005
FILE NO. 333-128277
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Dear Mr. Schiffman:
On behalf of NEBS Bancshares, Inc., we hereby provide the following
information in response to the Staff's further request for clarification on New
England Bancshares, Inc.'s investment in the Ultra Short Mortgage Fund and Ultra
Short Fund. The Staff is supplementally advised that in determining that the
investments in the Ultra Short Mortgage Fund and Ultra Short Fund as temporarily
impaired at June 30, 2005 and March 31, 2005, it relied heavily on interest rate
forecasts prepared by Global Insight, the leading economic and financial
forecasting company in the world, on continuing discussions with Shay Financial,
the manager of the funds, its review of the market and the funds' historical
performance relative to short-term interest rates (due to the 0.9 duration of
the funds), in particular, the United States Treasury six-month treasury bill
and the federal funds target rate. As stated in a prior response, while the
funds are equity securities, they consist of interest-rate sensitive assets and,
accordingly, the net asset value of each fund directly corresponds to changes in
short-term market interest rates. Based on its analysis, the registrant
determined that the net asset value of the funds will likely return to the
registrant's historical cost upon a stabilization or decline in market interest
rates.
In the most recent report issued by Global Insight, it provides that the
Federal Reserve Bank's tightening monetary policy will cease in the first
quarter of 2006 and that short-term rates will stabilize and remain flat for a
period of at least one year.
The registrant has reviewed the performance of the AMF Ultra Short
Mortgage Fund from its inception in September 1991 through September 2005 and
notes that in periods of stabilizing or
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Mr. Todd Schiffman
November 10, 2005
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declining interest rates, the net asset value of the fund has been near or above
the registrant's cost basis of $9.98, specifically during the following periods:
o the second and third quarters of 1992;
o almost all of 1993;
o first quarter of 1996;
o second quarter of 1997;
o first quarter of 1998; and
o fourth quarter of 2001 through the second quarter of 2003.
The registrant believes based on the aforementioned data that the funds
will begin to return to a net asset value that approximates or exceeds the
registrant's cost during the second half of 2006 based on the Federal Reserve
ceasing its increase in interest rates in the first quarter of 2006. This
expectation is based on the Global Insight report. Nevertheless, the registrant
hereby commits that: (1) if interest rates do not perform as predicted in the
report prepared by Global Insight; namely if interest rates do not begin to
stabilize or decline from current rates at some point during the first quarter
of 2006; or (2) if the fund does not perform as the registrant has predicted in
such interest rate environment, the registrant will determine such investments
to be other than temporarily impaired and take the appropriate charges required
of such a determination.
If you have any questions concerning this submission, please telephone the
undersigned at (202) 686-4930.
Very truly yours,
MULDOON MURPHY & AGUGGIA LLP
/s/ Scott A. Brown
Scott A. Brown
cc: Jessica Livingston, Securities and Exchange Commission
Nancy Maloney, Securities and Exchange Commission
Joyce Sweeney, Securities and Exchange Commission
Donald W. Dwyer, Office of Thrift Supervision - DC
John P. Harootunian, Office of Thrift Supervision - DC
Karen Marcotte, Office of Thrift Supervision - DC
Roger Smith, Office of Thrift Supervision - DC
Lauren S. Yablonsky, Office of Thrift Supervision - NE
David J. O'Connor, NEBS Bancshares, Inc.
Scott D. Nogles, NEBS Bancshares, Inc.
Lawrence M. F. Spaccasi, Esq., Muldoon Murphy & Aguggia LLP
Michael J. Brown, Esq., Muldoon Murphy & Aguggia LLP