LUSE GORMAN POMERENK & SCHICK
A PROFESSIONAL CORPORATION
ATTORNEYS AT LAW
5335 WISCONSIN AVENUE, N.W., SUITE 400
WASHINGTON, D.C. 20015
TELEPHONE (202) 274-2000
FACSIMILE (202) 362-2902
www.luselaw.com
WRITER'S DIRECT DIAL NUMBER WRITER'S EMAIL
(202) 274-2009 mlevy@luselaw.com
VIA EDGAR
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July 13, 2009
Ms. Kathryn McHale
Staff Attorney
U.S. Securities and Exchange Commission
Division of Corporation Finance
100 F Street, N.E.
Washington, DC 20549
Re: Chicopee Bancorp, Inc.
Form 10-K for December 31, 2008
Form 10-Q for March 31, 2009
Definitive Proxy Statement filed April 13, 2009
File No. 000-51996
Dear Ms. McHale:
We are in receipt of your letter dated June 22, 2009 providing comments on
the referenced filing for Chicopee Bancorp, Inc. (the "Company"). The Company's
responses are set forth below and are keyed to the staff's comment letter.
Form 10-K for the Fiscal Year Ended December 31, 2008
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1. Please refer to our previous comments 2, 6, 12-13 and 15 in our letter
dated April 30, 2009. We note your indication that our comments would be
addressed in future filings, however disclosures responsive to our comments
could not be located in your March 31, 2009 Form 10-Q. As previously
requested, please provide us with your proposed disclosures.
Previous Comment 2 will be addressed in future Form 10-K filings (unless
significant changes occur and earlier disclosure is required) substantially
as follows: "All adjustable-rate mortgage loans are underwritten taking the
FHLB rate or Treasury indexed rate into consideration at each adjustment
period until the full cap is reached. We calculate overall
Ms. Kathryn McHale
July 13, 2009
Page 2
debt to income based on the initial principal and interest payment along
with real estate taxes, insurance and other monthly payments due from the
borrower and also include the repricing of these payments of each
adjustment up to the maximum caps allowed under the note. This enables the
underwriting decision to minimize the risk of qualification at the time the
loan reaches the maximum rate for that product."
Previous Comment 6 will be addressed in future Form 10-K filings (unless
significant changes occur and earlier disclosure is required) by adding an
"earnings per share" line item at the end of the Selected Financial Data
substantially in the form below:
For the Years Ended December 31,
-------------------------------------------------------------------------------
2008 2007 2006 2005 2004
------------ ------------ ------------ ------------ ------------
Earnings per share $ 0.00 $ 0.24 $ (0.37) n/a n/a
Previous Comment 12 will be addressed in future filings. See attached
Memorandum from the Company (Exhibit A).
Previous Comment 13 will be addressed in future filings substantially in
the form below:
December 31, 2008
---------------------------------------------------------------
Gross Gross
Amortized Unrealized Unrealized
Cost Gains Losses Fair Value
------------ ------------ ------------ ------------
Securities available-for-sale
-----------------------------
Marketable equity securities $ 7,632 $ 189 $ (2,370) $ 5,451
------------ ------------ ------------ ------------
Total securities available-for-sale $ 7,632 $ 189 $ (2,370) $ 5,451
============ ============ ============ ============
Securities held-to-maturity
---------------------------
Debt securities of U.S. Government
sponsored enterprises $ 27,164 $ 25 -- $ 27,189
U.S. Treasury securities 11,997 3 -- 12,000
Corporate and industrial revenue
bonds 4,060 -- -- 4,060
Collateralized mortgage obligations (1) 6,441 12 (29) 6,424
------------ ------------ ------------ ------------
Total securities held-to-maturity $ 49,662 $ 40 $ (29) $ 49,673
============ ============ ============ ============
---------------------------------------
(1) The Company has 19 collateralized mortgage obligation bonds with an
aggregate value of $6.4 million, which include four bonds with a FICO
score of less than 650. This risk is mitigated by loan to value ratios
of less than 75%. The total exposure of these four bonds to the Company
is approximately $25,000. Since the purchase of these bonds, interest
payments have been current.
Ms. Kathryn McHale
July 13, 2009
Page 3
Previous Comment 15 will be addressed in future Form 10-K filings (unless
significant changes occur and earlier disclosure is required) substantially
in the form below:
Chicopee Bancorp, Inc. and Subsidiaries
Income Taxes
2008
-----------
Gross deferred tax assets
Charitable contribution carryforward 1,763
Allowance for loan losses 1,331
Unrealized loss on securities available for sale 760
Employee benefit and stock-based compensation plans 424
Other 120
-----------
Gross deferred tax assets 4,398
Gross deferred tax liabilities
Deferred loan costs 383
Mortgage servicing rights 30
Depreciation 120
Unrealized gain on securities available for sale --
Other 131
-----------
Gross deferred tax liabilities 664
-----------
Net deferred tax asset 3,734
Valuation allowance 1,300
-----------
Net deferred tax asset 2,434
===========
The adequacy of this allowance to fully utilize the charitable contribution
carry-forward was determined by using the Company's projected pre-tax
earning for the years of 2009 through 2011.
2. Please refer to our previous comment 7 in our letter dated April 30, 2009.
We note your response that the efficiency ratio presented in your filing
does not comply with that of your primary banking regulator and that you do
not consider this ratio a non-GAAP measure for the purposes of providing
disclosures pursuant to Item 10(e) of Regulation S-K. Please note that Item
10(e) of Regulation S-K does not contain an
Ms. Kathryn McHale
July 13, 2009
Page 4
exception related to "industry standards." Therefore, because the
efficiency ratio presented by you does not comply with that of your primary
banking regulator and is a measure that is not required to be reported by
them, please revise your future filings to provide the disclosures
previously requested. Please provide us with your proposed disclosures.
The Company will present the efficiency ratio in future Form 10-K filings
(unless significant changes occur and earlier disclosure is required) as in
prior periodic reports, but will disclose the calculation of the efficiency
ratio in Note (4) of the Selected Financial Data substantially in the form
below:
Footnote (4) The efficiency ratio represents the ratio of non-interest
expenses dividend by the sum of tax equivalent net interest
income and non-interest income. This ratio excludes gains
(losses) on investment securities, property, loans and
other, net. The ratio is calculated as follows:
Non-interest expenses $ 15,882
---------------
Tax equivalent net interest income $ 14,523
Non-interest income 2,227
Add back:
Loan sales and servicing, net 13
Net (loss) gain on sales of securities
available-for-sale 57
---------------
Total income included in calculation $ 16,820
Non-interest expenses divided to by Total income 94.42%
===============
3. Please refer to our previous comment 11 in our letter dated April 30, 2009.
Please tell us the following information:
a. Please provide us with additional detail regarding your other than
temporary analysis of equity securities than what was provided in your
response. In this regard, please provide us with greater detail
regarding the company specific and other information reviewed, the
industry specific information and the performance of the stock market
in general for each security in an unrealized loss position for
greater than 12 months at December 31, 2008. Please provide your
update to this analysis as of March 31, 2009.
b. Please tell us the specific information provided by the two money
managers to help you analyze your equity investments. Please tell us
the extent to which you independently verify the information and
assumptions included therein.
Ms. Kathryn McHale
July 13, 2009
Page 5
c. Your response does not address your projections of recovery, the
timeframes of that recovery, and the subsequent updates to those
projections. Please tell us the steps you took to compile such
projections and discuss the information on which you based such
projections. Refer to Staff Accounting Bulletin Topic 5:M, which
indicates that you should consider the "near term" prospects.
d. Please tell us and revise to disclose any other factors beyond those
listed in your response that you considered in determining whether an
other than temporary impairment had occurred on your securities at the
dates discussed.
a) See attached money manager (Armstrong Shaw (Exhibit B) and Salem
Capital Management, Inc. (Exhibit C)) analyses as of December 31, 2008
for our securities in an unrealized loss position for greater than 12
months, as well as a sample of a Morgan Stanley write-up as of
December 31, 2008 (Exhibit D). We have also attached an update to our
money manager's analyses as of March 31, 2009 (Exhibits E and F).
b) See attached reports from Salem Capital Management, Inc. and
Armstrong Shaw, Exhibits B through F. Also, see Memorandum from the
Company (Exhibit A).
c) See attached reports from Salem Capital Management, Inc. and
Armstrong Shaw, Exhibits A through G.
March 31, 2009 Form 10-Q
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Equity Incentive Plan, page 7
- -----------------------------
4. We note that you continue to use a dividend yield of 2% to value stock
options granted during the period. Please tell us your basis for this
assumption given that you have not paid dividends since your initial public
offering.
The Staff is advised that the Company made grants to stock options on July
26, 2007 and in December 2008 and based its 2% dividend yield on dividend
rates on similarly-situated publicly-traded financial institutions. The
Staff is advised that the Company is considering issuing a dividend with a
yield of approximately 2%. No final decision has been made by the Company's
Board of Directors on whether as to grant a dividend or the amount of such
dividend.
Ms. Kathryn McHale
July 13, 2009
Page 6
* * *
The Company hereby acknowledges that:
o the Company is responsible for the adequacy and accuracy of the
disclosure in the filing;
o 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
o the Company 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.
Pursuant to SEC Rule 83, 17 C.F.R. ss.200.83, the Company requests
confidential treatment for each of the attached exhibits. The Company believes
that to release such information would have adverse consequences to its business
and competition position.
We trust the foregoing is responsive to the Staff's comments. We request
that any questions with regard to the foregoing should be directed to the
undersigned at 202-274-2009.
Very truly yours,
/s/ Marc Levy
Marc Levy
cc: William J. Wagner, Chicopee Bancorp, Inc.
SEC Freedom of Information and Privacy Act Office
Lawrence Spaccasi, Esq.