June 30, 2006
Joyce Sweeney
Securities and Exchange Commission
Washington, D.C. 20549
RE: Synergy Financial Group, Inc.
Form 10-K for the Fiscal Year Ended December 31, 2005
File No. 000-50467
Dear Ms. Sweeney:
We have received your letter dated June 20, 2006 and would like to provide you
with the following response to the questions raised regarding the December 31,
2005 Form 10-K for Synergy Financial Group, Inc. (the "Company").
Note I - Income Taxes, page 78
The entire valuation allowance of $878,000 reported for the last three years in
our Income Tax footnote relates to the Net Operating Loss ("NOL") carry over
assumed from the Company's acquisition of First Bank of Central Jersey ("FBCJ")
on January 10, 2003, which was accounted for under purchase accounting. We
calculated the annual Section 382 limitation on the FBCJ NOL and scheduled out
the prospective annual usage of the NOL for the relevant carry over period and
concluded that the NOL would expire before it can be fully utilized.
Based on the attached NOL carry over schedule, management concluded to provide a
valuation allowance against the deferred tax asset to account for the fact that
the FBCJ NOL will more likely than not expire before it can be used within the
limitations of Section 382. The allowance never changes since the variables used
to determine it do not change - they are locked it at the acquisition date. The
only variable that could change is the tax law and to date, the tax law has not
changed.
In connection with the above response, we acknowledge the following statements:
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 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.
I trust this clarifies the comments you raised during your review of our Form
10-K.
Sincerely,
/s/A. Richard Abrahamian
-------------------------------------------------
A. Richard Abrahamian
Senior Vice President and Chief Financial Officer
Synergy Financial Group, Inc.
FIRST BANK OF CENTRAL JERSEY
SECTION 382 LIMITATION
Purchase Price 2,100,000
Adjusted Fed Long Term T/E Rate - Dec 2002 4.65% (Jan 2003 was not available)
--------
(IRS published rate)
Sec. 382 Annual Limit 97,650
========
NOL Carryforward: 1998 (131,587)Carryforward to 2018
(from FBCJ tax returns) 2001 (1,833,444)Carryforward to 2021
2002 (2,517,118)Carryforward to 2022
2003 (149,916)Carryforward to 2023
----------
(4,632,065) $(4,632,065)
==========
34%
----------
1,574,902 Deferred Tax Asset allowed on the $4,632,065
1998 2001 2002 2003
Loss Loss Loss Loss Totals
Year Utilized Utilized Utilized Utilized (max 97,650/yr)
----------------------------------------------------------------
2003 97,650 97,650 (4,534,415)
- -------------------------------------------------------------------------------
2004 33,937 63,713 97,650 (4,436,765)
- -------------------------------------------------------------------------------
2005 97,650 97,650
2006 97,650 97,650 34%
----------
2007 97,650 97,650 (1,508,500)
==========
2008 97,650 97,650
2009 97,650 97,650
2010 97,650 97,650
2011 97,650 97,650
2012 97,650 97,650
2013 97,650 97,650
2014 97,650 97,650
2015 97,650 97,650
2016 97,650 97,650
2017 97,650 97,650
2018 97,650 97,650
2019 N/A 97,650 97,650
2020 N/A 97,650 97,650
2021 N/A 97,650 97,650
2022 N/A N/A 97,650 97,650
2023 N/A N/A N/A 97,650 97,650
2024
-------------------------------------------------------------
131,587 1,723,763 97,650 97,650 2,050,650 2,050,650 NOL
34% Tax Rate
----------
697,221 Deferred Tax Asset - Actual
==========
(2,581,415) $ (877,681) Valuation allowance
==========