LAWRENCE SEIDMAN, ESQ.
100 Misty Lane
Parsippany, NJ 07054
(973) 952-0405
(973) 781-0876 fax
March 21, 2006
Via facsimile (202) 772-9203 and Federal Express
Mr. Michael Pressman, Division of Corporate Finance
Securities and Exchange Commission
100 F Street, N.E.
Washington, DC 20549
Re: Yardville National Bancorp
PREC 14A filed by Committee to Preserve Shareholder Value
Filed on March 2, 2006
File No. 1-10518
Dear Mr. Pressman:
I am writing in response to your March 20, 2006 comment letter. The
responses are numbered to correspond to the format of your comment letter.
General
Comment:
1. Please revise throughout the document to reflect that the
consulting agreement with Mr. Seidman did not require the board
to seek Mr. Seidman's services.
Response:
1. On page 4, the following sentences have been added: "During the
negotiations leading up to the consulting agreement, Mr. Ryan
assured Mr. Seidman that he would be able to meet with the
entire Board. Mr. Ryan also assured Mr. Seidman that he would
also have significant access to individual Board members.
However, the terms of the consulting agreement did not require
the Board to seek Mr. Seidman's services. Mr. Seidman would not
have agreed to the consulting agreement without Mr. Ryan's
assurances."
Comment:
2. Please provide support for your position that "Mr. Ryan has
stated to Mr. Seidman that significantly increasing Federal
Funds borrowing in or about 1999, for a term of approximately
ten (10) years by approximately $700 million, was a major
mistake for which he takes full responsibility." It is not clear
to the staff from where you derive $700 million value and that
the increase was to Federal Funds borrowing.
Response:
2. The following paragraph on page 4 has been revised as follows:
"Mr. Ryan has described several of the Bank's past operational
difficulties as "bumps in the road." The following are
situations which, in Mr. Seidman's opinion, were not beneficial
to the Company. The only incident listed below specifically
referred to by Mr. Ryan as a "bump in the road" was the
increasing of Federal Funds borrowing to approximately $700
million described herein. Mr. Ryan has stated to Mr. Seidman
that significantly increasing the Federal Funds borrowing
starting in or about 1999, some part of which was for a term of
approximately ten (10) years to approximately $700 million, was
a major mistake for which he takes full responsibility. This
strategy caused the Company's earning to be reduced when the
interest earned on its assets declined while the cost of the
borrowing did not decline in the same manner."
The support for the $700 million value is from the Company's
balance sheet, liability section, Federal Funding borrowing for
each of the following fiscal year ends:
1999 2000 2001 2002 2003 2004 2005
--------- --------- --------- --------- --------- --------- ---------
$ 250,293 $ 532,768 $ 695,008 $ 746,000 $ 726,000 $ 741,000 $ 740,000
The source used for this data was SNL Financial, except for
1999, for which the source was the Company's Form 10-K.
Comment:
3. Please provide support for your opinion that the sale of loans
would be "most likely at a profit...". Note that a reasonable
factual basis must exist for each such opinion or belief and
support for opinions or beliefs should be self-evident,
disclosed in the materials or provided to the staff on a
supplemental basis.
Response:
3. The following sentence has been added on page 5: "Mr. Seidman's
view that the Company most likely could sell loans at a profit
is based upon information provided to him by Company
representatives, his knowledge of the New Jersey real estate
market, and discussions with several other real estate finance
professionals."
Comment:
4. Please provide support for your position that the board received
a "vote of no-confidence from its primary regulatory agency."
Note that a reasonable factual basis must exist for each such
opinion or belief and support for opinions or beliefs should be
self-evident, disclosed in the materials or provided to the
staff on a supplemental basis.
Response:
4. The following paragraph on page 5, has been revised as follows:
"So in the last few years, the Company has experienced two
blow-ups in credit quality, taken on significant interest
rate risk that adversely affected its net income and entered
into an Agreement with its primary regulatory agency; wherein
the regulator required that the Board and management assess the
individual Board members qualifications and skills, and evaluate
each senior officers' qualifications. (See page 30 and 31 of the
Agreement attached hereto as an Exhibit.) That's too many bumps
in the road. Hopefully, the Company Shareholders won't get
knocked off the road from the extreme turbulence. "
Comment:
5. Please revise your disclosure to reflect that the lease with
Lalor required the bank to pay $4,984 per month as opposed to
$14,984 per month.
Response:
5. This section on pages 6 and 7 has been revised as follows to
include the updated disclosure from the Company's Preliminary
Proxy Statement.
"Mr. Hofing's material business relationships with the Company are
as follows:
In October 2004, upon expiration of the initial five-year term,
and second five-year renewal term, the Bank renewed its lease
for another five-year period for its Trenton, New Jersey branch
office, which is owned by the Lalor Urban Renewal Limited
Partnership. The Lalor Corporation, which is the general partner
of the limited partnership, is owned by Sidney L. Hofing. Under
the lease, the Bank is obligated to pay approximately, $3,100
per month, which includes any common area maintenance expenses.
In July 2000, the Bank signed a ten-year lease with four
five-year renewal options for its Lawrence, New Jersey branch
office. The property is owned by Union Properties, LLC. Sidney
L. Hofing has an ownership interest in Union Properties, LLC.
Under the terms of the lease, the Bank is obligated to pay
approximately $8,700 per month, which includes any common area
maintenance expenses. In March 2006, the Bank signed a new
10-year lease, with an unlimited number of one-year renewals.
The payment terms of the new lease are the same as the prior
lease.
In May 2001, the Bank signed a ten-year lease with three
five-year renewal options for its Bordentown, New Jersey branch
office. The Bank acquired the property from the bankruptcy
estate of a borrower and sold the property to BYN, LLC, a
limited liability company of which Sidney L. Hofing is a member.
The purchase price was $537,000. Under the terms of the lease,
the Bank is obligated to pay approximately $7,000 per month,
which includes any common area maintenance expenses.
In October 2001, the Bank signed a fifteen-year lease with three
five-year renewal options for its Hunterdon County Regional
Headquarters. The property is owned by FYNB, LLC. Sidney L.
Hofing had an ownership interest in FYNB, LLC, but several
members of Mr. Hofing's family including his spouse continue to
have an ownership interest. Under the terms of the lease, the
Bank is obligated to pay approximately $21,800 per month, which
includes any common area maintenance expenses. In March 2006,
the Bank signed a new lease for its Hunterdon County Regional
Headquarters with FYNB, LLC for a twelve-year
term with three five-year renewals. The new lease has an
effective date of November 1, 2005. The payment terms of the new
lease are the same as the prior lease.
In April 2005, the Bank signed a fifteen-year lease with two
five-year renewal options for a branch to be constructed and
located in West Windsor, New Jersey. The property is owned by
WWM Properties, LLC. Sidney L. Hofing has an ownership interest
in WWM Properties, LLC. Under the terms of the lease, the Bank
is obligated to pay an average of approximatrely $13,850 per
month, including any common area maintenance expenses. Lease
payments will start when the branch is completed.
In March 2006, the Bank signed a ten-year lease with an
unlimited number of one-year renewals for its Morrisville
branch. The lease has an effective date of November 1, 2005. The
property is owned by MYNB, LLC. Sidney L. Hofing has an
ownership interest in MYNB, LLC. Under the terms of the lease,
the Bank is obligated to pay $10,800 per month, which includes
any common area maintenance expenses.
Mr. Ryan told Mr. Seidman that the Bank intends to enter into
several more leases with entities in which Mr. Hofing, or his
family, have an ownership interest.
Mr. Marrazzo's material business relationship with the Company is as
follows:
In April 2000, the Bank signed a five-year lease with three
five-year renewal options for its branch in Marrazzo'a Thriftway
in West Trenton, New Jersey. The property is owned by Serenity
Point, LLC. Samuel D. Marrazzo, has an ownership interest in
Serenity Point, LLC and owns and operates Marrazzo's Thriftway.
Under the terms of the lease, which was executed prior to Mr.
Marrazzo becoming a member of the Board, the Bank is obligated
to pay $2,200 per month, which included any common area
maintenance expenses.
Mr. Vernon's material business relationships with the Company are as
follows:
In January 2005, the Bank signed a five-year lease with two
five-year renewal options for its storage and maintenance
facility. The property is owned by Lalor Storage, LLC. Mr.
Vernon has an ownership interest in Lalor Storage, LLC. Under
the terms of the lease, the Bank is required to pay $4,984 per
month, which includes any common area maintenance expenses.
In June 2003, the Bank sold its former operations building to
Mr. Vernon. The purchase price was $650,000 and the Board
recorded a gain of $429,000. The Bank leased the basement of the
building on a month-by-month basis from June 2003 to January
2005. Under the terms of the lease, the Bank paid $2,783 per
month, which included any common area maintenance expenses. In
February 2005, the Bank ended its lease for this property.
In January 2006, the Bank signed a one-year lease effective
December 1, 2005 for a temporary location for its Cream Ridge
Branch located in Plumsted Township, New Jersey. After the
initial term expires the lease will be a month-to-month lease
pending relocation to the final site. The current location is a
1,900 square foot space in a strip shopping center.
The Bank will occupy this space pending the completion of a full
service branch to be located on a pad site adjacent to the
shopping center. The shopping center and the pad site are owned
by Mercer Management and Development Inc. Mr. Vernon a director
of the Company and the Bank has an ownership interest in Mercer
Management and Development Inc. Under the terms of the lease,
the Bank is obligated to pay approximately $3,500 per month,
which includes any common area maintenance expenses. A new lease
will be negotiated for the pad site in the near future."
In addition, the following paragraph has been added on page 3:
"To Raise, or Not to Raise Capital."
"Mr. Ryan has told Mr. Seidman on several occasions that he
wants to sell stock to raise capital so the Company can continue
on its growth strategy. Mr. Seidman is not in favor of selling
stock to raise capital. If this issue is important to you, Mr.
Seidman suggests you contact Mr. Ryan to get his view on whether
or not the Company is considering raising capital through the
sale of stock. Mr. Ryan's direct telephone number is (609)
631-6177."
Also, on page 13, changes have been made to the resume section for
Dennis Pollack as follows:
"Dennis Pollack is 55 years of age and his residence address is
47 Blueberry Drive, Woodcliff Lake, New Jersey 07677. Mr.
Pollack is currently a consultant to Paulson & Company, Inc., a
hedge fund located at 590 Madison Avenue, New York, New York,
10022, and from June 2004 to February 28, 2006, Mr. Pollack was
the Chief Operating Officer for Paulson & Company. From December
2001 to May, 2004, Mr. Pollack was a Vice President at Valley
National Bank. From May, 2001 to December, 2001, Mr. Pollack was
the new business development officer for Mohawk Community Bank.
For more than five years prior thereto, Mr. Pollack held various
positions at Connecticut Bank of Commerce, Stamford,
Connecticut, President and Chief Executive Officer (April, 1996
- November 1998) and most recently as Vice Chairman and a
consultant to the bank (December, 1998 - May, 2001). From 1988
to 1993, he was the President, Chief Executive Officer, and
Member of the Board of the Savings Bank of Rockland County,
Spring Valley, New York, and when the bank was sold to First
Fidelity Bank, he became an Executive Vice President, Rockland
Region, until 1995."
If you require any additional information, or changes, please
contact the undersigned.
Very truly yours,
/s/ Lawrence B. Seidman
-----------------------
Lawrence B. Seidman