SecProbe.io

CORRESP
1
filename1.htm

SEC CORRESPONDENCE LETTER

[Womble Carlyle Sandridge & Rice, PLLC Letterhead]

July 19, 2005

    Ms. Lisa Vanjoske

Assistant Chief Accountant

Division of Corporation Finance

United States Securities and Exchange Commission

100 F Street, N.E.

Mail Stop 6010

Washington D.C. 20549

    VIA FACSIMILE

(202) 772-9217

    Re:

    GBC Bancorp, Inc.

    Form 10-KSB for December 31, 2004

    Filed March 23, 2005

    Form 10-QSB for March 31, 2005

    File No. 0-50265

Dear Ms. Vanjoske:

     On behalf of GBC Bancorp, Inc. (the “Company”), set forth below are responses to the comments
of the staff (the “Staff”) of the Securities and Exchange Commission (the “SEC”) in its letter
dated July 6, 2005, with respect to the filings referenced above.

     For your convenience, the text of the Staff’s comments is set forth below in bold followed in
each case by the response.

Cash Flow Statement

     1.      You have recognized significant gains on loan sales however you do not present the amount
of proceeds from loan sales. Revise the statement of cash flows to present separately 1)
originations of, and 2) proceeds from sales of loans held for sale as operating cash flows. Revise
Form 10-K for December 31, 2004 and Form 10-Q for March 31, 2005. In addition, loans held for sale
should be reported separately on the balance sheet.

     Response: The Company has recognized significant gains from the sale of the
guaranteed portion of U.S. Small Business Administration (“SBA”) loans during the periods covered
by the above-referenced reports in increasing amounts. The increases are due to the increased
activity in the SBA loan department of the Company’s banking subsidiary as it becomes more
established in its market. The department began in 2003 with increasing activity in 2004 and 2005.
These loans were processed within the reporting periods and therefore there were no loans held for
sale at the end of each of these periods. For the year ended December 31, 2004, the Company’s
banking subsidiary sold $13,231,733 in SBA loan originations and received proceeds of $14,414,620,
including SBA premiums of $1,182,887. For the quarter

U.S. Securities and Exchange Commission

July 19, 2005

Page 2 of 3

ended March 31, 2005, the Company’s banking subsidiary sold $4,013,971, receiving $4,534,380
including $520,409 in SBA premiums.

     Since the gains on sales of loans is included in net income for the year ended December 31,
2004 and the period ended March 31, 2005, and since there were no loans held for sale outstanding
at either December 31, 2004 or March 31, 2005, the cash flow statement for the year ended December
31, 2004 and the quarter ended March 31, 2005 will not change.

     Since all of these SBA loans have been processed within the reporting periods, there were no
loans held for resale at the end of either period.

     In filings relating to future periods, the Company will revise its statement of cash flows to
present separately originations of, and proceeds from, sales of loans held for sale as operating
cash flows.

     2.      Explain why gains on sale of loans is not presented as a reconciling item when reconciling
net income to cash provided by operations in the cash flow statement for the quarter ended March
31, 2005.

     Response: Gains on sale of loans is not presented since the Company is presenting the
cash flow statement in condensed form, as allowed in Regulation S-X, section 210.10-01 for the
period ending March 31, 2005. In filings relating to future periods, the Company will show the
gains on sale of loans held for sale, proceeds from the sale loans available for sale and
originations of loans available for sale in the cash flow statement.

     3.      The line item captioned “net other operating activities” in the 2004 cash flow statement is
significant. Disaggregate this line further. Explain significant changes in line items from year to
year in MD&A.

     Response: The change in Net Operating Activities in the 2004 cash flow statement
includes (a) an increase of $708,427 in accrued performance compensation and (b) and increase in
accrued deferred director fees of $308,500 due to the increase of equivalent value of our stock
from $14.00 to $17.00 per share. In filings relating to future periods, the Company will separate
changes of this type out of the change in net operating activities.

Management’s Discussion and Analysis

     4.      MD&A does not explain the reasons for changes in financial statement line items but merely
repeats the change reported in the financial statements. Revise MD&A to fully explain the
underlying reasons, quantifying each separately, for each factor causing a change in for example,
revenue and expense.

     Response: The MD&A in the Company’s 10K-SB and 10Q-SB have included changes due to
normal measured growth and therefore result in normal increases as it becomes more

U.S. Securities and Exchange Commission

July 19, 2005

Page 3 of 3

established in our market. There have not been any extraordinary changes that would have
affected the operating results of the Company’s baking subsidiary. The Company will expand its MD&A
to provide explanations of increases or decreases when appropriate in filings relating to future
periods.

     The Company believes that the comments and suggested changes do not materially affect the
Company’s financial statements as presented; however, to present a more detailed presentation, the
Company will revise its disclosure to address the Staff’s comments in all periodic reports for
future periods.

     If you have any questions or comments with respect to this filing, please do not hesitate to
call the undersigned at (404) 962-7515.

Very truly yours,

WOMBLE CARLYLE SANDRIDGE & RICE

A Professional Limited Liability Company

/s/ Glenn A. Brown

Glenn A. Brown

cc:      Mr. John T. Hopkins III