SEC Comment Letter for Tennessee Commerce Bancorp, Inc. (CIK 0001323033) — Jun 15, 2005
Tennessee Commerce Bancorp, Inc. (CIK 0001323033)
Date: June 15, 2005 · CIK: 0001323033 · Accession: 0000000000-05-030134
AI Filing Summary & Sentiment
Letter
Mail Stop 0408 By U.S. Mail and Facsimile to (615) 744-5740 Arthur F. Helf Chairman and Chief Executive Officer Tennessee Commerce Bancorp, Inc. 381 Mallory Station Road, Suite 207 Franklin, Tennessee 37067
Re: Tennessee Commerce Bancorp, Inc. Registration Statement on Form 10 Filed April 29, 2005 File No. 0-51281
Dear Mr. Helf:
We have reviewed your filing and have the following comments. Where indicated, we think you should revise your document in response to these comments. If you disagree, we will consider your explanation as to why our comment is inapplicable or a revision is unnecessary. Please be as detailed as necessary in your explanation. In some of our comments, we may ask you to provide us with supplemental information so we may better understand your disclosure. After reviewing this information, we may or may not raise additional comments.
The purpose of our review process is to assist you in your compliance with the applicable disclosure requirements and to enhance the overall disclosure in your filing. We look forward to working with you in these respects. We welcome any questions you may have about our comments or on any other aspect of our review. Feel free to call us at the telephone numbers listed at the end of this letter.
Business, page 1
Market Area and Competition, page 2
1. Please provide disclosure regarding the economic area in which you do business. For example, describe the nature of employment in the area, give demographic figures, and describe any material changes in these factors.
Business, page 4
2. Disclose whether Tennessee Commerce Bancorp has any plans to conduct any business apart from the activities of the bank.
Management`s Discussion and Analysis
Forward-looking Statements, page 14
3. Please delete all reference to the Private Securities Litigation Reform Act. It is inapplicable in this context, because Tennessee Commerce Bancorp is not currently a reporting company. See Section 21E(a)(1) of the Exchange Act.
Change in Results of Operations, page 14
4. Please review the guidance in Item 303(b)(1)(iv-vii) of Regulation S-B and revise to present an expanded discussion of your financial condition, changes in financial condition and results of operations for each of the reported periods. Provide reasons for changes in significant line items. Please address the key variables and other qualitative and quantitative factors necessary to understand and evaluate your business. For example, we noted the following:
* Your operations experienced double digit growth in all the major accounts on both your income statement and balance sheet; however no discussion was provide to address the economic and strategic drivers for this growth or whether the growth can be sustained.
Provision for Loan Losses, page 17
5. Please include a discussion of significant loan charge-offs for the periods presented. For example, we note that you had an $819 thousand single loan charge-off in 2004. Please include details such as the type of loan, loan amount and unique facts and circumstances which contributed to the timing and amount of loan charged-off. Disclose whether you have loans with similar risk and/or industry concentration, as applicable.
Loan Policy, page 28
6. Please revise your discussion to include descriptions of the products comprising each major loan category including but not limited to the underwriting policies and the related risk components.
7. Please revise to explain the reasons for changes in each of the elements and components of the loan loss allowance, specifically addressing the increase of $1.3 million in your total provision for loan losses from 2003 to 2004. Disclose how changes in risks in the portfolio during each period relate to the loan loss allowance established at period-end. Quantify and explain: - how changes in loan concentrations, quality, and terms that occurred during the period are reflected in the allowance, - how changes in estimation methods and assumptions affected the allowance, - how actual changes and expected trends in nonperforming loans affected the allowance, - how the level of your allowance compares with historical net loss experience.
Critical Accounting Policies
Recently Issued Accounting Standards, page 37
8. Please revise to include an accounting policy specifically addressing the impact of other than temporary impairments on your available-for-sale securities. Please refer paragraph 6-19 of EITF Abstracts No. 03-1.
Directors and Executive Officers, page 40
9. Please state what is meant by an audit committee financial expert.
10. Please indicate when the term of each director expires.
11. Please revise the biographical sketches generally to provide more dates to indicate how long current or recent positions have been held.
Employment Agreements, page 46
12. Please provide a complete discussion of all material elements of the employment agreements.
Market Price of and Dividends on the Corporation`s Common Stock and Other Shareholder Matters, page 48
13. Please disclose the amount of funds currently available for distribution as dividends.
Item 10 - Recent Sales of Unregistered Securities, page 49
14. In each case tell us the facts relied on for the exemption claimed.
15. For each mention of Section 3 of the Securities Act of 1933, revise to state what subsection was relied on.
Item 11 - Description of Registrant`s Securities to be Registered, page 50
16. Please delete the qualification in the second sentence of the first paragraph of the discussion of your common stock. While the discussion may not include every detail, it should be a complete discussion of all material aspects.
Item 13 - Financial Statements and Supplementary Data
Notes to Consolidated Financial Statements
Note 1 - page F-7
17. We note that gains on loan sales comprised approximately 60% of total non-interest income and 18% on net income before taxes in 2004. Revise to include an accounting policy specifically discussing how you determine gain or loss on loan sales. As a related matter, please provide us with a discussion detailing how you determined specific gain recognition on the four largest 2004 loan sales you discuss on page 17. Please refer to the appropriate authoritative guidance supporting gain determination and include specific assumptions or models used for each major loan discussed, as appropriate.
Note 12 - page F-18
18. You refer to a two-for-one stock split on December 31, 2003. Include a footnote in Note 1 and revise Note 15 to detail this split and disclose whether or not the relevant portions of your financial statements have been revised.
Note 15 - page F-21
19. Include relevant details regarding your prior public offerings of public shares. Include the month/year, number of shares sold and the price per share. You may opt to include a table or include in a textual presentation.
Signature Page
20. In future amendments, please include the date of signature.
* * * Closing Comments
As appropriate, please amend your registration statement in response to these comments. You may wish to provide us with marked copies of the amendment to expedite our review. Please furnish a cover letter with your amendment that keys your responses to our comments and provides any requested supplemental information. Detailed cover letters greatly facilitate our review. Please understand that we may have additional comments after reviewing your amendment and responses to our comments.
We direct your attention to Rules 460 and 461 regarding requesting acceleration of a registration statement. Please allow adequate time after the filing of any amendment for further review before submitting a request for acceleration. Please provide this request at least two business days in advance of the requested effective date.
We urge all persons who are responsible for the accuracy and adequacy of the disclosure in the filings reviewed by the staff to be certain that they have provided all information investors require for an informed decision. Since the company and its management are in possession of all facts relating to a company`s disclosure, they are responsible for the accuracy and adequacy of the disclosures they have made.
Notwithstanding our comments, in the event the company requests acceleration of the effective date of the pending registration statement, it should furnish a letter, at the time of such request, acknowledging that
* should the Commission or the staff, acting pursuant to delegated authority, declare the filing effective, it does not foreclose the Commission from taking any action with respect to the filing; * the action of the Commission or the staff, acting pursuant to delegated authority, in declaring the filing effective, does not relieve the company from its full responsibility for the adequacy and accuracy of the disclosure in the filing; and * the company may not assert this action as defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States.
In addition, please be advised that the Division of Enforcement has access to all information you provide to the staff of the Division of Corporation Finance in connection with our review of your filing or in response to our comments on your filing.
We will consider a written request for acceleration of the effective date of the registration statement as a confirmation of the fact that those requesting acceleration are aware of their respective responsibilities under the Securities Act of 1933 and the Securities Exchange Act of 1934 as they relate to the proposed public offering of the securities specified in the above registration statement. We will act on the request and, pursuant to delegated authority, grant acceleration of the effective date.
You may contact Paula Smith, Staff Accountant, at (202) 551- 3696 or John Nolan, Accounting Branch Chief, (202) 551-3492 if you have questions regarding comments on the financial statements and related matters. Please contact Gregory Dundas at (202) 551-3436 or me at (202) 551- with any other questions.
Sincerely,
William Friar
Senior Financial Analyst
Show Raw Text
<DOCUMENT>
<TYPE>LETTER
<SEQUENCE>1
<FILENAME>filename1.txt
<TEXT>
May 25, 2005
Mail Stop 0408
By U.S. Mail and Facsimile to (615) 744-5740
Arthur F. Helf
Chairman and Chief Executive Officer
Tennessee Commerce Bancorp, Inc.
381 Mallory Station Road, Suite 207
Franklin, Tennessee 37067
Re: Tennessee Commerce Bancorp, Inc.
Registration Statement on Form 10
Filed April 29, 2005
File No. 0-51281
Dear Mr. Helf:
We have reviewed your filing and have the following
comments.
Where indicated, we think you should revise your document in
response
to these comments. If you disagree, we will consider your
explanation as to why our comment is inapplicable or a revision is
unnecessary. Please be as detailed as necessary in your
explanation.
In some of our comments, we may ask you to provide us with
supplemental information so we may better understand your
disclosure.
After reviewing this information, we may or may not raise
additional
comments.
The purpose of our review process is to assist you in your
compliance with the applicable disclosure requirements and to
enhance
the overall disclosure in your filing. We look forward to working
with you in these respects. We welcome any questions you may have
about our comments or on any other aspect of our review. Feel
free
to call us at the telephone numbers listed at the end of this
letter.
Business, page 1
Market Area and Competition, page 2
1. Please provide disclosure regarding the economic area in which
you
do business. For example, describe the nature of employment in
the
area, give demographic figures, and describe any material changes
in
these factors.
Business, page 4
2. Disclose whether Tennessee Commerce Bancorp has any plans to
conduct any business apart from the activities of the bank.
Management`s Discussion and Analysis
Forward-looking Statements, page 14
3. Please delete all reference to the Private Securities
Litigation
Reform Act. It is inapplicable in this context, because Tennessee
Commerce Bancorp is not currently a reporting company. See
Section
21E(a)(1) of the Exchange Act.
Change in Results of Operations, page 14
4. Please review the guidance in Item 303(b)(1)(iv-vii) of
Regulation
S-B and revise to present an expanded discussion of your financial
condition, changes in financial condition and results of
operations
for each of the reported periods. Provide reasons for changes in
significant line items. Please address the key variables and other
qualitative and quantitative factors necessary to understand and
evaluate your business. For example, we noted the following:
* Your operations experienced double digit growth in all the major
accounts on both your income statement and balance sheet; however
no
discussion was provide to address the economic and strategic
drivers
for this growth or whether the growth can be sustained.
Provision for Loan Losses, page 17
5. Please include a discussion of significant loan charge-offs for
the periods presented. For example, we note that you had an $819
thousand single loan charge-off in 2004. Please include details
such
as the type of loan, loan amount and unique facts and
circumstances
which contributed to the timing and amount of loan charged-off.
Disclose whether you have loans with similar risk and/or industry
concentration, as applicable.
Loan Policy, page 28
6. Please revise your discussion to include descriptions of the
products comprising each major loan category including but not
limited to the underwriting policies and the related risk
components.
7. Please revise to explain the reasons for changes in each of the
elements and components of the loan loss allowance, specifically
addressing the increase of $1.3 million in your total provision
for
loan losses from 2003 to 2004. Disclose how changes in risks in
the
portfolio during each period relate to the loan loss allowance
established at period-end. Quantify and explain:
- how changes in loan concentrations, quality, and terms that
occurred during the period are reflected in the allowance,
- how changes in estimation methods and assumptions affected the
allowance,
- how actual changes and expected trends in nonperforming loans
affected the allowance,
- how the level of your allowance compares with historical net
loss
experience.
Critical Accounting Policies
Recently Issued Accounting Standards, page 37
8. Please revise to include an accounting policy specifically
addressing the impact of other than temporary impairments on your
available-for-sale securities. Please refer paragraph 6-19 of EITF
Abstracts No. 03-1.
Directors and Executive Officers, page 40
9. Please state what is meant by an audit committee financial
expert.
10. Please indicate when the term of each director expires.
11. Please revise the biographical sketches generally to provide
more
dates to indicate how long current or recent positions have been
held.
Employment Agreements, page 46
12. Please provide a complete discussion of all material elements
of
the employment agreements.
Market Price of and Dividends on the Corporation`s Common Stock
and
Other Shareholder Matters, page 48
13. Please disclose the amount of funds currently available for
distribution as dividends.
Item 10 - Recent Sales of Unregistered Securities, page 49
14. In each case tell us the facts relied on for the exemption
claimed.
15. For each mention of Section 3 of the Securities Act of 1933,
revise to state what subsection was relied on.
Item 11 - Description of Registrant`s Securities to be Registered,
page 50
16. Please delete the qualification in the second sentence of the
first paragraph of the discussion of your common stock. While the
discussion may not include every detail, it should be a complete
discussion of all material aspects.
Item 13 - Financial Statements and Supplementary Data
Notes to Consolidated Financial Statements
Note 1 - page F-7
17. We note that gains on loan sales comprised approximately 60%
of
total non-interest income and 18% on net income before taxes in
2004.
Revise to include an accounting policy specifically discussing how
you determine gain or loss on loan sales. As a related matter,
please provide us with a discussion detailing how you determined
specific gain recognition on the four largest 2004 loan sales you
discuss on page 17. Please refer to the appropriate authoritative
guidance supporting gain determination and include specific
assumptions or models used for each major loan discussed, as
appropriate.
Note 12 - page F-18
18. You refer to a two-for-one stock split on December 31, 2003.
Include a footnote in Note 1 and revise Note 15 to detail this
split
and disclose whether or not the relevant portions of your
financial
statements have been revised.
Note 15 - page F-21
19. Include relevant details regarding your prior public offerings
of
public shares. Include the month/year, number of shares sold and
the
price per share. You may opt to include a table or include in a
textual presentation.
Signature Page
20. In future amendments, please include the date of signature.
* * *
Closing Comments
As appropriate, please amend your registration statement in
response to these comments. You may wish to provide us with
marked
copies of the amendment to expedite our review. Please furnish a
cover letter with your amendment that keys your responses to our
comments and provides any requested supplemental information.
Detailed cover letters greatly facilitate our review. Please
understand that we may have additional comments after reviewing
your
amendment and responses to our comments.
We direct your attention to Rules 460 and 461 regarding
requesting acceleration of a registration statement. Please allow
adequate time after the filing of any amendment for further review
before submitting a request for acceleration. Please provide this
request at least two business days in advance of the requested
effective date.
We urge all persons who are responsible for the accuracy and
adequacy of the disclosure in the filings reviewed by the staff to
be
certain that they have provided all information investors require
for
an informed decision. Since the company and its management are in
possession of all facts relating to a company`s disclosure, they
are
responsible for the accuracy and adequacy of the disclosures they
have made.
Notwithstanding our comments, in the event the company
requests
acceleration of the effective date of the pending registration
statement, it should furnish a letter, at the time of such
request,
acknowledging that
* should the Commission or the staff, acting pursuant to delegated
authority, declare the filing effective, it does not foreclose the
Commission from taking any action with respect to the filing;
* the action of the Commission or the staff, acting pursuant to
delegated authority, in declaring the filing effective, does not
relieve the company from its full responsibility for the adequacy
and
accuracy of the disclosure in the filing; and
* the company may not assert this action as defense in any
proceeding
initiated by the Commission or any person under the federal
securities laws of the United States.
In addition, please be advised that the Division of
Enforcement
has access to all information you provide to the staff of the
Division of Corporation Finance in connection with our review of
your
filing or in response to our comments on your filing.
We will consider a written request for acceleration of the
effective date of the registration statement as a confirmation of
the
fact that those requesting acceleration are aware of their
respective
responsibilities under the Securities Act of 1933 and the
Securities
Exchange Act of 1934 as they relate to the proposed public
offering
of the securities specified in the above registration statement.
We
will act on the request and, pursuant to delegated authority,
grant
acceleration of the effective date.
You may contact Paula Smith, Staff Accountant, at (202) 551-
3696 or John Nolan, Accounting Branch Chief, (202) 551-3492 if you
have questions regarding comments on the financial statements and
related matters. Please contact Gregory Dundas at (202) 551-3436
or
me at (202) 551- with any other questions.
Sincerely,
William Friar
Senior Financial Analyst
cc: Mark Miller, Esq.
Baker Donelson Bearman Caldwell & Berkowitz
Commerce Center, Suite 1000
211 Commerce Street
Nashville, Tennessee 37201
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??
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??
Arthur F. Helf
Tennessee Commerce Bancorp, Inc.
May 25, 2005
Page 6
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