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WRITER’S
DIRECT DIAL NUMBER
(202)
274-2008
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WRITER’S
EMAIL
aschick@luselaw.com
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| RE: |
FSB
Community Bankshares, Inc., Amendment No. 1 to Registration
Statement
on Form SB-2 File No. 333-141380
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1.
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Provide
us with copies of all marketing materials. Upon review, we may have
comments.
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The
Company’s proposed marketing materials are included as Exhibits 99.6 and
99.7 to the Amended Form SB-2.
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| 2. |
Expand
the statement in the first paragraph regarding your intention to
have your
stock quoted on the OTC Bulletin Board to disclose the statement
you make
on pages 16 and 23 that you do not expect an active and liquid trading
market to develop. Also expand the disclosure on page 35 to include
this
disclosure.
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3.
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Reorder
the sections of your Summary so that the substantive disclosures
on the
company and the value of the offered stock to potential purchasers
appear
before the procedural disclosures on pages 13-15 concerning participating
in the offering.
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4.
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Please
include the registrant's website address in the
Summary.
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| 5. |
Clarify
why you chose to make the offering at this
time.
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| 6. |
Expand
your reasons to be more specific. For example, specify your plans
for
expanding your branch network and, if there are particular products
and
services you plan to enhance or begin to offer, so
state.
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7.
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Please
expand to be more specific and substantive in your summary of the
valuation and to clarify the aspects of your financial condition
and
results of operations that RP Financial considered most notable in
determining the value of FSB Community Bankshares and Fairport Savings
Bank. We note in the Valuation Report that RP Financial took many
downward
adjustments for elements of financial condition and for elements
of
profitability, growth and viability of earnings. Please briefly describe
specific aspects of the valuation that factored into the pricing
of this
offering. Provide corresponding and expanded disclosure in the main
section beginning on page
122.
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The
disclosure on pages 5 through 7 and 130 through 131 of the prospectus
has
been supplemented in response to the
comment.
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| 8. |
Move
the disclosure on the consequent reduction in earnings and possible
dilution appearing on pages 11-13 to appear before the four paragraphs
on
OTS regulations.
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9.
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Quantify
the estimated dollar amounts involved for the various uses of the
proceeds
to be distributed to Fairport Savings Bank, to the extent practicable.
Provide a timetable for the mentioned opening of new branches, expansion
of its banking franchise and acquisition plans. If the type of products
or
loans originated will change, discuss how. As your plans for use
of
proceeds solidify, please update the disclosure pursuant to Item
504 of
Regulation S-B both here and in the summary. Please make corresponding
changes in the main
section.
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The
disclosure on page 15 of the prospectus has been revised in order
to
clarify that currently we have not allocated the dollar amounts for
the
various uses of the net proceeds from the opening. The Company has
no
plans to change the types of products or loans offered as a result
of the
completion of the offering, and we hereby confirm to the staff that
we
will update the prospectus pursuant to Item 504 of Regulation S-B
should
the use of proceeds change or become more specific prior to the effective
date of the Form SB-2.
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10.
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Please
limit the background disclosure to just enough information to set
the risk
in context and state the risk near the top of the risk factor disclosure.
You may provide a cross reference to related disclosure elsewhere
in the
document.
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The
disclosure on page 21
of the prospectus has been revised in response to the
comment.
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| 11. |
Revise
the heading to relate the risk more specifically to your business.
As
written, the heading could apply to any business. For example, reference
that because all your loans are on real estate in the Rochester market,
a
downturn in that market would affect the repayment of your
loans.
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12.
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The
staff notes that the allowance for loan losses as a percent of
non-performing loans for the year ended December 31, 2005 is presented
as
827.50%. This disclosure appears to be inconsistent with the disclosure
appearing in the table of non-performing assets on page 74 as well
as the
disclosure appearing on F-16 (Note 3 - Loans) which states that the
bank
had nonaccrual loans of $70,000 at December 31, 2005. Please revise
the
disclosure throughout the filing, as
applicable.
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The
disclosure on pages 31, 77 and 80 of the prospectus has been revised
in
response to the comment.
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13.
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Please
expand the headnote to disclose the assumptions used in the tabular
presentation. Your reference to other assumptions set forth under
“Pro
Forma Data” is not clear to the
reader.
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14.
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We
noted your reference in note 7 which states that shareholders’ equity
equals GAAP capital. Please revise your disclosure to state that
this is
true based on the company's historical consolidated capitalization
at
December 31, 2006. Pro Forma total shareholders' equity is calculated
based upon the sale of the number of shares of common stock indicated
and
the assumptions stated in the headnote regarding the presentation
of pro
forma consolidated
capitalization.
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The
disclosure in note 7 on page 45 of the prospectus has been revised
in
response to the comment.
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15.
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We
noted your reference in note 8 which states that you issued 100 shares
of
common: stock to FSB Community Bankshares, MHC in connection with
the
mutual holding company reorganization in 2005. Please expand the
disclosure here and throughout the filing to state if these shares
will
continue to be considered outstanding after giving effect to the
stock
offering.
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The
disclosure on page 45 of the prospectus has been revised to clarify
that
the 100 shares of common stock currently outstanding will continue
to be
outstanding following the stock
offering.
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16.
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Please
expand the assumptions to state the amount of shares to be sold to
directors, executive officers and their associates. In addition,
state
that no fee will be paid with respect to shares purchased by the
ESOP,
directors, executive officers and
associates.
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We
note the staff’s comment and, as discussed with the staff telephonically,
respectfully submit that the current disclosure does not require
revision
as the amount of shares to be purchased by the employee stock ownership
plan and the insiders was not an assumption in preparing the pro
forma
valuation of the Company.
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17.
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Please
expand the disclosure to state which properties are owned vs. leased.
We
noted the disclosure on F-17 (Note 4 - Premises and Equipment) indicating
the Penfield and Irondequoit branches are leased
premises.
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The
disclosure on page 87 of the prospectus has been revised in response
to
the comment.
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18.
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We
note the disclosure here states the plan allows employees to contribute
from 1% to 100% of their annual salary subject to statutory limitations.
This disclosure appears inconsistent with the disclosure presented
on F-22
(Note 8 - Retirement Plans) which states that the plan allows employees
to
contribute 1% to 25% of their annual salary. Please reconcile the
disclosure or advise.
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The
disclosure on page F-22 (Note 8 - Retirement Plans) of the prospectus
has
been revised in response to the
comment.
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19.
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Please
expand your disclosure to state if Mengel, Metzger, Barr & Company
LLP, resigned, declined to stand for re-election or was dismissed
and the
date thereof. In addition, state whether the decision to change
accountants was recommended or approved by the board of directors
or an
audit committee of the board of directors. Refer to Item 304 (a)(1)(i
& iii).
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The
disclosure on page 141 of the prospectus has been revised in response
to
the comment.
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20.
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As
a result of the comment above, please provide a revised letter (i.e.
Exhibit 16 letter) from your former
accountants.
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A
revised letter from the Company’s former accountants is being filed as
Exhibit 16 to the Amended Form
SB-2.
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21.
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Please
note the updating requirements of Item 310(g) of Regulation S-B,
if
applicable and provide an updated consent in any
amendment.
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We
note the staff’s comment. An updated independent auditors’ consent is
being filed as Exhibit 23.2 to the Amended Form SB-2.
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22.
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We
note your disclosure appearing on page 65 which states that during
2006,
the company sold $1.2 million in loans. In addition, we note that
you
present the proceeds from sales of loans as investing activities.
Please
tell us the basis for your presentation as an investing activity
versus an
operating activity. Refer to SFAS 102 paragraph 9 and revise as
necessary.
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Historically,
the sale of loans by the Bank has represented a small percentage
of its
total loan portfolio. Loan sales during 2006 and 2005 represented
approximately 0.98% and 0.26% of net loans at December 31, 2006 and
2005,
respectively. The Bank does not originate any loans specifically
for the
purpose of being sold. More recently, based on market conditions
and in an
effort to mitigate interest rate risk, the Bank has occasionally
sold a
loan(s). Since loans are not originated for the purpose of being
sold, the
cash flows from the sale of such loans has been classified as an
investing
activity in the 2006 and 2005 consolidated statements of cash flows
in
accordance with paragraph 9 of SFAS
102.
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The
Company hereby acknowledges that:
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| · |
the
Company is responsible for the adequacy and accuracy of the disclosure
in
the filing;
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| · |
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
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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.
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Very
truly yours,
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/s/
Alan Schick
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Alan
Schick
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| cc: |
Dana
C. Gavenda, President and
Chief Executive Officer
Gary
Jeffers, Esq., OTS-Washington, D.C.
Ms.
Lane Langford, OTS - Washington, D.C.
Mr.
Roger Smith, OTS-Washington, D.C.
Eric
Luse, Esq.
Steven
Lanter, Esq.
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