Company Name: First Commerce of America, Inc.
Public Availability Date: 09-30-1991
INQUIRY LETTER 1MILLER, NASH, WIENER, HAGER & CARLSEN
3500 U.S. BANCORP TOWER,
111 S.W. FIFTH AVENUE
PORTLAND, OREGON 97204-3699
TELEPHONE (503) 224-5858 May 23, 1991 Act Section Rule
1933 3(a)(11) 147 Office of the Chief Counsel
Division of Corporation Finance
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549-1004 Subject: First Commerce of America, Inc. Gentlemen: We represent First Commerce of America, Inc. ("First Commerce"), an Oregon
corporation with its sole office located in Portland, Oregon. First Commerce
proposes to offer and sell debt instruments to investors in Oregon (the
"Offering") in reliance upon the exemption from the registration requirements of
the Securities Act of 1933, as amended (the "Act"), provided by Section 3(a)(11)
of the Act and Rule 147 ("Rule 147") promulgated thereunder. We respectfully request that the Division of Corporation Finance confirm, on the
basis of the information supplied below, that First Commerce will be doing
business within the state of Oregon within the meaning of Rule 147(c)(2) and
that the Division will not recommend enforcement action to the Commission with
respect to the Offering, assuming that all other requirements of Rule 147 are
met. Factual Background First Commerce was incorporated under the laws of the state of Oregon in July
1985. Since that time its business offices have been located in Portland,
Oregon. First Commerce is a wholly-owned subsidiary of Berg Capital Corporation,
an Oregon corporation ("Berg Capital"), owned by Arthur H. Berg and his spouse,
both Oregon residents. First Commerce has no subsidiaries, but Berg Capital owns
three other corporations, which are Commerce has no subsidiaries, but Berg
Capital owns three other corporations, which are engaged in the businesses of
the ownership and management of commercial real estate, the wholesale
distribution of residential and commercial door hardware, and pipe, irrigation,
hardware and industrial surplus sales, respectively. All of the proceeds of the
Offering will be used solely by First Commerce; no proceeds will be transferred
in any manner to the other subsidiaries of Berg Capital. Although originally founded and operated as a small business and commercial
insurance premium loan company, First Commerce has since 1987 engaged in the
business of purchasing loan portfolios and servicing the purchased loans. This
now constitutes the sole business of First Commerce. The loans that it holds and
services have been acquired in portfolios containing from less than 10 to more
than 400 loans; the average number of loans in First Commerce's current
portfolios is 138. First Commerce has purchased 21 loan portfolios since 1987;
it currently holds 16 loan portfolios. Nine of First Commerce's current loan portfolios were purchased from the Federal
Deposit Insurance Corporation ("FDIC"), three from the Resolution Trust
Corporation ("RTC"), and the other four from banks, mortgage companies, or
finance companies. First Commerce has acquired the majority of its loan
portfolios through a bid process. Prior to bidding, its loan acquisition team
visits the financial institution which originated the loans to conduct a due
diligence review. The majority of First Commerce's portfolios have been acquired
from or through financial institutions located outside the state of Oregon. The principal balances of the portfolios held by First Commerce totaled
approximately $8.6 million as of March 31, 1991. Most of the loans are due from
borrowers residing in states other than Oregon. First Commerce deals with such
borrowers primarily by mail or telephone. At March 31, 1991, approximately 20%
of the aggregate principal balances of the loans was secured by real property,
60% was secured by motor vehicles, 10% was secured by collateral other than real
property and motor vehicles, and 10% was unsecured. First Commerce intends to continue to engage in the business of purchasing loan
portfolios and servicing the loans. It is anticipated that the majority of loans
will be acquired from the FDIC or RTC. The proceeds of the Offering will be used
for such purpose. First Commerce does not intend to make loans directly to
borrowers or to purchase individual loans. Discussion It is our opinion that First Commerce is doing business in the state of Oregon
within the meaning of Rule 147(c)(2). The business of First Commerce is
conducted in Portland, Oregon, where its offices are located. Upon purchase,
each loan package and all documentation are transmitted to the Oregon offices.
The administrative staff then notifies each borrower of the new ownership of the
loans, transmits new loan payment coupon books, if necessary, and logs each loan
into First Commerce's accounting system. A loan officer in Oregon monitors the
performance of each loan. Loan payments are directed to First Commerce's offices
in Oregon. Virtually all accounting and loan servicing is performed at First
Commerce's Oregon offices. Since the business of First Commerce is conducted at its offices in Oregon,
First Commerce will thus derive all of its gross revenues from a business
carried on within Oregon. The principal assets of First Commerce consist of
loan-based accounts receivable. Since these assets are personal property, they
are, as a matter of Oregon law, located in the state of Oregon. First Commerce
intends to use all of the proceeds of the Offering to purchase loan-based
accounts receivable to be held and serviced in Oregon. We believe that our conclusion that First Commerce is doing business in Oregon
pursuant to the requirements of Rule 147(c)(2) is supported by no-action letters
relating to these requirements which have been publicly released by the
Commission. See Eastern Leasing Corporation (May 21, 1979) (lease receivables
deemed to be assets held within issuer's state and revenues received from
out-of-state lessees deemed to be revenues derived from business conducted
within issuer's state); Richard G. Wollack and Bryon S. Randolph (December 30,
1981) (limited partnership in the business of investing in units of unaffiliated
limited partnerships would qualify for the Rule 147 exemption from registration
even if the other limited partnerships were organized under, and held real
property in, states other than the state of the issuer); Insurance Finance
Company (October 18, 1974) (issuer in the insurance premium financing business
would qualify under Rule 147(c)(2) as doing business within its state even
though more than 20% of its accounts receivable related to individuals located
outside of the issuer's state); Provident Credit Corporation (November 6, 1975)
(issuer engaged in the business of making consumer automobile loans qualified
under Rule 147 even though 50% of its loans were made to persons resident
outside of the issuer's state of incorporation). On the basis of the foregoing, we request confirmation that First Commerce will
be deemed to be doing business within the state of Oregon and that no
enforcement action will be recommended if First Commerce engages in the Offering
without registration under the Act for the purpose of purchasing loans to be
held and serviced in Oregon as described above, assuming all other requirements
of Rule 147 are met.
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