January 14, 2005
Mail Stop 0408
By U.S. Mail and Facsimile to (202) 966-9409
Peter D. Griffith
President and Chief Executive Officer
FedFirst Financial Corporation
Donner at Sixth Street
Monessen, Pennsylvania 15062
Re: FedFirst Financial Corporation
Form SB-2 filed December 17, 2004
File No. 333-121405
Dear Mr. Griffith:
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.
General
1. Confirm that you will distribute this prospectus with each
proxy
statement distributed to depositors who will vote on the
conversion.
2. In the next amendment, please include the graphics, maps, any
photographs, and related captions as they will appear in the
prospectus, or provide them to us supplementally.
3. Please note the updating requirements of Item 310 of Regulation
S-
B when filing your amendment.
4. Please include an updated consent from your independent
auditors
when filing your amendment.
Cover Page
5. As required by rule 10b-9 under the 1934 Securities Act,
disclose
here and where appropriate throughout the prospectus that if the
minimum number of shares are not sold by the latest possible
closing
date, all subscribers will receive a prompt refund plus interest.
6. Please disclose the latest possible termination date of the
offering.
Summary - page 1
7. Please include a discussion regarding possible termination of
the
offering.
After-Market Performance of Mutual-to-Stock Information... - page
4
8. It is not clear what is meant in the first paragraph following
the
table by "short-term price performance." We note, for example,
that
the table shows price appreciation for certain stocks for a period
of
approximately three years.
Reason for the Offering - page 6
9. We note that the first listed reason for the offering is to
increase capital. Explain here or elsewhere in the prospectus
whether or not the lack of capital has been or is currently a
problem. We note your past capital ratios and that you are
outside
your 60/40 goal ratio of loans to investments, presumably because
of
the lack of high quality loans to make.
How We Will Use the Proceeds...- page 11
10. Both here and on page 21 you treat the bank like an
unconsolidated unrelated investment. Revise the disclosure to
disclose in the tables how the bank will use the new capital. We
also note the disclosure on page 14 that you are in the process of
identifying a location for a new branch. Please advise us where
you
are in the process and whether or not you have budgeted an amount
for
this new location.
11. We noted that the minimum offering range column of the tables
summarizing the use of proceeds do not foot. Please revise as
necessary. Please make the same change on page 20.
Purchases by Directors and Executive Officers - page 12
12. Please disclose whether insiders` purchases count towards the
minimum necessary to close this offering.
FedFirst Financial Corporation`s Dividend Policy - page 12
13. Please state clearly that the company has not yet determined
whether to pay a dividend, and revise to clarify the distinction
between the policy decision of whether or not to pay a dividend,
and
the factors, such as capital requirements, which may influence the
payment of a dividend.
14. Disclose in this section that you anticipate the FedFirst
Financial MHC will waive any dividends that the bank may pay.
Our Business - page 31
Market Area - page 31
15. Please expand your primary market area information to include
more specific information on the population characteristics of the
counties or areas you serve, including information and trends
relating to population growth or decline, aging and per capita
income, and any other material trends relating to the population.
Commercial Loans - page 40
16. Please provide a discussion regarding loan participations.
Include a discussion of your underwriting policies with respect to
loan participations, and the total value of such loans, and the
value
of all properties securing the loans located outside the bank`s
market area.
Balance Sheet Analysis - page 41
17. Please revise to quantify, if material, the impact of the June
1,
2002 acquisition of Exchange Underwriters, Inc. on your financial
condition as of December 31, 2002.
Provision for Loan Losses - page 51
18. Note the typo in the third line. We assume that should read
$239,000, not $39,000.
Results of Operations for the Years Ended December 31, 2003 and
2002
- - page 52
19. We note your disclosure on page 14 that following completion
of
the offering you intend to invest a greater proportion of your
assets
in loans with the goal of increasing your net interest income. We
also note your disclosure that following the offering your
noninterest expenses are likely to increase as a result of the
additional expenses associated with operating as a public company.
Please revise your MD&A to discuss these items and any other
uncertainties or trends that you anticipate may impact your future
results of operations and financial condition. Refer to Item
303(b)
of Regulation S-B.
20. We note your risk factor discussion on page 15 that you intend
to
use the net proceeds from this offering to increase earnings,
without
assuming undue risk, with the goal of achieving a more competitive
return on equity. Please revise your MD&A to describe your plans
for
improving your profitability and return on equity, including but
not
limited to a description of the types of lending, investment
strategies and sources of funding. Refer to Item 303(b) of
Regulation S-B.
Average Balances and Yields - page 54
21. Please revise to include each of the last three fiscal years.
Refer to General Instruction 3 and Item I.A and B of Industry
Guide
3.
22. Please revise to separately present short and long-term debt.
Refer to Item I.A and B of Industry Guide 3.
Analysis and Determination of the Allowance for Loan Losses - page
59
23. We note your disclosure on page 14 that it is difficult to
assess
the future performance of $75.2 million of loans acquired in 2003.
Please revise to describe this portion of your portfolio and
quantify
the amount as of each period end. Describe how the difficulty in
assessing future performance for this portion of your portfolio
has
impacted your determination of the allowance for the periods
presented.
Liquidity & Capital Management - page 63
24. Please revise to separately quantify the gross cash flows for
originations, purchases, and principal repayments of loans
receivable
for each period presented. Separately quantify the gross cash
flows
for purchases, maturities and prepayments, and sales of available-
for-sale securities for each period presented.
25. Please revise to discuss the following:
* Expected changes in the mix and relative cost of capital
resources;
* The effects of the fourth quarter 2004 balance sheet
restructuring;
and
* Estimated impact of the proposed offering.
Directors` Compensation - page 70
26. Note the cost to the company of the premiums of the life
insurance policies.
Executive Compensation - page 72
27. Please update the information to December 31, 2004.
28. Please confirm that the annual compensation table includes
commissions paid to Mr. Richard Boyer.
How We Determined the Offering Range and the $10.00 Purchase Price
- -
page 88
29. With regard to RP Financial`s valuation report, please revise
to
clarify the procedures followed; the findings and recommendations;
the bases for and methods of arriving such findings and
recommendations. Generally, an investor should be able to clearly
understand the relationship between RP Financial`s analysis in its
report and your offering size. For example, you should disclose
the
price to tangible book value and price to earnings ratios for the
comparable companies in RP Financial`s appraisal as well as for
FedFirst Financial. Also, include a brief narrative as well as a
tabular presentation disclosing a summary of selected pricing
ratios
utilized by RP Financial for the peer group companies and the
resulting pricing ratios for FedFirst on a fully-converted basis.
30. If there has been any material relationship between FedFirst
Financial and RP Financial within the previous two years, please
disclose that relationship.
Change in Accountants - page 106
31. As you have engaged new accountants to audit the financials
included with this Registration statement, please revise to
provide
all of the disclosures required by Item 304 of Regulation S-B,
including filing a letter from your former accountant as Exhibit
16.
32. Please supplementally tell us the nature and timing of the
non-
audit services provided by Parente Randolph, LLC.
33. Please supplementally tell us who reviewed your interim
financial
statements included within this registration statement. In
addition,
please tell us who you have engaged to perform the December 31,
2004
audit.
Where Your Can Find More Information - page 109
34. Please indicate where copies of the appraisal report is
available. We note your statement on page 90.
Consolidated Statement of Income - Page F-3
35. We note your disclosure on page F-6 that although you
accounted
for the acquisition of Exchange Underwriters, Inc. as a purchase,
your consolidated statements of income include the full operations
for the calendar year 2002 with the pre-acquisition earnings shown
as
a reduction to income. Please revise your 2002 financial
statements
and footnotes to only present the revenues and expenses for
Exchange
Underwriters subsequent to the acquisition date. Please similarly
revise your disclosures throughout the filing regarding your 2002
results of operations.
Consolidated Statement of Cash Flows - Page F-5
36. Please revise to separately quantify purchases of mortgage
loans.
Refer to paragraph 21 of SFAS 104.
37. Please supplementally tell us why the cash payments for the
purchase of bank-owned life insurance for the nine months ended
September 30, 2003 were $1 million, when the total cash payments
for
2003 were only $307,303.
Note 1 - Summary of Significant Accounting Policies - General -
page
F-6
38. Please revise to describe your accounting policy for bank
owned
life insurance.
Note 1 - Summary of Significant Accounting Policies - Investment
in
Affordable Housing Projects - page F-10
39. Please revise to describe how you considered whether your
limited
partnership interests in affordable housing projects are variable
interests in variable interest entities. If so, please describe
how
you determined that you did not need to consolidate the variable
interest entities under FIN 46R.
Note 2 - Investment Securities - Page F-17
40. Please revise to disclose the gross realized gains and losses
from sales of available-for-sale securities. Refer to paragraph
21
of SFAS 115.
* * *
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 Benjamin Phippen, Staff Accountant, at (202)
824-2906 or Joyce Sweeney, Senior Accountant at (202) 942-1939 if
you
have questions regarding comments on the financial statements and
related matters. Please contact Gregory Dundas at (202) 942-2932
or
me at (202) 942-2889 with any other questions.
Sincerely,
William Friar
Senior Financial Analyst
cc: Paul M. Aguggia, Esq.
Aaron M. Kaslow, Esq.
Muldoon Murphy Faucette & Aguggia LLP
5101 Wisconsin Avenue, N.W.
Washington, D.C. 20016
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FedFirst Financial Corporation
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