January 14, 2005
Mail Stop 0408
By U.S. Mail and facsimile to (614) 761-2909
Mr. Robert W. Hughes
OC Financial, Inc.
6033 Perimeter Drive
Dublin, OH 43017
Re: OC Financial, Inc.
Form SB-2 filed December 17, 2004
File No. 333-121411
Dear Mr. Hughes:
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 any other aspect of our review. Feel free
to
call us at the telephone numbers listed at the end of this letter.
General
1. Please include an updated consent of the independent auditors
in
the pre-effective amendment.
2. Please note the updating requirements of Item 3-10(g) of
Regulation S-B.
3. We note the "form of" exhibits as well as exhibits to be filed
in
the future. Please file all executed and final exhibits,
including
opinions, with the next amendment, if possible. They are subject
to
review, and the staff will need time for that review.
Front Cover of Prospectus
4. Confirm that the outside front cover page of the prospectus
will
be one page. Refer to Item 501(a) of Regulation S-B.
5. Please knockdown the all capital letter legends and use bold-
face
type to highlight this disclosure.
About the Prospectus - page i
Please delete this section and revise the document to make clear
from
context all references.6.
Summary
General
7. We note your summary contains much detail and often repeats
more
detailed information found in other sections of the prospectus.
For
example, the Ohio Central Savings disclosure on page 1, how you
may
purchase shares of common stock beginning on page 9, and the
business
strategy disclosure beginning on page 3. Please consult Item 503
of
Regulation S-B and revise your summary to serve as a brief
overview
of the key aspects of the offering. If you feel more detail is
needed, consider referring investors to specific sections where
they
can read more about each topic.
How We Intend To Use the Proceeds - page 10
8. Please compare the information in this first paragraph
regarding
the distribution of proceeds between OC Financial and Ohio Central
Savings with the information in the first paragraph of the section
entitled "Business of OC Financial" on page 50. These two
paragraphs
appear to conflict with one another.
Risk Factors
General
9. In each risk factor, get to the risk as quickly as possible and
provide only enough detail to place the risk in context. Please
review all risk factors and revise accordingly. For example, but
not
necessarily limited to, risk factors 2, 6 and 7.
10. Much of the risk factor disclosure is included elsewhere in
the
prospectus. For example, the disclosure in risk factor 6
regarding
the OTC Bulletin Board is repeated on page 29 in the "Market for
the
Common Stock" section. Where you repeat later in the prospectus
the
details you currently include in your risk factors section,
eliminate
the extensive detail here. Instead, include a very brief overview
to
place the risk in context and provide a specific cross reference
to
the more detailed discussion elsewhere in the prospectus. See
Item
503(a) of Regulation S-B.
Several risk factors appear only to be statements about OC
Financial
and Ohio Central Savings rather than risks. Revise your risk
factor
subheadings so they succinctly reflect the risk that follows. 11.
12. Generally, many of your risk factors state that you "cannot
assure" a specific outcome when the true risk is not your
inability
to give assurance, but the situation being described. Please
revise
to remove all similar language from Risk Factors.
We Will Use a Third Party to Originate One to Four Family
Residential
Loans - page 17
13. Please revise the Business section to provide an expanded
discussion of your agreement with the third party originator, to
include the nature and terms of any written agreement or the
absence
of such an agreement.
We Have Relied on Third Federal for the Past Three Years to
Provide
Several of Our Operational Needs - page 17
14. Please revise here and in the footnotes to the financial
statements to clarify how you considered SAB Topic 1:B in
preparing
the financial statements and related disclosures.
Reliance on Chief Executive Officer- page 17
15. Consider disclosing in this section Mr. Hughes` employment and
non-compete agreement and the risk of violation.
The Implementation of Stock-Based Benefit Plans - page 21
16. Please revise your disclosure to clarify how recently issued
SFAS
No. 123R will impact operations. Similarly revise the Recent
Accounting Standards sections throughout the document.
Capitalization - page 32
17. Please refer to the as adjusted column at September 30, 2004.
This column should reflect activity and transactions that have
happened or are probable of occurring subsequent to the balance
sheet
date and that are not a result of the conversion and
recapitalization. Please revise to present the redemption of Ohio
Central shares held by Third Financial within each of the pro
forma
capitalization columns, with appropriate cross reference to the
current footnote 5.
Management`s Discussion and Analysis of Financial Condition and
Plan
of Operations
General
18. Please move the "Results of Operations" disclosure to the
forepart of the MD&A section. To facilitate investor
comprehension,
consider adding a tabular presentation of material line items
similar
to an Item 301 table.
19. Please move the "Critical Accounting Policies" disclosure to
the
back of this section.
General - page 37
20. We note from you disclosures that you will discontinue
originations and sales of loans to Third Federal. Please revise
the
MD&A section to provide a separately headed section that discusses
the future trends of this decision on operations, including a
tabular
presentation quantifying the effects of these sales, and the
related
servicing income, on operations in each period presented.
21. Please revise to provide a discussion of the anticipated
effects
of the stock-based benefit plans on future operations, including
the
periods to be effected, the accounting policies related to these
plans and their terms.
22. In this section, please add a bold faced type cross reference
directing the reader to the specific page where the Critical
Accounting Policies` disclosure starts.
Critical Accounting Policies - page 37
23. Please revise to provide an expanded discussion your critical
accounting policies. Also, revise to clarify why you do not
consider
the significant estimates required to record income taxes as
critical
or address your tax policies in this section. Refer to Section V
of
Release Nos. 33-8350/34-48960 and revise this section to address
the
following for you each critical accounting policy:
* Specifically identify why each policy is considered critical by
management.
* Discuss why you could have selected estimates in the current
period
that would have had a materially different impact on your
financial
presentation.
* Discuss why your accounting estimates bear the risk of change
and
describe the potential impact on your financial statements.
* Discuss how accurate your estimates and assumptions have been in
the past and how much they have changed in the past.
* Include quantitative disclosure of your sensitivity to change
based
on other outcomes that are reasonably likely to occur and that
would
have a material effect on the company.
Business Strategy - page 38
24. We note that "AutoARMtm has not generated any earnings as of
September 30, 2004." Please add disclosure here and in the
Business
section detailing AutoARMtm`s operations, results, and expected
development over the next 12-24 months.
Comparison of Results of Operations for the Years Ended September
30,
2004 and 2003 - page 40
25. Please revise to provide expanded discussions of your non-
interest income and expenses, including the changes between period
of
material line items and related trends on future operating
results.
Your current discussions appear overly abbreviated.
Asset/Liability Management - page 44
26. Please revise to include a cumulative gap analysis. This
measure, which is standard in your industry, provides meaningful
information and enhances comparability between institutions.
27. You disclose that management monitors the effects on net
interest
income resulting from increases or decreases in interest rates and
that your level of interest rate risk is acceptable under this
approach. Please revise to disclose the interest rate risk you
have
calculated under your model, what interest rate risk(s) management
has determined are acceptable and why management believes they are
acceptable. Also, discuss the model in more detail.
Loan Portfolio Composition - page 53
28. Industry Guide 3 loan disclosures should only include
portfolio
loans. Please revise throughout the document to exclude loans
held
for sale from these presentations.
29. Please revise the loan maturity and pricing information to
conform to Item III.B of Industry Guide 3, which requires pricing
information for loans due after one year.
Delinquent Loans, Other Real Estate Owned and Classified Assets -
page 61
30. Please revise within this section and the Business section, as
appropriate, to discuss the repossession of automobiles, including
how you account for repossessions and the subsequent disposition
of
these assets.
Lending Activities - page 63
31. Please revise to include the disclosures required by Item
III.C.2
of Industry Guide 3.
Securities Activities - page 66
32. Please revise to provide an expanded discussion of the
significant increase in held to maturity investments, clarifying
how
in the current rate environment management determined that holding
MBS`s to maturity makes sound business sense. MBS`s are typically
held for liquidity reasons and are rate sensitive in a rising rate
environment.
Business of Ohio Central Savings
Subsidiary Activities - page 72
33. Please provide more detail with regard to the operating
activities of AutoARMtm. Refer to comment 23.
Legal Proceedings - page 72
34. Please revise here and in the footnotes to the financial
statements to disclose managements` assessment of threatened and
pending litigation on your cash flows.
Management of OC Financial
Transactions with Certain Related Parties - page 88
35. Please confirm that the executive officers and directors who
have
outstanding loans from Ohio Central Savings fall within an
exception
of Item 404 of Regulation S-B and, therefore, specific disclosure
of
their transactions is not required.
The Conversion and Reorganization
Material Income Tax Consequences - page 110
36. Clarify the tax opinion disclosure by deleting the assumption
in
point 6. Counsel cannot assume the conclusion. Revise the
disclosure and opinion accordingly.
Restrictions on Acquisition of OC Financial
Authorized but Unissued Shares - page 113
37. In this paragraph, you discuss OC Financial`s Board of
Directors`
ability to increase or decrease the aggregate number of shares
without action by the stockholders. Please consider including
this
dilution information as its own risk factor or including it in the
existing anti-takeover risk factor.
Annual Report
General
38. Please revise the table of contents to the financial
statements
to disclose why the financial statements in this registration
statement are not those of the registrant.
39. Please revise the face of the consolidated balance sheets to
reference your commitments and contingencies as disclosed in Note
11
to the financial statements. Refer to Rule 9-03.17 of Article 9
of
Regulation S-X.
Note 1 - Summary of Significant Accounting Policies
Loans - page F-8
40. Please revise to disclose the method used to recognize
deferred
fees and costs.
Premises and Equipment - page F-8
41. Please revise to disclose the range of depreciable lives for
each
major asset category.
Note 8 - Loan Sales and Servicing Activities - page F-14
42. Please revise to disclose how you determined that servicing
assets are immaterial to the financial statements taken as a whole
under SFAS No. 140 and supplementally provide us your SAB Topic
1:M
analysis. We note the significant contribution of servicing
income
to your pre-tax income.
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 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 a 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.
We direct your attention to Rules 460 and 461 regarding
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.
You may contact Isa Farhat at (202) 824-5418 or Paul Cline
at
(202) 942-1782 if you have questions regarding comments on the
financial statements and related matters. Please contact Kathryn
McHale at (202) 824-5538 or me at (202) 942-1779 with any other
questions.
Sincerely,
Barry McCarty
Senior Counsel
cc: Richard Garabedian, Esq.
Luse Gorman Pomerenk & Schick, P.C.
5335 Wisconsin Avenue, N.W., Suite 400
Washington, D.C. 20015
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OC Financial, Inc.
Mr. Robert Hughes
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