November 18, 2004
Mail Stop 0408
By U.S. Mail and facsimile to (202) 966-9409.
Tony D. Whitaker
Chief Executive Officer
Kentucky First Federal Bancorp
479 Main Street
Hazard, KY 41702
Re: Kentucky First Federal Bancorp
Form S-1 amended November 4, 2004
File No. 333-119041
Frankfort First
Proxy Statement filed September 16, 2004
Form 10-K for Fiscal Year ended June 30, 2004
File No. 0-26360
Dear Mr. Whitaker:
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.
Registration Statement on Form S-1 for Kentucky First Bancorp.
Cover Page
1. We note your response to prior comment 3. However, the cover
page
continues to refer to "certain depositors," rather than to mention
the distinct classes of depositors and borrowers of First Federal
of
Hazard who will have subscription rights and the respective
priority
of those subscription rights. Consequently, we reissue prior
comment
3.
2. Noting your response to prior comments 1 and 2, please clarify
that if Frankfort First shareholders elect to receive less than
the
full 45% to 49% of the total number of shares that Kentucky first
will issue during the conversion, then the amount that must be
purchased in the subscription offering or community offering would
increase. Also, please clarify that if Frankfort First
shareholders
fail to approve the merger, then the offering will terminate.
Summary - page 1
3. We note your response to prior comment 8. Please revise the
tabular presentation on page 1 to clarify that the 45% public
ownership will include both former depositors of First Federal of
Hazard and shareholders of Frankfort First.
How We Determined the Offering Range - page 6
4. We note your response to prior comment 9 and the proposed
disclosure emailed to the Staff on November 8, 2004. The
information
included in that response did not provide the staff with the
information requested. Consequently, please provide the staff
with
the following information:
* The calculations and assumptions that Keller and Company used to
convert the valuation of Kentucky First from a "fully converted"
basis to an "as converted" basis.
* An explanation of the reason for the discount on the valuation
of
Kentucky First`s shares on a fully converted basis compared to the
valuation of the peer group.
Furthermore, revise the disclosure to identify specific reasons
that
Keller identified to increase or decrease the valuation and also
identify the reason for any other discount, including a new issue
discount. The investor should be able to understand how the fair
market value of the company compares to the selected peers and
also
identify the reason for any difference.
5. We note the disclosure at the beginning of this section that
the
offering price was based upon the "estimated fair market value."
However, in the following paragraph, you state that the appraisal
"does not indicate market value." Please advise the staff, with a
view towards improved disclosure, what the appraiser means by fair
market value. We note, as disclosed later in this section, on
page
8, and in the appraisal, that the price in the trading market has
resulted in significant appreciation over both the short and
intermediate term. Clarify how the appraiser factors the typical
20%
one-day "pop" into the "fair market value." Please clarify the
particular time period that your implied "market value" is
intended
to result in pricing similar to that of the peer group. Finally,
please advise the staff the extent to which the appraiser
considered
the valuation of the most recent conversion-merger, New Alliance,
in
reaching its valuation.
6. Please expand the tabular presentation of the price "pop"
information to note the cumulative appreciation as of a recent
date.
Use of Proceeds - page 37
7. We note your revised disclosure on pages 15, 16 and 37 in
response
to prior comment 24. However, your revised disclosure continues
to
obscure the fact that at the minimum offering level, it appears
that
the proceeds alone would not be sufficient to cover the cost of
the
merger. This section, and related disclosure elsewhere in the
document, must make the true cost of the transaction clear.
Consequently, we reissue prior comment 24.
Pro Forma Data - page 45
8. Refer to prior comment 31. We are unable to locate a
discussion
clarifying all assumptions about the cash vs. stock election and
any
limits on cash. Please revise to include this discussion in the
introduction of the Pro Forma Data.
9. Please revise the consideration paid for outstanding shares
presented in footnote 3 on pages 47, 49 and 51 to read $29,765.
It
currently reads $29,675.
10. Refer to prior comment 37. Please supplementally provide us
your
core deposit intangible study. If you do not have one, please
tell
us how you determined the cost of funds associated with Frankfort
First deposits is higher than alternative sources of funding in
the
market place. In your response, address the effect on estimated
cost
of funds of your replacing a significant portion of the combined
funding. We are concerned that replacing a large amount of core
deposits would cause an increase in the market`s pricing of funds
to
the combined companies.
11. Refer to prior comment 38. Please supplementally provide us
with
your calculation of the fair value of the FHLB advances.
Loan Commitments - page 64
12. We note your response to prior comment 45. Please revise your
financial statements to present the allowance relevant to loan
commitments separate from your allowance for loan losses. Refer
to
paragraph 8e of SOP 01-6.
Management`s Discussion and Analysis - page 80
Critical Accounting Policies - Page 81
13. We note your discussion of the economic climate and its
stability
and expected improvement. Please revise to expand your discussion
of
assumptions that are more susceptible to change. In this regard,
if
it is management`s view that the economic climate is stable and
improving consider adding sensitivity analysis of other factors
that
are susceptible to changes that are reasonably likely to occur.
Operating Strategy - page 81
14. We note your response to prior comment 50 and the revised
disclosure in this section. However, we are not able to find any
meaningful discussion of how the combined companies will operate.
We
note that in the Summary and elsewhere there are brief mentions of
the intention of restructuring the balance sheets of the two
institutions by selling loans from Frankfort to Hazard. The
Management`s Discussion presents you with the opportunity to
expand
upon management`s pans for the combined entities. Therefore, we
reissue prior comment 50.
Impact of Recent Accounting Pronouncements - page 111
15. The effective date for the measurement and recognition
guidance
contained in paragraphs 10-20 of Issue 03-1 has been delayed.
Refer
to FSP No. EITF Issue 03-1-1. Please revise your discussion
accordingly.
Index to Financial Statements - page 172
16. Refer to prior comment 60. Despite that Kentucky First has
engaged only in organizational activities, they are acquiring a
business for which financial statements are required to be
included
and therefore financial statements of Kentucky First may not be
omitted. Please revise to include an audited balance sheet of
Kentucky First as of a date less than 135 days before the initial
filing date of the registration statement.
17. Please update the financial statements as necessary to comply
with Rule 3-12 of Regulation S-X prior to the effective date of
the
registration statement.
Financial Statements of First Federal of Hazard
Note B - Investment and Mortgage-backed Securities - page F-17
18. Refer to prior comment 63. Your current disclosure that
management has the intent and ability to hold securities that are
in
an unrealized loss position for the foreseeable future is unclear.
Please revise to clarify whether management has the intent and
ability to hold these securities until their fair values recover.
Financial Statements of Frankfort First Bancorp - page F-28
19. Please supplementally provide us with Frankfort First
Bancorp`s
calculation of the fair value of their FHLB advances as of June
30,
2004 as disclosed in note A-10 of their consolidated financial
statements.
Exhibit 2.1 - Agreement of Merger
20. Please provide Schedules 4.7 and 4.13.
Exhibit 8.1 - Tax Opinion of Muldoon Murphy Faucette & Aguggia
21. We note your response to prior comment 72 and are unable to
agree
with your analysis. The fact that your opinion ceases to be valid
based upon a future event is insufficient to meet the requirement
of
Item 601(b)(8), since the opinion fails to opine as to the tax
consequences. Either revise the opinion to clarify that the
shareholders who receive shares will not be taxed. Alternatively,
please confirm that the company will resolicit the votes of
Frankfort
First shareholders in the event that the company no longer has an
effective tax opinion and revise the proxy to disclose the
provision.
Proxy Statement of Frankfort Federal
Tax Consequences of the Merger - page P-7
22. We note your response to prior comment 76. To the extent that
your counsel continues to retain the 40% threshold, please
disclose
the number of shares, assuming no change in the offering amount
that
must be exchanged in order to exceed the limit.
Opinion of Frankfort First`s Financial Advisor - page P-57
23. Please advise the staff, with a view towards improving the
disclosure, how the tabular presentation "high and low" valuations
relate to the various forms of analysis discussed on the following
pages.
24. We note that Howe Barnes received financial projections from
First Federal of Hazard`s management. Please disclose the nature
of
the information that Howe Barnes received and disclose the
projections that the advisor received.
Material Federal Income Tax Consequences of the Merger - page P-51
25. To the extent that your counsel retains the 40% provision,
please
include a full discussion of the reason for the 40% threshold.
Also,
please disclose the minimum number of shares that must be
exchanged
in order to exceed the 40% threshold.
Recommendation of Frankfort First Board - page P-54
26. Please confirm that no specific acquisition targets were
discussed when the board considered "strategic alternatives."
* * *
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.
You may contact Heidi Berg, Staff Accountant, at (202) 824-
5463
or Donald Walker, Senior Assistant Chief Accountant, at (202) 942-
1799 if you have questions regarding comments on the financial
statements and related matters. You may contact Christian
Windsor,
Staff Attorney, at (202) 942-1974 or me at (202) 942-1779 any
other
questions regarding this review.
Sincerely,
Barry McCarty
Senior Counsel
cc: Via US MAIL AND FACSIMILE: (202) 966-9409
Gary R. Bronstein, Esquire
Joel E. Rappoport, Esquire
Muldoon Murphy Faucette & Aguggia LLP
5101 Wisconsin Avenue, N.W.
Washington, D.C. 20016
(202) 362-0840
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Kentucky First Federal Bancorp
Tony D. Whitaker, CEO
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