20549-0408
April 15, 2005
Gary Ocepek
President
Ottawa Savings Bancorp, Inc
925 LaSalle Street
Ottawa, Illinois 61350
Re: Ottawa Savings Bancorp, Inc.
Form SB-2, filed March 18, 2005
File Number 333-123455
Dear Mr. Ocepek:
We have reviewed your Form SB-2 and have the following
comments. Where indicated, we think you should revise your
documents
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 have
additional
comments.
Please understand that 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.
Form SB-2
Summary - page1
1. Where appropriate in the summary disclose that virtually all of
the company`s provision for loan losses for 2003 and 2004 relate
to
the $9.3 CLC loss first discussed in the risk factor bridging
pages
20 and 21. Clarify that absent these provisions the company would
have been profitable in both years.
Ottawa Savings Bank - page 2
2. Disclose that you only have one branch
3. Where appropriate in the summary, and in more detail in the
body
of the text, describe the local economy in which you do business.
Include state figures relative to those of the local economy,
describe any trends and discuss the underlying reasons for this
situation. We note the related information in the appraisal.
How We Determined to Offer... - page 6
4. Disclose which mutual holding company`s are included in the
reference group for the table on page 6. Also, include whether
the
figures for these companies and the registrant are on a fully
converted basis or not.
Ottawa Savings Bank Foundation - page 8
5. Please give examples of the size and type of disbursements the
foundation will make. Also, indicate if correct that you do not
plan
to make any further contributions to the foundation in the future.
6. Please disclose Ottawa`s charitable contributions for each of
the
last 2 years and compare those annual amounts with the estimated
$560,000 foundation you propose.
Tax Consequences - page 11
7. Please revise this section to indicate that it reflects the
opinion of tax counsel.
How We Will Use the Proceeds... - page 14
8. Given the lack of any specific use of the proceeds, discuss
your
ability to place these funds into productive use. Indicate the
amount of time you feel it will take to put these funds to use if
you
have developed such a figure. We note the first risk factor.
Strong competition... - page 20
9. Please reconcile the notion that your competition is intense
and
the fact that you control about 26% of local deposits.
Pro Forma Net Income - page 33
10. Please ensure that all pro forma information presented is
properly calculated. We noted a few instances where we were unable
to
recalculate amounts presented in the tables on pages 33 and 35.
For
example:
* the pro forma employee stock ownership plan adjustment,
* the pro forma stock-based incentive plan adjustments for stock
option grants,
* the pro forma net income excluding the contribution to
foundation
and the related net income per share.
Comparison of Independent Valuation and Pro Forma Financial
Information With and Without the Foundation - page 37
11. Please review the Pro Forma Financial Ratios for mathematical
accuracy and presentation consistency and revise as necessary.
Management`s Discussion and Analysis of Financial Condition and
Results of Operations
General - page 38
12. Please revise to address the material weaknesses in internal
control of financial reporting discussed in the Risk Factors
section
on page 19. Describe the magnitude of the weaknesses, the current
impact on the financial statements and the steps being taken to
mitigate these weaknesses in the future.
13. Please revise to address the prior period adjustments made in
2002 and 2003. Describe the magnitude of the errors, the impact
on
the financial statements, a description of each error and the
controls established to prevent these types of errors from
occurring
in the future.
Average Balance Sheet - page 43
14. Please revise to specify the rounding denomination used within
the Average Balance Sheet table. For example: "(dollars in
thousands)".
Delinquent Loans - page 56
15. Please revise to provide the amount of gross income that would
have been recorded during the period had the loans been current in
accordance with their original terms and the amount of interest
income on those loans that was included in net income for the
period.
Refer to Item III (c) Instructions (2) i & ii of Industry Guide
III
Allowance for Loan Losses - page 58
16. Please revise to explain the increase in 2004 of the
"Unallocated" category of the Allowance for Loan Losses. In 2004
it
is the largest category, representing 31% of the total allowance,
up
from 14% in 2003.
Material Income Tax Consequences - page 101
17. If correct, please revise the first two sentences of the first
paragraph on page 102 to indicate that this information is
supplied
by tax counsel.
Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure - page 111
18. Your citations alone did not provide enough information for
the
investors. Please revise to include all of the information
required
by Item 304 of Regulation S-B.
19. Please revise to state whether the auditors` report on your
financial statements for either of the past two years contained an
adverse opinion or a disclaimer of opinion or was qualified or
modified as to uncertainty, audit scope or accounting principles
and,
if so, a description of the nature of each adverse opinion,
disclaimer of opinion, modification or qualification. Refer to
Item
304(a)(1)(ii) of Regulation S-B.
20. Please revise to state whether you have authorized the former
accountant to respond fully to the inquiries of the successor
accountant concerning the subject matter of each of such
disagreements or events and, if not, describe the nature of and
reason for any limitations. Refer to Item 304(a)(1)(iv)(E) of
Regulation S-B.
21. Please revise to include a letter from your former auditors
addressing the revised disclosures as an exhibit. Refer to Item
304(a)(3) of Regulation S-B.
Exhibits
22. We note that certain exhibits will be filed in the future. We
may have comment once those documents are filed.
Signatures - page II-4
Pursuant to the signature instructions for this form, identify the
principal accounting officer. One person may serve in more than
one
capacity.
* * * * *
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 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
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.
Direct any questions on accounting matters to Paula Smith at
202-824-5698, or to Don Walker, Senior Assistant Chief Accountant,
at
202-942-1799. Please direct any other questions to David Lyon at
202-942-1796, or to me at 202-942-1779.
Sincerely,
Barry McCarty
Senior Counsel
By fax : J. Brett Pritchard
Fax number 312-443-0336
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Ottawa Savings Bancorp, Inc.
Page 6