Mail-Stop 4561
December 15, 2005
Via facsimile and U.S. Mail
Mr. Stephen M. Oksas
President and Chief Executive Officer
Mutual Federal Bancorp, Inc.
2212 West Cermak Road
Chicago, Illinois 60608
Re: Mutual Federal Bancorp, Inc.
Form SB-2
File No. 333-129835
Filed November 18, 2005
Dear Mr. Oksas:
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.
Prospectus Cover Page
1. Revise the fourth sentence of the third paragraph to state that
subscriptions will be returned unless the subscribers are
affirmatively resolicited.
Prospectus Summary
Persons Who May Subscribe ..., page 4
2. Revise the second bullet to add, "up to 10% of the offering".
3. Provide the staff supplementally with the RP appraisal book.
How We determined to Offer ..., page 6
4. Revise the last sentence on page 6 to disclose that
subscriptions
will be refunded unless the subscriber reaffirms the subscription.
5. The staff notes different ratios on the first two tables
presented
on page 7, however, the narrative does not adequately explain why
similar titles have different ratios. In this regard, the staff
notes
the first table presents minimum p/e at 27.78 while the second
table
presents 17.17%. Please revise to explain the differences that
result
in different ratios.
6. The staff notes the use of Amex and Nasdaq peer group, yet the
stock may be listed on the OTCBB. Please revise to include or
advise
the staff why OTCBB peers were not included.
7. The narrative preceding the table on page 8 does not reconcile
why
the ratios are different than the first two tables on page 7.
Please
revise the narrative to explain why the ratios are different.
8. With regard to the last three bullets on page 8, please revise
or
advise the staff;
* Why the ESOP is amortized over 20 years for the Company but 10
years for the peer group;
* Indicate in the second bullet whether the assumption is based on
open market purchases or new issuances; and,
Why offering expenses are listed at 3.4% when the cover page
indicates almost 10% down to around 6.7%.
9. Please revise the discussion on pages 7 and 8 to include a
definition of core earnings; reconciling it to net income. Refer
to
Item 10(h)(1)(i) of Regulation S-B.
Our Officers, Directors and Employees ...., page 12
10. Revise the first full paragraph on page 13 to disclose if the
benefit plans (excluding the ESOP) will issue the shares at no
cost
to Officers and Directors. In addition, disclose whether the
shares
held by the holding company will be able to vote those shares when
shareholder approval is sought.
Use of Proceeds, page 24
11. Revise the second bullet at the bottom of page 24 to disclose
the
Company`s present intention regarding stock repurchases.
MD&A
Sept. 30, 2005 and December 31, 2004, page 38
12. Revise the second paragraph to disclose whether or not
brokered
deposits have been used during the periods.
Comparison of Operating Results ...., page 38
13. Revise to explain why Net Interest Income decreased during the
period.
General
14. Please note the updating requirements of Rule 310(g) of
Regulation S-B.
15. Please file updated consents for all audited financial
statements
included in your next filing.
Pro Forma Data
Pro Forma Net Income, page 32 and 35
16. Please ensure that all pro forma information presented is
properly calculated. We noted that the September 30, 2005 post-tax
interest rate of 2.45% stated on page 31 appears to be use in
calculating the pro forma income on adjusted net proceeds amounts
for
both the September 30, 2005 and the December 31, 2004 scenarios.
Provision for Loan Losses, page 39
17. We note your loan portfolio increased by $5.8 million (21%)
during the nine months ended September 30, 2005, including a $4.3
million increase in your multi-family residential mortgage loan
portfolio. We further note your discussion in which you refer to
higher inherent risks in this category of lending due to higher
default rates and the possibility that repayments may be affected
by
economic conditions and interest rates. Please revise your
discussion here and in other related sections of the document to
more
fully explain why management made no provision for loan losses for
the nine months ended September 30, 2005.
Non-Interest Income, page 42
18. We note the $1.6 million gain on sale of FHLMC common stock
represented almost 65% of total net income before taxes for 2004.
Please revise this discussion to more fully discuss how and why
you
determined to sell these securities, the amount(s) sold, their
amortized cost and years held for both 2003 and 2004 sales.
Please
also discuss the relevant business purpose(s) for the sale(s) and
any
other considerations such as liquidity, for example, if
appropriate.
Consider revising other relevant sections of the document if
needed.
Closing Comments
As appropriate, please amend your filing and respond to
these
comments within 10 business days or tell us when you will provide
us
with a response. 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 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 filing to be certain that the
filing includes all information required under the Securities
Exchange Act of 1934 and that they have provided all information
investors require for an informed investment 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.
In connection with responding to our comments, please
provide,
in writing, a statement from the company acknowledging that:
* the company is responsible for the adequacy and accuracy of the
disclosure in the filing;
* staff comments or changes to disclosure in response to staff
comments do not foreclose the Commission from taking any action
with
respect to the filing; and
* the company may not assert staff comments 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 our review of your filing or in
response to our comments on your filing.
Any accounting questions may be directed to Paula Michelle
Smith
at (202) 551-3696 or John Nolan, Branch Chief at (202) 551-8415.
All
other questions regarding the comments may be directed to Michael
Clampitt at (202) 551-3434 or to me at (202) 551-3775.
Sincerely,
Todd Schiffman
Assistant Director
Financial Services Group
CC: Via U.S. Mail and Fax: (312) 609-5005
Daniel C. McKay II, Esq.
Jennifer Durham King, Esq.
Vedder, Price, Kaufman & Kramholz, P.C.
222 North LaSalle Street, Suite 2600
Chicago, Illinois 60601
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Mr. S.M. Oksas
Mutual Federal Bancorp, Inc.
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