<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 28, 1997.
REGISTRATION NO. 333-
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------
BANK PLUS CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
----------------
DELAWARE 6712 95-1782887
(State or Other (Primary Standard (I.R.S. Employer
Jurisdiction of Industrial Identification Number)
Incorporation or Classification Code
Organization) Number)
4565 COLORADO BOULEVARD
LOS ANGELES, CALIFORNIA 90039
(818) 241-6215
(Address, Including Zip Code, and Telephone Number, Including Area Code, of
Registrant's Principal Executive Offices)
----------------
GODFREY B. EVANS, ESQ.
GENERAL COUNSEL
BANK PLUS CORPORATION
4565 COLORADO BOULEVARD
LOS ANGELES, CALIFORNIA 90039
(818) 549-3330
(Name, Address, Including Zip Code, and Telephone Number, Including Area Code,
of Agent For Service)
----------------
Copy to:
JOHN L. SAVVA, ESQ.
SULLIVAN & CROMWELL
444 SOUTH FLOWER STREET, 12TH FLOOR
LOS ANGELES, CALIFORNIA 90071
(213) 955-8000
----------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: On the
Exchange Date, as described in the attached Prospectus.
If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance
with General Instruction G, check the following box. [_]
----------------
CALCULATION OF REGISTRATION FEE
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- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PROPOSED PROPOSED
MAXIMUM MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED(1) PER UNIT OFFERING PRICE(2) REGISTRATION FEE
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
12% SENIOR NOTES DUE , 2007 $51,750,000 N/A $59,512,500 $18,035
</TABLE>
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- -------------------------------------------------------------------------------
(1) Represents the approximate aggregate principal amount of Senior Notes to
be issued in the Exchange, based on the number of shares of Preferred
Stock of Fidelity Federal Bank, FSB currently outstanding and the
principal amount of Senior Notes issuable in exchange for each such share
pursuant to the Exchange Offer, all as described in the Prospectus.
(2) Determined pursuant to Rule 457(f)(1), solely for the purpose of
calculating the registration fee, on the basis of the average of the bid
and asked price as of March 27, 1997 for the securities to be received by
the Registrant in the Exchange, as described in the Prospectus.
----------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION
8(A), MAY DETERMINE.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED MARCH 28, 1997
PROSPECTUS
BANK PLUS CORPORATION
OFFER TO EXCHANGE
$1,000 PRINCIPAL AMOUNT OF ITS 12% SENIOR NOTES DUE , 2007
FOR EACH 40 SHARES OF OUTSTANDING
12% NONCUMULATIVE EXCHANGEABLE PERPETUAL PREFERRED STOCK, SERIES A OF
FIDELITY FEDERAL BANK, A FEDERAL SAVINGS BANK
PREFERRED STOCKHOLDERS NEED NOT TAKE ANY ACTION IN ORDER TO ACCEPT THE
EXCHANGE OFFER. PREFERRED STOCKHOLDERS WHO DO NOT WISH TO EXCHANGE SHARES OF
PREFERRED STOCK MUST EXPRESSLY REJECT THE EXCHANGE OFFER BY RETURNING A DULY
EXECUTED NOTICE OF REJECTION OF OFFER. THE RIGHT OF PREFERRED STOCKHOLDERS TO
REJECT THE EXCHANGE OFFER OR TO WITHDRAW A PREVIOUSLY TRANSMITTED REJECTION
WILL TERMINATE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON , 1997, UNLESS
THE EXCHANGE OFFER IS EXTENDED BY BANK PLUS CORPORATION (AS IT MAY BE SO
EXTENDED, THE "EXCHANGE DATE"). SHARES OF PREFERRED STOCK WITH RESPECT TO
WHICH A DULY EXECUTED NOTICE OF REJECTION OF OFFER HAS NOT BEEN RECEIVED BY
THE EXCHANGE AGENT PRIOR TO THE EXCHANGE DATE WILL BE DEEMED TO HAVE BEEN
TENDERED IN THE EXCHANGE OFFER.
Bank Plus Corporation, a Delaware corporation ("Bank Plus" or the "Company"),
hereby offers (the "Exchange Offer"), upon the terms and subject to the
conditions set forth in this Prospectus, to exchange $1,000 principal amount of
its 12% Senior Notes due , 2007 ("Senior Notes") for each 40 outstanding
shares of 12% Noncumulative Exchangeable Perpetual Preferred Stock, Series A
("Preferred Stock") of its subsidiary, Fidelity Federal Bank, A Federal Savings
Bank ("Fidelity" or the "Bank"). The Exchange Offer is being made to holders of
record of Preferred Stock as of the close of business on , 1997
("Preferred Stockholders") pursuant to the terms of the Preferred Stock, which
expressly provide for the making of the Exchange Offer at the election of Bank
Plus. The terms and provisions of the Exchange Offer are substantially as
described in the Offering Circular, dated November 9, 1995, with respect to the
offering and sale of the Preferred Stock.
PURSUANT TO THE TERMS OF THE PREFERRED STOCK, SUBJECT TO THE CONDITIONS
SPECIFIED HEREIN, ALL SHARES OF PREFERRED STOCK HELD BY A PREFERRED STOCKHOLDER
WILL BE DEEMED TENDERED AND EXCHANGED BY BANK PLUS FOR SENIOR NOTES ON THE
EXCHANGE DATE WITHOUT ANY ACTION ON THE PART OF SUCH PREFERRED STOCKHOLDER
UNLESS THE NOTICE OF REJECTION OF OFFER ACCOMPANYING THIS PROSPECTUS, DULY
EXECUTED, SPECIFYING THAT SHARES OF PREFERRED STOCK ARE NOT TO BE EXCHANGED FOR
SENIOR NOTES, HAS BEEN RECEIVED BY THE EXCHANGE AGENT (AS DEFINED HEREIN) AND
NOT WITHDRAWN PRIOR TO THE EXCHANGE DATE.
(Continued on the next page)
----------
FOLLOWING THE EXCHANGE DATE, PURSUANT TO THE TERMS OF THE PREFERRED STOCK,
DIVIDENDS WILL BE PAYABLE ON SHARES OF PREFERRED STOCK AT THE REDUCED RATE OF
10% OF THE LIQUIDATION PREFERENCE OF $25 PER SHARE PER ANNUM.
----------
THE SECURITIES OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK. POTENTIAL
INVESTORS ARE URGED TO READ AND CAREFULLY CONSIDER THE MATTERS SET FORTH UNDER
"RISK FACTORS" BEGINNING ON PAGE 15 HEREOF.
----------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE. THESE SECURITIES ARE NOT SAVINGS OR DEPOSIT AC-
COUNTS AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION,
BANK INSURANCE FUND, SAVINGS ASSOCIATION INSURANCE FUND OR ANY OTHER
GOVERNMENT AGENCY.
----------
The date of this Prospectus is , 1997.
<PAGE>
(cover page continued)
The Senior Notes to be issued pursuant to the Exchange Offer will be issued
pursuant to an Indenture (the "Indenture") between the Company and
, as trustee (the "Trustee"), and will bear interest
at the rate of 12% per annum, accruing from the Exchange Date (as defined
below) and payable quarterly in arrears on the 15th day of each February, May,
August and November following the Exchange Date (each, an "Interest Payment
Date"), and will mature on , 2007. The Senior Notes will not be subject
to mandatory redemption by Bank Plus at any time and will not be subject to
optional redemption by Bank Plus prior to November 15, 2005. However, the
Senior Notes will, subject to applicable regulatory limitations, if any, be
redeemable at the option of Bank Plus, in whole or in part, at any time or
from time to time, on or after November 15, 2005 at the redemption prices and
on the terms specified herein, plus accrued interest to and including the
applicable redemption date. The Senior Notes will be unsecured general
obligations solely of Bank Plus and not of Fidelity or any other subsidiary of
Bank Plus. There will be no sinking fund for the retirement of principal of
Senior Notes.
The Senior Notes will rank pari passu with any indebtedness of Bank Plus
that is not expressly subordinated to the Senior Notes. See "Description of
Senior Notes." In addition, because Bank Plus is a holding company, as a
practical matter the Senior Notes will be subordinated to all obligations of
Fidelity (and of all other subsidiaries of Bank Plus or of Fidelity). As of
December 31, 1996, the aggregate liabilities of Bank Plus' subsidiaries not
eliminated in Bank Plus' consolidated financial statements were approximately
$3.2 billion (including deposits).
In the event of a Holding Company Change of Control (as defined herein),
holders of Senior Notes will have the right to require Bank Plus to repurchase
the Senior Notes at a price equal to 110% of their principal amount, plus
accrued and unpaid interest, if any, to the date of repurchase, subject to the
conditions and in accordance with the provisions of the Indenture. There can
be no assurance that Bank Plus will have sufficient financial resources to
repurchase any or all of the Senior Notes at such time as it might be required
to do so.
Preferred Stockholders are currently entitled to receive noncumulative
dividends on shares of Preferred Stock when, as and if declared by the Board
of Directors of Fidelity at the rate of $3.00 per share per annum (12% of the
liquidation preference of $25 per share), payable quarterly in arrears on the
15th day of each February, May, August and November (each such date, a
"Dividend Payment Date," and each such quarter, a "Dividend Period"). Pursuant
to the terms of the Preferred Stock, from and after the Exchange Date,
dividends on the Preferred Stock will be payable at a reduced rate of $2.50
per share per annum (10% of the liquidation preference of $25 per share). See
"Description of Preferred Stock."
On the Exchange Date, Preferred Stockholders will be entitled to receive a
dividend on the Preferred Stock at the rate of 12% per annum for the period
from the most recent Dividend Payment Date (which Dividend Payment Date is
expected to be February 15, 1997) to the Exchange Date. From and after the
Exchange Date, Exchanging Stockholders (as defined below) will no longer be
entitled to receive dividends in respect of shares of Preferred Stock
exchanged for Senior Notes, but will be entitled to receive interest accruing
on such Senior Notes. Accrued interest on Senior Notes at the rate of 12% per
annum from the Exchange Date to the initial Interest Payment Date (which is
expected to be May 15, 1997) will be payable to holders of Senior Notes on
such Interest Payment Date. See "The Exchange Offer--Terms of Exchange."
For a comparison of certain terms of the Preferred Stock and the Senior
Notes, see "Summary--Comparison of Certain Terms of Senior Notes and Preferred
Stock."
The Preferred Stock is not, and the Senior Notes will not be, listed on any
national securities exchange or included in any interdealer quotation system.
The Preferred Stock does not, and at the Exchange Date the Senior Notes will
not, constitute a class of securities registered under the Securities Exchange
Act of 1934, as amended (the "Exchange Act"). To the extent that shares of
Preferred Stock are deemed tendered and accepted for exchange pursuant to the
Exchange Offer, the trading market for untendered shares of Preferred Stock
will be adversely affected.
2
<PAGE>
(cover page continued)
The Exchange Offer is not conditioned upon any minimum number of shares of
Preferred Stock being tendered. The Exchange Offer will expire at 12:00
midnight, New York City time, on , 1997 (the "Exchange Date"), unless
Bank Plus, in its sole discretion, notifies the Exchange Agent that the period
of the Exchange Offer has been extended, in which event the Exchange Date
shall be the latest time and date on which the Exchange Offer, as so extended,
will expire. Subject to the terms and conditions of the Exchange Offer,
including the reservation of certain rights by Bank Plus (as described under
"The Exchange Offer--Conditions of the Exchange Offer") and the right of
Preferred Stockholders to withdraw a tendered Notice of Rejection of Offer at
any time prior to the Exchange Date, all shares of Preferred Stock, other than
as set forth under "The Exchange Offer--Terms of Exchange" and other than
shares of Preferred Stock with respect to which a valid Notice of Rejection of
Offer has been duly tendered and not withdrawn pursuant to the procedures set
forth herein, will be accepted for exchange on the Exchange Date and exchanged
for Senior Notes (the "Exchange").
The Exchange Offer is subject to certain conditions. In addition, the
Exchange Offer may be extended, amended or terminated by Bank Plus as provided
herein. Preferred Stockholders who reject the Exchange Offer may withdraw such
rejection, as provided herein, at any time before the Exchange Date. As
promptly as practicable following the Exchange Date, Preferred Stockholders
who have not rejected the Exchange Offer with respect to their shares of
Preferred Stock in accordance with the procedures set forth herein
("Exchanging Stockholders") will be sent a notice of exchange, together with a
letter of transmittal and instructions for its use in effecting the surrender
of certificates representing shares of Preferred Stock in exchange for
certificates representing Senior Notes. See "The Exchange Offer."
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
AVAILABLE INFORMATION...................................................... 4
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE............................ 4
SUMMARY.................................................................... 6
RISK FACTORS............................................................... 15
CAPITALIZATION............................................................. 23
CONSOLIDATED RATIO OF EARNINGS TO FIXED CHARGES............................ 23
MARKET PRICES AND DIVIDENDS................................................ 23
BACKGROUND OF AND REASONS FOR THE EXCHANGE OFFER........................... 24
THE EXCHANGE OFFER......................................................... 24
BANK PLUS CORPORATION...................................................... 29
CERTAIN FEDERAL INCOME TAX CONSEQUENCES.................................... 29
CERTAIN REGULATORY RESTRICTIONS ON CAPITAL DISTRIBUTIONS................... 31
DESCRIPTION OF SENIOR NOTES................................................ 33
DESCRIPTION OF PREFERRED STOCK............................................. 38
VALIDITY OF SENIOR NOTES................................................... 43
EXPERTS.................................................................... 43
</TABLE>
3
<PAGE>
AVAILABLE INFORMATION
Bank Plus is subject to the informational requirements of the Securities
Exchange Act of 1934 (the "Exchange Act"), and the rules and regulations
thereunder, and in accordance therewith file reports, proxy statements and
other information with the Securities and Exchange Commission (the
"Commission"). Such reports, proxy statements and other information filed by
Bank Plus should be available for inspection and copying at the public
reference facilities maintained by the Commission at 450 Fifth Street, N.W.
Washington, D.C. 20549 and at the regional offices of the Commission located
at Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois
60661-2511 and at Seven World Trade Center, New York, New York 10048. Copies
of such material can be obtained from the Public Reference Section of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 upon payment of
prescribed fees. In addition, such reports, proxy statements and other
information should be available for inspection at the Commission's Web site,
available at http://www.sec.gov.
Bank Plus became the holding company of Fidelity pursuant to a
reorganization effected in May of 1996; until that time, such reports, proxy
statements and other information were filed by Fidelity with the Office of
Thrift Supervision (the "OTS"). Reports, proxy statements and other
information filed by Fidelity should be available for inspection and copying
at the public reference facilities maintained by the OTS at the Office of
Public Information, Office of Thrift Supervision, 1700 G Street, N.W.,
Washington, D.C. 20552, and also can be obtained by written request from such
office at prescribed rates. In addition, Bank Plus' common stock is listed on
The Nasdaq National Market, and accordingly such reports, proxy statements and
other information concerning Bank Plus and Fidelity also should be available
for inspection and copying at the National Association of Securities Dealers,
Inc., 1735 K Street, N.W., Washington, D.C. 20006.
Bank Plus has filed with the Commission under the Securities Act of 1933, as
amended (the "Securities Act"), and the rules and regulations thereunder, a
Registration Statement on Form S-4 (as it may be amended, the "Registration
Statement"), with respect to the Senior Notes issuable pursuant to the
Exchange Offer. This Prospectus does not contain all of the information
contained in the Registration Statement, certain portions of which have been
omitted pursuant to the rules and regulations of the Commission and to which
reference is hereby made. Any statements contained herein or in any document
incorporated by reference herein concerning the provisions of any contract or
other document are not necessarily complete, and in each instance reference is
made to the copy of such contract or other document filed as an exhibit to the
Registration Statement or other document, each such statement being qualified
in its entirety by such reference. The Registration Statement (and exhibits
thereto) should be available for inspection at the office of the Commission at
450 Fifth Street, N.W., Washington, D.C. 20549, and copies thereof may be
obtained from the Commission at prescribed rates.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents heretofore or hereafter filed with the Commission
under the Exchange Act are incorporated by reference in this Prospectus:
(1) Bank Plus' Annual Report on Form 10-K for the year ended December 31,
1996.
All documents filed by Bank Plus pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of this Prospectus and prior to the
Exchange Date shall be deemed to be incorporated by reference into this
Prospectus and to be a part hereof from the date of filing of such documents.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained
herein, or in any subsequently filed document which also is or is deemed to be
incorporated by reference herein, modifies or supersedes such statement. Any
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.
THIS PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WHICH ARE NOT PRESENTED
HEREIN OR DELIVERED HEREWITH. THESE DOCUMENTS ARE AVAILABLE UPON REQUEST FROM
, BANK PLUS
4
<PAGE>
CORPORATION, 4565 COLORADO BOULEVARD, LOS ANGELES, CALIFORNIA 90039, (818)
. IN ORDER TO ENSURE TIMELY DELIVERY OF THE DOCUMENTS, ANY REQUEST
SHOULD BE MADE BY , 1997. BANK PLUS WILL PROVIDE WITHOUT CHARGE TO
ANY PERSON TO WHOM THIS PROSPECTUS IS DELIVERED, INCLUDING ANY BENEFICIAL
HOLDER OF PREFERRED STOCK, UPON WRITTEN OR ORAL REQUEST OF SUCH PERSON TO THE
ADDRESS OR TELEPHONE NUMBER LISTED ABOVE, A COPY OF ANY OR ALL OF THE
FOREGOING DOCUMENTS INCORPORATED HEREIN BY REFERENCE (OTHER THAN EXHIBITS TO
SUCH DOCUMENTS WHICH ARE NOT SPECIFICALLY INCORPORATED THEREIN BY REFERENCE).
----------------
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS OR INCORPORATED BY REFERENCE
HEREIN IN CONNECTION WITH THE EXCHANGE OFFER, AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY BANK PLUS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL
OR A SOLICITATION OF AN OFFER TO PURCHASE ANY SECURITIES IN ANY JURISDICTION
TO OR FROM ANY PERSON WITH RESPECT TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER,
OR SOLICITATION OF AN OFFER, WITHIN SUCH JURISDICTION. NEITHER THE DELIVERY OF
THIS PROSPECTUS NOR THE DISTRIBUTION OF SECURITIES HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE INFORMATION HEREIN OR
IN THE DOCUMENTS INCORPORATED HEREIN BY REFERENCE IS CORRECT AS OF ANY TIME
SUBSEQUENT TO THE DATE HEREOF OR THE DATES THEREOF.
----------------
Bank Plus will not pay any commission or other remuneration to any broker,
dealer, salesperson or other similar person in connection with the Exchange
Offer.
5
<PAGE>
SUMMARY
The following information is not intended to constitute a complete
description of the Company and is qualified in its entirety by, and should be
read in conjunction with, the detailed information, consolidated financial
statements and notes thereto included or incorporated by reference in this
Prospectus. Certain capitalized terms used in this Prospectus Summary are
defined elsewhere herein. Unless the context otherwise requires, all references
to the "Company" refer to Bank Plus Corporation, a Delaware corporation ("Bank
Plus"), and its consolidated subsidiaries, which include Fidelity and Gateway
Investment Services, Inc. ("Gateway"), and all references to "Fidelity" or the
"Bank" refer to Fidelity Federal Bank, A Federal Savings Bank, and, with
respect to the period between August 3, 1994 and May 1996, include Gateway,
which was a wholly-owned subsidiary of Citadel Holding Corporation ("Citadel")
from November 1, 1992 through August 3, 1994, a direct wholly-owned subsidiary
of Fidelity from August 4, 1994 to May 1996 and a direct wholly-owned
subsidiary of Bank Plus since May 1996.
THE COMPANY
Bank Plus was formed on March 14, 1996 to be the holding company of Fidelity
and Gateway. In May 1996, Fidelity completed a reorganization pursuant to which
all of the outstanding common stock of Fidelity was converted on a one-for-one
basis into all of the outstanding common stock of Bank Plus (the
"Reorganization"). Bank Plus' principal operating subsidiaries are Fidelity and
Gateway, which prior to the reorganization was a subsidiary of the Bank. Bank
Plus currently has no significant business or operations other than serving as
the holding company for Fidelity and Gateway. The principal executive offices
of Bank Plus, Fidelity and Gateway are located at 4565 Colorado Boulevard, Los
Angeles, California 90039, (818) 241-6215.
THE BANK
Fidelity offers a broad range of consumer financial services, including
demand and term deposits and loans to consumers, through 33 full-service
branches, all of which are located in Southern California, principally in Los
Angeles and Orange counties. At this time, the Bank primarily provides
residential mortgages and consumer loans, which the Bank does not underwrite or
fund, by referral to certain established providers of mortgage and consumer
loan products with which the Bank has negotiated strategic alliances.
THE EXCHANGE OFFER
<TABLE>
<S> <C>
Securities Offered.. 12% Senior Notes due , 2007 of Bank Plus. See
"Description of Senior Notes."
Exchange Rate....... $1,000 principal amount of Senior Notes for each 40
outstanding shares of 12% Noncumulative Exchangeable
Perpetual Preferred Stock, Series A of Fidelity. See "The
Exchange Offer--Terms of Exchange."
Exchange Date....... 12:00 midnight, New York City time, on , 1997, or
such later date and time to which the Exchange Offer may
be extended by Bank Plus. See "The Exchange Offer--
Exchange Date; Extension; Amendment; Termination."
</TABLE>
6
<PAGE>
<TABLE>
<S> <C>
Deemed Tender and
Automatic Exchange...... Pursuant to the terms of the Preferred Stock, all shares
of Preferred Stock held by a Preferred Stockholder will
be deemed to have been tendered in the Exchange Offer and
will be automatically exchanged for Senior Notes on the
Exchange Date without any action on the part of such
Preferred Stockholder, unless a duly executed Notice of
Rejection of Offer specifying that shares of Preferred
Stock are not to be exchanged for Senior Notes pursuant
to the Exchange Offer has been received by the Exchange
Agent and not withdrawn prior to the Exchange Date. It is
currently expected that shares of Preferred Stock so
exchanged will remain outstanding and be held by Bank
Plus. See "The Exchange Offer--Terms of Exchange."
Reduction in Dividend
Rate on Preferred Stock
Following Exchange Date. Currently, dividends are payable on shares of Preferred
Stock when, as and if declared at a rate of 12% per annum
of the liquidation preference of $25 per share. From and
after the Exchange Date, pursuant to the terms of the
Preferred Stock, dividends will be payable on shares of
Preferred Stock when, as and if declared at a reduced
rate of 10% per annum of the liquidation preference of
$25 per share.
Accrued Dividend on
Preferred Stock; Initial
Interest Payment on
Senior Notes............ On the Exchange Date, Preferred Stockholders will be
entitled to receive a dividend on the Preferred Stock at
the rate of 12% per annum for the period from the most
recent Dividend Payment Date (which Dividend Payment Date
is expected to be February 15, 1997) to the Exchange
Date. From and after the Exchange Date, Exchanging
Stockholders will no longer be entitled to receive
dividends in respect of shares of Preferred Stock
exchanged for Senior Notes, but will be entitled to
receive interest accruing on such Senior Notes at the
rate of 12% per annum. Accrued interest on Senior Notes
from the Exchange Date to the initial Interest Payment
Date (which is expected to be May 15, 1997) will be
payable on such Interest Payment Date. See "The Exchange
Offer--Terms of Exchange."
Procedures for
Acceptance or Rejection
of Exchange Offer....... Preferred Stockholders who take no action in the Exchange
Offer will be deemed to have accepted the Exchange Offer,
and all of their shares of Preferred Stock will
automatically be exchanged for Senior Notes on the
Exchange Date. However, to the extent that the number of
shares represented by any Preferred Stockholder's
certificate(s) is not evenly divisible by 40, such
Preferred Stockholder will receive, in addition to Senior
Notes, a certificate representing a number of shares of
Preferred Stock equal to the amount by which the number
of shares of such Preferred Stockholder exceeds the
closest multiple of 40. In order for a Preferred
Stockholder to reject the Exchange Offer, such Preferred
Stockholder must expressly reject the Exchange Offer by
returning a properly completed and duly executed Notice
of Rejection of Offer (or facsimile thereof) to the
Exchange Agent prior to the Exchange Date.
</TABLE>
7
<PAGE>
<TABLE>
<S> <C>
See "The Exchange Offer--Procedures for Acceptance or
Rejection of Exchange Offer" and the form of Notice of
Rejection of Offer accompanying this Prospectus.
Withdrawal of
Rejection of Offer...... Preferred Stockholders who execute and return a Notice of
Rejection of Offer may withdraw such rejection by causing
the Exchange Agent to receive, at any time prior to the
Exchange Date, a written, telegraphic or facsimile
transmission of a notice of such withdrawal. See "The
Exchange Offer--Withdrawal of Notice of Rejection of
Offer."
Appraisal Rights........ No appraisal rights are available to Preferred
Stockholders in connection with the Exchange Offer.
Regulatory Approvals.... There are no material federal or state regulatory
requirements that remain to be complied with in
connection with the Exchange Offer.
Federal Income
Tax Consequences........ The Exchange will constitute a taxable exchange in which
an Exchanging Stockholder will recognize gain or loss
equal to the difference between the amount realized and
such holder's adjusted tax basis in the Preferred Stock.
See "Certain Federal Income Tax Consequences."
Conditions of the
Exchange Offer.......... Bank Plus' election to proceed with the Exchange Offer is
conditioned upon, among other things, the nonoccurrence
of any change, prior to the Exchange Date, which is
likely to affect the Exchange Offer adversely. See "The
Exchange Offer--Conditions of the Exchange Offer." In
addition, the consummation of the Exchange is subject to
certain other conditions, including the requirement that,
immediately following the Exchange, no Default or Event
of Default will exist under the Indenture. See "The
Exchange Offer--Conditions of Exchange." The Exchange
Offer is not conditioned upon the tender of a minimum
number of shares of Preferred Stock.
Termination of the
Exchange Offer.......... Bank Plus expressly reserves the right to terminate or
amend the Exchange Offer if any of the conditions thereto
is not satisfied on the Exchange Date. See "The Exchange
Offer."
Exchange Agent;
Information Agent....... The Exchange Agent for the Exchange Offer is American
Stock Transfer & Trust Company and the Information Agent
for the Exchange Offer is D.F. King & Co., Inc. See "The
Exchange Offer--Exchange Agent; Information Agent."
</TABLE>
8
<PAGE>
COMPARISON OF CERTAIN TERMS OF SENIOR NOTES AND PREFERRED STOCK
<TABLE>
<CAPTION>
SENIOR NOTES PREFERRED STOCK
------------ ---------------
<S> <C> <C>
Issuer.................. Bank Plus Fidelity
Principal Amount........ Up to $51,750,000 in $51,750,000 in aggregate
aggregate principal amount liquidation preference
may be issued. (represented by 2,070,000
shares) is currently out-
standing.
Dividend or Interest
Payments................ $120 per annum in interest, Currently, $3 per share
payable in cash, for each ($120 per each 40 shares)
$1,000 in principal amount, per annum in aggregate
payable quarterly in ar- noncumulative cash divi-
rears on the 15th day of dends, when, as and if de-
each February, May, August clared by the Board of Di-
and November. rectors of Fidelity, pay-
able quarterly in arrears
on the 15th day of each
February, May, August and
November.
From and after the Exchange
Date, $2.50 per share ($100
per each 40 shares) per an-
num in aggregate
noncumulative cash divi-
dends, when, as and if de-
clared by the Board of Di-
rectors of Fidelity, pay-
able quarterly in arrears
on the 15th day of each
February, May, August and
November.
</TABLE>
9
<PAGE>
<TABLE>
<CAPTION>
SENIOR NOTES PREFERRED STOCK
------------ ---------------
<S> <C> <C>
Rank.................... The Senior Notes will be The Preferred Stock, with
senior in right of payment respect to dividend rights
to any subordinated indebt- and rights on liquidation,
edness of Bank Plus, and winding up and dissolution
will rank pari passu with of Fidelity, ranks prior to
any indebtedness of Bank the common stock of Fidel-
Plus that is not expressly ity but junior to all
subordinated to the Senior claims of Fidelity's credi-
Notes. In addition, since tors. Fidelity's ability to
Bank Plus is a holding com- distribute cash dividends
pany, as a practical matter in respect of the Preferred
the Senior Notes will be Stock is subject to limita-
subordinated to all obliga- tions imposed by OTS regu-
tions of Fidelity (and of lations.
all other subsidiaries of
Bank Plus or of Fidelity).
Furthermore, Fidelity's
ability to distribute cash
dividends in respect of its
capital stock, on which
Bank Plus's ability to pay
interest and principal on
the Senior Notes will pri-
marily depend, will be sub-
ject to limitations imposed
by OTS regulations.
Maturity................ , 2007, subject to The Preferred Stock is
optional redemption, as perpetual in duration,
described below. subject to optional
redemption as described
below.
Mandatory Redemption.... None. None.
Optional Redemption..... The Senior Notes are not The Preferred Stock is not
redeemable at any time redeemable at any time
prior to November 15, 2005. prior to November 15, 2005.
On and after November 15, On and after November 15,
2005, the Senior Notes will 2005, the Preferred Stock
be redeemable at the option will be redeemable at the
of Bank Plus, in whole or option of Fidelity, in
in part, at redemption whole or in part, at re-
prices set forth herein, demption prices declining
together with accrued and to $25 per share on Novem-
unpaid interest to (and in- ber 15, 2010, together with
cluding) the redemption accrued and unpaid divi-
date. dends for the then current
Dividend Period up to (but
excluding) the redemption
date.
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
SENIOR NOTES PREFERRED STOCK
------------ ---------------
<S> <C> <C>
Liquidation Preference.. Not applicable. $25 per share plus divi-
dends accrued and unpaid
for the then current Divi-
dend Period in the event of
any voluntary or involun-
tary liquidation of Fideli-
ty, before any distribution
to Bank Plus, as the holder
of the common stock of
Fidelity, or any other ju-
nior class of stock.
Change of Control....... In the event of a Holding In the event of a Change in
Company Change in Control Control (as defined here-
(as defined herein), sub- in), subject to certain
ject to certain conditions conditions and limitations,
and limitations, each each holder of Preferred
holder of Senior Notes may Stock may require Fidelity
require Bank Plus to repur- to repurchase all of such
chase all of such holder's holder's shares of Pre-
Senior Notes at a purchase ferred Stock at a purchase
price equal to 110% of the price equal to 110% of the
then outstanding principal liquidation preference of
amount thereof, plus ac- the then outstanding shares
crued and unpaid interest of Preferred Stock, plus
to the repurchase date. dividends accrued and un-
paid for the then current
Dividend Period to the re-
purchase date.
Restrictive Covenants... The Indenture contains cer- None.
tain covenants, including,
but not limited to, cove-
nants with respect to the
following matters: (i) lim-
itations on additional in-
debtedness; (ii) restric-
tions on dividends; (iii)
restrictions on transac-
tions with affiliates; and
(iv) restrictions on merg-
ers, consolidations and the
transfer of all or substan-
tially all the property of
Bank Plus.
</TABLE>
RISK FACTORS
EACH OF THE EXCHANGE OFFER, INVESTMENT IN THE SENIOR NOTES AND INVESTMENT IN
THE PREFERRED STOCK INVOLVES A HIGH DEGREE OF RISK. PREFERRED STOCKHOLDERS
SHOULD CAREFULLY CONSIDER ALL OF THE MATTERS DESCRIBED HEREIN UNDER "RISK
FACTORS," INCLUDING, AMONG OTHERS, BANK PLUS' DEPENDENCE ON CAPITAL
DISTRIBUTIONS AND DIVIDENDS FROM FIDELITY TO MAKE PAYMENTS WITH RESPECT TO THE
SENIOR NOTES; THE RISK ASSOCIATED WITH A REDUCED DIVIDEND RATE ON THE PREFERRED
STOCK FOLLOWING THE EXCHANGE DATE; THE ANTICIPATED REDUCTION IN THE LIQUIDITY
OF THE PUBLIC TRADING MARKET FOR THE PREFERRED STOCK FOLLOWING THE EXCHANGE
DATE; THE RISK ASSOCIATED WITH BEING A CREDITOR OF A HOLDING COMPANY; THE
ABSENCE OF A PUBLIC TRADING MARKET FOR THE SENIOR NOTES; THE TAX CONSEQUENCES
ASSOCIATED WITH THE EXCHANGE; RESTRICTIONS ON CAPITAL DISTRIBUTIONS OR
DIVIDENDS TO BANK PLUS; THE SIGNIFICANT LOSSES INCURRED BY THE COMPANY IN
RECENT YEARS AND THE RISK OF CONTINUING LOSSES; THE RISKS ASSOCIATED WITH THE
BANK'S HIGH LEVEL OF NONPERFORMING
11
<PAGE>
ASSETS AND OTHER ASSETS WITH INCREASED RISK; THE POSSIBILITY THAT THE BANK WILL
BE REQUIRED TO MAKE ADDITIONAL PROVISIONS TO ITS ALLOWANCE FOR LOAN AND REO
LOSSES; THE RISKS ASSOCIATED WITH REAL ESTATE LENDING GENERALLY AND THE
ADDITIONAL RISKS ASSOCIATED WITH THE BANK'S CONCENTRATION OF MULTIFAMILY
RESIDENTIAL LOANS; THE EFFECTS OF DEPRESSED REAL ESTATE VALUES AND OTHER
ADVERSE ECONOMIC CONDITIONS IN THE BANK'S MARKET AREA; THE RISK OF POTENTIAL
LEGISLATION OR REGULATORY ACTIONS; THE RISK OF DECLINING MARGINS AS A RESULT OF
GENERAL ECONOMIC CONDITIONS, FLUCTUATIONS IN MARKET INTEREST RATES AND OTHER
FACTORS; THE FACT THAT THE BANK IS CURRENTLY THE SUBJECT OF CERTAIN LEGAL
PROCEEDINGS; AND RISKS ASSOCIATED WITH COMPETITION FROM OTHER FINANCIAL
INSTITUTIONS.
FORWARD-LOOKING STATEMENTS
Certain statements included or incorporated by reference in this Prospectus,
including without limitation statements containing the words "believes,"
"anticipates," "intends," "expects" and words of similar import, constitute
forward-looking statements. Such forward-looking statements involve known and
unknown risks, uncertainties and other factors that may cause the actual
results, performance or achievements of the Company to be materially different
from any future results, performance or achievements expressed or implied by
such forward-looking statements. Such factors include, among others, the
following: the continuing impact of California's economic recession on
collateral values and the ability of certain borrowers to repay their
obligations to Fidelity; the potential risk of loss associated with the Bank's
high level of nonperforming assets and other assets with increased risk;
changes in or amendments to regulatory authorities' capital requirements or
other regulations applicable to Fidelity; fluctuations in interest rates;
increased levels of competition for loans and deposits; and other factors
referred to under "Risk Factors" and elsewhere in this Prospectus and the
documents incorporated by reference herein. GIVEN THESE UNCERTAINTIES,
POTENTIAL EXCHANGING STOCKHOLDERS ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE ON
SUCH FORWARD-LOOKING STATEMENTS. The Company disclaims any obligation to update
any such factors or to publicly announce the result of any revisions to any of
the forward-looking statements included or incorporated by reference herein to
reflect future events or developments.
12
<PAGE>
SUMMARY FINANCIAL DATA
The following table sets forth selected financial and other data for the
Company at the dates or for the periods indicated:
<TABLE>
<CAPTION>
AT OR FOR THE YEAR ENDED DECEMBER 31,
----------------------------------------------------------------
1996 1995 1994 1993 1992
---------- ---------- ---------- ---------- ----------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Total assets............ $3,330,290 $3,299,444 $3,709,838 $4,389,781 $4,695,518
Total loans, net........ 2,691,931 2,935,116 3,288,303 3,712,051 3,990,449
Deposits................ 2,495,933 2,600,869 2,697,272 3,368,664 3,459,648
FHLB advances........... 449,851 292,700 332,700 326,400 581,400
Other borrowings........ 140,000 150,000 500,000 407,830 327,000
Preferred stock issued
by consolidated subsid-
iary................... 51,750 -- -- -- --
Subordinated notes...... -- -- -- 60,000 60,000
Stockholders' equity.... 161,657 229,043 156,547 182,284 220,171
Stockholders' equity per
common share(1)(2)..... 8.86 9.72 (3) 24.11 173.51 209.57
Common shares outstand-
ing(1)(2).............. 18,245,265 18,242,465 6,492,465 1,050,561 1,050,561
OPERATING DATA:
Interest income......... $ 237,913 $ 246,477 $ 241,465 $ 289,331 $ 370,715
Interest expense........ 152,623 174,836 155,828 188,494 240,124
---------- ---------- ---------- ---------- ----------
Net interest income..... 85,290 71,641 85,637 100,837 130,591
Provision for estimated
loan losses............ 15,610 69,724 (4) 65,559 65,100 51,180
---------- ---------- ---------- ---------- ----------
Net interest income
after provision for
estimated loan losses.. 69,680 1,917 20,078 35,737 79,411
Gains (losses) on loan
sales, net............. 22 522 (3,963) 194 1,117
Gains on securities and
trading activities,
net.................... 1,336 4,098 1,130 1,304 --
Gains on sales of ser-
vicing................. -- 4,604 -- -- --
Fee income from sale of
uninsured investment
products(5)............ 4,456 4,117 3,419 -- 2,606
Loans, retail banking
and other fees......... 5,339 6,866 9,040 8,660 12,291
Real estate operations.. (8,907) (9,145) (17,419) (48,843) (22,261)
SAIF special assessment. (18,000) -- -- -- --
1994 Restructuring and
Recapitalization
charges, net........... -- -- (65,394) -- --
Operating expense other
than SAIF special as-
sessment and 1994 Re-
structuring and Recapi-
talization charges..... (64,451) (81,954) (91,859) (98,732) (75,044)
---------- ---------- ---------- ---------- ----------
(Loss) before income
taxes and minority in-
terest in subsidiary... (10,525) (68,975) (144,968) (101,680) (1,880)
Income tax (benefit) ex-
pense.................. (1,093) 4 (16,524) (35,793) (2,167)
---------- ---------- ---------- ---------- ----------
Net (loss) earnings be-
fore minority interest
in subsidiary.......... (9,432) (68,979) (128,444) (65,887) 287
Minority interest in
subsidiary
(dividends on sub-
sidiary preferred
stock)................. (4,657) -- -- -- --
---------- ---------- ---------- ---------- ----------
Net (loss) earnings..... (14,089) (68,979) (128,444) (65,887) 287
Preferred stock
dividends.............. (1,553) -- -- -- --
---------- ---------- ---------- ---------- ----------
Net (loss) earnings
available for common
stockholders........... $ (15,642) $ (68,979) $ (128,444) $ (65,887) $ 287
========== ========== ========== ========== ==========
Net (loss) earnings per
common share(1)(2)..... $ (0.86) $ (8.84) $ (39.08) $ (62.72) $ 0.27
========== ========== ========== ========== ==========
Weighted average common
shares outstand-
ing(1)(2).............. 18,242,887 7,807,201 3,286,960 1,050,561 1,050,561
========== ========== ========== ========== ==========
</TABLE>
(continued)
13
<PAGE>
(continued)
<TABLE>
<CAPTION>
AT OR FOR THE YEAR ENDED DECEMBER 31,
-------------------------------------------------------
1996 1995 1994 1993 1992
-------- -------- -------- -------- --------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE
AMOUNTS)
<S> <C> <C> <C> <C> <C>
SELECTED OPERATING
RATIOS:
(Loss) return on average
assets................. (0.42)% (1.92)% (3.17)% (1.43)% 0.01%
(Loss) return on average
equity................. (7.01)%(6) (42.31)% (83.00)% (29.99)% 0.13%
Average equity divided
by average assets...... 6.71 % 4.54 % 3.82 % 4.77 % 4.57%
Ending equity divided by
ending assets.......... 4.85 % 6.94 % 4.22 % 4.15 % 4.69%
Operating expense to av-
erage assets(7)........ 1.94 % 2.28 % 2.27 % 2.14 % 1.52%
Efficiency ratio(8)..... 67.77 % 89.81 % 97.58 % 79.66 % 45.38%
Interest rate spread for
the period............. 2.31 % 1.89 % 2.24 % 2.31 % 2.66%
Net yield on interest-
earning assets......... 2.63 % 2.05 % 2.22 % 2.31 % 2.80%
ASSET QUALITY DATA:
NPAs(9)................. $ 60,788 $ 71,431 $ 85,729 $235,621 $234,405
NPAs to total assets.... 1.83 % 2.16 % 2.31 % 5.37 % 4.99%
Nonaccruing loans....... $ 36,125 $ 51,910 $ 71,614 $ 93,475 $112,041
Nonaccruing loans to to-
tal loans, net......... 1.34 % 1.77 % 2.18 % 2.52 % 2.83%
Classified assets....... $174,096 219,077 $141,536 $372,502 $353,738
Classified assets to to-
tal assets............. 5.23 % 6.64 % 3.82 % 8.49 % 7.53%
REGULATORY CAPITAL
RATIOS:
Tangible capital ratio.. 6.28 % 6.91 % 4.28 % 4.10 % 4.27%
Core capital ratio...... 6.29 % 6.92 % 4.29 % 4.15 % 4.35%
Risk-based capital ra-
tio.................... 11.85 % 12.43 % 8.28 % 9.32 % 9.76%
OTHER DATA:
Sales of investment
products(5)............ $118,061 $ 89,824 $112,430 $ 96,253 $ 77,078
Real estate loans fund-
ed..................... $ 13,859 $ 19,396 $521,580 $422,355 $435,690
Average interest rate on
new loans.............. 8.41 % 9.61 % 5.85 % 6.75 % 7.77%
Loans sold, net(10)..... $ (2,069) $ 390 $273,272 $115,003 $204,435
Number of:
Real estate loan ac-
counts (in thousands). 11 12 14 16 18
Deposit accounts (in
thousands)............ 194 207 216 241 233
Retail branch of-
fices(11)............. 33 33 33 42 43
</TABLE>
- --------
(1) For the periods prior to August 4, 1994, Fidelity's one share owned by
Citadel, its former holding company and sole stockholder, has been
retroactively reclassified into 1,050,561 shares of Class A Common Stock.
(2) On February 9, 1996, the Bank's stockholders approved a one-for-four
reverse stock split (the "Reverse Stock Split"). All per share data and
weighted average common shares outstanding have been retroactively adjusted
to reflect this change.
(3) Calculation excludes $51.8 million of preferred stock issued by
consolidated subsidiary.
(4) In 1995, the Bank recorded a $45 million loan portfolio charge in
connection with its adoption of the accelerated asset resolution plan (the
"Accelerated Asset Resolution Plan").
(5) Includes 100% of Gateway investment product sales.
(6) Net of dividends on preferred stock of subsidiary of $1.6 million.
(7) Excludes the impact of the Savings Association Insurance Fund ("SAIF")
special assessment and the net 1994 restructuring and recapitalization
charges (the "1994 Restructuring and Recapitalization").
(8) The efficiency ratio is computed by dividing total operating expense by net
interest income and noninterest income, excluding infrequent items,
provisions for estimated loan and real estate losses, direct costs of real
estate operations and gains/losses on the sale of securities.
(9) Nonperforming assets ("NPAs") include nonaccruing loans and foreclosed real
estate, net of specific valuation allowances, writedowns and real estate
owned ("REO") general valuation allowance ("GVA"), if any.
(10) Excludes loans sold in certain bulk sales consummated in 1994 (the "Bulk
Sales"), and is net of repurchases.
(11) All retail branch offices are located in Southern California.
14
<PAGE>
RISK FACTORS
Each of the Exchange Offer, investment in the Senior Notes and investment in
the Preferred Stock involves a high degree of risk. In considering whether to
participate in the Exchange and invest in the Senior Notes or to continue to
hold the Preferred Stock, investors are urged to read and carefully consider
the matters set forth below, as well as the other information contained
herein.
REDUCED DIVIDEND RATE ON PREFERRED STOCK FOLLOWING EXCHANGE DATE
Currently, noncumulative quarterly dividends are payable on the Preferred
Stock when, as and if declared by the Board of Directors of Fidelity at an
annual rate of $3 per share (12% of the liquidation preference of $25 per
share). Pursuant to the terms of the Preferred Stock, following the Exchange
Date, noncumulative quarterly dividends will be payable on the Preferred Stock
when, as and if declared by the Board of Directors of Fidelity at a reduced
annual rate of $2.50 per share (10% of the liquidation preference of $25 per
share). Accordingly, Preferred Stockholders who reject the Exchange Offer and
retain shares of Preferred Stock will experience a significant reduction in
the dividend rate payable on such shares of Preferred Stock following the
Exchange Date. See "Description of Preferred Stock."
REDUCTION IN LIQUIDITY OF TRADING MARKET FOR PREFERRED STOCK FOLLOWING
EXCHANGE DATE
The Preferred Stock is not, and after the Exchange Date will not be, listed
on any national securities exchange or included in any interdealer quotation
system. Fidelity has no outstanding publicly held securities other than the
Preferred Stock; after the Exchange Date, it is likely that the number of
publicly held shares of Preferred Stock will be significantly reduced. In
addition, on May 17, 1996, Fidelity ceased to be a reporting entity under the
Exchange Act; accordingly, public information regarding Fidelity is currently,
and after the Exchange Date will continue to be, available only insofar as it
may be included in the public reports of Bank Plus. All of these factors,
together with the reduction in the dividend rate for the Preferred Stock
subsequent to the Exchange Date, are likely to severely affect the liquidity
and market price of the Preferred Stock following the Exchange Date.
SENIOR NOTES; EFFECTIVE SUBORDINATION
Sources of Payment. At December 31, 1996, Bank Plus had cash and cash
equivalents of only $0.8 million and no material cash producing operations or
assets other than its investments in the Bank and Gateway. Accordingly, Bank
Plus' ability to pay interest and principal on the Senior Notes and to
repurchase Senior Notes upon the exercise by holders of the Senior Notes of
the right to require such repurchase upon a Holding Company Change in Control
will depend primarily on cash dividends from the Bank. As discussed below,
there are significant limitations on the ability of the Bank to pay dividends
or otherwise provide cash to Bank Plus. See "--Payment of Dividends." In
addition, the Senior Notes are effectively subordinated to all existing and
future indebtedness and other liabilities of Bank Plus' subsidiaries. As of
December 31, 1996, the aggregate liabilities of Bank Plus' subsidiaries not
eliminated in Bank Plus' consolidated financial statements was approximately
$3.2 billion (including deposits).
Absence of a Public Trading Market. The Company does not expect that the
Senior Notes will be listed on a national securities exchange or qualified for
trading on any automated quotation system. There is no assurance that a
trading market for the Senior Notes will develop or that holders of the Senior
Notes will have liquidity of investment. Friedman, Billings, Ramsey & Co.,
Inc. ("FBR") has indicated that it intends to effect a limited market in the
Senior Notes. FBR has no obligation to make such a limited market and any such
market making activities may be terminated at the sole option of FBR at any
time. After their initial issuance in the Exchange, the Senior Notes may trade
at a substantial discount from their principal amount as a result of limited
liquidity and the lack of a public trading market.
15
<PAGE>
Taxation. The exchange will constitute a taxable exchange in which a holder
will recognize gain or loss equal to, in general, the difference between the
amount realized and the holder's adjusted tax basis in the Preferred Stock.
See "Certain Federal Income Tax Considerations."
RESTRICTIONS ON PAYMENT OF DIVIDENDS
Bank Plus will be substantially dependent on the receipt of dividends on the
common stock of Fidelity and, following the Exchange Date, any shares of
Preferred Stock owned by Bank Plus to make payments of principal, premium, if
any, and interest with respect to the Senior Notes and amounts payable upon
repurchase of the Senior Notes following a Holding Company Change of Control.
Determinations by the Bank's Board of Directors to pay dividends will be
dependent upon, among other things, the Bank's financial condition, results of
operations and levels of regulatory capital. The ability of the Bank to pay
dividends is also subject to significant regulatory restrictions.
The OTS has promulgated a regulation that measures a savings institution's
ability to make a capital distribution according to the institution's capital
position. The rule establishes "safe harbor" amounts of capital distributions
that institutions can make after providing notice to the OTS, but without
needing prior approval. Institutions can distribute amounts in excess of the
safe harbor only with the prior approval of the OTS. For institutions ("Tier 1
institutions") that meet their fully phased-in capital requirements (the
requirements that will apply when the phase-out of supervisory goodwill and
investments in certain subsidiaries from capital is complete), the safe harbor
amount is the greater of (a) 75% of net income for the prior four quarters, or
(b) the sum of (l) the current year's net income and (2) the amount that would
reduce the excess of the institution's total capital to risk-weighted assets
ratio over 8% to one-half of such excess at the beginning of the year in which
the dividend is paid. For institutions that meet their current minimum capital
requirements but do not meet their fully phased-in requirements ("Tier 2
institutions"), the safe harbor distribution is 75% of net income for the
prior four quarters. As a function of the PCA provisions discussed above and
the OTS regulation regarding capital distributions, savings institutions that
do not meet their current minimum capital requirements ("Tier 3 institutions")
may not make any capital distributions, with the exception of repurchases or
redemptions of the institution's shares permitted by the OTS, after
consultation with the FDIC, that are made in connection with the issuance of
additional shares and that will improve the institution's financial condition.
The OTS retains the authority to prohibit any capital distribution otherwise
authorized under the regulation if the OTS determines that the distribution
would constitute an unsafe or unsound practice. The OTS also may reclassify a
Tier 1 institution as a Tier 2 or Tier 3 institution by notifying the
institution that it is in need of more than normal supervision. Further, an
adequately capitalized institution may not make a capital distribution if such
payment would cause the institution to become undercapitalized.
Fidelity is currently classified as a Tier 1 institution. At December 31,
1996, Fidelity would have been permitted to pay $35.7 million in dividends on
its common stock without prior approval of the OTS.
The OTS has informed the Bank that the OTS approves the payment of dividends
on the Preferred Stock so long as the Bank's ratio of core capital to risk-
weighted assets and total capital to risk-weighted assets are no less than 4%
and 8%, respectively, immediately after giving effect to the payment of any
such dividend. The OTS also confirmed that no further approvals are or will be
required by any applicable current or future statutory provisions. However,
notwithstanding the foregoing, the OTS may take appropriate supervisory
action, including restricting future dividend payments based on safety and
soundness concerns or subsequent examination findings.
Due to the fact that from and after the Exchange Date dividends on the
Preferred Stock (including shares of Preferred Stock acquired by Bank Plus in
the Exchange) will be payable at a reduced rate of 10% of the liquidation
preference of the Preferred Stock of $25 per share while the Senior Notes will
bear interest at the rate of 12% per annum, dividend payments on the shares of
Preferred Stock so acquired by Bank Plus, even if paid, will be insufficient
on their own to provide Bank Plus with funds to pay interest on the Senior
Notes.
16
<PAGE>
Accordingly, the Bank intends to request confirmation from the OTS that it
approves the payment of dividends on the Bank's common stock in the amount of
such insufficiency. There can be no assurance that the OTS will provide such
confirmation or as to the nature of the conditions and limitations that may be
contained in any such approval.
There can be no assurance that Fidelity will be permitted to pay sufficient
dividends on its common stock and any shares of Preferred Stock held by Bank
Plus following the Exchange Date to enable Bank Plus to pay principal,
premium, if any, or interest on the Senior Notes and any amounts payable upon
repurchase of the Senior Notes or, even if permitted, that the Board of
Directors of Fidelity will determine to declare such dividends. Payments of
dividends by Fidelity could be restricted by the OTS based on safety and
soundness concerns or examination findings or as a result of a deterioration
in the Bank's capital ratios. The Bank's ability to pay dividends on its
common stock and Preferred Stock would also be adversely affected if Fidelity
were to cease to be deemed a Tier 1 institution. Moreover, even if Fidelity
remains a Tier 1 institution, there can be no assurance that safe harbor
amounts available for the payment of dividends, if any, will be sufficient to
enable Bank Plus to make required payments with respect to the Senior Notes or
that the OTS will approve the payment of any dividends in excess of such safe
harbor amounts.
RISK OF CONTINUING LOSSES
Beginning in late 1991, the impact of the economic recession and substantial
declines in real estate values in Southern California began to adversely
affect collateral values and the ability of certain borrowers to repay their
obligations to the Bank. This led to high levels of NPAs and net chargeoffs in
1991, which adversely affected the Bank's asset quality and results of
operations. The foregoing factors contributed to a net loss of $65.9 million
($62.72 per share), a net loss of $128.4 million ($39.08 per share) and a net
loss of $69.0 million ($8.84 per share) for the years ended December 31, 1993,
1994 and 1995, respectively. The Bank's losses during these periods were
primarily due to significant increases in the provision for loan and real
estate losses, lower net interest income due primarily to high levels of NPAs,
decreased fee income due primarily to shrinkage of the Bank's deposit base,
and increased operating and other expenses relating to managing the Bank's
problem asset portfolio and the write-off of certain intangible assets.
For the year ended December 31, 1996, the Company reported a net loss of
$14.1 million before dividends on preferred stock of subsidiary of $1.6
million (after giving effect to the Savings Association Insurance Fund
("SAIF") special assessment of $18.0 million). Earnings during 1996 were
positively affected by, among other things, a reduced provision for estimated
loan losses of $15.6 million compared to provisions of $69.7 million
(including the effect of a $45 million loan portfolio charge taken in
connection with the Bank's adoption of an accelerated asset resolution plan
(the "Accelerated Asset Resolution Plan")) and $65.6 million during 1995 and
1994, respectively. The lower provision during 1996 is attributable to, among
other things, lower levels of NPAs and classified assets in 1996 compared to
prior years and the effect of the Accelerated Asset Resolution Plan and the
$45.0 million reserve taken in connection therewith in 1995. No assurance can
be given that economic conditions that may affect the Bank's market area or
other circumstances will not require an increased provision which could have
an adverse effect on the Company's financial condition and results of
operations. See "--Adequacy of Allowance for Loan and Real Estate Losses."
HIGH LEVELS OF NONPERFORMING ASSETS AND OTHER ASSETS WITH INCREASED RISK
Due to significant decreases in rental rates and property values, loans
originated during the years 1987 through 1991 (which included the peak years
of Southern California real estate values in recent periods) are characterized
by generally higher loan to value ratios and lower debt coverage ratios. The
levels of the Bank's NPAs between 1989 and 1994 increased as economic
conditions worsened and contributed to substantial declines in real estate
values. Subsequent to the 1994 Recapitalization and Restructuring, the levels
of NPAs decreased substantially and remained at such lower levels during 1995
and 1996. As of December 31, 1996, 61.7% of the outstanding gross loan
portfolio was originated between 1987 and 1991. Of the loan and REO chargeoffs
for the year ended December 31, 1996, 80.7% were associated with loans
originated in such period. High levels of NPAs
17
<PAGE>
were exacerbated as a result of the Bank's concentration of loans secured by
multifamily properties in geographic areas that suffered particularly
significant declines in rental rates and real estate values and the impact of
the Northridge earthquake. See "--Dependence on Real Estate and High
Concentration of Multifamily Residential Loans."
Levels of NPAs may remain at current levels or may increase in the future as
problem loans are worked out and in some instances properties are taken into
REO. The real estate market in Southern California and the overall economy in
the areas where the Bank operates are likely to continue to have a significant
effect on the quality of the Company's assets in the future.
ADEQUACY OF ALLOWANCE FOR LOAN AND REAL ESTATE LOSSES
The Company's results of operations have been adversely affected in recent
years by significant loan and real estate loss provisions taken in light of
significant chargeoffs against the Bank's allowance for estimated loan and REO
losses and high levels of NPAs and increased levels of REO, particularly with
respect to the Bank's loans on multifamily properties of 5 units or more. The
amount of the Bank's allowance for loan losses represents management's
estimate of the amount of loan losses likely to be incurred by the Bank, based
upon various assumptions as to economic and other conditions. As such, the
allowance for loan losses does not represent the amount of such losses that
could be incurred under adverse conditions that management does not consider
to be the most likely to arise. In addition, management's classification of
assets and evaluation of the adequacy of the allowance for loan losses is an
ongoing process. Consequently, there can be no assurance that material
additions to the Bank's allowance for loan losses will not be required in the
future, thereby adversely affecting earnings and the Bank's ability to
maintain or build capital. While management believes that the current
allowance is adequate to absorb the known and inherent risks in the loan
portfolio, no assurances can be given that the allowance is adequate or that
economic conditions which may adversely affect the Bank's market area or other
circumstances will not result in future loan or REO losses, which may not be
covered completely by the current allowance or may require an increased
provision which could have an adverse effect on the Bank's financial condition
and results of operations. Significant additional loan and real estate loss
provisions may negatively impact the Bank's future results of operations and
levels of regulatory capital.
ECONOMIC CONDITIONS IN FIDELITY'S MARKET AREA
The performance of the Bank's multifamily and commercial loan portfolios has
been adversely affected by Southern California economic conditions. These
portfolios are particularly susceptible to the potential for further declines
in the Southern California economy, such as increasing vacancy rates,
declining rents, increasing interest rates, declining debt coverage ratios and
declining market values for multifamily and commercial properties. In
addition, the possibility that investors may abandon properties or seek
bankruptcy protection with respect to properties experiencing negative cash
flow, particularly where such properties are not cross-collateralized by other
performing assets, can also adversely affect the multifamily loan portfolio.
California has been hit particularly hard by adverse economic conditions and
Southern California has experienced the brunt of the economic downturn in the
state. Although certain economic indicators suggest that the Southern
California economy is beginning to improve, many factors key to recovery may
be impacted adversely by the Federal Reserve Board's interest rate policy as
well as other factors. Consequently, rents and real estate values may not
stabilize, which may affect future delinquency and foreclosure levels and may
adversely impact the Company's asset quality, earning performance and capital
levels.
DEPENDENCE ON REAL ESTATE AND HIGH CONCENTRATION OF MULTIFAMILY RESIDENTIAL
LOANS
At December 31, 1996, substantially all of the Bank's loan portfolio was
secured by real estate, and the Company had $24.7 million of net REO. In light
of the economic recession in Southern California and the impact it has had and
may have on the Southern California real estate market, the Bank's real estate
dependence and high concentration of multifamily loans on properties of 5 or
more units (approximately 62% of the Bank's mortgage loan portfolio) increases
the risk of loss in the Bank's loan portfolio.
18
<PAGE>
Prior to the 1994 Restructuring and Recapitalization, the Bank experienced
high delinquency rates in its multifamily portfolio of 5 or more units
reflecting, among other things, (i) high vacancy rates, (ii) low apartment
rental rates, (iii) a greater willingness of borrowers to abandon such
properties or seek bankruptcy protection, particularly where such properties
are experiencing negative cash flow and the loans are not cross-collateralized
by other performing properties, and (iv) the substantial decreases in the
market value of multifamily properties experienced in recent periods
(resulting, in many cases, in appraised values less than the outstanding loan
balances).
Multifamily lending on properties of 5 or more units typically involves
larger loans to a single obligor and is generally viewed as exposing the
lender to a greater risk of loss than single family and multifamily (2 to 4
units) lending. The liquidation value of multifamily properties may be
adversely affected by risks generally incident to interests in real property,
which include: changes or continued weakness in general or local economic
conditions and/or specific industry segments, declines in real estate values,
declines in rental, room or occupancy rates, increases in interest rates, real
estate and personal property tax rates and other operating expenses (including
energy costs), the availability of refinancing, changes in governmental rules,
regulations and fiscal policies, including rent control ordinances and
environmental legislation, and other factors beyond the control of the
borrower or the lender.
CAPITAL REQUIREMENTS
The minimum capital requirements applicable to savings associations, such as
the Bank, were significantly increased by the Financial Institutions Reform,
Recovery, and Enforcement Act of 1989 ("FIRREA"). Under FIRREA, as implemented
to date by the OTS, thrifts are required to maintain ratios of tangible
capital to adjusted total assets (as defined in the regulations) of at least
1.5%, core capital to adjusted total assets (as defined in the regulations) of
at least 3% and total capital to risk-weighted assets (as defined in the
regulations) of at least 8%.
The Federal Deposit Insurance Corporation Improvement Act of 1991
("FDICIA"), among other things, required the OTS to implement a system
providing for regulatory sanctions against institutions that are not
adequately capitalized. The severity of the sanctions increases to the extent
that an institution's capital continues to decline. Under the Prompt
Corrective Action ("PCA") Regulations, an institution is adequately
capitalized (and, therefore, not undercapitalized) if (1) its ratio of core
capital to adjusted total assets (as defined in the regulations) is at least
4%, (2) its ratio of core capital to risk-weighted assets (as defined in the
regulations) is at least 4% and (3) its ratio of total capital to risk-
weighted assets (as defined in the regulations) is at least 8%. An institution
is treated as well capitalized if its core capital to adjusted total assets
ratio is at least 5%, its core capital to risk-weighted assets ratio is at
least 6%, and its total capital to risk-weighted assets is at least 10% and no
OTS order or directive requiring higher capital ratios is then in effect.
At December 31, 1996, the Bank met the requirements to be deemed well
capitalized for regulatory purposes. However, there can be no assurance that
the Bank will remain well capitalized in the future.
The OTS also has the authority to establish, for individual thrifts, an
individual minimum capital requirement ("IMCR") in excess of the standard
requirement upon a determination by the OTS that such an IMCR is necessary or
appropriate in light of such thrift's particular circumstances. For example,
the OTS may determine that an IMCR is appropriate if, among other things, the
OTS believes that an institution (i) has a high degree of exposure to interest
rate risk or credit risk, (ii) has a high degree of exposure to concentration
of credit risk or risks arising from nontraditional activities or fails to
adequately monitor and control the risks presented by concentration of credit
and nontraditional activities, (iii) may be adversely affected by the
operation or condition of its holding company, (iv) has a portfolio reflecting
weak credit quality or a significant likelihood of financial loss or (v) has
inadequate underwriting standards or procedures. If the OTS determines that an
IMCR should be imposed on an institution, the institution has an opportunity
to submit a response to the OTS, but may
19
<PAGE>
have no opportunity for judicial review of an IMCR. If an institution fails to
meet either the standard minimum capital requirements or any IMCR that may be
imposed on it, it will become subject to a number of regulatory sanctions.
Although the Bank is not currently subject to an IMCR, these can be no
assurance that the Bank will not be subject to an IMCR in the future.
The Bank's failure to meet its regulatory capital requirements would provide
grounds for one or more of the following actions, depending on the severity of
the violation: a requirement that the Bank file a capital restoration plan, a
requirement that the Bank take additional actions to comply with the capital
restoration plan, the issuance of a cease and desist order, the issuance of a
capital directive, the imposition of civil money penalties on the Bank and
certain affiliated parties, the imposition of such operating restrictions as
the OTS deems appropriate at the time, such other actions by the OTS as it may
be authorized or required to take under applicable statutes and regulations
and, under certain circumstances, the appointment of a conservator or receiver
for the Bank.
FLUCTUATIONS IN INTEREST RATES
Prevailing economic conditions, particularly changes in market interest
rates, as well as governmental policies and regulations concerning, among
other things, monetary and fiscal affairs, significantly affect interest rates
and a savings institution's net interest income. The results of operations of
the Company depend to a large extent on net interest income, which is the
difference between interest the Company receives from its loans, securities
and other interest-earning assets and the interest expense the Company pays on
its deposits and other interest-bearing liabilities. The Company is subject to
risk from fluctuations in interest rates to the extent its interest-bearing
liabilities mature or reprice at different times or on a different basis than
its interest-earning assets. Generally speaking, maturing liabilities, such as
deposits, may be replaced only with new liabilities paying interest rates
prevailing at the time of maturity, which may possibly be higher than the
rates applicable to the liabilities they replaced. Similarly, rates paid on
liabilities which reprice or adjust are adjusted based on interest rates
prevailing at the time of the repricing or adjustment. "Gap," generally
speaking, represents the estimated difference between the amount of interest-
earning assets and interest-bearing liabilities repricing during future
periods as adjusted for interest-rate swaps and other financial instruments as
applicable, and based on certain assumptions. One method the Company uses to
measure its exposure to interest rate fluctuations is by calculating its one-
year Gap, which is the ratio of (i) the difference between interest-sensitive
assets and those liabilities that mature or reprice within 12 months to (ii)
total assets. Analysis of the Gap provides only a static view of the Bank's
interest rate sensitivity at a specific point in time. The actual impact of
interest rate movements on the Company's net interest income may differ from
that implied by any Gap measurement. At December 31, 1996, the Company had net
repriceable liabilities that reprice within one year (a measure of "negative
one-year Gap") of 2.84% compared to a positive one-year Gap of 7.06% at
December 31, 1995. With a negative one-year Gap, the Company would anticipate
a declining net interest margin over the near term in a rising rate
environment. Conversely, in a falling interest rate environment, the Company
would anticipate that net interest margin would be positively affected.
At December 31, 1996, approximately 92.6% of the Company's total loan
portfolio consisted of loans which mature or reprice in accordance with the
Federal Home Loan Bank Eleventh District Cost of Funds Index within one year,
compared with approximately 92.4% at December 31, 1995 and approximately 90.6%
at December 31, 1994. During the latter part of 1995 and early 1996, the
Company benefitted from the fact that decreases in the interest rates accruing
on the Company's adjustable rate mortgage ("ARM") loans lagged the decreases
in interest rates accruing on its deposits. During the rising interest rate
environment experienced in early 1995 and the latter part of 1996, however,
the Company's net interest margin was reduced. If interest rates were to
increase again, the Company's net interest income may suffer further as a
result.
SIGNIFICANT REGULATION
The financial institutions industry is subject to significant regulation,
which has materially affected the industry in the past and will likely do so
in the future. Such regulations, which affect Fidelity and Bank Plus on a
daily basis, may be changed at any time, and the interpretation of the
relevant law and regulations is also subject to change by the authorities who
examine the Bank and interpret those laws and regulations. There can
20
<PAGE>
be no assurance that any present or future changes in the laws or regulations
or in their interpretation will not materially and adversely affect the
Company.
LIMITATIONS ON RIGHT OF HOLDERS OF PREFERRED STOCK AND SENIOR NOTES TO REQUIRE
REPURCHASE UPON A CHANGE OF CONTROL
The right of holders of the Preferred Stock to require the Bank to
repurchase such holders' shares of Preferred Stock is subject to certain
significant conditions and limitations. No Change of Control will be deemed to
have occurred unless the transaction that would result in the Change of
Control has been approved by the Board of Directors of the Bank and such
transaction, and the exercise by the holders of the Preferred Stock of their
right to require repurchase of the Preferred Stock with respect thereto, has
been approved by the OTS. In the event the OTS does not approve the exercise
of such repurchase right as described herein, the right of the holders to
require such repurchase shall irrevocably terminate with respect to such
Change of Control. See "Description of the Preferred Stock--Repurchase at
Option of Holders Upon Change of Control." The right of holders of Senior
Notes to require Bank Plus to repurchase Senior Notes upon a Holding Company
Change of Control would also be subject to certain significant conditions and
limitations, including the condition that the Holding Company Change of
Control shall be deemed to have occurred only if and when the transaction that
would result in such Holding Company Change of Control has been approved by
the Board of Director of Bank Plus and the OTS. See "Description of Senior
Notes--Right to Require Repurchase" and "--Notices; Method of Exercising
Repurchase Right, Etc."
LEGAL PROCEEDINGS
The Bank was named as a defendant in a purported class action lawsuit
alleging violations of federal securities laws in connection with the offering
of common stock by the Bank in 1994 as part of the Bank's 1994 Restructuring
and Recapitalization. The suit was filed by Harbor Finance Partners ("Harbor")
in an alleged class action complaint in the United States District Court-
Central District of California on July 28, 1995 and originally named as
defendants the Bank, Citadel, Richard M. Greenwood (the Bank's chief executive
officer and Citadel's former chief executive officer), J.P. Morgan Securities,
Inc. and Deloitte & Touche LLP. The suit alleged that false or misleading
information was provided by the defendants in connection with the Bank's 1994
Restructuring and Recapitalization and stock offering and that the defendants
knew and failed to disclose negative information concerning the Bank. A motion
to dismiss the original complaint was filed by the Bank, and was granted
without opposition. Thereafter, Harbor filed an amended complaint which did
not include J.P. Morgan Securities, Inc. and Deloitte & Touche LLP as
defendants and which contained some factual and legal contentions that were
different from those set forth originally. On May 21, 1996, the court granted
the Bank's and Greenwood's motion to dismiss the first amended complaint, but
granted leave to amend. Following the filing of a second amended complaint,
the Bank and Greenwood filed a motion to dismiss. At a hearing on July 22,
1996, the court ruled that the case should be dismissed with prejudice and a
formal order to that effect was submitted to the court for execution. Harbor
lodged certain objections to the proposed order, including objections that the
state law claims in the second amended complaint should not be dismissed with
prejudice. The court's order of dismissal was entered on August 5, 1996 and
provided that all claims asserted in the second amended complaint under
federal law were dismissed with prejudice and those under state law were
dismissed without prejudice to their renewal in state court pursuant to 28
U.S.C. (S)1367(b)(3). Harbor has filed a notice of appeal to the order of
dismissal. Briefing in the appeal is now concluded and the appeal awaits
hearing and disposition. On August 30, 1996, Harbor filed an alleged class
action complaint in state court containing allegations similar to those raised
in the federal court action as well as claims for unfair business practices to
which the Bank and Greenwood filed demurrers seeking to have the case
dismissed. These demurrers were sustained without leave to amend on March 13,
1997 and it is expected that a judgment of dismissal will be entered in the
trial court.
In addition, the Bank is a defendant in several individual and purported
class actions brought by several borrowers which raise claims with respect to
the manner in which the Bank serviced certain adjustable rate mortgages which
were originated during the period 1983 through 1988. The actions have been
filed between
21
<PAGE>
July 1, 1992 and February of 1995. In one case the Bank won a summary judgment
in Federal District Court. This judgment was appealed. On July 25, 1996, the
Ninth Circuit Court of Appeals filed its opinion which affirmed in part,
reversed in part and remanded back to the Federal District Court for further
hearing. In three Los Angeles Superior Court cases, judgment in favor of the
Bank was recently entered. Plaintiff has appealed in all three cases. Two
other cases are pending in the Los Angeles Superior Court. The plaintiffs'
principal claim is that the Bank selected an inappropriate review date to
consult the index upon which the rate adjustment is based that was one or two
months earlier than what was required under the terms of the notes. In a
declining interest rate environment, the lag effect of an earlier review
period defers the benefit to the borrower of such decline, and the reverse
would be true in a rising interest rate environment. The Bank strongly
disputes these contentions and is vigorously defending these suits. The legal
responsibility and financial exposure of these claims presently cannot be
reasonably ascertained and, accordingly, there is a risk that the final
outcome of one or more of these actions could result in the payment of
monetary damages that could be material in relation to the financial condition
or results of operations of the Bank. The Bank does not believe the likelihood
of such a result is probable and has not established any specific litigation
reserves with respect to such lawsuits.
An adverse outcome with respect to any of the foregoing claims could have a
material adverse effect on the Company's financial condition and results of
operations and the Bank's regulatory capital.
COMPETITION
The Company faces substantial competition for loans and deposits throughout
its market areas. The Company competes on a daily basis with commercial banks,
other savings institutions, thrift and loans, credit unions, finance
companies, retail investment brokerage houses, mortgage banks, money market
and mutual funds and other investment alternatives and other financial
intermediaries, many of which have substantially greater resources, experience
and capital than the Company. The Company faces competition throughout its
market area from local institutions, which have a large presence in the
Company's market areas, as well as from out-of-state financial institutions
which have offices in the Company's market areas. Many of these other
institutions offer services which the Company does not offer, including trust
services. Furthermore, banks with a larger capital base and financial firms
not subject to the restrictions imposed by banking regulation have larger
lending limits and can therefore serve the needs of larger customers.
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<PAGE>
CAPITALIZATION
The following table sets forth the unaudited consolidated capitalization of
Bank Plus as of December 31, 1996, (i) on a historical basis and (ii) as
adjusted to give effect to the exchange of all of the outstanding shares of
Preferred Stock for Senior Notes pursuant to the Exchange Offer. This table
should be read in conjunction with the historical consolidated financial
statements and the notes thereto incorporated by reference herein.
<TABLE>
<CAPTION>
DECEMBER 31, 1996
----------------------
ACTUAL AS ADJUSTED
--------- -----------
(DOLLARS IN
THOUSANDS)
<S> <C> <C>
Long Term Debt:
12% Senior Notes due , 2007..................... $ -- $ 51,750
--------- ---------
Minority Interest: Preferred stock of consolidated sub-
sidiary............................................... 51,750 --
--------- ---------
Total Long-Term Debt................................... $ -- $ 51,750
========= =========
Stockholders' Equity
Common Stock:
Common Stock, par value $.01 per share; 78,500,000
shares authorized; 18,245,265 shares outstanding...... 182 182
Paid-in capital........................................ 261,902 261,902
Unrealized gains on securities......................... 1,043 1,043
Accumulated deficit.................................... (101,470) (101,470)
--------- ---------
Total Stockholders' Equity............................ 161,657 161,657
--------- ---------
Total Capitalization................................. $ 213,407 $ 213,407
========= =========
</TABLE>
CONSOLIDATED RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the Company's ratios of earnings to fixed
charges for the years and periods indicated:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Consolidated Ratio of Earnings to Fixed Charges:
Including interest on deposits....................... * * * * *
Excluding interest on deposits....................... * * * * *
</TABLE>
- --------
*Less than one.
For purposes of this computation, earnings consist of income (loss) from
continuing operations before income taxes, plus fixed charges. Fixed charges
consist of interest expense, amortization of financing costs and that portion
of rental expense that is representative of the interest factor. For the
fiscal years ended December 31, 1996, 1995, 1994, 1993 and 1992, earnings were
insufficient to cover fixed charges and preferred stock dividends by $21.2
million, $69.0 million, $145.0 million, $101.7 million and $1.9 million,
respectively.
MARKET PRICES AND DIVIDENDS
The Preferred Stock is not listed on any national securities exchange or
included in any interdealer quotation system. Accordingly, there is no
established public trading market for, or generally available information as
to the trading price of, shares of Preferred Stock. However, Fidelity
understands that, at the date of this Prospectus, a limited market in the
Preferred Stock is being effected through the matching of buy and sell orders
by FBR.
23
<PAGE>
Bank Plus is informed that, on March 27, 1997, FBR was quoting bid and asked
prices on shares of Preferred Stock of $28 1/2 and $29 per share,
respectively.
Full quarterly dividends of $0.75 per share have been declared and paid on
the Preferred Stock with respect to each Dividend Payment Date since the
Preferred Stock was offered to investors in November 1995. On the Exchange
Date, subject to Bank Plus' right to terminate the Exchange Offer prior
thereto, Preferred Stockholders will be entitled to receive a dividend on the
liquidation preference of the Preferred Stock at the rate of 12% per annum for
the period from the most recent Dividend Payment Date (which Dividend Payment
Date is expected to be February 15, 1997) to the Exchange Date.
BACKGROUND OF AND REASONS FOR THE EXCHANGE OFFER
The Preferred Stock was initially offered to the public in November 1995
(the "Preferred Stock Offering") as one in a series of steps taken by Fidelity
to increase its regulatory capital and increase its operational flexibility.
At the time of the Preferred Stock Offering, Fidelity was considering the
possibility of forming a holding company that would hold all of the common
stock of Fidelity. Fidelity believed that a holding company structure would
provide Fidelity with greater operating and financial flexibility in
connection with certain financing, investment and other business and corporate
activities. A holding company structure would provide opportunities for a
financing structure under which the holding company would be able to borrow
money and contribute those funds to Fidelity as equity capital. This would
provide the holding company with a tax deduction for its interest payments on
the debt and would provide Fidelity with an increased capital base on which it
may be able to borrow additional funds in the capital markets. In light of the
possible holding company structure and the benefits to be received therefrom,
the terms of the Preferred Stock contained express provision for the exchange
of Preferred Stock for senior debt securities of the holding company in the
event of the formation of a holding company by Fidelity. Pursuant to those
terms, shares of Preferred Stock could be made exchangeable at the election of
the holding company, so long as all dividends accrued on the Preferred Stock
for the Dividend Period in which the exchange date were to occur (and, if the
exchange date were not a Dividend Payment Date, for the prior Dividend Period)
had been paid or set aside for payment. The terms of the Preferred Stock
specified certain required terms and conditions for the exchange, which have
been incorporated in the terms and conditions of the Exchange Offer, and
described certain optional features of the exchange, among them that shares of
Preferred Stock could be deemed exchanged for Senior Notes without action on
the part of the holder of such Preferred Stock unless such holder were to
return an election form stating that such holder's shares of Preferred Stock
were not to be exchanged for Senior Notes.
Bank Plus became the holding company for Fidelity in May 1996. All dividends
accrued on the Preferred Stock for the current Dividend Period and for the
Dividend Period in which the Exchange Date is expected to occur have been set
aside for payment. Accordingly, subject to the terms and conditions set forth
herein, Bank Plus has elected to make the Preferred Stock exchangeable for
Senior Notes in accordance with the terms of the Preferred Stock.
THE EXCHANGE OFFER
TERMS OF EXCHANGE
In the Exchange Offer, Bank Plus is offering to exchange $1,000 principal
amount of Senior Notes for each 40 outstanding shares of Preferred Stock. The
total number of shares of Preferred Stock outstanding at the date of this
Prospectus was 2,070,000.
Pursuant to the terms of the Preferred Stock, subject to the conditions
specified herein, all shares of Preferred Stock held by a Preferred
Stockholder will be deemed automatically exchanged for Senior Notes on
24
<PAGE>
the Exchange Date without any action on the part of such Preferred Stockholder
unless the enclosed Notice of Rejection of Offer specifying that shares of
Preferred Stock are not to be exchanged for Senior Notes has been duly
executed by such holder and received by the Exchange Agent and not withdrawn
prior to the Exchange Date. Accordingly, Preferred Stockholders who take no
action in the Exchange Offer will be deemed to have accepted the Exchange
Offer. However, to the extent that the number of shares represented by any
Preferred Stockholder's certificate(s) is not evenly divisible by 40, such
Preferred Stockholder will receive, in addition to Senior Notes, a certificate
representing a number of shares of Preferred Stock equal to the amount by
which the number of shares of such Preferred Stockholder exceeds the closest
multiple of 40.
On the Exchange Date, in accordance with the terms of the Preferred Stock,
subject to Bank Plus' right to terminate the Exchange Offer prior thereto,
Preferred Stockholders will be entitled to receive a dividend on the Preferred
Stock at the rate of 12% per annum for the period from the most recent
Dividend Payment Date (which is expected to be February 15, 1997) to the
Exchange Date, pro rated on the basis of twelve 30-day months and a 360-day
year, as specified by the terms of the Preferred Stock.
From and after the Exchange Date, Exchanging Stockholders will no longer be
entitled to receive dividends in respect of shares of Preferred Stock
exchanged for Senior Notes, but will be entitled to receive interest accruing
on such Senior Notes at the rate of 12% per annum. Accrued interest on Senior
Notes from the Exchange Date to the initial Interest Payment Date (which is
expected to be May 15, 1997) will be payable to holders of Senior Notes on
such Interest Payment Date.
From and after the Exchange Date, dividends will accrue on shares of
Preferred Stock at the reduced rate of 10% per annum. In addition, dividends
on shares of Preferred Stock will continue to be payable to holders of
Preferred Stock only when, as and if declared by the Board of Directors of
Fidelity.
It is currently expected that, following consummation of the Exchange Offer,
shares of Preferred Stock that are exchanged for Senior Notes will remain
outstanding and be held by Bank Plus.
EXCHANGE DATE; EXTENSION; AMENDMENT; TERMINATION
The Exchange Offer will expire at 12:00 midnight, New York City time, on
, 1997 unless Bank Plus, in its sole discretion, subject to the terms
of the Preferred Stock, extends the duration of the Exchange Offer. In such
event, the Exchange Offer will expire at the latest time on the latest date to
which the Exchange Offer shall have been so extended. Bank Plus reserves the
right to extend the Exchange Offer at any time and from time to time by giving
oral or written notice to the Exchange Agent and making a public announcement
by press release to the Dow Jones News Service prior to the previously
scheduled Exchange Date. During any such extension, any Notice of Rejection of
Offer previously executed and returned by a Preferred Stockholder may be
withdrawn. See "--Withdrawal of Notice of Rejection of Offer."
Bank Plus reserves the right (i) to terminate the Exchange Offer if the
conditions set forth below under "--Conditions of the Exchange Offer" are not
met or waived by Bank Plus and (ii) subject to appropriate notice and
compliance with the requirements with respect to the Exchange as provided in
the terms of the Preferred Stock, to amend the terms of the Exchange Offer at
any time and from time to time in any respect. If Bank Plus exercises its
right to terminate or amend the Exchange Offer, Bank Plus shall give oral or
written notice of such termination or amendment to the Exchange Agent and
shall make a public announcement thereof. Without limiting the manner in which
Bank Plus may choose to make a public announcement of termination or
amendment, Bank Plus will not, unless otherwise required by law, have any
obligation to publish, advertise or otherwise communicate any such public
announcement other than by press release to the Dow Jones News Service.
In the event of any termination of the Exchange Offer, Bank Plus will be
deemed not to have elected to effect the Exchange, and Bank Plus and Fidelity
will have all of the rights that each would have if the Exchange Offer had not
been made.
25
<PAGE>
PROCEDURES FOR ACCEPTANCE OR REJECTION OF EXCHANGE OFFER
Pursuant to the terms of the Preferred Stock, all shares of Preferred Stock
held by a Preferred Stockholder will be deemed to have been tendered in the
Exchange Offer and will automatically be deemed exchanged for Senior Notes on
the Exchange Date, subject to the conditions specified herein and except as
provided under "--Terms of Exchange", unless such Preferred Stockholder
expressly rejects the Exchange Offer with respect to all of such holder's
shares of Preferred Stock in accordance with the procedures described below.
Accordingly, no action is required on the part of a Preferred Stockholder in
order to accept the Exchange Offer.
Preferred Stockholders may reject the Exchange Offer in whole but not in
part; provided, however, that brokers, dealers, commercial banks, trust
companies and other Preferred Stockholders who hold Preferred Stock in a
representative capacity for one or more beneficial owners may reject the
Exchange Offer with respect to shares of Preferred Stock held on behalf of one
or more beneficial owners while tendering shares of Preferred Stock held on
behalf of one or more other beneficial owners. For a Preferred Stockholder to
retain such holder's shares of Preferred Stock, a properly completed and duly
executed Notice of Rejection of Offer (or facsimile thereof) with respect to
such shares must be received by the Exchange Agent at its address set forth on
the back cover of this Prospectus and not withdrawn prior to the Exchange
Date.
The method of delivery of a Notice of Rejection of Offer to the Exchange
Agent is at the election and risk of the Preferred Stockholder transmitting
such Notice of Rejection of Offer. If delivery is by mail, it is recommended
that such Preferred Stockholder use properly insured, registered mail with
return receipt requested, and that the mailing be made sufficiently in advance
of the Exchange Date to permit delivery to the Exchange Agent prior to the
Exchange Date.
All questions as to the form and validity (including time of receipt) of any
Notice of Rejection of Offer will be determined by Bank Plus in its sole
discretion, which determination will be final and binding. Bank Plus reserves
the absolute right to reject any Notice of Rejection of Offer that it
determines not to be in proper form, or the acceptance of which would, in the
opinion of Bank Plus' counsel, be unlawful. None of Bank Plus, the Exchange
Agent, the Information Agent or any other person will be under any duty to
give notification of any defect or irregularity in any Notice of Rejection of
Offer, nor will any of them incur any liability for failure to give such
notification. Bank Plus' interpretation of the terms and conditions of the
Exchange Offer (including the Notice of Rejection of Offer and instructions
thereto) will be final and binding.
WITHDRAWAL OF NOTICE OF REJECTION OF OFFER
Preferred Stockholders who execute and return a Notice of Rejection of Offer
may withdraw such Notice of Rejection of Offer, subject to the procedures
described below, at any time before the Exchange Date.
To be effective, a written, telegraphic or facsimile transmission of a
notice of withdrawal of a Notice of Rejection of Offer must (i) be timely
received by the Exchange Agent at its address specified on the back cover page
of this Prospectus, (ii) specify the person who executed the Notice of
Rejection of Offer and (iii) be signed by such person in the same manner as
the original signature on the Notice of Rejection of Offer.
All questions as to the form and validity (including time of receipt) of
notices of withdrawal will be determined by Bank Plus, in its sole discretion,
which determination will be final and binding. None of Bank Plus, the Exchange
Agent, the Information Agent or any other person will be under any duty to
give notification of any defects or irregularities in any notice of
withdrawal, nor will any of them incur any liability for failure to give such
notification.
CONDITIONS OF THE EXCHANGE OFFER
Bank Plus' election to proceed with the Exchange Offer is subject to certain
conditions. Notwithstanding any other provision of the Exchange Offer or any
extension of the Exchange Offer, Bank Plus will not be
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<PAGE>
required to issue Senior Notes in exchange for shares of Preferred Stock if,
prior to the Exchange Date, a change occurs that is likely to affect the
Exchange Offer adversely, including, but not limited to, the following:
(i) there shall have been instituted or threatened or be pending any
action or proceeding before or by any court or governmental agency or
instrumentality directly or indirectly relating to the Exchange Offer;
(ii) there shall have occurred any development in any pending action or
proceeding which, in the sole judgment of Bank Plus, would or might (a)
prohibit, restrict or delay consummation of the Exchange Offer or (b)
impair the contemplated benefits of the Exchange Offer;
(iii) there shall have occurred and be continuing any general suspension
of trading in, or limitation on prices for, securities on any national
securities exchange or interdealer quotation system;
(iv) any statute, rule or regulation shall have been proposed or enacted,
or any action shall have been taken by any governmental authority, which,
in the sole judgement of Bank Plus, would or might (a) prohibit, restrict
or delay consummation of the Exchange Offer or (b) impair the contemplated
benefits of the Exchange Offer; or
(v) there shall have occurred any change, or development involving a
prospective change, which has had or may have an adverse effect on the
Exchange Offer, or may change the contemplated benefits of the Exchange
Offer to Bank Plus or to holders of Preferred Stock or Senior Notes.
The foregoing conditions are for the sole benefit of Bank Plus and may be
asserted by Bank Plus regardless of the circumstances giving rise to such
conditions, or may be waived by Bank Plus, in whole or in part at any time and
from time to time, in its sole discretion. The failure by Bank Plus, at any
time, to exercise its rights with respect to any of these conditions will not
be deemed a waiver of any such conditions. Any determination by Bank Plus
concerning the events set forth under this caption will be final and binding
upon all parties.
As described under "--Exchange Date; Extension; Amendment; Termination"
above, Bank Plus expressly reserves the right to terminate or amend the
Exchange Offer if any of the foregoing conditions is not satisfied on the
Exchange Date.
CONDITIONS OF EXCHANGE
Pursuant to the terms of the Preferred Stock, the Exchange will not be
consummated on the Exchange Date unless, at such time: (i) Bank Plus is a
corporation organized under the laws of the United States, any state thereof
or the District of Columbia, owns all of the common stock of Fidelity and has
no indebtedness not permitted by the Indenture; (ii) the Senior Notes have
been registered under the Securities Act, unless an exemption from
registration is available; (iii) the Indenture has been executed and delivered
by Bank Plus and the Trustee; (iv) the Trustee has received an opinion (in the
form specified in the Indenture) to the effect that the Senior Notes will,
when issued in accordance with the Indenture, be legal, valid, binding and
enforceable obligations of Bank Plus in accordance with their terms and that
all necessary corporate and governmental approvals, including without
limitation any securities registrations, for the issuance of the Senior Notes
have been obtained; and (v) immediately following the Exchange, no Default or
Event of Default will exist under the Indenture. Bank Plus expects that each
of the foregoing conditions will be met at the Exchange Date.
PROCEDURES FOR EXCHANGE OF CERTIFICATES
As promptly as practicable after the Exchange Date, the Exchange Agent will
send to each Exchanging Stockholder a letter of transmittal and instructions
for its use in effecting the surrender of certificates representing shares of
Preferred Stock in exchange for certificates representing Senior Notes. Upon
surrender to the Exchange Agent of a certificate representing Preferred Stock,
together with a duly executed letter of transmittal and any other required
documents, the Exchanging Stockholder will be entitled to receive a
certificate representing $1,000 principal amount of Senior Notes for each 40
shares of Preferred Stock represented by the certificate exchanged therefor,
and the certificate so surrendered may either be canceled or, as is currently
expected, may remain
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outstanding and be held by Bank Plus. If fewer than all shares of Preferred
Stock represented by a certificate are exchanged in the Exchange Offer because
the number of shares represented by such certificate is not a multiple of 40,
upon surrender of such certificate, Bank Plus will cause Fidelity to issue to
the holder thereof a new certificate representing the shares of Preferred
Stock that are not so exchanged.
Following the Exchange Date, certificates previously representing shares of
Preferred Stock exchanged pursuant to the Exchange Offer shall represent only
the right to receive the principal amount of Senior Notes for which each share
of Preferred Stock represented thereby was exchanged, plus all other amounts
to which such holder is entitled pursuant to the Exchange Offer.
Notwithstanding the foregoing, none of Bank Plus, the Exchange Agent, the
Information Agent or any other person shall be liable to any Exchanging
Stockholder who holds unexchanged certificates for any amount properly
delivered to a public official pursuant to applicable abandoned property,
escheat or similar laws.
PREFERRED STOCKHOLDERS SHOULD NOT SUBMIT ANY STOCK CERTIFICATES UNTIL THEY
RECEIVE A LETTER OF TRANSMITTAL AND INSTRUCTIONS FROM THE EXCHANGE AGENT.
SERVICE CHARGES AND TRANSFER TAXES
No service charge will be made for any registration of transfer or exchange
of Preferred Stock certificates for Senior Note certificates. However, Bank
Plus may require the payment of a sum sufficient to cover any tax or
governmental charge that may be imposed in connection with any such
registration, other than exchanges not involving any transfer.
EXCHANGE AGENT; INFORMATION AGENT
American Stock Transfer & Trust Company (the "Exchange Agent") is the
exchange agent, and D.F. King & Co., Inc. (the "Information Agent") is the
information agent, in connection with the Exchange Offer. Preferred
Stockholders who require information about procedures for exchanging
certificates representing Preferred Stock for certificates representing Senior
Notes following the Exchange Date should call the Exchange Agent at
, or contact the Exchange Agent at its address set forth on the
back cover page of this Prospectus. Requests for general information or
additional copies of this Prospectus or the Notice of Rejection of Offer
should be directed to the Information Agent at or at its address
set forth on the back cover page of this Prospectus.
Any requests for information from Bank Plus concerning the Exchange Offer
may be made by calling Bank Plus at (collect) or by writing to
Bank Plus Corporation, 4565 Colorado Boulevard, Los Angeles, California 90039,
Attn: .
EXPENSES
Bank Plus has not retained any dealer-manager or broker-dealer in connection
with the Exchange Offer and will not make any payments to brokers, dealers,
salespersons or others for soliciting acceptances of the Exchange Offer. Bank
Plus will, however, pay the Exchange Agent and the Information Agent
reasonable and customary fees for their services and will reimburse them for
their reasonable out-of-pocket expenses in connection therewith. Bank Plus
will also reimburse brokerage firms and other custodians, nominees and
fiduciaries for reasonable out-of-pocket expenses incurred by them in
connection with the Exchange Offer, in forwarding copies of this Prospectus
and related documents to the beneficial owners of Preferred Stock and in
handling or forwarding Notices of Rejection of Offer, notices of withdrawal of
rejection and certificates on behalf of their customers. Bank Plus will also
pay all legal, accounting, printing, filing and other similar fees and
expenses in connection with the Exchange Offer.
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FUTURE PURCHASES OF PREFERRED STOCK
Bank Plus reserves the right in its sole discretion, subsequent to the
expiration of the Exchange Offer and subject to applicable law, to purchase
and make offers for any shares of Preferred Stock that remain outstanding on a
cash or exchange-of-securities basis, by tender offer, private purchase,
redemption (after November 15, 2005) or otherwise, and the terms of such
purchases, redemptions or offers could differ from the terms of the Exchange
Offer. Bank Plus has no present plans to make any such purchases, redemptions
or offers.
BANK PLUS CORPORATION
THE COMPANY
Bank Plus was formed on March 14, 1996 to be the holding company of Fidelity
and Gateway. In May 1996, Fidelity completed a reorganization pursuant to
which all of the outstanding common stock of Fidelity was converted on a one-
for-one basis into all of the outstanding common stock of Bank Plus (the
"Reorganization"). Bank Plus' principal operating subsidiaries are Fidelity
and Gateway, which prior to the reorganization was a subsidiary of the Bank.
Bank Plus currently has no significant business or operations other than
serving as the holding company for Fidelity and Gateway. Through Gateway, an
NASD registered broker/dealer, the Company provides customers with uninsured
investment products, including a number of mutual funds, annuities and unit
investment trusts. The principal executive offices of Bank Plus, Fidelity and
Gateway are located at 4565 Colorado Boulevard, Los Angeles, California 90039,
(818) 241-6215.
THE BANK
Fidelity offers a broad range of consumer financial services, including
demand and term deposits and loans to consumers, through 33 full-service
branches, all of which are located in Southern California, principally in Los
Angeles and Orange counties. At this time, the Bank primarily provides
residential mortgages and consumer loans, which the Bank does not underwrite
or fund, by referral to certain established providers of mortgage and consumer
loan products with which the Bank has negotiated strategic alliances.
The Bank's deposits are highly concentrated in Los Angeles and Orange
counties. The 33 branches held average deposit balances of $75.6 million and
total balances of approximately $2.5 billion at December 31, 1996. At December
31, 1996, the Bank's mortgage loan portfolio aggregated approximately $2.8
billion, 62% of which was secured by residential properties containing 5 or
more units, 31% of which was secured by single family and multifamily
residential properties containing 2 or 4 units and 7% of which was secured by
commercial and other property. At that same date, 97% of the Bank's loans
consisted of ARMs.
The Bank's deposit accounts are insured by the FDIC through the SAIF to the
maximum extent permitted by law. The Bank is subject to the examination,
supervision and reporting requirements of the OTS, which is the Bank's primary
federal banking regulator, and is also subject to examination and supervision
by the FDIC.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following discussion is a summary of certain federal income tax
consequences to Preferred Stockholders of the Exchange and of the ownership
and disposition of Senior Notes. It does not purport to be a complete analysis
of all of the potential tax considerations. Except as noted, this summary is
based upon laws, regulations, rulings and decisions currently in effect. This
summary does not discuss all aspects of federal income taxation that may be
relevant to a particular investor, nor does it discuss any aspect of state,
local or foreign tax laws. This summary is generally limited to taxpayers that
will hold Senior Notes as a "capital asset" within the meaning of section 1221
of the Internal Revenue Code of 1986 (the "Code"). In addition, the discussion
below is addressed to holders of Senior Notes that receive such Senior Notes
in the Exchange, and does not specifically
29
<PAGE>
address subsequent transferees of Senior Notes. The discussion is based on the
advice of Sullivan & Cromwell, Los Angeles, California, counsel to Bank Plus.
EXCHANGE OF PREFERRED STOCK FOR SENIOR NOTES
The Exchange will constitute a taxable exchange in which an Exchanging
Stockholder will recognize gain or loss equal to the difference between the
amount realized and such holder's adjusted tax basis in the Preferred Stock.
The amount realized by a holder will equal the "issue price" (as defined
below) of the Senior Notes received in the Exchange. Any gain or loss
recognized by a holder in respect of the Exchange will be capital gain or loss
if the holder held the Preferred Stock as a capital asset, and will be long-
term capital gain or loss if such Preferred Stock was treated as held for more
than one year.
Assuming the Senior Notes will be part of an issue that is "traded on an
established securities market," as defined below, the issue price of the
Senior Notes will equal the fair market value of the Senior Notes on the
Exchange Date. If the Senior Notes are not traded on an established securities
market, but the Preferred Stock is so traded, the issue price of the Senior
Notes will equal the fair market value of the Preferred Stock on the Exchange
Date. If neither the Preferred Stock nor the Senior Notes is traded on an
established securities market, the issue price of the Senior Notes will equal
the principal amount of such Senior Notes. The term "traded on an established
securities market" is defined for this purpose in Treasury regulations, and,
in the case of a debt instrument, includes securities for which price
quotations are readily available from dealers, brokers or traders even if such
securities are not listed on a national securities exchange or an interdealer
quotation system. Bank Plus anticipates that the Senior Notes will be treated
as traded on an established securities market, although no assurances can be
given that this will be the case.
SENIOR NOTES
Stated Interest on Senior Notes. In general, payments of interest based on
the stated interest rate on Senior Notes will be ordinary income, taxable when
accrued, in the case of a holder utilizing the accrual method of accounting,
or when received, in the case of a holder utilizing the cash receipts and
disbursements method of accounting.
Original Issue Discount. If the issue price of Senior Notes issued to a
holder in exchange for Preferred Stock is less than the "stated redemption
price at maturity" ("SRPM") of such Senior Notes, the excess of the SRPM over
the issue price generally will constitute original issue discount ("OID"). The
SRPM of Senior Notes will equal their principal amount. Under a de minimis
rule, if the excess of the SRPM of Senior Notes over their issue price is less
than one-fourth of one percent of the SRPM multiplied by the number of
complete years to maturity, the Senior Notes will not be treated as issued
with OID.
If Senior Notes are treated as issued with OID, a holder generally must
include in gross income a portion of the total OID that accrues on each day
the holder holds Senior Notes, calculated under a constant yield method,
regardless of such holder's method of accounting and without regard to the
timing of actual payments.
Premium on Senior Notes. If a holder's adjusted basis in Senior Notes
immediately after the Exchange exceeds the SRPM of such Senior Notes (as
defined above in "--Original Issue Discount"), such excess may constitute
amortizable bond premium which the holder may elect to amortize under a
constant yield method under section 171 of the Code. A holder that elects to
amortize bond premium must reduce the adjusted basis in the Senior Notes by
the amount so amortized. The amortizable bond premium will be treated as an
offset to interest income rather than as a separate deduction item. An
election to amortize bond premium under section 171 of the Code by a holder
will apply to all obligations owned or acquired by the holder in the current
and all subsequent taxable years and may not be revoked without the permission
of the Internal Revenue Service.
Redemption or Sale of Senior Notes. In general, upon a redemption or sale of
Senior Notes for cash, a holder will recognize gain or loss equal to the
difference between its adjusted basis in the Senior Notes (after
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<PAGE>
adjustment for amortized premium and accrued OID) and the amount of cash
received. Such gain or loss will be capital gain or loss if the holder held
the Senior Notes as a capital asset, and will be long-term capital gain or
loss if such Senior Notes were held for more than one year.
BACKUP WITHHOLDING
Certain noncorporate holders of Senior Notes may be subject to backup
withholding at the rate of 31 percent with respect to interest paid, OID
accrued with respect to, or the proceeds of a sale, exchange or redemption of
such Senior Notes, unless the holder complies with certain procedures. Any
amounts so withheld would be refunded by the Internal Revenue Service or
allowed as a credit against the holder's federal income tax liability.
PREFERRED STOCKHOLDERS ARE ADVISED TO CONSULT THEIR TAX ADVISORS REGARDING
THE TAX CONSEQUENCES OF EXCHANGING SHARES OF PREFERRED STOCK FOR SENIOR NOTES
AND OF THE OWNERSHIP AND DISPOSITION OF SENIOR NOTES.
CERTAIN REGULATORY RESTRICTIONS ON CAPITAL DISTRIBUTIONS
GENERAL
The ability of a savings association such as Fidelity to pay dividends on
its capital stock is subject to regulatory restrictions. The nature and extent
of such restrictions are dependent upon the institution's level of regulatory
capital and its income.
REGULATORY CAPITAL REQUIREMENTS
Under federal statute and OTS regulations, savings associations are
generally required to comply with each of three separate capital adequacy
standards. Such institutions are required to have "core ("leverage") capital"
equal to at least 3% of adjusted total assets, "tangible capital" equal to at
least 1.5% of adjusted total assets and "total risk-based capital" equal to at
least 8% of risk-weighted assets.
"Core capital" includes common stockholders' equity (including retained
earnings), noncumulative perpetual preferred stock and any related surplus,
nonwithdrawable accounts and pledged deposits qualifying as core capital and
minority interests in the equity accounts of fully consolidated subsidiaries.
Intangible assets, other than limited amounts of purchased mortgage servicing
rights ("PMSRs"), purchased credit card relationships ("PCCRs") and qualifying
supervisory goodwill, generally must be deducted from core capital. PMSRs
(together with certain PCCRs) may comprise only up to 50% of core capital. In
January 1993, the OTS issued Thrift Bulletin 56 ("TB-56"), which advised
savings associations to adopt Statement of Financial Accounting Standards No.
109 regarding accounting for deferred tax assets for regulatory reporting
purposes. TB-56 permits savings associations to include limited amounts of net
deferred tax assets in regulatory capital; i.e., to the extent that
realization of deferred net assets depends on future taxable income, the
institution may include the lesser of the amount that can be realized within
one year of the quarter-end report date, or 10% of core capital.
"Tangible capital" means core capital less any intangible assets, plus
properly valued PMSRs to the extent such PMSRs are includible in core capital.
For purposes of the risk-based capital requirement, "total risk-based
capital" means core capital plus supplementary capital, so long as the amount
of supplementary capital that is used to satisfy the requirement does not
exceed the amount of core capital. "Supplementary capital" includes, among
other things, general valuation loan and lease loss allowances up to a maximum
of 1.25% of risk-weighted assets. Risk-weighted assets are determined by
multiplying certain categories of the savings association's assets, including
off-balance sheet equivalents, by an assigned risk weight of 0% to 100% based
on the credit risk associated with those assets as specified in OTS
regulations. The OTS has also adopted a rule providing for an "interest-rate
risk"
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component of risk-based capital. Under this rule, an institution's "interest
rate risk" is measured by the decline in Net Portfolio Value ("NPV") resulting
from a hypothetical 200-basis point increase or decrease in interest rates
(whichever leads to the lower NPV) divided by the estimated economic value of
its assets. Fidelity is not currently required to maintain any additional
risk-based capital under this rule.
In 1991, Congress enacted the so-called "prompt corrective action" provi-
sions of FDICIA, which established five capital-based categories for deposi-
tory institutions insured by the FDIC: "well capitalized," "adequately capi-
talized," "undercapitalized," "significantly undercapitalized" and "critically
undercapitalized." The OTS is required to take certain mandatory action and is
authorized to take other discretionary action with respect to savings associa-
tions in the three undercapitalized categories. Under OTS regulations, an in-
stitution is treated as well capitalized if its ratio of total capital risk-
weighted assets is 10% or more, its ratio of core capital to risk-weighted as-
sets is 6% or more, its ratio of core capital to adjusted total assets is 5%
or more and it is not subject to any order or directive by the OTS to meet a
specific capital level. An institution whose capital falls between well capi-
talized and undercapitalized levels is treated as adequately capitalized. In
general, an institution is treated as undercapitalized if the above capital
ratios are less than 8%, 4% or 4%, respectively, and as significantly under-
capitalized if such ratios are less than 6%, 3% or 3%, respectively. An insti-
tution is treated as critically undercapitalized if its ratio of tangible eq-
uity (core capital, plus cumulative preferred stock, minus most intangible as-
sets) to total assets is equal to or less than 2%.
As of December 31, 1996, Fidelity had core capital and tangible capital of
$209.2 million and $208.9 million, respectively, which was equal to 6.29% and
6.28% of adjusted total assets, respectively, and total risk-based capital of
$233.6 million, which was equal to 11.85% of risk-weighted assets, and was
deemed "well capitalized" under the prompt corrective action provisions.
LIMITATIONS ON CAPITAL DISTRIBUTIONS
A savings association such as Fidelity may not make a capital distribution
if, following such distribution, the association will be "undercapitalized"
under the prompt corrective action provisions described above. In addition,
OTS regulations limit the ability of savings associations to pay dividends and
make other capital distributions according to the institution's level of
capital and income, with the greatest flexibility afforded to institutions
that meet or exceed their OTS capital requirements. For this purpose "capital
distributions" include cash dividends, payments to repurchase, redeem, retire
or otherwise acquire a savings association's shares, payments to stockholders
of another institution in a cash-out merger, other distributions charged
against capital and any other transaction that the OTS determines to entail a
payout of capital. To the extent that the OTS regulations described below and
the prompt corrective action provisions are inconsistent, the prompt
corrective action provisions control.
Under current OTS regulations, a savings association's ability to pay
dividends depends on its level of regulatory capital as well as its earnings.
A savings association that exceeds its OTS regulatory capital requirements
both before and after a proposed dividend (or other distribution of capital)
(a "Tier 1 Institution") and has not been advised by the OTS that it is in
need of more than normal supervision may, after prior notice to but without
the approval of the OTS, make capital distributions during a calendar year up
to the higher of (i) 100% of its net income to date during the calendar year
plus the amount that would reduce by one-half its "surplus capital ratio" (the
institution's excess capital over its capital requirements) at the beginning
of the calendar year or (ii) 75% of its net income over the most recent four-
quarter period. In addition, a Tier 1 Institution may make capital
distributions in excess of the foregoing limits if the OTS does not object
within a 30-day period following notice by the institution. Under OTS
regulations, a Tier 3 Institution (i.e., an institution that does not meet its
OTS capital requirements) generally cannot make any capital distribution
without the prior written approval of the OTS. A Tier 1 Institution that has
been notified by the OTS that it is in need of "more than normal supervision"
must, under OTS regulations, be treated as a Tier 2 or a Tier 3 Institution.
Under OTS regulations, a Tier 2 Institution may, after prior notice but
without the approval of the OTS, make capital distributions in an amount up to
75% of its net income during the most recent four-quarter period. The OTS also
may prohibit a proposed capital distribution that would otherwise be permitted
by the regulation if the OTS
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determines that the distribution would constitute an unsafe or unsound
practice. In addition, a savings association that has converted from mutual to
stock form may not declare or pay a dividend on, or repurchase, any of its
capital stock if the effect of such action would be to reduce the regulatory
capital of the institution below the amount required for its liquidation
account.
Fidelity is considered a Tier 1 Institution.
DESCRIPTION OF SENIOR NOTES
The Senior Notes are to be issued under the Indenture between Bank Plus and
, as Trustee. The Senior Notes are not savings accounts or deposits
and are not insured by the FDIC, any other governmental agency or otherwise.
Although they include a discussion of all material provisions of the
Indenture, the following summaries of certain provisions of the Indenture do
not purport to be complete and are subject to, and are qualified in their
entirety by reference to, the full text of the Indenture, including the
definitions of certain terms in the Indenture, which is incorporated herein by
reference. Wherever particular provisions and definitions of the Indenture are
referred to, such provisions and definitions are incorporated by reference as
part of the statements made, and the statements are qualified in their
entirety by those references. Section references are to applicable sections of
the Indenture. The form of the Indenture has been filed with the Commission as
an exhibit to the Registration Statement and can be obtained in the manner
described under "Available Information." In addition, copies of the form of
the Indenture are available from the Information Agent or from Bank Plus upon
request. Capitalized terms that are used but not otherwise defined herein have
the meanings assigned to them in the Indenture and such definitions are
incorporated herein by reference.
GENERAL
The Senior Notes will be limited to $51,750,000 in aggregate principal
amount. Interest on the Senior Notes will be payable from their date of issue
quarterly in arrears on the 15th day of each February, May, August and
November. Interest will be payable to each holder of a Senior Note (a
"Noteholder") in whose name the Senior Note is registered at the close of
business on the 30th day of the month (whether or not a business day)
preceding the applicable Interest Payment Date. Interest will be payable in
arrears for the period preceding each Interest Payment Date. The Senior Notes
will mature on , 2007. Principal and interest, and any payment of the
Senior Note Repurchase Price (as defined below), will be payable at an office
or agency to be maintained by Bank Plus in New York, New York, or in such
other office or agency as may be established by Bank Plus (initially the
principal corporate trust office of the Trustee in New York, New York), except
that, at the option of Bank Plus, interest may be paid by check mailed to the
Noteholder entitled to payment.
The Senior Notes will be unsecured general obligations only of Bank Plus and
not of Fidelity or any other subsidiary of Bank Plus. The Senior Notes will be
senior in right of payment to any subordinated indebtedness of Bank Plus. The
Senior Notes will rank pari passu with any indebtedness of Bank Plus that is
not expressly subordinated to the Senior Notes. The Senior Notes will not be
secured by any assets of Bank Plus or otherwise. There will be no sinking fund
for the retirement of principal of the Senior Notes. Only capital stock of
Bank Plus and any indebtedness of Bank Plus hereafter issued that is expressly
made subordinate to the Senior Notes will be junior in right of payment to the
Senior Notes.
The right of Bank Plus to participate in any distribution of assets of any
subsidiary, including Fidelity, upon its liquidation or reorganization or
otherwise (and thus the ability of Noteholders to benefit indirectly from each
distribution) are subject to the prior claims of creditors of that subsidiary.
Claims on Bank Plus' subsidiaries by creditors are expected to include
substantial obligations with respect to deposit liabilities. The Indenture
does not contain provisions that would provide protection to Noteholders
against a sudden and dramatic decline in credit quality resulting from
takeovers, recapitalizations or similar restructurings.
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The Senior Notes will be obligations solely of Bank Plus and not of
Fidelity. Whereas holders of Preferred Stock of Fidelity would be entitled to
a claim superior to the holders of common stock of Fidelity on any
liquidations, dissolution or winding up of Fidelity, Noteholders would instead
have a claim on the assets of Bank Plus, which owns the common stock of
Fidelity. As a result, in the event of a liquidation, dissolution or winding
up of the affairs of Fidelity, the holders of Preferred Stock would be
entitled to receive payment of their claims prior to the distribution of
assets of Fidelity to Bank Plus, as holder of its common stock. Because it is
currently expected that Preferred Stock that is exchanged pursuant to the
Exchange Offer will remain outstanding and be held by Bank Plus, Noteholders
are expected to benefit indirectly from the rights attributable to exchanged
Preferred Stock.
The Senior Notes will be issued only in fully registered form, without
coupons, in denominations of $1,000 and integral multiples thereof.
Noteholders may transfer or exchange the Senior Notes by surrendering them for
transfer or exchange at the principal corporate trust office of the Trustee,
duly endorsed for transfer. The Senior Notes will be transferable or
exchangeable without service charge, but Bank Plus may require payment to
cover taxes or other government charges. The Senior Notes must be surrendered
to Bank Plus in order to receive principal payments.
OPTIONAL REDEMPTION
The Senior Notes may not be redeemed by Bank Plus prior to November 15,
2005. The Senior Notes will, subject to applicable regulatory limitations, if
any, be redeemable at the option of Bank Plus, in whole or in part, at any
time or from time to time, on or after November 15, 2005, on not less than 45
nor more than 60 days' notice by first-class mail to Noteholders at the
redemption prices set forth below, plus in each case an amount equal to
accrued interest, if any, to (and including) the redemption date.
<TABLE>
<CAPTION>
IF REDEEMED DURING THE 12-MONTH REDEMPTION PRICE PER
PERIOD BEGINNING NOVEMBER 15, $1,000 OF PRINCIPAL AMOUNT
------------------------------- --------------------------
<S> <C>
2005.......................................... $1,100
2006.......................................... 1,080
</TABLE>
(Sections 202 and 1101)
If less than all of the Senior Notes are to be redeemed, the Trustee will
select those to be redeemed by lot or a substantially equivalent method.
(Section 1104)
LIMITATIONS ON DIVIDENDS
So long as any of the Senior Notes are outstanding, Bank Plus will not
declare or pay or set apart any funds for the payment of dividends on, or make
any other distribution in respect of, or make or permit any Subsidiary or
Affiliate to make any payment on account of the purchase, redemption or other
acquisition or retirement of, any shares of Bank Plus's capital stock (other
than dividends or distributions payable solely in shares of its capital stock)
if (at the time of such action and after giving effect, as if paid, to the
proposed dividend, distribution or payment): (a) the declaration or payment of
such dividend would be in violation of applicable federal or state banking
laws and regulations, (b) the Bank or Bank Plus would fail to be in compliance
with applicable regulatory capital requirements or (c) a Default or an Event
of Default shall have occurred and be continuing. (Section 1008)
CERTAIN COVENANTS
In addition to the limitations on dividends described above, the Indenture
contains certain other covenants of Bank Plus. Among other things, Bank Plus
will covenant (i) to punctually pay the principal of and interest on the
Senior Notes on the dates and in the manner provided in the Senior Notes, (ii)
that neither Bank Plus nor any Subsidiary will engage in transactions with any
Affiliate, except that Bank Plus or a Subsidiary may (x) make
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such payments and investments and enter into such transactions on terms and
conditions at least as favorable to Bank Plus or such Subsidiary, as the case
may be, as those that could be obtained in a comparable arm's length
transaction with a person who is not an Affiliate (as determined in good faith
by the Board of Directors of Bank Plus, whose determination shall be
conclusive) and (y) make payments or provide compensation (including the
extension of credit in accordance with the requirements of applicable laws and
regulations) for services rendered by any Affiliate who is an officer,
director or employee of Bank Plus or any Subsidiary, (iii) to (x) file with
the Trustee within five days after it files them, copies of all annual,
quarterly and other reports filed by Bank Plus pursuant to Section 13 of the
Exchange Act or, if Bank Plus is not subject to the requirements of such
section, certain other information based on certain of such requirements and
(y) as long as any Senior Notes are outstanding, mail to each Senior Note
holder copies of the annual and quarterly reports that it is required to file
with the Trustee (or summaries thereof) within 30 days after such filing is
required to be made, (iv) to keep, and to cause each Subsidiary to keep, all
Property useful in its business in good working order and condition and to
maintain and to cause each Subsidiary to maintain, with financially sound and
reputable insurance companies, insurance on all its Property in at least such
amounts as are usually insured against in the same general area by companies
of established repute engaged in a similar business, (v) to keep, and to cause
each Subsidiary to keep, proper books of record and account and to cause its
books of record and account and those of each of its Subsidiaries to be
examined on a consolidated basis by a nationally recognized firm of
independent public accountants not less frequently than annually for purposes
of preparing audited consolidated financial statements, (vi) that it and its
Subsidiaries will comply with applicable laws, rules and regulations and renew
any license, permit and other authorizations necessary to the ownership or
operations of their Properties or to the conduct of their businesses, if the
failure to so comply, obtain, preserve and renew adversely affects in any
material respect Bank Plus's consolidated business, prospects, earnings,
Properties or condition, (vii) to pay and to cause each Subsidiary to pay
prior to delinquency (x) all taxes, assessments and governmental charges or
levies imposed upon it or its Property and (y) all claims or demands of
materialmen, mechanics, carriers, warehousemen, landlords and other person
which, if unpaid, might result in the creation of a lien upon its Property,
provided that, among other things, Bank Plus or a Subsidiary is not contesting
any such items in good faith by appropriate proceedings, (viii) to take
certain actions in the event that it elects to act as paying agent for the
Senior Notes and (ix) to deliver to the Trustee on an annual basis an
Officer's Certificate dealing with compliance with its obligations under the
Indenture, including the covenants set forth therein. (Article X)
RESTRICTIONS ON ADDITIONAL INDEBTEDNESS
Bank Plus may not incur, assume, guarantee or otherwise create any Funded
Indebtedness (as defined below) if, immediately after giving effect thereto,
the amount of Funded Indebtedness, including the Senior Notes, would be
greater than 100% of Bank Plus's Consolidated Net Worth (as defined below).
"Funded Indebtedness" means any of the following obligations of Bank Plus: (a)
any obligation, contingent or otherwise, for borrowed money or for the
deferred purchase price of property or services (including any interest
accruing subsequent to an Event of Default (as defined below)), (b) all
obligations (including the Senior Notes) evidenced by bonds, notes, debentures
or other similar instruments, (c) all indebtedness created or arising under
any conditional sale or other title retention agreement with respect to
property acquired, except for trade payables and accrued liabilities arising
in the ordinary course of business, if and to the extent such indebtedness
would appear as a liability upon a balance sheet prepared on a consolidated
basis in accordance with GAAP, (d) all capital lease obligations, (e) all
indebtedness referred to above secured by (or for which the holder of such
debt has an existing right, contingent or otherwise, to be secured by) any
lien upon or in property (including, without limitation, accounts and contract
rights), even though Bank Plus has not assumed or become liable for the
payment of such debt, and (f) any guarantee of any item included above.
Notwithstanding the foregoing, there shall be excluded from the definition of
Funded Indebtedness all ordinary course and similar borrowings having a
contractual term to maturity of one year or less and not constituting
offerings of securities or commercial paper, including repurchase and reverse
repurchase agreements and brokers' margin loans and similar borrowing, but not
including revolving lines of credit or similar borrowings. As used herein,
"Consolidated Net Worth" means, at any date, the total amount of preferred
stock (excluding any preferred stock that is subject to mandatory redemption)
and common shareholders' equity (excluding amounts attributable to securities
that are
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exchangeable for or convertible into securities other than common stock) that
would appear on a consolidated statement of financial condition of Bank Plus
as such date, prepared in accordance with GAAP. (Section 1009)
MERGERS, CONSOLIDATIONS OR SALES OF ASSETS
Bank Plus will not consolidate or merge with or into, or convey, transfer or
lease all or substantially all of its property to, another Person unless,
among other things: (a) either Bank Plus shall be the entity surviving such
merger or consolidation or the corporation formed by or surviving such
consolidation or merger, or the Person to which such transfer, sale, lease or
conveyance shall have been made, shall be a corporation duly organized and
existing under the laws of the United States, any state thereof or the
District of Columbia and shall unconditionally assume by a supplemental
indenture in form satisfactory to the Trustee all the obligations of Bank Plus
under the Senior Notes and the Indenture; (b) immediately before and
immediately after giving effect to the transaction, no Default or Event of
Default shall have occurred and be continuing; and (c) immediately after
giving effect to the transaction, the surviving entity and its subsidiaries
meet all applicable statutory capital requirements. (Section 801)
RIGHT TO REQUIRE REPURCHASE
In the event that a Holding Company Change of Control (as hereinafter
defined) shall occur, then each holder of Senior Notes shall have the right,
at the holder's option, to require Bank Plus to repurchase, and upon the
exercise of such right Bank Plus shall repurchase, all of such holder's Senior
Notes, or any portion of the principal amount thereof that is an integral
multiple of $1,000, on the date (the "Senior Note Repurchase Date") that is 25
days after the date of the Holding Company Change of Control Notice (as
defined below) at a purchase price equal to 110% of the principal amount of
the Senior Notes to be repurchased (the "Senior Note Repurchase Price"),
together with accrued interest to the Senior Note Repurchase Date (unless the
Senior Note Repurchase Date shall occur prior to an Interest Payment Date and
after the close of business on the corresponding regular record date).
(Section 1201)
NOTICE; METHOD OF EXERCISING REPURCHASE RIGHT, ETC.
Unless the date fixed for redemption shall have occurred in connection with
Bank Plus's call for redemption of all the outstanding Senior Notes, on or
before the 15th day after the occurrence of a Holding Company Change of
Control, Bank Plus or, at the request of Bank Plus, the Trustee, shall mail to
all holders a notice (the "Change of Control Notice") of the occurrence of the
Holding Company Change of Control and of the repurchase right set forth in
herein arising as a result thereof. Bank Plus shall also deliver a copy of
such notice of a repurchase right to the Trustee and cause a copy of such
notice of a repurchase right, or a summary of the information contained
therein, to be published in a newspaper of general circulation in The City of
New York.
To exercise a repurchase right, a holder of Senior Notes shall deliver to
the Trustee on or before the 15th day after the date of the Holding Company
Change of Control Notice (i) written notice of the holder's exercise of such
right, which notice shall set forth the name of the holder, the principal
amount of the Senior Notes to be repurchased and a statement that an election
to exercise the repurchase right is being made thereby, and (ii) the Senior
Notes with respect to which the repurchase right is being exercised, duly
endorsed for transfer to Bank Plus. Such written notice shall be irrevocable.
A "Holding Company Change of Control" will be deemed to have occurred at
such time as:
(i) any Person (including any syndicate or group deemed to be a "person"
under Section 13(d)(3) of the Exchange Act, other than Bank Plus, any
subsidiary of Bank Plus or any employee benefit plan of Bank Plus), is or
becomes the beneficial owner directly or indirectly, through a purchase,
merger or other acquisition transaction or series of transactions, of
shares of capital stock of Bank Plus entitling such Person to exercise 50%
or more of the total voting power of all shares of capital stock of Bank
Plus entitled to vote generally in the election of directors; or
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<PAGE>
(ii) there occurs any consolidation of Bank Plus with, or merger of Bank
Plus into, any other Person, any merger of another Person into Bank Plus,
or any sale or transfer of all or substantially all of the assets of Bank
Plus to another Person (other than a merger which does not result in any
reclassification, conversion, exchange or cancellation of outstanding
shares of any class of Bank Plus's capital stock);
provided, however, that no Holding Company Change of Control shall be deemed
to have occurred unless and until the transaction that would result in such
Holding Company Change of Control has been approved by the Board of Directors
of Bank Plus and by the OTS. (Section 1202)
EVENTS OF DEFAULT
An Event of Default is defined in the Indenture to include: (i) failure by
Bank Plus to pay interest on any Senior Notes when due and payable, if such
failure continues for a period of 30 days, (ii) failure by Bank Plus to pay
the principal of any Senior Notes when due and payable at maturity or upon
redemption, acceleration or otherwise or to pay the Senior Note Repurchase
Price on any Senior Notes on the applicable Senior Note Repurchase Date, (iii)
failure by Bank Plus to comply with any other agreement or covenant contained
in the Indenture if such failure continues for a period of 30 days after
notice to Bank Plus by the Trustee or to Bank Plus and the Trustee by the
holders of at least 25% in principal amount of the Senior Notes then
outstanding, (iv) a default under any instrument or any other obligation
representing indebtedness of Bank Plus or any of its subsidiaries if as a
result of such default the indebtedness is accelerated and the aggregate
principal amount of such defaulted indebtedness exceeds $20,000,000, (v)
occurrence of certain events of bankruptcy, insolvency or reorganization of
Bank Plus and (vi) existence of judgments against Bank Plus or a subsidiary in
excess of $20,000,000 which remain undischarged 60 days after all rights to
review such judgment have been exhausted or have expired. (Section 501)
Bank Plus has covenanted in the Indenture to file annually with the Trustee
a statement regarding compliance by Bank Plus with the terms of the Indenture
and specifying any defaults of which the signers may have knowledge. (Section
1004)
If an Event of Default occurs and is continuing, the Trustee or the holders
of not less than 25% in principal amount of the Senior Notes then outstanding
may declare all the Senior Notes to be immediately due and payable by notice
to Bank Plus (and to the Trustee if given by the holders). Under certain
circumstances, the holders of a majority in principal amount of the Senior
Notes then outstanding may rescind such a declaration. (Section 502)
Notwithstanding the foregoing or any provisions of the Indenture or the
Senior Notes (or any related document), Bank Plus may not retire any part of
its obligation under the Senior Notes without the prior written consent of any
applicable federal or state banking regulatory authority.
MODIFICATION AND WAIVER
The Indenture generally may be modified by Bank Plus only with the consent
of Holders of not less than a majority in principal amount of outstanding
Senior Notes. However, no modifications may be made without the consent of the
Holder of each Senior Note affected thereby, if such modification would (a)
change the stated maturity of the principal of, or the due date of any
installment of interest on, any Senior Note, (b) reduce the principal of, or
the interest on, any Senior Note, (c) change any Place of Payment, or the coin
or currency in which, any Senior Note, or interest thereon, is payable, (d)
impair the right to institute suit for the enforcement of any such payment,
(e) adversely affect the right to cause Bank Plus to repurchase any Senior
Note upon a Senior Note Repurchase Date, (f) reduce the above-stated
percentage of Holders of the outstanding Senior Notes whose consent is
necessary to modify the Indenture or (g) modify the foregoing requirements or
reduce the percentage of outstanding Senior Notes whose consent is necessary
to waive any default. There are limited exceptions in which technical or other
modifications that would not adversely affect the interests of the Holders may
be made by Bank Plus and the Trustee without the consent of the Holders.
(Sections 901 and 902)
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The Holders of a majority in principal amount of outstanding Senior Notes
may waive compliance by Bank Plus with certain covenants, including those
described under "--Limitations on Dividends," "--Restrictions on Additional
Indebtedness" and "--Certain Covenants" above. (Section 1011)
DESCRIPTION OF PREFERRED STOCK
The summary of the Preferred Stock set forth below does not purport to be
complete and is subject to, and qualified in its entirety by reference to,
Fidelity's Amended and Restated Charter S, including the First Supplemental
Section to Section 5.B. thereto (as amended, the "Amended Charter"), wherein
the rights, preferences and designations of the Preferred Stock are fixed. The
Amended Charter has been filed with the Commission as an exhibit to the
Registration Statement, and is incorporated herein by reference. Copies of the
Amended Charter can be obtained in the manner described under "Available
Information," and are also available from the Information Agent upon request.
GENERAL
The Preferred Stock was issued as a series consisting of 2,070,000 shares.
Holders of Preferred Stock have no preemptive rights. The rights of the
holders of Preferred Stock are subordinate to the rights of Fidelity's general
creditors (including depositors). The Preferred Stock is perpetual in duration
and there is no sinking fund with respect to the Preferred Stock.
RANK
The Preferred Stock, with respect to dividend rights and rights on
liquidation, winding up and dissolution of Fidelity, ranks prior to the common
stock of Fidelity and to all other classes and series of equity securities now
or hereafter authorized, issued or outstanding, other than any classes or
series of equity securities expressly designated as ranking on a parity with
Preferred Stock as to dividend rights and rights upon liquidation, winding up
or dissolution ("Parity Stock"). The Preferred Stock is subject to the
creation of classes or series of Parity Stock or of equity securities ranking
junior to the Preferred Stock to the extent not expressly prohibited by the
Amended Charter. The Board of Directors of Fidelity has the authority to
establish the terms of any series of preferred stock to be issued by Fidelity,
including any dividend or liquidation preference relative to any other class
or series of stock outstanding or to be issued. However, under the terms of
the Amended Charter, Fidelity may not create any class or series of equity
securities, including preferred stock, ranking prior to the Preferred Stock,
without first obtaining the affirmative vote of the holders of at least 66
2/3% of the outstanding shares of the Preferred Stock, voting together as a
class. The Preferred Stock ranks junior to all claims of Fidelity's creditors,
including the claims of depositors and holders of Fidelity's outstanding
borrowings.
NONCUMULATIVE DIVIDENDS
There is no obligation on the part of the Board of Directors of Fidelity to
declare, or Fidelity to pay, dividends on the Preferred Stock. A variety of
regulatory restrictions limits the ability of Fidelity to pay dividends. See
"Certain Regulatory Restrictions on Capital Distributions."
The OTS has informed the Bank that it approves the payment of dividends on
the Preferred Stock so long as the Bank's ratio of core capital to risk-
weighted assets and total capital to risk-weighted assets are no less than 4%
and 8%, respectively, immediately after giving effect to the payment of any
such dividend. The OTS has also confirmed that no further approvals are or
will be required by any applicable current or future statutory provisions.
However, notwithstanding the foregoing, the OTS may take appropriate
supervisory action, including restricting future dividend payments based on
safety and soundness concerns or subsequent examination findings.
Holders of shares of Preferred Stock are entitled to receive, when, as and
if declared by the Board of Directors of Fidelity out of funds of Fidelity
legally available therefor, noncumulative cash dividends, payable
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<PAGE>
quarterly in equal amounts in arrears, at the rate of $3.00 per share per
annum (12% of the liquidation preference of $25 per share), which is
equivalent to $0.75 per share per quarter. Following the Exchange Date,
dividends on the Preferred Stock will be payable when, as and if declared by
the Board of Directors of Fidelity at the reduced rate of $2.50 per share per
annum (or 10% of the liquidation preference of $25 per share). Declared
dividends on the Preferred Stock are payable quarterly on each Dividend
Payment Date, being the 15th day of February, May, August, and November of
each year, or the next business day, if such 15th day is a non-business day.
The Preferred Stock is not entitled to participate in dividends with common
stock of Fidelity.
The right of holders of Preferred Stock to receive dividends is
noncumulative. Accordingly, if the Board of Directors of Fidelity fails to
declare a dividend payable on a Dividend Payment Date, then holders of the
Preferred Stock have no right to receive a dividend in respect of the Dividend
Period ending on such Dividend Payment Date, and Fidelity has no obligation to
pay the dividend accrued for such Dividend Period, whether or not dividends
are declared payable in respect of any future Dividend Periods on any future
Dividend Payment Dates.
No series of Parity Stock has been issued or is currently outstanding. Under
the terms of the Supplement, Parity Stock will have dividend periods which end
only on the same day as Dividend Periods for the Preferred Stock. No full
dividends shall be declared or paid or set apart for payment on any Parity
Stock for any Dividend Period unless full dividends on the Preferred Stock are
declared or paid or set apart for payment at the same time. If, with respect
to any Dividend Period, dividends are not paid in full on the Preferred Stock,
dividends on shares of Preferred Stock and Parity Stock shall only be declared
pro rata, such that the ratio consisting of the aggregate amount of dividends
declared on the Preferred Stock relative to the aggregate amount of dividends
declared on all Parity Stock shall be equal to the ratio consisting of
aggregate accrued dividends on the Preferred Stock for such Dividend Period
relative to aggregate accrued dividends on all Parity Stock for the applicable
dividend period ending on the same date as such Dividend Period.
Full dividends on the Preferred Stock must be declared and paid or set apart
for payment for the current quarterly Dividend Period before (a) any dividends
(other than dividends or distributions paid in shares of common stock or any
other stock ranking junior to the Preferred Stock as to dividends and upon
liquidation) on common stock or any other stock of Fidelity ranking junior to
the Preferred Stock may be declared or paid or set aside or (b) any common
stock or other stock of Fidelity ranking junior to the Preferred Stock may be
redeemed, purchased or otherwise acquired for any consideration (or any moneys
may be paid to or made available for a sinking fund for the redemption of any
shares of any such stock) by Fidelity (except by conversion into or exchange
for stock of Fidelity ranking junior to the Preferred Stock as to dividends
and upon liquidation) or (c) any Parity Stock is redeemed, purchased or
otherwise acquired for any consideration (or any moneys may be paid to or made
available for a sinking fund for the redemption of any shares of any such
stock) by Fidelity in accordance with the terms for redemption, prepayment or
payment at maturity of any Parity Stock otherwise than pursuant to a pro rata
offer to purchase or a concurrent redemption of all, or a pro rata portion, of
the outstanding shares of the Preferred Stock and any other stock on a parity
with the Preferred Stock (except by conversion into or exchange for stock of
Fidelity ranking junior to the Preferred Stock as to dividends and upon
liquidation).
Dividends payable for any period shorter than a full Dividend Period are
computed on the basis of a 360-day year of twelve 30-day months. Dividends
payable for each full Dividend Period are computed by dividing the annual
dividend by four. When a Dividend Payment Date falls on a non-business day,
the dividend is paid on the next succeeding business day.
No dividend may be paid or set aside for payment to holders of the Preferred
Stock for any Dividend Period unless full dividends have been paid or set
aside for payment to holders of each class or series of equity securities of
the Bank ranking senior to the Preferred Stock as to dividends.
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Dividends on the Preferred Stock and on all other classes and series of
preferred stock now or hereafter authorized, issued or outstanding will be
payable on a Dividend Payment Date when, as and if declared by the Board of
Directors of Fidelity in its sole discretion out of funds legally available
for such payment.
LIQUIDATION PREFERENCE
In the event of any liquidation, dissolution or winding up of Fidelity,
voluntary or involuntary, the holders of Preferred Stock will be entitled to
receive out of the assets of Fidelity available for distributions to
shareholders, before any distribution of assets is made to Bank Plus, as
holder of the common stock of Fidelity, or any other security ranking junior
to the Preferred Stock, liquidating distributions in the amount of $25 per
share plus dividends accrued and unpaid for the then-current Dividend Period
(without accumulation of accrued and unpaid dividends for prior Dividend
Periods) to the date fixed for such liquidation, dissolution or winding up.
If, upon any voluntary or involuntary liquidation, dissolution or winding up
of Fidelity, the amounts available for distribution to the Preferred Stock and
any other outstanding securities ranking on a parity with the Preferred Stock
with respect to distributions on liquidation, dissolution or winding up are
not sufficient to satisfy in full the liquidation rights of the Preferred
Stock and such other equity securities, then the holders of outstanding shares
of the Preferred Stock and such other equity securities will share ratably in
any such distribution in proportion to the full respective preferential
amounts to which they are entitled. All distributions made with respect to the
Preferred Stock in connection with such liquidation, dissolution or winding up
will be made pro rata to the holders of the Preferred Stock entitled thereto.
Neither the consolidation or merger of the Bank with or into any other entity,
nor the consolidation or merger of any other entity with or into the Bank, nor
a sale, transfer or lease of all or any part of the assets of the Bank will be
considered a liquidation, dissolution or winding up of the Bank. After
payments of the full amount of the liquidating distribution to which they are
entitled, the holders of Preferred Stock will not be entitled to any further
participation in any distribution of assets of Fidelity.
OPTIONAL REDEMPTION
The Preferred Stock is perpetual and is not redeemable prior to November 15,
2005. The shares of Preferred Stock will be (subject to applicable regulatory
limitations, including restrictions on capital distributions) redeemable by
the Bank at its option at any time, and from time to time, in whole or in
part, on or after November 15, 2005, at the redemption prices set forth below
in cash, plus an amount in cash equal to accrued but unpaid dividends for the
then-current Dividend Period up to (but excluding) the date fixed for
redemption (the "Redemption Date") without the accumulation of unpaid
dividends for prior Dividend Periods:
<TABLE>
<CAPTION>
IF REDEEMED DURING THE 12-MONTH
PERIOD BEGINNING NOVEMBER 15, REDEMPTION PRICE
------------------------------- ----------------
<S> <C>
2005.................................................... $27.50
2006.................................................... 27.00
2007.................................................... 26.50
2008.................................................... 26.00
2009.................................................... 25.50
2010 and thereafter..................................... 25.00
</TABLE>
The aggregate redemption price payable to each holder of record of Preferred
Stock to be redeemed will be rounded to the nearest cent ($0.01).
If fewer than all the outstanding shares of Preferred Stock are to be
redeemed, the shares to be redeemed shall be selected pro rata or by lot or by
such other method as the Board of Directors of the Bank, in its sole
discretion, determines to be equitable.
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REPURCHASE AT OPTION OF HOLDERS UPON CHANGE OF CONTROL
If a Change of Control (as defined below) occurs, each holder of shares of
Preferred Stock will have the right, at the holder's option, to require the
Bank to repurchase all or a specified number of such holder's shares of
Preferred Stock on the date (the "Repurchase Date") that is 25 days after the
date of the Bank Notice (as defined below), for cash at a price equal to 110%
of the liquidation preference of such shares of Preferred Stock to be
repurchased (the "Repurchase Price") plus dividends accrued and unpaid for the
then-current Dividend Period (without accumulation of accrued and unpaid
dividends for prior periods) to the Repurchase Date; provided, however, that
in the event the Repurchase Date shall occur prior to the opening of business
on a Dividend Payment Date and after the close of business on the
corresponding Record Date, the dividend payable on such Dividend Payment Date
shall be payable to the holder of such shares registered as such on the
relevant Record Date and no accrued and unpaid dividends shall be payable upon
repurchase of such shares. The aggregate Repurchase Price payable to such
holder will be rounded to the nearest cent ($0.01) with respect to the shares
of Preferred Stock as to which the repurchase right has been exercised.
Within 45 days after the occurrence of a Change of Control, the Bank is
obligated to mail to all holders of record of shares of Preferred Stock a
notice (the "Bank Notice") of the occurrence of such Change of Control and of
the repurchase right arising as a result thereof. To exercise the repurchase
right, a holder of such shares of Preferred Stock must deliver on or before
the 15th day after the date of the Bank Notice irrevocable written notice to
the Bank of the holder's exercise of such right, together with the shares of
Preferred Stock with respect to which the right is being exercised, duly
endorsed for transfer to the Bank.
A "Change of Control" will be deemed to have occurred at such time as:
(i) any Person (including any syndicate or group deemed to be a "person"
under Section 13(d)(3) of the Exchange Act, other than the Bank, any
subsidiary of the Bank or any employee benefit plan of the Bank), is or
becomes the beneficial owner, directly or indirectly, through a purchase,
merger or other acquisition transaction or series of transactions, of
shares of capital stock of the Bank entitling such Person to exercise 50%
or more of the total voting power of all shares of capital stock of the
Bank entitled to vote generally in the election of directors; or
(ii) there occurs any consolidation of the Bank with, or merger of the
Bank into, any other Person, any merger of another Person into the Bank, or
any sale or transfer of all or substantially all of the assets of the Bank
to another Person (other than a merger which does not result in any
reclassification, conversion, exchange or cancellation of outstanding
shares of any class of the Bank's capital stock);
provided, however, that no Change of Control shall be deemed to have occurred
under paragraphs (i) or (ii) above unless and until the transaction that would
result in the Change of Control has been approved by the Board of Directors of
the Bank and such transaction, and the exercise by the holders of the
Preferred Stock of their rights to require repurchase of the Preferred Stock
with respect thereto, has been approved by the OTS after receipt by the OTS of
written notice thereof from the Bank given no later than the business day
immediately following the day on which the Board of Directors of the Bank
approves the transaction. In the event the OTS does not approve the exercise
of such repurchase right within 30 days after the date the OTS receives such
notice from the Bank, one or more holders of shares of the Preferred Stock may
request from the OTS a reconsideration of such determination (pursuant to
applicable procedures of the OTS with respect thereto) within 60 days (or such
longer period as may be required or permitted by the OTS) of such failure to
approve such exercise. In the event the OTS disapproves the repurchase of the
Preferred Stock and does not approve such repurchase upon any such subsequent
request for reconsideration, the right of the holders to require such
repurchase shall irrevocably terminate with respect to such Change of Control,
but the right of the holders of the Preferred Stock to require such
repurchase, on the terms and subject to the conditions described herein
(including, without limitation, the requirements for OTS approval), in the
event of any subsequent Change of Control shall not be affected thereby.
"Beneficial owner" shall be determined in accordance with Rule 13d-3
promulgated under the Exchange Act, as in effect on the date hereof.
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Rule 13e-4 under the Exchange Act requires among other things the
dissemination of certain information to security holders in the event of an
issuer tender offer and may apply in the event that the repurchase option
becomes available to holders of Preferred Stock. The Bank will comply with
this rule to the extent applicable at that time.
VOTING RIGHTS
Except as set forth below and except as required by applicable law, the
holders of the Preferred Stock are not entitled to vote on any matter.
As long as any shares of the Preferred Stock remain outstanding, the
affirmative vote of the holders of at least 66 2/3% of the votes entitled to
be cast with respect to the then-outstanding shares of the Preferred Stock at
a meeting duly held for that purpose will be necessary (i) to issue or
authorize any additional class of equity stock ranking senior to the Preferred
Stock as to dividends or upon liquidation or which possesses rights to vote
separately as one class with the Preferred Stock on the basis of more than one
vote for each $25 of liquidation preference thereof (excluding any liquidation
preference for accrued but unpaid dividends), or to issue or authorize any
obligation or security convertible into, or evidencing a right to purchase,
such a security, or (ii) to repeal, amend or otherwise change any of the
provisions of the federal stock charter in any manner which adversely affects
the powers, preferences, voting power, dividend rights or other rights or
privileges of the Preferred Stock. No vote of the holders of Preferred Stock
will be required for any of the following, which are deemed not to adversely
affect the powers, preferences, voting power, dividend rights or other rights
or privileges of the Preferred Stock: (i) an amendment of the federal stock
charter which increases the number of shares of preferred stock which the Bank
is authorized to issue, (ii) the creation or issuance of Parity Stock or stock
ranking junior to the Preferred Stock as to dividends and as to rights upon
liquidation, winding up and dissolution of the Bank and (iii) a merger or
consolidation of the Bank with or into any other entity or a sale, transfer or
lease of all or any part of the assets of the Bank to any other entity.
If the Bank fails to pay full quarterly dividends on the Preferred Stock for
each of two consecutive quarters, the holders of Preferred Stock shall have
the exclusive right, (voting separately as a class together with the holders
of any Parity Stock upon which like voting rights have been conferred and are
then exercisable) to elect two directors (subject to compliance with any
requirement for regulatory approval of, or non-objection to, persons to serve
as directors of the Bank) for newly created directorships of the Board, each
director to be in addition to the number of directors constituting the Board
immediately prior to the vesting of such right (the remaining directors to be
elected by the other class or classes of stock entitled to vote therefor), at
each meeting of shareholders duly held for the purpose of electing directors.
At any time when the right to elect such directors is vested (but has not yet
terminated), the Bank may call a special meeting of the holders of the
Preferred Stock to fill such directorships, and upon the written request of
the holders of not less than 20% of such stock made in accordance with the
terms of the Preferred Stock, the Bank is obligated to do so. The right of the
holders of Preferred Stock to elect directors shall continue until dividends
on the Preferred Stock have been paid for two consecutive Dividend Periods, at
which time such voting rights of the holders of the Preferred Stock shall,
without further action, terminate, subject to revesting in the event of each
and every subsequent failure of the Bank to pay such dividends for two
consecutive Dividend Periods as described above.
The term of office of all directors elected by the holders of the Preferred
Stock in office at any time when the aforesaid voting right is vested in such
holders shall terminate upon the election of their successors at any meeting
of shareholders for the purpose of electing directors; provided, however,
that, without further action and unless otherwise required by law, any
directors who shall have been elected by the holders of the Preferred Stock as
provided herein may be removed at any time, either with or without cause, by
the affirmative vote of the holders of record of a majority of the outstanding
shares of the Preferred Stock (voting separately as a class together with the
holders of any Parity Stock upon which like voting rights have been conferred
and are then exercisable) at a duly held shareholders' meeting. Upon
termination of the aforesaid voting right in accordance with the foregoing
provisions, the term of office of all directors elected by the holders of the
Preferred Stock pursuant thereto then in office shall, without further action,
terminate unless otherwise required by law. Upon
42
<PAGE>
such termination, the number of directors constituting the Board shall,
without further action, be reduced by two, subject always to the increase of
the number of directors pursuant to the foregoing provisions in case of the
future vesting of the right of such holders of the Preferred Stock to elect
directors as provided above.
Unless otherwise required by law, in the case of any vacancy occurring in
the directorships so created, the remaining director who shall have been
elected to such a directorship may appoint a successor to hold office for the
unexpired term of the director whose place shall be vacant, and if all
directors so elected by the holders of the Preferred Stock shall cease to
serve as directors before their term shall expire, the holders of the
Preferred Stock then outstanding may, at a meeting of such holders duly held
(voting separately as a class together with the holders of any Parity Stock
upon which like voting rights have been conferred and are then exercisable),
elect successors to hold office for the unexpired terms of the directors whose
places shall be vacant.
The directors elected by the holders of the Preferred Stock in accordance
with the foregoing provisions shall be entitled to one vote per director on
any matter on which the directors not so elected are so entitled.
In connection with any matter on which the holders of the Preferred Stock
are entitled to vote as one class or otherwise pursuant to law or the
provisions of the federal stock charter, including, without limitation, the
election of directors as set forth above, each holder of the Preferred Stock
shall be entitled to one vote for each share of the Preferred Stock held by
such holder. Following the Exchange, it is expected that shares of Preferred
Stock exchanged for Senior Notes will remain outstanding and will be held by
Bank Plus.
If, after the Exchange Date, there remain any holders of Preferred Stock
other than Bank Plus and its affiliates, Bank Plus undertakes that Bank Plus
and such affiliates will vote all of their shares of Preferred Stock on all
matters submitted to a vote of holders of Preferred Stock in the same
proportion as those held by non-affiliates of Bank Plus.
NO OTHER RIGHTS
The shares of Preferred Stock have no preferences, voting powers or
relative, participating, optional or other special rights except as set forth
above and in the federal stock charter or as otherwise required by law.
VALIDITY OF SENIOR NOTES
The validity of the Senior Notes will be passed upon by Sullivan & Cromwell,
Los Angeles, California, counsel to Bank Plus.
EXPERTS
The financial statements and the related financial statement schedules
incorporated in this Prospectus by reference from Bank Plus' Annual Report on
Form 10-K for the year ended December 31, 1996 have been audited by Deloitte &
Touche LLP, independent auditors, as stated in their report, which is
incorporated herein by reference, and have been so incorporated in reliance
upon the report of such firm given upon their authority as experts in
accounting and auditing.
43
<PAGE>
Facsimile copies of the Notice of Rejection of Offer will be accepted. A
Notice of Rejection of Offer or a notice withdrawing such Notice of Rejection
should be sent by a Preferred Stockholder or such holder's broker, dealer,
commercial bank, trust company or other nominee to the Exchange Agent at one
of the addresses set forth below:
The Exchange Agent:
AMERICAN STOCK TRANSFER & TRUST COMPANY
By Mail: By Facsimile: By Hand/Overnight:
Any questions or requests for assistance or additional copies of this
Prospectus or the Notice of Rejection of Offer may be directed to the
Information Agent at the telephone numbers and address set forth below. You
may also contact your broker, dealer, commercial bank or trust company or
other nominee for assistance concerning the Exchange Offer.
The Information Agent:
D. F. KING & CO., INC.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Delaware General Corporation Law (the "DGCL") authorizes corporations to
limit or eliminate the personal liability of directors to the corporation and
its stockholders for monetary damages in connection with the breach of a
director's fiduciary duty of care. The duty of care requires that, when acting
on behalf of the corporation, directors must exercise an informed business
judgment based on all material information reasonably available to them.
Absent the limitation authorized by the DGCL, directors could be accountable
to corporations and their stockholders for monetary damages for conduct that
does not satisfy such duty of care. Although the DGCL does not change a
director's duty of care, it enables corporations to limit available relief to
equitable remedies such as injunction or rescission. The Registrant's
certificate of incorporation limits the liability of directors to the
Registrant or its stockholders to the fullest extent permitted by the DGCL as
in effect from time to time. Specifically, directors of the Registrant will
not be personally liable for monetary damages for breach of a director's
fiduciary duty as a director, except for liability (i) for any breach of the
director's duty of loyalty to the Registrant or its stockholder, (ii) for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) for unlawful payments of dividends or unlawful
stock repurchases or redemptions as provided in Section 174 of the DGCL or
(iv) for any transaction from which the director derived an improper personal
benefit. This provision does not affect a director's responsibilities under
certain other laws such as the federal securities laws or state or federal
environmental laws.
The bylaws of the Registrant provide that the Registrant shall indemnify its
officers, directors and employees to the fullest extent permitted by the DGCL.
The Registrant believes that indemnification under its bylaws covers at least
negligence and gross negligence on the part of the indemnified parties.
The Registrant has entered into indemnification agreements with its
directors and officers which provide for broad indemnification, except where
the "reviewing party" has determined that the indemnitee would not be entitled
to be indemnified under applicable law. The "reviewing party" is defined as
the majority vote of the directors of Registrant not subject to the particular
claim or, if none, independent legal counsel selected by the indemnitee and
approved by the Registrant. No payments may be made under these
indemnification agreements in connection with claims made against a director
or officer for which payment is made under an insurance policy or for which
such person is otherwise indemnified.
Under an insurance policy currently maintained by the Registrant, the
directors and officers of the Registrant are insured, within the limits and
subject to the limitations of the policy, against certain expenses in
connection with the defense of certain claims, actions, suits or proceedings,
and certain liabilities which may be imposed as a result of such claims,
actions, suits or proceedings which may be brought against them by reason of
being or having been such directors or officers.
II-1
<PAGE>
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits.
<TABLE>
<C> <S>
2.1 Agreement and Plan of Reorganization, dated as of March 27, 1996, among
Fidelity, Bank Plus and Fidelity Interim Bank (incorporated by reference
to Exhibit 2.1 to the Form 8-B of Bank Plus filed with the Commission on
April 22, 1996).
4.1+ Form of Indenture between Bank Plus and , as Trustee,
relating to the 12% Senior Notes due , 2007 of Bank Plus.
5.1+ Opinion of Sullivan & Cromwell regarding the validity of the securities
being registered.
8.1+ Opinion of Sullivan & Cromwell regarding certain federal income tax
matters with respect to the securities being registered.
12.1* Statement regarding computation of ratios.
23.1* Consent of Deloitte & Touche.
23.4+ Consent of Sullivan & Cromwell. (Included in its opinions filed as
Exhibits 5.1 and 8.1 to this Registration Statement.)
24.1* Powers of Attorney. (Set forth on the signature pages to this
Registration Statement).
25.1+ Statement of Eligibility under the Trust Indenture Act of 1939 on Form
T-1 of .
99.1+ Amended and Restated Charter S of Fidelity Federal Bank, A Federal
Savings Bank; First Supplemental Section to Section 5.B. of Amended and
Restated Charter S of Fidelity Federal Bank, A Federal Savings Bank.
99.2* Form of Notice of Rejection of Offer and instructions thereto.
99.3* Form of Letter to Brokers, Dealers, etc.
99.4* Form of Letter to Clients and instructions thereto.
(b) Not applicable.
(c) Not applicable.
</TABLE>
- --------
*Filed herewith
+To be filed by amendment
ITEM 22. UNDERTAKING.
The undersigned Registrant hereby undertakes:
(a)(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933.
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the Registration Statement.
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or
any material change to such information in the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
II-2
<PAGE>
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) That, for purposes of determining any liability under the Securities
Act of 1933, each filing of the Registrant's annual report pursuant to
Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (and, where
applicable, each filing of an employee benefit plan's annual report
pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is
incorporated by reference in the Registration Statement shall be deemed to
be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(c) To respond to requests for information that is incorporated by
reference into the prospectus pursuant to Items 4,10(b), 11, or 13 of this
Form, within one business day of receipt of such request, and to send the
incorporated documents by first class mail or other equally prompt means.
This includes information contained in documents filed subsequent to the
effective date of the Registration Statement through the date of responding
to the request.
(d) To supply by means of a post-effective amendment all information
concerning a transaction, and the company being acquired involved therein,
that was not the subject of and included in the Registration Statement when
it became effective.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions referred to in Item 20, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction, the question whether
such indemnification by it is against public policy as expressed in the Act
and will be governed by the final adjudication of such issue.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Los Angeles, State of
California, on this 28th day of March, 1997.
BANK PLUS CORPORATION
/s/ Richard M. Greenwood
By: ___________________________________
President and
Chief Executive Officer
POWER OF ATTORNEY
Each person whose signature appears below on this Registration Statement
hereby constitutes and appoints Richard M. Greenwood and Godfrey B. Evans, and
each of them, with full power to act without the other, his true and lawful
attorney-in-fact and agent, with full power of substitution and
resubstitution, and for him and in his name, place and stead, in any and all
capacities (unless revoked in writing) to sign any and all amendments
(including post-effective amendments thereto) to this Registration Statement
to which this power of attorney is attached, and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting to such attorney-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in connection
therewith, as fully to all intents and purposes as he might or could do in
person, hereby notifying and confirming all that such attorneys-in-fact and
agents or any of them, or their or his substitute or substitutes, may lawfully
do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ Richard M. Greenwood President, Chief Executive March 28, 1997
- --------------------------- Officer and Director
Richard M. Greenwood (principal executive officer)
/s/ William L. Sanders Executive Vice President and March 28, 1997
- --------------------------- Chief Financial Officer
William L. Sanders (principal financial officer)
/s/ Richard M. Villa Senior Vice President and Controller March 28, 1997
- --------------------------- (principal accounting officer)
Richard M. Villa
/s/ Norman Barker, Jr. Director March 28, 1997
- ---------------------------
Norman Barker, Jr.
/s/ Waldo H. Burnside Director March 28, 1997
- ---------------------------
Waldo H. Burnside
/s/ George Gibbs, Jr. Director March 28, 1997
- ---------------------------
George Gibbs, Jr.
/s/ Lilly V. Lee Director March 28, 1997
- ---------------------------
Lilly V. Lee
/s/ Gordon V. Smith Director March 28, 1997
- ---------------------------
Gordon V. Smith
/s/ Mark Sullivan III Director March 28, 1997
- ---------------------------
Mark Sullivan III
</TABLE>
II-4
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
- ------- -----------
<S> <C>
2.1 Agreement and Plan of Reorganization, dated as of March 27, 1996, among
Fidelity, Bank Plus and Fidelity Interim Bank (incorporated by reference to
Exhibit 2.1 to the Form 8-B of Bank Plus filed with the Commission on April 22,
1996).
4.1 Form of Indenture between Bank Plus and , as Trustee, relating to
the 12% Senior Notes due March , 2007 of Bank Plus.+
5.1 Opinion of Sullivan & Cromwell regarding the legality of the securities being
registered.+
8.1 Opinion of Sullivan & Cromwell regarding certain federal income tax matters
with respect to the securities being registered.+
12.1 Statement regarding computation of ratios.*
23.1 Consent of Deloitte & Touche LLP.*
23.4 Consent of Sullivan & Cromwell. (Included in its opinions filed as Exhibits 5.1
and 8.1 to this Registration Statement).+
24.1 Powers of Attorney. (Set forth on the signature pages to this Registration
Statement).*
25.1 Statement of Eligibility under the Trust Indenture Act of 1939 on Form T-1 of
.+
99.1 Amended and Restated Charter S of Fidelity Federal Bank, A Federal Savings
Bank; First Supplemental Section to Section 5.B. of Amended and Restated
Charter S of Fidelity Federal Bank, A Federal Savings Bank.+
99.2 Form of Notice of Rejection of Offer and instructions thereto.*
99.3 Form of Letter to Brokers, Dealers, etc.*
99.4 Form of Letter to Clients and instructions thereto.*
</TABLE>
- --------
*Filed herewith.
+To be filed by amendment.
<PAGE>
EXHIBIT 12.1
BANK PLUS CORPORATION AND SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
------------------------------------------------------
1996 1995 1994 1993 1992
-------- -------- --------- --------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Loss from continuing operations before
income taxes.................................... $(10,525) $(68,975) $(144,968) $(101,680) $ (1,880)
Add:
Interest on deposits........................... 120,265 128,242 108,310 131,721 175,077
Interest on borrowings......................... 32,358 46,594 47,518 56,773 65,047
One-third of rents............................. 990 930 870 900 840
-------- -------- --------- --------- --------
Earnings as adjusted (A)..................... $143,088 $106,791 $ 11,730 $ 87,714 $239,084
======== ======== ========= ========= ========
Adjusted earnings (loss) excluding
interest on deposits (B).................... $ 22,823 $(21,451) $ (96,580) $ (44,007) $ 64,007
======== ======== ========= ========= ========
Fixed Charges:
Interest on deposits........................... $120,265 $128,242 $ 108,310 $ 131,721 $175,077
Interest on borrowings......................... 32,358 46,594 47,518 56,773 65,047
One-third of rents............................. 990 930 870 900 840
Dividend on preferred stock of
subsidiary.................................... 10,707 -- -- -- --
-------- -------- --------- --------- --------
Fixed charges (C)............................. $164,320 $175,766 $ 156,698 $ 189,394 $240,964
======== ======== ========= ========= ========
Fixed charges excluding interest
on deposits (D).............................. $ 44,055 $ 47,524 $ 48,388 $ 57,673 $ 65,887
======== ======== ========= ========= ========
Ratio of earnings to fixed charges (A)/(C)....... 0.87 0.61 0.07 0.46 0.99
======== ======== ========= ========= ========
Ratio of earnings (loss) to fixed charges
excluding interest on deposits (B)/(D)......... 0.52 (0.45) (2.00) (0.76) 0.97
======== ======== ========= ========= ========
Amount of coverage deficiency.................... $(21,232) $(68,975) $(144,968) $(101,680) $ (1,880)
======== ======== ========= ========= ========
</TABLE>
<PAGE>
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
Bank Plus Corporation on Form S-4 of our report dated February 7, 1997, which is
included in the Annual Report on Form 10-K of Bank Plus Corporation for the year
ended December 31, 1996, and to the reference to Deloitte & Touche LLP under the
heading "Experts" in the Prospectus, which is part of this Registration
Statement.
/s/ Deloitte & Touche LLP
Los Angeles, California
March 28, 1997
<PAGE>
NOTICE OF REJECTION OF OFFER
to exchange
12% Noncumulative Exchangeable Perpetual Preferred Stock, Series A
of
Fidelity Federal Bank, A Federal Savings Bank
for
12% Senior Notes due , 2007
of
BANK PLUS CORPORATION
pursuant to the Prospectus dated , 1997
THE RIGHT OF PREFERRED STOCKHOLDERS TO REJECT THE EXCHANGE OFFER WILL
TERMINATE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON , 1997,
UNLESS THE EXCHANGE OFFER IS EXTENDED BY BANK PLUS CORPORATION.
The Exchange Agent:
AMERICAN STOCK TRANSFER & TRUST COMPANY
By Mail: By Facsimile: By Hand/Overnight:
AMERICAN STOCK TRANSFER & AMERICAN STOCK TRANSFER &
TRUST COMPANY TRUST COMPANY
The instructions accompanying this Notice of Rejection of Offer should be
read carefully before this Notice of Rejection of Offer is completed. Delivery
of this Notice of Rejection of Offer to an address other than as set forth
above or transmission of this Notice of Rejection of Offer via facsimile other
than as set forth above will not constitute a valid delivery.
THIS NOTICE OF REJECTION OF OFFER SHOULD BE RETURNED ONLY BY PREFERRED
STOCKHOLDERS WHO WISH TO REJECT THE EXCHANGE OFFER AND RETAIN THEIR SHARES OF
PREFERRED STOCK (AS EACH SUCH TERM IS DEFINED BELOW). PREFERRED STOCKHOLDERS
WHO WISH TO ACCEPT THE EXCHANGE OFFER SHOULD DO NOTHING AT THIS TIME. AS
PROMPTLY AS PRACTICABLE AFTER THE EXCHANGE DATE, THE EXCHANGE AGENT WILL SEND
PREFERRED STOCKHOLDERS WHO ACCEPT THE EXCHANGE OFFER A LETTER OF TRANSMITTAL
AND INSTRUCTIONS FOR ITS USE IN EFFECTING THE SURRENDER OF CERTIFICATES
REPRESENTING SHARES OF PREFERRED STOCK EXCHANGED IN THE EXCHANGE OFFER.
----------------
1
<PAGE>
Ladies and Gentlemen:
The undersigned hereby gives notice of its determination to reject the offer
(the "Exchange Offer") by Bank Plus Corporation ("Bank Plus") to exchange 12%
Senior Notes due , 2007 ("Senior Notes") of Bank Plus for shares of 12%
Noncumulative Exchangeable Perpetual Preferred Stock, Series A ("Preferred
Stock"), of its subsidiary, Fidelity Federal Bank, A Federal Savings Bank,
with respect to the shares of Preferred Stock described below (the
"Unexchanged Shares") on the terms and conditions set forth in Bank Plus's
prospectus dated , 1997 (the "Prospectus"), receipt of which is hereby
acknowledged.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
DESCRIPTION OF UNEXCHANGED SHARES
(SEE INSTRUCTIONS)
- -------------------------------------------------------------------------------------------------
NAME(S) AND ADDRESS(ES) OF UNEXCHANGED SHARES
PREFERRED STOCKHOLDER(S) (ATTACH ADDITIONAL LIST IF NECESSARY)
(AS NAME(S) APPEAR(S) ON CERTIFICATE(S))
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
NUMBER OF
SHARES NUMBER OF
CERTIFICATE REPRESENTED BY UNEXCHANGED SHARES*
NUMBER(S) CERTIFICATES(S) (SEE INSTRUCTION 3)
-------------------------------------------------------
-------------------------------------------------------
-------------------------------------------------------
TOTAL SHARES
- -------------------------------------------------------------------------------------------------
</TABLE>
* If you enter a number in this column, you must complete the Certification
for Preferred Stockholders Holding in a Representative Capacity provided
below. Failure to do so will result in all shares listed in the column
entitled Number of Shares Represented by Certificate(s) being deemed
Unexchanged Shares.
The undersigned hereby represents and warrants that the undersigned has full
power and authority to reject the Exchange Offer with respect to the
Unexchanged Shares.
THE UNDERSIGNED UNDERSTANDS AND ACKNOWLEDGES THAT, PURSUANT TO THE TERMS OF
THE PREFERRED STOCK, DIVIDENDS WILL BE PAYABLE ON THE UNEXCHANGED SHARES FROM
AND AFTER 12:00 MIDNIGHT, NEW YORK CITY TIME, ON , 1997 (THE "EXCHANGE
DATE") AT A REDUCED RATE OF 10% PER SHARE PER ANNUM.
- --------------------------------------------------------------------------------
SIGN HERE (SEE INSTRUCTION 2)
- --------------------------------------------------------------------------------
Signature(s) of Owner(s)
Name(s) ________________________________________________________________________
(Please Print)
Capacity (full title) __________________________________________________________
Address and Zip Code ___________________________________________________________
- --------------------------------------------------------------------------------
Area Code and Telephone Number _________________
Taxpayer Identification Number_____________
Dated __________________________________________________________________________
(Must be signed by registered holder(s) exactly as name(s) appear(s) on
stock certificate(s) or on a security position listing or by person(s)
authorized to become registered holder(s) by certificates and documents
transmitted herewith. If signature is by a trustee, executor, administer,
guardian, attorney-in-fact, agent, officer of a corporation or other
person acting in a fiduciary or representative capacity, please set forth
full title and see instruction 2.)
- --------------------------------------------------------------------------------
2
<PAGE>
- --------------------------------------------------------------------------------
CERTIFICATION FOR CERTAIN PREFERRED STOCKHOLDERS
HOLDING IN A REPRESENTATIVE CAPACITY (See instruction 3)
- --------------------------------------------------------------------------------
The undersigned hereby certifies that it holds shares of Preferred Stock in
a representative capacity on behalf of two or more clients and that in
rejecting the Exchange Offer with respect to shares of Preferred Stock held
by the undersigned on behalf of any client, the undersigned has rejected the
Exchange Offer with respect to all shares of Preferred Stock held by it on
behalf of such client.
----------------------------------------------------------
Signature
Name(s) _____________________________________________________________________
Title _______________________________________________________________________
- --------------------------------------------------------------------------------
3
<PAGE>
INSTRUCTIONS
FOR COMPLETING AND RETURNING THE
NOTICE OF REJECTION OF OFFER
1. DELIVERY OF NOTICE OF REJECTION OF OFFER. This Notice of Rejection of
Offer is to be USED ONLY by or on behalf of Preferred Stockholders who wish to
REJECT the Exchange Offer and retain their shares of Preferred Stock. In order
to reject the Exchange Offer, a Preferred Stockholder or such holder's
authorized representative must properly complete and duly execute the Notice
of Rejection of Offer (or a facsimile thereof) and mail or deliver it to the
Exchange Agent. The Exchange Agent must receive such Notice of Rejection of
Offer prior to 12:00 midnight on the Exchange Date. A Notice of Rejection of
Offer, even if properly completed and duly executed, that is received by the
Exchange Agent after the Exchange Date will be deemed invalid, and the shares
of Preferred Stock with respect to which such Notice of Rejection of Offer is
executed will be deemed exchanged for Senior Notes.
All questions as to the form and validity (including time of receipt) of any
Notice of Rejection of Offer will be determined by Bank Plus in its sole
discretion, which determination will be final and binding. Bank Plus reserves
the absolute right to reject any Notice of Rejection of Offer which it
determines not to be in proper form, or the acceptance of which would, in the
opinion of Bank Plus's counsel, be unlawful. Neither Bank Plus nor the
Exchange Agent will be under any duty to give notification of any defect or
irregularity in any Notice of Rejection of Offer, nor will they incur any
liability for failure to give such notification. Bank Plus' interpretation of
the terms and conditions of the Exchange Offer (including the Notice of
Rejection of Offer and instructions thereto) will be final and binding.
THE METHOD OF DELIVERY OF A NOTICE OF REJECTION OF OFFER TO THE EXCHANGE
AGENT IS AT THE ELECTION AND RISK OF THE PREFERRED STOCKHOLDER TRANSMITTING
SUCH NOTICE. IF DELIVERY IS BY MAIL, IT IS RECOMMENDED THAT SUCH HOLDER USE
PROPERLY INSURED, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, AND THAT THE
MAILING BE MADE SUFFICIENTLY IN ADVANCE OF THE EXCHANGE DATE TO PERMIT
DELIVERY TO THE EXCHANGE AGENT PRIOR TO THE EXCHANGE DATE.
2. SIGNATURES ON NOTICE OF REJECTION OF OFFER. If the shares of Preferred
Stock with respect to which a Notice of Rejection of Offer is executed are
owned of record by two or more joint owners, all such owners must sign such
Notice of Rejection of Offer.
If a Notice of Rejection of Offer is signed by a trustee, executor,
administrator, guardian, attorney-in-fact, officer of a corporation or other
person acting in a fiduciary or representative capacity, such person should so
indicate when signing, and proper evidence satisfactory to Bank Plus of such
person's authority so to act must be submitted.
3. REJECTION IN WHOLE. A Preferred Stockholder who rejects the Exchange
Offer may reject the Exchange Offer only in whole, and not in part. However,
brokers, dealers, commercial banks, trust companies and others holding shares
of Preferred Stock in a representative capacity on behalf of two or more
clients may return a Notice of Rejection of Offer on behalf of one or more
clients with respect to all shares of Preferred Stock held by such clients
while tendering shares of Preferred Stock on behalf of one or more other
clients. In such event, such Preferred Stockholder will be required to certify
that it holds shares of Preferred Stock in a representative capacity on behalf
of two or more clients and that if it has rejected the Exchange Offer with
respect to any shares of Preferred Stock held by it on behalf of a client, it
has rejected the Exchange Offer with respect to all shares of Preferred Stock
held by it on behalf of such client.
4
<PAGE>
BANK PLUS CORPORATION
OFFER TO EXCHANGE
$1,000 PRINCIPAL AMOUNT OF ITS 12% SENIOR NOTES DUE , 2007
FOR EACH 40 SHARES OF OUTSTANDING
12% NONCUMULATIVE EXCHANGEABLE PERPETUAL PREFERRED STOCK, SERIES A OF
FIDELITY FEDERAL BANK, A FEDERAL SAVINGS BANK
To Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:
We are enclosing herewith the material listed below relating to the offer
(the "Exchange Offer") by Bank Plus Corporation ("Bank Plus") to exchange
$1,000 principal amount of its 12% Senior Notes due , 2007 ("Senior
Notes") for each 40 shares of outstanding 12% Noncumulative Exchangeable
Perpetual Preferred Stock, Series A ("Preferred Stock") of its subsidiary,
Fidelity Federal Bank, A Federal Savings Bank ("Fidelity"), upon the terms and
subject to the conditions set forth in the prospectus, dated , 1997
(the "Prospectus").
Please note that, pursuant to the terms of Preferred Stock, as set forth in
the Prospectus, shares of Preferred Stock will automatically be deemed
tendered in the Exchange Offer and will be exchanged for Senior Notes except
to the extent that a Notice of Rejection of Offer, duly executed, has been
received by the Exchange Agent (as defined in the Prospectus) and is not
withdrawn prior to 12:00 midnight, New York City time, on , 1997,
or such later date and time to which the Exchange Offer may be extended by
Bank Plus.
Enclosed herewith are copies of the following documents:
1. Prospectus dated , 1997;
2. Notice of Rejection of Offer; and
3. Letter which may be sent to your clients for whose account you hold
Preferred Stock in your name or in the name of your nominee, with space
provided for obtaining such client's instruction with regard to the
Exchange Offer.
Please note that the Exchange Offer may be rejected in whole, but not in
part. However, if your clients include two or more beneficial owners of
Preferred Stock, you may return a Notice of Rejection of Offer on behalf of
one or more of your clients rejecting the Exchange Offer with respect to all
shares of Preferred Stock held by such clients while tendering shares of
Preferred Stock on behalf of one or more other clients. In such event, you
will be required to certify that you hold shares of Preferred Stock in a
representative capacity on behalf of two or more clients and that if you have
rejected the Exchange Offer with respect to any shares of Preferred Stock held
by you on behalf of a client, you have rejected the Exchange Offer with
respect to all shares of Preferred Stock held by you on behalf of such client.
See instruction 3 in the form of Notice of Rejection of Offer.
Bank Plus's election to proceed with the Exchange Offer is subject to
certain conditions, and Bank Plus expressly reserves the right to terminate or
amend the Exchange Offer as set forth in the Prospectus if any of these
conditions are not met or waived by Bank Plus.
Bank Plus will not make any payment to brokers, dealers, salespersons or any
other person (other than the Exchange Agent and the Information Agent) in
connection with the Exchange Offer. Bank Plus will, however, upon request,
reimburse you for reasonable out-of-pocket expenses incurred in connection
with the Exchange Offer, in forwarding copies of the Prospectus and related
documents to the beneficial owners of Preferred Stock and in handling or
forwarding Notices of Rejection of Offer, notices of withdrawal of rejection
and certificates on behalf of clients.
1
<PAGE>
D.F. King & Co., Inc. is the Information Agent in connection with the
Exchange Offer. All questions relating to the Exchange Offer, as well as
requests for assistance or additional copies of the Prospectus or Notice of
Rejection of Offer, may be directed to D.F. King & Co., Inc. at the address
and telephone numbers set forth on the back cover page of the Prospectus.
Very truly yours,
Bank Plus Corporation
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU
OR ANY OTHER PERSON AS THE AGENT OF BANK PLUS, THE INFORMATION AGENT OR THE
EXCHANGE AGENT, OR AUTHORIZE YOU OR ANY OTHER PERSON TO USE ANY DOCUMENT OR
MAKE ANY STATEMENT ON BEHALF OF ANY OF THEM IN CONNECTION WITH THE EXCHANGE
OFFER OTHER THAN THE ENCLOSED DOCUMENTS AND THE STATEMENTS CONTAINED THEREIN.
2
<PAGE>
BANK PLUS CORPORATION
OFFER TO EXCHANGE
$1,000 PRINCIPAL AMOUNT OF ITS 12% SENIOR NOTES DUE , 2007
FOR EACH 40 SHARES OF OUTSTANDING
12% NONCUMULATIVE EXCHANGEABLE PERPETUAL PREFERRED STOCK, SERIES A OF
FIDELITY FEDERAL BANK, A FEDERAL SAVINGS BANK
To Our Clients:
Enclosed for your consideration is a Prospectus dated , 1997
(the "Prospectus") and a Notice of Rejection of Offer relating to the offer
(the "Exchange Offer") by Bank Plus Corporation ("Bank Plus") to exchange 12%
Senior Notes due , 2007 ("Senior Notes") of Bank Plus for shares
of 12% Noncumulative Exchangeable Perpetual Preferred Stock, Series A
("Preferred Stock") of its subsidiary, Fidelity Federal Bank, A Federal
Savings Bank, on the terms and conditions set forth in the Prospectus.
PURSUANT TO THE TERMS OF THE PREFERRED STOCK, AS SET FORTH IN THE
PROSPECTUS, ALL SHARES OF PREFERRED STOCK WILL AUTOMATICALLY BE DEEMED
TENDERED IN THE EXCHANGE OFFER AND WILL BE EXCHANGED FOR SENIOR NOTES EXCEPT
AS SET FORTH BELOW AND EXCEPT TO THE EXTENT THAT A NOTICE OF REJECTION OF
OFFER, DULY EXECUTED, SPECIFYING THAT ALL SHARES OF PREFERRED STOCK HELD BY US
FOR YOUR ACCOUNT ARE NOT TO BE EXCHANGED FOR SENIOR NOTES, HAS BEEN RECEIVED
BY THE EXCHANGE AGENT (AS DEFINED IN THE PROSPECTUS) AND IS NOT WITHDRAWN
PRIOR TO 12:00 MIDNIGHT, NEW YORK CITY TIME, ON , 1997, UNLESS
THE EXCHANGE OFFER IS EXTENDED BY BANK PLUS (AS IT MAY BE SO EXTENDED, THE
"EXCHANGE DATE").
We are the holder of record of shares of Preferred Stock held for your
account. The Exchange Offer can be rejected with respect to such shares only
by us as the holder of record and pursuant to your instructions. THE NOTICE OF
REJECTION OF OFFER IS FURNISHED TO YOU FOR YOUR INFORMATION ONLY AND CANNOT BE
USED BY YOU TO REJECT THE EXCHANGE OFFER.
Accordingly, we request that you instruct us as to whether you wish us to
reject the Exchange Offer with respect to the shares held by us for your
account by completing the instruction form printed on the back of this letter.
IF YOU DO NOT EXPRESSLY INSTRUCT US TO REJECT THE EXCHANGE OFFER WITH RESPECT
TO ALL OF THE SHARES OF PREFERRED STOCK HELD BY US FOR YOUR ACCOUNT, ALL SUCH
SHARES WILL BE AUTOMATICALLY EXCHANGED FOR SENIOR NOTES ON THE EXCHANGE DATE,
SUBJECT TO THE CONDITIONS OF THE EXCHANGE OFFER AND EXCEPT AS SET FORTH BELOW.
If you wish to accept the Exchange Offer with respect to the shares of
Preferred Stock held by us for your account, you need do nothing at this time.
We call your attention to the following:
1. Your right to reject the Exchange Offer will expire at 12:00 midnight,
New York City time, on , 1997, unless Bank Plus extends the
Exchange Offer.
2. Pursuant to the terms of the Preferred Stock, dividends payable on
shares of Preferred Stock after the Exchange Offer will be paid when, as
and if declared by Fidelity's Board of Directors, at the reduced rate of
10% per annum.
3. Preferred Stockholders who wish to have their shares exchanged in the
Exchange Offer need do nothing at this time.
4. If you choose not to reject the Exchange Offer, to the extent that the
number of shares held by us for your account is not evenly divisible by
40, you will receive in the Exchange, in addition to Senior Notes, a
certificate representing a number of shares of Preferred Stock equal to
the amount by which the number of shares of Preferred Stock held by us
for your account exceeds the closest multiple of 40.
1
<PAGE>
YOUR INSTRUCTIONS TO US SHOULD BE FORWARDED IN AMPLE TIME TO PERMIT US TO
SUBMIT A NOTICE OF REJECTION OF OFFER TO THE EXCHANGE AGENT THAT REFLECTS YOUR
REJECTION OF THE EXCHANGE OFFER WITH RESPECT TO ALL OF THE SHARES OF PREFERRED
STOCK HELD BY US FOR YOUR ACCOUNT. YOUR RIGHT TO REJECT THE EXCHANGE OFFER
WILL TERMINATE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON , 1997,
UNLESS THE EXCHANGE OFFER IS EXTENDED BY BANK PLUS.
2
<PAGE>
INSTRUCTION FORM WITH RESPECT TO
THE EXCHANGE OFFER
The undersigned acknowledges receipt of your letter and the enclosed
Prospectus, dated , 1997, and the related Notice of Rejection
of Offer in connection with the offer (the "Exchange Offer") by Bank Plus
Corporation ("Bank Plus") to exchange 12% Senior Notes due ,
2007 of Bank Plus for shares of 12% Noncumulative Exchangeable Perpetual
Preferred Stock, Series A ("Preferred Stock") of its subsidiary, Fidelity
Federal Bank, A Federal Savings Bank.
THE UNDERSIGNED UNDERSTANDS AND ACKNOWLEDGES THAT, PURSUANT TO THE TERMS OF
THE PREFERRED STOCK, IN ACCORDANCE WITH THE EXCHANGE OFFER, THE DIVIDEND RATE
IN RESPECT OF SHARES OF PREFERRED STOCK WILL BE REDUCED TO 10% PER ANNUM AFTER
12:00 MIDNIGHT, NEW YORK CITY TIME, ON , 1997.
This will instruct you to REJECT the Exchange Offer with respect to all
shares of Preferred Stock which are held by you for the account of the
undersigned, the number of which is indicated below. This form need not be
completed or returned by Preferred Stockholders who wish to accept the
Exchange Offer.
---------------------------------
AGGREGATE NUMBER OF
SHARES OF PREFERRED STOCK
HELD BY YOU FOR THE
ACCOUNT OF THE
UNDERSIGNED
---------------------------------
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Date
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