<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------
FORM 10-Q
(Mark One)
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2000
OR
| | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________to _______________
COMMISSION FILE NUMBER 0-28292
--------------------
BANK PLUS CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 95-4571410
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
4565 COLORADO BOULEVARD 90039
LOS ANGELES, CALIFORNIA (ZIP CODE)
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (818) 549-3116
--------------------
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
--- ---
As of November 9, 2000, Registrant had outstanding 19,441,866 shares of
Common Stock, par value $.01 per share.
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<TABLE>
BANK PLUS CORPORATION
TABLE OF CONTENTS
<CAPTION>
PAGE
----
<S> <C> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Statements of Financial Condition as of September 30, 2000 and
December 31, 1999..................................................................... 1
Consolidated Statements of Operations for the quarter and nine months ended
September 30, 2000 and 1999........................................................... 2
Consolidated Statements of Comprehensive Income for the quarter and
nine months ended September 30, 2000 and 1999......................................... 4
Consolidated Statements of Cash Flows for the quarter and nine months ended
September 30, 2000 and 1999........................................................... 5
Notes to Consolidated Financial Statements .............................................. 6
Item 2. Management's Discussion and Analysis of Financial Condition and Results of
Operations............................................................................ 9
PART II. OTHER INFORMATION
Item 1. Legal Proceedings........................................................................ 27
Item 4 Submission of Matters to a Vote of Security Holders...................................... 32
Item 6. Exhibits and Reports on Form 8-K......................................................... 32
a. Exhibits........................................................................... 32
b. Reports on Form 8-K................................................................ 33
</TABLE>
i
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
BANK PLUS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
2000 1999
------------- -------------
<S> <C> <C>
ASSETS:
Cash and cash equivalents...................................................... $ 152,389 $ 89,527
Mortgage-backed securities ("MBS") available for sale ("AFS"), at fair value... 252,769 320,233
Loans receivable, net of allowances for estimated loan losses of $10,814
and $14,599 at September 30, 2000 and December 31, 1999, respectively........ 1,675,998 2,007,880
Investment in Federal Home Loan Bank ("FHLB") stock............................ 25,212 31,142
Premises and equipment......................................................... 28,115 30,141
Net assets of discontinued operations, at estimated disposition value at
September 30, 2000........................................................... 38,287 164,820
Other assets................................................................... 33,921 39,677
------------- -------------
Total Assets...................................................................... $ 2,206,691 $ 2,683,420
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY:
Liabilities:
Deposits..................................................................... $ 2,073,945 $ 2,501,246
FHLB advances................................................................ -- 20,000
Senior notes................................................................. 51,478 51,478
Other liabilities............................................................ 19,973 14,248
------------- -------------
Total Liabilities......................................................... 2,145,396 2,586,972
------------- -------------
Commitments and contingencies
Minority interest.............................................................. 272 272
Stockholders' equity:
Common stock:
Common stock, par value $.01 per share; 78,500,000 shares authorized;
19,470,400 and 19,463,343 shares outstanding
at September 30, 2000 and December 31, 1999, respectively............... 195 195
Paid-in capital.............................................................. 275,305 275,285
Accumulated other comprehensive loss......................................... (6,219) (9,272)
Accumulated deficit.......................................................... (208,258) (170,032)
------------- -------------
Total Stockholders' Equity................................................ 61,023 96,176
------------- -------------
Total Liabilities and Stockholders' Equity........................................ $ 2,206,691 $ 2,683,420
============= =============
See notes to consolidated financial statements.
</TABLE>
1
<PAGE>
<TABLE>
BANK PLUS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<CAPTION>
QUARTER ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
---------------------------- ----------------------------
2000 1999 2000 1999
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Interest Income:
Loans................................................. $ 32,602 $ 40,279 $ 101,198 $ 128,035
MBS................................................... 4,098 6,101 14,019 17,012
Investment securities and other....................... 2,878 3,267 7,695 13,650
------------- ------------- ------------- -------------
Total interest income............................... 39,578 49,647 122,912 158,697
------------- ------------- ------------- -------------
Interest Expense:
Deposits.............................................. 25,087 26,735 77,398 86,623
FHLB advances......................................... -- 6,267 182 22,411
Other borrowings...................................... 1,571 1,572 4,714 4,721
Interest allocated to discontinued operations......... (622) (2,475) (3,845) (8,464)
------------- ------------- ------------- -------------
Total interest expense.............................. 26,036 32,099 78,449 105,291
------------- ------------- ------------- -------------
Net interest income...................................... 13,542 17,548 44,463 53,406
Provision for estimated loan losses...................... (900) (3,452) (1,858) (11,476)
------------- ------------- ------------- -------------
Net interest income after provision for estimated loan
losses............................................... 14,442 21,000 46,321 64,882
------------- ------------- ------------- -------------
Noninterest Income (Expense):
Loan fee income....................................... 611 1,006 2,142 2,580
Fee income from the sale of investment products....... 1,462 1,571 5,199 4,792
Fee income from deposits and other fee income......... 699 940 2,196 2,676
Gain on sales of branches, net........................ 1,116 5,914 25,430 5,914
Other income ......................................... 51 75 210 1,366
Real estate operations, net........................... 555 (284) 616 (1,054)
------------- ------------- ------------- -------------
Total noninterest income............................ 4,494 9,222 35,793 16,274
------------- ------------- ------------- -------------
Operating Expense:
Personnel and benefits................................ 8,631 8,228 28,165 25,029
Occupancy............................................. 2,933 3,381 9,877 9,789
Federal Deposit Insurance Corporation ("FDIC")
insurance............................................ 1,010 1,975 3,997 5,356
Professional services................................. 1,496 2,158 6,360 8,463
Office-related expenses............................... 984 1,168 3,130 3,143
Other................................................. 244 (293) 270 (314)
------------- ------------- ------------- -------------
Total operating expense............................. 15,298 16,617 51,799 51,466
------------- ------------- ------------- -------------
Earnings from continuing operations before income
taxes and minority interest........................... 3,638 13,605 30,315 29,690
Income tax expense....................................... -- -- -- --
------------- ------------- ------------- -------------
Earnings from continuing operations before minority
interest.............................................. 3,638 13,605 30,315 29,690
Minority interest in subsidiary.......................... 7 7 21 21
------------- ------------- ------------- -------------
Earnings from continuing operations...................... 3,631 13,598 30,294 29,669
------------- ------------- ------------- -------------
Discontinued Operations:
Loss from operations.................................. -- (15,998) (7,344) (45,706)
Loss on disposal...................................... (832) -- (61,176) --
------------- ------------- ------------- -------------
Loss From Discontinued Operations........................ (832) (15,998) (68,520) (45,706)
------------- ------------- ------------- -------------
Net earnings (loss)...................................... $ 2,799 $ (2,400) $ (38,226) $ (16,037)
============= ============= ============= =============
(CONTINUED)
See notes to consolidated financial statements.
2
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<TABLE>
BANK PLUS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS -- CONTINUED
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<CAPTION>
QUARTER ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
---------------------------- ----------------------------
2000 1999 2000 1999
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
EARNINGS (LOSS) PER SHARE:
Continuing operations:
Basic............................................... $ 0.19 $ 0.70 $ 1.56 $ 1.53
Diluted............................................. 0.19 0.69 1.55 1.50
Discontinued operations:
Basic .............................................. (0.05) (0.82) (3.52) (2.35)
Diluted............................................. (0.05) (0.82) (3.52) (2.35)
Total:
Basic............................................... 0.14 (0.12) (1.96) (0.82)
Diluted............................................. 0.14 (0.12) (1.96) (0.82)
Weighted average common shares outstanding:
Basic............................................... 19,470,400 19,463,343 19,470,400 19,460,132
Diluted............................................. 19,522,245 19,788,790 19,486,957 19,772,404
See notes to consolidated financial statements.
3
</TABLE>
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<TABLE>
BANK PLUS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(DOLLARS IN THOUSANDS)
<CAPTION>
QUARTER ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
---------------------------- ----------------------------
2000 1999 2000 1999
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Net earnings (loss)....................................... $ 2,799 $ (2,400) $ (38,226) $ (16,037)
Other comprehensive earnings:
Investment and MBS AFS: Unrealized holding gains
(losses) arising during the period, net.............. 2,603 (1,080) 3,053 (4,092)
------------- ------------- ------------- -------------
Comprehensive earnings (loss)............................. $ 5,402 $ (3,480) $ (35,173) $ (20,129)
============= ============= ============= =============
See notes to consolidated financial statements.
4
</TABLE>
<PAGE>
<TABLE>
BANK PLUS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
<CAPTION>
QUARTER ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
---------------------------- ----------------------------
2000 1999 2000 1999
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earning (loss)...................................... $ 2,799 $ (2,400) $ (38,226) $ (16,037)
Add back discontinued operations; net loss from
operations and disposal............................... 832 15,998 68,520 45,706
------------- ------------- ------------- -------------
Earnings from continuing operations..................... 3,631 13,598 30,294 29,669
Adjustments to reconcile net earnings from continuing
operations to net cash provided by operating
activities of continuing operations:
Provisions for estimated loan and real
estate losses................................... (900) (3,452) (1,858) (11,337)
Net gains on sale of loans and securities.......... -- 594 (1) 540
FHLB stock dividends............................... (464) (414) (1,479) (1,765)
Depreciation and amortization...................... 2,170 1,699 5,620 5,178
Accretion of premiums, net deferred loan fees and
amortization of discounts........................ 341 24 1,527 197
Deferred income tax benefit........................ -- -- -- (56)
Proceeds from redemption of FHLB stock.................. -- 4,378 7,491 36,992
Interest receivable decrease............................ 56 504 855 3,318
Other assets decrease (increase)........................ (10,359) 2,661 (12,634) 6,698
Interest payable increase (decrease).................... 102 (1,414) (20) (4,018)
Other liabilities (decrease) increase................... (2,462) 2,512 14,561 (422)
------------- ------------- ------------- -------------
Net cash (used in) provided by operating activities
of continuing operations........................... (7,885) 20,690 44,356 64,994
------------- ------------- ------------- -------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Maturities of investment securities AFS................. -- -- -- 28,831
Purchases of MBS AFS.................................... (26,603) (24,901) (26,603) (135,478)
Proceeds from sale and principal repayments of MBS AFS.. 30,706 50,562 96,059 228,219
Loans receivable, net decrease.......................... 17,918 146,629 332,204 281,639
Proceeds from sale of real estate....................... 2,346 2,707 4,273 12,606
Dispositions (purchases) of premises and equipment...... (1,029) 134 4,198 (556)
------------- ------------- ------------- -------------
Net cash provided by investing activities of
continuing operations.............................. 23,338 175,131 410,131 415,261
------------- ------------- ------------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Demand deposits and passbook savings, net increase
(decrease)............................................ 7,150 (22,656) (80,866) (32,473)
Certificate accounts, net decrease...................... (49,712) (115,159) (346,435) (409,612)
Proceeds from FHLB advances............................. -- -- 6,000 --
Repayments of FHLB advances............................. -- (200,000) (26,000) (290,000)
Proceeds from exercise of stock options................. -- -- -- 13
------------- ------------- ------------- -------------
Net cash used in financing activities of
continuing operations.............................. (42,562) (337,815) (447,301) (732,072)
Net cash provided by discontinued operations............... 4,009 (30,001) 55,682 82,148
Net increase (decrease) in cash and cash equivalents....... (23,100) (111,993) 62,868 (169,669)
Cash and cash equivalents at beginning of period........... 175,489 320,489 89,521 378,165
------------- ------------- ------------- -------------
Cash and cash equivalents at end of period................. $ 152,389 $ 208,496 $ 152,389 $ 208,496
============= ============= ============= =============
SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid on deposits, advances and other
borrowings........................................... $ (26,176) $ (35,606) $ (81,173) $ (116,654)
Income tax (payments) refunds........................... (89) 17 (88) 1,519
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING
AND FINANCING ACTIVITIES:
Real estate acquired through foreclosure................ 530 2,851 2,921 12,149
Loans originated to finance sale of real estate owned... -- 1,320 -- 2,116
Stock awards and restricted stock issued................ -- -- 20 --
See notes to consolidated financial statements.
5
</TABLE>
<PAGE>
BANK PLUS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
QUARTER AND NINE MONTHS ENDED SEPTEMBER 30, 2000
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The consolidated financial statements include the accounts of Bank Plus
Corporation ("Bank Plus") and its subsidiaries. Bank Plus is the holding company
for Fidelity Federal Bank, A Federal Savings Bank, and its subsidiaries (the
"Bank" or "Fidelity") and Gateway Investment Services, Inc. ("Gateway") a
National Association of Securities Dealers, Inc. ("NASD") registered
broker/dealer (collectively, the "Company"). The Company offers a broad range of
consumer financial services, including demand and term deposits, loans and
uninsured investment products, including mutual funds and annuities. Fidelity
operates through 30 full-service branches, 29 of which are located in the
Southern California counties of Los Angeles and Orange, and one of which is
located in Bloomington, Minnesota.
In the opinion of the Company, the accompanying unaudited consolidated
financial statements, prepared from the Company's books and records, contain all
adjustments (consisting of only normal recurring accruals) necessary for a fair
presentation of the Company's financial condition as of September 30, 2000 and
December 31, 1999, and the results of operations, statements of comprehensive
income and statements of cash flows for the quarter and nine months ended
September 30, 2000 and 1999. All significant intercompany transactions and
balances have been eliminated. Certain reclassifications have been made to prior
years' consolidated financial statements to conform to the 2000 presentation.
The accompanying unaudited consolidated financial statements have been
prepared in accordance with the instructions to Form 10-Q and include all
information and footnotes required for interim financial statement presentation.
The financial information provided herein, including the information under the
heading Item 2. "Management's Discussion and Analysis of Financial Condition and
Results of Operations" ("MD&A"), is written with the presumption that the users
of the interim financial statements have read, or have access to, the most
recent Annual Report on Form 10-K which contains the latest available audited
consolidated financial statements and notes thereto, as of December 31, 1999,
together with the MD&A as of such date.
The preparation of financial statements in conformity with generally
accepted accounting principles ("GAAP") requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
2. DISCONTINUED OPERATIONS
In July 2000, the Board of Directors adopted a plan to dispose of its
remaining credit card operations. As a result, the carrying values of the
remaining credit card portfolios and other assets have been reduced to their
estimated disposition values and the credit card operations are now reported as
discontinued operations in the Company's financial statements. The remaining
assets are expected to be disposed of through sale within 12 months of the date
the plan was adopted. Summarized balance sheet data for the discontinued
operations is as follows:
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
2000 1999
------------- -------------
(Dollars in thousands)
<S> <C> <C>
Credit card balances and other receivables, net (at
estimated disposition value at September 30, 2000)......................... $ 35,149 $ 161,501
Other assets.................................................................. 7,376 3,351
Other liabilities............................................................. (4,238) (32)
------------- -------------
Net assets................................................................. $ 38,287 $ 164,820
============= =============
</TABLE>
6
<PAGE>
BANK PLUS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
QUARTER AND NINE MONTHS ENDED SEPTEMBER 30, 2000
Interest costs have been allocated to the discontinued operations based on
a rolling 12 month average of one-year fixed rate FHLB advances. Indirect
general and administrative expenses not specifically identifiable with either
the continuing operations or discontinued operations are allocated on the basis
of direct operating expenses. Expenses allocated to discontinued operations for
the quarter and nine months ended September 30, 2000 were $0.2 million and $2.2
million, respectively.
The net assets and results of operations of the credit card operations have
been reclassified in the consolidated financial statements for prior periods as
discontinued operations. In future periods, discontinued operations are not
expected to have a material impact on consolidated results of operations.
3. EARNINGS PER SHARE
The reconciliation of the numerators and denominators used in basic and
diluted (loss) earnings per share ("EPS") follows for the periods indicated:
<TABLE>
<CAPTION>
QUARTER ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
---------------------------- ----------------------------
2000 1999 2000 1999
------------- ------------- ------------- -------------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
EARNINGS FROM CONTINUING OPERATIONS........................ $ 3,631 $ 13,598 $ 30,294 $ 29,669
============= ============= ============= =============
Earnings per share:
Basic.................................................. $ 0.19 $ 0.70 $ 1.56 $ 1.53
Effect of dilutive securities-- stock options.......... -- (0.1) -- (0.03)
Effect of dilutive securities-- deferred stock awards.. -- -- (0.01) --
------------- ------------- ------------- -------------
Diluted................................................ $ 0.19 $ 0.69 $ 1.55 $ 1.50
============= ============= ============= =============
LOSS FROM DISCONTINUED OPERATIONS.......................... $ -- $ (15,998) $ (7,344) $ (45,706)
============= ============= ============= =============
Loss per share:
Basic.................................................. $ (0.05) $ (0.82) $ (3.52) $ (2.35)
Effect of dilutive securities-- stock options.......... -- -- -- --
Effect of dilutive securities-- deferred stock awards.. -- -- -- --
------------- ------------- ------------- -------------
Diluted................................................ $ (0.05) $ (0.82) $ (3.52) $ (2.35)
============= ============= ============= =============
NET EARNINGS (LOSS)........................................ $ 2,799 $ (2,400) $ (38,226) $ (16,037)
============= ============= ============= =============
Earnings (loss) per share:
Basic.................................................. $ 0.14 $ (0.12) $ (1.96) $ (0.82)
Effect of dilutive securities-- stock options.......... -- -- -- --
Effect of dilutive securities-- deferred stock awards.. -- -- -- --
------------- ------------- ------------- -------------
Diluted................................................ $ 0.14 $ (0.12) $ (1.96) $ (0.82)
============= ============= ============= =============
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic.................................................. 19,470,400 19,463,343 19,470,400 19,460,132
Effect of dilutive securities-- stock options.......... 18,512 308,608 -- 295,953
Effect of dilutive securities-- deferred stock awards.. 33,333 16,839 16,557 16,319
------------- ------------- ------------- -------------
Diluted................................................ 19,522,245 19,788,790 19,486,957 19,772,404
============= ============= ============= =============
</TABLE>
7
<PAGE>
BANK PLUS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
QUARTER AND NINE MONTHS ENDED SEPTEMBER 30, 2000
4. RECENT ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board ("FASB") issued
Statement of Accounting Standards ("SFAS") No. 133, "Accounting for Derivative
Instruments and Hedging Activities", as amended by SFAS No. 137, "Accounting for
Derivative Instruments and Hedging Activities -- Deferral of the Effective Date
of FASB Statement No. 133," effective for financial statements for annual
periods beginning after June 15, 2000. This statement establishes accounting and
reporting standards for derivative instruments and for hedging activities. It
requires the Company to recognize all derivatives as either assets or
liabilities in the statement of financial position and measure those instruments
at fair value. This statement allows derivatives to be designated as hedges only
if certain criteria are met, with the resulting gain or loss on the derivative
either charged to income or reported as a part of other comprehensive income. At
this time, the Company has not determined whether the adoption of SFAS No. 133
will have a material impact on its operations and financial position.
8
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
FORWARD-LOOKING STATEMENTS
Certain statements included in this Quarterly Report on Form 10-Q,
including without limitation statements containing the words "believes",
"anticipates", "intends", "expects" and words of similar import, constitute
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act. Such forward-looking statements involve known and unknown
risks, uncertainties and other factors that may cause the actual results,
performance or achievements of Bank Plus and Fidelity to be materially different
from any future results, performance or achievements expressed or implied by
such forward-looking statements. Such factors are referred to in Bank Plus' most
recent Annual Report on Form 10-K as of December 31, 1999. A number of other
factors may have a material adverse effect on the Company's financial
performance. These factors include a national or regional economic slowdown or
recession which increases the risk of defaults and credit losses; movements in
market interest rates that reduce our margins or the fair value of the financial
instruments we hold; changes in the fair value of the credit card portfolios
resulting from changes in economic conditions or in the market for these
receivables; restrictions imposed on the Bank's operations by regulators such as
a prohibition on the payment of dividends to Bank Plus; failure of regulatory
authorities to issue approvals or non-objection to material transactions
involving the Bank; actions by the Bank's regulators that could adversely affect
the Bank's capital levels; an increase in the number of customers seeking
protection under the bankruptcy laws which increases the amount of charge-offs;
the effects of fraud or other contract breaches by third parties or customers;
the effectiveness of the Company's collection efforts and the outcome of pending
and future litigation. Given these uncertainties, undue reliance should not be
placed on such forward-looking statements. Bank Plus disclaims any obligation to
update any such factors or to publicly announce the results of any revisions to
any of the forward-looking statements included herein to reflect future events
or developments.
RECENT DEVELOPMENTS
The following is a summary of significant events which occurred during the
first nine months of 2000:
In June, the Bank completed the sales of the MMG Direct, Inc. ("MMG")
credit card portfolio and the Bank's credit card servicing center located in
Beaverton, Oregon. In conjunction with this sale, the buyer of the credit card
servicing center is now servicing the Bank's American Direct Credit, Inc.
("ADC") credit card portfolio and has an option to purchase the ADC portfolio.
Effective in the second quarter of 2000, the Board of Directors adopted a
plan to dispose of the Company's remaining credit card operations. As a result,
the carrying values of the ADC and First Alliance Mortgage Company ("FAMCO")
credit card portfolios were reduced to their estimated disposition values and
the credit card operations are now reported as discontinued operations in the
Company's financial statements. Until the disposal of the credit card portfolios
has been completed, the Company's overall results of operations will continue to
include the results of these discontinued operations and any changes in the
anticipated proceeds from the disposal of the credit card portfolios.
In September 2000, upon the expiration of an option to buy the Bank's
branch in Minnesota that was not exercised by the buyer, the Bank recorded $1.1
million as noninterest income. In June 2000, the Bank completed the sale of one
of its retail branches with $82 million of deposits. This sale was funded with
$77 million of available cash. In March 2000, the Bank completed the sale of
five of its retail branches with $333 million of deposits in two separate
transactions. These sales were funded with $250 million of multifamily loans,
$59 million of cash and $4 million of other assets. The $25.4 million net gain
recorded for the nine month period includes the expenses of the transactions and
losses incurred in the disposition of mortgage loans delivered in the
transactions. Improvements in the results of the credit card operations during
9
<PAGE>
the first six months of 2000 allowed the Company to achieve its 2000 business
strategy objectives through the sale of $415 million of deposits as compared to
the $600 million of deposits the Company had originally contemplated selling .
The Company has settled substantially all of the various individual
lawsuits filed in Alabama and Mississippi relating to the ADC credit card
portfolio. In addition, a definitive settlement agreement has been executed and
approved by the court for the class action lawsuit filed in Alabama. On August
15, the court dismissed the class action on its merits, with prejudice. The
Company recorded a $4 million charge in the first quarter of 2000 which
represents the estimated settlement costs.
On February 24, 2000, the term of the FAMCO credit card program expired and
the Bank notified FAMCO that it would not be extending the term of the
agreements. Under the terms of the agreements, upon termination FAMCO or its
designee was required to purchase the outstanding accounts and receivables.
FAMCO has contended that it has no obligation to purchase, or cause a designee
to purchase, all of the outstanding accounts and receivables under the FAMCO
program. On March 23, 2000, First Alliance Corporation and its subsidiaries
(collectively "FACO") including FAMCO announced that they had filed voluntary
petitions under Chapter 11 of the United States Bankruptcy Code. It is uncertain
what effect the filing of the petitions for bankruptcy will have on FAMCO's
obligations under the program agreements. Fidelity is one of FACO's 20 largest
unsecured creditors and is represented on FACO's creditors committee. The Bank
has obtained relief from stay pursuant to an order of the bankruptcy court to
pursue its claim in arbitration seeking to enforce the demand that FAMCO
repurchase or cause the repurchase of the outstanding accounts and receivables.
The Bank is pursuing the arbitration claim which, if successful, may result in
the establishment of damages due to the Bank which would then be subject to
collection through the bankruptcy proceeding.
On October 1, 2000, the servicing of the accounts in the FAMCO program was
transferred from FAMCO to the Bank. As a result of FAMCO's defaults and the
expiration of the related program agreements, the Company recognizes all
revenues and expenses of the FAMCO credit card portfolio in its financial
statements. Fidelity currently holds $2.8 million in cash deposits securing
FAMCO's continuing obligation to purchase charged-off accounts under the
agreements. The ability of the Company to offset these cash deposits against
prior or future charge-offs or any deficiency that may arise upon the sale of
the portfolio is subject to bankruptcy court approval. As of September 30, 2000,
outstanding balances and the percentage of accounts over 30 days delinquent
under the FAMCO program were $10.9 million and 25.1%, respectively.
In the course of the Bank's annual safety and soundness examination the
Office of Thrift Supervision ("OTS") advised the Bank that the classification
and regulatory capital treatment of its allowance for loan and lease losses
("ALLL") related to credit card receivables held for disposal is not consistent
with regulatory policy. The OTS has instructed the Company to eliminate the ALLL
related to the credit card portfolio and classify it as a loss or establish a
specific valuation allowance. The Company strongly disagrees with this position
and believes there is no support for the OTS position in regulations or
generally accepted accounting principles ("GAAP"). The Company intends to appeal
this finding in its response to the report of examination. If the OTS position
prevails, supplementary capital related to the ALLL for purposes of computing
risk based capital would be reduced. The Bank's risk-based capital ratio at
September 30, 2000 would decrease to 8.65% and the related excess over the
minimum requirement to be considered adequately capitalized would decrease to
$8.4 million from $15.3 million. This determination by the OTS and the results
of the Company's appeal will have no impact on the Bank's core capital ratios,
financial position or results of operations. While the Company strongly believes
in the merits of its position, there can be no assurance that the Company will
prevail in its position.
In concluding its May 1999 special limited compliance examination of the
Bank's discontinued credit card operations, the OTS requested that the Bank
consent to an order requiring the Bank to document and maintain a comprehensive
compliance and risk management program for any new lending activities (the
"Order"). The Company believes that its current quality control, risk management
and compliance programs for new lending activities fulfill substantially all of
the requirements of the Order; however compliance with the Order will require
additional administration and documentation of any future new lending activity.
10
<PAGE>
While the Company disagreed with the necessity of this regulatory action, it
consented to the Order and to certain other compliance-related corrective
actions to maintain its regulatory relationships and to avoid the expense and
management distraction of opposing the Order. The Bank does not expect that this
action by the OTS will have a material adverse effect on the ongoing operations,
financial condition or results of operations of the Company. However, there can
be no assurance given that the OTS or other governmental agency will not pursue
additional actions relating to the discontinued credit card programs or that
this action or any future actions will not have a material adverse effect on the
operations, financial condition or results of operations of the Company.
RESULTS OF OPERATIONS
CONTINUING OPERATIONS
Earnings from continuing operations were $3.6 million and $30.3 million for
the quarter and nine months ended September 30, 2000, respectively, as compared
to $13.6 million and $29.7 million for the corresponding periods in 1999. Net
gains on sales of branches were $1.1 million and $25.4 million for the quarter
and nine months ended September 30, 2000, respectively, and $5.9 million for the
quarter and nine months ended September 30, 1999. Excluding net gains on sales
of branches, earnings from continuing operations decreased by $5.2 million and
$18.9 million for the quarter and nine months ended September 30, 2000,
respectively, as compared to the corresponding periods in 1999 primarily due to
reduced net interest income and lower net credits of provision for estimated
loan losses.
Net interest income decreased to $13.5 million and $44.5 million for the
quarter and nine months ended September 30, 2000, respectively, as compared to
$17.5 million and $53.4 million in the corresponding periods in 1999. The
decrease was primarily due to managed reductions in interest earning assets in
order to maintain regulatory capital compliance. These reductions were
accomplished primarily through the sale of deposits and repayment of borrowings.
The impact of the reduction in interest earnings assets was partially offset by
improvements in the interest margin. For the third quarter of 2000, net yield on
interest earning assets increased to 2.62% while average interest earning assets
decreased to $2.1 billion as compared to a net yield of 2.51% and average
interest earning assets of $2.9 billion in the third quarter of 1999. For the
nine months ended September 30, 2000, net yield on interest earning assets
increased to 2.67% while average interest earning assets decreased to $2.2
billion as compared to a net yield of 2.34% and average interest earning assets
of $3.0 billion in the corresponding period in 1999. While increases in market
interest rates have caused the Bank's deposit costs to increase since the 1999
third quarter, increases in the yield on assets and decreases in borrowings
balances, which have higher costs than deposits, have resulted in an increase in
the net yield on interest earning assets. The increased yield on assets was the
result of the repricing of the Bank's primarily adjustable rate mortgage
("ARMs") portfolio and improvements in the yield on its investment portfolio due
to lower prepayments.
Despite increasing deposit costs, the Company's overall cost of funds have
risen more slowly than the Federal Home Loan Bank ("FHLB") Eleventh District
Cost of Funds Index ("COFI") to which the majority of the Company's mortgage
loan portfolio is indexed. The difference between the Bank's overall cost of
funds and COFI was 0.57% for the month of September 2000 as compared to 0.12% in
September 1999. Because the Bank expects its competitors to continue to offer
high rates on their deposits, the Bank's cost of deposits is expected to
continue to increase in the near term as a result of the Bank's efforts to
retain its retail deposit relationships.
The provisions for estimated loan losses were net credits for the quarter
and nine months ended September 30, 2000 and 1999. These net credits represent
reduced estimates of future loan losses and net recoveries of specific valuation
reserves resulting from the continuing improvement in the asset quality of the
Bank's mortgage loan portfolio.
Excluding net gains on sales of branches, net noninterest income for the
quarter and nine months ended September 30, 2000 was relatively unchanged from
11
<PAGE>
the corresponding periods in the prior year. The Company's primary source of fee
income is its retail branches. The sale of eight of the Bank's retail branches
over the last fifteen months has not resulted in an expected decrease in
noninterest income because of improved results of the real estate operations and
increased sales of investment products in the Bank's current branches. The first
quarter of 1999 net noninterest income included $1.3 million of automated teller
machines cash service fees from the Americash program which was discontinued in
that quarter.
Operating expenses for the third quarter of 2000 were $15.3 million or $1.3
million lower than the third quarter of 1999 while operating expenses for the
nine months ended September 30, 2000 were $51.8 million or $0.3 million higher
than the corresponding period in the prior year. Both the quarter and nine month
period benefited from reduced FDIC insurance premiums, the impact of branch
sales completed in prior periods, lower information systems expense as well as
the Company's ongoing efforts to reduce overall operating expenses. These
decreases were offset by increases in personnel and benefits expense and reduced
allocations of expenses to the Company's discontinued credit card operations.
Expenses allocated to the discontinued credit card operations were $0.2 million
and $2.2 million for the quarter and nine months ended September 30, 2000 as
compared to $1.0 million and $2.7 million for the corresponding periods in 1999.
The Company's core information systems were converted to a new service bureau
based system in the second quarter of 2000 resulting in a significant decrease
in data processing costs partially offset by a small increase in personnel and
benefits expense. On a quarterly basis, the cost of the Company's information
systems are expected to be $1.0 million less than the costs incurred prior to
the conversion. The remaining increases in personnel and benefits expenses are
primarily due to compensation increases and other incentives to retain quality
personnel in a highly competitive employment market and the costs of the new
commercial and multifamily lending operations. While FDIC insurance premiums are
anticipated to remain lower in the fourth quarter of 2000, the Bank expects its
FDIC insurance premium rates to increase in 2001 based on its current regulatory
status and capital levels.
DISCONTINUED OPERATIONS
The losses from discontinued operations were $0.8 million in the third
quarter of 2000 and $68.5 million for the nine months ended September 30, 2000,
as compared to losses of $16.0 million and $45.7 million for the corresponding
periods in 1999. Loss on disposal of discontinued operations was $0.8 million
for the third quarter of 2000 and $61.2 million for the nine months ended
September 30, 2000. The loss on disposal of discontinued operations represents
the valuation loss recorded by the Company to reduce the carrying values of the
MMG, ADC and FAMCO portfolios to their estimated disposition values and $3.0
million of charges related to the future termination of a third party servicing
contract and the completed sale of the Company's credit card servicing center in
Beaverton, Oregon. The initial valuation loss related to the MMG portfolio was
recorded in the first quarter of 2000 while the initial valuation losses related
to the ADC and FAMCO portfolios were recorded in the second quarter of 2000. The
loss realized during the third quarter of 2000 reflects a decrease in estimated
disposal value of the credit card portfolios as a result of higher delinquency
levels. The losses from discontinued operations in 1999 were primarily due to
high provisions for estimated loan losses.
COMBINED RESULTS OF OPERATIONS
The Company reported overall net income of $2.8 million or $0.14 per
diluted share for the third quarter of 2000 and a net loss of $38.2 million, or
$1.96 per diluted share, for the nine months ended September 30, 2000.
12
<PAGE>
NET INTEREST INCOME -- CONTINUING OPERATIONS
The following tables present the primary determinants of net interest
income for the periods indicated. For the purpose of this analysis, nonaccruing
mortgage loans are included in the average balances, and delinquent interest on
such loans has been deducted from interest income.
<TABLE>
<CAPTION>
QUARTER ENDED SEPTEMBER 30,
---------------------------------------------------------------------------
2000 1999
---------------------------------------------------------------------------
AVERAGE AVERAGE AVERAGE AVERAGE
DAILY YIELD/ DAILY YIELD/
BALANCE INTEREST RATE BALANCE INTEREST RATE
------------- ------------- ------- ------------- ------------- -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Interest-earning assets:
Loans.................................... $ 1,689,714 $ 32,602 7.72% $ 2,232,168 $ 40,279 7.22%
Mortgage Backed Securities ("MBS")....... 247,797 4,098 6.62 386,234 6,101 6.32
Investment securities.................... 132,420 2,414 7.25 190,991 2,853 5.93
Investment in FHLB stock................. 25,056 464 7.37 31,930 414 5.14
------------- ------------- ------------- -------------
Total interest-earning assets......... $ 2,094,987 39,578 7.56 $ 2,841,323 49,647 6.99
============= ------------- ============= -------------
Interest-bearing liabilities:
Deposits:
Demand deposits......................... $ 323,528 1,133 1.39 $ 374,691 1,187 1.26
Savings deposits........................ 94,928 816 3.42 112,629 810 2.85
Time deposits........................... 1,677,486 23,138 5.40 2,055,501 24,738 4.71
------------- ------------- ------------- -------------
Total deposits........................ 2,095,942 25,087 4.76 2,542,821 26,735 4.17
Borrowings................................. 51,478 1,571 12.21 504,172 7,839 6.17
------------- ------------- ------------- -------------
Sub-total interest-bearing
liabilities........................ 2,147,420 26,658 4.94 3,046,993 34,574 4.50
Interest allocated to discontinued
operations.............................. (37,637) (622) 6.57 (187,656) (2,475) 5.23
------------- ------------- ------------- -------------
Total adjusted interest-bearing
liabilities............................. $ 2,109,783 26,036 4.91 $ 2,859,337 32,099 4.45
============= ------------- ============= -------------
Net interest income; interest rate spread.. $ 13,542 2.65% $ 17,548 2.54%
============= ======= ============= =======
Net yield on interest-earning assets....... 2.62% 2.51%
======= =======
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30,
---------------------------------------------------------------------------
2000 1999
---------------------------------------------------------------------------
AVERAGE AVERAGE AVERAGE AVERAGE
DAILY YIELD/ DAILY YIELD/
BALANCE INTEREST RATE BALANCE INTEREST RATE
------------- ------------- ------- ------------- ------------- -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Interest-earning assets:
Loans ................................... $ 1,792,097 $ 101,198 7.53% $ 2,305,716 $ 128,035 7.40%
MBS...................................... 276,826 14,019 6.75 381,693 17,012 5.94
Investment securities.................... 116,470 6,215 7.13 299,396 11,885 5.30
Investment in FHLB stock................. 27,815 1,480 7.11 47,672 1,765 4.95
------------- ------------- ------------- -------------
Total interest-earning assets......... $ 2,213,208 122,912 7.40 $ 3,034,477 158,697 6.97
============= ------------- ============= -------------
Interest-bearing liabilities:
Deposits:
Demand deposits......................... $ 344,749 3,589 1.39 $ 375,455 3,485 1.24
Savings deposits........................ 96,092 2,205 3.07 116,901 2,493 2.84
Time deposits........................... 1,825,339 71,605 5.16 2,193,472 80,645 4.83
------------- ------------- ------------- -------------
Total deposits ....................... 2,266,180 77,399 4.56 2,685,828 86,623 4.30
Borrowings................................. 54,303 4,895 12.04 583,043 27,132 6.20
------------- ------------- ------------- -------------
Sub-total interest-bearing
liabilities........................ 2,320,483 82,294 4.74 3,268,871 113,755 4.64
Interest allocated to discontinued
operations.............................. (82,157) (3,845) 6.25 (215,981) (8,464) 5.25
------------- ------------- ------------- -------------
Total adjusted interest-bearing
liabilities............................. $ 2,238,326 78,449 4.68 $ 3,052,890 105,291 4.60
============= ------------- ============= -------------
Net interest income; interest rate spread.. $ 44,463 2.72% $ 53,406 2.37%
============= ======= ============= =======
Net yield on interest-earning assets....... 2.67% 2.34%
======= =======
</TABLE>
13
<PAGE>
Net interest income is primarily affected by (a) the average volume and
repricing characteristics of the Company's interest-earning assets and
interest-bearing liabilities, (b) the level and volatility of market interest
rates, (c) the level of nonperforming loans ("NPLs") and (d) the interest rate
spread between the yields earned and the rates paid.
The following tables present the dollar amount of changes in interest
income and expense for each major component of interest-earning assets and
interest-bearing liabilities and the amount of change attributable to changes in
average balances and average rates for the periods indicated. Because of
numerous changes in both balances and rates, it is difficult to allocate
precisely the effects thereof. For purposes of these tables, the change due to
volume is initially calculated as the change in average balance multiplied by
the average rate during the prior period and the change due to rate is
calculated as the change in average rate multiplied by the average volume during
the current period. Any change that remains unallocated after such calculations
is allocated proportionately to changes in volume and changes in rates.
<TABLE>
<CAPTION>
COMPARISON OF QUARTERS ENDED COMPARISON OF NINE MONTHS ENDED
SEPTEMBER 30, 2000 SEPTEMBER 30, 2000
AND SEPTEMBER 30, 1999 AND SEPTEMBER 30, 1999
FAVORABLE (UNFAVORABLE) FAVORABLE (UNFAVORABLE)
------------------------------------------- -------------------------------------------
VOLUME RATE NET VOLUME RATE NET
------------- ------------- ------------- ------------- ------------- -------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Interest income:
Loans............................... $ (9,981) $ 2,304 $ (7,677) $ (29,419) $ 2,582 $ (26,837)
MBS................................. (2,211) 208 (2,003) (4,973) 1,980 (2,993)
Investment securities .............. (942) 503 (439) (7,844) 2,174 (5,670)
Investment in FHLB stock ........... (111) 161 50 (856) 571 (285)
------------- ------------- ------------- ------------- ------------- -------------
Total interest income ............ (13,245) 3,176 (10,069) (43,092) 7,317 (35,785)
------------- ------------- ------------- ------------- ------------- -------------
Interest expense:
Deposits:
Demand deposits .................. 152 (98) 54 252 (356) (104)
Savings deposits ................. 124 (130) (6) 376 (88) 288
Time deposits .................... 4,303 (2,703) 1,600 11,444 (2,404) 9,040
------------- ------------- ------------- ------------- ------------- -------------
Total deposits ................... 4,579 (2,931) 1,648 12,072 (2,848) 9,224
Borrowings ......................... 6,268 -- 6,268 22,321 (84) 22,237
------------- ------------- ------------- ------------- ------------- -------------
Subtotal interest bearing liabilities.. 10,847 (2,931) 7,916 34,393 (2,932) 31,461
Interest allocated to discontinued
operations........................ (2,222) 369 (1,853) (6,211) 1,592 (4,619)
------------- ------------- ------------- ------------- ------------- -------------
Total interest expense................. 8,625 (2,562) 6,063 28,182 (1,340) 26,842
------------- ------------- ------------- ------------- ------------- -------------
(Decrease) increase in net interest
income............................ $ (4,620) $ 614 $ (4,006) $ (14,910) $ 5,967 $ (8,943)
============= ============= ============= ============= ============= =============
</TABLE>
INCOME TAXES
The Company's expected combined federal and state statutory tax rate is
approximately 42.0% of earnings before income taxes. As of September 30, 2000
and December 31, 1999, the Company's significant deferred tax assets, which
primarily consisted of net operating loss carryforwards and bad debt timing
differences, were reduced by a valuation allowance as required under Statement
of Financial Accounting Standards No. 109, "Accounting for Income Taxes." As the
Company does not anticipate a significant change in the determination of the
valuation allowance during 2000, the Company does not expect to record any tax
expense or benefit in 2000.
14
<PAGE>
FINANCIAL CONDITION
ASSET QUALITY
CONTINUING OPERATIONS
The Company's mortgage loan portfolio is primarily secured by assets
located in Southern California and is comprised principally of single family and
multifamily residential loans. At September 30, 2000, 25.6% of Fidelity's real
estate loan portfolio consisted of California single family residences (1 to 4
units), while 62.2% consisted of California multifamily dwellings of 5 or more
units. Because 89.6% of the Company's mortgage loan portfolio is secured by
properties located in Southern California, the performance of the Company's
loans are particularly susceptible to the potential for declines in the Southern
California economy, such as increasing vacancy rates, declining rents, declining
debt coverage ratios, and declining market values for single family, multifamily
and commercial properties.
The possibility that borrowers may abandon properties or seek bankruptcy
protection with respect to income properties experiencing negative cash flow,
particularly where such properties are not cross-collateralized by other
performing assets, can also adversely affect portfolio performance. In addition,
because most of the Company's mortgage loan portfolio consists of adjustable
rate mortgages, increasing interest rates can adversely affect portfolio
performance.
DELINQUENT LOANS
The following tables present net delinquent loans at the dates indicated:
<TABLE>
<CAPTION>
QUARTERS ENDED
-------------------------------------------------------------------------
SEPTEMBER 30, JUNE 30, MARCH 31, DECEMBER 31, SEPTEMBER 30,
2000 2000 2000 1999 1999
------------- ------------- ------------- ------------- -------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Mortgage loan delinquencies by number of days:
30 to 59 days......................... $ 5,254 $ 3,306 $ 1,987 $ 5,210 $ 6,641
60 to 89 days......................... 1,646 1,416 1,964 3,871 2,633
90 days and over...................... 3,331 2,308 5,462 4,989 6,128
------------- ------------- ------------- ------------- -------------
Total............................... $ 10,231 $ 7,030 $ 9,413 $ 14,070 $ 15,402
============= ============= ============= ============= =============
As a percentage of outstanding balances:
30 to 59 days....................... 0.31% 0.20% 0.12% 0.26% 0.31%
60 to 89 days....................... 0.10 0.08 0.11 0.19 0.13
90 days and over.................... 0.20 0.14 0.32 0.25 0.30
------------- ------------- ------------- ------------- -------------
Total............................ 0.61% 0.42% 0.55% 0.70% 0.74%
============= ============= ============= ============= =============
Other loan delinquencies by number of days:
30 to 59 days......................... $ 338 $ 359 $ 336 $ 735 $ 745
60 to 89 days......................... 97 90 73 234 379
90 days and over...................... 159 111 91 148 123
------------- ------------- ------------- ------------- -------------
Total............................... $ 594 $ 560 $ 500 $ 1,117 $ 1,247
============= ============= ============= ============= =============
As a percentage of outstanding balances:
30 to 59 days....................... 3.14% 4.53% 3.95% 7.49% 6.99%
60 to 89 days....................... 0.90 1.13 0.86 2.38 3.56
90 days and over.................... 1.47 1.40 1.07 1.51 1.16
------------- ------------- ------------- ------------- -------------
Total............................ 5.51% 7.06% 5.88% 11.38% 11.71%
============= ============= ============= ============= =============
</TABLE>
Asset quality in the mortgage loan portfolio continues to be favorable with
delinquencies at September 30, 2000 of 0.61% for the overall portfolio and 0.20%
for the multifamily portfolio, compared to levels of 0.70% and 0.34%,
respectively, as of December 31, 1999.
15
<PAGE>
NONPERFORMING AND CLASSIFIED ASSETS
All assets and ratios are reported net of specific reserves unless
otherwise stated. The following table presents asset quality details at the
dates indicated:
<TABLE>
<CAPTION>
QUARTERS ENDED
-------------------------------------------------------------------------
SEPTEMBER 30, JUNE 30, MARCH 31, DECEMBER 31, SEPTEMBER 30,
2000 2000 2000 1999 1999
------------- ------------- ------------- ------------- -------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Nonperforming Assets ("NPAs") by Type:
NPLs................................... $ 3,468 $ 2,377 $ 5,513 $ 6,945 $ 7,108
REO.................................... 1,070 2,886 1,671 2,422 5,685
Other repossessed assets............... 8 -- -- 29 72
------------- ------------- ------------- ------------- -------------
Total NPAs........................... $ 4,546 $ 5,263 $ 7,184 $ 9,396 $ 12,865
============= ============= ============= ============= =============
Number of REO properties.................. 21 27 30 37 41
============= ============= ============= ============= =============
NPAs by Composition:
Single family (1 to 4 units)........... $ 3,810 $ 3,210 $ 5,036 $ 5,799 $ 6,474
Multifamily 5 units and over........... -- 1,470 1,598 2,147 3,893
Commercial and other................... 1,136 1,136 1,136 1,963 2,965
Consumer............................... 145 69 51 145 153
REO valuation allowances............... (545) (622) (637) (658) (620)
------------- ------------- ------------- ------------- -------------
Total NPAs........................... 4,546 5,263 7,184 9,396 12,865
Total troubled debt restructurings
("TDRs")............................ 25,188 24,855 28,259 30,851 25,022
------------- ------------- ------------- ------------- -------------
Total TDRs and NPAs.................. $ 29,734 $ 30,118 $ 35,443 $ 40,247 $ 37,887
============= ============= ============= ============= =============
Classified Assets:
NPAs................................... $ 4,546 $ 5,263 $ 7,184 $ 9,396 $ 12,865
Performing classified loans............ 43,728 41,881 43,429 51,359 50,631
Other classified assets................ 597 500 842 840 781
------------- ------------- ------------- ------------- -------------
Total classified assets.............. $ 48,871 $ 47,644 $ 51,455 $ 61,595 $ 64,277
============= ============= ============= ============= =============
Classified Asset Ratios:
NPLs to total assets................... 0.16% 0.11% 0.24% 0.28% 0.26%
NPLs to total loans.................... 0.21% 0.14% 0.32% 0.35% 0.34%
NPAs to total assets................... 0.21% 0.24% 0.32% 0.37% 0.47%
TDRs to total assets................... 1.16% 1.13% 1.27% 1.22% 0.91%
NPAs and TDRs to total assets.......... 1.37% 1.37% 1.59% 1.60% 1.37%
Classified assets to total assets...... 2.25% 2.16% 2.28% 2.45% 2.33%
NPLs to NPAs........................... 76.29% 45.16% 76.74% 73.91% 55.25%
</TABLE>
Total classified assets of continuing operations decreased $12.7 million
from December 31, 1999, to $48.9 million at September 30, 2000, primarily due to
decreases of $7.6 million in performing classified loans and $4.8 million in
NPA's. These decreases reflect the continuing improvement in the performance of
the Bank's mortgage loan portfolio, including improvements in the underlying
income properties of the multifamily portfolio.
16
<PAGE>
ALLOWANCE FOR ESTIMATED LOAN AND REO LOSSES
The following schedule summarizes the activity in the allowances for
estimated loan and REO losses:
<TABLE>
<CAPTION>
QUARTER ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
---------------------------- ----------------------------
2000 1999 2000 1999
------------- ------------- ------------- -------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Balance at beginning of period.............................. $ 12,632 $ 22,358 $ 15,257 $ 34,647
------------- ------------- ------------- -------------
Charge-offs.............................................. (296) (1,311) (1,759) (7,237)
Allocation of reserves to loans sold..................... -- -- (501)
Recoveries............................................... -- 599 275 2,121
------------- ------------- ------------- -------------
Net charge-offs........................................ (296) (712) (1,985) (4,635)
Provision:
Recovery of provision for estimated loan losses........ (900) (3,451) (1,858) (11,475)
REO.................................................... (77) -- (55) 139
------------- ------------- ------------- -------------
Balance at end of period.................................... $ 11,359 $ 18,195 $ 11,359 $ 18,195
============= ============= ============= =============
Ratio of net charge-offs during the period to
average loans outstanding, annualized.................... 0.07% 0.13% 0.15% 0.27%
</TABLE>
The following table presents loan and REO charge-offs and recoveries for
the periods indicated:
<TABLE>
<CAPTION>
QUARTER ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
---------------------------- ----------------------------
2000 1999 2000 1999
------------- ------------- ------------- -------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Charge-offs:
Single family (1 to 4 units)............................ $ 77 $ 256 $ 391 $ 1,091
Multifamily loans:
5 to 36 units......................................... -- 277 171 1,384
37 units and over..................................... -- (10) -- 275
------------- ------------- ------------- -------------
Total multifamily.................................. -- 267 171 1,659
------------- ------------- ------------- -------------
Commercial and industrial............................... -- 209 55 1,396
Auto and other loans.................................... 219 579 1,142 3,091
------------- ------------- ------------- -------------
Total charge-offs.......................................... $ 296 $ 1,311 $ 1,759 $ 7,237
============= ============= ============= =============
Recoveries:
Single family (1 to 4 units)............................ $ -- $ 144 $ 217 $ 834
Multifamily loans:
5 to 36 units......................................... -- 58 29 324
37 units and over..................................... -- 197 -- 365
------------- ------------- ------------- -------------
Total multifamily.................................. -- 255 29 689
------------- ------------- ------------- -------------
Commercial and industrial............................... -- -- 29 398
Auto and other loans.................................... -- 200 -- 200
------------- ------------- ------------- -------------
Total recoveries........................................... $ -- $ 599 $ 275 $ 2,121
============= ============= ============= =============
</TABLE>
Net charge-offs declined $0.4 million and $2.7 million for the quarter
and nine months ended September 30, 2000 as compared to the corresponding
periods in 1999. The decline in charge-offs is due to improvements in the
performance of the mortgage portfolio and the sale of $10.5 million of auto
loans at the end of the first quarter of 1999. At September 30, 2000, only $1.6
million of gross auto loans were outstanding.
17
<PAGE>
The following table sets forth the allowance for estimated loan and REO
losses at the dates indicated:
<TABLE>
<CAPTION>
QUARTERS ENDED
-------------------------------------------------------------------------
SEPTEMBER 30, JUNE 30, MARCH 31, DECEMBER 31, SEPTEMBER 30,
2000 2000 2000 1999 1999
------------- ------------- ------------- ------------- -------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Loans:
ALLL................................... $ 8,925 $ 9,574 $ 10,895 $ 10,697 $ 12,534
SVA.................................... 1,889 2,436 2,762 3,902 5,040
------------- ------------- ------------- ------------- -------------
Total ALLL and SVA................... 10,814 12,010 13,657 14,599 17,574
REO valuation allowances.................. 545 622 637 658 620
------------- ------------- ------------- ------------- -------------
Total allowances.......................... $ 11,359 $ 12,632 $ 14,294 $ 15,257 $ 18,194
============= ============= ============= ============= =============
Selected ratios:
Total allowances to net loans and REO.. 0.67% 0.75% 0.83% 0.75% 0.87%
Total ALLL to:
Net loans............................ 0.53% 0.57% 0.63% 0.53% 0.60%
Net NPLs............................. 257.28% 402.78% 197.62% 154.02% 176.34%
Net NPAs............................. 196.28% 181.91% 151.66% 113.85% 97.43%
Classified assets.................... 18.26% 20.09% 21.17% 17.37% 19.50%
Total assets......................... 0.41% 0.43% 0.48% 0.42% 0.45%
</TABLE>
Credit losses are inherent in the business of originating and retaining
loans. The Company maintains an allowance for credit losses to absorb losses
inherent in the loan portfolio. These allowances consist of SVAs and an ALLL
which are based on ongoing, quarterly assessments of the probable estimated
losses inherent in the loan portfolio.
The allowance for credit losses does not represent the amount of 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
credit losses is an ongoing process. Consequently, there can be no assurance
that material additions to the Bank's allowance for credit losses will not be
required in the future, thereby adversely affecting earnings and the Bank's
ability to maintain or build capital.
DISCONTINUED OPERATIONS
The performance of the Bank's credit card portfolio may be adversely
affected by a number of factors, including a national or regional economic
slowdown or recession, an increase in the number of customers seeking protection
under the bankruptcy laws, the effectiveness of the collection efforts, and
fraud or breaches of contracts by third parties or customers. In addition,
because the portfolio is primarily sub-prime, the Bank has and is expected to
continue to experience significantly higher delinquencies and charge-offs in its
credit card portfolio than those experienced by other credit card issuers whose
portfolio's are not sub-prime.
18
<PAGE>
DELINQUENT LOANS
The following table presents the credit card loan portfolio at the dates
indicated:
<TABLE>
<CAPTION>
QUARTERS ENDED
-------------------------------------------------------------------------
SEPTEMBER 30, JUNE 30, MARCH 31, DECEMBER 31, SEPTEMBER 30,
2000 2000 2000 1999 1999
------------- ------------- ------------- ------------- -------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Current.............................. $ 62,919 $ 73,065 $ 156,326 $ 170,533 $ 199,331
Delinquencies:
30 to 59 days...................... 4,858 4,717 6,907 11,157 13,397
60 to 89 days...................... 3,665 3,663 5,413 8,438 10,040
90 to 119 days..................... 3,540 2,815 5,108 7,596 9,877
120 to 149 days.................... 2,142 1,649 4,915 7,213 9,443
150 days and over.................. 1,765 1,522 4,376 5,706 8,734
------------- ------------- ------------- ------------- -------------
Total delinquencies............. 15,970 14,366 26,719 40,110 51,491
------------- ------------- ------------- ------------- -------------
Total................................ $ 78,889 $ 87,431 $ 183,045 $ 210,643 $ 250,822
============= ============= ============= ============= =============
As a percentage of outstanding balances:
30 to 59 days...................... 6.16% 5.40% 3.77% 5.30% 5.34%
60 to 89 days...................... 4.65 4.19 2.96 4.00 4.00
90 to 119 days..................... 4.49 3.22 2.79 3.61 3.94
120 to 149 days.................... 2.72 1.89 2.69 3.42 3.76
150 days and over.................. 2.23 1.74 2.39 2.71 3.48
------------- ------------- ------------- ------------- -------------
Total........................... 20.25% 16.44% 14.60% 19.04% 20.52%
============= ============= ============= ============= =============
</TABLE>
The decrease in outstanding balances during the third quarter was the
result of $6.0 million of charge-offs and $2.5 million of collections in excess
of purchases, interest and fees charged to the accounts. The decrease in total
balances outstanding and delinquent balances in the second quarter of 2000 was
primarily the result of the sale of the MMG portfolio in June 2000. At the time
of the sale the MMG portfolio had $75.8 million outstanding with $10.3 million
in delinquent balances.
ALLOWANCE FOR ESTIMATED LOAN LOSSES
The following schedule summarizes the activity in the discontinued
operations allowances for estimated loan losses: (See related discussion of ALLL
and regulatory capital in the Regulatory Capital Compliance section below.)
<TABLE>
<CAPTION>
QUARTER ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
---------------------------- ----------------------------
2000 1999 2000 1999
------------- ------------- ------------- -------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Balance at beginning of period.............................. $ 19,911 $ 51,889 $ 48,351 $ 74,551
------------- ------------- ------------- -------------
Charge-offs.............................................. (6,062) (28,391) (39,908) (67,775)
Allocation of reserves to loans sold..................... -- -- (14,000) --
Recoveries............................................... 412 635 4,511 980
------------- ------------- ------------- -------------
Net charge-offs........................................ (5,650) (27,756) (49,397) (66,795)
Provision:
Estimated loan losses.................................. 7,200 37,587 22,458 52,824
Funds provided by affinity marketers................... -- 552 49 1,692
------------- ------------- ------------- -------------
Balance at end of period.................................... $ 21,461 $ 62,272 $ 21,461 $ 62,272
============= ============= ============= =============
</TABLE>
Charge-offs purchased by FAMCO during the first nine months of 2000 and
1999 totaled $0.6 million and $1.9 million, respectively, and are not included
as charge-offs in the table above.
19
<PAGE>
REGULATORY CAPITAL COMPLIANCE
The OTS capital regulations, as required by the Financial Institutions
Reform, Recovery, and Enforcement Act of 1989, include three separate minimum
capital requirements for the savings institution industry--a "tangible capital
requirement," a "leverage limit" and a "risk-based capital requirement." These
capital standards must be no less stringent than the capital standards
applicable to national banks.
The Bank's actual and required capital are as follows at the dates
indicated:
<TABLE>
<CAPTION>
TO BE CATEGORIZED
AS ADEQUATELY TO BE CATEGORIZED
ACTUAL CAPITALIZED AS WELL CAPITALIZED
---------------------------- ---------------------------- ----------------------------
AMOUNT RATIO AMOUNT RATIO AMOUNT RATIO
------------- ------------- ------------- ------------- ------------- -------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
AS OF SEPTEMBER 30, 2000:
Total capital (to risk-weighted
assets) (1)........................ $ 119,137 9.18% $ 103,857 8.00% $ 129,074 10.00%
Core capital (to adjusted tangible
assets)............................ 103,049 4.68 66,075 3.00 110,125 5.00
Tangible capital (to tangible
assets)............................ 103,049 4.68 33,038 1.50 N/A
Core capital (to risk-weighted
assets)............................ 103,049 7.94 N/A 77,893 6.00
AS OF DECEMBER 31, 1999:
Total capital (to risk-weighted
assets)............................ $ 159,952 10.09% $ 126,796 8.00% $ 158,495 10.00%
Core capital (to adjusted tangible
assets)............................ 139,689 5.22 80,306 3.00 133,843 5.00
Tangible capital (to tangible
assets)............................ 139,689 5.22 40,153 1.50 N/A
Core capital (to risk-weighted
assets)............................ 139,689 8.81 N/A 95,097 6.00
</TABLE>
---------
(1) In the course of the Bank's annual safety and soundness examination the OTS
advised the Bank that the classification and regulatory capital treatment
of its ALLL related to credit card receivables held for disposal is not
consistent with regulatory policy. The OTS has instructed the Company to
eliminate the ALLL related to the credit card portfolio and classify it as
a loss or establish a specific valuation allowance. The Company strongly
disagrees with this position and believes there is no support for the OTS
position in regulations or GAAP. The Company intends to appeal this finding
in its response to the report of examination. If the OTS position prevails,
supplementary capital related to the ALLL for purposes of computing risk
based capital would be reduced. The Bank's risk-based capital ratio at
September 30, 2000 would decrease to 8.65% and the related excess over the
minimum requirement to be considered adequately capitalized would decrease
to $8.4 million from $15.3 million. This determination by the OTS and the
results of the Company's appeal will have no impact on the Bank's core
capital ratios, financial position or results of operations. While the
Company strongly believes in the merits of its position, there can be no
assurance that the Company will prevail in its position.
20
<PAGE>
The following table reconciles the Company's stockholders' equity to the
Bank's tangible, core and risk-based capital at the dates indicated:
<TABLE>
<CAPTION>
TANGIBLE CORE RISK-BASED
CAPITAL CAPITAL CAPITAL
------------- ------------- -------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
AS OF SEPTEMBER 30, 2000:
Consolidated stockholders' equity................. $ 61,023 $ 61,023 $ 61,023
Adjustments:
Fidelity's Preferred Stock...................... 51,750 51,750 51,750
Bank Plus equity excluding Fidelity............. (1,121) (1,121) (1,121)
------------- ------------- -------------
Fidelity's stockholders' equity................... 111,652 111,652 111,652
Accumulated other comprehensive loss.............. 6,219 6,219 6,219
Adjustments:
Intangible assets............................... (10,915) (10,915) (10,915)
Supplementary capital-- ALLL.................... -- -- 16,402
Net deferred tax assets......................... (3,907) (3,907) (3,907)
Assets required to be deducted.................. -- -- (314)
------------- ------------- -------------
Regulatory capital.................................. $ 103,049 $ 103,049 $ 119,137
============= ============= =============
AS OF DECEMBER 31, 1999:
Consolidated stockholders' equity................. $ 96,176 $ 96,176 $ 96,176
Adjustments:
Fidelity's Preferred Stock...................... 51,750 51,750 51,750
Bank Plus equity excluding Fidelity............. (1,250) (1,250) (1,250)
------------- ------------- -------------
Fidelity's stockholders' equity................... 146,676 146,676 146,676
Accumulated other comprehensive loss.............. 9,272 9,272 9,272
Adjustments:
Intangible assets............................... (12,352) (12,352) (12,352)
Nonincludable subsidiaries...................... (1) (1) (1)
Supplementary capital-- ALLL.................... -- -- 20,263
Net deferred tax assets......................... (3,906) (3,906) (3,906)
------------- ------------- -------------
Regulatory capital.................................. $ 139,689 $ 139,689 $ 159,952
============= ============= =============
</TABLE>
As of September 30, 2000, the Bank was "adequately capitalized" under the
prompt corrective action ("PCA") regulations adopted by the OTS pursuant to the
Federal Deposit Insurance Corporation Improvement Act of 1991.
21
<PAGE>
LIQUIDITY
The Bank derives funds from deposits, FHLB advances, securities sold under
agreements to repurchase, and other short-term and long-term borrowings. In
addition, funds are generated from loan payments and payoffs as well as from the
sale of loans and investments.
DEPOSITS
The largest source of funds for the Bank is deposits. Customer deposits are
insured by the FDIC to the maximum amount permitted by law. At September 30,
2000, the Bank had deposits of $2.1 billion. The following table presents the
distribution of deposit accounts at the dates indicated:
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31, SEPTEMBER 30,
2000 1999 1999
------------- ------------- -------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Checking accounts...................................... $ 314,555 $ 369,071 $ 355,533
Passbook accounts...................................... 37,513 49,973 53,395
Money market savings accounts.......................... 60,645 50,428 52,178
------------- ------------- -------------
Total transaction accounts.......................... 412,713 469,472 461,106
------------- ------------- -------------
Certificates of Deposit ("CDs"):
Less than $100,000.................................. 1,151,544 1,422,303 1,427,112
Greater than $100,000............................... 509,688 609,471 592,228
------------- ------------- -------------
Total CDs......................................... 1,661,232 2,031,774 2,019,340
------------- ------------- -------------
Total deposits......................................... $ 2,073,945 $ 2,501,246 $ 2,480,446
============= ============= =============
Weighted average interest rate on deposits............. 4.79% 4.21% 4.12%
============= ============= =============
</TABLE>
There were no brokered deposits outstanding at the dates indicated above.
During the third quarter of 2000, the Bank's deposits decreased by $43
million primarily due to deposits lost as a result of higher rates offered by
competitors. Over 75% of this decrease was in higher cost accounts with balances
in excess of $100,000. Notwithstanding the competition for deposits, the Bank's
deposits have increased $3 million during the first nine months of 2000,
excluding branches sold in 2000.
The following table provides information with regards to the Bank's most
recent quarterly experience in the levels of and pricing of certificates of
deposit ("CDs") for the period indicated:
<TABLE>
<CAPTION>
WEIGHTED AVERAGE RATE
----------------------------
NET NEW OR NET NEW OR
WITHDRAWALS RENEWED NET CHANGE WITHDRAWALS RENEWED
------------- ------------- ------------- ------------- -------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
CDs maturing in quarter ended:
September 30, 1999................... $ 577,716 $ 561,375 $ (16,341) 4.90% 4.79%
December 31, 1999.................... 482,455 494,889 12,434 4.55 4.96
March 31, 2000....................... 665,225 676,358 11,133 4.53 5.24
June 30, 2000........................ 454,380 453,744 (636) 4.88 5.56
September 30, 2000................... 434,029 384,317 (49,712) 4.95 5.68
</TABLE>
22
<PAGE>
The distribution of certificate accounts by date of maturity is an
important indicator of the relative stability of a major source of funds. Longer
term certificate accounts generally provide greater stability as a source of
funds, but currently entail greater interest costs than passbook accounts. The
following tables summarize certificate accounts by maturity and weighted average
rate at September 30, 2000:
WEIGHTED
AVERAGE
AMOUNT RATE
------------- -------------
MATURES IN QUARTER ENDED: (DOLLARS IN THOUSANDS)
------------------------
December 31, 2000............................... $ 336,698 5.32%
March 31, 2001.................................. 377,753 5.46
June 30, 2001................................... 279,550 5.75
September 30, 20001............................. 306,755 5.71
December 31, 2001............................... 88,130 4.89
March 31, 2002.................................. 135,849 5.34
June 30, 2002................................... 64,374 5.35
September 30, 2002.............................. 52,158 5.07
December 31, 2002 and after..................... 19,965 6.10
------------- -------------
Total CDs..................................... $ 1,661,232 5.48%
============= =============
BORROWINGS
The following table sets forth certain information as to the Company's FHLB
advances and other borrowings at the dates indicated:
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
2000 1999
------------- -------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
FHLB advances: fixed rate advances............................................. $ -- $ 20,000
Senior notes................................................................... 51,478 51,478
------------- -------------
Total borrowings............................................................... $ 51,478 $ 71,478
============= =============
Weighted average interest rate on all borrowings............................... 12.00% 11.05%
Percent of total borrowings to total liabilities and stockholders' equity...... 2.33% 2.66%
</TABLE>
UNDRAWN SOURCES
The Company maintains other sources of liquidity to draw upon, which at
September 30, 2000 include (a) available credit facilities with the FHLB of
$331.6 million, (b) $248.5 million in unpledged securities available to be
placed in reverse repurchase agreements or sold, (c) available credit facilities
at the Federal Reserve Bank of $100 million and the ability under Federal
Regulations to borrow $125 million through the use of brokered CDs.
CONTINGENT OR POTENTIAL USES OF FUNDS
The Bank had unfunded loans totaling $4.3 million and $3.4 million at
September 30, 2000 and December 31, 1999, respectively. Additionally, unused
lines of credit related to credit card loans, deposit overdraft accounts and
other credit lines totaled $62.0 million and $83.8 million at September 30, 2000
and December 31, 1999, respectively.
23
<PAGE>
LIQUIDITY
The regulatory required average daily balance of liquid assets is 4.0% of
the liquidity base, which is based on a quarterly average. The Bank's quarterly
average regulatory liquidity ratio was 22.7% and 12.0% for the nine months ended
September 30, 2000 and 1999, respectively.
HOLDING COMPANY LIQUIDITY
At September 30, 2000, Bank Plus had cash and cash equivalents of $0.3
million. Bank Plus has no material potential cash producing operations or assets
other than its investments in Fidelity and Gateway. Accordingly, Bank Plus is
substantially dependent on dividends from Fidelity and Gateway in order to fund
its cash needs, including its payment obligations on its $51.5 million senior
notes.
During the quarter, the Company made its scheduled interest payment on its
Senior Notes. The liquidity for interest payments in the near term is expected
to be provided by preferred and common stock dividends from the Bank and
currently projected liquidity at the holding company. The Bank has been
authorized by the OTS to make payments of dividends on the Bank's preferred
stock so long as the Bank's core and risk-based capital ratios remain above 4.0%
and 8.0%, respectively. During the quarter, the OTS notified the Bank that it is
amending its authorization to require the Bank to give the OTS 30 days notice
prior to the payment of any preferred stock dividend. The authorization from the
OTS does not constrain the OTS from restricting future dividend payments based
on safety and soundness considerations or future examination findings, and no
assurance can therefore be given that the OTS will permit future dividend
payments by Fidelity to Bank Plus. The Bank has received no indication from the
OTS that it will object to the continued payment of preferred dividends. In
November 2000, the Bank requested and received approval from the OTS to pay a
$250,000 common stock dividend to Bank Plus to be paid on November 15, 2000. The
amount of the common stock dividend ($250,000) approximates the difference
between the quarterly preferred stock dividend paid by the Bank to Bank Plus and
the quarterly interest payment on the Senior Notes.
24
<PAGE>
ASSET/LIABILITY MANAGEMENT
The objective of asset/liability management is to maximize the net income
of the Company while controlling interest rate risk exposure. Banks and savings
institutions are subject to interest rate risk when assets and liabilities
mature or reprice at different times (duration risk), against different indices
(basis risk) or for different terms (yield curve risk). The decision to control
or accept interest rate risk can only be made with an understanding of the
probability of various scenarios occurring. Having liabilities that reprice more
quickly than assets is beneficial when interest rates fall, but may be
detrimental when interest rates rise.
The following table sets out the maturity and rate sensitivity of the
interest-earning assets and interest-bearing liabilities as of September 30,
2000. "Gap," as reflected in the table, represents the estimated difference
between the amount of interest-earning assets and interest-bearing liabilities
repricing during future periods based on certain assumptions, including those
stated in the notes to the table.
MATURITY AND RATE SENSITIVITY ANALYSIS
<TABLE>
<CAPTION>
AS OF SEPTEMBER 30, 2000
MATURITY OR REPRICING
----------------------------------------------------------------------------------------
WITHIN 3 4-12 1-5 6-10 OVER 10
MONTHS MONTHS YEARS YEARS YEARS TOTAL
------------- ------------- ------------- ------------- ------------- -------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Interest-earning assets:
Cash and cash equivalents............ $ 152,389 $ -- $ -- $ -- $ -- $ 152,389
FHLB stock (1)....................... 25,212 -- -- -- -- 25,212
MBS (1).............................. 45,413 1,000 -- -- 206,356 252,769
Assets of discontinued operations.... 27,870 51,019 -- -- -- 78,889
Loans receivable:
ARMs (2)........................... 1,240,547 290,510 19,054 5,787 954 1,556,852
Fixed rate loans................... 2,961 1,059 3,042 9,980 108,971 126,013
------------- ------------- ------------- ------------- ------------- -------------
Total gross loans receivable..... 1,243,508 291,569 22,096 15,767 109,925 1,682,865
------------- ------------- ------------- ------------- ------------- -------------
Total interest-earning assets.......... 1,494,392 343,588 22,096 15,767 316,281 $ 2,192,124
------------- ------------- ------------- ------------- ------------- =============
Interest-bearing liabilities:
Deposits:
Checking and savings accounts (3).. 357,433 -- -- -- -- $ 357,433
Money market accounts (3).......... 55,280 -- -- -- -- 55,280
Fixed maturity deposits:
Retail customers................. 336,699 963,993 360,030 320 190 1,661,232
Wholesale customers.............. -- -- -- -- -- --
------------- ------------- ------------- ------------- ------------- -------------
Total deposits................. 749,412 963,993 360,030 320 190 2,073,945
Borrowings: Senior Notes............. -- -- -- 51,478 -- 51,478
------------- ------------- ------------- ------------- ------------- -------------
Total interest-bearing liabilities..... 749,412 963,993 360,030 51,798 190 $ 2,125,423
------------- ------------- ------------- ------------- ------------- =============
Repricing Gap.......................... $ 744,980 $ (620,405) $ (337,934) $ (36,031) $ 316,091
============= ============= ============= ============= =============
Gap to total assets.................... 33.70% (28.06)% (15.28)% (1.63)% 14.30%
Cumulative Gap to Total Assets......... 33.70% 5.64% (9.64)% (11.27)% 3.03%
</TABLE>
----------
(1) Repricings shown are based on the contractual maturity or repricing
frequency of the instrument.
(2) ARMs are primarily in the shorter categories as they are subject to
interest rate adjustments.
(3) These liabilities are subject to daily adjustments and are therefore
included in the "Within 3 Months" category.
25
<PAGE>
The Company manages interest rate risk by, among other things, maintaining
a portfolio consisting primarily of ARMs loans. Interest sensitive assets
provide the Company with a degree of long-term protection from rising interest
rates. ARM loans comprised 88% of the total mortgage loan portfolio at September
30, 2000 and 80% of ARMs in the mortgage loan portfolio are indexed to COFI. The
Company's liabilities reprice generally in line with the cost of funds of
institutions which comprise the FHLB Eleventh District. In the Company's case,
the lag between the repricing of its liabilities and its ARM loans indexed to
COFI is approximately three months. Thus, in a rising rate environment there
will be upward pressure on rates paid on deposit accounts and wholesale
borrowings, and the Company's net interest income will be adversely affected
until the majority of its interest-earning assets fully reprice. Conversely, in
a falling interest rate environment, net interest income will be positively
affected.
Analysis of the Gap provides only a static view of the Company'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. The actual impact on net interest income may depend on the
direction and magnitude of the interest rate movement, as well as competitive
and market pressures.
MARKET RISK
The Bank's Asset Liability Committee which is composed of senior management
representatives, monitors and considers methods of managing the rate and
sensitivity repricing characteristics of the balance sheet components consistent
with maintaining acceptable levels of changes in net portfolio value ("NPV") and
net interest income. A primary purpose of the Company's asset/liability
management is to manage interest rate risk to effectively invest the Company's
capital and to preserve the value created by its core business operations. As
such, certain management monitoring processes are designed to minimize the
impact of sudden and sustained changes in interest rates on NPV and net interest
income. There has been no significant change in interest rate sensitivity since
December 31, 1999.
26
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
ADC CREDIT CARD LITIGATION
Over one hundred lawsuits, on behalf of more than two hundred individual
plaintiffs, and two purported class actions, were filed in state and federal
courts in the State of Alabama against Fidelity and, in most instances, ADC,
Bank Plus, and various manufacturers and distributors of consumer appliances. In
addition, the Bank and Bank Plus have been sued in four cases in state court in
the State of Mississippi on behalf of more than seventy individual plaintiffs
(the Mississippi cases were removed to Federal Court in that state). All of
these cases arise out of the affinity credit card program between the Bank and
ADC in which independent third-party direct marketers sold consumer appliances
and concurrently offered consumers an opportunity to apply for a credit card
arranged by ADC and issued by the Bank which was then used to pay for the
appliance. The Bank discontinued financing such consumer products under the ADC
program in early 1999.
The plaintiffs in the litigation were cardholders who alleged, generally,
that misrepresentations were made to them by the sales people in connection with
their purchases of the consumer appliances and applications for credit card
accounts, including misrepresentations with respect to the nature and cost of
financing such purchases through credit cards issued by the Bank. The Bank
believes that it had substantial legal and factual defenses to these claims in
that it did not control, direct, or otherwise have any dealings with the sales
people who allegedly made such misrepresentations, and the financing and other
terms of the credit cards were disclosed in writing to cardholders by the Bank.
The Bank also believes that the majority of the plaintiffs claims were subject
to adjudication under federal laws.
Notwithstanding the Company's defenses, the Company settled the class
action litigation in Alabama and substantially all of the individual lawsuits.
The Alabama class action settlement agreement was executed and approved by
the trial court during the second and third quarters of 2000 and the settlement
is now final.
All but two of the individual lawsuits previously pending have been
settled. However one more individual lawsuit in Alabama has been filed and a
certain others in Mississippi have been threatened. In addition, twenty-four
class members in the Alabama litigation exercised their right to opt out of the
class action settlement. Several of these opt out cases have been settled. The
Bank intends to aggressively defend these cases if reasonable settlements cannot
be obtained. However, there can be no assurance that pending or threatened
individual cases (including the opt-outs) will be settled or adjudicated without
material cost to the Bank.
The Company recorded a $4.0 million charge in the first quarter of 2000
which represented the estimated settlement costs for all of the then-pending ADC
consumer cases.
The Bank is a third-party beneficiary of agreements in which ADC and the
distributors of the consumer products agreed to indemnify and defend the Bank
against potential claims relating to the program. The Bank believes that the
claims of the plaintiffs are within the scope of the indemnity and defense
covenants, and the Bank has demanded that ADC and the distributors indemnify the
Bank and provide a defense. Early this year ADC ceased payment of the Bank's
costs of defense and indicated that it does not have the funds to continue to
honor its indemnity obligations. Thus far one distributor has indicated a
tentative willingness to discuss a settlement; the other distributors have
either not responded to the Bank's demands for indemnity and defense, denied
such demands, or declined to respond until such time as the distributors have
had additional opportunity to investigate the claims. The Bank believes that it
has strong contractual indemnity claims against ADC and the distributors;
however, no assurance can be given that the Bank will collect on any of these
claims.
27
<PAGE>
NATIONWIDE CAPITAL COMPANY LLC CREDIT CARD LITIGATION
In November 1997, the Bank entered into a credit card marketing
relationship with MMG pursuant to which MMG was to solicit members of certain
agreed-upon affinity groups to become credit card holders. The Bank was to
contract for the provision of or provide credit card servicing and other related
functions. MMG and the Bank were to share equally in program profits and losses.
In late summer and fall of 1998, disputes arose between the parties. These
disputes were resolved in an arbitration proceeding in Los Angeles entitled IN
THE MATTER OF ARBITRATION BETWEEN FIDELITY FEDERAL BANK AND MMG DIRECT, INC.,
American Arbitration Association No. 72 147 01072 98.
As a part of the affinity credit card marketing program with MMG, the Bank
entered into an agreement with Nationwide Capital Company L.L.C. ("Nationwide"),
which purported to have arrangements with automobile dealers, including
arrangements to obtain lists of customers of the dealers, through which
dealer-branded credit cards would be marketed and issued to customers of the
dealers. The Nationwide contract expressly provided that it could be terminated
by the Bank upon termination of the Bank's contract with MMG and further
provided that any disputes arising in connection with the contract would be
arbitrated in Los Angeles, California. In September of 1998 the Bank suspended
marketing and thereafter terminated the MMG and Nationwide agreements.
Notwithstanding its commitment to arbitrate any disputes arising in
connection with the contract in Los Angeles, Nationwide instituted litigation
against the Bank in the Texas state court. The Bank sought to stay this
litigation in the Texas state court and also filed a petition against Nationwide
in the United States District Court for the Central District of California to
compel Nationwide to arbitrate and to stay the Texas proceedings. The Bank's
petition was granted by the District Court and, as a result, the Texas state
court litigation has been stayed and Nationwide has been ordered to arbitrate
its claim. After the District Court ruling became final, Nationwide filed an
arbitration proceeding against the Bank in Los Angeles.
In the arbitration Nationwide asserts claims for breach of contract against
the Bank and tort claims for interference with its contract rights with MMG and
with the automobile dealers in connection with the credit card program.
According to the claim in arbitration, the contract claims alone amount to $75
million. The Bank believes that Nationwide's claims are without merit. In
addition, the Bank has asserted counterclaims against Nationwide, including its
counterclaim for damages for failure to arbitrate and counterclaims alleging
fraud or breach of contract by Nationwide in failing to provide customer lists
of affinity group members as it promised to do.
PURPORTED CLASS ACTION LITIGATION
On October 19, 1998, a purported class action was filed against Bank Plus
and its current and immediately preceding chief executive officers. The case was
originally entitled Howard Gunty Profit Sharing Plan, both individually and on
behalf of all others similarly situated, Plaintiffs v. Richard M. Greenwood,
Mark K. Mason, Bank Plus Corporation, and Does I through 50, inclusive,
Defendants, Los Angeles Superior Court, Central Judicial District, Case No.
BC199336 ("Gunty I"). This action originally alleged that Bank Plus failed to
make adequate public disclosure concerning losses in the Bank's credit card
operations during the period from August 14, 1998 (when the Company filed its
quarterly report on Form l0-Q for the 1998 second quarter) through September 22,
1998 (when the Company issued a press release concerning its credit card
losses). An amended complaint was filed in the Los Angeles Superior Court,
Central Judicial District, Case No. BC199336, entitled Howard Gunty Profit
Sharing Plan and Robert E. Yelin, both individually and on behalf of the Yelin
Family Trust U/A, both individually and on behalf of all others similarly
situated, Plaintiffs, v. Richard M. Greenwood, Mark K. Mason, Bank Plus
Corporation, and Does 1 through 50, inclusive ("Gunty II"). The amended
complaint purports to expand the class period to extend from March 30, 1998
through September 22, 1998. The complaint and amended complaint each include
claims for negligent misrepresentation, common law fraud, statutory fraud and
violations of the California Corporations Code.
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Two proposed representative plaintiffs have been determined unsuitable to
serve as class representatives. Plaintiffs counsel is pursuing other potential
class action representatives through a letter solicitation process. During 2000,
the costs of defending this action exceeded the Company's deductible under its
Director and Officers insurance policy. The insurance carrier has agreed to pay
for any future litigation costs related to this action, subject to their
reservation of rights. There can be no guarantee that the insurance carrier will
continue to pay for future litigation costs.
The Bank intends to continue to assert all defenses to class certification
and further intends to continue to assert that any claims made on behalf of the
expanded class asserted in Gunty II are barred and preempted by the Securities
Litigation Uniform Standards Act. In addition, should any purported class of any
scope be certified, the Bank intends to vigorously defend on the merits. In this
respect, the Bank believes, among other things, that its communications to the
public were timely and accurate and that it did not engage in any market
activity which would generate liability under the California Corporations Code.
DURGA MA ARBITRATION
In April 1998, the Bank entered into two Private Label Credit Card
Agreements with Durga Ma, a New Jersey corporation, doing business as Diamond
Way International. One of those agreements contemplated issuing credit cards to
Durga Ma's jewelry customers; the other contemplated issuing cards to customers
of independent jewelry retailers selected by Durga Ma. According to the
agreements, the Bank would issue credit cards to customers whose applications
were approved by the Bank. The Bank would have the exclusive right to issue
credit cards bearing the name of Durga Ma or Diamond Way International to
qualified customers. No cards were ever issued under these programs.
In October 1999, Durga Ma invoked binding arbitration alleging "breach of
contract and fraud" and claims damages in the amount of $5.0 million. The Bank
believes these claims lack merit and the damages sought are speculative.
CHOICE ONE LITIGATION
At the time that the Bank began winding down its credit card operations in
1998, the Bank was in negotiations with Choice One Finance Corporation regarding
a proposed credit card program in which consumers would have an opportunity to
apply for credit cards to finance their purchases of water softeners and other
consumer goods. Several drafts of a proposed agreement were exchanged, but an
agreement was never signed and the program was not commenced. Choice One alleges
that an agreement or other enforceable obligations none-the-less exist, and on
March 12, 1999 commenced a lawsuit entitled CHOICE ONE FINANCE CORP. V. FIDELITY
FEDERAL BANK, Superior Court for the State of California, County of Los Angeles,
Case No. BC206945. The plaintiff seeks damages of at least $10 million based on
estimates of the revenue it would have received if the program had been
implemented. The Bank filed an answer disputing the claims. Discovery is
substantially complete, and the Bank filed a summary judgment motion in
September, 2000. The court dismissed two out of three of the plaintiff's causes
of action, and set a trial date of December 20, 2000 for the third. The Bank
believes that the plaintiff's claims are without merit, that the damages sought
are speculative, and that the Bank has valid defenses to the plaintiff's claims.
INTERNET CASINO LITIGATION
The Bank and MasterCard International, Inc. have been named as defendants
in a purported class action filed July 27, 1999 in the United States District
Court for the Middle District of Alabama, entitled Evelyn L. Brown, on behalf of
herself and all others similarly situated vs. MasterCard International, Inc. and
Fidelity Federal Bank, Civil Action Case No. CV 99-A-788-N. The plaintiff
alleges that she placed bets through a gambling site on the internet. The
internet site instructed her to open an account by entering her credit card
number. By this means, the plaintiff's gambling expenses incurred on the
internet site were charged to a MasterCard issued to the plaintiff by the Bank.
The plaintiff alleges that, in allowing its credit card to be used for illegal
gambling, the Bank violated a variety of Federal and State statutes, including
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the Wire Act (18 U.S.C. Section 1084(a)), the Travel Act (18 U.S.C. Section
1952), a Federal statute that specifically prohibits conducing an illegal
gambling business (18 U.S.C. Section 1955), the Racketeer Influenced and Corrupt
Organizations Act ("RICO")(18 U.S.C. Section 1962(c) and 1964(a)), and a number
of Alabama statutes. The plaintiff seeks certification of a class, declaratory
relief voiding her credit card charges, unspecified compensatory damages, triple
exemplary damages under RICO, punitive damages, and attorneys fees and costs.
The Bank and MasterCard have filed motions to dismiss the case. The Bank
believes that it should not have liability and that it has substantial legal
defenses to the lawsuit.
This lawsuit is substantially similar to a number of lawsuits filed around
the country against credit card issuers, MasterCard, and Visa. The plaintiff
sought to have the lawsuit consolidated with similar lawsuits in a Federal court
in New York. On March 1, 2000, the Judicial Panel on Multidistrict Litigation
consolidated the case with several others and ordered that these cases be
transferred to the U.S. District Court for the Eastern District of Louisiana.
The Bank's motion to dismiss currently is pending as part of the multidistrict
litigation.
FIRST ALLIANCE MORTGAGE COMPANY
In 1997, Fidelity entered into a series of agreements with FAMCO and its
affiliates to establish a secured credit card program (the "Program"). Under the
agreements, Fidelity serves as issuer and owner of the Program accounts and is
responsible for the risk management associated with the extension of credit.
FAMCO is responsible for marketing and processing applications and servicing the
accounts originated under the Program. FAMCO also provides credit enhancements
to guarantee full repayment of the Program receivables in the event of
cardholder defaults and, in exchange, has the right to purchase the outstanding
receivables at par and receives all revenues, net of expenses and funding costs
paid to Fidelity, from the Program. FAMCO is required to fund a cash collateral
account as part of the credit enhancement. As of September 30, 2000, total
receivables outstanding under the Program were $10.9 million, of which 25.1%
were delinquent, and the balance of the cash collateral account was $2.8
million.
On February 25, 2000, Fidelity delivered to FAMCO formal notice that the
agreements pertaining to the Program have expired, and a demand that FAMCO
fulfill all of its obligations under the agreements upon and after termination,
including an obligation to purchase, or cause a designee to purchase, from
Fidelity, at par, all of the outstanding accounts and related receivables
generated under the Program.
Also on February 25, 2000, Fidelity filed with the American Arbitration
Association in Los Angeles, California a formal demand for arbitration. The
arbitration proceeding is designated Fidelity Federal Bank, FSB v. First
Alliance Acceptance Corp. and First Alliance Mortgage Corp., File No. 72 148 226
00. The arbitration demand alleges that a dispute exists between the parties
because FAMCO contends that it has no obligation to comply with Fidelity's
demand that FAMCO purchase, or cause a designee to purchase, from Fidelity, at
par, all of the outstanding accounts and related receivables generated under the
Program.
On March 23, 2000, FAMCO and its affiliates filed a voluntary petition
under Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court,
Central District of California, Case No. SA 00-12370 LR. The bankruptcy
proceeding had the effect of staying the arbitration and any other action by
Fidelity to enforce FAMCO's obligations. It also had the effect of suspending
the monthly settlements with FAMCO pursuant to which FAMCO had previously been
performing its credit enhancement obligations. Fidelity has filed a proof of
claim in the bankruptcy proceeding relating to Fidelity's claims against FAMCO.
The Bank has obtained relief from stay pursuant to an order of the
Bankruptcy Court to pursue its claim in arbitration seeking to enforce the
demand that FAMCO repurchase or cause the repurchase of the outstanding accounts
and receivables, and to establish the amount of the Bank's claim against FAMCO's
bankruptcy estate for damages arising from FAMCO's breach of that repurchase
obligation. FAMCO has filed a counter demand for arbitration asserting a
conflict of interest on the part of the Bank's Chief Executive Officer based on
his alleged involvement in the negotiations of the agreements and seeking
damages because, as FAMCO alleges, the Bank's termination of the program
prevented FAMCO from securitizing the card portfolio. The arbitration is
scheduled to commence on March 5, 2001.
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FAMCO has listed Fidelity as one of its 20 largest unsecured creditors, and
Fidelity is represented on FAMCO's unsecured creditors' committee.
Subject to the constraints of applicable bankruptcy law, Fidelity intends
to mitigate its damages, pursue vigorously its rights and remedies to recover
amounts owed by FAMCO, and seek recourse to the cash collateral to recover any
shortfall. Among other strategies, Fidelity is currently exploring the potential
sale of the portfolio to mitigate its damages. However, there is substantial
uncertainty as to Fidelity's success in mitigating damages, the ability of FAMCO
to pay the claims of its creditors and the timing and amount of distributions
that may be made by FAMCO to its creditors. The ability of the Company to offset
the cash collateral account against prior or future charge-offs or any
deficiency that may arise upon the sale of the portfolio is subject to
bankruptcy court approval.
OTHER MATTERS
On November 1, 2000 the Bank and OTS entered into an agreement entitled
"Stipulation and Consent to the Issuance of an Order to Cease and Desist and for
Affirmative Relief" (the "Agreement"). Concurrently, pursuant to the Agreement,
the OTS issued to the Bank an "Order to Cease and Desist and for Affirmative
Relief" (the "Order"). The Agreement and the Order arose from the OTS's May 1999
special limited compliance examination of the Bank's discontinued credit card
operations (the "Examination").
The Order requires the Bank to document and maintain a comprehensive
compliance and risk management program for any new lending activities. The Bank
believes that its current quality control, risk management and compliance
programs for new lending activities fulfill substantially all of the
requirements of the Order; however, compliance with the Order will require
additional administration and documentation of any new lending activity. While
the Bank disagrees with the necessity of this regulatory action, it has
consented to the Order and to certain other compliance-related corrective
actions to maintain its regulatory relationships and to avoid the expense and
management distraction of opposing the Order. The Bank does not expect that this
action by the OTS will have a material adverse effect on the operations,
financial condition or results of operations of the Bank or the Company.
However, there can be no assurance given that the OTS or other governmental
agencies will not require additional actions relating to the Examination or that
this action or any future actions by the OTS or other governmental agencies will
not have a material adverse effect on the operations, financial condition or
results of operations of the Bank or the Company.
Copies of the Agreement and the Order were filed with the SEC as exhibits
to a report on Form 8-K dated November 1, 2000.
The legal responsibility and financial exposure with respect to some of the
foregoing claims and other matters presently cannot be reasonably ascertained
and, accordingly, there is a risk that the outcome of one or more of these
outstanding claims or matters could result in a material adverse effect on the
financial condition or results of operations of the Company.
In the normal course of business, the Company and certain of its
subsidiaries have a number of other lawsuits and claims pending. Although there
can be no assurance, the Company believes that none of these other lawsuits or
claims will have a material adverse effect on the financial condition or
business of the Company.
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ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------------- -------------------------------------------------------------------------------------------------
<S> <C>
3.1 Certificate of Incorporation of Bank Plus Corporation (Incorporated by reference to Exhibit
3.1 to the Form 8-B).*
3.2 Amended and Restated Bylaws of Bank Plus Corporation (incorporated by reference to Exhibit 5 to
the current report on Form 8-K filed with the SEC on March 30, 1999).*
3.3 Certificate of Designations of Series C Junior Participating Cumulative Preferred Stock (Par
Value $.01 per share) of Bank Plus Corporation.*
4.1 Specimen of Common Stock Certificate (incorporated by reference to Exhibit 4.1 to the Form 8-B).*
4.2 Indenture dated as of July 18, 1997, between Bank Plus Corporation and The Bank of New York,
as trustee relating to the 12% Senior Notes due July 18, 2007, of Bank Plus Corporation
(incorporated by reference to Exhibit 4.4 of the Registration Statement on Form S-8 of Bank Plus
filed on September 4, 1997).*
4.3 Form of Amended and Restated Rights Agreement, dated as of March 26, 1999, between Bank Plus
and American Stock Transfer & Trust Company, as Rights Agent (incorporated by reference to
Exhibit 4 to the current report on Form 8-K filed with the SEC on March 30, 1999).*
10.1 Limited Liability Company Agreement of American General Gateway Services, L.L.C. dated as of
January 1, 1999 between VALIC and Gateway (incorporated by reference to Exhibit 10.45 to the
annual report on Form 10-k for the year ended December 31, 1998).*
10.2 Form of 1999 Nonemployee Director Stock Option Agreement between the Company and certain
nonemployee directors.*
10.3 Stock Option Agreement between the Company and James E. Stutz dated July 28, 1999.*
10.4 Service Agreement dated as of October 14, 1999 between Fidelity and First Data Resources Inc.*
10.5 Agreement for Information Technology Services dated as of December 3, 1999 between Fidelity
and Electronic Data Systems Corporation and Electronic Data Systems Corporation Information
Services L.L.C.*
10.6 Agreement to Purchase Assets and Assume Liabilities dated as of February 7, 2000 by and
between Fidelity and First Federal Bank of California.*
10.7 Mortgage Loan Purchase Agreement dated as of February 7, 2000 by and between Fidelity and
First Federal Bank of California.*
10.8 Agreement to Purchase Assets and Assume Liabilities dated as of February 3, 2000 by and
between Fidelity and Jackson Federal Bank.*
10.9 Purchase and Assumption Agreement dated as of June 2, 2000 by and between Fidelity and
Household Bank (SB), N.A.*
10.10 Agreement to Purchase Assets and Assume Liabilities dated as of May 22, 2000 by and between
Fidelity and First Bank of Beverly Hills.*
27. Financial Data Schedule.
</TABLE>
-------------
* Indicates previously filed documents.
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REPORTS ON FORM 8-K
A current report on Form 8-K was filed with the SEC on November 1, 2000
reporting on Item 5 "Other Events" the execution of an agreement between the
Bank and the OTS and the issuance by the OTS of an order pursuant to that
agreement. See Item 1 - Legal Proceedings - Other Matters.*
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SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THE
REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED THEREUNTO DULY AUTHORIZED.
BANK PLUS CORPORATION
Registrant
Date: November 14, 2000 /s/ Mark K. Mason
--------------------------------------
Mark K. Mason
PRESIDENT AND CHIEF EXECUTIVE OFFICER;
VICE CHAIRMAN OF THE BOARD
(PRINCIPAL EXECUTIVE OFFICER)
Date: November 14, 2000 /s/ John M. Michel
--------------------------------------
John M. Michel
EXECUTIVE VICE PRESIDENT AND
CHIEF FINANCIAL OFFICER
(PRINCIPAL FINANCIAL OFFICER)
34
