As filed with the Securities and Exchange Commission on March 24, 1999
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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FIDELITY FEDERAL BANCORP
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(Exact name of registrant as specified in its charter)
INDIANA 35-1894432
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
700 South Green River Road, Evansville, Indiana 47715
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(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
M. Brian Davis, President
Donald R. Neel, Treasurer
Fidelity Federal Bancorp
700 South Green River Road
Evansville, Indiana 47715
(812) 469-2100
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(Name, address, including zip code, of agent for service)
Timothy M. Harden, Esq.
John W. Tanselle, Esq.
Krieg DeVault Alexander & Capehart, LLP
One Indiana Square, Suite 2800
Indianapolis, Indiana 46204-2017
(317) 636-4341
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(Copy to)
Approximate date of commencement of the proposed sale of the securities to
the public: As soon as practicable after the effective date of this
Registration Statement.
If the only securities being registered on this Form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box. / /
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. / /
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
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Title of each class of Amount Proposed maximum Proposed maximum Amount of
securities to be offering price aggregate offering registration
to be registered registered per unit price fee
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<S> <C> <C> <C> <C>
Common Stock,
no par value 524,611 shares $3.94 $2,066,967 $575
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The proposed maximum offering price per share and in the aggregate is estimated
solely for purposes of calculating the registration fee in accordance with Rule
457(c) and is based on $3.94, which was the average of the bid and ask price of
the Company's Common Stock as reported by the NASDAQ National Market System on
March 22, 1999.
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The registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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PROSPECTUS
OF
FIDELITY FEDERAL BANCORP
524,611 Shares of Common Stock
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Fidelity Federal Bancorp declared a dividend of nontransferable rights
to shareholders of record as of ___________ ___, 1999 to purchase 524,611 shares
of its common stock at a price of $________ per share. Through this Prospectus,
the Company is offering the shares of common stock that may be purchased upon
the exercise of these rights.
Shareholders of record as of ___________ ___, 1999 and beneficial
owners of shares held in the name of Cede & Co. as nominee for The Depository
Trust Company or in the name of any other depository or nominee at the close of
business on ____________ ___, 1999 will receive these Rights ("Rightsholders").
Shareholders will receive one Basic Right for every 6 shares held on
_____________ ___, 1999 (the "Basic Right"). Each Right will entitle the holder
to subscribe for and purchase from the Company one new share of common stock. If
you exercise your Basic Right in full, you will be entitled to subscribe for and
purchase, subject to certain limitations and subject to allocation, any shares
of common stock not acquired by Rightsholders ("Oversubscription Right"). The
Basic Rights and Oversubscription Rights are collectively referred to as
"Rights" in this prospectus. The Company will not issue any fractional Rights.
THE RIGHTS OFFERING WILL EXPIRE AT _____ P.M., EVANSVILLE, INDIANA TIME
ON ____________, 1999.
The Company is issuing the Rights to raise additional capital without
diluting the ownership interests of existing shareholders who exercise their
Rights, and without paying underwriting commissions and expenses. If you
exercise your Rights, you will be able to purchase shares at a price below
market, without incurring broker's commissions. Generally, shareholders who
exercise their Basic Rights in full will be able to maintain their pro rata
share of the Company's outstanding common stock. Shareholders who do not fully
exercise their Basic Rights should expect to own a smaller, proportional
interest in the Company.
The common stock is quoted on the Nasdaq National Market System and
traded under the symbol "FFED". The Company's principal executive offices are
located at 700 South Green River Road, Suite 2000, Evansville, Indiana 47715,
and its telephone number is (812) 469-2100.
SEE "RISK FACTORS" BEGINNING ON PAGE 1 FOR A DISCUSSION OF CERTAIN
MATERIAL FACTORS THAT YOU SHOULD CONSIDER IN CONNECTION WITH AN INVESTMENT IN
THE COMMON STOCK.
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NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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THE SECURITIES OFFERED IN THIS RIGHTS OFFERING ARE NOT SAVINGS ACCOUNTS
OR DEPOSITS AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION,
ANY OTHER GOVERNMENTAL AGENCY OR OTHERWISE.
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THIS PROSPECTUS, DATED __________ ___, 1999, WAS
FIRST MAILED TO SHAREHOLDERS ON ____________
___, 1999.
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TABLE OF CONTENTS
A Warning About Forward-Looking Statements......................ii
Prospectus Summary.............................................iii
Risk Factors.....................................................1
The Rights Offering.............................................11
Certain Federal Income Tax Considerations.......................19
Effect of Offering on Current Shareholders......................20
Use of Proceeds.................................................21
Market for Common Stock and Relected Shareholder Matters........21
Future Acquisitions and Affiliations............................22
Legal Opinions..................................................23
Experts.........................................................23
Available Information...........................................23
Incorporation of Certain Documents by Reference.................24
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A WARNING ABOUT FORWARD-LOOKING STATEMENTS
This prospectus contains and incorporates by reference certain forward
looking statements within the meaning of the Private Securities Litigation
Reform Act of 1995 with respect to the Company's business, financial condition
and results of operations, including, without limitation, statements under the
captions "Business" and "Management's Discussion and Analysis of Financial
Condition and Results of Operations" in the Company's annual and quarterly
reports. These forward looking statements reflect the Company's plans,
expectations and beliefs and, accordingly, are subject to certain risks and
uncertainties. The Company cannot assure you that any of such forward looking
statements will be realized.
Any statement in this prospectus, other than a statement of historical
fact, may be a forward-looking statement. You can generally identify
forward-looking statements by looking for words such as "may," "will," "expect,"
"intend," "estimate," "anticipate," "believe" or "continue." Variations on those
or similar words, or the negatives of such words, also may indicate
forward-looking statements.
Although the Company believes that the expectations reflected in this
prospectus are reasonable, the Company cannot assure you that its expectations
will be correct. The Company has included a discussion entitled "Risk Factors"
in this prospectus, disclosing important factors that could cause its actual
results to differ materially from its expectations. If in the future you hear or
read any forward-looking statements concerning the Company, you should refer
back to these Risk Factors.
The forward-looking statements in this prospectus are accurate only as
of its date. If the Company's expectations change, or if new events, conditions
or circumstances arise, the Company is not required to, and may not, update or
revise any forward-looking statement in this prospectus.
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PROSPECTUS SUMMARY
This summary highlights some of the information contained in this
Prospectus. Because this is a summary, it does not contain all the information
that may be important to you. To understand the Rights Offering fully and for a
more complete description of the legal terms of the Rights Offering, you should
read carefully this entire document and the documents we have referred you to.
THE COMPANY
The Company, formed in 1993, is a corporation organized under the laws of the
State of Indiana and is a registered savings and loan holding company, with its
principal office in Evansville, Indiana. The Company's savings and loan
subsidiary, United Fidelity Bank, fsb, organized in 1914, is a
federally-chartered stock savings bank located in Evansville, Indiana.
United Fidelity's subsidiaries, Village Housing Corporation, Village Management
Corporation, and Village Capital Corporation, have been involved in various
aspects of financing, owning, building, renting and managing affordable housing
projects. Village Capital Corporation has earned fees by providing real estate
mortgage banking services to unaffiliated borrowers since 1994. Another
subsidiary of United Fidelity, Village Insurance Corporation, is engaged in the
business of selling various insurance products.
A second subsidiary of the Company, Village Securities Corporation, a discount
brokerage service, ceased operations in December 1998. The third subsidiary,
Village Affordable Housing Corporation, was formed in fiscal 1998, but is not
operational. This company was originally formed to hold an interest in a housing
partnership that was initially financed by United Fidelity.
PURPOSE OF THE OFFER
The Company anticipates it will use a portion of the proceeds to refinance
certain letters of credit issued by the Company in connection with the financing
of affordable housing developments. Currently, the amount anticipated to be used
for the refinancing of these letters of credit would be $__________. The Company
anticipates that the remainder of the proceeds from the Rights Offering would be
used to increase the capital of United Fidelity Bank; however, the Company may
also use a portion of the proceeds to refinance other affordable housing
developments or for general corporate purposes. See "Use of Proceeds."
The Company is issuing the Rights to raise additional capital without diluting
the ownership interests of existing shareholders who exercise their Rights, and
without paying underwriting commissions and expenses. If you exercise your
Rights, you will be able to purchase shares at a price below market, without
incurring broker's Commissions. Generally, if you exercise your Basic Rights in
full, you be able to maintain your pro rata share of the Company's outstanding
common stock.
TERMS OF THE OFFER
Securities Offered. The Board of Directors declared a dividend of Rights to
purchase our common stock to holders of record as of the
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close of business on ___________ ____, 1999 ("Rightsholders"). Rightsholders
will be entitled to subscribe for and purchase up to an aggregate of 524,611
shares of the common stock of the Company. Beneficial owners of shares held in
the name of Cede & Co. as nominee for The Depository Trust Company or in the
name of any other depository or nominee as of the close of business on
____________ ___, 1999 will also be considered Rightsholders.
Basic Right. Rightsholders have the nontransferable right to subscribe for one
additional share of common stock (rounded to the next largest whole share) for
each 6 shares owned on _________ ___, 1999. The Company will not issue
fractional rights. Rightsholders are entitled to subscribe for all or any
portion of the shares of common stock underlying their Basic Rights.
The Rights may be exercised at any time during the subscription period, which
commences on __________, 1999 and ends at 5:00 p.m., Evansville, Indiana time,
on _________, 1999.
Subscription Price. The subscription price per common share is $_______.
Oversubscription Right. Rightsholders who exercise in full their Basic Right may
subscribe, subject to availability and allocation (as defined below), at $____
per share, for any shares which are not subscribed for by Rightsholders pursuant
to their Basic Rights ("Oversubscription Right"). The Oversubscription Right is
not transferable.
Proration of Oversubscription Right. If the number of shares available for sale
pursuant to the exercise of Oversubscription Rights is not sufficient to satisfy
in full all Oversubscription Right subscriptions, the Company will allocate the
available shares of common stock among the Rightsholders who exercise their
Oversubscription Rights pro rata based upon the number of shares owned by each
Rightsholders on the close of business on __________ __, 1999.
How to Exercise Rights. You may exercise your Basic Rights and Oversubscription
Rights. Subscription Rights (collectively the "Rights") by properly completing,
signing and delivering to the Company at 700 South Green River Road, Suite 2000,
Evansville, Indiana, 47715 the Shareholder Rights Agreement accompanying this
Prospectus. You also must make payment in full of the aggregate Subscription
Price by a bank certified check, cashier's check, or, if you are a customer with
a deposit relationship of United Fidelity, a personal check drawn upon the
United Fidelity. See "THE OFFERING -- Exercise Of Rights" on page _____.
Nontrasferability of Rights. The Rights are not transferable.
Fractional Shares. The Company will not issue fractional shares of common stock.
Any fractional share to which you would otherwise be entitled will be rounded up
to the next whole share.
Participation by Officers and Directors. Officers, directors, and certain
financial consultants of the Company who own, in the aggregate, ____________
shares, have informed the Company that they intend to purchase up to ______
shares through the exercise of Basic Rights. However, they are not legally bound
to do so and may actually purchase more or less shares than indicated.
Important Dates to Remember.
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Record Date: ____________ __, 1999
Expiration Date: ___________, 1999
Amendment, Extension or Termination of the Rights Offering. The Company reserves
the right, in its sole discretion, to: (a) terminate the Rights Offering prior
to delivery of the common shares for which Rightsholders have subscribed
pursuant to the exercise of Basic Rights or Oversubscription Rights; (b) extend
the Expiration Date to a later date; (c) change the Record Date prior to the
distribution of the Rights to shareholders; or (d) amend or modify the terms of
the Rights Offering.
Risk Factors. An investment in the common shares involves a high degree of
risk. You should exercise your Rights to purchase shares of Company common
stock only if you can afford the loss of your entire investment. See "Risk
Factors" on page 1.
Effect on Current Shareholders. You will have a reduced percentage interest in
the Company's net earnings and net assets and a smaller voting interest in the
Company following the Rights Offering if you do not exercise your Basic Right in
full in connection with this Rights Offering. See "EFFECT OF OFFERING ON CURRENT
SHAREHOLDERS" on page _____.
Capital Stock. The Company has _____ shares of common stock authorized, of which
_____ were issued and outstanding on the close of business on _______ __, 1999
and _____ were issued and outstanding as of _____________, 1999. If all ______
shares offered in the Rights Offering are sold, the Company will have ________
shares of common stock issued and outstanding. As of the date of this
Prospectus, the Company also has granted options and warrants to purchase ____
of its authorized but unissued shares of common stock.
Nasdaq Symbol. The Company's common stock is traded under the symbol "FFED."
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RISK FACTORS
As you decide whether to exercise your Rights, and when you evaluate
the Company's performance and the forward-looking statements in this prospectus,
you should consider carefully the following factors and other information in
this prospectus. The following factors could materially adversely affect the
proposed operations and prospects of the Company and the value of an investment
in the Company. There may be other factors that are not mentioned here or of
which we are not presently aware that could also affect the Company's
operations.
MARKET CONSIDERATIONS
It is possible that you may subscribe for shares at a time when the
subscription price of $_____ is less than the prevailing market price. The
market price of the common stock, however, may decline during the Rights
Offering. Your election to exercise Rights in the Rights Offering is
irrevocable. In addition, following the Rights Offering, you may not be able to
sell shares purchased in the Rights Offering at a price equal to or greater than
$_______. Moreover, until the Company delivers the certificates, you may not be
able to sell the shares of common stock which you purchased in the Rights
Offering.
You will not receive interest on funds delivered to the Company, as
subscription agent, pursuant to the exercise of Rights.
DILUTION
Shareholders may suffer a dilution in their voting rights and in their
percentage interest in any future net earnings of the Company if they do not
exercise their Basic Right in full. Your voting rights and your percentage
interest in any of the Company's net earnings will be diluted if (1) the Company
sells all of the shares in the Rights Offering, and (2) you do not purchase
shares pursuant to your Rights for the same percentage of the shares of the
Company's common stock offered in the Rights Offering as your current ownership
of Company common stock bears to the number of shares of the Company's common
stock currently outstanding. If, however, less than 524,611 shares are sold,
shareholders who subscribe for the same percentage will have a greater
percentage interest in the Company following the Rights Offering. Accordingly,
your
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percentage of ownership following the Rights Offering will necessarily depend
upon the total number of shares sold. The Company does not know the number of
shares which will be sold in the Rights Offering.
DEPENDENCE UPON SUBSIDIARIES
The Company's financial condition and results of operations are
dependent upon the successful operation of its subsidiaries (the
"Subsidiaries"). While the Company does receive some income at the holding
company level, such income is not sufficient to service the Company's
indebtedness. The Company is, therefore, dependent upon dividends, interest
income and other fees and income paid to it by the Subsidiaries. At the present
time, United Fidelity Bank , fsb, the Company's savings bank subsidiary ("United
Fidelity") cannot pay a dividend to the Company without approval of the Office
of Thrift Supervision ("OTS").
The Company had been involved in the real estate development market. In
fiscal 1997 the Company reevaluated its business plan due to increasing
competition and elected to exit operations in the real estate development
market.
SUPERVISORY AGREEMENT WITH OFFICE OF THRIFT SUPERVISION
United Fidelity entered into a Supervisory Agreement with the OTS on
February 3, 1999. The Supervisory Agreement follows the most recent examination
of United Fidelity by the OTS during United Fidelity's fourth fiscal quarter of
1998. Prior to entering into the Supervisory Agreement and in response to the
examination, United Fidelity voluntarily had already begun taking action to
respond to some of the OTS's criticisms in the examination and some of the
requirements of the Supervisory Agreement.
Under the terms of the Supervisory Agreement, United Fidelity must
develop and submit to the OTS for approval a strategic plan which includes, at a
minimum, capital targets; concentration limits for all assets; a plan for
reducing United Fidelity's concentration of high risk assets; review of
infrastructure, staffing and expertise with respect to each area of United
Fidelity's operations; and capital planning.
In addition, United Fidelity must, among other things, take specified
action within specified time frames. These actions include, among others: the
development of a written plan
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for the reduction of classified and criticized assets to specified levels;
maintenance of sufficient reserves in the allowance for loan and lease losses;
restriction of its growth in total assets to an amount not in excess of an
amount equal to the net interest credited on deposit liabilities without prior
OTS approval; limiting growth of its consumer loan portfolio to an amount not in
excess of 25% of its total assets; development of a written plan to divest all
real estate held for development; adoption of policies and procedures designed
to avoid potential conflicts of interest; development of policies and procedures
to increase liquidity; adoption of a policy with respect to its mortgage
brokerage activity, which would address the operation and risk management;
development of a policy to administer the general partnerships held by Village
Housing Corporation; and maintenance of a fully staffed and functioning internal
audit department and independent loan review process.
United Fidelity is also prohibited from taking certain actions,
including, among others: investing in, purchasing, or committing to make or
purchase any additional commercial loans or commercial real estate loans;
requesting permission from the OTS to engage in additional commercial loan
activity until United Fidelity has hired an experienced loan staff and credit
analyst; refinancing or extending classified or criticized commercial loans
without the prior approval of the OTS; engaging in "sub prime" consumer lending
activities; making capital distributions, including dividends to the Company;
making any additional equity investments; developing any real estate without
specific approval of the OTS; acquiring any additional real estate for future
development; selling any asset to an affiliated party without prior written
approval of the OTS; engaging in any new activities not included in the
to-be-developed strategic plan; and, refinancing or extending any non-classified
or criticized commercial loan if additional funds are extended.
United Fidelity is also required to obtain OTS approval prior to adding
or replacing any director or senior executive officer. United Fidelity is also
prohibited, without prior OTS approval, from entering into any contract with any
executive officer or director which would require a "golden parachute" payment
and from increasing the executive benefit package in an amount in excess of the
annual cost of living. United Fidelity is also required to develop a plan to
reduce employee turnover, build an experienced staff, and provide for management
succession.
Management of United Fidelity has begun taking the actions requested by
the OTS. In this respect, United Fidelity has already ceased making new
commercial loans; increased its
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allowance for loan and lease losses; restricted its growth; begun the process of
divesting its real estate held for development; engaged an independent vendor to
provide loan review services; ceased making additional equity investments; and
ceased developing real estate.
If United Fidelity is unable to comply with the terms and conditions of
the Supervisory Agreement, the OTS could take additional regulatory action,
including the issuance of a cease and desist order requiring further corrective
action. Such corrective action could include, among other things, increasing the
allowance for loan and lease losses, obtaining additional or new management, and
further restrictions on dividends. Because the Company is dependent upon United
Fidelity for its income, this could negatively impact the price of the Company's
stock and prohibit the payment of future dividends.
NO DIVIDENDS
The Company has not paid any cash dividends on its common stock since
July 6, 1998. Under the terms of the Supervisory Agreement, United Fidelity
cannot pay a dividend to the Company without approval of the OTS. For the
foreseeable future, the Company anticipates that any earnings generated by
United Fidelity will be retained by United Fidelity or, subject to OTS approval,
paid to the Company to service its existing debt, and that any earnings
generated in the Company also will be used to service its existing debt. As
such, the Company does not anticipate that cash dividends will be paid to
holders of common stock in the foreseeable future.
COMPANY DEBT SERVICE
Because United Fidelity is restricted from paying dividends without
prior approval of the OTS, the Company may need additional funds for debt
service. As of _______________, 1999 the Company had $______ in available cash.
Debt service for calendar year 1999, net of subordinated debt interest payments
due from United Fidelity, is expected to be approximately $450,000. The OTS has
indicated that it will permit dividends to the Company if necessary to support
debt service, as long as the Company does not pay dividends to its shareholders,
and it stays in compliance with provisions of the Supervisory Agreement.
However, the OTS could, if it considers necessary for the safety and soundness
of United Fidelity, prohibit the payment of dividends by United Fidelity in the
future.
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AFFORDABLE HOUSING ACTIVITIES
In 1992, the Board of Directors developed and began implementing a new
business plan for United Fidelity to improve the financial performance of the
organization. The key elements of this business plan included: (i) forming a
holding company (the Company) to provide financial flexibility and to develop
and engage in nonbanking businesses; (ii) forming an affordable housing group to
engage in real estate development, management and financing of affordable
housing projects; and (iii) growing assets through the origination and
acquisition of loans. After the Company implemented the business plan, revenue
generated from affordable housing activities increased dramatically and
significant asset growth was achieved which resulted in higher revenues. During
fiscal 1996 the Company encountered increasing competition in the affordable
housing group activities. As a result the Company reevaluated its business plan
in fiscal 1997 and closed its Indianapolis, Indiana real estate development
office. This process was completed in the fourth quarter of fiscal 1997.
During fiscal 1998 the OTS conducted an examination of United Fidelity
and the Company. During the examination the OTS used a different methodology to
compute the allowance for loan losses and to establish reserves for letters of
credit in connection with the affordable housing projects than the methodology
previously used by the Company to compute these estimates. Management agreed to
use the OTS's methodology and, as a result, made an additional provision for
loan losses of $3.6 million and a letter of credit valuation allowance of $6.8
million. The Company is pursuing a plan to refinance its affordable housing
projects, although it may be unable to do so. If the Company is able to
refinance these projects, it anticipates that it will need to make an additional
investment in some of the project(s) in order to obtain the refinancing. The
Company is unsure of the amount of these potential additional investments, and
is unsure if this amount will exceed amounts previously reserved. The Company
may not recover these additional amounts. The availability of such refinancing
depends upon numerous factors, including among other things, interest rates,
third-party appraisals and the occupancy levels in the affordable housing
projects.
If the Company is unable to refinance the affordable housing projects,
the Company and United Fidelity may add additional reserves to the allowance for
loan and lease losses. This would have a negative impact on the earnings of both
the Company and United Fidelity, which in turn could negatively impact the price
of the common stock.
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If an affordable housing project is not operating in compliance with
the requirements of the Internal Revenue Code, which provide certain tax credits
for affordable housing projects, all or a portion of the tax credits may be
recaptured or the tax-exempt status of the bonds issued in connection with the
projects may be forfeited. In this event, a subsidiary of United Fidelity, as
the general partner, has agreed in its current projects to reimburse limited
partners if tax credits are lost. Because another subsidiary of United Fidelity
provides the management services to the projects, and is familiar with the
specific guidelines pursuant to these sections of the Code, management does not
anticipate that this event will occur.
LOSS OF KEY PERSONNEL
In January 1999, the head of United Fidelity's consumer loan division
and key members of the consumer loan division staff left United Fidelity to
accept employment with a competitor of United Fidelity. Through these
individuals, the Company had participated in an arrangement in which automobile
loans were originated on behalf of another organization. Agent fee income, which
represents the Company's earned fee from these transactions, increased in 1998
to $650,000, as compared to $452,000 in 1997 and $47,000 in 1996. Because this
consumer loan business of United Fidelity has historically been dependent upon
the skills and relationships of these individuals, United Fidelity has since
been unable to continue to compete in this market segment. As such, United
Fidelity's monthly consumer lending revenue has been eliminated. United Fidelity
is actively engaged in searching for qualified individuals to staff its consumer
loan division. United Fidelity has received OTS approval to hire certain
individuals and has extended offers of employment to these individuals. The
Company cannot predict when or if these such individuals will be hired or what
volume of business these individuals will generate.
The Company depends, to a considerable degree, on the continued
services of its executive officers. The loss of the services of any of the
executive officers could have a material adverse effect on the Company. In
addition, the success of the Company will depend, among other factors, upon
successful recruitment and retention of additional highly skilled and
experienced management.
REQUIREMENTS FOR CONTINUED LISTING OF SECURITIES ON NASDAQ
The shares of the Company's common stock are traded on the Nasdaq
National Market System, which has adopted rules that establish criteria for
initial and continued listing of
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securities. Under the Nasdaq rules for continued listing, a company must
maintain at least $4,000,000 of net tangible assets; a market capitalization of
at least $50,000,000; or at least $50,000,000 of total assets and total revenue
of at least $50,000,000. Future losses from operations could cause the Company's
net tangible assets or market capitalization to decline below the Nasdaq listing
criteria. If the common stock is delisted by Nasdaq, trading in the common stock
could thereafter be conducted on the over-the-counter market on the Nasdaq
SmallCap Market or on an electronic bulletin board established for securities
that do not meet the Nasdaq listing requirements. If the common stock were
delisted from the Nasdaq National Market and were not listed on the Nasdaq
SmallCap Market, they would be subject to the so-called penny stock rules that
impose restrictive sales practice requirements on broker-dealers who sell such
securities. Consequently, delisting, if it occurred, could materially affect the
ability of shareholders to sell their Common Shares in the secondary market.
BROAD DISCRETION ON USE OF PROCEEDS
Management of the Company will have broad discretion in determining the
use to which the net proceeds of the Rights Offering will be put. Management
anticipates that a substantial portion of the proceeds will be used to assist in
the refinancing of the affordable housing projects.
CONTROL BY PRINCIPAL SHAREHOLDERS
Bruce A. Cordingley, Gerald K. Pedigo, Phillip K. Stoffregen, Sara A.
Lentz, Denise K. Cordingley and Pedcor Investments, A Limited Liability Company
(collectively, the "Cordingley Group"), currently own approximately ___% of the
Company's common stock, excluding options and warrants for the purchase of
common stock. Mr. Cordingley has received OTS approval to increase the holdings
of the Cordingley Group up to 35% of the Company's common stock on before
January 7, 2000. M. Brian Davis and Maybelle R. Davis (collectively, the "Davis
Group") currently own approximately ____% of the Company's common stock,
excluding options and warrants for the purchase of common stock. Barry A.
Schnakenburg currently beneficially owns approximately ____% of the Company's
common stock, excluding options and warrants for the purchase of common stock.
As a result of these holdings, these shareholders, if they act together, would
be able to effectively control virtually all matters requiring shareholder
approval.
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Messrs. Cordingley, Davis, and Schnakenburg are directors of the
Company and United Fidelity. In addition, Mr. Davis became CEO of the Company
in November of 1996 and President and CEO of United Fidelity in January 1998.
The Company is not aware of any other shareholder who has filed an
application seeking approval of the OTS to acquire 10% or more of the common
stock.
RISK OF OPERATIONS
The Company is subject to the risks generally associated with the
operation of banking and financial services businesses, including uncertainty of
revenue to meet fixed obligations, changes in local market conditions, changes
in the habits of the public, increases in tax rates and other operating expenses
and changes in governmental rules and fiscal policies, which may result in
uninsured losses, and other factors which may be beyond the control of the
Company.
REGULATION
The Company's businesses are subject to various state and federal laws
and regulations which govern the various aspects of its businesses. An adverse
change in these laws or regulations could have a material adverse effect on the
Company's profitability.
GOVERNMENTAL MONETARY POLICIES
In addition to the effect of general economic conditions, the earnings
of the Company are affected by the fiscal and monetary policies of the Federal
Reserve System, which regulates the national money supply. The techniques used
by the Federal Reserve System to regulate the money supply include setting the
reserve requirements of banks and establishing the discount rate on bank
borrowings. The Federal Reserve System also conducts open market operations in
United States Government securities. The policies of the Federal Reserve System
have a direct effect on the amount of bank loans and deposits, and the interest
rates charged and paid thereon. While the Company cannot predict the impact of
the current economic climate and the policies of the Federal Reserve System and
other regulatory authorities upon the future business and earnings of the
Company, such factors can materially affect the revenues and income of banking
institutions.
8
<PAGE>
COMPETITION
The Company faces intense and increasing competition both in making
loans and in attracting deposits and in engaging in its other lines of business.
The Company's market area has a large number of financial institutions, some of
which have greater financial resources, name recognition and market presence
than the Company, and all of which are competitors of the Company to varying
degrees. Particularly intense competition exists for deposits and the
origination of all of the loan products offered by the Company. The Company's
competition for loans comes principally from commercial banks, savings and loan
associations, savings banks, mortgage banking companies, finance companies and
credit unions. The Company's most direct competition for deposits historically
has come from commercial banks, savings and loan associations, savings banks and
credit unions. In addition, the Company faces increasing competition for
deposits from non-bank institutions such as brokerage firms, insurance
companies, money market mutual funds, other mutual funds (such as corporate and
government securities funds) and annuities. Trends toward the consolidation of
the banking industry and the lifting of interstate banking and branching
restrictions may make it more difficult for institutions such as the Company to
compete effectively with large national and super-regional banking institutions.
EFFECT OF INTEREST RATES
The Company's profitability is substantially dependent on its net
interest income, which is the difference between the interest income received
from its interest-earning assets and the interest expense incurred in connection
with its interest-bearing liabilities. The mismatch between maturities and
interest rate sensitivities of balance sheet items (i.e., interest-earning
assets and interest-bearing liabilities) results in interest rate risk, which
risk will change as the level of interest rates changes. Changes in interest
rates also can affect the amount of loans originated by a banking institution,
as well as the value of its loans and other interest-earning assets and the
resultant ability to realize gains on the sale of such assets. Changes in
interest rates also can result in the flow of funds away from banking
institutions into investments in U.S. Government and corporate securities, and
other investment vehicles which, because of the absence of federal insurance
premiums and reserve requirements among other reasons, generally can pay higher
rates of return than banking institutions.
9
<PAGE>
RISKS RELATED TO THE YEAR 2000 PROBLEM
Many existing computer programs use only two digits to identify a year
in the date field. These programs were designed and developed without
considering the impact of the upcoming change in the century. If not corrected,
many computer applications could fail or create erroneous results by or at the
Year 2000. This is commonly called the "Year 2000 Problem". The Year 2000
Problem affects virtually all companies to varying degrees. Like other financial
institutions and business organizations and individuals, the Company could be
adversely affected if the computer systems used by the Company and Company's
service providers fail to properly process and calculate date-related
information and data from and after January 1, 2000. The Company is currently on
schedule in addressing the Year 2000 Problem with respect to its computer
systems and is seeking assurances from the Company's major service providers
that they are taking comparable steps. These steps may not be sufficient to
avoid any adverse impact on the Company from the Year 2000 Problem.
10
<PAGE>
THE RIGHTS OFFERING
GENERAL
The Company is offering to its shareholders by means of this Rights
Offering up to 524,611 shares of its common stock at a price of $____ per share
("Subscription Price").
Shareholders of the Company of record on _____________ ___, 1999
("Record Date") have (i) the nontransferable right to purchase, at $____ per
share, one additional share of common stock (rounded to the next largest whole
share) for every 6 shares held on the Record Date ("Basic Right") and (ii) if
their Basic Right has been exercised in full, and subject to availability and
proration (as defined below), the nontransferable right to purchase, at $____
per share, any shares not subscribed for by other Rightsholders pursuant to
their Basic Rights ("Oversubscription Right").
No shareholder is obligated to exercise rights for any or all shares
pursuant to the Rights Offering. Shareholders who do not exercise in full their
rights under the Rights Offering will, however, have a reduced percentage
interest in the Company's net earnings and net assets and a smaller voting
interest in the Company following the Rights Offering. See "EFFECT OF OFFERING
ON CURRENT SHAREHOLDERS."
The Company is not making any assurance that the total number of shares
subject to the Offering will be sold.
ELIGIBLE SHAREHOLDERS
Only those persons who are shareholders of the Company of record on the
Record Date will be entitled to exercise any Rights ("Rightsholders"). Directors
and officers are eligible to participate in the Rights Offering. Beneficial
owners of shares held in the name of Cede & Co. as nominee for The Depository
Trust Company or in the name of any other depository or nominee at the close of
business on _________ __, 1999 will also be considered Rightsholders and they
will receive Rights. The Company has determined that Rightsholders owned
approximately ____ shares of common stock on the Record Date.
11
<PAGE>
BASIC RIGHTS
Subject to the terms and conditions of the Rights Offering and the
Shareholder Rights Agreement, Rightsholders have been granted the
nontransferable right to purchase, pursuant to the Basic Right, one share of
common stock for every 6 shares of Common stock owned on the Record Date.
Rightsholders may exercise their Basic Rights in whole or in part. Rightsholders
must, however, fully exercise their Basic Rights if they wish to exercise their
Oversubscription Rights. See "Oversubscription Right."
OVERSUBSCRIPTION RIGHTS
Rightsholders who exercise in full their Basic Rights have the right to
subscribe to purchase at the Subscription Price, subject to availability and
proration, an additional number of shares. The shares which may be purchased
pursuant to the Oversubscription Rights include those shares not purchased by
Rightsholders who elected to not exercise their Basic Right or did not exercise
their Basic Rights in full. The Oversubscription Right is nontransferable.
Shareholders of record as of ___________ ___, 1999 such as
broker-dealers, banks, and other professional intermediaries who hold shares on
behalf of clients, may participate in the Oversubscription Rights for the client
if the client fully exercises all Basic Rights attributable to him.
Rightsholders should indicate, on the Shareholders Rights Agreement
which they submit with respect to the exercise of the Basic Right issued to
them, how many shares they are willing to acquire pursuant to the
Oversubscription Right.
PRORATION OF OVERSUBSCRIPTION RIGHTS
If the shares available for purchase pursuant to the exercise of
Oversubscription Rights are not sufficient to satisfy all exercised
Oversubscription Rights, the Company will allocate the available shares, pro
rata (to the nearest whole share), among those who exercise Oversubscription
Rights according to the number of shares held on the Record Date relative to
other Rightsholders exercising Oversubscription Rights. If the amount so
allocated exceeds the amount subscribed for pursuant to the exercise of a
Rightsholders' Oversubscription Right, the excess will be reallocated (one or
more times as necessary) among those Rightsholders whose
12
<PAGE>
subscriptions are not fully satisfied on the same principle, until all available
shares have been allocated or all exercises of Oversubscription Rights
satisfied. Sufficient shares of common stock may not be available to satisfy in
whole any Rightsholders' request to subscribe for additional shares in excess of
the shares underlying such Rightsholders' Basic Right.
FRACTIONAL SHARES
The Company will not issue fractional shares of common stock pursuant
to the exercise of the Rights. Any fractional share to which Rightsholders would
otherwise be entitled will be rounded up to the next whole share.
EXPIRATION OF RIGHTS
All Rights will expire at 5:00 o'clock p.m., Evansville Time, on
_______, 1999 ("Expiration Date"), unless the Rights Offering is extended or
terminated as described herein. See "Interpretations, Amendments and Waivers".
Unless the Company receives notification of the exercise of Rights on the
properly completed Shareholder Rights Agreement on or before the Expiration
Date, the Rights will expire. In no event will the Rights Offering be extended
beyond _______, 1999.
NO MINIMUM NUMBER OF SHARES
The Rights Offering is not being underwritten and is not conditioned
upon the sale of any minimum number of shares.
EXERCISE OF RIGHTS
Rightsholders who wish to exercise their Rights must properly complete
and return to the Company the Shareholder Rights Agreement which accompanies
this Prospectus in the manner indicated below on or before the Expiration Date.
Rightsholders who wish to exercise their Oversubscription Rights may do so by
completing the appropriate section of the Shareholder Rights Agreement.
The Rightsholders must deliver the Shareholders Rights Agreement, along
with payment for the shares purchased to:
13
<PAGE>
Fidelity Federal Bancorp
Attention: Donald R. Neel, CFO
700 South Green River Road, Suite 2000
Evansville, Indiana 47715
Each Rightsholder is responsible for selecting the method of delivery
to the Company and bears the risk of the delivery method selected, including the
risk of delays in delivery or in delivery not being made for any reason. The
Company suggests that Express Mail or similar overnight carrier be used to
ensure timely delivery. If you deliver of the Shareholder Rights Agreement and
payment by regular mail, the Company recommends the use of insured, registered
or certified mail, return receipt requested. Telephone inquiries should be
directed to Debbie Fritz, Investor Relations, at (812) 469-2100, extension 16.
Payment of the aggregate Subscription Price must be made in United
States dollars and may be made by bank certified check, cashier's check or, in
the case of Rightsholders who maintain an account with United Fidelity, a
personal check drawn on their account, payable to the order of the Company. ONCE
A RIGHTSHOLDER HAS EXERCISED A RIGHT, THE EXERCISE IS IRREVOCABLE.
Each Rightsholder who desires to exercise his Basic Right or
Oversubscription Right will be required to make two representations and
warranties to the Company by virtue of signing a Shareholder Rights Agreement.
First, a shareholder must represent and warrant to the Company that he has
received a copy of this Prospectus. The Company's reason for requiring this
representation and warranty from Rightsholders is to ensure that such
Rightsholders have made their decision to exercise their Rights based upon the
information contained in this Prospectus. The Company also believes that a
Rightsholder making this representation and warranty will be encouraged to read
the Prospectus, in the event that he has not already done so, prior to executing
a Shareholder Rights Agreement. The Company may assert this representation and
warranty against a shareholder who claims that he was unaware of certain
information relating to the Company and that, had he been aware of such
information, he would not have exercised his Basic Right or Oversubscription
Right. However, this representation and warranty will not constitute a waiver of
any rights that the shareholder may have under the Securities Act of 1933
("Securities Act") or the Securities Exchange Act of 1934 ("Exchange Act").
14
<PAGE>
The second representation and warranty contained in each Shareholder
Rights Agreement is that the Rightsholder was a shareholder of record or a
beneficial shareholder of the Company on the Record Date. The Company's reason
for requiring this representation and warranty from Rightsholders exercising
their Basic Right or Oversubscription Right is to ensure that only eligible
shareholders of the Company as of the Record Date participate in the Rights
Offering. The Company may rely upon this representation and warranty when
determining which shareholders are of record on the Record Date and are eligible
to exercise Basic Rights and Oversubscription Rights.
If any representation or warranty is inaccurate when the Shareholder
Rights Agreement is signed or when the exercise of Rights contained therein is
accepted by the Company, then the shareholder agrees to indemnify and hold
harmless the Company, and its directors, officers, employees and agents, from
and against all claims, damages and liabilities resulting from any
misrepresentation or breach of warranty.
ACCEPTANCE OF SHAREHOLDER RIGHTS AGREEMENTS
The Company intends, subject to the terms of the Rights Offering, to
accept all properly completed Shareholder Rights Agreements from eligible
shareholders which are timely received for Basic Rights and Oversubscription
Rights. In the event there is an insufficient number of shares in the Rights
Offering to fill all exercised Rights, the Company intends to accept the
exercise of Basic Rights first and then to accept the exercise of
Oversubscription Rights on a pro rata basis (to the nearest whole share) and as
described above. See "Oversubscription Rights" and "Proration of
Oversubscription Rights." In the event that allotment is required in the
exercise of the Rights, the Company will promptly refund, without interest,
payments in excess of the amount required to satisfy such subscriptions as soon
as practicable following the termination of the Rights Offering. The Company
reserves the right to reject in whole or in part any Shareholder Rights
Agreement in its sole discretion.
If a Rightsholder does not indicate the number of Rights being
exercised, or does not deliver full payment of the Subscription Price for the
number of shares indicated as being subscribed through the exercise of Rights,
then such Rightsholder will be deemed to have exercised Rights to purchase the
maximum number of common shares determined by dividing the total Subscription
Price paid by $______, but not in excess of the number of common shares such
holder may purchase through the exercise of his Basic Rights.
15
<PAGE>
If the Rightsholder does not indicate the number of Rights being
exercised or the number of shares such holder wishes to purchase through the
Oversubscription Right, but submits payment for more shares than may be
purchased through the exercise of such holder's Basic Rights, the excess payment
received from such Rightsholder will be deemed to be a subscription payment for
a number of additional shares in the Oversubscription Right determined by
dividing the amount of such excess payment by $________.
The Company will actually sell the shares subscribed for pursuant to
the Shareholder Rights Agreement at 5:00 o'clock p.m. on the Expiration Date.
Certificates for shares of common stock purchased by the exercise of Rights will
be mailed or delivered as soon as practicable following the Expiration Date.
PLAN OF DISTRIBUTION
The Company is making the Rights Offering directly to its eligible
shareholders of record on the Record Date. The Company has not employed any
brokers, dealers or underwriters in connection with the Rights Offering, and it
will not pay any underwriting commissions, fees or discounts in connection with
the Rights Offering. Certain directors or officers of the Company may assist in
the Rights Offering, but such persons will not receive any commissions or
compensation other than their normal directors' fees or employment compensation.
Those directors or officers of the Company who may assist in the Rights
Offering will not register with the Securities and Exchange Commission as
brokers in reliance on certain safe harbor provisions contained in Rule 3a4-1
under the Exchange Act. The Company believes that these directors and officers
may be entitled to rely upon such safe harbor provisions because no director or
officer (1) to the Company's knowledge, is subject to a statutory
disqualification under the Exchange Act, (2) will receive commissions or
transaction-based remuneration in connection with the sale of the Company's
common stock in the Rights Offering and (3) to the Company's knowledge, is an
associated person of a broker or dealer.
In addition, each of such directors and officers (1) primarily performs
substantial duties for or on behalf of the Company other than in connection with
transactions in securities, (2) to the Company's knowledge, has not been a
broker or dealer, or an associated person of a broker or dealer, within the
preceding 12 months, and (3) to the Company's knowledge, has not
16
<PAGE>
participated in the selling or offering of securities for any issuer more than
once within the preceding 12 months other than in reliance upon Rule 3a4-1.
Although the Company believes that its directors and officers may be
entitled to rely upon these safe harbor provisions in connection with the Rights
Offering, such persons may rely on any other provisions of Rule 3a4-1.
INTERPRETATIONS, AMENDMENTS AND WAIVERS
The Company reserves the right, in its sole discretion, to terminate
the Rights Offering prior to delivery of the common shares for which
Rightsholders have subscribed pursuant to the exercise of Basic Rights or
Oversubscription Rights. The Company also reserves the right to extend the
Expiration Date (but in no event beyond _______________, 1999) and to amend the
terms and conditions of the Rights Offering, whether the amended terms are less
or more favorable to the Rightsholders. All questions as to the validity, form,
eligibility (including time of receipt and record ownership) and acceptance of
any exercise of Rights shall be determined by the Company, in its sole
discretion, and its determination shall be final and binding. The Company
reserves the right to reject any exercise if such exercise is not in accordance
with the terms of the Rights Offering or not in proper form or if the acceptance
thereof or the issuance of shares of common stock pursuant thereto could be
deemed unlawful.
The Company is under no duty or obligation to give any notification or
to permit the cure of any defect or irregularity in connection with the
submission of any Shareholders Rights Agreement, the exercise or attempt to
exercise any Right or Oversubscription Right, or the payment of the Subscription
Price. Subscriptions through the exercise of Rights will not be deemed to have
been received or accepted by the Company until all irregularities or defects
have been waived by the Company or cured to the satisfaction of, and within the
time allotted by, the Company in its sole discretion.
DETERMINATION OF SUBSCRIPTION PRICE
The Subscription Price was determined by the Company by averaging the
average of the last reported bid and ask prices of the common stock of the
Company for the five trading days prior to the commencement of the Rights
Offering, after deducting an amount equal to approximately 10% of such price.
The Subscription Price reflects the Company's objective to
17
<PAGE>
achieve the maximum net proceeds obtainable from the Rights Offering while
providing the shareholders with an opportunity to make an additional investment
in the Company at a price less than the current market price at the time of the
commencement of the Rights Offering. In determining the Subscription Price, the
Company considered such factors as the market price of the Company's common
stock, the business prospects of the Company and the general condition of the
securities markets at the time of the Rights Offering.
MARKET CONSIDERATIONS
It is possible that a shareholder may subscribe for shares at a time
when the Subscription Price is less than the prevailing market price. The market
price of the common stock, however, may decline during the subscription period
after such shareholder exercises his or her Rights. THE ELECTION OF A
SHAREHOLDER TO EXERCISE RIGHTS IN THE RIGHTS OFFERING IS IRREVOCABLE. In
addition, following the Rights Offering, a subscribing Rightsholder may not be
able to sell shares purchased in the Rights Offering at a price equal to or
greater than the Subscription Price. Moreover, until certificates are delivered,
subscribing Rightsholders may not be able to sell the shares of common stock
which they have purchased in the Rights Offering. Certificates representing
shares of common stock issued in the Rights Offering will be mailed to
subscribing Rightsholders at the addresses appearing on their Shareholder Rights
Agreement as soon as practicable following the Expiration Date.
THE BOARD OF DIRECTORS OF THE COMPANY MAKES NO RECOMMENDATION TO THE
RIGHTSHOLDERS REGARDING WHETHER THEY SHOULD EXERCISE THEIR RIGHTS.
SHARES EXPECTED TO BE PURCHASED BY DIRECTORS AND OFFICERS
The following table sets forth information as of _______________, 1999
to as to Rights intended be exercised by each Director of the Company (including
shares to be purchased by their associates) and all Directors and executive
officers as a group. Even though such individuals have indicated an intent to
purchase such shares, they are not legally bound to do so and may purchase more
or less shares than indicated. Any shares so acquired by officers, directors and
other persons who are "affiliates" of the Company, as that term is defined under
Rule 144 under the Securities Act or pursuant to an effective registration
statement under the Securities Act. In general, under Rule 144, as currently in
effect, an "affiliate" of the Company is entitled to sell, within any
three-month period, a number of shares that does not exceed the
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<PAGE>
greater of 1% of the then outstanding shares of common stock or the average
weekly reported trading volume of the shares of common stock during the four
calendar weeks preceding such sale. Sales under Rule 144 are also subject to
certain restrictions on the manner of sale, to notice requirements and to the
availability of current public information about the Company. For purposes of
the following table, it has been assumed that _______ shares of common stock
will be sold in the Rights Offering and that sufficient shares will be available
to satisfy all subscriptions pursuant to the Rights.
<TABLE>
<CAPTION>
Number (and %) Number (and %)
of Shares Number (and %) of Shares
Beneficially of Shares Proposed Following Rights
Names and Position Owned (1) to be Subscribed Offering (1)
- ------------------------------------ -------------- ------------------ -------------------
<S> <C>
Curt J. Angermeier
William R. Baugh
Bruce A. Cordingley
John R. Cunningham
M. Brian Davis
Robert F. Doerter
Donald R. Neel
Barry A. Schnakenburg
All Executive Officers and
Directors as a Group (8 persons)
- ------------------------------------
</TABLE>
(1) The information contained in this column is based upon information
furnished to the Company by the individuals named above as of ______,
1999. The nature of beneficial ownership for shares shown in this
column represent sole or shared voting and investment unless otherwise
noted.
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The following summarizes the material federal income tax considerations
of the Rights Offering. This summary is based on current law, which is subject
to change at any time, possibly with retroactive effect. This summary is not a
complete discussion of all federal income tax consequences of the Rights
Offering, and, in particular, may not address federal income tax consequences
applicable to Rightsholders subject to special treatment under federal income
tax law. In addition, this summary does not address the tax consequences of the
Rights Offering
19
<PAGE>
under applicable state, local or foreign tax laws. This discussion assumes that
your shares of common stock and the shares issued to you during the Rights
Offering constitute capital assets. Receipt and exercise of the Rights
distributed pursuant to the Rights Offering is intended to be nontaxable to
Company shareholders, and the following summary assumes they will qualify for
such nontaxable treatment.
THIS DISCUSSION IS INCLUDED FOR YOUR GENERAL INFORMATION ONLY. YOU
SHOULD CONSULT YOUR TAX ADVISOR TO DETERMINE THE TAX CONSEQUENCES TO YOU OF THE
RIGHTS OFFERING IN LIGHT OF YOUR PARTICULAR CIRCUMSTANCES, INCLUDING ANY STATE,
LOCAL AND FOREIGN TAX CONSEQUENCES.
RECEIPT OF A RIGHT. You will not recognize any gain or other income
upon receipt of a Right.
EXPIRATION OF RIGHTS. You will not recognize any loss upon the
expiration of a Right.
EXERCISE OF RIGHTS. You generally will not recognize a gain or loss on
the exercise of a Right. The tax basis of any share of common stock that you
purchase through the Rights Offering will be equal to the price paid for the
share. The holding period of the shares of common stock purchased through the
Rights Offering will begin on the date that you exercise your rights.
EFFECT OF OFFERING ON CURRENT SHAREHOLDERS
ANY RIGHTSHOLDER WHO DOES NOT EXERCISE HIS RIGHTS UNDER THE RIGHTS
OFFERING MAY HAVE A REDUCED PERCENTAGE EQUITY AND VOTING INTEREST IN THE COMPANY
FOLLOWING THE RIGHTS OFFERING.
Rightsholders who do not subscribe pursuant to their Rights for the
same percentage of the 524,611 shares of common stock offered hereby as their
current ownership bears to the ______ shares of common stock currently
outstanding will suffer a dilution in their voting rights and in their
percentage interest in any net earnings of the Company if all of the 524,611
shares are sold in the Rights Offering. If, however, less than 524,611 shares
are sold, shareholders who subscribe for the same percentage will have a greater
percentage interest in the Company following the Rights Offering. Accordingly, a
shareholder's percentage of ownership following
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<PAGE>
the Rights Offering will necessarily depend upon the total number of shares
sold. The Company does not know the number of shares which will be sold in the
Rights Offering.
USE OF PROCEEDS
The net proceeds to the Company from the sale of the common stock
offered hereby are estimated to be approximately $______, assuming all 524,611
shares are sold in the Rights Offering. The Company anticipates it will use a
portion of the proceeds to refinance certain letters of credit issued by the
Company in connection with the financing of affordable housing developments.
Currently, the amount anticipated to be used for the refinancing of these
letters of credit would be $__________. The Company anticipates that the
remainder of the proceeds from the Rights Offering would be used to increase the
capital of United Fidelity Bank; however, the Company may also use a portion of
the proceeds to refinance other affordable housing developments or for general
corporate purposes.
The foregoing represents the current intention of the Company with
respect to the use of the proceeds of the Rights Offering. Management of the
Company reserves the right, however, to use the proceeds in such manner as it
deems appropriate.
MARKET FOR COMMON STOCK AND RELATED SHAREHOLDER MATTERS
The Company's common stock is traded on the Nasdaq National Market
System under the symbol "FFED." The following table sets forth, for the periods
indicated, the high and low bid prices per share as reported by Nasdaq. The bid
prices represent prices between dealers, do not include retail mark-up,
mark-down, or commissions and may not represent actual transactions.
<TABLE>
<CAPTION>
Quarter Ending September 30, 1998 Quarter Ending December 31, 1998
Common Stock Bid Prices Common Stock Bid Prices
- ------------------------------------------------- -------------------------------------------------
High Low High Low
- ----------------- ---------------- ---------------- -----------------
<S> <C> <C> <C>
6.50 3.50 5.00 3.25
</TABLE>
21
<PAGE>
<TABLE>
<CAPTION>
Fiscal Year Ended Common Stock Bid Fiscal Year Ended Common Stock Bid
June 30,1998 Prices June 30, 1997 Prices
- ---------------------- --------------------------------- ---------------------- ---------------------------------
High Low High Low
-------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
First Quarter $ 9 $ 8-1/4 First Quarter $ 11-1/4 $ 10-1/4
Second Quarter 10-3/8 8-3/4 Second Quarter 10-1/2 8-3/4
Third Quarter 10-3/8 8-3/4 Third Quarter 9-3/8 8-1/4
Fourth Quarter 9-3/8 6-1/16 Fourth Quarter 8-3/4 7-1/2
</TABLE>
The Company declared dividends of $0.35 per share during fiscal 1998
compared to $0.60 per share for fiscal 1997 and $0.79 per share in fiscal 1996.
The Company has not declared or paid any dividends in 1999 and does not expect
to do so. The Company's principal source of income and funds is dividends from
United Fidelity. Under the terms of the Supervisory Agreement with the OTS,
United Fidelity cannot pay any dividends without OTS approval. United Fidelity
is uncertain when it will pay dividends in the future and the amount of such
dividends, if any. The Company anticipates not paying any dividends in the
immediate future even if it should receive a dividend from United Fidelity.
The approximate number of holders of outstanding Common stock, based
upon the number of record holders, as of _______, 1999 is ____. This does not
reflect the number of persons whose stock is in nominee or "street" name
accounts through brokers.
As of the date of this Prospectus, the Company has issued options which
are currently unexercised pursuant to various stock options plans to purchase
______ shares of its common stock. In addition, a total of _____ shares remained
subject to issuance upon the exercise of outstanding warrants.
FUTURE ACQUISITIONS AND AFFILIATIONS
The Company has been approached from time to time by organizations
wishing to discuss a possible merger or affiliation. Discussions of this nature
may also take place in the future. The Company is not currently in any
negotiations and is not actively seeking to engage in negotiations of this type
at this time. However, it is possible that the Board of Directors may determine
that such a particular strategic affiliation would be in the best interest of
the Company.
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<PAGE>
LEGAL OPINIONS
Certain legal matters in connection with the Rights Offering will be
passed upon for the Company by the law firm of Krieg DeVault Alexander &
Capehart, LLP, One Indiana Square, Suite 2800, Indianapolis, Indiana 46204.
EXPERTS
The consolidated financial statements of the Company and subsidiaries
incorporated into this Prospectus have been audited by Olive LLP, independent
auditors, to the extent and for the year indicated in their report thereon, and
have been so incorporated into this Prospectus in reliance upon the report of
Olive LLP and upon the authority of such firm as experts in auditing and
accounting.
AVAILABLE INFORMATION
The Company is subject to the reporting requirements of the Securities
Exchange Act of 1934, as amended ("Exchange Act"), and in accordance therewith
files reports, proxy statements and other information with the Securities and
Exchange Commission ("SEC"). Such reports, proxy statements and other
information may be inspected and copied at prescribed rates at the public
reference facilities maintained by the SEC at 450 Fifth Street, N.W., Judiciary
Plaza, Washington, D.C. 20549. Copies of such material may also be obtained at
prescribed rates from the Public Reference Section of the SEC, 450 Fifth Street,
N.W., Judiciary Plaza, Washington, D.C. 20549. You may obtain information on the
operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The
SEC maintains an Internet site that contains reports, proxy and information
statements, and other information regarding the Company and the address of that
site is (http://www.sec.gov). The Company common stock is quoted on the Nasdaq
National Market System and reports, proxy statements and other information
concerning the Company are available for inspection and copying at prescribed
rates at the office of the National Association of Securities Dealers, Inc.,
1735 K Street, Washington, D.C. 20006.
The Company has filed with the SEC a Registration Statement on Form S-3
under the Securities Act of 1933, as amended ("Securities Act"), with respect to
the shares of the Company common stock to be issued in connection with the
Rights Offering. This Prospectus does not contain all of the information set
forth in the Registration Statement, certain parts of which are
23
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omitted in accordance with the rules and regulations of the SEC. Reference is
made to the Registration Statement, including the exhibits filed as a part
thereof or incorporated therein by reference, which can be inspected and copied
at prescribed rates at the public reference facilities maintained by the SEC at
the addresses set forth above.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
This Prospectus incorporates by reference documents relating to the
Company which are not presented in the Prospectus or delivered to you with this
document. The following documents previously filed by the Company (SEC File No.
0-22880) with the SEC pursuant to the Exchange Act are incorporated herein by
reference:
1. The Company's Annual Report on Form 10-K for the fiscal year
ended June 30, 1998.
2. The Company's Quarterly Report on Form 10-Q for the quarter
ended September 30, 1998.
3. The Company's Quarterly Report on Form 10-Q for the quarter
ended December 31, 1998.
4. The Company's report on Form 8-K dated February 5, 1999.
5. The description of the Company's common stock contained in the
Registration Statement on Form S-4 (Commission File No.
33-67110) filed with the Commission on August 9, 1993,
including any amendment or report filed for the purpose of
updating such description.
These documents (excluding unincorporated exhibits) are available,
without charge, to any person, including any beneficial owner, to whom this
Prospectus is delivered, upon written or oral request to the following: Fidelity
Federal Bancorp, 700 South Green River Road, Suite 2000, Evansville, Indiana
47715, Attn: Donald R. Neel, CFO. Mr. Neel may be contacted by telephone at
(812) 429-0550 (ext. 301). All documents subsequently filed by the Company
pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act prior to the
Effective Date
24
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shall be deemed to be incorporated by reference into this Prospectus and to be a
part hereof from the date of filing such documents.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any other subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO PURCHASE ANY OF THE SECURITIES OFFERED BY THIS
PROSPECTUS, IN ANY JURISDICTION TO ANY PERSON TO WHOM IT WOULD BE UNLAWFUL TO
MAKE SUCH OFFER OR SOLICITATION OF AN OFFER IN SUCH JURISDICTION. NEITHER THE
DELIVERY OF THIS PROSPECTUS NOR ANY DISTRIBUTION OF THE SECURITIES COVERED
HEREBY AT ANY TIME SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT
THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR
THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO
THE DATE OF THIS PROSPECTUS.
25
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The following are actual or estimated expenses incurred or to be
incurred by the Company in connection with this offering:
Fees Amount
- ---- ------
Filing Fee $ 575
Printing Expenses 2,000*
Legal Fees, Blue Sky Fees and Expenses 12,000*
Accounting Fees and Expenses 2,000*
Miscellaneous Expenses 500*
--------
Total $17,075
========
*Estimated.
Item 15. Indemnification of Directors and Officers.
The Company's Articles of Incorporation provide that the Company will
indemnify any person who is or was a director or officer of the Company or of
any other corporation for which such director or officer is or was serving in
any capacity at the request of the Company against all liability and expense
that may be incurred in connection with any claim, action, suit or proceeding
with respect to which such director or officer is wholly successful or acted in
good faith in a manner such director or officer reasonably believed to be in, or
not opposed to, the best interests of the Company or such other corporation and,
with respect to any criminal action or proceeding, had no reasonable cause to
believe that such conduct was unlawful. A director or officer of the Company is
entitled to be indemnified as a matter of right with respect to those claims,
actions, suits or proceedings in which such director or officer has been wholly
successful. In all other cases, such director or officer, shall be entitled to
indemnification as a matter of right unless (i) the director or officer has
breached or failed to perform the person's duties in compliance with the
standard of conduct set forth above and (ii) such breach of failure to perform
constituted willful misconduct or recklessness as determined by the Board of
Directors of the Company, a committee of the Board of Directors, independent
legal counsel, or a committee of disinterested persons selected by the Board of
Directors. The foregoing is a summary of detailed provisions for indemnification
found at Article VI, Section 2 of the Articles of Incorporation of the Company
which are incorporated by reference into this Registration Statement as Exhibit
4(a).
<PAGE>
Item 16. Exhibits. The following exhibits are filed as part of this
Registration Statement:
Exhibit Number Exhibit
- -------------- -------
4(a) Articles of Incorporation of the Company (incorporated by
reference to Exhibit 3(a) of the Company's Annual Report on
Form 10-K [Commission File No. 0-22880] for the year ended
June 30, 1995) and Articles of Amendment.
4(b) By-Laws of the Company (incorporated by reference to
Exhibit 3(b) of the Company's Annual Report on Form 10-K
[Commission File No. 0-22880] for the year ended June 30,
1994).
5 Opinion of Krieg DeVault Alexander & Capehart, LLP re:
legality
23(a) Consent of Krieg DeVault Alexander & Capehart, LLP
(included in Exhibit 5)
23(b) Consent of Geo. S. Olive & Co. LLC
24 Powers of Attorney (included in Signature Page)
99(a) Shareholder Rights Agreement
99(b) Letter to Dealers, Banks, and Other Nominees
Item 17. Undertakings.
(a) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(b) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer, or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
<PAGE>
SIGNATURE PAGE
Pursuant to the requirements of the Securities Act of 1933, as amended,
the registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly caused this
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Evansville, State of Indiana, on March 17, 1999.
FIDELITY FEDERAL BANCORP
By: /S/ M. BRIAN DAVIS
--------------------------------
M. Brian Davis, President and
Chief Executive Officer
POWER OF ATTORNEY
Each person signing below hereby makes, constitutes and appoints M. Brian
Davis and Donald R. Neel, and each of them, his true and lawful
attorneys-in-fact to execute and file any and all amendments (including
post-effective amendments) to this Registration Statement on Form S-3 as such
attorney in-fact may deem appropriate.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this registration statement has been signed by the following persons in the
capacities indicated below as of March 17, 1999.
By /S/ BRUCE A. CORDINGLEY
-----------------------------------------
Bruce A. Cordingley, Director
By /S/ M. BRIAN DAVIS
-----------------------------------------
M. Brian Davis, Director, President, and Chief Executive Officer
(Principal Executive Officer)
By /S/ CURT J. ANGERMEIER
-----------------------------------------
Curt J. Angermeier, Director
By /S/ WILLIAM R. BAUGH
-----------------------------------------
William R. Baugh, Director
By /S/ JACK CUNNINGHAM
-----------------------------------------
Jack Cunningham, Chairman of the Board
By /S/ ROBERT F. DOERTER
-----------------------------------------
Robert F. Doerter, Director
<PAGE>
By /S/ BARRY A. SCHNAKENBURG
-----------------------------------------
Barry A. Schnakenburg, Director
By /S/ DONALD R. NEEL
-----------------------------------------
Donald R. Neel, Director, Executive Vice President, Treasurer and Chief
Financial Officer (Principal Accounting Officer)
Exhibit 5
March 23, 1999
Board of Directors
Fidelity Federal Bancorp
700 South Green River Road, Suite 2000
Evansville, Indiana 47715
Re: Issuance of Shares of Common Stock of Fidelity Federal Bancorp
in connection with Rights Offering
Gentlemen:
We have represented Fidelity Federal Bancorp ("Company"), Evansville,
Indiana, as special counsel in connection with the preparation and filing with
the Securities and Exchange Commission of a Registration Statement on Form S-3
("Registration Statement") dated as of the date of this letter for the purpose
of registering shares of the Company's common stock under the Securities Act of
1933, as amended ("Shares"). The Shares are to be issued pursuant to the terms
and conditions of the rights offering ("Rights Offering") of the Company, as set
forth and described in the Registration Statement. In connection with this
opinion, we have reviewed and are familiar with Company's Articles of
Incorporation and By-Laws and such other records, documents and information as
we have in our judgment deemed relevant.
Based upon the foregoing, it is our opinion that if and when sold
pursuant to the terms and conditions of the Rights Offering as set forth in the
Registration Statement, the Shares will, when issued in accordance with and
pursuant to the terms of the Rights Offering, be legally issued, fully paid and
non-assessable. This opinion is limited to the matters stated herein, and no
opinion is to be implied or may be inferred beyond the matters expressly stated.
This opinion is addressed to you and is solely for your use in
connection with the Registration Statement, and we assume no professional
responsibility to any other person whatsoever. Accordingly, the opinion
expressed herein is not to be relied upon, utilized or quoted by or delivered or
disclosed to, in whole or in part, any other person, corporation, entity or
governmental authority without, in each instance, the prior written consent of
this firm.
We hereby consent to the use of this opinion as an exhibit to the
Registration Statement and to the reference made to us in the Registration
Statement and the Prospectus forming a part thereof under the caption "Legal
Opinions". In giving this consent, we do not thereby admit that we come within
the category of persons whose consent is required under Section 7 of the
Securities Act of 1933, as amended, or the Rules and Regulations of the
Securities and Exchange Commission promulgated thereunder.
Very truly yours,
KRIEG DEVAULT ALEXANDER & CAPEHART, LLP
Exhibit 23(b)
Independent Auditor's Consent
We consent to the incorporation by reference in the Registration Statement of
Fidelity Federal Bancorp on Form S-3 of our report dated August 20, 1998, on the
financial statements of Fidelity Federal Bancorp appearing in its Annual Report
on Form 10-K for the year ended June 30, 1998 and to the reference to us under
the heading "Experts" in such Registration Statement.
OLIVE LLP
Evansville, Indiana
March 22, 1999
Exhibit 99(a)
FIDELITY FEDERAL BANCORP
700 SOUTH GREEN RIVER ROAD, SUITE 2000
EVANSVILLE, INDIANA 47715
SHAREHOLDER RIGHTS AGREEMENT
As more fully described in its Prospectus dated ______________________,
1999, Fidelity Federal Bancorp ("Company") declared a dividend of
nontransferable rights to shareholders of record and beneficial owners of shares
held in the name of Cede & Co. as nominee for The Depository Trust Company or in
the name of any other depository or nominee as of ___________ ___, 1999 ("Record
Date") to purchase at the price of $__________ per share ("Subscription Price")
one (1) additional share of Common Stock of the Company (rounded to the next
largest whole share) for every six (6) shares held on the Record Date ("Basic
Right"). The Company also has offered to its shareholders who have exercised in
full their Basic Right, subject to availability and proration, an additional
nontransferable right to subscribe to purchase, at the Subscription Price, for
such shareholder's pro rata portion (based upon the number of shares of Common
Stock owned by such shareholder on the Record Date relative to the other
shareholders exercising such oversubscription rights) of any shares that are not
subscribed for by other shareholders pursuant to their Basic Rights
("Oversubscription Right").
Rights may be exercised by eligible shareholders, in whole or in part,
prior to 5:00 o'clock p.m. on the expiration date of ______________________,
1999, provided that a shareholder's Oversubscription Right may only be exercised
if his Basic Right has been exercised in full.
As an inducement to the Company to accept this Agreement, the
undersigned hereby represents and warrants to the Company as follows:
(a) The undersigned has received a copy of the Prospectus of the
Company dated ________________, 1999.
(b) The undersigned was a shareholder of record or the beneficial owner
of shares of the Company on the Record Date.
As a further inducement to the Company to accept this Agreement, the
undersigned hereby acknowledges, understands and agrees as follows:
(a) The terms and conditions set forth in the Prospectus are
incorporated herein by reference and are made a part of this Agreement.
(b) The total consideration for the shares of Common Stock with respect
to which the undersigned has exercised his Basic Right and Oversubscription
Right must be paid in full by a bank certified check, cashier's check, or in the
case of shareholders who are customers of United Fidelity
1
<PAGE>
Bank, fsb, located in Evansville, Indiana, with a deposit relationship, a
personal check drawn upon United Fidelity, at the time that this Agreement is
delivered to the Company.
(c) This Agreement and the exercise of rights contemplated hereby may
be rejected, in whole or in part, at the sole discretion of the Company. In the
event that this Agreement, and the exercise of rights contemplated hereby, is
rejected by the Company for whatever reason, all funds that the undersigned has
paid pursuant to this Agreement will be promptly returned, without interest
thereon, as soon as practicable after such rejection.
(d) The representations, warranties, agreements and information
provided by the undersigned herein shall be relied upon by the Company when
issuing shares of its Common Stock pursuant to the exercise of the Basic Right
and Oversubscription Right by the undersigned.
(e) If the undersigned's shares of Common Stock of the Company are held
jointly, each owner thereof shall sign this Agreement.
(f) This Agreement shall be binding upon and inure to the benefit of
the undersigned's heirs, successors and representatives. The undersigned shall
not transfer or assign his interest under this Agreement.
(g) Any capitalized terms used in this Agreement which are not defined
above or elsewhere herein shall have the same meanings as set forth in the
Prospectus.
(h) This Agreement shall be construed in accordance with and governed
by the laws of the State of Indiana, without regard to choice of law principles
thereof.
(i) All information contained herein with respect to the undersigned
shall be true, accurate and complete on the date hereof and on the date that
this Agreement is accepted by the Company. The undersigned shall indemnify and
hold harmless the Company and its directors, officers, employees and agents from
and against all claims, losses, damages and liabilities, including without
limitation reasonable attorneys' fees and costs, resulting from or arising out
of any misrepresentation or any inaccuracy in or breach of any statement or
provision contained in this Agreement.
2
<PAGE>
EXERCISE OF RIGHTS
BASIC RIGHT
The undersigned hereby exercises his Basic Right to purchase
______________ shares of Common Stock of the Company at the price of
$____________ per share, subject to the terms and conditions as set forth in the
Prospectus.
OVERSUBSCRIPTION RIGHT
The undersigned has exercised his Basic Right in full and hereby
exercises his Oversubscription Right to purchase __________________ shares of
Common Stock of the Company at the price of $_____________ per share, subject to
the terms and conditions as set forth in the Prospectus.
TOTAL RIGHTS EXERCISED
Basic Right _______________________
Oversubscription Right _______________________
Total Rights Exercised _______________________ x $______ = $________
IN WITNESS WHEREOF, the undersigned (has/have) executed this Agreement
this _______ day of _________________________, 1999.
- -------------------------------- ---------------------------------
(Signature of Shareholder) (Signature of Shareholder)
- -------------------------------- ---------------------------------
(Printed Name) (Printed Name)
================================ =================================
(Address) (Address)
- -------------------------------
Telephone (Day)
- -------------------------------
Telephone (Night)
3
<PAGE>
FOR COMPANY USE ONLY
Accepted this __________ day of _________________________, 1999 by
Fidelity Federal Bancorp in reliance upon the representations, warranties,
agreements and information contained in the foregoing Shareholder Rights
Agreement.
FIDELITY FEDERAL BANCORP
By:_______________________________
Its: _____________________________
Exhibit 99(b)
FIDELITY FEDERAL BANCORP
RIGHTS OFFERING OF UP TO 524,611
SHARES OF ITS COMMON STOCK
To Securities Dealers, Commercial Banks,
Trust Companies and Other Nominees:
Fidelity Federal Bancorp (the "Company") is offering (the "Rights
Offering"), upon the terms and subject to the conditions set forth in the
enclosed Prospectus, dated _______________________, 1999 (the "Prospectus"), up
to 524,611 shares of its Common Stock, to shareholders of record and beneficial
owners of shares held in the name of Cede & Co. as nominee for The Depository
Trust Company or in the name of any other depository or nominee ("Holders") as
of ___________ ___, 1999 ("Record Date") at a price of $________ per share,
pursuant to nontransferable subscription rights.
We are asking you to contact your clients for whom you hold shares of
Common Stock registered in your name or in the name of your nominee or who hold
shares of Common Stock registered in their own names to obtain instructions as
to whether your clients would like you to exercise the Basic Rights or exercise
their Oversubscription Rights (collectively, the "Rights") on their behalf.
The Company will not pay any fees or commissions to any broker or
dealer or other person for soliciting exercises of Rights pursuant to the Rights
Offering. You will be reimbursed for customary mailing and handling expenses
incurred by you in forwarding any of the enclosed materials to your clients. The
Company will pay all transfer taxes, if applicable to the transfer of shares of
Common Stock to the Holders.
Enclosed are copies of the following documents:
1. The Prospectus;
2. The Shareholder Rights Agreement for your use and for the
information of your clients; and
3. A return envelope addressed to Fidelity Federal Bancorp,
Evansville, Indiana, the Subscription Agent.
Your prompt action is requested. The Rights Offering will expire at
__________________, ___________________ time on ____________________, 1999,
unless the Rights Offering is extended by the Company (the "Expiration Date").
<PAGE>
To participate in the Rights Offering, a properly completed and
executed Shareholder Rights Agreement and payment for all Rights exercised must
be delivered to the Company as indicated in the Prospectus prior to
__________________, _____________________ time, on the Expiration Date.
Additional copies of the enclosed materials may be obtained from
Fidelity Federal Bancorp, 700 South Green River Road, Evansville, Indiana 47715.
Very truly yours,
FIDELITY FEDERAL BANCORP
NOTHING HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU OR ANY PERSON
AS AN AGENT OF THE COMPANY, OR AUTHORIZE YOU OR ANY OTHER PERSON TO MAKE ANY
STATEMENTS ON BEHALF OF IT WITH RESPECT TO THE RIGHTS OFFERING, EXCEPT FOR
STATEMENTS EXPRESSLY MADE IN THE PROSPECTUS OR THE SHAREHOLDER RIGHTS AGREEMENT.
