UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report Under Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report February 5, 1999
FIDELITY FEDERAL BANCORP
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(Exact name of registrant as specified in its charter)
Indiana 0-22880 35-1894432
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(State of other jurisdiction Commission (IRS Employer
of Incorporation of File No. Identification No.)
Organization)
700 S. Green River Road, Suite 2000
Evansville, Indiana 47715
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(Address of principal executive offices) (Zip Code)
(812) 469-2100
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Registrant's telephone number, including area code
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(Former name, former address and former fiscal year,
if changed since last report)
<PAGE>
Item 5 Other events
On February 3, 1999 the Board of Directors of United Fidelity Bank, fsb
(the "Bank"), a wholly owned subsidiary of Fidelity Federal Bancorp ("FFED")
entered into a Supervisory Agreement ("Agreement") with the Office of Thrift
Supervision ("OTS"). The Supervisory Agreement follows the most recent
examination of the Bank by the OTS during the Bank's fourth quarter. As
previously reported and in response to such examination, the Bank voluntarily
had already begun taking action to respond to some of the OTS criticisms in the
examination and some of the requirements of the Supervisory Agreement. In
entering into the Supervisory Agreement, the Bank did not admit or deny any
violations of law or regulations and/or unsafe or unsound practices.
Under the terms of the Supervisory Agreement, the Bank must develop and
submit to the OTS for approval a strategic plan which includes, at a minimum,
capital targets; specific strategies; concentration limits for all assets; a
plan for reducing the Bank's concentration of high risk assets; review of
infrastructure, staffing and expertise with respect to each area of the Bank's
operations; and capital planning.
In addition, the Bank must, among other things, take specified action
within specified time frames. These actions include, among others: the
development of a written plan 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; and maintenance of a fully staffed and
functioning internal audit department and independent loan review process.
The Bank 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
the Bank 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; and,
refinancing or extending any non-classified or criticized commercial loan if
additional funds are extended.
The Bank is also required to obtain OTS approval prior to adding or
replacing any director or senior executive officer. The Bank 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. The Bank is also required to develop a plan to reduce employee
turnover, build an experienced staff, and provide for management succession.
Management of the Bank indicated that the Bank had already begun
taking, or refraining from taking, some of the actions requested by the OTS and
that the Bank expects to stay in compliance with the terms of the Supervisory
Agreement. In this respect, the Bank has already ceased making commercial loans;
increased its 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.
Included for filing is a press release dated January 29, 1999.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
FIDELITY FEDERAL BANCORP
Date: February 5, 1999 By: /s/ Donald R. Neel
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Donald R. Neel, Executive Vice
President, CFO and Treasurer
<PAGE>
[LETTERHEAD OF FIDELITY FEDERAL BANCORP]
CONTACTS: M. BRIAN DAVIS, PRESIDENT AND CEO (812)469-2100, Ext. 12
DONALD R. NEEL, EXEC. VP AND CFO (812)469-2100, Ext. 14
FOR IMMEDIATE RELEASE JANUARY 29, 1999
(Evansville, Indiana) Fidelity Federal Bancorp (the "Company") (NASDAQ
NMS:FFED), the holding company of United Fidelity Bank, fsb (the "Bank"),
reported that the Bank had entered into a Supervisory Agreement ("Agreement")
with the Office of Thrift Supervision ("OTS") on January 28, 1999. The Agreement
follows the most recent examination of the Bank by the OTS during the Bank's
fourth quarter. As previously reported and in response to such examination, the
Bank voluntarily had already begun taking action to respond to some of the OTS
criticisms in the examination and some of the requirements of the Agreement.
Under the terms of the Agreement, the Bank will develop and submit to
the OTS for approval a strategic plan which will include: capital targets;
specific strategies; concentration limits for all assets; a plan for reducing
the Bank's concentration of high risk assets; a review of infrastructure,
staffing and expertise with respect to each area of the Bank's operations; and
capital planning. In addition, the Bank will, among other things, take certain
actions within specified time frames, such as actions relating to asset quality,
restriction of growth, disposition of certain surplus real estate, cessation of
capital distributions, including dividends to the Company, and cessation of
additional commercial or commercial real estate lending activity. The Bank and
the OTS also agreed on certain actions the Bank will take before the Bank may
seek to resume its commercial lending activity.
Management of the Bank indicated that the Bank had already begun
taking, or refraining from taking, some of the actions requested by the OTS. In
this respect and as previously reported, the Bank has already ceased making
commercial loans and paying dividends. In addition, the Bank has already
increased its 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. Management indicated that
the Bank expects to stay in compliance with the terms of the Agreement.
The Company is a unitary savings and loan holding company based in
Evansville, Ind. Its savings bank subsidiary, United Fidelity Bank, fsb,
maintains four locations in Evansville. The Bank participates in various real
estate activities including mortgage banking and finance, as well as owning and
managing housing developments through its wholly-owned subsidiaries: Village
Capital Corporation, Village Housing Corporation, and Village Management
Corporation. The Bank also offers an array of insurance products through Village
Insurance Corporation.
Information on FFED is available on the Internet at
http://www.ufb-ffed.com.
