10-Q 1 bankplus_10q-0601.txt ================================================================================ SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------ FORM 10-Q (Mark One) |X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2001 OR |_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ____________to _______________ COMMISSION FILE NUMBER 0-28292 ------------------ BANK PLUS CORPORATION (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) DELAWARE 95-4571410 (STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION NUMBER) INCORPORATION OR ORGANIZATION) 4565 COLORADO BOULEVARD 90039 LOS ANGELES, CALIFORNIA (ZIP CODE) (ADDRESS OF PRINCIPAL EXECUTIVE OFFICE) REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (818) 549-3116 Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes |X| No |_| As of August 1, 2001, Registrant had outstanding 19,441,139 shares of Common Stock, par value $.01 per share. ================================================================================ BANK PLUS CORPORATION TABLE OF CONTENTS PAGE ---- PART I. FINANCIAL INFORMATION Item 1. Financial Statements Consolidated Statements of Financial Condition as of June 30, 2001 and December 31, 2000............................... 1 Consolidated Statements of Operations for the quarters and six months ended June 30, 2001 and 2000............................... 2 Consolidated Statements of Comprehensive Income for the quarters and six months ended June 30, 2001 and 2000....................... 4 Consolidated Statements of Cash Flows for the quarters and six months ended June 30, 2001 and 2000........................... 5 Notes to Consolidated Financial Statements .......................... 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations......................................... 8 PART II. OTHER INFORMATION Item 1. Legal Proceedings................................................... 24 Item 4. Submission of Matters to a Vote of Security Holders................. 30 Item 6. Exhibits and Reports on Form 8-K.................................... 30 a. Exhibits...................................................... 30 b. Reports on Form 8-K........................................... 32 i PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS BANK PLUS CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

See notes to consolidated financial statements. 1 BANK PLUS CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

See notes to consolidated financial statements. 2 BANK PLUS CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS -- CONTINUED

See notes to consolidated financial statements. 3 BANK PLUS CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (DOLLARS IN THOUSANDS)

See notes to consolidated financial statements. 4 BANK PLUS CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (DOLLARS IN THOUSANDS)

See notes to consolidated financial statements. 5 BANK PLUS CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS QUARTER AND SIX MONTHS ENDED JUNE 30, 2001 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Bank Plus Corporation ("Bank Plus"), through its wholly-owned subsidiaries, Fidelity Federal Bank, A Federal Savings Bank, and its subsidiaries (collectively "Fidelity" or the "Bank"), and Gateway Investment Services, Inc. ("Gateway") a National Association of Securities Dealers, Inc. ("NASD") registered broker/dealer, (collectively, the "Company"), offers a broad range of consumer financial services, including demand and term deposits, loans and uninsured investment products, including mutual funds and annuities. Fidelity operates through 29 full-service branches which are located in the Southern California counties of Los Angeles and Orange. In the opinion of the Company, the accompanying unaudited consolidated financial statements, prepared from the Company's books and records, contain all adjustments (consisting of only normal recurring accruals) necessary for a fair presentation of the Company's financial condition as of June 30, 2001 and December 31, 2000, and the results of operations, statements of comprehensive income and statements of cash flows for the quarter and six months ended June 30, 2001 and 2000. All significant intercompany transactions and balances have been eliminated. Certain reclassifications have been made to prior years' consolidated financial statements to conform to the 2001 presentation. The accompanying unaudited consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and include all information and footnotes required for interim financial statement presentation. The financial information provided herein, including the information under the heading Item 2. "Management's Discussion and Analysis of Financial Condition and Results of Operations" ("MD&A"), is written with the presumption that the users of the interim financial statements have read, or have access to, the most recent Annual Report on Form 10-K which contains the latest available audited consolidated financial statements and notes thereto, as of December 31, 2000 together with the MD&A as of such date. The preparation of financial statements in conformity with generally accepted accounting principles ("GAAP") requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. 2. DISCONTINUED OPERATIONS In July 2000, the Board of Directors adopted a plan to dispose of its remaining credit card operations. As a result, the carrying values of the remaining credit card portfolios and other assets have been reduced to their estimated disposition values and the credit card operations are now reported as discontinued operations in the Company's financial statements. The remaining assets are expected to be disposed of through normal payoffs and sales. Summarized balance sheet data for the discontinued operations is as follows: JUNE 30, DECEMBER 31, 2001 2000 ---------- ---------- (Dollars in thousands) Credit card balances and other receivables, net ...... $ 4,405 $ 5,822 Other assets ......................................... 2,377 3,921 Other liabilities .................................... (341) (2,245) ---------- ---------- Net assets ........................................ $ 6,441 $ 7,498 ========== ========== Interest costs have been allocated to the discontinued operations based on a rolling 12 month average of one-year fixed rate FHLB advances. Indirect general and administrative expenses not specifically identifiable with either the continuing operations or discontinued operations are allocated on the basis of direct operating expenses. Expenses allocated to discontinued operations for the quarter and six months ended June 30, 2001 were $0.1 million and $0.2 million, respectively. 6 BANK PLUS CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS QUARTER AND SIX MONTHS ENDED JUNE 30, 2001 The net assets and results of operations of the credit card operations have been reclassified in the consolidated financial statements for prior periods as discontinued operations. In future periods, discontinued operations are not expected to have a material impact on the consolidated results of operations. 3. EARNINGS (LOSS) PER SHARE The reconciliation of the numerators and denominators used in basic and diluted earnings (loss) per share ("EPS") follows for the periods indicated:

4. RECENT ACCOUNTING PRONOUNCEMENTS In June 2001, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards ("SFAS") No. 142, "Goodwill and Other Intangible Assets". SFAS No. 142 changes the accounting for goodwill from an amortization method to an impairment-only approach. Amortization of goodwill, including goodwill recorded in past business combinations, will cease upon adoption of this statement. SFAS 142 is effective for fiscal years beginning after December 15, 2001 to all goodwill and other intangible assets recognized in an entity's statement of financial position at that date, regardless of when those assets were initially recognized. The Company has not determined the impact, if any, that this statement will have on its consolidated financial position or results of operations. As of June 30, 2001, the Company had goodwill and other intangible assets, net of accumulated amortization, of $9.5 million, which would be subject to the transitional assessment provisions of SFAS 142. Amortization expense related to intangible assets was $0.5 million and $1.0 million for the quarter and six months ended June 30, 2001, respectively. 7 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FORWARD-LOOKING STATEMENTS Certain statements included in this Quarterly Report on Form 10-Q, including without limitation statements containing the words "believes", "anticipates", "intends", "expects" and words of similar import, constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of Bank Plus and Fidelity to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors are referred to in Bank Plus's most recent Annual Report on Form 10-K as of December 31, 2000. A number of other factors may have a material adverse effect on the Company's financial performance. These factors include a national or regional economic slowdown or recession which increases the risk of defaults and credit losses; the impact of changes in the availability or price of electrical or other forms of energy in the Company's markets; movements in market interest rates that reduce our margins or the fair value of the financial instruments we hold; restrictions imposed on the Bank's operations by regulators such as a prohibition on the payment of dividends to Bank Plus; the impact of future actions by the United States Department of Justice ("DoJ") on the Bank's financial condition or regulatory status; actions by the Bank's regulators or other governmental agencies having jurisdiction over the Bank that could adversely affect the Bank's regulatory compliance status or capital levels; failure of regulatory authorities to issue approvals or non-objections to material transactions involving the Bank; the effects of fraud or other contract breaches by third parties or customers; the effectiveness of the Company's collection efforts and the outcome of pending and future litigation. Given these uncertainties, undue reliance should not be placed on such forward-looking statements. Bank Plus disclaims any obligation to update any such factors or to publicly announce the results of any revisions to any of the forward-looking statements included herein to reflect future events or developments. RECENT DEVELOPMENTS On June 2, 2001, Bank Plus entered into a definitive merger agreement with FBOP Corporation, ("FBOP") under which Bank Plus will be acquired by FBOP. Under the terms of the agreement FBOP will pay $7.25 per share in cash for Bank Plus common stock. Subject to shareholder and regulatory approvals and the satisfaction of certain other conditions, the merger is expected to close in the fourth quarter of 2001. No assurances can be given that the merger will be completed or, if completed, will be completed within that timeframe. At the 2001 annual meeting of stockholders, which has been called for September 12, 2001, stockholders will be asked to vote upon the merger and to elect a slate of directors pending the closing of the merger. The Company anticipates mailing the definitive proxy statement to stockholders in August 2001. FBOP has advised the Company that it expects to file its application for regulatory approval of the proposed merger with the Board of Governors of the Federal Reserve System in August 2001. During the first quarter of 2001, the Office of Thrift Supervision ("OTS") upgraded the status of the Bank and removed the "problem association" and "troubled condition" designations. As a result, the Bank is no longer subject to certain regulatory restrictions related to those designations. At March 31, 2001, the Bank's regulatory capital status improved to "well capitalized". 8 During the first quarter of 2001, the Bank was advised by the OTS that they will not seek any further Bank corrective action in connection with the May 1999 Special Limited Compliance Examination of the Bank's discontinued credit card operations ("Special Compliance Examination"). Additionally, in March 2001 the OTS made a referral to the United States Department of Justice ("DoJ") for review of certain fair lending compliance issues arising from the Special Compliance Examination. The Bank believes that these issues primarily involve the origination and collection activities of third parties with which the Bank contracted regarding certain of its affinity credit card programs. Based upon recent initial discussions with the DoJ it appears the DoJ may take the position that the Bank has some liability for the actions of those third parties. No assurance can be given that potential future actions by the DoJ would not have a material adverse effect on the operations, financial condition or results of operations of the Bank or the Company. The Company and the Bank believe that any allegations of fair lending or other compliance violations by the Bank are without merit and that the Bank has strong defenses against any such potential allegations. In July 2001, the Bank completed the sale of the Mall of America branch in Bloomington, Minnesota, which had $8.9 million in deposits. The Bank's branch office located in Corona del Mar will be closed when its lease expires in September 2001 and all customer deposits, which totaled $36.6 million at June 30, 2001, will be transferred to its Newport Beach branch. RESULTS OF OPERATIONS SUMMARY Loss from continuing operations was $0.8 million for the second quarter of 2001 as compared to earnings from continuing operations of $6.0 million in the second quarter of 2000. Earnings from continuing operations for the six months ended June 30, 2001 was $1.4 million as compared to $26.7 million for the corresponding period in 2000. Comparison of earnings for these periods is affected by the following unusual items: o In the second quarter of 2001, the Company incurred merger related expenses of $1.6 million. o In the first quarter of 2001, the Company recorded income tax benefits of $1.5 million. o For the quarter and six months ended June 30, 2000, the Company realized gains on sales of branches of $4.7 million and $24.3 million, respectively. Excluding merger related expenses, income tax benefits and gains on sales of branches, earnings from continuing operations was $0.8 million and $1.5 million for the quarter and six months ended June 30, 2001, respectively, as compared to $1.3 million and $2.4 million for the corresponding periods in 2000. The decrease in earnings for the 2001 periods was the result of decreases in net interest income, no recoveries of provisions for loan losses in 2001 and decreases in noninterest income. The impact of these items was partially offset by lower operating expenses. As of June 30, 2001, the net assets of discontinued operations were $6.4 million and no income or loss from discontinued operations was realized during the quarter and six months ended June 30, 2001. CONTINUING OPERATIONS Net interest income in the second quarter of 2001 decreased to $13.2 million from $14.5 million in the second quarter of 2000 primarily due to decreases in the average balance of interest earning assets and in the net yield on interest earning assets. The average balance of interest earning assets decreased as a result of the sale of $82 million of deposits completed in the second quarter of 2000. The net yield on interest earning assets was adversely affected by a decrease in interest expense allocated to discontinued operations and lower yields on investments and mortgage-backed securities resulting from declining market interest rates. As compared to the corresponding period in 2000, net interest income for the six months ended June 30, 2001 decreased $3.4 million to $27.5 million primarily due to a decrease in interest earning assets resulting from the sales of $415 million of deposits during the first six months of 2000. 9 No provision for estimated loan losses was recorded for the quarter and six months ended June 30, 2001, as compared to recoveries of $1.5 million and $1.0 million recorded during the quarter and six months ended June 30, 2000. The low levels of provisions reflect the continuing strong asset quality trend in the Bank's mortgage loan portfolio, with delinquency and real estate owned balances remaining at historically low levels, and continuing decreases in classified assets. Excluding net gains on the sale of branches, noninterest income for the quarter and six months ended June 30, 2001 decreased to $2.9 million and $6.0 million, respectively, from $3.4 million and $6.9 million in the corresponding periods in 2000. During 2001, the Company realized lower investment product fees and deposit fees as a result of the sale of branches completed during the first six months of 2000. Excluding merger related expenses, operating expenses for the quarter and six months ended June 30, 2001 decreased $2.8 million and $5.3 million, respectively, as compared to the corresponding periods in 2000 primarily due to lower expenses as a result of the branch sales in 2000, lower information systems expenses and the benefits of the Company's cost reduction efforts. The branch sales reduced operating expenses by $1.2 million in 2001 as compared to 2000. The conversion to a new service bureau in May 2000 reduced information systems costs by $1.1 million during the first six months of 2001. The Federal Deposit Insurance Corporation has notified Fidelity that its insurance costs for the second half of 2001 will be $2.2 million lower than for the first half of 2001 as a result of the improvement in the Bank's regulatory status and its return to a "well capitalized" status for regulatory capital purposes. Merger related costs in the 2001 second quarter included $1.0 million of professional fees for legal and investment banking services and $0.4 million in additional directors compensation expense as a result of increases in the Company's stock price following the merger announcement. Directors earn their fees in the form of deferred stock units which are calculated at the market price of the stock on the date the fees are earned and are payable in cash upon retirement from the board. The value of the cumulative balance of these deferred stock units fluctuates with changes in the market price of the Company's common stock. During the first quarter of 2001 the Company recognized deferred tax benefits of $1.5 million, which increased net deferred tax assets to $5.6 million. The primary reasons for the increase during the quarter was the Company's continued earnings trend and the projected benefits to be realized from reduced regulatory costs, which include reduced FDIC insurance premiums. 10 NET INTEREST INCOME The following tables present the primary determinants of net interest income for the periods indicated. For the purpose of this analysis, nonaccruing mortgage loans are included in the average balances, and delinquent interest on such loans has been deducted from interest income.

Net interest income is primarily affected by (a) the average volume and repricing characteristics of the Company's interest-earning assets and interest-bearing liabilities, (b) the level and volatility of market interest rates, (c) the level of nonperforming loans ("NPLs") and (d) the interest rate spread between the yields earned and the rates paid. The following tables present the dollar amount of changes in interest income and expense for each major component of interest-earning assets and interest-bearing liabilities and the amount of change attributable to changes in average balances and average rates for the periods indicated. Because of numerous changes in both balances and rates, it is difficult to allocate precisely the effects thereof. For purposes of these tables, the change due to volume is initially calculated as the change in average balance multiplied by the average rate during the prior period and the change due to rate is calculated as the change in average rate multiplied by the average volume during the prior period. Any change that remains unallocated after such calculations is allocated proportionately to changes in volume and changes in rates.

12 INCOME TAXES The Company's expected combined federal and state statutory tax rate is approximately 42.0% of earnings before income taxes. As of June 30, 2001 and December 31, 2000, the Company's significant deferred tax assets, which primarily consisted of net operating loss carryforwards and bad debt timing differences, were reduced by a valuation allowance as required under Statement of Financial Accounting Standards ("SFAS") SFAS No. 109, "Accounting for Income Taxes." During the first quarter of 2001, the Company adjusted the valuation allowance required under SFAS No. 109 such that the amount of deferred tax assets recognized increased by $1.5 million to $5.6 million, resulting in $1.5 million of income tax benefits. The Company does not anticipate recording any significant amount of income tax benefits or expense during the remainder of 2001. FINANCIAL CONDITION ASSET QUALITY The Company's mortgage loan portfolio is primarily secured by assets located in Southern California and is comprised principally of single family and multifamily residential loans. At June 30, 2001, 28.6% of Fidelity's real estate loan portfolio consisted of single family residences (1 to 4 units), while 63.1% consisted of multifamily dwellings of 5 or more units. Because 91% of the Company's mortgage loan portfolio is secured by properties located in Southern California, the performance of the Company's loans are particularly susceptible to the potential for declines in the Southern California economy, such as increasing vacancy rates, declining rents, increasing interest rates, declining debt coverage ratios, and declining market values for single family, multifamily and commercial properties. In addition, the possibility that borrowers may abandon properties or seek bankruptcy protection with respect to income properties experiencing negative cash flow, particularly where such properties are not cross-collateralized by other performing assets, can also adversely affect portfolio performance. DELINQUENT LOANS The following tables present net delinquent mortgage loans at the dates indicated:

13 NONPERFORMING AND CLASSIFIED ASSETS All assets and ratios are reported net of specific reserves unless otherwise stated. The following table presents asset quality details at the dates indicated:

Total classified assets decreased $10.1 million from December 31, 2000 to June 30, 2001. This decrease reflects the continuing improvement in the performance of the mortgage loan portfolio and the underlying income properties. 14 ALLOWANCE FOR ESTIMATED LOAN AND REO LOSSES The following schedule summarizes the activity in the Bank's allowances for estimated loan and REO losses:

The following table presents loan and REO charge-offs and recoveries by property type, where applicable, for the periods indicated:

15 The following table sets forth the allowance for estimated loan and REO losses at the dates indicated:

Credit losses are inherent in the business of originating and retaining loans. The Company maintains an allowance for credit losses to absorb losses inherent in the loan portfolio. These allowances consist of SVAs and an ALLL which are based on ongoing, quarterly assessments of the probable estimated losses inherent in the loan portfolio. The allowance for credit losses does not represent the amount of losses that could be incurred under adverse conditions that management does not consider to be the most likely to arise. In addition, management's classification of assets and evaluation of the adequacy of the allowance for credit losses is an ongoing process. Consequently, there can be no assurance that material additions to the Bank's allowance for credit losses will not be required in the future, thereby adversely affecting earnings and the Bank's ability to maintain or build capital. 16 REGULATORY CAPITAL COMPLIANCE The OTS capital regulations, as required by the Financial Institutions Reform, Recovery, and Enforcement Act of 1989, include three separate minimum capital requirements for the savings institution industry--a "tangible capital requirement," a "leverage limit" and a "risk-based capital requirement." These capital standards must be no less stringent than the capital standards applicable to national banks. The Bank's actual and required capital are as follows at the dates indicated:

17 The following table reconciles the Company's stockholders' equity to the Bank's tangible, core and risk-based capital at the dates indicated: TANGIBLE CORE RISK-BASED CAPITAL CAPITAL CAPITAL ---------- ---------- ---------- (DOLLARS IN THOUSANDS) AS OF JUNE 30, 2001: Consolidated stockholders' equity ....... $ 69,223 $ 69,223 $ 69,223 Adjustments: Fidelity's Preferred Stock ............ 51,750 51,750 51,750 Bank Plus equity excluding Fidelity ... 1,911 1,911 1,911 ---------- ---------- ---------- Fidelity's stockholders' equity ......... 122,884 122,884 122,884 Accumulated other comprehensive loss .... 1,258 1,258 1,258 Adjustments: Intangible assets ..................... (9,477) (9,477) (9,477) Supplementary capital-- ALLL .......... -- -- 8,888 Net deferred tax assets limitations ... (4,213) (4,213) (4,213) Assets required to be deducted ........ -- -- (314) ---------- ---------- ---------- Regulatory capital ...................... $ 110,452 $ 110,452 $ 119,026 ========== ========== ========== AS OF DECEMBER 31, 2000: Consolidated stockholders' equity ....... $ 65,653 $ 65,653 $ 65,653 Adjustments: Fidelity's Preferred Stock ............ 51,750 51,750 51,750 Bank Plus equity excluding Fidelity ... (1,311) (1,311) (1,311) ---------- ---------- ---------- Fidelity's stockholders' equity ......... 116,092 116,092 116,092 Accumulated other comprehensive loss .... 3,036 3,036 3,036 Adjustments: Intangible assets ..................... (10,436) (10,436) (10,436) Supplementary capital-- ALLL .......... -- -- 8,681 Net deferred tax assets limitations ... (3,901) (3,901) (3,901) Assets required to be deducted ........ -- -- (314) ---------- ---------- ---------- Regulatory capital ...................... $ 104,791 $ 104,791 $ 113,158 ========== ========== ========== As of June 30, 2001, the Bank was "well capitalized" under the prompt corrective action ("PCA") regulations adopted by the OTS pursuant to the Federal Deposit Insurance Corporation Improvement Act of 1991. As of June 30, 2001, the most constraining of the capital ratio measurements under the PCA requirements was core capital to total assets which had an excess of $3.0 million above the minimum level required to be considered well capitalized. The Bank's capital amounts and classification are subject to review by federal regulators about components, risk-weightings and other factors. 18 LIQUIDITY The Bank derives funds from deposits, FHLB advances, securities sold under agreements to repurchase, and other short-term and long-term borrowings. In addition, funds are generated from loan payments and payoffs as well as from the sale of loans and investments. DEPOSITS The largest source of funds for the Company is deposits. Customer deposits are insured by the FDIC to the maximum amount permitted by law. The following table presents the distribution of deposit accounts at the dates indicated:

There were no brokered deposits outstanding at the dates indicated above. The following table provides information with regards to the Bank's most recent quarterly experience in the levels of and pricing of CDs for the period indicated:

19 The distribution of certificate accounts by date of maturity is an important indicator of the relative stability of a major source of funds. Longer term certificate accounts generally provide greater stability as a source of funds, but currently entail greater interest costs than transaction accounts. The following tables summarize certificate accounts by maturity and weighted average rate at June 30, 2001: WEIGHTED AVERAGE AMOUNT RATE ------------ --------- MATURES IN QUARTER ENDED: (DOLLARS IN THOUSANDS) ------------------------- September 30, 2001.................................. $ 353,726 5.64% December 31, 2001................................... 326,849 5.41 March 31, 2002...................................... 326,177 5.12 June 30, 2002....................................... 275,617 4.54 September 30, 2002.................................. 84,197 4.57 December 31, 2002................................... 81,905 4.57 March 31, 2003...................................... 79,992 4.88 June 30, 2003 and after............................. 73,752 4.99 ------------ --------- Total CDs........................................ $ 1,602,215 5.12% ============ ========= BORROWINGS As of June 30, 2001 and December 31, 2000, the Company's only borrowings were $51.5 million of Senior Notes which carry an interest rate of 12.0%. UNDRAWN SOURCES The Company maintains other sources of liquidity to draw upon, which at June 30, 2001 include (a) available credit with the FHLB of $323.8 million, (b) $374.1 million in unpledged securities available to be placed in reverse repurchase agreements or sold, (c) available credit facilities at the Federal Reserve Bank of $100 million and the ability under Federal Regulations to borrow $125 million through the use of brokered CDs. CONTINGENT OR POTENTIAL USES OF FUNDS The Bank had unfunded loans totaling $19.8 million and $4.2 million at June 30, 2001 and December 31, 2000, respectively. Additionally, unused lines of credit related to other loans totaled $36.8 million and $34.1 million at June 30, 2001 and December 31, 2000, respectively. HOLDING COMPANY LIQUIDITY At June 30, 2001, Bank Plus had cash and cash equivalents of $0.8 million. Bank Plus has no material potential cash producing operations or assets other than its investments in Fidelity and Gateway. Accordingly, Bank Plus is substantially dependent on dividends from Fidelity and Gateway in order to fund its cash needs, including its payment obligations on the $51.5 million senior notes. During the quarter, Bank Plus made its scheduled interest payment on its Senior Notes. The liquidity for interest payments in the near term is expected to be provided by preferred and common stock dividends from the Bank and currently projected liquidity at the holding company. The Bank has been authorized by the OTS to make payments of dividends on its preferred stock so long as its core and risk-based capital ratios remain above 4.0% and 8.0%, respectively. The Bank is required to give the OTS 30 days notice prior to the payment of any preferred stock dividend. The OTS has also given approval for the Bank to pay dividends of $250,000 on its common stock in August of 2001. The amount of the approved common stock dividend approximates the difference between 20 the quarterly preferred stock dividend paid by the Bank to Bank Plus and the quarterly interest payment on the Senior Notes. The authorization from the OTS does not constrain the OTS from restricting future dividend payments based on safety and soundness considerations or future examination findings, and no assurance can therefore be given that the OTS will permit future dividend payments by Fidelity to Bank Plus. The Bank has received no indication from the OTS that it will object to the continued payment of preferred dividends. ASSET/LIABILITY MANAGEMENT AND MARKET RISK The objective of asset/liability management is to maximize the net income of the Company while controlling interest rate risk exposure. Banks and savings institutions are subject to interest rate risk when assets and liabilities mature or reprice at different times (duration risk), against different indices (basis risk) or for different terms (yield curve risk). The decision to control or accept interest rate risk can only be made with an understanding of the probability of various scenarios occurring. Having liabilities that reprice more quickly than assets is beneficial when interest rates fall, but may be detrimental when interest rates rise. The following table sets out the maturity and rate sensitivity of the interest-earning assets and interest-bearing liabilities as of June 30, 2001. "Gap," as reflected in the table, represents the estimated difference between the amount of interest-earning assets and interest-bearing liabilities repricing during future periods based on certain assumptions, including those stated in the notes to the table. MATURITY AND RATE SENSITIVITY ANALYSIS

------------------------ (1) Repricings shown are based on the contractual maturity or repricing frequency of the instrument. (2) ARMs are primarily in the shorter categories as they are subject to nterest rate adjustments. (3) These liabilities are subject to daily adjustments and are therefore included in the "Within 3 Months" category. 21 The Company manages interest rate risk by, among other things, maintaining a portfolio consisting primarily of ARM loans. Interest sensitive assets provide the Company with a degree of long-term protection from rising interest rates. ARM loans comprised 90% of the total mortgage loan portfolio at June 30, 2001 and 76% of the mortgage portfolio is indexed to the FHLB Eleventh District Cost of Funds Index ("COFI"). The Company's liabilities reprice generally in line with the cost of funds of institutions which comprise the FHLB Eleventh District. In the Company's case, the lag between the repricing of its liabilities and its ARM loans indexed to COFI is approximately four months. Analysis of the Gap provides only a static view of the Company's interest rate sensitivity at a specific point in time. The actual impact of interest rate movements on the Company's net interest income may differ from that implied by any Gap measurement. The actual impact on net interest income may depend on the direction and magnitude of the interest rate movement, as well as competitive and market pressures. MARKET RISK The Bank's Asset Liability Committee ("ALCO"), which includes senior management representatives, monitors and considers methods of managing the rate and sensitivity repricing characteristics of the balance sheet components consistent with maintaining acceptable levels of changes in net portfolio value ("NPV") and net interest income. A primary purpose of the Company's asset/liability management is to manage interest rate risk to effectively invest the Company's capital and to preserve the value created by its core business operations. As such, certain management monitoring processes are designed to minimize the impact of sudden and sustained changes in interest rates on NPV and net interest income. There has been no significant change in interest rate risk since December 31, 2000. 22 PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS NATIONWIDE CAPITAL COMPANY LLC CREDIT CARD LITIGATION In November 1997, the Bank entered into a credit card marketing relationship with MMG Direct, Inc. ("MMG") pursuant to which MMG was to solicit members of certain agreed-upon affinity groups to become credit card holders. The Bank was to contract for the provision of or provide credit card servicing and other related functions. MMG and the Bank were to share equally in program profits and losses. In late summer and fall of 1998, disputes arose between the Bank and MMG. These disputes were resolved in an arbitration proceeding in Los Angeles entitled IN THE MATTER OF ARBITRATION BETWEEN FIDELITY FEDERAL BANK AND MMG DIRECT, INC., American Arbitration Association No. 72 147 01072 98. As a part of the affinity credit card marketing program with MMG, the Bank entered into an agreement with Nationwide Capital Company L.L.C. ("Nationwide"), which purported to have arrangements with automobile dealers, including arrangements to obtain lists of customers of the dealers, through which dealer-branded credit cards would be marketed and issued to customers of the dealers. The Nationwide contract expressly provided that it could be terminated by the Bank upon termination of the Bank's contract with MMG and further provided that any disputes arising in connection with the contract would be arbitrated in Los Angeles, California. In September of 1998 the Bank suspended marketing and thereafter terminated the MMG and Nationwide agreements. Nationwide initially instituted litigation against the Bank in the Texas State court. After the Bank's petition to compel Nationwide to arbitrate and stay proceedings filed by Nationwide in Texas was granted, Nationwide filed an arbitration proceeding against the Bank in Los Angeles. In the arbitration Nationwide asserts claims for breach of contract and intentional interference with contracts resulting from the Bank's termination of its agreements with Nationwide and MMG Direct, Inc., in October 1998, and the termination of the affinity credit card marketing program, Hometown Dealers. In response, the Bank has asserted counterclaims for fraud, breach of contract, and breach of Nationwide's promise to arbitrate. The Bank believes that Nationwide's claims are without merit, that it has valid defenses to Nationwide's claims, and that it has valid counterclaims against Nationwide for fraud and breach of contract, and the Bank intends to diligently defend against Nationwide's claims and pursue its counterclaims. The arbitration hearing is scheduled to commence in October 2001. PURPORTED CLASS ACTION LITIGATION On October 19, 1998, a purported class action was filed against Bank Plus and its current and immediately preceding chief executive officers. The case was originally entitled Howard Gunty Profit Sharing Plan, both individually and on behalf of all others similarly situated, Plaintiffs v. Richard M. Greenwood, Mark K. Mason, Bank Plus Corporation, and Does I through 50, inclusive, Defendants, Los Angeles Superior Court, Central Judicial District, Case No. BC199336 ("Gunty I"). This action originally alleged that Bank Plus failed to make adequate public disclosure concerning losses in the Bank's credit card operations during the period from August 14, 1998 (when the Company filed its quarterly report on Form l0-Q for the second quarter of 1998) through September 22, 1998 (when the Company issued a press release concerning its credit card losses). In February 1999, an amended complaint was filed in the Los Angeles Superior Court, Central Judicial District, Case No. BC199336, entitled Howard Gunty Profit Sharing Plan and Robert E. Yelin, both individually and on behalf of the Yelin Family Trust U/A, both individually and on behalf of all others similarly situated, Plaintiffs, v. Richard M. Greenwood, Mark K. Mason, Bank Plus Corporation, and Does 1 through 50, inclusive ("Gunty II"). The amended complaint purports to expand the class period to extend from March 30, 1998 through September 22, 1998. The complaint and amended complaint each include claims for negligent misrepresentation, common law fraud, statutory fraud and violations of the California Corporations Code. 23 The originally proposed representative plaintiff has been determined by the trial court to be unsuitable to serve as class representative. A second proposed representative plaintiff has been refused permission to intervene in this case on statute of limitations grounds, a ruling which is on appeal. Plaintiffs' counsel has proposed pursuing other potential class action representatives through a letter solicitation process. The Company has opposed the solicitation process on several grounds, including the ground that the lawsuit is an abusive class action. The trial court authorized the solicitation process, but with conditions that the plaintiffs' lawyers found objectionable. The plaintiffs' lawyers and the Bank both sought relief from the California Court of Appeal, through writs of mandamus, to modify the trial court's order regarding the solicitation process. On April 18, 2001, the Court of Appeal issued an opinion stating that the trial court's previous findings that the original plaintiff was a "professional plaintiff" and that the case was being driven by attorneys signaled a potential for abuse in this action. Therefore, the Court of Appeal directed the trial court to vacate its prior orders and to reassess its decision to continue the class certification hearing and to permit any solicitation. To this end, the Court of Appeal suggested that the trial court schedule a hearing on plaintiffs' motion for class certification, and directed the trial court to weigh the prior findings that the original plaintiff was a "professional plaintiff" and not an appropriate representative, any further evidence of abuse, the rights of the parties, and the policies underlying class action procedures. The Court of Appeal concluded that if after balancing these factors the trial court determines that plaintiffs established a prima facie proper class action, the trial court could then determine whether to allow any solicitation, weighing any abuses or potential abuses against the rights of the parties and the integrity of the litigation process. Alternately, if the trial court concludes that the action is an abusive class action, it need not permit any solicitation at all or it may refuse to certify the class. The continued hearing directed by the Court of Appeal took place July 30, 2001. Shortly before submissions to the Court in connection with that hearing were due, plaintiffs' counsel revealed that an investor had stepped forward and wished to act as a class representative or, if that request is denied, to pursue its individual claims in the pending lawsuit. Consequently, the trial court directed plaintiffs' counsel to file a motion to amend the complaint, which was heard at the same time as the continued hearing. This investor is seeking individual damages in excess of $10.0 million. A ruling is anticipated in late August regarding whether or not plaintiffs will be permitted to amend their complaint, whether that investor will be permitted to assert any class-based claims, whether it would be an appropriate class representative plaintiff or whether the investor would be permitted to amend solely for the purposes of pursuing its individual claims. In light of the emergence of this investor, however, plaintiffs' counsel have stated in papers submitted to the trial court that they are withdrawing their request for a solicitation. In the event the trial court permits plaintiffs to amend the complaint adding the investor as a proposed class representative, the Company intends to continue to assert all defenses to class certification, and further intends to continue to assert that any claims made by that investor or any other proposed representative plaintiff on behalf of the expanded class asserted in Gunty II are barred and preempted by the Securities Litigation Uniform Standards Act of 1998, and that such preemption may extend to the entire case depending on the nature of the rulings of the trial court. In addition, should any purported class of any scope be certified, or if the trial court allows plaintiffs to amend the complaint to add the investor as an individual plaintiff, the Company intends to vigorously defend itself on the merits. In this respect, the Company believes, among other things, that its communications to the public were timely and accurate and that it did not engage in any market activity which would generate liability under the California Corporations Code. During 2000, the costs of defending this action exceeded the Company's deductible under its Director and Officers insurance policy. The insurance 24 carrier has agreed to pay for any future litigation costs related to this action, subject to a general reservation of rights. There can be no assurance that the insurance carrier will continue to pay for future litigation costs or will not seek reimbursement of costs advanced to date. DURGA MA ARBITRATION In April 1998, the Bank entered into two Private Label Credit Card Agreements with Durga Ma, a New Jersey corporation, doing business as Diamond Way International. One of those agreements contemplated issuing credit cards to Durga Ma's jewelry customers; the other contemplated issuing cards to customers of independent jewelry retailers. These independent jewelry retailers were required to be customers of Durga Ma. According to the agreements, the Bank would issue credit cards to customers whose applications were approved by the Bank. The Bank would have the exclusive right to issue to qualified customers credit cards bearing the name "Diamond Way" or bearing names associated with the independent retailers. No agreements with independent jewelers were ever negotiated or executed and no cards were ever issued under either of these programs. In October 1999, Durga Ma invoked binding arbitration alleging "breach of contract and fraud" and claimed lost profit damages in excess of $7.0 million. The Bank believes these claims lack merit, that its defenses to the plaintiff's claims are valid, and the damages sought are speculative. The evidentiary hearing in the arbitration took place in July 2001. Closing arguments are scheduled for August 2001. CHOICE ONE LITIGATION During 1997 and 1998, the Bank was in negotiations with Choice One Finance Corporation regarding a proposed credit card program in which consumers would have an opportunity to apply for credit cards to finance their purchases of water softeners and other consumer goods. Several drafts of a proposed agreement were exchanged, but an agreement was never signed and the program was not commenced. Choice One alleges that an oral agreement or other enforceable obligations none-the-less exists, and on March 12, 1999 commenced a lawsuit entitled CHOICE ONE FINANCE CORP. v. FIDELITY FEDERAL BANK, Superior Court for the State of California, County of Los Angeles, Case No. BC206945. The plaintiff seeks damages of at least $10 million based on estimates of the profit it would have received if the program had been implemented. The Bank filed an answer disputing the claims. Discovery is complete, and the Bank filed a summary judgment motion in September 2000. The court dismissed two of three of the plaintiff's causes of action, but determined that Choice One is entitled to a trial on whether an enforceable oral contract existed and, if so, whether it was breached. The Bank believes that the plaintiff's claims are without merit, that the damages sought are speculative, and that the Bank has valid defenses to the plaintiff's claims. The trial is currently expected to commence in September 2001. INTERNET CASINO LITIGATION The Bank and MasterCard International, Inc. have been named as defendants in a purported class action filed July 27, 1999 in the United States District Court for the Middle District of Alabama, entitled Evelyn L. Brown, on behalf of herself and all others similarly situated vs. MasterCard International, Inc. and Fidelity Federal Bank, Civil Action Case No. CV 99-A-788-N. The plaintiff alleges that she placed bets through a gambling site on the internet. The internet site instructed her to open an account by entering her credit card number. By this means, the plaintiff's gambling expenses incurred on the internet site were charged to a MasterCard issued to the plaintiff by the Bank. The plaintiff alleges that, in allowing its credit card to be used for illegal gambling, the Bank violated a variety of Federal and State statutes, including the Wire Act (18 U.S.C. Section 1084(a)), the Travel Act (18 U.S.C. Section 1952), a Federal statute that specifically prohibits conducing an illegal gambling business (18 U.S.C. Section 1955), the Racketeer Influenced and Corrupt Organizations Act ("RICO")(18 U.S.C. Section 1962(c) and 1964(a)), and a number of Alabama statutes. The plaintiff seeks certification of a class, declaratory relief voiding her credit card charges, unspecified compensatory damages, triple exemplary damages under RICO, punitive damages, and attorneys fees and costs. The Bank and MasterCard have filed motions to dismiss the case. The Bank believes that it should not have liability and that it has substantial legal defenses to the lawsuit. 25 This lawsuit is substantially similar to a number of lawsuits filed around the country against credit card issuers, MasterCard, and Visa. The plaintiff sought to have the lawsuit consolidated with similar lawsuits in a Federal court in New York. On March 1, 2000, the Judicial Panel on Multidistrict Litigation consolidated the case with several others and ordered that these cases be transferred to the U.S. District Court for the Eastern District of Louisiana. The Bank's motion to dismiss currently is pending as part of the multidistrict litigation. The court in the multidistrict litigation elected to proceed with motions to dismiss in two "test" cases in which nearly all of the issues are the same as in all the other consolidated cases, including the Bank's. On February 23, 2001, the court entered an order granting the motions to dismiss based on plaintiff's failure to state a RICO claim. The court's order stated that it was dispositive of the issues in the other cases, including the Bank's case. The court certified its order as final for purposes of appeal. Plaintiffs have appealed the two test cases and the appeal is pending before the U.S. Court of Appeals for the Fifth Circuit. Pending the outcome of the appeal, Brown's lawsuit against the Bank is stayed, as are the other consolidated cases. FIRST ALLIANCE MORTGAGE COMPANY ("FAMCO") In 1997, Fidelity entered into a series of agreements with First Alliance Mortgage Company ("FAMCO") and its affiliates to establish a secured credit card program (the "Program"). Under the agreements, Fidelity served as issuer and owner of the Program accounts and was responsible for the risk management associated with the extension of credit. FAMCO was responsible for marketing and processing applications and servicing the accounts originated under the Program. FAMCO also provided credit enhancements to guarantee full repayment of the Program receivables in the event of cardholder defaults and, in exchange, had the right to purchase the outstanding receivables at par and received all revenues, net of expenses and funding costs paid to Fidelity, from the Program. FAMCO was required to fund a cash collateral account as part of the credit enhancement. FAMCO or a designee was required to purchase all outstanding receivables, at par, at the expiration of the Program. On February 25, 2000, Fidelity delivered to FAMCO formal notice that the agreements pertaining to the Program had expired, and a demand that FAMCO or a designee fulfill its obligation to purchase the receivables at par. FAMCO defaulted on this obligation. To enforce this obligation, Fidelity filed with the American Arbitration Association in Los Angeles, California a formal demand for arbitration. The arbitration proceeding is designated Fidelity Federal Bank, FSB v. First Alliance Acceptance Corp. and First Alliance Mortgage Corp., File No. 72 148 226 00. As of June 30, 2001, total receivables outstanding under the program were $6.3 million and the balance of the cash collateral account was $2.9 million. On March 23, 2000, FAMCO and its affiliates filed a voluntary petition under Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court, Central District of California, Case No. SA 00-12370 LR. The bankruptcy proceeding had the effect of staying the arbitration and any other action by Fidelity to enforce FAMCO's obligations. Fidelity has filed a proof of claim in the bankruptcy proceeding relating to Fidelity's claims against FAMCO. The Bank has obtained relief from stay pursuant to an order of the Bankruptcy Court to pursue its claim in arbitration seeking to enforce the demand that FAMCO repurchase or cause the repurchase of the outstanding receivables, and to establish the amount of the Bank's claim against FAMCO's bankruptcy estate for damages arising from FAMCO's breach of that repurchase obligation. FAMCO has filed a counter demand for arbitration asserting various defenses to the obligations, including an alleged conflict of interest on the part of Fidelity's Chief Executive Officer based on his concurrent service as an officer of FAMCO and a director of Fidelity during the time that the relevant agreements were negotiated. The parties have agreed to suspend the arbitration proceeding pending approval by the bankruptcy court of a stipulated settlement between Fidelity and FAMCO which provides for, among other things, (i) the release of the cash collateral account to Fidelity, (ii) a $2.4 million unsecured claim by Fidelity as a creditor in FAMCO's bankruptcy and (iii) the settlement of all outstanding claims between Fidelity and FAMCO. There can be no assurance that the bankruptcy court will approve the stipulated settlement. Even if the stipulation is approved by the bankruptcy court, no assurance can be made as to what priorities the $2.4 million unsecured claim will receive in the final plan of reorganization or liquidation or how much of the claim will be paid. 26 FAMCO has listed Fidelity as one of its 20 largest unsecured creditors, and Fidelity is represented on FAMCO's unsecured creditors' committee. If the bankruptcy court does not approve the stipulated settlement, Fidelity intends to mitigate its damages, pursue vigorously its rights and remedies to recover amounts owed by FAMCO, and seek recourse to the cash collateral to recover any shortfall subject to the constraints of applicable bankruptcy law. There is substantial uncertainty as to Fidelity's success in mitigating damages, the ability of FAMCO to pay the claims of its creditors and the timing and amount of distributions that may be made by FAMCO to its creditors. Although the Bank believes that it is entitled to offset the cash collateral it holds to reduce its claim in the bankruptcy, court approval will be required prior to executing such an offset. VIRTRUE CAPITAL ARBITRATION On August 6, 1999, the Bank entered into an agreement to sell to Virtrue Capital the Bank's branch office at the Mall of America ("MOA") in Minnesota. Concurrently with entering into that agreement, the Bank closed a sale to Virtrue Capital of all of the Bank's intellectual property rights relating to the name "iBank". The total purchase price for the branch and the intellectual property was $1.5 million, which was placed in escrow. Under the agreement, in the event that Virtrue Capital was unable to close the transaction to purchase the branch by a date certain, the funds in escrow would be released to the Bank. In the first quarter of 2000, the agreement was amended to (i) extend the term until September 30, 2000, (ii) to allow Virtue Capital to sell the MOA branch to a qualified buyer, and (iii) to immediately release all funds held in escrow to the Bank. Virtrue Capital was never able to get regulatory approval for the branch transaction or complete a sale to a qualified buyer. In October 2000, the Bank declined to extend the agreement any further and terminated the transaction. On December 18, 2000, Virtrue Capital filed a notice with the American Arbitration Association in Los Angeles, California, commencing an arbitration proceeding entitled VIRTRUE CAPITAL CORPORATION v. FIDELITY FEDERAL BANK, ET AL. (Case No. 72 Y 181 0135 00 BLV). Virtrue Capital's principal allegation is that the Bank breached an alleged oral promise to extend further the deadline for closing the transaction so as to enable Virtrue Capital to find a qualified buyer that could receive regulatory approval. On July 17, 2001, Virtrue amended its claim to add causes of action based on two new allegations. The first new allegation is that the Bank tortiously interfered with Virtrue Capital's efforts to sell the MOA branch to another buyer, Highland Bank. Virtrue Capital has also added several causes of action based on the claim that the Bank improperly continued to use the "iBank" name after expiration of the agreement with Virtrue Capital. The parties have exchanged documents and begun depositions. Based on the discovery obtained thus far, the Bank believes Virtrue Capital's claims lack merit and it has substantial defenses to the claims asserted by Virtrue Capital. The Bank intends to diligently defend itself in the arbitration. The arbitration hearing is scheduled to commence in October 2001. OTHER MATTERS In concluding the Special Compliance Examination the OTS requested that the Bank agree to a consent order (the "Consent Order"). On November 1, 2000 the OTS issued the Consent Order and the Bank and the OTS entered into an agreement entitled "Stipulation and Consent to Issuance of an Order to Cease and Desist and for Affirmative Relief" (the "Agreement"). The Consent Order requires the Bank to establish a compliance and risk management program to be used prior to offering any new lending product or service that it does not currently offer or engages in such activity with a third party, and to maintain records consistent with regulations and records related to credit card programs and accounts. The Company believes that its current quality control, risk management and compliance programs for new lending activities fulfill substantially all of the requirements of the Consent Order; however compliance with the Consent Order will require additional administration and documentation of any future new 27 lending activity. While the Company disagreed with the necessity of this regulatory action, it consented to the Consent Order and to certain other compliance-related corrective actions to maintain its regulatory relationships and to avoid the expense and management distraction of opposing the Consent Order. While the Bank has been advised by the OTS that they will not seek any further corrective action by the Bank in connection with the Special Compliance Examination, in March 2001 the OTS made a referral to the DoJ for review of certain fair lending or other compliance issues arising from the Special Compliance Examination. The Bank believes that these issues primarily involve the collection and origination activities of third parties; however, no assurance can be given that there will not be a DoJ proceeding regarding the Bank's fair lending or other compliance issues arising from the Special Compliance Examination or that potential future actions by the DoJ would not have a material adverse effect on the operations, financial condition or results of operations of the Bank or the Company. The Company believes, based on its knowledge of the issues and on the advice of its counsel, that any allegations of fair lending or other compliance violations by the Bank raised in the Special Compliance Examination are not meritorious and that the Bank has strong defenses against any such potential allegations. The legal responsibility and financial exposure with respect to some of the foregoing claims and other matters presently cannot be reasonably ascertained and, accordingly, there is a risk that the outcome of one or more of these outstanding claims or matters could result in a material adverse effect on the financial condition or results of operations of the Company. In the normal course of business, the Company and certain of its subsidiaries have a number of other lawsuits and claims pending. Although there can be no assurance, the Company believes that none of these other lawsuits or claims will have a material adverse effect on the financial condition or business of the Company. 28 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K EXHIBITS EXHIBIT NO. DESCRIPTION ------------- ----------------------------------------------------------------- 3.1 Certificate of Incorporation of Bank Plus Corporation (Incorporated by reference to Exhibit 3.1 to the Form 8-B filed with the SEC on May 10, 1996).* 3.2 Amended and Restated Bylaws of Bank Plus Corporation (incorporated by reference to Exhibit 5 to the report on Form 8-K filed with the SEC on March 30, 1999).* 3.3 Certificate of Designations of Series C Junior Participating Cumulative Preferred Stock (Par Value $.01 per share) of Bank Plus Corporation (incorporate by reference to Exhibit 3.3 to the annual report on form 10-K for the year ended December 31, 1998).* 4.1 Specimen of Common Stock Certificate (incorporated by reference to Exhibit 4.1 to the Form 8-B filed with the SEC on May 10, 1996).* 4.2 Indenture dated as of July 18, 1997, between Bank Plus Corporation and The Bank of New York, as trustee relating to the 12% Senior Notes due July 18, 2007, of Bank Plus Corporation (incorporated by reference to Exhibit 4.4 of the Registration Statement on Form S-8 of Bank Plus filed on September 4, 1997).* 4.3 Form of Amended and Restated Rights Agreement, dated as of March 26, 1999, between Bank Plus and American Stock Transfer & Trust Company, as Rights Agent (incorporated by reference to Exhibit 4 to the report on Form 8-K filed with the SEC on March 30, 1999).* 4.31 Form of First Amendment dated as of July 20, 2001 to Amended and Restated Rights Agreement between Bank Plus and American Stock Transfer & Trust Company, as Rights Agent. 10.1 Form of 1999 Nonemployee Director Stock Option Agreement between the Company and certain nonemployee directors (incorporated by reference to Exhibit 10.2 to the annual report on form 10-K for the year ended December 31, 1999).* 10.2 Stock Option Agreement between the Company and James E. Stutz dated January 26, 2000 (incorporated by reference to Exhibit 10.2 to the annual report on form 10-K for the year ended December 31, 2000).* 10.3 Agreement for Information Technology Services dated as of December 3, 1999 between Fidelity and Electronic Data Systems Corporation and Electronic Data Systems Corporation Information Services L.L.C. (incorporated by reference to Exhibit 10.5 to the annual report on form 10-K for the year ended December 31, 1999).* 10.4 Agreement to Purchase Assets and Assume Liabilities dated as of August 6, 1999 by and between Fidelity and Peoples Bank of California (incorporated by reference to Exhibit 10.4 to the annual report on form 10-K for the year ended December 31, 2000).* 10.5 Agreement to Purchase Assets and Assume Liabilities dated as of February 7, 2000 by and between Fidelity and First Federal Bank of California (incorporated by reference to Exhibit 10.6 to the annual report on form 10-K for the year ended December 31, 1999).* 29 EXHIBIT NO. DESCRIPTION ------------- ----------------------------------------------------------------- 10.6 Mortgage Loan Purchase Agreement dated as of February 7, 2000 by and between Fidelity and First Federal Bank of California (incorporated by reference to Exhibit 10.7 to the annual report on form 10-K for the year ended December 31, 1999).* 10.7 Agreement to Purchase Assets and Assume Liabilities dated as of February 3, 2000 by and between Fidelity and Jackson Federal Bank (incorporated by reference to Exhibit 10.8 to the annual report on form 10-K for the year ended December 31, 1999).* 10.8 Purchase and Assumption Agreement dated as of June 2, 2000 by and between Fidelity and Household Bank (SB), N.A. (incorporated by reference to Exhibit 10.9 to the quarterly report on form 10-Q for the month ended June 30, 2000).* 10.9 Agreement to Purchase Assets and Assume Liabilities dated as of May 22, 2000 by and between Fidelity and First Bank of Beverly Hills. (incorporated by reference to Exhibit 10.10 to the quarterly report on form 10-Q for the month ended June 30, 2000).* 10.10 Stipulation and Consent to the Issuance of an Order to Cease and Desist and for Affirmative Relief dated November 1, 2000 between the Bank and the OTS, and Order to Cease and Desist and for Affirmative Relief dated November 1, 2000 issued by OTS to the Bank (incorporated by reference to Exhibit 10.11 to the form 8-K filed with SEC on November 11, 2000).* 10.11 Purchase and Assumption Agreement dated as of December 11, 2000 by and between Fidelity and Household Bank (SB), N.A (incorporated by reference to Exhibit 10.11 to the annual report on form 10-K for the year ended December 31, 2000).* 10.12 Employment Contract by and between Bank Plus Corporation and Mark K. Mason dated as of October 28, 1998 (incorporated by reference to Exhibit 10.40 to the annual report on form 10-K for the year ended December 31, 1998).* 10.13 Amendment No. 1 to the Letter Agreement by and between Bank Plus Corporation and Mark K. Mason dated as of January 26, 2000 (incorporated by reference to Exhibit 10.13 to the annual report on form 10-K for the year ended December 31, 2000).* 10.14 Employment Contract by and between Bank Plus Corporation and James E. Stutz dated as of January 26, 2000 (incorporated by reference to Exhibit 10.14 to the annual report on form 10-K for the year ended December 31, 2000).* 10.15 Amendment No. 1 to the Letter Agreement by and between Bank Plus Corporation and James E. Stutz dated as of January 26, 2000 (incorporated by reference to Exhibit 10.15 to the annual report on form 10-K for the year ended December 31, 2000).* 10.16 Employment Contract by and between Bank Plus Corporation and Godfrey B. Evans dated as of November 19, 1998 (incorporated by reference to Exhibit 10.41 to the annual report on form 10-K for the year ended December 31, 1998).* 10.17 Amendment No. 1 to the Letter Agreement by and between Bank Plus Corporation and Godfrey B. Evans dated as of January 26, 2000 (incorporated by reference to Exhibit 10.17 to the annual report on form 10-K for the year ended December 31, 2000).* 30 EXHIBIT NO. DESCRIPTION ------------- ----------------------------------------------------------------- 10.18 Employment Contract by and between Bank Plus Corporation and John M. Michel dated as of November 19, 1998 (incorporated by reference to Exhibit 10.42 to the annual report on form 10-K for the year ended December 31, 1998).* 10.19 Amendment No. 1 to the Letter Agreement by and between Bank Plus Corporation and John M. Michel dated as of January 26, 2000 (incorporated by reference to Exhibit 10.19 to the annual report on form 10-K for the year ended December 31, 2000).* 10.20 Employment Contract by and between Bank Plus Corporation and Ronald A. Stoffers dated as of November 29, 2000 (incorporated by reference to Exhibit 10.20 to the annual report on form 10-K for the year ended December 31, 2000).* 10.21 Standstill Agreement dated March 30, 2000 between Bank Plus Corporation and Strome Partners, L.P.; Strome Offshore Limited; Strome Hedgecap Fund, L.P.; Strome Hedgecap Limited; Strome Investment Management, L.P.; SSCO, Inc. and Mark E. Strome (incorporated by reference to Exhibit 10.1 to the Form 8-K filed with the SEC on April 6, 2000).* 10.22 Standstill Agreement dated March 31, 2000 between Bank Plus Corporation and Jeffrey L. Gendell; Tontine Management, L.L.C.; Tontine Partners, L.P.; Tontine Financial Partners, L.P. and Tontine Overseas Associates, L.L.C (incorporated by reference to Exhibit 10.2 to the Form 8-K filed with the SEC on April 6, 2000).* 10.23 Amendment No. 2 to the Letter Agreement by and between Bank Plus Corporation and Mark K. Mason dated as of February 13, 2001 (incorporated by reference to Exhibit 10.23 to the annual report on form 10-K for the year ended December 31, 2000).* 10.24 Amendment No. 2 to the Letter Agreement by and between Bank Plus Corporation and Godfrey B. Evans dated as of February 13, 2001 (incorporated by reference to Exhibit 10.24 to the annual report on form 10-K for the year ended December 31, 2000).* 10.25 Amendment No. 2 to the Letter Agreement by and between Bank Plus Corporation and John M. Michel dated as of February 13, 2001 (incorporated by reference to Exhibit 10.25 to the annual report on form 10-K for the year ended December 31, 2000).* 10.26 Agreement to Purchase Assets and Assume Liabilities dated as of May 26, 1999 by and between Fidelity and Peoples Bank of California (incorporated by reference to Exhibit 10.26 to the annual report on form 10-K for the year ended December 31, 2000).* 10.27 Agreement and Plan of Merger by and between Bank Plus Corporation and FBOP Corporation dated June 2, 2001 (filed as Exhibit 2.1 to a current report on Form 8-K dated June 2, 2001).* * Indicates previously filed documents. REPORTS ON FORM 8-K Current report on Form 8-K dated June 2, 2001 reporting an Agreement and Plan of Merger by and between Bank Plus Corporation and FBOP Corporation dated June 2, 2001. 31 SIGNATURES PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THE REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED THEREUNTO DULY AUTHORIZED. BANK PLUS CORPORATION Registrant Date: August 6, 2001 /s/ Mark K. Mason -------------------------------------- Mark K. Mason PRESIDENT AND CHIEF EXECUTIVE OFFICER; VICE CHAIRMAN OF THE BOARD (PRINCIPAL EXECUTIVE OFFICER) Date: August 6, 2001 /s/ John M. Michel -------------------------------------- John M. Michel EXECUTIVE VICE PRESIDENT AND CHIEF FINANCIAL OFFICER (PRINCIPAL FINANCIAL OFFICER) 32

BANK PLUS CORP 10-Q