SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-K
[ X ] Annual Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 (fee required)
For the fiscal year ended: December 31, 2002
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934 (no fee required)
For the Transition period from ______ to __________.
Commission File No. 0-22880
Fidelity Federal Bancorp
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(Exact name of registrant as specified in its charter)
Indiana 35-1894432
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(State of other jurisdiction (I.R.S. Employer
of Incorporation or Identification No.)
Organization)
18 North West Fourth Street, PO Box 1347, Evansville, Indiana 47706-1347
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(Address of principal executive offices) (Zip Code)
Registrant's Telephone number, including area code (812) 424-0921
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Securities registered pursuant to Section 12 (b) of the Act: None
Securities registered pursuant to Section 12 (g) of the Act: Common Stock,
$1 Stated Value
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(Title of Class)
DOCUMENTS INCORPORATED BY REFERENCE
Documents Part of Form 10-K into which Incorporated
Portions of the 2002 Annual
Report to Shareholders Part II
Portions of the Definitive Proxy
Statement for the Annual Meeting
of Shareholders to be held
April 24, 2003. Part III
Exhibit index is on page 18
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 past preceding 12 months, and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
--- ---
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act). Yes No
--- ---
Indicate by checkmark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be contained to the best of
Registrant's knowledge, in the definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
form 10-K. [ X ]
The aggregate market value of voting stock held by non-affiliates of the
Registrant (for purposes of such calculation, includes persons who are not
directors, executive officers, or holders of more than 10% of the registrant's
common stock) based on the average bid and asked prices of such stock at June
28, 2002 was approximately $6,145,277.
Indicated below is the number of shares outstanding of each of the registrant's
classes of common stock as of February 14, 2003.
Common Stock - 6,740,883 shares
FIDELITY FEDERAL BANCORP
Index
PART I
Page
ITEM 1 - Business 3
ITEM 2 - Properties 11
ITEM 3 - Legal Proceedings 11
ITEM 4 - Submission of Matters to a Vote of Security Holders 11
PART II
ITEM 5 - Market for Registrant's Common Equity
and Related Stockholder Matters 11
ITEM 6 - Selected Financial Data 11
ITEM 7 - Management's Discussion and Analysis of
Financial Condition and Results of Operations 11
ITEM 7 A - Quantitative and Qualitative Disclosures About Market Risk 12
ITEM 8 - Financial Statements and Supplementary Data 12
ITEM 9 - Changes in and Disagreements with Accountants
on Accounting and Financial Disclosures 12
PART III
ITEM 10 - Directors and Executive Officers of the Registrant 12
ITEM 11 - Executive Compensation 12
ITEM 12 - Security Ownership of Certain Beneficial
Owners and Management and Related Stockholder Matters 12
ITEM 13 - Certain Relationships and Related Transactions 12
ITEM 14 - Controls and Procedures
PART IV
ITEM 15 - Exhibits, Financial Statement Schedules and Reports
on Form 8-K 13
SIGNATURES 15
PART I
ITEM 1. BUSINESS
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION
This discussion contains certain forward-looking statements that are subject to
risks and uncertainties and includes information about possible or assumed
future results of operations. Many possible events or factors could affect our
future financial results and performance. This could cause results or
performance to differ materially from those expressed in our forward-looking
statements. Words such as "expects", "anticipates", "may", "could", "intends",
"projects", "believes", "estimates", and variations of such words and other
similar expressions are intended to identify such forward-looking statements.
These statements are not guarantees of future performance and involve certain
risks, uncertainties and assumptions which are difficult to predict. Therefore,
actual outcomes and results may differ materially from what is expressed or
forecasted in, or implied by, such forward-looking statements. Investors and
readers should not rely solely on or place undue reliance on the forward-looking
statements and should consider all uncertainties and risks discussed throughout
this document. These statements are representative only on the date hereof.
The possible events or factors include the following: the restrictions imposed
by the Supervisory Agreement between the OTS and our savings bank subsidiary,
United Fidelity Bank; the dependence of our loan growth and funding on economic
conditions, as well as various discretionary factors, such as decisions to sell
or purchase certain loans or loan portfolios; participations of loans; retention
of residential mortgage loans; and the management of a borrower. The rate of
charge-offs and loan and letter of credit loss provisions can be affected by
local, regional and international economic and market conditions, concentrations
of borrowers, industries, products and geographic locations, the mix of the loan
portfolio and management's judgments regarding the collectibility of loans.
Liquidity requirements may change as a result of fluctuations in assets and
liabilities and off-balance sheet exposures, which will impact our capital and
debt financing needs and the mix of funding sources. Decisions to purchase, hold
or sell securities are also dependent on liquidity requirements and market
volatility, as well as on and off-balance sheet positions. Factors that may
impact interest rate risk include local, regional and international economic
conditions, levels, mix, maturities, yields or rates of assets and liabilities,
and the wholesale and retail funding sources of United. We are also exposed to
the potential of losses arising from adverse changes in market rates and prices
which can adversely impact the value of financial products, including
securities, loans, deposits, debt and derivative financial instruments, such as
futures, forwards, swaps, options and other financial instruments with similar
characteristics.
In addition, the banking industry in general is subject to various monetary and
fiscal policies and regulations, which include those determined by the Federal
Reserve Board, the OCC, the FDIC, state regulators and the Office of Thrift
Supervision, whose policies and regulations could affect our results. Other
factors that may cause actual results to differ from the forward-looking
statements include the following: competition with other local, regional and
international banks, thrifts, credit unions and other nonbank financial
institutions, such as investment banking firms, investment advisory firms,
brokerage firms, investment companies and insurance companies, as well as other
entities which offer financial services, located both within and outside the
United States and through alternative delivery channels such as the internet;
interest rate, market and monetary fluctuations; inflation; market volatility;
general economic conditions and economic conditions in the geographic regions
and industries in which we operate; introduction and acceptance of new
banking-related products, services and enhancements; fee pricing strategies,
mergers and acquisitions and our ability to manage these and other risks.
Overview
Fidelity Federal Bancorp, ("Fidelity") incorporated in 1993 under the laws of
the State of Indiana, is a registered savings and loan holding company with its
principal office in Evansville, Indiana. Fidelity's savings bank subsidiary,
United Fidelity Bank, fsb ("United"), was organized in 1914 and is a
federally-chartered stock savings bank located in Evansville, Indiana. Fidelity,
through its savings bank subsidiary, is engaged in the business of obtaining
funds in the form of savings deposits and other borrowings and investing such
funds in consumer, commercial, and mortgage loans, and in investment and money
market securities.
United's subsidiaries, Village Management Corporation and Village Capital
Corporation have previously been involved in various aspects of providing real
estate mortgage banking services and managing affordable housing projects. In
May 2000, a subsidiary of Pedcor Holdings LLC ("Pedcor"), began providing
management and certain accounting services for the properties previously managed
by Village Management Corporation. Village Management completed this transition
by the end of June 2000 and is currently inactive. Village Capital Corporation
has earned fees by providing real estate mortgage banking services. Village
Capital Corporation is currently inactive, other than fee income it records on
transactions previously completed. Another subsidiary of United, Village
Insurance Corporation, receives fee income for credit life and accident health
insurance sales. United, in 2001, formed a new subsidiary, United Fidelity
Finance,LLC, for purposes of acquiring, owning, purchasing, holding, selling,
transferring, pledging and otherwise dealing with automobile loan receivables.
United Fidelity Finance was utilized during 2002 to complete an automobile loan
securitization transaction.
Fidelity had consolidated total assets of $132.3 million and total shareholders'
equity of $9.6 million as of December 31, 2002.
Fidelity's subsidiaries at December 31, 2002, are listed below:
Subsidiary Principal Office Year Organized Assets (in thousands)
1. United Fidelity Bank, fsb Evansville, IN 1914 $127,613
Subsidiaries of United Fidelity
Bank, fsb:
Village Capital Corporation Evansville, IN 1994 68
Village Insurance Corporation Evansville, IN 1980 106
Village Management Corporation Evansville, IN 1992 55
Fidelity's home office is located at 18 North West Fourth Street,
Evansville, Indiana, 47708 and its telephone number is (812) 424-0921.
Competition
Fidelity and United face strong direct competition for deposits, loans and
other financial-related services. United competes in Indiana, Kentucky and
Illinois with other thrifts, commercial banks, credit unions, stockbrokers,
finance companies and insurance companies. Some of these competitors are local,
while others are statewide or national. United competes for deposits principally
by offering depositors a variety of deposit programs, convenient office
locations, hours and other services, and for loan originations primarily through
competitive interest rates and fees, the efficiency and quality of service
provided and the variety of loan products offered. Some of the non-bank
financial institutions and financial services organizations with which United
competes are not subject to the same degree of regulation as that imposed on
federal savings banks, thrifts, or thrift-holding companies. As a result, such
competitors may have advantages over United in providing certain services. As of
February 28, 2003, approximately 3 locally based banks (and several others with
branch or loan production offices), 2 thrifts, and at least 10 credit unions
operated in the Evansville, Indiana metropolitan area, which is United's
principal deposit market area. Many competitors are substantially larger or have
significantly greater capital resources than United. Due to enacted legislation
to allow unlimited interstate branching, Fidelity and United may experience
heightened competition from existing competitors and other major financial
institutions seeking to expand their regional banking presence in Indiana.
SUPERVISION AND REGULATION
In addition to the general provisions discussed below, Fidelity and United are
also subject to the provisions of the Supervisory Agreement entered into with
the OTS in February 1999, which also impacts the operations of the Company and
the Savings Bank. The footnote entitled "Other Restrictions" in the audited
financial statement provides further details.
Regulation of the Company
Fidelity is a savings and loan holding company within the meaning of
the Home Owners' Loan Act of 1933 ("HOLA"). Fidelity is registered with the
Office of Thrift Supervision and is subject to OTS regulations, examinations,
supervision and reporting requirements.
The Home Owners' Loan Act generally prohibits a savings and loan
holding company, without prior approval of the OTS, from (i) acquiring control
of any other savings association or savings and loan holding company; or (ii)
acquiring more than 5% of the voting shares of a savings association or savings
and loan holding company which is not a subsidiary. Except with the prior
approval of the OTS, no director or officer of a savings and loan holding
company or person owning or controlling more than 25% of such company's stock,
may acquire control of any savings association, other than a subsidiary
association, or any other savings and loan holding company.
Fidelity operates as a unitary savings and loan holding company. There
are generally no restrictions on the activities of a unitary savings and loan
holding company. However, if the OTS determines that there is reasonable cause
to
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believe that an activity of a savings and loan holding company constitutes a
serious risk to the financial safety, soundness, or stability of its subsidiary
savings association, the OTS may impose restrictions it considers necessary to
address such risk, which may include a limitation on the payment of dividends.
If the savings association subsidiary of a unitary savings and loan holding
company fails to meet the Qualified Thrift Lender Test ("QTL test"), as
discussed below, then the holding company would be required to register as, and
become subject to the activities restrictions applicable to, bank holding
companies.
If Fidelity were to acquire control of another savings association it
would become a multiple savings and loan holding company. In general, the
activities of Fidelity and any of its subsidiaries (other than United or other
subsidiary savings associations) would be subject to further restrictions. The
Home Owners' Loan Act generally provides that, among other things, no multiple
savings and loan holding company or subsidiary which is not a savings
association may engage in any business activity other than (i) furnishing or
performing management services for a subsidiary savings association, (ii)
conducting an insurance agency or escrow business, (iii) holding, managing or
liquidating assets owned by or acquired from a subsidiary savings association,
(iv) holding or managing properties used or occupied by a subsidiary savings
association, (v) acting as trustee under deeds of trust, (vi) those activities
previously directly authorized by regulation as of March 5, 1987, to be engaged
in by multiple savings and loan holding companies, or (vii) those activities
authorized by regulation of the Board of Governors of the Federal Reserve System
as permissible for bank holding companies, unless the OTS by regulation
prohibits or limits such activities for savings and loan holding companies.
Those activities described in (vii) above must also be approved by the OTS prior
to being engaged in by a multiple savings and loan holding company.
No company may acquire control of an insured savings association after
May 4, 1999, unless that company either (i) engages only in the financial
activities permissible for a financial holding company or (ii) is a
grandfathered, unitary savings and loan holding company. Generally, any company
that was a unitary savings and loan holding company on May 4, 1999 is
grandfathered. Such a company may continue to operate under present law as long
as (i) the company continues to control only one savings institution or its
successor (excluding supervisory acquisitions) that it controlled on May 4, 1999
and (ii) each controlled institution meets the qualified thrift lender test.
Fidelity is a grandfathered unitary savings and loan holding company.
The OTS may also approve acquisitions resulting in the formation of a
multiple savings and loan holding company which controls savings associations in
more than one state. Generally, this may only occur if the state in which the
association to be acquired is located specifically permits associations to be
acquired by state-chartered associations or savings and loan holding companies
located in the state where the acquiring entity is located or by a holding
company that controls that state-chartered savings association.
Indiana law permits federal and state savings association holding
companies with their home offices located outside of Indiana to acquire savings
associations whose home offices are located in Indiana and savings and loan
holding companies with their principal place of business in Indiana. Indiana
savings and loan holding companies also may acquire savings associations with
their home offices located outside of Indiana and savings association holding
companies with their principal place of business located outside of Indiana.
Savings Bank Regulation
General. As a federally chartered, SAIF-insured savings association,
United is subject to extensive regulation by the OTS and the FDIC. The OTS
periodically examines the books and records of United and, in conjunction with
the FDIC in certain situations, has examination and enforcement powers. This
supervision and regulation are intended primarily for the protection of
depositors and federal deposit insurance funds.
United's activities and operations are subject to a number of detailed,
complex and sometimes overlapping federal and state laws and regulations. These
include state usury and consumer credit laws, state laws relating to
fiduciaries, the Federal Truth-In-Lending Act and Regulation Z, the Federal
Equal Credit Opportunity Act and Regulation B, the Fair Credit Reporting Act,
the Community Reinvestment Act, anti-redlining legislation and antitrust laws.
The earnings of financial institutions are also affected by general economic
conditions and prevailing interest rates, both domestic and foreign and by the
monetary and fiscal policies of the United States Government and its various
agencies, particularly the Federal Reserve.
Additional legislation and administrative actions affecting the banking
industry is often considered by Congress, state legislatures and various
regulatory agencies. It cannot be predicted with certainty whether such
legislation or administrative action will be enacted or the extent to which the
banking industry in general or Fidelity and United in particular would be
affected.
Financial institutions, including United, are generally prohibited from
disclosing nonpublic personal financial information to third parties unless
customers have the opportunity to "opt out" of the disclosure and have not
chosen to "opt out" of such disclosure.
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Qualified Thrift Lender Requirement. In order for United to exercise
the powers granted to federally-chartered savings associations, it must be a
"qualified thrift lender", or a "QTL". A savings association is a QTL if its
qualified thrift investments equal or exceed 65% of the savings association's
portfolio assets on a monthly basis in 9 out of every 12 months. Qualified
thrift investments generally consist of (i) various housing related loans and
investments (such as residential construction and mortgage loans, home
improvement loans, manufactured housing loans, home equity loans and
mortgage-backed securities), (ii) certain obligations of the FSLIC, the FDIC,
the FSLIC Resolution Fund and the Resolution Trust Corporation (for limited
periods), and (iii) shares of stock issued by any Federal Home Loan Bank, the
Federal Home Loan Mortgage Corporation or the Federal National Mortgage
Association. At December 31, 2002, the qualified thrift investment percentage
test for United was 90.5%.
Loans-to-One-Borrower Limitations. The Home Owners' Loan Act generally
requires savings associations to comply with the loans-to-one-borrower
limitations applicable to national banks. In general, national banks may make
loans to one borrower in amounts up to 15% of the bank's unimpaired capital and
surplus, plus an additional 10% of capital and surplus for loans secured by
readily marketable collateral. At December 31, 2002, United's
loan-to-one-borrower limitation was approximately $2.4 million and no loans to a
single borrower exceeded that amount, except as provided herein. Under certain
conditions, a savings association may make loans to one borrower for residential
housing developments in amounts up to 30% of the bank's unimpaired capital and
surplus provided that all loans made in reliance upon the increased lending
limit do not, in the aggregate, exceed 150% of the bank's unimpaired capital and
surplus. At December 31, 2002, United had made $7.1 million such loans under
this higher lending limit.
Commercial Real Property Loans. The Home Owners' Loan Act limits the
aggregate amount of commercial real estate loans that a federal savings
association may make to an amount not in excess of 400% of the savings
association's capital.
Consumer Loans. The Home Owners' Loan Act limits the aggregate amount
of consumer loans that a federal savings association may make to an amount not
in excess of 35% of the savings association's total assets. Under the terms of
the Supervisory Agreement with the OTS, United's consumer loans may not exceed
$25 million, including the retained interest created from the securitization
transaction which totaled $2.1 million at December 31, 2002.
Limitation on Capital Distributions. Under OTS regulations, a savings
association must file an application with the OTS for a capital distribution,
including cash dividends, if (i) it is not eligible for expedited treatment of
its application, (ii) the proposed capital distribution, plus all other capital
distributions of the savings association during the calendar year, exceeds its
net income for that year to date plus its retained net income for the preceding
two years, (iii) it would not be at least adequately capitalized, as defined in
the prompt corrective action regulations of the OTS, or (iv) the proposed
distribution would be in violation of any applicable law, regulation, or
agreement with the OTS. A savings association has no restrictions on capital
distributions as long as, after the distribution, it is still classified as
adequately capitalized. Although no application is required, a prior notice must
filed with the OTS if the savings association would not be well capitalized
after the distribution, or if the savings association is a subsidiary of a
savings and loan holding company. United is currently restricted by the terms of
the Supervisory Agreement with the OTS from paying dividends.
Insurance of Deposits. The FDIC is an independent federal agency that
insures the deposits, up to $100,000 per depositor subject to aggregation rules,
of banks and thrifts and safeguards the safety and soundness of the banking and
thrift industries. The FDIC administers two separate insurance funds, the Bank
Insurance Fund (the "BIF") for commercial banks and state savings banks and the
SAIF for savings associations such as United. The FDIC is required to maintain
designated levels of reserves in each fund.
The FDIC is authorized to establish separate annual assessment rates
for deposit insurance for members of the BIF and members of the SAIF. The FDIC
has established a risk-based assessment system for both SAIF and BIF members.
Under this system, assessments vary depending on the risk the institution poses
to its deposit insurance fund. An institution's risk level is determined based
on its capital level and the FDIC's level of supervisory concern about the
institution.
Annual deposit insurance premiums range between $0.00 and $0.27 per
$100 of deposits and are in effect, based on the assessment determined in
accordance with the risk-assessment system discussed above.
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The Financing Corporation ("FICO") assessment to service the interest
on its bond obligations is separate from the SAIF assessment. As part of the
deposit insurance assessments, institutions pay a FICO assessment for debt
service requirements. The FICO assessment rate is subject to change on a
quarterly basis, depending on the debt service requirements. In 2002, United
paid $.004 per $100 of deposits to comply with this assessment. The total
deposit insurance expense paid was $57,000, $248,000, and $243,000 for 2002,
2001, and 2000, respectively.
Commonly Controlled Banks and Savings Associations. Subject to certain
exceptions, commonly controlled banks and savings associations must reimburse
the FDIC for any losses suffered in connection with a failed bank or savings
association affiliate. Institutions are commonly controlled if one is owned by
another or if both are owned by the same holding company.
Community Reinvestment Act. Ratings of depository institutions under
the Community Reinvestment Act of 1977 ("CRA") must be disclosed. The disclosure
includes both a four-tier descriptive rating using terms such as "outstanding,"
"satisfactory," "needs to improve," or "substantial non-compliance" and a
written evaluation of each institution's performance. United received a
satisfactory rating from the OTS in its most recent CRA examination. Also, the
Federal Housing Finance Board has adopted regulations establishing standards of
community investment and service for members of the FHLB System to meet to be
eligible for long-term advances. These regulations take into account a savings
association's CRA record and the member's record of lending to first-time home
buyers.
Brokered Deposits. Pursuant to the FDIC regulations, well-capitalized
institutions are subject to no brokered deposits limitations, while adequately
capitalized institutions are able to accept, renew or rollover brokered deposit
only (i) with a waiver from the FDIC, and (ii) subject to certain restrictions
on payment of rates. Undercapitalized institutions are not permitted to accept
brokered deposits and may not solicit deposits by offering an effective yield
that significantly exceeds the prevailing effective yields on insured deposits
of comparable maturity in the institution's normal market area or in which such
deposits are being solicited. United is currently restricted by the terms of the
Supervisory Agreement with the OTS from accepting brokered deposits.
Enforcement. The OTS has primary enforcement responsibility over
savings associations and has the authority to bring enforcement action against
all "institution-affiliated parties," including stockholders, and any attorneys,
appraisers and accountants who knowingly or recklessly participate in wrongful
action likely to have an adverse effect on an insured institution. Civil
penalties cover a wide range of violations and actions and range up to $25,000
per day unless a finding of reckless disregard is made, in which case penalties
may be as high as $1 million per day. In addition, regulators are provided with
flexibility to impose enforcement action on an institution that fails to comply
with its regulatory requirements, particularly with respect to the capital
requirements. Possible enforcement action ranges from the imposition of a
capital directive to receivership, conservatorship or the termination of deposit
insurance. The FDIC has the authority to recommend to the OTS that enforcement
action to be taken with respect to a particular savings institution. If action
is not taken by the OTS, the FDIC has authority to take such action under
certain circumstances.
Standards for Safety and Soundness. The federal banking agencies have
prescribed for all insured depository institutions safety and soundness
standards in the form of guidelines, relating to internal controls and
information systems, internal audit systems, loan documentation, credit
underwriting, interest rate risk exposure, asset quality and growth, earnings,
and compensation, fees and benefits, and safekeeping customer information. If an
insured depository institution fails to meet any of the standards described
above, it will be required to submit to the appropriate federal banking agency a
plan specifying the steps that will be taken to cure the deficiency. If an
institution fails to submit an acceptable plan or fails to implement the plan,
the appropriate federal banking agency will issue an order requiring the
institution to take immediate steps to correct a safety and soundness
deficiency.
Real Estate Lending Standards. OTS regulations require savings
associations to establish and maintain written internal real estate lending
policies. Each association's lending policies must be consistent with safe and
sound banking practices and appropriate to the size of the association and the
nature and scope of its operations. The policies must establish loan portfolio
diversification standards; establish prudent underwriting standards, including
loan-to-value limits that are clear and measurable; establish loan
administration procedures for the association's real estate portfolio; and
establish documentation, approval, and reporting requirements to monitor
compliance with the association's real estate lending policies. The
association's written real estate lending policies must be reviewed and approved
by the association's Board of Directors at least annually. Further, each
association is expected to monitor conditions in its real estate market to
ensure that its lending policies continue to be appropriate for current market
conditions.
Prompt Corrective Regulatory Action. The Federal Deposit Insurance Act
establishes a system of prompt corrective action to resolve the problems of
undercapitalized institutions. Under this system, the banking regulators are
required to
7
take certain supervisory actions against undercapitalized institutions, the
severity of which depends upon the institution's degree of capitalization.
Under the OTS prompt corrective action regulation, generally, a savings
association that has a total risk-based capital of less than 8.0% or a tier 1
risk-based capital ratio or leverage ratio of less than 4.0% is considered to be
undercapitalized. A savings association that has a total risk-based capital of
less than 6.0%, a tier 1 risk-based capital ratio of less than 3%, or a leverage
ratio that is less than 3.0% is considered to be "significantly
undercapitalized" and a savings association that has a tangible capital to
assets ratio equal to or less than 2% is deemed to be "critically
undercapitalized." Generally, a capital restoration plan must be filed with the
OTS within 45 days of the date an association receives notice that it is
"undercapitalized," "significantly undercapitalized" or "critically
undercapitalized". In addition, numerous mandatory supervisory actions become
immediately applicable to the associations, including, but not limited to,
restrictions on growth, investment activities, capital distributions, and
affiliate transactions. The OTS could also take any one of a number of
discretionary supervisory actions, including the issuance of a capital directive
and the replacement of senior executive officers and directors.
Capital Requirements. The OTS has adopted capital standards under which
savings associations must maintain (i) "core capital" in an amount not less than
3% of total adjusted assets for a savings association with a composite rating of
1, and not less than 4% for all other savings associations, (ii) "tangible
capital" in an amount not less than 1.5% of total adjusted assets, and (iii) a
level of risk-based capital equal to 8.0% of risk-weighted assets.
Under OTS regulations "core capital" includes common stockholders'
equity, noncumulative perpetual preferred stock and related surplus, and
minority interests in the equity accounts of consolidated subsidiaries, less
nonqualifying intangible assets. In determining compliance with the capital
standards, a savings association must deduct from capital its entire investment
in and loans to any subsidiary engaged in activities not permissible for a
national bank, other than subsidiaries (i) engaged in such non-permissible
activities solely as agent for their customers; (ii) engaged in mortgage banking
activities; or (iii) that are themselves savings associations or companies, the
only investment of which is another savings association, acquired prior to May
1, 1989.
Capital requirements higher than the generally applicable minimum
requirement may be established for a particular savings association if the OTS
determines that the association's capital was or may become inadequate in view
of its particular circumstances. Individual minimum capital requirements may be
appropriate where the savings association is receiving special supervisory
attention, has a high degree of exposure to interest rate risk, losses resulting
in capital inadequacy, poor liquidity or cash flow, or poses other safety or
soundness concerns.
In determining compliance with the risk-based capital requirements, a
savings association must determine its interest rate risk and, if such risk
exceeds a certain level, it must deduct an interest rate risk component in
calculating its total capital for purposes of determining whether it meets its
risk-based capital requirements. An association's interest rate risk (IRR) is
measured by the decline in the net portfolio value resulting from a 200 basis
point increase or decrease in market interest rates. If an association's
measured IRR exposure exceeds 2%, it must then deduct an IRR component from
total capital for determining its risk-based capital requirement.
The Savings Bank's Subsidiaries. The OTS regulations permit federal
savings associations to invest in the capital stock, obligations or specified
types of securities of subsidiaries known as "service corporations" and as
"operating subsidiaries". Operating subsidiaries may engage in any acitivity in
which the savings association may engage. There is no limit as to the amount of
the investment in an operating subsidiary. A service corporation may engage in
certain specified activities. The savings association may make loans to a
service corporation and joint ventures in which a service corporation is a
participant in an aggregate amount not exceeding 3% of an association's assets,
provided any investment over 2% is used for specified community or inner-city
development purposes. The FDIC may, after consultation with the OTS, prohibit
specific activities if it determines such activities pose a serious threat to
SAIF.
Assessments. Savings associations are required by OTS regulation to pay
assessments to the OTS to fund the operations of the OTS. The general assessment
is computed upon the savings association's total assets, condition, and
complexity of its operations, including consolidated subsidiaries, as reported
in United's latest quarterly Thrift Financial Report. United's total assessment
for the year ended December 31, 2002 was $69,000.
Acquisitions and Branching
The Bank Holding Company Act specifically authorizes a bank holding
company, upon receipt of appropriate regulatory approvals, to acquire control of
any savings association or holding company thereof wherever located. Similarly,
a savings and loan holding company may acquire control of a bank. Moreover,
federal savings associations may acquire or
8
be acquired by any insured depository institution. Regulations promulgated by
the Federal Reserve Board restrict the branching authority of savings
associations acquired by bank holding companies.
The OTS has adopted regulations which permit nationwide branching to
the extent permitted by federal statute. Federal statutes permit federal savings
associations to branch outside of their home state if the association meets the
domestic building and loan test in Section 7701(a)(19) of the Internal Revenue
Code or the asset composition test of Section7701(c) of the Internal Revenue
Code. Branching that would result in the formation of a multiple savings and
loan holding company controlling savings associations in more than one state is
permitted if the law of the state in which the savings association to be
acquired is located specifically authorizes acquisitions of its state-chartered
associations by state-chartered associations or their holding companies in the
state where the acquiring association or holding company is located. Moreover,
Indiana banks and savings associations are permitted to acquire other Indiana
banks and savings associations and to establish branches throughout Indiana.
Transactions with Affiliates
Pursuant to the Home Owners' Loan Act, transactions engaged in by a
savings association or one of its subsidiaries with affiliates of the savings
association generally are subject to the affiliate transaction restrictions
contained in Sections 23A and 23B of the Federal Reserve Act in the same manner
and to the same extent as such restrictions now apply to transactions engaged in
by a member bank or one of its subsidiaries with affiliates of the member bank.
Section 23A of the Federal Reserve Act imposes both quantitative and qualitative
restrictions on transactions engaged in by a member bank or one of its
subsidiaries with an affiliate, while Section 23B of the Federal Reserve Act
requires, among other things, that all transactions with affiliates be on terms
substantially the same, and at least as favorable to the member bank or its
subsidiary, as the terms that would apply to or would be offered in a comparable
transaction with an unaffiliated party. Loans to executive officers, directors,
and principal shareholders must comply with Section 22(h) of the Federal Reserve
Act, which requires these loans be made on terms substantially the same as
offered in comparable transactions to other persons. United was in compliance
with these rules at December 31, 2002.
Federal Home Loan Bank System
United is a member of the Federal Home Loan Bank of Indianapolis. The
Federal Home Loan Bank System consists of 12 regional Federal Home Loan Banks
("FHLBs"), each subject to supervision and regulation by the Federal Housing
Finance Board (the "FHFB"). The FHLBs provide a central credit facility for
members. As a member of the FHLB of Indianapolis, United is required to own
shares of capital stock in the FHLB in an amount at least equal to 1% of the
aggregate principal amount of its unpaid residential mortgage loans, home
purchase contracts, and similar obligations at the beginning of each year, or
1/20 of its advances (borrowings) from the FHLB, whichever is greater. As of
December 31, 2002, United was in compliance with this requirement.
Sarbanes-Oxley Act
On July 30, 2002, President George W. Bush signed into law the Sarbanes-Oxley
Act of 2002 (the "Sarbanes-Oxley Act"). The Sarbanes-Oxley Act implements a
broad range of corporate governance and accounting measures for public companies
designed to promote honesty and transparency in corporate America and better
protect investors from the type of corporate and accounting scandals that have
occurred during the past year. The Sarbanes-Oxley Act's principal legislation
includes:
o the creation of an independent accounting oversight board;
o auditor independence provisions which restrict non-audit services that
accountants may provide to their audit clients;
o additional corporate governance and responsibility measures, including
the requirement that the chief executive officer and chief financial
officer certify financial statements;
o the forfeiture of bonuses or other incentive-based compensation and
profits from the sale of an issuer's securities by directors and senior
officers in the twelve month period following initial publication of
any financial statements that later require restatement;
o an increase the oversight of, and enhancement of certain requirements
relating to audit committees of public companies and how they interact
with the company's independent auditors;
9
o requirements that audit committee members must be independent and are
absolutely barred from accepting consulting, advisory or other
compensatory fees from the issuer;
o requirements that companies disclose whether at least one member of the
committee is a "financial expert" (as such term will be defined by the
Securities and Exchange Commission) and if not, why not;
o expanded disclosure requirements for corporate insiders, including
accelerated reporting of stock transactions by insiders and a
prohibition on insider trading during pension blackout periods;
o a prohibition on personal loans to directors and officers, except
certain loans made by insured financial institutions;
o disclosure of a code of ethics and filing a Form 8-K for a change or
waiver of such code;
o mandatory disclosure by analysts of potential conflicts of interest;
and
o a range of enhanced penalties for fraud and other violations.
Although we anticipate that we will incur additional expense in complying with
the provisions of the Sarbanes-Oxley Act and the resulting regulations,
management does not expect that such compliance will have a material impact on
our results of operations or financial condition.
US Patriot Act
On October 26, 2001, President George W. Bush signed the United and
Strengthening America by Providing Appropriate Tools Required to Intercept and
Obstruct Terrorism Act of 2001 (the "USA Patriot Act"). The USA Patriot Act is
intended to strengthen the ability of U. S. Law Enforcement to combat terrorism
on a variety of fronts. The potential impact of the USA Patriot Act on financial
institutions is significant and wide-ranging. The USA Patriot Act contains
sweeping anti-money laundering and financial transparency laws and requires
financial institutions to implement additional policies and procedures with
respect to, or additional measures designed to address, any or all of the
following matters, among others: money laundering, suspicious activities and
currency transaction reporting; and currency crimes.
Personnel
As of December 31, 2002 Fidelity had 73 full-time equivalent employees. The
employees are not represented by any collective bargaining unit. Fidelity
believes its relations with its employees are good.
Fidelity maintains group life, hospital, surgical, dental, major medical,
and long-term disability programs for full-time employees. Fidelity also
participates in a defined benefit pension plan covering all eligible employees,
as well as a defined contribution 401(k) plan.
10
ITEM 2. PROPERTIES
- -------
The following table sets forth the location of Fidelity's savings bank
offices, all of which are owned by United, as well as certain additional
information relating to these offices as of December 31, 2002.
- --------------------------------------------------------------------------
Office Location Year Facility Opened Net Book Value
- --------------------------------------------------------------------------
Home Office 1974 $898,000
18 NW Fourth Street
Evansville, IN 47708
- --------------------------------------------------------------------------
Eastside Branch 1997 1,673,000
700 S. Green River Rd
Evansville, IN 47715
- --------------------------------------------------------------------------
Northside Branch 1976 80,000
4441 First Avenue
Evansville, IN 47710
- --------------------------------------------------------------------------
Westside Branch 1979 83,000
4801 W. Lloyd Expressway
Evansville, IN 47712
- --------------------------------------------------------------------------
Bell Oaks Branch 2001 481,000
8533 Bell Oaks Drive
Newburgh, IN 47630
- --------------------------------------------------------------------------
ITEM 3. LEGAL PROCEEDINGS
- -------
There are no material pending legal proceedings, other than ordinary
routine litigation incidental to the Registrant's business, to which the
Registrant or its subsidiaries is a party or of which any of their property is
the subject.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
- -------
No matter was submitted to a vote of the Registrant's security holders
during the fourth quarter of the year ended December 31, 2002.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDERS
- ------- MATTERS
The discussion concerning the market for the registrant's common equity and
related shareholder matters under the heading "Market Summary" is included in
the 2002 Annual Report to Stockholders on page 4 and is incorporated herein by
reference. Cash dividends by quarter for the current and previous year appear
under the heading "Quarterly Results of Operations" included in the 2002 Annual
Report to Stockholders on page 26 and is incorporated herein by reference. As of
February 14, 2003 Fidelity had 445 shareholders of record.
ITEM 6. SELECTED FINANCIAL DATA
- -------
Selected Financial and Other Data included in the 2002 Annual Report to
Stockholders on page 5 is incorporated herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
- ------- RESULTS OF OPERATIONS
Management' Discussion and Analysis of Financial Condition and Results of
Operations included in the 2002 Annual Report to Stockholders on pages 6 through
26 is incorporated herein by reference.
11
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOVE MARKET RISK
- --------
The discussion concerning quantitative and qualitative disclosures about market
risk under the heading "Asset/Liability Management" included in the 2002 Annual
Report to Stockholders on pages 17 and 18, and is incorporated herein by
reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
- -------
The financial statements and supplementary data required under this item are
incorporated herein by reference to pages 27 through 62 of the 2002 Annual
Report to Stockholders.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
- ------- FINANCIAL DISCLOSURES
No response to this item is required.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
- --------
The information is to be provided under this Item is incorporated by reference
to the information under the heading "Information Concerning Nominees, Directors
and Executive Officers" on pages 3 and 4 and under the heading "Section 16(a)
Beneficial Ownership Reporting Compliance" on page 14, (up to but exclusive of
the information presented under the caption "Item 2. Ratification of Independent
Auditors of Fidelity"), of the Company's definitive proxy statement dated March
24, 2003, as filed with the Securities and Exchange Commission pursuant to
Regulation 14A.
ITEM 11. EXECUTIVE COMPENSATION
- --------
The information to be provided under this Item is incorporated by reference to
the information under the heading "Executive Compensation and Other Information"
on pages 5 through 11 (up to but exclusive of the information presented under
the caption "Security Ownership of Management") of the Company's definitive
proxy statement dated March 24, 2003, as filed with the Securities and Exchange
Commission pursuant to Regulation 14A.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
- -------- RELATED STOCKHOLDER MATTERS
The information to be provided under this Item is incorporated by reference to
the information under the heading "Beneficial Ownership" on page 2 and 3 (up to
but exclusive of the information presented under the caption "Proxies") and
under the heading "Security Ownership of Management" on pages 13 and 14 (up to
but exclusive of the information presented under the caption "Section 16(a)
Beneficial Ownership Reporting Compliance" on page 14), and under the heading
"Equity Compensation Plan Information" on page 12 and 13 (up to but exclusive of
the information presented under the caption "Security Ownership Management" on
page 13) of the definitive proxy statement dated March 24, 2003 as filed with
the Securities and Exchange Commission pursuant to regulation 14A.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
- --------
The information to be provided under this Item is incorporated by reference to
the information under the heading "Certain Transactions and Other Matters
Between Management and Fidelity" on page 5 (up to but exclusive of the
information presented under the caption "Board Meetings") of the Company's
definitive proxy statement dated March 24, 2003 as filed with The Securities and
Exchange Commission pursuant to Regulation 14A.
ITEM 14. CONTROLS AND PROCEDURES
- --------
(a) Evaluation of Disclosure Controls and Procedures. The Corporation's
principal executive officer and principal financial officer have
concluded that the Corporation's disclosure controls and procedures (as
defined in Rule 13a-14(c) under the Securities Exchange Act of 1934, as
amended), based on their evaluation of these controls and procedures as
of a date within ninety (90) days prior to the filing date of this Form
10-K, are effective.
12
(b) Changes in Internal Controls. There have been no significant changes in
the Corporation's internal controls or in other factors that could
significantly affect these controls subsequent to the date of the
evaluation thereof, including any corrective actions with regard to
significant deficiencies and material weaknesses.
(c) Limitations on the Effectiveness of Controls. The Corporation's
management, including its principal executive officer and principal
financial officer, does not expect that the Corporation's disclosure
controls and procedures and other internal controls will prevent all
error and all fraud. A control system, no matter how well conceived and
operated, can provide only reasonable, not absolute, assurance that the
objectives of the control system are met. Further, the design of a
control system must reflect the fact that there are resource
constraints, and the benefits of controls must be considered relative
to their costs. Because of the inherent limitations in all control
systems, no evaluation of controls can provide absolute assurance that
all control issues and instances of fraud, if any, within the company
have been detected. These inherent limitations include the realities
that judgments in decision-making can be faulty, and that breakdowns
can occur because of simple error or mistake. Additionally, controls
can be circumvented by the individual acts of some persons, by
collusion of two or more people, or by management override of the
control.
The design of any system of controls also is based in part upon certain
assumptions about the likelihood of future events, and there can be no
assurance that any design will succeed in achieving its stated goals
under all potential future conditions; over time, control may become
inadequate because of changes in conditions, or the degree of
compliance with the policies or procedures may deteriorate. Because of
the inherent limitations in a cost-effective control system,
misstatements due to error or fraud may occur and not be detected.
(d) CEO and CFO Certifications. Appearing immediately following the
Signatures section of this report there are Certifications of the
Corporation's principal executive officer and principal financial
officer. The Certifications are required in accord with Section 302 of
the Sarbanes-Oxley Act of 2002 (the "Section 302 Certifications"). This
Item of this report which you are currently reading is the information
concerning the Evaluation referred to in the Section 302 Certifications
and this information should be read in conjunction with the Section 302
Certifications for a more complete understanding of the topics
presented.
PART IV
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
- --------
(a) (1) The following consolidated financial statements are included in
Item 8:
Page Numbers in
Annual report
Independent Auditor's Report on
Consolidated Financial Statements 27
Consolidated Balance Sheet
December 31, 2002 and 2001 28
Consolidated Statement of Income-
For the years ended December 31, 2002, 2001 and 2000 29-31
Consolidated Statement of Changes in Stockholders' Equity -
For the years ended December 31, 2002, 2001 and 2000 32
Consolidated Statement of Cash Flows -
For the years ended December 31, 2002, 2001 and 2000 33-34
Notes to consolidated Financial Statements 35-62
13
(2) See response to Item 14 (a) (1). All other financial statement
schedules have been omitted because they are not applicable, or the
required information is shown in the consolidated financial statements or
notes thereto.
(3) List of Exhibits
Exhibit Number Description
-------------- -----------
3(i) (a) Articles of Incorporation of Fidelity, filed as exhibit 3(a)
to Fidelity's 1995 Annual Report on Form 10-K, are
incorporated herein by reference
3(i) (b) Articles of Amendment of the Articles of Incorporation,
filed as exhibit 4.1 with Fidelity's Registration Statement on
Form S-3 (file no. 333-53668), are incorporated by reference
3(ii) By-Laws of Fidelity, filed as exhibit 4.2 with Fidelity's
Registration Statement on Form S-3 (file no. 333-53668), are
incorporated by reference
10 (a) The 1993 Director's Stock Option Plan, filed as exhibit 10(d)
to Fidelity's 1995 Annual Report on Form 10-K, is incorporated
herein by reference.
(b) The 1995 Key Employee's Stock Option Plan, filed as exhibit
10(c) to Fidelity's 1996 Annual Report on Form 10-K, is
incorporated herein by reference.
(c) Employment agreement between Fidelity and Donald R. Neel,
filed as exhibit 10(d) to Fidelity's 2000 Annual Report on
Form 10-K, is incorporated herein by reference
13 Annual report to shareholders
21 Subsidiaries of Fidelity Federal Bancorp
99.1 Regulation FD Disclosure - Chief Executive Officer
99.2 Regulation FD Disclosure - Chief Financial Officer
(b) Reports on 8-K
A form 8-K was filed on November 14, 2002 stating that Fidelity filed
with the Securities and Exchange Commission its Quarterly Report on
Form 10-Q for the period ended September 30, 2002. The certification by
Fidelity's chief executive officer and chief financial officer required
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906
of the Sarbanes - Oxley Act of 2002, accompanies such Quarterly Report.
A form 8-K was filed on February 20, 2003 in connection with Fidelity
Federal's fourth quarter earnings release and completion of the sale of
its affordable housing subsidiaries and related assets.
(c) See the list of exhibits in Item 14 (a) (3).
(d) No other financial statement schedules are required to be submitted.
14
SIGNATURES
Pursuant to the requirements of Section 13 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 on the 28th day of March, 2003.
FIDELITY FEDERAL BANCORP
Registrant
By /S/ DONALD R. NEEL
-------------------------------------
Donald R. Neel
President and Chief Executive Officer
(Principal Executive Officer)
By /S/ MARK A. ISAAC
-------------------------------------
Mark A. Isaac, Vice President and
Chief Financial Officer
(Principal Accounting Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below on March 28, 2003, by the following persons on behalf of
the registrant and in the capacities indicated.
By /S/ JACK CUNNINGHAM
-------------------------------------
Jack Cunningham,
Chairman
By /S/ BRUCE A. CORDINGLEY
-------------------------------------
Bruce A. Cordingley, Director
By /S/ WILLIAM R. BAUGH
-------------------------------------
William R. Baugh, Director
By /S/ PAUL E. BECKER
-------------------------------------
Paul E. Becker, Director
By /S/ DONALD R. NEEL
-------------------------------------
Donald R. Neel, Director
By /S/ GERALD K. PEDIGO
-------------------------------------
Gerald K. Pedigo, Director
By /S/ BARRY A. SCHNAKENBURG
-------------------------------------
Barry A. Schnakenburg, Director
By /S/ PHILLIP J. STOFFREGEN
-------------------------------------
Phillip J. Stoffregen, Director
15
CERTIFICATION
I, Donald R. Neel, certify that:
1. I have reviewed this annual report on Form 10-K of Fidelity Federal
Bancorp;
2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the period
covered by this annual report;
3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in
this annual report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
have:
a. designed such disclosure controls and procedures to ensure
that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us
by others within those entities, particularly during the
period in which this annual report is being prepared;
b. evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to
the filing date of this annual report (the "Evaluation Date");
and
c. presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based
on our evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the
audit committee of registrant's board of directors (or persons
performing the equivalent function):
a. all significant deficiencies in the design or operation of the
internal controls which could adversely affect the
registrant's ability to record, process, summarize and report
financial data and have identified for the registrant's
auditors any material weaknesses in internal controls; and
b. any fraud, whether or not material, that involves management
or other employees who have a significant role in the
registrant's internal controls; and
6. The registrant's other certifying officers and I have indicated in this
annual report whether or not there were significant changes in internal
controls or in other factors that could significantly affect the
internal controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant
deficiencies and material weaknesses.
Date: March 28, 2003 /S/ DONALD R. NEEL
---------------------------------
Donald R. Neel
President and CEO
(principal executive officer)
CERTIFICATION
I, Mark A. Isaac, certify that:
1. I have reviewed this annual report on Form 10-K of Fidelity Federal
Bancorp;
2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the period
covered by this annual report;
3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in
this annual report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
have:
a designed such disclosure controls and procedures to ensure
that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us
by others within those entities, particularly during the
period in which this annual report is being prepared;
b evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to
the filing date of this annual report (the "Evaluation Date");
and
c presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based
on our evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the
audit committee of registrant's board of directors (or persons
performing the equivalent function):
a all significant deficiencies in the design or operation of the
internal controls which could adversely affect the
registrant's ability to record, process, summarize and report
financial data and have identified for the registrant's
auditors any material weaknesses in internal controls; and
b any fraud, whether or not material, that involves management
or other employees who have a significant role in the
registrant's internal controls; and
6. The registrant's other certifying officers and I have indicated in this
annual report whether or not there were significant changes in internal
controls or in other factors that could significantly affect the
internal controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant
deficiencies and material weaknesses.
Date: March 28, 2003 /S/ MARK A. ISAAC
--------------------------------------
Mark A. Isaac
Vice President and CFO
(principal financial officer)
INDEX TO EXHIBITS
-----------------
Page Exhibit Number Exhibit
- --------------------------------------------------------------------------------
13 Annual report to shareholders
21 Subsidiaries of Fidelity Federal Bancorp
99.1 Regulation FD Disclosure - Chief Executive Officer
99.2 Regulation FD Disclosure - Chief Financial Officer
18