As filed with the Securities and Exchange Commission on March 15, 2004
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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FIDELITY FEDERAL BANCORP
(Exact name of registrant as specified in its charter)
INDIANA 35-1894432
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
18 N.W. Fourth Street, Evansville, Indiana 47706-1347
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices)
Donald R. Neel, President Timothy M. Harden, Esq.
Fidelity Federal Bancorp John W. Tanselle, Esq.
18 N.W. Fourth Street Krieg DeVault LLP
P. O. Box 1347 One Indiana Square, Suite 2800
Evansville, Indiana 47706-1347 Indianapolis, Indiana 46204-2079
(812) 424-0921 (317) 636-4341
(Name, address, including zip code, (Copy to)
of agent for service)
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Approximate date of commencement of the proposed sale of the
securities to the public: As soon as practicable after the
effective date of this Registration Statement.
If the only securities being registered on this Form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box. [ ]
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [ ]
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
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Title of each class Amount Proposed maximum Proposed maximum Amount of
of securities to be offering price aggregate offering registration
to be registered registered per unit (1) price (1) fee
Common Stock 1,550,000 $2.05 $3,177,500 $402.59
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(1) The proposed maximum offering price per share and in the aggregate is
estimated solely for purposes of calculating the registration fee in accordance
with Rule 457(c) and is based on $2.05, which was the closing price of the
Company's Common Stock as reported by the NASDAQ SmallCap Market System on March
12, 2004.
-------------------------
The registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
SUBJECT TO COMPLETION, DATED MARCH 15, 2004
Prospectus
FIDELITY FEDERAL BANCORP
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SHARES OF COMMON STOCK
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MATERIAL TERMS OF THE RIGHTS OFFERING
We are distributing subscription rights to persons who own our common
stock as of the close of business on March 1, 2004 to purchase shares of our
common stock. The subscription rights for the shares are exercisable beginning
on the date of this prospectus and will expire at 5:00 p.m., Central time, on
______________, 2004.
You will receive one basic subscription right, rounded down to the
nearest whole number, for every _____ shares of our common stock that you own
on the close of business on March 1, 2004, the record date. Each basic
subscription right will entitle you to purchase one share of our common stock
at the subscription price of $_____. The basic subscription right also includes
the right to over-subscribe, subject to availability and proration, for
additional shares of common stock at $_____ if not all of the shares offered
are purchased pursuant to the basic subscription rights. Your subscription,
once made, is irrevocable.
The directors, executive officers of Fidelity and their affiliates
currently beneficially own approximately 69.2% of our outstanding shares of our
common stock (not including stock options and warrants exercisable within 60
days) and intend to purchase _______________ shares. As a result, we expect to
receive subscriptions for at least _______________ shares of the ___________
shares being offered through the exercise of their subscription rights and
over-subscription rights, subject to the limitations set forth in this
prospectus. If no other stockholders exercise their subscription rights,
directors, executive officers and their affiliates will own of record in the
aggregate _________% and beneficially ______% of our outstanding common stock.
Accordingly, we expect to receive proceeds from the offering of at least
approximately $2.0 million, before deducting expenses payable by us.
There is no minimum amount of shares that must be subscribed for as a
condition to accepting subscriptions and closing the offering. However, if we
cancel the offering, any money received will be refunded promptly, without
interest. The amounts we receive as payment for the shares will not be
deposited into a segregated escrow account. There is no guarantee that we will
have these funds available to return to you. In this event, we expect to draw
upon an existing line of credit to borrow funds for this purpose.
Shares of our common stock are currently listed for quotation on the
Nasdaq SmallCap Market under the symbol "FFED." On ____, 2004 the closing price
of a share of our common stock on Nasdaq was $_____.
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Neither the shares nor the subscription amounts are savings or deposit
accounts or other obligations of United Fidelity Bank or any non-bank affiliate
of Fidelity and they are not insured by the Federal Deposit Insurance
Corporation or any other governmental agency.
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See "Risk Factors" beginning on page __ to read about factors you
should consider before exercising your subscription privileges to purchase
notes.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of this prospectus. Any representation to the contrary is
a criminal offense.
The date of this prospectus is _________, 2004.
Table of Contents
Prospectus Summary...................................................................................................1
Fidelity Federal Bancorp....................................................................................1
Questions and Answers About the Rights Offering.............................................................2
Risk Factors.........................................................................................................9
Risk Factors Relating to the Rights Offering and the Shares of Common Stock.................................9
We do not anticipate paying cash dividends on our common stock.....................................9
We may not be able to raise all the capital we need................................................9
Once you exercise your subscription rights, you may not revoke the exercise........................9
United Fidelity Bank is subject to the restrictions and conditions of a
Supervisory Agreement with the Office of Thrift Supervision...............................9
If you do not participate in this rights offering or do not exercise all of
your subscription rights, you may suffer significant dilution of your
percentage ownership of our common stock.................................................10
The price of our common stock may decline before or after the subscription
rights expire............................................................................10
The subscription price is not an indication of the value of Fidelity, and you
may be unable to sell shares purchased in the rights offering at a
price equal to or greater than $_____....................................................10
We may determine it is appropriate to terminate our reporting obligation under
the Securities Exchange Act of 1934 and delist our shares of common stock from
NASDAQ...................................................................................11
Risk Factors Related to Fidelity Federal...................................................................11
Because our business is only in the Evansville SMSA, a downturn in the economy
in our market area may adversely affect our business.....................................11
We must achieve sufficient earnings in order to realize our $6.1 million
deferred income tax receivable...........................................................11
Dividend restrictions and terms of subsequent financings may affect our
ability to meet our debt obligations.....................................................12
Our accomplishments are largely dependent upon the skill and experience of our
senior management team...................................................................12
The existence of controlling shareholders may limit the ability of other
shareholders to influence the outcome of matters requiring
stockholder approval, could discourage potential acquisitions of our
business by third parties, and could impact the price of our shares......................12
Our ability to authorize and issue preferred stock may delay or prevent a
takeover of Fidelity, which could prohibit you from receiving a price
for your shares at a premium to current market price.....................................13
United Fidelity Bank's consumer loan concentration increases the risk of
defaults by our borrowers, which may result in increased expenses and
the need for additional capital..........................................................13
We may need additional funds for debt service, which could result in dilution
of your ownership position or result in additional interest expense......................13
Special Note Regarding Forward-Looking Statements...................................................................14
United Fidelity Bank is Subject to a Supervisory Agreement with the Office of Thrift Supervision....................15
Use of Proceeds.....................................................................................................15
We Do Not Anticipate Paying Dividends...............................................................................16
Price Range of Common Stock.........................................................................................17
Capitalization......................................................................................................18
The Rights Offering.................................................................................................19
Material Federal Income Tax Considerations..........................................................................25
Description of Capital Stock........................................................................................27
Plan of Distribution................................................................................................28
Legal Matters.......................................................................................................28
Experts ...........................................................................................................28
Where You Can Find More Information.................................................................................29
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Fidelity has not authorized any person to give you information that
differs from the information in this prospectus. You should rely solely on the
information contained in this prospectus. This prospectus is not an offer to
sell these securities, and we are not soliciting offers to buy these securities,
in any state where the offer or sale of these securities is not permitted. The
information in this prospectus is accurate only as of the date of this
prospectus, even if the prospectus is delivered to you after the prospectus
date, or you buy our common stock after the prospectus date.
Until _______, 2004, all dealers that effect transactions in these
securities, whether or not participating in this offering, may be required to
deliver a prospectus.
TO CALIFORNIA RESIDENTS ONLY: The exemption afforded by Corporations
Code Section 25104(h) has been withheld by the Department of Corporations.
PROSPECTUS SUMMARY
This section answers in summary form some questions you may have about
Fidelity Federal Bancorp and this rights offering and highlights some of the
information in this prospectus. Because this section is a summary, it does not
contain all of the information that you should consider before exercising your
subscription rights. You should read the entire prospectus carefully, including
the "Risk Factors" section and the documents listed under "Where You Can Find
More Information."
Fidelity Federal Bancorp
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General. Fidelity was incorporated as a savings and loan holding
company under the laws of the State of Indiana in 1993. Fidelity owns all of the
issued and outstanding stock of United Fidelity Bank, fsb, its
federally-chartered savings bank subsidiary. United Fidelity Bank was formed in
1914 and maintains four locations in Evansville, Indiana and one in Newburgh,
Indiana. Our principal executive offices are located at 18 NW Fourth Street,
Evansville, Indiana 47708. Our telephone number is (812) 424-0921.
We, through our savings bank subsidiary, are engaged in the business of
obtaining funds in the form of savings deposits and other borrowings and
investing these funds in consumer, commercial and mortgage loans, and in
investment and money market securities.
Supervisory Agreement. We are subject to a Supervisory Agreement with
the Office of Thrift Supervision. The Supervisory Agreement has been in place
since February 1999 and has created certain operational challenges. The
Supervisory Agreement initially restricted our ability to originate new
commercial or multifamily loans and limited the percentage of consumer loans
outstanding to total assets. Because of our improving financial condition and
continued compliance with the Supervisory Agreement, commercial lending
authority was reinstated in February 2002 and a higher concentration limit of
consumer loans to total assets was approved in connection with United Fidelity
Bank's strategic plan.
We are also required to meet certain capital requirements set forth in
our strategic plan. The Supervisory Agreement also restricts the payment of
dividends to us from United Fidelity Bank, our subsidiary, which has negatively
impacted our ability to meet our debt service obligations. The Supervisory
Agreement also required that we reduce our classified assets, which primarily
consisted of our affordable housing assets. Our subsequent divestitures of these
affordable housing assets in recent years has caused us to incur additional
expense, utilized available cash and created significant net losses. Despite
these operational challenges, we have been able to meet all of our debt service
obligations. This has been accomplished primarily by raising capital through
debt and equity offerings and by the divestiture of our affordable housing
assets. We last raised capital in February 2002. In that month, we closed our
previous rights offering of junior subordinate notes and warrants to purchase
our common stock. In that offering, we sold 1,002 notes and 500,000 warrants,
and raised total proceeds, after expenses, of approximately $1,225,000. In
addition to this rights offering of shares of common stock, we are currently
offering to our shareholders in a separate rights offering up to $2.5 million of
our 9.00% Senior Subordinated Notes due April 20, 2009. The expiration date for
that offering is April 20, 2004.
United Fidelity Bank believes that it currently is in compliance with
the Supervisory Agreement, including the capital targets established in its
strategic plan.
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Questions and Answers About the Rights Offering
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Q: Will Fidelity return money received from shareholders if it cancels the
rights offering?
A: If we cancel the rights offering, any money received from shareholders
will be refunded promptly, without interest. However, there is no
guarantee that we will have these funds available to return to
shareholders who have submitted payment for shares. In this event, we
expect to draw upon our existing $500,000 line of credit with CIB Bank.
As long as funds are available under our line of credit, we may draw
funds at any time and for any purpose we deem appropriate. However, we
are not required to hold this line of credit open in order to repay
subscribers.
Q: What is the rights offering?
A: The rights offering is an opportunity for you to purchase at a fixed
price of $_____ per share one additional share of common stock of
Fidelity for every _____ shares of Fidelity common stock you own.
Q: Why are we engaging in a rights offering?
A: Because United Fidelity Bank is restricted in its ability to pay
dividends to us, we believe it is in our best interests to raise
additional capital. We have $1.8 million of senior subordinated debt
which matures in June 2005. We are undertaking this rights offering to
raise additional capital, without paying underwriting commissions and
expenses, for the purposes set forth under the following question
entitled "What will we do with the proceeds of the rights offering?".
We determined that a rights offering was an attractive method to raise
capital because your ownership interests in Fidelity will not be
diluted if you exercise your subscription privileges in full, and you
will be able to purchase shares of our common stock without incurring
broker's commissions.
Concurrently with this offering, we are offering to our shareholders in
a separate rights offering up to $2.5 million of our 9.00% Senior
Subordinated Notes due April 20, 2009. Fidelity is utilizing both
equity and debt offerings as a means to diversify capital raising
efforts in order to repay debt, service remaining debt, and contribute
capital to its subsidiary, United Fidelity Bank. Because of recent
growth, additional capital will be necessary for United in order to
comply with the minimum capital targets in its strategic plan.
Q: How many shares will directors and executive officers of Fidelity
purchase?
A: The directors, executive officers of Fidelity and their affiliates
currently beneficially own approximately 7,182,408 of our outstanding
shares of our common stock (not including stock options exercisable
within 60 days) of our outstanding common stock and intend to purchase
_______________ shares through the exercise of their subscription and
over-subscription rights, subject to the limitations set forth in this
prospectus. As a result, we expect to receive subscriptions for at
least $2.0 million for _______________of the shares being offered.
Q: How many shares of common stock will be outstanding after the rights
offering?
A: The number of shares of common stock that will be outstanding after the
rights offering depends on the number of shares that are purchased. We
expect to issue at least _______________ shares to directors and
affiliates during this rights offering, and if we sell all of the
shares offered by this
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prospectus, then we will issue _______________ new shares of common
stock. As a result, we expect to have between approximately
_______________ and _______________ shares of common stock outstanding
immediately after the rights offering.
The following table sets forth certain information assuming all
_______________ shares are sold and that directors and their affiliates
receive all _______________ shares for which they subscribe in the
rights offering.
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Shares % Owned Shares % Owned by Aggregate Aggregate Aggregate Net
Currently by Outstanding Directors and Proceeds Expenses Net Proceeds
Outstanding Directors After the their Affiliates Incurred Proceeds per Share
and Rights After the Rights
their Offering Offering
Affiliates
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The following table sets forth certain information assuming only the
_________ shares for which directors and their affiliates have
subscribed are sold in the rights offering.
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Shares Currently % Owned Shares % Owned by Aggregate Aggregate Aggregate Net
Outstanding by Outstanding Directors and Proceeds Expenses Net Proceeds Proceeds
Directors After the their Incurred per Share
and their Rights Affiliates
Affiliates Offering After the
Rights Offering
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Q: How much money will Fidelity receive from the rights offering?
A: The gross proceeds from the rights offering will depend on the number
of shares purchased. If we sell all shares which may be purchased upon
exercise of the rights offered by this prospectus, then we will receive
proceeds of $2.5 million, before deducting expenses payable by us,
which are estimated to be approximately $30,000.
Q: What will we do with the proceeds of the rights offering?
A: We anticipate that we will use a portion of the proceeds to repay the
remaining $800,000 of the senior subordinated debt that matures in June
2005, assuming enough proceeds are raised from our current rights
offering of our 9.00% Senior Subordinated Notes due April 20, 2009 to
our shareholders to pay down $1.0 million of the outstanding $1.8
million. We also anticipate that we will contribute $1.0 million of
capital to support potential growth of our subsidiary, United Fidelity
Bank. The remainder will be utilized to make interest payments on
outstanding debt, and to fund the limited operations of Fidelity.
Although we expect to use the proceeds in the manner discussed above,
we reserve the right to use the proceeds in any manner which we
consider appropriate.
Q: How did Fidelity arrive at the $_____ per share price?
A: A special committee of our board of directors (excluding any directors
that are deemed control persons) was established to determine the
appropriate purchase price. The special committee considered a variety
of factors in determining the subscription price of $_____, including
the
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historic and current market price of the common stock, general
conditions in the securities market, our need for capital, alternatives
available to us for raising capital, the amount of proceeds desired,
and the need to offer shares at a price that would be attractive to our
investors relative to the then current trading price of our common
stock. We believe that the $_____ per share price meets our objective
of raising the maximum amount of net proceeds while providing you with
an opportunity to make an additional investment in our common stock.
Because the price of shares in the rights offering is less than the
exercise price per share for certain of Fidelity's outstanding options,
Fidelity will receive less for shares purchased in the rights offering
by shareholders with options than it would have received if these
shareholders had purchased shares from Fidelity by exercising these
outstanding options at the higher exercise price. We did not seek or
obtain any opinion of financial advisors or investment bankers in
establishing the subscription price.
Q: What is a basic subscription right?
A: We are distributing to you, at no charge, one basic subscription right,
rounded down to the nearest whole number, for every _____ shares of
common stock that you owned on March 1, 2004, the record date. Each
basic subscription right entitles you to purchase one share of our
common stock for $_____.
Q: What does it mean to exercise a basic subscription right?
A: When you "exercise" a subscription right, that means that you choose to
purchase the common stock that subscription right entitles you to
purchase. You may exercise any number of your subscription rights, or
you may choose not to exercise any subscription right. The basic
subscription right carries with it an over-subscription privilege. You
must, however, fully exercise your basic subscription right if you wish
to exercise your over-subscription privileges. You cannot give or sell
your subscription rights to anybody else; only you can exercise them.
Q: What is the over-subscription privilege?
A: This privilege is available only if you fully exercise your basic
subscription privilege. We do not expect that all of our shareholders
will exercise all of their basic subscription rights. By extending
over-subscription privileges to our shareholders, we are providing for
the purchase of those shares which are not purchased through exercise
of basic subscription rights. The over-subscription privilege entitles
you, if you fully exercise your basic subscription right, to subscribe
for additional shares of common stock not acquired by other holders of
basic subscription rights. As described below, there are limitations on
your over-subscription privilege.
Q: What are the limitations on the over-subscription privilege?
A: We will issue up to _______________. The number of shares of common
stock available for over-subscription privileges will be
_______________ minus the aggregate number of shares of common stock
purchased upon exercise of all basic subscription rights.
If the number of shares for sale pursuant to the exercise of all
over-subscription privileges is not sufficient to satisfy in full all
over-subscription privileges, the additional shares of our common stock
that you will be entitled to purchase if you exercise your
over-subscription privilege will be limited.
4
In this situation, you will be entitled to purchase upon the exercise
of your over-subscription privilege a number of shares of equal to the
product, rounded down to the nearest whole number, of:
o the number of shares of our common stock owned by you on the
close of business on March 1, 2004, divided by the total
number of shares of our common stock owned by all shareholders
exercising their over-subscription privileges on the close of
business on March 1, 2004; and
o the number of shares available for sale pursuant to the
exercise of all over-subscription privileges.
For example, if we sell 1,000,000 shares pursuant to the exercise of
basic subscription rights, we then would have remaining ____________
shares available for purchase by individuals exercising
over-subscription privileges. If individuals exercising
over-subscription privileges subscribe for _________ or fewer shares by
use of their over-subscription privileges, then all over-subscription
privileges would be honored.
If individuals exercising over-subscription privileges subscribe for
more than __________ shares by use of their over-subscription
privileges, then over-subscription privileges would be limited. For
example, assume that individuals exercising over-subscription
privileges subscribe for 60,000 shares by use of their
over-subscription privileges, you own 10,000 shares of our common stock
and shareholders who are exercising their over-subscription privileges
own 100,000 shares. In this example, your over-subscription privilege
would be equal to __________ shares. This was calculated by dividing
the number of shares you own, or 10,000, by the total number of shares
owned by all shareholders exercising their over-subscription
privileges, or 100,000, and then multiplying this by the number of
shares available for sale pursuant to the exercise of all
over-subscription privileges, or ________.
In certain circumstances, in order to comply with applicable state
securities laws, we may not be able to honor all over-subscription
privileges.
Q: Must all holders of rights pay the subscription price in cash?
A: All shareholders granted rights, who wish to participate in the rights
offering, must timely pay the subscription price by wire transfer,
certified or cashier's check drawn on a U.S. bank, or personal check
that clears before expiration of the rights.
Q: Has the board of directors made a recommendation regarding this rights
offering?
A: Our board of directors does not make any recommendation to you about
whether you should exercise any rights.
Q: How long will the rights offering last?
A: You will be able to exercise your subscription rights only during a
limited period. If you do not exercise your subscription rights before
5:00 p.m., Central time, on ______________, 2004, your basic
subscription rights will expire.
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Q: After I exercise my subscription rights, can I change my mind?
A: No. Once you send in your shareholder rights agreement and payment, you
cannot revoke the exercise of either your basic subscription or
over-subscription right, even if you later learn information about us
that you consider to be unfavorable, and we will have immediate use of
the funds sent as payment. You should not exercise your subscription
rights unless you are certain that you wish to purchase shares of our
common stock.
Q: When will I receive my new shares?
A: If you purchase shares of common stock through the rights offering, you
will receive the shares as soon as practicable after ______________,
2004. Subject to state securities laws and regulations, we have the
discretion to delay allocation and distribution of any shares you may
elect to purchase by exercise of your basic subscription right or any
over-subscription right in order to comply with state securities laws.
Q: How and by what date must I exercise my subscription rights?
A: You must properly complete the attached shareholder rights agreement
and deliver it to us before 5:00 p.m., Central time, on ______________,
2004. Our address, for delivery purposes, is on page ___. Your
shareholder rights agreement must be accompanied by proper payment for
the notes that you wish to purchase.
Q: What should I do if I want to participate in the rights offering but my
shares are held in the name of my broker or a custodian bank?
A: If you hold shares of Fidelity common stock through a broker, dealer or
other nominee, we will ask your broker, dealer or nominee to notify you
of the rights offering. If you wish to exercise your rights, you will
need to have your broker, dealer or nominee act for you. To indicate
your decision with respect to your rights, you should complete and
return to your broker, dealer or nominee the form entitled "Beneficial
Owner Election Form." You should receive this form from your broker,
dealer or nominee with the other rights offering materials.
Q: Is exercising my subscription rights risky?
A: The exercise of your subscription rights involves certain risks.
Exercising your subscription rights means buying additional shares of
common stock and should be carefully considered as you would view other
investments. Among other things, you should carefully consider the
risks described under the heading "Risk Factors," beginning on page __.
Q: Can I sell or give away my subscription rights?
A: No. The subscription rights are not transferable.
Q: Must I exercise any subscription rights?
A: No.
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Q: What happens if I choose not to exercise my subscription rights?
A: You will retain your current number of shares of common stock in
Fidelity even if you do not exercise your subscription rights. However,
if other shareholders exercise their subscription rights and you do
not, your relative percentage ownership of Fidelity will decrease, and
your relative voting rights and economic interests will be diluted.
Because our directors, executive officers and their respective
affiliates, which own of record in the aggregate approximately 67.8%
and beneficially approximately 69.9% of our common stock, have agreed
to exercise their respective basic subscription privileges and
over-subscription privileges in the amount of approximately $2.0
million, your percentage ownership in Fidelity will be reduced and your
economic interest will be diluted if you do not exercise your basic
subscription privileges.
Q: What are the federal income tax consequences of exercising my
subscription rights?
A: The receipt and exercise of your subscription rights are nontaxable.
You should review the federal income tax discussion concerning the
rights offering under the heading "Material Federal Income Tax
Considerations," beginning on page ___. You should also review the tax
opinion of our legal counsel, Krieg DeVault LLP, also under the heading
"Material Federal Income Tax Considerations," beginning on page ___.
However, you should consult your own tax advisors in determining the
federal, state, local, foreign and any other tax consequences to you of
exercising your subscription rights.
Q: Can Fidelity cancel the rights offering?
A: Yes. Our board of directors may cancel the rights offering in its
discretion at any time on or before ______________, 2004. We don't
expect to cancel the rights offering and are not aware of any facts or
circumstances which would cause us to do so. We have reserved this
right in the event we determine that facts of which we are currently
unaware or future events would cause us to determine that the rights
offering is not in the best interests of Fidelity. These reasons may
include a material change in the price for our shares or the
institution or threat of litigation against us with respect to the
rights offering.
Q: Will interest accrue on amounts that I submit as payment for shares
prior to the date that the shares are issued?
A: No. However, if we cancel the rights offering, any money received from
shareholders will be refunded promptly, without interest. Further, if
you exercise your over-subscription privilege and are allocated less
than all of the shares for which you wished to subscribe, the excess
funds you paid for the shares will be returned to you as soon as
practicable, without interest. However, the subscription amounts we
receive for the number of shares of common stock requested through your
over-subscription privileges will not be deposited into an escrow
account and will be available immediately for use by Fidelity. As a
consequence, there is no guarantee that we will have these funds
available to return to you. In this event, we expect to draw upon our
existing $500,000 line of credit with CIB Bank. As long as funds are
available under our line of credit, we may draw funds at any time and
for any purpose we deem appropriate. However, we are not required to
hold this line of credit open in order to repay subscribers.
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Q: What if I have more questions?
A: If you have more questions about the rights offering, please contact
Mark A. Isaac, Vice President, at (812) 424-0921.
8
RISK FACTORS
You should carefully consider the risks and uncertainties described
below which we believe are material to the offering and the other information in
this prospectus before deciding whether to invest in the rights offering. If any
of the following risks identified actually occur, our business, financial
condition and operating results could be materially adversely affected. In such
case, we may be unable to satisfy the notes or the trading price of our common
stock could decline and you may lose part or all of your investment.
Risk Factors Relating to the Rights Offering and the Shares of Common Stock
---------------------------------------------------------------------------
We do not anticipate paying cash dividends on our common stock.
We conduct substantially all of our business through our operating
company, United Fidelity Bank. Although we have the ability to raise capital,
such as through the sale of additional shares of stock or the issuance of
additional debt, our cash flow and, consequently, our ability to pay dividends,
are largely dependent upon the cash flow of United Fidelity Bank and the payment
of funds by United Fidelity Bank to us.
The terms of the Supervisory Agreement require Office of Thrift
Supervision approval for United Fidelity Bank to pay us dividends. The OTS may
agree to allow the payment of dividends from United Fidelity Bank to us to
assist in debt service, although it has no obligation to do so and we cannot and
do not offer any assurances that the OTS will do so. Also, the OTS could
continue to prohibit the payment of dividends to us in the future if it
considers such action necessary for the safety and soundness of United Fidelity
Bank. If the current dividend restrictions were removed and assuming the absence
of any safety and soundness concerns as determined by the OTS, United Fidelity
Bank could provide up to $5.3 million in dividends to Fidelity as of December
31, 2003. For the foreseeable future, we anticipate that United Fidelity Bank
will retain any earnings which it generates or, subject to OTS approval, pay a
portion of these earnings to us in order for us to service our existing debt.
We may not be able to raise all the capital we need.
There is no guarantee that we will be able to sell all or any of the
shares offered in this prospectus. There is no minimum number of shares that we
must sell to complete the offering. In the event that we are unable to raise
sufficient capital from the offering, it is likely that we will need to obtain
additional capital so that we may execute successfully our business strategy.
Any necessary future raising of capital, if available, may be on terms which are
not favorable to us. Future financings on less favorable terms may be more
costly.
Once you exercise your subscription rights, you may not revoke the exercise.
Once you exercise your subscription rights, you may not revoke the
exercise, even if less than all of the notes that we are offering are actually
purchased.
United Fidelity Bank is subject to the restrictions and conditions of a
Supervisory Agreement with the Office of Thrift Supervision.
United Fidelity Bank entered into a Supervisory Agreement with the OTS
on February 3, 1999, which requires it to take certain actions and restricts
certain of its operations, including its ability to pay
9
dividends. If United Fidelity Bank is unable to comply with the terms and
conditions of the Supervisory Agreement, the OTS could take additional
regulatory action, including the issuance of a cease and desist order requiring
further corrective action. Such corrective action could include, among other
things, increasing the allowance for loan and lease losses or valuation
allowance for letters of credit, obtaining additional or new management, and
further restrictions on dividends. Because we are dependent upon United Fidelity
Bank for our income, this could negatively impact the price of our stock and
prohibit the payment of future dividends.
If you do not participate in this rights offering or do not exercise all of your
subscription rights, you may suffer significant dilution of your percentage
ownership of our common stock.
This rights offering is designed to enable Fidelity to raise capital
while allowing all shareholders on the record date to maintain their relative
proportionate voting and economic interests. Mr. Cordingley and his affiliates,
and our remaining directors and their respective affiliates, have agreed to
purchase, if available, at least $2.0 million worth of stock in the rights
offering pursuant to the exercise their respective basic subscription privileges
and over-subscription privileges and if available may purchase more. To the
extent that you do not exercise your subscription rights and shares are
purchased by other shareholders in the rights offering, your proportionate
voting interest will be reduced, and the percentage that your original shares
represent of our expanded equity after exercise of the subscription rights will
be disproportionately diluted.
If no shareholders other than Mr. Cordingley and his affiliates and the
remaining directors and their affiliates exercise their basic subscription
privileges, Mr. Cordingley and his affiliates' record ownership interest in
Fidelity will increase to approximately ____% from approximately 64.1%, and
beneficial ownership will increase to approximately ____% from 65.9%; the record
ownership interest of the remaining directors and their respective affiliates in
Fidelity will decrease to approximately ___% from approximately 3.7%, and
beneficial ownership will decrease to approximately ___% from 4.0%; and the
record ownership interest of the remaining shareholders, who currently own in
the aggregate approximately 32.2% of our common stock, will decrease to
approximately ___%, without giving effect to the shares that may be issued upon
the exercise of outstanding warrants and stock options.
The price of our common stock may decline before or after the subscription
rights expire.
We cannot assure you that the public trading market price of our common
stock will not decline after you elect to exercise your subscription rights. If
that occurs, you will have committed to buy shares of common stock at a price
above the prevailing market price and you will have an immediate unrealized
loss. Moreover, we cannot assure you that following the exercise of subscription
rights you will be able to sell your shares of common stock at a price equal to
or greater than the subscription price. Until shares are delivered upon
expiration of the rights offering, you may not be able to sell the shares of our
common stock that you purchase in the rights offering. Certificates representing
shares of our common stock purchased will be delivered as soon as practicable
after expiration of the rights offering. We will not pay you interest on funds
delivered pursuant to the exercise of rights.
The subscription price is not an indication of the value of Fidelity, and you
may be unable to sell shares purchased in the rights offering at a price equal
to or greater than $_____.
We cannot assure you that the market price of the common stock will not
decline during or after the rights offering or that you will be able to sell
shares of common stock purchased during the rights offering at a price equal to
or greater than $_____ per share. The subscription price was set by our board of
directors after considering a variety of factors. We have neither sought nor
obtained a valuation opinion from an outside financial consultant or investment
banker. The subscription price does not
10
necessarily bear any relationship to the book value of our assets, past
operations, cash flows, earnings, financial condition or any other established
criteria for value. You should not consider the subscription price as an
indication of the present or future value of Fidelity. Our board of directors
has established the subscription price at $_____ to encourage all shareholders
to exercise their subscription rights and thereby raise capital without diluting
the interests of current shareholders.
We may determine it is appropriate to terminate our reporting obligation under
the Securities Exchange Act of 1934 and delist our shares of common stock from
NASDAQ.
Fidelity's Board of Directors has discussed the desirability of taking steps to
delist its shares of common stock from NASDAQ and to terminate its reporting
obligations under the Securities Exchange Act of 1934. At this time, the Board
has come to no conclusions regarding this matter and is not able to predict when
it may do so. The Board has engaged in an analysis of this possibility due to
the costs incurred in connection with new requirements imposed by the
Sarbanes-Oxley Act. This could significantly reduce the marketability of your
shares.
Risk Factors Related to Fidelity Federal
----------------------------------------
Because our offices are located in the Evansville SMSA, a downturn in the
economy in our market area may adversely affect our business.
Substantially all of United Fidelity Bank's loans will be to businesses
and individuals in Vanderburgh County and the surrounding counties. Any decline
in the economy of these areas could have an adverse impact on United Fidelity
Bank. Like most banking institutions, United Fidelity Bank's net interest spread
and margin will be affected by general economic conditions and other factors
that influence market interest rates and United Fidelity Bank's ability to
respond to changes to such rates. Although we believe that economic conditions
in our market area have been generally favorable, we cannot assure you that such
conditions will continue to prevail.
We encounter strong competition from other financial institutions
operating in our market and elsewhere, including large national and
super-regional banking institutions. Unlike larger regional and multi-state
banking operations that do not depend upon only a few markets, United Fidelity
Bank's loan and deposit growth will rely predominantly on Vanderburgh County and
the surrounding counties. Because of this competition, we may have to pay higher
rates of interest to attract deposits. In addition, because of our smaller size,
the amount we can loan to one borrower is less than that for most of our
competitors. This may impact our ability to seek relationships with larger
businesses in our market area.
We must achieve sufficient earnings in order to realize our $6.1 million
deferred income tax receivable.
We currently have a deferred income tax receivable of approximately
$6.1 million as of December 31, 2003, net of a valuation allowance. We must
achieve sufficient annual earnings in order to be able to utilize this asset
within the federal and state carryforward periods. Our ability to utilize these
tax credit carryforwards will begin to expire in 2013 and continuing through
2025. We perform an analysis each fiscal quarter in order to estimate the future
expirations of existing federal and state tax carryforwards. This analysis takes
into consideration projected income in future years, our business plan and cost
reductions. We currently have estimated that not all of the tax credit
carryforwards will be utilized within the carryforward periods and a valuation
allowance of $500,000 has been established. If we are unable to achieve a
sufficient level of net income in future periods, we may need to establish an
additional valuation allowance for this deferred tax asset. Any additional
allowance would reduce the receivable and increase our expenses, thus reducing
our earnings.
11
Dividend restrictions and terms of subsequent financings may affect our ability
to meet our debt obligations.
We cannot assure you that we will be able to meet our debt obligations.
We have engaged in equity and debt financings to allow us to meet our debt
service requirements and reduce the overall level of our outstanding debt. Until
the current dividend restrictions are no longer in place, future equity or debt
financings will be necessary for us to continue to meet our debt service
requirements. If we are unable to generate sufficient cash through these
financings to meet our obligations or if we fail to satisfy the requirements of
our debt agreements, we will be in default. A default would permit certain debt
holders to require payment before the scheduled due date of the debt, resulting
in further financial strain on us and causing additional defaults under our
other indebtedness. Our ability to meet our debt and other obligations and to
reduce our total debt also depends on economic, financial, competitive,
regulatory and other factors. Many of these factors are beyond our control.
Although we believe that our existing current assets combined with working
capital from our operations and proceeds of future equity or debt financings
will be adequate to meet our existing financial obligations, we cannot assure
you that our business will generate sufficient cash flow or that future
financings will be available to provide sufficient proceeds to meet these
obligations.
Our accomplishments are largely dependent upon the skill and experience of our
senior management team.
The success of our business will depend upon the services of our senior
management team. Our business may suffer if we lose the services of any of these
individuals, including Bruce A. Cordingley and Donald R. Neel. We have entered
into a three year contract employment agreement with Mr. Neel, which expires on
May 19, 2005, subject to renewal. Mr. Cordingley's role with Fidelity is not
full time. He receives board fees, but he has no employment agreement with us,
does not receive a salary and has substantial business interests other than
Fidelity. Our future success also depends on our ability to identify, attract
and retain qualified senior officers and other employees in our identified
market.
The existence of controlling shareholders may limit the ability of other
shareholders to influence the outcome of matters requiring stockholder approval,
could discourage potential acquisitions of our business by third parties, and
could impact the price of our shares.
As of December 31, 2003 Bruce A. Cordingley, who is a director of
Fidelity, and entities and individuals affiliated with him own of record or
control 64.1% and beneficially own 65.9% of our issued and outstanding shares of
common stock. Our remaining directors, together with their respective
affiliates, own of record approximately 3.7% and beneficially 4.0% of our
outstanding common stock. He and his affiliates have agreed to purchase at least
$2.0 million worth of our common stock in the rights offering if such shares are
available. Our remaining directors, together with their respective affiliates,
have agreed to purchase at least $______ worth of our common stock in the rights
offering if such shares are available. As a result, unless all shareholders
exercise their basic subscription privileges, which we believe is highly
unlikely, Mr. Cordingley and his affiliates, and the remaining directors, will
increase their respective ownership interests in Fidelity as a result of this
rights offering. If no other shareholders exercise their subscription rights,
Mr. Cordingley and his affiliates and the remaining directors will in the
aggregate own of record approximately ________________% and beneficially
_____________%.
Although we are not aware of any arrangement or understanding,
contractual or otherwise, that obligates our directors to act in concert with
respect to Fidelity, the level of stock ownership held by the directors may
allow them to elect all of their designees to the board of directors and to
control the outcome of virtually all matters submitted for a vote of our
shareholders. Either the equity interests of
12
Mr. Cordingley and his affiliates, or the combined equity interests of all of
the directors in Fidelity, could have the effect of delaying or preventing a
change in control or otherwise discouraging a potential acquirer from attempting
to obtain control of Fidelity, even on terms that a stockholder might consider
favorable. This in turn could harm the market price of our common stock or
prevent our shareholders from realizing a premium over the market price for
their shares of common stock.
In addition, sales of a substantial amount of our common stock in the
public market, by our principal shareholders or otherwise, or the perception
that these sales may occur, could materially adversely affect the market price
of our common stock and impair our ability to raise funds in additional
offerings.
There currently are options outstanding to directors and employees for
351,996 shares. The existence of these options could have the effect of delaying
or preventing a change in control or otherwise discouraging a potential acquirer
from attempting to obtain control of Fidelity, even on terms that a stockholder
might consider favorable. This in turn could harm the market price of our common
stock or prevent our shareholders from realizing a premium over the market price
for their shares of common stock. Because our common stock has no pre-emptive
rights, this would also dilute your ownership position.
Our ability to authorize and issue preferred stock may delay or prevent a
takeover of Fidelity, which could prohibit you from receiving a price for your
shares at a premium to current market price.
Our charter documents may make it more difficult for a third party to
acquire control of us, even on terms that a stockholder might consider
favorable. Our amended and restated certificate of incorporation authorizes our
board of directors to issue preferred stock without stockholder approval. The
issuance of preferred stock could make it more difficult for a third party to
acquire us because the preferred stock could have dividend, redemption,
liquidation, conversion, voting or other rights that could adversely affect the
voting power or other rights of holders of our common stock. Our board of
directors does not currently have any intent to issue shares of preferred stock.
Because of the existence of this provision, you may not receive an acquisition
offer for your shares, which typically is at a premium price to current market
price, since third parties may be less inclined to make an offer to acquire
control of us.
United Fidelity Bank's consumer loan concentration increases the risk of
defaults by our borrowers, which may result in increased expenses and the need
for additional capital.
United Fidelity Bank makes various types of loans. Under the
Supervisory Agreement between the OTS and United Fidelity Bank, the consumer
loan portfolio is limited to 28% of total assets. Consumer loans carry more risk
as they rely primarily on borrower's continuing financial stability and, thus,
are more likely to be adversely affected by circumstances such as job loss and
personal bankruptcy, as well as general economic conditions. In many cases,
repossessed collateral for a defaulted consumer loan will not provide an
adequate source of repayment of the outstanding loan balance because of a
reduction in the value of the underlying collateral. Because of this, the OTS
may require United Fidelity Bank to maintain a higher level of capital than a
similarly sized institution with a smaller exposure to this type of loan.
Currently, approximately 22.3% of our assets are comprised of consumer loans. As
of December 31, 2003, $363,000 was set aside for consumer loan losses. This
represents approximately 0.93% of consumer loans outstanding.
We may need additional funds for debt service, which could result in dilution of
your ownership position or result in additional interest expense.
13
We may need additional funds for servicing our debt, which could result
in dilution of your ownership position or result in additional interest expense,
because United Fidelity Bank is restricted from paying dividends without prior
approval of the OTS. As of December 31, 2003 we had $39,000 available cash for
debt service and other needs. Anticipated debt service for the remainder of
calendar year 2004 is expected to be approximately $2.8 million, which includes
$1.8 million in principal payments in connection with the early retirement of
our 10% senior subordinated notes due 2005 and $1.0 million in principal on a 9%
note due June 2004. Required debt service for the remaining calendar year 2004
consists of interest payments of $323,000, which assumes we sell at least $1
million in senior 9.00% notes due 2009 in our current notes rights offering to
shareholders and use the proceeds from the sale of these notes to pay down $1.0
million in the 10.0% notes due 2005. It is anticipated that proceeds from this
common stock rights offering will be used to repay the remaining $800,000 in
10.0% senior subordinated notes due 2005 and paydown all or a portion of any
amounts outstanding on our line of credit in the amount of 375,000 at February
29, 2004.
If we raise additional capital through the sale of additional shares of
stock other than in this rights offering, your ownership interest in us may be
diluted. In addition, if we obtain funds through the issuance of additional
debt, our earnings may be negatively impacted as a result of the additional
interest expense, which could have an adverse effect on the price of our stock.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Some of the information in this prospectus, including the risk factors
section, contains or incorporates by reference certain forward-looking
statements, within the meaning of the Private Securities Litigation Reform Act
of 1995, about our financial condition, results of operations and business that
are based on our current and future expectations. You can find many of these
statements by looking for words such as "may," "will," "should," "expects,"
"plans," "anticipates," "believes," "estimates," "predicts," "potential," or
"continue," or the negative of such terms and other comparable terminology. Such
statements reflect our current views with respect to future events and are
subject to risks and uncertainties, including those discussed under "Risk
Factors" and elsewhere in this prospectus that could cause actual results to
differ materially from those contemplated in such forward-looking statements. A
few uncertainties which could affect our future performance include, without
limitation, the effects of competition, technological changes and regulatory
developments; changes in fiscal, monetary and tax policies; market, economic
conditions, either nationally or regionally, resulting in, among other things,
credit quality deterioration; and changes in the securities markets. Investors
should consider these risks, uncertainties, and other factors in addition to
those mentioned by us in other filings from time to time when considering any
forward-looking statement.
We believe it is important to communicate our expectations to our
investors. However, you are cautioned that no forward-looking statement is a
guarantee of future performance and you should not place undue reliance on these
forward-looking statements, which speak only as of the date of this prospectus.
There may be events in the future that we are not able to predict accurately or
over which we have no control. We do not undertake any obligation to publicly
release any revisions to these forward-looking statements to reflect events or
circumstances after the date of this prospectus or to reflect the occurrence of
unanticipated events which may cause actual results to differ from those
expressed or implied by the forward-looking statements contained in this
prospectus.
The risk factors listed above, as well as any cautionary language in
this prospectus, provide examples of risks, uncertainties and events that may
cause our actual results to differ materially from the
14
expectations we describe in our forward-looking statements. Before you invest in
our common stock, you should be aware that the occurrence of the events
described in these risk factors and elsewhere in this prospectus could have a
material adverse effect on our business, operating results and financial
condition.
UNITED FIDELITY BANK IS SUBJECT TO A SUPERVISORY AGREEMENT WITH THE
OFFICE OF THRIFT SUPERVISION
United Fidelity Bank entered into a supervisory agreement with the OTS
on February 3, 1999. The supervisory agreement, as amended on November 18, 2003,
currently requires United Fidelity Bank to:
o refrain from paying dividends without OTS approval;
o continue to conduct its banking activities in accordance with
its strategic plan as approved by the OTS. The strategic plan
calls for United Fidelity Bank to continue to originate
single-family residential loans, maintain consumer loans in an
amount not to exceed 28% of total assets, and originate most
types of commercial loans with the exception of loans for
commercial office speculation, loans to the hospitality
industry, loans to the restaurant industry, or loans for
dwellings of 5 or more families. See also "RISK FACTORS -
United Fidelity Bank's consumer loan concentration increases
the risk of defaults by our borrowers, which may result in
increased expenses and the need for additional capital." on
page ___. The strategic plan permits the use of brokered
deposits to fund loan originations up to 15% of total
deposits, in addition to current sources of retail deposits
and advances from the Federal Home Loan Bank . Finally, the
plan contains minimum capital target requirements, and does
not currently provide for the payment of dividends by United
Fidelity Bank. In its strategic plan, United Fidelity Bank set
minimum capital targets of 6.25%, 8.25%, and 11.00%, for core
capital, Tier I risk-based capital, and total risk-based
capital, respectively. As of December 31, 2003, United
Fidelity Bank's capital ratios for core capital, Tier I
risk-based capital, and total risk-based capital were 7.00%,
9.16%, and 13.62%, respectively;
o refrain from engaging in any transaction with or distribution
of funds to Fidelity or its subsidiaries or selling any assets
to an affiliate without OTS approval; and
o not engage in new activities not included in its strategic
plan without OTS approval.
United Fidelity Bank believes that it currently is in compliance with
all provisions of the supervisory agreement.
USE OF PROCEEDS
Our net proceeds from the rights offering will depend upon the number
of shares that are purchased. If we sell all of the shares which may be
purchased upon exercise of the rights offered by this prospectus, then we will
receive proceeds of $2.5 million, before deducting expenses payable by us, which
are estimated to be approximately $30,000. Since our directors, executive
officers and their affiliates, who currently own approximately 67.8% of our
outstanding shares of common stock, without giving effect to the shares that may
be issued upon the exercise of outstanding warrants and stock options, have
agreed to exercise certain of their basic and over-subscription subscription
privileges, we expect to issue at least _______________ shares and to receive
proceeds of at least approximately $2.0 million from the rights offering, before
deducting expenses.
15
We anticipate that we will use a portion of the proceeds to repay the
remaining $800,000 of the senior subordinated debt that matures in June 2005,
assuming enough proceeds are raised from our current rights offering of our
9.00% Senior Subordinated Notes due April 20, 2009 to our shareholders to pay
down $1.0 million of the outstanding $1.8 million. We also anticipate that we
will contribute $1.0 million of capital to support potential growth of our
subsidiary, United Fidelity Bank. The remainder will be utilized to make
interest payments on outstanding debt, and to fund the limited operations of
Fidelity. Although we expect to use the proceeds in the manner discussed above,
we reserve the right to use the proceeds in any manner which we consider
appropriate.
WE DO NOT ANTICIPATE PAYING DIVIDENDS
We have not paid any cash dividends on our common stock since July 6,
1998 and do not anticipate paying cash dividends in the foreseeable future,
since we are dependent upon United Fidelity Bank for funds for dividends and,
under the terms of the supervisory agreement, United Fidelity cannot pay a
dividend to us without approval of the OTS. For the foreseeable future, we
anticipate that United Fidelity Bank will retain any earnings which it generates
or, subject to OTS approval, pay a portion of these earnings to us in order for
us to service our existing debt. The declaration and payment in the future of
any cash dividends will be at the discretion of our board of directors and will
depend upon the receipt of dividends from United Fidelity Bank, earnings,
capital requirements and the financial position of Fidelity, general economic
conditions and other pertinent factors.
16
PRICE RANGE OF COMMON STOCK
Our common stock is traded on the Nasdaq SmallCap Market under the
symbol "FFED". The following table sets forth the reported high and low bid
prices of our common stock for the periods indicated:
2001 High Low
----
First Quarter $ 1.81 $ 1.31
Second Quarter 1.75 1.50
Third Quarter 3.70 1.75
Fourth Quarter 2.55 2.00
2002
----
First Quarter $ 3.15 $ 2.30
Second Quarter 2.95 2.15
Third Quarter 2.50 1.75
Fourth Quarter 2.15 1.30
2003
----
First Quarter $ 1.75 $ 1.21
Second Quarter 1.53 1.12
Third Quarter 1.75 1.25
Fourth Quarter 1.88 1.50
The closing price of our common stock was $____ on _______, 2004. We
urge you to obtain a current stock quote for our common stock.
17
CAPITALIZATION
The following table shows our indebtedness and capitalization as of
December 31, 2003. The table also shows our capitalization as adjusted for the
completion of the rights offering and assuming that all subscription rights are
exercised.
December 31, 2003
Actual As Adjusted
(dollars in thousands)
(unaudited)
Borrowings
- ----------
Junior subordinated notes, unsecured $ 5,002 5,002
Senior subordinated notes, unsecured 1,800 1,800
Federal Home Loan Bank Advances 31,550 31,550
Line of credit, $500,000 secured by 59,700
shares of United Fidelity Bank stock 275 275
Note payable to Pedcor Bancorp, unsecured 1,000 1,000
-------- --------
Total Borrowings $ 39,627 39,627
Shareholders' Equity
- --------------------
Common Stock $ 9,619
Stock Warrants 261
Additional paid-in capital 16,634
Accumulated other comprehensive loss (209)
Retained earnings (12,938)
-------- --------
Total shareholders' equity 13,367 15,837
-------- --------
Total capitalization $ 52,994 $ 55,464
======== ========
Note: The pro forma numbers do not reflect a current rights offering of
our 9.0% notes due 2009 to our shareholders. It is anticipated that our
directors, executive officers and their affiliates will purchase
18
at least $2.0 million in notes pursuant to such rights offering.
The Rights Offering
Before exercising any subscription rights, you should read carefully
the information set forth under "Risk Factors."
Eligibility.
The rights offering is available only to our shareholders as of the
close of business on March 1, 2004, which is the record date for the
distribution of the rights. Eligibility for the offering could also be affected
as described under the caption "-- Legal Compliance" below.
The Rights.
We are distributing at no charge to each of our shareholders as of the
record date, one basic subscription "right" (rounded down to the nearest whole
number) for every _____ shares of common stock held. Each basic subscription
right will entitle you, for $_____, to purchase one share of common stock. You
are not required to exercise any or all of your rights unless you wish to
purchase shares under your over-subscription privilege described below, in which
case you must exercise all of your basic subscription rights. You may not
transfer rights to any other person.
The Over-Subscription Privilege.
Subject to the limitations described below, shareholders who exercise
their rights to the fullest possible extent will have an "oversubscription
privilege," which will entitle them to subscribe for shares that other
shareholders declined to purchase. If you wish to exercise your
over-subscription privilege, you should indicate the number of additional shares
that you would like to purchase in the space provided on your shareholder rights
agreement.
Shares will be available for purchase pursuant to the oversubscription
privilege only to the extent that other shareholders decline to subscribe for
the full number of shares available to them. If the number of shares available
for oversubscriptions is less than the total number requested by shareholders
who exercise their oversubscription privilege, we will allocate the amount of
available shares that you will be entitled to purchase if you exercise your
over-subscription privilege on a pro rata basis with other shareholders
exercising their over-subscription privileges. For example, assume that (1)
there are 500,000 shares available for over-subscription, (2) individuals
exercising over-subscription privileges subscribe for 600,000 shares by use of
their over-subscription privileges, (3) you own 10,000 shares of our common
stock and (4) shareholders who are exercising their over-subscription privileges
own 100,000 shares. In this example, your over-subscription privilege would be
equal to 50,000 shares. This was calculated by dividing the number of shares you
own, or 10,000, by the total number of shares owned by all shareholders
exercising their over-subscription privileges with respect to the notes, or
100,000, and then multiplying this by the number of shares available for sale
pursuant to the exercise of all over-subscription privileges, or 500,000.
The formula for determining your over-subscription privilege will
entitle you to purchase a number of shares equal to the product of:
o the number of shares of our common stock owned by you on the
close of business on March 1, 2004, divided by the total
number of shares of our common stock owned by all
19
shareholders exercising their over-subscription privileges on
the close of business on March 1, 2004; and
o the number of shares available for sale pursuant to the
exercise of all over-subscription privileges.
If this results in a number of shares greater than you requested, you
will receive only the number of shares that you requested, and the excess will
be reallocated one or more times among those shareholders whose
over-subscription privileges are not fully satisfied on the same principle,
until all available shares have been allocated or all exercises of
over-subscription privileges are satisfied.
In certain circumstances, in order to comply with applicable state
securities laws, we may not be able to honor all over-subscription privileges.
Expiration Date.
The rights offering, including the oversubscription privilege, will
expire at the close of business on ______________, 2004. If you do not exercise
your subscription rights prior to that time, your basic subscription rights will
expire and will no longer be exercisable. We will not be required to issue
shares to you if we receive your shareholder rights agreement or your payment
after that time, regardless of when you sent the shareholder rights agreement
and payment.
No Minimum Condition.
There is no minimum number of shares that must be subscribed for as a
condition to accepting subscriptions and closing the offering. We have the right
to accept any subscriptions validly tendered.
Exercise Procedures.
General. If you are a beneficial owner of shares of Fidelity common
stock that you hold through a nominee holder, we will ask your broker, dealer or
other nominee to notify you of this rights offering. If you wish to exercise
your rights, you will need to have your broker, dealer or other nominee act for
you. To indicate your decision with respect to your rights, you should complete
and return to your broker, dealer or other nominee the form entitled "Beneficial
Owner Election Form." You should receive this form from your broker, custodian
bank or other nominee with the other rights offering materials.
Basic Subscription Rights. You may exercise your subscription rights by
delivering to us on or prior to ______________, 2004:
o A properly completed and duly executed shareholder rights
agreement;
o Any required signature guarantees; and
o Payment in full for the shares subscribed for by exercising
your basic subscription right and, if desired, your
over-subscription privileges.
You should deliver your shareholder rights agreement and payment to us
at the address shown on page ___. We will not pay you interest on funds
delivered to us pursuant to the exercise of rights.
Over-Subscription Privilege. When you send in your shareholder rights
agreement, you must also send the full purchase price for the number of shares
that you have requested to purchase, in addition to the payment due for the
number of shares requested through your over-subscription privileges. If the
number of shares you are eligible to purchase exceeds the number of shares you
requested, you will
20
receive only the number of shares that you requested, and the remaining shares
will be divided among other shareholders exercising their over-subscription
privileges.
To determine if you have fully exercised your basic subscription right,
we will consider only the rights held by you in the same capacity. For example,
suppose you were granted rights for shares of Fidelity common stock you own
individually and for shares of Fidelity common stock you own jointly with your
spouse. You only need to fully exercise your basic subscription right with
respect to your individually owned rights in order to exercise your
over-subscription privilege with respect to your individually owned rights. You
do not have to subscribe for any shares under the rights owned jointly with your
spouse to exercise your individual over-subscription privileges.
When you complete the portion of the shareholder rights agreement to
exercise the over-subscription privilege, you will be representing and
certifying that you have fully exercised your basic subscription rights received
in respect of shares of Fidelity common stock you hold in that capacity. You
must exercise your over-subscription privilege at the same time you exercise
your basic subscription right in full.
If you own your shares of Fidelity common stock through your broker,
dealer or other nominee holder who will exercise your over-subscription
privileges on your behalf, the nominee holder will be required to certify to us:
o the number of shares held on March 1, 2004, the record date,
on your behalf;
o the number of rights you exercised under your basic
subscription right; and
o that your entire basic subscription right held in the same
capacity has been exercised in full.
Your nominee holder must also disclose to us certain other information
received from you.
If you exercised your over-subscription privilege and are allocated
less than all of the number of shares for which you wished to subscribe, the
excess funds you paid for shares that are not allocated to you will be returned
in full by mail, without interest or deduction, as soon as practicable after the
expiration date of the rights. However, the subscription amounts we receive for
shares requested through your over-subscription privileges will not be deposited
into an escrow account and will be available immediately for use by Fidelity. As
a consequence, there is no guarantee that we will have these funds available to
return to you. In this event, we expect to draw upon our existing $500,000 line
of credit with CIB Bank. As long as funds are available under our line of
credit, we may draw funds at any time and for any purpose we deem appropriate.
However, we are not required to hold this line of credit open in order to repay
subscribers.
Ambiguities in the Exercise of Subscription Rights. If you do not
specify the number of subscription rights and over-subscription privileges being
exercised on your shareholder rights agreement, or if your payment is not
sufficient to pay the total purchase price for all of the shares that you
indicated you wished to purchase, you will be deemed to have exercised the
maximum number of subscription rights and over-subscription privileges that
could be exercised for the amount of the payment that we receive from you. If
your payment exceeds the total purchase price for all of the subscription rights
shown on your shareholder rights agreement, your payment will be applied, until
depleted, to subscribe for shares in the following order:
21
o to subscribe for the number of shares that you indicated on
the shareholder rights agreement that you wished to purchase
through your basic subscription right, until your basic
subscription right has been fully exercised; and
o to subscribe for additional shares pursuant to the
over-subscription privilege, subject to any applicable
limitations.
Any excess payment remaining after the foregoing allocation will be returned to
you as soon as practicable by mail, without interest or deduction.
Signature Guarantee. Signatures on the shareholder rights agreement do
not need to be guaranteed if either the shareholder rights agreement provides
that the shares to be purchased are to be delivered directly to the record owner
of such subscription rights, or the shareholder rights agreement is submitted
for the account of a member firm of a registered national securities exchange or
a member of the National Association of Securities Dealers, Inc., or a
commercial bank or trust company having an office or correspondent in the United
States. If a signature guarantee is required, signatures on the shareholder
rights agreement must be guaranteed by a commercial bank, broker, dealer, credit
union, national securities exchange or savings association.
Payment for the Shares. Payment for the shares must be made in United
States dollars. We will consider payment to have been received only upon:
o actual receipt of any certified check or cashier's check drawn
upon a U.S. bank or of any postal, telegraphic or express
money order payable to the order of Fidelity Federal Bancorp;
o actual receipt of any funds transferred by wire transfer; or
o actual receipt of any funds through an alternative payment
method which we may approve.
Payment for notes also may be effected through wire transfer as
follows:
Wire to: Federal Home Loan Bank of Indianapolis
ABA#: 074 001 019
Further Credit: United Fidelity Bank, fsb
Account #: 8166-9994
Further Credit: Fidelity Federal Bancorp - Rights Offering
Account #: 0-01-45002025
You May Not Revoke the Exercise of a Subscription Right.
After you have exercised your basic subscription right or
over-subscription privilege, you may not revoke that exercise. You should not
exercise your subscription rights and over-subscription privilege unless you are
certain that you wish to purchase the shares of common stock.
Our Decision Is Binding on You.
All questions concerning the timeliness, validity, form and eligibility
of any exercise of subscription rights and over-subscription privileges will be
determined by us, and our determinations will be final and binding. In our sole
discretion, we may waive any defect or irregularity, or permit a defect or
irregularity to be corrected within such time as we may determine, or reject the
purported exercise of any subscription right and over-subscription privilege by
reason of any defect or irregularity in such exercise.
22
Subscription rights and over-subscription privileges will not be deemed to have
been received or accepted until all irregularities have been waived or cured
within such time as we determine in our sole discretion. We will be under no
duty to notify you of any defect or irregularity in connection with the
submission of a shareholder rights agreement or incur any liability for failure
to give such notification.
Notice to Nominee Holders.
If you are a broker, a trustee or a depositary for securities which
holds shares of Fidelity common stock for the account of others as a nominee
holder, you should notify the respective beneficial owners of such shares of the
issuance of the rights as soon as possible to find out such beneficial owners'
intentions. You should obtain instructions from the beneficial owner with
respect to the rights, as set forth in the instructions we have provided to you
for your distribution to beneficial owners. If the beneficial owner so
instructs, you should complete the appropriate shareholder rights agreements
and, in the case of the over-subscription privilege, the related nominee holder
certification, and submit them to us with the proper payment. A nominee holder
that holds shares for the account(s) of more than one beneficial owner may
exercise the number of rights to which all such beneficial owners in the
aggregate otherwise would have been entitled if they had been direct record
holders of Fidelity common stock on the record date, so long as the nominee
submits the appropriate shareholder rights agreements and certifications and
proper payment to the subscription agent.
We Are Making No Recommendation to Rights Holders.
Neither Fidelity nor its board of directors is making any
recommendations to you as to whether or not you should exercise your
subscription rights or over-subscription privileges. You should make your
decision based on your own assessment of your best interests after reading this
prospectus.
Fidelity Has Reserved the Right to Withdraw or Cancel the Rights Offering.
Our board of directors may withdraw the rights offering in its sole
discretion at any time prior to or on the completion date. We don't expect to
withdraw the rights offering. We reserve the right to do so in the event we
later determine that facts of which we are currently unaware or future events
would cause us to believe that the rights offering is not in the best interests
of Fidelity. These reasons may include a material change in the price for our
shares or the institution or threat of litigation against us with respect to the
rights offering. We currently are not aware of any facts or circumstances which
would cause us to withdraw the rights offering.
If we cancel the rights offering, any money received from shareholders
will be refunded promptly, without interest. Because we will have immediate use
of funds received in the rights offering, if we withdraw the rights offering
there is no guarantee that we will have funds available to return to
shareholders who have submitted payment for shares. In the event that we would
have no funds available to return to shareholders, we expect to draw upon an
existing $500,000 line of credit with CIB Bank to obtain the funds for this
purpose. As long as funds are available under our line of credit, we may draw
funds at any time and for any purpose we deem appropriate. However, we are not
required to hold this line of credit open in order to repay subscribers.
No Interest on Subscription Funds.
No interest will accrue on funds received as payment for the shares. If
we cancel the rights offering, any money received from shareholders will be
refunded promptly, without interest. Further, if you exercise your
over-subscription privilege and are allocated less than all of the shares for
which you
23
wished to subscribe, the excess funds you paid for the notes will be returned to
you promptly, without interest.
Determination of the Subscription Price.
We believe that the $_____ per share price meets our objective of
raising the maximum amount of net proceeds while providing you with an
opportunity to make an additional investment in our common stock. A special
committee of our board of directors (excluding any control directors) chose the
$_____ per share subscription price after considering a variety of factors,
including the following:
o the historic and current market price of the common stock;
o general conditions in the securities market;
o our need for capital;
o alternatives available to us for raising capital;
o the amount of proceeds desired; and
o the then current trading price of our stock relative to the
subscription price of $_____.
We have neither sought, nor obtained, any valuation opinion from outside
financial advisors or investment bankers.
The $_____ per share subscription price should not be considered an
indication of the actual value of Fidelity or of our common stock. We cannot
assure you that the market price of the common stock will not decline during or
after the rights offering. We also cannot assure you that you will be able to
sell shares of common stock purchased during the rights offering at a price
equal to or greater than $_____ per share. We urge you to obtain a current quote
for our common stock before exercising your rights. Our common stock is traded
on the Nasdaq SmallCap Market under the symbol "FFED".
Management and Director Participation.
Mr. Cordingley and his affiliates, and the other directors of Fidelity
and their respective affiliates, who currently own of record approximately 64.1%
and 3.7%, respectively, and beneficially own approximately 65.9% and 4.0%,
respectively, of our outstanding shares of common stock, have agreed to exercise
their basic subscription rights, and over-subscription privileges in the amount
of at least _______________ shares. As a result, we expect that at least
_______________ shares, with gross proceeds of at least $2.0 million, will be
sold and received, respectively, by Fidelity.
Shares of Common Stock Outstanding after the Rights Offering.
Assuming we issue all of the shares of common stock offered in the
rights offering, approximately _______________ shares of common stock will be
issued and outstanding. This would represent an increase of approximately ____%
in the number of outstanding shares of common stock. If you do not exercise your
basic subscription rights, the percentage of common stock that you hold will
decrease if shares are purchased by other shareholders in the rights offering.
Legal and Regulatory Compliance.
We will not be required to issue you shares pursuant to the rights
offering if, in our opinion, you would be required to obtain prior clearance or
approval from any state or federal regulatory authorities to
24
own or control such shares if, at the time the subscription rights expire, you
have not obtained such clearance or approval.
The rights offering is not being made in any state or other
jurisdiction in which it is unlawful to do so, nor are we selling or accepting
any offers to purchase any shares to you if you are a resident of any such state
or other jurisdiction. We may delay the commencement of the rights offering in
certain states or other jurisdictions in order to comply with the securities law
requirements of such states or other jurisdictions. In certain circumstances, in
order to comply with applicable state securities laws, we may not be able to
honor all over-subscription privileges even if we have shares available. It is
not anticipated that there will be any changes in the terms of the rights
offering. In our sole discretion, we may decline to make modifications to the
terms of the rights offering requested by certain states or other jurisdictions,
in which case shareholders who live in those states or jurisdictions will not be
eligible to participate in the rights offering.
Fees and Expenses.
You are responsible for paying any commissions, fees, taxes or other
expenses incurred in connection with the exercise of the subscription rights. We
will not pay such expenses.
If You Have Questions.
If you have questions or need assistance concerning the procedure for
exercising subscription rights or if you would like additional copies of this
prospectus, the instructions, or forms for use in connection with the rights
offering, you should contact Deb Merritt, Assistant Vice President, Shareholder
Relations, of Fidelity, at:
Fidelity Federal Bancorp
18 NW Fourth Street, PO Box 1347
Evansville, Indiana 47706-1347
Telephone: (812) 424-0921, extension 2226
(800) 280-8280, extension 2226
Important: Please carefully read the instructions accompanying the
shareholder rights agreement and follow those instructions in detail. You are
responsible for choosing the payment and delivery method for your shareholder
rights agreement, and you bear the risks associated with such delivery. If you
choose to deliver your shareholder rights agreement and payment by mail, we
recommend that you use registered mail, properly insured, with return receipt
requested. We also recommend that you allow a sufficient number of days to
ensure delivery to us prior to ______________, 2004.
MATERIAL FEDERAL INCOME TAX CONSIDERATIONS
The following discussion is the opinion of our tax counsel, Krieg
DeVault LLP, as to the application of existing material federal income tax law
to facts as presented in this prospectus relating to the rights offering and
sale of the shares of common stock. Krieg DeVault's opinion is based on the
Internal Revenue Code of 1986, as amended (the "Code"), the Treasury regulations
promulgated thereunder, judicial authority and administrative rulings and
practice, all of which are subject to change at any time, possibly with
retroactive effect. Moreover, there can be no assurance that this opinion will
not be challenged by the Internal Revenue Service or that a court considering
the issues will not hold contrary to such opinion.
25
This discussion may not address federal income tax consequences
applicable to shareholders subject to special treatment under federal income tax
law, such as financial institutions, broker-dealers, life insurance companies or
traders in securities that elect to mark to market. Also, this discussion does
not address applicable tax consequences if you hold Fidelity common stock as
part of a hedging, straddle, constructive sale, conversion or other risk
reduction transaction. This summary does not address the tax consequences of the
rights offering under applicable state, local or foreign tax laws. You should
consult your own tax advisors in determining the federal, state, local or
foreign and any other tax consequences to you of the rights offering and
ownership of the shares of common stock.
Taxation of Shareholders
The receipt and exercise of the subscription rights distributed
pursuant to the rights offering is nontaxable to the shareholders.
Receipt of a Subscription Right. You will not recognize any gain or
other income upon receipt of a subscription right.
Tax Basis and Holding Period of Subscription Rights. Your tax basis in
each subscription right will effectively depend on whether you exercise the
subscription right or allow the subscription right to expire.
If you exercise a subscription right, your tax basis in the
subscription right will be determined by allocating the tax basis of your common
stock on which the subscription right is distributed between the common stock
and the subscription right, in proportion to their relative fair market values
on the date of distribution of the subscription right. However, if the fair
market value of your subscription rights is less than 15% of the fair market
value of your existing shares of common stock, then the tax basis of each
subscription right will be deemed to be zero, unless you elect, by attaching an
election statement to your federal income tax return for the taxable year in
which you receive the subscription rights, to allocate tax basis to your
subscription rights.
If you allow a subscription right to expire, it will be treated as
having no tax basis.
Your holding period for a subscription right will include your holding
period for the shares of common stock upon which the subscription right is
issued.
Expiration of Subscription Rights. You will not recognize any loss upon
the expiration or lapse of a subscription right.
Exercise of Subscription Rights. You will not recognize a gain or loss
on the exercise of a subscription right. The tax basis of any share of common
stock that you purchase through the rights offering will be equal to the sum of
your tax basis, if any, in the subscription right exercised and the price paid
for the share. The holding period of the shares of common stock purchased
through the rights offering will begin on the date that you exercise your
subscription rights.
Sale or Exchange of Shares Acquired Upon Exercise of Subscription Rights
If you sell or exchange shares of Fidelity common stock, you will
generally recognize gain or loss on the transaction. The gain or loss you
recognize is equal to the difference between the amount you realize on the
transaction and your basis in the shares you sold. Such gain or loss generally
will be capital gain or loss so long as you held the shares as a capital asset
at the time of the sale or exchange. Gain or loss from an asset held for more
than 12 months will generally be taxable as long-term capital gain or
26
loss. If you are an individual, any long-term capital gain is generally taxed at
a maximum federal income tax rate of 20%.
Taxation of Fidelity
Fidelity will not recognize any gain, other income or loss upon the
issuance of the subscription rights, the lapse of the subscription rights, or
the receipt of payment for shares of common stock upon exercise of the
subscription rights.
DESCRIPTION OF CAPITAL STOCK
The following is a summary of the terms of our capital stock and highlights some
of the provisions of our amended and restated articles of incorporation and
by-laws. Since we are only providing a general summary of certain terms of our
amended and restated articles of incorporation and by-laws, you should only rely
on the actual provisions of the amended and restated articles of incorporation
or the by-laws. If you would like to read the articles of incorporation or
by-laws, they are on file with the Securities and Exchange Commission.
Authorized and Outstanding Capital Stock.
Our authorized capital stock consists of 15,000,000 shares of common
stock, no par value, and 5,000,000 shares of preferred stock. As of March 1,
2004, there were 9,618,658 shares of common stock outstanding and approximately
429 beneficial holders of common stock of record. All outstanding shares of
common stock are fully paid and non-assessable. We have two issues of
outstanding warrants to purchase 18,282 and 9,471 shares of our common stock at
a price of $6.22 and $8.93 per share, respectively. The warrants expire on April
30, 2004 and January 31, 2005, respectively. The warrants may be exercised in
whole or in part at any time prior to expiration. Fidelity has reserved 27,753
shares of common stock for the possible exercise of these warrants. None of the
warrants have been exercised as of March 1, 2004.
In 2002, Fidelity completed a debt and equity rights offering in which
500,000 warrants were issued. The warrants may be exercised in whole or in part
at any time prior to February 28, 2012 at an exercise price of $3.00 per share,
less the purchase price of $0.50 per warrant. As of March 1, 2004, all 500,000
warrants were outstanding and we have reserved 500,000 shares of common stock
for the possible exercise of these warrants.
As of March 1, 2004, we also had outstanding, under our stock option
plans, options to purchase 351,996 shares of our common stock, of which
_________ were exercisable at a price greater than $_____. We have reserved
470,279 shares of common stock for the possible exercise of options under these
option plans.
Common Stock.
The holders of common stock are entitled to dividends in such amounts and at
such times as may be declared by the board of directors out of funds legally
available therefore. Holders of common stock are entitled to one vote per share
for the election of directors and other corporate matters. Such holders are not
entitled to vote cumulatively for the election of directors. In the event of
liquidation, dissolution or winding up of Fidelity, holders of common stock
would be entitled to share ratably in all of our assets available for
distribution to the holders of common stock. The common stock carries no
preemptive rights. All outstanding shares of common stock are, and the shares of
common stock to be sold by
27
Fidelity in the rights offering when issued will be, duly authorized, validly
issued, fully paid and non-assessable.
Preferred Stock.
Our board of directors is authorized to issue from time to time,
without shareholder authorization, in one or more designated series, shares of
preferred stock with such dividend, redemption, conversion and exchange
provisions as are provided in the particular series. The issuance of preferred
stock could have the effect of delaying or preventing a change in control of
Fidelity. Your rights as a holder of our common stock may be affected by any
preferred stock that we may issue. Our board of directors has no present plans
to issue any preferred stock.
Transfer Agent.
We act as our own transfer agent for our common stock.
PLAN OF DISTRIBUTION
On or about ______, 2004, we will distribute the subscription rights,
shareholder rights agreements and copies of this prospectus to individuals who
owned shares of common stock on [RECORD DATE]. We have not employed any brokers,
dealers or underwriters in connection with the rights offering and will not pay
any underwriting commissions, fees or discounts in connection with the rights
offering. Certain of our directors or officers may assist in the rights
offering. These individuals will not receive any commissions or compensation
other than their normal directors' fees or employment compensation and will not
register with the Securities and Exchange Commission as brokers in reliance on
certain safe harbor provisions contained in Rule 3a4-1 under the Securities
Exchange Act of 1934.
If you wish to exercise your subscription rights and purchase the
shares of common stock, you should complete the shareholder rights agreement and
return it with payment for the shares of common stock, to us, at the address
below. If you have any questions, you should contact Deb Merritt, Assistant Vice
President, Shareholder Relations, of Fidelity at:
Fidelity Federal Bancorp
18 NW Fourth Street, PO Box 1347
Evansville, Indiana 47706-1347
Telephone: (812) 424-0921, extension 2226
(800) 280-8280, extension 2226
LEGAL MATTERS
The validity of the shares of common stock offered by this prospectus
and the tax matters discussed under "Material Federal Income Tax Considerations"
has been passed upon for us by Krieg DeVault LLP, Indianapolis, Indiana.
EXPERTS
BKD, LLP, independent auditors, have audited our financial statements
and schedule included in our Annual Report on Form 10-K for the year ended
December 31, 2002, as set forth in their report, which is incorporated by
reference into this prospectus and elsewhere in the registration statement. Our
28
financial statements are incorporated by reference in reliance on the report of
BKD, LLP, given on their authority as experts in accounting and auditing.
WHERE YOU CAN FIND MORE INFORMATION
We file reports and other information with the SEC. You may read and
copy any document we file with the SEC at the SEC's public reference room
located at 450 Fifth Street, N.W., Washington, D.C. 20549. You may obtain
further information regarding the operation of the SEC's Public Reference Room
by calling the SEC at 1-800-SEC-0330. Our filings are also available to the
public on the SEC's Internet site located at http://www.sec.gov.
The SEC allows us to "incorporate by reference" into this prospectus
information we file with the SEC. This means we can disclose important
information to you by referring you to the documents containing such
information. The information we incorporate by reference is considered to be
part of this prospectus, unless we update or supersede that information by the
information contained in this prospectus or information we file subsequently
that is incorporated by reference into this prospectus. We are incorporating by
reference into this prospectus the following documents that we have filed with
the SEC, and our future filings with the SEC under Sections 13(a), 13(c), 14 or
15(d) of the Securities Exchange Act of 1934 until the rights offering is
completed:
o our annual report on Form 10-K for the fiscal year ended
December 31, 2002;
o our quarterly report on Form 10-Q for the fiscal quarter ended
March 31, 2003;
o our quarterly report on Form 10-Q for the fiscal quarter ended
June 30, 2003;
o our quarterly report on Form 10-Q for the fiscal quarter ended
September 30, 2003;
o our definitive proxy statement filed April 1, 2003 in
connection with our 2003 annual shareholder meeting.
Our SEC file number is 0-22880.
This prospectus is part of a registration statement on Form S-3 we have
filed with the SEC relating to the securities that we are offering under this
prospectus. As permitted by SEC rules, this prospectus does not contain all of
the information included in the registration statement and the accompanying
exhibits and schedules we file with the SEC. You should read the registration
statement and the exhibits and schedules for more information about us. The
registration statement, exhibits and schedules are also available at the SEC's
Public Reference Room or through its Internet site.
This document incorporates by reference important business, financial
and other information about us that is not included in or delivered with this
document. Documents incorporated by reference and any other copies of our
filings with the SEC are available from us upon written or oral request and
without charge to each person, including any beneficial owner, to whom a
prospectus is delivered, excluding all exhibits unless specifically incorporated
by reference as exhibits in this document.
Written and telephone requests for any of these documents should be
directed to us as indicated below:
Fidelity Federal Bancorp
18 NW Fourth Street
P.O. Box 1347
Evansville, Indiana 47706-1347
Attn.: Mark A. Isaac, Vice President
Telephone: (812) 424-0921
29
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
- -------- -------------------------------------------
The following are actual or estimated expenses incurred or to be
incurred by the Company in connection with this offering:
Fees Amount (in $)
---- ------
Filing Fee 402.59
Printing Expenses 4,000*
Legal Fees, Blue Sky Fees and Expenses 22,000*
Accounting Fees and Expenses 3,000*
Miscellaneous Expenses 500*
---------
Total 29,902.59*
=========
*Estimated.
Item 15. Indemnification of Directors and Officers.
- ------- -----------------------------------------
Chapter 23-1-37 of the Indiana Business Corporation Law gives
corporations the power to indemnify officers and directors under certain
circumstances.
The Company's Articles of Incorporation provide that the Company will
indemnify any person who is or was a director or officer of the Company or of
any other corporation for which such director or officer is or was serving in
any capacity at the request of the Company against all liability and expense
that may be incurred in connection with any claim, action, suit or proceeding
with respect to which such director or officer is wholly successful or acted in
good faith in a manner such director or officer reasonably believed to be in, or
not opposed to, the best interests of the Company or such other corporation and,
with respect to any criminal action or proceeding, had no reasonable cause to
believe that such conduct was unlawful. A director or officer of the Company is
entitled to be indemnified as a matter of right with respect to those claims,
actions, suits or proceedings in which such director or officer has been wholly
successful. In all other cases, such director or officer, shall be entitled to
indemnification as a matter of right unless (i) the director or officer has
breached or failed to perform the person's duties in compliance with the
standard of conduct set forth above and (ii) such breach of failure to perform
constituted willful misconduct or recklessness as determined by the Board of
Directors of the Company, a committee of the Board of Directors, independent
legal counsel, or a committee of disinterested persons selected by the Board of
Directors. The foregoing is a summary of detailed provisions for indemnification
found at Article VI, Section 2 of the Articles of Incorporation of the Company
which are incorporated by reference into this Registration Statement as Exhibit
3.1.
The Company also has policies insuring its officers and directors
against certain liabilities for action taken in such capacities, including
liabilities under the Securities Act of 1933, as amended.
30
See "Item 17. Undertakings" for a description of the SEC's position
regarding the indemnification of directors and officers for liabilities arising
under the Securities Act of 1933, as amended.
Item 16. Exhibits.
- ------- --------
The exhibits to this registration statement are listed in the attached
Exhibit Index.
Item 17. Undertakings.
- -------- ------------
(a) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(b) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer, or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
31
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
the registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly caused this
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Evansville, State of Indiana, on March 15, 2004.
FIDELITY FEDERAL BANCORP
By: /s/ DONALD R. NEEL
-------------------------------
Donald R. Neel, President and
Chief Executive Officer
POWER OF ATTORNEY
Each person signing below hereby makes, constitutes and appoints Bruce A.
Cordingley and Donald R. Neel, and each of them, his true and lawful
attorneys-in-fact to execute and file any and all amendments (including
post-effective amendments) to this Registration Statement on Form S-3 as such
attorney-in-fact may deem appropriate.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this registration statement has been signed by the following persons in the
capacities indicated below as of March 15, 2004.
By: /s/ BRUCE A. CORDINGLEY By: /s/ BARRY A. SCHNAKENBURG*
-------------------------------------- -------------------------------
Bruce A. Cordingley, Director and Barry Schnakenburg, Director
Chair of the Executive Committee
By: /s/ DONALD R. NEEL By: /s/ PHILLIP J. STOFFREGEN*
-------------------------------------- -------------------------------
Donald R. Neel, Director, Phillip J. Stoffregen, Director
President and Chief Executive Officer
(Principal Executive Officer)
By: /s/ GERALD K. PEDIGO* By: /s/ JACK CUNNINGHAM*
-------------------------------------- -------------------------------
Gerald K. Pedigo, Director Jack Cunningham, Director
By: /s/ PAUL E. BECKER*
--------------------------------------
Paul E. Becker, Director
By: /s/ DONALD R. NEEL*
--------------------------------------
Donald R. Neel, Attorney-in-fact
32
EXHIBIT INDEX
Report or Registration
Exhibit Number Document Description Statement
- -------------- -------------------- ---------
* 3.1 Articles of Incorporation; Articles of Annual Report on Form 10-K for the fiscal
Amendment of the Articles of Incorporation year ended June 30, 1995; Registration
Statement on Form S-3, dated January 12, 2001,
SEC File No. 333-53668
* 3.2 By-Laws of the Company Registration Statement on Form S-3, dated
January 12, 2001, SEC File No. 333-53668
** 5.1 Opinion of Krieg DeVault LLP regarding
legality of shares
** 8.1 Opinion of Krieg DeVault LLP regarding tax
matters
** 23.1 Consent of Krieg DeVault LLP (contained in
Exhibits 5.1 and 8.1)
** 23.2 Consent of BKD, LLP
** 24.1 Power of Attorney (included on the
signature page of the registration
statement)
** 99.1(a) Shareholder Rights Agreement
** 99.1(b) Instructions for Use of Shareholders Rights
Agreement
** 99.2 Letter to Record Shareholders
** 99.3 Letter to Nominee Holders
** 99.4 Letter to Clients of Nominee Holders
** 99.5 Beneficial Owner Election Form
** 99.6 Nominee Holder Certification
** 99.7 Substitute Form W-9
* Incorporated herein by reference as indicated.
** Filed herewith.
33