BANK PLUS CORPORATION
4565 COLORADO BOULEVARD
LOS ANGELES, CALIFORNIA 90039
April 5, 2000
Dear Stockholder:
You are cordially invited to attend the 2000 Annual Meeting of Stockholders
(the "Annual Meeting") of Bank Plus Corporation (the "Company"). The Annual
Meeting will be held on Wednesday, April 26, 2000, at 11:00 a.m. at the
corporate headquarters of the Company at 4565 Colorado Boulevard, Los Angeles,
California 90039. At the Annual Meeting, you will be asked to (i) elect four
persons to the Board of Directors of the Company; and (ii) transact such other
business as may properly come before the Annual Meeting. Following the meeting,
management will be pleased to answer your questions about the Company.
Your Board of Directors has approved the nominees for election as set forth
in the accompanying Proxy Statement as being in the best interests of the
Company and recommends that you vote FOR the persons it has nominated for
election to the Board of Directors.
I HOPE YOU WILL BE ABLE TO ATTEND THIS MEETING IN PERSON. WHETHER OR NOT
YOU EXPECT TO ATTEND, I URGE YOU TO SIGN, DATE AND RETURN THE ENCLOSED PROXY
CARD SO THAT YOUR SHARES WILL BE REPRESENTED.
Enclosed herewith is a copy of the Company's Annual Report on Form 10-K,
including financial statements for the year ended December 31, 1999, as filed
with the Securities and Exchange Commission.
If you have any questions, please call Neil L. Osborne, the Company's
Investor Relations Officer, at (818) 549-3116. I look forward to seeing you on
Wednesday, April 26, 2000.
Sincerely,
/S/ Gordon V. Smith
-------------------
Gordon V. Smith
CHAIRMAN OF THE BOARD
BANK PLUS CORPORATION
4565 COLORADO BOULEVARD
LOS ANGELES, CALIFORNIA 90039
NOTICE OF 2000 ANNUAL MEETING OF STOCKHOLDERS
The 2000 Annual Meeting of Stockholders (the "Annual Meeting") of Bank
Plus Corporation (the "Company") will be held at the corporate headquarters of
the Company at 4565 Colorado Boulevard, Los Angeles, California 90039 on
Wednesday, April 26, 2000, at 11:00 a.m. local time for the following reasons:
1. To elect four persons to the Board of Directors of the Company; and
2. To transact such other business as may properly come before the
Annual Meeting or any or all adjournments or postponements thereof.
Only holders of record of shares of Common Stock, $0.01 par value, at the
close of business on March 24, 2000 will be entitled to notice of and to vote at
the Annual Meeting. A list of such stockholders will be open for examination by
any stockholder at the meeting and for a period of ten days prior to the date of
the meeting during ordinary business hours at the corporate headquarters of the
Company.
EACH STOCKHOLDER, EVEN THOUGH HE OR SHE MAY NOW PLAN TO ATTEND THE ANNUAL
MEETING, IS REQUESTED TO SIGN AND DATE THE ENCLOSED PROXY CARD AND TO RETURN IT
WITHOUT DELAY IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
By Order of the Board of Directors,
/S/ Godfrey B. Evans
--------------------
Godfrey B. Evans
CORPORATE SECRETARY
April 5, 2000
April 5, 2000
BANK PLUS CORPORATION
4565 COLORADO BOULEVARD
LOS ANGELES, CALIFORNIA 90039
____________________
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 26, 2000
____________________
SOLICITATION AND REVOCABILITY OF PROXIES
This Proxy Statement (the "Proxy Statement") is furnished in connection
with the solicitation of proxies by the Board of Directors of Bank Plus
Corporation ("Bank Plus" or the "Company") for use at the 2000 annual meeting of
stockholders of Bank Plus (the "Annual Meeting") to be held at the time and
place, and for the purposes, set forth in the accompanying Notice of 2000 Annual
Meeting of Stockholders. It is anticipated that the Proxy Statement will first
be mailed to the holders of the Company's common stock, $0.01 par value (the
"Common Stock"), on or about April 5, 2000.
A person giving the enclosed proxy has the power to revoke it at any time
before it is exercised by (1) attending the Annual Meeting and voting in person,
(2) executing and delivering a proxy for the Annual Meeting bearing a later date
or (3) delivering written notice of revocation to the Secretary of the Company
prior to the Annual Meeting.
The expense of preparing, assembling, printing and mailing the Notice of
2000 Annual Meeting of Stockholders, this Proxy Statement and the materials used
in the solicitation of proxies for the Annual Meeting will be borne by the
Company. Following the mailing of this Proxy Statement, solicitation of proxies
may be made by mail, or by personal calls upon, or telephonic or electronic
communications with, stockholders or their personal representatives by
directors, officers, financial advisors and employees of the Company, none of
whom will be specially compensated for such services. Although there is no
formal agreement to do so, the Company may reimburse banks, brokerage houses and
other custodians, nominees and fiduciaries for their reasonable expenses in
forwarding the Proxy Statement to stockholders whose Common Stock is entitled to
be voted at the Annual Meeting and is held of record by these entities. In
addition, the Company has retained D.F. King & Co., Inc. ("D.F. King") to assist
in the solicitation of proxies. D.F. King may solicit proxies by mail,
telephone, telegraph and personal solicitation, and will request brokerage
houses and other nominees, fiduciaries and custodians nominally holding shares
of Common Stock of record to forward proxy soliciting material to the beneficial
owners of such shares. For these services, the Company will pay D.F. King a fee
estimated not to exceed $4,000, plus reimbursement for reasonable out-of-pocket
expenses.
VOTING SECURITIES
The Board of Directors has fixed the close of business on March 24, 2000,
as the record date for the determination of stockholders entitled to receive
notice of, and vote at, the Annual Meeting (the "Record Date"). The Company is
authorized to issue 78,500,000 shares of Common Stock, which is the only class
of the Company's capital stock entitled to vote at the Annual Meeting. On the
Record Date, 19,441,866 shares of Common Stock were outstanding and entitled to
vote.
Each share of Common Stock entitles the record holder on the Record Date to
one vote on each proposal to be voted on at the Annual Meeting. A majority of
the outstanding shares of Common Stock entitled to vote shall constitute a
quorum. Abstentions, including those stockholders who attend the Annual Meeting
but abstain from voting, and those stockholders who return their proxy cards to
the Company indicating abstention from voting, will be treated as shares present
and entitled to vote for purposes of determining the presence of a quorum. If a
broker indicates on the proxy that it does not have discretionary authority as
to certain shares to vote on a particular matter, those shares will not be
considered as present and entitled to vote with respect to that matter.
Directors will be elected by a plurality of the votes of the shares of Common
Stock present in person or represented by proxy and entitled to vote on the
election of directors. Any stockholder proposals that properly come before the
Annual Meeting will require the affirmative vote of a majority of the shares of
Common Stock present, in person or represented by proxy, at the Annual Meeting.
PROPOSAL NUMBER 1:
ELECTION OF DIRECTORS
At the Annual Meeting, stockholders of Bank Plus will be asked to vote on
the election of four directors. The four nominees receiving the highest number
of votes at the Annual Meeting will be elected directors of the Company, subject
to approval by the Office of Thrift Supervision. To fill these four board
positions, the enclosed proxy, unless indicated to the contrary, will be voted
FOR the nominees listed below and on the enclosed proxy card.
Set forth below are the names of the persons nominated by the Board of
Directors for election as directors at the Annual Meeting. Your proxy, unless
otherwise indicated, will be voted FOR the election of Messrs. Irving R.
Beimler, Steven M. Ellis, and Jeffrey E. Susskind to serve for terms of three
years, and Mr. Thomas E. King to serve for a term of two years. For a
description of each nominee's principal occupation and business experience
during the last five years and present directorships, please see the following
section entitled "Directors and Executive Officers--Nominees for Director."
Bank Plus has been advised by each nominee named in this Proxy Statement
that he is willing to be named as such herein and is willing to serve as a
director if elected. However, if any of the nominees should be unable to serve
as a director, the enclosed proxy will be voted in favor of the remainder of
those nominees not opposed by the stockholder on such proxy and may be voted for
a substitute nominee selected by the Board of Directors.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE ELECTION OF MESSRS.
IRVING R. BEIMLER, STEVEN M. ELLIS, THOMAS E. KING AND JEFFREY E. SUSSKIND AS
DIRECTORS OF BANK PLUS.
4
DIRECTORS AND EXECUTIVE OFFICERS
DIRECTORS
The following table sets forth the names and certain information with
respect to the four persons nominated by the Board of Directors for election as
directors of Bank Plus at the Annual Meeting and each other director of Bank
Plus who will continue to serve as a director after the Annual Meeting. Bank
Plus is the holding company for Fidelity Federal Bank, A Federal Savings Bank
("Fidelity" or the "Bank"), and Gateway Investment Services, Inc. ("Gateway").
FOR TERM DIRECTOR
NOMINEES FOR DIRECTOR AGE TO EXPIRE SINCE POSITIONS HELD WITH BANK PLUS AND FIDELITY
- ---------------------------------------------------------------------------------------------------------------------
Irving R. Beimler(1)(2) 53 2003 1999 Director of Bank Plus and Fidelity
Steven M. Ellis(1)(3) 42 2003 --
Thomas E. King(1)(3)(4) 56 2002 --
Jeffrey E. Susskind(1)(3) 46 2003 --
CONTINUING DIRECTORS
- --------------------
Norman Barker, Jr. 77 2001 1994 Director of Bank Plus
Victor H. Indiek 62 2002 1999 Director of Bank Plus and Fidelity
Robert W. Medearis 68 2002 1999 Director of Bank Plus
Mark K. Mason 40 2001 1998 Vice Chairman, President, Chief Executive Officer and
Director of Bank Plus; Chairman, Chief Executive
Officer and Director of Fidelity
Gordon V. Smith 67 2001 1996 Chairman and Director of Bank Plus
- --------
(1) See "Background of the Nominating Process," below for a description of
agreements between certain shareholder groups and the Company pursuant to
which the Board of Directors agreed to nominate these directors.
(2) Mr. Beimler's recent election to the Fidelity Board is effective as of the
date of the 2000 Annual Meeting and is subject to approval or non-objection
by the Office of Thrift Supervision (the "OTS"). An application is being
prepared for submission to the OTS.
(3) Election to the Bank Plus Board is subject to approval or non-objection by
the OTS. Applications for approval will be submitted to the OTS on or about
the date of mailing of this Proxy Statement.
(4) In order to perform its obligations under agreements between certain
shareholder groups and the Company, the Board of Directors amended the
Company's bylaws to increase the number of seats on the Board of Directors
from eight to nine. Mr. King is nominated for election to the new seat
created by this amendment to the bylaws. In order to balance the number of
directors in each class, the initial term of the new seat resulting from
the amendment to the bylaws is two years. See below, under "Background of
the Nominating Process," for a complete discussion.
BACKGROUND OF THE NOMINATING PROCESS
In December 1999, Strome Partners, L.P., Strome Offshore Limited, Strome
Hedgecap Fund, L.P., Strome Hedgecap Limited, Strome Investment Management,
L.P., SSCO, Inc., and Mark E. Strome (collectively, the "Strome Persons")
publicly disclosed in a filing with the Securities and Exchange Commission their
ownership of 1,870,000 shares of Common Stock of the Company and their
dissatisfaction with the performance of the Company and its Board of Directors.
The Strome Persons also disclosed their contemplation of calling a special
meeting of stockholders to propose an amendment to the Company's Bylaws to
increase the number of authorized directors of the Company and to elect a slate
of nominees selected by the Strome Persons and possibly other stockholders of
the Company to fill the resulting vacancies or to seek with other stockholders
of the Company to replace a majority of the Board of Directors.
5
In response to these and other criticisms from stockholders, the Board
invited the Company's largest stockholders to suggest candidates for election as
directors at the Annual Meeting. The Board expressed a willingness to nominate
such suggested candidates at the Annual Meeting, subject to a review of the
qualifications of the suggested candidates. In return, the Board asked those
stockholders whose candidates would be nominated by the Board to execute a
one-year Standstill Agreement, as described below.
On February 18, 2000, the Strome Persons notified the Secretary of the
Company of their intention to nominate Jeffrey E. Susskind and Mark E. Strome
for election as directors at the Annual Meeting.
After conducting interviews, background investigations and other diligence
as considered appropriate, the Board determined to nominate Jeffrey E. Susskind
and Thomas E. King, both suggested by the Strome Persons, and Steven M. Ellis, a
candidate suggested by Tontine Management, L.L.C., Tontine Partners, L.P.,
Tontine Financial Partners, L.P., Tontine Overseas Associates, L.L.C. and
Jeffrey L. Gendell (collectively, the "Tontine Persons").
As a consequence of having their candidates nominated by the Board for
election as directors at the Annual Meeting, the Strome Persons and the Tontine
Persons have entered into agreements with the Company ("Standstill Agreement").
Under the Standstill Agreements, subject to the non-objection of the Office of
Thrift Supervision (the "OTS"), the Company has agreed to nominate Jeffrey
Susskind, Thomas E. King and Steven M. Ellis for election to the Board of
Directors at the Annual Meeting for terms expiring at the annual meeting of
stockholders in the years 2003, 2002 and 2003, respectively. If the OTS objects
to any of these candidates, the Company has agreed to work with the Strome
Persons or the Tontine Persons, as applicable, to designate another nominee or
nominees. In return, the Strome Persons and the Tontine Persons agreed they
would not: (i) call a special meeting of stockholders or participate in any
solicitation of proxies to vote the Company's securities; (ii) acquire
beneficial ownership of more than 9.62% (in the case of the Strome Persons) or
9.97% (in the case of the Tontine Persons) of the Company's Common Stock; (iii)
make any filing or application with any governmental agency seeking control or,
except under certain limited circumstances, a rebuttal of a presumption of
control of the Company or Fidelity or (iv) otherwise seek to control the
Company's management, Board or policies. Pursuant to the Standstill Agreement
between the Company and the Strome Persons, the Strome Persons have agreed to
formally withdraw their February 18, 2000 notice described above. In addition,
the Strome Persons and Tontine Persons agreed to vote in favor of the director
nominees proposed by the Board at the Annual Meeting. Each of the Standstill
Agreements provides that it will terminate on the earliest to occur of: (a) the
failure of the contracting stockholders' director candidates(s) to be approved
by the OTS as director(s) within 60 days (in the case of the Strome Persons'
director candidates) or 90 days (in the case of the Tontine Persons' director
candidate) of receipt by the Company from the respective director candidate of
completed forms and disclosures necessary for submission to the OTS; (b) the
failure of the contracting stockholders' director candidate(s) to be elected to
the Board of Directors at the Annual Meeting; (c) the resignation, on or after
the February 5, 2001, of the contracting stockholders' director candidate(s)
from the Board of Directors and from the boards of directors of any direct or
indirect subsidiaries of the Company on which they serve; or (d) April 30, 2001.
Termination of the Standstill Agreement with the Tontine Persons on April 30,
2001, so long as the Tontine Persons have not breached such agreement, will not
cause the Tontine Persons director candidate to be removed from the Board.
Additionally, each of the Standstill Agreements provide that the director
candidate will execute a conditional resignation from the Board of Directors,
effective upon a breach by the contracting stockholders who suggested such
candidate of their Standstill Agreement.
The above summaries of the Standstill Agreements are subject to the terms
set forth in the complete agreements, copies of which will be attached as
exhibits to the Company's current report on Form 8-K to be filed with the SEC on
or about the date of mailing of this Proxy Statement.
In 1999, the Board appointed Mr. Beimler as a director for one year
pursuant to a Standstill Agreement that the Company executed with the Hovde
Persons in compromise of a threatened proxy contest. The standstill agreement
with the Hovde Persons will expire as of the 2000 Annual Meeting, and has not
been extended or renewed, and the Hovde Persons have declined to enter into a
new standstill agreement. However, the Strome Persons and the Tontine Persons
informed the Board that their willingness to sign a Standstill Agreement was
premised, among other things, on the Board's nomination of Mr. Beimler to an
additional term as director, in addition to the candidates proposed by the
Strome Persons and the Tontine Persons. In order to induce the Strome Persons
and the Tontine Persons to execute their Standstill Agreements, the Board of
Directors agreed to nominate Mr. Beimler. Accordingly, Mr. Beimler has been
nominated as a director pursuant to agreements between the Company and the
Strome Persons and the Tontine Persons but without any agreement between the
Company and the Hovde Persons.
6
In connection with the nomination of three new directors pursuant to the
Standstill Agreements, the Board has amended the Company's Bylaws to expand the
size of the Board of Directors from eight to a total of nine. As a result of the
expansion of the Board to nine members and the classification of directors into
three groups of three persons, three of whom stand for election in 2001, three
of whom stand for election in 2002 and three of whom stand for election in 2003
at the annual meeting of stockholders in such year, an equal number of Company
directors shall stand for election each year, consistent with preferred
corporate governance practices. Currently, the terms of Messrs. Smith, Mason and
Barker expire in 2001, and the terms of Messrs. Indiek and Medearis expire in
2002. The Board has nominated Mr. King for election to the class of directors
whose term expires in 2002 for an initial two-year term (bringing the total
number of directors in that class to three) and has nominated Messrs. Beimler,
Susskind and Ellis for election to the class of directors whose term expires in
2003.
Set forth below is certain information concerning the principal occupation
and business experience of each of the persons listed in the table above during
the past five years.
NOMINEES FOR DIRECTOR
IRVING R. BEIMLER has served as Senior Vice President and Merchant Banking
Manager at Hovde Capital, Inc., an investment banking firm located in
Washington, D.C., since November 1997. From January 1996 through November 1997,
Mr. Beimler was a self-employed consultant in Washington, D.C., providing
litigation support, training course development and other consulting services
for private companies and public agencies, including the Federal Deposit
Insurance Corporation. From September 1994 through January 1996, Mr. Beimler
served as Executive Vice President and Chief Credit Officer of The Riggs
National Bank in Washington, D.C. From 1974 through 1994, Mr. Beimler was
employed by Fleet Bank and predecessor institutions, serving as Executive Vice
President and Chief Credit Officer of Fleet Bank of New York from 1990 through
1994.
STEVEN M. ELLIS has served since 1997 on the board of directors of Century
Capital Financial, Inc., the holding company of City National Bank of Kilgore,
Texas. He also currently serves as shareholder, director and advisor of Mobile
Express Corporation, a light armored car company, and The Winebroker, Inc., a
broker of fine wines. Mr. Ellis is currently Vice President, Treasurer,
Secretary and Director of Davis BanCorporation, Inc., a bank holding company
headquartered in Davis, Oklahoma. The company owns 100% of the common stock of
First National Bank of Davis, Oklahoma. From 1990 to 1996, Mr. Ellis served as
Senior Vice President, Treasurer, Director and One-Third Owner of CAI
Corporation, a privately held investment corporation specializing in investments
in publicly traded thrifts, banks and other equities. From 1990 to 1993, Mr.
Ellis was Chief Executive Officer of Mortgage Innovations, Inc., a consulting
firm specializing in financial, operational and valuation consulting services to
the mortgage banking, thrift and banking industries.
THOMAS E. KING has served since November 1999 as Regional Vice President
for SOS Staffing Solutions, Inc., which is a staffing solutions company. From
September 1998 through October 1999, he was principal of Business Solutions
Consulting, focusing on transactions, transitions, and turnaround business
advice, strategies and planning. From July 1997 to July 1998, Mr. King was
Executive Vice President and Chief Operating Officer of Fullerton Community
Bank. From June 1994 to September 1996, Mr. King was President, Chief Executive
Officer, and Director of Bank of Southern California. From April 1992 to April
1994, Mr. King was President, Chief Executive Officer and Director of
CapitolBank Sacramento. Mr. King was an officer with various positions and
responsibilities at Security Pacific National Bank and its affiliates from 1962
to 1992.
JEFFREY E. SUSSKIND has served since 1999 as a consultant with Strome
Investment Management, L.P. and from 1992 through 1998 as a principal in its
predecessor company Strome, Susskind Investment Management, L.P. From 1991 to
1998, Mr. Susskind served as a director of Sheridan Energy, Inc. and from 1998
to 1999 as its Chairman of the Board. Mr. Susskind is currently Chairman of the
Supervisory Board of Poland Telecom Operators, N.V., an independent fixed-line
telephone company based in Warsaw, Poland, and a director of RB Asset, Inc., a
real estate investment company. Mr. Susskind received a law degree from the
University of Michigan Law School in 1979.
7
CONTINUING DIRECTORS
MR. BARKER served as Chairman of the Board of Fidelity from August 1994
until May 1996, and as Chairman of the Board of Bank Plus from May 1996 until
July 1997. He was Chairman of the Board and Chief Executive Officer of First
Interstate Bank of California until his retirement in 1986. He served as
Chairman of the Board of Pacific American Income Shares, Inc., a bond fund, from
1974 until 1998. Mr. Barker also serves as a director of TCW Convertible
Securities, Inc. and ICN Pharmaceuticals, Inc.
MR. INDIEK has over 30 years experience in the financial services and real
estate industries. He is currently the President of Brennan Enterprises, L.L.C.,
a real estate investment firm located in San Francisco, and has run his own real
estate marketing firm, Indiek Realty, in Newport Beach, California since 1995.
He served as Executive Vice President of Kennedy-Wilson International from 1989
until 1995. Before then, Mr. Indiek had extensive experience as an executive
officer of several financial institutions, including as Executive Vice President
and Chief Financial Officer of FCA/American Savings & Loan Association from 1983
until 1988. Mr. Indiek served as one of the original executive officers of
Federal Home Loan Mortgage Corporation (Freddie Mac) from 1970 to 1977, and was
its President and Chief Executive Officer from 1974 through 1977.
MR. MEDEARIS is the President, Chief Executive Officer and co-owner of
Chalice Investment, Inc., a company engaged in joint ventures and related
entrepreneurial and international management consulting activities in the former
Soviet Union, primarily the Republic of Georgia, since 1992. Since 1980, Mr.
Medearis has served as a director of eight companies, both private and public,
in the engineering, real estate and banking industries. He was a member of the
board of directors of Commerce Security Bank in Sacramento from 1991 through
1997 and was the founder of Silicon Valley Bank and served as its Chairman from
1983 until 1989. Mr. Medearis is currently a director of W&H Pacific, an
engineering firm headquartered in Bellevue, Washington, a director of Sherman
Homes, a homebuilder in Bellevue, Washington, TecHarmonic, a firm engaged in the
production of abatement equipment for Silicon Valley water production, and is
the Chairman of Design Power, Inc., a Silicon Valley software company. Mr.
Medearis was a Consulting Professor at the Graduate School of Construction
Management, Stanford University, from 1969 until 1998, and is currently a
Consulting Professor at the School of Management, University of California,
Davis.
MR. MASON was appointed Vice Chairman, President and Chief Executive
Officer of Bank Plus and Chairman and Chief Executive Officer of Fidelity in
October 1998 after having been appointed interim Chief Executive Officer in
September 1998 after the resignation of Richard M. Greenwood. He has over 18
years of experience in accounting, finance, real estate and banking including
serving as Executive Vice President and Chief Financial Officer of Bank Plus and
Fidelity between 1994 and 1995, leaving after the successful completion of that
restructuring and recapitalization. Mr. Mason had returned to Bank Plus in May
1998 as its Executive Vice President and Chief Operating and Financial Officer
prior to his appointment as Chief Executive Officer. Between 1995 and May 1998,
Mr. Mason served as Executive Vice President and Chief Financial Officer of
First Alliance Corporation, a mortgage banking firm. Prior to 1994, Mr. Mason
served as a Senior Manager at Deloitte & Touche, an international public
accounting firm and Executive Vice President and Chief Financial Officer of The
Eadington Companies, a diversified company involved in real estate development,
agriculture and lumber products. Mr. Mason is a Certified Public Accountant in
the State of California.
MR. SMITH joined the Fidelity Board in 1996 and was named Chairman of the
Board of Bank Plus in July 1997. He is chairman, founder and principal
stockholder of Miller & Smith, Inc., a diversified real estate investment and
construction company in the Washington, D.C. area. Mr. Smith also serves as a
director of Crown Northcorp, Inc., a real estate management company located in
Columbus, Ohio. From 1987 until 1993, he served as Chairman of the Board and
Chief Executive Officer of Providence Savings and Loan Association in Virginia.
COMMITTEES OF THE BOARD OF DIRECTORS
In 1999, Bank Plus had standing Executive, Audit and Compensation
Committees. The principal responsibilities of these committees and the number of
meetings of each held in 1999 appear below.
8
EXECUTIVE COMMITTEE. Subject to the authority conferred on the Company's
other committees, the Executive Committee is empowered to exercise all authority
in lieu of the Board which may be exercised by a committee of the Board pursuant
to applicable law. In addition, the Executive Committee has assumed nominating
and board development functions. Any stockholder who wishes to recommend a
prospective nominee for the Board of Directors for the Executive Committee's
consideration may do so by giving the candidate's name and qualifications to the
Secretary of the Company, 4565 Colorado Boulevard, Los Angeles, California
90039. The Executive Committee held six meetings in 1999. The members of the
Executive Committee are Mr. Smith, Chairman, and Messrs. Medearis, Mason and
Waldo H. Burnside. (Mr. Burnside will be retiring from the Board as of the 2000
Annual Meeting.)
AUDIT COMMITTEE. The Audit Committee is a joint committee with Fidelity's
Audit Committee. Its responsibilities are generally to assist the Board and
Fidelity's Board in fulfilling their legal and fiduciary responsibilities
relating to accounting, audit and financial reporting policies and practices of
the Company and its subsidiaries. The Audit Committee also, among other things,
recommends to the Board the engagement of the Company's independent accountants;
monitors and reviews the quality and activities of the Company's internal audit
function and those of its independent accountants; and monitors the adequacy of
the Company's operating and internal controls as reported by management, the
independent accountants and internal auditors. In 1999, the Audit Committee held
five meetings. The Bank Plus members of the joint Audit Committee are Mr.
Indiek, Chairman, and Mr. Burnside. Mr. George Gibbs, a current member of the
Fidelity Board of Directors and a member of the Bank Plus Board of Directors
until April 1999, was chairman of the Audit Committee until April 1999.
COMPENSATION COMMITTEE. The Compensation Committee is a joint committee
with Fidelity's Compensation Committee. It is authorized to review salaries and
compensation, including non-cash benefits, of directors, officers and other
employees of the Company and its subsidiaries and to recommend to the Board
salaries, remuneration and other forms of additional compensation and benefits
as it deems necessary. The joint Compensation Committee held five meetings in
1999. The Bank Plus members of the joint Compensation Committee are Mr.
Medearis, Chairman, Mr. Smith, Mr. Barker, and Lilly V. Lee. (Ms. Lee will be
retiring from the Board as of the 2000 Annual Meeting.)
MEETINGS OF THE BOARD OF DIRECTORS
In 1999, there were 16 meetings of the Board of Directors of Bank Plus. All
directors attended at least 75% of the aggregate of meetings of the Board of
Directors and the committees of the Board on which they served, in each case,
after the election of such individual to the Board or such committee.
EXECUTIVE OFFICERS
Set forth below are the executive officers of the Company and the Bank
(other than Mr. Mason--see "Directors" above), together with the positions
currently held by those persons.
NAME AGE POSITION HELD WITH BANK PLUS AND FIDELITY
- --------------------------------------------------------------------------------------------------------------
James E. Stutz.......... 56 President, Chief Operating Officer and Director of Fidelity
Godfrey B. Evans........ 46 Executive Vice President, Chief Administrative Officer and General
Counsel of Bank Plus and Fidelity
John M. Michel.......... 40 Executive Vice President and Chief Financial Officer of Bank Plus and
Fidelity
MR. STUTZ joined Fidelity in 1994 as Executive Vice President, Retail
Banking. Prior to joining Fidelity, Mr. Stutz served since 1985 as Executive
Vice President and Chief Operating Officer, Consumer Banking, of HomeFed Bank,
where he was responsible for a 215 branch network. Mr. Stutz was also Chairman,
President and Chief Executive Officer of Columbus Savings, a wholly owned
subsidiary of HomeFed Corporation, where he was responsible for the
consolidation of several savings institutions and the subsequent merger of the
company into HomeFed Bank. Mr. Stutz was named President of Fidelity in June
1996, its Chief Operating Officer in July 1997 and became a director of Fidelity
in October 1997.
9
MR. EVANS joined Fidelity as Senior Vice President and Senior Corporate
Counsel in 1987 and has been General Counsel of Fidelity since 1989 and of Bank
Plus since its formation. He served as Corporate Secretary of Fidelity from 1990
until 1999 and of Bank Plus from its formation in 1996 until 1999, and resumed
serving as Corporate Secretary in 2000. Mr. Evans became an Executive Vice
President of Fidelity in 1994. He was appointed Chief Administrative Officer of
Bank Plus and Fidelity in November 1998.
MR. MICHEL, a certified public accountant, was appointed Executive Vice
President and Chief Financial Officer of Bank Plus Corporation and Fidelity
Federal Bank in November 1998. He has over 18 years of experience in accounting
and finance, including serving as Senior Vice President and Director of Planning
at Fidelity from June 1998 to November 1998 and from March 1995 to April 1996
and as Vice President Accounting at the Akins Companies, a residential real
estate development company, from 1989 until 1995. From April 1996 until June
1998, Mr. Michel served as Vice President of Finance for First Alliance
Corporation, a mortgage banking firm. Prior to 1989, Mr. Michel served as a
senior manager at Deloitte & Touche, a national public accounting firm.
COMPENSATION COMMITTEE
REPORT ON EXECUTIVE COMPENSATION
The report of the Compensation Committee (the "Committee") shall not be
deemed incorporated by reference by any general statement incorporating by
reference this Proxy Statement into any filing under the Securities Act of 1933,
as amended (the "Securities Act"), or under the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), except to the extent that the Company
specifically incorporates this report by reference, and shall not otherwise be
deemed filed under such Acts or regulations thereunder.
COMMITTEE COMPOSITION
The Committee is composed of independent, non-employee members of the
Boards of Directors of Bank Plus and Fidelity. From January 1999 to April 1999
the Committee consisted of Mr. Smith, Ms. Lee and Mr. Ralph B. Perry III, a
Director of Fidelity. From April 1999 to date, the Committee members have been
Mr. Medearis, Ms. Lee, Mr. Smith and Mr. Barker. The Committee is advised by
members of management and outside experts in the field of compensation program
design. The Committee administers, reviews, and recommends for full Board
approval each of the elements of the executive compensation of Bank Plus and the
Bank.
COMPENSATION PHILOSOPHY
It is the philosophy of the Committee, Bank Plus and the Bank to provide
executives with total compensation opportunities that are competitive with the
marketplace and promote the attraction and retention of talented management. To
ensure competitiveness, the Committee reviews compensation levels of a peer
group of financial institutions within a defined range of asset size, and
considered as potential competitors for executive talent.
Compensation practices (i.e., program design) of this peer group are also
reviewed to assess compensation design "best practices", namely programs that
emphasize variable "Pay-for-Performance" over fixed compensation. As such, the
performance criteria also included goals other than profitability. In general,
the compensation programs have the overall goal of motivating and rewarding
performance that both contributes meaningfully to the Corporation's strategic
goals and creates value for the Corporation's shareholders. During this
turnaround period the Committee also recognized the importance of retaining
management and key employees.
ANNUAL CASH COMPENSATION
BASE SALARY
Each year, the Committee reviews the salary levels of the executive
officers for external competitiveness, internal equity, and individual
contribution; however, salary increases are generally administered in 18 month
or longer cycles, excluding adjustments for promotions. Based on input from
management, the Committee develops its recommendations for executive salary
increases, if any, and presents them to the Board for approval. During 1999
there were no adjustments to the base salaries of the executives. However, after
reviewing competitive salary data for the year 2000, the Committee recognized
that the CFO's base salary was below external competitive levels and therefore
recommended an 8% increase to Mr. Michel's base salary effective January 31,
2000.
10
ANNUAL INCENTIVE PLAN
INCENTIVE COMPENSATION
The 1999 annual incentive plan was approved by the Board in January 1999
and provided for target incentive award opportunities of 50% for the President
of the Bank and Executive Vice Presidents (EVPs) and 20% for Senior Vice
Presidents (SVPs). Under certain circumstances, the incentive award could
increase to 100% and 40%, respectively. Incentive goals were divided into
defined corporate performance goals and individual performance goals. There were
three corporate performance goals: (1) the Bank's regulatory ratings, (2)
achieving well-capitalized status and (3) pre-tax income, with levels of
achievement tied to the 1999 business plan. Incentive awards for the President
of the Bank and EVPs were weighted 75% on the corporate performance measures and
25% on defined individual and/or group goals that directly related to core
operations or key initiatives, for SVPs, the weightings were 50%/50%. For all
participants a minimum performance threshold required the Company to achieve and
maintain a well-capitalized status as a condition of any incentive awards being
paid.
In evaluating the performance achievements, the Committee considered that
the impact of the credit card operations loss on Company performance was in
large part outside of the control of the current executive officers. The
executive officers were generally given credit for the increase in earnings of
the core bank which were substantially in excess of the plan, a significant
reduction in the overall cost of funds, executing transactions that helped to
achieve a well-capitalized status, reducing the overall general and
administrative corporate expenses and productively managing the relationship
with the Bank's primary regulator. After consideration of the foregoing, the
Committee reduced the executive officer awards relative to the target
opportunities and credited management with achieving 66.7% of the corporate
goals. The Committee also evaluated the individually defined performance
achievements of the President of the Bank and EVPs and credited Mr. Stutz with
achieving 90% of his individual goals, Mr. Michel with achieving 80% of his
individual goals and Mr. Evans with achieving 80% of his individual goals. In
recognition of these achievements and in consideration of the overall
performance of the executives in the turnaround of the Company, the Committee
approved total awards as follows: a 36.25% of salary bonus award ($104,700) for
Mr. Stutz; a 35% of salary bonus award ($64,800) for Mr. Michel; and a 35% of
salary bonus award ($80,500) for Mr. Evans.
The Committee has adopted the corporate performance goals and the
individual goals of executive officers for the 2000 annual incentive plan based
on the 2000 corporate business plan.
STOCK OPTION PLAN/EXECUTIVE OWNERSHIP
During 1999, the Committee continued to recognize the importance of the
stock option component of the executive compensation program for purposes of
stockholder alignment and retention and to encourage executive ownership. In
this regard, in July 1999 the Committee evaluated the value of Mr. Stutz's
options, which had not been re-priced in 1998 along with other executives and
determined it appropriate to re-price his current options at the then market
value ($6.00 per share) and grant an additional 49,000 options to be
commensurate with other executive management. It was also determined that Mr.
Stutz's options would be subject to the same performance vesting schedule as
other executive management.
In January 2000, the Committee recognized the critical need to ensure the
retention of the President of the Bank. As such, the Committee agreed to renew
Mr. Stutz's employment agreement prior to its July 31, 2000 renewal date. Mr.
Stutz's new agreement will bear language in conformity with the other executive
officers with two exceptions: Mr. Stutz will be entitled to change-in-control
benefits without termination, and Mr. Stutz will promise not to solicit any
employees for a one year period following his departure from the Company. Mr.
Stutz's agreement will be subject to Office of Thrift Supervision approval and
FDIC concurrence. As an additional retention incentive, the Committee
recommended that Mr. Stutz's options, which were significantly below current
market value at that time, be re-priced as of January 26, 2000 at the then
market value ($3.00 per share).
11
CEO COMPENSATION
The Committee applies the same philosophy and methodology in determining
the compensation of the CEO as with the President of the Bank and EVPs as
discussed in the section entitled "Compensation Philosophy" set forth above.
The CEO's compensation program consisted of a base salary of $300,000, with
a target incentive award opportunity of 75% of base salary. Under certain
circumstances, this incentive award could increase to 150% of base salary. The
CEO's performance was measured on four corporate performance goals weighted as
indicated: (1) pre-tax earnings in conformance with the 1999 business plan, 50%,
(2) achieving well-capitalized status, 25%, (3) satisfactory Year 2000
compliance, 15%, and (4) development of a Community Development Act (CRA) plan
to achieve a satisfactory rating on the next regulatory examination, 10%.
In evaluating Mr. Mason's performance relative to his goals, the Committee
recognized that although the Company's overall pre-tax earnings fell short of
goal, the core bank earnings were substantially in excess of target. There was
also a significant reduction in the overall cost of funds, transactions were
executed that helped achieve a well-capitalized status, the overall general and
administrative corporate expenses were substantially reduced and Mr. Mason and
his executive team productively managed the relationship with the Bank's primary
regulator. After consideration of the foregoing, the Committee reduced the CEO
award relative to the target opportunity and credited Mr. Mason with achieving
70.8% of his goals for an award of 53.13% of his base salary or $159,400.
Mr. Mason's base salary has not changed since he returned to the Bank as
its Executive Vice President and Chief Financial Officer in May 1998.
DEDUCTIBILITY OF EXECUTIVE COMPENSATION
Section 162(m) of the Internal Revenue Code limits the deduction a publicly
held company is allowed for compensation paid to its highly compensated
executive officers. Generally, amounts in excess of $1,000,000 (other than
performance-based compensation) paid in any tax year to a covered executive
cannot be deducted. The Committee will continue to monitor the compensation
levels of the executive officers and determine the appropriate response to
Section 162(m), including considering ways to maximize the deductibility of
executive compensation while retaining the discretion the Committee deems
necessary to compensate executive officers in a manner commensurate with
performance and the competitive environment, when and if necessary.
The following members of the Compensation Committee have furnished the foregoing
report:
Robert W. Medearis, Chairman
Lilly V. Lee
Gordon V. Smith
Norman Barker, Jr.
12
PERFORMANCE GRAPH
The performance graph shall not be deemed incorporated by reference by any
general statement incorporating by reference this Proxy Statement into any
filing under the Securities Act or under the Exchange Act except to the extent
that the Company specifically incorporates this information by reference, and
shall not otherwise be deemed filed under such Acts or regulations thereunder.
The graph below compares the cumulative total stockholder return on the
Company's (or its predecessor's) Common Stock from March 31, 1996 to December
31, 1999 with the cumulative total return on a S&P 500 index and the Wall Street
Journal Savings & Loan Index, in each case assuming the investment of $100 on
March 31, 1996 at the closing price on that date and reinvestment of dividends.
The measurement period with respect to which the comparisons are made
corresponds to the period during which the Company's Common Stock has been
registered under Section 12 of the Exchange Act.
[Performance Graph for Bank Plus Corp]
Indexed Comparison of Cumulative Total Return-
Bank Plus, S&P 500 Index, Wall Street S&L Index
[PERFORMANCE GRAPH HERE]
13
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following Summary Compensation Table sets forth the compensation earned
during the three years ended December 31, 1999 by the Company's Chief Executive
Officer and the three other most highly compensated executive officers during
1999 who were serving as executive officers at December 31, 1999 (the "Named
Executive Officers"):
LONG-TERM COMPENSATION
-------------------------
SECURITIES
ANNUAL COMPENSATION RESTRICTED UNDERLYING
---------------------- STOCK STOCK ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY(1) BONUS(1) AWARD(S)(2) OPTIONS COMPENSATION(3)
- ----------------------------------------------------------------------------------------------------------------------
Mark K. Mason (4) 1999 $ 300,000 $ 159,400 -- -- $ 3,957
President & CEO of Bank Plus 1998 190,385 134,000 -- 580,000(5) 863
Chairman & CEO of Fidelity 1997 N/A N/A N/A N/A N/A
James E. Stutz 1999 $ 288,800 $ 104,700 -- 250,000(8) $ 4,800
President & COO of Fidelity 1998 299,908 50,000 -- 32,250 3,900
1997 284,665 90,000(7) $ 51,200(6) -- 1,188
Godfrey B. Evans 1999 $ 230,000 $ 80,500 -- -- $ 4,295
EVP, CAO & General Counsel 1998 219,277 50,000 -- 250,000(5) 3,763
of Bank Plus & Fidelity 1997 197,300 31,842(7) $ 145,116(6) -- 1,187
John M. Michel 1999 $ 185,000 $ 64,800 -- -- $ 4,800
Chief Financial Officer of Bank 1998 81,923 50,000 -- 250,000 2,800
Plus & Fidelity 1997 N/A N/A N/A N/A N/A
- --------
(1) Amounts shown include cash compensation earned and received by the
executive officer as well as amounts earned but deferred at the election of
those officers under the Company's Deferred Compensation Plan. Bonuses are
presented in the period earned and may have been paid in subsequent years.
Amounts in the "Salary" column for 1998 reflect 27 two-week pay periods,
instead of the usual 26 pay periods.
(2) Dollar amounts shown equal the number of shares of restricted stock granted
multiplied by the closing stock price on the grant date. All grants were
made under the 1997 Annual Incentive Plan, pursuant to which recipients of
bonus awards were entitled to elect to receive all or any portion of their
bonus in the form of restricted stock, at an exchange formula of $2.00 of
restricted stock (based on the then current market value) for each $1.00 of
cash incentive payment foregone. Awards of restricted stock will vest
ratably over a three-year period: the first third vested on January 1,
1999, the second vested on January 1, 2000 and the remaining third will
vest on January 1, 2001, subject to forfeiture if the officer is not
employed by the Company or the Bank on the relevant vesting date. In
addition, receipt of the awards may be subject to further deferral at the
election of the officer under the Company's Deferred Compensation Plan. The
restricted stock grants are shown in the period earned (1997); however, the
grant date for all awards was March 12, 1998, and the closing price of the
Company's Common Stock on the grant date was $14.50 per share.
(3) "Other Compensation" consists of the Company's matching contributions to
the Company's 401(k) Plan.
(4) Mr. Mason became Executive Vice President and Chief Financial Officer
effective May 11, 1998, and was named Chief Executive Officer of both Bank
Plus and Fidelity effective October 28, 1998. Mr. Mason's 1998 bonus was
paid pursuant to the terms of his agreement with the Company entered into
at the time he was hired as Chief Financial Officer in May 1998.
(5) Includes options cancelled and reissued at a new exercise price as of
November 19, 1998. See "Stock Option Grants in 1999" below.
14
(6) Amounts shown are based on value of the restricted stock at the time of the
grant ($14.50 per share). Based upon the $2.875 per share closing price of
the Company's Common Stock on December 31, 1999, the 10,008 shares of
restricted stock held by Mr. Evans were worth $28,773, and the 3,531 shares
of restricted stock held by Mr. Stutz were worth $10,151.
(7) All amounts represent the cash portion of bonus awards earned under the
1997 Annual Incentive Plan, whether such amounts were actually received or
deferred at the election of the officer. In addition to cash amounts
reflected in the "Bonus" column, the Named Executive Officers were entitled
to elect to receive all or any portion of their bonus under the 1997 Annual
Incentive Plan in the form of restricted stock, at an exchange formula of
$2.00 of restricted stock (based on the then current market value) for each
$1.00 of cash incentive payment foregone. Awards to the Named Executive
Officers under the 1997 Annual Incentive Plan were as follows: Mr. Stutz
was awarded $115,600, of which he elected to receive $90,000 in cash and
the remainder in restricted stock, resulting in an award of 3,531 shares of
restricted stock (with a market value at that time of $51,200); and Mr.
Evans was awarded $104,400, of which he elected to receive $31,842 in cash
and the remainder in restricted stock, resulting in an award of 10,008
shares of restricted stock (with a market value at that time of $145,116).
All of the foregoing awards are subject to additional deferral at the
election of the officers under the Company's Deferred Compensation Plan.
(8) Includes 201,000 options cancelled and reissued at a new exercise price of
$6.00 per share, and 49,000 additional options issued at $6.00 per share.
Does not include a transaction following the reporting period, on January
26, 2000, when all of Mr. Stutz's options were cancelled and reissued at a
new exercise price of $3.00 per share. See "Stock Option Grants in 1999"
below.
STOCK OPTION GRANTS IN 1999
As described above in the Compensation Committee Report on Executive
Compensation, Mr. Stutz's options, which had not been repriced in 1998 along
with other executives, were repriced on July 28, 1999 at the then-market price
of $6.00 per share. Concurrently, an additional 49,000 options were granted to
Mr. Stutz at the same exercise price of $6.00 per share. Following the reporting
period, on January 26, 2000, all of Mr. Stutz's options were repriced at $3.00
per share. See below, under "Unexercised Stock Options," for the vesting
schedule for these options.
POTENTIAL MAXIMUM
REALIZABLE VALUE AT ASSUMED
NO. OF PERCENT OF ANNUAL RATES
SHARES TOTAL OPTIONS OF STOCK PRICE APPRECIATION
UNDERLYING GRANTED TO EXERCISE FOR OPTION TERM
OPTIONS EMPLOYEES IN PRICE/ EXPIRATION ----------------------------
NAME GRANTED FISCAL YEAR SHARE DATE 5% ($) 10%($)
- --------------------------------------------------------------------------------------------------------------------
James E. Stutz............ 250,000(1) 47%(1) $ 3.00(2) 7/27/09 $ 447,431(3) $ 1,121,621(3)
- --------
(1) Includes 201,000 options repriced on July 28, 1999 and 49,000 new options
granted on July 28, 1999
(2) Reflects the repricing that occurred after the reporting period on January
26, 2000.
(3) Measured from the repricing that occurred after the reporting period on
January 26, 2000. In accordance with SEC rules, these columns show gains
that might exist for the respective options, assuming the market price of
the Company's Common Stock appreciates from the date of grant over a period
of ten years at the annualized rates of five and ten percent, respectively.
If the stock price does not increase above the exercise price at the date
of grant, realized value to the named executive from these options will be
zero.
15
UNEXERCISED STOCK OPTIONS
During 1999, none of the Named Executive Officers exercised any stock
options. The following table provides information concerning unexercised options
held by the Named Executive Officers as of the end of 1999:
SECURITIES UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS AT IN-THE-MONEY
YEAR-END OPTIONS AT YEAR-END
NAME EXERCISABLE/UNEXERCISABLE EXERCISABLE/ UNEXERCISABLE
- -------------------------------------------------------------------------------------------------------------------
Mark K. Mason......................................... 145,000/435,000(3) $0/$0(1)(3)
Godfrey B. Evans...................................... 62,500/187,500 $0/$0(1)
John M. Michel........................................ 62,500/187,500 $0/$0(1)
James E. Stutz........................................ 62,500/187,500 $0/$0(2)
- --------
(1) Based upon the difference between the option exercise price of $3.8125 per
share and the closing price of the Common Stock on December 31, 1999 of
$2.875 per share.
(2) Based upon the difference between the option exercise price of $3.00 per
share (reflecting the January 26, 2000 repricing) and the closing price of
the Common Stock on December 31, 1999 of $2.875 per share.
(3) Does not reflect an agreement with Mr. Mason under which Mr. Mason has
temporarily surrendered 25,000 of his outstanding options. (See below under
"Employment Agreements.")
The options vest on a percentage basis based on the market price of Bank
Plus Common Stock, per the following schedule:
PERFORMANCE VESTING CRITERIA:
PER SHARE MARKET VALUE VESTING
-------------------------------------- ------------------------
$ 4.00 10%
$ 5.00 25%
$ 6.00 40%
$ 7.00 55%
$ 8.00 70%
$ 9.00 85%
$10.00 100%
The per share market value must average at the incremental price level for
a rolling period of 20 business days to achieve the relevant vesting percentage.
The options will become fully vested without regard to stock price in the event
of the earlier to occur of a change in control or the seventh anniversary of the
date of grant.
As of this date, there are no additional options available for grant in the
stock option plan and the Committee anticipates there will be no further grants
in the year 2000.
16
TEN-YEAR OPTION REPRICINGS
The following table sets forth certain information with respect to the
Company's exchange of outstanding options with certain of its Named Executive
Officers in July 1999 and January 2000:
WEIGHTED
LENGTH OF
NUMBER OF WEIGHTED ORIGINAL
SECURITIES MARKET PRICE EXERCISE OPTION TERM
UNDERLYING OF STOCK AT PRICE AT REMAINING AT
OPTIONS TIME OF TIME OF NEW DATE OF
REPRICED OR REPRICING OR REPRICING EXERCISE REPRICING OR
NAME AND PRINCIPAL POSITION DATE AMENDED AMENDMENT OR AMENDMENT PRICE AMENDMENT
- ---------------------------------------------------------------------------------------------------------------------
James E. Stutz...................... 7/28/99 210,000 $ 6.00 $ 8.35 $ 6.00 77 months
President and COO of Fidelity
James E. Stutz...................... 1/26/00 250,000 $ 3.00 $ 6.00 $ 3.00 114 months
President and COO of Fidelity
RETIREMENT INCOME (DEFINED BENEFIT) PLAN
Fidelity maintains a Retirement Income Plan which is a qualified,
non-contributory defined benefit retirement plan. The Retirement Income Plan
provides for monthly retirement payments or an actuarially equivalent lump sum
to or on behalf of each covered employee or beneficiary upon retirement at age
65 or upon early retirement (i.e., the attainment of age 55 and the completion
of 10 years of service) and, under certain circumstances, upon disability, death
or other termination of employment, based upon the employee's average monthly
salary and the aggregate number of years of service. Effective February 28,
1994, the Retirement Income Plan was suspended, thereby freezing benefit.
The following table illustrates approximate annual benefits payable under
the Retirement Income Plan at normal retirement age for various combinations of
service and compensation:
AVERAGE FINAL COMPENSATION YEARS OF SERVICE
- --------------------------------------------------------------------------------
15 20 25 30 35
-------- -------- -------- -------- ------
$ 50,000.............. $ 11,302 $ 15,069 $ 18,836 $ 22,603 $ 26,370
100,000.............. 24,427 32,569 40,711 48,853 56,995
150,000.............. 37,552 50,069 62,586 75,103 87,620
200,000.............. 37,552 50,069 62,586 75,103 87,620
250,000.............. 37,552 50,069 62,586 75,103 87,620
300,000.............. 37,552 50,069 62,586 75,103 87,620
350,000.............. 37,552 50,069 62,586 75,103 87,620
400,000.............. 37,552 50,069 62,586 75,103 87,620
Compensation under the Retirement Income Plan includes all regular pay,
excluding overtime, commissions and bonuses, limited by the Internal Revenue
Code Section 401(a)(17) compensation limit. The benefit amounts listed above
were computed on a 10-year certain and life basis, which is the normal form
under the plan, and are not subject to deduction for Social Security or other
offset amounts.
Mr. Evans has 7 years of credited service in the Retirement Income Plan.
Because the Retirement Income Plan was suspended in 1994, Mr. Mason, Mr. Stutz
and Mr. Michel are not participants in the Retirement Income Plan.
17
EMPLOYMENT AGREEMENTS; SEVERANCE AND CHANGE IN CONTROL AGREEMENTS; SEVERANCE
ARRANGEMENTS
The Company has entered into employment agreements, severance and change in
control agreements or change in control agreements with all of its executive
officers.
AGREEMENT WITH MR. MASON
Mr. Mason and the Company have entered into an employment agreement dated
as of October 28, 1998 that provides for Mr. Mason's employment as Vice
Chairman, President and Chief Executive Officer of Bank Plus and Chairman and
Chief Executive Officer of the Bank, at an annual base salary of at least
$300,000, until October 2001, with one-year renewals thereafter, subject to
Board review and approval before each renewal. The agreement states that Mr.
Mason will be eligible for future incentive bonuses with a target range of 75%
to 150% of base salary. Mr. Mason is also entitled to participate in the
Company's medical benefits, dental and 401(k) retirement plans available to all
full time employees and in an executive medical and dental benefits plan
available only to executive officers of the Company.
If Mr. Mason's employment is terminated (i) other than for cause or (ii)
because of death, disability or retirement, his employment agreement provides
that he will receive, subject to certain limitations, his full base salary until
the second anniversary of the date of termination, plus a lump sum payment equal
to two times his average annual bonus during the prior two fiscal years. In the
event Mr. Mason is terminated other than for cause within thirty-six months
following a change in control (as defined in the agreement), Mr. Mason would
receive a lump sum payment in the amount of 2.99 times the sum of (1) his base
salary at the time of the change in control, (2) his average annual bonus for
the past three years and (3) an amount equal to the matching contribution he
would have received under the Bank's 401(k) plan if he had made the maximum
contribution under the plan during the year in which the change in control
occurs. In addition, if Mr. Mason's employment is terminated within thirty-six
months following a change in control, his health and welfare benefits will
continue for three years, or until such earlier time that he receives equivalent
benefits from a new employer or reaches the age of sixty-five. The agreement
also provides for, under certain specified circumstances, the payment of an
additional amount to cover excise taxes imposed by Section 4999 of the Internal
Revenue Code (the "Code") as a result of the agreement payment being defined as
an "excess parachute payment" within the meaning of Section 280G of the Code.
A "change in control" is generally defined in Mr. Mason's employment
agreement as: (a) the acquisition of 50% or more of the Company's voting stock
by any "person" (as defined) with certain limited exclusions, (b) such time as
directors who were added to the Board without the approval of two-thirds of the
incumbent directors or who were added to the Board under the threat of a proxy
contest constitutes 50% or more of the total directors, (c) a merger or
consolidation of the Company with any "person" (as defined), other than a merger
or consolidation of the Company that results in the Company's stockholders
owning 50% or more of the surviving entity, or a sale of all or substantially
all of the Company's assets, (d) a sale of all or substantially all of the
assets of the Bank or (e) a merger or other combination of the Bank that results
in the Company ceasing to own more than 50% of the voting securities of the Bank
(or the surviving entity in such combination).
Termination by the Company because of death, disability, retirement or
cause, or Mr. Mason's resignation (other than for "good reason" as described
below) does not entitle him to any benefits under his employment agreement.
Termination for "cause" requires either (i) a willful and continued failure to
perform substantially all of his duties or (ii) gross negligence, dishonesty,
incompetence, willful misconduct, breach of fiduciary duty involving personal
profit or willful violation of law. Termination for "good reason" means that Mr.
Mason may terminate his own employment and still receive benefits under the
agreement if (among other reasons listed in the agreement) (1) his status or
position in the Company has materially and adversely changed, (2) his base
salary is reduced, (3) the Company requires him to be based at an office more
than thirty-five miles from his current office or (4) after a change in control,
the Company fails to continue any benefit plan in which he was participating
prior to the change in control.
The number of options and deferred stock shares outstanding under the
Company's Stock Option and Equity Incentive Plan (the "Plan") is close to the
limit available under the Plan. In order to facilitate the issue of new stock
options to other managers hired in 1999, Mr. Mason has agreed with the Company
to surrender 25,000 of his outstanding stock options temporarily until such time
18
as sufficient shares are available under the Plan to replace those options. The
Company has agreed to reinstate the options surrendered by Mr. Mason as soon as
practicable and to make whatever adjustments are appropriate to cause him to be
in the same economic position as he would have been in if he had not surrendered
the options.
AGREEMENT WITH MR. STUTZ
Mr. Stutz entered into a severance and change in control agreement (the
"Severance Agreement") with the Company as of August 1, 1997. The Severance
Agreement provides for benefits (a) in the event of a change in control and (b)
upon termination other than for cause. The initial term of the Severance
Agreement is three years, with one-year renewals thereafter, subject to Board
review and approval before each renewal. After a change in control, the
Severance Agreement will continue automatically for two years. A "change in
control" is generally defined in the Severance Agreement as: (a) acquisition of
25% or more of the Company's voting stock by any "person" (as defined) with
certain limited exclusions, (b) change in a majority of the members of the Board
of Directors over a two-year period, (c) stockholder approval of a merger or
consolidation other than a merger or consolidation that results in the Company's
stockholders owning 60% or more of the surviving entity or (d) the Bank's
entering into one or more agreements to sell or transfer to one or more third
parties, in one transaction or a series of related transactions, assets and/or
liabilities representing 50% percent or more of the book value of its assets
and/or liabilities. The Severance Agreement will be terminated if Mr. Stutz or
the Bank experiences certain regulatory problems.
Termination by the Bank because of disability, retirement or cause, or Mr.
Stutz's resignation (other than for "good reason" as described below) does not
entitle him to any benefits under the Severance Agreement. Termination for
"cause" requires either (i) a willful and continued failure of Mr. Stutz to
perform substantially all of his duties or (ii) certain acts of dishonesty,
incompetence or illegality. Termination by Mr. Stutz for "good reason" means
that he may terminate his own employment and still receive benefits under the
Severance Agreement if (among other reasons listed in the agreement) (1) his
status or position in the Bank has adversely changed from the date of the
Severance Agreement, (2) his base salary is reduced from its level on the date
of the Severance Agreement, (3) the Bank requires him to be based at an office
more than thirty-five miles from his current office or (4) after a change in
control, the Bank fails to continue any benefit plan in which Mr. Stutz was
participating prior to the change in control.
In the event of a termination without "cause" or his resignation for "good
reason," Mr. Stutz would receive 2 times the sum of (1) his annual base salary
plus (2) his average annual bonus for the past two years. In the event of a
change in control, Mr. Stutz would receive a lump sum payment in the amount of
three times the sum of (1) his base salary at the time of the change in control,
(2) his average annual bonus for the past three years and (3) an amount equal to
the matching contribution he would have received under the Bank's 401(k) plan if
he had made the maximum contribution under the plan during the year in which the
change in control occurs. In addition, if Mr. Stutz's employment is terminated
within twenty-four months following a change in control, his health and welfare
benefits will continue for three years or until such earlier time that he
receives equivalent benefits from a new employer or reaches the age of
sixty-five. The agreement also provides for, under certain specified
circumstances, the payment of an additional amount to cover excise taxes imposed
by Section 4999 of the Code as a result of the agreement payment being defined
as an "excess parachute payment" within the meaning of Section 280G of the Code.
Mr. Stutz's agreement was scheduled for Board review for renewal on July
31, 2000. On January 26, 2000, the Board authorized a new agreement with Mr.
Stutz. The Board determined that the new agreement will have terms and
conditions substantially identical to those of Mr. Evans and Mr. Michel (as
described below), except as follows: (i) Base salary, (ii) term to be extended
two years to July 31, 2002, (iii) Mr. Stutz will receive his change in control
benefits following a change in control without the necessity that his employment
be terminated, and (iv) Mr. Stutz will promise not to solicit any employees of
the Company following his departure from the Company. Mr. Stutz is also entitled
to participate in the Company's medical benefits, dental benefits and 401(k)
retirement plans available to all full time employees and in an executive
medical and dental benefits plan available only to executive officers of the
Company. Mr. Stutz's new agreement will be subject to Office of Thrift
Supervision approval and FDIC concurrence.
19
AGREEMENT WITH MR. EVANS
Mr. Evans and the Company have entered into an employment agreement dated
as of November 19, 1998 that provides for Mr. Evans' employment as Executive
Vice President, Chief Administrative Officer and General Counsel of Bank Plus
and the Bank, at an annual base salary of at least $230,000, until November
2001, with one-year renewals thereafter, subject to Board review and approval
before each renewal. The agreement provides that Mr. Evans will be eligible for
future incentive bonuses with a target range of 50% - 100% of base salary.
If Mr. Evans' employment is terminated (i) other than for cause or (ii)
because of death, disability or retirement, his employment agreement provides
that he will receive, subject to certain limitations, his full base salary until
the second anniversary of the date of termination, plus a lump sum payment equal
to two times his average annual bonus during the prior two fiscal years. In the
event Mr. Evans is terminated other than for cause within twenty-four months
following a change in control (as defined in the agreement), Mr. Evans would
receive a lump sum payment in the amount of 2 times the sum of (1) his base
salary at the time of the change in control, (2) his average annual bonus for
the past two years and (3) an amount equal to the matching contribution he would
have received under the Bank's 401(k) plan if he had made the maximum
contribution under the plan during the year in which the change in control
occurs. In addition, if Mr. Evans' employment is terminated within twenty-four
months following a change in control, his health and welfare benefits will
continue for two years, or until such earlier time that he receives equivalent
benefits from a new employer or reaches the age of sixty-five. The agreement
also provides for, under certain specified circumstances, the payment of an
additional amount to cover excise taxes imposed by Section 4999 of the Code as a
result of the agreement payment being defined as an "excess parachute payment"
within the meaning of Section 280G of the Code.
Mr. Evans' employment agreement contains definitions for the terms "change
in control," "cause," and "good reason" that are substantially identical to the
definitions of those terms in Mr. Mason's employment agreement. Mr. Evans is
also entitled to participate in the Company's medical benefits, dental benefits
and 401(k) retirement plans available to all full time employees and in an
executive medical and dental benefits plan available only to executive officers
of the Company.
AGREEMENT WITH MR. MICHEL
Mr. Michel and the Company have entered into an employment agreement dated
as of November 17, 1998 that provides for Mr. Michel's employment as Executive
Vice President and Chief Financial Officer of Bank Plus and the Bank, at an
annual base salary of at least $185,000, until November 2001, with one-year
renewals thereafter, subject to Board review and approval before each renewal.
The agreement provides that Mr. Michel will be eligible for future incentive
bonuses with a target of 50% of base salary.
The general terms of Mr. Michel's agreement, including rights upon
termination, are substantially identical to those of Mr. Evans. Mr. Michel is
also entitled to participate in the Company's medical benefits, dental benefits
and 401(k) retirement plans available to all full time employees and in an
executive medical and dental benefits plan available only to executive officers
of the Company.
DIRECTOR COMPENSATION
BOARD RETAINER AND FEES. Non-employee directors initially elected to the
Board prior to January 1, 1996 are paid an annual cash retainer of $25,000.
Directors elected after that date receive no cash compensation; instead, they
are paid an annual retainer of $30,000 and their retainer and meeting fees are
paid in the form of deferred stock grants. Such grants are credited to the
directors' deferred stock accounts at the times cash fees or retainers would
otherwise be paid, and are paid upon the directors' retirement from the Board.
After the annual meeting in 2000, it will become mandatory for all directors to
receive their retainer and meeting fees in the form of deferred stock grants,
although directors initially elected prior to January 1, 1996 may do so on a
voluntary basis prior to that time.
20
Directors who serve on both the Bank Plus Corporation and the Fidelity
Federal Bank Boards receive an additional $5,000 annual retainer. The Chairman
of the Board receives an annual retainer of $60,000. In addition, payments of up
to $500 per month are made to reimburse the secretarial and other administrative
expenses of the Chairman related to the performance of his duties. Committee
Chairs are paid an annual retainer of $3,000 except for the Chairs of the Audit
Committee of the Company and the Credit Risk Committee of the Bank, who each
receive an annual retainer of $6,000. Meeting fees are $1,000 for Board meetings
and $850 for Committee meetings. Telephonic meetings are paid at the same rate
as in-person meetings unless the meetings last less than 30 minutes, in which
case meeting fees are paid at 50% of the normal rate.
Prior to October 27, 1999, deferred stock grants credited to a director's
deferred stock account were paid out, upon the director's retirement from the
Board, in the form of Bank Plus stock. However, the number of deferred stock
grants outstanding, when combined with the number of options outstanding and
restricted stock awards, is close to the limit permitted by the Company's Stock
Option and Equity Incentive Plan (the "Plan"). In order to avoid exceeding that
limit, the Board amended the Plan on October 27, 1999 to provide that deferred
stock grants to the Company's non-employee directors will continue to accrue as
provided in the Plan, but will be settled and paid upon the directors'
retirement or resignation from the Board in the form of cash rather than stock.
All members of the Board agreed to this change and agreed that the change would
also apply to deferred stock grants already outstanding. On January 26, 2000,
the Board further amended the Plan to provide that non-employee Fidelity
directors who also serve on the Company board will receive their Fidelity board
compensation in the form of deferred stock that will be settled and paid at the
time of the directors' retirement or resignation from the Board in cash rather
than stock. Directors who serve on the Fidelity board but not the Company board
will receive their board compensation without deferral in cash. The amendments
to the Plan enacted on January 26, 2000 will be effective as of the date of the
2000 Annual Meeting.
NON-EMPLOYEE DIRECTOR RETIREMENT PLAN. Non-employee directors who (1) were
initially elected prior to January 1, 1996, (2) have at least three years of
Board service and (3) have reached the age of 55 are eligible to participate in
the Non-Employee Director Retirement Plan. Directors elected after January 1,
1999 are not eligible to participate in the Plan. Eligible directors, after
termination from Board service for any reason other than cause, are entitled to
receive a quarterly payment equal to one quarter of their average annual
compensation (including compensation for service on the Board of any of the
Company's subsidiaries), including all retainers and meeting fees, received
during their last three years of Board service. Such payments commence at the
beginning of the first fiscal quarter subsequent to termination and continue for
a 3-year period. If a director's Board membership is terminated for cause, no
benefits are payable under this plan.
If an eligible director's Board membership is terminated within two years
following the effective date of a change in control, then he or she shall be
eligible for a lump sum payment in an amount that is the greatest of: (1) 150%
times average annual compensation during the preceding 3-year period, (2) the
sum of all retirement benefits payable under normal retirement provisions
described in the preceding paragraph or (3) $78,000. This lump sum payment would
be in lieu of, and not in addition to, the retirement benefits described in the
preceding paragraph.
STOCK OPTION AND EQUITY INCENTIVE PLAN. On December 11, 1995, the Board of
Directors of the Bank adopted the 1996 Stock Option Plan and granted awards
pursuant thereto to its non-employee directors subject to subsequent approval by
the Bank's stockholders. At a special meeting held on February 9, 1996, the
Bank's stockholders approved the plan and in May 1996, Bank Plus assumed the
plan in connection with the formation of Bank Plus. Accordingly, each of the
Company's and the Bank's non-employee directors received options representing
23,000 shares of Common Stock. All such options were granted at an exercise
price of $8.35 per share. Ten percent of the options granted to each
non-employee director became exercisable immediately upon stockholder approval
and another thirty percent became exercisable on each of the first, second and
third anniversaries of such approval. On April 30, 1997, the Company's
stockholders approved certain amendments to and a restatement of the Plan, which
was renamed the Bank Plus Corporation Stock Option and Equity Incentive Plan.
Among other things, the amended Plan provides that each non-employee director of
Bank Plus and Fidelity will receive automatic annual grants of options to
purchase 2,500 shares of Common Stock, at an exercise price equal to the fair
market value of the stock on the grant date, which will be fully vested and
exercisable upon grant.
21
RELATED PARTY TRANSACTIONS
LOANS TO MANAGEMENT
Fidelity offers home loans to directors, officers and employees of the
Bank. These mortgage loans are made in the ordinary course of business and, in
the judgment of management, do not involve more than the normal risk of
collectibility. The mortgage loans are secured by real property and are made on
substantially the same terms, including interest rate and collateral, as those
prevailing at the time for comparable transactions with non-affiliated persons.
In February 1999, Fidelity's Board of Directors approved an employee
discount mortgage loan program. Under this program, Fidelity will waive
origination fees (but not third party fees) on first lien mortgage loans made to
all employees who have been employed with the Company for at least six months,
provided that the loan is secured by the employee's principal residence and the
residence is within Fidelity's usual lending area (Southern California). If the
employee is an executive officer or another officer who significantly influences
corporate policy, then the loan is also conditioned upon determination, by the
Company's Compliance Department, that the requirements of Federal Reserve Board
Regulation O and the requirements of Fidelity's Transactions with Affiliates and
Insiders and Conflicts of Interest Policy (which, for these purposes,
essentially parallel Regulation O) have been satisfied. In all other respects,
the employee discount loans are made on substantially the same terms, including
interest rate and collateral, as those prevailing at the time for comparable
transactions with non-affiliated persons. The following loans under this program
were made to Named Executive Officers in 1999:
NAME MORTGAGE LOAN AMOUNT INTEREST RATE DATE CLOSED
- -------------------------- ---------------------- ----------------------- ----------------------
Mark K. Mason............. $591,000 6.875% 5/06/99
Godfrey B. Evans.......... $380,000 6.875% 4/30/99
- --------
Both of these mortgage loans were sold to a third party at or shortly after
closing. The sales were at par and without recourse (other than customary
representations and warranties).
FIRST ALLIANCE TRANSACTION
In 1997, Fidelity entered into a real estate secured credit card program
with First Alliance Mortgage Company ("FAMCO"), a subsidiary of First Alliance
Corporation ("FACO"). Under the program, Fidelity issued credit cards and
provided funding for the program. FAMCO provided credit enhancements to
guarantee full repayment of Fidelity's outstanding receivables in the event of
cardholder defaults, and, in exchange, had the right to purchase outstanding
receivables at par and received all revenues, net of expenses and funding costs
paid to Fidelity, from the program. In addition, FAMCO was required to fund a
cash reserve account as part of the credit enhancement. The program agreements
provided for individual credit limits of $5,000 to $12,000. Mark K. Mason, who
has been a Director at Fidelity since 1995 and rejoined Fidelity and Bank Plus
as an executive officer in May 1998, served as Executive Vice President, Chief
Financial Officer and a Director of FAMCO and FACO from December 1995 until May
1998. George Gibbs, Jr., a Director of Fidelity since 1994 and a Director of
Bank Plus from March 1996 to April 1999, was also a Director of FACO from 1996
to 1998.
In January 1999, FACO announced the discontinuance of originations of new
accounts under the program due to results that were lower than initially
anticipated. As a result, no new accounts have been originated under the program
since December 1998. Under the program agreement with FAMCO, upon termination of
the program, FAMCO or its designee was obligated to purchase all of the
outstanding accounts under the program. The term of the program agreements
expired on February 24, 2000 and the Bank made a demand upon FAMCO to purchase
all of the outstanding accounts of the program. Because FAMCO denied it has an
obligation to purchase the outstanding accounts, Fidelity has filed a request
for arbitration with the American Arbitration Association and FAMCO has filed
litigation in Orange County Superior Court. Both of these actions are currently
pending.
22
On March 23, 2000, FACO announced that it had filed voluntary petitions
under Chapter 11 of the United States Bankruptcy Code. It is uncertain what
effect the filing of the petition for bankruptcy will have on FAMCO's
obligations under the program agreements. If FAMCO does not perform its
obligations under the agreement, Fidelity may be required to record a loss to
the extent that estimated charge-offs exceed the cash reserves held by Fidelity.
As of February 29, 2000, the balance of accounts and related cash reserves of
this program were $16.4 million and $2.7 million, respectively.
INTEREST IN GREATER THAN 10% STOCKHOLDER
As of December 31, 1999, the Gordon V. and Helen C. Smith Foundation, a
Section 501(3)(c) organization of which Mr. Gordon V. Smith is President, had
invested $596,296, representing (at the time of investment) a 0.9727% ownership
interest, in Financial Institution Partners II, L.P. ("FIP II"). FIP II is an
entity indirectly controlled by Messrs. Eric D. Hovde and Steven D. Hovde, who
are deemed beneficial owners of an aggregate of 2,714,073 shares of the
Company's Common Stock according to their Forms 3 and 4 filed with the
Securities and Exchange Commission. In addition to its investment in the
Company, FIP II invests in securities of many other companies, primarily
financial institutions. Mr. Smith has no discretion or control over the
investments of FIP II.
BENEFICIAL OWNERSHIP OF BANK PLUS CAPITAL STOCK
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth the shares of Common Stock beneficially
owned as of February 7, 2000 by all directors and executive officers as a group,
by each director, the CEO and the Named Executive Officers of the Company:
SHARES UNDERLYING
SHARES OF COMMON OPTIONS EXERCISABLE TOTAL
STOCK BENEFICIALLY WITHIN 60 DAYS OF BENEFICIAL PERCENT OF
NAME OF BENEFICIAL OWNER OWNED FEBRUARY 7, 2000(1) OWNERSHIP COMMON STOCK
- --------------------------------------- ----------------------- ---------------------- ------------- -----------------
Norman Barker, Jr.................. 1,250 30,500 31,750 *
Irving R. Beimler.................. 2,000 2,500 4,500 *
Waldo H. Burnside.................. 7,000 29,125 36,125 *
Victor H. Indiek................... -- 2,500 2,500 *
Lilly V. Lee....................... 2,950 30,500 33,450 *
Robert W. Medearis................. -- 2,500 2,500 *
Gordon V. Smith (2)................ 259,112 7,500 266,612 1.4%
Godfrey B. Evans................... 11,922(3) 62,500 74,422 *
Mark K. Mason...................... 12,100 145,000 157,100 *
John M. Michel..................... -- 62,500 62,500 *
James E. Stutz..................... 14,854(3) 62,500 77,354 *
-------------- -------------- ----------
All directors and Named Executive
Officers as a group (11 persons) 311,188(3) 437,625 748,813 3.9%
============== ============== ==========
- ----------
(1) Options exercisable within 60 days of February 7, 2000 that were granted
pursuant to the Stock Option and Equity Incentive Plan. See "Executive
Compensation" and "Director Compensation" for discussion of the amounts and
terms of such options.
(2) 100,112 of these shares are registered in the name of Gordon V. and Helen
C. Smith Foundation, a Section 501(3)(c) organization of which Mr. Smith is
President.
(3) Includes the vested portion of shares of Common Stock granted to executive
officers as incentive compensation for 1997 which the officers elected to
receive as restricted stock awards under the Company's Stock Option and
Equity Incentive Plan. Mr. Evans received 10,008 restricted shares; as of
February 7, 2000, 6,672 of those shares were vested and 3,336 remain
restricted and subject to forfeiture. Mr. Stutz received 3,531 restricted
shares; as of February 7, 2000, 2,354 of those shares were vested and 1,177
remain restricted.
* Represents less than one percent of the outstanding shares of Common Stock.
23
Pursuant to the Company policy on insider trading, directors and executive
officers of the Company have been restricted from purchasing or selling
securities of the Company, primarily because of the Company's efforts to
market itself for sale.
SECURITY OWNERSHIP BY OTHERS
The following table sets forth, as of March 7, 2000, (i) the name of each
person known to the Company to be the beneficial owner of more than 5% of the
outstanding Common Stock, (ii) the total number of shares of Common Stock
beneficially owned by each person and (iii) the percentage of all Common Stock
outstanding held by each such person.
SHARES OF COMMON
STOCK BENEFICIALLY PERCENT OF
NAME AND ADDRESS OF BENEFICIAL OWNER OWNED (1) COMMON STOCK
- --------------------------------------------------------------------------------------
Eric D. Hovde..................................... 2,714,173(2) 13.9%
Steven D. Hovde
Financial Institution Partners, L.P.
Hovde Capital, Inc.
Financial Institution Partners II, L.P.
Hovde Capital, L.L.C.
Hancock Park Acquisition, L.P.
Hancock Park Acquisition, L.L.C.
Western Acquisition Partners, L.P.
Western Acquisitions, L.L.C.
Pacific Financial Investors, Ltd.
1826 Jefferson Place, N.W.
Washington, D.C. 20036
Tontine Partners, L.P............................. 1,934,700(3) 9.9%
Tontine Financial Partners, L.P.
Tontine Management, L.L.C.
Tontine Overseas Associates, L.L.C.
Jeffrey L. Gendell
31 West 52nd Street
New York, NY 10019
Strome Investment Management L.P.................. 1,855,000(4) 9.5%
SSCO, Inc.
Mark E. Strome
Strome Partners L.P.
Strome Offshore Limited
Strome Hedgecap Fund, L.P.
Strome Hedgecap Limited
100 Wilshire Boulevard
Santa Monica, CA 90401
Thomson Horstmann & Bryant, Inc. ................. 1,533,500(5) 7.9%
Park 80 West, Plaza Two
Saddle Brook, N.J. 07663
Dimensional Fund Advisors Inc. ................... 1,178,500(6) 6.1%
1299 Ocean Avenue
Santa Monica, CA 90401
- --------
(1) Except as otherwise indicated, the persons listed as beneficial owners of
the shares have the sole voting and investment power with respect to such
shares.
24
(2) According to Forms 3 and 4 filed with the Securities and Exchange
Commission (the "SEC") by Messrs. Eric D. and Steven D. Hovde, they are
deemed beneficial owners of 2,714,173 shares of Common Stock by virtue of
their positions as the controlling stockholder and director of the
controlling member and/or managing member of Hovde Capital, Inc., the
general partner of Financial Institution Partners, L.P. ("FIP"), Hovde
Capital, L.L.C., the general partner of Financial Institution Partners II,
L.P. ("FIP II"), Hancock Park Acquisition, L.L.C., the general partner of
Hancock Park Acquisition, L.P. ("HPA"), Western Acquisitions, L.L.C., the
general partner of Western Acquisition Partners, L.P. ("Western") and
Pacific Financial Investors, Ltd. ("PFI"). FIP, FIP II, HPA, Western and
PFI are the beneficial owners of 1,071,146, 808,976, 651,260, 140,000 and
42,791 shares of Common Stock, respectively.
(3) According to a Schedule 13D/A filed with the SEC, Tontine Partners, L.P.
has shared voting power and shared investment power with respect to 260,000
of these shares. Tontine Financial Partners, L.P. has shared voting power
and shared investment power with respect to 1,002,200 of these shares.
Tontine Management, L.L.C. has shared voting power and shared investment
power with respect to 1,262,200 of these shares. Tontine Overseas
Associates, L.L.C. has shared voting power and shared investment power with
respect to 672,500 of these shares. Jeffrey L. Gendell has shared voting
power and shared investment power with respect to all of these shares.
(4) According to a Schedule 13D filed with the SEC, Strome Partners L.P. has
shared voting power and shared investment power with respect to 296,800 of
these shares. Strome Offshore Limited has shared voting power and shared
investment power with respect to 1,172,200 shares. Strome Hedgecap Fund
L.P. has shared voting power and shared investment power with respect to
330,350 of these shares. Strome Hedgecap Limited has shared voting power
and shared investment power with respect to 55,650 shares. Mark E. Strome
and SSCO, Inc. have shared voting power and shared investment power with
respect to all of these shares.
(5) According to a Schedule 13G filed with the SEC, Thomson Horstmann & Bryant,
Inc. has shared voting power with respect to 26,400 of these shares.
(6) According to a Schedule 13G filed with the SEC, Dimensional Fund Advisors,
Inc. ("Dimensional") has sole voting power and investment power with
respect to all of these shares. Dimensional furnishes investment advice to
four investment companies registered under the Investment Company Act of
1940, and serves as investment manager to certain other investment vehicles
including commingled group trusts. These investment companies and
investment vehicles are the "Portfolios." In its role as investment advisor
and investment manager, Dimensional possesses both voting and investment
power over the shares that are owned by the Portfolios. All shares are
owned by the Portfolios, and Dimensional disclaims beneficial ownership of
such shares.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the directors and executive
officers of the Company and beneficial owners of more than ten percent of any
class of equity securities of the Company registered pursuant to Section 12 of
the Exchange Act to file reports of ownership and changes in ownership of their
equity securities of the Company. These persons are required to furnish the
Company with copies of all Section 16(a) forms they file.
Based solely on its review of the copies of such reports received by it
during or with respect to the year ended December 31, 1999, and/or written
representations from such reporting persons, the Company believes that all
reports required to be filed by such reporting persons during or with respect to
the year ended December 31, 1999 were timely filed.
STOCKHOLDER PROPOSALS
Any stockholder of the Company wishing to submit a proposal for inclusion
in the Proxy Statement relating to the Company's 2001 annual meeting of
stockholders must deliver such proposal to the Company at its principal office
at 4565 Colorado Boulevard, Los Angeles, California 90039 on or before December
6, 2000. The Board of Directors will review any proposals from eligible
stockholders which it receives by that date and will determine whether any such
proposal will be included in its 2001 proxy solicitation materials.
25
From time to time, stockholders of the Company submit proposals which they
believe should be voted upon at the Annual Meeting or nominate persons for
election to the Board of Directors. In accordance with the Company's Bylaws, any
such proposal or nomination submitted other than pursuant to Exchange Act Rule
14a-8 must be submitted in writing to the Secretary of the Company not less than
45 days nor more than 75 days prior to the first anniversary of the date of
mailing of the Proxy Statement for the preceding year's annual meeting of
stockholders. This submission must include certain specified information
concerning the proposal or nominee, as the case may be, and information as to
the proponent's ownership of Common Stock of the Company. Proposals or
nominations not meeting these requirements will not be entertained at the annual
meeting. The Secretary should be contacted in writing at the address set forth
in the preceding paragraph to make any submission or to obtain additional
information as to the proper form and content of submissions.
OTHER MATTERS
At the time of preparation of this Proxy Statement, the Board of Directors
of the Company was not aware of any other matters to be brought before the
Annual Meeting. However, if any other matters are properly presented for action,
it is the intention of the persons named in the enclosed form of proxy to vote,
or refrain from voting, in accordance with their respective best judgment on
such matters.
FINANCIAL INFORMATION
Enclosed herewith is a copy of the Company's Annual Report on Form 10-K,
including financial statements for the year ended December 31, 1999, as filed
with the Securities and Exchange Commission.
By Order of the Board of Directors,
/S/ Godfrey B. Evans
--------------------
Godfrey B. Evans
CORPORATE SECRETARY
Los Angeles, California
April 5, 2000
PLEASE SIGN, DATE, AND RETURN THE ENCLOSED PROXY CARD PROMPTLY. NO POSTAGE
IS REQUIRED IF MAILED IN THE UNITED STATES.
If your shares are held in the name of a brokerage firm, bank nominee or
other institution, only it can vote your shares. Accordingly, please contact the
person responsible for your account and give instructions for your shares to be
voted.
If you have any questions, or have any difficulty voting your shares,
please contact the Company by calling (818) 549-3116.