Bowing to shareholder pressure, Bank Plus Corp. of Los Angeles, the owner of Fidelity Federal Bank, said Monday that it has hired Keefe, Bruyette & Woods to identify potential acquirers.
Bank Plus' largest shareholder, Tontine Management LLP, had urged the thrift company's directors to either sell or replace its management team. New York-based Tontine owns 9.9% of its shares.
"It has become necessary for us ... to relay our grave concerns and lack of confidence with the current operation management," wrote Jeffrey L. Gendell, managing member of Tontine, in a letter to the thrift company on Friday. "It is time for our board of directors to act,'"
Bank Plus, which has $4.3 billion of assets, reported a net loss of $1.2 million for the second quarter stemming from hits to its portfolio of mortgage-backed securities. The Securities and Exchange Commission required the company to take a $4 million hedging loss in the quarter.
Because of a heavy focus on multifamily mortgages in the early 1990s, Fidelity Federal was slammed with loan losses when the bottom fell out of the market. Though the Southern California economy recovered, the thrift's performance did not follow suit, said Charlotte A. Chamberlain of Jefferies & Co., Los Angeles.
"It has been problem after problem after problem for Bank Plus," Ms. Chamberlain said. "I can't think of another California thrift that is as mired in substandard performance as Bank Plus."
Richard M. Greenwood, Bank Plus' chief executive, said the company hired Keefe Bruyette not only to look for buyers but also to review possible acquisitions that would boost loan origination or deposit-taking capabilities.
"We don't have any certainty that there will be somebody interested in acquiring us without that," Mr. Greenwood said.
But Mr. Gendell said he was shocked that the company is contemplating an acquisition.
"This company has neither the currency nor the capital to support anything other than a minor fill-in acquisition-assuming management demonstrates it can manage the existing business," he said.
Though Bank Plus has reined in its aggressive multifamily lending, it is facing new challenges. It has shifted its focus to subprime credit card loans, a business in which "thrifts generally don't do very well," Ms. Chamberlain said.
Mr. Greenwood acknowledged that this business line is under review by Keefe Bruyette.
Analysts said the short list of possible acquirers includes Golden State Bancorp., which is merging with the parent of California Federal Bank, and FirstFed Financial Corp. of Santa Monica, Calif. Ms. Chamberlain said she viewed $4 billion-asset FirstFed as the most likely buyer.
"They have sufficient size to buy Bank Plus, and they also have sufficient knowledge of the Southern California multifamily market to sort out Fidelity Federal's portfolio," 70% of which is multifamily home loans, she said.
