Bank Plus Gives Board Seat To Activist Major Investor

Avoiding a confrontation with its largest shareholder, Bank Plus Corp. has agreed to award a seat on its board to Hovde Financial Inc.

The Los Angeles-based thrift, which has been under pressure to sell since losing more than $56 million in 1998, said Monday that it would offer a board seat to Irving Beimler, senior vice president at the Washington, D.C.-based investment banking firm.

In turn, Hovde, which owns 13.98% of Bank Plus stock through various partnerships, agreed to withdraw its bid for more control of the $3.7 billion-asset thrift.

Last month, Hovde had filed an application with the Office of Thrift Supervision, seeking to acquire a 25% stake in Bank Plus. The firm had planned to nominate its own director next month at Bank Plus' annual meeting.

"We are pleased that we have reached an amicable resolution," said Eric D. Hovde. "We do not like to engage in proxy fights, and, hopefully, this settlement will allow everyone to move forward to enhance shareholder value."

Bank Plus, parent of Fidelity Federal Bank FSB, is ailing from losses to its subprime credit card portfolio. The company lost $56.3 million, or $2.90 per share, last year, and subsequently put itself on the selling block.

Investors are encouraging the sale of Bank Plus, though some-such as Hovde and LaSalle Financial Partners in Kalamazoo, Mich.-had been pushing for more control and a stronger voice in merger negotiations. But Bank Plus has been reluctant to relinquish control and, in recent weeks, enacted provisions to prevent a hostile takeover.

Tension was eased this week when Bank Plus agreed to appoint Mr. Beimler to the board-though that nomination must be approved by the OTS, which has been monitoring Bank Plus since last fall.

Bank Plus also agreed to amend its bylaws to allow three or more unaffiliated shareholders who collectively own 20% of its stock to call for a special meeting of shareholders. It also agreed to change voting procedures so that directors could be elected by a plurality vote, rather than by a majority.

Hovde and LaSalle had pushed for both proposals.

"We wanted to be sensitive to all shareholder interests," said Mark K. Mason, chief executive officer of Bank Plus. "This reflects steps taken to mitigate any concerns."

Richard J. Nelson, managing partner at LaSalle, called the deal beneficial to all shareholders. Like Hovde, LaSalle also agreed to drop its proposed nominee to the board.

"Now larger shareholders have some independent representation on the board," said Mr. Nelson, whose firm owns 3.6% of Bank Plus' outstanding shares. "The board has restored the ability of its shareholders to call for a special meeting, which is a fundamental right."

Bank Plus' announcement generated little enthusiasm among investors. At midday Monday, the stock was trading at $4.375, down 18.75 cents. The company's stock, which was trading above $16 in mid-1998, has been hovering between $3 and $5 since November.

The news also failed to excite analysts. Charlotte A. Chamberlain, a bank analyst at Jeffries & Co. in Los Angeles, doubts whether the thrift's agreements with Hovde and LaSalle will improve Bank Plus' performance.

"It's still a bust," Ms. Chamberlain said. "Bank Plus has major problems no matter who is on the board."

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