LOS ANGELES - Having put two years of credit card losses and lawsuits behind it, Bank Plus Corp. is prettying itself up for possible suitors.

In the last few months the $2.4 billion-asset parent of Fidelity Federal Bank has found a buyer for its money-losing credit card portfolio, settled most of the lawsuits related to that portfolio, boosted capital by selling branches, and awarded board seats to dissident shareholders who had been clamoring for the company's sale. By yearend Bank Plus may even turn a profit, said president and chief executive Mark K. Mason.

"Our first set of objectives was to stabilize the bank and clean up the credit card operations and return the bank to overall profitability," Mr. Mason said in an interview. "The business plan that we adopted this year was developed to address these weaknesses and position the bank to consider a sale."

What would a buyer find attractive in a company that has lost nearly $70 million the last two years?

Its rich deposit base, for one. Fidelity Federal operates 31 branches in one of the nation's most coveted markets - Los Angeles and Orange counties. Despite its well-documented troubles, several companies last year expressed an interest in Bank Plus, including Bay View Capital Corp. in San Mateo, Calif.

Mr. Mason acknowledged that buyers were turned off by Bank Plus' soured credit card portfolio, which had not only resulted in huge losses but had also generated a flood of lawsuits from consumers in the Southeast.

In June, Bank Plus said it had signed a definitive agreement to sell its $78.4 million MMG Direct Inc. subprime credit card portfolio to an unnamed financial services company, along with Bank Plus' credit card processing center in Beaverton, Ore. The buyer will also service the company's $77 million American Direct Credit Inc. card portfolio and has a one-year option to buy the second portfolio.

Bank Plus also recently agreed to settle for $4 million about 100 consumer lawsuits in Alabama and 60 in Mississippi. The plaintiffs had claimed that third-party sales representatives of an affinity credit card program, the now-defunct American Direct Credit Inc. of Boise, Idaho, made misrepresentations about the card. Mr. Mason said the settlement agreements should be completely resolved and paid out by October.

To offset some of the credit card losses, Bank Plus has sold eight branches, including five in the last quarter. It had expected to sell $600 million in deposits but only had to sell $430 million "as a result of better execution of those sales and lower runoff of deposits," Mr. Mason said.

"We're happy to report that we've accomplished all of these transactions better and sooner than we had anticipated," said the CEO, who predicts Bank Plus will break even this quarter and show a slight profit in the fourth.

Until the last decade, 60-year-old Fidelity Federal operated mainly as a community-based thrift focused on single-family and multifamily mortgage lending. However, like many thrifts, it racked up significant losses when several loans defaulted in the early 1990s as Southern California's real estate market crashed.

After recapitalizing twice in the mid-1990s, Bank Plus finally turned a profit in 1997.

Then, in an effort to be less reliant on multifamily residential mortgage lending in the volatile Southern California real estate market, Bank Plus ventured into what for it were uncharted areas: It entered the credit card business, dabbled in e-commerce technologies such as screen phones and smart cards, and at one point considered serving as financial adviser to California state employees through a subsidiary. That venture never got off the ground.

"We had to eliminate all of these activities when I took over," Mr. Mason said.

Mr. Mason was Bank Plus' chief financial officer in 1994 and 1995 before leaving to head First Alliance Corp., a now-bankrupt subprime mortgage lender in Irvine, Calif. Mr. Mason returned to Bank Plus in May 1998 as chief operating officer and chief financial officer, and was made CEO that September - shortly after the credit card troubles surfaced - when Robert Greenwood resigned.

David Moore, a banking analyst at Podesta & Co. in Chicago, said Bank Plus got lost because of poor direction.

"Getting into those credit card loans and the other [ventures] was a bizarre business strategy, considering they were supposed to be operating as a thrift," Mr. Moore said.

Still, he said the company is steering its way out of the mess and should catch buyers' attention once it finally turns the corner. "They will operate for a quarter or two just to show a buyer that there's something there worth buying that's profitable," he said.

Aside from its deposit base, buyers may like the fact that Bank Plus has originated $125 million in commercial and residential loan originations since 1998 - and that it has a rock-bottom stock price. The stock, which was traded in the $15 to $16 in mid-1998, bottomed out at $1.4375 in April. It was trading at $3.125 midday Thursday.

Moreover, Bank Plus' board is clearly motivated to sell.

With its stock and its earnings in a free fall, investors have been demanding for close to two years that Bank Plus find a buyer. In April the company appointed three new directors proposed by dissident shareholders who own more than one-third of Bank Plus' stock. The new directors joined another dissident, Irving R. Beimler, who was appointed in 1999 and represents the company's largest shareholder, Hovde Financial Inc.

Practically everyone on Bank Plus' board of directors is now "on the same page," Mr. Mason said. "The question now is when do we sell, and under what conditions."


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