CREDIT CARD WOES HURT BANK PLUS.

Byline: Deborah Adamson Daily News Staff Writer

Bank Plus Corp., the parent of Fidelity Federal Bank, reported a loss for the 1998 fiscal year due to problems in the thrift's credit card business.

The Los Angeles-based financial services holding company lost $56.3 million, or $2.90 per diluted share, for the year on revenues of $125.6 million compared with profits of $12.7 million (66 cents per share) on revenues of $84.9 million in 1997.

For the fourth quarter, Bank Plus made a profit of $1.1 million (6 cents per share) on revenues of $45.12 million. A year ago, the company made $1.78 million (8 cents per share) on revenues of $17.7 million.

``We've had higher-than-expected (credit card) delinquencies and charge-offs,'' said Neil Osborne, director of investor relations for Bank Plus.

These accounts were mainly held by customers with poor credit, so-called ``subprime'' loans.

Delinquencies rose to $75 million by year-end from $5.4 million in 1997.

Fidelity has terminated relationships it had with two credit card marketers who solicited these customers. But the action resulted in lawsuits.

Fidelity was upset that American Direct Credit allegedly didn't put up enough reserves or pay for delinquent loans as quickly as their contract stipulated, according to filings with the Securities and Exchange Commission. The lawsuit was settled. Fidelity alleges MMG Direct improperly solicited accounts. The case is still pending.

Due to its problems, Bank Plus is switching strategies. It had hoped to form an Internet bank. But a weakening of its finances prompted it to cut costs and turn back to its thrift's roots, single-family mortgages.

Bank Plus is seeking a buyer for itself and, separately, its credit card operations. It also adopted a stockholder-rights plan that would allow existing owners to buy more shares and thereby thwart any hostile takeovers.

The thrift's problems with its credit card portfolio has led to a host of other challenges as well.

It has had to increase its reserves for losses in these loans to $73 million for the year, up from $13 million in 1997.

Losses have led to a lowering of Fidelity's capital level to ``adequately capitalized'' from ``well-capitalized.'' As a result, the Office of Thrift Supervision has imposed certain restrictions on the company that include prior regulatory approval before increasing assets or making management changes.

The thrift also reduced assets to improve its capital ratio, which is calculated by dividing equity by total assets.

Fidelity's FDIC insurance premium - money banks and thrifts pay to insure customer deposits - will rise from 0.09 percent of deposits to 0.30 percent.